We currently sell our products direct to consumers and through resellers, and are focusing efforts on increasing our distribution channels. Our future revenue growth will depend in large part on sales of our products through reseller and other distribution relationships. We may not be successful in developing additional distribution relationships. Agreements with distribution partners generally provide for one-time and recurring commissions based on our list prices, and do not require minimum purchases or restrict development or distribution of competitive products. Therefore, entities that distribute our products may compete with us. In addition, distributors and resellers may not dedicate sufficient resources or give sufficient priority to selling our products. Our failure to develop new distribution channels, the loss of a distribution relationship or a decline in the efforts of a material reseller or distributor could have a material adverse effect on our business, financial condition and results of operations.

The development and marketing of our VoIP products will continue to place a significant strain on our limited personnel, management, and other resources. Our future success depends upon the continued services of our executive officers and other key employees who have critical industry experience and relationships that we rely on to implement our business plan. None of our officers or key employees are bound by employment agreements for any specific term. The loss of the services of any of our officers or key employees could delay the development and introduction of, and negatively impact our ability to sell our products which could adversely affect our financial results and impair our growth. We currently do not maintain key person life insurance policies on any of our employees.

We do not have long-term purchase agreements with our contract manufacturers or our component suppliers. There can be no assurance that our subcontract manufacturers will be able or willing to reliably manufacture our products, in volumes, on a cost-effective basis or in a timely manner. For our videophones and VoIP terminal adaptors and that are used with our Packet8 service, we rely on the availability of our semiconductor products. These devices are also sourced solely from certain overseas contract manufacturers and partners, and are currently not available from any other manufacturer.

Our Packet8 service depends on the availability of third party network service providers that provide telephone numbers and public switched telephone network (PSTN) call termination and origination services for our customers. Many of these network service providers are financially affected by the downturn in the telecommunications industry and may be forced to terminate the services that we depend on. The time to interface our technology to another network service provider, if available, and qualify this new service could have a material adverse effect on our business, operating results, and financial condition.

While we believe that relations with our current service provider are good and we have a contract in place, there can be no assurance that this service provider will be able or willing to supply services to us in the future or that we will be successful in signing up alternative or additional providers. While we believe that we could replace our current provider, if necessary, our ability to provide service to our subscribers would be impacted during this timeframe, and this could have an adverse effect on our business, financial condition and results of operations.

Our products have lead times of up to several months, and are built to forecasts that are necessarily imprecise. Because of our practice of building our products to necessarily imprecise forecasts, it is likely that, from time to time, we will have either excess or insufficient product inventory. Excess inventory levels would subject us to the risk of inventory obsolescence and the risk that our selling prices may drop below our inventory costs, while insufficient levels of inventory may negatively affect relations with customers. For instance, our customers rely upon our ability to meet committed delivery dates, and any disruption in the supply of our products could result in legal action from our customers, loss of customers or harm to our ability to attract new customers. Any of these factors could have a material adverse effect on our business, operating results, and financial condition.

Many of the potential customers for our Packet8 service have requested that our products and services be designed to interoperate with their existing networks, each of which may have different specifications and use multiple standards. Our customers' networks may contain multiple generations of products from different vendors that have been added over time as their networks have grown and evolved. Our products must interoperate with these products as well as with future products in order to meet our customers' requirements. In some cases, we may be required to modify our product designs to achieve a sale, which may result in a longer sales cycle, increased research and development expense, and reduced operating margins. If our products do not interoperate with existing equipment or software in our customers' networks, installations could be delayed, orders for our products could be canceled or our products could be returned. This could harm our business, financial condition, and results of operations.

Our Packet8 service must successfully integrate with products from other vendors, such as gateways to traditional telephone systems. As a result, when problems occur in a network, it may be difficult to identify the source of the problem. The occurrence of hardware and software errors, whether caused by our Packet8 service or another vendor's products, may result in the delay or loss of market acceptance of our products and any necessary revisions may force us to incur significant expenses. The occurrence of some of these types of problems may seriously harm our business, financial condition and results of operations.

We expect our competitors to continue to improve the performance of their current products and introduce new products or new technologies. If our competitors successfully introduce new products or enhance their existing products, this could reduce the sales or market acceptance of our products and services, increase price competition or make our products obsolete. To be competitive, we must continue to invest significant resources in research and development, sales and marketing, and customer support. We may not have sufficient resources to make these investments or to make the technological advances necessary to be competitive, which in turn will cause our business to suffer.

Many of our current and potential competitors have longer operating histories, are substantially larger, and have greater financial, manufacturing, marketing, technical, and other resources. Many also have greater name recognition and a larger installed base of customers than we have. Competition in our markets may result in significant price reductions. As a result of their greater resources, many current and potential competitors may be better able than us to initiate and withstand significant price competition or downturns in the economy. There can be no assurance that we will be able to continue to compete effectively, and any failure to do so would harm our business, operating results, and financial condition.

We are entering into new market areas and our success is partly dependent on our ability to forge new marketing and engineering partnerships. VoIP telephony communication systems are extremely complex and few, if any, companies possess all the required technology components needed to build a complete end to end solution. We will likely need to enter into partnerships to augment our development programs and to assist us in marketing complete solutions to our targeted customers. We may not be able to develop such partnerships in the course of our product development. Even if we do establish the necessary partnerships, we may not be able to adequately capitalize on these partnerships to aid in the success of our business.

We rely in part on trademark, copyright, and trade secret law to protect our intellectual property in the United States and abroad. We seek to protect our software, documentation, and other written materials under trade secret and copyright law, which afford only limited protection. We also rely in part on patent law to protect our intellectual property in the United States and internationally. We hold fifty-four United States patents and have a number of United States and foreign patent applications pending. We cannot predict whether such pending patent applications will result in issued patents. We may not be able to protect our proprietary rights in the United States or internationally (where effective intellectual property protection may be unavailable or limited), and competitors may independently develop technologies that are similar or superior to our technology, duplicate our technology or design around any patent of ours. We have in the past licensed and in the future expect to continue licensing our technology to others; many of who are located or may be located abroad. There are no assurances that such licensees will protect our technology from misappropriation. Moreover, litigation may be necessary in the future to enforce our intellectual property rights, to determine the validity and scope of the proprietary rights of others, or to defend against claims of infringement or invalidity. Such litigation could result in substantial costs and diversion of management time and resources and could have a material adverse effect on our business, financial condition, and operating results. Any settlement or adverse determination in such litigation would also subject us to significant liability.

