UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

    For the quarter ended                       Commission File Number 0-21138
        June 30, 2001

                                 INPRIMIS, INC.
             (Exact name of registrant as specified in its charter)

         Florida                                         59-2479377
(State or other jurisdiction                (I.R.S. Employer Identification No.)
of incorporation or organization)

  1601 Clint Moore Road                                    33487
   Boca Raton, Florida                                   (Zip Code)
  (Address of principal
    executive offices)

                                 (561) 997-6227
              (Registrant's telephone number, including area code)

              (Former name, former address, and former fiscal year
                         if changed since last report)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                   Yes X No___

         Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

         Class                                              Outstanding as of
         -----                                               August 13, 2001
Common stock, par value                                      ---------------
    $.01 per share                                             11,631,604


                                      -1-
<PAGE>

                         INPRIMIS, INC. AND SUBSIDIARIES
                  Form 10-Q for the Quarter Ended June 30, 2001

                                      INDEX
                                                                         Page
                                                                         ----
Part I. FINANCIAL INFORMATION
      Item 1.     Financial Statements

                  Condensed Consolidated Balance Sheets
                  (unaudited) as of June 30, 2001 and
                  December 31, 2000.......................................3

                  Condensed Consolidated Statements of
                  Operations (unaudited) for the three and six
                  months ended June 30, 2001 and 2000.....................4

                  Condensed Consolidated Statements of
                  Cash Flow (unaudited) for the six
                  months ended June 30, 2001 and 2000.....................5

                  Notes to Condensed Consolidated
                  Financial Statements (unaudited)........................6

      Item 2.     Management's Discussion and Analysis of
                  Financial Condition and Results of
                  Operations.............................................14

Part II. OTHER INFORMATION

      Item 1.     Legal Proceedings......................................26

      Items 2-3.  Not applicable.........................................26

      Item 4.     Submissions of Matters to a Vote of
                  Security Holders.......................................26

      Item 5.     Other Information......................................26

      Item 6.     Exhibits and Reports on Forms 8-K......................26

      Signatures.........................................................27


                                      -2-
<PAGE>

PART I.    Item 1.

                        INPRIMIS, INC. AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (Unaudited)
                        (In thousands except share data)
<TABLE>
<CAPTION>
                                                                              June 30,       December 31,
                                                                                2001             2000
                                                                       -------------------------------------
                                     ASSETS
<S>                                                                         <C>                    <C>
Current assets:
   Cash and equivalents............................................         $   1,124              $ 5,454
   Trade receivables,net...........................................               584                1,201
   Unbilled revenues...............................................                59                   --
   Prepaid expenses and other current assets.......................               198                  661
                                                                            ---------              -------
       Total current assets........................................             1,965                7,319
Property and equipment, net........................................               870                  971
Other assets.......................................................               586                  795
                                                                            ---------              -------
        Total assets...............................................         $   3,421              $ 9,085
                                                                            =========              =======


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable................................................         $     814              $ 1,259
   Deferred revenue................................................               133                  161
   Accrued expenses and other current liabilities .................               937                3,277
                                                                            ---------              -------
       Total current liabilities                                                1,884                4,697
                                                                            ---------              -------
Other non-current liabilities......................................                 9                   --
                                                                            ---------              -------

Commitments and contingencies
Stockholders' equity:
  Preferred stock, par value $.01 per share, 5,000,000 shares
   authorized; none issued and outstanding at June
   30, 2001 and December 31, 2000..................................                --                   --
  Common stock, par value $.01 per share, 25,000,000 shares
   authorized; 11,623,604 issued and outstanding
   at June 30, 2001, 11,608,788 issued and
   outstanding at December 31, 2000................................               116                  116
  Additional paid-in capital.......................................            40,055               40,043
  Accumulated deficit..............................................           (38,643)             (35,771)
                                                                            ---------              -------
     Total stockholders' equity....................................             1,528                4,388
                                                                            ---------              -------
      Total liabilities and stockholders' equity ..................         $   3,421              $ 9,085
                                                                            =========              =======
</TABLE>

           See notes to condensed consolidated financial statements.


                                      -3-
<PAGE>

                         INPRIMIS, INC. AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (Unaudited)
                      (In thousands except per share data)

<TABLE>
<CAPTION>
                                                        Three months                    Six Months
                                                       Ended June 30,                 Ended June 30,
                                               ------------------------------   ---------------------------
                                                     2001             2000         2001            2000
                                               -------------   --------------   -----------   -------------
<S>                                            <C>             <C>              <C>           <C>
Net sales
   Product sales...........................     $       228     $      2,706     $     389     $     6,985
   Engineering services....................             946              731         1,599           1,107
                                                -----------     ------------     ---------     -----------
     Total.................................           1,174            3,437         1,988           8,092
Cost of goods sold.........................             988            3,860         2,962           8,119
                                                -----------     ------------     ---------     -----------
  Gross profit (loss)......................             186             (423)         (974)            (27)
                                                -----------     ------------     ---------     -----------
Operating expenses:
   Research and development ...............             176              853           304           1,571
   Selling, general and administrative.....             788            4,003         1,756           7,229
   Asset impairment and other charges......              --            4,633            --           4,633
                                                -----------     ------------     ---------     -----------
     Total operating expenses ...............           964            9,489         2,060          13,433
                                                -----------     ------------     ---------     -----------
Loss from operations.........................          (778)          (9,912)       (3,034)        (13,460)
Non-operating income, net....................            76              254           164           1,407
                                                -----------     ------------     ---------     -----------
Loss before income taxes.....................          (702)          (9,658)       (2,870)        (12,053)
Income taxes.................................            --                2             2               2
                                                -----------     ------------     ---------     -----------
Net loss.....................................   $      (702)    $     (9,660)    $  (2,872)    $   (12,055)
                                                ===========     ============     =========     ===========
Net loss per share (basic and diluted).......   $     (0.06)    $      (0.83)    $   (0.25)    $     (1.04)
                                                ===========     ============     =========     ===========
Weighted average
   shares outstanding........................        11,624           11,601        11,624          11,564
                                                ===========     ============     =========     ===========
</TABLE>

           See notes to condensed consolidated financial statements.


                                      -4-
<PAGE>

                         INPRIMIS, INC. AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                   Six Months
                                                                                 Ended June 30,
                                                                                 --------------
                                                                            2001                 2000
                                                                       ---------------      ----------------
<S>                                                                    <C>                  <C>
Cash provided by (used in):
Operating activities:
   Net loss.........................................................     $     (2,872)        $     (12,055)
   Depreciation and amortization....................................              348                 1,215
   Adjustment for asset impairment and other charges................               --                 4,633
   Gain on sale of shares received under
    marketing agreement.............................................               --                  (956)
   Gain on sale of fixed assets.....................................               --                  (292)
   Changes in current assets and liabilities .......................           (1,766)                3,379
                                                                         ------------         -------------
    Net cash used in operating activities...........................           (4,290)               (4,076)
                                                                         ------------         -------------
Investing activities:
   Proceeds from sale of shares received under
    marketing agreement and shares in foreign
    investment......................................................               --                 1,156
   Proceeds from sale of fixed assets...............................               --                   715
   Payment received on note from Boundless..........................               63                    --
   Capital expenditures.............................................             (102)               (1,012)
                                                                         ------------         -------------
    Net cash provided by (used in) investing activities.............              (39)                  859
                                                                         ------------         -------------
Financing activities:
   Issuance of common stock.........................................               12                   470
   Payment on obligation of capital leases..........................              (13)                   --
                                                                         ------------         -------------
    Net cash provided by (used in) financing activities.............               (1)                  470
                                                                         ------------         -------------
Net decrease in cash and cash equivalents...........................           (4,330)               (2,747)
Cash and cash equivalents, beginning of period......................            5,454                11,819
                                                                         ------------         -------------
Cash and cash equivalents, end of period............................     $      1,124         $       9,072
                                                                         ============         =============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid during the six months for income taxes                       $          2         $          --
                                                                         ============         =============
  Non-cash investing and financing activities:
    Capital lease obligation incurred for equipment
       purchases                                                         $         65         $          --
                                                                         ============         =============
    Decrease in note receivable from Boundless as an offset
       for payment against the minimum purchase guarantee
       and accounts payable to Boundless                                 $        562         $          --
                                                                         ============         =============
</TABLE>

           See notes to condensed consolidated financial statements.


