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UNITED STATES SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549




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Form 10-K



|  |                                              
|- | ---------------------------------------------
|þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended March 29,
2002

or



|  |                                                  
|- | -------------------------------------------------
|o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934


For the Transition Period
From                               to                               .

Commission File Number 000-31231



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Repeater Technologies, Inc.

(Exact name of registrant as specified in its
charter)


|                                                                   |  |                                     
|------------------------------------------------------------------ |  | ------------------------------------
|Delaware                                                           |  | 77-0535658                          
|(State or other jurisdiction of
    incorporation or organization) |  | (I.R.S. Employer Identification No.)

1150 Morse Avenue

Sunnyvale, California 94089


(Address of principal executive
offices)


(408) 747-1900

(Registrants telephone number, including
area code)


Securities registered pursuant to
Section 12(b) of the Act:

None


Securities registered pursuant to
Section 12(g) of the Act:

Common Stock, $0.001 par value per
share


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  þ  No  o

Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of
registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this
Form 10-K.  o

As of May 15, 2002, the aggregate market
value of the shares of the registrants common stock held
by non-affiliates of the registrant, based on the closing price
for such common stock as quoted by the Nasdaq National Market on
that date, was approximately $2,961,831. Shares held by each
executive officer and director of the registrant and by each
person who owns ten percent or more of the registrants
outstanding common stock have been excluded from this
computation because such persons may be deemed to be affiliates
of the registrant. This determination of affiliate status for
this purpose is not necessarily a conclusive determination for
other purposes.

As of May 31, 2002, there were 23,914,052
shares of the registrants common stock, $0.001 par value
per share, outstanding. This is the only outstanding class of
stock of the registrant.



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TABLE OF CONTENTS



|              |                                                                                                         |  |  |  |  |  |  | 
|------------- | ------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I       
|              | Item 1. Business                                                                                       
|              | Item 2. Properties                                                                                     
|              | Item 3. Legal Proceedings                                                                              
|              | Item 4. Submission of Matters to a Vote of Security Holders                                            
|PART II      
|              | Item 5. Market for Registrants Common Equity and Related Stockholder Matters                          
|              | Item 6. Selected Financial Data                                                                        
|              | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations          
|              | Item 7A. Quantitative and Qualitative Disclosures of Market Risk                                       
|              | Item 8. Financial Statements and Supplementary Data                                                    
|              | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure           
|PART III     
|              | Item 10. Directors and Executive Officers of the Registrant                                            
|              | Item 11. Executive Compensation                                                                        
|              | Performance Measurement Comparison                                                                     
|              | Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|              | Item 13. Certain Relationships and Related Transactions                                                
|PART IV      
|              | Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K                              
|SIGNATURES   
|EXHIBIT INDEX
|EXHIBIT 10.3 
|EXHIBIT 10.12
|EXHIBIT 10.13
|EXHIBIT 10.14
|EXHIBIT 10.15
|EXHIBIT 10.16
|EXHIBIT 10.17
|EXHIBIT 10.18
|EXHIBIT 23.1 



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TABLE OF CONTENTS

|         |  |                                                                                                    |  |      |    | 
|-------- |  | -------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|         |  |                                                                                                    |  | Page
|         |  |                                                                                                    |  |     
|PART I  
|Item 1.  |  | Business                                                                                           |  |      | 1  | 
|Item 2.  |  | Properties                                                                                         |  |      | 19 | 
|Item 3.  |  | Legal Proceedings                                                                                  |  |      | 19 | 
|Item 4.  |  | Submission of Matters to a Vote of Security
    Holders                                            |  |      | 20 | 
|PART II 
|Item 5.  |  | Market for Registrants Common Equity and
    Related Stockholder Matters                          |  |      | 20 | 
|Item 6.  |  | Selected Financial Data                                                                            |  |      | 22 | 
|Item 7.  |  | Managements Discussion and Analysis of
    Financial Condition and                                |  |      |    | 
|         |  | Results of Operations                                                                              |  |      | 23 | 
|Item 7A. |  | Quantitative and Qualitative Disclosures About
    Market Risk                                     |  |      | 33 | 
|Item 8.  |  | Financial Statements and Supplementary Data                                                        |  |      | 34 | 
|Item 9.  |  | Changes in and Disagreements with Accountants on
    Accounting and                                |  |      |    | 
|         |  | Financial Disclosure                                                                               |  |      | 56 | 
|PART III
|Item 10. |  | Directors and Executive Officers of the Registrant                                                 |  |      | 56 | 
|Item 11. |  | Executive Compensation                                                                             |  |      | 58 | 
|Item 12. |  | Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters |  |      | 71 | 
|Item 13. |  | Certain Relationships and Related Transactions                                                     |  |      | 74 | 
|PART IV 
|Item 14. |  | Exhibits, Financial Statement Schedules, and
    Reports on Form 8-K                               |  |      | 76 | 

SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS

This report contains forward-looking statements
made in reliance upon the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. In some cases, you can
identify forward-looking statements by terminology such as
expects, anticipates,
intends, may, should,
plans, believes, seeks,
estimates, could, would or
the negative of such terms or other comparable terminology.

Forward-looking statements involve known and
unknown risks, uncertainties, and other factors that may cause
our, or our industrys, actual results, levels of activity,
performance or achievements to be materially different from any
future results, levels of activity, performance or achievements
expressed or implied by the forward-looking statements. These
factors and uncertainties include the Companys ability to
gain widespread industry acceptance of its products, its lengthy
and variable sales cycle and the difficulty in predicting the
timing and magnitude of sales. We refer readers to the
Risks That Could Affect Future Results section and
elsewhere in this report for descriptions of additional
uncertainties and factors that may affect forward-looking
statements.

Although we believe that the expectations
reflected in the forward-looking statements are reasonable, we
cannot guarantee future results, levels of activity, performance
or achievements. Moreover, neither we nor any other person
assumes responsibility for the accuracy and completeness of
these statements. We are under no duty to update any of the
forward-looking statements after the date of this report to
conform these statements to actual results.

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PART I




Item 1.     Business

Overview

Repeater Technologies, Inc. (the
Company) was incorporated in the State of California
in October 1983 and reincorporated in the State of Delaware
in May 2000. We develop, market and sell wireless network
equipment primarily for CDMA-based wireless communications
networks for use in suburban and rural areas, urban areas and
inside office buildings and other coverage-limited structures.

Our products are based on our Network Repeater
technology that expands the coverage area of a wireless network.
Our Network Repeater receives, amplifies and retransmits voice
and data signals between mobile handsets and base stations and
uses an operators existing radio frequency, or RF,
spectrum to provide the necessary connection to the wireless
network.

Our RepeaterHybrid Network incorporates our
family of Network Repeaters, third-party base stations and other
related network equipment to provide outdoor wireless service
coverage at significantly reduced capital and operating cost by
reducing the number of required base stations, related
communication links and other wireless network equipment.

Industry Background

Wireless Market
Growth.In recent years, there has
been substantial growth in the number of wireless subscribers. A
number of factors are driving worldwide wireless subscriber
growth, including the expansion of wireless coverage outside of
urban areas, the rapid price decline of wireless usage cost per
minute and the proliferation of new wireless applications such
as high-speed data services. These factors, alongside increasing
use of wireless handsets as a substitute for wire-based
communications, are also driving a substantial increase in
wireless minutes of use. To meet the growing demand for wireless
services, wireless service providers are increasingly focusing
on expanding network coverage in order to increase the number of
new subscribers and reduce subscriber turnover, or
churn, resulting from coverage limitations.

Wireless Standards.A number of analog and digital standards are available to
wireless service providers in the deployment of wireless
networks, including GSM, or Global System for Mobile
Communication, TDMA, or Time Division Multiple Access, and CDMA,
or Code Division Multiple Access. TDMA was established in 1988
and is now widely utilized across the United States as a result
of its transmission and cost efficiencies and signal quality.
GSM was introduced in 1991 as an extension of the TDMA standard
and is now widely utilized in Europe and Asia as a result of
similar factors as well as its open standard
compatibility. The GSM standard was developed by a consortium of
wireless service providers and wireless equipment manufacturers,
primarily in Europe, to provide a common air interface to enable
a subscriber who was traveling between networks and countries to
have uniform wireless service. Due to this effort, wireless
equipment manufacturers were able to develop products for a
large potential market and also were not required to pay
royalties for licensed technology. Both of these factors have
enabled GSM wireless network equipment to be offered by
manufacturers at a lower cost than CDMA wireless equipment. CDMA
is not generally considered an open standard, and
manufacturers of CDMA equipment generally are required to pay
royalties for licensed technology.

The first commercial deployment of a CDMA
wireless network took place in 1995 in Hong Kong and, since
then, CDMA wireless networks have been deployed in Korea, the
United States, Canada, India, Japan, Australia, Brazil and 19
other countries. Unlike competing standards, such as GSM and
TDMA, that divide radio frequency into time slots and allocate
these slots to users, CDMA does not assign a specific frequency
to each user. Instead, voice communications and data are encoded
in a random digital sequence for transport across the full
available spectrum. The current market acceptance of GSM and
TDMA technologies could place competitive pressures on the
growth of CDMA technology. Most wireless equipment vendors and
service providers support multiple standards.

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There are several new standards for incorporating
higher-speed data transmission rates into mobile telephone
networks, generally referred to as 2.5G and 3G standards.
The 2.5G standards allow for higher-speed data transmission
rates when compared to existing 2G digital mobile telephone
networks, and the 3G standards provide for even higher data
transmission rates, potentially greater than 1 megabit/
sec. The 3G standards are expected to require up to 5MHz of
spectrum to be allocated for their use.

The 2.5G standard known as General Packet
Radio Service (GPRS) is a technical standard for higher speed
data transmission rates for the currently deployed GSM mobile
standard. Deploying GPRS requires additional equipment and new
software to be deployed into existing GSM networks.

The 3G standards known as CDMA20001X and
CDMA20001xEV are derivatives of the first CDMA standard deployed
(cdmaOne or IS-95), allowing for enhanced data transmission
rates to and from the mobile devices by enhancing existing CDMA
networks through equipment and software upgrades. The CDMA20001X
standard is currently being deployed by wireless service
providers worldwide. Our recently introduced line of
RepeaterCell line of Network Repeaters are compatible with
CDMA20001X and CDMA20001xEV networks and are deployed in
CDMA20001X networks today.

CDMA3X is a 3G standard for CDMA networks
that incorporates very high-speed data transmission rates to and
from the mobile device and will generally require new software
and, in some instances, new equipment to be deployed into the
network. Universal Mobile Telephone Service (UMTS) is based on a
different technical standard, W-CDMA, or wideband CDMA. UMTS
allows for very high transmission speeds to and from the mobile
device and is the most likely 3G evolution path for GSM
networks. Our Network Repeaters will require some modifications
to enable them to work properly in CDMA3X or UMTS networks.
These modifications vary in difficulty depending on the
frequency band. Modifications for the U.S. PCS band are
relatively simple, while modifications for the
U.S. cellular band and European 2100 MHz band will be
more difficult and time consuming and will require a substantial
amount of our resources.

The availability of services utilizing these
advanced standards is expected to increase the demand for
wireless coverage. We believe the build-out of networks
utilizing these advanced standards by new licensees and upgrades
of existing networks should drive significant expenditures for
network equipment. The build-out and proliferation of these
high-speed networks, however, is subject to global economic
cycles in general, and conditions in the wireless
telecommunications industry in particular.

The market for our CDMA Network Repeaters is a
subset of the worldwide CDMA market. The market for Network
Repeaters may not reflect the growth rates of the broader CDMA
market. The growth of the market for Network Repeaters may be
limited by an inability to achieve broader market acceptance or
provide a sufficient value proposition as a result of expanding
capacity requirements or limited coverage requirements.

CDMA provides a number of benefits over competing
analog and digital standards, including:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Increased Capacity.Unlike competing standards, CDMA does not assign a specific
    frequency to each user. Instead, conversations and other
    information are encoded in random digital sequence for transport
    across the full available spectrum. By allowing multiple
    subscribers to share the same frequency, CDMA equipment can
    provide over three times the capacity of analog and other
    digital standards over the same amount of spectrum.
|
| |  | Improved Quality of
    Service.CDMA combines multiple
    signals and improves signal strength for a reduction of
    interference and fading. Additionally, the method of passing
    calls between cells in a CDMA network significantly reduces the
    risk of disruption or dropped calls.                                                                                                                                                                   
|
| |  | Better Support for
    Data.CDMA offers a powerful platform
    for evolving wireless technologies and enables subscribers to
    use a wide range of new services including voice recognition,
    short messaging services and Internet connections.                                                                                                                                                                                                             

Although CDMA provides a number of benefits over
analog and other digital standards, it is the newest wireless
communications technology standard and has yet to achieve the
market penetration of other more established digital standards,
including TDMA and GSM. At December 31, 2001, networks
using GSM or TDMA technologies served 77.9% of wireless
subscribers worldwide, networks using CDMA served 11.8%,

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and PDC/ PHS, analog and other wireless standards
served the remaining 10.3%. Between 1999 and 2001, the number of
wireless subscribers worldwide who use CDMA technologies grew by
123.6%, while the number using GSM or TDMA technologies grew by
149.2%. Relatively few wireless service providers have adopted
CDMA wireless technology and those which have are concentrated
in portions of North America, Central America, South America and
Asia.


Wireless System
Technology.Wireless networks operate
by dividing the geographic service area territory into a number
of areas called cells. A base station is the equipment that
transmits and receives the RF signal to and from the wireless
handsets in the cell sites coverage area. The coverage
provided by a base station is limited by the base stations
RF output power, the frequency of the RF signals and the amount
of clutter, such as buildings, hillsides and other physical
obstructions, in the path of the signals. The higher the RF
signals frequency, the shorter the distance it can travel
for a given output power. For example, a 1900 MHz RF
signal travels approximately half the distance of an
850 MHz cellular signal with equal output power. Therefore
a 1900 MHz RF network may require three to four times
the number of base stations to provide the same coverage as a
850 MHz RF network. PCS networks tend to utilize
1900 MHz RF while cellular networks usually utilize
850 MHz RF.

Market Segments.The
rapid growth in demand for wireless service has caused a
corresponding increase in the demand for widespread coverage in
the following four market segments:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Low-Density/ Low-Utilization
    Markets.These markets are typically
    suburbs and small towns in which capacity requirements are low
    because of low user density. However, the need for coverage
    remains high as wireless subscribers expect to have service
    throughout these areas. Wireless service providers have been
    slow to deploy wireless networks in these areas because the high
    infrastructure costs required cannot be spread over a large
    enough subscriber base.            
|
| |  | Traffic Corridors.These markets are typically major highways that connect
    population centers and are characterized by low-density
    utilization along a narrow geographic corridor. Wireless service
    providers must offer complete coverage along these corridors so
    that subscriber calls are not dropped in these
    areas. However, in these markets, as in low-density/
    low-utilization markets, wireless service providers find the
    deployment of base stations costly and inefficient.
|
| |  | High-Density/ High-Utilization
    Markets.These markets are typically
    urban areas in which service is provided by a large number of
    closely spaced base stations, which provide both the capacity
    for a large number of subscribers and coverage for a given
    geographic area. However, in spite of the large number of base
    stations, gaps in coverage commonly occur as the result of
    blockage of RF signals by buildings, tunnels and other
    obstructions.                             
|
| |  | In-Building Markets.These markets are characterized by high utilization throughout a
    concentrated geographical area. Although base stations can
    provide the necessary capacity, the materials used in building
    construction can inhibit and interfere with the transmission of
    RF signals to and from the building interior.                                                                                                                                                                         

Both existing wireless service providers and new
entrants to the competitive wireless markets face the challenge
of rapidly expanding coverage with limited capital and operating
resources. Addressing these coverage challenges has become a
critical differentiator as service providers attempt to expand
their existing subscriber base and minimize subscriber churn
resulting from coverage limitations. Because CDMA base stations
are designed to support high capacity networks in densely
populated urban centers, they do not scale well to low-density/
low-utilization markets. In addition, the need for a high
capacity digital telephone connection to the network from each
base station results in significant capital and operating
expenses. As a result of growing capacity and coverage
requirements and increasing competitive pressures, wireless
service providers are demanding solutions that provide:



| |   |                                       
| | - | --------------------------------------
| |  | rapid expansion of coverage;          
|
| |  | reduced capital and operating costs;  
|
| |  | ease of and flexibility in deployment;

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| |   |                                           
| | - | ------------------------------------------
| |  | improved quality of RF coverage;          
|
| |  | high levels of technical support; and     
|
| |  | rapidly deployable 3G-compatible products.

Repeater Technologies Solution

Our RepeaterHybrid Network integrates our Network
Repeaters with CDMA base stations, enabling wireless service
providers to quickly expand coverage at significantly reduced
cost. While base stations provide the overall capacity and
initial coverage for a wireless network, our Network Repeaters
redirect, focus or spread the concentrated capacity of a base
station to expand coverage to desired coverage areas. In
low-density/low-utilization markets and traffic corridors, our
RepeaterHybrid Network allows network operators to
cost-effectively utilize their network capacity to expand
coverage. In high-density/high-utilization markets, our Network
Repeaters fill the coverage gaps that occur as a result of
blockage of RF signals. For the in-building market, Network
Repeaters, when coupled with a distributed antenna system, can
provide RF coverage in smaller buildings. Our solutions offer
the following key benefits:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Reduced Capital Costs.RepeaterHybrid Networks provide
    expansion of coverage with significantly lower capital costs
    than required in the deployment of base station-only networks.
    Network Repeaters are significantly less expensive than CDMA
    base stations. In addition, wireless network operators who use
    base stations to increase coverage must incur increased capital
    costs both as a result of the need for more communications links
    and the deployment of larger base station controllers and mobile
    switching centers to support these sites. Our Network Repeaters
    typically require no physical communications link to base
    station controllers or mobile switching centers and, as such,
    reduce the overall capital cost of the network. In addition, our
    Network Repeaters are significantly smaller than base stations,
    making them less costly to site and install.
|
| | Lower Operating Costs.Our RepeaterHybrid Network can result
    in substantially lower operating costs than a base station-only
    network. By replacing a number of the base stations with our
    Network Repeaters, the wireless service provider saves the
    substantial monthly charges associated with the high capacity
    digital telephone connection required to link to the base
    station controller.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

Strategy

Our goal is to be the leader in the development
and deployment of CDMA wireless coverage enhancement solutions.
To achieve this goal, our strategy is to:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Continue to Expand Our Installed Base of
    Network Repeaters.We will continue to
    focus on providing RepeaterHybrid Network solutions to wireless
    service providers who are deploying new CDMA networks or
    expanding existing CDMA networks. We also plan to target more
    established CDMA service providers who intend to expand their
    wireless networks to include low-density/low-utilization areas
    as they expand coverage.                                                                                                                                                                                                     
|
| | Establish a Market Leadership Position in
    Third Generation or 3G Wireless Networks.We intend to capitalize on the low
    cost and flexibility of our Network Repeaters to speed service
    providers transition to third generation or 3G wireless
    technologies. We have developed significant expertise in CDMA
    technology, which will allow us to rapidly bring 3G products to
    market. Our Network Repeaters currently meet the CDMA20001X and
    CDMA20001xEV specifications of the 3G standard known as
    cdma2000. We intend to further develop our technology to meet
    the balance of the 3G CDMA standards, CDMA3X and UMTS.
|
| | Focus on Network Design and Customer Support.We have developed a substantial body
    of knowledge of network design incorporating repeaters and base
    stations in order to facilitate our customers assessment
    and implementation of our RepeaterHybrid Networks. Our network
    design services allow wireless service providers to modify
    network design prior to deployment to better suit                                                                                                                                                                                                                                                 

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| |                                                                                                                                                                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | coverage and capacity demands. We believe our
    extensive network design capabilities and comprehensive customer
    support have been significant factors in our ability to attract
    and retain customers.                                                                                                                                      
|
| | Pursue Strategic Transactions.We may from time to time make
    strategic acquisitions or engage in strategic transactions that
    may complement our products, expand the breadth of our product
    offerings, enhance our technical capabilities, help secure
    critical sources of supply or that may otherwise offer growth
    opportunities.

Our Products and Services



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Network Repeater.Our Network Repeater receives,
    filters, amplifies and re-transmits RF signals between wireless
    subscribers and base stations in CDMA wireless networks. Our
    Network Repeater features our patented receive diversity
    technology, which provides high quality voice and data
    transmission, while reducing the necessary amount of handset
    power. Receive diversity technology allows operators to deploy
    RepeaterHybrid Networks with comparable performance and quality
    to those of a base station-only network. We started deploying
    Network Repeaters in the June quarter of 1997. We introduced our
    new higher-powered 10 watts per channel dual-channel Network
    Repeater during the three months ended December 28, 2001.
    We also introduced another, higher-powered 15 watts per channel
    dual-channel Network Repeater in the quarter ended
    March 29, 2002.
|
| | RepeaterStar.Our
    RepeaterStar antenna sends and receives signals between the
    serving base station and our Network Repeater. Our RepeaterStar
    antenna possesses performance characteristics that are optimized
    for use within our RepeaterHybrid Network. We started deploying
    RepeaterStar antennas in the December quarter of 1999. We
    introduced a smaller, less expensive version of the RepeaterStar
    antenna, the RepeaterStarLite, in the quarter ended
    March 29, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | RepeaterPower.Our
    RepeaterPower battery back-up power system provides auxiliary
    power for the Network Repeaters in the event of a commercial
    power outage. We started deploying our battery back-up power
    systems in the June quarter of 1997.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | RepeaterWeb.RepeaterWeb is our proprietary network
    management system designed to monitor and control our Network
    Repeaters and other products from a central network operations
    center. RepeaterWeb provides a comprehensive browser-like
    graphical user interface allowing maintenance personnel to
    monitor numerous Network Repeaters, together with their back-up
    power sources and related equipment, over the Internet. We
    started delivering RepeaterWeb to customers for evaluation in
    the quarter ended March 29, 2002 and we have delivered a
    production-released system in the quarter ending June 28,
    2002. RepeaterWeb replaces our prior proprietary network
    management system, RepeaterNet.                                                                                                                                                                                    
|
| | Professional Services.Our Professional Services offering
    spans the range of wireless network deployment. Prior to network
    planning and deployment, we provide network consulting services
    to help our customers determine the most cost-effective approach
    to designing and building their CDMA networks. Our consulting
    services include capacity planning and analysis, the creation of
    engineering design guidelines and network equipment evaluation.                                                                                                                                                                                                                                                                                                                                                                                                                                                        

We offer a suite of design services to assist our
customers in deploying an efficient combination of Network
Repeaters, base stations, and other network equipment. We also
provide in-building design services for our customers seeking to
provide indoor coverage using repeaters or distributed antenna
systems.

We also may provide turnkey installation, and may
in the future contract for the construction, of repeater sites,
both indoors and outdoors, and network optimization of both base
stations and Network Repeaters. Optimization includes the
alignment of all Network Repeaters to optimize communication
with the base stations and the adjustment of base station and
other network parameters to optimize network performance.
Throughout all phases, we provide program management and project
management services.

Our Network Repeaters comprised approximately
87.0%, 88.9% and 84.2% of our net revenues for the fiscal years
ended March 31, 2000, March 30, 2001 and
March 29, 2002, respectively.

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In order to meet our customers delivery
requirements we need to carry significant amounts of inventory.
In addition, we need to provide a forecast and committed
delivery schedule to our contract manufacturer in advance of
receiving customer orders.

Sales and Marketing

We offer our products and services in the United
States and Canada through our direct sales force. Our
international sales efforts are conducted through a network of
agents and distributors, which are assisted by our direct sales
force. International sales accounted for 40.7%, 32.0%, and 39.2%
of our net revenues during our fiscal years ended March 31,
2000, March 30, 2001 and March 29, 2002, respectively. We
have provided additional information about the geographic
markets in which we operate in Note 1 to our Consolidated
Financial Statements contained in this report. During the fiscal
year ended March 31, 2000, sales to customers in Canada
totaled 11.0% of net revenues and sales to customers in Mexico
totaled 12.8% of net revenues. During the fiscal year ended
March 30, 2001, no country outside of the U.S. accounted
for more than 10.0% of net revenues. During the fiscal year
ended March 29, 2002, sales to customers in China totaled
15.7% of net revenues and sales to customers in Mexico totaled
14.5% of net revenues.

Our direct sales force works in conjunction with
our support personnel to assist current and potential customers
in identifying capacity and coverage goals. In addition, our
sales force assists customers in preparing a pro forma business
analysis comparing the customers initial deployment costs
and operating expenses using traditional wireless network
equipment against those associated with using our products and
services. Outside of our corporate headquarters, we currently
have sales personnel located in Atlanta, Dallas, and Chicago. We
also have established relationships with agents and distributors
located in Australia, Argentina, Brazil, Canada, Chile, China,
Colombia, Guatemala, Israel, Malaysia, Mexico, Uruguay and
Venezuela. As of March 29, 2002, six of our 39 employees
were engaged in sales and marketing.

In support of our sales efforts, we have
established a marketing organization that is responsible for the
branding and marketing of our products and services. Our
marketing efforts include participation in trade shows and trade
congresses, the sponsorship of a web site, advertising in trade
journals and publication of a periodic newsletter.

The market for wireless communications
infrastructure has been, and we believe will continue to be,
seasonal in nature. During the months of December, January and
February, demand for wireless equipment infrastructure from
wireless service providers in the northern hemisphere tends to
decline due to generally poor weather conditions.

Customers

Relatively few wireless service providers have
adopted CDMA wireless technology and those which have are
concentrated in portions of North America, Central America,
South America and Asia.

In the fiscal year ended March 31, 2000, ten
customers accounted for 69.7% of our net revenues, with PrimeCo,
Wireless Facilities, Inc. and ClearNet PCS accounting for 13.6%,
12.4% and 10.2%, respectively. In the fiscal year ended
March 30, 2001, ten customers accounted for 66.5% of our
net revenues, with Ubiquitel PCS accounting for 12.6%. In the
fiscal year ended March 29, 2002, ten customers accounted
for 74.4% of our net revenues, with Cellular South, Beijing
Telecom and Unefon accounting for 16.7%, 15.7% and 14.4%,
respectively. For information regarding revenues generated from
customers outside of the United States, see Note 1 to our
Consolidated Financial Statements.

Customer Service and Support

We provide a full range of post-sale customer
support, including a 24-hour hotline service to resolve
technical issues, field service inventory to support advance
replacement requirements, on-site field service engineer
support, in-house repair for in- and out-of-warranty products
and on-site training.

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Manufacturing

We contract with a third-party manufacturer to
manufacture some of our products. Our third-party manufacturer
is currently Sanmina Corporation. Our manufacturer assembles
modules for us, which we test for functionality prior to
assembly into finished products. We do not have a long-term
manufacturing contract with our contract manufacturer. We have
payment obligations that extend through September 2002 for units
previously purchased under a settlement agreement with our
manufacturer. Our ability to use this manufacturer is subject to
minimum order volumes. Any individual purchase order is
generally not cancelable by us unless the supplier fails to
deliver in conformance with the terms of the purchase order. We
believe that our third-party contract manufacturer has the
capability to support our demand for the foreseeable future.
Although we believe that we can obtain an alternate contract
manufacturer for our products if necessary, we cannot guarantee
that such a manufacturer can be obtained on short notice or that
our products could be manufactured by an alternative
manufacturer on satisfactory terms. Any of these problems could
damage relationships with current or prospective customers,
seriously harm our operating results and revenues in a given
period and impair our ability to generate future sales.

We rely on a sole source of supply for several of
our significant components, including antennas, power
amplifiers, power supplies, and battery back-up power systems.
Although we believe that we can obtain alternative sources of
supply for these components, we cannot guarantee that such
sources can be secured on short notice or that components will
be available from alternative sources on satisfactory terms. Any
of these problems could damage relationships with current or
prospective customers, seriously harm our operating results and
revenues in a given period and impair our ability to generate
future sales.

Research and Product Development

We plan to continue to develop and extend our
product offerings for the current CDMA market and future
generations of CDMA wireless standards, including the next
generation of wireless standards for high-speed data, which
includes third generation, or 3G, standards. Products which have
recently been developed or are currently under development
include:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 850MHz versions of RepeaterCell, our
    recently introduced next generation of CDMA Network Repeater. In
    addition, we are developing the capability to extend
    RepeaterCell to the requirements of emerging 3G CDMA
    standards, including the 2100 MHz band. Both of these
    products are in the planning stage of development. Significant
    development efforts will be required to complete these products.                                                                     
|
| |  | RepeaterLink, a fiber-optic communication link
    between our Network Repeaters and base stations. RepeaterLink
    converts RF signals to lightwaves and back to RF, allowing a
    Network Repeater to operate remotely at a substantial distance
    from a base station. RepeaterLink is advantageous when
    line-of-site for wireless communication between our Network
    Repeater and the base station is not feasible. This product has
    completed development, subject to testing.

As of March 29, 2002, eight of our
39 employees were engaged in research and product
development, including hardware and software engineering. Our
research and development expenses totaled $7.3 million,
$8.2 million and $5.5 million for the fiscal years
ended March 31, 2000, March 30, 2001 and
March 29, 2002, respectively.

Repeater Technologies, Network Repeater,
RepeaterHybrid Network, RepeaterCell, RepeaterPower,
RepeaterStar, RepeaterStarLite, RepeaterNet, RepeaterWeb and
RepeaterLink are trademarks or trade names of Repeater
Technologies, Inc. All other trademarks or trade names appearing
elsewhere in this report are the property of their respective
owners.

Competition

The wireless network equipment market is highly
competitive. The market for products that enhance wireless
coverage is characterized by rapidly changing technology,
evolving wireless industry standards and

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frequent new product introductions and
enhancements. Our ability to compete depends on many factors,
including:




| |   |                                   
| | - | ----------------------------------
| |  | continued new product development;
|
| |  | comprehensive service and support;
|
| |  | competitive pricing; and          
|
| |  | reliability.                      

The market for base stations, repeaters and
related products is highly competitive. We compete with large
infrastructure manufacturers, systems integrators, repeater
manufacturers and base station subsystem suppliers, as well as
new market entrants. Most of our current and potential
competitors have longer operating histories, larger installed
customer bases, substantially greater name recognition and more
financial, technical, manufacturing, marketing, sales,
distribution and other resources than we do. We may not be able
to compete successfully against current and future competitors,
including companies that develop and market new wireless
telecommunications products and services.

Many of our current and potential customers
require equipment financing to purchase our products. We do not
offer long-term equipment financing to our customers. If we
cannot assist in arranging long-term equipment financing for our
customers, we may lose sales and customers to competitors that
provide such financing. Additionally, if we decide to provide
our customers with long-term equipment financing in the future,
we could face credit risks, including slow payments or
non-payments from customers.

Current and potential competitors consist
primarily of major domestic and international companies that
offer coverage enhancement solutions based on their own
repeaters or base stations. Most of these companies have longer
operating histories, larger installed customer bases,
substantially greater name recognition and greater financial,
technical, manufacturing, marketing, sales and distribution
resources than we do. We also compete with the TDMA and GSM
product offerings from communications equipment providers and
expect that a number of them will develop competing data
communications products and technologies in the near future. Our
current and potential competitors can be divided into two
groups: base station manufacturers, such as Ericsson, Inc.,
Fujitsu Network Communication, Inc., Hyundai Electronics
Industries Co., Ltd., LG Information & Communications, Ltd.,
Lucent Technologies, Inc., Motorola, Inc., NEC Corporation,
Nokia Corporation, Nortel Networks Corp. and Samsung Electronics
Co., Ltd.; and wireless repeater manufacturers, such as Allen
Telecom Inc., Allgon AB, EMS Technologies, Inc. and Andrew
Corporation. We face actual and potential competition not only
from these established companies, but also from new companies
that may develop and market new wireless telecommunications
products and services.

Intellectual Property

We consider our technologies proprietary and seek
to protect our intellectual property rights. As of
March 29, 2002, we had four patents granted and five patent
applications pending. We have held these patents since November
1988, July 1990, February 1993 and September 2000, respectively.
One of our patent grants is based upon proprietary rights
originally obtained from Matthew P. Fuerter, a former vice
president of the Company. We consider this patent to be a key
differentiator for our products. This patent expires in February
2018. We are seeking patent protection outside of the United
States for this patent. We also have a technology license
agreement with Mr. Fuerter. For further information
regarding this technology license agreement, please see
Certain Relationships and Related Transactions.

While we believe that our patents will render it
more difficult for competitors to develop and market similar
products, our patents may be invalidated, circumvented, or
challenged. In addition, any pending or future patent
applications may not be issued with the scope we seek or at all.

We also rely on copyright and trade secret laws
for the protection of our proprietary software. Source code for
our proprietary software is protected as unpublished copyright
works and trade secrets. In addition, we generally enter into
confidentiality or licensing agreements with employees,
consultants, vendors, customers

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and licensees, and generally limit access to the
details of proprietary designs, software, documentation, and
other confidential information.


Notwithstanding our efforts to protect our
rights, it may be possible for a third party to copy or to
obtain and use our intellectual property without our
authorization. Although we are not currently engaged in any
legal proceedings concerning matters of infringement or
enforcement of intellectual property rights, we may have to
pursue litigation in the future to enforce our intellectual
property rights or to defend against claims of infringement.
Such litigation could result in substantial costs and diversion
of resources and could seriously harm our business, operating
results, and financial condition. In addition, others may
develop technologies superior to our technology, duplicate our
technology, or design around our patents.

Due to the competitive nature of the
telecommunications industry, particularly as it relates to
CDMA-based technology, any competitive advantage we may have
relies heavily upon protection of our intellectual property
rights. Because the legal standards relating to the validity,
enforceability and scope of protection of intellectual property
rights in our industry are uncertain and evolving, in the
future, we may be a party to litigation concerning the
intellectual property incorporated in our products. These
lawsuits, regardless of their outcome, would be time-consuming
and expensive to resolve and would divert management time and
attention. Any potential intellectual property litigation also
could force us to do one or more of the following:



| |   |                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | stop selling, incorporating or using our products
    that use the challenged intellectual property;                                                                                                  
|
| |  | obtain from the owner of the infringed
    intellectual property right a license to sell or use the
    relevant technology, which license may not be available on
    reasonable terms, or at all; or
|
| |  | redesign those products that use the challenged
    technology.                                                                                                                                       

If we are forced to take any of these actions,
our business may be harmed. Our insurance may not cover
potential claims of this type or may not be adequate to
indemnify us for all liability that may be imposed.

Government Regulation

In order for our products to be used in certain
jurisdictions, regulatory approval may be necessary. The delays
inherent in this regulatory approval process may cause the
rescheduling, postponement or cancellation of fulfillment of our
orders for products, which, in turn, may cause our customers to
reschedule, postpone or cancel orders for those products.

Employees

As of March 29, 2002, we employed
39 persons, consisting of eight in research and product
development, ten in operations, six in applications engineering,
customer service and post-sales support, six in sales and
marketing and nine in finance and administration. We also use
contract personnel, primarily for information technology support
and product development.

None of our employees are represented by a labor
union and we believe we have good relations with our employees.

Risks That Could Affect Future
Results

The factors discussed below are cautionary
statements that identify important factors that could cause
actual results to differ materially from those anticipated in
the forward-looking statements in this report.

We have incurred significant losses since we
began doing business, anticipate continuing losses, and may
never achieve or sustain profitability.

We have accumulated losses of $100.7 million
since we began doing business in 1983 through March 29,
2002, and we may never achieve or sustain profitability. We
incurred a net loss of $21.2 million for the year ended
March 29, 2002, a net loss of $23.6 million for the
year ended March 30, 2001, and a net loss of
$15.0 million for the year ended March 31, 2000. We
will continue to incur significant expenses, particularly

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research and product development and sales and
marketing expenses. We anticipate incurring net losses at least
through the fiscal year ending March 28, 2003. We will need
to generate significantly higher revenues to achieve
profitability and recoup our accumulated losses. We cannot be
certain that we will realize sufficient revenues to sustain our
business.


We will require additional capital in the
future which may not be available to us.

Cash used in operating activities for the year
ended March 29, 2002 was $17.4 million, as compared to
$21.3 million for the year ended March 30, 2001.
Although we have been successful in reducing our cash burn rate
gradually during the four consecutive quarters in the year ended
March 29, 2002, we have been unable to increase our
revenues. In an effort to sustain our business, we have reduced
our workforce by 17% in April 2001, 34% in October 2001 and an
additional 27% in March 2002. In addition, we have ceased
purchases for our older single-channel products, implemented a
sales promotion for our older single-channel products to reduce
our inventory and introduced our new dual-channel product, which
we started to ship during the three months ended March 29,
2002. We expect to increase the sales volume of our Network
Repeaters and realize higher margins on our new dual-channel
products. If these efforts prove to be insufficient, or if our
customers continue to defer new equipment purchases, we may be
forced to reduce our expenditures further by reducing our
purchase commitments, reducing capital expenditures, and
reducing other discretionary expenditures. Our failure to
increase the sales volume of our Network Repeaters, realize
higher margins on our new products or further reduce our
expenditures could have a material adverse effect on our ability
to continue as a going concern and to achieve our intended
business objectives.

We have had and expect to continue to have
negative cash flows from operations through December 2002. We
believe that our available cash reserves will not be sufficient
to fund operations and to meet our working capital needs and
anticipated capital expenditures after September 2002. We will
need additional financing through public or private debt or
equity financing to sustain our business and fund our operating
losses after this time.

If we raise additional funds through the issuance
of equity securities, the percentage ownership of our
stockholders will be reduced, stockholders will likely
experience additional dilution, and such equity securities may
have rights, preferences or privileges senior to those of the
holders of our common stock. If we raise additional funds
through the issuance of debt securities, those securities would
have rights, preferences and privileges senior to those of
holders of our common stock, and the terms of these debt
securities could impose restrictions on our operations. However,
there is no assurance that additional financing will be
available when needed, on favorable terms, or at all. Moreover,
if funding is insufficient at any time in the future, we may be
unable to develop or enhance our products or services, take
advantage of business opportunities or respond to competitive
pressures, any of which could materially harm our business.

