-
                                  United States
                       Securities and Exchange Commission

                             Washington, D.C. 20549

                                    FORM 10-Q

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the Period Ended October 31, 2001.

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the Transition Period from __________ to __________.

                        Commission File Number: 0-26387

                                 BE INCORPORATED
             (Exact name of Registrant as specified in its charter)

                    Delaware                           94-3123667
        (State or other jurisdiction of     (IRS Employer Identification No.)
           incorporation or organization)

        655 West Evelyn Street, Suite 6, Mountain View, California 94041
          (Address of principal executive offices, including zip code)

                                 (650) 965-4842
              (Registrant's telephone number, including area code)

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

              (Former name, former address and former fiscal year,
                          if changed since last report)

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

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

Common Stock, No Par Value --- 38,450,527 shares as of May 15, 2002

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

<PAGE>

                                 BE INCORPORATED

                                      Index

<TABLE>
<CAPTION>
                                                                                                        PAGE
PART 1     FINANCIAL INFORMATION
                      <S>                                                                                 <C>
           Item 1.    Financial Statements

                      Consolidated Statement of Net Assets in Liquidation at March 31, 2002...............1

                      Condensed Consolidated Balance Sheet at December 31, 2001...........................2

                      Consolidated Statement of Changes in Net Assets in Liquidation for the
                      period from March 16, 2002 to March 31, 2002........................................3

                      Condensed Consolidated Statements of Operations for the period
                      from January 1, 2002 to March 15, 2002 and for the three months
                      ended March 31, 2001................................................................4

                      Condensed Consolidated Statements of Cash Flows of Operations for
                      the period from January 1, 2002 to March 15, 2002 and for the three months
                      ended March 31, 2001................................................................5

                      Notes to Condensed Consolidated Financial Statements................................6

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

           Item 3.    Quantitative and Qualitative Disclosure about Market Risk..........................15

PART II.  OTHER INFORMATION

           Item 1.    Legal Proceedings..................................................................16

           Item 2.    Changes in Securities and Use of Proceeds..........................................16

           Item 3.    Defaults Upon Senior Securities....................................................16

           Item 4.    Submission of Matters to a Vote of Security Holders................................16

           Item 5.    Other Information..................................................................17

           Item 6.    Exhibits and Reports on Form 8-K...................................................17

SIGNATURES            ...................................................................................18
</TABLE>


<PAGE>


                          PART I FINANCIAL INFORMATION

ITEM 1 FINANCIAL STATEMENTS

                                 BE INCORPORATED
            CONSOLIDATED STATEMENT OF NET ASSETS IN LIQUIDATION
                                 (In thousands)

                                   (unaudited)

                                                              March 31, 2002
                                                              ----------------
ASSETS

  Cash and cash equivalents .......................................       $4,679
  Prepaid fees ....................................................           22
  Other assets ....................................................            9
                                                                          ------
    Total assets ..................................................       $4,710
                                                                          ======

LIABILITIES

  Accounts payable ................................................       $   48
  Technology License obligations ..................................          540
  Estimated costs during period of liquidation (Note 2) ...........          604

  Contingent liabilities (Note 4)
                                                                          ------
    Total liabilities .............................................        1,192
                                                                          ------
    Net assets in liquidation .....................................       $3,518
                                                                          ======


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


                                      -1-

<PAGE>

                                 BE INCORPORATED
                     Consolidated Balance Sheets - Unaudited
               (in thousands, except share and per share amounts)


                                                                    December 31,
                                                                        2001
                                                                        ----

Assets
Current assets:
       Cash and cash equivalents ....................................   $ 5,381
       Short-term investments .......................................      --
       Accounts receivable ..........................................        66
       Prepaid and other current assets .............................     1,363
                                                                         ------
           Total current assets .....................................     6,810
Property and equipment, net .........................................         2
Other assets, net of accumulated amortization .......................        24
                                                                         ------
           Total assets .............................................   $ 6,836
                                                                         ======

Liabilities and stockholders' equity:
       Accounts payable .............................................   $    96
       Accrued expenses .............................................        94
       Technology license obligations ...............................       815
       Deferred revenue .............................................        56
                                                                         ------
           Total liabilities ........................................     1,061
                                                                         ------

Commitments and Contingencies (Note 4)

Stockholders' Equity:
       Preferred stock, $.001 par value:
         Shares authorized: 2,000,000
         Shares issued and outstanding: none
       Common stock, $.001 par value:
         Shares authorized: 78,000,000 shares
         Shares issued and outstanding: 38,486,007...................        38
Additional paid-in capital...........................................   106,493
Deferred stock compensation..........................................       (39)
Accumulated deficit..................................................  (100,717)
Accumulated other comprehensive income (loss)........................        -
                                                                          ------
           Total stockholders' equity................................     5,775
                                                                         ------
             Total liabilities and stockholders' equity..............   $ 6,836
                                                                         =======


