##### 



UNITED STATES SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549FORM 10-Q

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

For Quarterly Period Ended March 31, 2002

[   ] 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 000-30251

TRITON NETWORK SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 59-3434350                          
|                                                               |  |                                     
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)

PO Box 5590, Winter Park, Florida 32793-5590
(Address of principal executive offices) (Zip Code)

(407) 492-9020
Registrants telephone number, including area code

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 [   ] No [X]

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

|                               |  |                             
|------------------------------ |  | ----------------------------
|Common Stock, $0.001 par value |  | 35,185,213 Shares           
|                               |  |                             
|Class                          |  | Outstanding at July 10, 2002





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##### 



TRITON NETWORK SYSTEMS, INC.

INDEX

|          |  |                                                                                                          |  |         
|--------- |  | -------------------------------------------------------------------------------------------------------- |  | --------
|          |  |                                                                                                          |  | Page No.
|          |  |                                                                                                          |  |         
|PART I    |  | FINANCIAL INFORMATION                                                                                    |  |         
|         
|Item 1.   |  | Consolidated Financial Statements                                                                        |  |         
|         
|          |  | Consolidated Statements of Net Assets in Liquidation at
March 31, 2002 and December 31, 2001             |  | 3       
|         
|          |  | Consolidated Statement of Changes in Net Assets in
Liquidation for the three months ended March 31, 2002 |  | 4       
|         
|          |  | Consolidated Statement of Operations for the three months
ended March 31, 2001 (Going Concern Basis)     |  | 5       
|         
|          |  | Consolidated Statement of Cash Flows for the three months
ended March 31, 2001 (Going Concern Basis)     |  | 6       
|         
|          |  | Notes to Consolidated Financial Statements                                                               |  | 7       
|         
|Item 2.   |  | Managements Discussion and Analysis of Financial
Condition and Results of Operations                    |  | 11      
|         
|Item 3.   |  | Quantitative and Qualitative Disclosures about Market
Risk                                               |  | 16      
|         
|PART II   |  | OTHER INFORMATION                                                                                        |  |         
|         
|Item 1.   |  | Legal Proceedings                                                                                        |  | 17      
|         
|Item 2.   |  | Change in Securities and Use of Proceeds                                                                 |  | 18      
|         
|Item 3.   |  | Defaults in Senior Securities                                                                            |  | 18      
|         
|Item 4.   |  | Submission of Matters to a Vote of Security Holders                                                      |  | 18      
|         
|Item 5.   |  | Other Information                                                                                        |  | 19      
|         
|Item 6.   |  | Exhibits and Reports on Form 8-K                                                                         |  | 19      
|         
|Signature |  |                                                                                                          |  | 21      

2



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##### 



PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

TRITON NETWORK SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF NET ASSETS IN LIQUIDATION

|                          |                                        |                   |            |                   |            |                |            |             |            | 
|------------------------- | -------------------------------------- | ----------------- | ---------- | ----------------- | ---------- | -------------- | ---------- | ----------- | ---------- | 
|                          |                                        |                   |            | December 31, 2001 |            | March 31, 2002
|                          |                                        |                   |            |                   |            |               
|                          |                                        |                   |            |                   |            |                |            | (Unaudited)
|ASSETS                    |                                        |                   |            |                   |            |                |            |            
|                          | Cash and cash equivalents              |                   | $          | 18,913,364        |            |                | $          | 24,282,689  |           
|                          | Short-term investments                 |                   |            | 15,690,415        |            |                |            | 6,500,000   |           
|                          | Receivables                            |                   |            | 3,597,746         |            |                |            | 2,913,944   |           
|                          | Prepaid expenses                       |                   |            | 525,073           |            |                |            | 1,711,663   |           
|                          | Other assets                           |                   |            | 521,350           |            |                |            | 684,343     |           
|                          |                                        |                   |            |                   |            |                |            |            
|                          |                                        | Total assets      |            |                   | 39,247,948 |                |            |             | 36,092,639 | 
|LIABILITIES               |                                        |                   |            |                   |            |                |            |            
|                          | Accounts payable                       |                   | $          | 1,307,940         |            |                | $          | 381,963     |           
|                          | Accrued compensation                   |                   |            | 1,246,698         |            |                |            | 104,547     |           
|                          | Other liabilities and accrued expenses |                   |            | 885,571           |            |                |            | 761,457     |           
|                          | Accrued vendor settlement costs        |                   |            | 500,000           |            |                |            |            |           
|                          | Accrued litigation costs               |                   |            | 5,500,000         |            |                |            | 5,500,000   |           
|                          |                                        |                   |            |                   |            |                |            |            
|                          |                                        | Total liabilities |            |                   | 9,440,209  |                |            |             | 6,747,967  | 
|NET ASSETS IN LIQUIDATION |                                        | $                 | 29,807,739 |                   |            | $              | 29,344,672 |            
|                          |                                        |                   |            |                   |            |                |            |            

See accompanying notes.

3



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##### 



TRITON NETWORK SYSTEMS, INC.

CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION

Period from January 1, 2002 through March 31, 2002
(Unaudited)

|                                                |                                                                                            |                                                     |            |          |         | 
|----------------------------------------------- | ------------------------------------------------------------------------------------------ | --------------------------------------------------- | ---------- | -------- | ------- | 
|Net assets in liquidation as of January 1, 2002 |                                                                                            | $                                                   | 29,807,739 |         
|Changes in net assets in liquidation:           |                                                                                            |                                                     |            |         
|                                                | Ongoing costs incurred during liquidation                                                  |                                                     |            | (696,832 | )      
|                                                | Costs of broadband modem operation through the
date of sale                                |                                                     |            | (727,531 | )      
|                                                | Proceeds from sale of assets in excess of estimated
realizable value at December 31, 2001: |                                                     |            |          |        
|                                                |                                                                                            | Broadband modem operation and intellectual
property |            |          | 203,000 | 
|                                                |                                                                                            | Stock of privately held company                     |            |          | 200,000 | 
|                                                | Interest income                                                                            |                                                     |            | 280,125  |        
|                                                | Adjust assets and liabilities to fair value                                                |                                                     |            | 278,171  |        
|                                                |                                                                                            |                                                     |            |         
|                                                | Total changes in net assets in liquidation                                                 |                                                     |            | (463,067 | )      
|                                                |                                                                                            |                                                     |            |         
|Net assets in liquidation as of March 31, 2002  |                                                                                            | $                                                   | 29,344,672 |         
|                                                |                                                                                            |                                                     |            |         

See accompanying notes

4



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##### 



TRITON NETWORK SYSTEMS, INC.

