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UNITED STATES
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 September 28, 2003

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 0-24758

Micro Linear Corporation

(Exact name of Registrant as specified in its charter)


|                                         |  |                       
|---------------------------------------- |  | ----------------------
|Delaware                                 |  | 94-2910085            
|(State or other jurisdiction of          |  | (I.R.S. Employer      
|incorporation or organization)           |  | Identification Number)
|                                         |  |                       
|2050 Concourse Drive                     |  | 95131                 
|San Jose, California                     |  | (Zip Code)            
|(Address of principal executive offices) |  |                       

Registrants telephone number, including area code:
(408) 433-5200

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 by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

The number of shares of the Registrants Common Stock outstanding as of
November 5, 2003, net of shares held in treasury, was 12,266,313.



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TABLE OF CONTENTS



|                              |                                                                                               |                                                                |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | -------------------------------------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION
|                              | Item 1. Financial Statements                                                                 
|                              |                                                                                               | CONSOLIDATED CONDENSED BALANCE SHEETS                         
|                              |                                                                                               | CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS               
|                              |                                                                                               | CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS               
|                              |                                                                                               | NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
|                              | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                              | Item 3. Quantitative and Qualitative Disclosures about Market Risk                           
|                              | Item 4. Controls and Procedures                                                              
|PART II. OTHER INFORMATION   
|                              | Item 1. Legal Proceedings                                                                    
|                              | Item 4. Submission of Matters to a Vote of Security Holders                                  
|                              | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                   
|INDEX TO EXHIBITS            
|EXHIBIT 31.1                 
|EXHIBIT 31.2                 
|EXHIBIT 32.1                 
|EXHIBIT 32.2                 



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TABLE OF CONTENTS

|                  |              |                                                                                       |                                                                                                                 |  |      |   | 
|----------------- | ------------ | ------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------- |  | ---- | - | 
|                  |              |                                                                                       |                                                                                                                 |  | PAGE
|                  |              |                                                                                       |                                                                                                                 |  |     
|PART I            |              | FINANCIAL INFORMATION                                                                 |                                                                                                                 |  | 3    |  
|Item 1.           |              | Financial Statements (Unaudited)                                                      |                                                                                                                 |  | 3    |  
|                  |              |                                                                                       | Consolidated Condensed Balance Sheets at September 30, 2003 and December 31, 2002                               |  |      | 3 | 
|                  |              |                                                                                       | Consolidated Condensed Statements of Operations for the three and nine months ended
September 30, 2003 and 2002 |  |      | 4 | 
|                  |              |                                                                                       | Consolidated
Condensed Statements of Cash Flows for the nine months ended
September 30, 2003 and 2002           |  |      | 5 | 
|                  |              |                                                                                       | Notes to Consolidated Condensed Financial Statements                                                            |  |      | 6 | 
|Item 2.           |              | Managements Discussion and Analysis of Financial Condition and Results of Operations |                                                                                                                 |  | 10   |  
|Item 3.           |              | Quantitative and Qualitative Disclosures about Market Risk                            |                                                                                                                 |  | 24   |  
|Item 4.           |              | Controls and Procedures                                                               |                                                                                                                 |  | 24   |  
|PART II           |              | OTHER INFORMATION                                                                     |                                                                                                                 |  | 25   |  
|Item 1.           |              | Legal Proceedings                                                                     |                                                                                                                 |  | 25   |  
|Item 4.           |              | Submission of matters to a vote of Security Holders                                   |                                                                                                                 |  | 25   |  
|Item 6.           |              | Exhibits and Reports on Form 8-K                                                      |                                                                                                                 |  | 26   |  
|SIGNATURES        |              |                                                                                       | 27                                                                                                              | 
|Index to Exhibits |              |                                                                                       | 28                                                                                                              | 
|                  | Exhibit 31.1 |                                                                                       |                                                                                                                 |  |     
|                  | Exhibit 31.2 |                                                                                       |                                                                                                                 |  |     
|                  | Exhibit 32.1 |                                                                                       |                                                                                                                 |  |     
|                  | Exhibit 32.2 |                                                                                       |                                                                                                                 |  |     

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PART I. FINANCIAL INFORMATION




Item 1.Financial Statements




MICRO LINEAR CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN THOUSANDS)
(Unaudited)

|                                     |                                                                                                                      |                            |                                            |         |               |        |              |         |        |        | 
|------------------------------------ | -------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------------------------------------------ | ------- | ------------- | ------ | ------------ | ------- | ------ | ------ | 
|                                     |                                                                                                                      |                            |                                            |         | September 30, |        | December 31,
|                                     |                                                                                                                      |                            |                                            |         | 2003          |        | 2002        
|                                     |                                                                                                                      |                            |                                            |         |               |        |             
|Assets                               |                                                                                                                      |                            |                                            |         |               |        |              |        
|Current assets:                      |                                                                                                                      |                            |                                            |         |               |        |              |        
|                                     | Cash and cash equivalents                                                                                            |                            | $                                          | 8,757   |               |        | $            | 10,801  |       
|                                     | Short-term investments                                                                                               |                            |                                            | 9,865   |               |        |              | 14,704  |       
|                                     | Accounts receivable, less allowance for doubtful accounts
of $123 at September 30, 2003 and $58 at December 31,
2002 |                            |                                            | 1,673   |               |        |              | 1,015   |       
|                                     | Inventories                                                                                                          |                            |                                            | 2,138   |               |        |              | 2,212   |       
|                                     | Other current assets                                                                                                 |                            |                                            | 744     |               |        |              | 2,171   |       
|                                     |                                                                                                                      |                            |                                            |         |               |        |              |         |       
|                                     |                                                                                                                      | Total current assets       |                                            |         | 23,177        |        |              |         | 30,903 |       
|Property, plant and equipment, net   |                                                                                                                      |                            | 5,995                                      |         |               |        | 8,092        |        
|Other assets                         |                                                                                                                      |                            | 26                                         |         |               |        | 27           |        
|                                     |                                                                                                                      |                            |                                            |         |               |        |              |         |       
|                                     |                                                                                                                      |                            | Total assets                               |         | $             | 29,198 |              |         | $      | 39,022 | 
|                                     |                                                                                                                      |                            |                                            |         |               |        |              |         |       
|Liabilities and Stockholders Equity |                                                                                                                      |                            |                                            |         |               |        |              |        
|Current liabilities:                 |                                                                                                                      |                            |                                            |         |               |        |              |        
|                                     | Accounts payable                                                                                                     |                            | $                                          | 1,828   |               |        | $            | 2,076   |       
|                                     | Accrued compensation and benefits                                                                                    |                            |                                            | 565     |               |        |              | 834     |       
|                                     | Deferred revenue                                                                                                     |                            |                                            | 1,409   |               |        |              | 2,045   |       
|                                     | Accrued commissions                                                                                                  |                            |                                            | 137     |               |        |              | 163     |       
|                                     | Other accrued liabilities                                                                                            |                            |                                            | 1,150   |               |        |              | 1,291   |       
|                                     | Current portion of long-term debt                                                                                    |                            |                                            | 279     |               |        |              | 239     |       
|                                     |                                                                                                                      |                            |                                            |         |               |        |              |         |       
|                                     |                                                                                                                      | Total current liabilities  |                                            |         | 5,368         |        |              |         | 6,648  |       
|Long-term debt                       |                                                                                                                      |                            | 1,829                                      |         |               |        | 2,064        |        
|                                     |                                                                                                                      |                            |                                            |         |               |        |              |        
|                                     |                                                                                                                      |                            | Total liabilities                          |         |               | 7,197  |              |         |        | 8,712  | 
|                                     |                                                                                                                      |                            |                                            |         |               |        |              |        
|Stockholders equity:                |                                                                                                                      |                            |                                            |         |               |        |              |        
|                                     | Common stock                                                                                                         |                            |                                            | 15      |               |        |              | 15      |       
|                                     | Additional paid-in capital                                                                                           |                            |                                            | 60,498  |               |        |              | 60,352  |       
|                                     | Accumulated deficit                                                                                                  |                            |                                            | (18,281 | )             |        |              | (9,848  | )     
|                                     | Accumulated other comprehensive income                                                                               |                            |                                            | 2       |               |        |              | 24      |       
|                                     | Treasury stock                                                                                                       |                            |                                            | (20,233 | )             |        |              | (20,233 | )     
|                                     |                                                                                                                      |                            |                                            |         |               |        |              |        
|                                     |                                                                                                                      | Total stockholders equity |                                            |         | 22,001        |        |              |         | 30,310 |       
|                                     |                                                                                                                      |                            |                                            |         |               |        |              |        
|                                     |                                                                                                                      |                            | Total liabilities and stockholders equity |         | $             | 29,198 |              |         | $      | 39,022 | 
|                                     |                                                                                                                      |                            |                                            |         |               |        |              |         |       

See accompanying notes to unaudited consolidated condensed financial statements.

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MICRO LINEAR CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)

|                                           |                                                   |                                                                 |                          |        |                    |       |                   |       |        |       |        |        |        |        |        |        |        |        | 
|------------------------------------------ | ------------------------------------------------- | --------------------------------------------------------------- | ------------------------ | ------ | ------------------ | ----- | ----------------- | ----- | ------ | ----- | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------ | 
|                                           |                                                   |                                                                 |                          |        | THREE MONTHS ENDED |       | NINE MONTHS ENDED
|                                           |                                                   |                                                                 |                          |        | September 30,      |       | September 30,    
|                                           |                                                   |                                                                 |                          |        |                    |       |                  
|                                           |                                                   |                                                                 |                          |        | 2003               |       | 2002              |       | 2003   |       | 2002  
|                                           |                                                   |                                                                 |                          |        |                    |       |                   |       |        |       |       
|Net revenue                                |                                                   | $                                                               | 5,818                    |        |                    | $     | 9,286             |       |        | $     | 16,851 |        |        | $      | 23,762 |       
|Cost of revenue                            |                                                   |                                                                 | 3,410                    |        |                    |       | 4,030             |       |        |       | 9,418  |        |        |        | 10,269 |       
|                                           |                                                   |                                                                 |                          |        |                    |       |                   |       |        |       |        |        |        |        |        |       
|                                           | Gross margin                                      |                                                                 |                          | 2,408  |                    |       |                   | 5,256 |        |       |        | 7,433  |        |        |        | 13,493 |       
|                                           |                                                   |                                                                 |                          |        |                    |       |                   |       |        |       |        |        |        |        |        |       
|Operating expenses:                        |                                                   |                                                                 |                          |        |                    |       |                   |       |        |       |        |        |        |        |        |       
|                                           | Research and development                          |                                                                 |                          | 1,712  |                    |       |                   | 3,891 |        |       |        | 7,477  |        |        |        | 12,160 |       
|                                           | Selling, general and administrative               |                                                                 |                          | 1,567  |                    |       |                   | 2,029 |        |       |        | 5,836  |        |        |        | 6,115  |       
|                                           | Fixed
assets impairment and restructuring charges |                                                                 |                          | 1,608  |                    |       |                   |      |        |       |        | 2,562  |        |        |        |       |       
|                                           |                                                   |                                                                 |                          |        |                    |       |                   |       |        |       |        |        |        |        |        |       
|                                           |                                                   |                                                                 | Total operating expenses |        |                    | 4,887 |                   |       |        | 5,920 |        |        |        | 15,875 |        |        |        | 18,275 | 
|                                           |                                                   |                                                                 |                          |        |                    |       |                   |       |        |       |        |        |        |        |        |       
|                                           | Loss from operations                              |                                                                 |                          | (2,479 | )                  |       |                   | (664  | )      |       |        | (8,442 | )      |        |        | (4,782 | )     
|Interest and other income                  |                                                   |                                                                 | 80                       |        |                    |       | 135               |       |        |       | 237    |        |        |        | 571    |       
|Interest and other expense                 |                                                   |                                                                 | (63                      | )      |                    |       | (65               | )     |        |       | (156   | )      |        |        | (199   | )     
|                                           |                                                   |                                                                 |                          |        |                    |       |                   |       |        |       |        |        |        |        |        |       
|                                           | Loss before income taxes                          |                                                                 |                          | (2,462 | )                  |       |                   | (594  | )      |       |        | (8,361 | )      |        |        | (4,410 | )     
|Provision for (benefits from) income taxes |                                                   |                                                                 | 22                       |        |                    |       | (3,989            | )     |        |       | 72     |        |        |        | (3,910 | )     
|                                           |                                                   |                                                                 |                          |        |                    |       |                   |       |        |       |        |        |        |        |        |       
|                                           | Net income (loss)                                 |                                                                 | $                        | (2,484 | )                  |       | $                 | 3,395 |        |       | $      | (8,433 | )      |        | $      | (500   | )     
|                                           |                                                   |                                                                 |                          |        |                    |       |                   |       |        |       |        |        |        |        |        |       
|Net Income (Loss) Per Share:               |                                                   |                                                                 |                          |        |                    |       |                   |       |        |       |        |        |        |        |        |       
|Basic                                      |                                                   |                                                                 |                          |        |                    |       |                   |       |        |       |        |        |        |        |        |       
|                                           |                                                   | Net income (loss) per share                                     |                          | $      | (0.20              | )     |                   | $     | 0.28   |       |        | $      | (0.69  | )      |        | $      | (0.04  | )     
|                                           |                                                   |                                                                 |                          |        |                    |       |                   |       |        |       |        |        |        |        |        |       
|                                           |                                                   | Weighted average number of shares
used in per share computation |                          |        | 12,250             |       |                   |       | 12,079 |       |        |        | 12,220 |        |        |        | 12,068 |       
|                                           |                                                   |                                                                 |                          |        |                    |       |                   |       |        |       |        |        |        |        |        |       
|Diluted                                    |                                                   |                                                                 |                          |        |                    |       |                   |       |        |       |        |        |        |        |        |       
|                                           |                                                   | Net income (loss) per share                                     |                          | $      | (0.20              | )     |                   | $     | 0.28   |       |        | $      | (0.69  | )      |        | $      | (0.04  | )     
|                                           |                                                   |                                                                 |                          |        |                    |       |                   |       |        |       |        |        |        |        |        |       
|                                           |                                                   | Weighted average number of shares used in
per share computation |                          |        | 12,250             |       |                   |       | 12,239 |       |        |        | 12,220 |        |        |        | 12,068 |       
|                                           |                                                   |                                                                 |                          |        |                    |       |                   |       |        |       |        |        |        |        |        |       