There has been substantial litigation in the semiconductor, electronics, and related industries regarding intellectual property rights, and from time to time third parties may claim infringement by us of their intellectual property rights. Our broad range of technology, including systems, digital and analog circuits, software, and semiconductors, increases the likelihood that third parties may claim infringement by us of their intellectual property rights. If we were found to be infringing on the intellectual property rights of any third party, we could be subject to liabilities for such infringement, which could be material. We could also be required to refrain from using, manufacturing or selling certain products or using certain processes, either of which could have a material adverse effect on our business and operating results. From time to time, we have received, and may continue to receive in the future, notices of claims of infringement, misappropriation or misuse of other parties' proprietary rights. There can be no assurance that we will prevail in these discussions and actions or that other actions alleging infringement by us of third party patents will not be asserted or prosecuted against us.

We rely upon certain technology, including hardware and software, licensed from third parties. There can be no assurance that the technology licensed by us will continue to provide competitive features and functionality or that licenses for technology currently utilized by us or other technology which we may seek to license in the future will be available to us on commercially reasonable terms or at all. The loss of, or inability to maintain existing licenses could result in shipment delays or reductions until equivalent technology or suitable alternative products could be developed, identified, licensed and integrated, and could harm our business. These licenses are on standard commercial terms made generally available by the companies providing the licenses. The cost and terms of these licenses individually are not material to our business.

Circuit-switched telephony networks feature very high reliability, with a guaranteed quality of service. In addition, such networks have imperceptible delay and consistently satisfactory audio quality. Emerging broadband IP networks, such as LANs, WANs, and the internet, or emerging last mile technologies such as cable, digital subscriber lines, and wireless local loop, may not be suitable for telephony unless such networks and technologies can provide reliability and quality consistent with these standards.

In addition to reliability and quality standards, the market acceptance of telephony over broadband IP networks is dependent upon the adoption of industry standards so that products from multiple manufacturers are able to communicate with each other. Our VoIP telephony products rely heavily on standards such as SIP, H.323, MGCP and Megaco to interoperate with other vendors' equipment. There is currently a lack of agreement among industry leaders about which standard should be used for a particular application, and about the definition of the standards themselves. These standards, as well as audio and video compression standards, continue to evolve. We also must comply with certain rules and regulations of the Federal Communications Commission (FCC) regarding electromagnetic radiation and safety standards established by Underwriters Laboratories, as well as similar regulations and standards applicable in other countries. Standards are continuously being modified and replaced. As standards evolve, we may be required to modify our existing products or develop and support new versions of our products. The failure of our products to comply, or delays in compliance, with various existing and evolving industry standards could delay or interrupt volume production of our VoIP telephony products, which would have a material adverse effect on our business, financial condition and operating results.

At present there are few laws, regulations or rulings that specifically address access to or commerce on the internet, including IP telephony. We are unable to predict the impact, if any, that future legislation, legal decisions or regulations concerning the internet may have on our business, financial condition, and results of operations. Regulation may be targeted towards, among other things, assessing access or settlement charges, imposing taxes related to internet communications, imposing tariffs or regulations based on encryption concerns or the characteristics and quality of products and services, imposing regulations and requirements related to the handling of emergency 911 services, any of which could restrict our business or increase our cost of doing business. The increasing growth of the broadband IP telephony market and popularity of broadband IP telephony products and services heighten the risk that governments or other legislative bodies will seek to regulate broadband IP telephony and the Internet. In addition, large, established telecommunication companies may devote substantial lobbying efforts to influence the regulation of the broadband IP telephony market, which may be contrary to our interests.

Many regulatory actions are underway or are being contemplated by federal and state authorities, including the FCC and other state regulatory agencies. On February 12, 2004, the FCC initiated a notice of public rule-making to update FCC policy and consider the appropriate regulatory classification for VoIP and other IP enabled services. On February 11, 2004, the California Public Utilities Commission (CPUC) initiated an investigation into voice over IP providers. As a tentative conclusion of law, the CPUC stated that they believe that VoIP providers are telecommunications providers and should be treated as such from a regulatory standpoint. There is risk that a regulatory agency requires us to conform to rules that are unsuitable for IP communications technologies or rules that cannot be complied with due to the nature and efficiencies of IP routing, or are unnecessary or unreasonable in light of the manner in which Packet8 offers service to its customers. It is not possible to separate the Internet, or any service offered over it, into intrastate and interstate components. While suitable alternatives may be developed in the future, the current IP network does not enable us to identify the geographic nature of the traffic traversing the Internet. There is also risk that specific E911 requirements imposed by a regulatory agency may impede our ability to offer service in a manner that conforms to these requirements. While we are developing technologies that seek to provide access to emergency services in conjunction with our IP communications offerings, the existing requirements, which are tethered to and dependent upon the legacy PSTN network, neither work in an IP environment nor take advantage of the significantly enhanced capabilities of the IP network.

The effects of federal or state regulatory actions could have a material adverse effect on our business, financial condition and operating results.

Several states have recently shown an interest in regulating voice over IP, or VoIP, services, as they do for providers of traditional telephone service. If this trend continues, and if state regulation is not preempted by action by the U.S. federal government, we may become subject to a "patchwork quilt" of state regulations and taxes, which would increase our costs of doing business, and adversely affect our operating results and future prospects.

We have already been contacted by several state regulatory authorities regarding our Packet8 service. On September 11, 2003, we received a letter from the Public Service Commission of Wisconsin (the WPSC) notifying us that the WPSC believes that we, via our Packet8 voice and video communications service, are offering intrastate telecommunications services in the state of Wisconsin without certification of the WPSC. According to the WPSC's letter, it believes that we cannot legally provide Packet8-based resold intrastate services in Wisconsin without certification of the WPSC. In addition, the Commission believes that Packet8 bills for intrastate services to Wisconsin customers are void and not collectible. The letter also states that if we do not obtain certification to offer intrastate telecommunications services, the matter will be referred to the State of Wisconsin Attorney General for enforcement action. The letter also states that even if the Company were certified by the WPSC, the previous operation without certification may still subject the Company to referral to the State of Wisconsin Attorney General for enforcement action and possible forfeitures. We consulted with counsel and have responded to the WPSC and disputed their assertions. While we do not believe that the potential amounts of any forfeitures would be material to us, if we are subject to an enforcement action, we may become subject to liabilities and may incur expenses that adversely affect our results of operations.

