<PAGE>

================================================================================
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

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

                                  FORM 10-KSB


[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

    For the Fiscal Year Ended: November 30, 2001

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

    For the transition period from  ______  to  ______

                        Commission File Number: 0-21367

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

                            DATA TRANSLATION, INC.
            (Exact name of registrant as specified in its charter)

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

                      Delaware                     04-3332230
            (State or other jurisdiction         (I.R.S Employer
          of incorporation or organization)  Identification Number)


                                100 Locke Drive
                      Marlboro, Massachusetts 01752-1192
         (Address of principal executive offices, including zip code)

                                (508) 481-3700
             (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, $0.01 par value

                               (Title of class)

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

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

   Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B in this form, and will not be contained, to the best of the
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB [_] .

   The issuer's revenues for its most recent fiscal year were: $14,884,000.

   The aggregate market value of the Company's voting and non-voting common
equity stock held by non-affiliates of the registrant was approximately
$3,511,312 as of January 31, 2002. The number of shares of Common Stock, $0.01
par value, outstanding as of January 31, 2002 was 3,511,312.

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

<PAGE>

                      DOCUMENTS INCORPORATED BY REFERENCE

   Portions of the registrant's Proxy Statement for the Annual Meeting of
Stockholders to be held on April 23, 2002 are incorporated by reference into
Part III.


<PAGE>

                                    PART 1

Item 1.  Business

Introduction

   Data Translation, Inc., f/k/a Data Translation II, Inc., (the "Company") was
incorporated in September 1996 as a wholly-owned subsidiary of Media 100 Inc.,
f/k/a Data Translation, Inc., ("Parent"). On November 29, 1996, Parent
contributed to the Company substantially all of the assets and liabilities of
Parent's data acquisition and imaging, commercial products and networking
distribution groups (the "Contributed Businesses"). In November 1996, Parent
sold a substantial portion of the assets of the networking distribution
business and during 1998 the Company discontinued the remainder of such
business. The Company continues to operate the data acquisition and imaging and
commercial products groups. On December 2, 1996 (the "Distribution Date"),
Parent distributed to its stockholders in the form of a dividend all of the
outstanding shares of capital stock of the Company (the "Distribution").
References to the "Company" below refer to the Contributed Businesses as
operated by the Company after the Distribution, or as operated by Parent prior
to the Distribution, as the context requires.

   The Company is a leader in the design, development and manufacture of high
performance data acquisition and imaging products. For more than two decades,
the Company's products have provided engineers and scientists with accurate and
timely data for measurement, analysis and process control in a wide range of
industrial, scientific and medical applications. The Company's principal
products in this area are data acquisition and imaging hardware, which are used
in personal computers ("PCs") to receive analog signals, convert them to
digital form and process the digital data. The Company's strategy is to
identify and capitalize on growth opportunities in the data acquisition,
imaging and machine vision markets.

   An outgrowth of the Company's core technology of analog to digital
conversion is its commercial products line which includes a low-cost,
high-performance video capture and encoding system for Microsoft(R) Windows(R)
95/98-based PCs called Broadway/TM. Broadway captures analog video, digitizes
it, compresses it into an editable MPEG-1 format, and writes it to disk in real
time. The Company's Broadway product has many applications, including
incorporation of video into web pages on the world wide web (the "Web"),
multimedia presentations, Webstreaming, CD-ROM titles and computer-based
training. /

Data Acquisition and Imaging

  Market

   The market for the Company's data acquisition and imaging products, which
are the Company's core products, is composed primarily of technical users, such
as engineers and scientists, interested in incorporating the Company's products
in their final products. These products are designed for the scientific
research and analysis, test and measurement and industrial machine vision
inspection markets. End users include original equipment manufacturers,
industrial manufacturers, research laboratories, universities, hospitals and
government agencies. Users require highly accurate, real-time measurement and
control of analog signals, such as temperature, pressure, sound and video.

   The data acquisition and imaging markets are highly fragmented and have been
adversely affected in recent years by reduced prices for PCs and peripherals.

  Business Strategy

   In the data acquisition and imaging area, the Company is focused on
providing system solutions built around development of its Peripheral Component
Interconnect ("PCI") and Universal Serial Bus ("USB") based products. These
developments are being driven by rapid adoption of PCI and USB slots by
personal computer manufacturers.

                                      1

<PAGE>

  Products and Services

   The Company's data acquisition and imaging products are designed to
facilitate (i) the high-speed capture of analog signals representing physical
events, such as temperature, pressure, sound and video, (ii) the conversion of
such signals into digital form and (iii) the use of such digital signals in PCs
for processing. These capabilities permit customers to use PCs for data
acquisition, to identify, measure, analyze and control physical phenomena, and
for imaging, to analyze or enhance video images.

   The Company's data acquisition and imaging systems consist of plug-in cards
and Microsoft(R) Windows(R)-based software which provide an integrated, high
performance systems solution to the general scientific and measurement
marketplace.

   The Company sells over 100 data acquisition and imaging products, which
range in retail price from $200 to $3,000. Domestically, the Company sells such
products to end users, value-added resellers ("VARs"), system integrators and
original equipment manufacturers ("OEMs"). Internationally, the Company sells
through its wholly-owned subsidiaries, as well as through resellers and
independent distributors. Such prices do not reflect distributor discounts for
international sales, which range from approximately 20% to 35% on hardware
products and up to approximately 50% on software applications.

   Data acquisition products provide capabilities ranging from simple
measurement to advanced digital signal processing functions. While researchers,
system integrators and OEMs have been the predominant data acquisition users in
the past, new data acquisition markets have emerged in the industrial and
medical areas, such as industrial inspection, medical diagnostic/therapeutic
applications, high-performance control, vibration analysis, acoustics and test
and measurement applications. Customers incorporate the Company's data
acquisition boards into PCs to measure real-world parameters, including
temperature, pressure, acceleration and sound; to analyze this data; and to use
the results to control real-world events and processes.

   The Company's imaging products may be used in a number of applications. In
machine vision applications, images can be captured and processed immediately,
in real time, for fast, accurate inspection of manufactured parts. In
scientific imaging applications, images can be captured from video cameras for
analysis, or images can be captured from cameras mounted on microscopes to
identify and count cells. In medical applications, images can be captured from
different diagnostic devices, such as CAT scanners or ultrasound imaging
devices, for enhancement, analysis and display.

  Customers and Sales

   The Company sells its data acquisition and imaging products to end users,
VARs, system integrators and OEMs for use primarily in the scientific, medical
and industrial markets. End users include manufacturers, research laboratories,
universities, hospitals and government agencies.

   The Company sells its data acquisition and imaging products through a
comprehensive, widely distributed annual catalog, an in-house telesales force,
OEM-focused direct sales, indirect channels (VARs, distributors and system
integrators), and extensive advertising and promotional campaigns. The Company
has a full-time sales and administrative staff of 10 employees in the United
States to support sales. Two subsidiaries and various distributors throughout
Europe, Asia and the Pacific Rim support international sales.

  Competition

   The Company competes in the data acquisition market principally with
National Instruments Corporation, Measurement Computing Corporation and IOtech
Incorporated. In the imaging market the Company competes with Matrox Electronic
Systems and Coreco, Inc. The aforementioned competitors may have substantially
greater financial, technical and marketing resources than the Company. The
Company also competes with a

                                      2

<PAGE>

number of smaller companies in each of these markets. The Company's data
acquisition and imaging products compete based upon their ability to supply
extensive hardware and software components with competitive performance and
price.

Commercial Products

  Market

   The convergence of voice, video and data, the advances in personal
computing, and the growth of the Internet have changed the way in which the
world communicates. As computing processor power and telecom/digital/cable
modem technologies evolve, so too does the PC user's ability to harness these
venues for creating and delivering video content. As PC costs continue to reach
new lows with substantial increases in computing power, the majority of PC
users will have access to an affordable tool for video creation. The Company
believes the most lucrative market segments for PC video are Web page
creators/hosts, business users for use in presentations, training, sales and
marketing and CD-ROM/Digital Video Disk ("DVD") title producers developing
entertainment, gaming and education content.

  Product and Technology

   Broadway is a high-performance video capture and encoding system for
Windows(R) based PCs. Broadway is a complete streaming and video editing
solution, and its videos may also be integrated with third party video editing
software packages to edit and produce Web streaming video based on Real
Networks technology, as well as VHS quality digital video clips with CD-quality
stereo sound. Using Broadway, a computer user can capture video from most
analog sources, edit the digitized version created by Broadway, fully compress
it to MPEG-1 and then distribute it on the Web or in hard media form. Users can
also incorporate the finished video into multimedia applications, such as Web
home pages, multimedia presentations and CD-ROMs. Broadway is composed of a PCI
integrated circuit board and a graphical user interface compatible with
Microsoft(R) Windows(R). The Company's standard Broadway package is shipped
complete with Ulead Systems, Inc.'s MediaStudio Pro/TM /video editing software.
Broadway is also designed to be integrated with a variety of other video
editing packages, including Adobe Premiere(R).

   Broadway uses a robust implementation of the MPEG-1 standard that uses a
combination of hardware and software to fully compress video clips into the
MPEG-1 format. Users of the latest Pentium III processors can compress into
MPEG-1 format in real-time. PCs with slower processors utilize hardware
compression to achieve real-time compression. Advances in processor speed may
make use of various software techniques to achieve faster compression and
enhanced editing capability.

   Using the MPEG-1 standard allows Broadway to produce compressed videos,
which may be played back at 30 frames per second: the standard, full-motion
video speed. Additionally, many users choose to share video content via the
Internet. These clips may be streamed, utilizing RealNetworks technology and
played back at their destination via a RealNetworks player. Since many users
have installed this player on their PC, this ability to communicate with video
is rapidly gaining adherents.

  Customers and Sales

   The Company's sales and marketing strategy is to move down the technical
sophistication curve and up the volume curve by targeting as primary customers
audio/video professionals, business presentation and education developers, home
hobbyists and family/home users.

   Worldwide, the Company's commercial products are sold directly on-line, as
well as through a two-tier distribution network. Users can order directly from
the Company's Web site for rapid delivery. The Company maintains direct
relationships with international mass-market distributors as well as resellers
and VARs. The

                                      3

<PAGE>

distributors sell the commercial products to retail outlets as well as smaller
computer resellers and VARs. This allows the Company's products to be available
through virtually any method used by its customers to purchase their products.
The Company currently offers a 30-day money back guarantee on its commercial
products.

   The Company currently provides end users with 90 days of free technical
support with the purchase of any product. Broadway includes extensive on-line
technical support via the Company's Web site, as well as documentation which
provides a video tutorial to the non-video user and an intuitive installation
guide.

  Competition

   The Company has a number of competitors. Some competitors sell products,
which like Broadway, employ MPEG encoding, while others sell products based on
different platforms and video standards. The Company's Broadway product
competes principally on the basis of ease of installation and use, brand name
awareness, and price.

   The Company's principal competition for the Broadway product includes other
products with MPEG encoding such as Pinnacle System's DC30, Matrox's Rainbow
Runner, Videonics' Python and Dazzle Multimedia's Snazzy and Dazzle products.
These companies may have substantially greater financial, technical and
marketing resources than the Company. In addition, there are a number of other
competitors whose products are based on platforms and video standards other
than those used by the Company.

Research and Development

   The Company intends to continue to invest in research and development for
new products and for enhancements to existing products. The Company is
currently targeting spending on research and development at an annual rate of
approximately 20.0% of net sales. For the fiscal year ended November 30, 2001,
the Company invested approximately $3,050,000, or 20.5% of net sales, in
product development compared to $3,031,000, or 19.0% of net sales in the prior
fiscal year.

   The Company employed, as of November 30, 2001, approximately 21 full-time
engineers whose primary duties relate to product development. Outside firms and
consultants are selectively engaged to develop or assist with development of
products when favorable opportunities exist.