See accompanying notes to unaudited consolidated condensed financial statements.

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MICRO LINEAR CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

|                                                    |                                                      |                                                     |        |                   |       |      |       |         |        |  
|--------------------------------------------------- | ---------------------------------------------------- | --------------------------------------------------- | ------ | ----------------- | ----- | ---- | ----- | ------- | ------ | -
|                                                    |                                                      |                                                     |        | NINE MONTHS ENDED
|                                                    |                                                      |                                                     |        | September 30,    
|                                                    |                                                      |                                                     |        |                  
|                                                    |                                                      |                                                     |        | 2003              |       | 2002
|                                                    |                                                      |                                                     |        |                   |       |     
|Net cash provided by (used in) operating activities |                                                      | $                                                   | (6,329 | )                 |       | $    | 1,205 |        
|Cash flows from investing activities:               |                                                      |                                                     |        |                   |       |      |       |        
|                                                    | Purchase of capital equipment                        |                                                     |        | (481              | )     |      |       | (282    | )     
|                                                    | Purchases of short-term investments                  |                                                     |        | (9,203            | )     |      |       | (11,082 | )     
|                                                    | Sales of short-term investments                      |                                                     |        | 14,020            |       |      |       | 10,702  |       
|                                                    |                                                      |                                                     |        |                   |       |      |       |        
|                                                    |                                                      | Net cash provided by (used in) investing activities |        |                   | 4,336 |      |       |         | (662   | )
|Cash flows from financing activities:               |                                                      |                                                     |        |                   |       |      |       |        
|                                                    | Principal payments on debt                           |                                                     |        | (195              | )     |      |       | (182    | )     
|                                                    | Proceeds from issuance of common stock               |                                                     |        | 144               |       |      |       | 40      |       
|                                                    |                                                      |                                                     |        |                   |       |      |       |        
|                                                    |                                                      | Net cash used in financing activities               |        |                   | (51   | )    |       |         | (142   | )
|                                                    |                                                      |                                                     |        |                   |       |      |       |        
|                                                    | Net increase (decrease) in cash and cash equivalents |                                                     |        | (2,044            | )     |      |       | 401     |       
|                                                    | Cash and cash equivalents at beginning of period     |                                                     |        | 10,801            |       |      |       | 14,888  |       
|                                                    |                                                      |                                                     |        |                   |       |      |       |        
|                                                    |                                                      | Cash and cash equivalents at end of period          |        | $                 | 8,757 |      |       | $       | 15,289 |  
|                                                    |                                                      |                                                     |        |                   |       |      |       |        

See accompanying notes to unaudited consolidated condensed financial statements.

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MICRO LINEAR CORPORATION




NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

1. Organization and Summary of Significant Accounting Policies

Organization

Micro Linear is a fabless semiconductor company specializing in high data
rate wireless integrated circuit solutions. These transceivers can be used in
streaming wireless applications such as cordless phones, wireless speakers and
headphones, security cameras, game controllers, headsets and other personal
electronic appliances.

Micro Linear is headquartered in San Jose, CA with sales offices and
authorized representatives and distributors worldwide.

Fiscal Year

We report results of operations on the basis of fifty-two or fifty-three
week periods, ending on the Sunday closest to December 31. Fiscal year 2002
ended on December 29, 2002. The third quarter of 2002 ended on September 29,
2002. The third quarter of 2003 ended on September 28, 2003. For presentation
purposes, the accompanying financial statements refer to the calendar year end
and month end of each respective period.

Principles of Consolidation

The consolidated financial statements include the accounts of Micro Linear
Corporation and our subsidiary in the United Kingdom. All significant
inter-company accounts and transactions have been eliminated.

The Company has designated the U.S. dollar as the functional currency for
its United Kingdom subsidiary since that subsidiary is dependent on the parent
companys economic environment. The gains and losses resulting from the
translation of the United Kingdom subsidiary are recorded as other income and
expense. For the first three quarters of 2003 and 2002, translation gains and
losses were not significant.

Basis of Presentation

The consolidated financial statements included herein have been prepared
by us in accordance with accounting principles generally accepted in the United
States of America and reflect all adjustments, consisting of normal recurring
adjustments, which in the opinion of management are necessary to state fairly
our financial position, results of operations, and cash flows for the periods
presented. Certain prior period adjustments in the condensed
financial statements have been reclassified where necessary to
conform to the quarter ended September 30, 2003.

The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q, and therefore do not
include all information and footnotes necessary for a fair presentation of
financial position, results of operations and cash flows in conformity with
generally accepted accounting principles. The unaudited consolidated condensed
financial statements and notes should be read in conjunction with the
consolidated financial statements and notes in the Annual Report on Form 10-K
for the year ended December 29, 2002, filed with the Securities and Exchange
Commission on March 27, 2003.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements as well as the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates, and such
differences may be material to the financial statements.

Net Income (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income (loss)
available to common stockholders by the weighted average number of common
shares outstanding during the period. Diluted earnings (loss) per share
excludes potential common stock

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if the effect is anti-dilutive. Diluted net earnings (loss) per share
includes the effect of all potentially dilutive common stock outstanding during
the period. We compute diluted earnings (loss) per share using the treasury
stock method for stock options outstanding.

A total of 3,810,595 and 4,457,396 shares of potential common stock were
not included in the dilutive net loss per share calculations for the periods
ending September 30, 2003 and 2002, because to include them would be
anti-dilutive.

Following is a reconciliation of the basic and diluted income (loss) per
share computations (in thousands, except per share amounts):

|         |                                            |                                 |   |                    |       |                   |   |        |      |      |   |        |       |   |   |        |       |  
|-------- | ------------------------------------------ | ------------------------------- | - | ------------------ | ----- | ----------------- | - | ------ | ---- | ---- | - | ------ | ----- | - | - | ------ | ----- | -
|         |                                            |                                 |   | Three Months Ended |       | Nine Months Ended
|         |                                            |                                 |   | September 30       |       | September 30     
|         |                                            |                                 |   |                    |       |                  
|         |                                            |                                 |   | 2003               |       | 2002              |   | 2003   |      | 2002
|         |                                            |                                 |   |                    |       |                   |   |        |      |     
|Basic:   |                                            |                                 |   |                    |       |                   |   |        |      |      |   |        |       |   |   |       
|         | Net income (loss)                          |                                 | $ | (2,484             | )     |                   | $ | 3,395  |      |      | $ | (8,433 | )     |   | $ | (500   | )    
|         |                                            |                                 |   |                    |       |                   |   |        |      |      |   |        |       |   |   |        |      
|         | Weighted average common shares outstanding |                                 |   | 12,250             |       |                   |   | 12,079 |      |      |   | 12,220 |       |   |   | 12,068 |      
|         |                                            |                                 |   |                    |       |                   |   |        |      |      |   |        |       |   |   |       
|         | Basic income (loss) per share              |                                 | $ | (0.20              | )     |                   | $ | 0.28   |      |      | $ | (0.69  | )     |   | $ | (0.04  | )    
|         |                                            |                                 |   |                    |       |                   |   |        |      |      |   |        |       |   |   |        |      
|Diluted: |                                            |                                 |   |                    |       |                   |   |        |      |      |   |        |       |   |   |       
|         | Net income (loss)                          |                                 | $ | (2,484             | )     |                   | $ | 3,395  |      |      | $ | (8,433 | )     |   | $ | (500   | )    
|         |                                            |                                 |   |                    |       |                   |   |        |      |      |   |        |       |   |   |        |      
|         | Weighted average common shares outstanding |                                 |   | 12,250             |       |                   |   | 12,079 |      |      |   | 12,220 |       |   |   | 12,068 |      
|         | Dilutive stock options                     |                                 |   |                   |       |                   |   | 160    |      |      |   |       |       |   |   |       |      
|         |                                            |                                 |   |                    |       |                   |   |        |      |      |   |        |       |   |   |        |      
|         | Weighted average common shares outstanding |                                 |   | 12,250             |       |                   |   | 12,239 |      |      |   | 12,220 |       |   |   | 12,068 |      
|         |                                            |                                 |   |                    |       |                   |   |        |      |      |   |        |       |   |   |       
|         |                                            | Diluted income (loss) per share |   | $                  | (0.20 | )                 |   | $      | 0.28 |      |   | $      | (0.69 | ) |   | $      | (0.04 | )
|         |                                            |                                 |   |                    |       |                   |   |        |      |      |   |        |       |   |   |        |      

Stock-Based Compensation

We account for our employee stock option plans in accordance with
Accounting Principles Board No. (APB) 25, Accounting for Stock Issued to
Employees. Under APB No. 25, compensation cost is measured as the excess, if
any, of the quoted market price of our stock at the date of grant over the
exercise price of the option granted. Compensation cost for stock options, if
any, is recognized ratably over the vesting period. We provide additional pro
forma disclosures as required under Statement of Financial Accounting Standards
(SFAS) No. 123, Accounting for Stock-Based Compensation and SFAS No. 148,
Accounting for Stock-Based Compensation, Transition and Disclosure in Note 1:
Pro Forma Net Income (Loss) Per Share.

We account for stock issued to non-employees in accordance with the
provisions of SFAS No. 123. Stock option awards issued to non-employees are
accounted for at fair value using the Black-Scholes option pricing model. The
fair value of each non-employee stock award is re-measured at each period end
until a commitment date is reached, which is generally the vesting date.