On September 17, 2003, we were contacted by the Ohio Public Utilities Commission (OPUC) and asked to respond to a questionnaire on Voice over IP technologies that the OPUC is conducting. The OPUC inquired as to the nature of our service, how it is provided, and to what Ohio residents the service is made available. The questionnaire did not contain any assertions regarding the legality of the Packet8 service under Ohio law or any statements as to whether the OPUC believes we are subject to regulation by the state of Ohio. We responded to this questionnaire on October 20, 2003.

On September 22, 2003, we also received a letter from the California Public Utilities Commission (CPUC). The correspondence alleges that we are offering intrastate telecommunications services for profit in California without having received formal certification from the CPUC to provide such service. The CPUC also requested that we file an application with the CPUC for authority to conduct business as a telecommunications utility no later than October 22, 2003. We consulted with regulatory counsel and have responded to the CPUC and disputed their assertions and did not file the requested application. In our response to the state of California, we disagreed with the CPUC's classification of us as a telephone corporation under the California Public Utilities Code. The letter from the CPUC did not indicate, and we cannot predict, what any potential penalties or consequences in failing to obtain certification might be. If we are subjected to penalties, or if we are required to comply with CPUC regulations affecting telecommunications service providers, our business may be adversely affected. On November 13, 2003, the CPUC held a hearing in San Francisco to hear testimony from CPUC staff and industry representatives regarding what course of action the CPUC should take with respect to Internet telephony. A representative from 8x8 testified at the hearing. In January 2004, the CPUC issued a statement that stated that it was pulling back from its immediate enforcement approach against IP telephony service providers, and was establishing a more deliberative process to set regulations. On February 11, 2004, the CPUC approved a formal investigation and rulemaking into VoIP providers. The CPUC has indicated that this process could last up to 18 months, but there is no way for us to predict the timetable or outcome of this process.

Most recently, on May 19, 2004, in response to a 2003 complaint case brought by Frontier Telephone of Rochester against Vonage, the New York State Public Service Commission, or NYPSC concluded that Vonage is a telephone corporation as defined by New York law and must obtain a Certificate of Public Convenience and Necessity, which represents the authorization of the PSC to provide telephone service in New York. The NYPSC will allow a forty-five day period in which Vonage can identify and seek waivers of any rules that it believes should not apply. Vonage will be required to provide 911 service in some form, and will be required to file a schedule of its rates. Currently, this decision applies only to Vonage. While this ruling applies only to Vonage and not to us, if we are subject to regulation by the NYPSC, we may become subject to liabilities and may incur expenses that adversely affect our results of operations.

In accordance with current industry practice, we do not collect state and federal telecommunications taxes, other than federal excise tax, or other telecommunications surcharges with respect to our Packet8 service. We do not collect Value Added Tax, or VAT, for services that we provide to customers in European Union, or EU, member countries. Future expansion of our Packet8 service, along with other aspects of our evolving business, may result in additional sales and other tax obligations. One or more states or foreign countries may seek to impose sales or other tax collection obligations on out-of-jurisdiction companies that provide telephone service. A successful assertion by one or more states or foreign countries that we should collect sales or other taxes on the sale of merchandise or services could result in substantial tax liabilities for past sales, decrease our ability to compete with traditional telephone companies, and could have a material adverse effect on our business, financial condition and operating results.

To date, the FCC has treated internet service providers as information service providers. Information service providers are currently exempt from federal and state regulations governing common carriers, including the obligation to pay access charges and contribute to the universal service fund. The FCC is currently examining the status of internet service providers and the services they provide. If the FCC were to determine that internet service providers, or the services they provide, are subject to FCC regulation, including the payment of access charges and contribution to the universal service funds, it could have a material adverse effect on our business, financial condition and operating results.

We market the Packet8 service to our residential customers as a secondary line service, not a primary line service. We do not encourage our residential customers to use Packet8 as their only telephone service, due to the fact that the IP dialtone service is only as reliable as a customer's underlying data service (which is not provided by us). We play a recorded message to any of our customers who dial 911 from phones connected to the Packet8 service instructing them to hang up and either dial their local police/fire department directly from the phone on the Packet8 service, or to dial 911 from a phone connected to the traditional telephone network. However, there may be a risk of liability or future regulatory action with respect to the inability of customers to access local 911 emergency services from a telephone connected to Packet8 service.

To date, the FCC has not classified any interstate VoIP telephony service provider as a "telecommunications carrier," preferring instead to permit the nascent industry to grow. Under current federal law, providers of "information services" do not incur obligations to participate in 911 and E911 emergency calling systems. However, there is no guarantee that the FCC's interpretations and the relevant federal law will not change in a manner that may increase our cost of doing business or otherwise adversely affect our ability to deliver the Packet8 service.

We are currently working on ways to deliver E911 services to our subscribers. However, many of the technical issues related to the mobility of IP endpoints may hamper the effectiveness of such a solution. Also, the rollout of E911 services to our subscribers will occur over time, and we cannot guarantee that 911 service will be available to all of our subscribers, or to subscribers outside of the United States. We are also developing ways to directly connect IP calls to emergency services, but there is no guarantee that these new technologies will work or that regulatory authorities will find these new methods acceptable for the handling of emergency call traffic.

The operation of our Packet8 service depends on our ability to avoid and mitigate any interruptions in service or reduced capacity for customers. Interruptions in service or performance problems, for whatever reason, could undermine confidence in our services and cause us to lose customers or make it more difficult to attract new ones. In addition, because our services may be critical to the businesses of our customers, any significant interruption in service could result in lost profits or other loss to our customers. Although we attempt to disclaim liability in our service agreements, a court might not enforce a limitation on liability, which could expose us to financial loss. In addition, we may provide our customers with guaranteed service level commitments. If we are unable to meet these guaranteed service level commitments as a result of service interruptions, we may be obligated to provide credits, generally in the form of free service for a short period of time, to our customers, which could negatively affect our operating results.

Consumer access to our websites directly affects our ability to sign new subscribers and the account management services we offer and thus affects our service revenues. We experience occasional system interruptions that make our websites unavailable or prevent us from efficiently fulfilling orders or providing services to consumers, which may reduce our service revenues and the attractiveness of our products and services. If we are unable to continually add additional software and hardware and upgrade our systems and network infrastructure in an effective manner, it could cause service interruption and adversely affect our ability to deliver the Packet8 service.

