##### Table of Contents



(Mark One)

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| |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
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| |  | SECURITIES EXCHANGE ACT OF 1934                         
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| |  | For the quarterly period ended March 31, 2001           
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| |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
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| |  | SECURITIES EXCHANGE ACT OF 1934                         
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| |  | For the transition period from ________ to ________     





|                                                                                    |  |                                                
|----------------------------------------------------------------------------------- |  | -----------------------------------------------
|DELAWARE
(State or other jurisdiction
of incorporation or organization)             |  | 38-3383038
(I.R.S. Employer Identification No.)
|                                                                                    |  |                                                
|4355 Varsity Drive, Suite E, Ann Arbor, MI
(Address of principal executive offices) |  | 48108
(Zip 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

The number of shares outstanding of the registrants Common Stock, $.001 par
value, as of April 30, 2001, was 24,284,975.





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TABLE OF CONTENTS



|                             |                                                                                               |                                                                                                                |  |  |  |  |  | 
|---------------------------- | --------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------- |  |  |  |  |  | 
|PART I FINANCIAL INFORMATION
|                             | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                             |                                                                                               | CONDENSED CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2001 (UNAUDITED) AND DECEMBER 31, 2000                  
|                             |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE
THREE MONTHS ENDED MARCH 31, 2001 AND 2000 (UNAUDITED)
|                             |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
THREE MONTHS ENDED MARCH 31, 2001 AND 2000 (UNAUDITED)
|                             | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)                             
|                             | ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                             | ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK                           
|PART II. OTHER INFORMATION  
|                             | ITEM 1. LEGAL PROCEEDINGS                                                                    
|                             | ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS                                            
|                             | ITEM 3. DEFAULTS UPON SENIOR SECURITIES                                                      
|                             | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|                             | ITEM 5. OTHER INFORMATION                                                                    
|                             | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.                                                    
|Stock Pledge Agreement      
|Promissory Note             



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##### Table of Contents



|                             |                                                                     |                                                                            |                                     |                           |   |          |   | 
|---------------------------- | ------------------------------------------------------------------- | -------------------------------------------------------------------------- | ----------------------------------- | ------------------------- | - | -------- | - | 
|                             |                                                                     |                                                                            |                                     |                           |   | Page No. |  
|                             |                                                                     |                                                                            |                                     |                           |   |          |  
|PART
I FINANCIAL INFORMATION
|                            
|                            
|                            
|                            
|                             | Item
1. Financial Statements                                       
|                            
|                            
|                            
|                            
|                             |                                                                     | Condensed Consolidated Balance Sheets as of March 31, 2001                
|                            
|                            
|                            
|                            
|                             |                                                                     |                                                                            | (unaudited) and December 31, 2000   |                           |   | 3        |  
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|                            
|                             |                                                                     | Condensed Consolidated Statements of Operations for the three months ended
|                            
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|                             |                                                                     |                                                                            | March 31, 2001 and 2000 (unaudited) |                           |   | 4        |  
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|                             |                                                                     | Condensed Consolidated Statements of Cash Flows for the three months ended
|                            
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|                            
|                             |                                                                     |                                                                            | March 31, 2001 and 2000 (unaudited) |                           |   | 5        |  
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|                             |                                                                     | Notes to Condensed Consolidated Financial Statements (unaudited)           |                                     |                           | 6 |         
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|                             | Item
2. Managements Discussion and Analysis of Financial
Condition
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|                             |                                                                     |                                                                            |                                     | and Results of Operations |   |          | 9 | 
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|                             | Item 3. Quantitative and Qualitative Disclosures About Market Risk  |                                                                            |                                     | 14                        |  
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|PART II OTHER INFORMATION   
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|                             | Item 1. Legal Proceedings                                           |                                                                            |                                     | 15                        |  
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|                             | Item 2. Changes In Securities and Use of Proceeds                   |                                                                            |                                     | 15                        |  
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|                             | Item 3. Defaults Upon Senior Securities                             |                                                                            |                                     | 16                        |  
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|                             | Item 4. Submission of Matters to a Vote of Security Holders         |                                                                            |                                     | 16                        |  
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|                             | Item 5. Other Information                                           |                                                                            |                                     | 16                        |  
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|                             | Item 6. Exhibits and Reports on Form 8-K                            |                                                                            |                                     | 17                        |  