                                      -5-
<PAGE>

                         INPRIMIS, INC. AND SUBSIDIARIES
             NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENT
                                   (Unaudited)

Basis of Presentation and Going Concern

The condensed consolidated financial statements include the accounts of
Inprimis, Inc. and subsidiaries (the "Company") and have been prepared in
accordance with the rules and regulations of the Securities and Exchange
Commission regarding interim financial reporting; accordingly, they do not
include all of the information and disclosures required by accounting principles
generally accepted in the United States of America ("generally accepted
accounting principles"). In the opinion of management, the condensed
consolidated financial statements contain all adjustments (consisting of normal
recurring accruals) necessary to present fairly the financial position of the
Company as of June 30, 2001, the results of its operations for the three and six
month periods ended June 30, 2001 and 2000, and its cash flows for the six month
periods ended June 30, 2001 and 2000. These results have been determined on the
basis of generally accepted accounting principles and practices applied
consistently with those used in the preparation of the Company's 2000 audited
consolidated financial statements.

The accompanying condensed consolidated financial statements have been prepared
on a going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business; and, as a
consequence the financial statements do not include any adjustments relating to
the recoverability and classification of recorded asset amounts or the amounts
and classifications of liabilities that might be necessary should the Company be
unable to continue as a going concern. The Company has experienced net operating
losses since 1997 and as of June 30, 2001, had an accumulated deficit of $38.6
million. Cash used in operations for the six months ended June 30, 2001 was $4.3
million. An unfavorable outcome of the legal contingencies (see "Commitments and
Contingencies") would also have an adverse affect on the Company's cash flow.
Such conditions raise substantial doubt that the Company will be able to
continue as a going concern for a reasonable period of time. The Company has
attempted to bring the Company's expense structure in line with the reduced
revenue levels being achieved and revenue levels that are forecasted. In April
2001, the Company further reduced its number of employees from 53 to 37. In July
2001 the Company implemented a 20% salary reduction for its five management
personnel and a 10% salary reduction for other management positions. The Company
has also taken steps to increase customer proposal activity in order to improve
sales. There can be no assurances that the Company will return to profitable
operations in the near term and therefore it is likely the Company's operations
will continue to consume cash over the foreseeable future. The Company has very
limited cash resources and therefore the Company must reduce its negative cash
flows in the near term to continue operating. In April 2001, the Company hired
an investment banker to seek additional capital or potential acquisitions or
merger candidates that could bring financing or profitable revenues to the
combined companies. However, there can be no assurances that the Company will
succeed in achieving its goals, and its failure to do so in the near term will
have a material adverse effect on its business, prospects, financial condition
and operating results and the Company's ability to continue as a going concern.
As a consequence, the Company may be forced to seek protection under the
bankruptcy laws. In that event, it is unclear whether the Company could
successfully reorganize its capital structure and operations, or whether the
Company could realize sufficient value for its assets to satisfy fully its
debts. Accordingly, should the Company file for bankruptcy there is no assurance
that any value would be received by the Company's shareholders.


                                      -6-
<PAGE>

                         INPRIMIS, INC. AND SUBSIDIARIES
             NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENT
                                   (Unaudited)

The accompanying condensed consolidated financial statements should be read in
conjunction with the Company's most recent audited consolidated financial
statements and notes thereto for the year ended December 31, 2000. The results
of operations for the three and six month periods ended June 30, 2001 are not
necessarily indicative of the results to be expected for the full year.

Certain prior year amounts have been reclassified to conform to the current
period presentation.

Recent Developments

The Company hired an investment banker in April 2001 to seek additional capital
or potential acquisitions or merger candidates that could bring financing or
profitable revenues to the combined companies. The Company signed a letter of
intent on March 27, 2001 to acquire iDVDBox, Inc. This letter of intent expired
and the Company is no longer in negotiations to acquire iDVD Box, Inc.

The Company embarked upon a plan in early 2000 to transition from being
primarily a data communications products manufacturer to its new focus on
providing engineering services. The Company announced in July 2000 that it no
longer would offer data communications products to the marketplace. In
conjunction with this transition, the Company changed its name from Boca
Research, Inc. to Inprimis, Inc. The Company's data communications sales were
insignificant in the six months ended June 30, 2001. The Company has eliminated
its purchase orders for new data communications products from Boundless
Manufacturing Services, Inc. ("Boundless"), the manufacturing subcontractor
utilized by the Company. Procurement of new data communications products was
eliminated as of September 30, 2000 and any sales of data communication since
then have been out of inventory. The Company previously announced in July 2000
the sale of certain assets to Zoom Telephonics, Inc. ("Zoom"), which provided
the Company with a smooth and customer oriented transition out of the analog
modem business. These actions resulted in the Company determining that the
goodwill and tradename/marketing assets related to the data communications
business had been impaired as of June 30, 2000, and the Company recorded a
charge to operations of $2.7 million in the second quarter of 2000. The Company
does not currently have goodwill or other intangible assets on its books. The
elimination of new purchase orders to Boundless resulted in the Company's
falling short of the guaranteed purchase commitments under the Supply Agreement
(the "Supply Agreement") between the Company and Boundless. This shortfall was
charged to expense in the year ended December 31, 2000. Although purchases by
Zoom from Boundless of the Company's products relating to the analog business
would have mitigated the shortfall (see "Agreement between Inprimis, Inc. and
Zoom Telephonics" and "Commitments and Contingencies"), Zoom did not make any
commitments to manufacture the Company's products at Boundless. As of March 31,
2001 the shortfall was satisfied.

The charges to operations relating to impairment of goodwill and
tradename/marketing assets and the shortfall for the guaranteed purchase
commitment were recorded under "Asset impairment and other charges" in the
Condensed Consolidated Statements of Operations. These charges occurred in June
2000. The Company will continue to discharge its warranty obligation on all
products sold. The warranty obligation is included within the caption "Accrued
expenses and other current liabilities" in the condensed consolidated balance
sheets.