CONSOLIDATED STATEMENT OF OPERATIONS

Three Months Ended March 31, 2001
(Unaudited)

|                                                         |                                            |                          |             |           |            | 
|-------------------------------------------------------- | ------------------------------------------ | ------------------------ | ----------- | --------- | ---------- | 
|Revenues:                                                |                                            |                          |             |          
|                                                         | Products                                   |                          | $           | 6,249,304 |           
|                                                         | Services                                   |                          |             | 1,278,888 |           
|                                                         |                                            |                          |             |          
|                                                         |                                            | Total revenues           |             |           | 7,528,192  | 
|Cost of revenues:                                        |                                            |                          |             |          
|                                                         | Provision for estimated excess inventory   |                          |             | 6,500,000 |           
|                                                         | Other                                      |                          |             | 6,317,399 |           
|                                                         |                                            |                          |             |          
|                                                         |                                            | Total cost of revenues   |             |           | 12,817,399 | 
|Gross profit (loss)                                      |                                            |                          | (5,289,207  | )        
|Operating expenses:                                      |                                            |                          |             |          
|                                                         | Research and development                   |                          |             | 4,821,952 |           
|                                                         | Selling, general and administrative        |                          |             | 3,715,149 |           
|                                                         | Provision for doubtful accounts receivable |                          |             | 2,700,000 |           
|                                                         | Severance and related costs                |                          |             | 500,000   |           
|                                                         | Amortization of intangible assets          |                          |             | 1,940,556 |           
|                                                         | Amortization of deferred compensation      |                          |             | 432,404   |           
|                                                         |                                            |                          |             |          
|                                                         |                                            | Total operating expenses |             |           | 14,110,061 | 
|                                                         |                                            |                          |             |          
|Loss from operations                                     |                                            |                          | (19,399,268 | )        
|Other income (expenses):                                 |                                            |                          |             |          
|                                                         | Interest income                            |                          |             | 904,850   |           
|                                                         | Interest and other expense                 |                          |             | (510,149  | )         
|                                                         |                                            |                          |             |          
|                                                         |                                            | Total other income       |             |           | 394,701    | 
|                                                         |                                            |                          |             |          
|Net loss                                                 |                                            | $                        | (19,004,567 | )        
|                                                         |                                            |                          |             |          
|Net loss per sharebasic and diluted                     |                                            | $                        | (0.55       | )        
|                                                         |                                            |                          |             |          
|Shares used in per share calculations
basic and diluted |                                            |                          | 34,565,333  |          
|                                                         |                                            |                          |             |          

See accompanying notes

5



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##### 



TRITON NETWORK SYSTEMS, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

Three Months Ended March 31, 2001
(Unaudited)

|                                                                            |                                                                                          |   |             |            |  
|--------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------- | - | ----------- | ---------- | -
|Cash flows from operating activities                                        |                                                                                          |   |             |           
|Net loss                                                                    |                                                                                          | $ | (19,004,567 | )         
|Adjustments to reconcile net loss to net cash used
in operating activities: |                                                                                          |   |             |           
|                                                                            | Depreciation and amortization                                                            |   |             | 1,557,472  |  
|                                                                            | Amortization of intangible assets                                                        |   |             | 1,940,556  |  
|                                                                            | Amortization of deferred compensation                                                    |   |             | 432,404    |  
|                                                                            | Provision for estimated excess inventory                                                 |   |             | 4,500,000  |  
|                                                                            | Provision for doubtful accounts receivable                                               |   |             | 2,700,000  |  
|Changes in operating assets and liabilities, net of
effects of acquisition: |                                                                                          |   |             |           
|                                                                            | Increase in trade receivables                                                            |   |             | (4,579,182 | )
|                                                                            | Increase in inventory                                                                    |   |             | (947,387   | )
|                                                                            | (Increase) decrease in other current assets                                              |   |             | 215,779    |  
|                                                                            | Increase in restricted cash and other
non-current assets                                 |   |             | (28,117    | )
|                                                                            | Increase (decrease) in accounts payable, accrued
compensation and other accrued expenses |   |             | 270,952    |  
|                                                                            |                                                                                          |   |             |           
|Net cash used in operating activities                                       |                                                                                          |   | (12,942,090 | )         
|                                                                           
|Cash flows from investing activities                                        |                                                                                          |   |             |           
|Purchases of property and equipment                                         |                                                                                          |   | (834,140    | )         
|Sales of investments                                                        |                                                                                          |   | 6,264,141   |           
|                                                                            |                                                                                          |   |             |           
|Net cash provided by (used in) investing activities                         |                                                                                          |   | 5,430,001   |           
|                                                                           
|Cash flows from financing activities                                        |                                                                                          |   |             |           
|Net proceeds from the issuance of common stock                              |                                                                                          |   | 182,814     |           
|Proceeds from notes payable                                                 |                                                                                          |   | 1,090,354   |           
|Payments on capital leases and notes payable                                |                                                                                          |   | (639,822    | )         
|                                                                            |                                                                                          |   |             |           
|Net cash provided by financing activities                                   |                                                                                          |   | 633,346     |           
|Net decrease in cash and cash equivalents                                   |                                                                                          |   | (6,878,743  | )         
|Cash and cash equivalents at beginning
of period                            |                                                                                          |   | 48,524,616  |           
|                                                                            |                                                                                          |   |             |           
|Cash and cash equivalents at end of period                                  |                                                                                          | $ | 41,645,873  |           
|                                                                            |                                                                                          |   |             |           
|Supplemental cash flow information                                          |                                                                                          |   |             |           
|Interest paid                                                               |                                                                                          | $ | 354,448     |           
|                                                                            |                                                                                          |   |             |           
|Non-cash financing and investing activities                                 |                                                                                          |   |             |           
|Fixed assets acquired under capital
lease obligations                       |                                                                                          | $ |            |           
|                                                                            |                                                                                          |   |             |           
|Common stock warrants issued in connection
with lease and credit agreements |                                                                                          | $ |            |           
|                                                                            |                                                                                          |   |             |           

See accompanying notes.

6



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##### 



TRITON NETWORK SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


BASIS OF PRESENTATION

On August 16, 2001, the Companys Board of Directors unanimously approved,
effective August 20, 2001, a Complete Plan of Liquidation and Dissolution of the
Company (the Plan). On October 29, 2001, the Companys stockholders ratified
and approved the Plan. Subsequent to August 20, 2001, the Companys activities
have been limited primarily to:



| |  | Selling remaining assets,                                                                  
|- |  | -------------------------------------------------------------------------------------------
| 
| |  | Paying creditors,                                                                          
| 
| |  | Terminating any remaining commercial agreements, relationships and
outstanding obligations,
| 
| |  | Continuing to honor certain obligations to customers, and                                  
| 
| |  | Conserving cash.                                                                           

The Plan provides for a pro rata cash, or in kind, distribution to stockholders
once the remaining assets are sold and liabilities are paid.