The failure of any equipment or facility on our network, or those of our partners or customers, could result in the interruption of customer service until necessary repairs are made or replacement equipment is installed. Network failures, delays and errors could also result from natural disasters, terrorist acts, power losses, security breaches and computer viruses. These failures, faults or errors could cause delays, service interruptions, expose us to customer liability or require expensive modifications that could have a material adverse effect on our business, financial condition and operating results.

We expect the volume of simultaneous calls to increase significantly as the Packet8 subscriber base grows. Our network hardware and software may not be able to accommodate this additional volume. If we fail to maintain an appropriate level of operating performance, or if our service is disrupted, our reputation could be hurt, we could lose customers and this could have a material adverse effect on our business, financial condition and results of operations.

A fundamental requirement for operating an internet-based, worldwide voice and video communications service and electronically billing our Packet8 customers is the secure transmission of confidential information over public networks. Although we have developed systems and processes that are designed to protect consumer information and prevent fraudulent credit card transactions and other security breaches, failure to mitigate such fraud or breaches may adversely affect our operating results. The law relating to the liability of providers of online payment services is currently unsettled. We rely on third party providers to process and guarantee payments made by Packet8 subscribers up to certain limits, and we may be unable to prevent our users from fraudulently receiving goods and services. Our liability risk will increase if a larger fraction of our Packet8 transactions involve fraudulent or disputed credit card transactions. Any costs we incur as a result of fraudulent transactions could harm our business. In addition, the functionality of our current billing system relies on certain third-party vendors delivering services. If these vendors are unable or unwilling to provide services, we will not be able to charge for our Packet8 services in a timely or scalable fashion.

Subscribers have obtained access to the Packet8 service without paying for monthly service and international toll calls by unlawfully using our authorization codes and submitting fraudulent credit card information. To date, such losses from unauthorized credit card transactions and theft of service have not been significant. We have implemented anti-fraud procedures in order to control losses relating to these practices, but these procedures may not be adequate to effectively limit all of our exposure in the future from fraud. If our procedures are not effective, consumer fraud and theft of service could significantly decrease our revenue and have a material adverse effect on our business, financial condition and operating results.

While we do not know of any technologies that are patented by others that we believe are necessary for us to provide our services, certain necessary technology may in fact be patented by other parties either now or in the future. If such technology were held under patent by another person, we would have to negotiate a license for the use of that certain technology. We may not be able to negotiate such a license at a price that is acceptable. The existence of such a patent, or our inability to negotiate a license for any such technology on acceptable terms, could force us to cease using such technology and offering products and services incorporating such technology.

Products as complex as those we offer frequently contain errors, defects, and functional limitations when first introduced or as new versions are released. We have in the past experienced such errors, defects or functional limitations. We sell products into markets that are extremely demanding of robust, reliable, fully functional products. Therefore, delivery of products with production defects or reliability, quality or compatibility problems could significantly delay or hinder market acceptance of such products, which could damage our credibility with our customers and adversely affect our ability to retain our existing customers and to attract new customers. Moreover, such errors, defects or functional limitations could cause problems, interruptions, delays or a cessation of sales to our customers. Alleviating such problems may require significant expenditures of capital and resources by us. Despite our testing, our suppliers or our customers may find errors, defects or functional limitations in new products after commencement of commercial production. This could result in additional development costs, loss of, or delays in, market acceptance, diversion of technical and other resources from our other development efforts, product repair or replacement costs, claims by our customers or others against us, or the loss of credibility with our current and prospective customers.

Sales to customers outside of the United States during the years ended March 31, 2004, 2003 and 2002 were 71%, 62%, and 61%, respectively, of total revenues. The following table illustrates our net revenues by geographic area. Revenues are attributed to countries based on the destination of shipment (in thousands):

                                                     Year Ended March 31,
                                             -------------------------------------
                                                2004         2003         2002
                                             -----------  -----------  -----------
United States.............................. $     2,728  $     4,218  $     5,777
Europe.....................................       1,309        2,657        4,126
Taiwan.....................................       4,163        1,569        2,026
Japan......................................         568          919        1,119
Other......................................         540        1,640        1,643
                                             -----------  -----------  -----------
                                            $     9,308  $    11,003  $    14,691
                                             ===========  ===========  ===========

                                                                 March 31,
                                                             --------------------
                                                               2004       2003
                                                             ---------  ---------
                          ASSETS
Current assets:
  Cash and cash equivalents................................ $  13,249  $   3,371
  Restricted cash..........................................       800         --
  Short term investments...................................        --        208
  Accounts receivable, net of allowance of
   $135 and $141, respectively.............................       608      1,290
  Inventory................................................        98        352
  Other current assets.....................................       645        595
                                                             ---------  ---------
          Total current assets.............................    15,400      5,816
Property and equipment, net................................       158        841
Other assets...............................................        13         48
                                                             ---------  ---------
                                                            $  15,571  $   6,705
                                                             =========  =========
           LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable......................................... $     854  $     652
  Accrued compensation.....................................       415        847
  Accrued warranty.........................................       194        428
  Deferred revenue.........................................       547        545
  Other accrued liabilities................................       559      1,174
  Income taxes payable.....................................       216        226
                                                             ---------  ---------
          Total current liabilities........................     2,785      3,872
                                                             ---------  ---------
Contingently redeemable common stock.......................        --        669
                                                             ---------  ---------
Commitments and contingencies (Note 10)
Stockholders' equity:
  Preferred stock, $0.001 par value:
     Authorized: 5,000,000 shares;
     Issued and outstanding: 1 share at March 31, 2004
      and March 31, 2003...................................        --         --
  Common stock, $0.001 par value:
     Authorized: 100,000,000 shares at March 31, 2004
      and March 31, 2003;
     Issued and outstanding: 38,315,769 shares
      at March 31, 2004 and 28,470,987 shares
      at March 31, 2003....................................        38         28
Additional paid-in capital.................................   164,469    150,827
Deferred compensation......................................        (3)       (12)
Accumulated deficit........................................  (151,718)  (148,679)
                                                             ---------  ---------
          Total stockholders' equity.......................    12,786      2,164
                                                             ---------  ---------
                                                            $  15,571  $   6,705
                                                             =========  =========