Pro Forma Net Income (Loss) Per Share

As required by SFAS No. 123, we disclose our pro forma net income (loss)
as if we had accounted for our employee stock purchase plan, employee stock
options and director stock options under the fair value method as prescribed in
SFAS No. 123. We estimate the fair value for these options at the date of grant
using the Black-Scholes option pricing model and the multiple option approach
with the following weighted-average assumptions:

|                         |  |                   |      |                    |  |                   |      |      |  |      |      |      |  |  |      |   |  |  |      |   |  |  |      |  
|------------------------ |  | ----------------- | ---- | ------------------ |  | ----------------- | ---- | ---- |  | ---- | ---- | ---- |  |  | ---- | - |  |  | ---- | - |  |  | ---- | -
|                         |  | Employee Stock    |      |                    |  |                   |      |      |  |      |      |      |  |  |      |   |  | 
|                         |  | Purchase Plan     |      | Stock Option Plans
|                         |  |                   |      |                   
|                         |  | Nine Months Ended |      | Three Months Ended |  | Nine Months Ended
|                         |  | September 30,     |      | September 30,      |  | September 30,    
|                         |  |                   |      |                    |  |                  
|                         |  | 2003              |      | 2002               |  | 2003              |      | 2002 |  | 2003 |      | 2002
|                         |  |                   |      |                    |  |                   |      |      |  |      |      |     
|Expected life (in years) |  |                   | 0.5  |                    |  |                   | 0.5  |      |  |      | 2.6  |      |  |  | 2.87 |   |  |  | 2.64 |   |  |  | 1.77 |  
|Risk-free interest rate  |  |                   | 1.19 | %                  |  |                   | 1.73 | %    |  |      | 2.98 | %    |  |  | 2.24 | % |  |  | 2.78 | % |  |  | 3.12 | %
|Volatility               |  |                   | 74   | %                  |  |                   | 81   | %    |  |      | 52   | %    |  |  | 85   | % |  |  | 61   | % |  |  | 85   | %
|Dividend yield           |  |                   |     |                    |  |                   |     |      |  |      |     |      |  |  |     |   |  |  |     |   |  |  |     |  

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The Black-Scholes option valuation model was intended for use in
estimating the fair value of publicly traded options that have no vesting
restrictions and are fully transferable, which differs significantly from the
terms of our stock option awards. In addition, option valuation models require
the input of highly subjective assumptions, including the expected stock price
volatility and the expected life of the options before exercise, which greatly
affect the calculated grant date fair value. There were no shares valued under
the Employee Stock Purchase Plan during the three months ended September 30,
2003 and 2002. The weighted average estimated fair values of shares at the date
of grant that were issued under the Employee Stock Purchase Plan during the
nine months ended September 30, 2003 and 2002 were $1.10 and $1.09,
respectively. The weighted average fair values at the date of grant of options
which were granted under the employee and directors stock option plans during
the three months ended September 30, 2003 and 2002 were $1.04 and $1.47
respectively. The weighted average fair values at the date of grant of options
that were granted under the employee and director stock option plans during the
nine months ended September 30, 2003 and 2002 were $1.24 and $1.31,
respectively.

SFAS No. 148 amended SFAS No. 123 in December 2002 to require that
disclosures of the pro forma effect of using the fair value method of
accounting for stock-based employee compensation be displayed more prominently
and in a tabular format. The following table illustrates the effect on our net
income (loss) and net income (loss) per share if we had recorded compensation
costs based on the estimated grant date fair value as defined by SFAS No. 123
for all granted stock-based awards.

|                                                                                                 |         |   |                                 |       |                                |   |       |      |      |   |        |       |   |   |        |       |  
|------------------------------------------------------------------------------------------------ | ------- | - | ------------------------------- | ----- | ------------------------------ | - | ----- | ---- | ---- | - | ------ | ----- | - | - | ------ | ----- | -
|                                                                                                 |         |   | Three Months Ended September 30 |       | Nine Months Ended September 30
|                                                                                                 |         |   |                                 |       |                               
|                                                                                                 |         |   | 2003                            |       | 2002                           |   | 2003  |      | 2002
|                                                                                                 |         |   |                                 |       |                                |   |       |      |     
|Net income (loss), as reported                                                                   |         | $ | (2,484                          | )     |                                | $ | 3,395 |      |      | $ | (8,433 | )     |   | $ | (500   | )    
|Add: Stock-based employee compensation
expense included in reported net
loss, net of tax         |         |   |                                |       |                                |   | 5     |      |      |   | 2      |       |   |   | 117    |      
|Deduct: Stock-based compensation
expense
determined under fair value based
method for all awards |         |   | (267                            | )     |                                |   | (532  | )    |      |   | (632   | )     |   |   | (2,128 | )    
|                                                                                                 |         |   |                                 |       |                                |   |       |      |      |   |        |       |   |   |        |      
|Pro forma net income (loss)                                                                      |         | $ | (2,751                          | )     |                                | $ | 2,868 |      |      | $ | (9,063 | )     |   | $ | (2,511 | )    
|                                                                                                 |         |   |                                 |       |                                |   |       |      |      |   |        |       |   |   |        |      
|Reported net income (loss) per share:                                                            |         |   |                                 |       |                                |   |       |      |      |   |        |       |   |   |        |      
|                                                                                                 | Basic   |   | $                               | (0.20 | )                              |   | $     | 0.28 |      |   | $      | (0.69 | ) |   | $      | (0.04 | )
|                                                                                                 | Diluted |   | $                               | (0.20 | )                              |   | $     | 0.28 |      |   | $      | (0.69 | ) |   | $      | (0.04 | )
|Pro forma net income (loss) per share:                                                           |         |   |                                 |       |                                |   |       |      |      |   |        |       |   |   |        |      
|                                                                                                 | Basic   |   | $                               | (0.22 | )                              |   | $     | 0.24 |      |   | $      | (0.74 | ) |   | $      | (0.21 | )
|                                                                                                 | Diluted |   | $                               | (0.22 | )                              |   | $     | 0.23 |      |   | $      | (0.74 | ) |   | $      | (0.21 | )

2. Financial Statement Details

Inventories consist of the following (in thousands):

|                               |  |               |       |              |  |   |       | 
|------------------------------ |  | ------------- | ----- | ------------ |  | - | ----- | 
|                               |  | September 30, |       | December 31,
|                               |  | 2003          |       | 2002        
|                               |  |               |       |             
|Work-in-process                |  | $             | 442   |              |  | $ | 755   | 
|Finished goods                 |  |               | 998   |              |  |   | 933   | 
|Inventory held by distributors |  |               | 698   |              |  |   | 524   | 
|                               |  |               |       |              |  |   |       | 
|Total inventories              |  | $             | 2,138 |              |  | $ | 2,212 | 
|                               |  |               |       |              |  |   |       | 

Property, plant and equipment consist of the following (in thousands):

|                                          |  |               |         |              |  |   |         |  
|----------------------------------------- |  | ------------- | ------- | ------------ |  | - | ------- | -
|                                          |  | September 30, |         | December 31,
|                                          |  | 2003          |         | 2002        
|                                          |  |               |         |             
|Land                                      |  | $             | 2,250   |              |  | $ | 2,850   |  
|Buildings and improvements                |  |               | 7,990   |              |  |   | 8,889   |  
|Machinery and equipment                   |  |               | 11,648  |              |  |   | 11,815  |  
|                                          |  |               |         |              |  |   |         |  
|Property, plant and equipment             |  |               | 21,888  |              |  |   | 23,554  |  
|Accumulated depreciation and amortization |  |               | (15,893 | )            |  |   | (15,462 | )
|                                          |  |               |         |              |  |   |         |  
|Net property, plant and equipment         |  | $             | 5,995   |              |  | $ | 8,092   |  
|                                          |  |               |         |              |  |   |         |  

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Provision for Income Taxes

The provision for income taxes for the three months and nine months ended
September 30, 2003 and three and nine months ended September 30, 2002 consists
of taxes incurred by our subsidiary in the United Kingdom and minimum state tax
obligations. We did not record a benefit for income taxes related to our net
losses in the U.S., as we believe that the available objective evidence creates
sufficient uncertainty regarding the realization of the deferred tax assets
such that we have recorded a full valuation allowance against our deferred tax
assets. The effective tax rate for the three months and nine months ended
September 30, 2003 was 1%. The effective tax rate for the three months ended
September 30, 2002 was impacted by a one time benefit of $3.9 million in tax
refunds generated by the carryback of federal tax losses to prior years.

Comprehensive Income

For the three and nine months ended September 30, 2003 and 2002,
comprehensive income (loss), which consists of the net income (loss) for the
periods and unrealized gain or loss on short-term marketable securities, is as
follows (in thousands):

|                                      |                                               |   |                    |    |                   |   |       |    |      |   |        |     |   |   |      |     |  
|------------------------------------- | --------------------------------------------- | - | ------------------ | -- | ----------------- | - | ----- | -- | ---- | - | ------ | --- | - | - | ---- | --- | -
|                                      |                                               |   | Three Months Ended |    | Nine Months Ended
|                                      |                                               |   | September 30,      |    | September 30,    
|                                      |                                               |   |                    |    |                  
|                                      |                                               |   | 2003               |    | 2002              |   | 2003  |    | 2002
|                                      |                                               |   |                    |    |                   |   |       |    |     
|Net income (loss)                     |                                               | $ | (2,484             | )  |                   | $ | 3,395 |    |      | $ | (8,433 | )   |   | $ | (500 | )  
|Accumulated Other Comprehensive Loss: |                                               |   |                    |    |                   |   |       |    |      |   |        |     |   |   |      |    
|                                      | Unrealized loss on marketable
securities, net |   |                    | (8 | )                 |   |       | (5 | )    |   |        | (22 | ) |   |      | (65 | )
|                                      |                                               |   |                    |    |                   |   |       |    |      |   |        |     |   |   |      |    
|Comprehensive Loss                    |                                               | $ | (2,492             | )  |                   | $ | 3,390 |    |      | $ | (8,455 | )   |   | $ | (565 | )  
|                                      |                                               |   |                    |    |                   |   |       |    |      |   |        |     |   |   |      |    

3. Recent Accounting Pronouncements

In November 2002, the FASB issued FASB Interpretation (FIN) No. 45,
Guarantors Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. FIN No. 45 requires that a
liability be recorded at fair value in the guarantors balance sheet upon
issuance of a guarantee. In addition, FIN No. 45 requires disclosures about the
guarantees that an entity has issued, including a reconciliation of changes in
the entitys product warranty liabilities. The initial recognition and initial
measurement provisions of FIN No. 45 are applicable on a prospective basis to
guarantees issued or modified after December 31, 2002, irrespective of the
guarantors fiscal year-end. We did not have significant warranty expense for
the three months and nine months ended September 30, 2003.

In November 2002 the EITF reached a consensus on EITF Issue No. 00-21,
Accounting for Revenue Arrangements with Multiple Deliverables (EITF Issue
No. 00-21). EITF Issue No. 00-21 provides guidance on how to account for
arrangements that involve the delivery or performance of multiple products,
services and/or rights to use assets. The provisions of EITF Issue No. 00-21
will apply to revenue arrangements entered into in fiscal periods beginning
after June 15, 2003. The adoption of the provisions of EITF Issue No. 00-21
did not have a material impact on our financial position and results of
operations.