2



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##### Table of Contents









PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS




|                                     |                                                                                                                                                                         |                                      |                                            |                             |        |             |        |         |              |        |        | 
|------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------ | ------------------------------------------ | --------------------------- | ------ | ----------- | ------ | ------- | ------------ | ------ | ------ | 
|                                     |                                                                                                                                                                         |                                      |                                            |                             |        | March 31,   |        |         | December 31, |       
|                                     |                                                                                                                                                                         |                                      |                                            |                             |        | 2001        |        |         | 2000         |       
|                                     |                                                                                                                                                                         |                                      |                                            |                             |        |             |        |         |              |       
|                                     |                                                                                                                                                                         |                                      |                                            |                             |        | (Unaudited) |        |         |              |       
|                                     |                                                                                                                                                                         |                                      |                                            |                             |        |             |        |         |              |       
|Assets                              
|                                    
|                                    
|                                    
|                                    
|Current Assets:                     
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                                                                                                         | Cash and cash equivalents            |                                            | $                           | 33,841 |             |        | $       | 40,159       |       
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                                                                                                         | Accounts receivable, net             |                                            |                             | 6,049  |             |        |         | 7,788        |       
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                                                                                                         | Inventories                          |                                            |                             | 6,707  |             |        |         | 5,734        |       
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                                                                                                         | Prepaid expenses and other           |                                            |                             | 866    |             |        |         | 1,114        |       
|                                     |                                                                                                                                                                         |                                      |                                            |                             |        |            
|                                     |                                                                                                                                                                         |                                      |                                            | Total current assets        |        |             | 47,463 |         |              |        | 54,795 | 
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                                                                                                         | Property and equipment, net          |                                            |                             | 4,698  |             |        |         | 4,735        |       
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                                                                                                         | Goodwill, net                        |                                            |                             | 880    |             |        |         | 954          |       
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                                                                                                         | License fees, net                    |                                            |                             | 4,410  |             |        |         | 4,524        |       
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                                                                                                         | Other assets                         |                                            |                             | 205    |             |        |         | 216          |       
|                                     |                                                                                                                                                                         |                                      |                                            |                             |        |            
|                                     |                                                                                                                                                                         |                                      |                                            | Total assets                |        | $           | 57,656 |         |              | $      | 65,224 | 
|                                     |                                                                                                                                                                         |                                      |                                            |                             |        |            
|Liabilities and Stockholders Equity
|                                    
|                                    
|                                    
|                                    
|Current Liabilities:                
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                                                                                                         | Current portion of long-term debt    |                                            | $                           | 744    |             |        | $       | 754          |       
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                                                                                                         | Accounts payable                     |                                            |                             | 2,931  |             |        |         | 3,711        |       
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                                                                                                         | Accrued liabilities                  |                                            |                             | 4,101  |             |        |         | 6,067        |       
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                                                                                                         | Deferred revenue                     |                                            |                             | 256    |             |        |         | 293          |       
|                                     |                                                                                                                                                                         |                                      |                                            |                             |        |            
|                                     |                                                                                                                                                                         |                                      |                                            | Total current liabilities   |        |             | 8,032  |         |              |        | 10,825 | 
|                                     |                                                                                                                                                                         |                                      |                                            |                             |        |            
|Long-Term Liabilities:              
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                                                                                                         | Long-term debt, less current portion |                                            |                             | 1,020  |             |        |         | 1,202        |       
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                                                                                                         | Other long-term liabilities          |                                            |                             | 70     |             |        |         | 1,208        |       
|                                     |                                                                                                                                                                         |                                      |                                            |                             |        |            
|                                     |                                                                                                                                                                         |                                      |                                            | Total long-term liabilities |        |             | 1,090  |         |              |        | 2,410  | 
|                                    
|                                    
|                                    
|                                    
|                                    
|                                    
|                                    
|                                    
|Stockholders Equity:               
|                                    
|                                    
|                                    
|                                    
|                                     | Convertible preferred stock, $0.001 par value; 15,000 shares
authorized; zero shares issued and outstanding at March 31,
2001 and December 31, 2000                     |                                      |                                            |                            |        |             |        |        |             
|                                    
|                                    
|                                    
|                                    
|                                     | Callable common stock, $.001 par value; 40,000 shares
authorized; 25,043 and 23,758 shares issued and outstanding
at March 31, 2001 and December 31, 2000, respectively |                                      |                                            | 24                          |        |             |        | 24      |             
|                                    
|                                    
|                                    
|                                    
|                                     | Common stock, $.001 par value; 40,000 shares authorized;
1,270 shares issued and outstanding at March 31, 2001 and
December 31, 2000                                    |                                      |                                            | 1                           |        |             |        | 1       |             
|                                    
|                                    
|                                    
|                                    
|                                     | Additional paid-in capital                                                                                                                                              |                                      |                                            | 94,290                      |        |             |        | 94,317  |             
|                                    
|                                    
|                                    
|                                    
|                                     | Notes receivable                                                                                                                                                        |                                      |                                            | (131                        | )      |             |        | (129    | )           
|                                    
|                                    
|                                    
|                                    
|                                     | Deferred compensation related to stock options                                                                                                                          |                                      |                                            | (92                         | )      |             |        | (98     | )           
|                                    
|                                    
|                                    
|                                    
|                                     | Retained deficit                                                                                                                                                        |                                      |                                            | (44,942                     | )      |             |        | (41,955 | )           
|                                    
|                                    
|                                    
|                                    
|                                     | Accumulated other comprehensive loss                                                                                                                                    |                                      |                                            | (616                        | )      |             |        | (171    | )           
|                                     |                                                                                                                                                                         |                                      |                                            |                             |        |            
|                                     |                                                                                                                                                                         |                                      | Total stockholders equity                 |                             |        | 48,534      |        |         |              | 51,989 |       
|                                     |                                                                                                                                                                         |                                      |                                            |                             |        |            
|                                     |                                                                                                                                                                         |                                      | Total liabilities and stockholders equity |                             | $      | 57,656      |        |         | $            | 65,224 |       
|                                     |                                                                                                                                                                         |                                      |                                            |                             |        |            

The accompanying notes are an integral part of these consolidated statements.

