UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q

[X]      Quarterly  report  pursuant  to Section  13 or 15(d) of the  Securities
         Exchange Act of 1934 for the quarterly period ended March 30, 2002 or

[_]      Transition  report  pursuant  to Section 13 or 15(d) of the  Securities
         Exchange Act of 1934 for the transition period from  _______________ to
         _______________.


                         Commission file number 0-31162
                             O P T I C N E T, I N C.
             (Exact name of Registrant as specified in its charter)


            Delaware                                     94-3368561
------------------------------------        ------------------------------------
    (State of incorporation)                (I.R.S. Employer Identification No.)


                           One Post Street, Suite 2500
                         San Francisco, California 94104
                    ----------------------------------------
                    (Address of principal executive offices)

                                 (415) 956-4477
                         -------------------------------
                         (Registrant's telephone number)


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                   Yes __ No X

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

Common  Stock:  $.0001 Par Value;  3,622,770  shares of Voting  Common Stock and
2,591,857 shares of Nonvoting Common Stock outstanding as of May 1, 2002.

                                                                    Page 1 of 16

<PAGE>


OPTICNET, INC.  (a development stage company)

INDEX


PART 1.   FINANCIAL INFORMATION PAGE

Item 1.   Financial Statements


                  Condensed  Balance  Sheets--March  30, 2002 and
                  September 29, 2001                                           3

                  Condensed Statements of Operations--Quarter and
                  Six Months ended March 30, 2002 and March 31,
                  2001 and the period from February 23, 2000
                  (inception) to March 30, 2002                                4

                  Condensed Statements of Cash Flows-- Quarter
                  and Six Months ended March 30, 2002 and March
                  31, 2001 and the period from February 23, 2000
                  (inception) to March 30, 2002                                5

                  Notes to Condensed Financial Statements--
                  March 30, 2002                                               6


Item 2.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations                                            9

Item 3.   Quantitative and Qualitative Disclosure About Market Risk           12


PART II.  OTHER INFORMATION

Item 4.   Submission of Matters to a Vote of Security Holders                 13

Item 6.   Exhibits and Reports on Form 8-K                                    13

                  (a) Exhibits

                  (b) Reports on Form 8-K

          SIGNATURES                                                          16


                                                                    Page 2 of 16

<PAGE>


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

OPTICNET, INC.  (a development stage company)
CONDENSED BALANCE SHEETS


                                                   March 30,      September 29,
                                                     2002             2001
                                                 (Unaudited)    (See note below)
                                                 -----------    ----------------
ASSETS
Cash and cash equivalents                        $   106,834      $   828,489
Trade receivables, net                                  --             99,720
Inventories                                          108,851             --
Other current assets                                  57,535           80,631
                                                 -----------      -----------
  Total current assets                               273,220        1,008,840

Property and equipment, net                           13,293           17,984
Other assets                                          22,025           22,025
                                                 -----------      -----------
                                                 $   308,538      $ 1,048,849
                                                 ===========      ===========

LIABILITIES AND STOCKHOLDERS' DEFICIT

Accounts payable                                 $   282,399      $   132,574
Accrued expenses and other liabilities               439,127          349,174
Note payable to related party                      2,656,338        1,166,608
                                                 -----------      -----------
  Total current liabilities                        3,377,864        1,648,356

Other liabilities                                     21,600           14,670
Stockholders' deficit                             (3,090,926)        (614,177)
                                                 -----------      -----------

                                                 $   308,538      $ 1,048,849
                                                 ===========      ===========


Note:  The balance sheet at September 29, 2001 has been derived from the audited
balance sheet at that date.


See notes to condensed financial statements.

                                                                    Page 3 of 16

<PAGE>


<TABLE>
OPTICNET, INC.  (a development stage company)
CONDENSED STATEMENTS OF OPERATIONS


<CAPTION>
(Unaudited)                                                 Quarter Ended                   Six Months Ended
                                                    ----------------------------      ----------------------------
                                                                                                                        Period from
                                                                                                                         February
                                                                                                                          23, 2000
                                                                                                                      (inception) to
                                                     March 30,         March 31,        March 30,       March 31,         March 30,
                                                        2002             2001             2002            2001             2002
                                                    -----------      -----------      -----------      -----------      -----------
<S>                                                 <C>              <C>              <C>              <C>              <C>
Revenues                                            $      --        $   325,000      $    87,500      $   325,000      $   586,500
Cost of revenues                                           --            195,000           43,752          195,000          303,392
                                                    -----------      -----------      -----------      -----------      -----------
Gross margin                                               --            130,000           43,748          130,000          283,108

Selling, general and administrative
  expenses                                              479,526          188,494          767,868          206,916        1,651,637
Research and development expenses                     1,256,733          111,686        1,720,299          286,013        2,793,815
                                                    -----------      -----------      -----------      -----------      -----------
Loss from operations                                 (1,736,259)        (170,180)      (2,444,419)        (362,929)      (4,162,344)

