2002 News Releases

"FOR IMMEDIATE RELEASE"

MOSAID Announces Second Quarter Results for Fiscal Year 2003

OTTAWA, Ontario, Canada – November 21, 2002 – MOSAID Technologies Inc. (TSE:MSD) today announced financial results for the second quarter of fiscal year 2003 ended October 25, 2002.

Revenues for the second quarter of fiscal year 2003 were $7,934,000 compared to $11,129,000 in the second quarter of fiscal year 2002. Net loss for the quarter was $3,438,000 ($0.34 per diluted share), compared to a net loss of $19,374,000 ($1.89 per diluted share) a year ago.

Revenues for the year to date were $15,585,000 compared to revenues of $32,903,000 reported for the same period last year. Net loss for the first six months of fiscal 2003 was $8,805,000 ($0.86 per diluted share), compared to a net loss of $16,955,000 ($1.70 per diluted share) reported in the first half of fiscal 2002. The year to date loss for fiscal 2003 includes a restructuring charge of $783,000. For the first six months of fiscal 2002, the Company had also recognized a restructuring charge of $11,017,000 and an income tax expense of $3,093,000 related to the write-down of future income tax assets in that same period.

"We believe that to be successful, we must consistently deliver compelling new products to our customers," said George Cwynar, President and Chief Executive Officer. "And while the memory and networking markets remain depressed, our development programs in all Divisions are performing well. During the quarter, the Systems Division shipped the first units of its latest MS4205ex tester, and the Semiconductor Division launched two new products in its MOSAID Class-IC ® family of network search engines, and began sampling the 18Mbit product. Further, the Intellectual Property Division added another 38 patent applications, and placed another two companies on notice for patent infringement."

"As with the product markets we serve, the financial markets are depressed, but MOSAID is well capitalized. Our expense levels are prudently managed and consistent with our mission to deliver a breadth of new products to the market place," said Richard Boadway, Senior Vice President, Finance and Administration and Chief Financial Officer. "At the end of the second quarter the Company's cash balance and short-term marketable securities were $49.7 million compared with $52.9 million in the first quarter of fiscal 2003."

During the quarter, MOSAID sold its stake in ATMOS Corporation to MoSys for net cash proceeds of $3.2 million, recognizing a loss of $426,000 on the disposal of the investment. In addition, following completion of a recent financing by Acuid Corporation Ltd., MOSAID reassessed the value of its ownership in the Company and recorded a $518,000 write-down of that investment.

On October 9, 2002, MOSAID initiated a Normal Course Issuer Bid to repurchase up to 300,000 of its Common Shares. By the close of the second quarter, the Company had purchased 55,600 shares at an average price of $5.71 per share.

Operating Highlights

· Twelve Companies Now on Notice

In the Intellectual Property Division, MOSAID placed two more companies on notice for patent infringement bringing the total on notice to twelve. MOSAID is in active licensing discussions with several of these companies. At the end of the second quarter, MOSAID had 422 issued or pending patents, representing an increase of 38 over the first quarter of fiscal 2003.

Following the close of the quarter, a Scheduling Conference for the Samsung litigation was held to review the progress in the fact discovery phase of exchanging documents and interrogatories. Timelines were established for the beginning of the patent claims construction process and for definitive responses from Samsung Electronics Co., Ltd. on certain of MOSAID's information requests.

· Launched New Products in MOSAID Class-IC® Family

During the second quarter, the Semiconductor Division announced two additions to the MOSAID Class-IC® family of high performance network search engines. The DC18288 is available and sampling with customers. This 18Mbit product is pin compatible with the DC9288, and provides an ultra-low power, cost effective solution, with a seamless upgrade path for system developers who require higher densities. The DC9000 is a new 9Mbit network search engine offering glue-less connectivity to industry leading network processors. It is the third product in the MOSAID Class-IC® family and will be available in the first half of calendar year 2003.

In September, the Company also achieved production readiness, as previously forecast, for its 9Mbit MOSAID Class-IC® DC9288 network search engine. The 9Mbit has been shipped to customers, including an OEM that has the potential to be a significant volume driver for its development of prototype networking equipment.

· First Shipments of MS4205ex

During the quarter, the Systems Division shipped the first units of its next generation test system, the MS4205ex. Introduced to the marketplace at Semicon West, California, in July 2002, this fifth generation tester is designed to equip customers with the ability to test the latest in high speed memories such as DDR-II SDRAM and QDR SRAM, as well as current DDR, SDRAM and flash memories.

