<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D. C. 20549
                                    FORM 10-Q

    (Mark One)

[X]      Quarterly report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934

                For the quarterly period ended December 31, 2001

                                       or

[ ]      Transition report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934

              For the transition period from _________ to _________

                         Commission file number 0-15858

                                    IMP, Inc.
                           ---------------------------
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                            <C>
                Delaware                                   94-2722142
    (State or other jurisdiction of            (IRS Employer Identification No.)
     incorporation or organization)

 2830 North First Street, San Jose, CA                       95134
(Address of principal executive offices)                  (Zip Code)
</TABLE>

               Registrant's telephone number, including area code
             (408) 432-9100 (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.

Common Stock, $0.01 par value outstanding at January 31, 2002: 7,017,000
<PAGE>
                                    IMP, Inc.
                                    FORM 10-Q
              Three Months and Nine Months Ended December 31, 2001

                                      INDEX

<TABLE>
<CAPTION>
                                                                                                                          PAGE
                                                                                                                          ----
<S>                                                                                                                       <C>
   Part I:   Financial Information (unaudited)

               Condensed Balance Sheets as of December 31, 2001 and March 31, 2001                                           3
               Condensed Statements of Operations for the three months and nine months ended December 31, 2001
                 and December 24, 2000                                                                                       4
               Condensed Statements of Cash Flows for the nine months ended December 31, 2001
                 and December 24, 2000                                                                                       5
               Notes to condensed financial statements
               Management's discussion and analysis of financial condition and results of operations                        10

   Part II: Other Information

               Item 1. Legal Proceedings                                                                                    18
               Item 3. Defaults by the Company on its Senior Securities                                                     18
               Item 6. Reports on Form 8-K                                                                                  18
               Signatures                                                                                                   18
</TABLE>

                                       2
<PAGE>
                                    IMP, Inc.
                            CONDENSED BALANCE SHEETS
                      (In thousands, except for par value)
                                   (unaudited)

                                     ASSETS

<TABLE>
<CAPTION>
                                                                                           DECEMBER 31,           MARCH 31,
                                                                                               2001                 2001
                                                                                             --------             --------
<S>                                                                                        <C>                    <C>
Current assets:
  Cash and cash equivalents
                                                                                             $     92             $     41
  Accounts receivable, net of allowances for doubtful accounts and
     returns of $100 and $2,540, respectively                                                   4,010                2,095
  Accounts receivable from related party                                                          438                  720
  Inventories                                                                                   7,135                7,462
  Other current assets                                                                          1,440                1,445
                                                                                             --------             --------
     Total current assets                                                                      13,115               11,764
Property and equipment:
     Leasehold improvements                                                                     9,073                9,073
     Machinery and equipment                                                                   85,307               86,341
                                                                                             --------             --------
                                                                                               94,380               95,414
    Less accumulated depreciation and amortization                                             89,544               88,897
                                                                                             --------             --------
    Net property and equipment                                                                  4,836                6,517
Deposits and other long term assets                                                               466                  544
                                                                                             --------             --------
    Total assets                                                                             $ 18,417             $ 18,825
                                                                                             --------             --------

                                   LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
   Current portion of debt                                                                         39                2,672
   Convertible debentures to related party, net of discount of $582 at
      December 31, 2001                                                                         2,918                   --
   Current portion of capital lease obligations                                                 2,010                1,593
   Trade accounts payable                                                                       4,148                7,183
   Accrued payroll and related expenses                                                         1,603                1,325
   Other current liabilities                                                                    1,857                3,454
   Advances from investors                                                                        675                1,253
                                                                                             --------             --------
      Total current liabilities                                                                13,250               17,480
   Long term portion of capital lease obligations                                                  --                  760
   Convertible debentures to related party                                                         --                3,500
                                                                                             --------             --------
      Total Liabilities                                                                        13,250               21,740
                                                                                             --------             --------

Stockholders' equity (deficit):
   Convertible preferred stock, $0.001 par value;
         1,000 shares authorized; no shares issued  and outstanding                                --                   --
   Common stock, $0.01  par value; 10,000 shares authorized; 7,017 and 1,809
    shares issued and outstanding, respectively                                                    70                   18
   Additional paid-in capital                                                                  86,417               78,836
   Obligation to issue common stock                                                                40                   40
   Accumulated deficit                                                                        (77,463)             (77,912)
   Treasury stock, at cost, 41  shares                                                         (3,897)              (3,897)
                                                                                             --------             --------
      Total stockholders' equity (deficit)                                                      5,167               (2,915)
                                                                                             --------             --------
      Total liabilities and stockholders' equity (deficit)                                   $ 18,417             $ 18,825
                                                                                             --------             --------
</TABLE>

See accompanying notes to unaudited condensed financial statements.

                                       3
<PAGE>
                                    IMP, Inc.
                       CONDENSED STATEMENTS OF OPERATIONS
                    (In thousands, except per share amounts)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                    THREE MONTHS ENDED                     NINE MONTHS ENDED
                                               ---------------------------           ---------------------------
                                              DECEMBER 31,      DECEMBER 24,       DECEMBER 31,       DECEMBER 24,
                                                 2001               2000               2001               2000
                                               --------           --------           --------           --------
<S>                                           <C>               <C>                <C>                <C>
   Net revenues:
    Component                                  $  5,454           $  9,266           $ 19,514           $ 23,779
    Related party sales                              --                377                 --              1,189
    Design and engineering services                  --                532                 86              1,253
                                               --------           --------           --------           --------
                                                  5,454             10,175             19,600             26,221
Cost of revenues

     Component                                    2,390              8,954             10,344             23,569
     Related party sales                             --                160                 --                810
     Design and engineering services                 --                398                 56                759
                                               --------           --------           --------           --------
                                                  2,390              9,512             10,400             25,138
Gross profit                                      3,064                663              9,200              1,083
Operating expenses:
  Research and development                          247                495              1,391              2,458
  Selling, general and administrative             2,889                637              6,540              2,992
                                               --------           --------           --------           --------
Total operating expenses                          3,136              1,132              7,931              5,450

 Income (loss) from operations                      (72)              (469)             1,269             (4,367)

 Interest expense                                  (160)              (738)              (566)            (1,029)
 Amortization of debt discount                     (412)                --             (1,052)                --
 Other income, net                                  661                 --                798                 --
                                               --------           --------           --------           --------
Net income (loss)                              $     17           $ (1,207)          $    449           $ (5,396)
                                               --------           --------           --------           --------


Basic net income (loss) per share              $   0.00           $   (.68)          $   0.09           $  (3.64)
                                               --------           --------           --------           --------
Diluted net income (loss) per share            $   0.00           $   (.68)          $   0.09           $  (3.64)
                                               --------           --------           --------           --------
Shares used in computing basic
  net income (loss) per share                     7,033              1,768              4,967              1,483
                                               --------           --------           --------           --------
Shares used in diluted
  net income (loss) per share                     7,033              1,768              5,085              1,483
                                               --------           --------           --------           --------
</TABLE>

See accompanying notes to unaudited condensed financial statements.