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


                                      -2-
<PAGE>


                                 BE INCORPORATED
       CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
                                 (In thousands)
                                   (Unaudited)


                                                             For the period from
                                                              March 15, 2002 to
                                                               March 31, 2002
                                                             -------------------
Net assets in liquidation at March 16, 2002                       $  3,435
    Recoveries and refunds, net                                         76
    Earnings on cash and cash equivalents                                7
                                                                  --------
Net liabilities in liquidation at March 31, 2002                  $  3,518
                                                                  ========


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


                                      -3-
<PAGE>


                                 BE INCORPORATED
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)
                                   (Unaudited)


                                                             For the
                                                              Period    Three
                                                            January 1,  Months
                                                              2002 to   Ending
                                                             March 15, March 31,
                                                               2002      2001
                                                           --------    --------

Cost of revenues .......................................        -           251
                                                          --------     --------
Gross profit (loss) ....................................        -          (151)

Operating expenses:
   Research and development ............................        -         2,481
   Sales and marketing .................................        -         1,618
   General and administrative ..........................       551        1,146
   Restructuring charge ................................        -           307
       Total operating expenses ........................       551        5,552
                                                           --------     --------
Loss from operations ...................................      (551)      (5,703)

Interest expense .......................................        -           (15)
Other income and expenses, net .........................         6          161
                                                           --------     --------
Net loss ...............................................      (545)      (5,557)
                                                           ========     ========
Net loss per common share--basic and diluted ...........  $   (.01)    $   (.15)
                                                           ========     ========
Shares used in per common share
   calculation--basic and diluted ......................    38,450       36,194
                                                           ========     ========


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


                                      -4-
<PAGE>


                                 BE INCORPORATED
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                             For the
                                                             Period     Three
                                                            January 1,  Months
                                                              2002 to   Ending
                                                             March 15, March 31,
                                                               2002       2001
                                                           --------    --------
<S>                                                         <C>        <C>
Cash flows from operating activities:
   Net loss ............................................    $ (545)    $ (5,557)
   Adjustments to reconcile net loss to net
     cash used in operating activities:
       Depreciation and amortization ...................         1          267
       Amortization of discount on
        technology license obligations .................         5           15
       Loss on disposal of fixed assets ................                      6
       Amortization of deferred stock compensation .....         2          302
       Changes in assets and liabilities
          Accounts receivable ..........................        52         (428)
          Prepaid and other current assets .............        78           (3)
          Accounts payable .............................       (88)        (190)
          Accrued expenses .............................       (53)         202
          Deferred revenue .............................       (56)         368
                                                           --------    --------
            Net cash used in operating activities ......      (604)      (5,018)
                                                           --------    --------
Cash flow provided by investing activities:
   Acquisition of property and equipment ...............        -           (72)
   Acquisition of licensed technology ..................        -          (175)
   Purchases of short-term investments .................        -        (1,728)
   Sales of short-term investments .....................        -         3,588
                                                           --------    --------
            Net cash provided by investing activities ..        -         1,613
                                                           --------    --------
Cash flows provided by financing activities:
Proceeds from issuance of common stock:
     pursuant to common stock options ..................        -            12
     pursuant to common stock warrants .................        -           180
     under Employee Stock Purchase Plan ................        -           324
                                                           --------    --------
            Net cash provided by financing activities ..        -           516
                                                           --------    --------
Net increase (decrease) in cash and cash equivalents ...      (604)      (2,889)
                                                           --------    --------
Cash and cash equivalents, beginning of period .........     5,381        9,463
                                                           --------    --------
Cash and cash equivalents, end of period ...............   $ 4,777     $  6,574
                                                           ========    ========
</TABLE>


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


                                      -5-

<PAGE>

                                 BE INCORPORATED
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - The Company and its Significant Accounting Policies:

     Be  Incorporated  ("Be" or the  "Company") was founded in 1990 and prior to
the cessation of its business operations offered software platforms designed for
Internet appliances and digital media applications.

     The unaudited condensed  consolidated  financial statements included herein
have been prepared by Be pursuant to the rules and regulations of the Securities
and Exchange  Commission.  Certain information or footnote  disclosures normally
included in financial  statements prepared in accordance with generally accepted
accounting  principles have been condensed or omitted pursuant to such rules and
regulations.   In  the  opinion  of  Be  the  accompanying  unaudited  condensed
consolidated  financial  statements contain all adjustments,  consisting only of
normal  recurring  adjustments,   necessary  to  present  fairly  the  financial
information  included  therein.  While  Be  believes  that the  disclosures  are
adequate to make the  information  not  misleading,  it is suggested  that these
financial  statements  be read  in  conjunction  with  the  unaudited  financial
statements and accompanying  notes included in Be's Annual Report on Form 10-K/A
for the fiscal year ended  December  31, 2001 as filed with the  Securities  and
Exchange Commission.