                                                              Year Ended March 31,
                                                         -------------------------------
                                                           2004       2003       2002
                                                         ---------  ---------  ---------
Product revenues....................................... $   2,679  $   5,739  $   6,044
License and service revenues...........................     6,629      5,264      8,647
                                                         ---------  ---------  ---------
          Total revenues...............................     9,308     11,003     14,691
                                                         ---------  ---------  ---------
Cost of product revenues...............................     1,768      2,781      2,626
Cost of license and service revenues (includes $1,164,.
   $0 and $0 of stock-based compensation expense)......     2,594      1,509        197
                                                         ---------  ---------  ---------
          Total cost of revenues.......................     4,362      4,290      2,823
                                                         ---------  ---------  ---------
          Gross profit.................................     4,946      6,713     11,868
                                                         ---------  ---------  ---------
Operating expenses:
  Research and development.............................     2,747      7,835     12,559
  Selling, general and administrative..................     6,060      7,441      8,560
  Amortization of intangibles..........................        --         --        763
  Restructuring and other charges......................        --      3,437         --
                                                         ---------  ---------  ---------
          Total operating expenses.....................     8,807     18,713     21,882
                                                         ---------  ---------  ---------
Loss from operations...................................    (3,861)   (12,000)   (10,014)
Other income, net......................................       822        597      1,029
Interest expense.......................................        --         --       (884)
                                                         ---------  ---------  ---------
Loss before provision for income taxes.................    (3,039)   (11,403)    (9,869)
Provision for income taxes.............................        --         --         15
                                                         ---------  ---------  ---------

Net loss before extraordinary gain.....................    (3,039)   (11,403)    (9,884)
Extraordinary gain on extinguishment of debt, net......        --         --        779
                                                         ---------  ---------  ---------
Net loss............................................... $  (3,039) $ (11,403) $  (9,105)
                                                         =========  =========  =========

Basic and diluted per share amounts:

  Net loss before extraordinary gain                    $   (0.09) $   (0.40) $   (0.36)
  Extraordinary gain on extinguishment of debt, net....        --         --       0.03
                                                         ---------  ---------  ---------
  Net loss............................................. $   (0.09) $   (0.40) $   (0.33)
                                                         =========  =========  =========

Basic and diluted shares outstanding...................    32,546     28,386     27,271
                                                         =========  =========  =========

                                                                           Notes                Accumulated
                                                                         Receivable               other
                                          Common Stock       Additional    from      Deferred   Comprehen-
                                       --------------------   Paid-in     Stock-    Compensa-      sive     Accumulated
                                         Shares     Amount    Capital     holders      tion        Loss      Deficit      Total
                                       -----------  -------  ----------  ---------  ----------  ----------  ----------  ---------
Balance at March 31, 2001............  26,680,726  $    27  $  150,015  $      (1) $     (174) $      (89) $ (128,146) $  21,632
Redemption of convertible
  subordinated debentures............   1,000,000       --         321         --          --          --         (25)       296
Issuance of common stock under
  stock plans........................     457,346       --         335         --          --          --          --        335
Issuance of common stock to debt
  holders to satisfy interest
  obligations........................      95,699       --          97         --          --          --          --         97
Forgiveness of note receivable.......      (5,556)      --          (1)         1          --          --          --         --
Deferred compensation related
  to stock options...................          --       --        (155)        --         144          --          --        (11)
Cumulative translation
  adjustment.........................          --       --          --         --          --         (10)         --         --
Net loss.............................          --       --          --         --          --          --      (9,105)        --
Total comprehensive loss.............          --       --          --         --          --          --          --     (9,115)
                                       -----------  -------  ----------  ---------  ----------  ----------  ----------  ---------
Balance at March 31, 2002............  28,228,215       27     150,612         --         (30)        (99)   (137,276)    13,234
Issuance of common stock under
  stock plans........................     242,772        1          88         --          --          --          --         89
Common stock no longer
  contingently redeemable............          --       --         144         --          --          --          --        144
Deferred compensation related
  to stock options...................          --       --         (17)        --          18          --          --          1
Cumulative translation
  adjustment.........................          --       --          --         --          --          99          --         --
Net loss.............................          --       --          --         --          --          --     (11,403)        --
Total comprehensive loss.............          --       --          --         --          --          --          --    (11,304)
                                       -----------  -------  ----------  ---------  ----------  ----------  ----------  ---------
Balance at March 31, 2003............  28,470,987       28     150,827         --         (12)         --    (148,679)     2,164
Issuance of common stock under
  stock plans........................   1,445,438        2       1,880         --          --          --          --      1,882
Sale of common stock and warrants in
  financing transactions.............   4,899,773        4       7,896         --          --          --          --      7,900
Issuance of common stock on exercise
  of warrants........................   3,499,571        4       1,895         --          --          --          --      1,899
Stock compensation charge............          --       --       1,308         --          --          --          --      1,308
Common stock no longer
  contingently redeemable............          --       --         669         --          --          --          --        669
Deferred compensation related
  to stock options...................          --       --          (6)        --           9          --          --          3
Net loss.............................          --       --          --         --          --          --      (3,039)        --
Total comprehensive loss.............          --       --          --         --          --          --          --     (3,039)
                                       -----------  -------  ----------  ---------  ----------  ----------  ----------  ---------
Balance at March 31, 2004............  38,315,769  $    38  $  164,469  $      --  $       (3) $       --  $ (151,718) $  12,786
                                       ===========  =======  ==========  =========  ==========  ==========  ==========  =========