                                      -7-
<PAGE>

                         INPRIMIS, INC. AND SUBSIDIARIES
             NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENT
                                   (Unaudited)

Agreement between Inprimis, Inc. and Zoom Telephonics

As previously reported, on July 28, 2000, the Company concluded a definitive
agreement with Zoom (the "Agreement") pursuant to which Zoom acquired certain of
the Company's assets, including selected trademarks such as Global Village(TM),
rights to Global Village and Boca Research branded products, and certain Web
domain names. Under the Agreement, the Company continues to support all the
products it has already shipped or will ship and remains responsible for
warranty, returns and technical support for these products, although technical
support has been outsourced to Zoom in order to provide customers with a single
point of contact. Zoom, acting as a master distributor, had the right to sell
products from the Company's inventory, utilizing the Global Village and Boca
Research brand names. Zoom has the right to introduce new products within both
product lines. In general, except for minor royalty payments, no payments were
received except that the Company is entitled to be paid a purchase price based
on the sales performance schedule as follows: $500,000 if sales by Zoom of the
Company's existing product lines over an initial 12 month period exceed $12
million; $1.0 million if sales by Zoom of the Company's existing product lines
over the subsequent 12 month period exceed $19 million; and $2.0 million if
sales by Zoom of the Company's existing product lines over the subsequent and
final 12 month period exceed $24 million. The determination of the purchase
price was arrived at by negotiation among the parties. Zoom has not to date
offered any of the Company's previous data communications products; therefore,
it is unlikely that the Company will receive any purchase price payment under
the performance schedule above. If Zoom had manufactured the Company's products
at Boundless, the Company would have received credit against the Company's
minimum guaranteed purchase commitment. As of June 30, 2001, Zoom had not made
any commitments to manufacture the Company's products at Boundless and the
minimum requirement is no longer in effect.

Revenue Recognition

Revenue from engineering services contracts is recognized as the work is
performed. With time-and-material type contracts, revenue is calculated by
multiplying the number of hours worked by the contractually agreed upon rate per
hour. Contracts are either time-and-material or fixed-price in nature. With
fixed-price type contracts, revenue is calculated by applying the percentage of
completion method, which is based on the ratio of total hours incurred to date
to the total estimated hours. Revenue recognition must satisfy several factors
depending on the nature of the contract. These factors include the completion of
certain contractual milestones, which is verified by the customer before revenue
is recognized, and a calculation of the costs incurred and an estimated cost to
complete to determine if costs are in excess of potential revenue. Contracts
generally allow for modification of the number of hours or the stated
deliverables via change orders based upon the actual work required to complete a
project and upon agreement between the Company and its customer(s). The Company
records a loss in the current period during which a loss on a project is
probable. The amount of such loss is the reasonably estimated loss on the
project and is recorded immediately upon determination that the loss is
probable. The Company has unbilled revenue under current assets in its balance
sheet as of June 30, 2001. This is for revenue that has been earned but was not
invoiced to customers. This situation can occur when the payment terms are
different than the amount of revenue earned under the contract when the
percentage of completion method of recognizing revenue is applied. The Company
is doing business with a number of start up companies. Generally accepted
accounting principles require


                                      -8-
<PAGE>

                         INPRIMIS, INC. AND SUBSIDIARIES
             NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENT
                                   (Unaudited)

that collectibility must be reasonably assured before revenue is recognized. The
Company evaluates each of its customers who are in a start up mode and assesses
its ability to pay and the customer's recent history of payments before the
Company recognizes revenue for services performed. Revenue from product
licensing is recognized as earned pursuant to the terms of the related contract,
which generally occurs when the Company ships equipment in conjunction with such
license. Amounts received but unearned as of June 30, 2001 are recorded as
deferred revenue at June 30, 2001. All the revenue recorded for the six months
ended June 30, 2001 were from engineering and prototype service contracts.

The majority of the revenue for the six months ended June 30, 2000 was from
product sales. The Company recognizes revenue from product sales upon shipment,
when the title passes. Under specified conditions, certain customers were
allowed to return product for credit. Also, under the terms of some of the
agreements, in the event the Company reduced its selling prices, the customer
received credit for the difference between the original purchase price and the
Company's reduced price for product remaining in the customer's inventory.

Trade Receivables

Trade receivables are presented net of an allowance for doubtful accounts of
$80,000 and $580,000 as of June 30, 2001 and December 31, 2000, respectively,
and net of the allowance for sales returns and price protection of $0 and
$100,000 as of June 30, 2001 and December 31, 2000, respectively.

Segment information

The Company operates in only one business segment but has two major product
categories. Sales by major product category are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                  Three Months            Six Months
                                                                                  Ended June 30,         Ended June 30,
                                                                                  --------------         --------------
                                                                                  2001      2000         2001      2000
                                                                                  ----      ----         ----      ----
<S>                                                                               <C>       <C>          <C>       <C>
Data communications, PC peripherals, and others                                   $0.0      $2.7         $0.0      $7.0
Engineering Services including prototype product sales                            $1.2      $0.7         $2.0      $1.1
</TABLE>

The Company does not have the information to break down profitability (loss) by
major product types.

Comprehensive Income (Loss)

Comprehensive income (loss) includes all changes in equity during a period
except those resulting from investment by owners and distributions to owners.
The Company's comprehensive income (loss) equals its net loss for the three and
six months ended June 30, 2001 and 2000.


                                      -9-
<PAGE>

                         INPRIMIS, INC. AND SUBSIDIARIES
             NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENT
                                   (Unaudited)

Fair Value of Financial Instruments

The carrying value of cash and cash equivalents, trade receivables, accounts
payable, and accrued expenses and other current and non-current liabilities
approximates fair value.

Capital Leases

The Company capitalizes leases that meet at least one of the following criteria:
(a) the lease transfers ownership of the property by the end of its lease term;
(b) the lease contains a bargain purchase option; (c) the lease term is equal to
75% or more of the estimated economic life of the leased property or (d) the
present value at the beginning of the lease term of the minimum lease payments
equals or exceeds 90% of the fair value of the leased property. All other leases
are accounted for as operating leases.

Net Loss per Share

The Company computes net loss per share under Statement of Financial Accounting
Standards ("SFAS") No. 128, " Earnings Per Share", which requires a dual
presentation of basic and diluted earnings per share on the face of the
statement of operations. Basic earnings per share excludes dilution and is
computed by dividing income or loss attributable to common shareholders by the
weighted-average number of common shares outstanding for the period. Diluted
earnings per share reflects the potential dilution that could occur if
securities or other contracts to issue common stock were converted into common
stock, but such securities or contracts are excluded if their effects would be
anti-dilutive. The Company excluded stock options to purchase 2,366,100 and
1,514,985 common shares from the weighted-average shares outstanding calculation
for the three and six months ended June 30, 2001 and 2000, respectively, as
their effect was anti-dilutive.

Commitments and Contingencies

On March 3, 2000, the Company completed the sale of certain of its assets (the
"Purchased Assets") relating to its manufacturing operations at 1377 Clint Moore
Road for the manufacture of products, including modems, to Boundless
Manufacturing Services, Inc. ("Boundless"), a wholly owned subsidiary of
Boundless Corporation, for $1.7 million in cash and notes (the "Boundless
Transaction"). The sale was part of the Company's efforts to improve gross
margins and resulted in a gain of $277,000. In accordance with the terms of the
Asset Purchase Agreement between the Company and Boundless Technologies, Inc.,
which was assigned to Boundless on the closing of the transaction, Boundless
paid the Company $700,000 in cash and Boundless issued to the Company a 6%
promissory note (the "Note") in the principal amount of $1,000,000 to be paid in
eight equal installments of $125,000 plus accrued interest commencing on June 1,
2000, and on the first business day of every third month thereafter, until paid
in full. Boundless Technologies, Inc. and Boundless Corporation guaranteed the
obligations of Boundless under the Note. As of June 30, 2001 the note receivable
was fully satisfied by offsetting the amount due from Boundless with the amount
due to Boundless under a minimum guaranteed purchase commitment. This offset
provision was provided for under the terms of the contract. Additionally,
concurrent with the closing of the Boundless Transaction, the Company entered
into a Supply Agreement with Boundless (the "Supply Agreement") pursuant to
which the Company agreed to outsource the manufacture of certain products to
Boundless for a period of two years.


