##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

|           |  |                                                                                                                                     
|---------- |  | ------------------------------------------------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                                                                     
|x          |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from  to         

Commission file number: 000-30549

GENOMIC SOLUTIONS INC.
(Exact name of registrant as specified in its charter)

|                                                                                    |  |                                                
|----------------------------------------------------------------------------------- |  | -----------------------------------------------
|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)                               

Registrants telephone number, including area code: (734) 975-4800

Indicate by check mark whether the registrant (1) has filed all reports
required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No o

The number of shares outstanding of the registrants Common Stock, $.001 par
value, as of July 31, 2002, was 31,257,198.





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TABLE OF CONTENTS



|                             |                                                                                               |                                                                                                                              |  |  |  |  |  | 
|---------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  | 
|PART I FINANCIAL INFORMATION
|                             | Item 1. Financial Statements                                                                 
|                             |                                                                                               | Condensed Consolidated Balance Sheets as of June 30, 2002 (unaudited) and December 31, 2001                                 
|                             |                                                                                               | Condensed Consolidated Statements of Operations for the three months and six months ended June 30, 2002 and 2001 (unaudited)
|                             |                                                                                               | Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2002 and 2001 (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                                                     



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##### Table of Contents



GENOMIC SOLUTIONS INC.
INDEX TO FORM 10-Q

|                             |                                                                                               |                                                                                                                              |    |   |  |         
|---------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------- | -- | - |  | --------
|                             |                                                                                               |                                                                                                                              |    |   |  | Page No.
|                             |                                                                                               |                                                                                                                              |    |   |  |         
|PART I FINANCIAL INFORMATION |                                                                                               |                                                                                                                             
|                             | Item 1. Financial Statements                                                                  |                                                                                                                              |   
|                             |                                                                                               | Condensed Consolidated Balance Sheets as of June 30, 2002
(unaudited) and December 31, 2001                                  |    | 3
|                             |                                                                                               | Condensed Consolidated Statements of Operations for the three
months and six months ended June 30, 2002 and 2001 (unaudited) |    | 4
|                             |                                                                                               | Condensed Consolidated Statements of Cash Flows for the six months ended
June 30, 2002 and 2001 (unaudited)                  |    | 5
|                             |                                                                                               | Notes to Condensed Consolidated Financial Statements (unaudited)                                                             |    | 6
|                             | Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations |                                                                                                                              | 12
|                             | Item 3. Qualitative and Quantitative Disclosures About Market Risk                            |                                                                                                                              | 21
|PART II OTHER INFORMATION    |                                                                                               |                                                                                                                             
|                             | Item 1. Legal Proceedings                                                                     |                                                                                                                              | 22
|                             | Item 2. Changes In Securities and Use of Proceeds                                             |                                                                                                                              | 22
|                             | Item 3. Defaults Upon Senior Securities                                                       |                                                                                                                              | 23
|                             | Item 4. Submission of Matters to a Vote of Security Holders                                   |                                                                                                                              | 23
|                             | Item 5. Other Information                                                                     |                                                                                                                              | 23
|                             | Item 6. Exhibits and Reports on Form 8-K                                                      |                                                                                                                              | 23

2



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##### Table of Contents












PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GENOMIC SOLUTIONS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS(in thousands)

|                                     |                                                                                                                                                               |                                            |                             |         |             |        |  |              |        |        | 
|------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | --------------------------- | ------- | ----------- | ------ |  | ------------ | ------ | ------ | 
|                                     |                                                                                                                                                               |                                            |                             |         | June 30,    |        |  | December 31, |       
|                                     |                                                                                                                                                               |                                            |                             |         | 2002        |        |  | 2001         |       
|                                     |                                                                                                                                                               |                                            |                             |         |             |        |  |              |       
|                                     |                                                                                                                                                               |                                            |                             |         | (Unaudited) |        |  |              |        |       
|Assets                               |                                                                                                                                                               |                                            |                             |         |             |        |  |             
|Current Assets:                      |                                                                                                                                                               |                                            |                             |         |             |        |  |             
|                                     |                                                                                                                                                               | Cash and cash equivalents                  |                             | $       | 5,266       |        |  | $            | 13,097 |       
|                                     |                                                                                                                                                               | Accounts receivable, net                   |                             |         | 7,156       |        |  |              | 5,466  |       
|                                     |                                                                                                                                                               | Inventories                                |                             |         | 10,954      |        |  |              | 9,622  |       
|                                     |                                                                                                                                                               | Prepaid expenses and other                 |                             |         | 1,027       |        |  |              | 948    |       
|                                     |                                                                                                                                                               |                                            |                             |         |             |       
|                                     |                                                                                                                                                               |                                            | Total current assets        |         |             | 24,403 |  |              |        | 29,133 | 
|                                     |                                                                                                                                                               | Property and equipment, net                |                             |         | 2,650       |        |  |              | 3,261  |       
|                                     |                                                                                                                                                               | Goodwill and intangible assets, net        |                             |         | 13,579      |        |  |              | 13,795 |       
|                                     |                                                                                                                                                               | Other long-term assets                     |                             |         | 1,361       |        |  |              | 1,735  |       
|                                     |                                                                                                                                                               |                                            |                             |         |             |       
|                                     |                                                                                                                                                               |                                            | Total assets                |         | $           | 41,993 |  |              | $      | 47,924 | 
|                                     |                                                                                                                                                               |                                            |                             |         |             |       
|Liabilities and Stockholders Equity |                                                                                                                                                               |                                            |                             |         |             |        |  |             
|Current Liabilities:                 |                                                                                                                                                               |                                            |                             |         |             |        |  |             
|                                     |                                                                                                                                                               | Lines of credit                            |                             | $       | 2,500       |        |  | $            | 2,500  |       
|                                     |                                                                                                                                                               | Current portion long-term debt             |                             |         | 44          |        |  |              | 57     |       
|                                     |                                                                                                                                                               | Accounts payable                           |                             |         | 3,813       |        |  |              | 5,213  |       
|                                     |                                                                                                                                                               | Accrued liabilities                        |                             |         | 3,901       |        |  |              | 4,755  |       
|                                     |                                                                                                                                                               | Deferred revenue                           |                             |         | 696         |        |  |              | 842    |       
|                                     |                                                                                                                                                               |                                            |                             |         |             |       
|                                     |                                                                                                                                                               |                                            | Total current liabilities   |         |             | 10,954 |  |              |        | 13,367 | 
|                                     |                                                                                                                                                               |                                            |                             |         |             |       
|Long-Term Liabilities:               |                                                                                                                                                               |                                            |                             |         |             |        |  |             
|                                     |                                                                                                                                                               | Long-term debt, less current portion       |                             |         | 44          |        |  |              | 66     |       
|                                     |                                                                                                                                                               | Other long-term liabilities                |                             |         | 63          |        |  |              | 52     |       
|                                     |                                                                                                                                                               |                                            |                             |         |             |       
|                                     |                                                                                                                                                               |                                            | Total long-term liabilities |         |             | 107    |  |              |        | 118    | 
|                                     |                                                                                                                                                               |                                            |                             |         |             |       
|Stockholders Equity:                |                                                                                                                                                               |                                            |                             |         |             |        |  |             
|                                     | Preferred stock, $0.001 par value; 15,000
shares authorized; zero shares issued and
outstanding                                                               |                                            |                             |        |             |        |  |             |       
|                                     | Common stock, $.001 par value; 60,000 shares
authorized; 31,216 and 31,154 shares issued
and outstanding at June 30, 2002 and December
31, 2001, respectively |                                            |                             | 31      |             |        |  | 31           |       
|                                     | Additional paid-in capital                                                                                                                                    |                                            |                             | 103,102 |             |        |  | 103,045      |       
|                                     | Notes receivable                                                                                                                                              |                                            |                             | (142    | )           |        |  | (137         | )     
|                                     | Deferred compensation related to stock options                                                                                                                |                                            |                             | (59     | )           |        |  | (72          | )     
|                                     | Retained deficit                                                                                                                                              |                                            |                             | (72,018 | )           |        |  | (68,055      | )     
|                                     | Accumulated
other comprehensive income (loss)                                                                                                                 |                                            |                             | 18      |             |        |  | (373         | )     
|                                     |                                                                                                                                                               |                                            |                             |         |             |       
|                                     |                                                                                                                                                               | Total stockholders equity                 |                             |         | 30,932      |        |  |              | 34,439 |       
|                                     |                                                                                                                                                               |                                            |                             |         |             |       
|                                     |                                                                                                                                                               | Total liabilities and stockholders equity |                             | $       | 41,993      |        |  | $            | 47,924 |       
|                                     |                                                                                                                                                               |                                            |                             |         |             |       