Interest expense                                         25,787             --             44,567             --             68,419
Other income (expense)                                   (5,725)          12,188            3,275           28,909           64,551
                                                    -----------      -----------      -----------      -----------      -----------
Net loss accumulated in the
  development stage                                 $(1,767,771)     $  (157,992)     $(2,485,711)     $  (334,020)     $(4,166,212)
                                                    ===========      ===========      ===========      ===========      ===========


                                                Basic and Diluted Net Loss per Share

Basic and diluted net loss per share                $     (0.32)     $     (0.03)     $     (0.45)     $     (0.07)     $     (1.08)
                                                    ===========      ===========      ===========      ===========      ===========


Weighted average shares used in
  computation of basic and diluted
  loss per share                                      5,539,735        4,904,184        5,486,573        4,783,739        3,865,398
                                                    ===========      ===========      ===========      ===========      ===========


See notes to condensed financial statements.

                                                                                                                        Page 4 of 16
</TABLE>


<PAGE>


<TABLE>
OPTICNET, INC.  (a development stage company)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)


<CAPTION>
                                                                   Quarter Ended               Six Months Ended
                                                            --------------------------    --------------------------
                                                                                                                       Period from
                                                                                                                        February 23,
                                                                                                                            2000
                                                                                                                      (inception) to
                                                             March 30,       March 31,     March 30,      March 31,       March 30,
                                                               2002            2001          2002           2001            2002
                                                            -----------    -----------    -----------    -----------    -----------
<S>                                                         <C>            <C>            <C>            <C>            <C>
Cash flows from operating activities:
Net loss                                                    $(1,767,771)   $  (157,992)   $(2,485,711)   $  (334,020)   $(4,166,212)

Adjustments to reconcile net loss to net cash
  provided (used) by operating activities:
   Depreciation and amortization                                  6,390             21         14,269          4,811         30,858
   Other                                                        409,446        (76,773)       260,673        404,853        576,740
                                                            -----------    -----------    -----------    -----------    -----------
Net cash provided (used) by operating activities             (1,351,935)      (234,744)    (2,210,769)        75,644     (3,558,614)

Cash flows from investing activities:
  Purchase of property and equipment                               --           (6,339)        (1,158)       (13,486)       (22,406)
  Other                                                            --           16,972           --          (20,237)       (22,025)
                                                            -----------    -----------    -----------    -----------    -----------
Net cash provided (used) by investing activities                   --           10,633         (1,158)       (33,723)       (44,431)

Cash flows from financing activities:
  Proceeds from borrowing on line of credit
    from related party                                          927,334           --        1,489,730           --        2,820,331
  Principal payments on line of credit from
    related party                                                  --             --             --             --         (163,993)
  Proceeds from issuance of convertible preferred stock            --             --             --             --        1,000,000
  Proceeds from issuance of common stock                            542          8,000            542          8,000         53,541
                                                            -----------    -----------    -----------    -----------    -----------
Net cash provided by financing activities                       927,876          8,000      1,490,272          8,000      3,709,879
                                                            -----------    -----------    -----------    -----------    -----------

Net increase (decrease) in cash and cash equivalents           (424,059)      (216,111)      (721,655)        49,921        106,834
Cash and cash equivalents at beginning of period                530,893      1,278,835        828,489      1,012,803           --
                                                            -----------    -----------    -----------    -----------    -----------

Cash and cash equivalents at end of period                  $   106,834    $ 1,062,724    $   106,834    $ 1,062,724    $   106,834
                                                            ===========    ===========    ===========    ===========    ===========

See notes to condensed financial statements.

                                                                                                                        Page 5 of 16
</TABLE>

<PAGE>


OPTICNET, INC.  (a development stage company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)


NOTE 1. BASIS OF PRESENTATION

The accompanying  unaudited condensed financial statements have been prepared in
accordance with accounting  principles  generally  accepted in the United States
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 accounting  principles  generally accepted
in the United  States  for  complete  financial  statements.  In the  opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included.  Operating results for the
interim periods presented are not necessarily indicative of the results that may
be expected for the year ending  September  28, 2002.  For further  information,
refer  to the  financial  statements  and  footnotes  thereto  in the  Company's
registration statement on Form 10, as amended April 25, 2002.

OpticNet,  Inc.  ("OpticNet" or the "Company") was  incorporated on February 23,
2000  in  the  State  of  Delaware,  as  a  majority  owned  subsidiary  of  BEI
Technologies, Inc. ("BEI Technologies").  From its inception (February 23, 2000)
through December 31, 2000,  OpticNet operated as a controlled  subsidiary of BEI
Technologies.  BEI Technologies accumulated the costs associated with OpticNet's
operation  in the period  from  February  23,  2000  through  December  31, 2000
including all expenses  directly  attributable  to OpticNet and an allocation of
the costs of  facilities,  salaries  and  employee  benefits  based on  relative
headcount.  These allocations were based on assumptions that management believes
are reasonable under the circumstances. However, these allocations and estimates
are not necessarily indicative of the costs that would have resulted if OpticNet
had been operated on a stand-alone basis during this period.