                                      -10-
<PAGE>

                         INPRIMIS, INC. AND SUBSIDIARIES
             NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENT
                                   (Unaudited)

Under the Supply Agreement, the Company guaranteed that it would purchase
products resulting in proceeds to Boundless exclusive of costs of materials, of
at least $3.8 million during the first year of the term of the Supply Agreement.
To the extent the Company fell short of the cumulative prorated amount
guaranteed in any of the four 90 day periods subsequent to March 3, 2000, the
amount of the shortfall would be due within 30 days after the end of the 90 day
period in which the shortfall occurred. As noted under "Recent Developments,"
the Company eliminated its purchase of data communications products from
Boundless as of September 30, 2000 and charged an estimated shortfall of $1.9
million to operations in the quarter ended June 30, 2000.

The calculation of the shortfall in the purchase commitment took into
consideration the Company's final purchase requirements for data communications
products through September 30, 2000, the use of Boundless to fulfill the
Company's obligations for warranty repairs, and other opportunities to satisfy
the purchase requirements that are afforded by the contract with Boundless. The
minimum guaranteed purchase commitment expired as of March 3, 2001 and all
obligations under the minimum guaranteed purchase commitment have been
satisfied. The Supply Agreement provided that any amounts due under the minimum
guaranteed purchase commitment could be offset against the Note Receivable,
which the Company did as of March 31, 2001. There is no minimum purchase
obligation during the second year of the Supply Agreement.

The Company receives communications from time to time alleging various claims.
These claims include, but are not limited to, allegations that certain of the
Company's products infringe the patent rights of other third parties. The
Company cannot predict the outcome of any such claims or the effect of any such
claims on the Company's operating results, financial condition or cash flows.

The Company has been named a co-defendant in an action brought in the United
States District Court for the District of Massachusetts, by NEC Technologies,
Inc. ("NEC"). The suit alleges that the Company supplied modem hardware to NEC,
which was combined by NEC with software supplied by another co-defendant, Ring
Zero Systems, Inc. NEC was subsequently sued for patent infringement by PhoneTel
Communications, Inc. ("PhoneTel"), allegedly as a result of NEC's combination of
modem hardware and software supplied by the vendors in its personal computer
products. NEC alleges that the Company and Ring Zero are obligated to indemnify
NEC for NEC's costs of defense and settlement of the PhoneTel suit, in the
amount of $327,000. This action was dismissed without prejudice on April 25,
2000; however, the reason for the dismissal was entirely procedural, and there
has been no resolution of the substantive dispute. The Company anticipates that
NEC will refile this action in an appropriate jurisdiction in the near future.
The Company continues to evaluate the claim, but cannot predict at this time
whether the claim will have a material adverse effect on the Company's operating
results, financial condition, or cash flows.


                                      -11-
<PAGE>

                         INPRIMIS, INC. AND SUBSIDIARIES
             NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENT
                                   (Unaudited)

The Company and its Boca Global, Inc. subsidiary have been named co-defendants
in an action brought in the District Court of South Dakota, by Gateway, Inc.
("Gateway"). Global Village, Inc. had contracted to supply its FaxWorks software
to be bundled with Gateway PCs. Gateway's complaint against the Company and Boca
Global, Inc. alleges that either or both of these entities assumed the
liabilities of Global Village, Inc. with respect to the FaxWorks product.
Gateway reportedly will pay between $5 million and $6 million to settle
litigation brought by PhoneTel, for which Gateway has sought indemnification
from the Company, Boca Global, Inc., and an unrelated co-defendant. On January
19, 2001, a motion to dismiss was granted with respect to Inprimis, Inc. Boca
Global, Inc. remains as a defendant. While the Company believes that Boca
Global, Inc. will be able to assert numerous defenses to liability, the Company
is unable to estimate what impact, if any, this claim will have upon the
Company's financial statements, given the preliminary nature of the claim.

The Company is committed through 2002 for rents under noncancelable operating
leases for use of its offices. The aggregate minimum payments under such leases
for the period July 1, 2001 to December 31, 2001 and for the year 2002 are
$196,136 and $231,798, respectively.

Stockholders' Equity

During the six month period ended June 30, 2001, 14,816 shares were issued in
connection with purchases by employees through the Employee Stock Purchase Plan.
The aggregate proceeds received from these exercises were $11,813.

Stock Option Plan

During the six month period ended June 30, 2001, the Company granted options to
purchase 32,000 shares at prices ranging from $1.05 to $2.44 to new employees,
and options to purchase 189,167 shares were canceled as a result of employees
who were terminated. The Company granted 472,500 new options to existing
employees, cancelled 531,946 previously granted options and re-priced these
options on April 25, 2001. The price of the new options and the re-priced
options were $.56. The new options and re-priced options have a three month
vesting period and have a life of 10 years as of April 25, 2001. The 531,946
re-priced options will have variable plan accounting treatment. Therefore if the
price of the Company's common stock is greater than the option price, the
Company will record compensation expense resulting in a charge to earnings. The
Company did not record any compensation expense for the three and six month
periods ended June 30, 2001 because the stock price was below the option price.
The Company will evaluate re-priced stock options each quarter and will record
compensation expense if required. Effective April 12, 2001, 250,000 options were
granted to the President and Chief Executive Officer, pursuant to his employment
agreement. These options vest 20% on April 12, 2002, 20% on April 12, 2003, and
60% on April 12, 2004. The price of these options were $.72. The total number of
options granted during the six month period ended June 30, 2001 was 1,284,446
and 765,113 were cancelled. On July 16, 2001 the Board of Directors approved an
additional grant of 309,000 shares to current employees, vesting 20%/20%/60%
over a three year period, with acceleration of vesting upon a change in control.


                                      -12-
<PAGE>

                         INPRIMIS, INC. AND SUBSIDIARIES
             NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENT
                                   (Unaudited)

Recently Issued Accounting Pronouncements and Interpretations:

In December 1999, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin ("SAB") No. 101 "Revenue Recognition" which provides
guidance on the recognition, presentation and disclosure of revenue in financial
statements. Based on management's current analysis of SAB No. 101, management
believes it has met all conditions of SAB No. 101 regarding revenue recognition.

Effective January 1, 2001, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No 133 "Accounting for Derivative Instruments and Hedging
Activities" as amended by SFAS No 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities." The Statement establishes
accounting and reporting standards requiring that every derivative instrument
(including certain derivative instruments embedded in other contracts) be
recorded in the balance sheet as either an asset or liability measured at its
fair value. The Statement requires that changes in the derivatives' fair value
be recognized currently in earnings unless specific hedge accounting criteria
are met. The effects of applying SFAS Nos.133 and 138 were not material to the
Company's financial statements.

In June 2001, the Financial Accounting Standards Board ("FASB") issued two new
pronouncements: Statement of Financial Accounting Standards ("SFAS") No 141,
"Business Combinations," and SFAS No.142, "Goodwill and Other Intangible
Assets." SFAS No. 141 is effective as follows: a) use of the pooling-of-interest
method is prohibited for business combinations initiated after June 30, 2001;
and b) the provisions of SFAS 141 also apply to all business combinations
accounted for by the purchase method that are completed after June 30, 2001
(that is, the date of the acquisition is July 2001 or later). There are also
transition provisions that apply to business combinations completed before July
1, 2001, that were accounted for by the purchase method. SFAS No. 142 is
effective for fiscal years beginning after December 15, 2001 for all goodwill
and other intangible assets recognized in an entity's statement of financial
position at that date, regardless of when those assets were initially
recognized. SFAS No. 142 specifies that goodwill and some intangible assets will
no longer be amortized but instead will be subject to periodic impairment
testing. The Company is currently evaluating the provisions of SFAS No. 141 and
SFAS No.142 and has not adopted such provisions in its June 30, 2001 condensed
consolidated financial statements.