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

3



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GENOMIC SOLUTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(unaudited; in thousands, except per share data)

|                                                                |                                                    |                                        |                                           |        |                            |        |        |                          |       |        |        |        |        |        |        |        |       |        |  
|--------------------------------------------------------------- | -------------------------------------------------- | -------------------------------------- | ----------------------------------------- | ------ | -------------------------- | ------ | ------ | ------------------------ | ----- | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ----- | ------ | -
|                                                                |                                                    |                                        |                                           |        | For the three months ended |        |        | For the six months ended |      
|                                                                |                                                    |                                        |                                           |        | June 30,                   |        |        | June 30,                 |      
|                                                                |                                                    |                                        |                                           |        |                            |        |        |                          |      
|                                                                |                                                    |                                        |                                           |        | 2002                       |        |        | 2001                     |       |        | 2002   |        |        | 2001   |       
|                                                                |                                                    |                                        |                                           |        |                            |        |        |                          |       |        |        |        |        |        |       
|Revenue:                                                        |                                                    |                                        |                                           |        |                            |        |        |                          |       |        |        |        |        |        |        |       
|                                                                |                                                    | Product revenue                        |                                           | $      | 5,847                      |        |        | $                        | 4,083 |        |        | $      | 12,392 |        |        | $      | 8,096 |       
|                                                                |                                                    | Service revenue                        |                                           |        | 193                        |        |        |                          | 380   |        |        |        | 324    |        |        |        | 746   |       
|                                                                |                                                    |                                        |                                           |        |                            |        |        |                          |       |        |        |       
|                                                                |                                                    |                                        | Total revenue                             |        |                            | 6,040  |        |                          |       | 4,463  |        |        |        | 12,716 |        |        |       | 8,842  |  
|                                                                |                                                    |                                        |                                           |        |                            |        |        |                          |       |        |        |       
|Cost of Revenue:                                                |                                                    |                                        |                                           |        |                            |        |        |                          |       |        |        |        |        |        |        |       
|                                                                |                                                    | Cost of product revenue                |                                           |        | 3,215                      |        |        |                          | 2,468 |        |        |        | 6,598  |        |        |        | 4,813 |       
|                                                                |                                                    | Cost of service revenue                |                                           |        | 45                         |        |        |                          | 73    |        |        |        | 59     |        |        |        | 153   |       
|                                                                |                                                    |                                        |                                           |        |                            |        |        |                          |       |        |        |       
|                                                                |                                                    |                                        | Total cost of revenue                     |        |                            | 3,260  |        |                          |       | 2,541  |        |        |        | 6,657  |        |        |       | 4,966  |  
|                                                                |                                                    |                                        |                                           |        |                            |        |        |                          |       |        |        |       
|                                                                |                                                    |                                        | Gross profit                              |        |                            | 2,780  |        |                          |       | 1,922  |        |        |        | 6,059  |        |        |       | 3,876  |  
|                                                                |                                                    |                                        |                                           |        |                            |        |        |                          |       |        |        |       
|Operating Expenses:                                             |                                                    |                                        |                                           |        |                            |        |        |                          |       |        |        |        |        |        |        |       
|                                                                |                                                    | Selling, general and administrative    |                                           |        | 3,792                      |        |        |                          | 3,571 |        |        |        | 7,311  |        |        |        | 6,932 |       
|                                                                |                                                    | Research and development               |                                           |        | 1,058                      |        |        |                          | 1,639 |        |        |        | 2,483  |        |        |        | 3,620 |       
|                                                                |                                                    |                                        |                                           |        |                            |        |        |                          |       |        |        |       
|                                                                |                                                    |                                        | Total operating expenses                  |        |                            | 4,850  |        |                          |       | 5,210  |        |        |        | 9,794  |        |        |       | 10,552 |  
|                                                                |                                                    |                                        |                                           |        |                            |        |        |                          |       |        |        |       
|                                                                |                                                    |                                        | Loss from operations                      |        |                            | (2,070 | )      |                          |       | (3,288 | )      |        |        | (3,735 | )      |        |       | (6,676 | )
|                                                                |                                                    |                                        |                                           |        |                            |        |        |                          |       |        |        |       
|Other Income (Expense):                                         |                                                    |                                        |                                           |        |                            |        |        |                          |       |        |        |        |        |        |        |       
|                                                                |                                                    | Interest expense                       | (43                                       | )      |                            |        | (19    | )                        |       |        | (57    | )      |        |        | (81    | )     
|                                                                |                                                    | Interest income                        |                                           |        | 50                         |        |        |                          | 312   |        |        |        | 107    |        |        |        | 834   |       
|                                                                |                                                    | Gain on sale of investment             |                                           |        |                           |        |        |                          |      |        |        |        | 23     |        |        |        |      |       
|                                                                |                                                    | Loss
on impairment of long lived asset |                                           |        | (500                       | )      |        |                          |      |        |        |        | (500   | )      |        |        |      |       
|                                                                |                                                    | Other income, net                      |                                           |        | 182                        |        |        |                          | 58    |        |        |        | 199    |        |        |        | 77    |       
|                                                                |                                                    |                                        |                                           |        |                            |        |        |                          |       |        |        |       
|                                                                |                                                    |                                        | Total other income (expense)              |        |                            | (311   | )      |                          |       | 351    |        |        |        | (228   | )      |        |       | 830    |  
|                                                                |                                                    |                                        |                                           |        |                            |        |        |                          |       |        |        |       
|                                                                |                                                    |                                        | Loss before taxes and extraordinary items |        |                            | (2,381 | )      |                          |       | (2,937 | )      |        |        | (3,963 | )      |        |       | (5,846 | )
|                                                               
|Provision (Benefit) for Income Taxes                            |                                                    |                                        |                                          |        |                            |        | (6     | )                        |       |        |       |        |        |        | 72     |       
|                                                                |                                                    |                                        |                                           |        |                            |        |        |                          |       |        |        |       
|Net Loss                                                        |                                                    |                                        | (2,381                                    | )      |                            |        | (2,931 | )                        |       |        | (3,963 | )      |        |        | (5,918 | )     
|Deemed dividend upon repurchase of stock from PerkinElmer, Inc. |                                                    |                                        |                                          |        |                            |        | (2,811 | )                        |       |        |       |        |        |        | (2,811 | )     
|                                                                |                                                    |                                        |                                           |        |                            |        |        |                          |       |        |        |       
|Net loss attributable to
common stockholders                    |                                                    | $                                      | (2,381                                    | )      |                            | $      | (5,742 | )                        |       | $      | (3,963 | )      |        | $      | (8,729 | )     
|                                                                |                                                    |                                        |                                           |        |                            |        |        |                          |       |        |        |       
|Net loss Per Share, Basic and Diluted:                          |                                                    |                                        |                                           |        |                            |        |        |                          |       |        |        |        |        |        |        |       
|                                                                | Net loss per share                                 |                                        | $                                         | (0.08  | )                          |        | $      | (0.12                    | )     |        | $      | (0.13  | )      |        | $      | (0.24  | )    
|                                                                | Loss per share from deemed dividend                |                                        |                                           | 0.00   |                            |        |        | (0.12                    | )     |        |        | 0.00   |        |        |        | (0.11  | )    
|                                                                |                                                    |                                        |                                           |        |                            |        |        |                          |       |        |        |       
|                                                                | Loss per share attributable to common
stockholders |                                        | $                                         | (0.08  | )                          |        | $      | (0.24                    | )     |        | $      | (0.13  | )      |        | $      | (0.35  | )    
|                                                                |                                                    |                                        |                                           |        |                            |        |        |                          |       |        |        |       
|                                                                | Weighted average common shares                     |                                        |                                           | 31,180 |                            |        |        | 24,429                   |       |        |        | 31,176 |        |        |        | 24,734 |      
|                                                                |                                                    |                                        |                                           |        |                            |        |        |                          |       |        |        |       