3



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##### Table of Contents






|                                             |                                           |                                           |        |                            |        |   |         |        |        |  
|-------------------------------------------- | ----------------------------------------- | ----------------------------------------- | ------ | -------------------------- | ------ | - | ------- | ------ | ------ | -
|                                             |                                           |                                           |        | For the three months ended |       
|                                             |                                           |                                           |        | March 31,                  |       
|                                             |                                           |                                           |        |                            |       
|                                             |                                           |                                           |        | 2001                       |        |   | 2000    |       
|                                             |                                           |                                           |        |                            |        |   |         |       
|Revenue:                                    
|                                            
|                                            
|                                            
|                                            
|                                             | Product revenue                           |                                           | $      | 4,013                      |        |   | $       | 3,791  |       
|                                            
|                                            
|                                            
|                                            
|                                             | Service revenue                           |                                           |        | 366                        |        |   |         | 204    |       
|                                             |                                           |                                           |        |                            |        |   |        
|                                             |                                           | Total revenue                             |        |                            | 4,379  |   |         |        | 3,995  |  
|                                             |                                           |                                           |        |                            |        |   |        
|Cost of Revenue:                            
|                                            
|                                            
|                                            
|                                            
|                                             | Cost of product revenue                   |                                           |        | 2,345                      |        |   |         | 1,945  |       
|                                            
|                                            
|                                            
|                                            
|                                             | Cost of service revenue                   |                                           |        | 80                         |        |   |         | 59     |       
|                                             |                                           |                                           |        |                            |        |   |        
|                                             |                                           | Total cost of revenue                     |        |                            | 2,425  |   |         |        | 2,004  |  
|                                             |                                           |                                           |        |                            |        |   |        
|                                             |                                           | Gross profit                              |        |                            | 1,954  |   |         |        | 1,991  |  
|                                             |                                           |                                           |        |                            |        |   |        
|Operating Expenses:                         
|                                            
|                                            
|                                            
|                                            
|                                             | Selling, general and administrative       |                                           |        | 3,361                      |        |   |         | 2,620  |       
|                                            
|                                            
|                                            
|                                            
|                                             | Research and development                  |                                           |        | 1,981                      |        |   |         | 1,125  |       
|                                             |                                           |                                           |        |                            |        |   |        
|                                             |                                           | Total operating expenses                  |        |                            | 5,342  |   |         |        | 3,745  |  
|                                             |                                           |                                           |        |                            |        |   |        
|                                             |                                           | Loss from operations                      |        |                            | (3,388 | ) |         |        | (1,754 | )
|                                             |                                           |                                           |        |                            |        |   |        
|Other Income (Expense):                     
|                                            
|                                            
|                                            
|                                            
|                                             | Interest expense                          |                                           |        | (62                        | )      |   |         | (1,661 | )     
|                                            
|                                            
|                                            
|                                            
|                                             | Interest income                           |                                           |        | 523                        |        |   |         | 96     |       
|                                            
|                                            
|                                            
|                                            
|                                             | Gain on sale of investment                |                                           |        |                           |        |   |         | 407    |       
|                                            
|                                            
|                                            
|                                            
|                                             | Other expense, net                        |                                           |        | 19                         |        |   |         | 68     |       
|                                             |                                           |                                           |        |                            |        |   |        
|                                             |                                           | Total other income (expense)              |        |                            | 480    |   |         |        | (1,090 | )
|                                             |                                           |                                           |        |                            |        |   |        
|                                             |                                           | Loss before taxes and extraordinary items |        |                            | (2,908 | ) |         |        | (2,844 | )
|                                            
|                                            
|                                            
|                                            
|Provision for Income Taxes                   |                                           |                                           | 79     |                            |        |   |        |       
|                                             |                                           |                                           |        |                            |        |   |        
|                                             | Loss before extraordinary items           |                                           |        | (2,987                     | )      |   |         | (2,844 | )     
|                                            
|                                            
|                                            
|                                            
|Extraordinary Loss,net of tax expense of $0  |                                           |                                           |       |                            |        |   | (1,050  | )     
|                                             |                                           |                                           |        |                            |        |   |        
|Net Loss                                     |                                           |                                           | (2,987 | )                          |        |   | (3,894  | )     
|                                            
|                                            
|                                            
|                                            
|Non-cash common stock warrant charge         |                                           |                                           |       |                            |        |   | (2,297  | )     
|                                            
|                                            
|                                            
|                                            
|Deemed dividend upon issuance of Series P   
|                                            
|                                            
|                                            
|                                            
|                                             | Preferred stock                           |                                           |        |                           |        |   |         | (8,000 | )     
|                                             |                                           |                                           |        |                            |        |   |        
|Net loss attributable to common stockholders |                                           | $                                         | (2,987 | )                          |        | $ | (14,191 | )     
|                                             |                                           |                                           |        |                            |        |   |        
|Net Loss Per Share, Basic and Diluted:      
|                                            
|                                            
|                                            
|                                            
|                                             | Loss per share before extraordinary items |                                           | $      | (0.12                      | )      |   | $       | (0.83  | )     
|                                            
|                                            
|                                            
|                                            
|                                             | Loss per share from extraordinary items   |                                           |        |                           |        |   |         | (0.31  | )     
|                                             |                                           |                                           |        |                            |        |   |        
|                                             | Loss per share                            |                                           |        | (0.12                      | )      |   |         | (1.14  | )     
|                                            
|                                            
|                                            
|                                            
|                                             | Loss per share from non-cash common stock
|                                            
|                                            
|                                            
|                                            
|                                             |                                           | warrant charge                            |        |                           |        |   |         | (0.67  | )     
|                                            
|                                            
|                                            
|                                            
|                                             | Loss per share from deemed dividend       |                                           |        |                           |        |   |         | (2.33  | )     
|                                             |                                           |                                           |        |                            |        |   |        
|                                             | Loss per share attributable to common    
|                                            
|                                            
|                                            
|                                            
|                                             |                                           | stockholders                              | $      | (0.12                      | )      |   | $       | (4.14  | )     
|                                             |                                           |                                           |        |                            |        |   |        
|                                             | Weighted average common shares            |                                           |        | 25,032                     |        |   |         | 3,429  |       
|                                             |                                           |                                           |        |                            |        |   |        

The accompanying notes are an integral part of these consolidated statements.