If the strategic restructuring of our
organization is not effective, our financial results and
business could suffer.

In response to changes in industry and market
conditions we are restructuring, and may continue to
restructure, our activities to more strategically realign our
resources and improve our operational efficiency. Our
restructuring plan is based on certain assumptions regarding the
cost structure of our business and the nature and severity of
the current industry adjustment, which may not prove to be
accurate. Our restructuring plan has involved the implementation
of a number of initiatives to streamline our business and
improve operational efficiency. We cannot assure you that our
restructuring plan will result in sufficient cost reduction or
greater operational efficiency in light of current or future
capital markets and telecommunications industry conditions. We
also cannot assure you that we will not be required to refine,
expand or extend our restructuring plan, or that we will improve
our operational efficiency as a result of our restructuring
plan. In addition, we cannot assure you that we will be able to
successfully utilize our reduced workforce resources effectively
or that our management will be effective during our
restructuring. Current and additional restructuring actions may
result in further cash and/or non-cash charges, which could
adversely affect our business, results of operations and
financial condition. Finally, we may be the target of employment
litigation in connection with our restructuring and reductions
in workforce.

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We have deployed a limited number of
RepeaterHybrid Networks and we may not be able to gain broad
market acceptance of the RepeaterHybrid Network
concept.

Our RepeaterHybrid Networks have yet to gain
widespread industry acceptance and we have deployed them with
only a limited number of wireless service providers. If we fail
to significantly increase the deployment and market acceptance
of our products and RepeaterHybrid Networks as replacements for
traditional networks using only base stations, we may fail to
generate sufficient revenues to sustain our business.

Our quarterly revenues and operating results
may fluctuate significantly.

Our quarterly operating results have fluctuated
significantly in the past and are likely to do so in the future.
Factors that could cause our quarterly results to fluctuate
include, but are not limited to:



| |   |                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | general economic conditions and, in particular,
    conditions within our industry that affect demand for our
    products;                                                                                 
|
| |  | the reduction in the selling price of our
    products due to competitive pressures from base station
    manufacturers and the introduction of other competing repeater
    products;                      
|
| |  | customer responses to announcements of new
    products and product enhancements by competitors and the entry
    of new competitors into our markets;                                                      
|
| |  | the concentration of customer orders at the end
    of a quarter, which can result in products shipping in the
    following quarter due to capacity constraints faced by our
    contract manufacturer; and
|
| |  | any delay in our introduction of new products or
    product enhancements, particularly our new products for use in
    3G networks.                                                                        

If our operating results do not meet the
expectations of securities analysts and investors, our stock
price is likely to decline.

In the quarter ended December 29, 2000, we
began to experience a slowdown in the booking of orders from new
and existing customers and certain customers requested delays in
shipment of existing orders. To date we have experienced
postponements of approximately $10.0 million in orders that
were initially planned to be shipped within the last
18 months. Our customers may further delay or cancel these
orders without any repercussion or penalty. We have been unable
to book new orders sufficient to offset the effects of these
postponements. While the reasons for these trends are uncertain,
they may be attributable to an overall slowdown in the economy
and in the telecommunications industry in particular, reduced or
deferred capital expenditures by our customers, or a difficulty
by some customers in obtaining financing. These trends have
continued through March 29, 2002 and have adversely
affected our business, financial condition and results of
operations, as indicated by the reduction in our net revenues
for the year ended March 29, 2002 as compared to the year
ended March 29, 2002. If these trends continue further or
accelerate, our net revenues, business, financial condition and
results of operations would continue to be adversely affected.

Our lengthy and variable sales cycle makes it
difficult for us to predict if and when a sale will be made and
could lead to operating difficulties and cash flow
problems.

Our sales cycle, which is the period from the
generation of a sales lead until the recognition of revenues,
ranges from nine to 24 months, making it difficult to
forecast revenues and operating results. Our inability to
accurately predict the timing and magnitude of sales of our
products and services could cause a number of problems,
including, but not limited to:



| |   |                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | expending significant management efforts and
    incurring substantial sales and marketing expenses in a
    particular period that do not translate into orders during that
    period, or at all;
|
| |  | difficulties in meeting our cash flow
    requirements and obtaining credit because of delays in receiving
    orders; and                                                                         

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| |   |                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------
| |  | difficulties in meeting our customers
    product delivery requirements in the event many orders are
    received in a short period of time.

The problems resulting from our lengthy and
variable sales cycle could impede our growth, cause fluctuations
in our operating results and restrict our ability to take
advantage of new opportunities.

Certain existing contracts may not result in
revenues as large as previously disclosed.

In the past, we publicly announced the signing of
certain purchase contracts and orders with three customers with
announced estimated aggregate values through November 2002 of
approximately $50.0 million, $15.0 million, and
$3.0 million, respectively. However, these agreements have
no required minimum purchase amounts and can be terminated
without penalty. Accordingly, any estimates of total value of
these agreements are speculative. Furthermore, we may never
achieve the expected values or sales volume publicly disclosed.
While we continue to internally estimate specific customer sales
volumes for business planning purposes, none of our prior
publicly disclosed estimates should be regarded as purchase
commitments or indicative of our current estimates or
expectations. To date, we have only recognized revenues of
$11.0 million, $3.4 million and $1.1 million,
respectively, for these three customers under these agreements.

In addition, on September 6, 2001, we
announced an $11.0 million order from Capitel Group, Ltd.
of Beijing for China Unicom. On October 22, 2001, we
announced that the delivery of products against this order would
be extended for a significant length of time and will most
likely be in volumes substantially lower than originally
anticipated. To date, we have shipped $2.2 million worth of
products under this purchase order.

Due to uncertainties in production
forecasting, we may experience unexpected surpluses or shortages
of inventory.

Our contract with our manufacturer requires us to
provide a rolling six-month forecast for production each month.
The forecast for the first two months of the six-month forecast
are considered firm purchase orders. If we fail to accurately
predict our customers demand for our products, we may be
subject to shortages of certain products and surpluses of other
products. If we fail to have an adequate supply of inventory for
our products, we may be subject to cancellation of orders from
our customers for these products. In addition, if we have a
surplus of certain products, we may incur charges for excess or
obsolete inventory. For example, in fiscal 2001, our cost of
revenue included $2.4 million related to inventory
valuation allowance for excess and obsolete inventory. In
addition, during the year ended March 29, 2002, we recorded
$4.6 million in inventory valuation allowance, which was
comprised of accrual of $0.8 million for
lower-of-cost-or-market and $3.8 million for excess and
obsolete inventory.

Some of the components of our products may have
long lead times from the date a purchase order is placed with
the supplier to the date the components are delivered to our
contract manufacturer. In order to ensure an adequate supply of
these components, we may be required to purchase the components
ourselves and then resell them to our contract manufacturer to
meet our forecasted requirements. If we fail to accurately
predict the demand for these components, we may face shortages
and potentially lose sales, or alternatively incur charges for
excess or obsolete inventory.

A small number of customers account for a
substantial portion of our revenues and the loss of any of these
customers could harm our business.

Our customer base has been and may continue to be
concentrated with a small number of customers. The loss of any
of these customers, or the delay, reduction or cancellation of
orders by or shipments to any of these customers could hurt our
results and cause a decline in our stock price. In the fiscal
year ended March 31, 2000, ten customers accounted for
69.7% of our net revenues, with PrimeCo, Wireless Facilities,
Inc. and ClearNet PCS accounting for 13.6%, 12.4% and 10.2%,
respectively. In the fiscal year ended March 30, 2001,
66.5% of our net revenues were derived from ten customers, with
sales to one customer, UbiquiTel PCS, comprising 12.6%. In the
fiscal year ended March 29, 2002, ten customers accounted
for 74.4% of our net revenues, with Cellular South, Beijing
Telecom and Unefon accounting for 16.7%, 15.7% and 14.4%,
respectively.

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When our products have been fully deployed in a
customers network or a customers demands are
otherwise satisfied, we must replace that customers sales
with those of new customers in order to maintain our sales
volume.

We do not have any long-term contracts with any
of our customers. Our contracts generally do not contain minimum
purchase requirements and are terminable at any time without
penalty. We expect to continue to depend on a small number of
customers for a substantial portion of our revenues.

In addition, we face increased credit risks,
including slow payments or non-payments, due to the
concentration of our customer base.

If we are unable to obtain or maintain vendor
qualification with nationwide wireless network operators, our
ability to sell our products would be impaired and our revenues
would likely decline.

Many of our current and potential customers are
large major network operators or affiliates of nationwide
wireless network operators. In order to sell our products to
these affiliates, our products must be authorized for purchase
by the network operator. This authorization process can be both
costly and lengthy. If we do not maintain our status as a
qualified vendor or supplier, we will be unable to sell our
products to these network operators and their affiliates, and
our revenues will likely decline.

Competition from larger, more established
companies with greater resources could lead to price reductions,
loss of revenues and market share and could prevent us from
achieving profitability.

The market for base stations, repeaters and
related products is highly competitive. We compete with large
infrastructure manufacturers, systems integrators, repeater
manufacturers and base station subsystem suppliers, as well as
new market entrants. Most of our current and potential
competitors have longer operating histories, larger installed
customer bases, substantially greater name recognition and more
financial, technical, manufacturing, marketing, sales,
distribution and other resources than we do. We may not be able
to compete successfully against current and future competitors,
including companies that develop and market new wireless
telecommunications products and services.

We have experienced downward pressure on selling
prices of our single-channel products as a result of our
entering into volume sale agreements with some customers and
general competitive pressures as discussed above. We expect that
our selling prices for these products will continue to decline
for the foreseeable future. If we cannot offset declines in
selling prices by increasing our sales volumes, realizing higher
gross margins on our new products or reducing manufacturing
costs, our revenues or gross margins will decline. These
competitive pressures may also result in longer sales cycles and
loss of customers. If we fail to significantly increase our
sales of Network Repeaters and the deployment of RepeaterHybrid
Networks or to broaden our customer base, we may fail to
generate sufficient revenues to sustain our business.

A significant decrease in the cost of base
stations and their communication links would diminish one of our
competitive advantages.

Unlike our repeater products, current base
stations typically require an expensive communications link,
usually through a high capacity digital telephone connection, to
the network. In addition, base stations themselves are typically
larger and more expensive than repeaters. A decrease in the cost
of base stations and the communication links used to connect
base stations to the local telephone network, especially in less
populated areas, will diminish a cost saving that our customers
experience from using our products. If the cost of base stations
and their communication links decline, demand for our products
may decrease and we may have to lower our product prices or
experience a decline in orders. Either one of these results
could cause decreased revenues and margins.

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Our dependence on a contract manufacturer for
most of our products may diminish our ability to control the
quality and timing of delivery of our products.

We utilize a third-party contract manufacturer to
manufacture modules that are assembled into our products. There
are risks associated with our dependence on a contract
manufacturer, including the contract manufacturers control
of capacity allocation, labor relations, production quality and
other aspects of the manufacturing process. If our contract
manufacturer encounters any of these problems, our manufacturing
processes will be adversely affected and we may lose customers.

We do not have long-term supply contracts with
our contract manufacturer, and they are not obligated to supply
us with products for any specific period, in any specific
quantity or at any specific price, except as may be provided in
a particular purchase order. If we are unable to obtain our
products from our contract manufacturer on schedule, revenues
from the sale of those products may be delayed or lost, and our
reputation, relationships with customers and our business could
be harmed. In addition, if our production volumes are too low to
maintain existing purchase orders with our contract
manufacturer, we could incur significant expenses and experience
substantial disruption to our business. Although we believe that
we can obtain an alternate contract manufacturer for our
products if necessary, we cannot guarantee that such a
manufacturer can be obtained on short notice or that our
products could be manufactured by an alternative manufacturer on
satisfactory terms. Any of these problems could damage
relationships with current or prospective customers, seriously
harm our operating results and revenues in a given period and
impair our ability to generate future sales.

Our contract manufacturers reliance on a
limited number of component suppliers could lead to delays,
additional costs, problems with our customers and potential
customers and loss of revenues.

Our contract manufacturer currently utilizes one
or a small number of suppliers for each of the components of our
products. In particular, there are currently only a few
suppliers of high-power amplifiers, a critical component for a
Network Repeater that meets our quality standards. Our contract
manufacturer has no long-term contracts or arrangements with the
suppliers of components for our products that guarantee the
availability of these components. If for any reason a supplier
fails to meet quality or quantity requirements, or stops selling
components at commercially reasonable prices, or if a competitor
enters into an exclusive relationship with one of our suppliers,
we could experience significant production delays or cost
increases.

From time to time, our contract manufacturer may
be required to replace some of the components of our products
when the supplier of a particular component discontinues
production. While we do not generally maintain an inventory of
components, we may purchase a quantity of these discontinued
components to supply to our contract manufacturer until new
suppliers or substitute components can be found. We face the
risk that we may deplete this inventory of discontinued
components before finding adequate substitutes, which could
cause the loss of significant sales opportunities.
Alternatively, we may be left with surplus quantities of these
components, which could cause us to incur charges for excess
inventory. Although we believe that we can obtain alternative
sources of components, we cannot guarantee that such sources can
be secured on short notice or that components will be available
from alternative sources on satisfactory terms. Any of these
problems could damage relationships with current or prospective
customers, seriously harm our operating results and revenues in
a given period and impair our ability to generate future sales.

Our inability to provide long-term equipment
financing for our customers is a competitive disadvantage and
could result in a loss of sales.

Many of our current and potential customers
require equipment financing to purchase our products. We do not
offer long-term equipment financing to our customers. If we
cannot assist in arranging long-term equipment financing for our
customers, we may lose sales and customers to competitors that
provide such financing. Additionally, if we decide to provide
our customers with long-term equipment financing in the future,
we could face credit risks, including slow payments or
non-payments from customers.

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We have significant sales efforts in
international markets, which will subject us to additional
business risks.

A significant portion of our sales efforts has
been targeted to international service providers in Australia,
Canada, Mexico, South America, Central America, and Asia.
Conducting business in these areas subjects us to a number of
risks and uncertainties, including:



| |   |                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | inadequate protection of intellectual property in
    foreign countries;                                                                                                                                       
|
| |  | increased difficulty in collecting accounts;                                                                                                                                                                   
|
| |  | delays and expenses associated with tariffs and
    other trade barriers;                                                                                                                                      
|
| |  | difficulties and costs associated with complying
    with a wide variety of complex foreign laws and treaties;                                                                                                 
|
| |  | currency fluctuations, including a decrease in
    the value of foreign currencies relative to the U.S. dollar
    which could make our products less competitive against those of
    foreign competitors; and
|
| |  | political and economic instability.                                                                                                                                                                            

Any of the factors described above could impair
our ability to continue expanding into international markets and
could prevent us from increasing our revenues and achieving
profitability. We may establish contract manufacturing
operations in other countries which could further subject us to
the risks described above, particularly the difficulty of
protecting intellectual property rights.

We have developed a product line primarily
based on the CDMA standard and we may not succeed if CDMA is not
widely accepted.

We have concentrated our efforts on the
development and sale of products specific to CDMA technology.
CDMA is the newest wireless communications technology standard
and has yet to achieve the market penetration of other more
established digital standards, including TDMA and GSM. There are
currently a limited number of wireless service providers
utilizing CDMA-based equipment. These service providers are
concentrated in North America, Central America, South America
and Asia. If CDMA technology is not widely accepted by wireless
service providers, the demand for our products will not be as
large as we are anticipating. A decline in demand for our
current products could have a significant negative impact on our
results of operations. In addition, a decline in demand may
require us to develop new products compatible with other
wireless technology standards, which would cause us to
experience significant production delays and cost increases with
no assurance of new product acceptance.

Because our products are deployed in complex
networks, they may have errors or defects that we find only
after deployment, which, if not remedied, could harm our
business.

Our products are highly complex, designed to be
deployed in complicated networks and may contain undetected
defects, errors or failures. Although our products are tested
during manufacturing prior to deployment, they can only be fully
tested when deployed in commercial networks. Consequently, our
customers may discover errors after the products have been
deployed. The occurrence of any defects, errors or failures
could result in installation delays, product returns, diversion
of our resources, increased service and warranty costs, legal
actions by our customers, increased insurance costs and other
losses to us or to our customers or end users. For example, in
fiscal years 2001 and 2002, our cost of sales included
$1.9 million and $0.2 million, respectively, related
to warranty expense due to defects discovered in our products
after installation and operation in our customers
networks. Any of these occurrences could also result in the loss
of or delay in market acceptance of our products, which would
harm our business and adversely affect our operating results and
financial condition.

15



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We are dependent on licensed technology for
our products.

The receive diversity technology contained in our
products is licensed from one of our former executive officers.
We have held this perpetual license since May 1998. The license
agreement requires the timely payment of royalties in the form
of cash and shares of our common stock. These royalty payments
are non-refundable. Failure to honor the terms of the license
agreement could adversely affect our business. Our ability to
continue to deploy our existing products and to develop new
products incorporating this technology depends significantly
upon this license.

If we are unable to protect and enforce our
intellectual property rights, we may be unable to compete
effectively.

We regard substantial elements of our products,
such as receive diversity technology, component design
specifications, network management software and network
component optimization techniques, as proprietary and attempt to
protect them by relying on patent, trademark, service mark,
copyright and trade secret laws. We also rely on confidentiality
procedures and contractual provisions with our employees,
consultants, vendors and licensees to protect our intellectual
property. Despite these efforts, we may be unable to prevent
third parties from infringing upon or misappropriating our
intellectual property, which could harm our business.

As of March 29, 2002, we had four patents
granted and five patent applications pending. We have held these
patents since November 1988, July 1990, February 1993 and
September 2000, respectively. It is possible that no patents
will be issued from these pending applications or from future
patent applications. Moreover, our currently issued patents and
any patents issued in the future may not provide us with any
competitive advantages over, or may be challenged by, third
parties.

Effective patent, trademark, service mark,
copyright and trade secret protection may not be available in
some countries in which our products are distributed,
particularly countries within South America and Asia.
Furthermore, our competitors may independently develop similar
technologies that limit the value of our intellectual property
or design around patents issued to us.

Because legal standards relating to the
protection of intellectual property rights related to the
telecommunications industry are uncertain and evolving, we may
be subject to intellectual property rights disputes, causing us
to incur significant costs, diverting the time and attention of
our management and preventing us from selling our
products.

Due to the competitive nature of the
telecommunications industry, particularly as it relates to
CDMA-based technology, any competitive advantage we may have
relies heavily upon protection of our intellectual property
rights. Because the legal standards relating to the validity,
enforceability and scope of protection of intellectual property
rights in our industry are uncertain and evolving, in the
future, we may be a party to litigation concerning the
intellectual property incorporated in our products. These
lawsuits, regardless of their outcome, would be time-consuming
and expensive to resolve and would divert management time and
attention. Any potential intellectual property litigation also
could force us to do one or more of the following:



| |   |                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | stop selling, incorporating or using our products
    that use the challenged intellectual property;                                                                                                  
|
| |  | obtain from the owner of the infringed
    intellectual property right a license to sell or use the
    relevant technology, which license may not be available on
    reasonable terms, or at all; or
|
| |  | redesign those products that use the challenged
    technology.                                                                                                                                       

If we are forced to take any of these actions,
our business may be harmed. Our insurance may not cover
potential claims of this type or may not be adequate to
indemnify us for all liability that may be imposed.

Delays in new product development projects
could harm our business.

The market for our products is subject to
competition from other repeater manufacturers and base station
manufacturers. As a result, we must continue to develop new
products and enhancements to our existing products to remain
competitive. In particular, we must develop and bring to market
our products designed to

16



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address third generation, or 3G, wireless
networks. If we do not successfully develop new products and
enhancements in a timely manner, we may lose market acceptance
of our products and be unable to compete effectively with new
competitive products, which could harm our business.


If we lose key engineering personnel or are
unable to hire additional qualified engineering personnel, we
may not be successful.

Our future success largely depends on our ability
to attract and retain qualified engineering personnel. The
market for qualified engineering personnel in the
telecommunications industry is highly competitive and if we
cannot attract and retain these personnel, our ability to
compete and to grow our business would be significantly limited.
We may find it more difficult to attract or retain qualified
personnel as a result of our recent reductions in workforce and
restructuring.

We have engaged in acquisitions and may engage
in future acquisitions or strategic transactions that may
subject us to various operational and financial risks.

We have in the past and expect in the future to
acquire other businesses or technologies that complement our
products, expand the breadth of our product offerings, enhance
our technical capabilities, help secure critical sources of
supply, or that may otherwise offer growth opportunities. In
connection with acquisitions, we may incur operational,
financial and other risks, including:



| |   |                                                                                            
| | - | -------------------------------------------------------------------------------------------
| |  | difficulties in combining operations, personnel,
    technologies or products;             
|
| |  | unanticipated costs;                                                                       
|
| |  | risks associated with entering markets in which
    we have no or limited prior experience;
|
| |  | diversion of managements attention from our
    core business;                            
|
| |  | adverse effects on existing business
    relationships with suppliers and customers;       
|
| |  | issuing stock that would dilute our current
    stockholders percentage ownership;        
|
| |  | incurring debt; and                                                                        
|
| |  | assumption of liabilities.                                                                 

Our certificate of incorporation, bylaws and
share purchase rights plan, as well as provisions of Delaware
law, could discourage potential acquisitions of our company that
stockholders may consider favorable.

Certain provisions of our certificate of
incorporation, our bylaws and Delaware law, as well as our share
purchase rights plan, may discourage, delay or prevent a merger
or acquisition that stockholders may consider favorable. This
could have an adverse effect on the market price of our common
stock or prevent our stockholders from realizing a premium over
the market price for their shares of our common stock.

Control by certain stockholders will limit the
ability of other stockholders to influence the outcome of
matters requiring stockholder approval and could discourage
potential acquisitions of our company by third
parties.

We believe that our executive officers, directors
and entities affiliated with them, along with the current
holders of more than 5% of our common stock, in the aggregate,
beneficially own a majority of our common stock (including
shares issuable pursuant to options and warrants held by those
parties which are currently exercisable or exercisable within
60 days of May 15, 2002). These stockholders, if
acting together, would be able to exert a significant degree of
influence over our management and affairs and over matters
requiring approval by our stockholders, including the election
of our board of directors and the approval of mergers or other
business combination transactions. This concentration of
ownership could have the effect of delaying or preventing a
change in our control or otherwise discourage a potential
acquirer from attempting to obtain control of us, which in turn
could have an adverse effect on the market price of our common
stock or prevent our stockholders from realizing a premium over
the market price for their shares of our common stock.

17



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Our requested transfer to the Nasdaq SmallCap
Market or the delisting of our common stock due to our low stock
price will adversely affect the liquidity of our common
stock.

On February 14, 2002, Nasdaq advised us that
the bid price of our common stock had been less than the minimum
of $1.00 and the market value of our publicly-held stock had
been less than the minimum of $5,000,000 for 30 consecutive
trading days and that we would be provided 90 calendar
days, or until May 15, 2002, to regain compliance with
these required listing criteria. Our common stock did not meet
these criteria and on May 15, 2002, we applied for a
transfer to the Nasdaq SmallCap Market. Our application for
transfer is under review by Nasdaq and while it is under review,
our common stock has continued to be listed on the Nasdaq
National Market. If our application for transfer to the Nasdaq
SmallCap Market is rejected, our common stock could be delisted.

If our common stock were transferred to the
Nasdaq SmallCap Market or delisted, the liquidity of our common
stock could be adversely affected. Such transfer or delisting
could make trading our shares more difficult for investors,
increase trading spreads and adversely affect investors
perception of us and our prospects, any of which could lead to
declines in our share price. Transfer or delisting could also
make it more difficult for us to raise additional capital. We
would also incur additional costs under state blue sky laws to
sell equity if our common stock were transferred or delisted.

We are currently involved in litigation that
could divert managements time and attention and may be
time-consuming and expensive to defend.

On September 17, 2001, The Gwydion Company,
LLC and its members filed direct and stockholder derivative
lawsuits against us and certain of our current and former
directors and officers claiming breach of contract, fraud,
intentional and negligent misrepresentation, and breach of
fiduciary duty, and requesting damages and attorneys fees.
On January 10, 2002, our challenge to the shareholder
derivative lawsuit was sustained without leave to amend and on
January 17, 2002, the court entered judgment in favor of us
and against Gwydion and its members. The direct suit for breach
of contract and fraud remains pending. While we believe that the
plaintiffs direct claims are without merit and intend to
vigorously defend ourselves against them, we cannot predict the
ultimate outcome of the pending action.

On November 16, 2001, a purported
stockholder class action lawsuit was filed against us, certain
of our current and former directors and officers and certain
underwriters of our initial public offering of common stock.
This lawsuit purports to bring suit on behalf of all purchasers
of our common stock between August 8, 2000, the effective
date of our initial public offering, and December 6, 2000.
The plaintiffs allege, among other things, that our prospectus,
incorporated in our Registration Statement on Form S-1
filed with the Securities and Exchange Commission, was
materially false and misleading because it failed to disclose,
among other things, that certain underwriters allegedly
(i) solicited and received excessive and undisclosed
commissions from certain investors in exchange for which such
underwriters allocated to those investors substantial portions
of the shares issued in our initial public offering, and
(ii) entered into agreements with customers whereby the
underwriters agreed to allocate shares of our common stock to
those customers in our initial public offering in exchange for
which the customers agreed to purchase additional shares of our
common stock in the aftermarket at pre-determined prices. The
plaintiffs seek unspecified damages and other relief. We believe
that we have meritorious defenses and intend to vigorously
defend ourselves against these allegations.

In connection with these lawsuits, we expect to
incur substantial legal and other expenses. In addition, this
litigation could divert the efforts and attention of our
management. Such expenses and diversion of resources associated
with this litigation could seriously harm our business and
financial condition.

Variable plan accounting treatment of certain
outstanding stock options may have a significant adverse impact
on our stated expenses.

In November 2001, we extended an offer to our
eligible employees and directors to cancel stock options with
exercise prices greater than $0.30 per share and to grant
replacement stock options with an exercise price equal to the
quoted market price of our common stock at December 27,
2001, one day before the expiration of the offer. On
December 28, 2001, we granted replacement options to
purchase an aggregate of

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3,143,628 shares of our common stock at
$0.29 per share to eligible employees and directors who accepted
the offer in a one-for-one exchange for such cancelled stock
options. Each replacement option will vest monthly over one year
following the date of grant and will expire 18 months after
the date of grant. We will account for all such replacement
options, as well as eligible options to purchase an aggregate of
69,770 shares of common stock which were not exchanged,
under the variable accounting method and will revalue these
stock options at the end of each reporting period until the
options are exercised, forfeited, or expire unexercised; the
resulting charge will be recorded as compensation expense. In
the case of the unexchanged stock options to purchase
69,770 shares, the variable accounting treatment may be in
effect up to 10 years from the date of grant. The higher
the market value of our common stock, the greater the
compensation expense we will record. To date we have not
recorded any compensation expense under the variable accounting
method due to the low price of our common stock.





Item 2.     Properties

Our headquarters consist of approximately
40,000 square feet of space leased through
December 31, 2003, located in Sunnyvale, California. Our
products are primarily manufactured at our contract
manufacturers facilities located in San Jose, California
and Calgary, Alberta, Canada. Our primary research and
development operations are located at our headquarters in
Sunnyvale, California. We believe this facility will be adequate
to meet our requirements for the foreseeable future.




Item 3.     Legal
Proceedings

In November 1999, in connection with our
acquisition of substantially all of the assets of The Gwydion
Company, LLC, we issued 573,334 shares of our common stock
to the members of Gwydion, Harry Ayvazian and Gary Grimes. These
shares were to be held in an escrow account and subject to our
right of repurchase for $1.00 in the aggregate until certain
performance criteria were met. In May 2001, we filed an escrow
claim with Gwydion and the escrow agent to assert our right
under the Gwydion acquisition agreement to repurchase the
573,334 shares issued as consideration. Gwydion and its
members have disputed this claim and on September 17, 2001
filed direct and stockholder derivative lawsuits in the Superior
Court of the State of California for the County of Santa Clara
against us and Kenneth L. Kenitzer, Timothy A. Marcotte, Chris
L. Branscum, John E. Bosch, Bandel Carano, Richard G. Grey,
Perry M. LaForge and Alessandro A. Piol in their capacities as
our current and former directors and officers. We initially
reported these legal proceedings in our Quarterly Report on
Form 10-Q for the quarter ended September 28, 2001.

In the stockholder derivative action, the
plaintiffs alleged that, among other things, the defendants
(i) made untrue representations in connection with the
acquisition agreement, (ii) entered into the acquisition
agreement with no intention of committing the resources
necessary to the success of the Gwydion project, and
(iii) contributed to the decrease in value of our stock;
claimed fraud, intentional and negligent misrepresentation, and
breach of fiduciary duty; and requested damages and
attorneys fees. In the direct lawsuit, the plaintiffs
allege that, among other things, the defendants engaged in
conduct that precluded the plaintiffs from fulfilling their
obligations under the Gwydion acquisition agreement, claim
breach of contract and fraud, and request compensatory and
punitive and/or exemplary damages, costs and attorneys
fees. On January 10, 2002, our challenge to the stockholder
derivative lawsuit was sustained without leave to amend and on
January 17, 2002, the court entered judgment in favor of us
and against Gwydion and its members. The direct suit for breach
of contract and fraud remains pending. While we believe that the
plaintiffs direct claims are without merit and intend to
vigorously defend ourselves against them, we cannot predict the
ultimate outcome of the pending action.

On November 16, 2001, a purported
stockholder class action lawsuit was filed in the United States
District Court for the Southern District of New York against us,
Chris L. Branscum, Kenneth Kenitzer, Timothy Marcotte and
certain underwriters of our initial public offering of common
stock. This lawsuit purports to bring suit on behalf of all
purchasers of our common stock between August 8, 2000, the
effective date of our initial public offering, and
December 6, 2000. The plaintiffs allege, among other
things, that our prospectus, incorporated in our Registration
Statement on Form S-1 filed with the Securities and
Exchange Commission, was materially false and misleading because
it failed to disclose, among other things, that certain

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underwriters allegedly (i) solicited and
received excessive and undisclosed commissions from certain
investors in exchange for which such underwriters allocated to
those investors substantial portions of the shares issued in our
initial public offering, and (ii) entered into agreements
with customers whereby the underwriters agreed to allocate
shares of our common stock to those customers in our initial
public offering in exchange for which the customers agreed to
purchase additional shares of our common stock in the
aftermarket at pre-determined prices. As a result of the alleged
omissions and/or misrepresentations in our prospectus, the
plaintiffs claim violations of Sections 11, 12 and 15 of
the Securities Act of 1933, as amended (the 1933
Act), Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934, as amended (the 1934 Act), and
Rule 10b-5 promulgated thereunder, and seek unspecified
damages and other relief. We believe that we have meritorious
defenses and intend to vigorously defend ourselves against these
allegations.





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

No matters were submitted to a vote of security
holders, through the solicitation of proxies or otherwise,
during the fourth quarter of the fiscal year covered by this
report.




PART II




Item 5.     Market
for Registrants Common Equity and Related Stockholder
Matters

Market Information for Common Stock

Our common stock has traded on the Nasdaq
National Market since August 9, 2000 under the symbol
RPTR. The following table sets forth the high and
low sale prices reported on the Nasdaq National Market for the
periods indicated. The market price of our common stock has been
volatile. See Risks That Could Affect Future Results.

|                                      |                                                                   |      |   |       |  |  |   |      | 
|------------------------------------- | ----------------------------------------------------------------- | ---- | - | ----- |  |  | - | ---- | 
|                                      |                                                                   | High |   | Low  
|                                      |                                                                   |      |   |      
|Fiscal Year Ended March 29,
    2002: |                                                                   |      |   |       |  |  |   |     
|                                      | First quarter ended June 29, 2001                                 |      | $ | 1.40  |  |  | $ | 0.38 | 
|                                      | Second quarter ended September 28, 2001                           |      | $ | 0.57  |  |  | $ | 0.26 | 
|                                      | Third quarter ended December 28, 2001                             |      | $ | 0.44  |  |  | $ | 0.18 | 
|                                      | Fourth quarter ended March 29, 2002                               |      | $ | 0.37  |  |  | $ | 0.13 | 
|Fiscal Year Ended March 30,
    2001: |                                                                   |      |   |       |  |  |   |     
|                                      | Second quarter ended September 29, 2000
    (from August 9, 2000) |      | $ | 19.69 |  |  | $ | 9.00 | 
|                                      | Third quarter ended December 29, 2000                             |      | $ | 11.75 |  |  | $ | 1.70 | 
|                                      | Fourth quarter ended March 30, 2001                               |      | $ | 3.38  |  |  | $ | 0.94 | 

Stockholders

As of June 21, 2002, there were
approximately 181 record holders of our common stock.

Dividends

We have never paid or declared any dividends on
our common stock. We currently anticipate that we will retain
all future earnings for use in our business, and do not
anticipate paying or declaring any dividends in the foreseeable
future.

Equity Compensation Plan Information

Please see Equity Compensation Plan
Information in Item 12 of this report for certain
information regarding the Companys equity compensation
plans.

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Recent Sales of Unregistered
Securities

On March 12, 2002, the Company issued
9,560 shares of common stock to Matthew Fuerter in exchange
for proprietary rights obtained from Mr. Fuerter pursuant
to a license agreement entered into with Mr. Fuerter in May
1998. The shares were not registered under the Securities Act of
1933, as amended, in reliance on the exemption provided by
Section 4(2) thereunder for transactions by an issuer not
involving a public offering.

Use of Proceeds

On August 8, 2000, the Securities and
Exchange Commission declared effective our registration
statement on Form S-1 (No. 333-31266) relating to the
initial public offering of our common stock.

The net offering proceeds to us from our initial
public offering, after deducting the underwriting discounts and
commissions and offering expenses, were approximately
$42.3 million. The majority of the proceeds have been used
for expansion of sales, marketing and future development of our
products and for general corporate purposes, including working
capital. We intend to use the remaining proceeds to support our
operations and to provide working capital.

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|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data

The following selected financial data should be
read together with Managements Discussion and
Analysis of Financial Condition and Results of Operations
and the consolidated financial statements, including the related
notes, found elsewhere in this report. The consolidated
statement of operations data for the fiscal years ended
March 31, 2000, March 30, 2001 and March 29, 2002
and the consolidated balance sheet data as of March 30,
2001 and March 29, 2002 are derived from the audited
consolidated financial statements of Repeater Technologies, Inc.
included elsewhere in this report, which have been audited by
PricewaterhouseCoopers LLP, independent accountants. The
consolidated statement of operations data for the years ended
March 27, 1998 and March 26, 1999 and the consolidated
balance sheet data as of March 27, 1998, March 26,
1999 and March 31, 2000 have been derived from audited
consolidated financial statements not included in this report.
Our fiscal year ends on the last Friday in March.

|                                                                             |                                     |                                       |         |           |        |           |         |           |        |           |         |       |        |   |         |       |        |   |         |       |        | 
|---------------------------------------------------------------------------- | ----------------------------------- | ------------------------------------- | ------- | --------- | ------ | --------- | ------- | --------- | ------ | --------- | ------- | ----- | ------ | - | ------- | ----- | ------ | - | ------- | ----- | ------ | 
|                                                                             |                                     |                                      
|                                                                             |                                     | Years Ended                          
|                                                                             |                                     |                                      
|                                                                             |                                     | March 27,                             |         | March 26, |        | March 31, |         | March 30, |        | March 29,
|                                                                             |                                     | 1998                                  |         | 1999      |        | 2000      |         | 2001      |        | 2002     
|                                                                             |                                     |                                       |         |           |        |           |         |           |        |          
|                                                                             |                                     |                                      
|                                                                             |                                     | (in thousands, except per share data)
|Consolidated Statement of Operations
    Data:                               |                                     |                                       |         |           |        |           |         |           |        |           |         |       |        |   |         |       |        |   |         |      
|Net revenues                                                                 |                                     | $                                     | 7,770   |           |        | $         | 9,612   |           |        | $         | 16,953  |       |        | $ | 21,990  |       |        | $ | 13,914  |      
|Cost of revenues                                                             |                                     |                                       | 8,807   |           |        |           | 8,883   |           |        |           | 12,145  |       |        |   | 20,664  |       |        |   | 18,687  |      
|                                                                             |                                     |                                       |         |           |        |           |         |           |        |           |         |       |        |   |         |       |        |   |         |      
|Gross profit (loss)                                                          |                                     |                                       | (1,037  | )         |        |           | 729     |           |        |           | 4,808   |       |        |   | 1,326   |       |        |   | (4,773  | )    
|                                                                             |                                     |                                       |         |           |        |           |         |           |        |           |         |       |        |   |         |       |        |   |         |      
|Operating expenses:                                                          |                                     |                                       |         |           |        |           |         |           |        |           |         |       |        |   |         |       |        |   |         |      
|                                                                             | Research and development            |                                       |         | 6,214     |        |           |         | 4,258     |        |           |         | 7,349 |        |   |         | 8,175 |        |   |         | 5,547 |       
|                                                                             | Sales and marketing                 |                                       |         | 3,936     |        |           |         | 4,514     |        |           |         | 7,075 |        |   |         | 9,112 |        |   |         | 6,078 |       
|                                                                             | General and administrative          |                                       |         | 1,520     |        |           |         | 2,227     |        |           |         | 2,997 |        |   |         | 4,821 |        |   |         | 4,820 |       
|                                                                             | In-process research and development |                                       |         |          |        |           |         |          |        |           |         | 885   |        |   |         |      |        |   |         |      |       
|                                                                             |                                     |                                       |         |           |        |           |         |           |        |           |         |       |        |   |         |       |        |   |         |      
|                                                                             |                                     | Total operating expenses              |         |           | 11,670 |           |         |           | 10,999 |           |         |       | 18,306 |   |         |       | 22,108 |   |         |       | 16,445 | 
|                                                                             |                                     |                                       |         |           |        |           |         |           |        |           |         |       |        |   |         |       |        |   |         |      
|Loss from operations                                                         |                                     |                                       | (12,707 | )         |        |           | (10,270 | )         |        |           | (13,498 | )     |        |   | (20,782 | )     |        |   | (21,218 | )    
|Other income (expense), net                                                  |                                     |                                       | 79      |           |        |           | (300    | )         |        |           | (1,542  | )     |        |   | (2,865  | )     |        |   | 42      |      
|                                                                             |                                     |                                       |         |           |        |           |         |           |        |           |         |       |        |   |         |       |        |   |         |      
|Net loss                                                                     |                                     | $                                     | (12,628 | )         |        | $         | (10,570 | )         |        | $         | (15,040 | )     |        | $ | (23,647 | )     |        | $ | (21,176 | )    
|                                                                             |                                     |                                       |         |           |        |           |         |           |        |           |         |       |        |   |         |       |        |   |         |      
|Net loss per common share  basic and
    diluted                            |                                     | $                                     | (5.31   | )         |        | $         | (4.47   | )         |        | $         | (6.00   | )     |        | $ | (1.53   | )     |        | $ | (0.92   | )    
|                                                                             |                                     |                                       |         |           |        |           |         |           |        |           |         |       |        |   |         |       |        |   |         |      
|Shares used in net loss per common share
    calculation  basic and diluted |                                     |                                       | 2,376   |           |        |           | 2,367   |           |        |           | 2,508   |       |        |   | 15,495  |       |        |   | 23,023  |      
|                                                                             |                                     |                                       |         |           |        |           |         |           |        |           |         |       |        |   |         |       |        |   |         |      

|                                     |  |                |        |           |  |           |        |           |  |           |         |   |  |   |        |  |  |   |        | 
|------------------------------------ |  | -------------- | ------ | --------- |  | --------- | ------ | --------- |  | --------- | ------- | - |  | - | ------ |  |  | - | ------ | 
|                                     |  |               
|                                     |  | As of         
|                                     |  |               
|                                     |  | March 27,      |        | March 26, |  | March 31, |        | March 30, |  | March 29,
|                                     |  | 1998           |        | 1999      |  | 2000      |        | 2001      |  | 2002     
|                                     |  |                |        |           |  |           |        |           |  |          
|                                     |  |               
|                                     |  | (in thousands)
|Consolidated Balance Sheet Data:     |  |                |        |           |  |           |        |           |  |           |         |   |  |   |        |  |  |   |        | 
|Cash and cash equivalents            |  | $              | 8,102  |           |  | $         | 10,358 |           |  | $         | 4,823   |   |  | $ | 26,084 |  |  | $ | 5,250  | 
|Working capital                      |  |                | 7,356  |           |  |           | 11,579 |           |  |           | 4,641   |   |  |   | 26,196 |  |  |   | 5,745  | 
|Total assets                         |  |                | 13,787 |           |  |           | 17,202 |           |  |           | 16,217  |   |  |   | 42,886 |  |  |   | 15,514 | 
|Long-term obligations                |  |                | 665    |           |  |           | 501    |           |  |           | 3,585   |   |  |   | 141    |  |  |   |       | 
|Convertible subordinated debentures  |  |                |       |           |  |           | 15,000 |           |  |           | 15,000  |   |  |   |       |  |  |   |       | 
|Total stockholders equity (deficit) |  |                | 8,639  |           |  |           | (1,643 | )         |  |           | (11,604 | ) |  |   | 29,872 |  |  |   | 8,922  | 

22



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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis
    of Financial Condition and Results of Operations

You should read the following discussion and
analysis in conjunction with Selected Financial Data
and our consolidated financial statements and notes included
elsewhere in this report. References to year ended
or year ending refer to our fiscal year, which ends
on the last Friday in March.

