================================================================================



                                  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 June 30, 2005

                                       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 000-31861


                      OPTICAL COMMUNICATION PRODUCTS, INC.
             (Exact Name of Registrant as Specified in Its Charter)
                              --------------------





Delaware                                                              95-4344224
(State or Other Jurisdiction                                    (I.R.S. Employer
of Incorporation or Organization)                            Identification No.)

                               6101 Variel Avenue
                        Woodland Hills, California 91367
                    (Address of principal executive offices,
                               including zip code)
       Registrant's Telephone Number, Including Area Code: (818) 251-7100




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

        Indicate by check mark whether the  registrant is an  accelerated  filer
(as defined in Rule 12b-2 of the Exchange Act). Yes |_| No |X|

        The  registrant  has two  classes of common  stock  authorized,  Class A
Common Stock and Class B Common Stock. The rights, preferences and privileges of
each class of common stock are identical  except for voting rights.  The holders
of Class A Common  Stock are  entitled  to one vote per share  while  holders of
Class B Common  Stock are entitled to ten votes per share on matters to be voted
on by stockholders. As of August 10, 2005, there were 46,967,657 shares of Class
A common  stock  outstanding  and  66,000,000  shares  of  Class B Common  Stock
outstanding.



================================================================================



<PAGE>


<TABLE>
<CAPTION>


                      OPTICAL COMMUNICATION PRODUCTS, INC.

                           INDEX TO FORM 10-Q FOR THE
                      QUARTERLY PERIOD ENDED JUNE 30, 2005


                                                                                PAGE
<S>       <C>                                                                     <C>

                             PART I. FINANCIAL INFORMATION

Item 1.   Financial Statements (unaudited)

          Balance Sheets as of June 30, 2005 (unaudited) and September 30, 2004    1

          Statements of Operations for the Three Months and Nine Months Ended
          June 30, 2005 and 2004 (unaudited)                                       2

          Statements of Cash Flows for the Nine Months Ended June 30, 2005
          and 2004 (unaudited)                                                     3

          Notes to Financial Statements (unaudited)                                4

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

Item 3.   Quantitative and Qualitative Disclosure about Market Risk              30

Item 4.   Controls and Procedures                                                30

                  PART II. OTHER INFORMATION AND SIGNATURES

Item 1.   Legal Proceedings                                                      31
Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds            31
Item 3.   Defaults upon Senior Securities                                        31
Item 4.   Submission of Matters to a Vote of Security Holders                    31
Item 5    Other Information                                                      31
Item 6.   Exhibits                                                               31

                                  SIGNATURES                                     32
</TABLE>



<PAGE>


                                     PART I.
                              FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

OPTICAL COMMUNICATION PRODUCTS, INC.

BALANCE SHEETS
(Dollars in thousands)

<TABLE>
<CAPTION>

                                                                                         June 30,         September 30,
                                                                                         2005                  2004
--------------------------------------------------------------------------------------------------------------------------
                                                                                      (Unaudited)
<S>                                                                                        <C>                  <C>
ASSETS

CURRENT ASSETS:
  Cash and cash equivalents                                                                 $ 84,622             $ 75,423
  Marketable securities                                                                       64,814               75,131
  Accounts receivable less allowance for doubtful accounts:
    $369 at June 30, 2005 and $362 at September 30, 2004                                       8,539                8,566
  Inventories                                                                                 11,466                8,649
  Prepaid expenses and other current assets                                                    1,310                1,118
                                                                                   ------------------    -----------------

           Total current assets                                                              170,751              168,887

Property, plant and equipment, net                                                            25,937               29,278
Intangible assets, net                                                                         1,127                1,802
                                                                                   ------------------    -----------------

TOTAL ASSETS                                                                               $ 197,815            $ 199,967
                                                                                   ==================    =================

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable                                                                           $ 2,157              $ 1,136
  Accounts payable to related parties                                                          4,436                3,325
  Accrued payroll and benefits                                                                 1,365                1,989
  Accrued bonus                                                                                1,822                4,451
  Other accrued expenses                                                                       1,018                1,248
  Income taxes payable                                                                            97                  158
                                                                                   ------------------    -----------------

           Total current liabilities                                                          10,895               12,307

OTHER LONG-TERM LIABILITIES                                                                      200                  400
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:

  Class A common stock, $0.001 par value; 200,000,000
    shares authorized, 46,962,777 and 46,771,927 shares
    outstanding at June 30, 2005 and September 30, 2004,
    respectively.                                                                                 47                   47
  Class B common stock $0.001 par value; 66,000,000 shares
    authorized, 66,000,000 shares issued and outstanding at
    June 30, 2005 and September 30, 2004                                                          66                   66
  Additional paid-in-capital                                                                 133,010              132,917
  Retained earnings                                                                           53,597               54,230
                                                                                   ------------------    -----------------

           Total stockholders' equity                                                        186,720              187,260
                                                                                   ------------------    -----------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                 $ 197,815            $ 199,967
                                                                                   ==================    =================
</TABLE>


                        See Notes to Financial Statements


                                       1
<PAGE>



OPTICAL COMMUNICATION PRODUCTS, INC.

STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

<TABLE>
<CAPTION>

                                                      Three Months Ended June 30,              Nine Months Ended June 30,
                                                   -------------------------------------  --------------------------------------

                                                         2005                2004               2005                2004
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>                 <C>                 <C>                 <C>

REVENUE                                                    $ 13,621            $ 14,299            $ 41,172            $ 43,977

COST OF REVENUE                                               8,300               7,770              25,849              24,732
                                                   -----------------   -----------------  ------------------  ------------------

GROSS PROFIT                                                  5,321               6,529              15,323              19,245
                                                   -----------------   -----------------  ------------------  ------------------

EXPENSES:
  Research and development                                    3,510               4,152              11,155              12,970
  Selling and marketing                                       1,120               1,153               3,574               3,831
  General and administrative                                  1,219               1,504               3,660               4,728
                                                   -----------------   -----------------  ------------------  ------------------
           Total expenses                                     5,849               6,809              18,389              21,529
                                                   -----------------   -----------------  ------------------  ------------------

LOSS FROM OPERATIONS                                           (528)               (280)             (3,066)             (2,284)

OTHER INCOME, Net                                               996               1,286               2,433               1,842
                                                   -----------------   -----------------  ------------------  ------------------

INCOME (LOSS) BEFORE INCOME TAXES                               468               1,006                (633)               (442)

INCOME TAX PROVISION                                              -                   -                   -                 192
                                                   -----------------   -----------------  ------------------  ------------------

NET INCOME (LOSS)                                             $ 468             $ 1,006              $ (633)             $ (634)
                                                   =================   =================  ==================  ==================

BASIC EARNINGS (LOSS) PER SHARE                              $ 0.00              $ 0.01             $ (0.01)            $ (0.01)
                                                   =================   =================  ==================  ==================

DILUTED EARNINGS (LOSS) PER SHARE                            $ 0.00              $ 0.01             $ (0.01)            $ (0.01)
                                                   =================   =================  ==================  ==================

BASIC SHARES OUTSTANDING                                    112,927             112,655             112,868             112,463
                                                   =================   =================  ==================  ==================


DILUTED SHARES OUTSTANDING                                  113,754             113,938             112,868             112,463
                                                   =================   =================  ==================  ==================
</TABLE>



                       See Notes to Financial Statements



                                       2
<PAGE>



OPTICAL COMMUNICATION PRODUCTS, INC

STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

<TABLE>
<CAPTION>

                                                                            Nine Months Ended June 30,
                                                                        -------------------------------
                                                                            2005             2004
-------------------------------------------------------------------------------------------------------
<S>                                                                          <C>              <C>

Operating Activities:
Net loss                                                                       $ (633)          $ (634)

Adjustments to reconcile net loss to net
cash from operating activities:
    Depreciation and amortization of property, plant and equipment              3,727            3,166
    Amortization of intangibles                                                   675              674
    Amortization of  premiums on marketable securities                             66              812
    Gain on sale of real property                                                  -             (942)
Changes in operating assets and liabilities:
    Accounts receivable, net                                                       27           (1,837)
    Income taxes receivable                                                         -           11,743
    Inventories                                                                (2,817)          (2,248)
    Prepaid expense and other assets                                             (194)            (595)
    Accounts payable                                                            1,021              433
    Accounts payable to related parties                                         1,111            2,055
    Accrued payroll and benefits                                                 (624)             372
    Accrued bonuses                                                            (2,629)            (604)
    Other accrued expenses                                                       (491)          (1,511)
                                                                        --------------  ---------------

  Net cash (used in) provided by operating activities                            (761)          10,884
                                                                        --------------  ---------------

Investing Activities:
    Purchase of marketable securities                                         (39,747)         (40,478)
    Maturities of marketable securities                                        50,000           45,000
    Net proceeds from sale of real property                                        -            5,693
    Purchase of property, plant and equipment                                    (386)          (1,355)
                                                                        --------------  ---------------

  Net cash provided by investing activities                                     9,867            8,860
                                                                        --------------  ---------------

Financing Activities:
    Principal payments on long-term debt                                            -             (353)
    Issuance of common stock                                                       93              195
                                                                        --------------  ---------------

  Net cash provided by (used in) financing activities                              93             (158)
                                                                        --------------  ---------------

Increase in cash and cash equivalents                                           9,199           19,586

Cash and cash equivalents, beginning of period                                 75,423           64,895
                                                                        --------------  ---------------


Cash and cash equivalents end of period                                      $ 84,622         $ 84,481
                                                                        ==============  ===============
</TABLE>


                        See Notes to Financial Statements


                                       3
<PAGE>



Optical Communication Products, Inc
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

1.      BASIS OF PRESENTATION

        The  accompanying  unaudited  interim  financial  statements  of Optical
        Communication  Products,  Inc., a Delaware  corporation (the "Company"),
        have been prepared in accordance  with accounting  principles  generally
        accepted  in  the  United  States  of  America  and  Article  10 of  the
        Securities and Exchange Commission's  Regulation S-X. Accordingly,  they
        do  not  include  all of  the  information  and  footnotes  required  by
        accounting principles generally accepted in the United States of America
        for  complete  financial   statements.   In  management's  opinion,  the
        unaudited  financial  statements contain all adjustments,  consisting of
        normal recurring adjustments,  necessary to present fairly the Company's
        financial  statements  as of June 30, 2005 and for all  interim  periods
        presented.  The financial  statements should be read in conjunction with
        the audited  financial  statements  included in the annual report of the
        Company filed on Form 10-K with the Securities  and Exchange  Commission
        for the year ended September 30, 2004. The results of operations for the
        period ended June 30, 2005 are not necessarily indicative of the results
        that may be expected for the fiscal year ending  September 30, 2005. The
        Company's   operations   are  primarily   located  in  Woodland   Hills,
        California.  The Company is a majority-owned  subsidiary of The Furukawa
        Electric  Company,  Ltd. of Japan  ("Furukawa").  Furukawa  beneficially
        owned  58.4% of the  Company's  common  stock at June  30,  2005,  which
        accounts for 93.4% of the combined  voting power of all of the Company's
        outstanding stock.

        Recent Accounting Pronouncements

        In December  2004,  the Financial  Accounting  Standards  Board ("FASB")
        issued  Statement of Financial  Accounting  Standards  ("SFAS") No. 123R
        Share-Based  Payment that will  require  compensation  costs  related to
        share-based  payment  transactions  to be  recognized  in the  financial
        statements.  With limited  exceptions,  the amount of compensation  cost
        will be  measured  based on the  grant-date  fair value of the equity or
        liability  instruments  issued.  In addition,  liability  awards will be
        remeasured each reporting  period.  Compensation cost will be recognized
        over the period that an employee  provides  service in exchange  for the
        award.  SFAS No. 123R replaces SFAS No. 123,  Accounting for Stock-Based
        Compensation,  and supersedes  APB Opinion No. 25,  Accounting for Stock
        Issued to Employees.  In April 2005 the SEC changed the  effective  date
        for SFAS 123R to the first  fiscal year that begins after June 15, 2005.
        We  currently  expect  to adopt  SFAS  No.  123R in the  quarter  ending
        December  31,  2005.  The Company has not yet  determined  the method of
        adoption or the effect of adopting SFAS No. 123R.