     On August 16,  2001,  the Board of  Directors  of the  Company  unanimously
adopted  resolutions  approving the sale of  substantially  all of the Company's
intellectual  property  and other  technology  assets (the "Asset  Sale") to ECA
Subsidiary  Acquisition  Corporation,  a Delaware  corporation  and an  indirect
wholly-owned  subsidiary of Palm, Inc.  ("Palm"),  pursuant to an Asset Purchase
Agreement  dated  August 16,  2001.  On October 9,  2001,  the  Company  filed a
definitive proxy statement  soliciting  stockholder  approval for the Asset Sale
and the dissolution of the Company  pursuant to a plan of dissolution (the "Plan
of Dissolution").  The Plan of Dissolution  provides for the orderly liquidation
of Be's remaining assets, the winding-up of Be's business and operations and the
dissolution  of the  Company.  In  accordance  with  the  terms  of the  Plan of
Dissolution,  Be will pay, or provide for the payment of, all of its liabilities
and  obligations  following  the  approval  of the  Board  to  proceed  with the
liquidation  and dissolution of the company.  If there are any remaining  assets
after the payment,  or the provision for payment,  of all of its liabilities and
obligations,  Be will then distribute such assets to its  stockholders in one or
more distributions.

                                      -6-
<PAGE>

     At a special  meeting  of  stockholders  held on  November  12,  2001,  the
stockholders  of Be  approved  the Asset Sale and the Plan of  Dissolution.  The
Asset Sale was  completed on November 13, 2001.  Under the terms of the Purchase
Agreement,  Be received an aggregate  of  4,104,478  shares of Palm common stock
valued at approximately  $11,000,000 on the closing date of the transaction.  On
March 15, 2002, the Company filed a certificate of dissolution with the Delaware
Secretary  of State in  accordance  with the  plan of  dissolution  approved  by
stockholders  on  November  12,  2001 and as set forth in the  Definitive  Proxy
Statement filed on October 9, 2001.

     Accordingly,  all activities of Be as of March 15, 2002 are presented under
the liquidation basis of accounting.  Under the liquidation basis of accounting,
assets are stated at their  estimated net realizable  values and liabilities are
stated at their  anticipated  settlement  amount, if reasonably  estimable.  See
"Activities  While in Liquidation"  below.  Additionally,  Be's common stock was
delisted from the NASDAQ National Market effective March 15, 2002.


Activities While in Liquidation

     Changes in net assets in liquidation  for the period from March 16, 2002 to
March 31, 2002 of $83,000, were primarily a result of the early termination of a
technology license agreement.

     Be expects to  continue  to incur  certain  administrative  and other costs
associated  with  winding up its  affairs.

     The amount of unknown or contingent  liabilities  cannot be quantified  and
could decrease or eliminate any remaining  assets  available for distribution to
Be's shareholders. Further, if Be is subject to any contingent liabilities, this
could require that it establish reserves that could delay any distribution to Be
shareholders.  Because of the  uncertainties  as to the precise  net  realizable
value of Be's assets and the settlement amount of Be's debts and liabilities, Be
cannot at this time determine the timing or amount of distributions  that may be
made to its shareholders, if any. Only if there are assets remaining at the time
of the liquidation of Be's assets will Be shareholders receive a distribution of
those assets.


                                      -7-
<PAGE>


Note 2 - Balance Sheet Components (in Thousands):

Estimated Costs During Period of Liquidation:


                                                     March 31, 2002

Accrued salaries, wages and benefits                     $   122
Accrued professional fees                                    425
Accrued leases payable                                         5
Miscellaneous accrued expenses                                52
                                                          ------
  Estimated costs during period of liquidation            $  604
                                                          ======


Note 3 - Net Loss Per Share:

     Basic net loss per share is computed  using the weighted  average number of
common  shares  outstanding  during the  periods.  Diluted net loss per share is
computed using the weighted  average number of common and  potentially  dilutive
common shares during the periods presented.

     Diluted  loss per share was the same as basic  loss per share for the three
months ended March 31, 2002 and 2001.  During the period from January 1, 2002 to
March 15, 2002 and the three month period ended March 2001,  options to purchase
approximately 899,000 and 7.1 million shares of common stock, respectively, were
outstanding but not included in the calculation because they were anti-dilutive.
During the period  from  January 1, 2002 to March 15,  2002 and the three  month
period  ended  March 31 2001,  warrants to  purchase  approximately  1.5 million
shares were  outstanding but not included in the  calculation  because they were
anti-dilutive.