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

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GENOMIC SOLUTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited; in thousands)

|                                               |                                                                             |                                                                                                   |                            |                                       |       |                          |         |        |       |        |        |  
|---------------------------------------------- | --------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------- | -------------------------- | ------------------------------------- | ----- | ------------------------ | ------- | ------ | ----- | ------ | ------ | -
|                                               |                                                                             |                                                                                                   |                            |                                       |       | For the six months ended |        
|                                               |                                                                             |                                                                                                   |                            |                                       |       | June 30,                 |        
|                                               |                                                                             |                                                                                                   |                            |                                       |       |                          |        
|                                               |                                                                             |                                                                                                   |                            |                                       |       | 2002                     |         |        | 2001  |       
|                                               |                                                                             |                                                                                                   |                            |                                       |       |                          |         |        |       |       
|Cash Flows from Operating Activities:          |                                                                             |                                                                                                   |                            |                                       |       |                          |         |       
|                                               |                                                                             |                                                                                                   |                            |                                       |       |                          |         |       
|                                               | Net loss                                                                    |                                                                                                   | $                          | (3,963                                | )     |                          | $       | (5,918 | )    
|                                               | Adjustments to reconcile net loss to net cash used in operating
activities- |                                                                                                   |                            |                                       |       |                          |         |        |      
|                                               |                                                                             | Depreciation and amortization                                                                     |                            |                                       | 1,254 |                          |         |        | 1,149 |       
|                                               |                                                                             | Gain on sale of assets                                                                            |                            |                                       | (23   | )                        |         |        |      |       
|                                               |                                                                             | Loss
on impairment of long lived asset                                                            |                            |                                       | 500   |                          |         |        |      |       
|                                               |                                                                             | Increase (decrease in cash resulting from changes in assets
and liabilities, net of acquisitions- |                            |                                       |       |                          |         |        |       |       
|                                               |                                                                             |                                                                                                   | Accounts receivable        |                                       |       | (1,439                   | )       |        |       | 1,767  |       
|                                               |                                                                             |                                                                                                   | Inventories                |                                       |       | (1,306                   | )       |        |       | (2,009 | )     
|                                               |                                                                             |                                                                                                   | Prepaid expenses and other |                                       |       | (99                      | )       |        |       | 321    |       
|                                               |                                                                             |                                                                                                   | Accounts payable           |                                       |       | (1,514                   | )       |        |       | (791   | )     
|                                               |                                                                             |                                                                                                   | Accrued liabilities        |                                       |       | (829                     | )       |        |       | (879   | )     
|                                               |                                                                             |                                                                                                   | Deferred revenue           |                                       |       | (135                     | )       |        |       | (63    | )     
|                                               |                                                                             |                                                                                                   |                            |                                       |       |                         
|                                               |                                                                             |                                                                                                   |                            | Net cash used in operating activities |       |                          | (7,554  | )      |       |        | (6,423 | )
|                                               |                                                                             |                                                                                                   |                            |                                       |       |                         
|Cash Flows from Investing Activities:          |                                                                             |                                                                                                   |                            |                                       |       |                          |         |       
|                                               | Purchase of property and equipment                                          |                                                                                                   |                            | (149                                  | )     |                          |         | (1,273 | )    
|                                               | Increase in other assets                                                    |                                                                                                   |                            | (93                                   | )     |                          |         | (19    | )    
|                                               | Capitalized license fees                                                    |                                                                                                   |                            | (125                                  | )     |                          |         | (2,250 | )    
|                                               | Equity investment                                                           |                                                                                                   |                            |                                      |       |                          |         | (500   | )    
|                                               | Proceeds from sale of property and equipment                                |                                                                                                   |                            | 62                                    |       |                          |         | 19     |      
|                                               |                                                                             |                                                                                                   |                            |                                       |       |                         
|                                               |                                                                             |                                                                                                   |                            | Net cash used in investing activities |       |                          | (305    | )      |       |        | (4,023 | )
|                                               |                                                                             |                                                                                                   |                            |                                       |       |                         
|Cash Flows from Financing Activities:          |                                                                             |                                                                                                   |                            |                                       |       |                          |         |       
|                                               | Proceeds from issuance of common stock and callable common stock            |                                                                                                   |                            | 29                                    |       |                          |         | 86     |      
|                                               | Repayment of long-term debt                                                 |                                                                                                   |                            | (35                                   | )     |                          |         | (389   | )    
|                                               | Repurchase of stock from PerkinElmer, Inc.                                  |                                                                                                   |                            |                                      |       |                          |         | (5,500 | )    
|                                               | Other financing activities                                                  |                                                                                                   |                            | (4                                    | )     |                          |         | (4     | )    
|                                               |                                                                             |                                                                                                   |                            |                                       |       |                         
|                                               |                                                                             |                                                                                                   |                            | Net cash used in financing activities |       |                          | (10     | )      |       |        | (5,807 | )
|                                               |                                                                             |                                                                                                   |                            |                                       |       |                         
|Effect of Exchange Rate Changes on Cash        |                                                                             |                                                                                                   | 38                         |                                       |       |                          | 22     
|                                               |                                                                             |                                                                                                   |                            |                                       |       |                         
|Net Decrease in Cash and Cash Equivalents      |                                                                             |                                                                                                   | (7,831                     | )                                     |       |                          | (16,231 | )     
|                                               |                                                                             |                                                                                                   |                            |                                       |       |                         
|Cash  Beginning of Period                     |                                                                             |                                                                                                   | 13,097                     |                                       |       |                          | 40,159  |       
|                                               |                                                                             |                                                                                                   |                            |                                       |       |                         
|Cash  End of Period                           |                                                                             | $                                                                                                 | 5,266                      |                                       |       | $                        | 23,928  |       
|                                               |                                                                             |                                                                                                   |                            |                                       |       |                         
|Supplemental Disclosure of Cash Flow Activity: |                                                                             |                                                                                                   |                            |                                       |       |                          |         |       
|                                               | Cash paid for interest                                                      |                                                                                                   | $                          | 51                                    |       |                          | $       | 99     |      
|                                               |                                                                             |                                                                                                   |                            |                                       |       |                         
|                                               | Cash paid for income taxes                                                  |                                                                                                   | $                          |                                      |       |                          | $       | 56     |      
|                                               |                                                                             |                                                                                                   |                            |                                       |       |                         

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

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GENOMIC SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of
Genomic Solutions Inc. and its 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
and six month periods ended June 30, 2002 and 2001, 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 denominator used in
computing both basic and diluted net loss per share allocable to common
stockholders for each period are equal. The total number of shares excluded
from the calculations of diluted net loss per share, prior to application of
the treasury stock method, was 2,071,445 and 2,782,511 for the three months
ended June 30, 2002 and 2001, respectively and 2,021,336 and 2,594, 490 for the
six months ended June 30, 2002 and 2001, respectively.