                                      -13-
<PAGE>

Item 2.
                         INPRIMIS, INC. AND SUBSIDIARIES

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This report on Form 10-Q contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 23E of the
Securities Act of 1934, as amended. These statements relate to future events or
future financial performance. Any statements contained in this report that are
not statements of historical fact may be deemed forward-looking statements. In
some cases, forward-looking statements can be identified by terminology such as
"may," "will," "should," "expect," "plan," "anticipate," "intend", "believe,"
"estimate," "predict," "potential" or "continue," or the negative of such terms
or other comparable terminology. These statements are only predictions. Actual
events or results may differ materially.

Although the Company believes that the expectations reflected in the
forward-looking statements are reasonable, the Company cannot guarantee future
results, levels of activity, performance or achievements. Moreover, neither the
Company, nor any other entity, assumes responsibility for the accuracy and
completeness of the forward-looking statements. The Company is under no
obligation to update any of the forward-looking statements after the filing of
this Form 10-Q to conform such statements to actual results or to changes in the
Company's expectations.

The following discussion should be read in conjunction with the Company's
condensed consolidated financial statements, related notes and the other
financial information appearing elsewhere in this Form 10-Q. Readers are also
urged to carefully review and consider the various disclosures made by the
Company, which attempt to advise interested parties of the factors which affect
the Company's business, including without limitation, the disclosures made under
the caption "Certain Factors That May Affect Future Performance."


                                      -14-
<PAGE>

As an aid to reviewing the Company's results of operations for the three and six
months ended June 30, 2001 and 2000, the following table sets forth the
financial information as a percentage of net sales and the percentage change
from the comparable period in 2000.

<TABLE>
<CAPTION>
                                                    Three Months                          Six Months
                                                   Ended June 30,        Percent        Ended June 30,         Percent
                                                  2001       2000        Change        2001        2000        Change
                                                --------   --------    ---------     --------    --------    ----------
<S>                                             <C>        <C>         <C>           <C>         <C>         <C>
Net sales                                        100.0  %    100.0 %     (65.8) %     100.0  %     100.0 %     (75.4)%
Cost of goods sold                                84.2       112.3       (74.4)       149.0        100.3       (63.5)
                                                  ----       -----                    -----        -----
   Gross profit (loss)                            15.8       (12.3)        *          (49.0)        (0.3)        *
                                                  ----       -----                    -----        -----
Operating expenses:
 Research and development                         15.0        24.8       (79.4)        15.3         19.4       (80.6)
 Selling, general and administrative              67.1       116.5       (80.3)        88.3         89.3       (75.7)
 Asset impairment and other charges                0.0       134.8      (100.0)         0.0         57.3      (100.0)
                                                  ----       -----                    -----        -----
  Total operating expenses                        82.1       276.1       (89.8)       103.6        166.0       (84.7)
                                                  ----       -----                    -----        -----
Loss from operations                             (66.3)     (288.4)      (92.2)      (152.6)      (166.3)      (77.5)
Non-operating income, net                          6.5         7.4       (70.1)         8.2         17.4       (88.3)
                                                 -----       -----                    -----        -----
Loss before income taxes                         (59.8)     (281.0)      (92.7)      (144.4)       148.9       (76.2)
Income taxes                                       0.0         0.1      (100.0)         0.0          0.0         *
                                                 -----       -----                    -----        -----
Net loss                                         (59.8) %   (281.1)%     (92.7)      (144.4) %    (148.9)%     (76.2)%
                                                 =====       =====                    =====        =====
</TABLE>

* Not applicable

Results of Operations

Net Sales: The Company's net sales decreased by 65.8% to $1.2 million in the
three- month period ended June 30, 2001 from $3.4 million for the three months
ended June 30, 2000. For the six months ended June 30, 2001 net sales decreased
by 75.4% to $2.0 million from $8.1 million for the six months ended June 30,
2000. Sales in the three and six month periods ended June 30, 2001 versus the
comparable period in 2000 are shown by product category as follows:

<TABLE>
<CAPTION>
                                                                               Three Months           Six Months
                                                                              Ended June 30,        Ended June 30,
                                                                             ---------------       ---------------
                                                                              2001      2000        2001      2000
                                                                              ----      ----        ----      ----

                           Product Categories                                 (In Millions)         (In Millions)
                           ------------------
<S>                                                                          <C>        <C>        <C>        <C>
Data Communications ...................................................         --     $ 2.1          --     $ 5.5
Custom Manufacturing ..................................................         --        --          --       0.1
I/O, IDE, & Multiport .................................................         --       0.6          --       1.3
Internet Access Device, Thin Client ...................................         --        --          --       0.1
Engineering Services including prototype product sales                       $ 1.2       0.7       $ 2.0       1.1
                                                                             -----     -----       -----     -----
                                                                             $ 1.2     $ 3.4       $ 2.0     $ 8.1
                                                                             =====     =====       =====     =====
</TABLE>


                                      -15-
<PAGE>

The sales decrease was primarily attributable to data communications products,
which the Company is no longer offering to the marketplace. Engineering service
revenue increased to $1.2 million in the three months ended June 30, 2001 from
$0.7 million in the comparable period in 2000. For the six month period
engineering service revenues increased to $2.0 million from $1.1 million for the
comparable period in 2000.

Engineering services revenue for the three months ended June 30, 2001, consisted
primarily of $1.0 million for contract engineering and $0.2 million from
prototype and product sales arising from engineering contracts. For the three
months ended June 30, 2000 engineering service revenue consisted of $0.5 million
from contract engineering and $0.2 million in royalties from licensing the
Company's Internet appliance reference design. Engineering service revenue for
the six months ended June 30, 2001 consisted of $1.6 million for contract
engineering and $0.4 million for prototype and product sales arising from
engineering contracts. For the six months ended June 30, 2000 engineering
service revenues consisted of $0.9 million from contract engineering and $0.2
million in royalties from licensing the Company's Internet appliance reference
design. The product sales, which are included as engineering services, are shown
in the statement of operations under product sales. These product sales are not
comparable to the data communication product sales in the previous year. The
Company did not earn any royalties from its Internet appliance reference design
for the six months ended June 30, 2001.

International sales were insignificant for the three months ended June 30, 2001
compared to $0.5 million the three months ended June 30, 2000. International
sales were insignificant for the six months ended June 30, 2001 compared to $1.0
million for the six months ended June 30, 2000.

Gross Profit (Loss): The Company recorded a gross profit of $0.2 million for the
three months ended June 30, 2001 as compared to a gross profit (loss) of ($0.4)
million for the three months ended June 30, 2000. For the six months ended June
30, 2001 the Company recorded a gross profit (loss) of ($1.0) million compared
to a small gross margin loss in the comparable period in 2000. The Company's
negative gross profit for the six months ended June 30, 2001 was the result of
engineering costs being charged to projects that exceeded recognized revenue for
the project. This situation can be caused by a number of factors such as
under-pricing of the project, inefficiency of the engineers, and difficulties
encountered in the project. The Company decreased its engineering staff in the
second quarter to partially rectify the situation where the workload has
diminished. This has resulted in the Company's achieving a positive gross margin
of $0.2 million in the three months ended June 30, 2001. The majority of sales
for the six months ended June 30, 2000 were data communications products as
noted in the table above.