4



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##### Table of Contents






|                                                     |                            |                                                                 |                                                                  |                                           |        |                            |        |     |        |       |        |  
|---------------------------------------------------- | -------------------------- | --------------------------------------------------------------- | ---------------------------------------------------------------- | ----------------------------------------- | ------ | -------------------------- | ------ | --- | ------ | ----- | ------ | -
|                                                     |                            |                                                                 |                                                                  |                                           |        | For the Three Months Ended |       
|                                                     |                            |                                                                 |                                                                  |                                           |        | March 31,                  |       
|                                                     |                            |                                                                 |                                                                  |                                           |        |                            |       
|                                                     |                            |                                                                 |                                                                  |                                           |        | 2001                       |        |     | 2000   |      
|                                                     |                            |                                                                 |                                                                  |                                           |        |                            |        |     |        |      
|Cash Flows from Operating Activities:               
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                            | Net loss                                                        |                                                                  | $                                         | (2,987 | )                          |        | $   | (3,894 | )    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                            | Adjustments to reconcile net loss to net cash used in operating
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                            |                                                                 | activities-                                                     
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                            |                                                                 | Depreciation and amortization                                    |                                           |        | 452                        |        |     |        | 370   |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                            |                                                                 | Amortization of discount on subordinated debt                    |                                           |        |                           |        |     |        | 1,272 |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                            |                                                                 | Callable common stock issued in lieu of interest                 |                                           |        |                           |        |     |        | 118   |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                            |                                                                 | Amortization of deferred compensation                            |                                           |        | 6                          |        |     |        | 6     |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                            |                                                                 | Amortization of capitalized license fees                         |                                           |        | 114                        |        |     |        |      |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                            |                                                                 | Extraordinary loss                                               |                                           |        |                           |        |     |        | 1,050 |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                            |                                                                 | Gain on sale of investment                                       |                                           |        |                           |        |     |        | (407  | )     
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                            |                                                                 | Increase (decrease) in cash resulting from changes in assets and
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                            |                                                                 |                                                                  | liabilities, net of acquisitions-        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                            |                                                                 |                                                                  | Accounts receivable                       |        |                            | 1,443  |     |        |       | (625   | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                            |                                                                 |                                                                  | Inventories                               |        |                            | (1,221 | )   |        |       | (727   | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                            |                                                                 |                                                                  | Prepaid expenses and other                |        |                            | 222    |     |        |       | (197   | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                            |                                                                 |                                                                  | Accounts payable                          |        |                            | (734   | )   |        |       | 338    |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                            |                                                                 |                                                                  | Accrued liabilities                       |        |                            | (748   | )   |        |       | 555    |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                            |                                                                 |                                                                  | Deferred revenue                          |        |                            | (50    | )   |        |       | 21     |  
|                                                     |                            |                                                                 |                                                                  |                                           |        |                            |        |    
|                                                     |                            |                                                                 |                                                                  | Net cash used in operating activities     |        |                            | (3,503 | )   |        |       | (2,120 | )
|                                                     |                            |                                                                 |                                                                  |                                           |        |                            |        |    
|Cash Flows from Investing Activities:               
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                            | Purchase of property and equipment                              |                                                                  |                                           | (453   | )                          |        |     | (134   | )    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                            | Increase in other assets                                        |                                                                  |                                           | 1      |                            |        |     | (74    | )    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                            | Capitalized license fees                                        |                                                                  |                                           | (2,250 | )                          |        |     |       |      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                            | Proceeds from sale of investment                                |                                                                  |                                           |       |                            |        |     | 575    |      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                            | Proceeds from sale of property and equipment                    |                                                                  |                                           | 19     |                            |        |     |       |      
|                                                     |                            |                                                                 |                                                                  |                                           |        |                            |        |    
|                                                     |                            |                                                                 |                                                                  | Net cash used in investing activities     |        |                            | (2,683 | )   |        |       | 367    |  
|                                                     |                            |                                                                 |                                                                  |                                           |        |                            |        |    
|Cash Flows from Financing Activities:               
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                            | Proceeds from issuance of callable common stock                 |                                                                  |                                           | 8      |                            |        |     | 10     |      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                            | Net borrowings under lines of credit                            |                                                                  |                                           |       |                            |        |     | 20,001 |      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                            | Repayment of long-term debt                                     |                                                                  |                                           | (189   | )                          |        |     | (170   | )    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                            | Proceeds from issuance of preferred stock                       |                                                                  |                                           |       |                            |        |     | 7,483  |      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                            | Other financing activities                                      |                                                                  |                                           | (2     | )                          |        |     | (35    | )    
|                                                     |                            |                                                                 |                                                                  |                                           |        |                            |        |    
|                                                     |                            |                                                                 |                                                                  | Net cash provided by financing activities |        |                            | (183   | )   |        |       | 27,289 |  
|                                                     |                            |                                                                 |                                                                  |                                           |        |                            |        |    
|Effect of Exchange Rate Changes                      |                            |                                                                 | 51                                                               |                                           |        |                            | (72    | )  
|                                                     |                            |                                                                 |                                                                  |                                           |        |                            |        |    
|Net Increase (Decrease) in Cash and Cash Equivalents |                            |                                                                 | (6,318                                                           | )                                         |        |                            | 25,464 |    
|                                                    
|                                                    
|                                                    
|                                                    
|Cash
and Cash Equivalents  Beginning of Period      |                            |                                                                 | 40,159                                                           |                                           |        |                            | 1,328  |    
|                                                     |                            |                                                                 |                                                                  |                                           |        |                            |        |    
|Cash and Cash Equivalents  End of Period            |                            | $                                                               | 33,841                                                           |                                           |        | $                          | 26,792 |    
|                                                     |                            |                                                                 |                                                                  |                                           |        |                            |        |    
|Supplemental Disclosure of Cash Flow Activity:      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Cash paid for interest     |                                                                 | $                                                                | 62                                        |        |                            | $      | 248 |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Cash paid for income taxes |                                                                 | $                                                                | 56                                        |        |                            | $      |    |       
|                                                     |                            |                                                                 |                                                                  |                                           |        |                            |        |    

The accompanying notes are an integral part of these consolidated statements.

5



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##### Table of Contents








|1. |  | SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
|-- |  | --------------------------------------------

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Genomic Solutions Inc. and subsidiaries
(the Company) have been prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by generally accepted accounting principles for
complete annual financial statements. In the opinion of management, all adjustments, consisting of normal
recurring adjustments, considered necessary for a fair presentation have been included. Interim results are not
necessarily indicative of results that may be expected for a full year.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the
audited consolidated financial statements and footnotes thereto included in the Companys latest annual report on
Form 10-K.