   In the data acquisition and imaging area, the Company's focus on hardware
development includes the integration of application specific integrated
circuits ("ASICs") into circuit boards, which may reduce cost and advance the
development of new computer bus technologies (e.g., PCI). The Company's
software development in data acquisition and imaging centers on supporting
Windows(R) 95/98 and Windows NT/TM/.

Manufacturing

   The Company manufactures all of its products at a leased facility in
Marlboro, Massachusetts. The Company believes its control of manufacturing
significantly contributes to hardware design improvements, and allows for more
rapid turn-around of product development to the marketplace. The Company
periodically assesses its production efficiencies against the benefits of
outsourcing certain hardware production. The Company has been ISO 9001
certified since 1994.

   The Company's fully integrated assembly and test operations have sufficient
capacity to meet the Company's current needs for assembled printed circuit
boards. In addition, the Company designs circuit boards and modules using
advanced computer-aided-design technology. The Company's manufacturing
capabilities include the assembly of fine pitch, surface mounted electronic
devices utilizing state of the art pick and place robotics for high density,
multi-layered, single or double sided boards. A majority of the Company's
shipments incorporate surface-mount components. Initial testing is performed to
assure that products are free from process-

                                      4

<PAGE>

related defects after assembly. Following initial testing, a complete
functional test is performed twice on each board, with an environmental stress
screen between tests to eliminate defects and assure long-term reliability of
products. The Company uses automated test equipment to assure product quality,
improve throughput and increase production yields.

   Components used in circuit board assembly are generally available from
several distributors and manufacturers. Suppliers are selected based on their
ability to provide defect-free products quickly at low cost. The Company
continuously measures the performance of key suppliers. Special programs are
used to speed availability of material and protect the Company from unplanned
shifts in product demand. These programs include ship-to-stock, and
point-of-use bonding, a program in which suppliers hold material on-site at the
Company and as the material is used, title transfers to the Company and payment
is made. Certain components used by the Company do not have ready substitutes
or have been subject to industry-wide shortages. There can be no assurance that
the Company's inventories would be adequate to meet the Company's production
needs during any interruption of supply. The Company's inability to develop
alternative supply sources, if required, or a reduction or stoppage in supply,
could adversely affect its operations until new sources of supply became
available.

Proprietary Rights

   The Company holds twelve United States patents, expiring from July 2003
through May 2019, and has three pending patent application in the United
States, none of which the Company believes is material to its business or
operations. Pursuant to an agreement with Parent, the Company also has
cross-licenses to technology under Parent's current patents and patent
applications, together with technology resulting from patent applications,
which Parent applied for through December 2, 1998.

   The Company believes that its success depends primarily upon the proprietary
know-how, innovative skills, technical competence and marketing abilities of
its employees.

Backlog

   Most of the Company's customers order products on an as-needed basis,
relying, in the case of most products, on the Company's five-day delivery
capability. As a result, the Company believes that its backlog at any point in
time is not indicative of its future sales and is not material to operations.

Employees

   As of November 30, 2001, the Company employed approximately 72 persons
worldwide. None of the employees is represented by a labor union. The Company
believes it has good relations with its employees.

   Competition for employees with the skills required by the Company is intense
in the geographic areas in which the Company's operations are located. The
Company believes that its future success will depend on its continued ability
to attract and retain qualified employees, especially in research and
development.

Executive Officers of the Company

<TABLE>
<CAPTION>
Name                              Age Position with the Company
----                              --- -------------------------
<S>                               <C> <C>
Alfred A. Molinari, Jr........... 60  Chairman and Chief Executive Officer
Jeffrey M. Cronin................ 37  Vice President, Operations
Michael A. DiPoto................ 34  Vice President, Finance,CFO and Treasurer
Ellen W. Harpin.................. 46  Vice President Engineering
</TABLE>

   Mr. Molinari has been the Chief Executive Officer and Chairman of the
Company since December 1996. Mr. Molinari is the founder of Parent and served
as the Chief Executive Officer and a director of Parent from its inception in
1973 until November 1996.

                                      5

<PAGE>

   Mr. Cronin was appointed Vice President, Operations in February 1999. Prior
to that Mr. Cronin served as Director of Operations and Manufacturing of the
Company from December 1996 to February 1999 and as Director of Manufacturing of
Parent from March 1992 to December 1996.

   Mr. DiPoto was appointed Vice President of Finance, Chief Financial and
Treasurer in July 1999. Prior to that Mr. DiPoto served as the Chief Accounting
Officer of the Company from March 1999 to June 1999. Prior to joining the
Company Mr. DiPoto served as Corporate Controller of NuMega Technologies, Inc.
from January 1996 to March 1999. Prior to that Mr. DiPoto served as Accounting
Manager and Controller of Acuity Imaging, Inc. from January 1994 to December
1995.

   Ms. Harpin was appointed Vice President of Engineering in July 2001. Ms.
Harpin has been the Secretary and a director of the Company since 1997. Ms.
Harpin previously served as Vice President, Administration from October 1998 to
May 1999 and as Vice President, Sales from October 1997 to October 1998. Ms.
Harpin served as Vice President of Administration of Parent from July 1995 to
September 1996. Ms. Harpin was employed by the Parent from March 1983 until
November 1996 serving as Chief Financial Officer, Treasurer, Vice President,
Manufacturing and Director of Sales.

Item 2.  Properties

   The Company maintains its principal executive, engineering, manufacturing
and sales operations in a 100,000 square foot facility located in Marlboro,
Massachusetts. The building is leased from a related party trust under an
agreement expiring in 2009. The Company sublets a portion of the building to
certain tenants. The minimum annual net basic rent for the building is
approximately $1,300,000, which is allocated between the Company and its
tenants pursuant to certain sub-lease agreements.

   The Company's United Kingdom sales operations are conducted in a 1,000
square foot office facility in Basingstoke, Hants, England that is leased under
a five-year renewable lease, expiring in 2004, by Data Translation Ltd. The
minimum quarterly basic rent is approximately $11,000 per quarter.

   The Company's German sales operations are conducted in a 2,420 square foot
office facility in Bietigheim-Bissingen, Germany that is leased under a
five-year renewable lease, expiring in 2005, by Data Translation GmbH. The
minimum annual basic rent is approximately $35,000 per year.

Item 3.  Legal Proceedings

   From time to time, the Company is involved in disputes and/or litigation
with respect to its products and operations in its normal course of business.
The Company does not believe that the ultimate impact of the resolution of such
matters will have a material adverse effect on the Company's financial
condition or results of operations.

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

   There were no matters submitted to a vote of stockholders during the fourth
quarter of fiscal 2001.

                                      6

<PAGE>

                                    PART II

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

   The common stock of the Company is traded in the over-the-counter market and
is reported on the Nasdaq SmallCap Market System under the symbol "DATX". The
Company's stock began trading on December 16, 1996 subsequent to the stock
dividend issued in connection with the Distribution. The high and low sale
prices of the Company's Common Stock on the over-the-counter market since the
Distribution Date through January 31, 2002 as reported on the Nasdaq SmallCap
Market System were $9.91 and $.53, respectively. The table below sets forth the
high and low quarterly sales prices of the Common Stock during the two most
recent fiscal years:

<TABLE>
<CAPTION>
                                               2001   2001   2000   2000
                                               High   Low    High   Low
                                              ------ ------ ------ ------
      <S>                                     <C>    <C>    <C>    <C>
      First quarter.......................... $2.875 $1.500 $9.906 $6.000
      Second quarter.........................  2.400  1.250  9.375  3.625
      Third quarter..........................  2.350  0.800  6.875  3.062
      Fourth quarter.........................  1.250  0.800  3.500  1.750
</TABLE>

   The Company has never paid a cash dividend on its Common Stock, and the
Board of Directors does not anticipate paying cash dividends in the foreseeable
future. As of January 31, 2002, there were approximately 150 stockholders of
record of the Company's common stock.

                                      7

<PAGE>

Item 6.  Selected Financial Data

   The following data has been derived from the Company's consolidated
financial statements that have been audited by Arthur Andersen LLP, independent
public accountants, as of and for the fiscal years in the five-year period
ended November 30, 2001. The data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements and the notes thereto and
other financial information included elsewhere in this Form 10-KSB.

   For the period presented prior to the Distribution Date, the selected
historical financial data relates to the Contributed Businesses as they were
operated as part of Parent. They also include an allocation of certain general
corporate expenses of Parent which were not directly related to these
businesses. The financial information included herein for periods prior to the
Distribution Date may not, however, reflect the results of operations or
financial position that would have been obtained had the Company been a
separate, independent company. The consolidated financial data for all periods
subsequent to the Distribution Date reflect the results of operations,
financial position, changes in stockholders' investment and cash flows of the
independent company.

<TABLE>
<CAPTION>
                                                              Fiscal Years Ended November 30,
                                                        ------------------------------------------
                                                         2001     2000     1999    1998     1997
                                                        -------  -------  ------- -------  -------
                                                         (In thousands, except per share amounts)
<S>                                                     <C>      <C>      <C>     <C>      <C>
Consolidated Statements of Operations Data:
Net sales.............................................. $14,885  $15,924  $16,254 $16,781  $20,452
Cost of sales..........................................   6,890    7,590    7,048   8,070    9,932
                                                        -------  -------  ------- -------  -------
   Gross profit........................................   7,995    8,334    9,206   8,711   10,520
Research and development expenses......................   3,050    3,031    2,569   2,444    3,808
Selling and marketing expenses.........................   4,627    5,113    4,100   5,621   10,481
General and administrative expenses....................   1,723    2,017    1,943   2,001    2,426
                                                        -------  -------  ------- -------  -------
   Income (loss) from operations.......................  (1,405)  (1,827)     594  (1,355)  (6,195)
Interest income........................................      76      114      100     149      269
Other expense..........................................      --       --       --     (46)     (53)
                                                        -------  -------  ------- -------  -------
   Income (loss) from operations before provision for
     income taxes......................................  (1,329)  (1,713)     694  (1,252)  (5,979)
Provision for income taxes.............................      --       --       32      --       --
                                                        -------  -------  ------- -------  -------
   Net income (loss)................................... $(1,329) $(1,713) $   662 $(1,252) $(5,979)
                                                        =======  =======  ======= =======  =======
Basic net income (loss) from operations per common
  share................................................ $ (0.52) $ (0.78) $   .31 $ (0.60) $ (2.94)
                                                        =======  =======  ======= =======  =======
Diluted net income (loss) per common and potential
  common share......................................... $ (0.52) $ (0.78) $   .30 $ (0.60) $ (2.94)
                                                        =======  =======  ======= =======  =======
Basic weighted average number of common shares
  outstanding..........................................   2,579    2,205    2,123   2,083    2,033
                                                        =======  =======  ======= =======  =======
Diluted weighted average number of common and potential
  common shares outstanding............................   2,579    2,205    2,241   2,083    2,033
                                                        =======  =======  ======= =======  =======
</TABLE>

<TABLE>
<CAPTION>
                                                              As of November 30,
                                                      -----------------------------------
                                                       2001   2000   1999   1998   1997
                                                      ------ ------ ------ ------ -------
                                                                (In thousands)
<S>                                                   <C>    <C>    <C>    <C>    <C>
Consolidated Balance Sheet Data:
Cash, cash equivalents and marketable securities..... $3,733 $2,855 $4,098 $2,780 $ 3,922
Working capital......................................  4,226  3,611  4,988  4,102   6,110
Total assets.........................................  7,473  7,918  9,049  7,576  10,559
Total liabilities....................................  2,701  3,345  2,799  2,024   3,830
Total stockholders' investment.......................  4,772  4,573  6,250  5,552   6,729
</TABLE>

                                      8

<PAGE>

Item 7.  Management's Discussion And Analysis Of Financial Condition And
         Results Of Operations

Forward Looking Statements

   Certain statements in Management's Discussion and Analysis of Financial
Condition and Results of Operations contain "forward-looking" information (as
defined in the Private Securities Litigation Reform Act of 1995). The words
"believe", "expect", "anticipate", "intend", "estimate", "assume" and other
similar expressions which are predictions of or indicate future events and
trends and which do not relate to historical matters identify forward-looking
statements. Reliance should not be placed on forward-looking statements because
they involve known and unknown risks, uncertainties and other factors, which
are in some cases beyond the control of the Company and may cause the actual
results, performance or achievements of the Company to differ materially from
anticipated future results, performance or achievements expressed or implied by
such forward-looking statements.