On January 31, 2002, the Company filed a Certificate of Dissolution with the
Secretary of State of Delaware. Simultaneous with the filing of the Certificate
of Dissolution, the Company requested the Nasdaq Stock Market to voluntarily
delist the Companys common stock, requested the stock transfer books be closed
and recording of stock transfers of common stock be discontinued. Under Delaware
law, the Company will not be dissolved for three years subsequent to the filing
of the Certificate of Dissolution.

The accompanying financial statements and notes should be read in conjunction
with the consolidated financial statements, related notes and discussions
contained in the Companys Annual Report on Form 10-K for the year ended
December 31, 2001.

The interim financial information contained herein is unaudited; however; in the
opinion of management, all adjustments necessary for the fair presentation of
such financial information on a liquidation basis for the three months ended
March 31, 2002 and a going concern basis for the three months ended March 31,
2001 have been included.

The December 31, 2001 consolidated statements of net assets in liquidation data
presented herein was derived from the Companys audited financial statements,
but does not include all disclosures required by generally accepted accounting
principles.

The condensed consolidated financial statements for the three months ended March
31, 2001 were prepared on the going concern basis of accounting, which
contemplates realization of assets and satisfaction of liabilities in the normal
course of business. As a result of the adoption of the Plan and the imminent
nature of the liquidation, the Company adopted the liquidation basis of
accounting effective October 1, 2001. This basis of accounting is considered
appropriate when, among other things, liquidation of a company is probable and
the net realizable value of assets are reasonably determinable.

During the three months ended March 31, 2002 the Company recorded adjustments of
$278,171 to increase its assets to net realizable value. These adjustments
reflect the sales value of inventory and equipment sold in July 2002.

7



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##### 



The estimated net realizable value of assets represents managements best
estimate of the recoverable value of the assets, net of selling expenses, and
without consideration for the effect that the settlement of any pending
litigation may have on the value of the assets. The assets are held at their net
realizable value until they are sold or liquidated. There can be no assurance,
however, that the Company will be successful in selling the assets at the net
realizable value. Operating expenses, legal and other expenses that may be
incurred in defending current and future litigation, and other expenses expected
to be incurred during the liquidation wind down period have not been recorded in
the consolidated statement of net assets in liquidation as of March 31, 2002.

The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries, TNS Finance Company, Inc. and Triton Network
Systems  Japan. All intercompany transactions have been eliminated.

SALE OF BROADBAND MODEM OPERATION AND INTELLECTUAL PROPERTY

In March 2002, the Company completed the sale of the broadband modem operation
to Carriercomm, Inc. (Carriercomm), a wholly owned subsidiary of Moseley
Associates. Carriercomm acquired all the assets and assumed certain liabilities
of the broadband modem operation, including facility and equipment leases and
certain employee severance obligations. The Company received $103,000 in cash
and may receive contingent consideration, up to $250,000, depending on future
deliveries of modem chips under an existing customer contract. Additionally, the
Company sold its radio intellectual property and a number of radios to
Carriercomm for $100,000 in cash, which was received in April 2002. The $100,000
was reflected as a receivable on the Consolidated Statement of Net Assets in
Liquidation as of March 31, 2002.

PREPAID EXPENSES

The Company extended its director and officer insurance for three years in March
2002. The premiums of approximately $1,771,000 was recorded as a prepaid expense
on the Consolidated Statement of Net Assets in Liquidation in March 2002 and
will be amortized over the policy period.

NET LOSS PER SHARE

Basic and diluted net loss per share is based on the weighted-average number of
common shares outstanding for the reporting period. Restricted shares issued are
not included in basic or diluted loss per share in accordance with Statement of
Financial Accounting Standards Board Statement No. 128, Earnings Per Share.
Potentially dilutive securities, consisting of outstanding preferred stock,
stock options and common stock warrants, have been excluded from the diluted
loss per share calculation because their effects would have been anti-dilutive.

The following table sets forth the computation of basic and diluted loss per
share:

|                                                                 |                                      |   |                    |       |  
|---------------------------------------------------------------- | ------------------------------------ | - | ------------------ | ----- | -
|                                                                 |                                      |   | Three months ended
|                                                                 |                                      |   | March 31,         
|                                                                 |                                      |   | 2001              
|                                                                 |                                      |   |                   
|Net loss                                                         |                                      | $ | (19,004,567        | )    
|                                                                 |                                      |   |                    |      
|Weighted-average shares used in
basic and diluted loss per share |                                      |   | 34,565,333         |      
|                                                                 |                                      |   |                    |      
|                                                                 | Basic and diluted net loss per share |   | $                  | (0.55 | )
|                                                                 |                                      |   |                    |      

CREDIT FACILITY

In March 2001, prior to approval of the Plan, the Company entered into a loan
agreement with a financial institution to borrow up to $3,000,000 to finance
capital equipment purchases during 2001. At the end of March 2001, approximately
$1,100,000 had been borrowed under this facility. The loans, which were
repayable over a three-year period, bear interest at an annual rate of 12% and
were secured by the specific capital purchases.

8



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##### 



During the third quarter of 2001 and in conjunction with the execution of the
Plan, the company repaid amounts outstanding under this facility, in addition to
an early payment penalty.

INVENTORY AND RECEIVABLE PROVISION

During the first quarter of 2001, there was a rapid and unexpected decline in
the U.S. CLEC market for the Companys products as several existing and
potential customers had difficulty finding additional funding for network
buildouts. As a result of this rapid change in market conditions for the
Companys products, provisions for doubtful accounts receivable of $2,700,000
and estimated excess inventory of $6,500,000 were made during the first quarter
of 2001. The provision for doubtful accounts was for the outstanding receivable
balance from a customer, which had filed for bankruptcy protection. The excess
inventory provision was due to inventory purchases and purchase commitments made
in the later part of 2000 for long lead-time components to support expected
customer demand in 2001.

CONTINGENCIES

The Company is or has been a party to the following legal proceedings:

On November 13, 2001, a securities class action complaint seeking class action
status was filed in the United States District Court for the Southern District
of New York. The complaint was brought on behalf of all persons who purchased
the Companys common stock from July 12, 2000 through December 6, 2000. The
complaint names as defendants the Company, a former officer and a current
officer of the Company, and several investment banking firms that served as
managing underwriters of the Companys initial public offering. The complaint
alleges liability under the Securities Act of 1933 and the Securities Exchange
Act of 1934, on the grounds that the registration statement for the Companys
initial public offering did not disclose that: (1) the underwriters had
allegedly agreed to allow certain of their customers to purchase shares in the
offering in exchange for allegedly excess commissions paid to the underwriters;
and (2) the underwriters had allegedly arranged for certain of their customers
to purchase additional shares in the aftermarket at pre-determined prices under
alleged arrangements to manipulate the price of the stock in aftermarket
trading. The Company is aware that similar allegations have been made in
numerous other lawsuits challenging initial public offerings conducted in 1998,
1999 and 2000. The Company does not know if a specific amount of damages is
claimed in the complaint involving its initial public offering. The Company
intends to contest the claims vigorously. The Company is unable at this time to
determine whether the outcome of the litigation will have a material impact on
its net assets or its plan of liquidation.