Overview

We develop, market and sell wireless network
equipment primarily for CDMA-based wireless communications
networks. We provide cost-effective, high-quality products for
use in suburban and rural areas, urban areas and inside office
buildings and other coverage-limited structures. Our products
have been deployed with over 70 CDMA wireless service providers
in more than ten countries. International sales accounted for
approximately 40.7%, 32.0% and 39.2% of net revenues for the
years ended March 31, 2000, March 30, 2001 and
March 29, 2002, respectively.

From our inception in 1983 through our year ended
March 31, 1996, we were primarily focused on providing
microwave frequency repeaters for long-distance
telecommunications applications and cellular repeaters for
non-CDMA-based wireless communications applications.

Beginning in our year ended March 31, 1997,
we changed our strategic focus and re-directed our resources to
the development and marketing of repeaters for wireless networks
based on the CDMA digital standard. This wireless standard
offered us the opportunity to develop a new type of repeater,
which we call our Network Repeater. In conjunction with CDMA
base stations, our Network Repeater enables wireless service
providers to deploy or extend CDMA wireless networks in
non-urban areas at a significantly reduced cost. CDMA technology
is not as widely deployed, and the customer base for CDMA-based
products is not as broad, as compared to other digital
standards. Our Network Repeaters, along with the associated
network management system, are designed specifically to operate
as an integrated network element within a CDMA wireless network,
extending the coverage area of a CDMA base station without
compromising the quality of the wireless service. We have
licensed a portion of the technology for our CDMA-based
repeaters from one of our former executives. Our ability to
continue to deploy our existing products and to develop new
products depends significantly upon this license. We shipped our
first Network Repeaters for CDMA wireless networks in May 1997.

We contract with a third-party manufacturer to
manufacture some of our products. Our third-party manufacturer
is currently Sanmina Corporation. Our manufacturer assembles
modules for us, which we test for functionality prior to
assembly into finished products. We do not have a long-term
manufacturing contract with our contract manufacturer. We have
payment obligations that extend through September 2002 for units
previously purchased under a settlement agreement with our
manufacturer. Our ability to use this manufacturer is subject to
minimum order volumes. Any individual purchase order is
generally not cancelable by us unless the supplier fails to
deliver in conformance with the terms of the purchase order. We
believe that our third-party contract manufacturer has the
capability to support our demand for the foreseeable future.
Although we believe that we can obtain an alternate contract
manufacturer for our products if necessary, we cannot guarantee
that such a manufacturer can be obtained on short notice or that
our products could be manufactured by an alternative
manufacturer on satisfactory terms. Any of these problems could
damage relationships with current or prospective customers,
seriously harm our operating results and revenues in a given
period and impair our ability to generate future sales.

We rely on a sole source of supply for several of
our significant components, including antennas, power
amplifiers, power supplies, and battery back-up power systems.
Although we believe that we can obtain alternative sources of
supply for these components, we cannot guarantee that such
sources can be secured on short notice or that components will
be available from alternative sources on satisfactory terms. Any
of these problems could damage relationships with current or
prospective customers, seriously harm our operating results and
revenues in a given period and impair our ability to generate
future sales.

While we expect to realize significant cost
savings from outsourcing our manufacturing, we will also face
significant risks. These risks include reduced ability to
control the manufacturing and production quality

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processes, the risk that we may be unable to
procure products because our competitors have entered into
exclusive relationships with key suppliers, the risk associated
with a requirement to commit to minimum purchases, increased
risk of excess inventory due to customer demand uncertainties
and a dependence on a small number of suppliers. During the year
ended March 29, 2002, we recorded $4.6 million in
inventory valuation allowance, which was comprised of accrual of
$0.8 million for lower-of-cost-or-market and
$3.8 million for excess and obsolete inventory.


In November 1999, in connection with our
acquisition of substantially all of the assets of The Gwydion
Company, LLC (Gwydion), we issued
573,334 shares of our common stock to the members of
Gwydion. These shares were to be held in an escrow account and
subject to our right of repurchase for $1.00 in the aggregate
until certain performance criteria were met. We revalued these
shares at the end of each reporting period until April 20,
2001, at which time we entered into an agreement to sell
substantially all of the assets of the Gwydion development
project. Total compensation expense recorded related to these
shares was $579,000 in the aggregate. The consideration received
for the sale was approximately $969,000 in cash. We recorded a
gain on sale of approximately $357,000 in the three months ended
June 29, 2001 in relation to the sale of substantially all
of the assets of the Gwydion development project. In May 2001,
we filed an escrow claim with Gwydion and the escrow agent to
assert our right under the Gwydion acquisition agreement to
repurchase the 573,334 shares issued as consideration.
Gwydion and its members have disputed this claim and on
September 17, 2001 filed direct and stockholder derivative
lawsuits against us and certain of our current and former
directors and officers claiming breach of contract, fraud,
intentional and negligent misrepresentation, and breach of
fiduciary duty, and requesting damages and attorneys fees.
On January 10, 2002, our challenge to the stockholder
derivative lawsuit was sustained without leave to amend and on
January 17, 2002, the court entered judgment in favor of us
and against Gwydion and its members. The direct suit for breach
of contract and fraud remains pending. While we believe that the
plaintiffs direct claims are without merit and intend to
vigorously defend ourselves against them, we cannot predict the
ultimate outcome of the pending action.

In April 2001, we implemented a workforce
reduction of 17 employees. The total cost incurred in
relation to this workforce reduction was approximately $206,000,
which has been recorded as payroll expense during the three
months ended June 29, 2001. On October 12, 2001, we
implemented a workforce reduction of 28 employees. The
total cost incurred in relation to this workforce reduction was
approximately $128,000, which has been recorded as payroll
expense during the three months ended December 28, 2001. We
will continue to adjust our sales, marketing, engineering,
service and support, manufacturing and administrative expenses
to reflect our anticipated business volume. In addition, we
further reduced our workforce by 27% in March 2002, to sustain
our operations and align our resources with current market
conditions. The total cost incurred in relation to this
workforce reduction was approximately $160,000.

On October 22, 2001, we announced that the
delivery of products against an order worth $11.0 million
by our distributor in China would be extended for a significant
length of time and will most likely be in volumes substantially
lower than originally anticipated. To date, we have shipped
$2.2 million worth of products against the
$11.0 million order. We are expecting that the order from
our distributor will ultimately be for substantially less than
$11.0 million and the delivery schedule will be extended
for a long period of time. We had placed a $5.6 million
purchase order with our contract manufacturer in relation to the
order received from our distributor in China. We have
subsequently cancelled a portion of this order. At
March 29, 2002, we had $2.9 million in inventory in
relation to this purchase order.

Since our inception, we have used stock option
programs for employees as compensation to attract strong
business and technical talent. Stock-based compensation consists
of the difference between the deemed fair market value of stock
subject to stock options and the exercise price of these
options. This difference is being amortized on an accelerated
basis over the vesting period of the grants, generally four
years. For the years ended March 31, 2000, March 30,
2001 and March 29, 2002, we recorded $2.5 million,
$2.3 million and $38,000, respectively, of stock-based
compensation expense in connection with options granted to
employees and consultants.

On August 8, 2001, our board of directors
approved the adoption of a Share Purchase Rights Plan. The
description and terms of the Rights are set forth in a Rights
Agreement, dated as of August 9, 2001, entered

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into between the Company and U.S. Stock Transfer
Corporation, as rights agent, filed as an exhibit to the
Companys Form 10-Q for the quarter ended
June 29, 2001. The Rights have certain anti-takeover
effects. The Rights will cause substantial dilution to a person
or group that attempts to acquire the Company on terms not
approved by our board of directors.


In November 2001, the Company extended an offer
to its eligible employees and directors to cancel stock options
with exercise prices greater than $0.30 per share and to grant
replacement stock options with an exercise price equal to the
quoted market price of the Companys common stock at
December 27, 2001, one day before the expiration of the
offer. On December 28, 2001, the Company granted
replacement options to purchase an aggregate of 3,143,628 shares
of its common stock at $0.29 per share to eligible employees and
directors who accepted the offer in a one-for-one exchange for
such cancelled stock options. Each replacement option will vest
monthly over one year following the date of grant and will
expire 18 months after the date of grant. The Company will
account for all such replacement options, as well as eligible
options to purchase an aggregate of 69,770 shares of common
stock which were not exchanged, under the variable accounting
method and will revalue these stock options at the end of each
reporting period until the options are exercised, forfeited, or
expire unexercised; the resulting charge will be recorded as
compensation expense. The higher the market value of the
Companys common stock, the greater the compensation
expense will be. To date we have not recognized any compensation
expense in relation to this stock option exchange.

Net Revenues.Our
net revenues are derived primarily from products based on the
CDMA standard, including our Network Repeaters. In addition, we
sell complementary equipment for these products, including
battery back-up systems, antennas and network management
software. We also provide training, installation support, design
and implementation services to our customers on a
fee-for-service basis.

In the past, we publicly announced the signing of
certain purchase contracts and orders with three customers with
announced estimated aggregate values through November 2002 of
approximately $50.0 million, $15.0 million, and
$3.0 million, respectively. However, these agreements have
no required minimum purchase amounts and can be terminated
without penalty. Accordingly, any estimates of total value of
these agreements are speculative. To date, we have only
recognized revenues of $11.0 million, $3.4 million and
$1.1 million, respectively, for these three customers under
these agreements.

In addition, on September 6, 2001, we
announced an $11.0 million order from Capitel Group, Ltd.
of Beijing for China Unicom. On October 22, 2001, we
announced that the delivery of products against this order would
be extended for a significant length of time and will most
likely be in volumes substantially lower than originally
anticipated. To date, we have shipped $2.2 million in products
under this purchase order.

In the quarter ended December 29, 2000, we
began to experience a slowdown in the booking of orders from new
and existing customers and certain customers requested delays in
shipment of existing orders. To date we have experienced
postponements of approximately $10.0 million in orders that
were initially planned to be shipped within the last
18 months. Our customers may further delay or cancel these
orders without any repercussion or penalty. We have been unable
to book new orders sufficient to offset the effects of these
postponements. While the reasons for these trends are uncertain,
they may be attributable to an overall slowdown in the economy
and in the telecommunications industry in particular, reduced or
deferred capital expenditures by our customers, or a difficulty
by some customers in obtaining financing. These trends have
continued through March 29, 2002 and have adversely
affected our business, financial condition and results of
operations, as indicated by the reduction in our net revenues
for the year ended March 29, 2002 as compared to the year
ended March 29, 2002. If these trends continue further or
accelerate, our net revenues, business, financial condition and
results of operations would continue to be adversely affected.

We have experienced downward pressure on selling
prices of our single-channel products as a result of our
entering into volume sale agreements with some customers and
general competitive pressures. We expect that our selling prices
for these products will continue to decline for the foreseeable
future. If we cannot offset declines in selling prices by
increasing our sales volumes, realizing higher gross margins on
our new products or reducing manufacturing costs, our revenues
or gross margins will decline.

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We believe that the introduction and sale of our
new dual-channel Network Repeater product should help generate
customer interest and assist in reversing this trend in
declining orders and revenues. While we have shipped the new
dual-channel Network Repeater during the quarter ending
June 28, 2002, we have not received orders sufficient to
reverse this trend of declining revenues in the quarter ending
June 28, 2002.

We have experienced and expect to continue to
experience significant fluctuations in our quarterly net
revenues as a result of our long and variable sales cycle.
Historically, our sales cycle, which is the period from the time
a sales lead is generated until the recognition of revenue from
that lead, has averaged nine to 24 months. The variability
and length of our sales cycle is influenced by a number of
factors, including:



| |   |                                                                                          
| | - | -----------------------------------------------------------------------------------------
| |  | our customers deployment schedules;                                                     
|
| |  | our customers access to financing for the
    purchase of our products;                 
|
| |  | the need to design networks to incorporate our
    products;                             
|
| |  | the need to demonstrate our products before
    purchase;                                
|
| |  | the manufacturing lead times for our products; and                                       
|
| |  | our inventory levels for the specific product
    configuration ordered by our customers.

As noted in our comparative results discussion,
our customer base has been and may continue to be concentrated
with a small number of customers.

If we fail to significantly increase our sales of
Network Repeaters and the deployment of RepeaterHybrid Networks
or to broaden our customer base, we may fail to generate
sufficient revenues to sustain our business.

Cost of Revenues.Our cost of revenues consists of the
costs of the various components used to assemble our products,
the third-party charges to assemble and test the products, the
overhead cost of the operations departments, inventory valuation
allowance, the direct costs of network design services we sell
to our customers and the cost of providing customer service,
including warranty and repair charges. Our components are
currently obtained from a small number of suppliers and contract
manufacturers. Several of these suppliers are either
single-source or sole-source suppliers, which could limit our
ability to achieve lower prices from these suppliers and could
lead to delays and interruption in supply.

Gross Profit.Our
gross profit is affected by the level of demand for our products
and services, new product introductions by us and our
competitors, and the competitive pressures and costs of the
various components and production services provided by our
vendors. If we are unable to offset our expected decline in
selling prices with lower unit costs, our gross profits may
decline. Additionally, as part of volume and other sales
agreements, we sell our products at a reduced margin to certain
customers. If sales to these customers represent an increased
portion of sales in any quarter, we may experience a reduction
in our gross margins. Warranty reserve, inventory valuation
allowance and similar charges also have a significant effect on
gross profit in any one particular year or quarter.

Operating Expenses.Research and development expenses
consist primarily of expenses incurred in the design and
development of our products and our proprietary technology.
These expenses include the salaries and associated overhead
expenditures for our engineers and technicians, materials for
the production of prototypes and expenses for various
consultants. We expect to incur significant expenses in the
development of our next generation of products to serve the
emerging high-speed wireless markets.

Sales and marketing expenses consist primarily of
salaries, commissions, consulting fees, trade show expenses,
travel expenses, advertising, direct marketing expenses and
associated overhead expenses. We must maintain significant
levels of sales and marketing expenses so that we may enter new
markets or introduce new products in order to generate
sufficient revenues to sustain our business.

General and administrative expenses consist
primarily of expenses for finance, corporate management, general
office administration, insurance, legal, accounting and other
professional fees.

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In connection with the acquisition of Gwydion, we
recorded an in-process technology charge of $0.9 million
for the year ended March 31, 2000 and we issued 573,334
shares subject to our right of repurchase until certain
performance criteria were met. These shares were held in an
escrow account and subject to our right of repurchase under
certain conditions. We revalued these shares at the end of each
reporting period until April 20, 2001, at which time we
entered into an agreement to sell substantially all of the
assets of the Gwydion development project. In connection with
this contingent consideration, we recognized a research and
development expense of $1.9 million during the year ended
March 31, 2000. During the year ended March 30, 2001,
we recorded a net credit to research and development expense of
$1.4 million under this arrangement.

During the year ended March 29, 2002, we
recorded $0.1 in research and development expense under this
arrangement. Total compensation expense recorded related to
these shares was $579,000 in the aggregate.

Stock-based compensation consists of the
difference between the deemed fair market value of stock subject
to stock options and the exercise price of these options. This
difference is being amortized over the vesting period of the
options, generally four years. For the years ended
March 31, 2000, March 30, 2001 and March 29,
2002, we recorded $2.5 million, $2.3 million and
$38,000, respectively, of stock-based compensation expense in
connection with options granted to employees and consultants.
The portion included in operating expenses was
$1.9 million, $1.7 million and $0.6 million,
respectively.

Loss from Operations.We have incurred substantial losses
since our inception and, as of March 29, 2002, had an
accumulated deficit of approximately $100.7 million. We
expect to continue to incur substantial operating losses for the
fiscal year ending March 28, 2003 and we may never achieve
or sustain profitability.

During our past three fiscal years, we have not
achieved profitability on a quarterly or annual basis. Because
we need to continue to invest significant financial resources in
our sales and marketing efforts and developing our products and
new technology, we expect to continue to incur losses at least
through the fiscal year ending March 28, 2003. We will need
to generate significantly higher revenues in order to support
our operating expenses and to achieve and maintain profitability.

Other Income and (Expense), Net.Other income and (expense), net
consists primarily of interest income earned on balances held in
our interest-bearing accounts, offset by interest expense on our
convertible subordinated debentures and promissory notes and
non-cash interest expense related to the beneficial conversion
feature and fair value of warrants issued in connection with our
convertible subordinated debentures.

Significant Accounting Policies

We prepare our financial statements in conformity
with accounting principles generally accepted in the United
States of America. As such, we are required to make certain
estimates, judgments and assumptions that we believe are
reasonable based upon the information available. These
estimates, judgments and assumptions affect the reported amounts
of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the periods presented. The significant accounting
policies which we believe are the most critical to aid in fully
understanding and evaluating our reported financial results
include the following:

Revenue Recognition.The Company recognizes revenue in
accordance with SEC Staff Accounting Bulletin No. 101,
Revenue Recognition in Financial Statements (SAB 101), as
amended by SAB 101A and SAB 101B. SAB 101
requires that four basic criteria must be met before revenue can
be recognized: (1) persuasive evidence of an arrangement
exists, generally in the form of a contract or a purchase order;
(2) delivery has occurred or services have been rendered;
(3) the fee is fixed and determinable; and
(4) collectibility is reasonably assured.

Revenues for products and complementary equipment
is recognized upon shipment or delivery to the customer,
depending upon the terms of the sale, where there is a purchase
order or a sales agreement and collectibility of the resulting
receivable is probable. Where a purchase order or a sales
agreement contains a customer acceptance clause, we defer any
recognition of revenue until the acceptance criteria have been
met.

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Revenues for training, installation support,
design and implementation services are recognized when these
services are performed. When warranty and post-contract customer
support obligations exist beyond one year, the related revenue
is deferred and is recognized ratably over the term of the
arrangement.

Revenues generated from certain foreign countries
are derived from sales to distributors. The Company does not
grant return rights, exchange rights or price protection rights.
Payment terms are on average 60 days after invoice and the
Company usually requires an irrevocable letter of credit, a down
payment or credit insurance. Revenue from distributors is
recognized upon shipment or delivery to the distributor,
depending on sales terms.

The Companys sales agents act strictly as
sales representatives and receive commission which is recorded
in sales and marketing expenses. The Company invoices the end
user directly and revenue is recognized upon shipment or
delivery to the end-user, depending upon the terms of the sale.

At the time of sale, we provide for the estimated
cost of meeting product warranty and hotline technical support.
When warranty and post-contract customer support obligations
exist beyond one year, the related revenue is deferred and
recognized ratably over the term of the arrangement.

The accounting rules related to revenue
recognition are complex and are affected by interpretations of
the rules and an understanding of industry practices, both of
which are subject to change. Consequently, management must make
significant judgments, including those with respect to evidence
of an arrangement and collectibility of receivables. The
determinations that we make can materially impact the timing of
recognition of revenues.

Inventory Valuation Allowance.We value our inventory at the lower of
the actual cost to purchase and/or manufacture the inventory or
the current estimated market value of the inventory. We
regularly review inventory quantities on hand and record an
inventory valuation allowance for excess and obsolete inventory
based primarily on our estimated forecast of product demand and
production requirements for the next twelve months. Our products
require a considerable amount of lead-time for production and we
may run into inventory overages due to our inability to cancel
production orders from our contract manufacturer. For example,
in fiscal 2001, our cost of revenue included $2.4 million
related to inventory valuation allowance for excess and obsolete
inventory. In addition, during the year ended March 29,
2002, we recorded $4.6 million in inventory valuation
allowance which was comprised of accrual of $0.8 million
for lower-of-cost-or-market and $3.8 million for excess and
obsolete inventory. Additionally, our estimates of future
product demand may prove to be inaccurate, in which case we may
have understated or overstated the allowance required for excess
and obsolete inventory. In the future, if our inventory is
determined to be overvalued, we would be required to recognize
such costs in our cost of goods sold at the time of such
determination. Likewise, if our inventory is determined to be
undervalued, we may have over-reported our costs of goods sold
in previous periods and would be required to recognize such
additional operating income at the time of sale. Therefore,
although we make every effort to ensure the accuracy of our
forecasts of future product demand, any significant
unanticipated changes in demand or technological developments
could have a significant impact on the value of our inventory
and our reported operating results. See Due to
uncertainties in production forecasting, we may experience
unexpected surpluses or shortages of inventory, and
Our quarterly revenues and operating results may fluctuate
significantly under Risks That Could Affect Future
Results.

Warranty Reserve.Our warranty reserve is established
based on our best estimate of the amounts necessary to settle
future and existing claims on products sold as of the balance
sheet date. While our warranty costs have historically been
within our expectations and the provisions established, we
cannot guarantee that we will continue to experience the same
warranty return rates or repair costs that we have in the past.
A significant increase in product return rates, or a significant
increase in the costs to repair our products, could have a
material adverse impact on our operating results for the period
or periods in which such returns or additional costs materialize.

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Results of Operations

The following table sets forth certain operating
data as a percentage of net revenues for the periods indicated:

|                                               |                                     |                          |       |           |       |           |        |      |       |  |        |      |       | 
|---------------------------------------------- | ----------------------------------- | ------------------------ | ----- | --------- | ----- | --------- | ------ | ---- | ----- |  | ------ | ---- | ----- | 
|                                               |                                     |                         
|                                               |                                     | Years Ended             
|                                               |                                     |                         
|                                               |                                     | March 31,                |       | March 30, |       | March 29,
|                                               |                                     | 2000                     |       | 2001      |       | 2002     
|                                               |                                     |                          |       |           |       |          
|Consolidated Statement of Operations
    Data: |                                     |                          |       |           |       |           |        |      |       |  |        |     
|Net revenues                                   |                                     |                          | 100.0 | %         |       |           | 100.0  | %    |       |  | 100.0  | %   
|Cost of revenues                               |                                     |                          | 71.6  |           |       |           | 94.0   |      |       |  | 134.3  |     
|                                               |                                     |                          |       |           |       |           |        |      |       |  |        |     
|Gross margin                                   |                                     |                          | 28.4  |           |       |           | 6.0    |      |       |  | (34.3  | )   
|                                               |                                     |                          |       |           |       |           |        |      |       |  |        |     
|Operating expenses:                            |                                     |                          |       |           |       |           |        |      |       |  |        |     
|                                               | Research and development            |                          |       | 43.4      |       |           |        | 37.2 |       |  |        | 39.9 |      
|                                               | Sales and marketing                 |                          |       | 41.7      |       |           |        | 41.4 |       |  |        | 43.7 |      
|                                               | General and administrative          |                          |       | 17.7      |       |           |        | 21.9 |       |  |        | 34.6 |      
|                                               | In-process research and development |                          |       | 5.2       |       |           |        |     |       |  |        |     |      
|                                               |                                     |                          |       |           |       |           |        |      |       |  |        |     
|                                               |                                     | Total operating expenses |       |           | 108.0 |           |        |      | 100.5 |  |        |      | 118.2 | 
|                                               |                                     |                          |       |           |       |           |        |      |       |  |        |     
|Loss from operations                           |                                     |                          | (79.6 | )         |       |           | (94.5  | )    |       |  | (152.5 | )   
|Other income (expense), net                    |                                     |                          | (9.1  | )         |       |           | (13.0  | )    |       |  | 0.3    |     
|                                               |                                     |                          |       |           |       |           |        |      |       |  |        |     
|Net loss                                       |                                     |                          | (88.7 | )%        |       |           | (107.5 | )%   |       |  | (152.2 | )%  
|                                               |                                     |                          |       |           |       |           |        |      |       |  |        |     

Year Ended
March 30, 2001 Compared to Year Ended March 29,
2002

Net Revenues.Net
revenues decreased $8.1 million, or 36.7%, from
$22.0 million for the year ended March 30, 2001 to
$13.9 million for the year ended March 29, 2002. This
decrease was primarily due to decreased shipments of our
CDMA-based repeaters to new and existing customers. During the
year ended March 30, 2001, 66.5% of our net revenues were
derived from ten customers, with sales to UbiquiTel PCS
comprising 12.6%. During the year ended March 29, 2002, ten
customers accounted for 74.4% of our net revenues, with Cellular
South, Beijing Telecom and Unefon accounting for 16.7%, 15.7%
and 14.4%, respectively. International sales accounted for 32.0%
of net revenues during the year ended March 30, 2001 and
39.2% for the year ended March 29, 2002.

Cost of Revenues and Gross Margin.Cost of revenues decreased
$2.0 million, or 9.6%, from $20.7 million for the year
ended March 30, 2001 to $18.7 million for the year
ended March 29, 2002. The gross profit margin was adversely
affected and has decreased from 6.0% for the year ended
March 30, 2001 to negative 34.3% for the year ended
March 29, 2002. Of this 40.3 percentage-point decrease
in gross profit margin, approximately 29.4 percentage
points were due to increased inventory valuation allowance in
relation to our legacy products, particularly the OA 850,
6.3 percentage points were due to reduced direct material
margins resulting from reduced sales prices to reduce inventory
levels and the remaining 10.8 percentage points were due to
other increases in costs related to the materials and test
departments, offset by 6.2 percentage points due to credits
in relation to stock-based compensation regarding terminated
employees.

Research and Development.Research and development expenses
decreased $2.7 million, or 32.1%, from $8.2 million
for the year ended March 30, 2001 to $5.5 million for
the year ended March 29, 2002. This decrease was primarily
due to reduced research and development costs of
$2.1 million due to the sale of substantially all of the
assets of the Gwydion development project and the remaining
$0.6 million was due to reduced headcount.

Sales and Marketing.Sales and marketing expenses decreased
$3.0 million, or 33.3%, from $9.1 million for the year
ended March 30, 2001 to $6.1 million for the year
ended March 29, 2002. This decrease was due

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to reduced payroll-related and travel costs and
employee commissions offset partially by sales representative
commissions.


General and Administrative.General and administrative expenses
remained stable at $4.8 million for the years ended
March 30, 2001 and March 29, 2002.

Interest and Other Income.Interest and other income, net, in
2002 primarily included a gain of $357,000 on disposal of assets
related to the Gwydion development project and interest income
of $431,000 from money market funds. Interest and other income,
net, in 2001 primarily include a non-recurring charge of
$444,000 for tax exposure and interest income of $488,000 from
money market funds.

Interest Expense.Interest expense decreased from
$2.9 million in 2001 to $0.5 million in 2002 primarily
as a result of conversion of Series EE convertible
debentures which occurred upon the Companys initial public
offering in August 2000 and repayment of the bank loan.

Year Ended
March 31, 2000 Compared to Year Ended March 30,
2001

Net Revenues.Net
revenues increased $5.0 million, or 29.7%, from
$17.0 million for the year ended March 31, 2000 to
$22.0 million for the year ended March 30, 2001. This
increase was primarily due to increased shipments of our
CDMA-based repeaters to new and existing customers. During the
year ended March 31, 2000, approximately 69.7% of our net
revenues were derived from ten customers, with sales to three
customers, PrimeCo, Wireless Facilities, Inc. and Clearnet PCS,
comprising 13.6%, 12.4% and 10.2%, respectively. During the year
ended March 30, 2001, 66.5% of our net revenues were
derived from ten customers, with sales to UbiquiTel PCS
comprising 12.6%. International sales accounted for 40.7% of net
revenues during the year ended March 31, 2000 and 32.0% for
the year ended March 30, 2001.

Cost of Revenues and Gross Margin.Cost of revenues increased
$8.5 million, or 70.1%, from $12.1 million for the
year ended March 31, 2000 to $20.7 million for the
year ended March 30, 2001. Of this increase,
$1.7 million was related to warranty expense primarily due
to the correction of defects discovered in our products after
installation and operation in our customers networks,
$2.0 million was related to inventory valuation allowance
primarily due to excess inventory resulting from our inability
to decrease our purchases from our contract manufacturers in a
timely manner in response to a slowdown in shipments during the
latter part of our fiscal year ended March 30, 2001,
$0.3 million was related to the physical inventory
adjustment and the remainder was primarily due to increased unit
sales. The gross profit margin decreased to 6.0% for the year
ended March 30, 2001 from 28.4% for the year ended
March 31, 2000. Of this 22.4 percentage point decrease
in gross profit margin, approximately 9.1 percentage points
were due to the increased inventory valuation allowance,
7.7 percentage points were due to increased warranty
reserves for certain customers, 1.3 percentage points were
due to year-end physical inventory adjustment and the remainder
was due to a decrease in direct material margins, as the average
sales prices of our products declined. Cost of revenues for the
year ended March 30, 2001 included amortization of
stock-based compensation of $0.6 million.

Research and Development.Research and development expenses
increased $0.8 million, or 11.2%, from $7.3 million
for the year ended March 31, 2000 to $8.2 million for
the year ended March 30, 2001. This increase was primarily
due to additional research and development personnel we hired,
an increase in the number of contractors we used for research
and development activities, and an increase in product
development costs for the in-building products and our Network
Repeaters, offset primarily by a decrease in amortization of
stock-based compensation derived from grants of incentive stock
options below the deemed fair market value of $0.3 million
and a $1.4 million credit to stock-based compensation
attributable to the acquisition of substantially all of the
assets of Gwydion. Research and development expenses for the
year ended March 30, 2001 included a credit of
$0.9 million for amortization of stock-based compensation.

Sales and Marketing.Sales and marketing expenses increased
$2.0 million, or 28.8%, from $7.1 million for the year
ended March 31, 2000 to $9.1 million for the year
ended March 30, 2001. This increase was primarily
attributable to the additional sales personnel we hired to
support our international and domestic sales efforts, increased
tradeshow and advertising expenses, increased sales commissions
and bonuses and increased travel expenses, offset by a reduction
in the amortization of stock-based compensation of
$0.3 million during

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the year ended March 30, 2001. We hired
seven additional sales employees during the year ended
March 30, 2001. Sales and marketing expenses for the year
ended March 30, 2001 included amortization of stock-based
compensation of $0.2 million.


General and Administrative.General and administrative expenses
increased $1.8 million, or 61.0%, from $3.0 million
for the year ended March 31, 2000 to $4.8 million for
the year ended March 30, 2001. Of this increase,
$0.5 million was due to the increase in amortization of
stock-based compensation, $0.6 million was due to expenses
related to costs associated with being a public company such as
legal and accounting and directors and officers insurance, and
the balance was due to increased payroll costs attributable to
increased headcount. General and administrative expenses for the
year ended March 30, 2001 included amortization of
stock-based compensation of $1.0 million.

In-Process Research and Development.In-process research and development
expense was $0.9 million for the year ended March 31,
2000, which related to the acquisition of all of the assets of
The Gwydion Company LLC.

Interest Expense.Interest expense increased
$1.0 million, from $1.9 million for the year ended
March 31, 2000 to $2.9 million for the year ended
March 30, 2001. This increase was primarily attributable to
the beneficial conversion feature of $1.1 million
associated with the Series EE convertible subordinated
debentures and fair value of the warrants of $0.5 million
issued in connection with the Series EE convertible
subordinated debentures.

Liquidity and Capital Resources

At March 29, 2002, we had $5.3 million
in cash and cash equivalents, as compared to $26.1 million
at March 30, 2001. Cash used in operating activities for
the year ended March 29, 2002 was $17.4 million, as
compared to $21.3 million for the year ended March 30,
2001. The significant use of cash in operating activities during
the year ended March 29, 2002 resulted from our net losses
of $21.2 million, an increase in inventories of
$1.2 million, a decrease in accounts payable, accrued
compensation and other accrued liabilities of $2.1 million,
a decrease in deferred revenue of $1.4 million, offset by
non-cash depreciation and amortization expenses of
$1.9 million, inventory valuation allowance of
$4.6 million, a decrease in accounts receivable of
$1.9 million, and non-cash expenses of $0.2 million
for amortization of debt discount due to the repayment of the
Transamerica credit facility. Cash used in operating activities
for the June 2001, September 2001, December 2001 and March 2002
quarters were $6.7, $5.2, $3.4 and $2.2 million,
respectively. Management is continuing to strive to reduce cash
used in operating activities by reducing inventory levels,
continuing to maintain daily sales outstanding of 53 days
(42 days excluding the receivables that are supported by an
irrevocable 90 day letter of credit) and reducing expenses
where appropriate.

Cash used in investing activities for the year
ended March 29, 2002 was $0.3 million, as compared to
cash used in investing activities of $3.8 million for the
year ended March 30, 2001. Capital expenditures of
$1.3 million were primarily investments in computerized
test equipment to test our products, additional computer
equipment to support our business and field service parts. We
received proceeds of $1.0 million attributable to the sale
of substantially all of the assets related to the Gwydion
development project.

Net cash used in financing activities was
$3.1 million for the year ended March 29, 2002, as
compared to net cash provided by financing activities of
$46.3 million for the year ended March 30, 2001. For
the year ended March 29, 2002, $3.3 million was due to
payments against long-term liabilities, offset by
$0.2 million for exercise of stock options.

The sale of substantially all of the assets
related to the Gwydion project resulted in our violation of a
loan and security agreement covenant that prohibits us from the
sale of any assets over $25,000 that is outside of the ordinary
course of business prior to our obtaining written approval from
the lender. As a result, the lender declared the loan in default
and amounts owing under this loan agreement immediately due and
payable. We received a waiver for this covenant violation and
subsequent default on October 30, 2001. The remaining
balance of this loan was repaid during the year ended
March 29, 2002.

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Our contractual obligations at March 29,
2002 were as follows:

Payments Due by Period

|                                   |  |                |       |           |  |           |     |       |  |   |   |  |  |   |       | 
|---------------------------------- |  | -------------- | ----- | --------- |  | --------- | --- | ----- |  | - | - |  |  | - | ----- | 
|                                   |  | Less than      |       |           |  |           |     |      
|Contractual Obligations            |  | 1 Year         |       | 1-3 Years |  | 4-5 Years |     | Total
|                                   |  |                |       |           |  |           |     |      
|                                   |  |               
|                                   |  | (in thousands)
|Capital-lease obligations          |  | $              | 141   |           |  |           |    |       |  |   |  |  |  | $ | 141   | 
|Operating leases                   |  | $              | 675   |           |  | $         | 486 |       |  | $ | 2 |  |  | $ | 1,163 | 
|Unconditional purchase obligations |  | $              | 1,742 |           |  |           |    |       |  |   |  |  |  | $ | 1,742 | 
|                                   |  |                |       |           |  |           |     |       |  |   |   |  |  |   |       | 
|Total contractual obligations      |  | $              | 2,558 |           |  | $         | 486 |       |  | $ | 2 |  |  | $ | 3,046 | 
|                                   |  |                |       |           |  |           |     |       |  |   |   |  |  |   |       | 

We incurred a net loss of $21.2 million for
the year ended March 29, 2002, and a net loss of
$23.6 million for the year ended March 30, 2001. Cash
used in operating activities for the year ended March 29,
2002 was $17.4 million, as compared to $21.3 million
for the year ended March 30, 2001. Although we have been
successful in reducing our cash usage rate gradually during the
four consecutive quarters in the year ended March 29, 2002,
we have been unable to increase our revenues. In an effort to
sustain our business, we have reduced our workforce by 17% in
April 2001, 34% in October 2001 and an additional 27% in March
2002, we have ceased purchases for our older single-channel
products except for the remaining units on order from Capitel
Group, Ltd., we have implemented a sales promotion for our older
single-channel products to reduce our inventory and we have
introduced our new dual-channel product which we started to ship
during the quarter ended March 29, 2002. If these efforts
prove to be insufficient, we may be forced to reduce our
expenditures further by reducing our purchase commitments,
reducing capital expenditures, and reducing other discretionary
expenditures. Our failure to increase the sales volume of our
Network Repeaters, realize higher margins on our new products or
further reduce our expenditures could have a material adverse
effect on our ability to continue as a going concern and to
achieve our intended business objectives.