                                       4
<PAGE>
                                    IMP, Inc.
                       CONDENSED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                         NINE  MONTHS ENDED
                                                                                     ---------------------------
                                                                                  DECEMBER 31,         DECEMBER 24,
                                                                                      2001                2000
                                                                                     -------             -------
<S>                                                                               <C>                  <C>
Cash flows from operating activities:
  Net income (loss)                                                                  $   449             $(5,396)
Adjustments to reconcile net income (loss) to net cash provided
  by operating activities:
  Depreciation and amortization                                                        1,768               1,526
  Provision for obsolete and slow moving inventory                                        --                  98
  Amortization of debt discount                                                        1,052                 184
  Provision for doubtful accounts                                                      1,255                  --
  Non-cash settlement of other liabilities                                            (1,207)                 --
  Gain on disposal of property and equipment                                            (658)                 --
  Changes in operating assets and liabilities:
      Accounts receivable                                                             (3,170)               (244)
      Accounts receivable from related party                                             282                (695)
      Inventories                                                                        327                (482)
      Other current assets                                                                 5                (962)
      Deposits and other long term assets                                                 33                  44
      Trade accounts payable                                                          (2,781)              1,950
      Accrued payroll and related expenses                                               278                (139)
      Other current liabilities                                                         (449)                611
                                                                                     -------             -------
Net cash used in operating activities                                                 (2,816)             (3,515)
                                                                                     -------             -------
Cash flows from investing activities:
  Purchase of property and equipment                                                    (421)             (2,467)
  Proceeds from sales of property and equipment                                           19                  --
                                                                                     -------             -------
  Net cash used for investing activities                                                (402)             (2,467)
Cash flows from financing activities:
  Net proceeds from line of credit                                                        --               1,115

  Net borrowings (repayments) of advances from investors                                (578)              2,199
  Advanced proceeds for common stock issuance                                          6,000                  --
  Net repayments of revolving credit facility and equipment notes payable             (1,868)             (1,216)
  Principal payments under capital lease obligations                                    (285)             (2,210)
  Proceeds from capital lease obligations                                                 --                 818
  Proceeds from issuance of common stock                                                  --               3,864
                                                                                     -------             -------
  Net cash provided by financing activities                                           (3,269)              5,922
                                                                                     -------             -------
  Net increase (decrease) in cash and cash equivalents                                    51                 (60)
  Cash and cash equivalents at beginning of period                                        41                 261
                                                                                     -------             -------
  Cash and cash equivalents at end of period                                         $    92             $   201
                                                                                     -------             -------

Supplemental information:
  Cash paid during the period for interest                                           $    --             $ 1,211
                                                                                     =======             =======
  Acquisition of equipment under capital lease obligations                           $    --             $ 2,251
                                                                                     =======             =======
  Discount on convertible debentures                                                 $ 1,633             $    --
                                                                                     =======             =======
  Return of equipment and reduction of accounts payable                              $   253             $    --
                                                                                     =======             =======
  Issuance of common stock to new investors                                          $ 6,000             $    --
                                                                                     =======             =======

  Repayment of debt through sale of equipment                                        $   765             $    --
                                                                                     =======             =======
</TABLE>

See accompanying notes to unaudited condensed financial statements

                                       5
<PAGE>
                                    IMP, Inc.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (unaudited)

NOTE 1 - BASIS OF PRESENTATION

IMP, Inc. (the "Company") has prepared the accompanying unaudited interim
condensed financial statements pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and note disclosures
normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted pursuant to such rules and regulations. In the opinion of
management, all adjustments (consisting of normal recurring items) considered
necessary for a fair presentation have been included. The results of operations
for the three months and nine months ended December 31, 2001 are not necessarily
indicative of the results to be expected for the entire year. These financial
statements should be read in conjunction with the financial statements and the
notes thereto included in the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 2001.

Subba, Mok LLC ("Subba Mok"), a limited liability company headquartered in the
United States, owns approximately 72% of the common stock of the Company on a
fully diluted basis. Teamasia, a private corporation headquartered in India,
owns approximately 14% of the common stock of the Company on a fully diluted
basis.

In 2001, the Company changed its year-end to March 31. Prior to the year ended
March 31, 2001, the Company's fiscal year ended on the Sunday nearest to March
31.

On October 2, 2001, the Company completed a five for one reverse stock split.
All shares, options, warrants and per share amounts in the condensed financial
statements have been retroactively adjusted to reflect this stock split.

The accompanying condensed financial statements have been prepared assuming that
the Company will continue as a going concern. The Company incurred net losses of
$10.5 million for the year ended March 31, 2001. For the nine months ended
December 31, 2001, the Company generated net income of $449,000; however the
current economic slowdown, the downturn in the semiconductor sector and the
Company's liquidity problems cause significant uncertainty over the Company's
ability to operate profitably. In addition, the Company has an accumulated
deficit of $77.5 million as of December 31, 2001. The Company has failed to make
required payments under various debt agreements and capital lease obligations,
and as a result is in default with respect to these agreements. A number of
vendors and other parties have filed suit against the Company for non-payment,
and the Company is delinquent on the remittance of federal and state payroll
withholding taxes in the amount of approximately $841,000.

During the fiscal year ended March 31, 2001 and the nine months ended December
31, 2001, management actively negotiated with the Company's creditors. As a
result of these negotiations, the Company was able to bring current, refinance
or pay off certain of its debt and lease obligations using cash from sales of
stock, convertible debentures and advances from Subba Mok. As of December 31,
2001, the Company remained in default on all capital lease obligations.

The indebtedness related to agreements in which the Company is in default is
classified as current on the Company's balance sheets as of December 31, 2001
and March 31, 2001 because such creditors and lessors had the right to
effectively declare the principal amount of the Company's indebtedness to be
immediately due and payable (or to exercise an equivalent remedy with respect to
a capitalized lease).

On May 10, 2001, the Company entered into a Memorandum of Understanding ("MOU")
with Teamasia and Subba Mok to purchase 72% of the equity of the Company. The
general terms of the MOU are as follows:

     -    the due date of the $3.5 million convertible debenture held by
          Teamasia was extended to no earlier than May 2002;

     -    the Company issued a warrant to Teamasia to purchase 319,800 shares of
          common stock at an exercise price of $1.10;

     -    the interest rate on the convertible debenture was raised from 0% to
          prime;

                                       6
<PAGE>
     -    The Company sold to Subba Mok 5,208,170 shares of common stock
          representing 72% of the Company's fully diluted equity for $6.0
          million. As of December 31, 2001, all $6.0 million from Subba Mok had
          been received either in cash or by payments for operating expenses
          made by the investor on the Company's behalf.

     Certain events have occurred which may have an impact on the Company's
     ability to continue as a going concern, including:

     In June 2001, International Rectifier Corporation (IR) notified the Company
     that it would be canceling future orders. Revenues from IR for the three
     months ended December 31, 2001 and nine months ended December 31, 2001
     totaled $389,000 and $3.4 million, respectively.

     On July 10, 2001, CIT gave notice of termination and acceleration and
     demand for repayment for both the revolving credit facility and the term
     loan. This cancellation resulted from defaults under both the CIT agreement
     and related forbearance letters. CIT declared all obligations due and
     payable as of July 11, 2001. All amounts due to CIT were repaid on August
     13, 2001. The Company is actively seeking additional sources of financing.