In November 2001, a customer, XO Communications, filed a lawsuit in the Circuit
Court of Fairfax County, Virginia that contended the Company would breach its
contract with them when the Company is liquidated. The complaint asked, among
other things, money damages, interest, attorney fees and costs totaling in
excess of $9,000,000 be awarded to the plaintiff. In May 2002, the Company
settled the lawsuit with the payment of $1,500,000 in cash, delivery of certain
available inventory to XO Communications, and termination of the contract
between the Company and XO Communications. As a result, the Consolidated
Statement of Net Assets in Liquidation at December 31, 2001 and March 31, 2002
included an accrued liability of $1,550,000 for the cost of the settlement,
including legal expenses.

In October 17, 2001, a complaint was filed in the Circuit Court of the Ninth
Judicial Circuit, in and for Orange County, Florida. The complaint was brought
by a customer and alleged the Company had breached a supply agreement the
Company entered into with the plaintiff by announcing the Companys intention to
liquidate and dissolve because it would be unable to perform certain ongoing
maintenance and service obligations under the agreement. The complaint asked,
among other things, money damages, interest and attorneys fees and costs be
awarded to the plaintiff. In April 2002, the Company settled the lawsuit with
the payment of $50,000, and terminated the contract between the Company and the
customer. The Consolidated Statement of Net Assets in Liquidation at December
31, 2001 and March 31, 2002 included an accrued liability of $70,000 for the
cost of the settlement and associated legal expenses.

On December 21, 2000, a complaint was filed in the Circuit Court of the
Thirteenth Judicial Circuit, in and for Hillsborough County, Florida. The
complaint was brought by a stockholder and alleged, among other things,

9



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##### 



the Company improperly failed to permit the sale of unregistered shares of its
common stock, and otherwise prevented plaintiff from selling his shares before
the share price dropped significantly. In March 2002, the Company settled the
lawsuit with the payment of $3,650,000 to the stockholder. However, the Company
subsequently reached an agreement with one of its insurance carriers relating to
this settlement. The insurance carrier has agreed to loan the Company
$1,750,000, plus interest, on October 30, 2002. This loan will be repaid with
the proceeds of a lawsuit that the Company intends to file against the law firm
which advised the Company with regard to the stockholders stock transfer
request, or the loan will be forgiven by the insurance carrier if the Company is
ultimately unsuccessful in the lawsuit against the law firm. Furthermore, if the
Company is ultimately unsuccessful in this lawsuit, the insurance carrier will
pay an additional $750,000, plus interest, to the Company. The insurance carrier
also will pay the legal costs of prosecuting the action against the law firm.
The Consolidated Statement of Net Assets in Liquidation at December 31, 2001 and
March 31, 2002 included an accrued liability of $3,900,000, including legal and
associated costs, and a receivable of $2,500,000 to reflect the impact of this
matter on the Companys net assets.

On June 11, 2002, a securities complaint seeking class action status was filed
in the United States District Court, Middle District of Florida, Tampa Division
(Case No. 8:02-CV-1041-T-27 MAP), by Delano Cox (the Cox Complaint), against
past and present officers and directors of the Company, as well as certain
investment bankers involved in the Companys initial public offering, certain
venture capital firms owning shares of the Company prior to the initial public
offering, and the Companys independent auditors. The complaint is brought
purportedly on behalf of all persons who purchased the Companys common stock
from July 13, 2000 through August 14, 2001. The complaint alleges violations of
Sections 11 and 15 of the Securities Act of 1933 and Sections 10b and 20A of the
Securities and Exchange Act of 1934 (the Exchange Act), and Rule 10b-5
promulgated thereunder, on the grounds that the Companys registration statement
relating to its initial public offering and certain of it subsequent Exchange
Act reports and press releases contained untrue statements of material facts, or
omitted to state facts necessary to make the statements made therein not
misleading, with regard to the Companys revenues in fiscal 2000, the nature of
its relationship with certain of its customers, and its financial statement
presentation. Plaintiff seeks compensatory damages in favor of plaintiff and the
other class members, as well as reasonable costs and expenses incurred in
connection with this action. No amounts have been accrued in the Companys
Consolidated Statement of Net Assets in Liquidation at December 31, 2001 or
March 31, 2002.

Similarly, on June 17, 2002, another securities complaint seeking class action
status was filed in the United States District Court, Middle District of
Florida, Tampa Division (Case No. 8:02-CV-1070-T-24 TGW), against past and
present officers and directors of the Company, as well as certain investment
bankers involved in the Companys initial public offering, certain venture
capital firms owning shares of the Company prior to the initial public offering,
and the Companys independent auditors. The complaint is brought by Gary
Streeter purportedly on behalf of all persons who purchased the Companys common
stock from July 13, 2000 through August 14, 2001. The factual basis alleged to
underlie the proceeding and the relief sought is similar to that alleged and
contained in the Cox Complaint. No amounts have been accrued in the Companys
Consolidated Statement of Net Assets in Liquidation at December 31, 2001 or
March 31, 2002.

While the Company currently has not been named as a defendant in the two June
actions, its past and present officers and directors have indemnification
agreements with the Company, pursuant to which the Company is required to
reimburse those individuals for any liabilities and damages incurred by, or
imposed upon, such individuals in connection with the foregoing lawsuits,
including their attorneys fees and costs, provided that they acted in good
faith and in a manner they reasonably believed to be in, or not opposed to, the
best interests of the Company. The Company intends to assist its current and
former officers and directors in contesting the claims. The Company carries
director and officer liability insurance (up to a maximum dollar limit) that may
cover the claims against its current and former directors and officers, but the
Company cannot, at the present time, be certain that any ultimate liability
related to the foregoing lawsuits will be reimbursed by its insurance carriers.
As a result, the Company is unable at this time to determine whether the
forgoing lawsuits will have a material negative impact on its net assets or its
plan of liquidation.

10



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##### 



SUBSEQUENT EVENTS

In June 2002, the Company sold its equity interest in a publicly held company
for approximately $305,000. The value of this equity interest was recorded in
other assets in the Consolidated Statement of Net Assets in Liquidation at March
31, 2002 with a corresponding amount recorded in other liabilities to reflect
the deferral of income.

ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion and analysis should be read in conjunction with our consolidated
financial statements and accompanying notes included in this report and the
financial statements and notes thereto for the year ended December 31, 2001 and
the risk factors included in the Companys Annual Report on Form 10-K for the
year 2001. Operating results are not necessarily indicative of results that may
occur in future periods.