We have had and expect to continue to have
negative cash flows from operations through December 2002. We
believe that our available cash reserves will not be sufficient
to fund operations and to meet our working capital needs and
anticipated capital expenditures after September 2002. We will
need additional financing through public or private debt or
equity financing to sustain our business and fund our operating
losses after this time.

If we raise additional funds through the issuance
of equity securities, the percentage ownership of our
stockholders will be reduced, stockholders may experience
additional dilution, or such equity securities may have rights,
preferences or privileges senior to those of the holders of our
common stock. If we raise additional funds through the issuance
of debt securities, those securities would have rights,
preferences and privileges senior to those of our common stock,
and the terms of these debt securities could impose restrictions
on our operations. However, there is no assurance that
additional financing will be available when needed, on favorable
terms, or at all.

Recent Accounting Pronouncements

In July 2001, the FASB issued SFAS 141,
Business Combinations. SFAS 141 requires the
purchase method of accounting for business combinations
initiated after June 30, 2001 and eliminates the
pooling-of-interests method. We did not enter into any business
combinations after June 30, 2001; therefore, the adoption
of SFAS 141 has not had a significant impact on our
financial statements.

In July 2001, the FASB issued SFAS 142,
Goodwill and Other Intangible Assets. SFAS 142
requires, among other things, the discontinuance of goodwill
amortization and the testing for impairment of goodwill at least
annually. We currently do not carry goodwill in our financial
statements; therefore, the adoption of SFAS 142 has not had
a material impact on our financial statements.

On October 3, 2001, the FASB issued SFAS
144, Accounting for the Impairment or Disposal of
Long-Lived Assets. SFAS 144 supercedes SFAS 121,
Accounting for the Impairment of Long-Lived Assets and

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for Long-Lived Assets to Be Disposed Of.
SFAS 144 applies to all long-lived assets (including
discontinued operations) and consequently amends Accounting
Principles Board opinion No. 30, Reporting Results of
Operations Reporting the Effects of Disposal of a Segment of a
Business. SFAS 144 develops one accounting model for
long-lived assets that are to be disposed of by sale.
SFAS 144 requires that long-lived assets that are to be
disposed of by sale be measured at the lower of net book value
or fair value less cost to sell. Additionally, SFAS 144
expands the scope of discontinued operations to include all
components of an entity with operations that (i) can be
distinguished from the rest of the entity and (ii) will be
eliminated from the ongoing operations of the entity in a
disposal transaction. SFAS 144 is effective for financial
statements issued for fiscal years beginning after
December 15, 2001. We do not expect the adoption of
SFAS 144 to have a significant impact on our financial
statements.





Item 7A.     Quantitative
and Qualitative Disclosures of Market Risk

We believe we do not have any significant
exposures to quantitative and qualitative market risks. For the
year ended March 29, 2002, we did not have any derivative
financial instruments or any derivative commodity instruments.
Our financial instruments include trade accounts receivable,
trade accounts payable, convertible subordinated debentures and
a term note. Our accounts receivable and accounts payable are
relatively short term in duration and, as a consequence, are not
exposed to significant interest rate changes and consequent fair
value adjustments. Our cash equivalents are invested in
interest-bearing accounts, generally money market accounts of
less than seven days average maturity, and as a result are
not subject to significant valuation adjustments due to interest
rate changes. Our financial market risk includes risks
associated with international operations and related foreign
currencies. We anticipate that international sales will continue
to account for a significant portion of our consolidated
revenues. Most of our international sales are in U.S. dollars
and, therefore, are not subject to foreign currency exchange
rate risk. At March 29, 2002, approximately 2.3% of our
ending accounts receivable were denominated in a foreign
currency and as a result, we were subject to foreign currency
exchange risk on this amount. In addition, expenses of our
international operations are denominated in each countrys
local currency and are subject to foreign currency exchange
risk. Expenses in our international operations primarily consist
of payroll-related costs and have not been significant. Through
March 29, 2002, we have not experienced any significant
negative impact on our operations as a result of fluctuations in
foreign currency exchange rates.

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Item 8.     Financial
Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS

|                                                             |  |      |    | 
|------------------------------------------------------------ |  | ---- | -- | 
|                                                             |  | Page
|                                                             |  |     
|REPEATER TECHNOLOGIES, INC.                                  |  |      |    | 
|Report of Independent Accountants                            |  |      | 35 | 
|Consolidated Balance Sheets                                  |  |      | 36 | 
|Consolidated Statements of Operations                        |  |      | 37 | 
|Consolidated Statement of Stockholders
    Equity (Deficit) |  |      | 38 | 
|Consolidated Statements of Cash Flows                        |  |      | 39 | 
|Notes to Consolidated Financial Statements                   |  |      | 40 | 

|                              |                                                                                          |      |  |    | 
|----------------------------- | ---------------------------------------------------------------------------------------- | ---- |  | -- | 
|                              |                                                                                          | Page
|                              |                                                                                          |     
|Supplementary Financial Data: |                                                                                          |      |  |   
|                              | Selected Quarterly Financial Data (Unaudited) for
    the two years ended March 29, 2002 |      |  | 55 | 

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REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders

of Repeater Technologies, Inc.:


In our opinion, the consolidated financial
statements listed in the accompanying index present fairly, in
all material respects, the financial position of Repeater
Technologies, Inc. and its subsidiary at March 30, 2001 and
March 29, 2002, and the results of their operations and
their cash flows for each of the three years in the period ended
March 29, 2002 in conformity with accounting principles
generally accepted in the United States of America. In addition,
in our opinion, the financial statement schedule appearing under
Item 14(a)(2) presents fairly, in all material respects,
the information set forth therein when read in conjunction with
the related consolidated financial statements. These financial
statements and the financial statement schedule are the
responsibility of the Companys management; our
responsibility is to express an opinion on these financial
statements and the financial statement schedule based on our
audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform
the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.

The accompanying financial statements have been
prepared assuming that the Company will continue as a going
concern. As discussed in Note 1 to the financial
statements, the Company has incurred recurring losses and
negative cash flows from operations, which raise substantial
doubt about its ability to continue as a going concern.
Managements plans in regard to these matters are also
described in Note 1. The financial statements do not
include any adjustments that might result from the outcome of
this uncertainty.

/s/ PRICEWATERHOUSECOOPERS LLP

San Jose, California

May 16, 2002


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REPEATER TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEETS

|                                                  |                                                                                                                                                                                                                           |                                            |       |           |        |  |       |          |        | 
|------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ----- | --------- | ------ |  | ----- | -------- | ------ | 
|                                                  |                                                                                                                                                                                                                           | March 30,                                  |       | March 29,
|                                                  |                                                                                                                                                                                                                           | 2001                                       |       | 2002     
|                                                  |                                                                                                                                                                                                                           |                                            |       |          
|                                                  |                                                                                                                                                                                                                           |                                           
|                                                  |                                                                                                                                                                                                                           | (In thousands, except                     
|                                                  |                                                                                                                                                                                                                           | share and per share data)                 
|ASSETS                                           
|Current assets:                                   |                                                                                                                                                                                                                           |                                            |       |           |        |  |       |         
|                                                  | Cash and cash equivalents                                                                                                                                                                                                 |                                            | $     | 26,084    |        |  | $     | 5,250    |       
|                                                  | Accounts receivable, net of allowance for
    doubtful accounts of $294 and $172 at March 30, 2001 and
    March 29, 2002, respectively                                                                                   |                                            |       | 3,584     |        |  |       | 1,628    |       
|                                                  | Inventories, net                                                                                                                                                                                                          |                                            |       | 7,960     |        |  |       | 4,184    |       
|                                                  | Other current assets                                                                                                                                                                                                      |                                            |       | 541       |        |  |       | 424      |       
|                                                  |                                                                                                                                                                                                                           |                                            |       |           |        |  |       |         
|                                                  |                                                                                                                                                                                                                           | Total current assets                       |       |           | 38,169 |  |       |          | 11,486 | 
|Service parts, net                                |                                                                                                                                                                                                                           |                                            | 890   |           |        |  | 960   |         
|Property and equipment, net                       |                                                                                                                                                                                                                           |                                            | 3,710 |           |        |  | 2,973 |         
|Other assets                                      |                                                                                                                                                                                                                           |                                            | 117   |           |        |  | 95    |         
|                                                  |                                                                                                                                                                                                                           |                                            |       |           |        |  |       |         
|                                                  |                                                                                                                                                                                                                           | Total assets                               |       | $         | 42,886 |  |       |          | 15,514 | 
|                                                  |                                                                                                                                                                                                                           |                                            |       |           |        |  |       |         
|LIABILITIES AND STOCKHOLDERS
    EQUITY         
|Current liabilities:                              |                                                                                                                                                                                                                           |                                            |       |           |        |  |       |         
|                                                  | Accounts payable                                                                                                                                                                                                          |                                            |       | 4,406     |        |  |       | 3,811    |       
|                                                  | Accrued compensation                                                                                                                                                                                                      |                                            |       | 831       |        |  |       | 375      |       
|                                                  | Other accrued liabilities                                                                                                                                                                                                 |                                            |       | 2,200     |        |  |       | 1,263    |       
|                                                  | Deferred revenue                                                                                                                                                                                                          |                                            |       | 1,500     |        |  |       | 150      |       
|                                                  | Current portion of notes payable                                                                                                                                                                                          |                                            |       | 2,641     |        |  |       |         |       
|                                                  | Current portion of capital lease obligations                                                                                                                                                                              |                                            |       | 395       |        |  |       | 141      |       
|                                                  |                                                                                                                                                                                                                           |                                            |       |           |        |  |       |         
|                                                  |                                                                                                                                                                                                                           | Total current liabilities                  |       |           | 11,973 |  |       |          | 5,740  | 
|Deferred revenue, net of current portion          |                                                                                                                                                                                                                           |                                            | 900   |           |        |  | 852   |         
|Capital lease obligations, net of current portion |                                                                                                                                                                                                                           |                                            | 141   |           |        |  |      |         
|                                                  |                                                                                                                                                                                                                           |                                            |       |           |        |  |       |         
|                                                  |                                                                                                                                                                                                                           | Total liabilities                          |       |           | 13,014 |  |       |          | 6,592  | 
|                                                  |                                                                                                                                                                                                                           |                                            |       |           |        |  |       |         
|Commitments and contingencies (Note 3)            |                                                                                                                                                                                                                           |                                            |       |           |        |  |       |         
|Stockholders equity:                             |                                                                                                                                                                                                                           |                                            |       |           |        |  |       |         
|                                                  | Common Stock, $0.001 par value; 70,000,000 shares
    authorized at March 30, 2001 and March 29, 2002;
    23,215,021 and 23,880,133 shares issued and outstanding at
    March 30, 2001 and March 29, 2002, respectively |                                            |       | 23        |        |  |       | 24       |       
|                                                  | Additional paid in capital                                                                                                                                                                                                |                                            |       | 111,339   |        |  |       | 109,830  |       
|                                                  | Unearned stock-based compensation                                                                                                                                                                                         |                                            |       | (1,968    | )      |  |       | (234     | )     
|                                                  | Accumulated deficit                                                                                                                                                                                                       |                                            |       | (79,522   | )      |  |       | (100,698 | )     
|                                                  |                                                                                                                                                                                                                           |                                            |       |           |        |  |       |         
|                                                  |                                                                                                                                                                                                                           | Total stockholders equity                 |       |           | 29,872 |  |       |          | 8,922  | 
|                                                  |                                                                                                                                                                                                                           |                                            |       |           |        |  |       |         
|                                                  |                                                                                                                                                                                                                           | Total liabilities and stockholders equity |       | $         | 42,886 |  |       | $        | 15,514 | 
|                                                  |                                                                                                                                                                                                                           |                                            |       |           |        |  |       |         

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

36



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REPEATER TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF
OPERATIONS

|                                                                             |                                     |                                       |         |           |        |           |         |       |        |   |         |       |        | 
|---------------------------------------------------------------------------- | ----------------------------------- | ------------------------------------- | ------- | --------- | ------ | --------- | ------- | ----- | ------ | - | ------- | ----- | ------ | 
|                                                                             |                                     |                                      
|                                                                             |                                     | Years Ended                          
|                                                                             |                                     |                                      
|                                                                             |                                     | March 31,                             |         | March 30, |        | March 29,
|                                                                             |                                     | 2000                                  |         | 2001      |        | 2002     
|                                                                             |                                     |                                       |         |           |        |          
|                                                                             |                                     |                                      
|                                                                             |                                     | (In thousands, except per share data)
|Net revenues                                                                 |                                     | $                                     | 16,953  |           |        | $         | 21,990  |       |        | $ | 13,914  |      
|Cost of revenues                                                             |                                     |                                       | 12,145  |           |        |           | 20,664  |       |        |   | 18,687  |      
|                                                                             |                                     |                                       |         |           |        |           |         |       |        |   |         |      
|Gross profit (loss)                                                          |                                     |                                       | 4,808   |           |        |           | 1,326   |       |        |   | (4,773  | )    
|                                                                             |                                     |                                       |         |           |        |           |         |       |        |   |         |      
|Operating expenses:                                                          |                                     |                                       |         |           |        |           |         |       |        |   |         |      
|                                                                             | Research and development            |                                       |         | 7,349     |        |           |         | 8,175 |        |   |         | 5,547 |       
|                                                                             | Sales and marketing                 |                                       |         | 7,075     |        |           |         | 9,112 |        |   |         | 6,078 |       
|                                                                             | General and administrative          |                                       |         | 2,997     |        |           |         | 4,821 |        |   |         | 4,820 |       
|                                                                             | In-process research and development |                                       |         | 885       |        |           |         |      |        |   |         |      |       
|                                                                             |                                     |                                       |         |           |        |           |         |       |        |   |         |      
|                                                                             |                                     | Total operating expenses              |         |           | 18,306 |           |         |       | 22,108 |   |         |       | 16,445 | 
|                                                                             |                                     |                                       |         |           |        |           |         |       |        |   |         |      
|Loss from operations                                                         |                                     |                                       | (13,498 | )         |        |           | (20,782 | )     |        |   | (21,218 | )    
|Interest expense                                                             |                                     |                                       | (1,904  | )         |        |           | (2,869  | )     |        |   | (537    | )    
|Interest and other income, net                                               |                                     |                                       | 362     |           |        |           | 4       |       |        |   | 579     |      
|                                                                             |                                     |                                       |         |           |        |           |         |       |        |   |         |      
|Net loss                                                                     |                                     | $                                     | (15,040 | )         |        | $         | (23,647 | )     |        | $ | (21,176 | )    
|                                                                             |                                     |                                       |         |           |        |           |         |       |        |   |         |      
|Net loss per common share  basic and diluted                                |                                     | $                                     | (6.00   | )         |        | $         | (1.53   | )     |        | $ | (0.92   | )    
|                                                                             |                                     |                                       |         |           |        |           |         |       |        |   |         |      
|Shares used in net loss per common share
    calculation  basic and diluted |                                     |                                       | 2,508   |           |        |           | 15,495  |       |        |   | 23,023  |      
|                                                                             |                                     |                                       |         |           |        |           |         |       |        |   |         |      

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

37



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##### Table of Contents



REPEATER TECHNOLOGIES, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS
EQUITY (DEFICIT)

For the Years Ended March 31, 2000,
March 30, 2001 and March 29, 2002


|                                                                                                                            |  |                                      |            |              |  |            |     |             |  |             |            |               |  |         |    |           |  |   |         |   |  |   |         |   |  |   |          |   |  |   |         |  
|--------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------ | ---------- | ------------ |  | ---------- | --- | ----------- |  | ----------- | ---------- | ------------- |  | ------- | -- | --------- |  | - | ------- | - |  | - | ------- | - |  | - | -------- | - |  | - | ------- | -
|                                                                                                                            |  |                                      |            |              |  |            |     |             |  |             |            |               |  |        
|                                                                                                                            |  | Convertible                          |            |              |  |            |     |             |  |             |            | Total        
|                                                                                                                            |  | Preferred Stock                      |            | Common Stock |  | Additional |     | Unearned    |  |             |            | Stockholders
|                                                                                                                            |  |                                      |            |              |  | Paid-in    |     | Stock-Based |  | Accumulated |            | Equity       
|                                                                                                                            |  | Shares                               |            | Amount       |  | Shares     |     | Amount      |  | Capital     |            | Compensation  |  | Deficit |    | (Deficit)
|                                                                                                                            |  |                                      |            |              |  |            |     |             |  |             |            |               |  |         |    |          
|                                                                                                                            |  |                                     
|                                                                                                                            |  | (In thousands, except share amounts)
|Balances at March 26, 1999                                                                                                  |  |                                      | 9,874,691  |              |  |            | 10  |             |  |             | 2,407,063  |               |  |         | 2  |           |  |   | 39,935  |   |  |   | (755    | ) |  |   | (40,835  | ) |  |   | (1,643  | )
|Exercise of stock options, net of repurchases                                                                               |  |                                      |           |              |  |            |    |             |  |             | 334,102    |               |  |         |   |           |  |   | 109     |   |  |   |        |   |  |   |         |   |  |   | 109     |  
|Issuance of Common Stock for acquisition                                                                                    |  |                                      |           |              |  |            |    |             |  |             | 573,334    |               |  |         | 1  |           |  |   | 6,879   |   |  |   | (6,880  | ) |  |   |         |   |  |   |        |  
|Issuance of Common Stock under license agreement                                                                            |  |                                      |           |              |  |            |    |             |  |             | 1,810      |               |  |         |   |           |  |   | 7       |   |  |   |        |   |  |   |         |   |  |   | 7       |  
|Issuance of warrants in connection with line of
    credit                                                                  |  |                                      |           |              |  |            |    |             |  |             |           |               |  |         |   |           |  |   | 542     |   |  |   |        |   |  |   |         |   |  |   | 542     |  
|Unearned stock-based compensation                                                                                           |  |                                      |           |              |  |            |    |             |  |             |           |               |  |         |   |           |  |   | 7,083   |   |  |   | (7,083  | ) |  |   |         |   |  |   |        |  
|Amortization of unearned stock-based compensation                                                                           |  |                                      |           |              |  |            |    |             |  |             |           |               |  |         |   |           |  |   |        |   |  |   | 4,421   |   |  |   |         |   |  |   | 4,421   |  
|Net loss                                                                                                                    |  |                                      |           |              |  |            |    |             |  |             |           |               |  |         |   |           |  |   |        |   |  |   |        |   |  |   | (15,040  | ) |  |   | (15,040 | )
|                                                                                                                            |  |                                      |            |              |  |            |     |             |  |             |            |               |  |         |    |           |  |   |         |   |  |   |         |   |  |   |          |   |  |   |         |  
|Balances at March 31, 2000                                                                                                  |  |                                      | 9,874,691  |              |  |            | 10  |             |  |             | 3,316,309  |               |  |         | 3  |           |  |   | 54,555  |   |  |   | (10,297 | ) |  |   | (55,875  | ) |  |   | (11,604 | )
|Exercise of stock options, net of repurchases                                                                               |  |                                      |           |              |  |            |    |             |  |             | 106,970    |               |  |         |   |           |  |   | 69      |   |  |   |        |   |  |   |         |   |  |   | 69      |  
|Exercise of warrants                                                                                                        |  |                                      |           |              |  |            |    |             |  |             | 846,451    |               |  |         | 1  |           |  |   | 133     |   |  |   |        |   |  |   |         |   |  |   | 134     |  
|Unearned stock-based compensation                                                                                           |  |                                      |           |              |  |            |    |             |  |             |           |               |  |         |   |           |  |   | (7,400  | ) |  |   | 7,400   |   |  |   |         |   |  |   |        |  
|Amortization of unearned stock-based compensation                                                                           |  |                                      |           |              |  |            |    |             |  |             |           |               |  |         |   |           |  |   |        |   |  |   | 929     |   |  |   |         |   |  |   | 929     |  
|Conversion of Series AA, BB, and CC
    convertible preferred stock into Common Stock                                       |  |                                      | (9,874,691 | )            |  |            | (10 | )           |  |             | 10,116,319 |               |  |         | 10 |           |  |   |        |   |  |   |        |   |  |   |         |   |  |   |        |  
|Conversion of Series DD and EE convertible
    subordinated debentures into Common Stock                                    |  |                                      |           |              |  |            |    |             |  |             | 3,364,772  |               |  |         | 3  |           |  |   | 20,047  |   |  |   |        |   |  |   |         |   |  |   | 20,050  |  
|Issuance of warrants and beneficial conversion
    feature in relation to Series EE convertible subordinated
    debentures |  |                                      |           |              |  |            |    |             |  |             |           |               |  |         |   |           |  |   | 1,636   |   |  |   |        |   |  |   |         |   |  |   | 1,636   |  
|Issuance of Common Stock in relation to initial
    public offering net of issuance costs                                   |  |                                      |           |              |  |            |    |             |  |             | 5,462,500  |               |  |         | 6  |           |  |   | 42,279  |   |  |   |        |   |  |   |         |   |  |   | 42,285  |  
|Issuance of Common Stock under license agreement                                                                            |  |                                      |           |              |  |            |    |             |  |             | 1,700      |               |  |         |   |           |  |   | 20      |   |  |   |        |   |  |   |         |   |  |   | 20      |  
|Net loss                                                                                                                    |  |                                      |           |              |  |            |    |             |  |             |           |               |  |         |   |           |  |   |        |   |  |   |        |   |  |   | (23,647  | ) |  |   | (23,647 | )
|                                                                                                                            |  |                                      |            |              |  |            |     |             |  |             |            |               |  |         |    |           |  |   |         |   |  |   |         |   |  |   |          |   |  |   |         |  
|Balances at March 30, 2001                                                                                                  |  |                                      |           |              |  |            |    |             |  |             | 23,215,021 |               |  |         | 23 |           |  |   | 111,339 |   |  |   | (1,968  | ) |  |   | (79,522  | ) |  |   | 29,872  |  
|Issuance of common stock under ESPP                                                                                         |  |                                      |           |              |  |            |    |             |  |             | 68,405     |               |  |         |   |           |  |   | 9       |   |  |   |        |   |  |   |         |   |  |   | 9       |  
|Exercise of stock options                                                                                                   |  |                                      |           |              |  |            |    |             |  |             | 596,707    |               |  |         | 1  |           |  |   | 178     |   |  |   |        |   |  |   |         |   |  |   | 179     |  
|Unearned stock-based compensation                                                                                           |  |                                      |           |              |  |            |    |             |  |             |           |               |  |         |   |           |  |   | (1,696  | ) |  |   | 1,696   |   |  |   |         |   |  |   |        |  
|Amortization of unearned stock-based compensation                                                                           |  |                                      |           |              |  |            |    |             |  |             |           |               |  |         |   |           |  |   |        |   |  |   | 38      |   |  |   |         |   |  |   | 38      |  
|Net loss                                                                                                                    |  |                                      |           |              |  |            |    |             |  |             |           |               |  |         |   |           |  |   |        |   |  |   |        |   |  |   | (21,176  | ) |  |   | (21,176 | )
|                                                                                                                            |  |                                      |            |              |  |            |     |             |  |             |            |               |  |         |    |           |  |   |         |   |  |   |         |   |  |   |          |   |  |   |         |  
|Balances at March 29, 2002                                                                                                  |  |                                      |           |              |  |            |    |             |  |             | 23,880,133 |               |  | $       | 24 |           |  | $ | 109,830 |   |  | $ | (234    | ) |  | $ | (100,698 | ) |  | $ | 8,922   |  
|                                                                                                                            |  |                                      |            |              |  |            |     |             |  |             |            |               |  |         |    |           |  |   |         |   |  |   |         |   |  |   |          |   |  |   |         |  

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

38



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##### Table of Contents



REPEATER TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CASH
FLOWS

|                                                                                |                                                                            |                           |                                           |           |        |           |         |        |        |         |         |        |        |         |  
|------------------------------------------------------------------------------- | -------------------------------------------------------------------------- | ------------------------- | ----------------------------------------- | --------- | ------ | --------- | ------- | ------ | ------ | ------- | ------- | ------ | ------ | ------- | -
|                                                                                |                                                                            |                          
|                                                                                |                                                                            | Years Ended              
|                                                                                |                                                                            |                          
|                                                                                |                                                                            | March 31,                 |                                           | March 30, |        | March 29,
|                                                                                |                                                                            | 2000                      |                                           | 2001      |        | 2002     
|                                                                                |                                                                            |                           |                                           |           |        |          
|                                                                                |                                                                            |                          
|                                                                                |                                                                            | (In thousands)           
|Cash flows from operating
    activities:                                       |                                                                            |                           |                                           |           |        |           |         |        |        |         |         |       
|Net loss                                                                        |                                                                            | $                         | (15,040                                   | )         |        | $         | (23,647 | )      |        | $       | (21,176 | )     
|Adjustments to reconcile net loss to net cash
    used in operating activities: |                                                                            |                           |                                           |           |        |           |         |        |        |         |         |       
|                                                                                | Depreciation and amortization                                              |                           |                                           | 1,053     |        |           |         | 1,773  |        |         |         | 1,907  |       
|                                                                                | Provision for losses on accounts receivable                                |                           |                                           | 97        |        |           |         | 38     |        |         |         | 79     |       
|                                                                                | Provision for writedowns on inventories                                    |                           |                                           | 339       |        |           |         | 2,358  |        |         |         | 4,559  |       
|                                                                                | Issuance of equity instruments under license
    agreement                 |                           |                                           | 7         |        |           |         | 20     |        |         |         |       |       
|                                                                                | Loss on disposal of property and equipment                                 |                           |                                           |          |        |           |         |       |        |         |         | 10     |       
|                                                                                | Gain on sale of Gwydion development project                                |                           |                                           |          |        |           |         |       |        |         |         | (357   | )     
|                                                                                | Amortization of unearned stock-based compensation                          |                           |                                           | 4,421     |        |           |         | 929    |        |         |         | 38     |       
|                                                                                | Amortization of debt issuance costs                                        |                           |                                           | 16        |        |           |         | 5      |        |         |         |       |       
|                                                                                | Amortization of debt discount                                              |                           |                                           | 135       |        |           |         | 172    |        |         |         | 234    |       
|                                                                                | Non cash interest expense                                                  |                           |                                           |          |        |           |         | 1,635  |        |         |         |       |       
|                                                                                | In process research and development                                        |                           |                                           | 885       |        |           |         |       |        |         |         |       |       
|                                                                                | Changes in operating assets and liabilities, net
    of acquisitions:      |                           |                                           |           |        |           |         |        |        |         |         |        |       
|                                                                                |                                                                            | Accounts receivable       |                                           |           | (2,659 | )         |         |        | 761    |         |         |        | 1,876  |        
|                                                                                |                                                                            | Inventories               |                                           |           | (850   | )         |         |        | (7,268 | )       |         |        | (1,234 | )      
|                                                                                |                                                                            | Other current assets      |                                           |           | (1,178 | )         |         |        | (269   | )       |         |        | 117    |        
|                                                                                |                                                                            | Other assets              |                                           |           | (16    | )         |         |        | (14    | )       |         |        | 22     |        
|                                                                                |                                                                            | Accounts payable          |                                           |           | 2,869  |           |         |        | 115    |         |         |        | (851   | )      
|                                                                                |                                                                            | Accrued compensation      |                                           |           | 37     |           |         |        | 258    |         |         |        | (455   | )      
|                                                                                |                                                                            | Other accrued liabilities |                                           |           | 84     |           |         |        | 1,181  |         |         |        | (820   | )      
|                                                                                |                                                                            | Deferred revenue          |                                           |           | 1,702  |           |         |        | 698    |         |         |        | (1,398 | )      
|                                                                                |                                                                            |                           |                                           |           |        |           |         |        |        |         |         |       
|                                                                                |                                                                            |                           | Net cash used in operating activities     |           |        | (8,098    | )       |        |        | (21,255 | )       |        |        | (17,449 | )
|                                                                                |                                                                            |                           |                                           |           |        |           |         |        |        |         |         |       
|Cash flows used in investing
    activities:                                    |                                                                            |                           |                                           |           |        |           |         |        |        |         |         |       
|                                                                                | Purchase of property and equipment                                         |                           |                                           | (507      | )      |           |         | (2,593 | )      |         |         | (706   | )     
|                                                                                | Purchase of field service parts                                            |                           |                                           | (397      | )      |           |         | (1,206 | )      |         |         | (620   | )     
|                                                                                | Proceeds from disposal of property and equipment                           |                           |                                           |          |        |           |         |       |        |         |         | 51     |       
|                                                                                | Proceeds from sale of Gwydion development project                          |                           |                                           |          |        |           |         |       |        |         |         | 969    |       
|                                                                                | Payment for acquired business                                              |                           |                                           | (754      | )      |           |         |       |        |         |         |       |       
|                                                                                |                                                                            |                           |                                           |           |        |           |         |        |        |         |         |       
|                                                                                |                                                                            |                           | Net cash used in investing activities     |           |        | (1,658    | )       |        |        | (3,799  | )       |        |        | (306    | )
|                                                                                |                                                                            |                           |                                           |           |        |           |         |        |        |         |         |       
|Cash flows from financing
    activities:                                       |                                                                            |                           |                                           |           |        |           |         |        |        |         |         |       
|                                                                                | Proceeds from notes payable                                                |                           |                                           | 5,000     |        |           |         |       |        |         |         |       |       
|                                                                                | Principal payments on notes payable                                        |                           |                                           | (423      | )      |           |         | (1,841 | )      |         |         | (2,875 | )     
|                                                                                | Payments on capital lease obligations                                      |                           |                                           | (465      | )      |           |         | (439   | )      |         |         | (394   | )     
|                                                                                | Proceeds from convertible subordinated debentures                          |                           |                                           |          |        |           |         | 5,100  |        |         |         |       |       
|                                                                                | Net proceeds of issuance of Common Stock under
    initial public offering |                           |                                           |          |        |           |         | 43,293 |        |         |         |       |       
|                                                                                | Net issuances (repurchase) of Common Stock                                 |                           |                                           | 109       |        |           |         | 202    |        |         |         | 190    |       
|                                                                                |                                                                            |                           |                                           |           |        |           |         |        |        |         |         |       
|                                                                                |                                                                            |                           | Net cash provided by financing activities |           |        | 4,221     |         |        |        | 46,315  |         |        |        | (3,079  | )
|                                                                                |                                                                            |                           |                                           |           |        |           |         |        |        |         |         |       
|Net increase/(decrease) in cash and cash
    equivalents                        |                                                                            |                           | (5,535                                    | )         |        |           | 21,261  |        |        |         | (20,834 | )     
|Cash and cash equivalents at beginning of the year                              |                                                                            |                           | 10,358                                    |           |        |           | 4,823   |        |        |         | 26,084  |       
|                                                                                |                                                                            |                           |                                           |           |        |           |         |        |        |         |         |       
|Cash and cash equivalents at end of the year                                    |                                                                            | $                         | 4,823                                     |           |        | $         | 26,084  |        |        | $       | 5,250   |       
|                                                                                |                                                                            |                           |                                           |           |        |           |         |        |        |         |         |       
|Supplemental disclosure of cash flow
    information:                           |                                                                            |                           |                                           |           |        |           |         |        |        |         |         |       
|                                                                                | Cash paid for interest                                                     |                           | $                                         | 1,782     |        |           | $       | 1,137  |        |         | $       | 331    |       
|                                                                                | Taxes paid                                                                 |                           | $                                         | 2         |        |           | $       | 1      |        |         | $       | 1      |       
|Supplemental disclosure of non-cash investing
    and financing activities:     |                                                                            |                           |                                           |           |        |           |         |        |        |         |         |       
|                                                                                | Equipment purchased under capital lease
    obligations                    |                           | $                                         | 579       |        |           | $       | 49     |        |         | $       |       |       
|                                                                                | Issuance of shares for acquired business                                   |                           | $                                         | 6,880     |        |           | $       |       |        |         | $       |       |       
|                                                                                | Issuance of warrants with notes payable                                    |                           | $                                         | 542       |        |           | $       |       |        |         | $       |       |       
|                                                                                | Conversion of convertible subordinated debentures
    into Common Stock    |                           | $                                         |          |        |           | $       | 20,050 |        |         | $       |       |       
|                                                                                | Conversion of convertible preferred stock into
    Common Stock            |                           | $                                         |          |        |           | $       | 29,416 |        |         | $       |       |       

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

39



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##### Table of Contents



REPEATER TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Note 1  The Company and
Summary of Significant Accounting Policies:



| |             
| | ------------
| | Organization

Repeater Technologies, Inc. (the
Company), formerly Peninsula Wireless
Communications, Inc., was formed in October 1983. The
Companys name was changed to Repeater Technologies, Inc.
in December 1996. The Companys principal activity is the
development, marketing and selling of wireless communications
network equipment based on the Code Division Multiple Access
(CDMA) technology standard. The Company
reincorporated into the State of Delaware on May 18, 2000.



| |            
| | -----------
| | Fiscal Year

The Company ends its fiscal year on the last
Friday in March.



| |                 
| | ----------------
| | Use of Estimates

The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those
estimates.



| |                      
| | ---------------------
| | Basis of Presentation

The Company has a history of operating losses and
operates in an industry sector that is subject to significant
and rapid shifts in demand and changes in technology. The
Company completed its initial public offering in August 2000,
which raised $42.3 million, net of expenses. However, the
Company has incurred substantial losses and negative cash flows
from operations since inception. For the years ended
March 30, 2001, and March 29, 2002, the Company
incurred losses from operations of approximately
$23.6 million and $21.2 million respectively, and
negative cash flows from operations of approximately
$21.3 million and $17.4 million, respectively. These
circumstances raise substantial doubt about the Companys
ability to continue as a going concern. In regard to this
matter, management plans to continue to reduce cash used in
operating activities. Three workforce reductions have been
implemented during fiscal year 2002, the last in March 2002.
Management also plans to increase the sales volume of its
Network Repeaters and realize higher margins on its new
dual-channel products. If these efforts prove to be
insufficient, certain discretionary expenditures could be
further reduced. The Company may also need additional financing
in the next year. Failure to generate sufficient revenues, raise
additional capital or reduce certain discretionary spending
could have a material adverse effect on the Companys
ability to continue as a going concern and to achieve its
intended business objectives. The financial statements do not
include any adjustments that may be necessary if the Company is
unable to continue as a going concern.



| |                             
| | ----------------------------
| | Concentration of Credit Risk

The Companys cash and cash equivalents are
primarily maintained at a major US financial institution.
Deposits in this institution may exceed the amount of insurance
provided on such deposits.

The Companys customers are providers of
wireless communications services. The Company performs periodic
credit evaluations of these customers and generally does not
require collateral for its domestic customers. For certain
international customers, the Company requires letters of credit
prior to shipment or obtains credit insurance for sales on open
accounts. The Company maintains reserves for potential credit
losses and such losses have historically been within
managements expectations.

As of March 30, 2001 two customers accounted
for 21% and 16% of total receivables, respectively. As of
March 29, 2002 three customers accounted for 31%, 22% and
13% of total receivables, respectively.

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| |                    
| | -------------------
| | Revenue Recognition

The Company recognizes revenue when four basic
criteria are met: (1) persuasive evidence of an arrangement
exists, generally in the form of a contract or a purchase order;
(2) delivery has occurred or services have been rendered;
(3) the fee is fixed and determinable; and
(4) collectibility is reasonably assured.

The Companys revenues are derived primarily
from the sale of the Companys hardware products and
accessories. Product revenue is recognized upon shipment or
delivery to the customer, depending on the terms of the sale.
Where a purchase order or a sales agreement contains a customer
acceptance clause, the Company defers revenue recognition until
the acceptance criteria have been met.

Revenues from services, including network design,
training and installation support, are recognized when services
are performed.

Revenues from Network Management Systems software
are recognized upon completion of installation, provided that no
significant vendor obligations remain and collectibility is
reasonably assured. To date, revenue from software products has
been immaterial.

Sales to distributors  Revenues
generated from certain foreign countries are derived from sales
to distributors. The Company does not grant return rights,
exchange rights or price protection rights. Payment terms are on
average 60 days after invoice and the Company usually
requires an irrevocable letter of credit, a down payment or
credit insurance. Revenue from distributors is recognized upon
shipment or delivery to the distributor, depending on sales
terms.

Sales through agents  The
Companys sales agents act strictly as sales
representatives and receive commission which is recorded in
sales and marketing expenses. The Company invoices the end user
directly and revenue is recognized upon shipment or delivery to
the end-user, depending upon the terms of the sale.