     On July 26, 2001, the Company attended a hearing before a Nasdaq Listing
     Qualifications Panel concerning the Company's failure to comply with
     certain requirements for continued listing on The Nasdaq SmallCap Market.
     Nasdaq has determined the Company's securities will continue to be listed
     as long as certain conditions are met. The conditions require that
     stockholders equity, as reported in the Company's Quarterly Reports on Form
     10-Q for the quarters ended September 30, 2001 and December 31, 2001, meet
     specified minimum amounts. In addition, the conditions require that the
     Company be able to demonstrate compliance with all requirements for
     continued listing on The Nasdaq SmallCap Market.

The Company incurred net losses of $10.5 million for the year ended March 31,
2001 and generated a net income $449,000 for the nine months ended December 31,
2001. At December 31, 2001, the Company had stockholders' equity of $5.17
million. Management has put in place plans to reduce the cost of operating the
business, improve the operating efficiency of the Company's manufacturing
facility and obtain new customers. In addition, the Company is actively seeking
additional capital, both debt and equity. If the Company is unable to
successfully continue to meet its obligations under the renegotiated payment
terms on its borrowings, or if management's operating plans do not materialize
or additional financing is not secured, this could significantly and adversely
impact the Company's ability to continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty

NOTE 2 - REVENUE RECOGNITION

Component revenues are recognized as products are shipped, except for sales
through distributors, which are recognized on a sell-through basis. Design and
engineering service revenues are recognized under design and engineering
contracts once defined development phases are completed by the Company and
accepted by the customers.

During the year ended March 31, 2001, the Company entered into an agreement with
a foundry customer whereby the Company agreed to sell wafers to the customer at
a discount in exchange for certain equipment. The agreement required the Company
to sell wafers to the customer such that the cumulative discount equaled the
cost of the equipment of approximately $1.15 million, at which time the title of
the equipment transferred to the Company. At the onset of the agreement the
Company recorded the equipment and corresponding liability representing the
value of the equipment. Prior to March 31, 2001, the customer cancelled its
order, and under the terms of the agreement, was required to pay the Company for
the completed work-in-process on the wafers. At March 31, 2001, the Company
wrote down the value of the work-in-process inventory to approximately $177,000,
management's best estimate at the time of the market value of the inventory.

During the quarter ended December 31, 2001, the Company reached a settlement
with the customer. The settlement required the customer to purchase the
work-in-process inventory for approximately $1.0 million. The settlement also
required the Company to pay $150,000 to the customer to satisfy the remaining
obligation for the equipment. As a result, during the quarter ended December 31,
2001, approximately $1.0 million was recognized by the Company as revenue. The
Company paid the customer $75,000 and has recorded the remaining $75,000 as
other liabilities.

NOTE 3 - CASH AND CASH EQUIVALENTS

                                       7
<PAGE>
The Company considers all highly liquid financial instruments purchased with a
maturity of three months or less at the date of purchase to be cash and cash
equivalents. The fair market value of these highly liquid instruments
approximates cost at December 31, 2001 and March 31, 2001.

NOTE 4 - INVENTORIES

Inventories are stated at the lower of standard cost (which approximates actual
cost on a first-in, first-out basis) or market.

Inventories consist of the following (in thousands):

<TABLE>
<CAPTION>
                                          DECEMBER 31,        MARCH 31,
                                              2001              2001
                                             ------            ------
<S>                                       <C>                 <C>
                  Raw materials              $  366            $  848
                  Work-in-process             4,314             4,490
                  Finished goods              2,455             2,124
                                             ------            ------
                                             $7,135            $7,462
                                             ------            ------
</TABLE>

During the quarter ended June 30, 2001, the Company re-evaluated the practical
production capacity of its fabrication facility in light of measures taken to
reduce the costs and improve the efficiency of the manufacturing process, as a
result of the steep decline in the semiconductor market. Prior to the quarter
ended June 30, 2001, the practical capacity of the Company's fabrication
facility was estimated to be approximately 3,000 wafers per week. After
re-evaluating the production capacity of the fabrication facility in light of
changes made to the production process, reductions in headcount and other
considerations, management estimates the current production capacity to be
approximately 1,200 wafers per week. Accordingly, overhead absorption is higher
than it would have been using the prior estimate of production capacity.

NOTE 5 - PROPERTY AND EQUIPMENT

Property and equipment are stated at cost and are amortized and depreciated
using the straight-line method over the shorter of the period of the lease for
leasehold improvements or the estimated useful lives of the assets. The
estimated useful life of equipment is five years.

NOTE 6 - FEDERAL AND STATE WITHHOLDING TAXES

The Company is delinquent on the remittance of federal and state payroll
withholding taxes in the amounts of $841,000. The Company is currently
negotiating a repayment plan with the taxing authorities. Additionally, the
Company is subject to various penalties and interest in connection with the
delinquent payments. The Company estimates that these penalties and interest
will be in the range of $138,000 to $280,000, and therefore, in accordance with
SFAS No. 5 "Accounting for Contingencies," has accrued $138,000 in the
consolidated statement of operations.

NOTE 7 - EARNINGS PER SHARE

Earnings per share are calculated in accordance with the provisions of SFAS No.
128 "Earnings per Share." SFAS No. 128 requires the Company to report both basic
and diluted earnings per share. Basic EPS is computed by dividing net income
(loss) available to common stockholders by the weighted average number of common
shares outstanding during the period. For the periods presented, no adjustments
to net income (loss) reported in the condensed statements of operations were
necessary to determine net loss available to common stockholders.

Options to purchase 312,476 and 231,590 shares of common stock were outstanding
at December 31, 2001 and December 24, 2000, respectively, but do not impact
diluted earnings per share because the options' exercise price was greater than
the average market price of the common shares during those periods. Warrants to
purchase 381,545 shares of common stock were outstanding at December 31, 2001.
Of these, 61,745 warrants are anti-dilutive and are excluded from the diluted
earnings per share calculation. Of the remaining warrants, 138,247 have been
considered in computation of diluted earnings per share based on the treasury
stock method weighted for the period outstanding for the nine months ending
December 31, 2001.

                                       8
<PAGE>
NOTE 8 - LEASING ARRANGEMENTS AND COMMITMENTS

The Company leases certain machinery and equipment under long-term lease
agreements reported as capital leases. The terms of the leases range from four
to five years, with purchase options at the end of the respective lease terms.
As of December 31, 2001, lease payments totaling $2,010,000 owed by the Company
are past due.

The Company leases its San Jose facility under a non-cancelable operating lease
which will expire in December 2006. The lease requires the Company to pay tax,
insurance and maintenance expenses. Rental expense is recorded using the
straight-line method. As of December 31, 2001, amounts totaling $197,300 owed
under this lease agreement are past due.

NOTE 9 - RELATED PARTY TRANSACTIONS

Two members of the Board of Directors own approximately 22% of Teamasia. The
same two members of the Board of Directors own 66% of Subba Mok.

As part of the stock purchase agreement entered into in October 1999, Teamasia
agreed to purchase wafers from the Company commencing with the Company's quarter
ended December 26, 1999. This agreement further stipulated that Teamasia's
purchase commitments are not to be less than 25% of the Company's installed
capacity for the quarters ended March 26, June 25 and December 24, 2000.
Teamasia was not able to meet the minimum purchase commitment to satisfy this
obligation. Teamasia agreed to allow the Company to manufacture and sell certain
discrete products owned by Teamasia. Revenue from these discrete products for
the three months ended December 31,2001 was $398,000.