   For further discussion identifying important factors that could cause actual
results to differ materially from those anticipated in forward-looking
statements, see "Certain Factors that May Affect Future Results" herein.

Background

   Data Translation, Inc., f/k/a Data Translation II, Inc., (the "Company") was
incorporated in September 1996 as a wholly-owned subsidiary of Media 100 Inc.,
f/k/a Data Translation, Inc., ("Parent"). On November 29, 1996, Parent
contributed to the Company substantially all of the assets and liabilities of
Parent's data acquisition and imaging, commercial products and networking
distribution groups (the "Contributed Businesses"). On November 11, 1996,
Parent sold a substantial portion of the assets of the networking distribution
business, and during 1998 the Company discontinued the remainder of such
business. The Company will continue to operate the data acquisition and imaging
and commercial products groups. On December 2, 1996 (the "Distribution Date"),
Parent distributed to its stockholders in the form of a dividend all of the
outstanding shares of capital stock of the Company (the "Distribution").

   Following the Distribution, the Company became a stand-alone entity with
objectives and strategies separate from those of Parent. The Company is focused
on providing products in the data acquisition, imaging, machine vision and PC
video editing industries.

Comparison of Fiscal Year Ended November 30, 2001 to Fiscal Year Ended November
30, 2000

   Net sales for the fiscal year ended November 30, 2001 were $14,885,000
compared to $15,924,000 for the same period in the prior year, which represents
a decrease of approximately 6.5% or $1,040,000. Sales from the Company's data
acquisition and imaging products decreased approximately $744,000, or 5.9% from
the prior fiscal year. The Company believes that the decrease in sales is
primarily attributable to the impact of the global economic downturn.
Discretionary spending by our customers has been reduced, causing delays and
postponement of orders. The decrease is also attributable to reduced sales of
the Company's legacy products as well as a shift in the data acquisition and
imaging markets toward new, lower priced hardware and software products
(particularly in PC prices) and competitive pricing pressures. Sales from the
Company's commercial product, Broadway, decreased approximately $821,000, or
42.6%, from the comparable period in fiscal 2000, which the Company believes is
due primarily to increased competition and pricing pressures within the video
capture and encoding marketplace.

   Gross profit for the fiscal year ended November 30, 2001 was 53.7%, compared
to 52.3% in the comparable period of the prior year. The increase in gross
profit from the comparable prior year period was the result of lower
manufacturing overhead expenses as well as a more favorable product mix.

   The Company's loss from operations for fiscal 2001 was $1,405,000, compared
to loss from operations of $1,827,000 in the comparable period of the prior
year. A decrease in operating expenses as well as a higher

                                      9

<PAGE>

gross margin percentage contributed to the increase in income from operations.
Operating expenses for fiscal 2001 were $9,400,000 representing 63.2% of sales,
compared to $10,161,000, representing 63.8% of sales, in the prior year. Fiscal
year 2001 operating expenses include a significant investment in engineering
development for the Company's fiscal 2002 product releases. Research and
development expenses in fiscal year 2001 were $3,050,000, representing 20.5% of
sales, compared to $3,031,000, representing 19.0% of sales, in the prior year
period. Sales and marketing expenses in fiscal year 2001 were $4,627,000,
representing 31.0% of sales, compared to $5,113,000, representing 32.1% of
sales, in the prior year period. The decrease in sales and marketing expenses
is primarily a result of decreased spending in advertising, promotion and sales
channel development as well as reduced headcount within the sales and marketing
departments. General and administrative expenses in fiscal year 2001 were
$1,723,000, representing 11.6% of sales, compared to $2,017,000, representing
12.7% of sales, for the comparable period in fiscal 2000. The decrease in
general and administrative expenses is primarily the result of reduced
headcount, salaries and professional fees within the general and administrative
departments.

   Interest income for the fiscal year ended November 30, 2001 was $76,000,
compared to interest income of $114,000, for the same period in fiscal 2000.
The decrease in interest income was a result of less favorable interest rates
during fiscal 2001. The primary source of interest income is from the
investment of proceeds received from a rights offering consummated in August
2001 and other existing cash balances.

   Net loss for the fiscal year ended November 30, 2001 was $1,329,000, or
$0.52 per diluted share, compared to a net loss of $1,713,000, or $0.78 per
diluted share, for the same period in fiscal 2000.

Comparison of Fiscal Year Ended November 30, 2000 to Fiscal Year Ended November
30, 1999

   Net sales for the fiscal year ended November 30, 2000 were $15,924,000
compared to $16,254,000 for the same period in the prior year, which represents
a decrease of approximately 2.0% or $330,000. Sales from the Company's data
acquisition and imaging products decreased approximately $224,000, or 1.6% from
the prior fiscal year. The Company believes that sales continue to be adversely
impacted by various market conditions including a perceived shift in the data
acquisition and imaging markets toward new, lower priced hardware and software
products (particularly in PC prices), competitive pricing pressures, a decline
in the financial markets of certain regions abroad and declining sales from the
Company's legacy products. Sales from the Company's commercial product,
Broadway, decreased approximately $107,000, or 5.3%, from the comparable period
in fiscal 1999, which the Company believes is due primarily to a reduction in
marketing programs, a decrease in the sales staff and increased competition
within the video capture and encoding marketplace.

   Gross profit for the period ended November 30, 2000 was 52.3%, compared to
56.6% in the comparable period of the prior year. The decrease in gross profit
from the comparable prior year period was the result of higher manufacturing
overhead expenses as well as a less favorable product mix.

   The Company's loss from operations for fiscal 2000 was $1,827,000, compared
to income from operations of $594,000 in the comparable period of the prior
year. An increase in operating expenses as well as lower gross profits
contributed to the decrease in income from operations. Operating expenses for
fiscal 2000 were $10,161,000 representing 63.8% of sales, compared to
$8,612,000, representing 53.0% of sales, in the prior year. Fiscal year 2000
operating expenses include a significant investment in engineering,
advertising, promotion and sales channel development for the Company's fiscal
2000 product releases. Research and development expenses in fiscal year 2000
were $3,031,000, representing 19.0% of sales, compared to $2,569,000,
representing 15.8% of sales, in the prior year period. The increase is
primarily attributable to an increased development effort in the Company's data
acquisition and imaging product lines. Sales and marketing expenses in fiscal
year 2000 were $5,113,000 representing 32.1% of sales, compared to $4,100,000,
representing 25.2% of sales, in the prior year period. The increase in sales
and marketing expenses is primarily a result of the investment in advertising,
promotion and sales channel development for the Company's fiscal 2000 product
releases. General and administrative expenses in fiscal year 2000 were
$2,017,000, representing 12.7% of sales, compared to $1,943,000, representing
12.0% of sales, for the comparable period in fiscal 1999.

                                      10

<PAGE>

   Interest income for the fiscal year ended November 30, 2000 was $114,000,
compared to interest income of $100,000, for the same period in fiscal 1999.
The primary source of interest income is from the investment of cash generated
from operations.

   Net loss for the fiscal year ended November 30, 2000 was $1,713,000, or
$0.78 per diluted share, compared to a net income of $662,000, or $0.30 per
diluted share, for the same period in fiscal 1999.

Liquidity and Capital Resources

   As of November 30, 2001, the Company had cash and cash equivalents totaling
$3,618,000, as compared to cash and cash equivalents of $2,741,000 as of
November 30, 2000.

   During fiscal 2001, the Company used $582,000 in operating activities,
resulting from the net loss for the fiscal year, decreases in accounts payable
and accrued expenses, partially offset by decreases in inventory and prepaid
expenses.

   The Company used $70,000 in investing activities during fiscal 2001, mainly
as a result of acquisitions of property, equipment and other long-term assets.

   The Company generated $1,510,000 from financing activities during fiscal
2001, primarily from a rights offering and other stock plans. The Company
commenced a rights offering of up to 2,325,614 shares of common stock to its
existing stockholders at a subscription price of $1.25 per share on July 26,
2001. Each holder of common stock of record as of July 25, 2001, was entitled
to receive one right for each share of Common Stock held as of such date.
Stockholders who fully exercised their basic subscription rights also had
over-subscription privileges. The subscription period for the rights offering
expired at 5:00 p.m., Eastern Standard Time on August 14, 2001. As of the
expiration date of the rights offering, the holders of the rights had
subscribed for an aggregate of 1,238,269 shares of common stock for total net
proceeds to the Company of approximately $1,446,000.

   The Company believes that its existing cash, cash equivalents and short-term
investment balances and cash flows expected to be generated from future
operations will be sufficient to meet its capital requirements for at least the
next twelve months, although the Company may be required, or could elect, to
seek additional funding prior to that time. The Company's future capital
requirements will depend on many factors, including the rate of revenue growth,
the timing and extent of spending to support product development efforts and
expansion of sales and marketing, the timing of introductions of new products
and enhancements to existing products, and market acceptance of the Company's
products. There can be no assurances that additional funding, if required, will
be available on acceptable terms or at all.

                                      11

<PAGE>

Results of Operations

   The following table shows certain statements of operations data as a
percentage of net sales.

<TABLE>
<CAPTION>
                                                           Fiscal Year Ended
                                                              November 30,
                                                         ---------------------
                                                         2001    2000    1999
                                                         -----   -----   -----
<S>                                                      <C>     <C>     <C>
Net sales............................................... 100.0%  100.0%  100.0%
Gross margin............................................  53.7    52.3    56.6
Research and development expenses.......................  20.5    19.0    15.8
Selling and marketing expenses..........................  31.0    32.1    25.2
General and administrative expenses.....................  11.6    12.7    12.0
                                                         -----   -----   -----
Income (loss) from operations...........................  (9.4)  (11.5)    3.7
Interest income (expense) and other, net................   0.5     0.7     0.6
                                                         -----   -----   -----
Income (loss) from operations before provision for
  income taxes..........................................  (8.9)  (10.8)    4.3
Provision for income taxes..............................   0.0     0.0     0.2
                                                         -----   -----   -----
   Net income (loss)....................................  (8.9)% (10.8)%   4.1%
                                                         =====   =====   =====
</TABLE>

Certain Factors That May Affect Future Results

   Except for the historical information contained herein, the matters
discussed in this Annual Report on Form 10-KSB are forward-looking statements,
are based on current expectations, and involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Company, or industry results, to be materially different
from those expressed in such forward-looking statements. The risks and
uncertainties associated with such statements include the following:

Significant Fluctuations and Unpredictability of Operating Results

   Our quarterly operating results may vary significantly for a number of
reasons, including new product announcements and introductions by us or our
competitors, changes in pricing, and the volume and timing of orders received
during each quarter. Historically a significant percentage of our net sales
have resulted from orders received from universities, research laboratories and
government agencies. These sales are historically slower during our third
fiscal quarter as a result of seasonal vacation schedules and university
shutdowns. We have also in the past experienced delays in the development of
new products and enhancements, and such delays may occur in the future. These
factors make the forecasting of revenue inherently uncertain. Additionally, a
significant portion of our operating expenses is relatively fixed, and
operating expense levels are based primarily on internal expectations of future
revenue. As a consequence, quarterly operating expense levels cannot be reduced
rapidly in the event that quarterly revenue levels fail to meet internal
expectations. Therefore, if quarterly revenue levels fail to meet internal
expectations, our operating results would be adversely affected.