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 and
six months ended June 30, 2002 and 2001 are as follows (in thousands):

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|                                        |  |                            |        |   |                          |   |        |             |  |   |             |   |  |   |        |  
|--------------------------------------- |  | -------------------------- | ------ | - | ------------------------ | - | ------ | ----------- |  | - | ----------- | - |  | - | ------ | -
|                                        |  | For the three months ended |        |   | For the six months ended |  
|                                        |  | June 30,                   |        |   | June 30,                 |  
|                                        |  |                            |        |   |                          |  
|                                        |  | 2002                       |        |   | 2001                     |   |        | 2002        |  |   | 2001        |  
|                                        |  |                            |        |   |                          |   |        |             |  |   |             |  
|                                        |  | (Unaudited)                |        |   | (Unaudited)              |   |        | (Unaudited) |  |   | (Unaudited) |  
|                                       
|                                       
|                                       
|                                       
|                                       
|Net loss                                |  | $                          | (2,381 | ) |                          | $ | (2,931 | )           |  | $ | (3,963      | ) |  | $ | (5,918 | )
|Foreign currency translation adjustment |  |                            | 557    |   |                          |   | (60    | )           |  |   | 391         |   |  |   | (505   | )
|                                        |  |                            |        |   |                          |   |        |             |  |   |             |  
|Comprehensive loss                      |  | $                          | (1,824 | ) |                          | $ | (2,991 | )           |  | $ | (3,572      | ) |  | $ | (6,423 | )
|                                        |  |                            |        |   |                          |   |        |             |  |   |             |  

New Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board (FASB) issued
Statements of Financial Accounting Standards (SFAS) No. 141, Business
Combinations and SFAS No. 142 Goodwill and Other Intangible Assets. These
pronouncements amend the accounting for business combinations, goodwill, and
other intangible assets. SFAS No. 141 eliminates the pooling-of-interests
method of accounting for business combinations and further clarifies the
criteria to recognize intangible assets separately from goodwill. The
requirements of SFAS No. 141 are effective for any business combination
completed after June 30, 2001. Upon adoption of SFAS No. 142 goodwill and
other indefinite-lived assets are no longer amortized, but are subject to
annual impairment reviews, or more frequently, if events or circumstances
indicate there may be an impairment. The amortization provisions of SFAS No.
142 apply to goodwill and intangible assets acquired after June 30, 2001. With
respect to goodwill and intangible assets acquired prior to July 1, 2001,
companies are required to adopt the pronouncement in their fiscal year
beginning after December 15, 2001. The Company adopted SFAS 142 on January 1,
2002. During the second quarter of 2002, the Company completed the
implementation impairment review as required. Upon completing the
review, the Company concluded there was
no impairment of goodwill at the time of implementation. The proposed
acquisition of the Company by Harvard Bioscience, Inc. (HBIO) is an event under
SFAS 142 that may indicate that the value of the Companys goodwill is impaired
as of July 17, 2002 (see Note 7). The Company will calculate the amount of impairment, if
any, and will record an impairment charge, if necessary, in the third quarter
of 2002. Total goodwill included in the Companys Financial Statements was $9.7
million at June 30, 2002 and $9.6 million at December 31, 2001.

Total operating expenses would have been reduced by approximately $73,000 and
$147,000 for the three and six months ended June 30, 2001 if goodwill had not
been amortized. This would have resulted in a net loss of $2.9 million or $(0.12) per share
and $5.8 million or $(0.23) per share
for the three and six months ended June 30, 2001, respectively.

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations. SFAS No. 143 establishes standards associated with the
retirement of tangible long-lived assets and the associated asset retirement
costs. This statement is effective for financial statements issued for fiscal
years beginning after June 15, 2002. Genomic Solutions has not yet assessed
the impact of this standard on its financial statements, but does not expect
the impact to be material.

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. SFAS No. 144 supersedes SFAS No. 121, although
it retains the fundamental principles of how to measure the impairment of
assets held for use

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and assets to be disposed of by sale. It requires that
long-lived assets to be disposed of other than by sale be considered held and
used until disposed of. It also provides new guidance for using a
probability-weighted approach for measuring future cash flows when there are
alternative courses of action. This statement is effective for financial
statements issued for years beginning after December 15, 2001. On January 1,
2002, the Company adopted SFAS No. 144.

The Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standard (SFAS) No. 145, Rescission of FASB Statements No. 4, 44,
and 64, Amendment of FASB Statement No. 13, and Technical Corrections,
effective for fiscal years beginning May 15, 2002 or later that rescinds FASB
Statement No. 4, Reporting Gains and Losses from Extinguishment of Debt, FASB
Statement No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund
Requirements, and FASB Statement No. 44, Accounting for Intangible Assets of
Motor Carriers. This Statement amends FASB Statement No. 4 and FASB Statement
No. 13, Accounting for Leases, to eliminate an inconsistency between the
required accounting for sale-leaseback transactions. This Statement also amends
other existing authoritative pronouncements to make various technical
corrections, clarify meanings, or describe their applicability under changed
conditions. The Company does not believe the impact of adopting SFAS No. 145
will have a material impact on its operations.

In July 2002, the FASB issued Statement No. 146, Accounting for Costs
Associated with Exit or Disposal Activities. Statement No. 146 is based on the
fundamental principle that a liability for a cost associated with an exit or
disposal activity should be recorded when it (1) is incurred, that is, when it
meets the definition of a liability in FASB Concepts Statement No. 6, Elements
of Financial Statements, and (2) can be measured at fair value. The principal
reason for issuing Statement No. 146 is the Boards belief that some
liabilities for costs associated with exit or disposal activities that entities
record under current accounting pronouncements, in particular EITF Issue 94-3,
do not meet the definition of a liability. Statement No. 146 nullifies EITF
Issue 94-3; thus, it will have a significant effect on practice because
commitment to an exit or disposal plan no longer will be a sufficient basis for
recording a liability for costs related to those activities. Statement No.146
is effective for exit and disposal activities initiated after December 31,
2002. Early application is encouraged; however, previously issued financial
statements may not be restated. An entity would continue to apply the
provisions of EITF Issue 94-3 to an exit activity that it initiated under an
exit plan that met the criteria of EITF Issue 94-3 before the entity initially
applied Statement No.146. The Company does not believe that the adoption of
this statement on January 1, 2003 will have a material impact on its
operations.

2. INVENTORIES

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

|                |  |             |        |  |              |   |       | 
|--------------- |  | ----------- | ------ |  | ------------ | - | ----- | 
|                |  | June 30,    |        |  | December 31, |  
|                |  | 2002        |        |  | 2001         |  
|                |  |             |        |  |              |  
|                |  | (Unaudited) |        |  |              |   |      
|Raw materials   |  | $           | 4,360  |  |              | $ | 3,908 | 
|Work-in-process |  |             | 2,174  |  |              |   | 2,077 | 
|Finished goods  |  |             | 4,420  |  |              |   | 3,637 | 
|                |  |             |        |  |              |  
|                |  | $           | 10,954 |  |              | $ | 9,622 | 
|                |  |             |        |  |              |  

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3. RESTRUCTURING AND INVENTORY IMPAIRMENT CHARGES

On September 7, 2001, the Company announced restructuring initiatives designed
to lower its cost structure. The restructuring plan
included closing certain facilities, divesting its proteomic contract research
services business, reducing its employee headcount and discontinuing certain
products. As a result of this restructuring plan, the Company recorded
restructuring and inventory impairment charges of approximately $2.7 million
and $1.2 million, respectively, during 2001.

The restructuring charge of $2.7 million consisted of $261,000 for the
impairment of goodwill; $376,000 for the impairment of certain long-lived
assets, $917,000 for the loss on disposal and sale of certain fixed assets,
$688,000 for employee termination benefits for 50 employees, and $488,000 for
exit costs associated with closing certain facilities. In connection with the
restructuring initiatives, the Company estimated the discounted future cash
flows related to goodwill and certain fixed assets and reduced these assets to
their estimated fair value. As of June 30, 2002, the Company had terminated 45
employees and paid out $699,000 in termination benefits. At June 30, 2002, the
remaining balance of the restructuring reserve totaled $361,000 and is included
in accrued liabilities in the Companys consolidated balance sheet.

The following tables summarize the restructuring charges (in millions):

|                                    |       |   |           |     |  |      |          |     |          |            |     |      |  |   |     |     | 
|----------------------------------- | ----- | - | --------- | --- |  | ---- | -------- | --- | -------- | ---------- | --- | ---- |  | - | --- | --- | 
|                                    |       |   |           |     |  |      | Utilized |     |          | Accrual at |    
|                                    |       |   | Original  |     |  |      |          |     | June 30, |           
|                                    |       |   | Provision |     |  | Cash |          |     | Noncash  |            |     | 2002 | 
|                                    |       |   |           |     |  |      |          |     |          |            |     |      | 
|Impairment of long-lived assets     |       | $ | 0.6       |     |  | $    |         |     |          | $          | 0.6 |      |  | $ |    |    
|Loss on disposal and sale of assets |       |   | 0.9       |     |  |      |         |     |          |            | 0.9 |      |  |   |    |    
|Employee termination benefits       |       |   | 0.7       |     |  |      | 0.7      |     |          |            |    |      |  |   |    |    
|Lease cancellation costs            |       |   | 0.5       |     |  |      | 0.1      |     |          |            |    |      |  |   | 0.4 |    
|                                    |       |   |           |     |  |      |          |     |          |            |     |     
|                                    | Total |   | $         | 2.7 |  |      | $        | 0.8 |          |            | $   | 1.5  |  |   | $   | 0.4 | 
|                                    |       |   |           |     |  |      |          |     |          |            |     |     

4. LINE OF CREDIT

During the second quarter of 2002, the Company amended its $2.5 million
line-of-credit agreement with a bank which extends the term of the agreement
for an additional year, therefore, providing for borrowings through June 2003.