This Form 10-Q contains forward-looking statements. These statements relate to
future events or the Companys future financial performance. In some cases, you
can identify forward-looking statements by terminology such as may, will,
should, expects, plans, anticipates, believes, estimates, predicts, potential,
continue or the negative of these terms or other comparable terminology. These
statements involve known and unknown risks, uncertainties and other factors that
may cause the Companys actual results, levels of activity, performance or
achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by the
forward-looking statements. Examples of these forward-looking statements
include, but are not limited to, statements regarding the Companys plan of
liquidation, including its efforts to liquidate assets, pay creditors, satisfy
its obligations, distribute any remaining assets to its stockholders, the nature
and timing of any liquidation distribution to stockholders, the anticipated
outcome of pending and anticipated legal proceedings, and the recovery, if any,
of a portion of any litigation costs from third parties, including insurance
carriers. These and equivalent statements are only predictions. In evaluating
such statements, you should consider various factors, including the risks
contained in this Form 10-Q, as well as identified in the Companys other
filings with the Securities and Exchange Commission, including the Companys
Annual Report on Form 10-K for the year ended December 31, 2001 and its Proxy
Statement filed on October 2, 2001. These factors may cause actual events or
results to differ materially from those expressed or implied by any
forward-looking statement. Although the Company believes that the expectations
reflected in the forward-looking statements are reasonable, the Company cannot
guarantee future results, levels of activity, performance or achievements. The
Company disclaims any intention or obligation to update or revise
forward-looking statements, whether as a result of new information, future
events or otherwise.

OVERVIEW

Historical Operations

Prior to adopting the Plan, the Company provided broadband wireless equipment
that enabled communications service providers to deliver high-speed,
cost-effective voice, video and data services to their business customers. The
Company offered two product lines: the Invisible Fiber Internet product line for
Internet service providers and the Invisible Fiber SONET product line for
communications service providers. Subsequent to the Companys acquisition of the
broadband modem product line from IBM at the end of the first quarter of 2000,
the Company also supplied modem chips and provided engineering design services
to an existing wireline customer.

From the Companys inception in March 1997 through late 1999, its operations
consisted primarily of start-up activities, including raising capital,
recruiting personnel, conducting research and development, establishing the
market for the Companys initial products and purchasing operating assets. In
addition, the Company developed its final product assembly and testing
capabilities, entered into manufacturing agreements with third-parties and
developed the Companys sales, marketing and administrative organizations.

The Company began supplying the Invisible Fiber products for use in field trials
during the second half of 1999 and recognized its first revenue in the first
quarter of 2000. During 2000, its revenues increased from approximately $3.5
million in the first quarter to approximately $9.5 million in the fourth
quarter, and it signed supply agreements with a number of companies. The Company
sold its products through the Companys direct

11



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sales force to service providers in North America and Japan who have government
licenses to provide wireless services. In addition, the Company had a
non-exclusive agreement with a value added reseller in Asia and a non-exclusive
global Original Equipment Manufacturer agreement with Nortel Networks.

The Company has incurred significant losses since inception.

Plan of Liquidation and Dissolution

Early in 2001 there was a rapid deterioration in the market for fixed broadband
wireless access equipment, particularly in the U.S. By the second quarter, three
of the four major fixed wireless CLECs in the U.S. had filed for bankruptcy
protection. The Companys revenue had declined from $9.5 million in the fourth
quarter of 2000 to $1.9 million in the second quarter of 2001, and the net loss
for the first half of 2001 was $(40.6) million. Based on these conditions, the
Company significantly downsized its operations to reduce costs and conserve
cash, while reviewing alternative business strategies. As a result of this rapid
change in market conditions for the Companys products, the Company have made
provisions for doubtful accounts receivable of $2.7 million and estimated excess
inventory of $6.5 million during the first quarter of 2001. Additionally, the
Company provided $500,000 for severance and related costs for cost reduction
actions the Company took during the first quarter of 2001.

In January 2001, the Company engaged Broadview International to assist in
identifying and evaluating strategic alternatives, including the sale or merger
of the Company. Broadview contacted a large number of prospective acquirers or
merger partners, both domestic and international. Discussions were held with a
number of companies. After a careful review, the Board of Directors concluded in
August 2001 that none of the acquisition or merger opportunities available to
the Company would be likely to provide stockholders with as much liquidity or
value as could be achieved through a liquidation and dissolution.

The Board of Directors also considered whether to continue the current strategy
of maintaining operations, managing expenses and waiting for a market recovery.
There were a number of risks associated with such a strategy. Timing of a market
recovery remained uncertain, and it appeared likely that there would be a
protracted period of weak demand for the Companys products. Immediately prior
to the adoption of the Plan, the Company had a minimal backlog of customer
orders, and prospects for material revenue over the next few quarters was
limited. Although the Company had the financial resources to weather a lengthy
market downturn, significant amounts of cash would be required to continue
operations and remain competitive, including significant expenditures to develop
international sales channels and to support research and development activities
needed to enhance existing products and develop new products. Furthermore,
employee retention would continue to become increasingly difficult. In light of
these risks, there was a substantial possibility that a strategy of waiting for
a market recovery would cause a continued erosion of the Companys cash, asset
value and employee base, thus reducing stockholder value without any assurance
of a future recovery. In addition, the Companys stock was trading below the
anticipated cash liquidation value of the shares. For these reasons, the Board
of Directors concluded that liquidation and dissolution of the Company would
have the highest probability of returning the greatest value to the
stockholders.

Accordingly, on August 16, 2001, the Companys Board of Directors unanimously
approved, effective August 20, 2001, a complete plan of liquidation and
dissolution of the Company (the Plan). On October 29, 2001, the Companys
stockholders ratified and approved the Plan. On January 31, 2002, the Company
filed its Certificate of Dissolution with the State of Delaware. The Company no
longer conducts business as a going concern, and since August 20, 2001, the
Companys activities have been limited primarily to:



| |  | Selling remaining assets,                                                                  
|- |  | -------------------------------------------------------------------------------------------
| 
| |  | Paying creditors,                                                                          
| 
| |  | Terminating any remaining commercial agreements, relationships and
outstanding obligations,
| 
| |  | Continuing to honor certain obligations to customers, and                                  
| 
| |  | Conserving cash.                                                                           

In accordance with the Plan, the Company intends, as promptly as possible, to
liquidate its assets and distribute pro rata to its stockholders of record on
January 31, 2002, the Final Record Date, in cash or in-kind, all

12



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property and assets remaining after the Company has satisfied, or created a
reserve for, all of its obligations and liabilities. However, the Company does
not anticipate that it will be in a position to make any distributions to
stockholders until all material pending legal proceedings have been resolved. As
of July 10, 2002, three purported class action lawsuits are pending. See Legal
Proceedings.

Under Delaware law, the Company will not be dissolved for three years subsequent
to the filing of the Certificate of Dissolution. Accordingly, the liquidation is
expected to be concluded prior to January 2005, or such later date as required
by Delaware law, by a final liquidating distribution either directly to the
stockholders or to a liquidating trust.