Development and Introduction of New Products

   Our future success depends upon our ability to address the rapidly changing
needs of our customers by developing and introducing high-quality,
cost-effective products, product enhancements and services on a timely basis
and by keeping pace with technological developments and emerging industry
standards. We have new product launches and upgrades to our existing products
planned for fiscal year 2001. Our future revenue growth will be dependent on
the success of these new product launches as legacy product sales continue to
erode. We have in the past experienced delays in product development and such
delays may occur in the future. In addition, as we introduce new or enhanced
products, we will have to manage successfully the transition from older
products in order to minimize disruption in our customers' ordering patterns,
avoid excessive levels of older

                                      12

<PAGE>

product inventories and ensure that enough supplies of new products can be
delivered to meet our customers' demands. Our ability to develop and
successfully introduce new products and product enhancements, which are broadly
accepted, will affect our revenues.

Dependence on A Few Key Original Equipment Manufacturers (Oems)

   We depend on a few key original equipment manufacturer customers (OEMs). For
example, in the year ended November 30, 2001, sales to our OEM channel
represented 20% of our total revenue. We anticipate that our operating results
will continue to depend on sales to the OEM channel. Therefore, the loss of any
of our OEMs or a significant reduction in sales to these OEMs could
substantially reduce our revenues.

Ability To Manage Distribution Channel

   We rely primarily on a worldwide network of independent value-added
resellers (VARs) to distribute and sell our products to end-users. Our
resellers generally offer products of several different companies, including,
in some cases, products which are competitive with our products. In addition,
many of these VARs are small organizations with limited capital resources.
There can be no assurance that the our resellers will continue to purchase our
products or provide them with adequate levels of support, or that our efforts
to expand our VAR network will be successful. Any significant failure of the
preceding factors could have a material adverse effect on our business and
operating results.

Reliance on International Sales

   Sales of our products outside of North America represented approximately 41%
of our net sales for the fiscal year ended November 30, 2001. International
sales and operations may be subject to risks such as the imposition of
government controls, export license requirements, restrictions on the export of
critical technology, less effective enforcement or proprietary rights, currency
exchange fluctuations, generally longer collection periods, political
instability, trade restrictions, changes in tariffs, difficulties in staffing
and managing international operations, potential insolvency of international
resellers and difficulty in collecting accounts receivable. Our international
sales are also subject to more seasonal fluctuation than domestic sales. In
this regard, the traditional summer vacation period, which occurs during our
third fiscal quarter, may result in a decrease in sales, particularly in
Europe. There can be no assurance that these factors will not have an adverse
effect on our future international operations and consequently, on our business
and operating results.

Dependence on Single or Limited Source Suppliers

   We are dependent on single or limited source suppliers for several key
components used in our products. The availability of many of these components
is dependent on our ability to provide suppliers with accurate forecasts of our
future requirements, and certain components used by us have been subject to
industry-wide shortages. We do not carry significant inventories of these
components and have no guaranteed supply arrangements with such suppliers.
There can be no assurance that our inventories would be adequate to meet our
production needs during any interruption of supply. Our inability to develop
alternative supply sources, if required, or a reduction or stoppage in supply,
could delay product shipments until new sources of supply become available, and
any such delay could adversely affect our business and operating results in any
given period.

Dependence on Key Personnel

   Competition for employees with the skills required by us is intense in the
geographic areas in which our operations are located. We believe that our
future success will depend on our continued ability to attract and retain
qualified employees, especially in research and development. In addition,
companies in our industry whose

                                      13

<PAGE>

employees accept positions with competitors frequently claim that their
competitors have engaged in unfair hiring practices. We cannot assure you that
we will not receive such claims in the future as we seek to hire qualified
personnel or that such claims will not result in material litigation. We could
incur substantial costs in defending ourselves against these claims, regardless
of their merits.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

   The Company's investing strategy, to manage interest rate exposure, is to
invest in short term highly liquid investments. Currently, the Company's
short-term investments are in highly rated government securities. At November
30, 2001, the fair value of the Company's short-term investments approximated
their market value.

   The Company faces exposure to movements in foreign currency exchange rates.
The Company does not use derivative financial instruments or other financial
instruments to hedge economic exposures or for trading. The Company's primary
exposures have been related to the operations of its European subsidiaries. In
fiscal 2001, the net impact of foreign currency changes was not material.

                                      14

<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

                  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                            Page
                                                                                            ----
<S>                                                                                         <C>
Report of Independent Public Accountants................................................... F-2
Consolidated Balance Sheets as of November 30, 2001 and 2000............................... F-3
Consolidated Statements of Operations for the Fiscal Years Ended November 30, 2001, 2000
  and 1999................................................................................. F-4
Consolidated Statements of Stockholders' Investment and Comprehensive Income (Loss) for the
  Fiscal Years Ended November 30, 2001, 2000 and 1999...................................... F-5
Consolidated Statements of Cash Flows for the Fiscal Years Ended November 30, 2001, 2000
  and 1999................................................................................. F-6
Notes to Consolidated Financial Statements................................................. F-7
</TABLE>

Item 8.  Financial Statements and Supplementary Data

                                      F-1

<PAGE>

                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Data Translation, Inc.:

   We have audited the accompanying consolidated balance sheets of Data
Translation, Inc. (a Delaware corporation) and subsidiaries as of November 30,
2001 and 2000, and the related consolidated statements of operations,
stockholders' investment and comprehensive income (loss) and cash flows for
each of the three years in the period ended November 30, 2001. These financial
statements are the responsibility of Data Translation, Inc.'s management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

   We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audits 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. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

   In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Data Translation, Inc. and
subsidiaries as of November 30, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years in the period ended
November 30, 2001, in conformity with accounting principles generally accepted
in the United States.

                                          ARTHUR ANDERSEN LLP

Boston, Massachusetts
December 20, 2001 (except with respect
  to the matters discussed in Note 12, as to
  which the date is February 21, 2002)

                                      F-2

<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                       November 30,
                                                                                 ------------------------
                                                                                    2001         2000
                                                                                 -----------  -----------
<S>                                                                              <C>          <C>
Current Assets:
   Cash and cash equivalents.................................................... $ 3,618,000  $ 2,741,000
   Marketable securities........................................................     115,000      114,000
   Accounts receivable, net.....................................................   1,480,000    1,980,000
   Inventories..................................................................   1,324,000    1,577,000
   Prepaid expenses.............................................................     390,000      544,000
                                                                                 -----------  -----------
       Total current assets.....................................................   6,927,000    6,956,000
Property and equipment, net.....................................................     469,000      890,000
Other assets....................................................................      77,000       72,000
                                                                                 -----------  -----------
       Total assets............................................................. $ 7,473,000  $ 7,918,000
                                                                                 ===========  ===========
Current Liabilities:
   Accounts payable............................................................. $   857,000  $ 1,450,000
   Accrued expenses.............................................................   1,844,000    1,895,000
                                                                                 -----------  -----------
       Total current liabilities................................................   2,701,000    3,345,000

Commitments and Contingencies (Note 6)
Stockholders' Investment:
   Preferred stock, $0.01 par value--
       Authorized: 5,000,000 shares; none issued or outstanding.................          --           --
   Common stock, $0.01 par value--
       Authorized: 30,000,000 shares; 3,568,412 and 2,281,921 shares issued
         in 2001 and 2000, respectively; 3,511,947 and 2,225,456 shares
         outstanding in 2001 and 2000, respectively.............................      36,000       23,000
   Additional paid-in capital...................................................  14,642,000   13,145,000
   Treasury stock, common, at cost, 56,465 shares in 2001 and 2000..............    (227,000)    (227,000)
   Accumulated deficit..........................................................  (9,611,000)  (8,282,000)
                                                                                 -----------  -----------
   Cumulative translation adjustment............................................     (68,000)     (86,000)
                                                                                 -----------  -----------
       Total stockholders' investment...........................................   4,772,000    4,573,000
                                                                                 -----------  -----------
       Total liabilities and stockholders' investment........................... $ 7,473,000  $ 7,918,000
                                                                                 ===========  ===========
</TABLE>



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

                                      F-3

<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                             Fiscal Years Ended November 30,
                                                          -------------------------------------
                                                             2001         2000         1999
                                                          -----------  -----------  -----------
<S>                                                       <C>          <C>          <C>
Net sales................................................ $14,885,000  $15,924,000  $16,254,000
Cost of sales............................................   6,890,000    7,590,000    7,048,000
                                                          -----------  -----------  -----------
   Gross profit..........................................   7,995,000    8,334,000    9,206,000
Research and development expenses........................   3,050,000    3,031,000    2,569,000
Selling and marketing expenses...........................   4,627,000    5,113,000    4,100,000
General and administrative expenses......................   1,723,000    2,017,000    1,943,000
                                                          -----------  -----------  -----------
   (Loss) income from operations.........................  (1,405,000)  (1,827,000)     594,000
Interest income..........................................      76,000      114,000      100,000
                                                          -----------  -----------  -----------
   (Loss) income before provision for income taxes.......  (1,329,000)  (1,713,000)     694,000
Provision for income taxes...............................          --           --       32,000
                                                          -----------  -----------  -----------
   Net (loss) income..................................... $(1,329,000) $(1,713,000) $   662,000
                                                          ===========  ===========  ===========
Basic net (loss) income per common share................. $     (0.52) $     (0.78) $      0.31
                                                          ===========  ===========  ===========
Diluted net (loss) income per common and potential common
  share.................................................. $     (0.52) $     (0.78) $      0.30
                                                          ===========  ===========  ===========
Basic weighted average number of common shares
  outstanding............................................   2,579,000    2,205,000    2,123,000
                                                          ===========  ===========  ===========
Diluted weighted average number of common and potential
  common shares outstanding..............................   2,579,000    2,205,000    2,232,000
                                                          ===========  ===========  ===========
</TABLE>



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

                                      4

<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT AND
                          COMPREHENSIVE INCOME (LOSS)

<TABLE>
<CAPTION>
                                              Common Stock           Treasury Stock
                                      ----------------------------- ----------------
                                                 $0.01  Additional  Number                         Cumulative      Total
                                       Number     Par    Paid-in      of              Accumulated  Translation Stockholders'
                                      of Shares  Value   Capital    Shares  Amount      Deficit    Adjustment   Investment
                                      --------- ------- ----------- ------ ---------  -----------  ----------- -------------
<S>                                   <C>       <C>     <C>         <C>    <C>        <C>          <C>         <C>
Balance, November 30, 1998........... 2,096,920 $21,000 $12,764,000     --        --  $(7,231,000)  $ (2,000)   $ 5,552,000
  Proceeds from stock plans..........    78,860   1,000     127,000     --        --           --         --        128,000
  Purchase of treasury stock.........        --      --          -- 15,000   (43,000)          --         --        (43,000)
  Translation adjustment.............        --      --          --     --        --           --    (49,000)       (49,000)
  Net income.........................        --      --          --     --        --      662,000         --        662,000
                                      --------- ------- ----------- ------ ---------  -----------   --------    -----------
Total Comprehensive Income...........

Balance, November 30, 1999........... 2,175,780  22,000  12,891,000 15,000   (43,000)  (6,569,000)   (51,000)     6,250,000
  Proceeds from stock plans..........   106,141   1,000     254,000     --        --           --         --        255,000
  Purchase of treasury stock.........        --      --          -- 41,465  (184,000)          --         --       (184,000)
  Translation adjustment.............        --      --          --     --        --           --    (35,000)       (35,000)
  Net loss...........................        --      --          --     --        --   (1,713,000)        --     (1,713,000)
                                      --------- ------- ----------- ------ ---------  -----------   --------    -----------
Total Comprehensive Loss.............