As of  October  30,  2000,  BEI  Technologies  distributed  3,578,387  shares in
OpticNet to BEI Technologies'  stockholders (the "Distribution"),  substantially
all of the  Company's  voting  common  stock  held by BEI  Technologies.  In the
Distribution,  each  holder  of record of BEI  Technologies  common  stock as of
October 30, 2000  received one share of OpticNet  voting  common stock for every
two  shares  of BEI  Technologies  common  stock  held,  and cash in lieu of any
fractional  share  of  OpticNet  common  stock.  After  the  Distribution,   BEI
Technologies  continued  to  hold  securities  of the  Company  in the  form  of
convertible preferred and voting common stock,  representing an aggregate direct
ownership interest of approximately 25% in the Company.

The principal  focus of the Company's  business is to develop,  manufacture  and
market fiber optic components and subsystems for the telecommunications market.

OpticNet's  primary  activities  since inception have been devoted to developing
its product  offerings and related  technologies,  recruiting key management and
technical  personnel and raising  capital to fund  operations.  OpticNet has not
recognized significant revenues since inception.  All revenue recognized to date
relates to engineering agreements funded by unaffiliated customers. As a result,
the accompanying financial statements are presented in accordance with Financial
Accounting  Statement  ("FAS") No. 7,  "Accounting  and Reporting by Development
Stage Enterprises."

OpticNet's  operations  are  subject  to  significant  risks and  uncertainties,
including  competitive,  financial,   developmental,   operational,  growth  and
expansion, technological, regulatory and other risks associated with an emerging
business.

These  financial  statements  have been prepared  assuming that the Company will
continue as a going  concern.  Since its  inception,  the  Company has  incurred
recurring  operating  losses and negative cash flows from  operations and has an
accumulated  deficit of $4.2 million at March 30, 2002.  These  conditions raise
substantial  doubt about the Company's  ability to continue as a going  concern.
The financial  statements do not include any

                                                                    Page 6 of 16

<PAGE>


adjustments  to reflect the possible  future effects on the  recoverability  and
classification  of assets or the amounts and  classification of liabilities that
may result from the outcome of this uncertainty.

Management and the Company's board of directors made a decision in March 2002 to
reduce the level of  incremental  spending for research and  development  and to
reduce operations to a level that will solely support the current customer base.
The Company is actively  seeking  additional  funding but the decision to reduce
operations  was made based on the  inability to obtain  additional  funding from
unaffiliated investors at this time.

Use of Estimates

The  preparation  of these  financial  statements  requires  management  to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues  and  expenses  and  related   disclosure  of  contingent   assets  and
liabilities.  The estimates are based on  historical  experience  and on various
other   assumptions  that  management   believes  to  be  reasonable  under  the
circumstances. On an ongoing basis, the Company evaluates its estimates. Results
may differ from these  estimates due to actual  outcomes  being  different  from
those on which the Company based its assumptions.

Allowance for Doubtful Accounts

The Company  continuously  monitors  collections and payments from its customers
and maintains allowances for doubtful accounts based upon historical  experience
and any specific  customer  collection  issues that the Company has  identified.
While  such  credit   losses   have   historically   been  within   management's
expectations,  there can be no  assurance  that the  Company  will  continue  to
experience  the same relative level of credit losses that it has in the past. In
addition,  the Company's revenues and accounts  receivable are concentrated in a
relatively  few number of customers.  A  significant  change in the liquidity or
financial  position of any one of these customers or a further  deterioration in
the economic environment or telecommunications  industry, in general, could have
a  material  adverse  impact on the  collectability  of the  Company's  accounts
receivable  and  future  operating  results,  including  a  reduction  in future
revenues  and  additional  allowances  for  doubtful  accounts.  If, at the time
revenue is recognized, the Company determines that collection of a receivable is
not  reasonably  assured,  the revenue is deferred  and  recognized  at the time
collection  becomes  reasonably  assured,  which is  generally  upon  receipt of
payment.

Revenue Recognition

The Company has not recognized  revenue from  commercial  product sales to date.
All revenue  recognized to date  consisted of engineering  work performed  under
engineering agreements with unaffiliated customers. Revenue for this engineering
work is  recognized  based on customer  acknowledgement  of the  achievement  of
milestones  in the  engineering  agreement.  Payments,  if  any,  for  prototype
deliveries to customers by the Company are  accounted  for as an offset  against
research and development expense as described below.

Research and Development Expense

The Company's  products are highly technical in nature and require a significant
level of research and development  effort.  Research and  development  costs are
charged to expense as incurred in  accordance  with FAS No. 2,  "Accounting  for
Research and Development  Costs." No prototype  units were delivered  during the
quarters  ended  March  30,  2002  and  March  31,  2001,  thus no  payments  or
receivables  for  prototype   deliveries   were  offset  against   research  and
development expense in the statements of operations for the periods indicated.