At the time of sale, the Company provides for the
estimated cost of meeting product warranty and hot-line
technical support. When warranty and post contract customer
support obligations exist beyond one year, the related revenue
is deferred and recognized ratably over the term of the
arrangement.



| |            
| | -----------
| | Inventories

Inventories are stated at the lower of cost or
market, with cost determined using the first-in, first-out
(FIFO) method. Appropriate allowances are made to
reduce the value of inventories to net realizable value, where
this is below cost. These allowances are based on
managements judgment, when management determines that
inventories may be slow moving or obsolete.



| |                                    
| | -----------------------------------
| | Impairment of Long-lived
    Assets

The Company regularly evaluates its long-lived
assets for indicators of possible impairment by comparison of
the carrying amounts to undiscounted estimated cash flows to be
generated by such assets. Should an impairment exist, the
impairment loss would be measured based on the excess carrying
value of the asset over the assets fair value or
discounted estimates of future cash flows.



| |                                        
| | ---------------------------------------
| | Fair Value of Financial
    Instruments

The fair value of financial instruments,
including accounts receivable and accounts payable, approximate
their carrying value due to their relatively short maturities.
The fair values of equipment financing notes payable and
convertible subordinate debentures were estimated using
discounted cash flow analysis, based on the Companys
current incremental borrowing rate for similar types of
borrowing arrangements and approximate their carrying values.



| |                                            
| | -------------------------------------------
| | Segments and Enterprise-wide
    Disclosure

The Company operates in one segment, using one
measurement of profitability to manage its business. All
long-lived assets are maintained in the United States.

41



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During the year ended March 31, 2000 three
customers each accounted for 14%, 12% and 10% of net revenues,
respectively. During the year ended March 30, 2001 one
customer accounted for 13% of net revenues. During the year
ended March 29, 2002 three customers accounted for 17%, 16%
and 14%, of net revenues, respectively.

Net revenues through March 29, 2002 have
primarily been derived from the sale of outdoor communication
network equipment. Export sales as a percentage of net revenues
are as follows:

|                   |                    |             |    |           |   |           |    |    |   |  |    |    |  
|------------------ | ------------------ | ----------- | -- | --------- | - | --------- | -- | -- | - |  | -- | -- | -
|                   |                    |            
|                   |                    | Years Ended
|                   |                    |            
|                   |                    | March 31,   |    | March 30, |   | March 29,
|                   |                    | 2000        |    | 2001      |   | 2002     
|                   |                    |             |    |           |   |          
|Asia               |                    |             | 3  | %         |   |           | 2  | %  |   |  | 16 | % 
|South America      |                    |             | 16 | %         |   |           | 12 | %  |   |  | 17 | % 
|Canada             |                    |             | 15 | %         |   |           | 5  | %  |   |  | 4  | % 
|Australia          |                    |             | 0  | %         |   |           | 9  | %  |   |  | 1  | % 
|Other export sales |                    |             | 7  | %         |   |           | 4  | %  |   |  | 1  | % 
|                   |                    |             |    |           |   |           |    |    |   |  |    |   
|                   | Total export sales |             |    | 41        | % |           |    | 32 | % |  |    | 39 | %
|                   |                    |             |    |           |   |           |    |    |   |  |    |   

Accounting
for Stock-based Compensation

The Company accounts for stock-based employee
compensation arrangements in accordance with provisions of
Accounting Principles Board Opinion No. 25,
Accounting for Stock issued to Employees
(APB 25) and Financial Accounting Standards
Board Interpretation No. 28, Accounting for Stock
Appreciation Rights and Other Variable Stock Option or Award
Plan (FIN 28) and complies with the
disclosure provisions of Statement of Capital Financial
Accounting Standards No. 123, Accounting for
Stock-Based Compensation (SFAS 123).

Under APB 25, compensation expense for
grants to employees is based on the difference, if any, on the
date of the grant, between the fair value of the Companys
stock and the exercise price of the option. SFAS 123
defines a fair value based method of accounting for
an employee stock option or similar equity investment. The pro
forma disclosures of the difference between compensation expense
included in net loss and the related cost measured by the fair
value method are presented in Note 5.

The Company accounts for equity instruments
issued to non-employees in accordance with the provisions of
SFAS 123 and the Emerging Issues Task Force
(EITF) 96-18 Accounting for Equity Instruments
That Are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services.

Cash and Cash
Equivalents

The Company considers all highly liquid
investments with an original maturity of three months or less at
the time of purchase to be cash equivalents.

Service
Parts

Parts used for servicing installed equipment and
equipment used for replacement are stated at cost and
depreciation is computed over the estimated useful life,
generally three years.

Property and
Equipment

Property and equipment are stated at cost.
Depreciation and amortization is computed using the
straight-line method over the shorter of the estimated useful
lives of the assets, generally three to five years, or the lease
term. Gains and losses upon asset disposal are taken into income
in the year of disposition. Maintenance and repairs are charged
to operations as incurred.

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Research and
Development Expenses

Research and development costs are expensed as
incurred.

Income
Taxes

The Company accounts for income taxes under the
asset and liability method. Deferred tax assets and liabilities
are recognized for the tax consequences attributable to
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases,
and operating loss carry-forwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in the tax
rates is recognized in income in the period that includes the
enactment date. A valuation allowance is recorded for loss
carry-forwards and other deferred tax assets where it is more
likely than not that such loss carry-forwards and deferred tax
assets will not be realized.

Principles of
Consolidation

In April 1999, the Company incorporated Repeater
Technologies-America do Sul S/ C LTDA, a majority-owned
subsidiary in Brazil. Repeater Technologies-America do
Suls principal activity is sales and sales support for the
Brazilian market. The consolidated financial statements include
the accounts of Repeater Technologies-America do Sul S/ C LTDA
up to March 15, 2001 at which time the Company closed its
subsidiary in Brazil. All significant inter-company accounts and
transactions have been eliminated.

Net Loss Per
Common Share

Basic net loss per share is computed by dividing
net loss available to common stockholders by the weighted
average number of vested common shares outstanding for the
period. Diluted net loss per share is computed giving effect to
all dilutive potential common shares, including options,
warrants, convertible subordinated debentures and convertible
preferred stock. Options, warrants, convertible subordinated
debentures and convertible preferred stock were not included in
the computation of diluted net loss per share for the years
ended March 31, 2000, March 30, 2001 and
March 29, 2002 because the effect would be antidilutive. A
reconciliation of the numerator and denominator used in the
calculation of historical basic and diluted net loss per share
follows (in thousands, except per share data):

|                                                  |                                                                   |             |       |           |   |           |        |         |   |   |        |         |  
|------------------------------------------------- | ----------------------------------------------------------------- | ----------- | ----- | --------- | - | --------- | ------ | ------- | - | - | ------ | ------- | -
|                                                  |                                                                   |            
|                                                  |                                                                   | Years Ended
|                                                  |                                                                   |            
|                                                  |                                                                   | March 31,   |       | March 30, |   | March 29,
|                                                  |                                                                   | 2000        |       | 2001      |   | 2002     
|                                                  |                                                                   |             |       |           |   |          
|Numerator:                                        |                                                                   |             |       |           |   |           |        |         |   |   |        |        
|                                                  | Net loss                                                          |             | $     | (15,040   | ) |           | $      | (23,647 | ) |   | $      | (21,176 | )
|                                                  |                                                                   |             |       |           |   |           |        |         |   |   |        |        
|Denominator:                                      |                                                                   |             |       |           |   |           |        |         |   |   |        |        
|                                                  | Weighted average common shares outstanding                        |             |       | 2,776     |   |           |        | 16,118  |   |   |        | 23,596  |  
|                                                  | Weighted average unvested common shares subject
    to repurchase |             |       | (268      | ) |           |        | (623    | ) |   |        | (573    | )
|                                                  |                                                                   |             |       |           |   |           |        |         |   |   |        |        
|Denominator for basic and diluted calculation     |                                                                   |             | 2,508 |           |   |           | 15,495 |         |   |   | 23,023 |        
|                                                  |                                                                   |             |       |           |   |           |        |         |   |   |        |        
|Net loss per common share  basic and
    diluted |                                                                   | $           | (6.00 | )         |   | $         | (1.53  | )       |   | $ | (0.92  | )      
|                                                  |                                                                   |             |       |           |   |           |        |         |   |   |        |        

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Antidilutive
Securities

The following potential Common Stock have not
been included in the computation of diluted net loss per share
as they are antidilutive:

|                                                                           |  |             |            |           |  |           |           |  |  |  |           | 
|-------------------------------------------------------------------------- |  | ----------- | ---------- | --------- |  | --------- | --------- |  |  |  | --------- | 
|                                                                           |  |            
|                                                                           |  | Years Ended
|                                                                           |  |            
|                                                                           |  | March 31,   |            | March 30, |  | March 29,
|                                                                           |  | 2000        |            | 2001      |  | 2002     
|                                                                           |  |             |            |           |  |          
|Convertible preferred stock (after effect of
    antidilutive provision)   |  |             | 10,116,319 |           |  |           |          |  |  |  |          | 
|Options outstanding to purchase Common Stock                               |  |             | 3,534,806  |           |  |           | 6,214,326 |  |  |  | 3,054,824 | 
|Warrants outstanding to purchase Common Stock                              |  |             | 252,937    |           |  |           | 250,395   |  |  |  | 250,395   | 
|Warrants outstanding to purchase Series BB
    convertible preferred stock |  |             | 835,352    |           |  |           |          |  |  |  |          | 
|Warrants outstanding to purchase Series DD
    convertible preferred stock |  |             | 103,955    |           |  |           |          |  |  |  |          | 
|Convertible subordinated debentures                                        |  |             | 2,727,263  |           |  |           |          |  |  |  |          | 
|Shares subject to repurchase                                               |  |             | 609,518    |           |  |           | 573,334   |  |  |  | 573,334   | 
|                                                                           |  |             |            |           |  |           |           |  |  |  |           | 
|Total                                                                      |  |             | 18,180,150 |           |  |           | 7,038,055 |  |  |  | 3,878,553 | 
|                                                                           |  |             |            |           |  |           |           |  |  |  |           | 

Recent
Accounting Pronouncements

In July 2001, the Financial Accounting Standards
Board (FASB) issued SFAS 141, Business
Combinations. SFAS 141 requires the purchase method
of accounting for business combinations initiated after
June 30, 2001 and eliminates the pooling-of-interests
method. The Company did not enter into any business combinations
after June 30, 2001; therefore, the adoption of
SFAS 141 has not had a significant impact on the
Companys financial statements.

In July 2001, the FASB issued SFAS 142,
Goodwill and Other Intangible Assets. SFAS 142
requires, among other things, the discontinuance of goodwill
amortization and the testing for impairment of goodwill at least
annually. The Company currently does not carry goodwill in its
financial statements; therefore, the adoption of SFAS 142
has not had a material impact on the Companys financial
statements.

On October 3, 2001, the FASB issued
SFAS 144, Accounting for the Impairment or Disposal
of Long-Lived Assets. SFAS 144 supercedes
SFAS 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of.
SFAS 144 applies to all long-lived assets (including
discontinued operations) and consequently amends Accounting
Principles Board opinion No. 30, Reporting Results of
Operations Reporting the Effects of Disposal of a Segment of a
Business. SFAS 144 develops one accounting model for
long-lived assets that are to be disposed of by sale.
SFAS 144 requires that long-lived assets that are to be
disposed of by sale be measured at the lower of net book value
or fair value less cost to sell. Additionally, SFAS 144
expands the scope of discontinued operations to include all
components of an entity with operations that (i) can be
distinguished from the rest of the entity and (ii) will be
eliminated from the ongoing operations of the entity in a
disposal transaction. SFAS 144 is effective for financial
statements issued for fiscal years beginning after
December 15, 2001. The Company does not expect the adoption
of SFAS 144 to have a significant impact on its financial
statements.

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Note 2  Balance Sheet Components (In
thousands):

Inventories consisted of the following:

|                |  |           |        |           |  |   |        |  
|--------------- |  | --------- | ------ | --------- |  | - | ------ | -
|                |  | March 30, |        | March 29,
|                |  | 2001      |        | 2002     
|                |  |           |        |          
|Raw materials   |  | $         | 2,471  |           |  | $ | 1,556  |  
|Work in process |  |           | 91     |           |  |   | 1,298  |  
|Finished goods  |  |           | 9,176  |           |  |   | 7,786  |  
|                |  |           |        |           |  |   |        |  
|                |  |           | 11,738 |           |  |   | 10,640 |  
|Less: allowance |  |           | (3,778 | )         |  |   | (6,456 | )
|                |  |           |        |           |  |   |        |  
|                |  | $         | 7,960  |           |  | $ | 4,184  |  
|                |  |           |        |           |  |   |        |  

Service parts consisted of the following:

|                               |  |           |       |           |  |   |       |  
|------------------------------ |  | --------- | ----- | --------- |  | - | ----- | -
|                               |  | March 30, |       | March 29,
|                               |  | 2001      |       | 2002     
|                               |  |           |       |          
|Service parts                  |  | $         | 1,757 |           |  | $ | 1,325 |  
|Less: accumulated depreciation |  |           | (867  | )         |  |   | (365  | )
|                               |  |           |       |           |  |   |       |  
|                               |  | $         | 890   |           |  | $ | 960   |  
|                               |  |           |       |           |  |   |       |  

Property and equipment consisted of the following:

|                               |  |           |        |           |  |   |        |  
|------------------------------ |  | --------- | ------ | --------- |  | - | ------ | -
|                               |  | March 30, |        | March 29,
|                               |  | 2001      |        | 2002     
|                               |  |           |        |          
|Computer equipment             |  | $         | 2,751  |           |  | $ | 2,798  |  
|Manufacturing equipment        |  |           | 5,689  |           |  |   | 5,920  |  
|Furniture and fixtures         |  |           | 685    |           |  |   | 762    |  
|Leasehold improvements         |  |           | 79     |           |  |   | 79     |  
|                               |  |           |        |           |  |   |        |  
|                               |  |           | 9,204  |           |  |   | 9,559  |  
|Less: accumulated depreciation |  |           | (5,494 | )         |  |   | (6,586 | )
|                               |  |           |        |           |  |   |        |  
|                               |  | $         | 3,710  |           |  | $ | 2,973  |  
|                               |  |           |        |           |  |   |        |  

Depreciation expense was $795,000, $ 1,101,000
and $1,363,000 for the years ended March 31, 2000,
March 30, 2001 and March 29, 2002, respectively.

Included as part of the property and equipment
balances above:

|                               |  |           |        |           |  |   |        |  
|------------------------------ |  | --------- | ------ | --------- |  | - | ------ | -
|                               |  | March 30, |        | March 29,
|                               |  | 2001      |        | 2002     
|                               |  |           |        |          
|Capital leased equipment       |  | $         | 1,155  |           |  | $ | 1,123  |  
|Less: Accumulated depreciation |  |           | (1,069 | )         |  |   | (1,118 | )
|                               |  |           |        |           |  |   |        |  
|                               |  | $         | 86     |           |  | $ | 5      |  
|                               |  |           |        |           |  |   |        |  

Other accrued liabilities consisted of the
following:

|                          |  |           |       |           |  |   |       | 
|------------------------- |  | --------- | ----- | --------- |  | - | ----- | 
|                          |  | March 30, |       | March 29,
|                          |  | 2001      |       | 2002     
|                          |  |           |       |          
|Warranty reserve          |  | $         | 1,152 |           |  | $ | 518   | 
|Accrued sales and use tax |  |           | 470   |           |  |   | 78    | 
|Other                     |  |           | 578   |           |  |   | 667   | 
|                          |  |           |       |           |  |   |       | 
|                          |  | $         | 2,200 |           |  | $ | 1,263 | 
|                          |  |           |       |           |  |   |       | 

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Note 3  Commitments and
contingencies:

Leases

The Company has entered into capital lease
arrangements for computer and manufacturing equipment and
furniture. The Company also leases its administrative and
manufacturing facility under an operating lease which expires in
December 2003, as well as certain equipment under
non-cancellable operating leases which expire in 2006. As of
March 29, 2002 future minimum lease payments under
non-cancelled capital and operating leases for years ending in
March are as follows:

|                                        |                              |                |     |                  |  |  |     |       | 
|--------------------------------------- | ---------------------------- | -------------- | --- | ---------------- |  |  | --- | ----- | 
|                                        |                              |                |     | Non-cancellable 
|                                        |                              | Capital Leases |     | Operating Leases
|                                        |                              |                |     |                 
|                                        |                              |               
|                                        |                              | (in thousands)
|2003                                    |                              |                | 144 |                  |  |  | 675 |      
|2004                                    |                              |                |    |                  |  |  | 486 |      
|2005 and thereafter                     |                              |                |    |                  |  |  | 2   |      
|                                        |                              |                |     |                  |  |  |     |      
|                                        | Total minimum lease payments |                |     | 144              |  |  | $   | 1,163 | 
|                                        |                              |                |     |                  |  |  |     |      
|Less: amount representing interest      |                              |                | 3   |                  |  |  |     |      
|                                        |                              |                |     |                  |  |  |     |      
|Present value of minimum lease payments |                              | $              | 141 |                  |  |  |     |      
|                                        |                              |                |     |                  |  |  |     |      

Rent expense under operating leases for the years
ended March 31, 2000, March 30, 2001 and March 29,
2002 was approximately $717,000, $794,000 and $ 723,000
respectively.

Purchase
Commitments

At March 29, 2002, the Company had
$1,742,000 in non-cancellable purchase commitments with its
third party suppliers.

Litigation

In May 2001, the Company filed an escrow claim
with Gwydion and the escrow agent to assert the Companys
right under the Gwydion acquisition agreement to repurchase the
573,334 shares issued as consideration (see
Note 10  Acquisition and Disposal). Gwydion and
its members have disputed this claim and on September 17,
2001 filed direct and stockholder derivative lawsuits against
the Company and certain of its current and former directors and
officers claiming breach of contract, fraud, intentional and
negligent misrepresentation, and breach of fiduciary duty, and
requesting damages and attorneys fees. On January 10,
2002, the Companys challenge to the stockholder derivative
lawsuit was sustained without leave to amend and on
January 17, 2002, the court entered judgment in favor of
the Company and against Gwydion and its members. The direct suit
for breach of contract and fraud remains pending. While the
Company believes that the plaintiffs direct claims are
without merit and intends to vigorously defend itself against
these allegations, it cannot predict the ultimate outcome of the
pending action.

On November 16, 2001, a purported
stockholder class action lawsuit was filed against the Company,
certain of the Companys current and former directors and
officers and certain underwriters of the Companys initial
public offering of common stock. This lawsuit purports to bring
suit on behalf of all purchasers of the Companys common
stock between August 8, 2000, the effective date of the
Companys initial public offering, and December 6,
2000. The plaintiffs allege, among other things, that the
Companys prospectus, incorporated in the Companys
Registration Statement on Form S-1 filed with the
Securities and Exchange Commission, was materially false and
misleading because it failed to disclose, among other things,
that certain underwriters allegedly (i) solicited and
received excessive and undisclosed commissions from certain
investors in exchange for which such underwriters allocated to
those investors substantial portions of the shares issued in the
Companys initial public offering, and (ii) entered
into agreements with customers whereby the underwriters agreed
to allocate shares of the Companys common stock to those
customers in the Companys initial public offering in
exchange for which the customers agreed to purchase additional
shares of the Companys common

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stock in the aftermarket at pre-determined
prices. The plaintiffs seek unspecified damages and other
relief. The Company believes that it has meritorious defenses
and intends to vigorously defend itself against these
allegations.


Note 4  Convertible Subordinated
Debentures:

Series DD
Convertible Subordinated Debentures

The Company issued $15,000,000 in five-year
convertible subordinated debentures in November 1998. The
debentures accrued interest at 8.0% per year, payable quarterly
in arrears, and were to mature on November 25, 2003. The
debentures were convertible into Series DD convertible
preferred stock at any time prior to the maturity date at the
option of the holder. The Series DD convertible
subordinated debentures were converted into Series DD
convertible preferred stock and subsequently to 2,727,263 shares
of common stock immediately prior to the closing of the
Companys initial public offering in August 2000 at $5.50
per share.

Series EE
Convertible Subordinated Debentures

In July 2000, the Company issued
$5.1 million of Series EE convertible subordinated
debentures. These debentures bore interest at 8% and were due to
mature in November 2003. These debentures were convertible into
Series EE convertible preferred stock at any time at the
option of the holder at a conversion price which was the lesser
of $8.00 per share or the common stock initial public offering
price. In addition, the Company had the right to convert the
debentures into Series EE convertible preferred stock in
the event that it completed a qualified public offering, at
which time Series EE convertible preferred stock would
automatically convert into common stock at a conversion ratio of
one for one. The difference between the conversion price and the
fair value of the common stock on the transaction date resulted
in a beneficial conversion feature of approximately
$1.1 million, which has been recorded as a charge to
interest expense in the year ended March 30, 2001. Upon
completion of the IPO, the company converted the Series EE
convertible debentures into 637,500 shares of common stock.

Note 5  Stockholders
Equity:

Common
stock

At March 29, 2002, the Company had
70,000,000 shares of Common Stock authorized. A portion of the
shares issued are subject to a right of repurchase at original
price in favor of the Company, which lapses over a service
period. At March 29, 2002, the Company had 573,334 shares
subject to repurchase that were issued in connection with
acquisition of The Gwydion Company LLC (see
Note 10-Acquisition and Disposal).

On August 8, 2001, the Companys Board
of Directors adopted a Stockholder Rights Plan. The description
and terms of the Rights are set forth in a Rights Agreement,
dated as of August 9, 2001, entered into between the
Company and U.S. Stock Transfer Corporation, as rights agent,
filed as an exhibit to the Companys Form 10-Q for the
quarter ended June 29, 2001. Under this Plan, the Company
declared for each outstanding share of common stock a dividend
of one right to purchase one one-hundredth share of the
Companys Series A junior participating preferred
stock at an initial exercise price of $7.00. Each one-hundredth
of a share of Series A preferred stock has economic terms
similar to that of one share of common stock. The rights will
separate from the common stock and become exercisable after any
person or group of affiliated persons has acquired beneficial
ownership of 20% or more of the common stock then outstanding or
ten business days after any person or group announces a tender
or exchange offer which would result in a 20% or greater
ownership level. If a buyer acquires more than 20% of the
Companys common stock, all Rights holders except the
buyer, will be entitled to receive upon exercise a number of
shares of common stock with market value equal to twice the
exercise price of the Rights. The Rights will expire in 2011 and
are redeemable for $0.001 at the option of the Company.

The Rights have certain anti-takeover effects.
The Rights will cause substantial dilution to a person or group
that attempts to acquire the Company on terms not approved by
the Companys Board of Directors.

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Convertible
Preferred Stock

At March 29, 2002, the Company had 5,000,000
shares of preferred stock authorized.

Warrants

In July 1997, in connection with a capital lease,
the Company issued warrants to a leasing company for the
purchase of 18,940 shares of Series BB convertible
preferred stock at $2.64 per share. The warrants expire in 2004.
As of March 29, 2002, all of these warrants remained
outstanding and are exercisable for Common Stock.

In connection with an equipment lease line of
credit, the Company issued in January 1999 warrants to purchase
3,955 shares of Series DD convertible preferred stock at
$5.50 per share. The warrants expire in 2009. As of
March 29, 2002, all warrants remained outstanding and are
exercisable for Common Stock.

Using the Black-Scholes method, the fair market
values of the warrants issued in conjunction with the lease were
determined to be insignificant.

In July 1999, in connection with two promissory
notes issued to a financial institution, the Company issued
warrants to purchase 100,000 shares of Series DD convertible
preferred stock at $5.50 per share. The warrants expire in 2006.
As of March 29, 2002, all warrants remained outstanding and
are exercisable for Common Stock. These warrants were valued
using the Black-Scholes method using the same assumptions for
SFAS 123 disclosures (Note 5) plus a volatility factor
of 50% and were recorded as debt discount which was amortized
over the term of the promissory notes.

In connection with the Series EE convertible
debentures, the Company issued warrants to purchase a number of
shares of Series EE convertible preferred stock equal to
$1,020,000 divided by the conversion price of the Series EE
convertible debenture, at an exercise price of $8.00 per share.
The warrants are immediately exercisable and expire on
July 11, 2005. The relative fair value of the warrants,
which has been determined to be approximately $0.5 million,
using the Black-Scholes valuation method, has been recorded as
debt discount and amortized to interest expense over the life of
the debentures. Upon completion of the IPO, the Series EE
warrants automatically converted into warrants to purchase
127,500 shares of Common Stock. These warrants remained
outstanding as of March 29, 2002.

Reserved
Shares

The Company has reserved shares of Common Stock
for future issuance as follows:

|                                              |  |           |           | 
|--------------------------------------------- |  | --------- | --------- | 
|                                              |  | March 29,
|                                              |  | 2002     
|                                              |  |          
|Shares available for stock option grants      |  |           | 2,550,854 | 
|Stock options outstanding                     |  |           | 3,054,824 | 
|Warrants outstanding to purchase Common Stock |  |           | 250,395   | 
|                                              |  |           |           | 
|                                              |  |           | 5,856,073 | 
|                                              |  |           |           | 

Stock
Plans

In May 1990, the Company adopted the 1990
Incentive Stock Plan (the 1990 Plan) under which
shares of Common Stock are reserved for exercise of options to
be granted to key employees, members of the Board of Directors
and consultants to the Company. As of March 29, 2002, a
total of 2,716,909 shares have been reserved for option grants
under the 1990 Plan. As of March 29, 2002, the 1990 Plan
has expired.

In May 1993, the Company adopted the Key
Executives Stock Option Plan under which shares of Common Stock
are reserved for exercise of options to be granted to certain
key executive employees of the Company. A total of 1,351,544
shares have been reserved for option grants under this Plan.

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On February 15, 2000, the Board of Directors
approved the 2000 Equity Incentive Plan under which the Company
initially reserved 3,000,000 shares; this reserve will be
increased each January beginning on January 1, 2001 by the
lesser of 1,000,000 shares, 4% of the total outstanding shares
of Common Stock or a smaller number as designated by the Board
of Directors. At March 29, 2002, 4,883,106 shares were
reserved for grants to employees, directors and consultants. The
plan became effective on the date of the Companys initial
public offering.

The Plans permit the Company to (i) grant
incentive options at 100% of fair value at the date of grant;
(ii) grant nonqualified options at 85% or greater of fair
value; and (iii) sell Common Stock at 85% of fair value
subject to stock purchase agreements giving the Company
repurchase rights in the event of termination. Options have a
vesting period of four years from the date of grant and are
exercisable immediately. The Company has a right to repurchase
all or any of the unvested shares, at the original exercise
price, in the event of termination of employment. The options
have a maximum term of ten years. Options granted to 10%
stockholders shall have a maximum term of five years. In
addition under the 2000 Equity Incentive Plan 10% stockholders
shall not be granted an incentive stock option unless the
exercise price of such option is at least 110% of the fair
market value of the Common Stock at the date of grant and no
employee shall be eligible to be granted options covering more
than 2,000,000 shares of Common Stock during any calendar year.

2000 Employee
Stock Purchase Plan

On February 15, 2000, the Board of Directors
approved the 2000 Employee Stock Purchase Plan (the 2000
ESPP), which became effective upon the closing of the
Companys initial public offering on August 8, 2000.

Under the plan employees may elect to have up to
15% of their earnings withheld from their pay to be applied
under the plan to purchase the Companys Common Stock at
85% of fair market value. The Company initially reserved 500,000
shares under the plan; this reserve will be increased each
January beginning on January 1, 2002 by the lesser of
250,000 shares or 1.5% of the total outstanding shares of Common
Stock. During the year ended March 29, 2002, the Company
issued 68,000 shares of common stock under the 2000 ESPP and
suspended the 2000 ESPP until further decision by its Board of
Directors.

Pro Forma
Stock-Based Compensation

The Company has adopted the disclosure-only
provisions of SFAS 123, Accounting for Stock-Based
Compensation (SFAS 123). Had compensation
costs been determined based on the fair value method prescribed
by SFAS 123, the Companys net loss would have been as
follows (in thousands, except per share amounts):

|                                                              |  |             |         |           |  |           |         |   |  |   |         |  
|------------------------------------------------------------- |  | ----------- | ------- | --------- |  | --------- | ------- | - |  | - | ------- | -
|                                                              |  |            
|                                                              |  | Years Ended
|                                                              |  |            
|                                                              |  | March 31,   |         | March 30, |  | March 29,
|                                                              |  | 2000        |         | 2001      |  | 2002     
|                                                              |  |             |         |           |  |          
|Net loss attributed to common stockholders 
    as reported  |  | $           | (15,040 | )         |  | $         | (23,647 | ) |  | $ | (21,176 | )
|Net loss attributed to common stockholders 
    pro forma    |  |             | (15,660 | )         |  |           | (26,445 | ) |  |   | (21,405 | )
|Net loss per common share  basic and
    diluted as reported |  | $           | (6.00   | )         |  | $         | (1.53   | ) |  | $ | (0.92   | )
|Net loss per common share  basic and
    diluted pro forma   |  | $           | (6.24   | )         |  | $         | (1.71   | ) |  | $ | (0.93   | )

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Such pro forma disclosures may not be
representative of future compensation cost because options vest
over several years and additional grants are made each year. The
fair value of each option grant is estimated on the date of
grant using the following assumptions used for grants:

|                                         |  |             |         |           |  |           |         |   |  |  |         |  
|---------------------------------------- |  | ----------- | ------- | --------- |  | --------- | ------- | - |  |  | ------- | -
|                                         |  |            
|                                         |  | Years Ended
|                                         |  |            
|                                         |  | March 31,   |         | March 30, |  | March 29,
|                                         |  | 2000        |         | 2001      |  | 2002     
|                                         |  |             |         |           |  |          
|Weighted average risk-free interest rate |  |             | 5.50    | %         |  |           | 6.00    | % |  |  | 5.00    | %
|Expected life                            |  |             | 5 years |           |  |           | 5 years |   |  |  | 2 years |  
|Expected dividends                       |  |             | 0       | %         |  |           | 0       | % |  |  | 0       | %
|Volatility                               |  |             | 0       | %         |  |           | 129     | % |  |  | 129     | %

Based on the above assumptions, the weighted
average values per share of options granted were approximately,
$5.74, $ 3.27 and $0.25 for the years ended, March 31,
2000, March 30, 2001 and March 29, 2002 respectively.

The following table summarizes stock option
activity:

|                           |  |           |            |             |  |           |            |   |  |   |      | 
|-------------------------- |  | --------- | ---------- | ----------- |  | --------- | ---------- | - |  | - | ---- | 
|                           |  |           |            |             |  | Weighted-
|                           |  |           |            |             |  | Average  
|                           |  | Shares    |            |             |  | Exercise 
|                           |  | Available |            | Shares      |  | Price Per
|                           |  | For Grant |            | Outstanding |  | Share    
|                           |  |           |            |             |  |          
|Balance at March 26, 1999  |  |           | 275,684    |             |  |           | 2,702,367  |   |  | $ | 0.64 | 
|Additional shares reserved |  |           | 1,000,000  |             |  |           |           |   |  |   |     | 
|Granted                    |  |           | (1,795,150 | )           |  |           | 1,795,150  |   |  | $ | 6.68 | 
|Exercised                  |  |           |           |             |  |           | (334,102   | ) |  | $ | 0.33 | 
|Canceled                   |  |           | 628,609    |             |  |           | (628,609   | ) |  | $ | 1.31 | 
|                           |  |           |            |             |  |           |            |   |  |   |      | 
|Balance at March 31, 2000  |  |           | 109,143    |             |  |           | 3,534,806  |   |  | $ | 3.62 | 
|Additional shares reserved |  |           | 3,627,000  |             |  |           |           |   |  |   |      | 
|Granted                    |  |           | (3,264,000 | )           |  |           | 3,264,000  |   |  | $ | 3.74 | 
|Exercised                  |  |           |           |             |  |           | (106,970   | ) |  | $ | 0.64 | 
|Canceled                   |  |           | 477,510    |             |  |           | (477,510   | ) |  | $ | 4.56 | 
|                           |  |           |            |             |  |           |            |   |  |   |      | 
|Balance at March 30, 2001  |  |           | 949,653    |             |  |           | 6,214,326  |   |  | $ | 3.66 | 
|Additional shares reserved |  |           | 955,000    |             |  |           |           |   |  |   |      | 
|Granted                    |  |           | (4,179,128 | )           |  |           | 4,179,128  |   |  | $ | 0.38 | 
|Exercised                  |  |           |           |             |  |           | (596,707   | ) |  | $ | 0.30 | 
|Expiration of 1990 Plan    |  |           | (1,916,594 | )           |  |           |           |   |  |   |      | 
|Cancelled                  |  |           | 6,741,923  |             |  |           | (6,741,923 | ) |  | $ | 3.41 | 
|                           |  |           |            |             |  |           |            |   |  |   |      | 
|Balance at March 29, 2002  |  |           | 2,550,854  |             |  |           | 3,054,824  |   |  | $ | 0.38 | 
|                           |  |           |            |             |  |           |            |   |  |   |      | 

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The following table summarizes information
relating to stock options outstanding at March 29, 2002:

|                         |  |                 |           |                |  |                 |         |  |  |  |      | 
|------------------------ |  | --------------- | --------- | -------------- |  | --------------- | ------- |  |  |  | ---- | 
|                         |  |                 |           |                |  | Weighted-      
|                         |  |                 |           |                |  | Average        
|                         |  | Options         |           |                |  | Remaining      
|                         |  | Outstanding and |           |                |  | Contractual    
|Option Exercise Price    |  | Exercisable     |           | Options Vested |  | Life (in years)
|                         |  |                 |           |                |  |                
|$0.20                    |  |                 | 8,000     |                |  |                 |        |  |  |  | 9.88 | 
|$0.29                    |  |                 | 2,713,029 |                |  |                 | 678,250 |  |  |  | 1.25 | 
|$0.30                    |  |                 | 125,275   |                |  |                 | 125,275 |  |  |  | 5.89 | 
|$0.33                    |  |                 | 52,000    |                |  |                 |        |  |  |  | 9.41 | 
|$0.34                    |  |                 | 40,000    |                |  |                 | 40,000  |  |  |  | 9.46 | 
|$0.38                    |  |                 | 45,000    |                |  |                 | 20,000  |  |  |  | 9.71 | 
|$0.50                    |  |                 | 270       |                |  |                 | 270     |  |  |  | 3.96 | 
|$0.59                    |  |                 | 20,000    |                |  |                 |        |  |  |  | 9.19 | 
|$1.00                    |  |                 | 18,750    |                |  |                 | 16,406  |  |  |  | 6.45 | 
|$2.25                    |  |                 | 4,625     |                |  |                 | 1,445   |  |  |  | 8.70 | 
|$3.00                    |  |                 | 375       |                |  |                 | 375     |  |  |  | 6.85 | 
|$8.00                    |  |                 | 2,500     |                |  |                 | 1,145   |  |  |  | 8.15 | 
|$9.00                    |  |                 | 25,000    |                |  |                 |        |  |  |  | 8.36 | 
|                         |  |                 |           |                |  |                 |         |  |  |  |      | 
|$0.38 (weighted average) |  |                 | 3,054,824 |                |  |                 | 883,166 |  |  |  | 1.99 | 
|                         |  |                 |           |                |  |                 |         |  |  |  |      | 

Stock-based
Compensation

During the years ended March 31, 2000,
March 30, 2001 and March 29, 2002, the Company
recorded $7,083,000, $327,000 and $0 of unearned stock-based
compensation for the excess of the deemed fair market value over
the exercise price at the date of grant. The compensation
expense is being recognized over the option vesting period of
generally four years, using the method prescribed by
FIN 28. Under the FIN 28 method, each vested tranche
of options is accounted for as a separate option grant awarded
for past services. Accordingly, the compensation expense is
recognized over the period during which the services have been
provided. This method results in a front-loading of the
compensation expense. For the years ended March 31, 2000,
March 30, 2001 and March 29, 2002, the Company
recorded $2,510,000, $2,315,000 and $38,000 of stock-based
compensation expense in connection with options granted to
employees and consultants.

In November 2001, the Company extended an offer
to its eligible employees and directors to cancel stock options
with exercise prices greater than $0.30 per share and to grant
replacement stock options with an exercise price equal to the
quoted market price of the Companys common stock at
December 27, 2001, one day before the expiration of the
offer. On December 28, 2001, the Company granted
replacement options to purchase an aggregate of 3,143,628 shares
of its common stock at $0.29 per share to eligible employees and
directors who accepted the offer in a one-for-one exchange for
such cancelled stock options. Each replacement option will vest
monthly over one year following the date of grant and will
expire 18 months after the date of grant. The Company will
account for all such replacement options, as well as eligible
options to purchase an aggregate of 69,770 shares of common
stock which were not exchanged, under the variable accounting
method and will revalue these stock options at the end of each
reporting period until the options are exercised, forfeited, or
expire unexercised; the resulting charge will be recorded as
compensation expense. The higher the market value of the
Companys common stock, the greater the compensation
expense will be. To date, the Company has not recorded any
compensation expense in relation to the stock option exchange.

Note 6  401(k) Plan:

The Company has a 401(k) plan under which
matching and discretionary contributions may be made. The
Company did not make any contributions under this plan for any
of the periods presented.

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Note 7  Notes
Payable:

In July 1999, the Company entered into a note
agreement with a financial institution. Borrowings made pursuant
to this agreement would not exceed $5,000,000 in the aggregate
and were secured by all assets of the Company, subject to
permitted liens. Pursuant to this agreement, the Company issued,
in July 1999 and September 1999, two promissory notes for
$3,000,000 and $2,000,000, respectively, bearing interest at
13.47% and 13.68%, respectively. The Company made monthly
interest-only payments through February 2000, followed by
30 monthly installments of $118,335 and $79,090 for the
$3,000,000 and the $2,000,000 promissory notes, respectively.
The promissory notes contained restrictions, including but not
limited to fundamental changes (as defined), payment of
dividends, acquisition or redemption of stock, and acquisition
or sale of assets other than equipment or inventory in the
ordinary course of business. The sale of substantially all of
the assets related to the Gwydion project resulted in the
Companys violation of the covenant that prohibited the
Company from the sale of any assets over $25,000 outside of the
ordinary course of business prior to its obtaining written
approval from the lender. The Company received a waiver for this
covenant violation and subsequent default on October 30,
2001 and agreed with the lender to repay the remaining balance
of this loan by March 2002 in equal monthly installments. As of
March 29, 2002, the loan was repaid in full.