Balance, November 30, 2000........... 2,281,921  23,000  13,145,000 56,465  (227,000)  (8,282,000)   (86,000)     4,573,000
  Proceeds from stock plans..........    48,222   1,000      63,000     --        --           --         --         64,000
  Proceeds from rights offering, net
   of $102,000 in issuance costs..... 1,238,269  12,000   1,434,000     --        --           --         --      1,446,000
  Translation adjustment.............        --      --          --     --        --           --     18,000         18,000
  Net loss...........................        --      --          --     --        --   (1,329,000)        --     (1,329,000)
                                      --------- ------- ----------- ------ ---------  -----------   --------    -----------
Total Comprehensive Loss.............

Balance, November 30, 2001........... 3,568,412 $36,000 $14,642,000 56,465 $(227,000) $(9,611,000)  $(68,000)   $ 4,772,000
                                      --------- ------- ----------- ------ ---------  -----------   --------    -----------
</TABLE>
<TABLE>
<CAPTION>



                                      Comprehensive
                                      Income (Loss)
                                      -------------
<S>                                   <C>
Balance, November 30, 1998...........           --
  Proceeds from stock plans..........           --
  Purchase of treasury stock.........           --
  Translation adjustment.............      (49,000)
  Net income.........................      662,000
                                       -----------
Total Comprehensive Income...........  $   613,000
                                       ===========
Balance, November 30, 1999...........           --
  Proceeds from stock plans..........           --
  Purchase of treasury stock.........           --
  Translation adjustment.............      (35,000)
  Net loss...........................   (1,713,000)
                                       -----------
Total Comprehensive Loss.............  $(1,748,000)
                                       ===========
Balance, November 30, 2000...........
  Proceeds from stock plans..........           --
  Proceeds from rights offering, net
   of $102,000 in issuance costs.....           --
  Translation adjustment.............       18,000
  Net loss...........................   (1,329,000)
                                       -----------
Total Comprehensive Loss.............  $(1,311,000)
                                       ===========
Balance, November 30, 2001...........

</TABLE>



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

                                      F-5

<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                         Fiscal Years Ended November 30,
                                                                      ------------------------------------
                                                                         2001         2000         1999
                                                                      -----------  -----------  ----------
<S>                                                                   <C>          <C>          <C>
Cash Flows from Operating Activities:
   Net (loss) income................................................. $(1,329,000) $(1,713,000) $  662,000
   Adjustments to reconcile net (loss) income to net cash (used in)
     provided by operating activities
   Depreciation and amortization.....................................     484,000      677,000     879,000
   Loss on disposal of equipment.....................................          --           --       6,000
   Reserve for doubtful accounts.....................................      23,000       12,000    (108,000)
Changes in current assets and liabilities:
   Accounts receivable...............................................     477,000       43,000    (164,000)
   Inventories.......................................................     253,000     (283,000)    (92,000)
   Prepaid expenses..................................................     154,000     (187,000)     21,000
   Accounts payable..................................................    (593,000)     804,000     390,000
   Accrued expenses..................................................     (51,000)    (254,000)    387,000
   Deferred income taxes.............................................          --       (3,000)         --
                                                                      -----------  -----------  ----------
          Net cash (used in) provided by operating activities........    (582,000)    (904,000)  1,981,000
                                                                      -----------  -----------  ----------
Cash Flows from Investing Activities:
   Purchases of property and equipment...............................     (64,000)    (324,000)   (679,000)
   Purchase of marketable securities.................................    (115,000)    (114,000)   (109,000)
   Maturity of marketable securities.................................     114,000      109,000          --
   Increase in other assets..........................................      (5,000)     (50,000)    (18,000)
                                                                      -----------  -----------  ----------
          Net cash used in investing activities......................     (70,000)    (379,000)   (806,000)
                                                                      -----------  -----------  ----------
Cash Flows from Financing Activities:
   Purchase of treasury stock........................................          --     (184,000)    (43,000)
   Proceeds from stock plans.........................................      64,000      255,000     128,000
   Proceeds from rights offering.....................................   1,446,000           --          --
                                                                      -----------  -----------  ----------
          Net cash provided by financing activities..................   1,510,000       71,000      85,000
Exchange Rate Effects................................................      19,000      (36,000)    (51,000)
                                                                      -----------  -----------  ----------
Net (decrease) increase in cash and cash equivalents.................     877,000   (1,248,000)  1,209,000
Cash and cash equivalents, beginning of year.........................   2,741,000    3,989,000   2,780,000
                                                                      -----------  -----------  ----------
Cash and cash equivalents, end of year............................... $ 3,618,000  $ 2,741,000  $3,989,000
                                                                      ===========  ===========  ==========
</TABLE>

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

                                      F-6

<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  Background and Basis of Presentation

   Data Translation, Inc., formerly known as Data Translation II, Inc. (the
"Company"), was incorporated in September 1996 as a wholly owned subsidiary of
Media 100 Inc., formerly known as Data Translation, Inc. ("Parent"). The
Company designs, develops and manufactures high performance data acquisition
and imaging products for use with personal computers. The Company's principal
products are digital signal processing boards and software, which receive
analog signals, convert them to digital form and process the digital data.

   On November 29, 1996, Parent contributed to the Company substantially all of
the assets and liabilities of Parent's data acquisition and imaging, commercial
products and networking distribution groups (the "Contributed Businesses"). On
November 11, 1996, Parent sold a substantial portion of the assets of the
networking distribution business, and the Company completed the winding-up of
the remainder of such business during 1998. On December 2, 1996 (the
"Distribution Date"), Parent distributed to its stockholders in the form of a
dividend all of the outstanding shares of capital stock of the Company (the
"Distribution"). The Company continues to operate the data acquisition and
imaging and commercial products groups.

2.  Summary of Significant Accounting Policies

  (a) Principles of Consolidation

   The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries, Data Translation Ltd., and Data
Translation GmbH. All material intercompany accounts and transactions have been
eliminated in consolidation.

  (b) Use of Estimates

   The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

  (c) Cash and Cash Equivalents

   Cash equivalents are carried at cost, which approximates market value, and
have original maturities of less than three months. Cash equivalents include
money market accounts, U.S. Treasury bills and repurchase agreements with
overnight maturities.

   The Company accounts for marketable securities in accordance with Statement
of Financial Accounting Standards ("SFAS") No. 115, Accounting for Certain
Investments in Debt and Equity Securities. Under this standard, the Company is
required to classify all investments in debt and equity securities into one or
more of the following three categories: held-to-maturity, available-for-sale or
trading. The Company's marketable security as of November 30, 2001 matures in
August 2002, and is classified as held-to-maturity as the Company has the
positive intent and ability to hold to maturity. Accordingly, it is reported at
amortized cost, which approximates fair market value. The Company's cash
equivalents and marketable securities are invested in highly rated government
securities and highly liquid money market funds.

                                      F-7

<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


  (d) Inventories

   Inventories are stated at the lower of first-in, first-out ("FIFO") cost or
market and consist of the following:

<TABLE>
<CAPTION>
                                                               November 30,
                                                           ---------------------
                                                              2001       2000
                                                           ---------- ----------
<S>                                                        <C>        <C>
Raw materials............................................. $  951,000 $1,006,000
Work-in-process...........................................    116,000    213,000
Finished goods............................................    257,000    358,000
                                                           ---------- ----------
                                                           $1,324,000 $1,577,000
                                                           ========== ==========
</TABLE>

   Work-in-process and finished goods inventories include material, labor and
manufacturing overhead. Management performs periodic reviews of inventory and
disposes of items not required by their manufacturing plan and reduces the
carrying cost of inventory items to the lower of cost or market (with market
value generally defined as the lower of replacement cost or net realizable
value).

  (e) Depreciation and Amortization

   The Company provides for depreciation and amortization, using the
straight-line method, by charges to operations in amounts that allocate the
cost of the equipment and leasehold improvements over their following estimated
useful lives:

<TABLE>
<CAPTION>
       Description                                           Useful Lives
       -----------                                           ------------
       <S>                                                   <C>
       Machinery and equipment.............................. 3 to 5 years
       Furniture and fixtures...............................   7 years
       Vehicles.............................................   3 years
</TABLE>

   Leasehold improvements are amortized over the shorter of their economic life
or the life of the lease.

  (f) Property and Equipment

   Property and equipment are stated at cost, less accumulated depreciation and
amortization, and consist of the following:

<TABLE>
<CAPTION>
                                                         November 30,
                                                     ---------------------
                                                        2001       2000
                                                     ---------- ----------
     <S>                                             <C>        <C>
     Machinery and equipment........................ $4,231,000 $4,265,000
     Furniture and fixtures.........................    148,000    148,000
     Vehicles.......................................     61,000     58,000
     Leasehold improvements.........................  1.019,000  1,006,000
                                                     ---------- ----------
                                                      5,459,000  5,477,000
     Less--Accumulated depreciation and amortization  4,990,000  4,587,000
                                                     ---------- ----------
                                                     $  469,000 $  890,000
                                                     ========== ==========
</TABLE>

  (g) Other Assets

   Other assets includes long-term deposits and a non-controlling investment in
the preferred stock of a privately-held company. The investment is carried at
cost as of November 30, 2001 and 2000.

                                      F-8

<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


  (h) Foreign Currency

   The Company translates the assets and liabilities of its foreign
subsidiaries at the rates of exchange in effect at year-end. Revenues and
expenses are translated using exchange rates in effect during the year. Gains
and losses from foreign currency translation are credited or charged to
"Cumulative translation adjustment" included in stockholders' investment in the
accompanying consolidated balance sheets. Foreign currency transaction gains
and losses are included in general and administrative expenses in the
accompanying consolidated statements of operations. Foreign currency
transaction gains and losses were not significant for the years ended November
30, 2001, 2000 or 1999.

  (i) Revenue Recognition

   The Company recognizes revenue from sales to end users, resellers and
distributors upon shipment, provided persuasive evidence of an arrangement
exists, the sales price is fixed or determinable and collection of the related
receivable is probable. Warranty costs are estimated and recorded by the
Company at the time of revenue recognition.

   In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial Statements.
This bulletin established additional guidelines for revenue recognition. The
Company's revenue recognition policy complies with this pronouncement.

  (j) Research and Development Costs

   The Company charges research and development costs to operations as
incurred. However, in accordance with SFAS No. 86, Accounting for the Costs of
Computer Software to Be Sold, Leased, or Otherwise Marketed, the Company
capitalizes certain computer software development costs upon establishing
technological feasibility. All such costs capitalized by the Company were fully
amortized as of November 30, 1999, and no costs qualified for capitalization in
2001 or 2000. These costs are amortized on a straight-line basis over the
lesser of two years or the economic life of the product. Amortization expense,
included in cost of sales in the accompanying consolidated statements of
operations, was $121,000 in 1999.

  (k) Concentration of Credit Risk

   SFAS No. 105, Disclosure of Information About Financial Instruments with
Off-Balance Sheet Risk and Financial Instruments with Concentrations of Credit
Risk, requires disclosure of any significant off-balance sheet risk and credit
risk concentrations. The Company has no significant off-balance sheet risk such
as foreign exchange contracts, option contracts or other foreign hedging
arrangements, or concentration of credit risk. Financial instruments that
subject the Company to credit risk consist primarily of trade accounts
receivable. As of November 30, 2001 and 2000, no individual customer accounted
for greater than 10% of accounts receivable. For the years ended November 30,
2001, 2000 and 1999, no individual customer accounted for greater than 10% of
revenues.

  (l) Disclosure About Fair Value of Financial Instruments

   SFAS No. 107, Disclosure About Fair Market Value of Financial Instruments,
requires disclosure of estimated fair values for certain financial instruments.
The Company's financial instruments include cash, marketable securities,
accounts receivable and accounts payable. The carrying amounts of these
financial instruments approximate their fair values due to their short-term
nature.

                                      F-9

<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


  (m) Stock-based Compensation

   The Company accounts for stock options issued to employees under Accounting
Principles Board Opinion (APB) No. 25, Accounting for Stock Issued to
Employees, and complies with the disclosure provisions of SFAS No. 123,
Accounting for Stock-Based Compensation. SFAS No. 123 establishes a
fair-value-based method of accounting for stock-based compensation plans.