On March 3, 2000, the Company completed the sale of certain of its assets (the
"Purchased Assets") relating to its manufacturing operations at 1377 Clint Moore
Road for the manufacture of products, including modems, to Boundless, a wholly
owned subsidiary of Boundless Corporation, for $1,700,000 in cash and notes (the
"Boundless


                                      -16-
<PAGE>

Transaction"). The sale was part of the Company's efforts to improve gross
margins and resulted in a gain of $277,000. In accordance with the terms of the
Asset Purchase Agreement between the Company and Boundless Technologies, Inc.,
which was assigned to Boundless on the closing of the transaction, Boundless
paid the Company $700,000 in cash and Boundless issued to the Company a 6%
promissory note (the "Note") in the principal amount of $1,000,000 to be paid in
eight equal installments of $125,000 plus accrued interest commencing on June 1,
2000, and on the first business day of every third month thereafter, until paid
in full. The obligations of Boundless under the Note were guaranteed by
Boundless Technologies, Inc. and Boundless Corporation. As of June 30, 2001 the
note receivable was fully satisfied by offsetting the amount due from Boundless
with the amount due to Boundless under a minimum guaranteed purchase commitment.
This offset provision was provided for under the terms of the contract.
Additionally, concurrent with the closing of the Boundless Transaction, the
Company has entered into a Supply Agreement with Boundless (the "Supply
Agreement") pursuant to which the Company agreed to outsource the manufacture of
certain products to Boundless for a period of two years.

Under the Supply Agreement, the Company guaranteed that it would purchase
products resulting in proceeds to Boundless exclusive of costs of materials, of
at least $3.8 million during the first year of the term of the Supply Agreement.
To the extent the Company fell short of the cumulative prorated amount
guaranteed in any of the four 90 day periods subsequent to March 3, 2000, the
amount of the shortfall would be due within 30 days after the end of the 90 day
period in which the shortfall occurred. The Company eliminated its purchase of
data communications products from Boundless as of September 30, 2000 and
estimated that there would be a shortfall in meeting its contractual purchase
commitment of $1.9 million. This amount was charged to operations in the second
quarter ended June 30, 2000.

Research and Development Expenses: Research and development expenses decreased
to $0.2 in the three months ended June 30, 2001 from $0.9 million in the three
months ended June 30, 2000. For the six month period ended June 30, 2001,
research and development costs decreased to $0.3 million from $1.6 million for
the comparable period in 2000. Research and development expenses decreased
because the majority of the engineering department is now allocated to cost of
sales, where in the products business it was categorized as research and
development. The portion of the engineering department allocated to research and
development in the current year is for those projects that the Company is
internally funding and for which there is no customer contract.

Selling, General and Administrative Expenses: Selling, general and
administrative expenses decreased to $0.8 million in the three months ended June
30, 2001 from $4.0 million in the three months ended June 30, 2000. Selling,
general and administrative expenses as a percentage of net sales decreased to
67.1% in the three months ended June 30, 2001 from 116.5% in the three months
ended June 30, 2000. Selling, general and administrative expenses decreased to
$1.8 million in the six months ended June 30, 2001 from $7.2 million for the six
month period ended June 30, 2000. Selling, general and


                                      -17-
<PAGE>

administrative expenses as a percentage of net sales in the six months ended
June 30, 2001 was 88.3% versus 89.3% in the comparable period in 2000. The
decreases in expenses in 2001 versus the comparable period in 2000 primarily was
the result of the Company's efforts to reduce expenses as it transitioned from a
products company to a service company.

Selling, general and administrative expenses as a percentage of net sales will
continue to fluctuate and will be influenced by the level of sales. Selling,
general and administrative expenses are likely to be different for a service
business than for a products business. The Company is adjusting this expense to
support the anticipated sales level of the new business. Certain selling,
general and administrative expenses have a fixed nature, thus a reduction in net
sales may result in an increase in selling, general and administrative expenses
as a percentage of net sales.

Asset Impairment and Other Charges: As discussed above, the Company previously
announced the sale of certain assets to Zoom during 2000, which sale was
intended to provide the Company with a smooth and customer oriented transition
out of the analog modem business. These actions resulted in the Company's
determining that the goodwill and tradename/marketing assets related to the data
communications business had been impaired as of June 30, 2000, and the Company
recording a charge to operations of $2.7 million in the second quarter of 2000.
The elimination of new purchase orders to Boundless resulted in the Company's
falling short of the guaranteed purchase commitments under the Supply Agreement
with Boundless. The Company estimated this shortfall to be $1.9 million and this
amount was charged to operations during the second quarter of 2000. As of June
30, 2001, the Company's estimated shortfall had been satisfied by payments to
Boundless and by the offset of the note receivable from Boundless. The condensed
consolidated statement of operations reflects the above charges of $2.7 million
and $1.9 million under the caption of asset impairment and other charges for the
three and six months ended June 30, 2000. As of June 30, 2001 Zoom had not made
any commitments to manufacture the Company's products at Boundless. Also, the
minimum guaranteed purchase commitment had expired with Boundless and there are
no future obligations.


LIQUIDITY AND CAPITAL RESOURCES

During the period from December 31, 2000, through June 30, 2001, the Company's
working capital decreased by $2.5 million. This decrease was primarily the
result of a $4.3 million decrease in cash, $0.6 million decrease in accounts
receivable and a decrease in prepaid expenses and other current assets in the
amount of $0.5 million, offset by a decrease in accrued expenses, accounts
payable and other current liabilities of $2.8 million. The Company's operations
used cash of $4.3 million for the six months ended June 30, 2001. Working
capital as of June 30, 2001 was $0.1 million compared to $2.6 million as of
December 31, 2000.


                                      -18-
<PAGE>

The Company had a two-year collateralized revolving line of credit agreement,
which originally expired on November 9, 2000, and permitted borrowings of the
lesser of $5 million or 60% of qualified accounts receivable and 20% of eligible
inventory. During March 2000, the Company's total credit limit under the loan
agreement was reduced from $5 million to $2.5 million. The line of credit was
terminated early on October 6, 2000. During fiscal 2000, the Company did not
have any borrowings under the revolving line of credit.

The Company has incurred substantial operating losses in 1997, 1998, 1999, 2000,
and in the first six months of 2001 and it is likely that cash flow from
operations will be negative in the foreseeable future. An unfavorable outcome of
the legal contingencies (see "Commitments and Contingencies") would also have an
adverse affect on the Company's cash flows. Such conditions raise substantial
doubt that the Company will be able to continue as a going concern for a
reasonable period of time. Management has attempted to take steps to bring the
Company's expense structure in line with the reduced revenue levels being
achieved. In April 2001, the Company reduced the number of employees from 53 to
37. In July 2001 the Company implemented a 20% salary reduction for its five
management personnel and a 10% salary reduction for other management positions.
The Company will continue to use its best efforts to reduce costs to match
forecasted revenues. The Company believes that since the engineering service
business does not require large amounts of working capital, which were required
in the products business, the alignment of sales and expenses is the key to cash
flow and to preserving the Company's limited cash resources. As is customary in
the engineering service business, the Company will pursue advance payment on
engineering service contracts to further reduce the working capital requirements
for carrying accounts receivables. However, in the near term, the Company
believes it must achieve the aforementioned financial goals in order for it to
continue to operate. There can be no assurances that the Company will succeed in
achieving these short term goals, and its failure to do so in the near term will
have a material adverse affect on its business, prospects, financial condition,
and operating results and the Company's ability to continue as a going concern.
As a consequence, the Company may be forced to seek protection under the
bankruptcy laws. In that event, it is unclear whether the Company could
successfully reorganize its capital structure and operation, or whether the
Company could realize sufficient value for its assets to satisfy its debts.
Accordingly, should the Company file for bankruptcy, there is no assurance that
any value would be received by the Company's shareholders.