NOTE 4 - Legal Contingencies:

     Stockholder lawsuit

     As previously  disclosed in the Company's  filings with the  Securities and
Exchange Commission, in November 2000, the Company's stock transfer agent, Wells
Fargo Bank  Minnesota,  N.A.,  received a demand  letter from  Financial  Square
Partners ("FSP"), a Be stockholder, alleging damages resulting from the transfer
agent's  failure  to timely  issue its stock  certificates.  Failing  to reach a
settlement,  on May 9,  2001,  FSP  filed  a  claim  in the  Superior  Court  of
California,  naming Be and Wells Fargo Bank  Minnesota,  N.A. as  defendants.  A
settlement conference occurred in April 2002 and a settlement was reached in May
2002  whereby  the Company  agreed to pay FSP an amount less than the  Company's
insurance deductible of $250,000.  Financial Square Partners was seeking damages
in the amount of approximately $2.4 million.

      Antitrust lawsuit

     On February 15, 2002, Be engaged Susman Godfrey LLP on a contingency  basis
to bring forth claims against Microsoft  Corporation for the destruction of Be's
business  resulting from  anticompetitive  business  practices.  On February 19,
2002,  the Company  filed a lawsuit in the United States  District  Court in San
Francisco alleging,  among other things, Microsoft harmed Be through a series of
illegal, exclusionary and anticompetitive acts designed to maintain its monopoly
in the Intel-compatible PC operating system market and created exclusive dealing
arrangements with PC OEMs prohibiting the sale of PCs with multiple preinstalled
operating systems.

     Be is seeking recovery of an unspecified  amount of damages for the benefit
of the Company and its stockholders.



                                      -8-
<PAGE>


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

     The following  Management's  Discussion and Analysis of Financial Condition
and  Results of  Discontinued  Operations  contains  forward-looking  statements
within the meaning of Section 27A of the  Securities Act of 1933 and Section 21E
of the  Securities  Exchange  Act of  1934.  Any  statements  contained  in this
document,  including without limitation  statements to the effect that Be or its
management  "believes,"  "expects,"   "anticipates,"   "plans,"  "may,"  "will,"
"projects,"  "continues," or "estimates," or statements concerning  "potential,"
or "opportunity" or other  variations  thereof or comparable  terminology or the
negative  thereof,  that  are  not  statements  of  historical  fact  should  be
considered  forward-looking  statements.  These  forward-looking  statements are
based on current  expectations and entail various risks and  uncertainties  that
could cause  actual  results to differ  materially  from those  projected in the
forward-looking  statements.  Some of such risks and uncertainties are set forth
below under "Risk Factors".

Overview

     Be was  founded  in  1990  and  prior  to  the  cessation  of its  business
operations  offered  software  solutions  designed for Internet  appliances  and
digital  media  applications.  On August  16,  2001,  we  entered  into an asset
purchase agreement with Palm, Inc. to sell substantially all of our intellectual
property  and other  technology  assets.  This  transaction  was approved by our
stockholders  on November 12, 2001 and was  completed  on November 13, 2001.  On
March 15, 2002,  we filed a  Certificate  of  Dissolution  with the Secretary of
State of Delaware  pursuant to Section 275 of the Delaware  General  Corporation
Law,  closed our transfer books and  voluntarily  delisted our common stock from
the Nasdaq National Market System.

     Prior to 1998, we had no revenues and our operations consisted primarily of
research and  development.  In December  1998,  we shipped the first  version of
BeOS,  our desktop  operating  system  targeted  primarily  to end users.  Prior
releases of BeOS were targeted primarily to software developers. Throughout 1999
we focused on delivering BeOS as a desktop  operating  system to end users,  but
ultimately  determined the barriers to entry and the cost of intense competition
in that market was more than we could  overcome.  In recognition of this, and to
address  shareholder  value, in 2000 we shifted our resources to focus primarily
on the market for Internet appliances and the further development, marketing and
deployment of BeIA, our software solution intended for Internet  appliances.  At
the same  time we  announced  that we would be making  available  at no charge a
version of BeOS for personal  use, and a more fully  featured  version  would be
available for a charge through third party publishers. Our revenues in 2000 were
primarily  generated  from  the  sale  of  BeOS  to  our  licensed  third  party
publishers,  and other resellers and  distributors,  and direct sales of BeOS to
end users  through  our  BeDepot.com  Web site.  We also  generated  revenue  by
collecting commission from sales of third party software through our BeDepot.com
Web site.

                                      -9-
<PAGE>

     In 2001, revenues were generated through royalty payments,  maintenance and
support fees,  professional services and integration fees and by revenue-related
consulting  services  performed after August 16, 2001 under a funding  agreement
with Palm executed in connection  with the asset sale.  These  payments and fees
were received from developers and manufacturers of Internet appliances,  as well
as other  systems  and  hardware  manufacturers  incorporating  BeIA into  their
products.  However,  revenues from BeIA did not offset the loss of revenues from
sales  of BeOS.  Upon the  completion  of the sale of  substantially  all of our
assets to Palm,  we received an  aggregate  of  4,104,478  shares of Palm common
stock and sold these shares on November 13, 2001 for $10,100,772 in cash, net of
brokerage  and  transaction  fees. As a result of the sale of our assets and the
cessation  of our business  operations,  we do not expect to generate any future
revenues.