        In November 2004, the FASB issued SFAS 151,  Inventory  Costs.  SFAS 151
        requires that allocation of fixed  production  overheads to the costs of
        conversion be based on the normal capacity of the production  facilities
        and unallocated  overheads are recognized as an expense in the period in
        which they are  incurred.  In  addition,  other  items such as  abnormal
        freight,   handling  costs  and  amounts  of  wasted  materials  require
        treatment  as  current  period  charges  rather  than a  portion  of the
        inventory  cost.  SFAS 151 is effective  for  inventory  costs  incurred
        during  fiscal  years  beginning  after June 15,  2005.  The  Company is
        currently assessing the impact of adopting SFAS 151.

        In July 2004,  the Emerging  Issues Task Force  ("EITF")  published  its
        consensus  on Issue No.  03-01,  "The  Meaning  of  Other-Than-Temporary
        Impairment and Its Application to Certain  Investments."  EITF Issue No.
        03-01 addresses the meaning of  other-than-temporary  impairment and its
        application to debt and equity  securities within the scope of Statement
        of Financial


                                       4
<PAGE>


        Accounting   Standards   ("SFAS")  No.  115,  certain  debt  and  equity
        securities  within the scope of SFAS No. 124, and equity securities that
        are not subject to the scope of SFAS No. 115 and not accounted for under
        the equity method of accounting. In September 2004, the FASB issued FASB
        Staff Position  ("FSP")  Emerging Issues Task Force (EITF) Issue 03-1-1,
        Effective Date of Paragraphs 10-20 of EITF Issue No. 03-1,] which delays
        the effective date for the recognition and measurement  guidance in EITF
        Issue No.  03-1.  In  addition,  the FASB has issued a  proposed  FSP to
        consider   whether  further   application   guidance  is  necessary  for
        securities  analyzed  for  impairment  under  EITF Issue No.  03-1.  The
        Company  continues to assess the  potential  impact that the adoption of
        the proposed FSP could have on its financial statements.

        Stock Based Compensation

        The  Company  accounts  for its  employee  stock  option  plan under the
        intrinsic value method prescribed by Accounting Principles Board Opinion
        No.  25,   Accounting  for  Stock  Issued  to  Employees,   and  related
        interpretations.  The Company has a stock-based  compensation  plan. All
        options  granted had an exercise  price equal to the quoted market price
        of the underlying common stock on the date of grant. The following table
        illustrates the effect on the operating results and per share amounts if
        the  fair  value  recognition   provisions  of  Statement  of  Financial
        Accounting  Standards  ("SFAS")  No.  123,  Accounting  for  Stock-Based
        Compensation,  as  amended by SFAS No. 148  Accounting  for  Stock-Based
        Compensation--Transition  and  Disclosure an amendment of FASB Statement
        No. 123 had been applied to stock-based employee compensation:


<TABLE>
<CAPTION>

                                                      Three months ended June 30,                 Nine months ended June 30,
                                                --------------------------------------    ------------------------------------------
                                                    2005                  2004                   2005                  2004
                                                ---------------    -------------------    -------------------    -------------------
                                                             (in thousands, except per share amounts)
<S>                                                  <C>                 <C>                     <C>                    <C>

Net income (loss):
  As reported:                                       $ 468               $ 1,006                $ (633)                $ (634)

  Deduct total stock-based employee
  compensation expense determined under
  fair value based method for all
  awards, net of related tax effects:                 (252)              (1,548)                   (747)                (4,533)
                                                ---------------    -------------------    -------------------    -------------------
Pro forma net income (loss)                          $ 216               $ (542)               $ (1,380)              $ (5,167)
                                                ===============    ===================    ===================    ===================

Basic earnings (loss) per share
  As reported                                       $ 0.00               $ 0.01                 $ (0.01)              $ (0.01)
  Pro forma                                         $ 0.00              $ (0.00)                $ (0.01)              $ (0.05)

Diluted earnings (loss) per share
  As reported                                       $ 0.00               $ 0.01                 $ (0.01)              $ (0.01)
  Pro forma                                         $ 0.00              $ (0.00)                $ (0.01)              $ (0.05)
</TABLE>



        The fair value of each option grant  estimated on the date of grant used
        to  compute  pro  forma  income  per  share  is   estimated   using  the
        Black-Scholes  option-pricing model. The following assumptions were used
        in completing the model:


                                       5
<PAGE>


<TABLE>
<CAPTION>

                                           Three months ended June 30,             Nine months ended June 30,
                                        ---------------------------------    --------------------------------------
                                             2005              2004                2005                  2004
                                        -------------    ----------------    ----------------    ------------------
        <S>                                 <C>               <C>                 <C>                   <C>
        Dividend yield                        0%                0%                  0%                    0%
        Expected volatility                 92.6%             101.0%              92.6%                 101.0%
        Risk-free rate of return            3.88%              4.36%              4.13%                  3.94%
        Expected life (years)                8.0                7.1                8.0                    7.1
</TABLE>



        During the three  months ended June 2005 and 2004,  the Company  granted
        137,416 and 207,940 stock options,  respectively,  with exercise  prices
        equal to the fair value of the  underlying  Common  Stock on the date of
        grant. The average exercise prices of the underlying Common Stock on the
        dates of the grant were $1.81 and $3.05 for the three  months ended June
        30, 2005 and 2004, respectively.

        During the nine months ended June 30, 2005 and 2004, the Company granted
        164,416 and 437,940 stock options,  respectively,  with exercise  prices
        equal to the fair value of the  underlying  Common  Stock on the date of
        grant.  The fair market  values of the  underlying  Common  Stock on the
        dates of grant were $1.56 and $3.02,  for the nine months ended June 30,
        2005 and 2004, respectively.

2.   INVENTORIES

        Inventories consist of the following (in thousands):


                                  June 30, 2005           September 30, 2004
        -----------------------------------------------------------------------

         Raw materials                       $ 6,181                   $ 4,911
         Work-in-process                       3,723                     2,927
         Finished goods                        1,562                       811
                             -----------------------    -----------------------
         Total inventories                  $ 11,466                   $ 8,649
                             =======================    =======================


3.   PROPERTY, PLANT AND EQUIPMENT

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

<TABLE>
<CAPTION>

                                                          June 30, 2005            September 30, 2004      Useful Life
        -----------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>                        <C>           <C>
         Land                                                         $ 6,729                    $ 6,729
         Building improvements                                         14,949                     14,949        39 years
         Machinery and equipment                                       20,267                     19,965         5 years
         Computer hardware and software                                 1,676                      1,592         3 years
         Furniture and fixtures                                           382                        382         5 years
         Leasehold improvements                                           181                        181         9 years
                                                     -------------------------  -------------------------
                                                                       44,184                     43,798
         Less accumulated depreciation                                 18,247                     14,520
                                                     -------------------------  -------------------------
                                                                     $ 25,937                   $ 29,278
                                                     =========================  =========================
</TABLE>



                                       6
<PAGE>


4.   INTANGIBLE ASSETS

        The Company's intangible assets by major asset class are as follows:

<TABLE>
<CAPTION>

                                                                                          Weighted Average
                                           June 30, 2005          September 30, 2004     Amortization Period
                                      -----------------------------------------------------------------------
                                          (in thousands)                                       (Years)
<S>                                                   <C>                       <C>             <C>

Licensing Fees                                        $ 2,000                   $ 2,000          3.5
   Accumulated Amortization                            (1,883)                   (1,534)

Patents                                                   950                       950          5.0
   Accumulated Amortization                              (507)                     (364)

Acquired Technology                                     1,216                     1,216          5.0
   Accumulated Amortization                              (649)                     (466)
                                      ------------------------- ------------------------

Total intangible assets, net                          $ 1,127                   $ 1,802
                                      ======================== =========================
</TABLE>


        Aggregate   amortization   expense  related  to  intangible  assets  was
        approximately  $225,000 and $225,000 for the three months ended June 30,
        2005 and 2004,  respectively  and  $675,000  and  $679,000  for the nine
        months  ended  June  30,  2005  and  2004,  respectively.  There  was no
        impairment  loss recorded  during the three and nine month periods ended
        June 30, 2005 or 2004.

       Following is a summary of future amortization expense in each of the next
       five fiscal years.


                                                      (in thousands)

        Remaining three months fiscal 2005                       $ 225
        fiscal 2006                                                433
        fiscal 2007                                                433
        fiscal 2008                                                 36
                                                      -----------------
                                                               $ 1,127
                                                      -----------------


                                       7
<PAGE>


5.   EARNINGS (LOSS) PER SHARE

        The  following  is a  calculation  of basic and  diluted  loss per share
("EPS"):

<TABLE>
<CAPTION>

                                                     Three Months Ended June 30,              Nine Months Ended June 30,
                                                 ------------------------------------    -------------------------------------
                                                      2005               2004                  2005               2004
                                                                    (in thousands, except per share data)
------------------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>                <C>                   <C>                <C>
 BASIC EPS COMPUTATION
   Net income (loss) applicable to
   common stock                                             $ 468            $ 1,006                $ (633)            $ (634)
   Weighted average common shares outstanding             112,927            112,655               112,868            112,463
                                                 ----------------- ------------------    ------------------ ------------------
 Basic earnings (loss) per share                           $ 0.00             $ 0.01               $ (0.01)           $ (0.01)
                                                 ================= ==================    ================== ==================

 DILUTED EPS COMPUTATION
   Net income (loss) applicable to
   common stock                                             $ 468            $ 1,006                $ (633)            $ (634)
   Weighted average common shares outstanding             113,754            113,938               112,868            112,463
                                                 ----------------- ------------------    ------------------ ------------------
 Diluted earnings (loss) per share                         $ 0.00             $ 0.01               $ (0.01)           $ (0.01)
                                                 ================= ==================    ================== ==================
</TABLE>


        The weighted  average  diluted common shares  outstanding  for the three
        months  ended June 30,  2005 and June 30,  2004  excludes  the  dilutive
        effect of approximately  7,070,357 and 7,071,097 options,  respectively.
        The weighted  average  diluted  common shares  outstanding  for the nine
        months  ended June 30,  2005 and June 30,  2004  excludes  the  dilutive
        effect of approximately  7,101,901 and 6,942,400 options,  respectively.
        The options are  excluded  when the  options  have an exercise  price in
        excess of the average market value of the Company's  Common Stock during
        the period or due to a net operating loss.

6.   COMMITMENTS AND CONTINGENCIES

        Operating Leases

        The Company has operating leases for certain facilities.  Lease payments
        are made  monthly.  The Company's  leases are renewable  annually or for
        three  years.  Rent  expense for these leases for the three months ended
        June 30, 2005 and 2004 was $113,000 and $134,000,  respectively  and for
        the nine months ended June 30, 2005 and 2004 was $379,000 and  $381,000,
        respectively.

        Following is a summary of future  minimum  payments due under  operating
        leases  that have  initial or  remaining  noncancelable  lease  terms in
        excess of one year at June 30, 2005:

        (in thousands)
        ---------------------------------------------------------------------
              Three months thru September 30, 2005                     $ 130
              2006                                                       189
              2007                                                        12

        ---------------------------------------------------------------------

              Total minimum lease payments                             $ 331
              ---------------------------------------------------------------



                                       8
<PAGE>




        Warranty Accruals

        The  Company  provides a standard  warranty of one year from the date of
        sale for its products  from defects in materials  and  workmanship.  The
        warranty is limited to repair or replacement,  at the Company's  option,
        of defective items authorized for return. From time to time, the Company
        may offer extended warranty for its products up to five years. The table
        below sets forth the activity of the Company's warranty reserve.


<TABLE>
<CAPTION>

                             Balance at      Additions
                            beginning of     charged to                         Balance at end
Warranty Reserve              period           expense         Deductions         of period
<S>                        <C>              <C>               <C>                 <C>

Nine Months Ended:
June 30, 2004              $        46      $        11       $        (17)       $        40
June 30, 2005              $        31      $        26       $        (26)       $        31
</TABLE>


        Tax Audit

        In March 2005, the Internal  Revenue  Service  commenced an audit of our
        federal tax returns for our 2001 and 2003 fiscal years.  The audit is in
        process  and  outcome  cannot  be  determined  at the  current  time  by
        management.