Transactions and balances with Teamasia are as follows (in thousands):


<TABLE>
<CAPTION>
                                                              DECEMBER 31,      DECEMBER 24,
                                                                  2001              2000
                                                                 ------            ------
<S>                                                           <C>               <C>
                  Revenue for the three months  ended            $  --            $  377
                  Revenue for the nine months ended              $  --            $1,189
</TABLE>

<TABLE>
<CAPTION>
                                                                    DECEMBER 31,        MARCH 31,
                                                                        2001              2001
                                                                       ------            ------
<S>                                                                    <C>               <C>
                  Accounts receivable                                  $  438            $  720
                  Accounts payable                                     $   --            $1,253
                  Convertible debenture, net of discount of
                    $582 as of December 31, 2001                       $2,918            $3,500
</TABLE>

Transactions and balances with Subba Mok are as follows ( in thousands):

<TABLE>
<CAPTION>
                                                                                          DECEMBER 31,      DECEMBER 24,
                                                                                              2001              2000
                                                                                             ------            ------
<S>                                                                                       <C>               <C>
                 Expenses paid by Subba Mok on the Company's behalf for
                  the three months ended                                                      2,972                --
                  Expenses paid by Subba Mok on the Company's behalf for the nine
                  months ended                                                                2,972                --
                  Advances due to investors                                                  $  675            $   --
</TABLE>

In November 2000, Teamasia loaned the Company $1.2 million under a convertible
debenture originally due on May 28, 2001. Under its original terms, the
debenture was non-interest bearing and convertible into 137,143 shares of common
stock at Teamasia's option, representing a conversion ratio equal to $8.75 per
share.

                                       9
<PAGE>
In December 2000, Teamasia loaned the Company an additional $2.3 million under a
convertible debenture originally due on June 18, 2001. Under its original terms,
the debenture was non-interest bearing and convertible into 262,857 shares of
common stock, at Teamasia's option, representing a conversion ratio equal to
$8.75 per share

In May 2001, a Memorandum of Understanding (MOU) was entered into with Teamasia
that modified the terms of the convertible debentures as follows:

     -    the due date for both debentures was extended until no earlier than
          May 2002;

     -    the Company agreed to issue a warrant to Teamasia to purchase 319,800
          shares of common stock at an exercise price of $1.10;

     -    the interest rate was raised to prime; and

     -    the convertible debentures are convertible into common stock, at
          Teamasia's option, at a conversion ratio equal to $3.45 per share.

Under the MOU, the Company is required to issue warrants once the $6.0 million
had been received. As of December 31, 2001, a total of $6.0 million had been
received, however, warrants are pending to be issued. Because the terms of the
warrants were fixed at the time the MOU was executed, the issuance of the
warrants was recorded at that time. The convertible debentures and warrants have
been recorded based on their relative fair values. The fair value of the
warrants was determined using the Black-Scholes pricing model using the
following assumptions: 221% volatility; zero dividends; 6.4% risk free interest
rate; and 3-year term.

The Company also determined that the convertible debentures contained a
beneficial conversion feature after allocating value to the warrants as
described above. The beneficial conversion feature was calculated as the
difference between the effective conversion price per share and the fair value
of the common stock on the effective date of the MOU multiplied by the number of
shares into which the convertible debentures are convertible at the stated
conversion ratio of $3.45 per share.

The Company recorded this transaction as follows:

                  Convertible debentures                $   1,867,000
                  Warrants                                    821,000
                  Beneficial conversion feature               812,000
                                                        -------------
                                                        $   3,500,000
                                                        -------------

The combined warrants and beneficial conversion feature totaling $1.6 million
has been recorded as a discount to the convertible debentures and is being
amortized into interest expense over 12 months. During the three months and nine
months ended December 31, 2001, $412,000, and $1,052,000 was amortized into
interest expense, respectively.

NOTE 10 - RECENT ACCOUNTING PRONOUNCEMENTS

In July 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No.
141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 141 requires the purchase method of accounting to be used for
all business combinations initiated after June 30, 2001 as well as all purchase
method business combinations completed after June 30, 2001. SFAS No. 141 also
specifies conditions intangible assets acquired in a purchase method business
combination must meet to be recognized and reported apart from goodwill. SFAS
No. 142 specifies that goodwill and intangible assets with indefinite useful
lives no longer be amortized, but instead be tested for impairment at least
annually in accordance with the provisions of SFAS No. 142. SFAS No. 142 also
requires that intangible assets with determinable useful lives be amortized over
their useful lives to their estimated residual values, and reviewed for
impairment in accordance with SFAS No. 121.

The Company is required to adopt the provisions of SFAS No. 141 for any future
business combination entered into. SFAS No. 142 is effective for the Company on
April 1, 2002, and its adoption is not expected to have a significant impact on
the Company's financial condition or results of operations until such time when
significant goodwill or intangible assets are recorded by the Company.

                                       10
<PAGE>

In July 2001, FASB issued SFAS 143, "Accounting for Asset Retirement
Obligations." SFAS 143 requires the recognition of a liability for an asset
retirement obligation in the period in which it is incurred. When the liability
is initially recorded, the carrying amount of the related long-lived asset is
correspondingly increased. Over time, the liability is accreted to its present
value and the related capitalized charge is depreciated over the useful life of
the asset. SFAS 143 is effective for fiscal years beginning after June 15, 2002.
Management is currently reviewing the impact of adopting SFAS 143 on the
Company.

In August 2001 the FASB issued SFAS 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." SFAS 144 addresses accounting and reporting for
the impairment or disposal of long-lived assets, including the disposal of a
segment of a business. SFAS 144 is effective for fiscal years beginning after
December 15, 2001, with earlier application encouraged. Management is currently
reviewing the impact of adopting SFAS 144 on the Company.

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

The following discussion contains forward-looking statements that involve risks
and uncertainties. Our actual future results could differ materially from those
discussed here. Factors that would cause or contribute to such differences
include, but are not limited to, those discussed in this section, as well as in
the section entitled "Business" in our Form 10-K for the year ended March 31,
2001 filed with the Securities and Exchange Commission.

This information should also be read along with the unaudited condensed
financial statements and notes thereto included in Item I of this Quarterly
Report and the audited financial statements and notes thereto and Management's
Discussion and Analysis of Financial Condition and Results of Operations for the
fiscal year ended March 31, 2001 contained in the Company's Annual Report filed
on Form 10-K.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 2001

The following table sets forth, as a percentage of net revenues, certain
statement of operations data for the periods indicated.

<TABLE>
<CAPTION>
                                                            THREE MONTHS ENDED
                                                        DECEMBER     DECEMBER 24,
                                                        31, 2001        2000
                                                        -------      ---------
<S>                                                      <C>          <C>
        Total revenues                                   100.0%       100.0%
        Cost of revenue                                   43.8         93.5
                                                         -----        -----
              Gross margin                                56.2          6.5
        Operating expenses:
              Research and development                     4.5          4.9
              Selling, general and administrative         53.0          6.3
                                                         -----        -----
        Operating income (loss)                           (1.3)        (4.6)
        Interest expense                                  (2.9)        (7.3)
        Amortization of debt discount                     (7.6)        --
        Other income, net                                 12.1         --
                                                         -----        -----
        Net income (loss)                                  0.3%       (11.9)%
                                                         -----        -----
</TABLE>

During the quarter ended December 31, 2001, the Company generated net revenues
of $5.45 million compared to $9.3 million for the same period of the prior year.
The decrease in net revenues was due to decreased demand for the Company's
foundry and power management products. The decreased demand for the Company's
products reflects the industry wide slow down in demand for semiconductor
products. Foundry product sales accounted for 65% of net revenues in the quarter
ended December 31, 2001 and power management product sales accounted for 35% of
net revenues in the quarter ended December 31, 2001. The sale of standard
products are slowly increasing as percentage of the sales and we expect the
trend to continue in the near future.