Conference Call and Webcast
Management will hold a conference call and webcast on Thursday, November 21 at 10:00 a.m. (EST). Participants wishing to access the conference call should dial 1-888-881-4892. The conference call will also be webcast live at www.mosaid.com and www.newswire.ca, and subsequently archived on MOSAID's web site. A rebroadcast of the conference call will be available until midnight on Thursday, November 29, 2002. To access the rebroadcast, please dial 1-877-289-8525 and enter the passcode 217465#.

About MOSAID
MOSAID Technologies Incorporated is an independent semiconductor company operating through three divisions:

• Semiconductor – a fabless provider of networking chips
• Intellectual Property – a licensor of intellectual property to semiconductor manufacturers worldwide
• Systems – the leading supplier of engineering memory test and analysis systems to memory manufacturers, foundries and fabless chip companies.

Founded in 1975, MOSAID is based in Ottawa, Ontario, Canada, with offices in Santa Clara, California; Newcastle upon Tyne, U.K; and Tokyo, Japan. For more information, visit the Company’s web site at www.mosaid.com.

Forward Looking Information
This document may contain forward-looking statements relating to the Company’s operations or to the environment in which the Company operates. Such statements are based on current expectations that are subject to a variety of risks and uncertainties that are difficult to predict and/or beyond MOSAID’s control. Actual results may differ materially from those expressed in any forward-looking statements, due to factors such as customer demand and timing of purchasing decisions, product and business mix, competitive products, pricing pressures as well as general economic and industry conditions. MOSAID assumes no obligation to update these forward-looking statements, or to update the reasons why actual results could differ from those reflected in any forward-looking statements. Additional information identifying risks and uncertainties is contained in other public filings with the Ontario Securities Commission.

For more information, please contact:

Investor Inquiries Heidi Vincent Director, Investor Relations & Communications 613-599-9539 x1205 vincent@mosaid.com

Media Inquiries Sara Haskill Communications Specialist 613-599-9539 x1228 haskill@mosaid.com

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

The following discussion and analysis should be read in conjunction with the unaudited Consolidated Financial Statements of MOSAID Technologies Incorporated ("MOSAID" or "the Company") for the period ended October 25, 2002 appearing elsewhere in this report and with the audited annual Consolidated Financial Statements and the Management's Discussion and Analysis (MD&A) included in the Company's most recent Annual Report for the fiscal year ended April 26, 2002. All dollar amounts are in Canadian dollars, except where otherwise indicated.

Overview

The Company reported revenues of $7.9 million for the 13 weeks ended October 25, 2002 ("Q2 fiscal 2003"), representing a decrease of 29% from revenues of $11.1 million for the 13 weeks ended October 26, 2001 ("Q2 fiscal 2002"). The net loss for Q2 fiscal 2003 was $3.4 million or $0.34 per diluted share, compared to a net loss of $19.4 million or $1.89 per diluted share for Q2 fiscal 2002. Revenues of $15.6 million for the 26 weeks ended October 25, 2002 represent a decrease of 53% from revenues of $32.9 million for the same period a year ago. The net loss for the 26 weeks ended October 25, 2002 was $8.8 million or $0.86 per diluted share, compared to a net loss of $17.0 million or $1.70 per diluted share for the same period a year ago.

Results of Operations

The following table shows the percentage of revenues represented by certain items in the Company's consolidated statement of earnings for the fiscal periods indicated.

The Semiconductor Division showed a net loss of $4.9 million for the second quarter of fiscal 2003, compared to a net loss of $16.8 million for the same period last year. For the 26 weeks ended October 25, 2002, the net loss was $9.4 million, compared to $23.4 million for the same period last year. In both cases, the net loss for the respective period for fiscal 2002 was higher than for the current year mainly due to the restructuring charge recorded in fiscal 2002. Without the effect of the Division's $10.3 million restructuring charge, the loss would have been $6.5 million for Q2 fiscal 2002 and $13.1 million for the first half of fiscal 2002.

The Intellectual Property ("IP") Division's net profit of $4.6 million for Q2 fiscal 2003 was the same as the $4.6 million net profit for the same quarter in the previous year. The net profit of $7.9 million for the 26 weeks ended October 25, 2002 was 48% lower than the net profit of $15.3 million for the same period last year. The decrease is mainly due to the decrease in license revenues from Q1 fiscal 2002 to Q1 fiscal 2003, offset by a decrease in sales and marketing expenses.