NOTE 2. TRANSACTIONS WITH RELATED PARTIES

On October 6, 2000, the Company and BEI  Technologies  entered into a Technology
Transfer and Distribution  Agreement (the "Distribution  Agreement") whereby BEI
Technologies contributed to the Company certain assets and intellectual property
related to the fiber optic components  technology  developed by BEI Technologies
and

                                                                    Page 7 of 16

<PAGE>


BEI Technologies'  majority-owned subsidiary,  SiTek, Inc. ("SiTek") in exchange
for 3,616,000  shares of the  Company's  common stock.  BEI  Technologies  later
distributed  3,578,387 of these shares to its  stockholders on November 21, 2000
in connection with the Company's separation from BEI Technologies.

In connection with the Distribution  Agreement,  on October 6, 2000, the Company
and SiTek  entered into a License and  Technical  Assistance  Agreement  whereby
Sitek agreed to license certain technology to the Company, assist the Company in
certain  research and development  efforts  following the  Distribution and also
fabricate and supply  certain  components  utilized in the  Company's  products.
Further,  Sitek  granted to the Company a perpetual,  royalty  free,  worldwide,
exclusive  license to develop,  make, use and sell products  within the field of
telecommunications data transmission utilizing technology now possessed or later
developed  by  SiTek,  and the  Company  has  granted  to SiTek a  corresponding
perpetual, royalty free, worldwide,  exclusive license to develop, make, use and
sell products outside of the Company's  defined market utilizing  technology now
possessed or later  developed by the Company.  This agreement  shall continue in
effect  for five  years  and  automatically  renew  thereafter  for  consecutive
one-year terms unless either party gives written notice of termination.

On  October  27,  2000,  the  Company  and  BEI  Technologies  entered  into  an
InterCompany   Services  Agreement  (the  "Services   Agreement")   whereby  BEI
Technologies agreed to make available to the Company certain office and facility
space, personnel support and supervision, financial and administrative services,
record-keeping  functions  and other  assistance,  with BEI  Technologies  being
reimbursed for the costs and expenses  incurred in connection with the provision
of these services to OpticNet.  Charges for these services were allocated to the
Company based upon usage,  headcount and other methods that management  believes
to be reasonable. These allocations totaled $25,000 for the each of the quarters
ended March 30, 2002 and March 31, 2001.

The  Services  Agreement  further  provided  for  a  line  of  credit  from  BEI
Technologies  to the Company for up to $2.0 million with  interest at prime plus
1.5%, expiring on September 28, 2002, unless extended by mutual agreement of the
parties.  In March 2002, BEI Technologies  increased this line of credit by $1.0
million.  As of March 30, 2002, the Company had outstanding  borrowings totaling
approximately  $2.7  million  on this line of  credit.  To  maintain  sufficient
liquidity  in the future and to fund  operations,  the Company may need to enter
into a new credit agreement in the future with a commercial lender. A new credit
line, if available, could include less favorable terms than the existing line of
credit agreement with BEI Technologies.

On September 28, 2001 the Company entered into an equipment  sublease  agreement
with BEI  Technologies,  as  lessor,  which  is  subordinate  to a master  lease
agreement entered into by BEI Technologies,  as lessee. This equipment under the
equipment  sublease  agreement  was valued at  approximately  $708,000,  with an
initial lease term of 36 months.  Rental  payments are on a quarterly  basis and
are equal to a monthly  equivalent  rent  determined by the  Company's  level of
usage of the equipment, the cost of the equipment and applicable interest.

On  December  20, 2001 the  Company  executed  two  additional  equipment  lease
schedules  under  the  Company's   equipment   sublease   arrangement  with  BEI
Technologies.  This additional  equipment under the equipment sublease agreement
was valued at  approximately  $3.5  million,  with an  initial  lease term of 36
months.  Rental  payments  are on a  quarterly  basis and are equal to a monthly
equivalent rent determined by the Company's level of usage of the equipment, the
cost of the equipment and applicable interest.

On March 28, 2002 the Company  executed an additional  equipment  lease schedule
under the Company's equipment sublease  arrangement with BEI Technologies.  This
additional  equipment  under the  equipment  sublease  agreement  was  valued at
approximately  $2.8  million,  with an initial  lease term of 36 months.  Rental
payments  are on a quarterly  basis and are equal to a monthly  equivalent  rent
determined by the  Company's  level of usage of the  equipment,  the cost of the
equipment and applicable interest.

The Company  leases  15,571 square feet of office and  manufacturing  facilities
used for research  and  development  and  manufacturing  activities  in Hayward,
California  from BEI  Technologies  under a sublease  agreement  entered into in
October 2001,  for an initial term expiring  December  2005.  The average annual
rental payment under the sublease agreement is approximately $220,000.

                                                                    Page 8 of 16

<PAGE>


As of March 30, 2002,  the Company,  in  recognition  of its inability to obtain
significant  strategic  partners  or third  party  financing,  concluded  it was
necessary to reduce  operating  costs.  The Company agreed with BEI Technologies
that  this  reduction  in  operations  includes  lower  usage  of the  subleased
facilities and equipment described above.

All of the  arrangements  outlined above were  negotiated by related parties and
may not represent transactions at arms length and the Company may not be able to
obtain terms as favorable with third parties if and when the  arrangements  with
BEI Technologies come to an end.