4. Operations by Geographic Regions

The following is a summary of operations by geographical regions (in
thousands):

|             |               |   |                    |       |                   |   |       |       |      |   |        |        |  |   |        |        | 
|------------ | ------------- | - | ------------------ | ----- | ----------------- | - | ----- | ----- | ---- | - | ------ | ------ |  | - | ------ | ------ | 
|             |               |   | Three Months Ended |       | Nine Months Ended
|             |               |   | September 30,      |       | September 30,    
|             |               |   |                    |       |                  
|             |               |   | 2003               |       | 2002              |   | 2003  |       | 2002
|             |               |   |                    |       |                   |   |       |       |     
|Net revenue: |               |   |                    |       |                   |   |       |       |      |   |        |        |  |   |        |       
|             | United States |   | $                  | 408   |                   |   | $     | 680   |      |   | $      | 1,369  |  |   | $      | 2,701  | 
|             | Asia          |   |                    | 4,850 |                   |   |       | 7,915 |      |   |        | 13,028 |  |   |        | 18,691 | 
|             | Europe        |   |                    | 503   |                   |   |       | 659   |      |   |        | 2,315  |  |   |        | 2,214  | 
|             | Other         |   |                    | 57    |                   |   |       | 32    |      |   |        | 139    |  |   |        | 156    | 
|             |               |   |                    |       |                   |   |       |       |      |   |        |        |  |   |        |        | 
|Consolidated |               | $ | 5,818              |       |                   | $ | 9,286 |       |      | $ | 16,851 |        |  | $ | 23,762 |       
|             |               |   |                    |       |                   |   |       |       |      |   |        |        |  |   |        |        | 

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|                               |               |   |                    |        |                   |   |      |      |      |   |        |        |   |   |        |        |  
|------------------------------ | ------------- | - | ------------------ | ------ | ----------------- | - | ---- | ---- | ---- | - | ------ | ------ | - | - | ------ | ------ | -
|                               |               |   | Three Months Ended |        | Nine Months Ended
|                               |               |   | September 30,      |        | September 30,    
|                               |               |   |                    |        |                  
|                               |               |   | 2003               |        | 2002              |   | 2003 |      | 2002
|                               |               |   |                    |        |                   |   |      |      |     
|Loss from operations:          |               |   |                    |        |                   |   |      |      |      |   |        |        |   |   |        |       
|                               | United States |   | $                  | (54    | )                 |   | $    | 33   |      |   | $      | (389   | ) |   | $      | (311   | )
|                               | Asia          |   |                    | (2,352 | )                 |   |      | (730 | )    |   |        | (7,292 | ) |   |        | (4,190 | )
|                               | Europe        |   |                    | (66    | )                 |   |      | 32   |      |   |        | (728   | ) |   |        | (264   | )
|                               | Other         |   |                    | (7     | )                 |   |      | 1    |      |   |        | (33    | ) |   |        | (17    | )
|                               |               |   |                    |        |                   |   |      |      |      |   |        |        |   |   |        |        |  
|Consolidated                   |               | $ | (2,479             | )      |                   | $ | (664 | )    |      | $ | (8,442 | )      |   | $ | (4,782 | )     
|                               |               |   |                    |        |                   |   |      |      |      |   |        |        |   |   |        |        |  
|Capital expenditures:          |               |   |                    |        |                   |   |      |      |      |   |        |        |   |   |        |       
|                               | United States |   | $                  | 10     |                   |   | $    | 187  |      |   | $      | 481    |   |   | $      | 259    |  
|                               | Europe        |   |                    |       |                   |   |      |     |      |   |        |       |   |   |        | 23     |  
|                               |               |   |                    |        |                   |   |      |      |      |   |        |        |   |   |        |        |  
|Consolidated                   |               | $ | 10                 |        |                   | $ | 187  |      |      | $ | 481    |        |   | $ | 282    |       
|                               |               |   |                    |        |                   |   |      |      |      |   |        |        |   |   |        |        |  
|Depreciation and amortization: |               |   |                    |        |                   |   |      |      |      |   |        |        |   |   |        |       
|                               | United States |   | $                  | 203    |                   |   | $    | 497  |      |   | $      | 1,032  |   |   | $      | 1,522  |  
|                               | Europe        |   |                    |        |                   |   |      | 83   |      |   |        | 46     |   |   |        | 135    |  
|                               |               |   |                    |        |                   |   |      |      |      |   |        |        |   |   |        |        |  
|Consolidated                   |               | $ | 203                |        |                   | $ | 580  |      |      | $ | 1,078  |        |   | $ | 1,657  |       
|                               |               |   |                    |        |                   |   |      |      |      |   |        |        |   |   |        |        |  

Identifiable assets by geographic region are as follows (in thousands):

|                     |               |   |               |        |              |   |        |        | 
|-------------------- | ------------- | - | ------------- | ------ | ------------ | - | ------ | ------ | 
|                     |               |   | September 30, |        | December 31,
|                     |               |   | 2003          |        | 2002        
|                     |               |   |               |        |             
|Identifiable assets: |               |   |               |        |              |   |        |       
|                     | United States |   | $             | 29,032 |              |   |        | 38,865 | 
|                     | Asia          |   |               | 41     |              |   |        | 41     | 
|                     | Europe        |   |               | 125    |              |   |        | 116    | 
|                     |               |   |               |        |              |   |        |       
|Consolidated         |               | $ | 29,198        |        |              | $ | 39,022 |       
|                     |               |   |               |        |              |   |        |        | 

5. Fixed Assets Impairment and Restructuring Charges

In the
third quarter of 2003, we completed an impairment review of our land
and buildings. The review was undertaken due to continued weakness in
the commercial real estate markets, local vacancy rates and recent
real estate transactions in our local market. Upon completion of our
review, we determined that the carrying values of these assets
exceeded their future undiscounted cashflows. Accordingly, we
recorded an impairment loss of $1.5 million to write down the
assets to their current estimated market value.

On May 19, 2003, we announced a restructuring plan to better align our
organizational structure with current business conditions. This realignment
process included workforce reductions across all functions of the Companys
operations and a consolidation of our design centers into our San Jose
facility. The restructuring charge in the second quarter of 2003 was $1.0
million, consisting primarily of employee severance and related termination
costs of $0.6 million and a fixed asset impairment charge of $0.4 million for
assets to be disposed of due to headcount reductions and vacating facilities.
Additional charges in the third quarter of 2003 were $0.1 million, consisting
primarily of employee severance and relocation costs. During the
third quarter ended September 30, 2003, we paid out
$0.2 million related to the restructuring charges. Our
restructuring accrual was $0.1 million at September 30,
2003.




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

The statements in this report or incorporated by reference which are not
historical are forward-looking statements and include, without limitation,
statements under the caption, Managements Discussion and Analysis of
Financial Condition and Results of Operations. Terms such as may, will,
could, should, project, believe, anticipate, expect, plan,
estimate, forecast, potential, intend, continue and variations of
these words or similar expressions are intended to identify forward-looking
statements.

These forward-looking statements include, but are not limited to,
statements regarding: anticipated revenue from our wireless and networking
products, our beliefs regarding future research and development and selling,
general and administrative expenses and that the level of spending on research
and development to remain near their current levels over the next quarter, our
intentions to continue to focus significant resources on development of new
products and may increase spending as necessary, our beliefs regarding the
impact of our recent corporate restructuring, our beliefs regarding our
accounting policies, our beliefs regarding deferred tax assets, including our
beliefs that the available objective evidence creates sufficient uncertainty
regarding the realization of the deferred tax assets such that we have recorded
a full valuation allowance against our deferred tax assets, our expectation
that international revenue will account for a significant percentage of our
revenue for the next 12 months, our belief that existing cash

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resources are sufficient to fund any anticipated operating losses and
purchases of capital equipment, provide adequate working capital for the next
12 months, and our beliefs regarding certain litigation matters pending against
us.

Forward-looking statements are subject to risks and uncertainties that
could cause actual results to differ materially from those projected. These
risks and uncertainties include, but are not limited, to our dependence on key
products and customers, changes in the demand for our products and seasonal
factors affecting certain of our products, our ability to attract and retain
customers and distribution partners for existing and new products, our ability
to develop and introduce new and enhanced products in a timely manner, our
dependence on international sales and risks associated with international
operations, our dependence on outside foundries and test subcontractors in the
manufacturing process and other outside suppliers, our ability to recruit and
retain qualified employees, and the strength of competitive offerings and the
prices being charged by those competitors, and the risks set forth below under
Factors that May Affect Future Operating Results.

These forward-looking statements are made only as of the date of this
report. We do not undertake to update or revise the forward-looking statements,
whether as a result of new information, future events or otherwise. We caution
you not to give undue weight to any of the forward-looking statements. You
should not regard the inclusion of forward-looking information as a
representation by us or any other person that we will achieve our objectives or
plans.

Critical Accounting Policies

Managements Discussion and Analysis of Financial Condition and Results of
Operations is based upon our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements requires
management to make estimates and assumptions that affect the reported amounts
of assets, liabilities, revenue and expenses, and related disclosure of
contingent assets and liabilities. Management bases its estimates on historical
experience and other assumptions that are believed to be reasonable under the
circumstances. These results form the basis for making judgments about the
carrying values of assets and liabilities that are not readily apparent from
other sources. Senior management has discussed the development, selection and
disclosure of these estimates with the Audit Committee of Micro Linears Board
of Directors. Actual results may differ from these estimates under different
assumptions or conditions. Management believes the following critical
accounting policies reflect its more significant estimates and assumptions used
in the preparation of its consolidated financial statements. They include those
regarding (1) revenue recognition, (2) estimating accrued liabilities and
allowance for doubtful accounts, (3) inventory and related allowance for
obsolete and excess inventory, (4) accounting for income taxes, and (5)
valuation of long-lived and intangible assets.

The critical accounting policies are described in Item 7, Management
Discussion and Analysis of Financial Condition and Results of Operations, of
our Annual Report on Form 10-K for the year ended December 29, 2002.

Overview

Micro Linear is a fabless semiconductor company specializing in high data
rate wireless integrated circuit solutions. These transceivers can be used in
streaming wireless applications such as cordless phones, wireless speakers and
headphones, security cameras, game controllers, headsets and other personal
electronic appliances.

We were founded in 1983 and until 2000, we were a supplier of advanced
analog and mixed signal integrated circuits to the computer, communications,
telecommunications, consumer and industrial markets. During 2000, we divested
our manufacturing test operation and our non-communication product lines and
focused our marketing, engineering and product development on new
communications products, including some wired networking products, but most
notably wireless integrated circuits. During 2001, we established ourselves as
a volume supplier of RF transceivers to the digital cordless telephone segment
of the communications market. Wireless product revenue represented 72% of net
revenue for the third quarter of 2003 compared to 80% of net revenue for the
third quarter of 2002.

On May 19, 2003, we announced a restructuring plan to better align our
organizational structure. This realignment process included workforce
reductions across all functions of the Companys operations and a consolidation
of our design centers into our San Jose facility. The restructuring charge in
the second quarter of 2003 was $1.0 million, consisting primarily of employee
severance and related termination costs of $0.6 million and a fixed asset
impairment charge of $0.4 million for assets to be disposed of due to headcount
reductions and vacating facilities. Additional charges in the third quarter of
2003 were $0.1 million, consisting primarily of employee severance and
relocation costs. During the
third quarter ended September 30, 2003, we paid out
$0.2 million related to the restructuring charges. Our
restructuring accrual was $0.1 million at September 30,
2003.

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Results of Operations

Three Months Ended and Nine Months Ended September 30, 2003 Compared with Three
Months and Nine Months Ended September 30, 2002

Net Revenue

Net revenue for the third quarter of 2003 was $5.8 million, a decrease of 37%
from $9.3 million for the third quarter of 2002. Net revenue for the first nine
months of 2003 decreased 29% to $16.8 million from $23.8 million for the first
nine months of 2002. The decrease in net revenue from the comparable third
quarter of 2002 was primarily due to decreasing selling prices of our wireless
products and a decrease in overall unit sales volume of those products. Unit
volume shipments of our wireless products decreased 13% from the comparable
third quarter of 2002, however unit shipment volumes for the first nine months
of 2003 were 7% greater than the first nine months of 2002. Our average selling
prices for the third quarter of 2003 decreased by 35% from the third quarter of
2002 primarily due to continued competitive pressures in the wireless chipset
market. The decrease in net revenue for the first nine months of 2003 as
compared to the first nine months of 2002 was primarily due to decreasing demand
for our legacy network products, decreases in average selling prices and
continued competitive pressures in the wireless chipset market.

Revenue from wireless products totaled $4.2 million, or 72% of net revenue
for the third quarter of 2003, compared to $7.4 million, or 80% of net revenue
for the third quarter of 2002. Revenue from the sales of wireless products
totaled $11.3 million for the first nine months of 2003 and $16.0 million for
the first nine months of 2002. Revenue from wireless products comprised 67% of
net revenue in the first nine months of 2003 and the first nine months of 2002.
Revenue from networking products for the third quarter of 2003 totaled $1.6
million, or 28% of net revenue compared to $1.9 million, or 20% of net revenue
for the third quarter of 2002. Revenue from sales of networking products for
the first nine months of 2003 totaled $5.5 million compared to $7.8 million of
net revenue for the first nine months of 2002. Revenue from networking
products accounted for 33% of net revenue in the first nine months of 2003 and
the first nine months of 2002.

In the third quarter of 2003 and 2002, Uniden Corporation accounted for
more than 10% of our net revenue. Similarly, for the first nine months of 2003
and 2002, Uniden Corporation accounted for more than 10% of net revenue.