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

The following  discussion  of our financial  condition and results of operations
should be read in  conjunction  with our  financial  statements  and the related
notes to such  financial  statements  included  elsewhere  in this  Report.  The
following discussion contains forward-looking  statements that involve risks and
uncertainties.  Words  such as  "anticipates,"  "expects,"  "intends,"  "plans,"
"believes,"  "may,"  "will" or similar  expressions  are  intended  to  identify
forward-looking statements. The statements are based on current expectations and
actual results could differ materially from those discussed herein. Factors that
could cause or contribute to the  differences are discussed below in this Report
under "Risk  Factors" and elsewhere in this Report,  and in our Annual Report on
Form 10-K filed with the Securities and Exchange Commission ("SEC") for the year
ended September 30, 2004.

Critical Accounting Policies

        The  preparation  of financial  statements  and related  disclosures  in
conformity with accounting  principles  generally  accepted in the United States
requires management to make judgments, assumptions and estimates that affect the
amounts reported in the Financial  Statements and accompanying  notes. Note 2 to
the  Financial  Statements in the Annual Report on Form 10-K for the fiscal year
ended  September 30, 2004  describes  the  significant  accounting  policies and
methods used in the preparation of the financial statements.  Estimates are used
for, but not limited to, the accounting for the allowance for doubtful  accounts
and  sales  returns,  valuation  of  excess  and  obsolete  inventory,  warranty
accruals,  long-lived assets and income taxes.  Actual results could differ from
these  estimates.  The  following  critical  accounting  policies  are  impacted
significantly by judgments, assumptions and estimates used in the preparation of
our Financial Statements.

Allowance for Doubtful Accounts and Sales Returns

        Our accounts receivable balance,  net of allowance for doubtful accounts
and sales  returns,  was $8.5  million as of June 30, 2005,  compared  with $8.6
million as of September 30, 2004. The allowance


                                       9
<PAGE>


for  doubtful  accounts  and sales  returns  as of June 30,  2005 was  $369,000,
compared with  $362,000 as of September 30, 2004.  The allowance is based on our
assessment of the collectibility of customer accounts and potential returns.  We
regularly  review  the  allowance  by  considering  factors  such as  historical
experience,  credit quality,  age of the accounts receivable  balances,  current
economic  conditions that may affect a customer's  ability to pay and historical
customer returns.  If a major customer's  creditworthiness  deteriorates,  or if
actual defaults are higher than our historical  experience,  or if actual future
customer  returns were to deviate from our  expectations,  our  estimates of the
recoverability  of  amounts  due  to us  could  be  overstated,  and  additional
allowances  could  be  required,  which  could  have an  adverse  impact  on our
operations.

Inventory Write-downs

        Our inventory  balance was $11.5  million as of June 30, 2005,  compared
with $8.6 million as of September  30, 2004.  At June 30, 2005 and September 30,
2004  inventory  with a  historical  cost of $10.1  million  and $10.5  million,
respectively, was written down as excess and obsolete inventory. We estimate our
excess and obsolete  inventory  primarily  through reference to historical usage
and future demand forecasts. We operate in a highly-volatile  industry with high
and unpredictable rates of inventory obsolescence. At the point of write down, a
new, lower-cost basis for that inventory is established,  and subsequent changes
in facts and  circumstances do not result in the restoration or increase in that
newly  established  cost  basis.  If there were to be a sudden  and  significant
decrease  in demand for our  products,  or if there were a higher  incidence  of
inventory  obsolescence  because of rapidly  changing  technology  and  customer
requirements,  we could be required to increase inventory  write-downs,  and our
gross  margin  could  be  adversely  affected.  We do  not  necessarily  discard
written-down  inventory and, on occasion,  we have discovered that  written-down
inventory  was not  obsolete  or  excess,  as  previously  estimated.  In  those
situations,  when written down  inventory is sold cost of sales reflects the new
written-down basis.

Warranty Accruals

        The  liability  for  product  warranties,   included  in  other  accrued
liabilities,  was  $31,000  as of June 30,  2005 and  September  30,  2004.  Our
products sold are generally  covered by a warranty for periods  ranging from one
to five years.  We accrue for warranty  costs as part of our cost of sales based
on associated  material costs,  and labor costs. If we experience an increase in
warranty  claims  compared  with our  historical  experience,  or if the cost of
servicing  warranty claims is greater than the expectations on which the accrual
has been based, our gross margin could be adversely affected.

Long-Lived Assets

        We monitor and evaluate the  recoverability of our long-lived assets. If
the carrying amount of a long-lived asset exceeds the expected future cash flows
(undiscounted  and  without  interest  charges)  from the use of the  asset,  we
recognize  an  impairment  loss in the  amount  of the  difference  between  the
carrying amount and the fair value of the asset.  Our long-lived  assets subject
to impairment are our property,  plant and equipment and our  intangible  assets
which had net carrying values of $26.0 million and $1.1 million, respectively at
June 30, 2005. We currently estimate that undiscounted future cash flows will be
sufficient to recover the value of our long-lived assets. However, our estimates
of future  cash  flows are  subject to change.  Should our  estimates  of future
undiscounted  cash flows  indicate  that the  carrying  value of our  long-lived
assets may not be recoverable,  we would be required to determine the fair value
of those  assets  and  record a loss for the  difference,  if any,  between  the
carrying value and the fair value of those assets.

Income Taxes

        At June 30, 2005, the  unadjusted net book value of our deferred  income
tax assets totaled  approximately $4.7 million,  which was principally comprised
of federal and state net operating loss  carry-


                                       10
<PAGE>


forwards and differences between the book and tax basis of our inventories.  The
provisions  of SFAS No. 109  Accounting  for Income  Taxes,  require a valuation
allowance when, based upon currently available information and other factors, it
is more likely than not that all or a portion of the  deferred  income tax asset
will not be  realized.  We  intend  to  maintain  a  valuation  allowance  until
sufficient  evidence exists to support its reversal.  Also, until an appropriate
level of  profitability  is reached,  we do not expect to recognize any domestic
income tax benefits in future results of operations.

        We  continually   reassess  our   assumptions  and  judgments  and  make
adjustments when significant facts and circumstances dictate.

Overview

        We  design,   manufacture  and  sell  a   comprehensive   line  of  high
performance,  highly reliable fiber optic subsystems and modules for fiber optic
transmission  systems that are used to address the bandwidth  limitations in the
metropolitan area network,  or MAN, local area network, or LAN, and storage area
network,   or  SAN,   markets.   Our  subsystems  and  modules  include  optical
transmitters,  receivers,  transceivers and transponders that convert electronic
signals into optical signals and back to electronic signals, enabling high-speed
communication  of voice and data  traffic over public and private  networks.  We
began our operations and shipped our first products in November of 1991.

        Furukawa  beneficially owns all of our outstanding Class B common stock,
representing  58.4% of our  outstanding  shares of common stock and 93.4% of the
combined  voting power of all of our  outstanding  common stock as of the fiscal
quarter  ended  June  30,  2005.   Since  our   inception,   we  have  purchased
substantially  all of our  lasers  and the  majority  of our other  fiber  optic
components from Furukawa.  We have relied on Furukawa's research and development
capabilities to provide us with technologically  advanced lasers and fiber optic
components  that we purchase from  Furukawa for  inclusion in our  products.  We
currently  purchase the majority of lasers from Furukawa under a one-year Master
Purchase Agreement, which we entered into with Furukawa on October 1, 2003. This
Agreement renews automatically on October 1 of each year unless it is terminated
upon written  notice by either  Furukawa or us prior to renewal.  This agreement
was automatically renewed on October 1, 2004.

        We operate in one industry segment,  the design and manufacture of fiber
optic subsystems and modules.  We sell our products to  communication  equipment
manufacturers,  or CEMs, their contract  manufacturers,  or CMs, who incorporate
them into systems they  assemble for CEMs,  and to  distributors.  We define our
customers as CEMs who have purchased our products directly or indirectly through
CMs and  distributors.  We recognize  revenue upon product  shipment,  and sales
returns and allowances have been insignificant. Historically, a relatively small
number of customers have accounted for a significant  percentage of our revenue.
Our 10 largest  customers  accounted  for  approximately  66.9% and 69.1% of our
total  revenue for the nine months  ended June 30, 2005 and 2004,  respectively.
Cisco  Systems  and  Alcatel   (including   sales  to  each  of  their  contract
manufacturers) accounted for approximately 16.7% and 16.3%, respectively, of our
total revenue for the nine months ended June 30, 2005. Alcatel and Cisco Systems
(including  sales  to  each  of  their  contract  manufacturers)  accounted  for
approximately 16.3% and 12.0%,  respectively,  of our total revenue for the nine
months ended June 30, 2004. No other end-user  customer  accounted for more than
10.0% of our total revenue for the nine months ended June 30, 2005 or 2004.

        For financial  reporting  purposes,  we consider our customers to be the
CEMs,  CMs  and  distributors  who  place  purchase  orders  with  us  directly.
Sanmina-SCI  accounted for 13.3% of our total revenue in the current quarter. No
other direct customer accounted for more than 10.0% of our total revenue for the
three  months or nine months  ended June 30, 2005 or 2004.  Although our revenue
from  sales to our  other  customers  continues  to  increase,  we  expect  that
significant customer concentration will continue for the foreseeable future. Our
sales are made on a purchase  order  basis  rather  than by  long-term


                                       11
<PAGE>


purchase commitments.  Our customers may cancel or defer purchase orders without
penalty on short notice.

        The fiber optic  communication  industry  continues to face  challenging
market   conditions.   Capital   spending  by  service   providers   on  network
infrastructure has remained substantially below pre-2001 levels, increasing only
slightly  -  if  at  all  -  during  the  last  year.  As  a  result,  equipment
manufacturers  have also  dramatically  reduced  their  quarterly  purchases  of
components  and  modules  from our  competitors  and from  us.  Several  service
providers, including BellSouth, SBC and Verizon, have recently announced current
and planned investments in  Fiber-to-the-premises  (FTTP) and  Fiber-to-the-node
(FTTN)  applications,  which we believe  could  increase  traffic  demand on the
metropolitan area networks (MANs) into which such FTTP/FTTN infrastructure would
feed.  However,  it is too  early to  predict  the  outcome  of these  potential
FTTP/FTTN roll-outs on our business.  Because visibility in the industry remains
extremely limited, we cannot provide any assurance as to the timing or extent of
any  increased  business  that we may  receive  as a  result  of  these or other
industry developments.

        The average  selling  prices of our products  generally  decrease as the
products mature from factors such as increased competition,  the introduction of
new  products or  technology,  increased  unit  volumes,  and price  concessions
required by our  customers.  We anticipate  that average  selling  prices of our
existing products will continue to decline in future periods although the timing
and degree of the  declines  cannot be  predicted  with any  certainty.  We must
continue to develop and introduce new products  that  incorporate  features that
can be sold at higher average selling prices on a timely basis.

        Our  cost of  revenue  consists  principally  of  materials,  as well as
salaries and related expenses for manufacturing personnel, and other production.
Our materials  include  purchase of several key components from a limited number
of suppliers.

        Our research and development  expenses consist primarily of salaries and
related  expenses for design  engineers and other technical  personnel,  cost of
developing prototypes,  and depreciation of test and prototyping equipment.  Our
research and  development  expenses also consist of materials and overhead costs
related  to major  product  development  projects.  We charge all  research  and
development  expenses to  operations  as  incurred.  We believe  that  continued
investment  in research  and  development  is  critical  to our future  success.
Accordingly,  we may  continue to expand our internal  research and  development
capabilities  in the future to  develop  new  technology  or  products  and as a
result,  our research and  development  expenses in absolute  dollar amounts may
increase in future periods.

        Sales and marketing  expenses consist  primarily of salaries and related
expenses for sales and marketing personnel,  commissions paid to sales personnel
and independent manufacturers'  representatives,  marketing and promotion costs.
We may  expand  our sales  and  marketing  operations  and  efforts  in order to
increase sales and market awareness of our products.  We believe that investment
in sales and marketing is critical to our success.  As a result,  these expenses
may increase in future periods.

        General and  administrative  expenses consist  primarily of salaries and
related expenses for our administrative,  finance,  information system and human
resources personnel,  professional fees and other corporate expenses.  We expect
that general and administrative expenses may increase in the near term primarily
due to an increase in professional  fees associated with  implementation  of the
requirements of the  Sarbanes-Oxley Act of 2002 and an increase in our legal and
consulting fees associated with analysis of strategic planning, including future
market  opportunities,  that have been undertaken by our management and board of
directors.