For the three months ended December 31, 2001, the Company's largest customers
were Linfinity Microelectronics, National Semiconductor and International
Rectifier, which accounted for approximately 31%, 17% and 7% of net revenues and
3%, 0%, and 7% of net accounts receivable at December 31, 2001, respectively.
Revenues from National Semiconductor resulted from the one time sale of
work-in-process inventory. The Company expects no revenue from National
Semiconductor in the near future.


                                       11
<PAGE>
COST OF REVENUES. Cost of revenues in the three months ended December 31, 2001
was $2.4 million, representing 43.8% of net revenues compared to $9.5 million,
representing 93.5% of net revenues for the same quarter in the prior fiscal
year. The decrease in cost of revenues as a percentage of revenues is a result
of several actions taken by the Company, including:

     -    an aggressive program to reduce the costs and improve the efficiency
          of the manufacturing process;

     -    a reduction in force, reducing headcount from 201 on March 31, 2001 to
          90 on December 31, 2001; and

     -    negotiations with vendors to reduce costs of raw materials and
          supplies.

The reduction in cost of revenues also includes the favorable effect of one time
sale of work-in-process inventory to National Semiconductor. Excluding this
transaction, the gross profit margin for the quarter ended December 31, 2001
would have been 50%.

During the quarter ended June 30, 2001, the Company re-evaluated the practical
production capacity of its fabrication facility in light of the actions
described above, as a result of the steep decline in the semiconductor market.
Prior to the quarter ended June 30, 2001, the practical capacity of the
Company's fabrication facility was estimated to be approximately 3,000 wafers
per week. After re-evaluating the production capacity of the fabrication
facility in light of changes made to the production process, reductions in
headcount and other considerations, management estimates the current production
capacity to be approximately 1,200 wafers per week. Accordingly, overhead
absorption is higher than it would have been using the prior estimated
production capacity.

RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses were
$247,000 (4.5% of revenues) in the quarter ended December 31, 2001 compared to
$495,000 (4.9% of revenues) in the corresponding quarter of the prior fiscal
year. Costs of engineering resources associated with design revenues are
included in cost of revenues. The reduction in research and development expenses
is a result of cost control measures put in place. The Company believes that
research and development expenses in absolute dollars will increase from current
levels as it invests in the development, design and introduction of standard
product, at the appropriate time, this may include an increase in staffing and
related personnel compensation.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $2.9 million (53.0% of revenues) in the quarter
ended December 31, 2001, up from $ 637,000 (6.3% of revenues) in the same
quarter of the prior year. The increase in selling, general and administrative
expenses is due to increased sales and marketing, travel expenses and
professional fees.

INTEREST EXPENSE. Interest expense was $160,000 for the quarter ended December
31, 2001, a decrease of $578,000 over the corresponding period in the prior
year. The decrease in expenses is due to the pay off of the Company's operating
line of credit in the quarter ended September 20,2001.

AMORTIZATION OF DEBT DISCOUNT. During the quarter ended June 30, 2001, the
Company granted warrants in connection with the issuance of convertible
debentures to Teamasia. The transaction also contained a beneficial conversion
feature. The value of the warrants and the beneficial conversion feature,
totaling $1.633 million, is reflected as a discount on the subordinated
debenture and is being amortized over the term of the subordinated debenture
which is one year. For the three months ended December 31, 2001, a non-cash
charge of $412,000, representing the amortization of the discount associated
with the warrant and beneficial conversion feature, was recorded by the Company.

OTHER INCOME, NET. During the three months ended December 31, 2001, the Company
sold fully depreciated equipment and realized a gain totaling $578,000.
Additionally, the Company realized a gain of $83,000 on the settlement of
liabilities

NET INCOME (LOSS). The Company generated net income of $17,000 for the three
months ended December 31, 2001, representing no earnings per share for either
basic or diluted compared to a net loss of $1.2 million in the quarter ended
December 24, 2000, or $.68 per share (both basic and diluted). Management has
taken a number of actions that are designed to enable the Company to achieve
profitable results at much lower revenue levels. Scaled down operations, cost
control and improvements in its manufacturing efficiency are the major drivers
of the Company's return to profitability.



                                       12
<PAGE>
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED DECEMBER 31, 2001

The following table sets forth certain items from the Company's condensed
statements of operations as a percentage of net revenues for the periods
indicated.

<TABLE>
<CAPTION>
                                                                 NINE MONTHS ENDED
                                                            DECEMBER     DECEMBER 24,
                                                            31, 2001       2000
                                                            ---------    ----------
<S>                                                         <C>          <C>
         Total revenues                                       100.0%       100.0%
         Cost of revenue                                       53.1         95.8
                                                             ------        -----
               Gross margin                                    46.9          4.1
         Operating expenses:
               Research and development                         7.0          9.4
               Selling, general and administrative             33.4         11.4
                                                             ------        -----
         Income (loss) from operations                          6.5        (16.7)
         Interest expense, net                                 (2.9)        (3.9)
         Amortization of debt discount                         (5.4)          --
         Other income, net                                      4.1           --
                                                             ------        -----
         Net income (loss)                                      2.3%     (11.0)%
</TABLE>

NET REVENUES. Net revenues for the nine months ended December 31, 2001 decreased
25.2% to $19.6 million compared to $26.2 million for the same period of the
prior year. The decrease in net revenues was principally due to decreased demand
for the Company's products, which reflects the downturn in the semiconductor
market. Foundry product sales decreased 19.0% and accounted for 72% of net
revenues in the first nine months of fiscal 2002, versus 67% in the first nine
months of fiscal 2001. Standard product and design engineering sales decreased
by 25.0%.

For the nine months ended December 31, 2001, the Company's largest customers
were Linfinity Microelectronics, National Semiconductor and International
Rectifier which accounted for approximately 23%, 16% and 8% of net revenues and
3%, 0%, and 7% of net receivables at December 31, 2001, respectively.

COST OF REVENUES. Cost of revenues for the nine months ended December 31, 2001
was $10.4 million representing 53.1% of net revenues, compared to $25.1 million,
representing 95.8% of net revenues for the same period of the prior fiscal year.
Gross margins improved in the first nine months of fiscal year 2002 due to the
cost cutting measures taken by the Company and the recognition of approximately
$1.0 million in revenues from National Semiconductor in the quarter ended
December 31, 2001 as a result of the settlement of a cancelled sales order.

RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses were $1.4
million (7.0% of revenues) in the nine months ended December 31, 2001 compared
to $2.5 million (9.4% of revenues) in the corresponding period of the prior
fiscal year. Cost of engineering resources associated with design revenue is
included in cost of revenues. Management believes that research and development
expenses in absolute dollars will increase from current levels.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $6.5 million (33.4% of net revenues) in the nine
months ended December 31, 2001 up from $3.0 million (11.4% of net revenues) in
the same period of the prior year. The increase was primarily due to an increase
in cost of sales and marketing expenses and sales administration, travel
expenses and professional fees.