A net loss of $2.3 million for the Systems Division for the 13 weeks ended October 25, 2002 compares to a net loss of $4.7 million for the same period last year. The decrease is the result of a decrease in spending quarter over quarter, higher margins associated with the MS4205 product line and the $759,000 restructuring charge recorded in Q2 fiscal 2002. For the 26 weeks ended October 25, 2002, the net loss was $6.7 million, compared to a net loss of $5.7 million for the same period a year ago.

In Q2 fiscal 2003, the Semiconductor Division generated revenues from design services and product sales. Revenues in the Semiconductor Division may vary significantly from period to period, depending on chip volumes, pricing and the extent of design services.

In the IP Division, patent licensing revenues decreased $1.6 million in Q2 fiscal 2003 from Q2 fiscal 2002 and $11.1 million in the 26 weeks ended October 25, 2002 from the same period last year. Revenues from the IP Division can vary significantly from period to period depending on licensing fees and contracted payment schedules.

Systems Division revenues for Q2 fiscal 2003 were 8% lower than revenues for the same quarter in the previous year. Revenues for the 26 weeks ended October 25, 2002 were 47% lower than revenues for the same period last year. This is mainly due to the deterioration of market conditions, which resulted in a significant reduction in capital expenditures by memory manufacturers.

The change in the revenue split, with proportionately more revenues coming from the Systems Division, reflects the decline in revenues from the IP Division as payments from existing licensees decreased.

Interest income in Q2 fiscal 2003 has decreased 48% from interest income in Q2 fiscal 2002, primarily as a result of the decrease in interest rates and reduced cash balances. Interest income in the first half of fiscal 2003 decreased 42%, compared to interest income for the same period last year.

The approximate geographic breakdown of revenues from operations is as follows:

The Company markets its products and services globally. The percentage decrease in the Japanese market is due to the decrease in patent licensing revenues. The increase in the percentage of sales from the United States is driven by the sales mix in the Systems Division, which can vary from quarter to quarter.

This category comprises the chip product costs and labour, materials and subcontracting costs to assemble, integrate, test and service the memory test systems.

For Q2 fiscal 2003, chip costs were negligible. Labour and materials have decreased in Q2 fiscal 2003 as a percentage of Systems Division revenues and increased as a percentage of total revenues as compared to the same period last year. The decrease as a percentage of Systems Division revenues is due to a provision for obsolete inventory recorded in Q2 fiscal 2002. Without the provision for obsolete inventory, labour and materials as a percentage of Systems Division revenues for Q2 fiscal 2002 would have been 60%. The increase as a percentage of total revenues is primarily due to the decrease in revenues from the IP Division.

For the 26 weeks ended October 25, 2002, labour and materials have increased as a percentage of Systems Division revenues and of total revenues. This is due to an increase in the provision for obsolete inventory in Q1 fiscal 2003, overall lower margins on the MS4205 product line and the downturn in the market for test equipment. Without the provision for obsolete inventory in Q1 fiscal 2003, labour and materials as a percentage of Systems Division revenues would have been 60%.

The decrease in labour and materials in absolute amounts, from Q2 fiscal 2002 to Q2 fiscal 2003 and from the first half of fiscal 2002 to the first half of fiscal 2003, is mainly due to the decrease in the number of test systems produced and sold in fiscal 2003 as a result of the downturn in the memory market.

The decrease in research and development expenditures in absolute amounts, for the current quarter and for the first half of fiscal 2003 as compared to the same periods last year, is mainly due to the reduction in the number of employees and projects since the restructurings that were undertaken in Q2 fiscal 2002 and Q1 fiscal 2003.

For Q2 fiscal 2003, research and development, as a percentage of total revenues, decreased from Q2 fiscal 2002. This is again due to the reduced number of employees and projects since the restructuring. For the 26 weeks ended October 25, 2002, research and development increased as a percentage of total revenues as compared to the same period last year, mainly as a result of the significant decrease in revenues from the IP Division.

Investment tax credits of $500,000 in Q2 fiscal 2003 compared to $531,000 in Q2 fiscal 2002 were applied to reduce current R&D expenses. The decrease in investment tax credits results from lower labour costs due to decreased R&D effort since the first half of fiscal 2002.

The decrease in S&M expenses in absolute terms for the current quarter and for the first half of fiscal 2003 as compared to the same periods last year, is primarily related to a decrease in commissions in the IP Division. Commissions were paid to an agent until the current quarter when the relationship was terminated and an agreement was reached regarding the final payment of commissions, resulting in the reversal of a portion of the commissions accrued.