     Our research and development  expenses consisted  primarily of compensation
and related costs for research and  development  personnel.  We also included in
research  and   development   expenses  the  costs   relating  to  licensing  of
technologies and amortization of costs of software tools used in the development
of our operating  system.  Costs incurred in the research and development of new
releases and  enhancements  are expensed as incurred.  These costs  included the
cost  of  licensing  technology  that  is  incorporated  into  a  product  or an
enhancement   that  is  still  in   preliminary   development,   and  for  which
technological feasibility has not been established.  Once the product is further
developed and technological feasibility has been established,  development costs
are capitalized until the product is available for general release. Products and
enhancements have generally reached technological  feasibility and were released
for sale at substantially the same time. As we have ceased business  operations,
we do not expect to incur any research and development expenses in the future.

     Our sales and marketing  expenses  consisted  primarily of compensation and
related  costs for sales and marketing  personnel,  marketing  programs,  public
relations,  investor  relations,  promotional  materials,  travel,  and  related
expenses for attending  trade shows.  In July 2001, we eliminated  our sales and
marketing  group.  As we have ceased  operations,  we do not expect to incur any
sales and marketing expenses in the future.

     General and administrative expenses consisted primarily of compensation and
related expenses for management, finance, and accounting personnel, professional
services and related fees,  occupancy  costs and other  expenses.  We expect our
general and administrative expenses in the future to be minimal as we intend for
only one employee to remain with the Company in order to facilitate  the wind up
of the company's operations and to oversee legal proceedings.

     In the past,  we marketed  and sold our  products in the United  States and
internationally. International sales of products accounted for approximately 0%,
23% and 56% of total revenues in 2001,  2000 and 1999,  respectively.  We do not
expect to generate any revenues in the near or extended future.


                                      -10-
<PAGE>

     From time to time in the past,  we have granted stock options to employees,
consultants and non-employee directors. As of December 31, 2001, we had recorded
deferred  compensation  related to these  options  in the total  amount of $12.6
million,  net of cancellations,  representing the difference  between the deemed
fair value of our common stock, as determined for accounting  purposes,  and the
exercise  price of options at the date of grant.  Of this amount,  $11.9 million
had been  amortized  at December 31, 1999,  with $2.6 and $(2.0)  million  being
amortized in 2000 and 2001, respectively.  The negative amount shown for 2001 is
due to the  cancellation  of options.  Following the filing of the certifcate of
dissolution  on March 15,  2002,  it was deemed  that the  remaining  options no
longer had any value and accordingly the remaining deferred compensation balance
was cancelled.  We amortized the deferred  compensation  charge monthly over the
vesting  period of the  underlying  option.  Due to  cessation  of our  business
operations, we do not expect to grant stock options to employees, consultants or
directors in the future.


Comparison  of the period  from  January 1, 2002 to March 15,  2002 to the Three
Month Period ended March 31, 2001

     Since the  completion  of the Asset Sale to Palm on November 13,  2001,  we
have generated no material revenues from operations and the vast majority of our
expenses have been of a general and administrative nature.

     General and administrative  expenses decreased  approximately  $615,000, or
54%, to $531,000 for the period from January 1, 2002 to March 15, 2002 from $1.1
million for the three month period ended March 31, 2001. In 2002,  such expenses
are primarily  attributable to the rent costs of approximately  $242,000 for the
lease of our former  headquarters  in Menlo Park. This lease expired on February
28, 2002. Other expenses included salary costs of approximately $140,000 for the
5 person  transition  team in charge of winding down  operations.  After May 15,
2002,  we intend for only one  employee  to remain with the  Compnay.  Remaining
expenses  were  related to  professional  fees and also to moving  costs for the
relocation of the Company's offices.


Statement of Changes in Net Assets in  Liquidation  from March 16, 2002 to March
31, 2002

     Changes in net assets in liquidation  for the period from March 16, 2002 to
March 31, 2002 of $83,000 were primarily a result of the early  termination of a
technology license agreement.

Liquidity and Capital Resources

     Since our inception,  we  traditionally  financed our operations  primarily
through the sale of our equity securities and through borrowing arrangements. On
November  13,  2001,  we  sold  substantially  all of our  assets  to  Palm  for
approximately  $11.0  million in Palm stock.  That same day,  we sold  4,104,478
shares of Palm stock for  $10,100,772 in cash, net of brokerage and  transaction
fees.   Cash  and  cash   equivalents  and  short-term   investments   decreased
approximately  $600,000 to $4.8  million at March 15, 2002 from $5.4  million at
December 31, 2001.  This decrease is primarily  attributable to the amounts used
to fund the winding down of the Company's operations.