INTEREST EXPENSE. Interest expense was $566,000 for the nine months ended
December 31, 2001, a decrease of $463,000 over the corresponding period in the
prior year. The decrease reflects interest at the prime rate on the subordinated
debenture, offset by a decline in the interest expense on the Company's
operating line or credit that was paid off in August 2001.

AMORTIZATION OF DEBT DISCOUNT. During the quarter ended June 30, 2001, the
Company granted warrants in connection with the issuance of convertible
debentures to Teamasia. The transaction also contained a beneficial conversion
feature. The value of the warrants and the beneficial conversion feature,
totaling $1.633 million, is reflected as a discount on the subordinated
debentures and is being amortized over the term of the subordinated debentures,
which is one year. For the nine months ended December 31,

                                       13
<PAGE>
2001, a non-cash charge of $1,052,000, representing the amortization of the
discount associated with the warrant and beneficial conversion feature, was
recorded by the Company.

OTHER INCOME, NET. During the nine months ended December 31, 2001, the Company
sold fully depreciated equipment and recognized gains of $658,000. Additionally
the Company recognized $140,000 in gains related to the settlement of
liabilities.

NET INCOME (LOSS). The Company generated net income of $449,000 for the nine
months ended December 31, 2001. This represents earnings per basic and diluted
common share of $0.09. For the corresponding period of the prior year, the
Company generated a net loss of $5.4 million or $3.64 per share. The net income
for the nine months ended December 31, 2001 resulted from cost cutting measures
taken by the Company.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents were $92,000 at December 31, 2001 compared to $41,000
at March 31, 2001. In general, the increase resulted from decreased sales, cost
cutting measures and advance proceeds from sale of stock, offset by growth in
accounts receivable and disbursements to vendors and creditors.

Cash used in operating activities for the nine months ended December 31, 2001
totaled $ 2.8 million. The Company received $3.27 million net cash from
financing activities during the nine months ended December 31, 2001, including
$675,000 net cash as an advance from Subba Mok. The Company received proceeds
from the sale of equipment totaling $19,000 and used $421,000 in cash to
purchase equipment.

On May 10, 2001, the Company entered into an agreement with Subba Mok whereby
Subba Mok agreed to acquire 72% of the equity of the Company for $6.0 million.
Of this amount, $2.5 million was received in June 2001, $3.4 million was
received in July 2001 and the remaining $100,000 was received in the quarter
ended December 31, 2001. The proceeds were used to pay down certain borrowings
and past due obligations.

In April 1999, the Company entered into an agreement with The CIT Group for a
$9.5 million loan facility. Included in the facility were secured term loans for
up to $2.0 million for equipment purchases and a revolving credit facility that
allowed the Company to borrow up to $7.5 million based on qualifying accounts
receivable and inventory balances at 1.5% over prime. On July 10, 2001, the CIT
Group gave notice of termination and acceleration and demand for repayment for
the revolving credit facility, including the equipment term loans. All amounts
due to CIT were repaid in August 2001. Management is actively negotiating with
several lenders to replace the CIT Group revolving credit facility.

The Company has been unable to meet its obligations under debt agreements and
certain of its capital lease obligations. These instances of non-payment put the
Company in default of these agreements.

The Company is currently delinquent in payments for federal and state
withholding taxes in the amount of $841,000. The Company is working out a
payment plan with appropriate agencies to pay off the amount Additionally, a
number of vendors and suppliers have filed suit against the Company for
non-payment.

Management has been actively negotiating with the Company's creditors. As a
result of these negotiations, and by using proceeds from sales of stock in June
2000 and convertible debentures in November and December 2000 to Teamasia
totaling $7,430,000, as well as additional proceeds from Subba Mok in June and
July 2001 totaling $6.0 million, the Company has been able to bring current, pay
off, or refinance certain of its debt obligations. The Company continues to be
in default on all capital lease obligations.

As of December 31, 2001, the Company's short-term portion of debt and capital
lease obligations totaled $5.6 million, which is comprised of (i) $3.5 million
of convertible debentures due in May 2002, net of a discount of $582,000, (ii)
$2.0 million of capital lease obligations and (iii) $675,000 of other debt
obligations. The capital lease obligations are comprised of five individual
leases, all of which are past due.

As of December 31, 2001, the Company no had long-term capital lease obligations.


                                       14
<PAGE>
In May 2001, the Company entered into a MOU with Teamasia whereby Teamasia
agreed, among other provisions, to extend the due date of $3.5 million of
convertible debentures until May 2002. In addition, under the MOU, Subba Mok
agreed to purchase stock representing 72% of the Company's fully diluted equity
for $6.0 million, to be received in installments, the last of which was received
in the quarter ended December 31, 2001.

FACTORS AFFECTING FUTURE RESULTS

Except for historical information contained herein, the matters set forth in
this Report on Form 10-Q, including the statements in the following paragraphs,
are forward-looking statements that are subject to certain risks and
uncertainties including such factors as, among others, operating cash
availability, delays in new product and process technology announcements and
product introductions by the Company or its competitors, competitive pricing
pressures, fluctuations in manufacturing yields, changes in the mix or markets
in which products are sold, availability and costs of raw materials, reliance on
subcontractors, the cyclical nature of the semiconductor industry, industry-wide
wafer processing capacity, political and economic conditions in various
geographic areas, and costs associated with other events, such as under
utilization or expansion of production capacity, intellectual property disputes,
litigation, or environmental regulation and other factors described below.

The Company has minimal financial resources and its operating needs are funded
principally from the collection of accounts receivable and from the sale of
common stock and convertible debentures to Teamasia in fiscal year 2001 and the
sale of common stock to Subba Mok in fiscal year 2002. The Company continues to
focus on restructuring its operations to conserve cash.

Excluding the two previous quarters, the Company has reported operating losses
and total negative cash flow from operating activities since the second quarter
of fiscal 1997. Unless a trend of increasing revenue is achieved or the Company
is able to sustain a lower break-even point, the Company may continue to report
losses and negative cash flows in the future.

The Company sells its products to distributors and manufactures in Southeast
Asia, which is currently experiencing an economic downturn. Sales in this region
accounted for 25% of the Company's net revenues in fiscal year 2001 and
approximately 30% for the nine months ended December 31, 2001. If the region is
not able to overcome its economic problems, there is no assurance that the
Company's results of operations will not be adversely affected.

As a result of the severe downturn in the semiconductor market, the Company
experienced a significant decrease in sales in the fourth quarter of fiscal year
2001, and the trend continued in the subsequent nine months ended December 31,
2001. The downturn in the semiconductor market is expected to continue for the
foreseeable future and could compound the Company's liquidity issues.

In June 2001, International Rectifier Corporation (IR) notified the Company that
it would be canceling future orders. Revenues for the year ended March 31, 2001
and three months and nine months ended December 31, 2001 totaled $9.3 million,
$389,000 and $3.4 million respectively. The impact of this cancellation could
have a significant negative impact on the results of operations of the Company.
In subsequent quarters, although IR is expected to remain a customer, the
Company expects the present level of revenue to continue in the near future.