The decrease in S&M expenses as a percentage of revenues is mainly due to the reversal of the IP Licensing commission accrual, as discussed above.

The decrease in G&A expenses in absolute amounts is driven by decreases in professional fees and subcontract expenses as the Company makes efforts to contain costs as well as reduced labour costs resulting from the restructuring in fiscal 2002 and 2003. G&A expenses have increased as a percentage of revenues due to the decline in revenues in the IP and Systems Divisions.

Bad Debt
The Company had a recovery of bad debts of $173,000 during Q2 fiscal 2003, compared with a recovery of $14,000 in Q2 fiscal 2002. For the 26 weeks ended October 25, 2002, the Company had a recovery of bad debts of $160,000, compared with a recovery of $48,000 in the same period last year. Persistent efforts to collect receivables in a declining market resulted in the collection of balances that were doubtful.

Loss on write-down of investment in long-term investment
During the quarter, the Company recorded a $518,000 write-down, from $1.8 million to $1.3 million, of its portfolio investment in Acuid Corporation Limited. The write-down reflects the Company's assessment that an other than temporary decline in the carrying value of the investment has occurred following the completion of a recent financing by Acuid.

Loss on disposal of long-term investment
During Q2 fiscal 2003, the Company announced the sale of its investment in ATMOS Corporation to MoSys for net proceeds of $3.2 million. A loss of $426,000 resulted from the disposal of the investment, which had a book value of $3.6 million. The loss includes an estimate by management of escrowed funds that will not be recovered.

Income Taxes
Income tax expense of $155,000 for Q2 fiscal 2003 and $291,000 for the 26 weeks ended October 25, 2002 was recorded to reflect the tax effect of ITC's recorded at an effective tax rate of 32%. In comparison, a tax expense of $3.1 million for Q2 fiscal 2002 and $4.4 million for the first half of fiscal 2002 was reported, which resulted from a write-down of future income tax assets due to announced reductions in corporate tax rates and deferred profitability.

Restructuring Costs
During the first quarter of fiscal 2003, the Company announced a reduction in its workforce by 15 employees, mainly in the Systems Division, in light of continuing uncertainty in the market for memory test equipment and ongoing divisional and Company losses. A restructuring charge of $783,000 was recorded primarily for severance costs and other related payments due to the terminations.

Liquidity and Capital Resources
During the 26 weeks ended October 25, 2002, the Company generated a negative cashflow of $5.3 million from operations, as compared to a net cash inflow from operations of $8.4 million in the same period last year. The decrease is mainly due to the change in non-cash working capital items. The reduction in accounts receivable in the first half of fiscal 2002 was much greater than the reduction in accounts receivable in the first half of fiscal 2003.

Cash and short term marketable securities
As of October 25, 2002, the Company had cash and short-term marketable securities of $49.7 million, compared to $53.4 million as of the end of fiscal 2002. Working capital decreased to $48.9 million at the end of Q2 fiscal 2003 from $53.6 million at the end of fiscal 2002. The decrease is mainly due to the use of cash and reduced accounts receivable during the quarter. Management believes that the Company is well capitalized with sufficient working capital to fund ongoing operations.

During Q2 fiscal 2003, the Company began a normal course issuer bid, as approved by the Toronto Stock Exchange. The Company has repurchased 55,600 common shares in accordance with the normal course issuer bid for a total cost of approximately $317,000. Of this amount paid, $141,000 has been credited directly to contributed surplus, representing a discount paid on redemption of common shares, with the balance charged to share capital.

A $10,000,000 bank credit facility is available to cover the fluctuations in cash requirements but was not used during the quarter. The available operating line is calculated using a formula based on accounts receivable.

Accounts receivable
Accounts receivable decreased to $2.9 million at the end of Q2 fiscal 2003, from $5.0 million at the end of fiscal 2002, due to a reduction in revenues between the first half of fiscal 2003 and the last half of fiscal 2002 and due to timing of collections. The Company employs financial instruments (principally forward exchange contracts) in the management of its foreign currency exposures, and has committed to sell, by November 26, 2002, US $2,000,000 at an average rate of 1.5864.

Inventory
Inventory levels decreased to $3.7 million at the end of Q2 fiscal 2003, from $4.5 million at the end of fiscal 2002, primarily due to the Q1 fiscal 2003 adjustment of inventory to bring it in line with sales expectations for the coming year.