International revenue for the third quarter of 2003 totaled $5.4 million,
or 93% of net revenue compared to $8.6 million, or 92% of net revenue for the
third quarter of 2002. International revenue for the first nine months of 2003
totaled $15.5 million, or 92% of net revenue compared to $21.1 million, or 89%
of net revenue for the first nine months of 2002. Domestic revenue was
approximately 7% of net revenue for the third quarter of 2003 compared to 8%
for the third quarter of 2002. Domestic revenue was approximately 8% of net
revenue for the nine months of 2003 compared to 11% for the first nine months
of 2002.

Gross Margin

Gross margin is affected by the unit volume of product shipments, selling
prices, product mix, manufacturing subcontract costs, manufacturing
utilization, and product yields. It is also periodically affected by costs
incurred in connection with start-up and installation of new process
technologies at outside manufacturing foundries.

Gross margin as a percentage of net revenue for the third quarter of 2003
was 41% compared to 57% in the third quarter of 2002. Gross margin percentage
for the first nine months of 2003 was 44% compared to 57% for the first nine
months of 2003. The decrease in gross margin for both the three and nine months
ended September 30, 2003 was primarily due to low yields from the introduction
of a new wireless transceiver that began shipping in high volumes during the
second quarter of 2003 and a decrease in average selling prices on our wireless
products.

Research and Development Expenses

Research and development expenses include costs associated with the
definition, design and development of new products. In addition, research and
development expenses include test development and prototype costs associated
with new product development.

We expense wafers and production mask sets related to new products as
research and development costs until products based on new designs are fully
characterized, support published data sheets and satisfy reliability tests.

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Research and development expenses for the third quarter of 2003 was $1.7
million, a decrease of $2.2 million or 56% from $3.9 million in the third
quarter of 2002. Research and development expenses for the first nine months of
2003 was $7.5 million, a decrease of $4.7 million or 39% from $12.2 million in
the first nine months of 2002. The decrease in research and development
expenses for both the three and nine months ended September 30, 2003 was
primarily due to the cancellation of our 802.11a broadband wireless product
development effort in October 2002 and our restructuring efforts in the second
quarter of 2003. The Company remains committed to funding new product
development and while we expect the level of spending on research and
development to remain near their current levels over the next quarter, we
intend to continue to focus significant resources on development of new
products and may increase spending as necessary.

Selling, General and Administrative Expenses

Selling, general and administrative (SG&A) expenses for the third quarter
of 2003 decreased 23% to $1.6 million from $2.0 million for the third quarter
of 2002. SG&A expenses for the first nine months of 2003 decreased 5% to $5.8
million from $6.1 million in the first nine months of 2002. The decrease in
SG&A expenses for the third quarter of 2003 compared to the third quarter of
2002 was primarily due to the workforce reductions that occurred in the fourth
quarter of 2002 and the second quarter of 2003. The decrease in SG&A expenses
for the first nine months of 2003 compared with the first nine months of 2002
was primarily due to the two workforce reductions, offset somewhat by increases
in consulting expenses as well as increases in marketing and prototype expenses
associated with the introduction of new products.

Fixed Assets Impairment and Restructuring Charges

In the
third quarter of 2003, we completed an impairment review of our land
and buildings. The review was undertaken due to continued weakness in
the commercial real estate markets, local vacancy rates and recent
real estate transactions in our local market. Upon completion of our
review, we determined that the carrying values of these assets
exceeded their future undiscounted cashflows. Accordingly, we
recorded an impairment loss of $1.5 million to write down the
assets to their current estimated market value.

On May 19, 2003, we announced a restructuring plan to better align our
organizational structure with current business conditions. This realignment
process included workforce reductions across all functions of the Companys
operations and a consolidation of our design centers into our San Jose
facility. The restructuring charge in the second quarter of 2003 was $1.0
million, consisting primarily of employee severance and related termination
costs of $0.6 million and a fixed asset impairment charge of $0.4 million for
assets to be disposed of due to headcount reductions and vacating facilities.
Additional charges in the third quarter of 2003 were $0.1 million, consisting
primarily of employee termination and relocation expenses.

Interest and Other Income and Interest and Other Expense

Interest and other income was $0.1 million for the third quarter of 2003
and 2002. Interest and other income was $0.2 million and $0.6 million in the
first nine months of 2003 and 2002, respectively. The decrease in interest and
other income for the first nine months of 2003 as compared to the nine months
of 2002 was primarily due to the changes in cash balances as well as lower
prevailing interest rates.

Interest and other expense, primarily attributable to a mortgage on our
facilities, was less than $0.1 million in the third quarter of 2003 and 2002.
Interest and other expense was $0.2 million in the first nine months of 2003
and 2002, respectively.

Provision for Income Taxes

The provision for income taxes for the three months and nine months ended
September 30, 2003 and three and nine months ended September 30, 2002 consists
of taxes incurred by our subsidiary in the United Kingdom and minimum state tax
obligations. We did not record a benefit for income taxes related to our net
losses in the U.S., as we believe that the available objective evidence creates
sufficient uncertainty regarding the realization of the deferred tax assets
such that we have recorded a full valuation allowance against our deferred tax
assets. The effective tax rate for the three months and nine months ended
September 30, 2003 was 1%. The effective tax rate for the three months ended
September 30, 2002 was impacted by a one time benefit of $3.9 million in tax
refunds generated by the carryback of federal tax losses to prior years.

Liquidity and Capital Resources

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Net cash used in operating activities was $6.3 million for the first nine
months of 2003. Net cash provided by operating activities was $1.2 million in
the first nine months of 2002. Net cash used in operating activities during the
first nine months of 2003 was due primarily to a net operating loss of $8.4
million, an increase in accounts receivable of $0.6 million, and decreases in
deferred revenue of $0.6 million and accrued liabilities of $0.4 million.
These were partially offset by a non-cash asset impairment charge of $1.5
million, a decrease in other current assets of $1.4 million and non-cash
charges for depreciation and amortization of $1.0 million .

Net cash provided by investing activities was $4.3 million in the first
nine months of 2003 and net cash used in investing activities was $0.7 million
in the comparable period of 2002. Investing activities during these periods
consisted primarily of net sales of short-term investments, which totaled $4.8
million for the nine months of 2003, and net purchases of short-term
investments of $0.7 million for the first nine months of 2002. Capital
expenditures were $0.5 million for the first nine months of 2003 and $0.3
million in the comparable period of 2002.

Cash used in financing activities, consisting of principal payments on our
long-term debt, was $0.1 million in the first nine months of both 2003 and
2002. These principal payments were partially offset by proceeds from the
issuance of common stock.

Working capital amounted to $17.8 million as of September 30, 2003,
compared to $24.3 million as of December 31, 2002. Working capital at September
30, 2003 includes cash and cash equivalents of $8.8 million and short-term
investments of $9.9 million.

We anticipate that existing cash resources are sufficient to fund any
anticipated operating losses, purchases of capital equipment, and provide
adequate working capital for at least the next 12 months. Our liquidity is
affected by many factors, including, among others, the extent to which we
pursue additional wafer fabrication capacity from existing foundry suppliers or
new suppliers, capital expenditures, the level of our product development
efforts, and other factors related to the uncertainties of the industry and
global economies. Accordingly, there can be no assurance that events in the
future will not require us to seek additional capital sooner or, if so
required, that such capital will be available on terms acceptable to us.

Recent Accounting Pronouncements

In November 2002, the FASB issued FASB Interpretation (FIN) No. 45,
Guarantors Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. FIN No. 45 requires that a
liability be recorded at fair value in the guarantors balance sheet upon
issuance of a guarantee. In addition, FIN No. 45 requires disclosures about the
guarantees that an entity has issued, including a reconciliation of changes in
the entitys product warranty liabilities. The initial recognition and initial
measurement provisions of FIN No. 45 are applicable on a prospective basis to
guarantees issued or modified after December 31, 2002, irrespective of the
guarantors fiscal year-end. We did not have significant warranty expense for
the three months and nine months ended September 30, 2003.

In November 2002 the EITF reached a consensus on EITF Issue No. 00-21,
Accounting for Revenue Arrangements with Multiple Deliverables (EITF Issue
No. 00-21). EITF Issue No. 00-21 provides guidance on how to account for
arrangements that involve the delivery or performance of multiple products,
services and/or rights to use assets. The provisions of EITF Issue No. 00-21
will apply to revenue arrangements entered into in fiscal periods beginning
after June 15, 2003. We do not anticipate that adoption of this statement will
have a material impact on our financial position or results of operations.

Factors That May Affect Future Operating Results

The risks and uncertainties described below are not the only ones we face.
If any of the following risks actually occurs, our business, financial
condition or results of operations could be materially and adversely affected:

Our operating results are difficult to predict and are likely to fluctuate
significantly. They may fail to meet or exceed the expectations of securities
analysts or investors, causing our stock price to decline.

Our operating results are difficult to predict and have fluctuated
significantly in the past. They are likely to continue to fluctuate in the
future as a result of many factors, some of which are outside of our control.
Some of the factors that may cause these fluctuations include, but are not
limited to, those listed below and those identified throughout this Factors
That May Affect Future Operating Results section:



| |  | the level and timing of spending by our customers, both in the U.S.
and in foreign markets;
|- |  | -------------------------------------------------------------------------------------------

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| |  | changes in market demand, including seasonal and cyclical
fluctuations;                                                         
|- |  | --------------------------------------------------------------------------------------------------------------------------------
| 
| |  | timing, amount, cancellation or rescheduling of customer orders;                                                                
| 
| |  | the gain or loss of a key customer, design win or order;                                                                        
| 
| |  | fluctuations in manufacturing yields;                                                                                           
| 
| |  | timing of revenue from contracts, which may span several quarters;                                                              
| 
| |  | competitive market conditions and
their effect on average selling prices and gross margins;                                     
| 
| |  | competitive market conditions;                                                                                                  
| 
| |  | new product introductions;                                                                                                      
| 
| |  | market acceptance of new or existing products;                                                                                  
| 
| |  | decline in revenue from products
that are reaching or have been announced as reaching the end of their
respective product lives;
| 
| |  | the timely development, introduction, marketing, and transition to
volume production of new products and technologies;          
| 
| |  | mix of products sold;                                                                                                           
| 
| |  | economic conditions specific to the networking and wireless
industries and markets, as well as general economic conditions;     
| 
| |  | ability to hire and retain qualified technical and other personnel;                                                             
| 
| |  | development of new industry standard communication protocols;                                                                   
| 
| |  | availability and performance of advanced silicon process technologies
from foundry sources;                                     
| 
| |  | ability to transition the
manufacture of products among foundry suppliers or between foundries
operated by the same supplier;   
| 
| |  | international conflicts and acts of terrorism and economic and
political conditions worldwide; and                              
| 
| |  | major health concerns, such as the recurrence of severe acute
respiratory syndrome (SARS).                                    

We believe that period-to-period comparisons of our operating results will
not necessarily be meaningful. You should not rely on these comparisons as an
indication of our future performance. If our operating results in one or more
future periods fail to meet or exceed the expectations of securities analysts
or investors, the trading price of our common stock may decline, possibly by a
significant amount.

The markets in which we operate are intensely competitive, and many competitors
are larger and more established. If we do not compete successfully, we will be
unable to gain market share or enter into new markets.

Intense international and domestic competition, decreasing selling prices,
rapid technological change, short product life cycles and cyclical patterns
characterize the markets for our products. Competitors include significantly
larger corporations. New entrants in these markets could provide additional
competition. Most of our competitors are substantially larger and have greater
financial, technical, marketing and other resources than we do. Many of these
large organizations are in a better position to withstand any significant
reduction in spending by customers in these markets. They often have broader
product lines and market focus, and will therefore not be as susceptible to
downturns in a particular market. These competitors may be able to adapt more
quickly to new or emerging technologies and changes in customer requirements.
In addition, many competitors have focused on the wireless market for longer
than we have, and therefore have more long-standing and established
relationships with domestic and foreign customers. If we fail to compete
successfully, we will be unable to gain market share or enter into new markets.