5. LITIGATION

In December 2001, the Company filed suit against Photonic Sensor Systems, Inc.,
a Georgia corporation, in the Federal District Court for the Eastern District
of Michigan, alleging breach of contract and seeking monetary relief in the
amount of the Companys preferred stock investment of $500,000. In January
2002, Photonic filed a counter-claim seeking monetary damages and alleging breach of contract,

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indemnification and tortious interference based on the alleged failure of the
Company to purchase stock upon the achievement of certain milestones.

On June 28, 2002, the Company settled the litigation with Photonic. Pursuant
to the Settlement Agreement, the Company relinquished its entire equity
interest in Photonic. Neither party was obligated to pay any amounts or fees
to the other party. The Company determined that the value of its investment in
Photonic Sensors preferred stock was impaired and recorded an adjustment of
$500,000 to reduce this asset to its estimated fair value. This write-down is
included in the loss on impairment of long lived asset in the accompanying
condensed consolidated statement of operations.

From time to time, the Company is involved in routine legal matters that arise in the
ordinary course of its business. The Company currently is not a party to any such
matters that it believes will have, individually or in the aggregate, a material
adverse effect on its business, financial condition or results of operation.

6. SEGMENT INFORMATION

The Company operates in one segment: the development, manufacture and marketing
of life science systems for dispensing, separating and analyzing biomolecules.
The Companys three product lines, genomic, proteomic and microscale liquid
handling systems, 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, the Company
aggregates its product lines into a single segment of genomic, proteomic and
microscale liquid handling systems. The Company operates primarily in three
geographic regions: North America, the United Kingdom and Japan.

The Company distributes products to customers on a worldwide basis. Sales and
marketing operations outside the United States are conducted principally
through the Companys foreign subsidiaries and third party distributors,
including PerkinElmer, Inc. Intercompany sales and transfers between
geographic areas are accounted for at prices which are designed to be
representative of third party transactions. Revenue is attributed to each
geographic location based on which office makes the sale, which includes
intercompany sales.

The following table summarizes selected financial information of the Companys
operations by geographic location (in thousands):

|         |                             |               |   |                            |       |  |                          |        |       |             |   |        |             |  |   |        |       | 
|-------- | --------------------------- | ------------- | - | -------------------------- | ----- |  | ------------------------ | ------ | ----- | ----------- | - | ------ | ----------- |  | - | ------ | ----- | 
|         |                             |               |   | For the three months ended |       |  | For the six months ended |       
|         |                             |               |   | June 30,                   |       |  | June 30,                 |       
|         |                             |               |   | 2002                       |       |  | 2001                     |        |       | 2002        |   |        | 2001        | 
|         |                             |               |   |                            |       |  |                          |        |       |             |   |        |             | 
|         |                             |               |   | (Unaudited)                |       |  | (Unaudited)              |        |       | (Unaudited) |   |        | (Unaudited) | 
|        
|        
|        
|        
|        
|Revenue: |                             |               |   |                            |       |  |                          |        |       |             |   |        |             |  |   |       
|         | United States               |               | $ | 5,889                      |       |  | $                        | 3,610  |       |             | $ | 12,342 |             |  | $ | 6,560  |      
|         | Europe                      |               |   | 2,812                      |       |  |                          | 2,902  |       |             |   | 5,617  |             |  |   | 5,655  |      
|         | Japan                       |               |   | 330                        |       |  |                          | 850    |       |             |   | 2,110  |             |  |   | 2,152  |      
|         | Less  Intercompany revenue |               |   | (2,991                     | )     |  |                          | (2,899 | )     |             |   | (7,353 | )           |  |   | (5,525 | )    
|         |                             |               |   |                            |       |  |                          |        |       |             |   |       
|         |                             | Total revenue |   | $                          | 6,040 |  |                          | $      | 4,463 |             |   | $      | 12,716      |  |   | $      | 8,842 | 
|         |                             |               |   |                            |       |  |                          |        |       |             |   |       

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|                   |                     |                         |   |             |        |  |              |        |        | 
|------------------ | ------------------- | ----------------------- | - | ----------- | ------ |  | ------------ | ------ | ------ | 
|                   |                     |                         |   | June 30,    |        |  | December 31, |       
|                   |                     |                         |   | 2002        |        |  | 2001         |       
|                   |                     |                         |   |             |        |  |              |       
|                   |                     |                         |   | (Unaudited) |        |  |              |        |       
|Long-lived assets: |                     |                         |   |             |        |  |              |       
|                   | United States       |                         | $ | 15,927      |        |  | $            | 17,093 |       
|                   | Europe              |                         |   | 876         |        |  |              | 921    |       
|                   | Japan               |                         |   | 115         |        |  |              | 142    |       
|                   | Goodwill            |                         |   | 9,671       |        |  |              | 9,579  |       
|                   | Less  Eliminations |                         |   | (8,999      | )      |  |              | (8,944 | )     
|                   |                     |                         |   |             |        | 
|                   |                     | Total long-lived assets |   | $           | 17,590 |  |              | $      | 18,791 | 
|                   |                     |                         |   |             |        | 

7. SUBSEQUENT EVENTS

Definitive Agreement to be Acquired by Harvard Bioscience, Inc.

On July 17, 2002, the Company signed a definitive agreement to be acquired by
Harvard Bioscience, Inc. (HBIO) whereby HBIO will acquire
the Company for consideration of 3.2 million shares of HBIO common stock and $9 million in
cash. This transaction is expected to close in the fourth quarter of
2002 subject to Genomic Solutions stockholder approval and completing other customary
closing conditions. As of July 17, 2002, the total estimated purchase price of
$26 million is less than the carrying value of the Companys net assets as of
that date, and is an event under SFAS 142 that may indicate that the value of
the Companys goodwill is impaired as of that date. The Company will calculate
the amount of impairment, if any, and will record an impairment charge, if
necessary, in the third quarter of 2002.

Restructuring

On July 18, 2002, the Company announced restructuring initiatives designed to
lower its cost structure and achieve profitability. The restructuring plan
included reducing its employee headcount, discontinuing certain products and
closing certain facilities. As a result of this restructuring plan, the
Company will record restructuring and inventory impairment charges of
approximately $1.5 million during the third quarter of 2002.

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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 June 30, 2002 and for the three and six month
periods ended June 30, 2002 and 2001 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, 2001. 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 develop, manufacture and sell instruments, consumables and software for the
life sciences research and drug discovery markets. Our market focus is based
on three key high growth areas: genomics, proteomics and microscale liquid
handling systems. These areas comprise three of the major technologies used by
researchers in studying disease and developing new drugs. Our products allow
researchers to perform high volume experiments, and analyze the resultant data,
at lower costs and in less time than with traditional techniques. Our products
are distributed and sold to pharmaceutical and biotechnology companies,
government agencies, academic institutions and private research organizations
throughout the world.

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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CRITICAL ACCOUNTING POLICIES

Managements Discussion and Analysis of Financial Condition and Results of
Operations discusses our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. On an on-going basis,
management evaluates its estimates and judgments, including those related to
bad debts, inventories, investments, intangible assets, financing operations,
warranty obligations, restructuring costs, contingencies and litigation.
Management bases its estimates and judgments on historical experience, our
observance of trends in the industry, information provided by our customers and
information available from other outside sources and on various other factors
that are believed to be reasonable under the circumstances. These sources form
the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions and conditions.