NOTE 3. NOTE PAYABLE TO RELATED PARTY

During fiscal 2001, the Company entered into a line of credit agreement with BEI
Technologies, a minority investor.  Borrowings outstanding on the line of credit
were as follows:

                                                   March 30,          March 31,
                                                     2002               2001
                                                  ----------         ----------
Unsecured revolving promissory note from BEI
Technologies due 9/28/02, at a rate of prime
plus 1.5%; 6.3% and 9.5% at March 30, 2002
and March 31, 2001, respectively)                 $2,656,338         $    --
                                                  ----------         ----------
                                                  $2,656,338         $    --
                                                  ==========         ==========


No interest  was paid during the quarter  ended March 30, 2002 or in the quarter
ended March 31, 2001.  Accrued  interest  expense was  approximately  $68,000 at
March 30, 2002. No interest expense was accrued at March 31, 2001.


NOTE 4. CONTINGENCIES AND LITIGATION

The Company may be subject to various legal actions arising in the normal course
of business  from time to time.  As of March 30, 2002,  the Company had no legal
actions pending.


NOTE 5. SUBSEQUENT EVENT

In April 2002,  the Company  underwent a reduction  in force  resulting in eight
individuals  departing  employment  with  the  Company,  including  engineering,
manufacturing  and marketing  personnel.  Severance pay for affected persons was
per Company policy,  including cash payment and the  acceleration of the vesting
of options for certain  affected  individuals.  Total cash costs  related to the
reduction in force of  approximately  $86,000 are expected to be recorded in the
fiscal quarter ending June 29, 2002.


Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

Except for the historical information contained herein, the following discussion
contains  forward-looking  statements that involve risks and uncertainties.  The
Company's  actual results could differ  materially  from those  expressed in, or
implied  by,  such  forward-looking  statements.  Factors  that  could  cause or
contribute to such differences  include, but are not limited to, those discussed
in this section,  and those discussed in the Company's Form 10, as amended April
25, 2002, in particular, within the "Risk Factors" section thereof.

Critical Accounting Policy and the Use of Estimates

Management's  discussion  and  analysis of  financial  condition  and results of
operations is based upon the  Company's  financial  statements,  which have been
prepared in accordance  with  accounting  principles  generally

                                                                    Page 9 of 16

<PAGE>


accepted in the United  States of America.  The Company  reviews the  accounting
policies  used in  reporting  its  financial  results  on a regular  basis.  The
preparation of these financial  statements requires management to make estimates
and judgments that affect the reported amounts of assets, liabilities,  revenues
and expenses and related  disclosure of contingent  assets and liabilities.  The
estimates are based on historical  experience  and on various other  assumptions
that management believes to be reasonable under the circumstances. On an ongoing
basis,  the  Company  evaluates  its  estimates.  Results  may differ from these
estimates due to actual outcomes being different from those on which the Company
based its assumptions.  The Company believes the following  critical  accounting
policy  affects  its  more  significant  judgments  and  estimates  used  in the
preparation of its financial statements.

Allowance for Doubtful Accounts

The Company  continuously  monitors  collections and payments from its customers
and maintains allowances for doubtful accounts based upon historical  experience
and any specific  customer  collection  issues that the Company has  identified.
While  such  credit   losses   have   historically   been  within   management's
expectations,  there can be no  assurance  that the  Company  will  continue  to
experience  the same relative level of credit losses that it has in the past. In
addition,  the Company's revenues and accounts  receivable are concentrated in a
relatively  few number of customers.  A  significant  change in the liquidity or
financial  position of any one of these customers or a further  deterioration in
the economic environment or telecommunications  industry, in general, could have
a  material  adverse  impact on the  collectability  of the  Company's  accounts
receivable  and  future  operating  results,  including  a  reduction  in future
revenues  and  additional  allowances  for  doubtful  accounts.  If, at the time
revenue is recognized, the Company determines that collection of a receivable is
not  reasonably  assured,  the revenue is deferred  and  recognized  at the time
collection  becomes  reasonably  assured,  which is  generally  upon  receipt of
payment.

Significant Accounting Policies

Revenue Recognition

The Company  recognizes  revenue  using the guidance  from SEC Staff  Accounting
Bulletin No. 101 "Revenue  Recognition  in  Financial  Statements".  Under these
guidelines, revenue recognition is deferred on transactions where (i) persuasive
evidence  of  an  arrangement  does  not  exist,  (ii)  revenue  recognition  is
contingent upon performance of one or more obligations of the Company, (iii) the
price is not fixed or determinable or (iv) payment is not reasonably assured.

To date, the Company has not recognized revenue related to non-prototype product
offerings.  All  revenue  recognized  to  date  consisted  of  engineering  work
performed under engineering agreements with unaffiliated customers.  Revenue for
this  engineering work is recognized  based on customer  acknowledgement  of the
achievement of milestones in the engineering agreement.

Research and Development Expense

The Company's  products are highly technical in nature and require a significant
level of research and development  effort.  Research and  development  costs are
charged to expense as incurred in  accordance  with FAS No. 2,  "Accounting  for
Research  and  Development  Costs."  Payments  and  receivables   recorded  from
customers for the delivery under contracts of prototype units are offset against
research and development expense in the statements of operations.