     Since November 2001, we have been winding down our business  operations and
have substantially reduced our working capital requirements. Our working capital
requirements  are now  minimal  and we  believe  that  existing  cash  and  cash
equivalents  will be  sufficient  to meet our  remaining  operating  and capital
requirements  for at least the next twelve  months or until a final  liquidation
occurs. As part of the winding down process, we intend to distribute part of our
remaining cash to our shareholders as soon as practicable under Delaware law and
dissolution  procedures.  After  that time,  we intend to retain  only a nominal
amount of cash to complete the winding down process.

Critical Accounting Policies

     Use of estimates and liquidation accounting

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

     All  activities  of Be  as of  March  15,  2002  are  presented  under  the
liquidation  basis of  accounting.  Under the  liquidation  basis of accounting,
assets are stated at their  estimated net realizable  values and liabilities are
stated at their anticipated settlement amount, if reasonably estimable.

                                      -11-

<PAGE>


FACTORS AFFECTING OUR BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION


The following is a discussion of certain risks,  uncertainties and other factors
that  currently  impact or may impact our  business,  operating  results  and/or
financial condition. Anyone evaluating us and making an investment decision with
respect  to our common  stock or other  securities  is  cautioned  to  carefully
consider these  factors,  along with similar  factors and cautionary  statements
contained in our filings with the Securities and Exchange Commission.


Our  stockholders  may be liable to our creditors for an amount up to the amount
received  from the  Company  if our  reserves  for  payments  to  creditors  are
inadequate.

     Although we filed a certificate  of  dissolution on March 15, 2002 with the
State of Delaware, Be will continue to exist for three years following this date
or for such longer period as the Delaware Court of Chancery shall direct for the
purpose of  prosecuting  and  defending  lawsuits  and  enabling Be to close its
business,  to dispose of its  property,  to  discharge  its  liabilities  and to
distribute to its stockholders any remaining assets.  Under Delaware law, in the
event Be fails to create an  adequate  contingency  reserve  for  payment of its
expenses and liabilities  during this period,  each Be stockholder could be held
liable for payment to Be's  creditors  of such  stockholder's  pro rata share of
amounts owed to creditors in excess of the contingency reserve. The liability of
any  stockholder  would be limited to the  amounts  previously  received by such
stockholder from Be (and from any liquidating  trust or trusts).  As a result, a
stockholder  could be required to return all  distributions  previously  made to
such  stockholder  and  would  receive  no  amounts  from Be  under  the Plan of
Dissolution.  Moreover,  in the event a  stockholder  has paid  taxes on amounts
previously received, a repayment of all or a portion of such amount could result
in a stockholder  incurring a net tax cost if the stockholder's  repayment of an
amount previously  distributed does not cause a commensurate  reduction in taxes
payable.  Although Be intends to exercise  caution in setting up its contingency
reserve and making distributions to stockholders, there can be no assurance that
the contingency reserve established by Be will be adequate to cover our expenses
and liabilities.

Our stock  transfer  books were closed on March 15, 2002, the final record date,
after which any trades will not be recorded by the Company.

     We closed our stock transfer books and discontinued  recording transfers of
Common Stock at the close of business on March 15, 2002 (the "Record Date"), the
date of  effectiveness  of the  Certificate  of  Dissolution  we filed  with the
Delaware Secretary of State.  Thereafter,  certificates  representing our Common
Stock  will not be  assignable  or  transferable  on our  books  except by will,
intestate  succession or operation of law.  Although our Common Stock  currently
trades on the "over-the-counter"  securities market, the proportionate interests
of our  stockholders  have  been  fixed on the basis of their  respective  stock
holdings  at the close of  business on the Record  Date,  and,  after the Record
Date,  any  distributions  made  by the  Company  will  be  made  solely  to the
stockholders  of record at the close of business on the Record  Date,  except as
may be  necessary  to reflect  subsequent  transfers  recorded on our books as a
result of any assignments by will, intestate succession or operation of law. For
any other trades after the Record  Date,  the seller and  purchaser of the stock
will need to negotiate and rely on contractual  obligations  between  themselves
with respect to the allocation of stockholder proceeds arising from ownership of
the shares.

We have not  completed  an audit of our fiscal 2001  financials  that were to be
filed with our annual report on From 10-K.

     In order to further  curtail  expenses in  connection  with our wind-up and
dissolution,  we filed  unaudited  financial  statements  with our Form 10-K, as
amended,  for the 2001 fiscal year. Because these financial  statements were not
audited by an outside auditor, such statements could be subject to change or the
financial  information included therein may be materially different from audited
financial  information.   There  can  be  no  assurance  that  such  changes  or
differences would not be significant.

                                      -12-
<PAGE>

Our stock was delisted from the Nasdaq  National Market on March 15, 2002 and is
significantly less liquid than before.