                                       12
<PAGE>


Results of Operations - Comparison of Three Months Ended June 30, 2005 and 2004

        The  following  table  sets  forth  statement  of  operations  data  and
percentage of change for the periods indicated:

<TABLE>
<CAPTION>

                                                   Three Months Ended June 30,
                                                -----------------------------------
                                                           (Unaudited)                                  %
                                                     2005               2004             Change       Change
-----------------------------------------------------------------------------------   -------------------------
<S>                                                       <C>              <C>              <C>          <C>

 REVENUE                                               $ 13,621           $ 14,299          $ (678)      -4.7%

 COST OF REVENUE                                          8,300              7,770             530        6.8%
                                                ----------------   ----------------   -------------

 GROSS PROFIT                                             5,321              6,529          (1,208)     -18.5%
                                                ----------------   ----------------   -------------

 EXPENSES:
   Research and development                               3,510              4,152            (642)     -15.5%
   Selling and marketing                                  1,120              1,153             (33)      -2.9%
   General and administrative                             1,219              1,504            (285)     -18.9%
                                                ----------------   ----------------   -------------
            Total expenses                                5,849              6,809            (960)     -14.1%
                                                ----------------   ----------------   -------------

 LOSS FROM OPERATIONS                                      (528)              (280)           (248)      88.6%

 OTHER INCOME, Net                                          996              1,286            (290)     -22.6%
                                                ----------------   ----------------   -------------

 INCOME BEFORE INCOME TAXES                                 468              1,006            (538)     -53.5%

 INCOME TAX  PROVISION                                        -                  -               -           -
                                                ----------------   ----------------   -------------

 NET INCOME                                               $ 468            $ 1,006          $ (538)     -53.5%
                                                ================   ================   =============
</TABLE>


        Revenue - Revenue  decreased  4.7% to $13.6 million in the quarter ended
June 30, 2005 from $14.3  million in the quarter  ended June 30,  2004.  Revenue
attributable to our top ten customers was approximately $1.5 million less in the
current  quarter as compared to the third quarter of fiscal 2004.  This reflects
slightly  softer  demand for our  products as  compared  to the same  quarter in
fiscal  2004.  Sales  of  our  products  for  metropolitan  area  networks  were
approximately  90% of revenue  for the quarter  ended June 30, 2005  compared to
approximately  87% of revenue for the quarter ended June 30, 2004.  Sales of our
products  for local area and storage  area  networks  were  approximately  9% of
revenue for the quarter  ended June 30, 2005  compared to  approximately  12% of
revenue  for the  quarter  ended June 30,  2004.  We cannot  assure you that our
decrease in revenue  will  reverse in future  periods,  as the  average  selling
prices for  existing  products  may  continue  to decline in response to product
introductions by competitors or us, or other factors, including the reduction of
customer   demand  for  our  products  or  pressure  from  customers  for  price
concessions.

        Cost of Revenue - Cost of revenue  increased 6.8% to $8.3 million in the
quarter  ended June 30,  2005 from $7.8  million in the  quarter  ended June 30,
2004.  Gross margin decreased to 39.1% from 45.7% in the quarters ended June 30,
2005 and 2004, respectively. The decrease in gross margin was primarily due to a
decrease  in average  selling  prices and an  increase  in  material  costs as a
percent of revenue to 40.3% from 34.4%,  in the quarters ended June 30, 2005 and
2004, respectively.  The increase in material cost is significantly related to a
decrease in the use of  inventory  in products  sold during the quarter that was
previously  written down as excess  inventory.  We used previously  written down
inventory of $543,000,  or 4.0% of sales,  in the quarter ended June 30, 2005 as
compared to  previously  written  down  inventory of $1.6  million,  or 11.2% of
sales, in the quarter ended June 30, 2004.


                                       13
<PAGE>


        Research and Development - Research and development  expenses  decreased
$642,000 or 15.5% to $3.5  million in the quarter  ended June 30, 2005 from $4.2
million in the quarter ended June 30, 2004. The most  significant  components of
the decrease were a decreases in supplies  expense of $135,000,  in professional
services of  $79,000,  in bonus  expense of  $194,000  and a decrease in regular
compensation  and benefits of  approximately  $150,000 related to a reduction in
the number of  employees in research  and  development.  We do not expect any of
these factors to have a material impact on our ongoing  research and development
efforts.

        Sales and Marketing - Sales and marketing  expenses decreased $33,000 or
2.9% to $1,120,000  for the quarter  ended June 30, 2005 from  $1,153,000 in the
quarter  ended June 30,  2004.  The  decrease was  primarily  attributable  to a
$85,000  decrease in bonus expense offset by a $47,000  increase in salaries and
related expenses.  We believe that investment in sales and marketing is critical
to our  success and these  expenses  may  increase  in  absolute  dollars in the
future.

        General  and  Administrative  -  General  and  administrative   expenses
decreased  $285,000 or 18.9% to $1.2 million in the quarter  ended June 30, 2005
from $1.5 million in the quarter ended June 30, 2004. The decrease in expense in
the quarter ended June 30, 2005 was  primarily due to decreases in  professional
services expense of $147,000,  in Directors' and Officers'  insurance expense of
$187,000 and an  immaterial  decrease in bonus  expense.  These  decreases  were
partially offset by a charge to bad debt expense of $57,000.

        Other  Income,  net - Other income,  net decreased  $290,000 or 22.6% to
$996,000  in the quarter  ended June 30,  2005 from $1.3  million in the quarter
ended June 30, 2004. Investment income has increased  approximately  $600,000 in
the quarter  ended June 30, 2005 as compared to the quarter ended June 30, 2004.
Other  income in the prior  quarter  ended  June 30,  2004  included  a $945,000
non-recurring gain from the sale of the Chatsworth facility. As adjusted for the
non-recurring gain, there would have been a $655,000 or 192.1% increase in other
income, net in the current period.

        Income  Taxes - There  was no  income  tax  provision  recorded  for the
quarters ended June 30, 2005 and June 30, 2004.

        The following  table compares our sales of MAN, LAN and SAN products for
the periods indicated:

<TABLE>
<CAPTION>

                         Three months ended June 30,
                  -------------------------------------------
                         2005                   2004
                  --------------------   --------------------
                                (in thousands)                        Change     % change
                                                               --------------------------
<S>                          <C>                    <C>               <C>           <C>
MAN                          $ 12,239               $ 12,468          $ (229)      -1.8%

LAN/SAN                         1,188                  1,731            (543)     -31.4%

Others                            194                    100              94       94.0%
                  --------------------   --------------------  --------------

Total                        $ 13,621               $ 14,299          $ (678)      -4.7%
                  ====================   ====================  ==============
</TABLE>


Metropolitan Area Network sales decreased  $229,000 or 1.8% for the three months
ended  June 30,  2005 as  compared  to the same  period in 2004 and  Local  Area
Network and Storage Area Network sales decreased $543,000 or 31.4% for the three
months  ended  June 30,  2005 as  compared  to the  same  period  in 2004.  Both
reductions  reflect  slightly  softer demand for our products as compared to the
prior fiscal quarter.


                                       14
<PAGE>


Results of Operations - Comparison of Nine months Ended June 30, 2005 and 2004

        The  following  table  sets  forth  statement  of  operations  data  and
percentage of change for the periods indicated:

<TABLE>
<CAPTION>

                                               Nine Months Ended June 30
                                            ----------------------------------                      %
                                                                                                -----------
                                                2005               2004             Change        Change
------------------------------------------------------------------------------    -------------------------
<S>                                              <C>                 <C>             <C>             <C>
 REVENUE                                         $ 41,172            $ 43,977        $ (2,805)      -6.4%

 COST OF REVENUE                                   25,849              24,732           1,117        4.5%
                                              ------------        ------------    ------------
 GROSS PROFIT                                      15,323              19,245          (3,922)     -20.4%
                                              ------------        ------------    ------------

 EXPENSES:
   Research and development                        11,155              12,970          (1,815)     -14.0%
   Selling and marketing                            3,574               3,831            (257)      -6.7%
   General and administrative                       3,660               4,728          (1,068)     -22.6%
                                              ------------        ------------    ------------
            Total expenses                         18,389              21,529          (3,140)     -14.6%
                                              ------------        ------------    ------------

 LOSS FROM OPERATIONS                              (3,066)             (2,284)           (782)      34.2%

 OTHER INCOME, Net                                  2,433               1,842             591       32.1%
                                              ------------        ------------    ------------

 LOSS BEFORE INCOME TAXES                            (633)               (442)           (191)      43.2%

 INCOME TAX PROVISION                                   -                 192            (192)    -100.0%
                                              ------------        ------------    ------------

 NET LOSS                                          $ (633)             $ (634)            $ 1       -0.2%
                                              ============        ============    ============
</TABLE>


        Revenue - Revenue  decreased  6.4% to $41.2  million in the nine  months
ended June 30, 2005 from $44.0  million in the nine months  ended June 30, 2004.
Revenue  attributable  to our top ten customers was  approximately  $2.8 million
less in the nine  months  ended June 30,  2005 as compared to the same period of
fiscal 2004.  This reflects  slightly softer demand for our products as compared
to the same quarter in fiscal 2004. Sales of our products for metropolitan  area
networks  were  approximately  89% of revenue for the nine months ended June 30,
2005 compared to approximately 87% of revenue for the nine months ended June 30,
2004.  Sales of our  products  for local area and  storage  area  networks  were
approximately 10% of revenue for the nine months ended June 30, 2005 compared to
approximately  12% of revenue for the nine months ended June 30, 2004. We cannot
assure you that our decrease in revenue will reverse in future  periods,  as the
average selling prices for existing products may continue to decline in response
to product  introductions by competitors or us, or other factors,  including the
reduction of customer  demand for our products or pressure  from  customers  for
price concessions.

        Cost of Revenue - Cost of revenue increased 4.5% to $25.8 million in the
nine months ended June 30, 2005 from $24.7 million in the nine months ended June
30, 2004. Gross margin decreased to 37.2% in the nine months ended June 30, 2005
from  43.7% in the same  period  last year.  The  decrease  in gross  margin was
primarily  due to a  decrease  in average  selling  prices  and an  increase  in
material  costs as a percent of revenue to 40.7% from 34.6%,  in the nine months
ended June 30, 2005 and 2004,  respectively.  The  increase in material  cost is
significantly  related to a decrease in the use of  inventory  in products  sold
during the quarter that was previously written down as excess inventory. We used
previously  written down inventory of $2.0 million,  or 4.9%, in the nine months
ended June 30, 2005 as compared to  previously  written  down  inventory of $4.4
million, or 10.0%, in the nine months June 30, 2004.

        Research and Development - Research and development  expenses  decreased
$1.8 million or 14.0% to $11.2 million in the nine months


                                       15
<PAGE>


ended June 30, 2005 from $13.0  million in the nine months  ended June 30, 2004.
The most  significant  components  of the  decrease  were a  decreases  in bonus
expense of $789,000, in supplies expense of $381,000 and in regular compensation
and benefits of  approximately  $400,000 related to a reduction in the number of
employees in research and development.  We do not expect any of these factors to
have a material impact on our ongoing research and development efforts.

        Sales and Marketing - Sales and marketing expenses decreased $257,000 or
6.7% to $3.6 million in the nine months ended June 30, 2005 from $3.8 million in
the nine months ended June 30, 2004. The primary components of the decrease were
decreases in bonus expense of $189,000 and in professional services of $155,000.
These  decreases  were  partially  offset by increases in  compensation  related
expenses  of $65,000 and in  advertising  expense of  $31,000.  We believe  that
investment in sales and marketing is critical to our success and these  expenses
may increase in absolute dollars in the future.

        General  and  Administrative  -  General  and  administrative   expenses
decreased  $1.1  million or 22.6% to $3.7  million in the nine months ended June
30, 2005 from $4.7 million in the nine months ended June 30, 2004.  The decrease
was primarily due to decreases in Directors' and Officers'  insurance expense of
$652,000, in bonus expense of $204,000 and in consulting fees of $192,000.