The computer networking equipment and wireless markets have undergone a
period of rapid growth and consolidation in recent years. We expect our
dependence on sales to network equipment manufacturers to continue. Our
business and results of operations would be materially and adversely affected
in the event of a significant slowdown in the computer networking equipment
market. In addition, as a result of competitive pricing pressures, we have
experienced lower gross margin in some of our products. Such pricing pressures
will continue to have an adverse effect on our results of operations, and our
business could suffer unless they can be offset by higher gross margin on other
products or lower operating expenses.

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We do not currently manufacture our own semiconductor wafers. As a result,
we are vulnerable to process technology advances competitors use to manufacture
products offering higher performance and lower cost. Larger companies with
wafer manufacturing facilities, broader product lines, greater technical and
financial resources and greater service and support capabilities have an
advantage in this market.

In addition, our products are generally sole-sourced to our customers. If
our customers were to develop other sources for our products, our operating
results would suffer.

The market for wireless applications is characterized by rapid technological
change. Our future success depends on our ability to respond to these changes.

Rapidly changing technology, frequent product introductions and evolving
industry standards make it difficult to accurately predict the future growth
rate, size or technological direction of the market for wireless applications.
In view of the evolving nature of this market, suppliers of wireless products
may decide to adopt alternative standards or technologies that are incompatible
with our products. If we are unable to design, develop, manufacture and sell
products that are compatible with these new standards or technologies, our
business and operating results will suffer. We have, in the past, invested
substantial resources in emerging technologies that did not achieve the market
acceptance that we had expected. If new markets do not develop as we
anticipate, or if our products do not gain acceptance in these markets, our
business and operating results will suffer.

If we are unable to develop and introduce new products successfully, and in a
cost-effective and timely manner, or achieve market acceptance of new products,
our business and operating results could suffer.

Continuing technological advancement, changes in customer requirements and
evolving industry standards characterize the wireless and computer equipment
networking markets. To compete successfully, we must design, develop,
manufacture and sell new or enhanced products that:



| |  | provide increasingly higher levels of performance and reliability; 
|- |  | -------------------------------------------------------------------
| 
| |  | meet performance or other objective specified parameters;          
| 
| |  | are cost effective;                                                
| 
| |  | are brought to market in a timely manner;                          
| 
| |  | are in accordance with existing or evolving industry standards; and
| 
| |  | achieve market acceptance.                                         

The development of these new circuits is highly complex. We have sometimes
experienced delays in completing the development and introduction of new
products. Successful product development and introduction depends on many
factors, including:



| |  | ability to predict market requirements and evolving industry
standards;
|- |  | -----------------------------------------------------------------------
| 
| |  | proper new product definition;                                         
| 
| |  | timely completion and introduction of new product designs;             
| 
| |  | availability of foundry capacity;                                      
| 
| |  | acceptable manufacturing yields; and                                   
| 
| |  | market acceptance of our products and our customers products.         

We must be able to adjust to changing market conditions quickly and
cost-effectively to compete successfully. Furthermore, we must introduce new
products in a timely manner, and achieve market acceptance for these products.
In the fourth quarter of 2002, we

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discontinued product development activities for our 802.11a products
because of competitive pressures in the 802.11a product market. In connection
with the discontinuance, we redirected certain engineering activities to focus
on a variety of wireless products. If we are unable to successfully compete in
the wireless product market, our business and operating results will suffer. In
addition, our customers products which incorporate our products must be
introduced in a timely manner and achieve market acceptance. If we, or our
customers, fail to develop and introduce new products successfully, our
business and operating results will suffer.

To successfully develop and market certain of our planned products, we may
need to enter into technology development or licensing agreements with third
parties. If we cannot enter into such agreements on acceptable terms, our
ability to develop and market new products could suffer, and our business and
operating results could be harmed.

Customers typically take a long time to evaluate our new products. It
typically takes three to six months or more for customers to test new products,
and at least an additional three to 12 months until customers begin significant
production of products incorporating our products.

We may, therefore, experience a lengthy delay between product development
and the generation of revenue from new products. Delays inherent in such a long
sales cycle raise additional risks of customer decisions to cancel or change
their product plans. Such changes could result in the loss of anticipated
sales. Our business, financial condition, and results of operations would
suffer if customers reduce or delay orders, or choose not to release products
incorporating our products.

We have a history of losses and, because of continued investment in product
development, expect to incur losses in the future. We may not become
profitable.

We have incurred quarterly net losses from June 2000 through September
2003, except for a profit in the third quarter of 2002 which was attributable
to an income tax refund. Because of those losses, we had an accumulated deficit
of approximately $18.3 million as of September 30, 2003.

Successful engineering development and market penetration in the product
areas we have chosen require high levels of engineering and product development
expense. We intend to continue to spend significant amounts on new product and
technology development. If revenue does not correspondingly increase, our
operating results and financial condition could be harmed. Our networking
products are reaching maturity, and revenue from this product line has declined
and is expected to decline further over the next twelve months. We anticipate
that our existing cash will fund any anticipated operating losses, purchases of
capital equipment, and provide adequate working capital for at least the next
12 months. We expect to incur losses in the future and may not achieve our
additional goals of positive net income and cash flow. As a result, we may not
be able to retain employees, or new product and technology development or sales
and marketing programs to successfully compete against our competitors. For
example, in the fourth quarter of 2002 and in the second quarter of 2003, we
consolidated certain business operations and completed a reduction in our work
force to balance the size of our employee base with our anticipated revenue
levels. There can be no assurance that we will not be required to further
reduce our work force. If we do not achieve or increase profitability in the
future at a level expected by securities analysts or investors, the market
price of our common stock will likely decline.

We recently announced two restructurings of our operations which included
discontinuing certain of our product lines and reductions in force, which could
harm our operating results

In October 2002, we announced the discontinuation of development of our
802.11a products in order to better align our product development activities.
As a part of the restructuring, we reduced our workforce by approximately 39
employees and redirected certain of our engineering activities and reorganized
our sales, marketing and applications functions. In addition, in May 2003, we
announced a corporate restructuring which included the consolidation of some
functions at our headquarters in San Jose, California and included a workforce
reduction of approximately 37 employees. Many factors, such as the reallocation
of responsibilities among remaining personnel, the planned consolidation of our
facilities and employee morale issues, may adversely impact our ability to
deliver our products in accordance with our current plans or customer
expectations, cause delays in the delivery of our products, or lead us to
change our product plans, which in turn may have a negative impact on our
revenues and customer relationships. In addition, the implementation of the
restructurings may itself result in customer concerns regarding our future
performance and our ability to meet their expectations for our products, the
diversion of efforts of our executive management team and other key employees,
and higher than anticipated costs, any of which may harm our operating results.

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To the extent that our existing resources and cash generated from operations
are insufficient to fund our future activities, we may need to raise additional
capital. If funds are not available on acceptable terms, we may not be able to
hire and retain employees, fund our operations or compete effectively.

We believe that our existing capital resources and cash generated from
operations will enable us to maintain our operations for at least the next 12
months. However, if our capital requirements vary materially from those
currently planned, we may require additional financing sooner than anticipated.
If additional funds are raised through the issuance of debt securities, these
securities could have rights, preferences and privileges senior to holders of
common stock, and the terms of this debt could impose restrictions on our
operations. The sale of additional equity or convertible debt securities could
result in additional dilution to our stockholders.

We cannot be certain that additional financing will be available in
amounts or on terms acceptable to us, if at all. If adequate funds are not
available, or are not available on acceptable terms, our ability to hire, train
or retain employees, to fund our operations and sales and marketing efforts,
take advantage of unanticipated opportunities, develop or enhance services or
products, or respond to competitive pressures would be significantly limited,
which could harm our business, financial condition and operating results.

We depend on networking, wireless, and telecommunications spending for our
revenue. Any decrease or delay in spending in these industries would negatively
impact future operating results and financial condition.

Demand for our products in the future will depend on the amount and timing
of spending by network providers, manufacturers of wireless consumer products,
and telecommunications equipment suppliers. Spending in these areas depends
upon a variety of factors, including competitive pressures, discretionary
consumer spending patterns, and general economic conditions.

During 2002 and in the first nine months of 2003, new orders slowed,
customers cancelled or placed holds on existing orders, and orders dropped from
prior periods, due to developments in the general economy and capital markets.
This situation could recur in the future. Because the majority of our revenue
comes from sales to a few customers, a delay in orders from one customer could
have a significant negative effect on future revenue.

Relatively short product life cycles characterize the computer network
equipment and digital cordless telephone markets. If one or more of our
significant customers were to select circuits manufactured by a competitor for
future products, our business will suffer. The loss of one or more of our
current customers, failure to attract new customers, or disruption of our sales
and distribution channels could harm our business and operating results.

We have relied and expect to continue to rely on a limited number of customers
for a significant portion of our revenue. Our revenue could decline due to the
delay of customer orders or if we are unable to maintain or develop
relationships with current or new customers.

A significant majority of our revenue comes from sales to relatively few
customers. Sales to our ten largest customers, excluding domestic distributors,
accounted for approximately 88% and 81% of net revenue for the three months and
nine months ended September 30, 2003 and approximately 90% and 84% of net
revenue for the three and nine months ended September 30, 2002, respectively.
One customer, Uniden Corporation, accounted for 63% of our net revenue for the
third quarter of 2003. Sales to domestic distributors for the three months and
nine months ended September 30, 2003 accounted for approximately 7% and 8% of
net revenue and 4% and 7% of net revenue for the three and nine months ended
September 30, 2002, respectively. We anticipate that a limited number of key
customers, including Uniden Corporation, and distributors will continue to
provide a significant portion of our net revenue for the foreseeable future.
Our future success depends on our ability to retain our current customers and
attract new customers. A reduction, delay or cancellation of orders from one or
more significant customers could materially harm our operating results. In
addition, our operating results could be harmed if one or more of our major
customers were to develop other sources for the products we now supply them.

Because many of our current competitors have pre-existing relationships
with our current and potential new customers, we might not be able to achieve
sufficient market penetration to achieve or sustain profitability. Many of our
competitors have established relationships with our current and potential
customers and can devote substantial resources aimed at preventing us from
establishing or enhancing our customer relationships. If we are unable to gain
additional market share or enter new markets due to these pre-existing
relationships with potential customers, our operating results could be harmed.

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Customers may generally cancel or reschedule orders to purchase standard
products without significant penalty until 30 days prior to shipping. Customers
frequently revise delivery schedules, and the quantities of products to be
delivered, to reflect changes in their needs. Since backlog can be canceled or
rescheduled, our backlog at any time is not necessarily indicative of future
revenue.

We depend on international sales and are subject to the risks associated with
international operations, which may negatively affect our business.

Sales to customers outside of the United States represented approximately
93% and 92% of net revenue for the three months and nine months ended September
30, 2003 and 92% and 89% of net revenue for the three and nine months ended
September 30, 2002, respectively. We expect that international sales will
continue to generate a substantial proportion of net revenue for the
foreseeable future. Our international operations are subject to a number of
risks, including:



| |  | changes in foreign government regulations and telecommunications
standards;                                                                                            
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | import and export legislation and license requirements, tariffs,
taxes, quotas and other trade barriers;                                                               
| 
| |  | compliance with foreign laws, treaties and technical standards;                                                                                                        
| 
| |  | delays resulting from difficulty in obtaining export licenses for
certain technology;                                                                                  
| 
| |  | fluctuations in currency exchange rates;                                                                                                                               
| 
| |  | difficulty in collecting accounts receivable;                                                                                                                          
| 
| |  | difficulty in staffing and managing foreign operations;                                                                                                                
| 
| |  | loss of one or more international distributors;                                                                                                                        
| 
| |  | geopolitical risks, changes in diplomatic and trade relationships and
economic instability;                                                                            
| 
| |  | the effects of the terrorist attacks on the United States, the
United States war on international terrorism and any related conflicts or
similar events worldwide; and
| 
| |  | major health concerns, such as the recurrence of SARS.                                                                                                                 

Substantially all of our international sales must be licensed by the
Office of Export Administration of the U.S. Department of Commerce. If we
experience any significant difficulties in obtaining export licenses, it could
harm out business.

Our international sales are typically denominated in U.S. dollars.
Fluctuations in currency exchange rates could cause our products to become
relatively more expensive to customers in a particular country, while
competitors products denominated in local currencies become less expensive.
This may lead to a reduction in sales or profitability in that country, which
could harm our business.