The Company regularly evaluates acquisitions of businesses, technologies or
products complementary to the Company's business. In the event that the Company
pursues one or more acquisitions, the Company's limited cash balances may be
utilized to finance such acquisitions and additional sources of liquidity such
as debt or equity financing will in all likelihood be required for such
acquisitions or to meet working capital needs. There can be no assurance that
additional capital beyond the amounts forecasted by the Company will not be
required or that any such required capital will be available on terms acceptable
to the Company, if at all, at such time or times as required by the Company. As
previously reported, the Company had signed a letter of intent to acquire


                                      -19-
<PAGE>

iDVDBox, Inc. This letter of intent has expired and the Company is no longer in
negotiations to acquire iDVD Box, Inc. In April 2001, the Company hired an
investment banker to seek additional capital or potential acquisitions or merger
candidates that could bring financing or profitable revenues to the combined
companies.


Certain Factors That May Affect Future Performance

In addition to the other information in this Form 10-Q, readers should consider
carefully the following factors that may affect the future performance of the
Company.

Transition of the Company; Unproven Business Plan and Limited Experience

The Company embarked upon a plan in early 2000 to transition from being
primarily a data communication products manufacturer to its new focus on
providing engineering services. Currently, the Company has very limited
experience providing these services, and there can be no assurances that the
Company will succeed in implementing its as-yet unproven business plan. Risks
associated with this transition include:

      a.  the existence of a limited number of network operators and
          information appliance manufacturers that have deployed products and
          services using the Company's technology;
      b.  potential delays in deploying high-speed networks and
          internet-enhanced services and applications by the Company's
          customers;
      c.  an unproven business model, which depends on revenues from
          engineering services and royalty fees paid by information appliance
          manufacturers and network operators;
      d.  potential inability of the Company to expand its engineering and
          design staff, increase its sales or marketing activities, and invest
          in its technological infrastructure; and
      e.  the Company's severely distressed financial condition including
          limited liquidity and capital resources.

Uncertainty in Development of an Evolving Industry

The market for intelligent computing devices is emerging and the potential size
of this market and the timing of its development are not known. As a result, the
profitability of the Company is uncertain and anticipated revenues may not
materialize. The Company is dependent upon the broad acceptance by business and
consumers of a wide variety of intelligent computing devices, which depend on
many factors, including:

      a.  the development of content and applications for intelligent
          computing devices;
      b.  the willingness of large numbers of businesses and consumers to use
          devices such as handheld and palm-size PCs and handheld industrial
          data collectors to perform functions currently carried out manually or
          by traditional PCs, including inputting and sharing data,
          communicating among users and connecting to the Internet; and


                                      -20-
<PAGE>

      c.  the evolution of industry standards that facilitate the
          distribution of content over the Internet to these devices via wired
          and wireless telecommunications systems, satellite, or cable.

There can be no assurances that the Company will succeed in achieving its goals,
and its failure to do so in the near term will have a material adverse effect on
its business, prospects, financial condition and operating results and the
Company's ability to continue as a going concern.

Software Development and Services Market; Low Barriers to Entry

The market for software development and services is becoming increasingly
competitive. Increased competition may result in price reductions, lower gross
margins, and loss of market share, which would harm the Company's planned
business. The Company faces competition from:

      a.  current and potential customers' internal research and development
          departments that may seek to develop their own proprietary solutions;
      b.  large professional engineering services firms that may enter the
          market;
      c.  established intelligent computing device software and tools
          manufacturers; and
      d.  small and medium-sized engineering service companies.

As the Company assists other companies in developing new products, particularly
products focused on specific industries, they may begin competing with companies
in sectors that have not been identified above. It is also possible that new
competitors will enter the market or that existing competitors will form
alliances that may enable them to rapidly increase their market share. The
barriers to entering the market as software developer or hardware design
consultant for intelligent computing devices are low. New market entrants may
have lower overhead than the Company and therefore be able to offer advantageous
pricing. The Company expects that competition will increase as other established
and emerging companies enter the intelligent computing device market and as new
products and technologies are introduced.

Rapid Pace of Technological Change; Effect On New and Existing Products and
Services

The markets for the Company's products and services are characterized by rapidly
changing technology, evolving industry standards, and short product life cycles.
The Company's success depends upon its ability to enhance its existing products
and services and to introduce new products and services with features that meet
changing end-user requirements. The Information Technology ("IT") sector in
which the Company offers outsourcing and other services is characterized by
rapidly changing technology with continuous improvements in both computer
hardware and software and rapid obsolescence of current systems. The Company's
success will depend in part on its ability to develop solutions that keep pace
with continuing changes in information technology, evolving industry standards
and changing client preferences. Additionally, there can be


                                      -21-
<PAGE>

no assurance that the Company will be successful in identifying new markets, in
developing and marketing new products and services, or in enhancing its existing
products and services, either internally or through strategic relationships with
third parties. The Company's business would be adversely affected if the Company
were to incur delays in developing new, or enhancing existing, products and
services, due to delays in obtaining any required regulatory approvals for its
products or if any such new products or enhancements did not gain market
acceptance. In addition, there can be no assurance that products or technologies
developed by others will not render the Company's products or technologies
noncompetitive or obsolete.

Potential Significant Fluctuations in Quarterly Results; Effect on Company Stock
Price

The Company's quarterly operating results have varied significantly, and
continue to vary significantly, depending on a number of factors, some of which
could adversely affect the Company's operating results and the trading price of
the Company's Common Stock in the future. These factors include the level of
demand for the Company's products and services, competition, competitive pricing
pressures, and the timing of engineering contracts and completion of the
contracts per the specified terms. There can be no assurance that the Company
will be able to achieve growth in revenue or return to profitability on a
quarterly or annual basis. The Company's expense levels are based, in part, on
its expectations as to future revenue. If sales and revenue levels are below
expectations, operating results will continue to be adversely affected, which
will likely have an adverse effect on the trading price of the Company's Common
Stock.

Effect of Potential Acquisitions on Operations, Products, Services, and
Personnel

The Company may from time to time determine to pursue the acquisition of other
companies, assets, technologies, or product lines that would complement or
expand its existing business. Certain of these acquisitions may involve
businesses in which the Company lacks experience. Acquisitions involve a number
of risks that could adversely affect the Company's operating results, including
the diversion of management's attention, the assimilation of the operations,
products and personnel of the acquired companies, the amortization of acquired
intangible assets and the potential loss of key employees of the acquired
companies. There can be no assurance that the Company will be able to identify
businesses that would complement or expand its existing business or such
acquisitions; finance any such acquisitions; manage one or more acquisitions
successfully; or integrate the operations, products, or personnel gained through
such acquisition without a material adverse impact on the Company's business,
financial condition, and results of operations, particularly in the quarters
immediately following such acquisitions.


                                      -22-
<PAGE>

Effects of Increasing Competition

The Company has entered into new markets, including the Internet TV appliance
industry, and has encountered competition from a number of well-established
companies, most of which have greater financial, technical, product development,
manufacturing and marketing resources and experience than that of the Company.
Further, the markets for the Company's products and services are increasingly
competitive, resulting in increasing pricing pressures. The Company believes
that its ability to compete depends on a number of factors, including price,
quality and reliability, availability, credit terms, name recognition, delivery
time, and post-sale service and support. There can be no assurance that the
Company will be able to continue to compete successfully with respect to these
factors. A variety of companies currently offer products and services that
compete directly with the Company's products and services. These competitors
could introduce additional products and services that are superior to the
Company's, or that achieve greater market acceptance. The introduction of lower
priced competitive products and services or significant price reductions by the
Company's competitors would result in price reductions in the Company's products
and services that could have a material adverse effect on the Company's
operating results.