Capital assets
During the first half of fiscal 2003, the Company expended $1.5 million (net) for capital purchases, compared to $5.9 million (net) during the same period last year. The capital purchases in the first half of fiscal 2003 were primarily for the Semiconductor Division.

Future income taxes recoverable
The October 25, 2002 balance for Future Income Taxes Recoverable is $11.9 million, compared with $10.3 million at April 26, 2002, reflecting an increase in investment tax credits and payments withheld in foreign countries. The intellectual property licensing revenues generated from companies in foreign countries results in withholdings when payments are received from those countries. The Company continues to record investment tax credits earned (netted against the appropriate R&D capital cost or expense), as well as any withholding taxes related to payments withheld in foreign countries and applicable to taxes to be paid in Canada. To the extent that these items, in total, exceed the income tax expense for a given quarter, they have contributed to an increase in future taxes recoverable. The future income taxes recoverable balance reflects management's estimate of loss carry-forwards, investment tax credits and other tax balances that are more likely than not to be utilized in future periods to offset income taxes payable.

Accounts payable and accrued liabilities
Accounts payable and accrued liabilities decreased to $8.6 million at October 25, 2002, from $9.6 million at April 26, 2002. This is due to a decrease in commissions payable resulting from the settlement agreement with and payment to the agent, offset by an increase in accounts payable due to the purchase of capital assets late in the quarter.

Deferred revenue
Deferred revenue decreased to $387,000 at the end of Q2 fiscal 2002, from $675,000 at the end of fiscal 2002, mainly due to the payment received from a customer for which there had been extended payment terms.

Mortgage payable
A mortgage of $6,000,000, at a fixed rate of 8.24% per annum and for a ten-year term, has been put in place to finance the Company's principal physical facility, which went into service in December 1997. The remaining principal amount at the end of Q2 fiscal 2003 was $5.3 million, of which $184,000 is due within 12 months. The cost of the land and building was $7.9 million, less amortization of $1.3 million at the end of the quarter.

Risks and Uncertainties
The Company expects that its future operating results may be subject to quarterly and annual fluctuations resulting from a variety of factors, including market conditions, changes in customer and geographic distribution, potential schedule slippages, and the possibility that its patents might be declared invalid. Sales to a relatively small number of customers account for a substantial portion of the Company's total revenues. In the IP Division, revenues are primarily derived from a small number of large contracts, principally related to patent licensing agreements, each with finite payment terms. In the Systems Division, a portion of revenues in any fiscal quarter may result from customer orders received in the same quarter. Delays in booking patent licensing agreements, Systems orders, and schedule slippages in one or more Semiconductor contracts or in networking chip product development projects, may lead to significant volatility in financial performance, particularly in terms of quarterly results. The semiconductor industry is characterized by rapid technological change and evolving industry and customer requirements, specifications and standards. The Company's success will depend on its ability to enhance its existing designs, create new intellectual property, chips and test systems and to develop new designs, patent licensing agreements, chips and test systems on a timely and cost-effective basis. Furthermore, the Company's current orientation to the semiconductor memory and networking equipment markets exposes its quarterly operating results to the influence of the business cycles in these markets.

MOSAID TECHNOLOGIES INCORPORATED
(Incorporated under the Ontario Business Corporations Act)
CONSOLIDATED BALANCE SHEETS
(in thousands)

See accompanying Notes to the Consolidated Financial Statements.

MOSAID TECHNOLOGIES INCORPORATED
CONSOLIDATED STATEMENTS OF EARNINGS AND (DEFICIT) RETAINED EARNINGS
(in thousands, except per share amounts)
(unaudited)

		13 weeks ended October 25, 2002		13 weeks ended October 26, 2001			26 weeks ended October 25, 2002	26 weeks ended October 26, 2001
Revenues
	Operations	$7,672		$10,624			$14,986	$31,873
	Interest	262		505			599	1,030
		7,934		11,129			15,585	32,903
Expenses
	Labour and materials	1,477		1,859			3,784	4,987
	Research and development	5,978		8,515			11,439	16,385
	Selling and marketing	1,297		3,832			3,950	8,673
	General and administration	1,694		2,201			3,359	4,449
	Bad debts	(173)		(14)			(160)	(48)
	Restructuring	-		11,017			783	11,017
		10,273		27,410			23,155	45,463
Loss from operations		(2,339)		(16,281)			(7,570)	(12,560)
Loss on write-down of long-term investment (Note 2)		518		-			518	-
Loss on disposal of long-term investment (Note 2)		426		-			426	-
Income tax expense		155		3,093			291	4,395
Net loss		(3,438)	(19,374)			(8,805)		(16,955)
(Deficit) retained earnings, beginning of period		(5,829)	26,971			(462)		24,552
Premium on redemption of common shares		-	(328)			-		(328)
(Deficit) retained earnings, end of period		$(9,267)	$7,269			$(9,267)		$7,269
Loss per share (Note 5)
	Basic	$(0.34)		$(1.89)	$(0.86)			$(1.70)
	Diluted	$(0.34)		$(1.89)	$(0.86)			$(1.70)

See accompanying Notes to the Consolidated Financial Statements.