The semiconductor industry is extremely capital intensive. To remain
competitive, the Company must continue investing in advanced design tools,
manufacturing equipment and process technologies. The Company anticipates
significant continuing capital expenditure during the next several years. There
can be no assurance that the Company will not be required to seek additional
debt or equity financing to satisfy its cash and capital needs or that such
financing will be available on terms satisfactory to the Company. If such
financing is required and if such financing is not available on terms
satisfactory to the Company, its operations would be materially adversely
affected.

New products and process technology require significant research and development
expenditures. However, there can be no assurance that the Company will be able
to develop and introduce new products in a timely manner or that new products
will gain market acceptance or that new process technologies can be successfully
implemented. If the Company is unable to develop new products in a timely
manner, and to sell them at gross margins comparable to the Company's current
products, the future results of operations could be adversely impacted.

Part of the Company's future product development strategy included the
acquisition of the product portfolio of Epic Semiconductor based in Phoenix,
Arizona. Such products are based on the UARTs and MOSFET technologies. The
Company currently believes that,

                                       15
<PAGE>
if successful in manufacturing and marketing of such products, these products
could enhance the revenue of the Company. However there can be no assurance that
the manufacturing and marketing of these products can be successfully
implemented in a timely manner. From time to time, the Company has experienced
manufacturing difficulties due to equipment failures that have caused delivery
delays and product returns. There can be no assurance that the Company will not
experience manufacturing problems and product delays in the future as a result
of, among other reasons, changes to the process technologies, equipment failure,
or production scheduling issues. The Company depends on outside contract
assembly vendors to test, assemble and package its products, and, any delays in
product delivery, quality and assembly problems from these outside contract
assembly companies could adversely affect the Company's operating results.

Although we are not currently a party to any material litigation relating to
patents and other intellectual property rights, because of technological
developments in the semiconductor industry, it may be possible that certain of
our designs or processes may involve infringement of existing patents. We also
cannot be sure that any of our patents will not be invalidated, circumvented or
challenged, that the rights granted there under will provide competitive
advantages to us or that any of our pending or future patent applications will
be issued. We have from time to time received, and may in the future receive,
communications from third parties asserting patents, mask-work rights, or
copyrights on certain of our products and technologies. Although we are not
currently a party to any material litigation, if a third party were to make a
valid intellectual property claim and a license were not available on
commercially reasonable terms, our operating results could be materially and
adversely affected. Litigation, which could result in substantial cost to us and
diversion of our resources, may also be necessary to enforce our patents or
other intellectual property rights or to defend us against claimed infringement
of the rights of others.

The Company is subject to a variety of federal, state, and local governmental
regulations related to the use, storage, discharge and disposal of toxic,
volatile or otherwise hazardous chemicals and gases used in its manufacturing
process. Although the Company believes that its activities conform to presently
applicable environmental regulations, the failure to comply with present or
future regulations could result in penalties being imposed on the Company,
suspension of production or a cessation of operations. There can be no assurance
that regulatory changes or changes in regulatory interpretation or enforcement
will not render compliance more difficult and costly. Any failure of the Company
to control the use of, or adequately restrict the discharge of, hazardous
substances, or otherwise comply with environmental regulations, could subject it
to significant future liabilities.

Effective April 1999, our common stock was moved from the Nasdaq National Market
to the Nasdaq SmallCap Market where it continues to trade under the symbol
"IMPX." Our common stock trading price remains below $5.00 per share and could
also be subject to the requirements of certain rules promulgated under the
Securities Exchange Act of 1934, as amended, which requires additional
disclosure by broker-dealers in connection with any trades involving a stock
defined as a penny stock (generally, any non-Nasdaq equity security that has a
market price of less than $5.00 per share, subject to certain exceptions). The
additional burdens imposed upon broker-dealers by such requirements could
discourage broker-dealers from trading in our common stock. Additionally, future
announcements concerning the Company, its competitors or its principal
customers, including quarterly operating results, changes in earnings estimates
by analysts, technological innovations, new product introductions, governmental
regulations or litigation may cause the market price of the Company's Common
Stock to continue to fluctuate substantially. Further, in recent years the stock
market has experienced extreme price and volume fluctuations that have
particularly affected the market prices of equity securities of many high
technology companies and that often have been unrelated or disproportionate to
the operating performance of such companies. These fluctuations, as well as
general economic, political and market conditions such as recessions or
international currency fluctuations may materially adversely affect the market
price of the Common Stock.

On July 26, 2001, the Company attended a hearing before a Nasdaq Listing
Qualifications Panel concerning the Company's failure to comply with certain
requirements for continued listing on The Nasdaq SmallCap Market. Nasdaq has
determined the Company's securities will continue to be listed as long as
certain conditions are met. The conditions require that stockholders equity, as
reported in the Company's Quarterly Reports on Form 10-Q for the quarters ended
September 30, 2001 and December 31, 2001, meet specified minimum amounts. In
addition, the conditions require that the Company be able to demonstrate
compliance with all requirements for continued listing on The Nasdaq SmallCap
Market. There can be no assurance that the Company will be able to comply with
the terms of the conditions.

The Company has taken steps to complete a major upgrade to its
manufacturing-execution software and hardware and currently is in the final
stages of implementing financial application software and hardware. The Company
expects that all upgrades to the financial system will be completed in the
quarter ending March 31, 2002.


                                       16
<PAGE>
The ability of the Company to transition from the fabrication of lower-margin
products to higher-margin products, including both those developed by the
Company and those for which it serves as a third-party foundry, is very
important for the Company's future results of operations. Rapidly changing
customer demands may result in the obsolescence of existing Company inventories.
There can be no assurances that the Company will be successful in its efforts to
keep pace with changing customer demands. In this regard, the ability of the
Company to develop higher-margin products will be materially and adversely
affected if it is unable to retain its engineering personnel due to the
Company's current business climate.

Many of our competitors have substantially greater technical, manufacturing,
financial and marketing resources than we do. Our international sales are
primarily denominated in U.S. currency. Consequently, changes in exchange rates
that strengthen the U.S. dollar could increase the price in local currencies of
our products in foreign markets and make our products relatively more expensive
than our competitor's products that are denominated in local currency. Due to
the current demand for semiconductors of all types, including both foundry
services and analog integrated circuits, we expect continued strong competition
from existing suppliers and the entry of new competitors. Such competitive
pressures could reduce the market acceptance of our products and result in
market price reductions and increases in expenses that could adversely affect
our business, financial condition or results of operations.

The fabrication of integrated circuits is a highly complex and precise process.
Minute impurities, contaminants in the manufacturing environment, difficulties
in the fabrication process, defects in the masks used to print circuits on a
wafer, manufacturing equipment failure, wafer breakage or other factors can
cause a substantial percentage of wafers to be rejected or numerous die on each
wafer to be nonfunctional. The majority of our costs of manufacturing are
relatively fixed, and, consequently, the number of shippable die per wafer for a
given product is critical to our results of operations. If we do not achieve
acceptable manufacturing yields, or if we experience product shipment delays, or
if we encounter capacity constraints, or issues related to volume production
ramp-ups, our financial condition or results of operations would be materially
and adversely affected. We have from time to time in the past experienced lower
than expected production yields, which have delayed product shipments and
adversely affected gross margins. Moreover, we cannot be sure that we will be
able to maintain acceptable manufacturing yields in the future.

In 2001, we experienced difficulties meeting product specifications for certain
customers and, as a result, accepted product returns from these customers. We
have since implemented changes to our processes to ensure our products meet
customer acceptance criteria, however, there can be no assurance that we will
not be required to accept product returns in the future.