Quarters ended March 30, 2002 and March 31, 2001

There were no revenues or prototype product deliveries during the second quarter
of fiscal 2002. Revenues during the second quarter of fiscal 2001 were $325,000,
reflecting work performed under an engineering

                                                                   Page 10 of 16

<PAGE>


agreement with one unaffiliated customer. In addition, during the second quarter
of fiscal 2001 the Company  recorded  payments or receivables  for deliveries of
prototype  products to one  unaffiliated  customer,  accounted  for as an offset
against research and development expense.

There was no cost of  revenues  in the  second  quarter of fiscal  2002.  In the
second quarter of fiscal 2001,  cost of revenues as a percentage of revenues was
60%, resulting in gross profit of $130,000.  Cost of revenues includes salaries,
materials and production overhead.

Selling,  general and  administrative  expenses in the second  quarter of fiscal
2002 increased  approximately  $291,000 from $189,000 in the same quarter of the
prior fiscal year to  $480,000.  The  increase  was  primarily  due to increased
professional,  consulting and legal fees of approximately  $158,000,  as well as
increased  direct  employee   compensation   expense  and  related  benefits  of
approximately  $100,000. The remaining increase was due to travel, facility rent
and other costs. Selling,  general and administrative expenses included payments
made to BEI  Technologies  for various  accounting,  human  resources  and other
administrative  services  provided by BEI Technologies  pursuant to the Services
Agreement between the two companies. These payments during the second quarter of
both  fiscal  2002 and 2001  totaled  $25,000.  The cost of these  services  was
established at $25,000 per fiscal quarter based upon square footage,  headcount,
usage and other methods management believes to be reasonable.

Research and development expenses in the second quarter of fiscal 2002 increased
approximately  $1,145,000  from $112,000 in the same quarter of the prior fiscal
year to $1,257,000.  The increase was primarily due to increased gross costs for
facility rent and  operations of  approximately  $419,000,  as well as increased
gross costs for direct  employee  compensation  expense and related  benefits of
approximately  $334,000, and increased gross costs for materials and supplies of
approximately  $197,000.  The  remaining  increase  was due to gross  costs  for
professional fees, travel and other expenses.

Interest expense was approximately  $26,000 in the second quarter of fiscal 2002
due to the outstanding  balance and additional  borrowings during the quarter on
the  Company's  line of credit  agreement  with BEI  Technologies.  No  interest
expense  was  incurred  during the second  quarter of fiscal  2001  because  the
Company did not borrow any  amounts on the line of credit with BEI  Technologies
during that time.

Six Months ended March 30, 2002 and March 31, 2001

Revenues  during the first six months of fiscal 2002  reflected  work  performed
under  engineering  agreements  with two  unaffiliated  customers  and decreased
approximately $237,000 to $88,000 from $325,000 during the same period in fiscal
2001. The decrease is due to the slow down of demand for new  telecommunications
equipment  components compared to prior periods.  In addition,  during the first
six months of fiscal 2002,  the Company  recorded  payments or  receivables  for
deliveries of prototype products to two unaffiliated customers, accounted for as
an offset against research and development expense.

Cost of revenues as a  percentage  of revenues in the first six months of fiscal
2002 decreased 10 percentage  points to 50% from 60% in the comparable period of
fiscal 2001.  The decrease is due to slightly  lower direct costs on engineering
agreements in the current period.

Selling,  general  and  administrative  expenses  during the first six months of
fiscal 2002  increased  approximately  $561,000 from $207,000 in the  comparable
period of the prior fiscal year to $768,000.  The increase was  primarily due to
increased professional,  consulting and legal fees of approximately $354,000, as
well as increased direct employee  compensation  expense and related benefits of
approximately  $140,000. The remaining increase was due to facility rent, travel
and other costs. Selling,  general and administrative expenses included payments
made to BEI  Technologies  for various  accounting,  human  resources  and other
administrative  services  provided by BEI Technologies  pursuant to the Services
Agreement between the two companies.  These payments during the first six months
of fiscal 2002 and 2001 were  $50,000  and  $25,000,  respectively.  The cost of
these  services  was  established  at $25,000 per fiscal  quarter at the time of
entrance into the Services Agreement based upon square footage, headcount, usage
and other methods management believes to be reasonable.

                                                                   Page 11 of 16

<PAGE>


Research  and  development  expenses  during the first six months of fiscal 2002
increased approximately $1,434,000 from $286,000 in the comparable period of the
prior fiscal year to  $1,720,000.  The increase was  primarily  due to increased
gross costs for direct  employee  compensation  expense and related  benefits of
approximately  $605,000,  as well as increased gross costs for facility rent and
operations of  approximately  $560,000,  and increased gross costs for materials
and supplies of approximately  $254,000. The remaining increase was due to gross
costs for professional fees, travel and other costs.