   In March 2000, the FASB issued Interpretation No. 44, Accounting for Certain
Transactions Involving Stock Compensation-An Interpretation of Accounting
Principles Board (APB) Opinion No. 25 (FIN 44). FIN 44 clarifies the
application of APB Opinion No. 25, in certain situations, as defined. FIN 44 is
effective July 1, 2000 but is retroactive for certain events occurring after
December 15, 1998. The adoption of FIN 44 affected the accounting for stock
options repriced during the fiscal year 1999 (see Note 4(g)).

   The Company accounts for stock options issued to non-employees in accordance
with SFAS No. 123 and Emerging Issues Task Force (EITF) Issue No. 96-18,
Accounting for Equity Instruments Issued to Other Than Employees for Acquiring,
or in Conjunction with Selling, Goods or Services. The Company has issued
options to purchase 15,000 common shares to non-employees. As of November 30,
2001, options to purchase 4,998 common shares were vested. As of November 30,
2001, 10,002 options are subject to vesting over the next two years. The
Company will record the fair value of these invested options over the period
that services are being provided.

  (n) Long-Lived Assets

   The Company follows the provisions of SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived AssetsTo Be Disposed Of, and
reviews its long-lived assets for impairment as events and circumstances
indicate that the carrying amount of an asset may not be recoverable.
Management believes that as of November 30, 2001 and 2000, none of the
Company's long-lived assets was impaired.

  (o) Comprehensive Income (Loss)

   SFAS No. 130, Reporting Comprehensive Income, requires disclosure of all
components of comprehensive income (loss) on an annual and interim basis.
Comprehensive income (loss) is defined as the change in equity of a business
enterprise during a period from transactions and other events and circumstances
from nonowner sources. Comprehensive income (loss) consists of the net income
(loss) plus translation adjustments resulting from the consolidation of the
Company's foreign operations (see Note 2 (h)) and is disclosed in the
accompanying consolidated statements of stockholders' investment and
comprehensive income (loss).

  (p) Disclosures about Segments of an Enterprise

   The Company adopted SFAS No. 131, Disclosures About Segments of an
Enterprise and Related Information, in the fiscal year ended November 30, 1999.
SFAS No. 131 establishes standards for reporting information regarding
operating segments in annual financial statements and requires selected
information for those segments to be presented in interim financial reports
issued to stockholders. SFAS No. 131 also establishes standards for related
disclosures about products and services and geographic areas. Operating
segments are identified as components of an enterprise about which separate
financial information is available for evaluation by the chief decision maker,
or decision making group, in making decisions about how to allocate resources
and assess performance. The Company's chief operating decision-maker, as
defined under SFAS No. 131, is the chief executive officer (see Note 8).

                                     F-10

<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


  (q) Derivatives

   In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, as amended by SFAS No. 137 and SFAS No.
138, which establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. SFAS No. 133 requires that an entity
recognize all derivatives as either assets or liabilities in the balance sheet
and measure those instruments at fair value. SFAS No. 133 is effective for all
fiscal quarters of fiscal year 2001. The Company adopted SFAS No. 133 in the
fiscal year ended November 30, 2001. The adoption did not have any impact on
the Company's financial statements or results of operations.

  (r) New Accounting Standards

   In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets, which supersedes SFAS No. 121 and certain
accounting and reporting provisions of APB No. 30, Reporting the Results of
Operations-Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions. SFAS
No. 144 addresses financial accounting and reporting for the impairment or
disposal of long-lived assets and is effective for fiscal years beginning after
December 15, 2001, and interim periods within those fiscal years.

   In July 2001, the FASB issued Statement of Financial Accounting Standards
SFAS Nos. 141 Business Combinations, and SFAS No. 142, Goodwill and Other
Intangible Assets. SFAS 141 requires that all business combinations initiated
after June 30, 2001, be accounted for using the purchase method of accounting.
SFAS 142 specifies how intangible assets that are acquired should be accounted
for in financial statements upon their acquisition. In addition, under SFAS
142, goodwill and other indefinite--lived intangible assets are no longer
amortized but are reviewed at least annually (or more frequently if impairment
indicators arise) for impairment. Separable intangible assets that are not
deemed to have an indefinite life will continue to be amortized over their
useful lives (but with no maximum life).

   In November 2001, the FASB staff made an anouncement relating to the
accounting for reimbursements received for out-of-pocket expenses. In
accordance with this new guidance reimbursements received for out-of-pocket
expenses incurred should be characterized as revenue in the statement of
operations. The Company has historically accounted for the reimbursements
received for out-of-pocket expenses incurred as a reduction to the cost of
service revenues in the statement of operations to offset the costs incurred.
The Company will adopt this new guidance in financial reporting periods
beginning after November 30, 2001 and comparative financial statements for
prior periods will be reclassified to comply with this guidance.

   The Company does not expect the adoption of these new pronouncements to have
a material effect on its financial position, results of operations or cash
flows.

3.  Net Income (Loss) Per Common Share

   The Company applies SFAS No. 128, Earnings Per Share. This statement
establishes standards for computing and presenting earnings per share and
applies to entities with publicly traded common stock or potential common
stock. Basic earnings per share is determined by dividing net income (loss) by
the weighted average common shares outstanding during the period. Diluted
earnings per share is determined by dividing net income (loss) by diluted
weighted average shares outstanding. Diluted weighted average shares reflects
the dilutive effect, if any, of potential common stock. Potential common stock
includes options to purchase common stock to the extent their effect is
dilutive. Basic net loss per share is the same as diluted net loss per share
for the years ended November 30, 2001 and 2000, as the effects of the potential
common stock are antidilutive.

                                     F-11

<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   A reconciliation of basic and diluted weighted average shares outstanding is
as follows:

<TABLE>
<CAPTION>
                                                    Years Ended November 30,
                                                  -----------------------------
                                                    2001      2000      1999
                                                  --------- --------- ---------
<S>                                               <C>       <C>       <C>
Basic weighted average shares outstanding........ 2,579,000 2,205,000 2,123,000
Weighted average common equivalent shares........        --        --   109,000
                                                  --------- --------- ---------
Diluted weighted average shares outstanding...... 2,579,000 2,205,000 2,232,000
                                                  ========= ========= =========
</TABLE>

   Diluted weighted average shares outstanding do not include approximately
10,578, 146,759, and 14,100 shares of potential common stock, calculated using
the treasury stock method, for the years ended November 30, 2001, 2000 and
1999, respectively, as their effect would be antidilutive.

4.  Stockholders' Investment

  (a) Stock Purchase Rights Plan

   On April 14, 1999, the Board of Directors of the Company declared a special
dividend distribution (a right) for each outstanding share of common stock of
the Company outstanding as of April 30, 1999. The rights will become
exercisable only if a person or group (i) acquires 15% or more of the Company's
common stock, or (ii) announces a tender offer that would result in ownership
of 15% or more of the common stock. Each right would entitle a stockholder to
buy one one-hundredth of a share of preferred stock. Once a person or group has
acquired 15% or more of the outstanding common stock of the Company, each right
may entitle its holder (other than the 15% person or group) to purchase $21.00
worth of newly issued shares of common stock of the Company (or of any company
that acquires Data Translation) at a price equal to 50% of their current market
price. The rights are redeemable at the option of the Board of Directors up
until 10 days after public announcement that any person or group has acquired
15% or more of Data Translation's common stock. The redemption price is $0.001
per right. The rights will expire on April 30, 2009, unless redeemed prior to
that date.

  (b) Rights Offering

   The Company commenced a rights offering of up to 2,325,614 shares of common
stock to its existing stockholders at a subscription price of $1.25 per share
on July 26, 2001. Each holder of common stock of record as of July 25, 2001,
was entitled to receive one right for each share of common stock held as of
such date. Stockholders who fully exercised their basic subscription rights
also had over-subscription privileges. The subscription period for the rights
offering expired at on August 14, 2001. As of the expiration date of the rights
offering, the holders of the rights had subscribed for an aggregate of
1,238,269 shares of common stock for total net proceeds to the Company of
approximately $1,446,000.

  (c) Employee Stock Purchase Plan

   In December 1996, the Company established an Employee Stock Purchase Plan
(the "ESPP") which permits the eligible employees of the Company and its
subsidiaries to purchase shares of the Company's common stock, at 85% of the
Company's closing market price on either the first day or last day of the
applicable six-month period, whichever is lower. Employees may participate in
the ESPP through regular monthly payroll deductions of up to 10% of their
pre-tax gross salary. Subject to adjustment for stock splits, stock dividends
and similar events, a maximum of 150,000 shares of common stock may be issued
under the ESPP. Through November 30, 2001, 144,550 shares of common stock have
been purchased under the ESPP.

                                     F-12

<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


  (d) Stock Option Plans

  Replacement Stock Option Plan

   Effective December 2, 1996, the Company's Board of Directors adopted the
Company's Replacement Stock Option Plan (the "Replacement Plan"). The
Replacement Plan provided for the issuance of options to purchase shares of the
Company's common stock (the "Replacement Options") to holders of options to
purchase shares of Parent Stock that were granted under Parent Plans and which
were outstanding on the Distribution Date (the "Parent Options") as part of an
adjustment to the Parent Options. The Company has authorized the issuance of up
to 275,000 shares of the Company's common stock under the Replacement Plan, of
which options for 264,794 shares of common stock were granted as of November
30, 2001. No additional options may be granted under the Replacement Plan.

   It was intended that Replacement Options issued to employees of the Company
("Transferred Employees") in respect of Parent Options that qualified as
incentive stock options (ISO's) shall continue to qualify as ISO's pursuant to
Section 424(a) of the Code. Replacement Options that do not qualify as ISO's
will be nonqualified stock options.

   1996 Stock Option Plan

   In December 1996, the Company adopted the 1996 Stock Option Plan (the "1996
Plan") for its key employees, directors and others, which permits the grant of
stock options as approved by the Company's Board of Directors (the Board).
Under the 1996 Plan, 1,500,000 shares of common stock have been reserved for
issuance. At the discretion of the Board, options granted pursuant to the 1996
Plan may be ISO's as defined by the Code provided that the exercise price of
the stock option is not less than 100% of the fair market value of the
Company's common stock. The Board will determine the exercise price of stock
options granted and when the options will vest and expire, but in no event will
the option period exceed 10 years. As of November 30, 2001, 1,253,405 shares of
common stock were available for future issuance under the 1996 Plan.

   All of the Company's stock options granted to employees during 2001, 2000
and 1999 were granted with exercise prices equal to the fair market value of
the Company's common stock. As a result, in accordance with APB Opinion No. 25,
no stock-based compensation was recorded in connection with these options.