Gains and losses on the conversion to U.S. dollars of accounts receivable,
accounts payable and other international assets and liabilities may contribute
to fluctuations in operating results. In addition, international customers
typically take longer to pay for purchases than customers in the United States.
If foreign markets do not continue to develop, or foreign sales cycles prove
unpredictable, our revenue and business may be harmed.

Selling prices for networking and wireless products typically decrease, which
could lead to lower operating results.

Average selling prices for products in the networking and wireless markets
have rapidly declined due to many factors, including:



| |  | rapidly changing technologies;       
|- |  | -------------------------------------
| 
| |  | price-performance enhancements;      
| 
| |  | product introductions by competitors;

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| |  | price pressure from significant customers; and
|- |  | ----------------------------------------------
| 
| |  | product maturity and obsolescence.            

The decline in the average selling prices of our products may cause
substantial fluctuations in our operating results. We continue to develop and
market new products that incorporate valued new features and sell at higher
prices. Failure to deliver new products offering increased value would result
in a decline in both revenue and gross margin, harming our business, financial
condition, and results of operations.

Revenue from our networking
products, most of which are reaching or have been announced as
reaching the end of their respective product lives, could continue to
decline and harm our business.

Most of
out networking products are reaching or have been announced as
reaching the end of their respective product lives and revenue from these products will continue to decline
and we will eventually stop shipping these products. If we are not
successful in increasing demand for our current network products or
in introducing and gaining acceptance of new products our overall
revenue could continue to decline, which would harm our business and
operating results.

Defects in our products, product returns and product liability could result in
a decrease in customers and revenue, unexpected expenses and loss of market
share, any of which could harm our business.

Complex products such as ours frequently contain errors, defects, and bugs
upon release. Despite thorough testing by Micro Linear, our test houses and
customers, these errors, defects and bugs are sometimes discovered after we
begin to ship products. We expend significant resources to remedy these
problems, but occasionally have faced legal claims by customers and others.
Product defects can also cause interruptions, delays or cancellations of sales
to customers, in addition to claims against us, any of which could harm our
business and operating results.

We depend on the health of the semiconductor industry, which is highly
cyclical. The decline in demand in the semiconductor industry could harm our
financial condition and results of operations.

The semiconductor industry experiences significant downturns and wide
fluctuations in supply and demand. The industry also experiences significant
fluctuations in anticipation of changes in general economic conditions. This
causes significant variances in product demand and production capacity, and
aggravates selling price fluctuations. These cyclical patterns, which we expect
to continue, may substantially harm our business, financial condition, and
results of operations.

If we fail to adequately forecast demand for our products, we may incur product
shortages or excess product inventory.

We regularly request indications from customers as to their future plans
and requirements, to ensure that we will be prepared to meet production demand
for our products. However, we may not receive anticipated purchase orders for
our products. We must be able to effectively manage the expenses and inventory
risks associated with meeting potential demand. If we fail to meet customers
supply expectations, we may lose business from such customers. If we expend
resources and purchase materials, or enter into commitments to acquire
materials and manufacture products, and customers do not purchase these
products, our business and operating results could be harmed.

Design wins, which require significant expenditures, often precede the
generation of volume sales by a year or more. The value of any design win will
largely depend upon the commercial success of the customers product, and on
the extent to which the design of the customers product accommodates
components manufactured by our competitors. We cannot assure that we will
achieve design wins, or that any design win will result in significant future
revenue.

We depend on a limited number of outside foundries and test subcontractors in
the manufacturing process, and any failure to obtain sufficient foundry or
testing capacity could significantly delay our ability to ship our products,
damage our customer relationships, and result in reduced revenue.

We utilize outside foundries for all wafer production. We believe that
utilizing outside foundries enable us to focus on our design strengths,
minimize fixed costs and capital expenditures and access diverse manufacturing
technologies. We currently intend to continue to rely exclusively upon our
outside foundries for our wafer fabrication requirements. However, there are
significant risks associated with the reliance on outside foundries, including
the lack of assured wafer supply and control over delivery schedules, delays in
obtaining access to key process technologies, and limited control over
manufacturing yields and production costs.

The manufacture of integrated circuits is a highly complex and technically
demanding process. We have diversified our sources of wafer supply and have
worked closely with our foundries to minimize the likelihood of reduced
manufacturing yields. However, our foundries have sometimes experienced lower
than anticipated manufacturing yields, particularly in connection with the
introduction of new products and the installation and start-up of new
processes. Reduced yields have, at times, negatively affected our operating
results, a situation which may recur in the future.

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Dependence on foundries located outside of the United States subjects us
to numerous risks, including exchange rate fluctuations, export and import
restrictions, trade sanctions, political and labor instability and tariff
increases. Our main foundries are located in Singapore and Hong Kong, which
presents specific risks,including political instability and health concerns
related to the recent outbreak of cases of SARS.

We purchase wafers from outside foundries pursuant to customers purchase
orders. We generally do not have a guaranteed level of wafer capacity or wafer
costs at our foundries. Our wafer suppliers could prioritize capacity for other
uses, or reduce or eliminate deliveries to us on short notice. In addition, we
depend upon a limited number of foundries for our wafer requirements. Any
sudden demand for an increased amount of wafers, or sudden reduction or
elimination of any source of wafers, could result in a material delay in the
shipment of products. Disruptions in supply, which have occurred in the past,
may occur in the future. If such a disruption occurred, and we were unable to
qualify alternative manufacturing sources for our products in a timely manner,
or if such sources were unable to produce wafers with acceptable manufacturing
yields, our business and operating results could be materially harmed.

We rely on two outside test service subcontractors to test our products.
The same risks described in the paragraphs above, concerning guaranteed
capacity, dependence upon a limited number of test service subcontractors, and
disruptions in service, also apply to our test and assembly subcontractors.

Rapid technological change and frequent new product introductions
characterize the markets for our products. To remain competitive, we must
develop or obtain access to new semiconductor process technologies in order to
reduce die size, increase die performance and functional complexity, and
improve manufacturing yields. If we are unable to obtain access to advanced
wafer processing technologies, limiting our ability to introduce competitive
products on a timely basis, our future operating results may be harmed.

Minute levels of contaminants in the semiconductor manufacturing
environment, defects in the masks used to print circuits on a wafer,
difficulties in the fabrication process and other factors can cause a
substantial percentage of wafers to be rejected or a significant number of die
on each wafer to be nonfunctional. Many of these manufacturing problems are
difficult to diagnose and time consuming and expensive to remedy. Our foundries
have, at times, experienced lower than anticipated yields, which have adversely
affected production and operating results.

The manufacturing processes utilized by our foundries are continuously
being improved in order to increase yield and product performance. Process
changes can, however, result in interruptions in production or significantly
reduced yields. New process technologies or new products are especially
susceptible to wide variations in manufacturing yields and efficiency.
Irregularities, adverse yield fluctuations or other manufacturing problems at
our foundries could result in production interruption or delivery delays,
harming our business and results of operations.

Changes
in technology and in available foundry capacity sometimes require us
to migrate products between foundry suppliers or among foundries
operated by the same supplier. In addition, our current foundry
suppliers may choose to open new foundries or close existing
foundries and this may require us to migrate the manufacture of our
products among their foundries. If we are unable to find new
foundries for our products or experience difficulties in the
manufacture of our products as a result of migrating products between
foundry suppliers, our business and operating results may be harmed.

We have granted nontransferable, limited process licenses to some of our
foundries to utilize our processes to manufacture and sell wafers to other
customers. We protect our proprietary technology, particularly our design
methodology, but may not be able to prevent its misappropriation by our
foundries or others.

We and the independent foundries and subcontractors we use to manufacture and
test our products are subject to environmental laws. Failure to comply with
these laws could delay manufacturing of our products and result in unexpected
expenses.

Our wafer suppliers and test and assembly subcontractors are subject to a
variety of U.S. and foreign government regulations related to the discharge or
disposal of toxic, volatile or otherwise hazardous chemicals used in their
manufacturing processes. Failure by our suppliers or subcontractors to comply
with environmental regulations could result in fines, suspension of production
or cessation of operations. Environmental regulations could also require our
suppliers or subcontractors to acquire equipment or incur other expenses to
comply with environmental regulations. If our suppliers or subcontractors incur
substantial additional expenses, product costs could significantly increase,
harming our results of operations.

We are also subject to a variety of environmental regulations relating to
our operations. If we fail to comply with present and future regulations, the
government could impose fines on us, or compel us to suspend or cease
operations. If we or our suppliers or subcontractors fail to control the use or
discharge of hazardous substances, we could be subject to civil or criminal
liabilities, which could harm our business and operating results.

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Because competition for qualified personnel is intense, we may not be
successful in attracting and retaining personnel, which could have an impact
upon the development or sales of our products.

Our future success will depend to a significant extent on our ability to
attract, retain and motivate personnel, especially those with engineering
design experience and expertise. We may not be successful in attracting and
retaining such personnel.In the fourth quarter of 2002 and in the second
quarter of 2003, we consolidated certain business operations and completed a
reduction in our work force to balance the size of our employee base with our
anticipated revenue levels. Reductions in our workforce could make it difficult
to motivate and retain remaining employees or attract needed new employees, and
provide distractions affecting our ability to develop new products and
technologies and deliver products in a timely fashion.

Competitors may attempt to recruit our employees. While employees are
required to sign standard agreements concerning confidentiality and ownership
of inventions, we do not have employment contracts or non-competition
agreements with most of our personnel. The loss of the services of key
employees, the inability to attract or retain qualified personnel, or delays in
hiring personnel, particularly engineers and other technical personnel, could
negatively affect our business and prevent us from achieving our business
goals.

Our success depends on our ability to protect our intellectual property and
proprietary rights.

We currently own 11 U.S. patents, and have six U.S. patent applications
and 17 foreign patent applications pending. Through a sale of a portion of our
assets, we maintain a royalty-free license to 45 U.S. patents, three foreign
patents, seven U.S. patent applications, and three foreign patent applications.

We attempt to protect our intellectual property rights through patents,
trademarks, copyrights, licensing arrangements, maintaining certain technology
as trade secrets and other measures. However, any patent, trademark, copyright
or other intellectual property rights we own may be invalidated, circumvented
or challenged. We cannot be certain that our intellectual property rights will
provide competitive advantages, or that any pending or future patent
applications will be issued with the scope of the claims sought by us.
Competitors may develop technologies that are similar or superior to our
technology, duplicate our technology or design around the patents that we own.
In addition, effective patent, copyright and trade secret protection may be
unavailable or limited in certain foreign countries in which we do business.

We believe that the future success of our business will depend on our
ability to translate technological expertise and innovation into new and
enhanced products. We enter into confidentiality or license agreements with our
employees, consultants, vendors and customers, and limit access to and
distribution of our proprietary information. Nevertheless, we may not be able
to prevent misappropriation of our technology.

In addition, we have taken legal action to enforce our patents and other
intellectual property rights, protect our trade secrets, determine the validity
and scope of the proprietary rights of others, and defend against claims of
infringement or invalidity. If a third party makes a valid claim, and we cannot
obtain a license to the technology on reasonable terms, our operations could be
harmed.

We may be subject to legal proceedings and claims from time to time in the
ordinary course of our business, including claims of alleged infringement of
the proprietary rights and other intellectual property rights of third parties.
Intellectual property litigation is expensive and time-consuming, and could
divert our managements attention away from running our business.

We have in the past, and may in the future, be parties to legal proceedings
that could have a negative financial impact on us.

In December 1995, Pioneer Magnetics, Inc. (Pioneer) filed a complaint in
the Federal District Court for the Central District of California alleging that
certain of our integrated circuits violate a Pioneer patent. Pioneer sought
monetary damages and an injunction against the alleged patent violation. The
District Court concluded that Micro Linear did not infringe on Pioneers
patent. Pioneer then appealed the District Courts decision to the Court of
Appeals for the Federal Circuit, which affirmed the District Courts Judgment.
In May 2001, Pioneer filed a petition for appeal with the Supreme Court. On
June 3, 2002, the Supreme Court granted the petition, vacated the judgment, and
remanded the case to the Court of Appeals for further consideration, in light
of the recently decided case of Festo Corp. v. Shoketsu Kinzoku Kogyo
Kabushiki. On June 2, 2003, the Court of Appeals for the Federal Circuit
affirmed the District Courts judgment. Pioneer may petition the Supreme Court for a writ of certiorari to
review the Federal Circuits judgment. Although we believe that this claim is
unwarranted and without merit, we cannot provide any assurance as to the
outcome of this proceeding.