Note 8  Income
Taxes:

Net deferred tax assets are as follows (in
thousands):

|                     |                                                                           |                           |   |           |        |           |   |         |        |  |   |         |        | 
|-------------------- | ------------------------------------------------------------------------- | ------------------------- | - | --------- | ------ | --------- | - | ------- | ------ |  | - | ------- | ------ | 
|                     |                                                                           |                          
|                     |                                                                           | Years Ended              
|                     |                                                                           |                          
|                     |                                                                           | March 31,                 |   | March 30, |        | March 29,
|                     |                                                                           | 2000                      |   | 2001      |        | 2002     
|                     |                                                                           |                           |   |           |        |          
|Deferred tax assets: |                                                                           |                           |   |           |        |           |   |         |        |  |   |        
|                     | Net operating loss carry-forwards                                         |                           | $ | 16,780    |        |           | $ | 22,384  |        |  | $ | 29,539  |       
|                     | Research and other credits                                                |                           |   | 1,144     |        |           |   | 1,746   |        |  |   | 1,931   |       
|                     | Inventory reserve                                                         |                           |   | 629       |        |           |   | 1,494   |        |  |   | 2,553   |       
|                     | Stock compensation                                                        |                           |   | 762       |        |           |   |        |        |  |   |        |       
|                     | Depreciation and amortization                                             |                           |   | 1,295     |        |           |   | 1,394   |        |  |   | 1,594   |       
|                     | Other accruals and reserves not currently
    deductible for tax purposes |                           |   | 641       |        |           |   | 2,074   |        |  |   | 948     |       
|                     |                                                                           |                           |   |           |        |           |   |         |        |  |   |        
|                     |                                                                           | Total deferred tax assets |   |           | 21,251 |           |   |         | 29,092 |  |   |         | 36,565 | 
|                     | Valuation allowance for deferred taxes                                    |                           |   | (21,251   | )      |           |   | (29,092 | )      |  |   | (36,565 | )     
|                     |                                                                           |                           |   |           |        |           |   |         |        |  |   |        
|                     |                                                                           | Net deferred taxes        |   | $         |       |           |   | $       |       |  |   | $       |       | 
|                     |                                                                           |                           |   |           |        |           |   |         |        |  |   |        

Management believes that, based on a number of
factors, it is more likely than not that the deferred tax assets
will not be utilized; as a result, a full valuation allowance
has been recorded.

At March 29, 2002, the Company had federal
and state net operating loss carry-forwards of approximately
$82,852,000 and $24,700,000 respectively, available to offset
future taxable income. The Company also had federal and state
research and development tax credits of approximately $1,167,000
and $1,158,000. The net operating loss and tax credit
carry-forwards will expire at various dates from 2003 to 2022,
if not utilized.

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Expiration dates for federal and state operating
loss carry-forwards are as follows, in thousands:

|                              |  |         |        |       |  |   |        | 
|----------------------------- |  | ------- | ------ | ----- |  | - | ------ | 
|                              |  | Federal |        | State
|                              |  |         |        |      
|March 31, 2003                |  | $       | 61     |       |  | $ | 3,724  | 
|March 31, 2004                |  |         | 410    |       |  |   | 2,945  | 
|March 31, 2005                |  |         | 284    |       |  |   | 3,569  | 
|March 31, 2006                |  |         | 522    |       |  |   |       | 
|March 31, 2007                |  |         | 108    |       |  |   |       | 
|March 2008 through March 2022 |  |         | 81,467 |       |  |   | 14,462 | 
|                              |  |         |        |       |  |   |        | 
|                              |  | $       | 82,852 |       |  | $ | 24,700 | 
|                              |  |         |        |       |  |   |        | 

Utilization of the net operating losses and
credits may be subject to a substantial annual limitation due to
the change in ownership provisions of the Internal
Revenue Code of 1986 and similar state provisions. The annual
limitation may result in the expiration of net operating losses
and credits before utilization.

Note 9  Related Party
Transactions:

The Companys Chief Executive Officer is a
director and an audit committee member at SureWest
Communications (SureWest). During the years ended
March 30, 2001 and March 29, 2002, the Company made
sales to SureWest of $1,456,000 and $11,000, respectively.

Note 10  Acquisition and
Disposal

Acquisition

On November 4, 1999, the Company acquired
substantially all of the assets of The Gwydion Company LLC
(Gwydion), a development stage company engaged in
design and development of radio frequency and microwave
fiber-optic equipment for cellular and PCS (personal
communication services), satellite communications and related
markets. The purchase consideration consisted of $754,000 in
cash.

The transaction was recorded using the purchase
method of accounting and the results of Gwydion have been
included in the Companys financial statements subsequent
to November 4, 1999. The allocation of the purchase price
to the tangible and identifiable intangible assets acquired in
connection with this acquisition was based on estimated fair
values as determined by management as follows (in thousands):

|                                             |  |   |      |  
|-------------------------------------------- |  | - | ---- | -
|Computer equipment                           |  | $ | 10   |  
|Assumed liabilities                          |  |   | (175 | )
|Acquired workforce                           |  |   | 34   |  
|Acquired in-process research and development |  |   | 885  |  
|Deferred income taxes                        |  |   | 354  |  
|Valuation allowance                          |  |   | (354 | )
|                                             |  |   |      |  
|Total purchase consideration                 |  | $ | 754  |  
|                                             |  |   |      |  

Disposal of
Assets

On April 21, 2001 the Company entered into
an agreement to sell substantially all of the assets of the
Gwydion product development project. The consideration received
for the sale was approximately $969,000 in cash. The Company
recorded a gain on sale of approximately $357,000 in the first
quarter of fiscal year ending March 29, 2002 in relation to
the sale of substantially all of the assets of the Gwydion
development project.

Contingent
Consideration

In November 1999, in connection with the
acquisition of substantially all of the assets of The Gwydion
Company, LLC (Gwydion), the Company issued
573,334 shares of common stock to the members of

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Gwydion. These shares were to be held in an
escrow account and subject to the Companys right of
repurchase for $1.00 in the aggregate until certain performance
criteria were met. These performance criteria include continued
employment of one member for a period of 18 months. The
Company revalued these shares at the end of each reporting
period until April 21, 2001, at which time the Company
entered into an agreement to sell substantially all of the
assets of the Gwydion development project. Amounts recognized in
research and development expense in fiscal years 2000, 2001 and
2002 in connection with this contingent consideration were a
charge of $1,911,000, a credit of $1,387,000, and a charge of
$55,000 respectively. Total compensation expense recorded
related to these shares was $579,000 in the aggregate.


In May 2001, the Company filed an escrow claim
with Gwydion and the escrow agent to assert the Companys
right under the Gwydion acquisition agreement to repurchase the
573,334 shares issued as consideration.

Gwydion and its members have disputed this claim
and have filed direct and stockholder derivative lawsuits
against the Company (see note 3  Commitments and
Contingencies).

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Selected Quarterly Financial Data
(unaudited)

The following table sets forth quarterly
financial data for the eight quarters ended March 29, 2002.
This quarterly information has been prepared on the same basis
as the audited financial information presented elsewhere herein
and, in our opinion, includes all adjustments, consisting only
of normal recurring adjustments, that we consider necessary for
a fair presentation of the information for the quarters
presented. The quarterly data should be read in conjunction with
our consolidated financial statements and related notes. The
operating results for any quarter are not necessarily indicative
of operating results for any future period.

|                                                  |  |                |        |               |  |              |        |           |  |          |        |               |  |              |        |           |  |   |        |   |  |   |        |   |  |   |        |   |  |   |        |  
|------------------------------------------------- |  | -------------- | ------ | ------------- |  | ------------ | ------ | --------- |  | -------- | ------ | ------------- |  | ------------ | ------ | --------- |  | - | ------ | - |  | - | ------ | - |  | - | ------ | - |  | - | ------ | -
|                                                  |  |               
|                                                  |  | Quarter Ended 
|                                                  |  |               
|                                                  |  | June 29,       |        | September 29, |  | December 29, |        | March 30, |  | June 29, |        | September 28, |  | December 28, |        | March 29,
|                                                  |  | 2000           |        | 2000          |  | 2000         |        | 2001      |  | 2001     |        | 2001          |  | 2001         |        | 2002     
|                                                  |  |                |        |               |  |              |        |           |  |          |        |               |  |              |        |          
|                                                  |  |               
|                                                  |  | (in thousands)
|Net revenues                                      |  | $              | 7,355  |               |  | $            | 4,870  |           |  | $        | 6,887  |               |  | $            | 2,878  |           |  | $ | 3,902  |   |  | $ | 3,728  |   |  | $ | 3,260  |   |  | $ | 3,025  |  
|Gross profit (loss)                               |  |                | 2,335  |               |  |              | 926    |           |  |          | 1,230  |               |  |              | (3,165 | )         |  |   | 179    |   |  |   | (484   | ) |  |   | (1,088 | ) |  |   | (3,448 | )
|Other income (expense), net                       |  |                | (492   | )             |  |              | (1,861 | )         |  |          | (39    | )             |  |              | (472   | )         |  |   | 302    |   |  |   | 10     |   |  |   | (205   | ) |  |   | (65    | )
|Net loss                                          |  | $              | (3,659 | )             |  | $            | (8,772 | )         |  | $        | (2,083 | )             |  | $            | (9,133 | )         |  | $ | (4,518 | ) |  | $ | (5,338 | ) |  | $ | (4,609 | ) |  | $ | (6,710 | )
|Net loss per common share  basic and
    diluted |  | $              | (1.36  | )             |  | $            | (0.62  | )         |  | $        | (0.09  | )             |  | $            | (0.40  | )         |  | $ | (0.20  | ) |  | $ | (0.23  | ) |  | $ | (0.20  | ) |  | $ | (0.29  | )

We have experienced a decline in our shipments
starting from the quarter ended September 28, 2000 due to
the overall downturn in the technology, and particularly in the
telecommunications, industry. Our revenues increased in the
quarter ended December 29, 2000 as compared to the quarter
ended September 28, 2000 due to deferral of revenue
recognition in relation to certain acceptance clauses in some of
our sales contracts.

Gross margins have declined for the last three
quarters of the fiscal year ended March 29, 2002, due to
decreased unit sales, and lower pricing particularly in the
third and fourth quarters. Third quarter gross margins were
negatively impacted due to the cancellation penalty accrual in
relation to the order from Capitel Group, Ltd. of Beijing for
China Unicom. Fourth quarter gross margins have been affected by
the increase in inventory valuation allowance. The increase in
inventory valuation allowance was primarily due to excess
inventory resulting from our inability to cancel our purchase
order from our contract manufacturer under our agreement in
response to a slowdown in shipments to Capitel Group, Ltd. of
Beijing for China Unicom during the latter part of our fiscal
year ended March 29, 2002.

We have experienced and expect to continue to
experience significant fluctuations in quarterly operating
results as a result of many factors. We believe that
period-to-period comparisons of our operating results should not
be relied upon as any indication of future performance.

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Item 9.     Changes
in and Disagreements with Accountants on Accounting and
Financial Disclosure

Not applicable.




PART III




Item 10.     Directors
and Executive Officers of the Registrant

Board of Directors

The Companys Amended and Restated
Certificate of Incorporation and Bylaws provide that the
Companys Board of Directors (the Board) shall
be divided into three classes. Each class has a three-year term.
Vacancies on the Board may be filled only by persons elected by
a majority of the remaining directors. A director elected by the
Board to fill a vacancy in a class (including a vacancy created
by an increase in the number of directors) shall serve for the
remainder of the full term of that class, and until the
directors successor is elected and qualified.

The Board presently has five members. The Board
is currently composed of two Class I directors
(John E. Bosch and Richard G. Grey), one Class II
director (Alessandro A. Piol) and two Class III directors
(Chris L. Branscum and Perry M. LaForge), whose terms will
expire at the annual meetings of stockholders to be held in
2004, 2002 and 2003, respectively.

John E. Bosch,age
67, has served as the Companys Chairman of the Board since
January 2001, on the Executive Committee of the Board since
December 2000 and as a director since May 1990. Since 1981,
Mr. Bosch has been a general partner of Bay Partners, a
venture capital firm. In 1976, he co-founded Cronus Precision
Products, Inc., a digital timing company, and served as its
President and Chief Executive Officer until 1981. In 1970,
Mr. Bosch co-founded Anixter, Bosch and Russell, a
consulting firm specializing in marketing and sales consulting
for high technology companies. Mr. Bosch holds a B.S. in
mechanical engineering and an M.B.A. in marketing from the
University of Southern California. Mr. Bosch currently
serves on the board of directors of NetManage, Inc.

Chris L. Branscum,age 53, has served as the Companys President and Chief
Executive Officer since December 2000, on the Executive
Committee of the Board since December 2000, and as a director
since 1990. Mr. Branscum served as the Companys
Chairman of the Board from 1993 to 2000. Mr. Branscum has
been a General Partner of Hallador Venture Partners, a venture
capital firm, since 1990 and a Managing Director of Hallador
Venture Partners, LLC since 1997. From 1985 through 1989,
Mr. Branscum was with Arthur Young & Company, where he
was a partner. Prior to 1985, Mr. Branscum was in the
private practice of law. Mr. Branscum holds a J.D. from the
University of Pacific, McGeorge School of Law and a B.S. in
Business Administration from California State University,
Sacramento. Mr. Branscum currently serves on the board of
directors of SureWest Communications.

Richard G. Grey,age
72, has served as a director since 1990. Since 1995,
Mr. Grey has served as General Partner of HMS Hawaii
Management Partners, a venture capital firm. Mr. Grey has
also served as General Partner of HMS Group, which manages
venture capital funds for investments in the communications
industry, since 1984. Previously, Mr. Grey served as a
Director from 1982 to 1987 for HMS Capital Limited. From 1979 to
1987, Mr. Grey was in the private practice of law.
Mr. Grey holds a J.D. from the University of San Francisco
and an M.B.A. and a B.S. from the University of California, Los
Angeles.

Perry M. LaForge,age 44, has served as a director since September 1999.
Mr. LaForge is Vice President and Partner of the
international management consulting firm of Pittiglio Rabin Todd
& McGrath, with which he has been associated since 1984.
Mr. LaForge founded the CDMA Development Group, a
non-profit trade organization, and has served as the Executive
Director and Chairman since December 1994. He founded and serves
as the President and Chief Executive Officer of inOvate
Communications Group, which creates and capitalizes promising
companies in the Internet and telecommunications industries. He
is also the founder of inCode Telecom Group, a
telecommunications consulting company. Mr. LaForge holds a
B.E. from Santa

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Clara University and an M.B.A. from the Amos Tuck
School at Dartmouth College. Mr. LaForge currently serves
on the board of directors of Signalsoft Corporation.


Alessandro A. Piol,age 45, has served as a director since January 1998. Since 1995,
Mr. Piol has served as Managing Director of Invesco Private
Capital (formerly Chancellor Capital Management), a venture
capital and investment management firm. Mr. Piol co-founded
and, from 1993 to 1995, was a General Partner of AT&T
Ventures, the venture capital arm of AT&T. Prior to AT&T
Ventures, Mr. Piol spent six years in various operational
positions at AT&T and co-founded Pixel Machines.
Mr. Piol holds a B.S. and M.S. in Computer Science from the
Columbia University School of Engineering and an M.B.A. from the
Harvard Business School.

Executive Officers

The Companys executive officers as of
June 27, 2002 are as follows:

|                    |  |     |    |          |  |                                                                                  
|------------------- |  | --- | -- | -------- |  | ---------------------------------------------------------------------------------
|Name                |  | Age |    | Position
|                    |  |     |    |         
|Chris L. Branscum   |  |     | 53 |          |  | President and Chief Executive Officer                                            
|Timothy A. Marcotte |  |     | 45 |          |  | Executive Vice President, Chief Operating Officer
    and Chief Financial Officer
|John L. Soliday     |  |     | 44 |          |  | Vice President of Engineering/R&D                                                
|Joel J. Spina       |  |     | 51 |          |  | Vice President of Marketing and Business
    Development                         

Chris L. Branscum,age 53, has served as the Companys President and Chief
Executive Officer since December 2000, on the Executive
Committee of the Board since December 2000, and as a director
since 1990. Mr. Branscum served as the Companys
Chairman of the Board from 1993 to 2000. Mr. Branscum has
been a General Partner of Hallador Venture Partners since 1990
and a Managing Director of Hallador Venture Partners, LLC since
1997. From 1985 through 1989, Mr. Branscum was with Arthur Young
& Company, where he was a partner. Prior to 1985,
Mr. Branscum was in the private practice of law.
Mr. Branscum holds a J.D. from the University of Pacific,
McGeorge School of Law and a B.S. in Business Administration
from California State University, Sacramento. Mr. Branscum
currently serves on the board of directors of SureWest
Communications.

Timothy A. Marcotte,age 45, has served as the Executive Vice President of the
Company since January 2001, its Chief Operating Officer since
December 2000 and its Chief Financial Officer since November
1999. He has also served as the Companys corporate
Secretary since June 2001. From March 1999 to November 1999,
Mr. Marcotte was an independent financial consultant. From
August 1997 to March 1999, Mr. Marcotte served as Vice
President of Finance and Chief Financial Officer of Sunrise
Technologies International, Inc., a laser medical device
manufacturer. From December 1996 to August 1997,
Mr. Marcotte served as Vice President and Chief Financial
Officer of InfoGain Corporation, an information technology
consulting firm. From June 1996 to December 1996,
Mr. Marcotte was the Vice President and Chief Financial
Officer of IRIDEX Corporation, a laser medical device
manufacturer. From April 1993 to June 1996, Mr. Marcotte
served as Executive Vice President and Chief Financial Officer
of Now Software, Inc., a software development company.
Mr. Marcotte holds a B.S. Anthropology/ Zoology and an
M.B.A. from the University of Michigan.

John L. Soliday,age 44, has served as the Companys Vice President of
Engineering/R&D since April 2001. From August 1998 to April
2001, Mr. Soliday served as the Companys Executive
Director of Advanced Technology. Mr. Soliday was an
independent engineering consultant from August 1997 to July 1998
for various power amplifier firms. From September 1995 to July
1997, Mr. Soliday was the Director of Engineering at
Spectrian Corporation, an RF amplifier supplier. From January
1984 to August 1995, Mr. Soliday held various managerial
and technical positions at Motorola, Inc. Mr. Soliday holds
a B.S.E.E. from the University of Wisconsin and an M.S.E.E. from
the University of Illinois.

Joel J. Spina,age 51, has served as the Companys Vice President of
Marketing and Business Development since April 2001. From
February 1998 to April 2001, Mr. Spina served as the
Companys Vice President of International Sales. From May
1997 to February 1998, Mr. Spina worked for CommScope Inc.,
a

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telecommunications products provider, as Vice
President of Latin America and the Caribbean. From April 1996 to
May 1997, Mr. Spina worked for ADC Telecommunications Inc.
as their Vice President, Latin America. From 1992 to April 1996,
Mr. Spina worked for Andrew Corporation, an RF products and
services provider, as their Director of Sales for Latin America.
Mr. Spina holds a B.S.E.E. from Mackenzie University and an
M.B.A. from Northwestern University.


Involvement in Certain Legal
Proceedings

Mr. LaForge, a current director of the
Company, served as the president and chief executive officer of
inServ e-Customer Solutions, Inc. (inServ) from
December 6, 1999 to January 1, 2001. On
August 16, 2001, inServ executed a general assignment for
the benefit of creditors.

Section 16(a) Beneficial Ownership
Reporting Compliance

Section 16(a) of the Securities Exchange Act
of 1934, as amended, requires the Companys directors and
executive officers, and persons who own more than ten percent of
a registered class of the Companys equity securities, to
file with the Securities and Exchange Commission
(SEC) initial reports of ownership and reports of
changes in ownership of common stock and other equity securities
of the Company. Officers, directors and greater than ten percent
stockholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file.

To the Companys knowledge, based solely on
a review of the copies of such reports furnished to the Company
and written representations that no other reports were required,
during the fiscal year ended March 29, 2002, all Section
16(a) filing requirements applicable to its officers, directors
and greater than ten percent beneficial owners were complied
with except that: (i) a Form 4 was filed late by
Mr. Branscum covering an aggregate of two transactions;
(ii) a Form 5 covering one stock option grant was
filed one day late by Mr. LaForge, inadvertently reported
an incorrect acquisition date of the stock option and
inadvertently failed to report the acquisition of a stock option
grant in the amount of 25,000 shares which was subsequently
cancelled in connection with the Companys Option Exchange
Program (as defined in the section entitled Compensation
of Directors); (iii) a Form 5 covering one stock
option grant was filed one day late by Mr. Bosch and
inadvertently reported an incorrect acquisition date of the
stock option; and (iv) a Form 5 covering one stock
option grant was filed one day late by Mr. Grey and
inadvertently reported an incorrect acquisition date of the
stock option. In the case of Messrs. LaForge, Bosch and
Grey, these errors will be corrected by filing amended
Form 5s.




Item 11.     Executive
Compensation

Compensation of Directors

Since June 1, 2001, each non-employee
director of the Company has received a monthly retainer of
$1,000 and a fee of $750 for each Board meeting attended and for
each Board committee meeting attended as a committee member (or
$750 for the first meeting and $500 for each additional meeting
attended on the same date). In addition, since January 2001,
Mr. Bosch has received monthly fees of $6,250 for services
performed for the Company as a member of the Executive Committee
of the Board, of which Mr. Branscum is also a member. In
the fiscal year ended March 29, 2002, the total
compensation paid to non-employee directors was $117,250. The
members of the Board are also eligible for reimbursement for
their expenses incurred in connection with attendance at Board
meetings in accordance with Company policy.

Each director of the Company and its affiliates
(as defined in the Internal Revenue Code) is also eligible to
receive stock option grants, stock bonuses and rights to acquire
restricted stock under the Companys 2000 Equity Incentive
Plan (the 2000 Plan). Options granted to
non-employee directors under the 2000 Plan are intended by the
Company not to qualify as incentive stock options under the
Internal Revenue Code.

Certain option grants to non-employee directors
under the 2000 Plan are non-discretionary. Each person who is
elected or appointed for the first time to be a non-employee
director after the effective date of the Companys initial
public offering of its common stock is granted an option to
purchase 50,000 shares (or, prior

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to June 7, 2001, 25,000 shares) of
common stock on the date of his or her initial election or
appointment, and each person who is a non-employee director on
the day after the Companys annual stockholders
meeting is granted an option to purchase 13,000 shares of
common stock on such date (Annual Option), with such
grant reduced pro rata for each full quarter the person did not
serve as a director during the period since the preceding annual
stockholders meeting, without further action by the
Company, the Board or the stockholders of the Company
(collectively, Non-Employee Director Options).


The exercise price of the Non-Employee Director
Options is 100% of the fair market value of the common stock
subject to the option on the date of the option grant. The term
of Non-Employee Director Options is 10 years. In the event
of an acquisition of the Company or similar corporate event, the
vesting of each option will accelerate in full and will become
exercisable for 12 months after the termination of the
directors service on the Board following the change of
control or, if shorter, the original term of the option.

On August 24, 2001, the Company granted an
Annual Option to purchase 13,000 shares of common stock to
each of Messrs. Bosch, Grey, LaForge and Piol at an
exercise price of $0.33 per share. The fair market value of such
common stock on the date of grant was $0.33 per share (based on
the closing sales price reported on the Nasdaq National Market
for the last trading day prior to the date of grant). Fifty
percent of the shares subject to these options vest after one
year of service and 50% vest after the following year. Such
options are immediately exercisable to the extent permitted
under applicable regulations of the Internal Revenue Service and
any unvested shares issued pursuant to early exercise provisions
are subject to a repurchase option in favor of the Company at
the original exercise price upon termination of services to the
Company.

In November 2001, the Company extended an offer
to its eligible employees and directors to cancel stock options
with exercise prices greater than $0.30 per share and to grant
replacement stock options (Replacement Options)
under the 2000 Plan with an exercise price equal to the quoted
market price of the Companys common stock at
December 27, 2001, one day before the expiration of the
offer (the Option Exchange Program). On
December 28, 2001, the Company granted Replacement Options
to purchase an aggregate of 3,143,628 shares of common
stock at $0.29 per share to eligible employees and directors who
accepted the offer in a one-for-one exchange for such cancelled
stock options. Each Replacement Option will vest monthly over
one year following the date of grant and will expire
18 months after the date of grant.

Pursuant to the Option Exchange Program, on
December 28, 2001, the Company granted options to purchase
175,000 shares, 475,000 shares, 25,000 shares and
65,000 shares of common stock to Messrs. Bosch,
Branscum, Grey and LaForge, respectively, at an exercise price
of $0.29 per share. The fair market value of such common stock
on the date of grant was $0.29 per share (based on the closing
price of the Companys common stock reported on the Nasdaq
National Market on last trading day prior to the date of grant).
The options become exercisable in twelve equal monthly
installments beginning on January 28, 2002.

As of May 15, 2002, none of the options
granted to the Companys directors as described above had
been exercised.

In May 2002, the Company entered into a change of
control agreement with Mr. Bosch. Under the terms of this
agreement, in the event of an acquisition of the Company or
similar corporate event, Mr. Boschs stock options
will become fully vested, provided that Mr. Bosch is a
member of the Board on the date of such change of control.

Mr. Branscum received compensation for
services provided as the Companys President and Chief
Executive Officer, as further described in the section entitled
Compensation of Executive Officers.

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Compensation of Executive Officers

The following table shows for the fiscal years
ended March 31, 2000, March 30, 2001 and
March 29, 2002 compensation awarded or paid to, or earned
by, the Companys Chief Executive Officer and its four
other executive officers at March 29, 2002 and one former
executive officer who departed from the Company during fiscal
year 2002 (the Named Executive Officers):

Summary Compensation Table

|                               |                                               |        |      |                     |  |                     |         |              |  |            |   |           |  |              |         |         |      |  |   |   |  |  |         |         |     |  |        |      |    
|------------------------------ | --------------------------------------------- | ------ | ---- | ------------------- |  | ------------------- | ------- | ------------ |  | ---------- | - | --------- |  | ------------ | ------- | ------- | ---- |  | - | - |  |  | ------- | ------- | --- |  | ------ | ---- | ---
|                               |                                               |        |      |                     |  |                     |         |              |  |            |   |          
|                               |                                               |        |      |                     |  |                     |         |              |  | Long-Term  |   |          
|                               |                                               |        |      |                     |  | Compensation Awards |         |             
|                               |                                               |        |      | Annual Compensation |  |                     |         |             
|                               |                                               |        |      |                     |  | Restricted          |         | Securities   |  |           
|                               |                                               |        |      |                     |  | Other Annual        |         | Stock        |  | Underlying |   | All Other
|                               |                                               | Fiscal |      | Salary              |  | Bonus               |         | Compensation |  | Awards     |   | Options   |  | Compensation
|Name and Principal Position(s) |                                               | Year   |      | ($)                 |  | ($)                 |         | ($)(1)       |  | ($)        |   | (#)(2)    |  | ($)         
|                               |                                               |        |      |                     |  |                     |         |              |  |            |   |           |  |             
|Chris L. Branscum(3)           |                                               |        | 2002 |                     |  |                     | 225,000 |              |  |            |  |           |  |              |        |         |      |  |  |   |  |  | 475,000 |         |     |  |       |     
|                               | President & Chief Executive Officer           |        |      | 2001                |  |                     |         | 56,250       |  |            |   |          |  |              |         |        |      |  |   |  |  |  |         | 450,000 | (4) |  |        |     |    
|Timothy A. Marcotte(5)         |                                               |        | 2002 |                     |  |                     | 202,462 |              |  |            |  |           |  |              |        |         |      |  |  |   |  |  | 370,000 | (6)     |     |  |       |     
|                               | Executive Vice President, Chief               |        |      | 2001                |  |                     |         | 170,577      |  |            |   |          |  |              |         |        |      |  |   |  |  |  |         | 150,000 | (7) |  |        |     |    
|                               | Operating Officer and Chief Financial Officer |        |      | 2000                |  |                     |         | 64,384       |  |            |   | 15,000    |  |              |         |        |      |  |   |  |  |  |         | 180,000 | (7) |  |        | 128  | (8)
|Joel J. Spina                  |                                               |        | 2002 |                     |  |                     | 171,346 |              |  |            |  |           |  |              | 102,789 | (9)     |      |  |  |   |  |  | 140,000 | (6)     |     |  |       |     
|                               | Vice President, Marketing &                   |        |      | 2001                |  |                     |         | 148,654      |  |            |   |          |  |              |         | 53,699  | (10) |  |   |  |  |  |         | 60,000  | (7) |  |        |     |    
|                               | Business Development                          |        |      | 2000                |  |                     |         | 137,692      |  |            |   |          |  |              |         | 42,286  | (10) |  |   |  |  |  |         | 40,000  | (7) |  |        |     |    
|Richard R. Conlon(11)          |                                               |        | 2002 |                     |  |                     | 156,716 |              |  |            |  |           |  |              | 67,196  | (10)    |      |  |  |   |  |  | 10,000  |         |     |  | 60,000 | (12)
|                               | Vice President, North America                 |        |      | 2001                |  |                     |         | 151,281      |  |            |   | 55,000    |  |              |         | 126,000 | (10) |  |   |  |  |  |         | 120,000 |     |  |        |     |    
|                               | Sales                                         |        |      | 2000                |  |                     |         | 137,692      |  |            |   | 30,972    |  |              |         | 111,419 | (10) |  |   |  |  |  |         | 40,000  |     |  |        |     |    
|John L. Soliday                |                                               |        | 2002 |                     |  |                     | 158,692 |              |  |            |  |           |  |              |        |         |      |  |  |   |  |  | 220,000 | (13)    |     |  |       |     
|                               | Vice President, Engineering                   |        |      | 2001                |  |                     |         | 131,239      |  |            |   |          |  |              |         |        |      |  |   |  |  |  |         | 30,000  | (7) |  |        |     |    
|                               |                                               |        |      | 2000                |  |                     |         | 125,540      |  |            |   | 3,000     |  |              |         |        |      |  |   |  |  |  |         |        |     |  |        |     |    
|Danny C. Santo(14)             |                                               |        | 2002 |                     |  |                     | 152,885 |              |  |            |  |           |  |              |        |         |      |  |  |   |  |  | 32,500  | (15)    |     |  |       |     
|                               | Vice President, Operations                    |        |      | 2001                |  |                     |         | 3,942        |  |            |   | 10,000    |  |              |         |        |      |  |   |  |  |  |         | 30,000  | (7) |  |        |     |    



---



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | In accordance with the rules of the SEC, no
    amounts are shown with respect to certain
    perquisites, where such amounts do not exceed the
    lesser of $50,000 or 10% of any officers salary and bonus.                                                                                                                                                                                                                                                     
|
| | (2) | Indicates number of shares of common stock
    underlying options.                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | (3) | Mr. Branscum became an executive officer of
    the Company in December 2000.                                                                                                                                                                                                                                                                                                                                                                                         
|
| | (4) | Does not include an option to purchase 25,000
    shares granted to Mr. Branscum on August 8, 2000 at an
    exercise price of $9.00 per share, as such grant occurred prior
    to Mr. Branscums election as an executive officer of
    the Company and was in compensation for Mr. Branscums
    services as a non-employee director of the Company. These
    options were cancelled on December 28, 2001 pursuant to the
    Companys Option Exchange Program.
|
| | (5) | Mr. Marcotte joined the Company in November
    1999.                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | (6) | Does not include an option for 40,000 shares
    granted in May 2001, but subsequently exchanged in the
    Companys Option Exchange Program.                                                                                                                                                                                                                                                                                                                        
|
| | (7) | These options were cancelled in the
    Companys Option Exchange Program.                                                                                                                                                                                                                                                                                                                                                                                            
|
| | (8) | Represents term life insurance premiums paid by
    the Company.                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | (9) | Represents the following: (i) $42,789 of
    commissions paid pursuant to the Companys sales commission
    plan; and (ii) an advancement in April 2001 on sales
    commissions and bonuses to be earned in the future in the amount
    of $60,000, which was earned in May 2002 and will be recorded as
    a bonus paid to Mr. Spina in the fiscal year ending
    March 28, 2003.                                                                               



|     |                                                                                 
|---- | --------------------------------------------------------------------------------
|(10) | Represents commissions paid pursuant to the
    Companys sales commission plan.

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|     |                                                                                                                                               
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------
|(11) | Mr. Conlons employment with the
    Company terminated in October 2001.                                                                      
|    
|(12) | Represents consulting fees paid after termination
    of employment with the Company.                                                         
|    
|(13) | Does not include an option for 90,000 shares
    granted in May 2001, but subsequently exchanged in the
    Companys Option Exchange Program.
|    
|(14) | Mr. Santos employment with the Company
    began in March 2001 and terminated in April 2002.                                                 
|    
|(15) | Does not include an option for 30,000 shares
    granted in May 2001, but subsequently exchanged in the
    Companys Option Exchange Program.

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Stock Option Grants And Exercises

The Company grants options to its executive
officers under the 2000 Plan and its Key Executives Stock Option
Plan (the Key Executives Plan) and formerly granted
options to its executive officers under its 1990 Incentive Stock
Plan (the 1990 Plan and, collectively with the 2000
Plan and Key Executives Plan, the Plans). As of
May 15, 2002, options to purchase a total of
4,060,614 shares were outstanding under the Plans and
options to purchase 1,544,964 shares remained available for
grant thereunder.