Net Loss Per Share

Net loss per share is computed in accordance with SFAS No. 128, Earnings Per Share, by dividing the net loss
allocable to common stockholders by the weighted average number of shares of common stock outstanding. For the
three month periods ended March 31, 2001 and 2000, the effect of stock options and warrants outstanding for the
purchase of shares of common stock have not been used in the calculation of diluted net loss per share because to
do so would be anti-dilutive. As such, the numerator and the denominator used in computing both basic and diluted
net loss per share allocable to common stockholders for each period are equal.

Comprehensive Loss

Comprehensive loss is the total of net loss and all other non-owner changes in equity. The difference between
net loss, as reported in the accompanying condensed consolidated statements of operations, and comprehensive loss
is the foreign currency translation adjustment for the respective periods. Accumulated other comprehensive loss
consists solely of the cumulative translation adjustment as presented in the accompanying condensed consolidated
balance sheets. The components of comprehensive loss for the three months ended March 31, 2001 and 2000 are as
follows (in thousands):

|                                        |  |                            |        |   |             |   |        |  
|--------------------------------------- |  | -------------------------- | ------ | - | ----------- | - | ------ | -
|                                        |  | For the three months ended |       
|                                        |  | March 31,                  |       
|                                        |  |                            |       
|                                        |  | 2001                       |        |   | 2000        |  
|                                        |  |                            |        |   |             |  
|                                        |  | (Unaudited)                |        |   | (Unaudited) |  
|                                       
|                                       
|                                       
|                                       
|Net loss                                |  | $                          | (2,987 | ) |             | $ | (3,894 | )
|                                       
|                                       
|                                       
|                                       
|Foreign currency translation adjustment |  |                            | (445   | ) |             |   | (38    | )
|                                        |  |                            |        |   |             |  
|Comprehensive loss                      |  | $                          | (3,432 | ) |             | $ | (3,932 | )
|                                        |  |                            |        |   |             |  

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2. INVENTORIES

Finished goods and work-in-process inventories include material, labor and manufacturing overhead costs.
Inventories consisted of the following (in thousands):

| |                 |   |       |             |  |   |              |       |  | 
| | --------------- | - | ----- | ----------- |  | - | ------------ | ----- |  | 
| |                 |   |       | March 31,   |  |   | December 31, |      
| |                 |   |       | 2001        |  |   | 2000         |      
| |                 |   |       |             |  |   |              |      
| |                 |   |       | (Unaudited) |  |   |              |      
| |                 |   |       |             |  |   |              |      
| | Raw materials   |   | $     | 3,393       |  |   | $            | 2,673 | 
|
|
|
|
| | Work-in-process |   |       | 1,174       |  |   |              | 764   | 
|
|
|
|
| | Finished goods  |   |       | 2,140       |  |   |              | 2,297 | 
| |                 |   |       |             |  |   |             
| |                 | $ | 6,707 |             |  | $ | 5,734        |      
| |                 |   |       |             |  |   |             



|3. |  | SUBSEQUENT EVENTS
|-- |  | -----------------

On April 18, 2001, we reached an agreement with PerkinElmer, Inc. that ends all litigation between the companies and
settles all disputes between the parties. As part of the settlement, we purchased 873,016 shares, or about 69% of the total shares of our common stock
held by PerkinElmer, at PerkinElmer's original purchase price. As a result of the sale of
PerkinElmers stock in the Company, PerkinElmers
right to cause us to redeem our callable common stock terminated and each outstanding share of our callable common
stock automatically converted into one share of our common stock.



|4. |  | SEGMENT INFORMATION
|-- |  | -------------------

In 1999, we adopted SFAS No. 131, Disclosures about
Segments of an Enterprise and Related Information. Under
the provisions of SFAS No. 131, we operate in one segment: the development, manufacture and marketing of
integrated, high throughput genomic and proteomic systems and services for analyzing and quantifying
biomolecules. Our two product lines, genomic and proteomic systems and services, have similar economic
characteristics and attributes, including similar marketing and distribution patterns, similar production
processes and similar, if not the same, customers. As a result, we aggregate our product lines into a single
segment of genomic and proteomic systems and services. We operate primarily in three geographic regions: the
United States, United Kingdom and Japan.

We sell products to customers on a worldwide basis. Sales and marketing operations outside the United States
are conducted principally through our foreign subsidiaries and our international distribution partner,
PerkinElmer, Inc. Intercompany sales and transfers between geographic areas are accounted for at prices, which
are designed to be, representative of third party transactions.

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The following table summarizes selected financial information of our operations by geographic location (in
thousands):

|         |                             |               |   |                                     |       |  |             |        |       | 
|-------- | --------------------------- | ------------- | - | ----------------------------------- | ----- |  | ----------- | ------ | ----- | 
|         |                             |               |   | For
the three months endedMarch 31, |      
|         |                             |               |   |                                     |      
|         |                             |               |   | 2001                                |       |  | 2000        |       
|        
|         |                             |               |   | (Unaudited)                         |       |  | (Unaudited) |       
|         |                             |               |   |                                     |       | 
|Revenue:
|        
|        
|        
|        
|         | United States               |               | $ | 2,950                               |       |  | $           | 2,246  |      
|        
|        
|        
|        
|         | Europe                      |               |   | 2,753                               |       |  |             | 2,555  |      
|        
|        
|        
|        
|         | Japan                       |               |   | 1,302                               |       |  |             | 1,093  |      
|        
|        
|        
|        
|         | Less  Intercompany revenue |               |   | (2,626                              | )     |  |             | (1,899 | )    
|         |                             |               |   |                                     |       |  |            
|         |                             | Total revenue |   | $                                   | 4,379 |  |             |        | 3,995 | 
|         |                             |               |   |                                     |       |  |            
|        