Proprietary Rights; Dependence on Software Licenses

The Company receives from time to time, and may receive in the future,
communications from third parties asserting intellectual property rights
relating to the Company's products (which include services) and technologies.
There can be no assurance that in the future the Company will be able to obtain
licenses of any intellectual property rights owned by third parties with respect
to the Company's products or that any such licenses can be obtained on terms
favorable to the Company. If the Company is unable to obtain licenses of
protected technology, it could be prohibited from developing and marketing
products incorporating that technology. The Company could also incur substantial
costs in redesigning its products or in defending any legal action taken against
it. Should the Company be found to infringe the proprietary rights of others,
the Company could be required to pay damages to the infringed party, which could
have a material adverse effect on the Company's operating results. In certain of
its products, the Company includes software licensed from third parties. The
Company's operating results could be adversely affected by a number of factors
relating to this third party software, including lack of market acceptance,
failure by the licensors to promote or support the software, delays in shipment
of the Company's products as a result of delays in the introduction of licensed
software or errors in the licensed software, or excess customer support costs or
product returns experienced by the Company due to errors in the licensed
software. Moreover, any impairment or termination of the Company's relationship
with any licensors of third party software could have a material adverse effect
on the Company's operating results.


                                      -23-
<PAGE>

Volatility of Stock Price

The price of the Company's Common Stock historically has been volatile due to
fluctuations in operating results and other factors relating to the Company's
operations, the market's changing expectations for the Company's growth, overall
equity market conditions relating to the market for technology stocks generally,
and other factors unrelated to the Company's operations, including announcements
by or relating to the Company's competitors. Such fluctuations are expected to
continue. In addition, stock markets have experienced more price volatility in
recent years. This volatility has had a substantial effect on the market prices
of securities issued by many technology companies, often for reasons unrelated
to the operating performance of the specific companies.

Status of Company Common Stock Listing on Nasdaq National Market

Stock traded on The Nasdaq National Market must meet certain listing
requirements, including requirements with respect to a Company's net tangible
assets, the bid price of its stock and the market value of its public float. As
previously announced, the Company received a Nasdaq Staff Determination on June
26, 2001, indicting that the Company does not meet the net tangible assets
requirement for continued listing, and that its stock is, therefore, subject to
delisting from the Nasdaq National Market. Nasdaq has also advised the Company
that the Company is not in compliance with the $1 minimum bid requirement and
the minimum market value requirement with respect to its public float. The
Company has requested a hearing before a Nasdaq Listing Qualifications Panel to
review the Staff Determination, which is scheduled to be held on August 16,
2001.The Company will remain listed and its common stock will continue to trade
on The Nasdaq National Market pending the outcome of the hearing. There can be
no assurance as to when the Panel will reach a decision, or that the Panel will
grant the Company's request for continued listing. An unfavorable decision would
result in the immediate delisting of the Company's common stock from The Nasdaq
National Market irrespective of the Company's ability to appeal the decision. If
delisted, the Company expects that its common stock would be eligible for
quotation on the Over-the-Counter Bulletin Board.

Dependence on Key Personnel

The Company is dependent on its executive officers and other key personnel,
certain of whom could be difficult to replace. If certain of these people were
to leave the Company, operating results could be adversely affected. The future
growth and success of the Company also depends in part on its ability to attract
and retain skilled employees. In light of the Company's overall financial
condition, it may be difficult to implement compensation packages sufficient to
attract and retain such skilled employees. All five of the Company's executive
officers have formal employment contracts.


                                      -24-
<PAGE>

Liquidity and Capital Resource Difficulties

The Company has incurred substantial operating losses in 1997, 1998, 1999, and
2000. Although cash and cash equivalents were $1.1 million as of June 30, 2001,
the Company's net cash used in operating activities was $4.3 million for the six
months then ended. The Company's working capital was only $.1 million as of June
30, 2001. Furthermore, it is likely that the Company's operations will continue
to consume cash in the foreseeable future. An unfavorable outcome of the legal
contingencies would also have an adverse affect on the Company's cash flow. Such
conditions give rise to substantial doubt that the Company will be able to
continue as a going concern.


Management has attempted to take steps to bring the Company's expense structure
in line with the reduced revenue levels being achieved. In April 2001, the
Company reduced the number of employees from 53 to 37. In July 2001 the Company
implemented a 20% salary reduction for its five management personnel and a 10%
salary reduction for other management positions. The Company will continue to
use its best efforts to reduce costs to match forecasted revenues. The Company
believes that since the engineering service business does not require large
amounts of working capital, which were required in the products business, the
alignment of sales and expenses is the key to cash flow and to preserving the
Company's limited cash resources. As is customary in the engineering service
business, the Company will pursue advance payment on engineering service
contracts to further reduce the working capital requirements for carrying
accounts receivables. However, in the near term, the Company believes it must
achieve the aforementioned financial goals in order to continue to operate.

Management believes that it will be necessary for the Company to return to
profitable operations in the near future in order for existing cash balances and
cash generated from operations to be sufficient to meet the Company's short term
liquidity and capital needs. Should the Company require additional capital,
there can be no assurance that any such required capital will be available on
terms acceptable to the Company, if at all, at such time or times as required by
the Company. On October 6, 2000, the Company terminated its collateralized line
of credit, which was originally scheduled to expire on November 9, 2000. There
can be no assurance that the Company will succeed in achieving its goals, and
its failure to do so in the near term will have a material adverse effect on its
business, prospects, financial condition, operating results, and the Company's
ability to continue as a going concern. As a consequence, the Company may be
forced to seek protection under the bankruptcy laws. In that event, it is
unclear whether the Company could successfully reorganize its capital structure
and operations, or whether the Company could realize sufficient value for its
assets to satisfy fully its debts. Accordingly, should the Company file for
bankruptcy there is no assurance that any value would be received by the
Company's shareholders.


                                      -25-
<PAGE>

PART II.
                         INPRIMIS, INC. AND SUBSIDIARIES
                                OTHER INFORMATION

Item 1. Legal Proceedings


The information required by this Item is disclosed in the "Commitments and
Contingencies" Note to the Company's Condensed Consolidated Financial Statements
contained in Part I hereof.


Items 2-3.


        Not applicable.


Item 4. Submission of Matters to a Vote of Security Holders


        None


Item 5. Other Information


Joseph M. O'Donnell resigned from the Board of Directors effective August 6,
2001


Item 6. Exhibits and Reports on Form 8-K


        (a)   Exhibits:

              Exhibit 11   Statement re computation of per share earnings (loss)

              All information required by Exhibit 11 is presented within the
              Condensed Consolidated Statements of Operations and the Notes to
              the Condensed Consolidated Financial Statements under "Net loss
              per Share" in accordance with the provisions of SFAS No. 128.

        (b)   Reports on Form 8-K: Not Applicable


                                      -26-
<PAGE>

                         INPRIMIS, INC. AND SUBSIDIARIES




                                   SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf of the
undersigned thereunto duly authorized.

                                           INPRIMIS, INC.

Dated:  August 13, 2001                    By:  /s/ Eduard Will
                                                ---------------
                                            Eduard Will
                                            Chief Executive Officer
                                            (Principal Executive Officer)




Dated:  August 13, 2001                    By:  /s/ R. Michael Brewer
                                                ---------------------
                                            R. Michael Brewer
                                            Senior Vice President of Finance and
                                            Chief Financial Officer
                                            (Principal Financial and
                                            Accounting Officer)


                                      -27-