The following tables show for the fiscal year
ended March 29, 2002 certain information regarding options
granted to, exercised by, and held at year end by, the Named
Executive Officers:

Option Grants in Last Fiscal Year

|                    |  |                   |         |                      |  |              |      |                  |  |                |      |         |  |  |               |  |  |  |        |  |  |  |         | 
|------------------- |  | ----------------- | ------- | -------------------- |  | ------------ | ---- | ---------------- |  | -------------- | ---- | ------- |  |  | ------------- |  |  |  | ------ |  |  |  | ------- | 
|                    |  |                   |         |                     
|                    |  | Individual Grants |         | Potential Realizable
|                    |  |                   |         | Value at Assumed    
|                    |  |                   |         | % of Total           |  |              |      | Annual Rates of 
|                    |  | Number of         |         | Options              |  |              |      | Stock Price     
|                    |  | Securities        |         | Granted to           |  |              |      | Appreciation for
|                    |  | Underlying        |         | Employees            |  | Exercise     |      |                  |  | Option Term(3)
|                    |  | Options           |         | in Fiscal            |  | Price        |      |                  |  |               
|Name                |  | Granted(#)        |         | Year(1)              |  | ($/Share)(2) |      | Expiration Date  |  | 5% ($)         |      | 10% ($)
|                    |  |                   |         |                      |  |              |      |                  |  |                |      |        
|Chris L. Branscum   |  |                   | 475,000 | (4)                  |  |              | 12.4 | %                |  | $              | 0.29 |         |  |  | June 30, 2003 |  |  |  | 10,459 |  |  |  | 21,171  | 
|Timothy A. Marcotte |  |                   | 40,000  | (5)                  |  |              | 1.0  | %                |  | $              | 0.99 |         |  |  | May 8, 2011   |  |  |  | 24,904 |  |  |  | 63,112  | 
|                    |  |                   | 370,000 | (4)                  |  |              | 9.6  | %                |  | $              | 0.29 |         |  |  | June 30, 2003 |  |  |  | 8,147  |  |  |  | 16,491  | 
|Joel J. Spina       |  |                   | 40,000  | (5)                  |  |              | 1.0  | %                |  | $              | 0.99 |         |  |  | May 8, 2011   |  |  |  | 24,904 |  |  |  | 63,112  | 
|                    |  |                   | 140,000 | (4)                  |  |              | 3.6  | %                |  | $              | 0.29 |         |  |  | June 30, 2003 |  |  |  | 3,083  |  |  |  | 6,240   | 
|Richard R. Conlon   |  |                   | 10,000  | (6)                  |  |              | 0.3  | %                |  | $              | 0.38 |         |  |  | Dec. 12, 2011 |  |  |  | 2,390  |  |  |  | 6,056   | 
|John L. Soliday     |  |                   | 90,000  | (5)                  |  |              | 2.4  | %                |  | $              | 0.99 |         |  |  | May 8, 2011   |  |  |  | 56,035 |  |  |  | 142,002 | 
|                    |  |                   | 220,000 | (4)                  |  |              | 5.7  | %                |  | $              | 0.29 |         |  |  | June 30, 2003 |  |  |  | 4,844  |  |  |  | 9,805   | 
|Danny C. Santo      |  |                   | 30,000  | (5)                  |  |              | 0.8  | %                |  | $              | 0.99 |         |  |  | May 8, 2011   |  |  |  | 18,678 |  |  |  | 47,334  | 
|                    |  |                   | 130,000 | (4)(7)               |  |              | 3.4  | %                |  | $              | 0.29 |         |  |  | June 30, 2003 |  |  |  | 2,863  |  |  |  | 5,794   | 



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Based on options to purchase an aggregate of
    3,837,128 shares granted to employees (including employee
    directors) during the fiscal year ended March 29, 2002. The
    foregoing total excludes options granted to consultants and
    non-employee directors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(2) | The exercise price per share of each option was
    equal to the fair market value of the Companys common
    stock on the date of grant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|(3) | In accordance with the rules of the SEC, the
    potential realizable value over the term of the option, i.e.,
    the period from the grant date to the expiration date, is based
    on assumed annual rates of share price appreciation of 5% and
    10%, compounded annually. These amounts do not represent the
    Companys estimate of future price. Actual gains, if any,
    on option exercises will depend on the future performance of the
    Companys common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|(4) | These options were granted on December 28,
    2001 under the 2000 Plan pursuant to the Option Exchange
    Program. The options become exercisable in twelve equal monthly
    installments beginning on January 28, 2002. Each such
    option terminates on the expiration date, subject to earlier
    termination upon the occurrence of events related to termination
    of employment. The options will fully vest upon a corporate
    transaction, as defined in the 2000 Plan, unless the acquiring
    company assumes the options or substitutes similar options.
    Notwithstanding the foregoing, the stock options granted to
    Messrs. Branscum, Marcotte, Spina and Soliday will become fully
    vested in certain circumstances pursuant to change in control
    agreements as more fully described in the section entitled
    Employment, Severance and Change of Control
    Agreements.
|   
|(5) | These options were cancelled on December 28,
    2001 pursuant to the Option Exchange Program. These options were
    granted under the 2000 Plan 10 years before their
    respective expiration dates referenced and were to terminate on
    the expiration date, subject to earlier termination upon the
    occurrence of events related to termination of employment.
    Twenty-five percent of the shares subject to each option were to                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | vest one year after the date of grant and the
    balance were to vest ratably over the following 36 months.
    Each such option was immediately exercisable to the extent
    permitted under applicable regulations of the Internal Revenue
    Service and any unvested shares issued pursuant to early
    exercise provisions would have been subject to a repurchase
    option in favor of the Company at the original exercise price
    upon termination of employment. The options would have fully
    vested upon a corporate transaction, as defined in the 2000
    Plan, unless the acquiring company assumed the options or
    substituted similar options. Notwithstanding the foregoing, the
    stock options granted to Mr. Marcotte would have become
    fully vested in certain circumstances pursuant to a change in
    control agreement as more fully described in the section
    entitled Employment, Severance and Change of Control
    Agreements.
|   
|(6) | Mr. Conlons employment with the
    Company terminated on October 12, 2001. All stock options
    held by Mr. Conlon as of this termination date (both vested
    and unvested) were cancelled as of such date. A new option for
    10,000 shares was granted on December 12, 2001 under
    the 2000 Plan in connection with consulting services that
    Mr. Conlon provided pursuant to a consulting agreement with
    the Company, dated October 15, 2001. These shares vested
    ratably over three months and were fully vested on
    March 12, 2002. Mr. Conlon ceased providing consulting
    services to the Company on February 28, 2002, but his
    option continued to vest through March 12, 2002 and expired
    unexercised on June 12, 2002.                                                                                                                                                                                                                   
|   
|(7) | Mr. Santos employment with the Company
    terminated in March 2002. As of Mr. Santos
    termination date, 32,500 shares were vested, and Mr. Santo
    has 90 days from his termination date to exercise this
    option as to these vested shares. All options held by
    Mr. Santo on his termination date which had not vested were
    immediately terminated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

Aggregated Option Exercises in Last Fiscal
Year, and Fiscal Year-End Option Values

|                     |  |          |   |          |  |                        |   |                         |  |             |         |               |  |  |         |  |  |  |   |  |  |  |   | 
|-------------------- |  | -------- | - | -------- |  | ---------------------- | - | ----------------------- |  | ----------- | ------- | ------------- |  |  | ------- |  |  |  | - |  |  |  | - | 
|                     |  |          |   |          |  |                        |   |                         |  |            
|                     |  |          |   |          |  | Number of              |   |                        
|                     |  | Shares   |   |          |  | Securities Underlying  |   | Value of Unexercised   
|                     |  | Acquired |   |          |  | Unexercised Options at |   | In-the-Money Options   
|                     |  | on       |   | Value    |  | March 29, 2002(#)(1)   |   | at March 29, 2002($)(2)
|                     |  | Exercise |   | Realized |  |                        |   |                        
|Name                 |  | (#)      |   | ($)      |  | Exercisable            |   | Unexercisable           |  | Exercisable |         | Unexercisable
|                     |  |          |   |          |  |                        |   |                         |  |             |         |              
|Chris L. Branscum    |  |          |  |          |  |                        |  |                         |  |             | 118,750 |               |  |  | 356,250 |  |  |  |  |  |  |  |  | 
|Timothy A. Marcotte  |  |          |  |          |  |                        |  |                         |  |             | 92,500  |               |  |  | 277,500 |  |  |  |  |  |  |  |  | 
|Joel J. Spina        |  |          |  |          |  |                        |  |                         |  |             | 185,000 |               |  |  | 105,000 |  |  |  |  |  |  |  |  | 
|Richard R. Conlon(3) |  |          |  |          |  |                        |  |                         |  |             | 10,000  |               |  |  |        |  |  |  |  |  |  |  |  | 
|John L. Soliday      |  |          |  |          |  |                        |  |                         |  |             | 55,000  |               |  |  | 165,000 |  |  |  |  |  |  |  |  | 
|Danny C. Santo(4)    |  |          |  |          |  |                        |  |                         |  |             | 32,500  |               |  |  | 97,500  |  |  |  |  |  |  |  |  | 



---



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | As of March 29, 2002, all options held by
    the Named Executive Officers were out-of-the-money.
    Out-of-the-money options are options with exercise
    prices at or above the market price of the Companys common
    stock at March 28, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | (2) | Based upon a fair market value of $0.23 per
    share, which was the closing price of the Companys common
    stock on the Nasdaq National Market on March 28, 2002, less
    the exercise price per share of the options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | (3) | Mr. Conlons employment with the
    Company terminated on October 12, 2001. All stock options
    held by Mr. Conlon as of this termination date (both vested
    and unvested) were cancelled as of such date. A new option for
    10,000 shares was granted on December 12, 2001 under the
    2000 Plan in connection with consulting services that
    Mr. Conlon provided pursuant to a consulting agreement with
    the Company, dated October 15, 2001. These shares vested
    ratably over three months and were fully vested on
    March 12, 2002. Mr. Conlon ceased providing consulting
    services to the Company on February 28, 2002, but his
    option continued to vest through March 12, 2002 and expired
    unexercised on June 12, 2002.
|
| | (4) | Mr. Santos employment with the Company
    terminated in March 2002. As of Mr. Santos
    termination date, 32,500 shares were vested, and Mr. Santo
    has 90 days from his termination date to exercise this                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

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| |  |                                                                                                                                                  
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------
| |  | option as to these vested shares. All options
    held by Mr. Santo on his termination date which had not
    vested were immediately terminated.

Employment, Severance and Change of Control
Agreements

In November 1999, the Company entered into a
change of control agreement with Mr. Marcotte. Under the
terms of this agreement, in the event of an acquisition of the
Company or similar corporate event, Mr. Marcottes
stock options will become fully vested. Furthermore, if
Mr. Marcottes employment with the Company is
involuntarily terminated without just cause within one year
after a change of control of the Company, he will be entitled to
six months of severance pay and employee benefits. In addition,
Mr. Marcottes options will be exercisable for a
period of nine months from the date of termination.

In April 2001, the Company advanced
Mr. Spina $60,000 on sales commissions and bonuses to be
earned in the future. This $60,000 advancement was earned in May
2002 and will be recorded as a bonus paid to Mr. Spina in
the fiscal year ending March 28, 2003.

On October 12, 2001, Mr. Conlons
employment with the Company terminated. On October 15,
2001, the Company entered into a consulting agreement with
Seascape Services, Inc. (Seascape), a company where
Mr. Conlon serves as president. Pursuant to this consulting
agreement, Seascape provided certain consulting services from
October 15, 2001 through February 28, 2002 in
consideration for the following: (i) $13,333.34 per month;
(ii) Company-paid COBRA benefits for Mr. Conlon
through the term of the consulting agreement;
(iii) reimbursement of outside services, direct charges,
and travel and subsistence; and (iv) Company-paid
commission on revenue recognized on certain accounts in the
amount of 0.65% of revenue recognized through January 15,
2002 and 0.45% of revenue recognized from January 16, 2002
through February 28, 2002. All stock options held by
Mr. Conlon as of his termination date (both vested and
unvested) were cancelled as of such date. A new option for
10,000 shares was granted to Mr. Conlon on
December 12, 2001 under the 2000 Plan in connection with
Mr. Conlons consulting services. These shares vested
ratably over three months and were fully vested on
March 12, 2002. Mr. Conlon ceased providing consulting
services to the Company on February 28, 2002, but his
option continued to vest through March 12, 2002 and expired
unexercised on June 12, 2002.

In May 2002, the Company entered into a change of
control agreement with Mr. Branscum. Under the terms of
this agreement, in the event of an acquisition of the Company or
similar corporate event, Mr. Branscums stock options
will become fully vested. Furthermore, in the event that the
Company terminates Mr. Branscums employment without cause
or if Mr. Branscum terminates his employment for good
reason at any time within five years after the effective date of
the agreement and within 12 months after an acquisition of
the Company or similar corporate event, then he will receive
from the Company his full-time base salary and other benefits
for six months after such termination and his options will
become exercisable for a period of 270 days after such
termination.

In May 2002, the Company entered into a change of
control agreement with each of Messrs. Spina and Soliday.
Under the terms of each agreement, in the event that the Company
terminates the employees employment without cause or if
the employee terminates his employment for good reason at any
time within five years after the effective date of the agreement
and within 12 months after an acquisition of the Company or
similar corporate event, then all of such employees
options will become fully vested and will become exercisable for
a period of 270 days after such termination, and he will
receive from the Company his full-time base salary and other
benefits for six months after such termination.

In June 2002, the Company entered into a
retention agreement with Mr. Branscum, pursuant to which
Mr. Branscum is eligible to earn cash payments, as follows:
On each of June 1, July 1, August 1, and
September 1, 2002 (each a Retention Date and,
collectively, the Retention Dates),
Mr. Branscum will earn a retention payment, each in the
amount of $28,125, subject to standard payroll deductions and
withholdings (each a Branscum Retention Payment and,
collectively, the Branscum Retention Payments),
subject to the terms of the agreement. Mr. Branscums
right to receive the Branscum Retention Payments terminates on
the earliest of: (i) a sale as a going concern of
substantially all of the Companys assets and/or stock, or
a merger (Sale); (ii) a debt or equity
financing of the Company that is not part of a

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Sale (Financing); or
(iii) September 1, 2002 (the Termination
Date). In the event of a Sale or Financing,
Mr. Branscums right to receive the Branscum Retention
Payments shall terminate and he will not earn any Branscum
Retention Payment(s) corresponding to any later Retention Date.
In addition, in the event the Company terminates
Mr. Branscums employment without cause,
Mr. Branscum is entitled to six months of his base salary
less the aggregate Branscum Retention Payment(s) paid to him as
of his termination date (the Branscum Severance).
Mr. Branscums right to receive the Branscum Severance
shall survive the Termination Date by four weeks. If
Mr. Branscum voluntarily terminates his employment or the
Company terminates his employment with cause, Mr. Branscum
shall not be entitled to Branscum Severance and will not earn
any Branscum Retention Payment(s) corresponding to any later
Retention Date.


In June 2002, the Company entered into a
retention agreement with Mr. Marcotte, pursuant to which
Mr. Marcotte is eligible to earn cash payments, as follows:
On each Retention Date (as defined above), Mr. Marcotte
will earn a retention payment, each in the amount of $26,250,
subject to standard payroll deductions and withholdings (each a
Marcotte Retention Payment and, collectively, the
Marcotte Retention Payments), subject to the terms
of the agreement. Mr. Marcottes right to receive the
Marcotte Retention Payments terminates on the Termination Date
(as defined above). In the event of a Sale (as defined above) or
Financing (as defined above), Mr. Marcottes right to
receive the Marcotte Retention Payments shall terminate and he
will not earn any Marcotte Retention Payment(s) corresponding to
any later Retention Date. In addition, in the event the Company
terminates Mr. Marcottes employment without cause,
Mr. Marcotte is entitled to six months of his base salary
less the aggregate Marcotte Retention Payment(s) paid to him as
of his termination date (the Marcotte Severance).
Mr. Marcottes right to receive the Marcotte Severance
shall survive the Termination Date by four weeks. If Mr.
Marcotte voluntarily terminates his employment or the Company
terminates his employment with cause, Mr. Marcotte shall
not be entitled to Marcotte Severance and will not earn any
Marcotte Retention Payment(s) corresponding to any later
Retention Date.

In June 2002, the Company entered into a
retention agreement with Mr. Soliday, pursuant to which
Mr. Soliday is eligible to earn cash payments, as follows:
On each Retention Date (as defined above), Mr. Soliday will
earn a retention payment, each in the amount of $21,250, subject
to standard payroll deductions and withholdings (each a
Soliday Retention Payment and, collectively, the
Soliday Retention Payments), subject to the terms of
the agreement. Mr. Solidays right to receive the
Soliday Retention Payments terminates on the Termination Date
(as defined above). In the event of a Sale (as defined above) or
Financing (as defined above), Mr. Solidays right to
receive the Soliday Retention Payments shall terminate and he
will not earn any Soliday Retention Payment(s) corresponding to
any later Retention Date. In addition, in the event the Company
terminates Mr. Solidays employment without cause,
Mr. Soliday is entitled to six months of his base salary
less the aggregate Soliday Retention Payment(s) paid to him as
of his termination date (the Soliday Severance).
Mr. Solidays right to receive the Soliday Severance
shall survive the Termination Date by four weeks. If
Mr. Soliday voluntarily terminates his employment or the
Company terminates his employment with cause, Mr. Soliday
shall not be entitled to Soliday Severance and will not earn any
Soliday Retention Payment(s) corresponding to any later
Retention Date.

In June 2002, the Company entered into a
retention agreement with Mr. Spina, pursuant to which
Mr. Spina is eligible to earn cash payments, as follows: On
each Retention Date (as defined above), Mr. Spina will earn
a retention payment, each in the amount of $20,625, subject to
standard payroll deductions and withholdings (each a Spina
Retention Payment and, collectively, the Spina
Retention Payments), subject to the terms of the
agreement. Mr. Spinas right to receive the Spina
Retention Payments terminates on the Termination Date (as
defined above). In the event of a Sale (as defined above) or
Financing (as defined above), Mr. Spinas right to
receive the Spina Retention Payments shall terminate and he will
not earn any Spina Retention Payment(s) corresponding to any
later Retention Date. In addition, in the event the Company
terminates Mr. Spinas employment without cause,
Mr. Spina is entitled to six months of his base salary less
the aggregate Spina Retention Payment(s) paid to him as of his
termination date (the Spina Severance).
Mr. Spinas right to receive the Spina Severance shall
survive the Termination Date by four weeks. If Mr. Spina
voluntarily terminates his employment or the Company terminates
his employment with

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cause, Mr. Spina shall not be entitled to
Spina Severance and will not earn any Spina Retention Payment(s)
corresponding to any later Retention Date.


Report of the Compensation Committee of the
Board of Directors on Executive
Compensation1

The Compensation Committee is responsible for
establishing the base salary and incentive programs for the
Companys executive officers and other key employees and
administering certain other compensation programs for such
individuals. The Compensation Committee is composed of three
non-employee Board members: Messrs. Grey, LaForge and Piol.

General
Compensation Policy

The Compensation Committee acts on behalf of the
Board to establish the Companys general compensation
policy for all of its employees. The Compensation Committee
typically reviews and establishes base salary levels and other
incentive compensation for the Companys Chief Executive
Officer (the CEO) and other executive officers.

The Compensation Committees compensation
philosophy for executive officers, including the CEO, is to
relate compensation directly to corporate performance, while
providing a total compensation package that is competitive and
enables the Company to attract, motivate, reward and retain key
executives. Each executive officers compensation package
is composed of the following two elements:



| |   |                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | base salary that is designed primarily to be
    competitive with base salary levels in effect at high technology
    companies in the San Francisco Bay area that are of comparable
    size to the Company; and
|
| |  | long-term equity incentives to strengthen the
    mutuality of interests between the Companys executive
    officers and its stockholders.                                                                      

In addition, executives with direct
responsibility for sales receive variable incentive cash
compensation in the form of commissions and bonus based on
performance.

The Compensation Committee determines base
salaries, incentive compensation and stock option grants of the
executive officers based in part on its review of independent
surveys of prevailing compensation practices among
high-technology companies. To this end, the committee attempts
to compare the compensation of the Companys executive
officers with comparable survey positions and the compensation
practices of comparable companies to determine base salary and
target total cash compensation. To provide the Compensation
Committee with more information for making compensation
comparisons, the Company surveys a broader group of
high-technology companies than those companies included in the
Nasdaq Telecommunications Index used in the performance
measurement comparison graph below.

The Compensation Committee reviews this
competitive market information with the CEO for each
executive-level position and within the Compensation Committee
as to the CEO. In addition, the Compensation Committee reviews
each executive officers performance for the preceding year
and objectives for the following year, together with the
executive officers responsibility level and the
Companys fiscal performance compared to objectives for the
preceding year and the Companys performance targets for
the following year. The relative weight given to these factors
varies with each individual at the discretion of the
Compensation Committee. Based upon such reviews, the executive
officers salaries and option grants are set in the
mid-range as compared to other high-technology companies.

Fiscal 2002
Executive Compensation

Base Compensation.Salaries for executive officers for
the fiscal year ended March 29, 2002 were generally
determined on an individual basis by subjectively evaluating
each executives scope of responsibility,



---

|  |                                                                                                                                                                                                                                                                                                                                                      
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1 | The material in this report is not
    soliciting material, is not deemed filed
    with the SEC, and is not to be incorporated by reference in any
    filing of the Company under the 1933 Act or the 1934 Act,
    whether made before or after the date hereof and irrespective of
    any general incorporation language in any such filing.

66



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performance, prior experience and salary history
and the Companys performance, as well as surveying the
salaries for similar positions at comparable companies.


Incentive Compensation.In April 2001 the Company advanced
Mr. Spina $60,000 on sales commissions and bonuses to be
earned in the future. This $60,000 advancement was earned in May
2002 and will be recorded as a bonus paid to Mr. Spina in
the fiscal year ending March 28, 2003. In addition, Messrs.
Spina and Conlon earned $42,789 and $67,196, respectively, in
commissions during fiscal year 2002.

Stock Options.Stock
options are an essential element of the Companys executive
compensation package. The Compensation Committee believes that
equity-based compensation in the form of stock options links the
interests of management and stockholders by focusing employees
and management on increasing stockholder value. Stock options
have value for the executive only if the price of the
Companys common stock increases above the fair market
value on the grant date and the executive remains in the
Companys employ for the period required for the options to
vest. Substantially all of the Companys full-time
employees are granted employee stock options.

In fiscal year 2002, the Compensation Committee
granted stock options to executive officers to aid in the
retention of executive officers and to align their interests
with those of the stockholders. Stock options typically have
been granted to executive officers when the executive first
joins the Company, and in connection with a significant change
in responsibilities. The Compensation Committee may, however,
recommend additional stock options to executives for other
reasons. The number of shares subject to each stock option
granted is within the discretion of the Compensation Committee
and is based on anticipated future contribution and ability to
impact corporate results, past performance or consistency within
the executives peer group, as well as the number of
unvested options or shares held by the executive officer. In the
discretion of the Compensation Committee, executive officers may
also be granted stock options to provide greater incentives to
continue their employment with the Company and to strive to
increase the value of the Companys common stock. The stock
options generally become exercisable over a four-year period and
are granted at a price that is equal to the fair market value of
the Companys common stock on the date of grant.

However, many of the stock options granted to
executive officers in fiscal year 2002 and previous years had
exercise prices that were significantly higher than the
then-current market price of the Companys common stock.
Accordingly, these options no longer provided the intended
long-term incentive, and the Compensation Committee determined
it was appropriate to offer an exchange program.

In November 2001, the Company instituted an
option exchange program whereby eligible employees were given
the option to cancel certain previously granted options with
exercise prices greater than $0.30 per share and to grant
replacement stock options (Replacement Options)
under the 2000 Plan with an exercise price equal to the quoted
market price of the Companys common stock at
December 27, 2001, one day before the expiration of the
offer (the Option Exchange Program). On
December 28, 2001, the Company granted Replacement Options
at $0.29 per share to eligible employees who accepted the offer
in a one-for-one exchange for such cancelled stock options. Each
Replacement Option will vest monthly over one year following the
date of grant and will expire 18 months after the date of
grant.

Pursuant to the Option Exchange Program, on
December 28, 2001, the Company granted options to purchase
475,000 shares, 370,000 shares, 140,000 shares and 220,000
shares of common stock to Messrs. Branscum, Marcotte, Spina
and Soliday, respectively, at an exercise price of $0.29 per
share. The fair market value of such common stock on the date of
grant was $0.29 per share (based on the closing price of the
Companys common stock reported on the Nasdaq National
Market on last trading day prior to the date of grant). The
options become exercisable in twelve equal monthly installments
beginning on January 28, 2002.

CEO
Compensation

The Compensation Committee has reviewed and
intends to continue to review annually the performance and
compensation of the CEO, Chris L. Branscum, according to the
criteria and procedures described above. The CEO is not present
during the discussion of his compensation.

67



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CEOs Base Salary.Using the criteria and procedures
above, the Compensation Committee set Mr. Branscums
base salary for the fiscal year ended March 29, 2002 at
$225,000. Mr. Branscums salary for the fiscal year
ending March 28, 2003 has also been set at $225,000.

CEOs Stock Options.As described above, on
December 28, 2001, the Company granted Mr. Branscum an
option to purchase 475,000 shares of the Companys common
stock pursuant to the Option Exchange Program. The fair market
value of such common stock on the date of grant was $0.29 per
share (based on the closing price of the Companys common
stock reported on the Nasdaq National Market on last trading day
prior to the date of grant). The option becomes exercisable in
twelve equal monthly installments beginning on January 28,
2002.

On April 15, 2002, the Compensation
Committee granted an option to purchase 150,000 shares of common
stock to Mr. Branscum under the Key Executives Plan at an
exercise price of $0.19 per share, which represented the fair
market value of such common stock on the date of grant.
Twenty-five percent of these shares vest one year after the date
of grant and 1/48th of these shares vest monthly thereafter.
This option is immediately exercisable to the extent permitted
under applicable regulations of the Internal Revenue Service and
any unvested shares issued pursuant to early exercise provisions
are subject to a repurchase option in favor of the Company at
the original exercise price upon termination of
Mr. Branscums services to the Company, with certain
exceptions more fully described above in the section entitled
Employment, Severance and Change of Control
Agreements. This grant was intended to maintain the
overall competitiveness of Mr. Branscums compensation
and to maintain the strength of alignment of his interests with
those of the Companys stockholders.

The Compensation Committee intends to continue to
monitor Mr. Branscums compensation levels in light of
his performance and the compensation levels of executives at
comparable companies.

Compliance
with Section 162(m) of the Internal Revenue
Code

Section 162(m) of the Internal Revenue Code
(the Code) limits the Company to a deduction for
federal income tax purposes of no more than $1 million of
compensation paid to certain Named Executive Officers in a
taxable year. Compensation above $1 million may be deducted
if it is performance-based compensation within the
meaning of the Code.

The statute containing this law and the
applicable proposed Treasury regulations offer a number of
transitional exceptions to this deduction limit for pre-existing
compensation plans, arrangements and binding contracts. As a
result, the Compensation Committee believes that at the present
time it is quite unlikely that the compensation paid to any
Named Executive Officer in a taxable year which is subject to
the deduction limit will exceed $1 million. Therefore, the
Compensation Committee has not yet established a policy for
determining which forms of incentive compensation awarded to its
Named Executive Officers shall be designed to qualify as
performance-based compensation. The Compensation
Committee intends to continue to evaluate the effects of the
statute and any final Treasury regulations and to comply with
Code Section 162(m) in the future to the extent consistent
with the best interests of the Company.



| |                       
| | ----------------------
| | Compensation Committee
|
| | Richard G. Grey       
| | Perry M. LaForge      
| | Alessandro A. Piol    

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Option Repricing Information

The following table shows certain information
concerning the repricing of options received by the Named
Executive Officers during the last ten years.

Ten Year Option Repricings

|                    |                                     |      |               |               |  |              |         |              |  |          |      |                    |  |   |       |      |  |   |      |      |  |  |                       |                       | 
|------------------- | ----------------------------------- | ---- | ------------- | ------------- |  | ------------ | ------- | ------------ |  | -------- | ---- | ------------------ |  | - | ----- | ---- |  | - | ---- | ---- |  |  | --------------------- | --------------------- | 
|                    |                                     |      |               | Number of     |  | Market       |         |              |  |          |      |                   
|                    |                                     |      |               | Securities    |  | Price of     |         | Exercise     |  |          |      |                   
|                    |                                     |      |               | Underlying    |  | Stock at     |         | Price at     |  |          |      | Length of Original
|                    |                                     |      |               | Options       |  | Time of      |         | Time of      |  | New      |      | Option Term       
|                    |                                     |      |               | Repriced or   |  | Repricing or |         | Repricing or |  | Exercise |      | Remaining at      
|                    |                                     |      |               | Amended       |  | Amendment    |         | Amendment    |  | Price    |      | Date of Repricing 
|Name                |                                     | Date |               | (#)(1)        |  | ($)          |         | ($)          |  | ($)      |      | or Amendment      
|                    |                                     |      |               |               |  |              |         |              |  |          |      |                   
|Chris L. Branscum   |                                     |      | Dec. 28, 2001 |               |  |              | 25,000  |              |  | $        | 0.29 |                    |  | $ | 9.00  |      |  | $ | 0.29 |      |  |  | 8 years and 7 months  |                      
|                    | President & Chief Executive Officer |      |               | Dec. 28, 2001 |  |              |         | 450,000      |  |          | $    | 0.29               |  |   | $     | 1.25 |  |   | $    | 0.29 |  |  |                       | 9 years and 3 months  | 
|Timothy A. Marcotte |                                     |      | Dec. 28, 2001 |               |  |              | 180,000 |              |  | $        | 0.29 |                    |  | $ | 3.00  |      |  | $ | 0.29 |      |  |  | 7 years and 10 months |                      
|                    | Executive Vice President,           |      |               | Dec. 28, 2001 |  |              |         | 50,000       |  |          | $    | 0.29               |  |   | $     | 9.00 |  |   | $    | 0.29 |  |  |                       | 8 years and 7 months  | 
|                    | Chief Operating Officer             |      |               | Dec. 28, 2001 |  |              |         | 100,000      |  |          | $    | 0.29               |  |   | $     | 2.25 |  |   | $    | 0.29 |  |  |                       | 8 years and 11 months | 
|                    | and Chief Financial Officer         |      |               | Dec. 28, 2001 |  |              |         | 40,000       |  |          | $    | 0.29               |  |   | $     | 0.99 |  |   | $    | 0.29 |  |  |                       | 9 years and 4 months  | 
|Joel J. Spina       |                                     |      | Dec. 28, 2001 |               |  |              | 40,000  |              |  | $        | 0.29 |                    |  | $ | 12.00 |      |  | $ | 0.29 |      |  |  | 8 years               |                      
|                    | Vice President,                     |      |               | Dec. 28, 2001 |  |              |         | 10,000       |  |          | $    | 0.29               |  |   | $     | 6.80 |  |   | $    | 0.29 |  |  |                       | 8 years and 6 months  | 
|                    | Marketing & Business                |      |               | Dec. 28, 2001 |  |              |         | 50,000       |  |          | $    | 0.29               |  |   | $     | 2.25 |  |   | $    | 0.29 |  |  |                       | 8 years and 11 months | 
|                    | Development                         |      |               | Dec. 28, 2001 |  |              |         | 40,000       |  |          | $    | 0.29               |  |   | $     | 0.99 |  |   | $    | 0.29 |  |  |                       | 9 years and 4 months  | 
|John L. Soliday     |                                     |      | Dec. 28, 2001 |               |  |              | 100,000 |              |  | $        | 0.29 |                    |  | $ | 2.00  |      |  | $ | 0.29 |      |  |  | 6 years and 8 months  |                      
|                    | Vice President,                     |      |               | Dec. 28, 2001 |  |              |         | 30,000       |  |          | $    | 0.29               |  |   | $     | 2.25 |  |   | $    | 0.29 |  |  |                       | 8 years and 11 months | 
|                    | Engineering                         |      |               | Dec. 28, 2001 |  |              |         | 90,000       |  |          | $    | 0.29               |  |   | $     | 0.99 |  |   | $    | 0.29 |  |  |                       | 9 years and 4 months  | 
|Danny C. Santo(2)   |                                     |      | Dec. 28, 2001 |               |  |              | 100,000 |              |  | $        | 0.29 |                    |  | $ | 1.25  |      |  | $ | 0.29 |      |  |  | 9 years and 3 months  |                      
|                    | Vice President, Operations          |      |               | Dec. 28, 2001 |  |              |         | 30,000       |  |          | $    | 0.29               |  |   | $     | 0.99 |  |   | $    | 0.29 |  |  |                       | 9 years and 4 months  | 



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | In November 2001, the Company extended an
    offer to its eligible employees and directors to cancel stock
    options with exercise prices greater than $0.30 per share and to
    grant replacement stock options under the 2000 Plan with an
    exercise price equal to the quoted market price of the
    Companys common stock at December 27, 2001, one day
    before the expiration of the offer. On December 28, 2001,
    the Company granted replacement options to purchase an aggregate
    of 3,143,628 shares of its common stock at $0.29 per share
    to eligible employees and directors who accepted the offer in a
    one-for-one exchange for such cancelled stock options. Each
    replacement option will vest monthly over one year following the
    date of grant and will expire 18 months after the date of
    grant. The Company will account for all such replacement
    options, as well as eligible options to purchase an aggregate of
    69,770 shares of common stock which were not exchanged,
    under the variable accounting method and will revalue these
    stock options at the end of each reporting period until the
    options are exercised, forfeited, or expire unexercised; the
    resulting charge will be recorded as compensation expense. The
    higher the market value of the Companys common stock, the
    greater the compensation expense will be. To date the Company
    has not recognized any compensation expense in relation to this
    stock option exchange.
|   
|(2) | Mr. Santos employment with the Company
    terminated in March 2002. Mr. Santo had
    32,500 shares fully vested, and has 90 days from his
    termination date to exercise these options. All options held by
    Mr. Santo on his termination date which had not vested were
    immediately terminated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

Compensation Committee Interlocks and Insider
Participation

During the fiscal year ended March 29, 2002,
the members of the Companys Compensation Committee were
Messrs. Grey, LaForge and Piol. None of these members of
the Companys Compensation Committee is currently or has
been at any time one of the Companys officers or employees.

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Performance Measurement
Comparison1

The following graph shows the total stockholder
return of an investment of $100 in cash on August 9, 2000
(the date public trading commenced in the Companys common
stock) for (i) the Companys common stock (at the
initial public offering price of $9.00), (ii) the Nasdaq
Composite Index (Nasdaq Composite) and
(iii) the Nasdaq Telecommunications Index (Nasdaq
Telecom). All values assume reinvestment of the full
amount of all dividends.

GRAPH OF STOCKHOLDER RETURN

GRAPH OF STOCKHOLDER RETURN

|          |  |                             |        |                  |  |                |        |  |  |  |        | 
|--------- |  | --------------------------- | ------ | ---------------- |  | -------------- | ------ |  |  |  | ------ | 
|          |  | Repeater Technologies, Inc. |        | Nasdaq Composite |  | Nasdaq Telecom
|          |  |                             |        |                  |  |               
|09-Aug-00 |  |                             | 100.00 |                  |  |                | 100.00 |  |  |  | 100.00 | 
|30-Mar-01 |  |                             | 6.00   |                  |  |                | 48.00  |  |  |  | 41.00  | 
|29-Mar-02 |  |                             | 1.00   |                  |  |                | 48.00  |  |  |  | 22.00  | 







---

|  |                                                                                                                                                                                                                                                                                                                                     
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1 | This Section is not soliciting
    material, is not deemed filed with the SEC and
    is not to be incorporated by reference in any filing of the
    Company under the 1933 Act or the 1934 Act whether made before
    or after the date hereof and irrespective of any general
    incorporation language in any such filing.

70



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|         |                                                                                                       
|-------- | ------------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder
    Matters

Equity Compensation Plan Information

The following table provides certain information
with respect to all of the Companys equity compensation
plans in effect as of the end of March 29, 2002.

Equity Compensation Plan Information

|                                                               |  |                            |           |                   |  |                         |      |  |  |  |           | 
|-------------------------------------------------------------- |  | -------------------------- | --------- | ----------------- |  | ----------------------- | ---- |  |  |  | --------- | 
|                                                               |  |                            |           |                   |  | Number of Securities   
|                                                               |  |                            |           |                   |  | Remaining Available for
|                                                               |  |                            |           | Weighted-average  |  | Issuance Under Equity  
|                                                               |  | Number of Securities to be |           | Exercise Price of |  | Compensation Plans     
|                                                               |  | Issued Upon Exercise of    |           | Outstanding       |  | (Excluding Securities  
|                                                               |  | Outstanding Options,       |           | Options, Warrants |  | Reflected in           
|Plan Category                                                  |  | Warrants and Rights (a)    |           | and Rights (b)    |  | Column (a))(c)(1)      
|                                                               |  |                            |           |                   |  |                        
|Equity compensation plans approved by security
    holders     |  |                            | 3,054,824 |                   |  | $                       | 0.38 |  |  |  | 2,550,854 | 
|Equity compensation plans not approved by
    security holders |  |                            |          |                   |  |                         |     |  |  |  |          | 
|Total                                                          |  |                            | 3,054,824 |                   |  | $                       | 0.38 |  |  |  | 2,550,854 | 



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Each year on January 1, starting
    January 1, 2001, the aggregate number of shares of common
    stock that may be issued pursuant to stock awards under the 2000
    Plan is automatically increased by the lesser of
    1,000,000 shares or 4% of the total number of shares of
    common stock outstanding on that date (or a lesser amount as
    determined by the Board for each year).

Security Ownership of Certain Beneficial
Owners and Management

The following table sets forth certain
information regarding the ownership of the Companys common
stock as of May 15, 2002 by: (i) each director;
(ii) each of the executive officers named in the Summary
Compensation Table; (iii) all executive officers and
directors of the Company as a group; and (iv) all those
known by the Company to be beneficial owners of more than five
percent of its common stock. Unless otherwise indicated, the
address for each listed beneficial owner is c/o Repeater
Technologies, Inc., 1150 Morse Avenue, Sunnyvale,
California 94089.

|                                                        |                                                                 |                         |           |            |  |  |      |   | 
|------------------------------------------------------- | --------------------------------------------------------------- | ----------------------- | --------- | ---------- |  |  | ---- | - | 
|                                                        |                                                                 |                        
|                                                        |                                                                 | Beneficial Ownership(1)
|                                                        |                                                                 |                        
|                                                        |                                                                 | Number of               |           | Percent of
|Beneficial Owner                                        |                                                                 | Shares                  |           | Total     
|                                                        |                                                                 |                         |           |           
|Entities Affiliated with Oak Investment
    Partners(2) |                                                                 |                         | 3,173,523 |            |  |  | 13.3 | %
|                                                        | One Gorham Island
     Westport, CT 06880                       |                         |           |            |  |  |      |   | 
|                                                       
|Entities Affiliated with Nazem & Company(3)             |                                                                 |                         | 2,185,821 |            |  |  | 9.1  |  
|                                                        | 645 Madison Avenue
    New York, NY 10022                       |                         |           |            |  |  |      |   | 
|                                                       
|Alessandro A. Piol(4)                                   |                                                                 |                         | 2,177,660 |            |  |  | 9.1  |  
|                                                       
|Entities Affiliated with INVESCO Private
    Capital(5) |                                                                 |                         | 2,164,660 |            |  |  | 9.0  |  
|                                                        | 1166 Avenue of the Americas
    New York, NY 10036              |                         |           |            |  |  |      |   | 
|                                                       
|Trans Capital SDN BHD (6)                               |                                                                 |                         | 1,711,949 |            |  |  | 7.2  |  
|                                                        | 20, Lorong Jelawat 2
     Seberang Jaya, 13700 Penang, Malaysia |                         |           |            |  |  |      |   | 
|Chris L. Branscum(7)                                    |                                                                 |                         | 1,289,957 |            |  |  | 5.3  |  
|John E. Bosch(8)                                        |                                                                 |                         | 925,931   |            |  |  | 3.8  |  

71



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|                                                                     |  |                         |           |            |  |  |      | 
|-------------------------------------------------------------------- |  | ----------------------- | --------- | ---------- |  |  | ---- | 
|                                                                     |  |                        
|                                                                     |  | Beneficial Ownership(1)
|                                                                     |  |                        
|                                                                     |  | Number of               |           | Percent of
|Beneficial Owner                                                     |  | Shares                  |           | Total     
|                                                                     |  |                         |           |           
|Richard G. Grey(9)                                                   |  |                         | 485,802   |            |  |  | 2.0  | 
|Timothy A. Marcotte(10)                                              |  |                         | 335,508   |            |  |  | 1.4  | 
|Joel J. Spina(11)                                                    |  |                         | 330,300   |            |  |  | 1.4  | 
|John L. Soliday(12)                                                  |  |                         | 236,502   |            |  |  | 1.0  | 
|Perry M. LaForge(13)                                                 |  |                         | 60,500    |            |  |  | *    | 
|Danny C. Santo(14)                                                   |  |                         | 32,500    |            |  |  | *    | 
|Richard R. Conlon(15)                                                |  |                         | 10,000    |            |  |  | *    | 
|All executive officers and directors as a group
    (10 persons)(16) |  |                         | 5,842,160 |            |  |  | 23.0 | 



---



| |   |                       
| | - | ----------------------
| | * | Less than one percent.