|                   |                     |                         |   |             |        |  |              |        |        | 
|------------------ | ------------------- | ----------------------- | - | ----------- | ------ |  | ------------ | ------ | ------ | 
|                   |                     |                         |   | March 31,   |        |  | December 31, |       
|                   |                     |                         |   | 2001        |        |  | 2000         |       
|                  
|                   |                     |                         |   | (Unaudited) |        |  |              |       
|Long-lived assets:
|                  
|                  
|                  
|                  
|                   | United States       |                         | $ | 17,216      |        |  | $            | 17,334 |       
|                  
|                  
|                  
|                  
|                   | Europe              |                         |   | 898         |        |  |              | 916    |       
|                  
|                  
|                  
|                  
|                   | Japan               |                         |   | 143         |        |  |              | 168    |       
|                  
|                  
|                  
|                  
|                   | Goodwill            |                         |   | 880         |        |  |              | 954    |       
|                  
|                  
|                  
|                  
|                   | Less  Eliminations |                         |   | (8,944      | )      |  |              | (8,943 | )     
|                   |                     |                         |   |             |        |  |             
|                   |                     | Total long-lived assets |   | $           | 10,193 |  |              | $      | 10,429 | 
|                   |                     |                         |   |             |        |  |             
|                  

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

Cautionary Statement

This Managements Discussion and Analysis of Financial Condition and Results of Operations as of March
31, 2001 and for the three month periods ended March 31, 2001 and 2000 should be read in conjunction with
Managements Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated
Financial Statements and Notes thereto contained in the Companys Annual Report on Form 10-K for the year ended
December 31, 2000. The following discussion of the financial condition and results of our operations should be
read in conjunction with our Condensed Consolidated Financial Statements, including the Notes thereto, included
elsewhere in this Form 10-Q. This Form 10-Q contains forward-looking statements within the meaning of Section 21E
of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended.
Such statements are based on managements current expectations and are subject to a number of factors and
uncertainties that could cause actual results or outcomes to differ materially from those described in such
forward-looking statements. When used in this report or elsewhere by management from time to time, the words
believe, anticipates, intends, plans, estimates, and similar expressions are forward-looking
statements. These statements address or may address the following subjects: results of operations, customer
growth and retention; development of technology; losses or earnings; operating expenses, including, without
limitation, marketing expense and technology and development expense; and revenue growth. Prospective investors
are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks
and uncertainties. Actual events or results may differ materially from those discussed in the forward-looking
statements as a result of various factors, many of which are described in the Risk Factors section of our
latest Annual Report on Form 10-K. You should carefully consider those risks, in addition to the other
information in this report and in our other filings with the Securities and Exchange Commission. Except as
required by law, we undertake no obligations to update any forward-looking statements.

Overview

We design, develop, manufacture, market and sell genomic and proteomic instruments, software, consumables and
services. Unlike many other life sciences companies in the DNA microarray and proteomic markets, we offer
integrated systems with demonstrated market acceptance. Our DNA microarray and proteomic products and systems enable
researchers to perform complex, high-volume experiments at lower costs and in less time than with traditional
techniques. Our customers use our integrated and automated systems to produce microarrays, maintain DNA libraries,
quantify gene expression levels and isolate, identify and characterize proteins, thereby facilitating more rapid
and less expensive drug discovery. We have sold our products in over 30 countries to pharmaceutical and
biotechnology companies, government agencies, universities and private research institutions.

We have a limited history of operations, and we anticipate that our quarterly results will fluctuate for the
foreseeable future due to several factors, including market acceptance of current and new products, the
introduction of new products by our competitors, the success of our research and development projects and the
timing of significant orders. Our limited operating history makes it difficult or impossible to accurately
predict future operations.

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RESULTS OF OPERATIONS

Three months ended March 31, 2001 and 2000

Revenue

Revenue increased $384,000, or 10%, to $4.4 million in the first quarter of 2001 from $4.0 million in the first
quarter of 2000. This increase in revenue was due primarily to increased sales of our proteomic systems,
consumables and services, which increased $621,000, or 47%, to $2.0 million from $1.3 million in the first
quarter of 2000. Increased sales of these proteomic product offerings offset the $313,000 decrease in unit sales of our GeneTAC
Biochip System and the $56,000 revenue decline associated with our products for documenting and analyzing one
dimensional separations of DNA and proteins, which were discontinued in 1999 in all markets except Japan. The
remaining increase in our revenue of $132,000 was attributable to services and consumables associated with our
biochip product line.

Cost of revenue

Cost of revenue increased $421,000, or 21%, to $2.4 million in the first quarter of 2001 from $2.0 million in the
first quarter of 2000. Of this increase, approximately $227,000 was due to increased cost of materials
attributable to increased proteomic instrumentation, consumable and service sales. The remainder of the increase
in cost of revenue was attributable to increased spending on product support and employees as a result of
hiring 21 additional production and assembly personnel.

Selling, general and administrative expenses

Selling, general and administrative expenses increased $741,000, or 28%, to $3.4 million in the first quarter of
2001 from $2.6 million in the first quarter of 2000. Of this increase, approximately $333,000 was attributable
to salaries and other employee related costs due primarily to the hiring of 22 additional
sales, marketing and administrative personnel. Approximately $191,000 was attributable to
increased professional and legal expenses, approximately $120,000 was attributable to increased expenses
associated with promotional activities and the remaining approximately $97,000 was attributable to increased
office expenses and depreciation expense associated with the hiring of additional personnel.

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Research and development expenses

Research and development expenses increased $856,000, or 76%, to $2.0 million in the first quarter of 2001
compared to $1.1 million in the first quarter of 2000. Of this increase, approximately $192,000 was attributable
to salaries and other employee related costs due primarily to the hiring of 7 additional research and development
personnel. Approximately $241,000 was attributable to an increase in our usage of development materials for new
products and approximately $188,000 was due to an increase in outside consulting services and patent costs. The
remaining approximately $235,000 was attributable to increased facility expenses and depreciation expense
primarily due to the new Ann Arbor proteomic center opened in the third quarter of 2000 and the associated lab
equipment.