We believe our most critical accounting polices are related to inventories and
impairment of long-lived assets. Details regarding our use of these policies
and the related estimates are described fully in our 2001 Annual Report filed
with the Securities and Exchange Commission on Form 10-K. During the second
quarter of 2002, there have been no material changes to accounting policies
which are considered by the Company to be critical in their impact on our financial condition
or results of operations.

RESULTS OF OPERATIONS

Three months ended June 30, 2002 and 2001

Revenue

Revenue increased $1.6 million, or 35%, to $6.0 million in the second quarter
of 2002 from $4.5 million in the second quarter of 2001. The increase in total
revenue was primarily due to sales of our new high throughput screening
products of $2.6 million and a 40%, or $538,000, increase to $1.9 million in
revenue from sales of our proteomic instrumentation and related consumables
products. The increase in our proteomic product sales was primarily
attributed to increased sales of our Investigator ProPic and ProPrep robotic
instruments and sales of our proteomic software. The overall increase in
revenue also reflects sales by Cartesian Technologies, Inc. of its microscale
liquid handling instrumentation. We acquired Cartesian Technologies
on December 18, 2001. The
revenue increases described above were partially offset by a decrease of 45%,
or $1.2 million, from sale of our genomic products. The decline in our genomic
revenue was primarily due to fewer unit sales of our GeneTAC G3 robotic
workstation and our GeneTAC hybridization station. Sales of our instruments
tend to vary quarter to quarter. Slightly offsetting our total revenue
increase for the second quarter 2002 was the absence of proteomic research
services revenue this year compared to $131,000 last year as a result of the
divestiture of our proteomic research services business in September 2001. The
balance of our total revenue for the second quarter

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of 2002, approximately $228,000, was derived from field service
maintenance and sales of our discontinued legacy products for analyzing one
dimensional separations of DNA and proteins. Revenue in this area decreased
from $334,000 for the same period in 2001.

Cost of revenue

Cost of revenue increased $719,000, or 28%, to $3.3 million in the second
quarter of 2002 from $2.5 million in the second quarter of 2001. The increase
in cost of revenue is primarily attributable to the 35%, or $1.6 million,
increase in revenue described above. Gross profit as a percentage of total
revenue increased to 46% in the second quarter of 2002 compared with 43% in the
second quarter of 2001. The increase in gross profit percentage was primarily
due to cost savings as a result of completing our 2001 restructuring plan,
which included consolidating facilities and reduction in personnel, and
revenue from sales of proteomic analysis software exclusively licensed from
Proteometrics, LLC.

Selling, general and administrative expenses

Selling, general and administrative expenses increased $221,000, or 6%, to $3.8
million in the second quarter of 2002 from $3.6 million in the second quarter
of 2001. Of this increase, approximately $205,000 was due to amortization of
intangible assets related to the acquisition of Cartesian Technologies,
slightly offset by $73,000 in goodwill amortization expense charged last year.
Goodwill is no longer being amortized in 2002 as a result of the adoption of
Statement of Financial Accounting Standards (SFAS) No. 142 Goodwill and
Other Intangible Assets.

Research and development expenses

Research and development expenses decreased $581,000, or 35%, to $1.1 million
in the second quarter of 2002 compared to $1.6 million in the second quarter of
2001. This decrease was primarily attributable to a decrease of approximately
$372,000 in salaries and other employee related costs as a result of employing
an average of 40 research and development personnel during the second quarter
of 2002 compared to an average of 52 in the second quarter of 2001 and a
decrease of approximately $176,000 in our usage of outside contract labor and
consultants and development materials.

Interest income

Interest income decreased $262,000 to $50,000 in the second quarter of 2002
from $312,000 in the second quarter of 2001. This decrease is primarily due to
lower average cash and cash equivalent balances in 2002.

Loss on Impairment of Asset

In June 2002, the Company determined that the value of its investment in
Photonic Sensors preferred stock was impaired and recorded a write-down of
$500,000 to reduce this assets estimated fair value to zero.

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Other income

Other income, net of other expense, increased $124,000 to net income of
$182,000 in the second quarter of 2002 from net income of approximately $58,000
in the second quarter of 2001. This increase is primarily due to an increase
in foreign currency gain of $123,000.

Benefit from income taxes

We incurred net operating losses in the three months ended June 30, 2002 and
2001, and consequently, we did not pay any federal income taxes. At December
31, 2001, we have available net operating loss carryforwards of approximately
$42.9 million, which can be utilized to offset future taxable income. These net
operating loss carryforwards expire between 2010 and 2021. 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. Accordingly, valuation allowances in
amounts equal to the deferred tax assets have been established to reflect these
uncertainties.

Six months ended June 30, 2002 and 2001

Revenue

Revenue increased $3.9 million, or 44%, to $12.7 million in the first six
months of 2002 from $8.8 million in the first six months of 2001. The increase
in total revenue was primarily due to sales of our new high throughput
screening products of $5.3 million. This revenue reflects sales by Cartesian
Technologies, Inc. of its high throughput screening instrumentation. This
revenue increase was partially offset by a 15%, or $694,000, decrease in
revenue from our genomic product offerings primarily due to fewer unit sales of
our GeneTACTM G3 robotic workstation. Revenue from our proteomic
instrumentation and related consumable products was flat during the first six
months of 2002 as compared to the same period of 2001. Also offsetting our
overall revenue increase year over year was the absence of proteomic research
services revenue this year compared to $284,000 last year as a result of the
divestiture of our proteomic research services business in September 2001. The
balance of our total revenue for the six months of 2002, approximately
$340,000, was derived from field service maintenance and sales of our
discontinued legacy products for analyzing one dimensional separations of DNA
and proteins. Revenue in this area decreased from $733,000 for the same period
in 2001.

Cost of revenue

Cost of revenue increased $1.7 million, or 34%, to $6.7 million in the first
six months of 2002 from $5 million in the first six months of 2001. The
increase in cost of revenue is primarily attributable to the 44%, or $3.9
million, increase in revenue described above. Gross profit as a percentage of
total revenue increased to 48% in the first six months of 2002 compared with
44% in the first six months of 2001. The increase in gross profit percentage
was primarily due to cost savings as a result of completing our 2001
restructuring plan,

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which included consolidating facilities and reduction in
personnel and revenue from sales of proteomic analysis software exclusively
licensed from Proteometrics, LLC.

Selling, general and administrative expenses

Selling, general and administrative expenses increased $379,000, or 5%, to $7.3
million in the first six months of 2002 from $6.9 million in the first six
months of 2001. This increase is primarily due to approximately $410,000 in
amortization expense of intangible assets related to the acquisition of
Cartesian Technologies, slightly offset by $147,000 in goodwill amortization
expense charged last year. Goodwill is no longer being amortized in 2002 as a
result of the adoption of Statement of Financial Accounting Standards (SFAS)
No. 142 Goodwill and Other Intangible Assets. The increase in selling,
general and administrative expenses is also partially attributable to increased
compensation related to commissions and incentives earned in connection with
the increase in revenue for the period.

Research and development expenses

Research and development expenses decreased $1.1 million, or 31%, to $2.5
million in the first six months of 2002 compared to $3.6 million in the first
six months of 2001. This decrease is primarily due to a decrease of
approximately $513,000 in salaries and other employee related costs as a
result of employing an average of 40 research and development personnel during
the first six months of 2002 compared to an average of 48 in the first six
months of 2001 and a decrease of approximately $485,000 in our usage of outside
contract labor and consultants and development materials. The reduction in
research and development spending and personnel was primarily due to our 2001
restructuring activities which included the divestiture of our proteomic
research services group of scientists.

Interest expense

Interest expense decreased $24,000 in the first six months of 2002 to $57,000
from $81,000 in the first six months of 2001. This decrease was primarily due
to the repayment of long-term debt related to our capital fixed asset leased
lines of credit in September 2001.

Interest income

Interest income was $107,000 in the first six months of 2002 as compared to
$834,000 in the first quarter of 2001. The decrease year over year in interest
income earned is primarily due to lower average cash and cash equivalent
balances in 2002.