The actual nature, amount and timing of all distributions will be determined by
the Board of Directors, in its sole discretion, and will depend in part upon the
Companys ability to convert its remaining non-cash assets into cash and pay and
settle its remaining liabilities and obligations. Although there can be no
assurance and depending on the outcome of the pending legal proceedings and any
other unknown contingencies, the Company currently believes the ultimate total
distribution to its stockholders should be in the range of $25.5 million to
$27.0 million, or approximately $0.73 to $0.77 per share.

Current Status of Company

As of March 31, 2002, the Company had disposed of a significant portion of its
non-cash assets. As of March 31, 2002, the Companys net assets were
approximately $29.3 million, including $30.7 million in cash and marketable
securities, and total liabilities of approximately $6.7 million.

At the end of March 2002, the Company had 7 employees and its ongoing expenses
included the payroll and related costs of the employees, legal expenses related
to the Plan and ongoing litigation, and continuing costs of supporting certain
customer requirements. In March 2002, the Company extended its director and
officer insurance liability policy for an additional three years, which cost the
Company approximately $1.8 million.

Subsequent to the end of March 2002, three outstanding lawsuits against the
Company were settled. These included a previously reported stockholder lawsuit
and the outstanding lawsuits with two customers, XO Communications and
CAVU/Expedient. The total settlement costs (net of recovery), including legal
expenses, were approximately $3.0 million.

The settlement of the stockholder lawsuit resulted in a cost of approximately
$3.9 million, including legal and associated costs. However, the Company
subsequently reached an agreement with one of its insurance carriers relating to
this settlement. The insurance carrier has agreed to loan the Company
$1,750,000, plus interest, on October 30, 2002. This loan will be repaid with
the proceeds of a lawsuit that the Company intends to file against the law firm
which advised the Company with regard to the shareholders stock transfer
request, or the loan will be forgiven by the insurance carrier if the Company is
ultimately unsuccessful in the lawsuit against the law firm. Furthermore, if the
Company is ultimately unsuccessful in this lawsuit, the insurance carrier will
pay an additional $750,000, plus interest, to the Company. The insurance carrier
also will pay the legal costs of prosecuting the action against the law firm.

The settlement of the lawsuit between the Company and XO Communications cost the
Company $1,550,000, including legal expenses. The settlement of the lawsuit with
CAVU/Expedient cost the Company $70,000.

The total costs of the litigation settlements of approximately $5.5 million and
a receivable of $2.5 million for recovery associated with the litigation were
recorded in the Statement of Net Assets in Liquidation at the end of December
31, 2001 and March 31, 2002. See Legal Proceedings.

Recently, the Company was informed that in June, 2002, two new securities
complaints seeking class action status have been filed against past and present
officers and directors of the Company, as well as certain investment bankers
involved in the Companys initial public offering, certain venture capital firms
owning shares of the Company prior to the initial public offering, and the
Companys independent auditors. The Company is unable at this time to determine
whether the forgoing lawsuits will have a material negative impact on its net
assets or its plan of liquidation. See Legal Proceedings.

13



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The Company expects that claims, liabilities and future expenses for operations
(including salaries, payroll and local taxes, professional fees and
miscellaneous office expenses), although currently declining in the aggregate,
will continue to be incurred with execution of the Plan. These costs will reduce
the amount of assets available for ultimate distribution to stockholders. See
Legal Proceedings.

14



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##### 



CHANGES IN NET ASSETS IN LIQUIDATION

Three Months Ended March 31, 2002

Ongoing Costs Incurred during Liquidation. From December 31, 2001 through March
31, 2002, the Company incurred ongoing costs of approximately $0.7 million.
These costs were comprised of approximately $0.2 million of payroll and payroll
related costs; approximately $0.2 million associated with the dissolution
activities and legal services; and approximately $0.2 million for amortization
of the Companys prepaid directors and officers insurance premiums.

Costs of Broadband Modem Operation through Date of Sale. Until the broadband
modem group was sold in late March 2002, the Company incurred approximately $0.7
million of costs (primarily payroll and related costs) for this operation.

Interest Income. During the first quarter of 2002, the Company earned
approximately $.3 million in interest from its investment of cash and marketable
securities.

Sale of Broadband Modem Operation and Intellectual Property. In March 2002, the
Company completed the sale of the broadband modem operation to Carriercomm, Inc.
(Carriercomm), a wholly owned subsidiary of Moseley Associates. Carriercomm
acquired all the assets and assumed certain liabilities of the broadband modem
operation, including facility and equipment leases and certain employee
severance obligations. The Company received $100,000 in cash and may receive
contingent consideration, up to $250,000 depending on future deliveries of modem
chips under an existing customer contract. Additionally, the Company sold its
radio intellectual property and a number of radios to Carriercomm for $100,000
in cash, which was received in April 2002.

Sale of Privately Held Stock. During the first quarter of 2002, the Company
sold its equity interest in a privately held company for $200,000.

Increase in Fair Value of Assets. Subsequent to March 31, 2001, the Company sold
certain inventory and equipment for approximately $250,000 in excess of its
estimated realizable value at December 31, 2001.

15



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RESULTS OF OPERATIONS

Three Months Ended March 31, 2001

Revenues. Revenues were $7.5 million for the quarter ended March 31, 2001 of
which approximately 83% represented shipments of Invisible Fiber units and
delivery of modem chips, and 17% represents ASIC engineering services. Two
customers represented over 50% of total revenues.

Gross Margins. Excluding the $6.5 million excess inventory provision, gross
margins as a percentage of revenues were approximately 16.1 % in the first
quarter of 2001. See notes to the consolidated financials statements for further
explanation of the excess inventory provision.

Research and Development. Research and development expenses were approximately
$4.8 million for the first quarter of 2001, and consisted mainly of personnel
related costs.

Selling, General and Administrative. Selling, general and administrative
expenses were approximately $3.7 million for the first quarter of 2001, and
consisted of mainly personnel related costs and rent.

Provision for doubtful accounts receivables. During the first quarter of 2001,
the Company made a provision for doubtful accounts which related to the
outstanding receivable balance from a customer who had filed for bankruptcy
protection.

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2002, the Company had net assets of approximately $ 29.3 million
compared to $29.8 million on December 31, 2001. The net assets at March 31, 2002
included cash and marketable securities of approximately $30.7 million;
receivables of $2.9 million (including $2.5 million associated with the
settlement of litigation); prepaid expenses of $1.7 million; and other assets of
$0.7 million and total liabilities of approximately $6.7 million. The
liabilities include approximately $5.5 million related to litigation settled and
paid subsequent to the end of March 2002.

In June 2002, the Company sold shares of stock in a public company for
approximately $305,000.

The Board of Directors of the Company is currently unable to estimate when and
if there will be a distribution to its stockholders due to the class action
lawsuits pending against the Company (see Legal Proceedings). The Company will
continue to incur costs for a significant period of time for customer support,
administration, legal matters, and other miscellaneous items.