        Other  Income,  net - Other income,  net increased  $591,000 or 32.0% to
$2.4  million in the nine months  ended June 30,  2005 from $1.8  million in the
nine months ended June 30, 2004. Investment income increased $1.3 million, which
was primarily the result of increased interest rates. Other income for the prior
nine months ended June 30, 2004 included a $945,000  non-recurring gain from the
sale of our Chatsworth  facility.  As adjusted for the non-recurring gain, there
would have been a $1.5 million or 171.1%  increase in other  income,  net in the
current nine -month period.

        Income  Taxes - There  was no  income  tax  provision  recorded  for the
quarter  ended June 30, 2005.  Income tax expense of $192,000 in the nine months
ended June 30,  2004  includes  a charge of  $557,000  related to the  valuation
allowance for the  carry-forward  of net loss for the nine months ended June 30,
2004,  to reduce the  deferred  income tax asset to the amount  determined  more
likely than not to be realized.

        The following  table compares our sales of MAN, LAN and SAN products for
the periods indicated:

<TABLE>
<CAPTION>

                                                Nine Months Ended June 30,
                                           --------------------------------------                  %
                                                                                              ------------
                                                2005               2004             Change       Change
------------------------------------------------------------------------------   -------------------------
<S>                                              <C>                 <C>             <C>             <C>

 MAN                                             $ 36,584            $ 38,114        $ (1,530)      -4.0%

 LAN/SAN                                            4,123               5,533          (1,410)     -25.5%

 Other                                                465                 330             135       40.9%
                                           ---------------    ----------------   -------------

 Total revenue                                   $ 41,172            $ 43,977        $ (2,805)      -6.4%
                                           ===============    ================   =============
</TABLE>


Metropolitan  Area  Network  sales  decreased  $1.5 million or 4.0% for the nine
months ended June 30, 2005 as compared to the similar period in 2004. Local Area
Network and Storage Area Network sales  decreased  $1.4 million or 25.5% for the
nine months ended June 30, 2005 as compared to the similar period in 2004.  Both
reductions  reflect  slightly  softer demand for our products as compared to the
prior fiscal year.


                                       16
<PAGE>


Liquidity and Capital Resources

        As of June 30, 2005,  our primary  source of liquidity  was our cash and
cash equivalents balance of $84.6 million and our marketable  securities balance
of $64.8 million,  which consists  primarily of United States Treasury notes and
bonds. At September 30, 2004, we had $75.4 million in cash and cash  equivalents
and $75.1 million in current marketable securities.

        Since  inception,  we have financed our  operations  primarily with cash
generated from operations. Additional financing has been generated through lines
of credit and term loans, and through our initial public offering of our Class A
common stock,  which we completed on November 3, 2000. As of June 30, 2005,  our
working  capital was $159.9 million with a current ratio of 16:1 compared to our
working  capital of $156.6  million with a current ratio of 14:1 as of September
30, 2004. Our working  capital  increased  during the nine months ended June 30,
2005  primarily due to earnings on  investments.  We believe that cash flow from
operations,  cash and equivalents,  and marketable securities will be sufficient
to fund operations for the next twelve months.

        During the nine months ended June 30, 2005,  cash used by operations was
$761,000  compared to cash  provided by  operations of $10.9 million in the nine
months ended June 30, 2004.  The cash used by  operating  activities  during the
nine months ended June 30, 2005 was  primarily the result of the net loss and an
increase in inventories, partially offset by increases in payables, depreciation
and  decreases in accrued  bonus and other  accrued  expenses.  Cash provided by
operations in the prior nine months ended June 30, 2004  included  $11.7 million
related to cash  received  from an income tax refund.  The  reduction  in income
taxes  receivable  was  partially  offset by a net loss, an increase in accounts
receivable and decrease in accrued bonus and other accrued expenses.

        During the nine months ended June 30, 2005,  cash  provided by investing
activities  was $9.9  million  compared to $8.9 million in the nine months ended
June 30,  2004.  The cash  provided by investing  activities  in the nine months
ended June 30,  2005 was  primarily  the result of $10.0  million in  marketable
securities  maturities  net of  purchases.  $386,000  of  funds  were  used  for
purchases  of property  plant and  equipment.  The cash  provided  by  investing
activities  during the nine months ended June 30, 2004 was  primarily the result
of $4.5 million in marketable  securities  purchases net of maturities  and $5.7
million in net proceeds from the sale of our  Chatsworth  facility.  Also during
the nine  months  ended  June 30,  2004,  $1.4  million  of funds  were used for
purchases of property plant and equipment.

        During the nine months ended June 30, 2005,  cash  provided by financing
activities was $93,000 compared to cash used in financing activities of $158,000
in the  nine  months  ended  June  30,  2004.  The cash  provided  by  financing
activities in the nine months ended June 30, 2005 was the result of the exercise
of stock  options.  The cash used in  financing  activities  for the nine months
ended June 30, 2004 was for principal  payments on the Company's  long-term debt
offset by issuance of common stock for the exercise of stock options.

        We believe that our existing cash,  cash  equivalents and investments on
hand, together with cash that we expect to generate from our operations, will be
sufficient  to meet our  capital  needs  for at least  the next  twelve  months.
However,  it is possible that we may need or elect to raise  additional funds to
fund our activities beyond the next year or to consummate  acquisitions of other
businesses,  products or technologies. We could raise such funds by selling more
stock  to the  public  or to  selected  investors,  or by  borrowing  money.  In
addition,  even though we may not need  additional  funds, we may still elect to
sell additional equity securities or obtain credit facilities for other reasons.
We  cannot  assure  you  that we will be able  to  obtain  additional  funds  on
commercially favorable terms, or at all. If we raise additional funds by issuing
additional equity or convertible debt securities,  the ownership  percentages of
existing  stockholders  would  be  reduced.  In  addition,  the  equity  or debt
securities  that we issue may have rights,  preferences or privileges  senior to
those of the holders of our common stock.


                                       17
<PAGE>


        Although we believe we have  sufficient  capital to fund our  activities
for at least the next twelve months,  our future capital  requirements  may vary
materially  from those now  planned.  The amount of capital that we will need in
the future will depend on many factors, including:

o       the market acceptance of our products;
o       the levels of promotion and advertising that will be required to launch
        our new products and achieve and maintain a competitive position in the
        marketplace;
o       price discounts on our products to our customers;
o       our business, product, capital expenditure and research and development
        plans and product and technology roadmaps;
o       the levels of inventory and accounts receivable that we maintain;
o       capital improvements to new and existing facilities;
o       technological advances;
o       our competitors' response to our products;
o       our pursuit of strategic alternatives, including future market
        opportunities; and
o       our relationships with suppliers and customers.

        In addition,  we may require additional  capital to accommodate  planned
growth, hiring,  infrastructure and facility needs or to consummate acquisitions
of other businesses, products or technologies.

Inflation

        Inflation  has not had a  material  adverse  effect  on our  results  of
operations,  however,  our results of operations may be materially and adversely
affected by inflation in the future.

Off-Balance Sheet Arrangements

        We do not have  any  off-balance  sheet  arrangements,  as such  term is
defined in rules  promulgated by the Securities  and Exchange  Commission,  that
have or are  reasonably  likely  to  have a  current  or  future  effect  on our
financial  condition,  changes in  financial  condition,  revenues or  expenses,
results of operations, liquidity, capital expenditures or capital resources that
are material to investors.

Contractual Obligations

        There have been no material changes to the contractual obligations as of
September 30, 2004 disclosed in our Form 10-K filed with the SEC on December 29,
2004.


                                       18
<PAGE>


RISK FACTORS

        This Report  contains  forward-looking  statements  based on the current
expectations,  assumptions, estimates and projections about us and our industry.
Our  actual  results  could  differ  materially  from those  discussed  in these
forward-looking  statements  as a  result  of  certain  factors,  as more  fully
described in this section and  elsewhere in this Report.  These  forward-looking
statements  involve risks and  uncertainties.  You should carefully consider the
following risks before you decide to buy shares of our Class A common stock. The
risks  and  uncertainties  described  below  are not the only  ones  facing  us.
Additional  risks  and  uncertainties,   including  those  risks  set  forth  in
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations" and elsewhere in this Report,  may also adversely  impact and impair
our  business.  If any of the  following  risks  actually  occur,  our business,
results of operations or financial  condition would likely suffer. In such case,
the trading  price of our Class A common stock could  decline,  and you may lose
all or part of the  money  you paid to buy our  stock.  We do not  undertake  to
update  publicly  any  forward-looking  statements  for any reason,  even if new
information becomes available or other events occur in the future.

Our continued success in generating revenue depends on growth in construction of
fiber optic MANs, LANs, and SANs.

        Our fiber optic  subsystems  and modules are used primarily in MAN, LAN,
and SAN applications. These markets are rapidly evolving, and it is difficult to
predict  their  potential  size or  future  growth  rate.  In  addition,  we are
uncertain  as to the extent to which  fiber optic  technologies  will be used in
these  markets.  Our success in generating  revenue will depend on the growth of
these  markets and their  adoption of fiber optic  technologies.  A  substantial
portion of our  revenue is derived  from sales of our product in the MAN market.
Sales of our products for the MAN market represented  approximately 89%, and 87%
of our revenue for the nine months ended June 30, 2005, and 2004, respectively.

        As the result of currently uncertain economic and market conditions, (a)
our revenue may decline, (b) we are unable to predict future revenue accurately,
and (c) we are  currently  unable  to  provide  long-term  guidance  for  future
financial performance. The conditions contributing to this difficulty include:

        o       lower near term revenue visibility; and
        o       general market and economic uncertainty.

        Based on these  and other  factors,  many of our  major  customers  have
reduced  orders for our  products  and have  expressed  uncertainty  as to their
future requirements.  As a result, our revenue in future periods may decline. In
addition,  our ability to meet financial  expectations for future periods may be
harmed.

We derive a  significant  portion of our total  revenue  from a few  significant
customers,  and our total  revenue  may  decline  significantly  if any of these
customers cancels, reduces or delays purchases of our products or extracts price
concessions from us.

        Our success  depends on our  continued  ability to develop and  maintain
relationships  with a  limited  number  of  significant  customers.  We sell our
products  into  markets  dominated  by a  relatively  small  number  of  systems
manufacturers,  a fact that limits the number of our  potential  customers.  Our
dependence  on orders from a  relatively  small  number of  customers  makes our
relationship with each customer critical to our business.

        We do not have long-term  sales  contracts with our customers.  Instead,
sales to our customers are made on the basis of individual  purchase orders that
our customers may cancel or defer on short notice without  significant  penalty.
In the past,  some of our major  customers  canceled,  delayed or  significantly


                                       19
<PAGE>


accelerated  orders in response to changes in the  manufacturing  schedules  for
their  systems,  and they are  likely  to do so in the  future.  The  reduction,
cancellation  or delay of individual  customer  purchase  orders would cause our
revenue to decline.  Moreover,  these  uncertainties  complicate  our ability to
accurately  plan  our  manufacturing  schedule.  Additionally,  if  any  of  our
customers  cancel or defer  orders,  our  operating  expenses  may increase as a
percentage of revenue.

        In the past,  our customers have sought price  concessions  from us, and
they are likely to  continue to do so in the future.  In  addition,  some of our
customers may shift their purchases of products from us to our competitors.  The
loss of one or more of our significant customers,  our inability to successfully
develop  relationships  with  additional  customers or future price  concessions
could cause our revenue to decline significantly.

We are  dependent  on a  limited  number  of  suppliers  for  most  of  our  key
components. If these suppliers are unable or unwilling to meet our manufacturing
requirements,  if they raise prices of their  products,  or if they  discontinue
certain key components, we may experience production delays leading to delays in
shipments, increased costs and cancellation of orders for our products.

        We purchase several key components that we incorporate into our products
from a limited number of suppliers.  We also purchase the majority of our lasers
from Furukawa under a Master Purchase Agreement. We do not have long-term supply
contracts with any of our other key suppliers and our agreement with Furukawa is
only for one year. Our dependence on a small number of suppliers and our lack of
longer  term  supply  contracts  exposes  us to  several  risks,  including  our
potential  inability  to obtain an adequate  supply of quality  components,  the
discontinuance  of key components  from our suppliers,  price increases and late
deliveries.  For example, we face the risk that price increases imposed on us by
our  suppliers  will be higher  than the  price  increases  (or cost  increases)
imposed  on  our  competitors  when  they  purchase  (or  manufacture)   similar
components;  and we face a  corresponding  risk that any price decreases that we
are able to obtain from our suppliers will be less than the price  decreases (or
cost  reductions)   that  our   competitor's   obtain  when  they  purchase  (or
manufacture)  similar  components.  We have experienced  shortages and delays in
obtaining,  and the  discontinuation of key components in the past and expect to
experience  shortages,  delays, and the discontinuation of key components in the
future.