                                     F-13

<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   The stock option activity under the Replacement Plan and the 1996 Plan for
the three years ended November 30, 2001 is as follows:

<TABLE>
<CAPTION>
                                        Number of Exercise Price  Weighted Avg
                                         Shares       Range      Exercise Price
                                        --------- -------------- --------------
 <S>                                    <C>       <C>            <C>
 Outstanding, November 30, 1998........  394,730    0.61-- 5.08       3.03
    Granted............................  396,450    1.50-- 5.53       3.11
    Exercised..........................  (53,228)   0.61-- 4.11       2.03
    Expired/canceled................... (238,040)   0.97-- 5.08       2.51
                                        --------   ------------      -----
 Outstanding, November 30, 1999........  499,912    1.44-- 5.53       3.24
    Granted............................  598,650    2.94-- 8.88       6.21
    Exercised..........................  (86,572)   1.44-- 5.08       2.25
    Expired/canceled................... (183,796)   1.44-- 8.88       6.15
                                        --------   ------------      -----
 Outstanding, November 30, 2000........  828,194    1.50-- 8.88       5.81
    Granted............................   15,300    1.50-- 2.50       1.96
    Exercised..........................      200    1.50-- 1.50       1.50
    Expired/canceled................... (218,914)   1.50-- 7.75       4.94
                                        --------   ------------      -----
 Outstanding, November 30, 2001........  624,780   $1.50--$8.88      $4.81
                                        ========   ============      =====
 Exercisable, November 30, 1999........   54,388   $1.44--$5.53      $2.68
                                        ========   ============      =====
 Exercisable, November 30, 2000........  204,042   $1.50--$8.88      $4.53
                                        ========   ============      =====
 Exercisable, November 30, 2001........  347,313   $1.50--$8.88      $4.81
                                        ========   ============      =====
</TABLE>

  (e)  Stock-based Compensation

   The Company has computed the pro forma disclosures required under SFAS No.
123 for all stock option grants during the years ended November 30, 2001, 2000
and 1999 using the Black-Scholes option pricing model prescribed by SFAS No.
123. The assumptions used in 2001, 2000 and 1999 are as follows: dividend yield
of 0% for all years; expected volatility of 62%, 77% and 96%, risk-free
interest rates of 3.91%-5.17%, 5.42%-6.69% and 4.48%-5.92% and expected lives
of five, five and six years, respectively. The weighted average grant date fair
value of options granted during 2001, 2000 and 1999 was $1.96, $6.21 and $3.11,
respectively. The weighted average remaining contractual life of outstanding
options at November 30, 2001 was 3.5 years.

   Had compensation cost for these plans been determined consistent with SFAS
No. 123, the Company's net income (loss) and net income (loss) per share would
have been the following pro forma amounts:

<TABLE>
<CAPTION>
                                                        Years Ended November 30,
                                                   ----------------------------------
                                                      2001         2000        1999
                                                   -----------  -----------  --------
<S>                                                <C>          <C>          <C>
Net (loss) income:
   As reported.................................... $(1,329,000) $(1,713,000) $662,000
   Pro forma...................................... $(1,985,000) $(2,557,000) $292,000

Basic net (loss) income per common and potential
 common share outstanding:
   As reported.................................... $     (0.52) $     (0.78) $   0.31
   Pro forma...................................... $     (0.77) $     (1.16) $   0.14

Diluted net (loss) income per common and potential
 common share outstanding:
   As reported.................................... $     (0.52) $     (0.78) $   0.30
   Pro forma...................................... $     (0.77) $     (1.16) $   0.13
</TABLE>

                                     F-14

<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   The resulting pro forma compensation expense may not be representative of
the amount to be expected in future years, as the pro forma expense may vary
based on the number of options granted. The Black-Scholes option pricing model
was developed for use in estimating the fair value of traded options that have
no vesting restrictions and are fully transferable. In addition, option pricing
models require the input of highly subjective assumptions, including expected
stock price volatility. Because the Company's employee stock options have
characteristics significantly different from those of traded options and
because changes in the subjective input assumptions can materially affect the
fair value estimate, in management's opinion, the existing models do not
necessarily provide a reliable single measure of the fair value of its employee
stock options.

  (f) Stock Buyback Plan

   On June 22, 2000, the Company announced that its Board had approved the
purchase of up to $250,000 of its shares of common stock over the remainder of
the calendar year. Purchases were made at prevailing prices as market
conditions and cash availability permitted. As of December 31, 2000, the
Company had completed the programs and repurchased 41,465 and 15,000 shares of
its common stock under the 2000 and a 1999 stock buyback plans, respectively,
for an aggregate purchase price of $227,000, which is classified as treasury
stock in the accompanying consolidated statements of stockholders' investment
and comprehensive income (loss).

  (g) Stock Option Repricing

   On December 16, 1998, the Company's Board authorized the repricing of
employee options to purchase 100,000 shares of common stock from an exercise
price of $3.00 per share to an exercise price of $1.50 per share, which
represented the fair market value of the Company's common stock on the date of
repricing. These options are subject to variable plan accounting, as defined in
FIN 44 (see Note 2(m)). There were no charges required during fiscal 2001 or
2000 because the exercise price of the variable stock options exceeded the
Company's stock price. As of November 30, 2001, 66,667 options, were still
outstanding and are subject to variable plan accounting through the earlier of
the exercise or termination of the options.

5.  Employee Savings Plan

   In December 1996, the Company established the Employee Savings Plan (the
Savings Plan). In the event the Company is profitable, the Savings Plan
provides for annual Company contributions of up to 15% of the first 6% of total
salary per participant. These contributions vest immediately. Contributions to
the Savings Plan charged to operations in 2001, 2000 and 1999 were $0, $30,000
and $26,000, respectively.

6.  Commitments and Contingencies

  (a) Lease Commitments

   The Company has operating lease agreements expiring in December 2009 for a
building and property owned by a related party trust. The agreements require
the Company to pay aggregate minimum annual rental payments plus other expenses
of the lessor on a net basis. Total rental expense charged to operations on
these leases included in the accompanying consolidated statements of
operations, net of sub-lease and rent allocations, was approximately $216,000,
$243,000 and $254,000 for the years ended November 30, 2001, 2000 and 1999,
respectively.

                                     F-15

<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   In addition, the Company leases sales facilities and equipment under leases
expiring through 2005. Rent expense, net of sub-lease agreements totaled
$123,000 $189,000 and $152,000 in the years ended November 30, 2001, 2000 and
1999, respectively. Future minimum lease payments, net of sub-lease payments to
be received, under all operating leases are as follows:

<TABLE>
<CAPTION>
                  Fiscal Years Ending November 30,   Amount
                  -------------------------------- ----------
                  <S>                              <C>
                  2002............................ $  629,000
                  2003............................  1,067,000
                  2004............................  1,131,000
                  2005............................  1,131,000
                  2006............................  1,366,000
                  Thereafter......................  3,900,000
                                                   ----------
                     Total minimum lease payments. $9,224,000
                                                   ==========
</TABLE>

  (b) Contingencies

   From time to time, the Company is involved in disputes and/or litigation
encountered in its normal course of business. The Company does not believe that
the ultimate impact of the resolution of such matters will have a material
adverse effect on the Company's financial statements.

7.  Income Taxes

   The Company accounts for income taxes in accordance with SFAS No. 109,
Accounting for Income Taxes, whereby a deferred tax asset or liability is
recognized for the expected future tax consequences of temporary differences
between the financial statement and the tax bases of the assets and liabilities.

   The components of the income tax provision are approximately as follows:

<TABLE>
<CAPTION>
                                     Fiscal Years Ended
                                        November 30,
                                     ------------------
                                     2001  2000  1999
                                     ----  ---- -------
                         <S>         <C>   <C>  <C>
                         Federal:
                            Current. $ --  $ -- $32,000
                                     ====  ==== =======
</TABLE>

   The difference between the combined federal and state statutory tax rate of
40% and the effective tax rate during 1999 is due to the Company's use of
federal and state net operating loss carryforwards. At November 30, 2001, the
Company had approximately $10,266,000 of federal and state net operating loss
carryforwards available to offset future taxable income, which expire in
varying amounts through 2021. Due to the uncertainty surrounding the timing of
realizing the benefits of its favorable tax attributes in future income tax
returns, the Company has placed a full valuation allowance against its
otherwise recognizable deferred tax assets at November 30, 2001 and 2000.

                                     F-16

<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   The approximate income tax effect of each type of temporary difference and
carryforward is as follows:

<TABLE>
<CAPTION>
                                                            November 30,
                                                      ------------------------
                                                         2001         2000
                                                      -----------  -----------
<S>                                                   <C>          <C>
Net operating loss carryforwards..................... $ 4,184,000  $ 3,463,000
Depreciation.........................................     820,000      193,000
Nondeductible accruals...............................     575,000      541,000
Less--valuation allowance............................  (5,529,000)  (4,197,000)
                                                      -----------  -----------
   Net deferred tax asset (liability)................ $        --  $        --
                                                      ===========  ===========
</TABLE>

8.  Segment and Geographic Information

  (a) Segment Reporting

   The Company's reportable segments are Core and Commercial. The Core segment
is composed of the imaging and data acquisition business that consists of
plug-in cards and Microsoft(R) Windows(R)-based software that provide an
integrated, high performance system solution to the general scientific and
measurement marketplace. The Commercial segment is a business that consists of
plug-in video capture card; Broadway, which is a high-performance video capture
and encoding system for Microsoft(R) Windows(R) 98 and Microsoft(R) Windows(R)
NT personal computers. The accounting policies of the segments are the same as
those described in the summary of significant accounting policies. The Company
evaluates performance based on revenues and operating margin. Revenues are
attributed to geographic areas based on where the customer is located. Segment
information for the years ended November 30, 2001, 2000 and 1999 is as follows:

<TABLE>
<CAPTION>
                                                Core     Commercial    Total
                                             ----------- ---------- -----------
 <S>                                         <C>         <C>        <C>
 Fiscal 2001
 Revenues from unaffiliated customers....... $13,780,000 $1,105,000 $14,885,000
 Cost of revenue............................   6,331,000    559,000   6,890,000
 Research and development...................   2,358,000      9,000   3,050,000
                                             ----------- ---------- -----------
 Operating margin(1)........................ $ 4,408,000 $  537,000 $ 4,945,000
                                             =========== ========== ===========

 Fiscal 2000
 Revenues from unaffiliated customers....... $13,998,000 $1,926,000 $15,924,000
 Cost of revenue............................   6,638,000    952,000   7,590,000
 Research and development...................   2,830,000    201,000   3,031,000
                                             ----------- ---------- -----------
 Operating margin(1)........................ $ 4,530,000 $  773,000 $ 5,303,000
                                             =========== ========== ===========

 Fiscal 1999
 Revenues from unaffiliated customers....... $14,221,000 $2,033,000 $16,254,000
 Cost of revenue............................   5,991,000  1,057,000   7,048,000
 Research and development...................   2,312,000    257,000   2,569,000
                                             ----------- ---------- -----------
 Operating margin(1)........................ $ 5,918,000 $  719,000 $ 6,637,000
                                             =========== ========== ===========
</TABLE>
--------
(1) The operating margins reported reflect only the expenses of the line of
    business and do not represent the actual margins for each operating segment
    since they do not contain an allocation for selling and marketing, general
    and administrative, development and other corporate expenses incurred in
    support of the line of business.