                                                                             Year Ended March 31,
                                                                        -------------------------------
                                                                          2004       2003       2002
                                                                        ---------  ---------  ---------
Cash flows from operating activities:
  Net loss............................................................ $  (3,039) $ (11,403) $  (9,105)
  Adjustments to reconcile net loss to net cash used
    in operating activities:
    Depreciation and amortization.....................................       565      1,780      3,862
    Extraordinary gain due to debt redemption ........................        --         --       (779)
    Stock compensation expense........................................     1,311          1        (11)
    Gain on sale of investments, net..................................        --         --       (131)
    Non-cash portion of restructuring and other charges...............        --      2,273         --
    Gain on sale of Centile Europe SA.................................      (790)        --         --
    Other.............................................................       (69)       204         26
  Changes in assets and liabilities, net of effects
    of businesses sold:
      Accounts receivable.............................................       682        (71)     1,668
      Inventory.......................................................       325        298        501
      Other current and noncurrent assets.............................       (91)        64      1,607
      Accounts payable................................................       263        104       (839)
      Accrued compensation............................................      (258)      (249)      (610)
      Accrued warranty................................................      (234)        (1)       (47)
      Deferred revenue................................................         2     (1,876)    (3,482)
      Other accrued liabilities.......................................      (239)        93       (579)
      Income taxes payable............................................       (10)       (54)       (26)
                                                                        ---------  ---------  ---------
         Net cash used in operating activities........................    (1,582)    (8,837)    (7,945)
                                                                        ---------  ---------  ---------
Cash flows from investing activities:
  Acquisitions of property and equipment..............................      (106)      (137)      (172)
  Proceeds from sale of investments...................................        --         --        543
  Proceeds from the sale of equipment.................................        79         42        116
  Restricted cash (increase) decrease.................................      (800)        --         --
  Proceeds from sale of Centile Europe SA, net........................       398         --         --
  Short-term investments--trading activity, net.......................       208       (208)        --
                                                                        ---------  ---------  ---------
         Net cash (used in) provided by investing activities..........      (221)      (303)       487
                                                                        ---------  ---------  ---------
Cash flows from financing activities:
  Debt repayments.....................................................        --         --     (4,581)
  Proceeds from equity financing transactions, net....................     9,799         --         --
  Proceeds from issuance of common stock under employee benefit plans.     1,882         89        335
                                                                        ---------  ---------  ---------
         Net cash provided by (used in) financing activities..........    11,681         89     (4,246)
                                                                        ---------  ---------  ---------
Net decrease in cash and cash equivalents.............................     9,878     (9,051)   (11,704)
Cash and cash equivalents, beginning of year..........................     3,371     12,422     24,126
                                                                        ---------  ---------  ---------
Cash and cash equivalents, end of year................................ $  13,249  $   3,371  $  12,422
                                                                        =========  =========  =========
Supplemental and non-cash disclosures:
  Income taxes paid................................................... $      --  $      36  $      12
                                                                        =========  =========  =========
  Interest paid....................................................... $      --  $      --  $     204
                                                                        =========  =========  =========
  Common stock issued to satisfy interest obligations................. $      --  $      --  $      97
                                                                        =========  =========  =========
   Issuance of shares and repricing of warrants in
     connection with the debt extinguishment.......................... $      --  $      --  $   1,109
                                                                        =========  =========  =========

                                                                      March 31,
                                                                --------------------
                                                                  2004       2003
                                                                ---------  ---------
                                                                  (in thousands)
  Raw materials and work-in-process...........................        57        147
  Finished goods..............................................        41        205
                                                                ---------  ---------
                                                               $      98  $     352
                                                                =========  =========

                                                                     March 31,
                                                                --------------------
                                                                  2004       2003
                                                                ---------  ---------
                                                                  (in thousands)
  Machinery and computer equipment............................ $   4,233  $   7,378
  Furniture and fixtures......................................       693        847
  Licensed software...........................................     2,613      4,142
  Leasehold improvements......................................       903        914
                                                                ---------  ---------
                                                                   8,442     13,281
Less: accumulated depreciation and amortization...............    (8,284)   (12,440)
                                                                ---------  ---------
                                                               $     158  $     841
                                                                =========  =========

                                                     Year Ended March 31,
                                             -------------------------------------
                                                2004         2003         2002
                                             -----------  -----------  -----------
Net loss:                                   $    (3,039) $   (11,403) $    (9,105)
Add: Stock-based compensation expense
     included in reported net income.......       1,311            1          (11)
Deduct: Total stock-based compensation
        determined pursuant to SFAS No.123.      (2,113)      (4,446)      (9,483)
                                             -----------  -----------  -----------
Pro forma net loss (basic and diluted)      $    (3,841) $   (15,848) $   (18,599)
                                             ===========  ===========  ===========
As reported net loss per share............. $     (0.09) $     (0.40) $     (0.33)
Pro forma net loss per share............... $     (0.12) $     (0.56) $     (0.68)

                                                          Year Ended March 31,
                                                   ---------------------------------
                                                      2004        2003       2002
                                                   -----------  ---------  ---------
Net loss......................................... $    (3,039) $ (11,403) $  (9,105)
Accretion of dividends on contingently
  redeemable common stock........................          --         --        (25)
                                                   -----------  ---------  ---------
Net loss available to common
  stockholders................................... $    (3,039) $ (11,403) $  (9,130)
                                                   ===========  =========  =========
As reported net loss per share                    $     (0.09) $   (0.40) $   (0.33)

                                                          Year Ended March 31,
                                                   ---------------------------------
                                                      2004        2003       2002
                                                   -----------  ---------  ---------
Common stock options.............................       6,213      7,615      9,900
Warrants.........................................       2,319         --        701
                                                   -----------  ---------  ---------
                                                        8,532      7,615     10,601
                                                   ===========  =========  =========

                                  Total       Cash      Non-Cash    Liability at     Cash    Liability at
                                 Charges    Payments    Charges    March 31, 2003  Payments  March 31, 2004
                                ----------  ---------  ----------  --------------  --------  -------------
Restructuring Charges:
 Severance.................... $    1,177  $  (1,002) $       --  $          175  $   (175) $          --
 Facility related.............        508       (161)       (273)             74       (33)            41
                                ----------  ---------  ----------  --------------  --------  -------------
   Total restructuring charges      1,685     (1,163)       (273)            249      (208)            41
                                ----------  ---------  ----------  --------------  --------  -------------
Asset Impairments:
 Fixed Assets.................        212         --        (212)             --        --             --
 Goodwill.....................      1,539         --      (1,539)             --        --             --
                                ----------  ---------  ----------  --------------  --------  -------------
   Total impairment charges...      1,751         --      (1,751)             --        --             --
                                ----------  ---------  ----------  --------------  --------  -------------
   Total restructuring and
     impairment charges....... $    3,436  $  (1,163) $   (2,024) $          249  $   (208) $          41
                                ==========  =========  ==========  ==============  ========  =============

                                                        Year Ended March 31,
                                                   ---------------------------------
                                                      2004        2003       2002
                                                   -----------  ---------  ---------
Reported net loss ............................... $    (3,039) $ (11,403) $  (9,105)
Add back: Goodwill and intangibles amortization..          --         --        763
                                                   -----------  ---------  ---------
Adjusted net loss................................ $    (3,039) $ (11,403) $  (8,342)
                                                   ===========  =========  =========
Basic and diluted earnings per share:
  Reported net loss per share.................... $     (0.09) $   (0.40) $   (0.33)
  Goodwill and intangibles amortization..........          --         --       0.03
                                                   -----------  ---------  ---------
Adjusted net loss per share...................... $     (0.09) $   (0.40) $   (0.30)
                                                   ===========  =========  =========