     We  voluntarily  requested  that our stock be delisted  from trading on the
Nasdaq  Stock  Market on March 15,  2002 due to the fact that we had  ceased our
business operations. Following delisting, the ability of stockholders to buy and
sell our shares  has been  materially  impaired,  and is  limited  primarily  to
over-the-counter  quotation services, such as Pink Sheets, that handle high-risk
ventures and are not regulated by the Securities and Exchange Commission.

There  is  no  guarantee   that  our  stock  will   continue  to  be  quoted  on
over-the-counter markets.

     If we are unable to comply with the requirements for continued  listing for
over-the-counter  markets such as the OTC Bulletin Board or the Pink Sheets, our
stock may no longer be eligible for quotation on such services.  If our stock is
removed from quotation from these regulated quotation  services,  it may further
limit the liquidity of our common stock and impair stockholders'  ability to buy
and sell our shares.

We cannot  guarantee  how much cash,  if any, will be available to distribute to
our  stockholders  and if there is cash to  distribute,  the  timing of any such
distribution.

     There is currently no firm  timetable for the  distribution  of proceeds to
our stockholders  because of contingencies  inherent in winding up the Company's
business.  The proportionate  interests of all of our stockholders will be fixed
on the basis of their  respective stock holdings at the close of business on the
Record Date, and after such date, any distributions  made by the Company will be
made  solely to  stockholders  of record on the close of  business on the Record
Date, except to reflect permitted transfers.  We are, however,  currently unable
to  predict  the  precise  nature,  amount  or  timing  of any  distribution  to
stockholders.  The actual nature, amount and timing of all distributions will be
determined by our Board of Directors, in its sole discretion.

     Uncertainties  as to the  precise  net value of our  non-cash  assets,  the
resolution  of our  outstanding  claim  against  Microsoft  Corporation  and the
ultimate amount of our debts and liabilities  make it  impracticable  to predict
the  aggregate  net value  ultimately  distributable  to  stockholders.  Claims,
liabilities and expenses from operations  (including  costs  associated with the
sale of our remaining  assets and the  settlement of our remaining  liabilities,
taxes,  legal  and  accounting  fees and  miscellaneous  office  expenses)  will
continue to be incurred. These expenses will reduce the amount of cash available
for ultimate  distribution to stockholders.  However, no assurances can be given
that available cash and amounts  received on the sale of assets will be adequate
to provide for our  obligations,  liabilities,  expenses  and claims and to make
cash distributions to stockholders.  If such available cash and amounts received
from the  sale of  assets  are not  adequate  to  provide  for our  obligations,
liabilities,  expenses and claims,  we may not be able to distribute  meaningful
cash, or any cash, to our stockholders.

                                      -13-
<PAGE>

The filing of the antitrust lawsuit against Microsoft or the engagement of legal
counsel for that purpose does not guarantee that the outcome of the suit will be
favorable for Be.

     On February 15, 2002, Be engaged Susman Godfrey LLP on a contingency  basis
to bring forth claims against Microsoft  Corporation for the destruction of Be's
business  resulting from  anticompetitive  business  practices.  On February 19,
2002,  the Company  filed a lawsuit in the United States  District  Court in San
Francisco alleging,  among other things, Microsoft harmed Be through a series of
illegal, exclusionary and anticompetitive acts designed to maintain its monopoly
in the Intel-compatible PC operating system market and created exclusive dealing
arrangements with PC OEMs prohibiting the sale of PCs with multiple preinstalled
operating systems. While Susman Godfrey was hired by Be to represent the company
and to seek a recovery for the benefit of stockholders,  Susman Godfrey does not
directly  represent the  stockholders  themselves,  either  individually or as a
class.  The filing of the antitrust  lawsuit or the  engagement of legal counsel
for that purpose does not guarantee that the outcome of the suit will be in Be's
favor or that  stockholders  can assume that any  distribution  of proceeds will
occur  as a  result  of a  settlement  of  the  lawsuit  or a  judgment  against
Microsoft.  In addition,  we have engaged Susman Godfrey on a contingency  basis
such that any amounts  collected as a result of a settlement of the lawsuit or a
judgment against  Microsoft would be divided between the Company for the benefit
of its stockholders and Susman Godfrey under the terms of the engagement  letter
entered into between the parties.

The proceeds from the sale of our remaining assets may be less than anticipated.

     Sales of any remaining assets will be made on such terms as are approved by
the Board of Directors and may be conducted by competitive bidding, public sales
or privately negotiated sales. The prices at which we will be able to sell these
assets will depend  largely on factors beyond our control such as general market
conditions. Because some of our remaining assets may decline in value over time,
we may not be able to  consummate  the sale of these  assets in time to generate
meaningful  value.  In  addition,  we may  not  obtain  as  high a  price  for a
particular asset as we might secure if we were not in liquidation.

We  may be  unable  to  negotiate  settlements  with  respect  to our  remaining
liabilities.