        In the past,  industry  capacity  has been  constrained  and some of our
component  suppliers  placed limits on the number of  components  sold to us. If
industry capacity becomes constrained in the future, our component suppliers may
place similar  limits on us. We do not have any control over these  limits,  and
our  suppliers  may  choose  to  allocate  more  of  their   production  to  our
competitors.

        A  disruption  in, or  termination  of,  our  supply  relationship  with
Furukawa  or any of our  other  key  suppliers,  or  our  inability  to  develop
relationships  with new suppliers would interrupt and delay the manufacturing of
our products,  which could result in delays in our revenue,  or the cancellation
of  orders  for our  products.  We may not be able  to  identify  and  integrate
alternative  suppliers  in a  timely  fashion,  or at  all.  Any  transition  to
alternative suppliers would likely result in delays in shipment, quality control
issues and increased  expenses,  any of which would limit our ability to deliver
products  to  our  customers.  Furthermore,  if we are  unable  to  identify  an
alternative  source of supply,  we may have to redesign or modify our  products,
which would cause delays in shipments,  increase design and manufacturing  costs
and require us to increase the prices of our products.

Our future  operating  results are likely to fluctuate  from quarter to quarter,
and if we fail to meet the expectations of securities analysts or investors, our
stock price could decline significantly.

        Our historical  quarterly  operating results have varied  significantly,
and our  future  quarterly  operating  results  are likely to  continue  to vary
significantly   from   period  to  period.   As  a  result,   we  believe


                                       20
<PAGE>


that period-to-period comparisons of our operating results should not be relied
upon as an indicator of our future performance. Some of the factors that could
cause our operating results to vary include:

        o       fluctuations in demand for, and sales of, our products, which is
                dependent on the implementation of fiber optic networks;
        o       the timing of customer orders, particularly from our significant
                customers;
        o       competitive factors, including introductions of new products,
                product enhancements and the introduction of new technologies by
                our competitors, the entry of new competitors into the fiber
                optic subsystems and modules market and pricing pressures;
        o       our ability to control expenses;
        o       the mix of our products sold; and
        o       economic conditions specific to the communications and related
                industries.

        We incur expenses from time to time that may not generate  revenue until
subsequent quarters. In addition, in connection with new product  introductions,
we incur research and development expenses and sales and marketing expenses that
are not matched with revenue until a subsequent  quarter when the new product is
introduced. We cannot assure you that our expenditures on manufacturing capacity
will  generate  increased  revenue in  subsequent  quarters  or that new product
introductions will generate sufficient revenue in subsequent quarters to recover
our research  and  development  expenditures.  If growth in our revenue does not
outpace the increase in our expenses,  our quarterly  operating results may fall
below expectations and cause our stock price to decline significantly.

        Due to these and other factors,  we believe that our quarterly operating
results are not an indicator of our future performance. If our operating results
are below the  expectations  of public  market  analysts or  investors in future
quarters,  the  trading  price of our  Class A common  stock  would be likely to
decrease significantly.

General economic factors could negatively impact our growth plan.

        The unfavorable  economic  conditions in the United States that began in
2001 detrimentally affected the U.S. manufacturing industry,  particularly sales
of fiber  optics  equipment to service  providers  and  communication  equipment
companies.  Announcements  by fiber  optics  equipment  manufacturers  and their
customers at the time indicated that there was a reduction in spending for fiber
optic  equipment  as a result of the  economic  slowdown  and  efforts to reduce
then-existing  inventories.  Based  on  these  and  other  factors,  some of our
customers  reduced,  modified,  cancelled or rescheduled orders for our products
and  expressed   uncertainty  as  to  their  future  requirements.   Despite  an
improvement in general economic conditions in the United States since that time,
capital spending by service providers in the fiber optic communications industry
on network  infrastructure has remained substantially below pre-2001 levels. Our
business,  operating results and financial condition are likely to suffer if the
global economy, or economic conditions in the United States, experiences another
downturn.

If we do not develop and  introduce  new products  with higher  average  selling
prices in a timely manner,  the overall  average  selling prices of our products
will decrease.

        The market for fiber optic  subsystems and modules is  characterized  by
declining  average  selling  prices  for  existing  products  due  to  increased
competition,   the  introduction  of  new  products,  product  obsolescence  and
increased unit volumes as manufacturers deploy new network equipment. We have in
the  past  experienced,  and  in the  future  may  experience,  period-to-period
fluctuations in operating results due to declines in our overall average selling
prices.  We anticipate  that the selling  prices for our existing  products will
decrease in the future in response to product  introductions  by  competitors or
us, or other factors,  including  pressure from significant  customers for price
concessions.  Therefore,  we must continue to develop and introduce new products
that can be sold at higher  prices on a timely  basis to  maintain  our  overall
average  selling  prices.  Failure to do so could  cause our  revenue  and gross
margins to decline.


                                       21
<PAGE>


If our  customers  do not approve our  manufacturing  processes  and qualify our
products, we will lose significant customer sales and opportunities.

        Customers  generally  will not purchase any of our products  before they
qualify them and approve our manufacturing processes and quality control system.
Our customers may require us to register under international  quality standards,
such as ISO 9001. We are currently  registered  under ISO  9001:2000.  Delays in
product  qualification or loss of ISO 9001  certification may cause a product to
be dropped  from a long-term  supply  program and result in a  significant  lost
revenue opportunity. If particular customers do not approve of our manufacturing
processes, we will lose the sales opportunities with those customers.

If we fail to predict our manufacturing  requirements accurately, we could incur
additional  carrying  costs and have excess and  obsolete  inventory or we could
experience  manufacturing  delays,  which  could  cause  us to  lose  orders  or
customers.

        We currently use  historical  data, a backlog of orders and estimates of
future  requirements  to determine our demand for components  and materials.  We
must  accurately  predict  both the demand for our  products  and the  lead-time
required  to obtain  the  necessary  components  and  materials.  Lead times for
components  and materials  vary  significantly  depending on factors such as the
specific  supplier,  the size of the order,  contract  terms and demand for each
component at a given time.  We generally  maintain  levels of  inventories  that
increase our inventory  carrying costs and periodically  cause us to have excess
and obsolete  inventory.  However,  if we were to  underestimate  our purchasing
requirements,  manufacturing  could  be  interrupted,  resulting  in  delays  in
shipments.

Our  markets  are  highly  competitive,  some  of our  customers  are  also  our
competitors,  and our other  customers  may choose to purchase our  competitors'
products  rather than our products or develop  internal  capabilities to produce
their own fiber optic subsystems and modules.

        The market for fiber optic subsystems and modules is highly  competitive
and we expect  competition to intensify in the future.  Our primary  competitors
include Agilent Technologies,  ExceLight Communications,  Finisar, JDS Uniphase,
MRV  Communications,  OpNext,  Picolight,  and Stratos  Lightwave.  We also face
indirect  competition from public and private companies  providing products that
address the same fiber optic  network  problems that our products  address.  The
development of alternative solutions to fiber optic transmission problems by our
competitors,  particularly systems companies that also manufacture modules, such
as  Fujitsu,  could  significantly  limit our  growth  and harm our  competitive
position.

        Many of our current  competitors and potential  competitors  have longer
operating histories and significantly  greater financial,  technical,  sales and
marketing  resources  than we do. As a  result,  these  competitors  are able to
devote  greater  resources to the  development,  promotion,  sale and support of
their  products.   In  addition,   our   competitors   that  have  large  market
capitalization  or cash reserves are in a much better  position to acquire other
companies in order to gain new  technologies  or products  that may displace our
products.  Any of these  potential  acquisitions  could give our  competitors  a
strategic  advantage.  In addition,  many of our  competitors  have much greater
brand  name   recognition,   more  extensive   customer  bases,  more  developed
distribution  channels and broader product offerings than we do. These companies
can use their broader customer bases and product  offerings and adopt aggressive
pricing policies to gain market share.

        In addition,  existing and potential customers,  especially in Japan and
other international  markets, may also become competitors.  These customers have
the internal  capabilities to integrate their  operations by producing their own
optical  subsystems and modules or by acquiring our competitors or the rights to
produce  competitive  products or  technologies,  which may allow them to reduce
their purchases or cease purchasing from us.


                                       22
<PAGE>


        We expect our  competitors  to introduce new and improved  products with
lower prices, and we will need to do the same to remain competitive.  We may not
be able to compete  successfully  against either  current or future  competitors
with respect to new products.  We believe that competitive  pressures may result
in price reductions, reduced margins and our loss of market share.

Our sales  cycle  runs from our  customers'  initial  design to  production  for
commercial sale. This cycle is long and  unpredictable and may cause our revenue
and operating results to vary from our forecasts.

        The period of time  between our initial  contact with a customer and the
receipt of a purchase  order  from that  customer  may span more than a year and
varies by product  and  customer.  During  this time,  customers  may perform or
require us to perform  extensive  evaluation  and  qualification  testing of our
products.  Generally, they consider a wide range of issues before purchasing our
products, including interoperation with other subsystems and components, product
performance  and  reliability.  We may incur  substantial  sales  and  marketing
expenses and expend significant  management effort while potential customers are
qualifying our products. Even after incurring these costs, we ultimately may not
sell any or sell only small amounts of our products to a potential customer.  If
sales forecasts to specific customers are not realized,  our revenue and results
of operations may be negatively impacted.

If we do not achieve acceptable manufacturing yields in a cost-effective manner,
or we are required to develop new manufacturing processes to improve our yields,
our operating results would be impaired.

        The manufacture of our products involves complex and precise  processes.
As a result, it may be difficult to cost-effectively  meet our production goals.
In addition,  changes in our manufacturing  processes or those of our suppliers,
or our suppliers'  inadvertent use of defective  materials,  could significantly
reduce our  manufacturing  yields,  increase  our costs and  reduce our  product
shipments.  To increase  our gross  margin,  while  offering  products at prices
acceptable to customers, we will need to develop new manufacturing processes and
techniques that will involve higher levels of automation.

We could be subjected to  litigation  regarding  intellectual  property  rights,
which may divert  management  attention,  cause us to incur significant costs or
prevent us from selling our products.

        In recent  years,  there has been  significant  litigation in the United
States  involving  patents  and  other  intellectual   property  rights  in  the
networking  technologies industry.  Many companies aggressively use their patent
portfolios to bring infringement claims against competitors. As a result, we may
be  a  party  to  litigation  or  be  involved  in  disputes  over  our  alleged
infringement of others'  intellectual  property in the future.  These claims and
any resulting lawsuit, if successful,  could subject us to significant liability
for damages and prevent us from making or selling  some of our  products.  These
lawsuits,  regardless  of  their  merit,  would  likely  be  time-consuming  and
expensive  to resolve and would  divert  management's  time and  attention.  Any
potential intellectual property litigation also could force us to do one or more
of the following:

        o stop selling, incorporating or using our products that use the
          infringed intellectual property;
        o obtain a license to make, sell or use the relevant technology from the
          owner of the infringed intellectual property, which license may not be
          available on commercially reasonable terms, if at all; or
        o redesign the products to not use the infringed intellectual property,
          which may not be technically or commercially feasible.

        If we are forced to take any of these actions,  we may be limited in our
ability to execute our business plan.


                                       23
<PAGE>


        We may in the future initiate claims or litigation against third parties
for infringement of our proprietary rights.  These claims could result in costly
litigation and the diversion of our technical and management  personnel.  In the
process of asserting our  intellectual  property  rights,  these rights could be
found to be invalid,  unenforceable  or not infringed.  Failure to  successfully
assert our intellectual property rights could result in our inability to prevent
our competitors from utilizing our proprietary rights.

If we are unable to protect our proprietary technology, this technology could be
misappropriated,  which  would  make  it  difficult  for  us to  compete  in our
industry.