Although there can be no assurance and depending on the outcome of the pending
legal proceedings and any other unknown contingencies, the Company currently
believes the ultimate distribution to its stockholders should be in the range of
$25.5 million to $27.0 million, or approximately $0.73 to $0.77 per share.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The primary objective of our investment activities is to preserve principal
while at the same time maximizing the income we receive from our investments
without significantly increasing risk. Some of the securities that we may invest
in may be subject to market risk. This means that a change in prevailing
interest rates may cause the principal amount of the investment to fluctuate.
For example, if we hold a security that was issued with a fixed interest rate at
the then-prevailing rate and the prevailing interest rate later rises, the
principal amount of our investment will probably decline. To minimize this risk,
we maintain our portfolio of cash equivalents and investments in a variety of
securities, including commercial paper, money market funds, government and
investment grade non-government debt securities. These securities are of a
short-term nature with an immaterial portion invested in long-term securities.
As a result, we do not believe that near-term changes in interest rates will
have a material effect on our future results of operations.

16



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PART II  OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is or, during the last year, has been a party to the following legal
proceedings:

On November 13, 2001, a securities class action complaint seeking class action
status was filed in the United States District Court for the Southern District
of New York. The complaint was brought on behalf of all persons who purchased
the Companys common stock from July 12, 2000 through December 6, 2000. The
complaint names as defendants the Company, a former officer and a current
officer of the Company, and several investment banking firms that served as
managing underwriters of the Companys initial public offering. The complaint
alleges liability under the Securities Act of 1933 and the Securities Exchange
Act of 1934, on the grounds that the registration statement for the Companys
initial public offering did not disclose that: (1) the underwriters had
allegedly agreed to allow certain of their customers to purchase shares in the
offering in exchange for allegedly excess commissions paid to the underwriters;
and (2) the underwriters had allegedly arranged for certain of their customers
to purchase additional shares in the aftermarket at pre-determined prices under
alleged arrangements to manipulate the price of the stock in aftermarket
trading. The Company is aware that similar allegations have been made in
numerous other lawsuits challenging initial public offerings conducted in 1998,
1999 and 2000. The Company does not know if a specific amount of damages is
claimed in the complaint involving its initial public offering. The Company
intends to contest the claims vigorously. The Company is unable at this time to
determine whether the outcome of the litigation will have a material impact on
its net assets or its plan of liquidation.

In November 2001, a customer, XO Communications, filed a lawsuit in the Circuit
Court of Fairfax County, Virginia that contended the Company would breach its
contract with them when the Company is liquidated. The complaint asked, among
other things, money damages, interest, attorney fees and costs totaling in
excess of $9,000,000 be awarded to the plaintiff. In May 2002, the Company
settled the lawsuit with the payment of $1,500,000 in cash, delivery of certain
available inventory to XO Communications, and termination of the contract
between the Company and XO Communications. As a result, the Consolidated
Statement of Net Assets in Liquidation at December 31, 2001 and March 31, 2002
included an accrued liability of $1,550,000 for the cost of the settlement,
including legal expenses.

In October 17, 2001, a complaint was filed in the Circuit Court of the Ninth
Judicial Circuit, in and for Orange County, Florida. The complaint was brought
by a customer and alleged the Company had breached a supply agreement the
Company entered into with the plaintiff by announcing the Companys intention to
liquidate and dissolve because it would be unable to perform certain ongoing
maintenance and service obligations under the agreement. The complaint asked,
among other things, money damages, interest and attorneys fees and costs be
awarded to the plaintiff. In April 2002, the Company settled the lawsuit with
the payment of $50,000, and terminated the contract between the Company and the
customer. The Consolidated Statement of Net Assets in Liquidation at December
31, 2001 and March 31, 2002 included an accrued liability of $70,000 for the
cost of the settlement and associated legal expenses.

On December 21, 2000, a complaint was filed in the Circuit Court of the
Thirteenth Judicial Circuit, in and for Hillsborough County, Florida. The
complaint was brought by a stockholder and alleged, among other things, the
Company improperly failed to permit the sale of unregistered shares of its
common stock, and otherwise prevented plaintiff from selling his shares before
the share price dropped significantly. In March 2002, the Company settled the
lawsuit with the payment of $3,650,000 to the stockholder. However, the Company
subsequently reached an agreement with one of its insurance carriers relating to
this settlement. The insurance carrier has agreed to loan the Company
$1,750,000, plus interest, on October 30, 2002. This loan will be repaid with
the proceeds of a lawsuit that the Company intends to file against the law firm
which advised the Company with regard to the stockholders stock transfer
request, or the loan will be forgiven by the insurance carrier if the Company is
ultimately unsuccessful in the lawsuit against the law firm. Furthermore, if the
Company is ultimately unsuccessful in this lawsuit, the insurance carrier will
pay an additional $750,000, plus interest, to the Company. The insurance carrier
also will pay the legal costs of prosecuting the action against the law firm.
The Consolidated Statement of Net Assets in Liquidation at December 31, 2001 and
March 31,

17



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2002 included an accrued liability of $3,900,000, including legal and associated
costs, and a receivable of $2,500,000 to reflect the impact of this matter on
the Companys net assets.

On June 11, 2002, a securities complaint seeking class action status was filed
in the United States District Court, Middle District of Florida, Tampa Division
(Case No. 8:02-CV-1041-T-27 MAP), by Delano Cox (the Cox Complaint), against
past and present officers and directors of the Company, as well as certain
investment bankers involved in the Companys initial public offering, certain
venture capital firms owning shares of the Company prior to the initial public
offering, and the Companys independent auditors. The complaint is brought
purportedly on behalf of all persons who purchased the Companys common stock
from July 13, 2000 through August 14, 2001. The complaint alleges violations of
Sections 11 and 15 of the Securities Act of 1933 and Sections 10b and 20A of the
Securities and Exchange Act of 1934 (the Exchange Act), and Rule 10b-5
promulgated thereunder, on the grounds that the Companys registration statement
relating to its initial public offering and certain of its subsequent Exchange
Act reports and press releases contained untrue statements of material facts, or
omitted to state facts necessary to make the statements made therein not
misleading, with regard to the Companys revenues in fiscal 2000, the nature of
its relationship with certain of its customers, and its financial statement
presentation. Plaintiff seeks compensatory damages in favor of plaintiff and the
other class members, as well as reasonable costs and expenses incurred in
connection with this action. No amounts have been accrued in the Companys
Consolidated Statement of Net Assets in Liquidation at December 31, 2001.