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | This table is based in part upon information
    supplied by officers, directors and principal stockholders and
    Schedules 13D and 13G, if any, filed with the SEC.
    Beneficial ownership is determined in accordance with the rules
    of the SEC. In computing the number of shares beneficially owned
    by a person and the percentage ownership of that person, shares
    of common stock subject to options and warrants held by that
    person that are currently exercisable or exercisable within
    60 days of May 15, 2002 are deemed to be outstanding.
    Such shares, however, are not deemed outstanding for the purpose
    of computing the percentage ownership of each other person.
    Unless otherwise indicated in the footnotes to this table and
    subject to community property laws where applicable, the Company
    believes that each of the stockholders named in this table has
    sole voting and investment power with respect to the shares
    indicated as beneficially owned. Applicable percentages are
    based on 23,885,797 shares outstanding on May 15,
    2002, adjusted as required by rules promulgated by the SEC.                                                                                                                                                                                                                                                                                                               
|   
|(2) | Consists of 3,052,313 shares held by Oak
    Investment Partners VI, L.P. (Oak Investment Partners
    VI), 48,860 shares which Oak Investment
    Partners VI has the right to acquire within 60 days
    after May 15, 2002 pursuant to an outstanding warrant,
    71,210 shares held by Oak VI Affiliates Fund, L.P.
    (Oak VI Affiliates) and 1,140 shares which
    Oak VI Affiliates has the right to acquire within
    60 days after May 15, 2002 pursuant to an outstanding
    warrant. Oak Investment Partners VI and Oak VI
    Affiliates are members of a group for purposes of
    Section 13(d) of the 1934 Act.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|(3) | Consists of 1,605,445 shares held by Nazem
    & Company IV, L.P. (Nazem),
    12,500 shares which Nazem has the right to acquire within
    60 days after May 15, 2002 pursuant to an outstanding
    warrant, and 567,876 shares held by Transatlantic Venture
    Partners C.V., which is managed by Nazem & Company and
    Banexi Corp.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(4) | Consists of 13,000 shares which
    Mr. Piol has the right to acquire within 60 days after
    May 15, 2002 pursuant to an outstanding option,
    1,310,952 shares held by Citiventure 96 Partnership,
    L.P. (Citiventure 96), 37,500 shares which
    Citiventure 96 has the right to acquire within 60 days
    after May 15, 2002 pursuant to an outstanding warrant,
    499,657 shares held by Chancellor Private Capital Offshore
    Partners II, L.P. (Chancellor II),
    277,371 shares held by Chancellor Private Capital
    Partners III, L.P. (Chancellor III), and
    39,180 shares held by Chancellor Private Capital Offshore
    Partners I, C.V. (Chancellor I).
    Mr. Piol, a director of the Company, is Managing Director
    of (a) INVESCO Private Capital Investments, Inc., which is
    the general partner of (i) Chancellor KME IV Partner,
    L.P., the general partner of Chancellor I, (ii) CPCO
    Associates, L.P., the general partner of Chancellor II, and
    (iii) CPCP Associates, L.P., the general partner of
    Chancellor III; and (b) INVESCO Private Capital, Inc.,
    which is an investment advisor to Citiventure 96, and as
    such may be deemed to share voting and investment power over the
    shares held by these entities and therefore may be deemed a
    beneficial owner of such shares. Mr. Piol disclaims
    beneficial ownership of such shares, except to the extent of his
    pecuniary interest therein.
|   
|(5) | Consists of 1,310,952 shares held by
    Citiventure 96, 37,500 shares which Citiventure 96 has
    the right to acquire within 60 days after May 15, 2002
    pursuant to an outstanding warrant, 499,657 shares held by
    Chancellor II, 277,371 shares held by
    Chancellor III, and 39,180 shares held by
    Chancellor I.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(6) | Based on information supplied in connection with
    the proxy statement for the Companys annual meeting of
    stockholders in 2001, in the absence of any updated information
    filed by Trans Capital with the SEC or supplied to the Company
    in response to the Companys requests.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(7) | Includes 871,807 shares held by Hallador
    Venture Fund II, L.P. (Hallador II) and
    387,500 shares which Mr. Branscum has the right to
    acquire within 60 days after May 15, 2002 pursuant to
    outstanding options. Mr. Branscum, a director of the
    Company, is a general partner of Hallador Venture Partners, LLC,
    which is the manager of Hallador II, and as such may be
    deemed to share voting and investment power over the shares held
    by these funds and therefore may be deemed a beneficial owner of
    such shares. Mr. Branscum disclaims beneficial ownership of
    the shares held by Hallador II, except to the extent of his
    pecuniary interest therein.                                                                                                                             
|   
|(8) | Consists of 669,407 shares held by Bay
    Partners IV, 56,024 shares held by California BPIV,
    L.P. and 200,500 shares which Mr. Bosch has the right to
    acquire within 60 days after May 15, 2002 pursuant to
    outstanding options. Mr. Bosch, a director of the Company,
    is a general partner of Bay Partners, which is a general partner
    of Bay Partners IV and California BPIV, L.P., and as such
    may be deemed to share voting and investment power over the
    shares held by these funds and therefore may be deemed a
    beneficial owner of such shares. Mr. Bosch disclaims
    beneficial ownership of such shares, except to the extent of his
    pecuniary interest therein.                                                                                                                      
|   
|(9) | Consists of 88,044 shares held by HMS
    Capital Partners (HMS Capital), 351,414 shares
    held by HMS Capital Partners (Annex) (HMS (Annex)),
    20,844 shares held by HMS (Overseas) Partners (HMS
    (Overseas)) and 25,500 shares which Mr. Grey has
    the right to acquire within 60 days after May 15, 2002
    pursuant to outstanding options. Mr. Grey, a director of
    the Company, is a general partner of HMS Management, which is a
    general partner of HMS Capital, HMS (Annex) and HMS (Overseas),
    and as such may be deemed to share voting and investment power
    over the shares held by these funds and therefore may be deemed
    a beneficial owner of such shares. Mr. Grey disclaims
    beneficial ownership of such shares, except to the extent of his
    pecuniary interest therein.



|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Includes 335,000 shares which Mr. Marcotte
    has the right to acquire within 60 days after May 15,
    2002 pursuant to outstanding options, but does not include 200
    shares held by Mr. Marcottes brother, as to which
    shares Mr. Marcotte disclaims beneficial ownership.                                                                                                                                                                                                                                                                       
|    
|(11) | Includes 255,000 shares which Mr. Spina has
    the right to acquire within 60 days after May 15, 2002
    pursuant to outstanding options, but does not include 1,540
    shares held by adult children of Mr. Spina who share
    Mr. Spinas home, as to which shares Mr. Spina
    disclaims beneficial ownership.                                                                                                                                                                                                                                       
|    
|(12) | Includes 235,000 shares which Mr. Soliday
    has the right to acquire within 60 days after May 15,
    2002 pursuant to outstanding options and 751 shares held by
    a trust for the minor daughter of Mr. Soliday.                                                                                                                                                                                                                                                                                                                                       
|    
|(13) | Consists of 15,000 shares held by a family trust
    of which Mr. LaForge is sole trustee, which shares
    Mr. LaForge, acting alone, has the power to vote and
    dispose of, and 45,500 shares which Mr. LaForge has the
    right to acquire within 60 days after May 15, 2002
    pursuant to outstanding options.                                                                                                                                                                                                                                     
|    
|(14) | Consists of 32,500 shares which Mr. Santo
    has the right to acquire within 60 days after May 15,
    2002 pursuant to an outstanding option. Mr. Santos
    employment with the Company terminated in April 2002.                                                                                                                                                                                                                                                                                                                                        
|    
|(15) | Consists of 10,000 shares which Mr. Conlon
    has the right to acquire within 60 days after May 15,
    2002 pursuant to an outstanding option. Mr. Conlons
    employment with the Company terminated in October 2001.                                                                                                                                                                                                                                                                                                                                    
|    
|(16) | Includes 1,497,000 shares which the
    Companys executive officers and directors have the right
    to acquire within 60 days after May 15, 2002 pursuant
    to outstanding options, 4,184,700 shares held by affiliates of
    the Companys directors, 37,500 shares which such
    affiliates have the right to acquire within 60 days after
    May 15, 2002 pursuant to outstanding warrants, 15,000
    shares held by a family trust of which Mr. LaForge is
    trustee, and 751 shares held by a trust for the minor daughter
    of Mr. Soliday.

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|         |                                                   
|-------- | --------------------------------------------------
|Item 13. | Certain Relationships and Related
    Transactions

The Company has entered into indemnity agreements
with certain officers and directors which provide, among other
things, that the Company will indemnify such officer or
director, under the circumstances and to the extent provided for
therein, for expenses, damages, judgments, fines and settlements
he or she may be required to pay in actions or proceedings which
he or she is or may be made a party by reason of his or her
position as a director, officer or other agent of the Company,
and otherwise to the fullest extent permitted under Delaware law
and the Companys Bylaws.

In January 2001, the Company advanced $100,000 in
royalties to Matthew P. Fuerter, a former executive officer of
the Company, in connection with a license agreement entered into
with Mr. Fuerter in May 1998. No interest has been charged
on this advance. The largest amount outstanding on this advance
during the fiscal year ended May 29, 2002 was $89,800. As
of May 15, 2002, the amount outstanding on this advance was
$36,325. Mr. Fuerter does not make payments against this
amount. The balance is decreased as a result of calculating
royalties due Mr. Fuerter under the licensing agreement.

The Company pays Mr. Bosch $6,250 per month
for services performed for the Company as a member of the
Executive Committee of the Board. During the fiscal year ended
March 29, 2002, Mr. Bosch received $75,000.

In April 2001, the Company advanced
Mr. Spina $60,000 on sales commissions and bonuses to be
earned in the future. This $60,000 advancement was earned in May
2002 and will be recorded as a bonus paid to Mr. Spina in
the fiscal year ending March 28, 2003.

On October 12, 2001, Mr. Conlons
employment with the Company terminated. On October 15,
2001, the Company entered into a consulting agreement with
Seascape Services, Inc. (Seascape), a company where
Mr. Conlon serves as president. Pursuant to this consulting
agreement, Seascape provided certain consulting services from
October 15, 2001 through February 28, 2002 in
consideration for the following: (i) $13,333.34 per month;
(ii) Company-paid COBRA benefits for Mr. Conlon
through the term of the consulting agreement;
(iii) reimbursement of outside services, direct charges,
and travel and subsistence; and (iv) Company-paid
commission on revenue recognized on certain accounts in the
amount of 0.65% of revenue recognized through January 15,
2002 and 0.45% of revenue recognized from January 16, 2002
through February 28, 2002. All stock options held by
Mr. Conlon as of his termination date (both vested and
unvested) were cancelled as of such date. A new option for
10,000 shares was granted to Mr. Conlon on
December 12, 2001 under the 2000 Plan in connection with
Mr. Conlons consulting services. These shares vested
ratably over three months and were fully vested on
March 12, 2002. Mr. Conlon ceased providing consulting
services to the Company on February 28, 2002, but his
option continued to vest through March 12, 2002 and expired
unexercised on June 12, 2002.

On October 12, 2001, the employment with the
Company of Edward Johnson, an executive officer of the Company,
terminated. On October 27, 2001, the Company entered into a
consulting agreement with BanDao Associates, LLC
(BanDao), a company where Mr. Johnson serves as
president. Pursuant to this consulting agreement, BanDao
provided certain consulting services through June 1, 2002
in consideration for (i) $14,583.34 per month from
October 27, 2001 through March 1, 2002, and
(ii) $1,600 per day for a minimum of 5 days per month
from March 1, 2002 to June 1, 2002. In addition, the
Company paid COBRA benefits for Mr. Johnson through the
term of the consulting agreement. All stock options held by
Mr. Johnson as of his termination date (both vested and
unvested) were cancelled as of such date. A new option for
20,000 shares was granted to Mr. Johnson on
December 12, 2001 under the 2000 Plan in connection with
Mr. Johnsons consulting services. These shares vested
ratably over six months and were fully vested on June 12,
2002. Mr. Johnson ceased providing consulting services to
the Company on June 1, 2002, but his option continued to
vest through June 12, 2002.

In May 2002, the Company entered into a change of
control agreement with Mr. Bosch. Under the terms of this
agreement, in the event of an acquisition of the Company or
similar corporate event, Mr. Boschs stock options
will become fully vested, provided that Mr. Bosch is a
member of the Board on the date of such change of control.

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In May 2002, the Company entered into a change of
control agreement with Mr. Branscum. Under the terms of
this agreement, in the event of an acquisition of the Company or
similar corporate event, Mr. Branscums stock options
will become fully vested. Furthermore, in the event that the
Company terminates Mr. Branscums employment without cause
or if Mr. Branscum terminates his employment for good
reason at any time within five years after the effective date of
the agreement and within 12 months after an acquisition of
the Company or similar corporate event, then he will receive
from the Company his full-time base salary and other benefits
for six months after such termination and his options will
become exercisable for a period of 270 days after such
termination.

In May 2002, the Company entered into a change of
control agreement with each of Messrs. Spina and Soliday.
Under the terms of each agreement, in the event that the Company
terminates the employees employment without cause or if
the employee terminates his employment for good reason at any
time within five years after the effective date of the agreement
and within 12 months after an acquisition of the Company or
similar corporate event, then all of such employees
options will become fully vested and will become exercisable for
a period of 270 days after such termination, and he will
receive from the Company his full-time base salary and other
benefits for six months after such termination.

Mr. Branscum is a director and a member of
the audit committee of the board of directors of SureWest
Communications. During the years ended March 30, 2001 and
March 29, 2002, the Company made sales to SureWest of
$1,456,000 and $11,000, respectively.

In June 2002, the Company entered into a
retention agreement with Mr. Branscum, pursuant to which
Mr. Branscum is eligible to earn cash payments, as follows:
On each of June 1, July 1, August 1, and
September 1, 2002 (each a Retention Date and,
collectively, the Retention Dates),
Mr. Branscum will earn a retention payment, each in the
amount of $28,125, subject to standard payroll deductions and
withholdings (each a Branscum Retention Payment and,
collectively, the Branscum Retention Payments),
subject to the terms of the agreement. Mr. Branscums
right to receive the Branscum Retention Payments terminates on
the earliest of: (i) a sale as a going concern of
substantially all of the Companys assets and/or stock, or
a merger (Sale); (ii) a debt or equity
financing of the Company that is not part of a Sale
(Financing); or (iii) September 1, 2002
(the Termination Date). In the event of a Sale or
Financing, Mr. Branscums right to receive the
Branscum Retention Payments shall terminate and he will not earn
any Branscum Retention Payment(s) corresponding to any later
Retention Date. In addition, in the event the Company terminates
Mr. Branscums employment without cause,
Mr. Branscum is entitled to six months of his base
salary less the aggregate Branscum Retention Payment(s) paid to
him as of his termination date (the Branscum
Severance). Mr. Branscums right to receive the
Branscum Severance shall survive the Termination Date by
four weeks. If Mr. Branscum voluntarily terminates his
employment or the Company terminates his employment with cause,
Mr. Branscum shall not be entitled to Branscum Severance
and will not earn any Branscum Retention Payment(s)
corresponding to any later Retention Date.

In June 2002, the Company entered into a
retention agreement with Mr. Marcotte, pursuant to which
Mr. Marcotte is eligible to earn cash payments, as follows:
On each Retention Date (as defined above), Mr. Marcotte
will earn a retention payment, each in the amount of $26,250,
subject to standard payroll deductions and withholdings (each a
Marcotte Retention Payment and, collectively, the
Marcotte Retention Payments), subject to the terms
of the agreement. Mr. Marcottes right to receive the
Marcotte Retention Payments terminates on the Termination Date
(as defined above). In the event of a Sale (as defined above) or
Financing (as defined above), Mr. Marcottes right to
receive the Marcotte Retention Payments shall terminate and he
will not earn any Marcotte Retention Payment(s) corresponding to
any later Retention Date. In addition, in the event the Company
terminates Mr. Marcottes employment without cause,
Mr. Marcotte is entitled to six months of his base
salary less the aggregate Marcotte Retention Payment(s) paid to
him as of his termination date (the Marcotte
Severance). Mr. Marcottes right to receive the
Marcotte Severance shall survive the Termination Date by
four weeks. If Mr. Marcotte voluntarily terminates his
employment or the Company terminates his employment with cause,
Mr. Marcotte shall not be entitled to Marcotte Severance
and will not earn any Marcotte Retention Payment(s)
corresponding to any later Retention Date.

75



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In June 2002, the Company entered into a
retention agreement with Mr. Soliday, pursuant to which
Mr. Soliday is eligible to earn cash payments, as follows:
On each Retention Date (as defined above), Mr. Soliday will
earn a retention payment, each in the amount of $21,250, subject
to standard payroll deductions and withholdings (each a
Soliday Retention Payment and, collectively, the
Soliday Retention Payments), subject to the terms of
the agreement. Mr. Solidays right to receive the
Soliday Retention Payments terminates on the Termination Date
(as defined above). In the event of a Sale (as defined above) or
Financing (as defined above), Mr. Solidays right to
receive the Soliday Retention Payments shall terminate and he
will not earn any Soliday Retention Payment(s) corresponding to
any later Retention Date. In addition, in the event the Company
terminates Mr. Solidays employment without cause, Mr.
Soliday is entitled to six months of his base salary less
the aggregate Soliday Retention Payment(s) paid to him as of his
termination date (the Soliday Severance).
Mr. Solidays right to receive the Soliday Severance
shall survive the Termination Date by four weeks. If
Mr. Soliday voluntarily terminates his employment or the
Company terminates his employment with cause, Mr. Soliday
shall not be entitled to Soliday Severance and will not earn any
Soliday Retention Payment(s) corresponding to any later
Retention Date.

In June 2002, the Company entered into a
retention agreement with Mr. Spina, pursuant to which
Mr. Spina is eligible to earn cash payments, as follows: On
each Retention Date (as defined above), Mr. Spina will earn
a retention payment, each in the amount of $20,625, subject to
standard payroll deductions and withholdings (each a Spina
Retention Payment and, collectively, the Spina
Retention Payments), subject to the terms of the
agreement. Mr. Spinas right to receive the Spina
Retention Payments terminates on the Termination Date (as
defined above). In the event of a Sale (as defined above) or
Financing (as defined above), Mr. Spinas right to
receive the Spina Retention Payments shall terminate and he will
not earn any Spina Retention Payment(s) corresponding to any
later Retention Date. In addition, in the event the Company
terminates Mr. Spinas employment without cause,
Mr. Spina is entitled to six months of his base salary
less the aggregate Spina Retention Payment(s) paid to him as of
his termination date (the Spina Severance).
Mr. Spinas right to receive the Spina Severance shall
survive the Termination Date by four weeks. If
Mr. Spina voluntarily terminates his employment or the
Company terminates his employment with cause, Mr. Spina
shall not be entitled to Spina Severance and will not earn any
Spina Retention Payment(s) corresponding to any later Retention
Date.




PART IV




Item 14.     Exhibits,
Financial Statement Schedules, and Reports on
Form 8-K

(a) The following documents are filed as
part of this Report:

1.     Financial
Statements

The Index to Consolidated Financial Statements is
included in Item 8 on page F-1 of this report.

2.     Financial
Statement Schedules

Schedule II  Valuation and
Qualifying Accounts and Reserves

|                             |  |                |        |            |  |          |      |             |  |            |    |            |  |          |     |             |  |            |        |            |  |          |        |             |  |            |   |  |  |  |     |  |  |  |        |   |  |  |        |   |  |  |     |  |  |  |       |  |  |  |        |  
|---------------------------- |  | -------------- | ------ | ---------- |  | -------- | ---- | ----------- |  | ---------- | -- | ---------- |  | -------- | --- | ----------- |  | ---------- | ------ | ---------- |  | -------- | ------ | ----------- |  | ---------- | - |  |  |  | --- |  |  |  | ------ | - |  |  | ------ | - |  |  | --- |  |  |  | ----- |  |  |  | ------ | -
|                             |  |                |        |            |  |          |      |             |  |            |    |            |  |          |     |             |  |            |        |           
|                             |  |                |        | Additions  |  |          |      |             |  | Additions  |    |            |  |          |     | Additions   |  |            |        |           
|                             |  |                |        |            |  |          |      |             |  |            |    |            |  |          |     |             |  |            |        |           
|                             |  |                |        |            |  | Charged  |      |             |  |            |    |            |  | Charged  |     |             |  |            |        |            |  | Charged  |        |             |  |           
|                             |  |                |        | Charged to |  | to/from  |      |             |  |            |    | Charged to |  | to/from  |     |             |  |            |        | Charged to |  | to/from  |        |             |  |           
|                             |  | Balance at     |        | Costs and  |  | Other    |      | Deductions/ |  | Balance at |    | Costs and  |  | Other    |     | Deductions/ |  | Balance at |        | Costs and  |  | Other    |        | Deductions/ |  | Balance at
|Description                  |  | 26-Mar-99      |        | Expenses   |  | Accounts |      | Writeoffs   |  | 31-Mar-00  |    | Expenses   |  | Accounts |     | Writeoffs   |  | 30-Mar-01  |        | Expenses   |  | Accounts |        | Writeoffs   |  | 29-Mar-02 
|                             |  |                |        |            |  |          |      |             |  |            |    |            |  |          |     |             |  |            |        |            |  |          |        |             |  |           
|                             |  |               
|                             |  | (In thousands)
|Provision for doubtful debts |  |                | (820   | )          |  |          | (97  | )           |  |            |   |            |  |          | 661 |             |  |            | (255   | )          |  |          | (38    | )           |  |            |  |  |  |  |    |  |  |  | (294   | ) |  |  | (79    | ) |  |  |    |  |  |  | 201   |  |  |  | (172   | )
|Inventory allowance          |  |                | (1,858 | )          |  |          | (339 | )           |  |            | 14 |            |  |          | 604 |             |  |            | (1,579 | )          |  |          | (2,359 | )           |  |            |  |  |  |  | 160 |  |  |  | (3,778 | ) |  |  | (4,559 | ) |  |  | 142 |  |  |  | 1,739 |  |  |  | (6,456 | )

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3.     Exhibits

|        |       |     |  |                         |  |                                                                                                                                                                                                                                                                                                                                      
|------- | ----- | --- |  | ----------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |     |  |                        
|Number  |       |     |  | Description of Document
|        |       |     |  |                        
|        | 3.1(  | 1)  |  |                         |  | Amended and Restated Certificate of Incorporation
    of the registrant.                                                                                                                                                                                                                                                             
|        | 3.3(  | 2)  |  |                         |  | Bylaws of the registrant, as currently in effect.                                                                                                                                                                                                                                                                                    
|        | 4.1(  | 2)  |  |                         |  | Specimen Common Stock Certificate.                                                                                                                                                                                                                                                                                                   
|        | 4.2(  | 2)  |  |                         |  | Amended and Restated Preferred Stock Purchase
    Warrant, dated August 6, 1997, issued to Lighthouse Capital
    Partners II, L.P.                                                                                                                                                                                                  
|        | 4.3(  | 2)  |  |                         |  | Warrant to Purchase Shares of Series DD
    Preferred Stock of Repeater Technologies, Inc., dated
    January 25, 1999, issued to Phoenix Leasing Incorporated.                                                                                                                                                                      
|        | 4.4(  | 2)  |  |                         |  | Stock Subscription Warrant to Purchase
    Series DD Preferred Stock of Repeater Technologies, Inc.,
    dated July 8, 1999, issued to TBCC Funding Trust II.                                                                                                                                                                        
|        | 4.5(  | 2)  |  |                         |  | Seventh Amended and Restated Investors
    Rights Agreement, dated July 11, 2000.                                                                                                                                                                                                                                                   
|        | 4.6(  | 2)  |  |                         |  | Form of Warrant to Purchase Shares of
    Series EE Preferred Stock.                                                                                                                                                                                                                                                                 
|        | 4.7(  | 3)  |  |                         |  | Certificate of Designation of Series A
    Junior Participating Preferred Stock.                                                                                                                                                                                                                                                     
|        | 4.8(  | 3)  |  |                         |  | Rights Agreement, dated as of August 9,
    2001, between Repeater Technologies, Inc. and U.S. Stock
    Transfer Corporation, including Form of Right Certificate.                                                                                                                                                                  
|        | 10.1( | 2)* |  |                         |  | Form of Indemnity Agreement between the
    registrant and its directors and executive officers.                                                                                                                                                                                                                                     
|        | 10.2( | 4)* |  |                         |  | 1990 Incentive Stock Plan and forms of offering
    documents.                                                                                                                                                                                                                                                                       
|        | 10.3* |     |  |                         |  | Key Executives Stock Option Plan and forms of
    offering documents.                                                                                                                                                                                                                                                                
|        | 10.4( | 5)* |  |                         |  | 2000 Equity Incentive Plan and forms of offering
    documents.                                                                                                                                                                                                                                                                      
|        | 10.5( | 2)* |  |                         |  | 2000 Employee Stock Purchase Plan and form of
    offering document.                                                                                                                                                                                                                                                                 
|        | 10.6( | 2)  |  |                         |  | Lease, dated August 7, 1992, between
    Repeater Technologies, Inc. and The Sobrato 1979 Trust, as
    amended by the First Amendment to Lease, dated October 16,
    1998, between Repeater Technologies, Inc. and Sobrato
    Interests II.                                                                                       
|        | 10.7( | 2)* |  |                         |  | Change of Control Agreement, dated
    November 3, 1999, between Repeater Technologies, Inc. and
    Timothy A. Marcotte.                                                                                                                                                                                                            
|        | 10.8( | 2)  |  |                         |  | License Agreement, dated May 12, 1998,
    between Repeater Technologies, Inc. and Matthew Fuerter.                                                                                                                                                                                                                                  
|        | 10.10 | (2) |  |                         |  | Convertible Debenture and Warrant Purchase
    Agreement, dated July 11, 2000.                                                                                                                                                                                                                                                       
|        | 10.11 | (4) |  |                         |  | Loan and Security Agreement, dated as of
    July 8, 1999, by and between Repeater Technologies, Inc.
    and Transamerica Business Credit Corporation, as amended by
    Amendment to Loan Documents, dated as of October 10, 2001,
    by and between Repeater Technologies, Inc. and Transamerica
    Business Credit Corporation.
|        | 10.12 |     |  |                         |  | Settlement Agreement and Release, effective as of
    March 11, 2002, by and between Repeater Technologies, Inc.
    and Sanmina-SCI Corporation.                                                                                                                                                                                    
|        | 10.13 | *   |  |                         |  | Change of Control Agreement, dated May 3,
    2002, between Chris L. Branscum and Repeater Technologies, Inc.                                                                                                                                                                                                                        
|        | 10.14 | *   |  |                         |  | Change of Control Agreement, dated May 3,
    2002, between Joel J. Spina and Repeater Technologies, Inc.                                                                                                                                                                                                                            
|        | 10.15 | *   |  |                         |  | Change of Control Agreement, dated May 3,
    2002, between John L. Soliday and Repeater Technologies, Inc.                                                                                                                                                                                                                          
|        | 10.16 | *   |  |                         |  | Change of Control Agreement, dated May 15,
    2002, between John E. Bosch and Repeater Technologies, Inc.                                                                                                                                                                                                                           
|        | 10.17 | *   |  |                         |  | Consulting Agreement for Non-Technical Services,
    dated as of October 15, 2001, between Repeater
    Technologies, Inc. and Seascape Services, Inc.                                                                                                                                                                               

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|        |       |   |  |                         |  |                                                                                                                                                               
|------- | ----- | - |  | ----------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |   |  |                        
|Number  |       |   |  | Description of Document
|        |       |   |  |                        
|        | 10.18 | * |  |                         |  | Form of Retention Agreement between Repeater
    Technologies, Inc. and each of Chris L. Branscum, Timothy A.
    Marcotte, Joel J. Spina and John L. Soliday.
|        | 23.1  |   |  |                         |  | Consent of PricewaterhouseCoopers LLP,
    independent accountants.                                                                                           
|        | 24.1  |   |  |                         |  | Power of Attorney (see signature pages).                                                                                                                      



---



|    |                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Incorporated by reference from the
    correspondingly numbered exhibit to the registrants
    Quarterly Report on Form 10-Q for the quarterly period
    ended June 30, 2000, filed with the Commission on
    September 20, 2000.    
|   
|(2) | Incorporated by reference from the
    correspondingly numbered exhibit to the registrants
    Registration Statement on Form S-1, as amended
    (No. 333-31266), declared effective by the Commission on
    August 8, 2000.         
|   
|(3) | Incorporated by reference from the
    correspondingly numbered exhibit to the registrants
    Quarterly Report on Form 10-Q for the quarterly period
    ended June 29, 2001, filed with the Commission on
    August 13, 2001.       
|   
|(4) | Incorporated by reference from the
    correspondingly numbered exhibit to the registrants
    Quarterly Report on Form 10-Q for the quarterly period
    ended September 28, 2001, filed with the Commission on
    November 13, 2001.
|   
|(5) | Incorporated by reference from the
    correspondingly numbered exhibit to the registrants Annual
    Report on Form 10-K for the fiscal year ended
    March 30, 2001, filed with the Commission on June 28,
    2001.                



| |   |                                                                       
| | - | ----------------------------------------------------------------------
| | * | Denotes a management contract or compensatory
    plan or arrangement.

(b)     Reports on
Form 8-K

The
registrant has not filed a report on Form 8-K during the
quarter ended March 29, 2002.

(c)     See Exhibits
listed under Item 14(a)(3).

(d)     Not applicable.

78



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SIGNATURES

Pursuant to the requirements of Section 13
or 15(d) 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, in the City of
Sunnyvale, State of California, on June 27, 2002.



| |                            
| | ---------------------------
| | REPEATER TECHNOLOGIES, INC.



| |     |                      
| | --- | ---------------------
| | By: | /s/ CHRIS L. BRANSCUM

| |                                          
| | -----------------------------------------
| |                                          
| | Chris L. Branscum                        
| | President and Chief Executive
    Officer
| | (Principal Executive Officer)            



| |     |                        
| | --- | -----------------------
| | By: | /s/ TIMOTHY A. MARCOTTE

| |                                                      
| | -----------------------------------------------------
| |                                                      
| | Timothy A. Marcotte                                  
| | Executive Vice President, Chief Financial
    Officer
| | and Chief Operating Officer                          
| | (Principal Financial and Accounting
    Officer)     

79



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POWER OF ATTORNEY

Know All Persons By These
Presents, that each person whose
signature appears below constitutes and appoints Chris L.
Branscum and Timothy A. Marcotte, as true and lawful
attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, in any
and all capacities to sign this Annual Report on Form 10-K
filed herewith and any or all amendments to said report, and to
file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission granting unto said attorneys-in-fact and agents the
full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the
foregoing, as to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or his substitute,
may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities stated and on the dates indicated.

|                                           |  |                                                                                                                                    |  |              
|------------------------------------------ |  | ---------------------------------------------------------------------------------------------------------------------------------- |  | -------------
|Signature                                  |  | Title                                                                                                                              |  | Date         
|                                           |  |                                                                                                                                    |  |              
|/s/ CHRIS L. BRANSCUMChris L. Branscum     |  | President and Chief Executive Officer and
    Director (Principal Executive Officer)                                               |  | June 27, 2002
|                                          
|/s/ TIMOTHY A. MARCOTTETimothy A. Marcotte |  | Executive Vice President, Chief Financial Officer
    and Chief Operating Officer (Principal Financial and Accounting
    Officer) |  | June 27, 2002
|                                          
|/s/ JOHN E. BOSCHJohn E. Bosch             |  | Chairman of the Board                                                                                                              |  | June 27, 2002
|                                          
|/s/ RICHARD G. GREYRichard G. Grey         |  | Director                                                                                                                           |  | June 27, 2002
|                                          
|/s/ PERRY M. LAFORGEPerry M. LaForge       |  | Director                                                                                                                           |  | June 27, 2002
|                                          
|/s/ ALESSANDRO A. PIOLAlessandro A. Piol   |  | Director                                                                                                                           |  | June 27, 2002

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EXHIBIT INDEX

|        |       |     |  |                         |  |                                                                                                                                                                                                                                                                                                                                      
|------- | ----- | --- |  | ----------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |     |  |                        
|Number  |       |     |  | Description of Document
|        |       |     |  |                        
|        | 3.1(  | 1)  |  |                         |  | Amended and Restated Certificate of Incorporation
    of the registrant.                                                                                                                                                                                                                                                             
|        | 3.3(  | 2)  |  |                         |  | Bylaws of the registrant, as currently in effect.                                                                                                                                                                                                                                                                                    
|        | 4.1(  | 2)  |  |                         |  | Specimen Common Stock Certificate.                                                                                                                                                                                                                                                                                                   
|        | 4.2(  | 2)  |  |                         |  | Amended and Restated Preferred Stock Purchase
    Warrant, dated August 6, 1997, issued to Lighthouse Capital
    Partners II, L.P.                                                                                                                                                                                                  
|        | 4.3(  | 2)  |  |                         |  | Warrant to Purchase Shares of Series DD
    Preferred Stock of Repeater Technologies, Inc., dated
    January 25, 1999, issued to Phoenix Leasing Incorporated.                                                                                                                                                                      
|        | 4.4(  | 2)  |  |                         |  | Stock Subscription Warrant to Purchase
    Series DD Preferred Stock of Repeater Technologies, Inc.,
    dated July 8, 1999, issued to TBCC Funding Trust                                                                                                                                                                            
|        | 4.5(  | 2)  |  |                         |  | Seventh Amended and Restated Investors
    Rights Agreement, dated July 11, 2000.                                                                                                                                                                                                                                                   
|        | 4.6(  | 2)  |  |                         |  | Form of Warrant to Purchase Shares of
    Series EE Preferred Stock.                                                                                                                                                                                                                                                                 
|        | 4.7(  | 3)  |  |                         |  | Certificate of Designation of Series A
    Junior Participating Preferred Stock.                                                                                                                                                                                                                                                     
|        | 4.8(  | 3)  |  |                         |  | Rights Agreement, dated as of August 9,
    2001, between Repeater Technologies, Inc. and U.S. Stock
    Transfer Corporation, including Form of Right Certificate.                                                                                                                                                                  
|        | 10.1( | 2)* |  |                         |  | Form of Indemnity Agreement between the
    registrant and its directors and executive officers.                                                                                                                                                                                                                                     
|        | 10.2( | 4)* |  |                         |  | 1990 Incentive Stock Plan and forms of offering
    documents.                                                                                                                                                                                                                                                                       
|        | 10.3* |     |  |                         |  | Key Executives Stock Option Plan and forms of
    offering documents.                                                                                                                                                                                                                                                                
|        | 10.4( | 5)* |  |                         |  | 2000 Equity Incentive Plan and forms of offering
    documents.                                                                                                                                                                                                                                                                      
|        | 10.5( | 2)* |  |                         |  | 2000 Employee Stock Purchase Plan and form of
    offering document.                                                                                                                                                                                                                                                                 
|        | 10.6( | 2)  |  |                         |  | Lease, dated August 7, 1992, between
    Repeater Technologies, Inc. and The Sobrato 1979 Trust, as
    amended by the First Amendment to Lease, dated October 16,
    1998, between Repeater Technologies, Inc. and Sobrato
    Interests II.                                                                                       
|        | 10.7( | 2)* |  |                         |  | Change of Control Agreement, dated
    November 3, 1999, between Repeater Technologies, Inc. and
    Timothy A. Marcotte.                                                                                                                                                                                                            
|        | 10.8( | 2)  |  |                         |  | License Agreement, dated May 12, 1998,
    between Repeater Technologies, Inc. and Matthew Fuerter.                                                                                                                                                                                                                                  
|        | 10.10 | (2) |  |                         |  | Convertible Debenture and Warrant Purchase
    Agreement, dated July 11, 2000.                                                                                                                                                                                                                                                       
|        | 10.11 | (4) |  |                         |  | Loan and Security Agreement, dated as of
    July 8, 1999, by and between Repeater Technologies, Inc.
    and Transamerica Business Credit Corporation, as amended by
    Amendment to Loan Documents, dated as of October 10, 2001,
    by and between Repeater Technologies, Inc. and Transamerica
    Business Credit Corporation.
|        | 10.12 |     |  |                         |  | Settlement Agreement and Release, effective as of
    March 11, 2002, by and between Repeater Technologies, Inc.
    and Sanmina-SCI Corporation.                                                                                                                                                                                    
|        | 10.13 | *   |  |                         |  | Change of Control Agreement, dated May 3,
    2002, between Chris L. Branscum and Repeater Technologies, Inc.                                                                                                                                                                                                                        
|        | 10.14 | *   |  |                         |  | Change of Control Agreement, dated May 3,
    2002, between Joel J. Spina and Repeater Technologies, Inc.                                                                                                                                                                                                                            
|        | 10.15 | *   |  |                         |  | Change of Control Agreement, dated May 3,
    2002, between John L. Soliday and Repeater Technologies, Inc.                                                                                                                                                                                                                          
|        | 10.16 | *   |  |                         |  | Change of Control Agreement, dated May 15,
    2002, between John E. Bosch and Repeater Technologies, Inc.                                                                                                                                                                                                                           
|        | 10.17 | *   |  |                         |  | Consulting Agreement for Non-Technical Services,
    dated as of October 15, 2001, between Repeater
    Technologies, Inc. and Seascape Services, Inc.                                                                                                                                                                               
|        | 10.18 | *   |  |                         |  | Form of Retention Agreement between Repeater
    Technologies, Inc. and each of Chris L. Branscum, Timothy A.
    Marcotte, Joel J. Spina and John L. Soliday.                                                                                                                                                                       
|        | 23.1  |     |  |                         |  | Consent of PricewaterhouseCoopers LLP,
    independent accountants.                                                                                                                                                                                                                                                                  
|        | 24.1  |     |  |                         |  | Power of Attorney (see signature pages).                                                                                                                                                                                                                                                                                             



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##### Table of Contents





---



|    |                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Incorporated by reference from the
    correspondingly numbered exhibit to the registrants
    Quarterly Report on Form 10-Q for the quarterly period
    ended June 30, 2000, filed with the Commission on
    September 20, 2000.    
|   
|(2) | Incorporated by reference from the
    correspondingly numbered exhibit to the registrants
    Registration Statement on Form S-1, as amended
    (No. 333-31266), declared effective by the Commission on
    August 8, 2000.         
|   
|(3) | Incorporated by reference from the
    correspondingly numbered exhibit to the registrants
    Quarterly Report on Form 10-Q for the quarterly period
    ended June 29, 2001, filed with the Commission on
    August 13, 2001.       
|   
|(4) | Incorporated by reference from the
    correspondingly numbered exhibit to the registrants
    Quarterly Report on Form 10-Q for the quarterly period
    ended September 28, 2001, filed with the Commission on
    November 13, 2001.
|   
|(5) | Incorporated by reference from the
    correspondingly numbered exhibit to the registrants Annual
    Report on Form 10-K for the fiscal year ended
    March 30, 2001, filed with the Commission on June 28,
    2001.                



| |   |                                                                       
| | - | ----------------------------------------------------------------------
| | * | Denotes a management contract or compensatory
    plan or arrangement.