        Our  success  and  ability  to  compete  is  dependent  in  part  on our
proprietary technology.  We rely primarily on patent,  copyright,  trademark and
trade secret laws, as well as confidentiality  agreements and other methods,  to
establish  and protect  our  proprietary  rights.  Existing  patent,  copyright,
trademark  and trade  secret laws afford only limited  protection.  While we are
pursuing foreign patent  protections,  the laws of some foreign countries do not
protect the unauthorized use of our proprietary  technology and processes to the
same extent as do the laws of the United States,  and policing the  unauthorized
use  of  our  products  is  difficult.  Many  U.S.  companies  have  encountered
substantial  infringement  problems in some foreign  countries.  Because we sell
some of our products overseas, we have exposure to foreign intellectual property
risks.  Any  infringement  of our  proprietary  rights  could  result  in costly
litigation,  and any failure to adequately  protect our proprietary rights could
result in our competitors  offering similar products,  potentially  resulting in
the loss of some of our competitive advantage and a decrease in our revenue.

If we are  unable to  generate  adequate  additional  revenue as a result of the
expansion of our sales  operations,  our competitive  position may be harmed and
our revenue or margins may decline.

        Historically,  we have relied primarily on a limited direct sales force,
supported by third party  manufacturers'  representatives  and distributors,  to
sell our  products.  Our sales  strategy  focuses  primarily on  developing  and
expanding   our  direct  sales   force,   manufacturers'   representatives   and
distributors.  We have  incurred and will  continue to incur  significant  costs
related to the expansion of our sales operations.  If the expansion of our sales
operations does not generate adequate additional revenue,  our operating margins
may decline.  To the extent we are  unsuccessful  in developing our direct sales
force,   we  will  likely  be  unable  to  compete   successfully   against  the
significantly  larger and well-funded sales and marketing  operations of many of
our  current  or  potential  competitors.  In  addition,  if we fail to  develop
relationships with significant  manufacturers'  representatives or distributors,
or if these representatives or distributors are not successful in their sales or
marketing  efforts,  sales of our  products  may  decrease  and our  competitive
position would be harmed. Our representatives or distributors may not market our
products  effectively  or may not continue to devote the resources  necessary to
provide us with effective sales,  marketing and technical support. Our inability
to  effectively  manage our  domestic  and foreign  sales and  support  staff or
maintain   existing   or   establish   new   relationships   with   manufacturer
representatives  and distributors would harm our revenue and result in declining
margins.

The market for our products is new and is characterized  by rapid  technological
changes and evolving industry standards.  If we do not respond to the changes in
a timely manner, our products likely will not achieve market acceptance.

        The market for our  products  is  characterized  by rapid  technological
change, new and improved product introductions, changes in customer requirements
and evolving industry standards. Our future success will depend to a substantial
extent on our  ability to develop,  introduce  and  support  cost-effective  new
products and technology on a successful and timely basis.  Because the costs for
research  and  development  of new  products  and  technology  are  expensed  as
incurred,  we expect a negative impact on our reported net operating results. If
we fail to develop and deploy new  cost-effective  products and  technologies or
enhancements of existing  products on a timely basis, or if we experience delays
in the


                                       24
<PAGE>


development,  introduction or enhancement of our products and technologies,  our
products will no longer be competitive and our revenue will decline.

        The development of new,  technologically  advanced products is a complex
and uncertain  process  requiring  high levels of innovation  and highly skilled
engineering and development  personnel,  as well as the accurate anticipation of
technological  and market  trends.  We cannot assure you that we will be able to
identify, develop, manufacture,  market or support new or enhanced products on a
timely basis, if at all. Furthermore, we cannot assure you that our new products
will gain market  acceptance or that we will be able to respond  effectively  to
product announcements by competitors, technological changes or emerging industry
standards.  Our  failure  to respond  to  product  announcements,  technological
changes or industry  changes in standards would likely prevent our products from
gaining market acceptance and harm our competitive position.

Terrorist  activities and resulting  military and other actions could  adversely
affect our business.

        The September 11, 2001 terrorist attacks in the United States and recent
terrorist  attacks in other parts of the world, as well as continued  threats of
global  terrorism,  current and future military  response to them and the United
States  military  action  in Iraq  have  created  many  economic  and  political
uncertainties  that make it extremely  difficult  for us, our  customers and our
suppliers to  accurately  forecast  and plan future  business  activities.  This
reduced  predictability  challenges our ability to operate profitably or to grow
our  business.  In  particular,   it  is  difficult  to  develop  and  implement
strategies,   sustainable   business  models  and  efficient   operations,   and
effectively  manage contract  manufacturing and supply chain  relationships.  In
addition,  the  continued  threats  of  terrorism  and the  heightened  security
measures in response to such threats have and may continue to cause  significant
disruption to commerce throughout the world. Disruption in air transportation in
response to these  threats or future  attacks may result in  transportation  and
supply-chain  disruptions,  increase our costs for both receipt of inventory and
shipment  of  products  to our  customers,  and cause  customers  to defer their
purchasing  decisions.   Disruptions  in  commerce  could  also  cause  consumer
confidence  and  spending to decrease or result in increased  volatility  in the
U.S. and  worldwide  financial  markets and  economy.  They also could result in
economic  recession in the U.S. or abroad. Any of these occurrences could have a
significant impact on our operating results, revenue and costs and may result in
the  volatility  of the  market  price for our  Class A common  stock and on the
future price of our Class A common stock.

Our success depends on our key personnel,  including our executive officers, the
loss of any of whom could harm our business.

        Our  success  depends  on the  continued  contributions  of  our  senior
management  and other key  research and  development,  sales and  marketing  and
operations  personnel,  including Muoi Van Tran, our Chief Executive Officer and
President,  Susie  Nemeti,  our Chief  Financial  Officer and Vice  President of
Finance and Administration, and Mohammad Ghorbanali, our Chief Operating Officer
and Vice  President of Technical  Operations.  Competition  for employees in our
industry is intense.  We do not have life insurance policies covering any of our
executives.  There can be no assurance  that we will be  successful in retaining
such key  personnel,  or that we will be  successful in hiring  replacements  or
additional key personnel.  Our loss of any key employee,  the failure of any key
employee  to perform in his or her current  position,  or the  inability  of our
officers  and key  employees to expand,  train and manage our employee  base may
prevent us from executing our growth strategy.

        We will need to attract and retain highly qualified managers,  sales and
marketing and technical  support  personnel.  We have had difficulty  hiring the
necessary engineering, sales and marketing and management personnel in the past.
If we fail to hire and retain  qualified  personnel  when  needed,  our  product
development  efforts and  customer  relations  will suffer.  Our key  management
personnel  have limited  experience  in managing  the growth of  technologically
complex businesses in a rapidly evolving


                                       25
<PAGE>


environment.  If we are unable to manage our growth  effectively,  we will incur
additional expenses that will negatively impact our operating results.

Our products may have defects that are not detected  until full  deployment of a
customer's  system.  Any of these  defects  could result in a loss of customers,
damage to our reputation and substantial costs.

        We design our products for large and complex fiber optic  networks,  and
our products must be  compatible  with other  components of the network  system,
both current and future.  We have  experienced  in the past, and may continue to
experience in the future,  defects in our  products.  Defects in our products or
incompatibilities  in our products may appear only when deployed in networks for
an extended  period of time.  In  addition,  our  products  may fail to meet our
customers'  design  specifications,  or our  customers  may change  their design
specifications  after the  production  of our  product.  A  failure  to meet our
customers' design  specification  often results in a loss of the sale due to the
length of time required to redesign the product.  We may also experience defects
in third party components that we incorporate into our products. We have and may
continue to  experience  the  following  due to our  inability  to detect or fix
errors:

        o increased costs associated with the replacement of defective products,
          redesign of  products to meet  customer  design  specification  and/or
          refund of the purchase price;
        o diversion of development resources; and
        o increased service and warranty costs.

Our  products and the systems  into which our  products  are  incorporated  must
comply with  domestic and  international  governmental  regulations,  and if our
products do not meet these regulations, our ability to sell our products will be
restricted.

        Our  products  are subject to various  regulations  of U.S.  and foreign
governmental  authorities  principally in the areas of radio frequency  emission
standards and eye safety.  Radio frequency  emission  standards govern allowable
radio interference with other services. Eye safety standards govern the labeling
and  certification  of laser products to ensure that they are used in a way that
does not create a hazard to the human eye.  Our  products  and the systems  into
which they are incorporated  must also comply with  international  standards and
governmental standards of the foreign countries where our products are used. Our
inability,  or the  inability  of our  customers,  to comply  with  existing  or
evolving standards  established by regulatory  authorities,  or to obtain timely
domestic or foreign  regulatory  approvals  or  certificates  will  restrict our
ability to sell our products.

We are subject to environmental  laws and other legal requirements that have the
potential to subject us to substantial  liability and increase our cost of doing
business.

        Our properties and business  operations are subject to a wide variety of
federal,  state and local environmental,  health and safety laws and other legal
requirements,  including  those  relating to the  storage,  use,  discharge  and
disposal  of  toxic,  volatile  or  otherwise  hazardous  substances.  We may be
required  to incur  substantial  costs to comply  with  current or future  legal
requirements.  In addition,  if we fail to obtain required  permits or otherwise
fail to operate within these or future legal requirements, we may be required to
pay substantial penalties,  suspend our operations or make costly changes to our
manufacturing  processes or  facilities.  We believe our properties and business
operations  are in  compliance  with  applicable  environmental  laws. We do not
anticipate  any  material  capital   expenditures  for   environmental   control
facilities for the 2005 fiscal year.


                                       26
<PAGE>


We face risks associated with our international operations that could prevent us
from marketing and distributing our products internationally.

        Although a  significant  portion of our sales has  historically  been in
North  America,  a growing  percentage  of our revenue is  generated  from sales
outside North America. Sales of our products outside North America accounted for
approximately  43.9%,  and 45.1% of our revenue for the three  months ended June
30,  2005,  and 2004,  respectively.  We expect that our sales  outside of North
America will continue to contribute  materially to our revenue.  We have limited
experience in marketing and  distributing our products  internationally.  One of
our  objectives  is to  expand  our  international  operations  in  the  future.
Significant  management  attention and financial resources are needed to develop
our international sales, support and distribution channels and manufacturing. We
may not be able to establish  or maintain  international  market  demand for our
products.

        In  addition,  international  operations  are  subject  to other  risks,
including:

        o greater  difficulty  in  accounts  receivable  collection  and  longer
          collection periods;
        o difficulties  and costs of staffing  and managing  foreign  operations
          with personnel who have expertise in fiber optic technology;
        o unexpected  changes in regulatory or  certification  requirements  for
          optical networks; and
        o political or economic instability.

        A portion of our  international  revenue and expenses may be denominated
in foreign currencies in the future.  Accordingly, we could experience the risks
of  fluctuating  currencies  and  may  choose  to  engage  in  currency  hedging
activities.  These factors could  adversely  impact our  international  sales or
increase our costs of doing business abroad or impair our ability to expand into
international markets, and therefore could significantly harm our business.

Disruption of our  operations at our Woodland  Hills,  California  manufacturing
facility could require us to lease alternative manufacturing facilities or limit
our manufacturing operations.

        In  August  2003,  we  relocated  our   headquarters   from  Chatsworth,
California to Woodland Hills,  California.  All of our manufacturing  operations
are  conducted  in our  Woodland  Hills,  California  headquarters.  Due to this
geographic   concentration,   a  disruption  of  our  manufacturing  operations,
resulting  from  sustained  process  abnormalities,   human  error,   government
intervention  or natural  disasters,  such as earthquakes,  fires or floods,  or
other causes, could require us to cease or limit our manufacturing operations.

Our  limited  experience  in  acquiring  other  businesses,  product  lines  and
technologies  may make it difficult for us to overcome  problems  encountered in
connection with any acquisition we may undertake.

        We expect to review  opportunities to buy other businesses,  products or
technologies  that would  enhance our  technical  capabilities,  complement  our
current  products or expand the  breadth of our  markets or which may  otherwise
offer growth  opportunities.  Our acquisition of businesses or technologies will
require significant  commitment of resources.  We may be required to pay for any
acquisition with cash, but we cannot be certain that additional  capital will be
available to us on favorable  terms, if at all. In lieu of paying cash, we could
issue stock as  consideration  for an  acquisition  that would  dilute  existing
stockholders' percentage ownership,  incur substantial debt or assume contingent
liabilities.  We have  little  experience  in  acquiring  other  businesses  and
technologies. Potential acquisitions also involve numerous risks, including:

        o problems  assimilating  the  purchased  operations,   technologies  or
          products;
        o unanticipated costs associated with the acquisition;


                                       27
<PAGE>


        o diversion of management's attention from our core business;
        o adverse effects on existing business  relationships with suppliers and
          customers;
        o risks  associated with entering markets in which we have no or limited
          prior experience; and
        o potential loss of key employees of purchased organizations.