Interest expense

Interest expense decreased $1.6 million to $62,000 in the first quarter of 2001 from $1.7 million in the first
quarter of 2000. This decrease was due primarily to the repayment on June 9, 2000 of $6 million of subordinated
notes with warrants issued April 1999 and $3.5 million of subordinated notes with warrants issued October 1999.
The $62,000 of interest in the first quarter of 2001 represents interest incurred on the increased borrowings
under our commercial bank borrowing facility and under capital leases.

Interest income

Interest income increased $427,000 in the first quarter of 2001 to $523,000 from $96,000 in the first quarter of
2000. Interest income increased due to higher average cash and cash equivalent balances in 2001, resulting from
the investment of the proceeds from our initial public offering which closed on May 10, 2000.

Other income

Other income, net of other expense, decreased $456,000 to $19,000 in the first quarter of 2001 from $475,000 in
the first quarter of 2000. This decrease is primarily due to the $407,000 gain on the sale of our 30% ownership
interest in HD Technologies recognized in January 2000.

Provision for income taxes

We incurred net operating losses in the three months ended March 31, 2001 and 2000, and consequently, we did not
pay any federal income taxes in the United States. The income tax expense of $79,000 for the three months ended March 31, 2001 represents income taxes paid in Japan by our Japanese subsidiary. At December 31, 2000, we have available net operating
loss carryforwards of
approximately $27.4 million, which can be utilized to offset future taxable income. These net operating loss
carryforwards expire between 2010 and 2020. Additionally, utilization of net operating loss carryforwards are
limited under Section 382 of the Internal Revenue Code due to ownership changes, as defined by Section 382, that
occurred in 1997 and as a result of our initial public offering completed in May 2000. These and other deferred
income tax assets are fully reserved by a valuation allowance due to historical operating losses. Realization of
deferred tax assets is dependent on future earnings, if any, the timing and amount of which are uncertain.

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Accordingly, valuation allowances in amounts equal to the deferred tax assets have been established to reflect
these uncertainties.

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2001 our cash and cash equivalents totaled
$33.8 million compared to $40.2 million at December 31,
2000. The $6.3 million decrease in cash and cash equivalents is principally due to $3.5 million net cash used
for operating activities in the three months ended March 31, 2001 and to $2.3 million in license fee payments.

Cash used in operations for the three-month period ended March 31, 2001 was $3.5 million compared with $2.1
million for the same period in 2000. The $1.4 million increase in net cash used in operating activities was
primarily due to the decrease in operating loss of $907,000 being offset by non-cash charges of $1.3 million for
amortization of discount on subordinated notes with warrants and $1.1 million for extraordinary loss on
extinguishment of debt in the first quarter of 2000. Our net loss of $3.0 million in the first three months of
2001 included non-cash charges of $452,000 for depreciation and amortization expense. Our net loss of $3.9
million in the first three months of 2000 included non-cash charges of $1.3 million for amortization of discount
on subordinated notes with warrants, $1.1 million for extraordinary loss on extinguishment of debt and $370,000
for depreciation and amortization expense, offset by $407,000 gain on sale of investment in HD Technologies.

Our investing activities for the three months ended March 31, 2001 used cash of $2.7 compared with our investing
activities providing cash of $367,000 for the same period in 2000. Cash used in investing activities was
attributable to $453,000 in capital expenditures and $2.3 million in license fee payments. Cash provided in 2000
was attributable to approximately $575,000 in cash received from the sale of our 30% ownership interest in HD
Technologies offset by $134,000 for capital expenditures.

Net cash used in financing activities for the three months ended March 31, 2001 was $183,000 compared with net
cash provided by financing activities of $27.3 million for the same period in 2000. Cash used in financing
activities in 2001 was primarily due to the repayment of long-term debt of $189,000. Financing activities in
2000 included borrowings of $20.0 million under our amended primary bank line-of-credit agreement and the receipt
of $7.4 million in net proceeds from the sale of preferred stock in January 2000 offset by repayment of long-term
debt of $170,000.

In March and April 2000, we amended our primary bank line-of-credit agreement to provide for borrowings up to $32
million through July 2001. As of March 31, 2001 there were no outstanding borrowings under this line of credit.

Working capital decreased $4.5 million to $39.4 million
at March 31, 2001 from $44.0 million at December 31,
2000. The decrease in working capital resulted from a decrease in cash of $6.3 million and accounts receivable of
$1.7 million partially offset by an increase of $1.0 million in inventory and a $2.7 million decrease in accounts
payable and accrued liabilities balances.

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As of March 31, 2001, we had an aggregate of $1.8 million in future obligations of principal payments under
capital leases and other long-term debt, of which $744,000 is to be paid within the next twelve months.

We believe our existing cash, cash equivalents and short term investments will be sufficient to fund our
operating expenses, debt obligations and capital requirements on both a short-term and long-term, greater than 12
months, basis. However, we may need to raise additional capital to fund our research and development programs, to
scale up manufacturing activities, to expand our sales and marketing capabilities or to fund unforeseeable
expenses. Even if we have sufficient funds for our operating plans, we may choose to raise additional capital due
to market conditions or strategic considerations. We may seek funding through public or private equity offerings,
debt financing or additional collaborations. We cannot assure you that additional financing will be available on
favorable terms, if at all.

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ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

Other than as disclosed in this report on Form 10-Q, there have been no significant changes in our market risk
exposure as described in Managements Discussion and Analysis of Financial Condition and Results of Operations
included in our latest Annual Report on Form 10-K, and incorporated herein by reference.

Recent accounting pronouncements

We adopted Statement of Financial Accounting Standards Nos. 133
and 138, Accounting for Derivative Instruments
and Hedging Activities. There was no impact on our consolidated financial position or results of operations.