Similarly, on June 17, 2002, another securities complaint seeking class action
status was filed in the United States District Court, Middle District of
Florida, Tampa Division (Case No. 8:02-CV-1070-T-24 TGW), against past and
present officers and directors of the Company, as well as certain investment
bankers involved in the Companys initial public offering, certain venture
capital firms owning shares of the Company prior to the initial public offering,
and the Companys independent auditors. The complaint is brought by Gary
Streeter purportedly on behalf of all persons who purchased the Companys common
stock from July 13, 2000 through August 14, 2001. The factual basis alleged to
underlie the proceeding and the relief sought is similar to that alleged and
contained in the Cox Complaint. No amounts have been accrued in the Companys
Consolidated Statement of Net Assets in Liquidation at December 31, 2001.

While the Company currently has not been named as a defendant in the two June
actions, its past and present officers and directors have indemnification
agreements with the Company, pursuant to which the Company is required to
reimburse those individuals for any liabilities and damages incurred by, or
imposed upon, such individuals in connection with the foregoing lawsuits,
including their attorneys fees and costs, provided that they acted in good
faith and in a manner they reasonably believed to be in, or not opposed to, the
best interests of the Company. The Company intends to assist its current and
former officers and directors in contesting the claims. The Company carries
director and officer liability insurance (up to a maximum dollar limit) that may
cover the claims against its current and former directors and officers, but the
Company cannot, at the present time, be certain that any ultimate liability
related to the foregoing lawsuits will be reimbursed by its insurance carriers.
As a result, the Company is unable at this time to determine whether the
forgoing lawsuits will have a material negative impact on its net assets or its
plan of liquidation. See Risk Factors.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None

18



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ITEM 5. OTHER INFORMATION.

None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a)  Exhibits: The following exhibits have been filed with this report:

|          |  |                                                                                                                                                     
|--------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------
|Number    |  | Description of Document                                                                                                                             
|          |  |                                                                                                                                                     
|2.1**     |  | Plan of Liquidation                                                                                                                                 
|3.1**     |  | Form of Amended and Restated Certificate of Incorporation
of the Registrant                                                                         
|3.2**     |  | Form of Amended and Restated Bylaws of the Registrant                                                                                               
|4.1**     |  | Form of stock certificate                                                                                                                           
|10.1**    |  | Amended and Restated 1997 Stock Plan                                                                                                                
|10.2**    |  | 2000 Employee Stock Purchase Plan                                                                                                                   
|10.3**    |  | Restated Investor Rights Agreement, dated October 18,
1999, between the Registrant and certain stockholders                                         
|10.4**    |  | Lease by and between Gran Central Corporation and Triton
Network Systems, dated March 26, 1998                                                      
|10.5**    |  | Lease by and between Gran Central Corporation and Triton
Network Systems, dated May 5, 1998                                                         
|10.5.1**  |  | Lease by and between Gran Central Corporation and Triton
Network Systems, dated September 16, 1999                                                  
|10.6+**   |  | License Agreement with Lockheed Martin Corporation dated
June 12, 1997                                                                              
|10.6.1.** |  | Agreement to Purchase Additional Shares with Lockheed
Martin Corporation                                                                            
|10.7**    |  | Acquisition and License Agreement between International
Business Machines Corporation and Triton Network Systems,
Inc. dated as of February 29, 2000
|10.8**    |  | Form of Indemnification Agreement between the Registrant
and each of its directors and officers                                                     
|10.9+**   |  | Supply Agreement with CenturyTel dated December 7, 1999                                                                                             
|10.10+**  |  | Supply Agreement with Advanced Radio Telecom dated
December 23, 1999                                                                                
|10.11**   |  | Employment offer letter for Skip Speaks dated August 16,
1999                                                                                       
|10.12**   |  | Employment offer letter for Brian Andrew dated September 9, 1999                                                                                    
|10.13**   |  | Employment offer letter for Ken Vines dated September 22,
1998                                                                                      
|10.14**   |  | Employment offer letter for Doug Campbell dated December 18,
1998                                                                                   
|10.14.1** |  | Amended Employment offer letter for Doug Campbell dated
July 20, 1999                                                                               
|10.15**   |  | Employment offer letter for Mike Clark dated February 27,
1997                                                                                      
|10.15.1** |  | Amended Employment offer letter for Mike Clark dated July 20,
1999                                                                                  
|10.16**   |  | Employment offer letter for Philip Gulliford dated march
20, 1997.                                                                                  
|10.17**   |  | Common Stock Purchase Warrant Agreement with FINOVA
Capital Corporation dated February 25, 2000                                                     
|10.18**   |  | Common Stock Purchase Warrant Agreement with FINOVA
Capital Corporation dated February 25, 2000                                                     
|10.19**   |  | Loan and Lease Commitment Letter with FINOVA Capital
Corporation dated January 15, 2000                                                             
|10.20**   |  | Master Lease Agreement with FINOVA Capital Corporation
dated January 27, 2000                                                                       
|10.21**   |  | Master Loan and Security Agreement with FINOVA Capital
Corporation dated January 27, 2000                                                           

19



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##### 



|         |  |                                                                     
|-------- |  | --------------------------------------------------------------------
|Number   |  | Description of Document                                             
|         |  |                                                                     
|10.22+** |  | Supply Agreement with CAVU dated April 15, 2000                     
|10.23**  |  | Employment off letter for Mark Johnson dated May 22, 2000           
|10.24*** |  | Asset Purchase Agreement with CarrierComm, Inc. dated
March 15, 2002



---

|+   |  | Triton has requested and been granted confidential treatment with respect
to certain portions of this Exhibit. The omitted portions have been
separately filed with the Commission.           
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|**  |  | Incorporated by reference from the Companys registration statement on Form
S-1, registration number 333-31434, declared effective by the Securities
and Exchange Commission on July 12, 2000.
|   
|*** |  | Incorporated by reference from the Companys Form 8-K, filed separately
with the Commmission on March 29, 2002.                                                                               

(b) Reports on Form 8-K

On March 29, 2002, the Company filed a report on Form 8-K with respect to the
sale of its broadband modem operation to CarrierComm, Inc.

On April 9, 2002, the Company filed a report on Form 8-K with respect to the
settlement of a lawsuit with one of its shareholders, Frank Musilino.

On April 22, 2002, the Company filed a report on Form 8-K with respect to the
settlement of a lawsuit with one of its customers, Cavu, Inc.

On May 24, 2002, the Company filed a report on Form 8-K with respect to the
settlement of a lawsuit with one of its customers, XO Communications, Inc.

On June 10, 2002, the Company filed a report on Form 8-K with respect to the
announcement of an agreement with one of its insurance carriers addressing a
certain settlement with one of the Companys shareholders, Frank Musilino.

On June 20, 2002, the Company file a report on Form 8-K with respect to the
announcement of certain securities complaints seeking class action status.

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##### 



SIGNATURE

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

Triton Network Systems, Inc.
(Registrant)

|                    |  |                     
|------------------- |  | --------------------
|Date: July 22, 2001 |  | /s/ Kenneth R. Vines
|                    |  |                     
|                    |  | CEO and CFO         

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