We manufacture all of our wafers at our fabrication facility in San Jose,
California. Given the unique nature of our processes, it would be difficult to
arrange for independent manufacturing facilities to supply such wafers in a
short period of time. Any inability to utilize our manufacturing facility as a
result of fire, natural disaster or utility interruption, otherwise, would have
a material adverse effect on our financial condition or results of operations.
Although we believe that we have adequate capacity to support our near term
plans, we have in the past subcontracted the fabrication of a portion of our
wafer production to outside foundries, and may need to do so again. At the
present time, there are several wafer foundries that are capable of supplying
certain of our needs. However, we cannot be sure that we will always be able to
find the necessary foundry capacity.

Due to the relatively long manufacturing cycle for integrated circuits, we build
some of our inventory before we receive orders from our customers. Because of
inaccuracies inherent in forecasting the demand for such products, inventory
imbalances periodically occur that result in surplus amounts of some of our
products and shortages of others. Such shortages can adversely affect customer
relationships; surpluses can result in larger than desired inventory levels. Our
backlog consists of distributor and OEM customer orders required to be shipped
within nine months following the order date. Customers may generally cancel or
reschedule orders to purchase products without penalty. As a result, to reflect
changes in their needs, customers frequently revise the quantities of our
products to be delivered and their delivery schedules. Because backlog can be
canceled or rescheduled without significant penalty, we do not believe our
backlog is a meaningful indicator of future revenue. In addition, our backlog
includes our orders from domestic distributors as to which revenues are not
recognized until the products are sold by the distributors. Such products when
sold may result in revenue lower than the stated backlog amounts as a result of
discounts that we authorize at the time of sale by the distributors.

The Company utilizes various external "silicon wafer service foundries" (for
epitaxial growth) and assembly sites to assemble and package its products. Any
product delivery delays, quality and manufacturing problems from these external
operations could adversely affect the Company's operating results.


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We depend on a number of subcontractors for certain of our manufacturing
processes, such as epitaxial deposition services. If any of these subcontractors
fails to perform these processes on a timely basis, there could be manufacturing
delays, which would materially adversely affect our results of operations.
Currently, we purchase certain materials, including silicon wafers, on a
purchase order basis from a limited number of vendors. Any interruption or
termination of supply from any of these suppliers would have a material adverse
effect on our financial condition, results of operations, or liquidity. Our
products are packaged by a limited group of third party subcontractors in
Southeast Asia. Certain of the raw materials included in such products are
obtained from sole source suppliers. Although we are trying to reduce our
dependence on our sole and limited source suppliers, disruption or termination
of any of these sources could occur and such disruptions could have a material
adverse effect on our financial condition or results of operations. As is common
in the industry, independent third party subcontractors in Asia currently
assemble all of our products. In the event that any of our subcontractors were
to experience financial, operational, production or quality assurance
difficulties resulting in a reduction or interruption in our supply, our
operating results would be adversely affected until alternate subcontractors, if
any, became available.

The present and future success of the Company depends on its ability to continue
to attract, retain and motivate qualified senior management, sales and technical
personnel, particularly highly skilled semiconductor design and development
personnel, and process engineers, for whom competition is intense. The Company
is currently engaged in an executive search to hire a chief executive officer, a
chief financial officer and a controller. The loss of key executive officers,
key design and development personnel, or process engineers, or the inability to
hire and retain sufficient qualified personnel could have a material adverse
effect on the Company's business, financial condition and results of operations.
There can be no assurance that the Company will be able to retain these
employees.


We face risks associated with potential acquisitions, investments, strategic
partnerships and other ventures, including whether any such transactions can be
identified, completed and the other party integrated with our business on
favorable terms. In the ordinary course of our business, we regularly engage in
discussions and negotiations relating to potential investments, strategic
partnerships and acquisitions. We may acquire or make investments in
complementary businesses, technologies, services or products, or enter into
strategic partnerships with parties who can provide access to those assets, if
appropriate opportunities arise in the future. From time to time, we have had
discussions and negotiations with a number of companies regarding our acquiring,
investing in or partnering with their businesses, products, services or
technologies. Some of those discussions also contemplate the other party making
an investment in our company. We may not identify suitable acquisition,
investment or strategic partnership candidates or, if we do identify suitable
candidates, we may not complete those transactions on commercially acceptable
terms or at all. In addition, the key personnel of an acquired company may
decide not to work for us. If we make acquisitions, we could have difficulty
integrating the acquired products, services or technologies into our operations.
These difficulties could disrupt our ongoing business, distract our management
and employees and increase our expenses which could adversely affect our
operating results. Subba Mok, our majority stockholder, has publicly announced
its intention to explore opportunities for us and affiliates of Subba Mok,
including Teamasia and its affiliates, to work together on transactions
involving assets and/or business operations that Subba Mok and/or its affiliates
own presently or may develop in the future, including, without limitation,
opportunities to share and mutually benefit from production, design, quality
control and other assets and/or business operations applicable to the
semiconductor industry, including, without limitation, the combination of our
operations with the operations of another company. The share ownership held by
Subba Mok permits Subba Mok to significantly influence or control most of the
corporate decisions involving our company.



PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

The Company was named as one of 88 defendants in a legal action brought by the
Lemelson Medical Foundation for patent violations. In December 2000, we settled
all outstanding claims for $150,000 due in three annual installments, the last
of which is due in December 2002. We are party to litigation in the ordinary
course of business. Any adverse outcome in any of these matters could have a
material adverse affect on our business and results of operations.


 Item 2.  Changes in Securities and Use of Proceeds


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On November 30, 2001, the Company completed the issuance of an aggregate of
5,482,000 shares of Common Stock to a group of investors, including Subba Mok,
for an aggregate purchase price of $6.0 million. At the closing, the Company
also (i) restructured the terms of $3.5 million of outstanding convertible
debentures held by Teamasia and (ii) issued a warrant to purchase an aggregate
of 319,800 shares of Common Stock to Teamasia at a per share exercise price of
$1.10. The issuance of securities in this transaction was deemed exempt from
registration under the Securities Act of 1933, as amended, in reliance on
Section 4(2), Regulation D and/or Regulation S promulgated thereunder. The
investors represented their intention to acquire the securities for investment
only and not with a view to or for sale in connection with any distribution
there of and appropriate legends were affixed to the certificates issued in this
transaction. All recipients either received adequate information about the
Company or had access, through employment or other relationships, to such
information. The Company used the proceeds to repay the amount owed under its
prior credit facility with The CIT Group and for working capital and general
corporate purposes.


Item 3. Defaults by the Company on its Senior Securities

On July 10, 2001, CIT gave notice of termination and acceleration and demand for
repayment for both the revolving credit facility and the term loan. This
cancellation results from defaults under both the CIT agreement and related
forbearance letters. CIT has declared all obligations due and payable as of July
11, 2001. All amounts due to CIT were repaid on August 13, 2001. No new
financing has been secured.

Item 6. Reports on Form 8-K.

Report on Form 8-K dated December 17,2001

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 by the
undersigned thereunto duly authorized.

Date: February 18, 2002.                 IMP Inc.
                                             Registrant

                                         By:  /s/   Subbarao Pinamaneni
                                              ----------------------------
                                              Name:  Subbarao Pinamaneni
                                              Title: Chairman of the Board

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