     We are currently in the process of negotiating  settlements with respect to
our remaining obligations and liabilities which include, without limitation, tax
obligations,  claims by licensees, and contractual and trade payables with third
parties  including  vendors  and  service   providers.   If  we  are  unable  to
successfully negotiate termination of these obligations, we will have fewer cash
proceeds to distribute to our stockholders.


                                      -14-
<PAGE>


If Be fails to retain the services of its remaining  executive officer and Board
members, the plan of dissolution may not succeed.

     The  success  of the Plan of  Dissolution  depends  in large part upon Be's
ability to retain the services of its current  President and Board of Directors.
For this reason, Be approved  incentive  arrangements with its President and the
three remaining members of its Board of Directors.  Despite these  arrangements,
the  retention  of  qualified  personnel is  particularly  difficult  under Be's
current circumstances.

We may continue to incur the expense of complying with public company  reporting
requirements.

     We have an obligation to continue to comply with the  applicable  reporting
requirements  of the  Securities  Exchange Act of 1934, as amended,  even though
compliance with such reporting requirements is economically burdensome.

The decline in the value of our stock and our  resulting  cessation  of business
operations  and  dissolution  could give rise to securities  class action claims
against  us,  which  could  deplete  any  proceeds  that may be  distributed  to
stockholders.

     Securities  class action claims have been brought against  companies in the
past where the market  price of the  company's  securities  has fallen due to an
inability  of  the  company  to  achieve  operational  profitability.  Any  such
litigation  could be very costly and divert our remaining  resources  from being
available for  distribution to our  stockholders.  Any adverse  determination in
this kind of  litigation  could  also  deplete  our cash  position,  and  reduce
proceeds that would otherwise be distributed to our stockholders.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK


        Be's cash equivalents are exposed to financial market risks due to
fluctuations and interest rates, which may affect interest income. Due to the
short term nature of Be's investment portfolio, Be would not expect
operating results or cash flows to be affected to any significant degree by the
effect of a sudden change in market interest rates. Be does not use its
investment portfolio for trading or other speculative purposes.


                                      -15-
<PAGE>


                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     Stockholder lawsuit

     As previously  disclosed in the Company's  filings with the  Securities and
Exchange Commission, in November 2000, the Company's stock transfer agent, Wells
Fargo Bank  Minnesota,  N.A.,  received a demand  letter from  Financial  Square
Partners ("FSP"), a Be stockholder, alleging damages resulting from the transfer
agent's  failure  to timely  issue its stock  certificates.  Failing  to reach a
settlement,  on May 9,  2001,  FSP  filed  a  claim  in the  Superior  Court  of
California,  naming Be and Wells Fargo Bank  Minnesota,  N.A. as  defendants.  A
settlement conference occurred in April 2002 and a settlement was reached in May
2002  whereby  the Company  agreed to pay FSP an amount less than the  Company's
insurance deductible of $250,000.  Financial Square Partners was seeking damages
in the amount of approximately $2.4 million.

      Antitrust lawsuit

     On February 15, 2002, Be engaged Susman Godfrey LLP on a contingency  basis
to bring forth claims against Microsoft  Corporation for the destruction of Be's
business  resulting from  anticompetitive  business  practices.  On February 19,
2002,  the Company  filed a lawsuit in the United States  District  Court in San
Francisco alleging,  among other things, Microsoft harmed Be through a series of
illegal, exclusionary and anticompetitive acts designed to maintain its monopoly
in the Intel-compatible PC operating system market and created exclusive dealing
arrangements with PC OEMs prohibiting the sale of PCs with multiple preinstalled
operating systems.

     Be is seeking recovery of an unspecified  amount of damages for the benefit
of the Company and its stockholders.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

        None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

        None

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

        None

                                      -16-
<PAGE>


ITEM 5. OTHER INFORMATION

        None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

        (a) Exhibits

               None

        (b) Reports on Form 8-K

          (i)  Current Report on Form 8-K, filed March 6, 2002,  announcing that
               (i) on  February  19,  2002 Be had filed suit  against  Microsoft
               Corporation for the  destruction of Be's business  resulting from
               the  anticompetitive  business practices of Microsoft and (ii) on
               March 4,  2002,  the  Company  planned to file a  certificate  of
               dissolution  with the  Delaware  Secretary  of State on March 15,
               2002 in  accordance  with the  Plan of  Dissolution  approved  by
               stockholders on November 12, 2001.

          (ii) Current Report on Form 8-K, filed March 28, 2002, announcing that
               on March 15, 2002, Be had filed a certificate of dissolution with
               the Delaware Secretary of State and voluntarily delisted from the
               Nasdaq National Market.


                                      -17-
<PAGE>


                                   Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Dated: May 15, 2002

                                                BE INCORPORATED
                                                (Registrant)

                                                By: /s/ DANIEL S. JOHNSTON
                                                -----------------------------
                                                Daniel S. Johnston
                                                President and General Counsel

                                      -18-
<PAGE>