Interest  expense  was  approximately  $45,000 in the first six months of fiscal
2002 due to the outstanding balance and additional  borrowings during the period
on the Company's  line of credit  agreement with BEI  Technologies.  No interest
expense was  incurred  during the  comparable  period of fiscal 2001 because the
Company did not borrow any  amounts on the line of credit with BEI  Technologies
during that time.

Liquidity and Capital Resources

During the first six months of fiscal 2002,  total cash used by  operations  was
approximately  $2,211,000.  Cash  provided by  operations  included the positive
impact  of  non-cash  charges  from  bad  debt  expense,  and  depreciation  and
amortization of $57,000 and $14,000, respectively. In addition, positive impacts
to cash  resources  resulted from  decreases in other  current  assets and trade
receivables of $44,000 and $43,000,  respectively, as well as increases in trade
accounts  payable,  accrued expenses and other  liabilities and deferred rent of
$150,000, $90,000 and $7,000, respectively.  These cash inflows were offset by a
net loss of $2,486,000,  as well as increases in inventory and prepaid  expenses
of $109,000 and $21,000, respectively.

Cash used by  investing  activities  during the first six months of fiscal  2002
consisted of a purchase of $1,000 in capital equipment. In addition,  during the
first six months of fiscal 2002 the Company  financed  equipment with a value of
approximately  $6.3  million and an initial  lease term of three years under the
equipment sublease arrangement with BEI Technologies. The subleased equipment is
in addition to the  approximately  $708,000 of equipment  subleased as of fiscal
2001 year end.  Rent expense  related to this  equipment  totaled  approximately
$340,000  and $59,000  during the second and first  quarters,  respectively,  of
fiscal 2002.  Beginning in the third quarter of fiscal 2002, the Company intends
to reduce  operations due to its inability to obtain  additional  financing from
unaffiliated  investors at this time. Thus, due to reduced usage now expected on
the subleased  equipment,  past rent expense on the subleases is not necessarily
indicative of future results.  Transactions  with BEI  Technologies,  a minority
investor and the Company's  former parent  company,  are not  necessarily  on an
arms-length  basis and the Company may receive more favorable  terms under these
arrangements than it would from an unrelated third party.

Cash provided by financing activities during the first six months of fiscal 2002
consisted  of proceeds of  $1,490,000  from  borrowings  on the  Company's  note
payable to BEI Technologies under its related party line of credit  arrangement.
The  borrowings  were used to fund daily  operations,  capital  investments  and
product  development.  In March 2002,  BEI  Technologies  increased this line of
credit by $1.0 million.

The Company anticipates  incurring  substantial  additional losses over at least
the next several  years.  Since  inception,  the Company has incurred  recurring
operating losses and negative cash flows from operations.  As of March 30, 2002,
the Company had an  accumulated  deficit of $4.2 million.  As of that date,  the
Company's  management  was advised  that  further  debt  financing  would not be
provided by BEI Technologies. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. The Company has been in recent
discussions  with BEI Technologies and other  prospective  outside  investors to
obtain  additional  equity  financing,  however  it can offer no  assurances  an
investment by outside  investors will be accomplished in the near future,  if at
all.  The Company  does not believe it possesses  sufficient  financing  for the
remainder of its 2002 fiscal year unless it obtains additional  financing during
the current fiscal year. In March 2002,  management  and the Company's  board of
directors decided to reduce the level of incremental spending by the Company for
research and  development  and to reduce  operations to a level that will solely
support the current  customer base. The Company is actively  seeking  additional
funding but the decision to reduce operations was made based on the

                                                                   Page 12 of 16

<PAGE>


inability to obtain additional investor funding at this time.

The Company had no material capital commitments at March 30, 2002.

Recent developments

In April 2002,  the Company  underwent a reduction  in force  resulting in eight
individuals  departing  employment  with  the  Company,  including  engineering,
manufacturing  and marketing  personnel.  Severance pay for affected persons was
per Company policy,  including cash payment and the  acceleration of the vesting
of options for certain  affected  individuals.  Total cash costs  related to the
reduction in force of  approximately  $86,000 are expected to be recorded in the
fiscal quarter ending June 29, 2002.

Effects of Inflation

Management  believes  that, for the periods  presented,  inflation has not had a
material effect on the Company's operations.


Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The  Company  was  incorporated  in  February  2000  and  commenced  independent
operations in November  2000.  The Company has not yet  generated  revenues from
sales of its  products  but only  from  engineering  work  performed  for  three
customers to date. The Company  expects to incur net losses for the  foreseeable
future.  The Company may never  achieve  profitability  and may not succeed as a
going  concern  and its  independent  auditor has  included a statement  to this
effect in their most recently issued audit report.

The Company  believes  that there have been no material  changes in the reported
market risks faced by the Company since those  discussed in the  Company's  Form
10, as amended April 25, 2002, under the heading corresponding to that set forth
above.  The  Company's  exposure to market  risk is limited to  interest  income
sensitivity,  which is affected by changes in the general level of U.S. interest
rates,  as a portion of the Company's cash  equivalents  are in short-term  debt
securities  issued by  corporations.  The Company's cash  equivalents are placed
with high-quality issuers and the Company attempts to limit the amount of credit
exposure  to any one  issuer.  Due to the  nature  of the  Company's  short-term
investments,  the Company believes that it is not subject to any material market
risk  exposure.  The  Company  does  not  have  any  foreign  currency  or other
derivative financial instruments.