Other income

Other income, net of other expense, increased $122,000 to net income of
$199,000 in the first six months of 2002 from net income of approximately
$77,000 in the first six months of 2001. This increase is primarily due to an
increase in foreign currency gain of $199,000 and a $23,000 gain on sale of
assets in the first quarter of 2002.

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Benefit from income taxes

We incurred net operating losses in the six months ended June 30, 2002 and
2001, and consequently, we did not pay any federal income taxes. At December
31, 2001, we have available net operating loss carryforwards of approximately
$42.9 million, which can be utilized to offset future taxable income. These net
operating loss carryforwards expire between 2010 and 2021. 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. Accordingly, valuation allowances in
amounts equal to the deferred tax assets have been established to reflect these
uncertainties.

Recent accounting pronouncements

In June 2001, the Financial Accounting Standards Board (FASB) issued
Statements of Financial Accounting Standards (SFAS) No. 141, Business
Combinations and SFAS No. 142 Goodwill and Other Intangible Assets. These
pronouncements amend the accounting for business combinations, goodwill, and
other intangible assets. SFAS No. 141 eliminates the pooling-of-interests
method of accounting for business combinations and further clarifies the
criteria to recognize intangible assets separately from goodwill. The
requirements of SFAS No. 141 are effective for any business combination
completed after June 30, 2001. Upon adoption of SFAS No. 142 goodwill and
other indefinite-lived assets are no longer amortized, but are subject to
annual impairment reviews, or more frequently, if events or circumstances
indicate there may be an impairment. The amortization provisions of SFAS No.
142 apply to goodwill and intangible assets acquired after June 30, 2001. With
respect to goodwill and intangible assets acquired prior to July 1, 2001,
companies are required to adopt the pronouncement in their fiscal year
beginning after December 15, 2001. We adopted SFAS 142 on January 1, 2002.
During the second quarter of 2002, we completed the implementation
impairment review as required. Upon completing the review, we concluded there was no impairment of
goodwill at the time of implementation. The proposed acquisition of the
Company by Harvard Bioscience, Inc. (HBIO) is an event under SFAS 142 that may indicate
that the value of our goodwill is impaired as of July 17, 2002
(see Note 7). We will calculate the amount of impairment, if any, and will record an
impairment charge, if necessary, in the third quarter of 2002. Total goodwill included
in our Financial Statements was $9.7 million at June 30, 2002 and
$9.6 million at December 31, 2001.

Total operating expenses would have been reduced by approximately $73,000 and
$147,000 for the three and six months ended June 30, 2001 if goodwill had not
been amortized. This would have resulted in a net loss of $2.9
million or $(0.12) per share and $5.8 million or $(0.23) per share
for the three and six months ended June 30, 2001, respectively.

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations. SFAS No. 143 establishes standards associated with the
retirement of tangible long-lived assets and the associated asset retirement
costs. This statement is effective for financial statements issued for fiscal
years beginning after June 15, 2002. We have not yet

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assessed the impact of
this standard on our financial statements, but we do not expect the impact to be
material.

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. SFAS No. 144 supercedes SFAS No. 121, although
it retains the fundamental principles of how to measure the impairment of
assets held for use and assets to be disposed of by sale. It requires that
long-lived assets to be disposed of other than by sale be considered held and
used until disposed of. It also provides new guidance for using a
probability-weighted approach for measuring future cash flows when there are
alternative courses of action. This statement is effective for financial
statements issued for years beginning after December 15, 2001. On January 1,
2002, we adopted SFAS No. 144.

The Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standard (SFAS) No. 145, Rescission of FASB Statements No. 4, 44,
and 64, Amendment of FASB Statement No. 13, and Technical Corrections,
effective for fiscal years beginning May 15, 2002 or later that rescinds FASB
Statement No. 4, Reporting Gains and Losses from Extinguishment of Debt, FASB
Statement No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund
Requirements, and FASB Statement No. 44, Accounting for Intangible Assets of
Motor Carriers. This Statement amends FASB Statement No. 4 and FASB Statement
No. 13, Accounting for Leases, to eliminate an inconsistency between the
required accounting for sale-leaseback transactions. This Statement also amends
other existing authoritative pronouncements to make various technical
corrections, clarify meanings, or describe their applicability under changed
conditions. The Company does not believe the impact of adopting SFAS No. 145
will have a material impact on its operations.

In July 2002, the FASB issued Statement No. 146, Accounting for Costs
Associated with Exit or Disposal Activities. Statement No. 146 is based on the
fundamental principle that a liability for a cost associated with an exit or
disposal activity should be recorded when it (1) is incurred, that is, when it
meets the definition of a liability in FASB Concepts Statement No. 6, Elements
of Financial Statements, and (2) can be measured at fair value. The principal
reason for issuing Statement No. 146 is the Boards belief that some
liabilities for costs associated with exit or disposal activities that entities
record under current accounting pronouncements, in particular EITF Issue 94-3,
do not meet the definition of a liability. Statement No. 146 nullifies EITF
Issue 94-3; thus, it will have a significant effect on practice because
commitment to an exit or disposal plan no longer will be a sufficient basis for
recording a liability for costs related to those activities. Statement No.146
is effective for exit and disposal activities initiated after December 31,
2002. Early application is encouraged; however, previously issued financial
statements may not be restated. An entity would continue to apply the
provisions of EITF Issue 94-3 to an exit activity that it initiated under an
exit plan that met the criteria of EITF Issue 94-3 before the entity initially
applied Statement No.146. The Company does not believe that the adoption of
this statement on January 1, 2003 will have a material impact on its
operations.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2002 our cash and cash equivalents totaled $5.3 million compared to
$13.1 million at December 31, 2001. As detailed below, the $7.8 million
decrease in cash and cash equivalents is principally due to $7.3 million net
cash used in operating activities during the six months ended June 30, 2002, a
$125,000 license fee payment for an exclusive license with Proteometrics, LLC
and $149,000 in fixed asset additions.

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We believe our existing cash and cash equivalents, and cash from operations,
will be sufficient to fund our operating expenses, debt obligations and capital
requirements for at least the next twelve months. Our primary sources of
liquidity include our cash balances and our future operating cash flows.
Managements goal is to achieve positive operating cash flows sometime during
the next twelve months. Our ability to achieve this goal depends upon several
factors including the following: (i) the cost savings from our restructuring
initiatives implemented in late 2001 and July 2002; (ii) our success in
expanding our direct sales and building our distributor base to supplement
PerkinElmers sales efforts; (iii) our ability to efficiently manage our
working capital; and (iv) achieving our anticipated revenue derived not only
from the sales of the Companys genomic and proteomic product offerings but
also from sales of our high throughput screening and dispensing instrumentation
and sales of our protein analysis software subject to our exclusive license
with Proteometrics, LLC.

Our expected revenue is dependent on many factors beyond our control, including
factors discussed in the risk factors section of our latest annual report on
Form 10-K. We may not realize our anticipated revenue levels, we may become
profitable at a different time or we may never become profitable. Given the
current economic downturn, customers may delay or rethink large capital
equipment purchases and budgets, making forecasting more difficult. Even if we
do achieve profitability, we may not sustain or increase profitability on a
quarterly or annual basis. These and other factors, some of which are beyond
our control, will determine if and when we may need funds and how much we will
need. We may need funds sooner than currently anticipated. 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 for unanticipated 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.

Cash used in operating activities, which includes changes in working capital
during the six months ended June 30, 2002, was $7.6 million compared with $6.4
million for the same period in 2001. Cash used in operations during the first
six months of 2002 consisted primarily of our net loss of $4 million, which
included a non-cash charge of $1.3 million for depreciation and amortization
expense, $500,000 write off of an equity investment in Photonic Sensors
Systems, Inc. and a non-cash gain of $23,000 for gain on sale of assets. The
use of cash in operating activities in the first six months of 2002 was also
due to an increase of $1.4 million in accounts receivable due to the $3.9
million increase in revenue for the six months ended June 30, 2002. The
majority of revenue is shipped at the end of each quarter. The use of cash in
the first six months of 2002 was also due to an increase of $1.3 million in
inventory, consisting primarily of increases in raw material and finished goods
stock of our genomic, proteomic and high throughput screening instrumentation.
The use of cash in operating activities was also due to a $2.3 million decrease
in accounts payable and accrued liabilities. The decrease in accounts payable
was due to the payment of approximately $1.1 million in professional fees and
expenses associated with the acquisition of Cartesian Technologies and with
bringing Cartesian Technologies vendor balances current. The decrease in
accrued liabilities was principally due to severance and retention bonus
payments made in connection with our restructuring plan initiated in September
2001,

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and with the payment of the Companys matching contribution to the
Genomic Solutions 401k plan. By comparison, for the six months ended June 30,
2001 cash used in operations totaled $6.4 million primarily due to our net loss
of $5.9 million which included a non-cash charge of $1.1 million for
depreciation and amortization expense. The use of cash in operating activities
in the first six months of 2001 was also due to an increase of $2 million in
inventories, and a decrease of $1.7 million in accounts payable and accrued
liabilities. The use of cash was partially offset by a $1.8 million decrease
in accounts receivable and a $321,000 decrease in prepaid expenses and other
current assets.