                                     F-17

<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   Profit (Loss) Reconciliation:

<TABLE>
<CAPTION>
                                                         Fiscal Years Ended November 30,
                                                      -------------------------------------
                                                         2001         2000         1999
                                                      -----------  -----------  -----------
<S>                                                   <C>          <C>          <C>
Total operating margin for reportable segments....... $ 4,945,000  $ 5,303,000  $ 6,637,000
Selling and marketing expenses.......................  (4,627,000)  (5,113,000)  (4,100,000)
General and administrative expenses..................  (1,723,000)  (2,017,000)  (1,943,000)
Interest income......................................      76,000      114,000      100,000
                                                      -----------  -----------  -----------
   (Loss) income before provision for income taxes... $(1,329,000) $(1,713,000) $   694,000
                                                      ===========  ===========  ===========
</TABLE>

  (b) Geographic Information

<TABLE>
<CAPTION>
                                                                     United
                                                      United States  Kingdom     Germany   Eliminations Consolidated
                                                      ------------- ----------  ---------- ------------ ------------
<S>                                                   <C>           <C>         <C>        <C>          <C>
Fiscal 2001
Sales to unaffiliated customers(1)...................  $11,414,000  $1,455,000  $2,016,000 $        --  $14,885,000
Sales or transfers between geographic areas..........    1,677,000          --          --  (1,677,000)          --
                                                       -----------  ----------  ---------- -----------  -----------
Total net sales......................................  $13,091,000  $1,455,000  $2,016,000 $(1,677,000) $14,885,000
                                                       ===========  ==========  ========== ===========  ===========
(Loss) income from continuing operations before
  provision for income taxes.........................  $(1,396,000) $    6,000  $   72,000 $   (11,000) $(1,329,000)
                                                       ===========  ==========  ========== ===========  ===========
Property and equipment...............................  $   420,000  $   44,000  $   18,000 $   (13,000) $   469,000
                                                       ===========  ==========  ========== ===========  ===========

Fiscal 2000
Sales to unaffiliated customers(1)...................  $12,277,000  $1,342,000  $2,305,000 $        --  $15,924,000
Sales or transfers between geographic areas..........    1,818,000          --          --  (1,818,000)          --
                                                       -----------  ----------  ---------- -----------  -----------
Total net sales......................................  $14,095,000  $1,342,000  $2,305,000 $(1,818,000) $15,924,000
                                                       ===========  ==========  ========== ===========  ===========
(Loss) income from continuing operations before
  provision for income taxes.........................  $(1,628,000) $ (104,000) $   27,000 $    (8,000) $(1,713,000)
                                                       ===========  ==========  ========== ===========  ===========
Property and equipment...............................  $   819,000  $   62,000  $   23,000 $   (14,000) $   890,000
                                                       ===========  ==========  ========== ===========  ===========

Fiscal 1999
Sales to unaffiliated customers(1)...................  $12,136,000  $1,529,000  $2,589,000 $        --  $16,254,000
Sales or transfers between geographic areas..........    1,835,000          --          --  (1,835,000)          --
                                                       -----------  ----------  ---------- -----------  -----------
Total net sales......................................  $13,971,000  $1,529,000  $2,589,000 $(1,835,000) $16,254,000
                                                       ===========  ==========  ========== ===========  ===========
Income (loss) from continuing operations before
  provision for income taxes.........................  $   673,000  $   68,000  $   68,000 $  (115,000) $   694,000
                                                       ===========  ==========  ========== ===========  ===========
Property and equipment...............................  $ 1,163,000  $   76,000  $   17,000 $   (13,000) $ 1,243,000
                                                       ===========  ==========  ========== ===========  ===========
</TABLE>
--------
(1) Foreign sales from the United States to unaffiliated customers for the
    years ended November 30, 2001, 2000 and 1999 were approximately $2,700,000,
    $3,522,000 and $3,309,000, respectively.

                                     F-18

<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


9.  Accrued Expenses

   Accrued expenses consist of the following:

<TABLE>
<CAPTION>
                                                            November 30,
                                                        ---------------------
                                                           2001       2000
                                                        ---------- ----------
  <S>                                                   <C>        <C>
  Payroll and related taxes............................ $  244,000 $  585,000
  Fringe benefits......................................    286,000    356,000
  Marketing............................................    205,000     72,000
  Other................................................  1,109,000    882,000
                                                        ---------- ----------
                                                        $1,844,000 $1,895,000
                                                        ========== ==========
</TABLE>

10.  Valuation and Qualifying Accounts

   The following table sets forth activity in the Company's reserve for
doubtful accounts:

<TABLE>
<CAPTION>
                                            Beginning Cost and             End of
                                             of Year  Expense  Deductions   Year
                                            --------- -------- ---------- --------
<S>                                         <C>       <C>      <C>        <C>
For the Year Ended November 30, 1999....... $397,000  $36,000   $144,000  $289,000
For the Year Ended November 30, 2000....... $289,000  $12,000   $ 24,000  $277,000
For the Year Ended November 30, 2001....... $277,000  $15,000   $ 38,000  $254,000
</TABLE>

11.  Selected Quarterly Information (Unaudited)

  For the Fiscal Quarters Ended:

<TABLE>
<CAPTION>
                                            February 28, May 31, August 31, November 30,
                                            ------------ ------- ---------- ------------
                                               (In thousands, except per share data)
<S>                                         <C>          <C>     <C>        <C>
2001
Net sales..................................    $4,186    $3,998    $3,648      $3,053
Gross profit...............................     2,377     2,271     1,799       1,548
Loss from operations.......................       (79)     (192)     (687)       (447)
Net loss...................................       (53)     (176)     (672)       (428)
Basic and diluted loss per share...........    $(0.02)   $(0.08)   $(0.29)     $(0.12)

2000
Net sales..................................    $3,902    $3,959    $3,968      $4,095
Gross profit...............................     2,204     2,081     2,045       2,005
Loss from operations.......................        (1)     (417)     (596)       (813)
Net loss...................................        24      (384)     (567)       (785)
Basic and diluted loss per share...........    $ 0.01    $(0.17)   $(0.26)     $(0.35)

1999
Net sales..................................    $3,857    $4,079    $4,061      $4,257
Gross profit...............................     2,186     2,347     2,307       2,366
Loss from operations.......................        74       132       153         235
Net income.................................       102       156       177         227
Basic net income per share.................    $ 0.05    $ 0.07    $ 0.08      $ 0.11
Diluted net income (loss) per share........    $ 0.05    $ 0.07    $ 0.08      $ 0.10
</TABLE>

                                     F-19

<PAGE>

                    DATA TRANSLATION, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


12.  Subsequent Events

   On February 21, 2002, the Company announced to certain holders of
outstanding options to purchase Data Translation common stock an offer to
cancel their outstanding options in exchange for new options to purchase the
same number of shares covered by the options tendered for exchange. The new
options would not be issued for a period of about six months and one day after
the cancellation of the existing options and will have an exercise price per
share equal to the fair market value of the Company's common stock on the date
of issuance. This offer is voluntary and must be accepted by individual option
holders in writing no later than March 22, 2002. All options currently
outstanding under the 1996 Stock Option Plan with an exercise price equal to or
greater than $4.00 per share are eligible for exchange. In addition, the option
holder must continue to be an employee of the Company on the date of grant of
the new options. One third of the new options will be vested as of the date of
issuance and the remaining new options will vest every six months over a period
of two years from the date of issuance.

                                     F-20

<PAGE>

Item 8.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure.

   None.

                                   PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
       Compliance with Section 16(a) of the Exchange Act

   Directors. The information appearing under the caption "Nomination and
Election of Directors" in the Company's Proxy Statement for its Annual Meeting
of Stockholders to be held on April 23,2002 (the "Proxy Statement") is
incorporated herein by reference.

   Executive Officers. Information in response to this Item appears under the
caption "Executive Officers of the Company" in Item 1 of this Form 10-KSB.

   Section 16(a) Beneficial Ownership Reporting Compliance. The information
appearing under the caption "Nomination and Election of Directors" in the Proxy
Statement is incorporated herein by reference.

Item 10.  Executive Compensation

   The information required by this Item appears under the caption "Executive
Compensation" in the Proxy Statement and is incorporated herein by reference.

Item 11.  Security Ownership of Certain Beneficial Owners and Management

   The information required by this Item appears under the caption "Security
Ownership of Certain Beneficial Owners and Management" in the Proxy Statement
and is incorporated herein by reference.

Item 12.  Certain Relationships and Related Transactions

   The information required by this Item appears under the caption "Certain
Relationships and Related Transactions" in the Proxy Statement and is
incorporated herein by reference.

                                     F-21

<PAGE>

Item 14.  Financial Statements and Exhibits.

   (a) Financial Statements.  The Index to Consolidated Financial Statements
appears at page 15 of this Form 10-KSB.

   Schedules.  Schedules for which provision is made in the applicable
regulations of the Securities and Exchange Commission have been omitted because
the information is disclosed in the financial statements or because such
schedules are not required or are not applicable. See Index to Consolidated
Financial Statements.

   Exhibits.   Exhibits 10.6 through 10.8 constitute all of the management
contracts and compensation plans and arrangements of the Company required to be
filed as Exhibits to this Form 10-KSB.

<TABLE>
<C>    <S>

 3.1   Certificate of Incorporation of Registrant(1)

 3.2   By-laws of Registrant(1)

 4.1   Specimen Stock Certificate of Common Stock (See also Exhibits 3.1 and 3.2)(1)

10.1   Distribution Agreement dated as of November 19, 1996 with Media 100 Inc.(2)

10.2   Intellectual Property Agreement dated as of December 2, 1996 with Media 100 Inc.(3)

10.3   Corporate Services Agreement dated as of December 2, 1996 with Media 100 Inc.(4)

10.4   Use and Occupancy Agreement dated as of December 2, 1996 with Media 100 Inc.(5)

10.5   Lease dated December 1, 1979, as amended, for Locke Drive with Nason Hill Trust(1)

10.6   1996 Stock Option Plan(6)

10.7   Employee Stock Purchase Plan(7)

10.8   Replacement Stock Option Plan(8)

10.9*  Software Bundling Master License Agreement(1)

10.10* Distribution Agreement dated June 26, 1996 by and between Data Translation, Inc. and DS
         Datenverarbeitung und Sensortechnik GmbH(1)

21     List of Subsidiaries of the Registrant

23.1   Consent of Arthur Andersen LLP
</TABLE>
--------
 * Certain portions have been omitted and filed separately with the Securities
   and Exchange Commission.
(1) Incorporated herein by reference to the Company's Registration Statement on
    Form 10 (No. 000-21367) filed with the Securities and Exchange Commission
    on November 26, 1996
(2) Incorporated herein by reference to Exhibit 10.8.1 to the 1996 Annual
    Report on Form 10-K of Media 100 Inc. (File No. 0- 14779) filed with the
    Securities and Exchange Commission on February 28, 1997
(3) Incorporated herein by reference to Exhibit 10.8.2 to the 1996 Annual
    Report on Form 10-K of Media 100 Inc. (File No. 0- 14779) filed with the
    Securities and Exchange Commission on February 28, 1997
(4) Incorporated herein by reference to Exhibit 10.8.3 to the 1996 Annual
    Report on Form 10-K of Media 100 Inc. (File No. 0- 14779) filed with the
    Securities and Exchange Commission on February 28, 1997
(5) Incorporated herein by reference to Exhibit 10.8.4 to the 1996 Annual
    Report on Form 10-K of Media 100 Inc. (File No. 0- 14779) filed with the
    Securities and Exchange Commission on February 28, 1997
(6) Incorporated herein by reference to the Company's Registration Statement on
    Form S-8 (No. 333-16855) filed with the Securities and Exchange Commission
    on November 26, 1996
(7) Incorporated herein by reference to the Company's Registration Statement on
    Form S-8 (No. 333-16857) filed with the Securities and Exchange Commission
    on November 26, 1996
(8) Incorporated herein by reference to the Company's Registration Statement on
    Form S-8 (No. 333-16859) filed with the Securities and Exchange Commission
    on November 26, 1996

                                     F-22

<PAGE>

                                  SIGNATURES

   In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                               DATA TRANSLATION, INC.

                                               By: /s/  ALFRED A. MOLINARI, JR.
                                                   -----------------------------
                                                     Alfred A. Molinari, Jr.,
                                                      Chief Executive Officer

Date:  February 28, 2002

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

          Signature                       Title                   Date
          ---------                       -----                   ----

/s/  ALFRED A. MOLINARI, JR.  Chief Executive Officer and   February 28, 2002
-----------------------------   Chairman
   Alfred A. Molinari, Jr.

   /s/  MICHAEL A. DIPOTO     VP Finance and CFO            February 28, 2002
-----------------------------
      Michael A. DiPoto

   /s/  DR. DAVID CYGANSKI    Director                      February 28, 2002
-----------------------------
     Dr. David Cyganski

      /s/  D'ANNE HURD        Director                      February 28, 2002
-----------------------------
         D'Anne Hurd

      /s/  ELLEN HARPIN       VP, Engineering and Director  February 28, 2002
-----------------------------
        Ellen Harpin

                                     F-23

<PAGE>


                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
                 Exhibit
                 Number  Document Description
                 ------  --------------------
                 <C>     <S>
                  21     List of Subsidiaries of the Registrant
                  23.1   Consent of Arthur Andersen LLP
</TABLE>