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From time to time we have received correspondence from vendors,
distributors, customers or end-users of our products regarding disputes with
respect to contract rights, product performance or other matters that occur in
the ordinary course of business. Some of these disputes may involve us in
costly litigation or other actions, the outcome of which cannot be determined
in advance and may harm our business. The defense of lawsuits or other actions
could divert our managements attention away from running our business. In
addition, negative developments with respect to litigation could cause the
price of our common stock to decline significantly.

Recently enacted and proposed regulatory changes may cause us to incur
increased costs.

Recently enacted and proposed changes in the laws and regulations
affecting public companies, including the provisions of the Sarbanes-Oxley Act
of 2002 and rules adopted and proposed by the Securities and Exchange
Commission and the Nasdaq Stock Market could cause us to incur increased costs
as we evaluate the implications of new rules and respond to new requirements.
The new rules could make it more difficult for us to obtain certain types of
insurance, including director and officer liability insurance, and we may be
forced to accept reduced policy limits and coverage or incur substantially
higher costs to obtain the same or similar coverage. The impact of these events
could also make it more difficult for us to attract and retain qualified
persons to serve on our board of directors, or as executive officers. We are
presently evaluating and monitoring developments with respect to these new and
proposed rules, and we cannot predict or estimate the amount of additional
costs we may incur or the timing of such costs.

Our stock price has been and will likely continue to be volatile because of
stock market fluctuations that affect the price of technology stocks. A decline
in our stock price could result in securities class action litigation against
us, which could divert managements attention and harm our business.

Our stock price has been and is likely to continue to be highly volatile.
Between January 1, 2003 and September 30, 2003, our stock price has traded as
high as $4.00 on February 20, 2003, and as low as $2.47 on June 9, 2003. Our
stock price could fluctuate significantly due to a number of factors,
including:



| |  | variations in our actual or anticipated operating results;                                                        
|- |  | ------------------------------------------------------------------------------------------------------------------
| 
| |  | sales of substantial amounts of our stock;                                                                        
| 
| |  | announcements about us or about our competitors, including
technological innovation or new products;              
| 
| |  | litigation and other developments relating to our patents or other
proprietary rights or those of our competitors;
| 
| |  | conditions in the computer networking equipment and wireless markets;                                             
| 
| |  | governmental regulation and legislation; and                                                                      
| 
| |  | changes in securities analysts estimates of our performance, or
our failure to meet analysts expectations.      

Many of these factors are beyond our control. In addition, the stock
markets in general, and the Nasdaq National Market and the market for
technology companies in particular, have experienced extreme price and volume
fluctuations recently. These fluctuations often have been unrelated or
disproportionate to the operating performance of these companies. These broad
market and industry factors may decrease the market price of our common stock,
regardless of our actual operating performance. In the past, companies that
have experienced volatility in the market prices of their stock have been the
object of securities class action litigation. If we were the object of
securities class action litigation, it could result in substantial costs and a
diversion of managements attention and resources, which could harm our
business.

Our Certificate of Incorporation and Bylaws, Stockholder Rights Plan and
Delaware law contain provisions that could discourage a change in control, even
if the change in control would be beneficial to our stockholders.

Provisions of our Amended and Restated Certificate of Incorporation,
Bylaws, the 1998 Shareholder Rights Plan, our stock option plans and Delaware
law could make it more difficult for a third party to acquire us, even if doing
so would be beneficial to our stockholders. These provisions could limit the
price that investors might be willing to pay in the future for shares of our
common stock.

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Under the Shareholder Rights Plan, adopted in August 1998, each share of
our outstanding common stock carries one Right to purchase 1/1000 of a share of
Series A Participating Preferred Stock at an exercise price of $30.00 per
Right. If someone acquires 15% or more of our common stock, each Right not
owned by a holder of 15% or more of our common stock entitles the holder, upon
payment of the $30.00 exercise price, to receive common stock having a current
market value of $60.00. This issuance of additional common stock would
significantly reduce the percentage of common stock held by a potential
acquirer. The Rights expire in August 2008.

In addition, Section 203 of the Delaware General Corporation Law and the
terms of our stock option plans may discourage, delay or prevent a change in
control of Micro Linear. Specifically, Section 203 prohibits a Delaware
corporation from engaging in any business combination with an interested
stockholder for three years after the date the stockholder became an interested
stockholder unless specific conditions are met. Also, in the event outstanding
options granted pursuant to certain of our stock option plans are not assumed
by an acquiring corporation, the unvested portion of such options may be
accelerated upon a change of control. In addition, some individual stock option
grants provide for the partial or complete acceleration of vesting upon a
change of control.




Item 3.Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

As September 30, 2003, our investment portfolio consisted of U.S.
government obligations, commercial paper and money market funds, typically with
maturities of less than 12 months. Some of these securities are subject to
interest rate risk, and will decline in value if market interest rates
increase. We intend to hold our fixed income investments until maturity and,
therefore, do not expect to recognize an adverse impact from interest rate
changes on income or cash flows. If market interest rates were to increase
immediately and uniformly by 10% as of September 30, 2003 and September 30,
2002, the decline in the fair value of the portfolio would not be material.

Foreign Currency Exchange Risk

We have international facilities and are, therefore, subject to foreign
currency rate exposure. We limit our foreign currency risks principally by
maintaining minimal foreign currency balances. Since our exposure related to
exchange rate volatility has not been significant, we do not currently hedge
this exposure.




Item 4.Controls and Procedures

(a)  Evaluation of disclosure controls and procedures.We maintain
disclosure controls and procedures, as such term is defined in Rule 13a-15(e)
under the Securities Exchange Act of 1934 (the Exchange Act), that are
designed to ensure that information required to be disclosed by us in reports
that we file or submit under the Exchange Act is recorded, processed,
summarized, and reported within the time periods specified in Securities and
Exchange Commission rules and forms, and that such information is accumulated
and communicated to our management, including our Chief Executive Officer and
Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure. In designing and evaluating our disclosure controls and
procedures, management recognized that disclosure controls and procedures, no
matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the disclosure controls and
procedures are met. Additionally, in designing disclosure controls and
procedures, our management necessarily was required to apply its judgment in
evaluating the cost-benefit relationship of possible disclosure controls and
procedures. The design of any disclosure controls and procedures also is based
in part upon certain assumptions about the likelihood of future events, and
there can be no assurance that any design will succeed in achieving its stated
goals under all potential future conditions.

Based on their evaluation as of the end of the period covered by this
Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial
Officer have concluded that, subject to the limitations noted above, our
disclosure controls and procedures were effective to ensure that material
information relating to us, including our consolidated subsidiaries, is made
known to them by others within those entities, particularly during the period
in which this Quarterly Report on Form 10-Q was being prepared.

(b)  Changes in internal control over financial reporting.There was no
change in our internal control over financial reporting (as defined in Rule
13a-15(f) under the Exchange Act) identified in connection with the evaluation
described in Item 4(a) above that occurred during our last fiscal quarter that
has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.

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PART II. OTHER INFORMATION




Item 1.Legal Proceedings

In December 1995, Pioneer Magnetics, Inc. (Pioneer) filed a complaint in
the Federal District Court for the Central District of California alleging that
certain of our integrated circuits violate a Pioneer patent. Pioneer sought
monetary damages and an injunction against the alleged patent violation. The
District Court concluded that Micro Linear did not infringe on Pioneers
patent. Pioneer then appealed the District Courts decision to the Court of
Appeals for the Federal Circuit, which affirmed the District Court judgment. In
May 2001, Pioneer filed a petition for appeal with the Supreme Court.
On June 3, 2002, the Supreme Court granted the petition, vacated the judgment, and
remanded the case to the Court of Appeals for further consideration, in light
of the recently decided case of Festo Corp. v. Shoketsu Kinzoku Kogyo
Kabushiki. On June 2, 2003, the Court of Appeals for the Federal Circuit
affirmed the District Courts judgment. Pioneer may petition the Supreme Court for a writ of certiorari to
review the Federal Circuits judgment. Although we believe that this claim is
unwarranted and without merit, we cannot provide any assurance as to the
outcome of this proceeding.

From time to time we receive correspondence from vendors, distributors,
customers or end-users of our products regarding disputes with respect to
contract rights, product performance or other matters that occur in the
ordinary course of business. Some of these disputes may involve us in costly
litigation or other actions, the outcome of which cannot be determined in
advance and may adversely affect our business. The defense of lawsuits or other
actions could divert our managements attention away from running our business.
In addition, negative developments with respect to litigation could cause the
price of our common stock to decline significantly.




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

The registrants Annual Meeting of Stockholders was held on August 6,
2003.

The following actions were taken at the annual meeting:

1. The following Directors were elected

|                   |  |     |            |          |  |  |         | 
|------------------ |  | --- | ---------- | -------- |  |  | ------- | 
|                   |  | For |            | Withheld
|                   |  |     |            |         
|Timothy Richardson |  |     | 11,181,148 |          |  |  | 431,889 | 
|David Gellatly     |  |     | 11,163,471 |          |  |  | 449,566 | 
|William Pohlman    |  |     | 11,530,005 |          |  |  | 83,032  | 
|Joseph Rizzi       |  |     | 11,513,582 |          |  |  | 99,455  | 
|A. Thampy Thomas   |  |     | 11,530,005 |          |  |  | 83,032  | 

2. The ratification of the appointment of PricewaterhouseCoopers LLP as
our independent auditors for the year ending December 31, 2003 was approved.

|           |  |         |       |         |  |  |       | 
|---------- |  | ------- | ----- | ------- |  |  | ----- | 
|For        |  | Against |       | Abstain
|           |  |         |       |        
|11,604,372 |  |         | 6,265 |         |  |  | 2,400 | 

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Item 6.Exhibits and Reports on Form 8-K

(a) Exhibits:

|        |  |                                                            
|------- |  | -----------------------------------------------------------
|Exhibit |  |                                                            
|Number  |  | Description of Document                                    
|        |  |                                                            
|31.1    |  | Rule 13a-14(a) Certification by the Chief Executive Officer
|31.2    |  | Rule 13a-14(a) Certification by the Chief Financial Officer
|32.1    |  | Section 1350 Certification by the Chief Executive Officer  
|32.2    |  | Section 1350 Certification by the Chief Financial Officer. 

(b) Reports on Form 8-K

On July 24, 2003, the Company filed a Current Report on Form 8-K
furnishing under item 12 the Companys press release relating to its financial
results for the quarter ended June 30, 2003.

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SIGNATURES

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

|                        |  |                          |  |                                             
|----------------------- |  | ------------------------ |  | --------------------------------------------
|                        |  | MICRO LINEAR CORPORATION
|                        |  |                          |  |                                             
|Date: November 12, 2003 |  | By                       |  | /s/ TIMOTHY A. RICHARDSON                   
|                        |  |                          |  |                                             
|                        |  |                          |  | Timothy A. Richardson                       
|                        |  |                          |  | President and Chief Executive Officer       
|                        |  |                          |  | (Principal Executive Officer)               
|                        |  |                          |  |                                             
|Date: November 12, 2003 |  | By                       |  | /s/ MICHAEL W. SCHRADLE                     
|                        |  |                          |  |                                             
|                        |  |                          |  | Michael W. Schradle                         
|                        |  |                          |  | Chief Financial Officer                     
|                        |  |                          |  | (Principal Financial and Accounting Officer)

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INDEX TO EXHIBITS

|        |  |                                                            
|------- |  | -----------------------------------------------------------
|Exhibit |  |                                                            
|Number  |  | Description of Document                                    
|        |  |                                                            
|31.1    |  | Rule 13a-14(a) Certification by the Chief Executive Officer
|31.2    |  | Rule 13a-14(a) Certification by the Chief Financial Officer
|32.1    |  | Section 1350 Certification by the Chief Executive Officer  
|32.2    |  | Section 1350 Certification by the Chief Financial Officer. 

28