Depreciation and amortization expense for the six
months ended June 30, 2002
was $1.3 million and includes $410,000 in amortization expense of intangible
assets capitalized from the acquisition of Cartesian Technologies in December
2001. Amortization expense was offset by approximately $147,000 in goodwill
amortization expense charged last year that is no longer being expensed in 2002
as a result of the adoption of SFAS No. 142 Goodwill and Other Intangible
Assets.

Our investing activities for the six months ended June 30, 2002 used cash of
$305,000 compared with $4.0 million for the same period in 2001. Cash used in
investing activities in 2002 was attributable to $149,000 in fixed asset
additions, a $125,000 license fee payment for an exclusive license with
Proteometrics, LLC, and $93,000 for other long term assets, partially offset by
receiving $62,000 in cash from the sale of property and equipment. By
comparison, for the six months ended June 30, 2001 cash used in investing
activities was attributable to $2.3 million in license fee payments for certain
genomic technologies, $1.3 million in fixed asset expenditures primarily for
laboratory equipment, and
$500,000 equity investment in Photonic Sensor Systems, Inc., partially offset
by receiving approximately $19,000 in cash from the sale of property and
equipment.

Our financing activities for the six months ended June 30, 2002 used cash of
$10,000 compared to $5.8 million for the same period in 2001. Cash used in
financing activities in 2002 was primarily due to the repayment of long-term
debt of $35,000 and due to other financing activities of $4,000. Cash used in
financing activities was partially offset by the receipt of $29,000 in proceeds
from the sale of our common stock upon the exercise of vested stock options by
our employees. By comparison, for the six months ended June 30, 2001 cash used
in financing activities was primarily due to the repurchase of our stock from
PerkinElmer, Inc. for $5.5 million and the repayment of long-term debt of
$389,000 and to other financing activities of $4,000. The cash used in
financing activities in 2001 was partially offset by the receipt of $86,000 in
proceeds from the sale of our common stock upon the exercise of vested stock
options by our employees.

In June 2002, we amended our primary bank line-of-credit agreement to provide
for borrowings up to $2.5 million through June 2003. As of June 30, 2002, there
were outstanding borrowings of $2.5 million under this line of credit. The
Company from time to time draws on this line of credit to fund its short term
working capital needs. Management believes it has the ability to amend and
expand this line of credit and has the working capital capacity to support the
current borrowing level.

Working capital decreased $2.4 million to $13.4 million at June 30, 2002 from
$15.8 million at December 31, 2001. The decrease in working capital is
primarily due to a $7.8 million decrease in cash. The decrease in working
capital was partially offset by a $1.7 million

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increase in accounts receivable,
a $1.3 million increase in inventory, and a $2.3 million decrease in accounts
payable and accrued liabilities.




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.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

In December 2001, we filed suit against Photonic Sensor Systems, Inc., a
Georgia corporation, in the Federal District Court for the Eastern District of
Michigan alleging breach of contract and seeking monetary relief in the amount
of the Companys preferred stock investment of $500,000. In January 2002,
Photonic filed a counter-claim seeking monetary damages and alleging breach of contract, indemnification and
tortious interference based on the alleged failure of the Company to purchase
stock upon the achievement of certain milestones.

On June 28, 2002, the Company settled the litigation with Photonic. Pursuant
to the Settlement Agreement, the Company relinquished its entire equity
interest in Photonic. Neither party was obligated to pay any amounts or fees
to the other party.

From time to time, we are involved in routine legal matters that arise in the
ordinary course of our business. We currently are not a party to any such
matters that we believe will have, individually or in the aggregate, a material
adverse effect on our business, financial condition or results of operation.

Other than the foregoing settlement, 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, 2001.




ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.

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 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 $55.1 million. Of the net offering
proceeds, through June 30, 2002, approximately $9.8 million has been used to
pay off long-term and other debt, approximately $5.5 million to repurchase our
stock from PerkinElmer, Inc., approximately $3.6 million to purchase equipment
and improve leaseholds, approximately $3.6 million for capitalized license
fees, approximately $2.5 million to acquire Cartesian Technologies, Inc.,
approximately $500,000 for equity investment in a third party and approximately
$27.8 million for general corporate purposes, including hiring additional

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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.

The Company held its
annual meeting of shareholders on May 7, 2002. At the meeting, the
Company's shareholders were asked to elect two directors to serve on
the board of directors until the 2005 annual meeting or until their
respective successors are elected and to consider and vote upon the
adoption of the 2002 Stock Option Plan.

Robert G. Shepler and
Daniel J. Mitchell were elected to the board of directors. Both
Messrs. Shepler and Mitchell received 23,873,782 votes for election
to the board and 195,077 votes against election. The terms of office
of the
following directors continued after the meeting: Jeffrey S. Williams,
J. Matthew Mackowski, Damion E. Wicker, M.D. and Thomas C. Tisone, PhD.

The 2002 Stock Option
Plan was adopted by the Company's shareholders. Votes for the
adoption were 14,090,029, votes against were 663,341, and votes
abstained were 1,572,401.




ITEM 5. OTHER INFORMATION.

Not applicable.




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

(a)  Exhibits

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

|        |  |                     |  | 
|------- |  | ------------------- |  | 
|Exhibit |  |                     |  | 
|Number  |  | Description         | 
|        |  |                     | 
|None   
|       
|(b)     |  | Reports on Form 8-K



| |  | A report on Form 8-K
dated May 23, 2002 was filed during the three months
ended June 30, 2002. The Company filed a report on Form 8-K
dated May 23, 2002, disclosing that the Company had terminated Arthur
Andersen, LLP as its independent public accountant, effective as of
May 22, 2002. In addition, the report also disclosed that the Company
engaged Ernst & Young, LLP to replace Arthur Andersen as its
independent public accountant. The report was filed on May 23, 2002.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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SIGNATURES

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

GENOMIC SOLUTIONS INC.

|                      |  |                                                                                                                                  
|--------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------
|Date: August 14, 2002 |  | By: /s/ Jeffrey S. Williams                                                                                                      
|                      |  |                                                                                                                                  
|                      |  | JEFFREY S. WILLIAMS
President and Chief Executive Officer                                                                        
|                     
|Date: August 14, 2002 |  | By: /s/ Steven J. Richvalsky                                                                                                     
|                      |  |                                                                                                                                  
|                      |  | STEVEN J. RICHVALSKY
Chief Financial Officer, Executive
Vice President and
Treasurer (principal financial and
accounting officer)

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CERTIFICATION

The undersigned
officers hereby certify that: (a) this Form 10-Q fully complies with
the requirements of Section 13(a) or 15(d) of the Securities Exchange
Act of 1934, as amended; and (b) the information contained in this
Form 10-Q fairly presents, in all material respects, the financial
condition and results of operations of the issuer.



|                                              |  |                       
|--------------------------------------------- |  | ----------------------
|/s/ Jeffrey S. Williams                       |  |                       
|                                              |  | Dated: August 14, 2002
|Jeffrey S. Williams, Chief Executive Officer  |  |                       
|                                              |  |                       
|                                              |  |                       
|/s/ Steven J. Richvalsky                     
|                                              |  | Dated: August 14, 2002
|Steven J. Richvalsky, Chief Financial Officer |  |