14



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##### Table of Contents









PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

On February 12, 2001, PerkinElmer, Inc. filed a lawsuit in Delaware Chancery Court requesting that the
Delaware court interpret the terms of PerkinElmers right, under our Certificate of Incorporation, to require us to
call and redeem our callable common stock. The lawsuit named the Company as well as each of our directors and
alleged, among other things, that we sought to improperly impede or
terminate PerkinElmers right to cause us to
redeem our callable stock, and to impose an improper financial penalty upon an exercise by PerkinElmer of that
right. PerkinElmers complaint was in the context of a proposed transaction that we were pursuing with an unnamed
third party, which if completed without PerkinElmer exercising its right, would have had the effect of terminating
the right.

On February 15, 2001, we filed a motion for summary judgment seeking dismissal of the lawsuit. On April 18, 2001, we
reached an agreement with PerkinElmer that ends all litigation between the companies and settles all disputes between
the parties. As part of the settlement, we purchased approximately 69% of the shares of our common stock held by
PerkinElmer. As a result of the sale of PerkinElmers stock in
the Company, PerkinElmers right to cause us to
redeem our callable common stock terminated and each outstanding share of our callable common stock automatically
converted into one share of our common stock. We filed a Form 8-K reporting the settlement, together with copies of
the settlement documents.

Other than as described above, there have been no material developments with respect to legal
proceedings since the date of our Annual Report on Form 10-K for the year ended December 31, 2000.




ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.

On April 19, 2001, the call period for our callable common stock terminated as a result of the sale by
PerkinElmer to us of more than 50% of the shares of our common stock owned by PerkinElmer. Pursuant to the terms
of our Third Amended and Restated Certificate of Incorporation, upon termination of the call period for the
callable common stock, each outstanding share of our callable common stock automatically converted into one share
of our common stock. We filed an Amendment to Form 8-A registering our common stock, $.001 par value per share.
Our common stock has been listed on the Nasdaq National Market and
will continue to trade under the symbol GNSL.

Use of Proceeds

On May 10, 2000 we completed an initial public offering of 7,000,000 shares of callable common stock at $8.00 per
share. The managing underwriters in the offering were UBS Warburg LLC, Lehman Brothers and Dain Rauscher
Wessels. The shares of callable common stock sold in the offering were registered under the Securities Act of
1933 on a Registration Statement on Form S-1 (Registration No. 333-30246) that was declared effective by the
Securities and Exchange Commission on May 4, 2000. The purchase price

15



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to the public was $8.00 per share and,
after deducting underwriter discounts and commissions, we received proceeds per share of $7.44. The
aggregate-offering price was approximately $57.0 million. We incurred expenses of approximately $6.1 million, of
which approximately $4.3 million represented underwriting discounts and commissions and approximately $1.8
million represented other expenses related to the offering. The proceeds to us from the offering, including the
over-allotment option, after deducting underwriting discounts and commissions and other offering expenses, were
approximately $55.2 million. Of the net offering proceeds,
through March 31, 2001, approximately $10.6 million
has been used to payoff long-term and other debt, approximately $1.9 million to purchase equipment and improve
leaseholds, approximately $2.3 million for capitalized license fees and approximately $10.7 million for general
corporate purposes, including hiring additional personnel, development and manufacturing of products and expansion
of facilities. The balance is invested in short-term investment-grade securities.




ITEM 3. DEFAULTS UPON SENIOR SECURITIES.



| |                
| | ---------------
| | Not applicable.




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



| |                
| | ---------------
| | Not applicable.




ITEM 5. OTHER INFORMATION.



| |                
| | ---------------
| | Not applicable.

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

|   
|---
|(a)

The following is a list of exhibits filed as part of this Quarterly
Report on Form 10-Q.

|        |  |                                               
|------- |  | ----------------------------------------------
|Exhibit
|Number  |  | Description                                   
|        |  |                                               
|10.1    |  | Stock Pledge Agreement between Jeffrey S.     
|       
|       
|       
|       
|        |  | Williams and Genomic Solutions Inc., dated    
|       
|       
|       
|       
|        |  | April 15, 2001                                
|       
|       
|       
|       
|10.2    |  | Promissory Note between Jeffrey S. Williams as
|       
|       
|       
|       
|        |  | borrower and Genomic Solutions Inc. as lender,
|       
|       
|       
|       
|        |  | dated April 15, 2001                          
|       
|       
|       
|       
|(b)     |  | Reports on Form 8-K                           



|                                                                                                                                                                                                                                                          
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|No reports on Form 8-K were filed during the three months ended
March 31, 2001. The Company did file a report on Form 8-K on April 23,
2001 reporting the settlement of the PerkinElmer lawsuit and the
conversion of the Companys callable common stock.

17



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##### Table of Contents



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



|                   |  |                                                                                                                                  
|------------------ |  | ---------------------------------------------------------------------------------------------------------------------------------
|                  
|Date: May 14, 2001 |  | By:  /s/ Steven J. Richvalsky                                                                                                    
|
|                   |  | STEVEN J. RICHVALSKY
Chief Financial Officer, Executive
Vice President and
Treasurer (principal financial and
accounting officer)

18



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##### Table of Contents



EXHIBIT INDEX



|        |  |                                               
|------- |  | ----------------------------------------------
|Exhibit
|Number  |  | Description                                   
|        |  |                                               
|10.1    |  | Stock Pledge Agreement between Jeffrey S.     
|       
|       
|       
|       
|        |  | Williams and Genomic Solutions Inc., dated    
|       
|       
|       
|       
|        |  | April 15, 2001                                
|       
|       
|       
|       
|10.2    |  | Promissory Note between Jeffrey S. Williams as
|       
|       
|       
|       
|        |  | borrower and Genomic Solutions Inc. as lender,
|       
|       
|       
|       
|        |  | dated April 15, 2001                          

19