                                                         Year Ended March 31,
                                                   ---------------------------------
                                                      2004        2003       2002
                                                   -----------  ---------  ---------
Current:
  Federal........................................ $        --  $      --  $     (10)
  State..........................................          --         --         --
  Foreign........................................          --         --         25
                                                   -----------  ---------  ---------
                                                  $        --  $      --  $      15
                                                   ===========  =========  =========

                                                                     March 31,
                                                                --------------------
                                                                  2004       2003
                                                                ---------  ---------
Research and development credit carryforwards................. $   5,667  $   5,459
Net operating loss carryforwards..............................    31,678     41,543
Inventory valuation...........................................       457        419
Reserves and allowances.......................................       490        349
Fixed assets and intangibles..................................    15,898         --
Other.........................................................        --      2,806
                                                                ---------  ---------
                                                                  54,190     50,576
Valuation allowance...........................................   (54,190)   (50,576)
                                                                ---------  ---------
          Total............................................... $      --  $      --
                                                                =========  =========

                                                          Year Ended March 31,
                                                   ---------------------------------
                                                      2004        2003       2002
                                                   -----------  ---------  ---------
Benefit at statutory rate........................ $    (1,033) $  (3,877) $  (3,090)
State income taxes (benefit) before valuation
  allowance, net of federal effect...............        (177)      (684)       229
Non-deductible goodwill..........................          --        523        259
Discount on issuance of Common Stock.............          --         --        558
Research and development credits.................        (208)        --       (216)
Change in valuation allowance....................         904      4,030      2,302
Non-deductible compensation......................         522         --         (4)
Foreign rate differences.........................          (8)        --        (30)
Other............................................          --          8          7
                                                   -----------  ---------  ---------
                                                  $        --  $      --  $      15
                                                   ===========  =========  =========

Balance at April 1, 2003........... $     428
Accruals for warranties............        88
Settlements........................       (12)
Changes in estimates...............      (310)
                                     ---------
Balance at March 31, 2004.......... $     194
                                     =========

 YEAR ENDING MARCH 31,
 ---------------------
2005..........................................................       216
2006..........................................................         2
                                                                ---------
          Total minimum payments.............................. $     218
                                                                =========

                                                                   Weighted
                                                        Shares      Average
                                           Shares     Subject to   Exercise
                                          Available    Options       Price
                                          for Grant  Outstanding   Per Share
                                         ----------- ------------  ---------
Balance at March 31, 2001...............  2,906,198    7,731,891  $    5.24
Change in options available for grant...    (23,898)          --         --
Granted................................. (4,901,073)   4,901,073       1.09
Exercised...............................         --      (40,757)      0.01
Returned to plan........................  2,692,381   (2,692,381)      6.18
                                         ----------- ------------
Balance at March 31, 2002...............    673,608    9,899,826       2.95
Change in options available for grant...  1,370,187           --         --
Granted.................................   (857,800)     857,800       0.48
Exercised...............................         --      (53,040)      0.37
Returned to plan........................  3,089,997   (3,089,997)      3.05
                                         ----------- ------------
Balance at March 31, 2003...............  4,275,992    7,614,589       2.65
Change in options available for grant...                                 --
Granted................................. (2,420,000)   2,420,000       2.12
Exercised...............................         --   (1,445,438)      1.30
Returned to plan........................  2,375,843   (2,375,843)      2.64
                                         ----------- ------------
Balance at March 31, 2004...............  4,231,835    6,213,308  $    2.77
                                         =========== ============

                     Options Outstanding                 Options Exercisable
                    ----------------------------------  -------------------------
                                Weighted    Weighted                   Weighted
                                 Average    Average                     Average
                                Exercise   Remaining                   Exercise
 Range of Exercise                Price   Contractual                    Price
      Prices          Shares    Per Share Life (Years)     Shares      Per Share
- ------------------- ----------  --------- ------------  ------------  -----------
$ 0.01 to $ 3.16... 4,653,134  $    1.63          7.8     2,090,208  $      1.71
$ 3.16 to $ 6.32... 1,061,268       3.94          7.1       722,702         3.77
$ 6.32 to $ 9.49...   174,406       7.44          3.4       165,561         7.41
$ 9.49 to $12.65...   266,000      11.50          4.5       255,287        11.48
$12.65 to $15.81...    23,500      14.59          6.2        22,602        14.59
$15.81 to $28.46...    35,000      21.19          4.5        35,000        21.19
                    ----------                          ------------
                    6,213,308                             3,291,360
                    ==========                          ============

                                                             Weighted
                                                  Shares      Average
                                      Shares    Subject to   Exercise
                                     Available    Options      Price
                                     for Grant  Outstanding  Per Share
                                    ----------- -----------  ---------

Balance at March 31, 2001..........  1,828,000   3,172,000  $    0.50
Granted............................   (136,000)    136,000       0.50
Returned to plan...................    264,834    (264,834)      0.50
                                    ----------- -----------
Balance at March 31, 2002..........  1,956,834   3,043,166       0.50
Granted............................   (617,000)    617,000       0.50
Returned to plan...................  1,945,490  (1,945,490)      0.50
                                    ----------- -----------
Balance at March 31, 2003..........  3,285,324   1,714,676       0.50
Returned to plan.................... 1,714,676  (1,714,676) $    0.50
                                    ----------- -----------
Balance at March 31, 2004..........  5,000,000          --  $     --
                                    =========== ===========

                                                             Weighted
                                                  Shares      Average
                                      Shares    Subject to   Exercise
                                     Available    Options      Price
                                     for Grant  Outstanding  Per Share
                                    ----------- -----------  ---------

Balance at March 31, 2001..........    393,000   4,107,000 $     0.43
Granted............................   (846,000)    846,000       0.43
Exercised..........................         --          --         --
Returned to plan...................  2,688,000  (2,688,000)      0.43
                                    ----------- -----------
Balance at March 31, 2002..........  2,235,000   2,265,000       0.43
Granted............................    (96,000)     96,000       0.43
Exercised..........................         --          --         --
Returned to plan...................    459,128    (459,128)      0.43
                                    ----------- -----------
Balance at March 31, 2003..........  2,598,128   1,901,872       0.43
Returned to plan...................  1,901,872  (1,901,872) $    0.43
                                    ----------- -----------
Balance at March 31, 2004..........  4,500,000          --  $      --
                                    =========== ===========