MOSAID TECHNOLOGIES INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

MOSAID TECHNOLOGIES INCORPORATED
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
26 weeks ended October 25, 2002
(tabular dollar amounts in thousands, except per share amounts)

1. Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in Canada for interim financial information. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for annual financial statements.

In the opinion of management, all adjustments consisting of normal recurring adjustments, considered necessary for a fair presentation of the Company's financial position, results of operations and cash flows have been included. Operating results for the interim period presented are not necessarily indicative of the results to be expected for any subsequent quarter or for the full fiscal year ending April 25, 2003.

The accounting policies used in preparing these interim financial statements are consistent with those used in preparing the annual financial statements, except for the following new accounting standard change:

a. Stock-based compensation

These statements should be read in conjunction with the Company's audited consolidated financial statements prepared for the fiscal year ended April 26, 2002.

2. Long-term Investments

During the quarter, the Company recorded a $518,000 write-down, from $1.8 million to $1.3 million, of its portfolio investment in Acuid Corporation Limited. The write-down reflects the Company's assessment that an other than temporary decline in the carrying value of the investment has occurred following the completion of recent financing by Acuid.

During Q2 fiscal 2003, the Company announced the sale of its investment in ATMOS Corporation to MoSys for net proceeds of $3.2 million. A loss of $426,000 resulted from the disposal of the investment, which had a book value of $3.6 million. The loss includes an estimate by management of escrowed funds that will not be recovered.

3. Share Capital

During the 13 weeks ended October 25, 2002, the Company began a normal course issuer bid, as approved by the Toronto Stock Exchange. Under the terms of the normal course issuer bid, the Company has the right to purchase up to a maximum of 300,000 common shares (representing 2.9% of the issued and outstanding common shares of the Company as at October 1, 2002). The normal course issuer bid will remain in effect until the earlier of October 8, 2003 or until the Company has purchased the maximum number of shares permitted under the bid. During the 13 weeks ended October 25, 2002, the Company has purchased 55,600 common shares in accordance with the normal course issuer bid for a total cost of $317,000. Of this amount paid, $141,000 has been credited to contributed surplus, representing a discount on redemption of common shares, with the balance charged to share capital. All repurchased shares have been cancelled.

4. Stock-based Compensation

The Company has an employee stock purchase plan program whereby employees may elect to designate up to 5% of their annual salary to purchase shares of the Company at a 10% discount from the fair market value. The purchase price is deducted over a six-month period via payroll.

Also, the Company has an Employee and Director Stock Option Plan. The exercise price is no lower than the market price on the date of grant. Options granted under the Plan expire within a period of six years of granting, with vesting periods determined by the Compensation Committee.

CICA 3870 requires proforma disclosure of the net loss and loss per share, as if the fair value based method as opposed to the intrinsic value based method of accounting had been applied. The disclosures in the following table show the Company's net loss and loss per share on a proforma basis using the fair value method, on a straight line basis, as determined using the Black-Scholes option pricing model:

		13 weeks ended October 25, 2002	26 weeks ended October 25, 2002
Net income	- as reported	(3,438)	(8,805)
	- proforma	(3,438)	(8,836)
Basic and diluted loss per share	- as reported	$(0.34)	$(0.86)
	- proforma	$(0.34)	$(0.86)

5. Earnings per Share

The following is a reconciliation of the numerator and denominator of the basic and fully diluted per share computations.

6. Business Segment Information

Based upon the Company's internal reporting structure, the following operating segments have been assigned:

The significant accounting policies of the above segments are the same as those described in Note 1. Intersegment sales are recorded at cost. General and administrative costs are allocated to the operating segments based upon estimates of usage. The Company has not included interest revenue, foreign exchange gains or losses, bad debts, unusual items, gains or losses of long-term assets or income tax expense in the determination of operating segment profit.