Our stock price is likely to be volatile and could drop unexpectedly.

        Our Class A common  stock has been  publicly  traded  since  November 3,
2000.  The  market  price  of our  Class A common  stock  has  been  subject  to
significant  fluctuations  since the date of our initial  public  offering.  The
stock  market  has from time to time  experienced  significant  price and volume
fluctuations  that have affected the market prices of  securities,  particularly
securities of  telecommunications  and fiber optic companies.  As a result,  the
market price of our Class A common stock may materially  decline,  regardless of
our operating  performance.  In the past, following periods of volatility in the
market  price of a  particular  company's  securities,  securities  class action
litigation has often been brought  against that company.  We may become involved
in this  type of  litigation  in the  future.  Litigation  of this type is often
expensive and diverts management's attention and resources.

We may not be able to maintain our listing on the Nasdaq  National Market and if
we fail to do so,  the  price  and  liquidity  of our  Class A common  stock may
decline.

        The Nasdaq Stock Market has  quantitative  maintenance  criteria for the
continued  listing of  securities  on the Nasdaq  National  Market.  The current
requirements  affecting us include  maintaining a minimum bid price per share of
$1. Our bid price has been below $1 in the past. If the bid price of our Class A
common stock drops below $1 per share and remains at that level for more than 30
consecutive trading days, we will be in violation of Nasdaq's listing standards.
If within 90 days  thereafter,  our Class A common stock does not have a minimum
bid price of $1 per share for 10 consecutive  trading days, Nasdaq will commence
proceedings to delist our Class A common stock from the Nasdaq National  Market.
If we fail to maintain  continued listing on the Nasdaq National Market and must
move to a market with less liquidity,  our stock price would likely decline.  If
we are delisted, it could have a material adverse effect on the market price of,
and the liquidity of the trading market for, our Class A common stock.

We have potential business  conflicts of interest with Furukawa,  the resolution
of  which  may  not  be  as  favorable  to us as if  we  were  dealing  with  an
unaffiliated third party.

        We have  historically  relied on  Furukawa's  research  and  development
capabilities to provide us with technologically  advanced lasers and fiber optic
components that we purchase from Furukawa for inclusion in our products,  and we
expect to continue to rely on Furukawa in the future. We currently  purchase the
majority of lasers from Furukawa under a Master  Purchase  Agreement.  We cannot
assure  you that  Furukawa  will  renew the  Agreement  upon its  expiration  on
September  30,  2005 or  whether  it  will  continue  to  provide  services  and
components  to us, and if not,  whether or on what terms we could find  adequate
alternative sources for these services and components.  We intend to continue to
maintain our relationship  with Furukawa and Furukawa can control the outcome of
any stockholder votes, as discussed below. The terms of future transactions with
Furukawa  may or may not be  comparable  to those that would be  available  from
unaffiliated third parties.

        Potential  conflicts  of interest  exist  between  Furukawa  and us in a
number of areas,  including  the nature  and  quality of  services  rendered  by
Furukawa  to  us,   potential   competitive   business   activities,   sales  or
distributions by Furukawa of all or any portion of its ownership interest in us,
or Furukawa's ability to control our management and affairs. It is possible that
business  decisions  made by  management  that are in the best  interest  of our
stockholders may conflict with Furukawa's interests.  For example, we may decide
to enter  into or  acquire a line of  business  competitive  with  Furukawa,  or
Furukawa may decide to


                                       28
<PAGE>


enter  into or  acquire a line of  business  competitive  with us.  Any of these
events may alter or  eliminate  our  ability to rely on  Furukawa  to supply key
components to us in the future, increase our costs of producing our products and
result in increased  competition  in our markets.  We cannot  assure you that we
will be able to resolve any  conflicts  we may have with  Furukawa or, if we are
able to do so, that the resolution will be favorable to us.

Furukawa  will  control  the outcome of  stockholder  voting and there may be an
adverse effect on the price of our Class A common stock due to disparate  voting
rights of our Class A common stock and our Class B common stock.

        Furukawa  beneficially  owns all of our  outstanding  shares  of Class B
common stock,  which as of June 30, 2005  represented  93.4% voting control over
all  stockholder  issues.  The  holders of our Class A common  stock and Class B
common  stock have  identical  rights  except that holders of our Class A common
stock are  entitled  to one vote per share  while  holders of our Class B common
stock  are  entitled  to ten  votes  per  share  on  matters  to be  voted on by
stockholders.  The differential in the voting rights of our Class A common stock
and Class B common stock could adversely  affect the price of our Class A common
stock to the extent that  investors  or any  potential  future  purchaser of our
shares of Class A common stock give greater value to the superior  voting rights
of our  Class B common  stock.  Each  share of our  Class B  common  stock  will
automatically  convert  into  one  share  of  Class  A  common  stock  if  it is
transferred to any entity,  other than an entity  controlling,  controlled by or
under common control with Furukawa.  In addition,  our Class B common stock will
automatically  convert  into  shares  of our  Class A common  stock if the total
number of  outstanding  shares of Class B common  stock falls below 20% of total
number of  outstanding  shares of our common  stock.  As long as Furukawa  has a
controlling  interest,  it will continue to be able to elect our entire board of
directors  and  generally  be able to  determine  the  outcome of all  corporate
actions  requiring  stockholder  approval.  As a result,  Furukawa  will be in a
position to continue to control all matters affecting us, including:

    o a change of control, including a merger;
    o our acquisition or disposition of assets;
    o our future issuances of common stock or other securities;
    o our incurrence of debt; and
    o our payment of dividends on our common stock.

        Three members of our board of directors are also executives of Furukawa.
These individuals have obligations to both our company and Furukawa and may have
conflicts of interest with respect to matters  potentially or actually involving
or affecting us, such as acquisitions and other corporate opportunities that may
be suitable for both Furukawa and us.

Our exploration of strategic alternatives may not be successful.

        On September  29, 2003,  we  announced  that a special  committee of our
board of directors is evaluating strategic alternatives.  The special committee,
which is  comprised  of our three  independent  directors,  has  retained  Bear,
Stearns & Co. Inc. to advise it in evaluating strategic alternatives,  including
a special dividend, share repurchase, strategic merger or sale of the Company.

        We are uncertain as to what strategic  alternatives  may be available to
us or what impact any particular  strategic  alternative  will have on our stock
price if  accomplished.  Uncertainties  and risks relating to our exploration of
strategic alternatives include:

    o the  exploration  of strategic  alternatives  may disrupt  operations  and
      distract  management,  which could have a material  adverse  effect on our
      operating results;
    o the process of exploring strategic alternatives may be more time consuming
      and expensive than we currently anticipate;


                                       29
<PAGE>


    o we may not be able to  successfully  achieve the benefits of the strategic
      alternative undertaken by us; and
    o perceived  uncertainties  as to the future  direction  of the  Company may
      result in the loss of employees or business partners.

The current  audit by the  Internal  Revenue  Service of our federal tax returns
could result in adverse adjustments to our financial statements.

        In March 2005, the Internal  Revenue  Service  commenced an audit of our
federal tax returns for our 2001 and 2003 fiscal  years.  At this early stage of
the audit,  we are unable to predict  whether any adjustments to our tax returns
will be required,  and if so,  whether these  adjustments  will be adverse or in
favor of us. In addition,  we cannot predict  whether any  adjustment  resulting
from the IRS audit will be material,  or whether such an adjustment will require
us to change our previously reported financial results.



ITEM 3.         QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        We are  currently  exposed  to  interest  rate  risk  on our  investment
portfolio. We do not have any term loan debt as of June 30, 2005.

        The  primary  objective  of our  investment  activities  is to  preserve
capital.  We have not used  derivative  financial  instruments in our investment
portfolio.  Our cash and cash equivalents includes $84.6 million the majority of
which is  invested  in money  market and other  interest  bearing  accounts.  In
addition,  we have  $64.8  million  invested  in  marketable  securities,  which
represents investments in United States treasury notes and treasury bonds.

        As of June 30, 2005,  our  investment  in  marketable  securities  had a
weighted-average   time  to  maturity  of  approximately  164  days.  Marketable
securities  represent  United  States  treasury  notes and  treasury  bonds with
maturity on the date  purchased of greater than three months.  These  securities
are classified as held to maturity  because we have the intention and ability to
hold  the  securities  to  maturity.   Gross  unrealized  gains  and  losses  on
held-to-maturity  marketable  securities  have  historically  not been material.
Maturities on the date purchased of held-to-maturity  marketable debt securities
can range from three months to two years.

        If interest  rates were to increase or decrease  1%, the result would be
an annual  increase  or  decrease  of  interest  income of $1.5  million  on our
investment portfolio.  However, due to the uncertainty of the actions that would
be taken and their  possible  effects,  this  analysis  assumes no such  action.
Further,  this  analysis does not consider the effect of the change in the level
of overall economic  activity that could exist in such an environment.  Sales to
foreign customers are denominated in U.S. dollars and as such we have no foreign
currency fluctuation risk.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our principal  executive officer and principal  financial officer have concluded
that our disclosure  controls and  procedures (as defined in Rules  13a-15(e) or
15d-15(e)  under the  Securities  Exchange  Act of 1934  ("Exchange  Act"))  are
effective as of the end of the period covered by this quarterly  report based on
their  evaluation of these controls and procedures  required by paragraph (b) of
Rules 13a-15 or 15d-15 under the Exchange Act.


                                       30
<PAGE>


Changes in Internal Control

There  were  no  changes  in  our  internal  control  over  financial  reporting
identified in connection with the evaluation  required by paragraph (d) of Rules
13a-15 or 15d-15  under the Exchange  Act that  occurred  during our last fiscal
quarter that have materially  affected,  or are reasonably  likely to materially
affect, our internal control over financial reporting.


                                    PART II.
                        OTHER INFORMATION AND SIGNATURES

ITEM 1.         LEGAL PROCEEDINGS

        We are not currently involved in any material legal proceedings.  We are
not aware of any other material legal proceedings  threatened or pending against
us.  From time to time,  however,  we may  become  subject to  additional  legal
proceedings,  claims, and litigation arising in the ordinary course of business.
In addition, in the past we have received, and we may continue to receive in the
future,  letters alleging  infringement of patent or other intellectual property
rights.  Our management  believes that these letters generally are without merit
and intend to contest them vigorously.

ITEM 2.         UNREGESTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

        None.

ITEM 3.         DEFAULTS UPON SENIOR SECURITIES

        None.

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

        None.

ITEM 5.         OTHER INFORMATION

        None.

ITEM 6.         EXHIBITS


<TABLE>
<CAPTION>

Exhibit Number    Description
--------------    ---------------------------------------------------------------------------------
<S>                   <C>
                                                                             .

31.1                  Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350,
                      as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2                  Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350,
                      as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1                  Certification of Chief Executive Officer and Chief Financial Officer
                      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
                      the Sarbanes-Oxley Act of 2002.
</TABLE>


                                       31
<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.


                                   OPTICAL COMMUNICATION PRODUCTS, INC.,
                                   a Delaware corporation


Date:    August 12, 2005               By:    /s/ Muoi Van Tran
        ----------------                      ----------------------
                                       Name:  Muoi Van Tran
                                       Title: Chairman of the Board,
                                              Chief  Executive Officer and
                                              President


Date:    August 12, 2005               BY:    /s/ Susie Nemeti
        ----------------                      ----------------------
                                       Name:  Susie Nemeti
                                       Title: Chief Financial Officer (Principal
                                              Financial and Accounting Officer)


                                       32
<PAGE>


                                  EXHIBIT INDEX

<TABLE>
<CAPTION>

Exhibit Number    Description
--------------    -----------
<S>                   <C>


31.1                  Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350,
                      as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2                  Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350,
                      as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1                  Certification of Chief Executive Officer and Chief Financial Officer
                      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
                      the Sarbanes-Oxley Act of 2002.
</TABLE>