                                                     Year Ended March 31,
                                             -------------------------------------
                                                2004         2003         2002
                                             -----------  -----------  -----------
Net loss:
  As reported.............................. $    (3,039) $   (11,403) $    (9,105)
  Pro forma*............................... $    (3,841) $   (15,869) $   (18,588)
Basic and diluted loss per share:
  As reported.............................. $     (0.09) $     (0.40) $     (0.33)
  Pro forma................................ $     (0.12) $     (0.56) $     (0.68)

                                                     Year Ended March 31,
                                             -------------------------------------
                                                2004         2003         2002
                                             -----------  -----------  -----------
Expected volatility........................         174%         162%         135%
Expected dividend yield....................          --           --           --
Risk-free interest rate....................  2.5% to 3.6% 2.8% to 4.7% 3.5% to 4.9%
Weighted average expected option term......   4.9 years    5.1 years    5.1 years
Weighted average fair value of options
  granted.................................. $      2.02  $      0.45  $      0.96

                                               Year Ended March 31,
                                             ------------------------
                                                2003         2002
                                             -----------  -----------
Expected volatility........................          81%          67%
Expected dividend yield....................         0.0%         0.0%
Risk-free interest rate....................  2.8% to 4.8% 4.1% to 4.8%
Weighted average expected option term......   5.16 years   5.25 years
Netergy weighted average fair value
  of options granted....................... $      0.34  $      0.31
Centile weighted average fair value
  of options granted....................... $      0.29  $      0.26

                                               Year Ended March 31,
                                             ------------------------
                                                2003         2002
                                             -----------  -----------
Expected volatility........................         162%         135%
Expected dividend yield....................        0.0%         0.0%
Risk-free interest rate....................        1.53%        3.82%
Weighted average expected rights term......   1.25 years   1.25 years
Weighted average fair value of rights
  granted.................................. $      0.30  $      1.16

                                                     Year Ended March 31,
                                             -------------------------------------
                                                2004         2003         2002
                                             -----------  -----------  -----------
Revenues:
  Semiconductors and related software...... $     7,730  $     9,719  $    13,350
  Hosted iPBX Solutions....................         272          861          260
  Packet8, videophones/equipment and other.       1,306          423        1,081
                                             -----------  -----------  -----------
          Total revenues................... $     9,308  $    11,003  $    14,691
                                             ===========  ===========  ===========

                                                     Year Ended March 31,
                                             -------------------------------------
                                                2004         2003         2002
                                             -----------  -----------  -----------
United States.............................. $     2,728  $     4,218  $     5,777
Europe.....................................       1,309        2,657        4,126
Taiwan.....................................       4,163        1,569        2,026
Japan......................................         568          919        1,119
Other......................................         540        1,640        1,643
                                             -----------  -----------  -----------
                                            $     9,308  $    11,003  $    14,691
                                             ===========  ===========  ===========

                                                                     March 31,
                                                                --------------------
                                                                  2004       2003
                                                                ---------  ---------
                                                                  (in thousands)

United States................................................. $     154  $     645
France........................................................         4        244
                                                                ---------  ---------
                                                               $     158  $     889
                                                                =========  =========

                                      Balance   Additions
                                        at      Charged to             Balance
                                     Beginning  Costs and              at End
Description                           of Year   Expenses   Deductions  of Year
- -----------------------------------  ---------  ---------  ---------  ---------
Allowance for doubtful accounts:
 Year ended March 31, 2002......... $     389  $       0  $     103  $     286
 Year ended March 31, 2003.........       286         20        165        141
 Year ended March 31, 2004.........       141          0          6        135

                                                                        QUARTER ENDED
                                        ------------------------------------------------------------------------------
                                        March 31, Dec. 31,  Sept. 30, June 30,  March 31, Dec. 31,  Sept. 30, June 30,
                                          2004      2003      2003      2003      2003      2002      2002      2002
                                        --------  --------  --------  --------  --------  --------  --------  --------
Total revenues........................ $  1,970  $  3,289  $  2,426  $  1,623  $  2,907  $  2,386  $  2,442  $  3,268
Cost of revenues......................    1,099     1,857       652       754     1,692       755       982       861
                                        --------  --------  --------  --------  --------  --------  --------  --------
Gross profit..........................      871     1,432     1,774       869     1,215     1,631     1,460     2,407
                                        --------  --------  --------  --------  --------  --------  --------  --------
Operating expenses:
  Research and development............      525       522       656     1,044     1,540     1,825     2,078     2,392
  Selling, general, and
    administrative....................    1,893     1,672     1,229     1,266     1,383     2,023     1,852     2,183
  Restructuring and other charges.....       --        --         --       --     2,097     1,340         --       --
                                        --------  --------  --------  --------  --------  --------  --------  --------
        Total operating expenses......    2,418     2,194     1,885     2,310     5,020     5,188     3,930     4,575
                                        --------  --------  --------  --------  --------  --------  --------  --------
Loss from operations..................   (1,547)     (762)     (111)   (1,441)   (3,805)   (3,557)   (2,470)   (2,168)
Other income (expense), net...........       15         8       858       (59)       27        16       511        43
                                        --------  --------  --------  --------  --------  --------  --------  --------
Loss before income taxes..............   (1,532)     (754)      747    (1,500)   (3,778)   (3,541)   (1,959)   (2,125)
Provision for income taxes............       --        --        --        --        --        --        --        --
                                        --------  --------  --------  --------  --------  --------  --------  --------
Net income (loss)..................... $ (1,532)     (754)      747    (1,500)   (3,778)   (3,541)   (1,959)   (2,125)
                                        ========  ========  ========  ========  ========  ========  ========  ========
Net income (loss) per share:
  Basic............................... $  (0.04) $  (0.02) $   0.02  $  (0.05) $  (0.13) $  (0.12) $  (0.07) $  (0.08)
  Diluted.............................    (0.04)    (0.02)     0.02     (0.05)    (0.13)    (0.12)    (0.07)    (0.08)
Shares used in per share calculations:
  Basic...............................   38,105    33,549    30,069    28,474    28,460    28,452    28,387    28,246
  Diluted.............................   38,105    33,549    31,213    28,474    28,460    28,452    28,387    28,246