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

During the fiscal quarter ended March 30, 2002, the  stockholders of the Company
approved  by an  action  by  written  consent  an  amendment  to  the  Company's
certificate of incorporation to (i) increase the aggregate  authorized shares of
the Company's capital stock to 50 million shares from the previously  authorized
aggregate  of 40  million;  (ii)  increase  the number of shares  designated  as
preferred  stock to an  aggregate  of 22  million  shares  from  the  previously
designated  aggregate  of 7 million  shares;  and (iii)  increase  the number of
shares  designated as voting  common stock to an aggregate of 45 million  shares
from the previously  designated aggregate of 35 million shares. The amendment to
the Company's  certificate of incorporation was approved by a simple majority of
the stockholders of the Company  entitled to vote on the amendment.  None of the
newly authorized shares were issued.

                                                                   Page 13 of 16

<PAGE>


OPTICNET, INC.   (a development stage company)


PART II. OTHER INFORMATION


Item 6.  Exhibits and Reports on Form 8-K

         (a) Listing of Exhibits

<TABLE>
<CAPTION>
       Exhibit Numbers              Description                                                      Footnote
       ---------------              -----------                                                      --------
<S>                                 <C>                                                                <C>
           2.1                      Technology  Transfer and Distribution  Agreement  between BEI
                                    Technologies, Inc. and the registrant                                i

           3.1                      Amended and Restated Certificate of Incorporation                   ii

           3.2                      Bylaws                                                               i

           4.1                      Specimen Voting Common Stock certificate                             i

           4.2                      Bylaws (see Exhibit 3.2)                                             i

           4.3                      Amendment to Preferred Stock Purchase  Agreement  between BEI
                                    Technologies, Inc. and the registrant                                i

          10.1                      InterCompany  Agreement  between BEI  Technologies,  Inc. and
                                    the registrant                                                       i

          10.2                      License  and  Technical   Assistance  Agreement  between  BEI
                                    Technologies, Inc. and the registrant                                i

          10.3                      Sublease  Agreement  between BEI  Technologies,  Inc. and the
                                    registrant                                                          ii

          10.4                      Equipment Sublease Agreement between BEI Technologies, Inc.
                                    and the registrant                                                   i

          10.5                      Amended  and  Restate  2000  Equity  Incentive  Plan  of  the
                                    registrant                                                           i

          10.6                      Form of option agreement under 2000 Equity Incentive Plan            i

          10.7                      Form   of   Leave   of   Absence   Agreements   between   BEI
                                    Technologies,  Inc. and Certain Named  Executive  Officers of
                                    the registrant                                                       i

          10.8                      Revolving  Line of Credit Note executed by the  registrant in
                                    favor of BEI Technologies, Inc.                                      i

          10.9                      Form  of  Indemnity  Agreement  to be  entered  into  by  the
                                    registrant with each of its directors and executive officers        ii

                                                                                                Page 14 of 16
</TABLE>

<PAGE>


<TABLE>
<CAPTION>

<S>                                 <C>                                                                <C>
          10.10                     Consulting   Agreement   between   Danforth  Joslyn  and  the
                                    registrant                                                          ii

          10.11                     Consulting   Agreement   between   Gary  D.  Wrench  and  BEI
                                    Technologies, Inc.                                                 iii

          10.12                     Amendment   No.  1  to  License  and   Technical   Assistance
                                    Agreement between the registrant and SiTek, Inc.                   iii

          99.1                      Preliminary  Information Statement of BEI Technologies,  Inc.
                                    dated September 65, 2000                                             i

          99.2                      Final Information  Statement of BEI Technologies,  Inc. dated
                                    November 17, 2000                                                    i
</TABLE>


          (i)     Incorporated by reference.  Previously  filed as an exhibit to
                  the  Registrant's  Information  Statement on Form 10 (file no.
                  0-31162) as filed on January 25, 2002.

          (ii)    Incorporated by reference.  Previously  filed as an exhibit to
                  Amendment No. 1 to the Registrant's  Information  Statement on
                  Form 10 (file no. 0-31162) as filed on March 22, 2002.

          (iii)   Incorporated by reference.  Previously  filed as an exhibit to
                  Amendment No. 2 to the Registrant's  Information  Statement on
                  Form 10 (file no. 0-31162) as filed on April 25, 2002.


                  (b) Reports on Form 8-K

                      No reports on Form 8-K were  filed by the  Company  during
                      the quarter ended March 30, 2002.

                                                                   Page 15 of 16

<PAGE>


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 on May 13, 2002.



                                                 OpticNet, Inc.

                                                 By: /s/ Gary D. Wrench
                                                     -------------------------
                                                     Gary D. Wrench
                                                     Chief Financial Officer
                                                     (Chief Accounting Officer)

                                                                   Page 16 of 16