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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549


FORM 10-Q

(Mark One)

|    |  |                                                                                                                            
|--- |  | ---------------------------------------------------------------------------------------------------------------------------
|[X] |  | Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the period ending June 30, 2002

OR

|      |  |                                                                                         
|----- |  | ----------------------------------------------------------------------------------------
|[   ] |  | Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

Commission file number 000-31089

VIRAGE LOGIC CORPORATION(Exact name of registrant as specified in its charter)

|                                                                        |  |                                             
|----------------------------------------------------------------------- |  | --------------------------------------------
|Delaware
(State or other jurisdiction of
incorporation or organization) |  | 77-0416232
(IRS Employer Identification No.)

46501 Landing Parkway
Fremont, California 94538
(Address of principal executive offices)

(510) 360-8000
(Registrants telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes   [X]      No   [   ]


As of July 31, 2002 there were 20,873,727 shares of the Registrants Common
Stock outstanding.

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|                                                                                      |                                                                    |                                                                |  |  |  |  |  | 
|------------------------------------------------------------------------------------- | ------------------------------------------------------------------ | -------------------------------------------------------------- |  |  |  |  |  | 
|                                                                                      |                                                                    | UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS               
|                                                                                      |                                                                    | UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS     
|                                                                                      |                                                                    | UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS                  
|                                                                                      |                                                                    | NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                                                                      | Item 3. Quantitative and Qualitative Disclosures about Market Risk
|PART II  OTHER INFORMATION                                                          
|                                                                                      | ITEM 1. Legal Proceedings                                         
|                                                                                      | ITEM 2. Changes in Securities and Use of Proceeds                 
|                                                                                      | ITEM 3. Defaults upon Senior Securities                           
|                                                                                      | ITEM 4. Submission of Matters to a Vote of Security Holders       
|                                                                                      | ITEM 5. Other Information                                         
|                                                                                      | ITEM 6. Exhibits and Reports on Form 8-K                          
|SIGNATURES                                                                           
|EXHIBIT INDEX                                                                        
|EXHIBIT 10.32                                                                        
|EXHIBIT 10.33                                                                        
|EXHIBIT 10.34                                                                        
|EXHIBIT 10.35                                                                        
|EXHIBIT 99.1                                                                         
|EXHIBIT 99.2                                                                         



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VIRAGE LOGIC CORPORATION

FORM 10-Q



INDEX

|                                                                                               |                                                                                                                      |  |      |   | 
|---------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------- |  | ---- | - | 
|                                                                                               |                                                                                                                      |  | Page
|                                                                                               |                                                                                                                      |  |     
|PART I  Financial Information                                                                 |                                                                                                                      |  |      |  
|                                                                                              
|ITEM 1  Financial Statements                                                                  |                                                                                                                      |  |      |  
|                                                                                               | Unaudited Condensed Consolidated Balance Sheets as of
June 30, 2002 and September 30, 2001                           |  |      | 3 | 
|                                                                                               | Unaudited Condensed Consolidated Statements of Operations
for the three and nine months ended June 30, 2002 and 2001 |  |      | 4 | 
|                                                                                               | Unaudited Condensed Consolidated Statements of Cash Flows
for the nine months ended June 30, 2002 and 2001           |  |      | 5 | 
|                                                                                               | Notes to Unaudited Condensed Consolidated Financial Statements                                                       |  |      | 6 | 
|ITEM 2  Managements Discussion and Analysis of Financial Condition
and Results of Operations |                                                                                                                      |  | 11   |  
|ITEM 3  Quantitative and Qualitative Disclosures about Market Risk                            |                                                                                                                      |  | 30  
|                                                                                              
|PART II  Other Information                                                                    |                                                                                                                      |  |      |  
|ITEM 1  Legal Proceedings                                                                     |                                                                                                                      |  | 31   |  
|ITEM 2  Changes in Securities and Use of Proceeds                                             |                                                                                                                      |  | 31   |  
|ITEM 3  Defaults upon Senior Securities                                                       |                                                                                                                      |  | 31   |  
|ITEM 4  Submission of Matters to a Vote of Security Holders                                   |                                                                                                                      |  | 31   |  
|ITEM 5  Other Information                                                                     |                                                                                                                      |  | 31   |  
|ITEM 6  Exhibits and Reports on Form 8-K                                                      |                                                                                                                      |  | 31   |  
|                                                                                              
|Signatures                                                                                     |                                                                                                                      |  | 33   |  

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VIRAGE LOGIC CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)

|                                               |                                                              |                                                                                                                 |                                            |         |          |        |               |         |     |        | 
|---------------------------------------------- | ------------------------------------------------------------ | --------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | -------- | ------ | ------------- | ------- | --- | ------ | 
|                                               |                                                              |                                                                                                                 |                                            |         | June 30, |        | September 30,
|                                               |                                                              |                                                                                                                 |                                            |         | 2002     |        | 2001         
|                                               |                                                              |                                                                                                                 |                                            |         |          |        |              
|                                               |                                                              |                                                                                                                 |                                            |         |          |        |               |         | (1)
|ASSETS                                         |                                                              |                                                                                                                 |                                            |         |          |        |               |        
|Current assets:                                |                                                              |                                                                                                                 |                                            |         |          |        |               |        
|                                               | Cash and cash equivalents                                    |                                                                                                                 | $                                          | 51,910  |          |        | $             | 27,868  |    
|                                               | Short-term investments                                       |                                                                                                                 |                                            | 3,001   |          |        |               | 24,800  |    
|                                               | Accounts receivable, net                                     |                                                                                                                 |                                            | 13,911  |          |        |               | 9,874   |    
|                                               | Costs in excess of related billings on uncompleted contracts |                                                                                                                 |                                            | 546     |          |        |               | 572     |    
|                                               | Prepaid expenses and other                                   |                                                                                                                 |                                            | 1,773   |          |        |               | 1,579   |    
|                                               | Taxes receivable                                             |                                                                                                                 |                                            | 710     |          |        |               | 1,582   |    
|                                               |                                                              |                                                                                                                 |                                            |         |          |        |               |        
|                                               |                                                              |                                                                                                                 | Total current assets                       |         |          | 71,851 |               |         |     | 66,275 | 
|                                               | Property, equipment and leasehold improvements, net          |                                                                                                                 |                                            | 5,531   |          |        |               | 4,810   |    
|                                               | Intangible assets, net                                       |                                                                                                                 |                                            | 3,630   |          |        |               | 270     |    
|                                               | Goodwill                                                     |                                                                                                                 |                                            | 9,782   |          |        |               |        |    
|                                               | Deferred tax assets                                          |                                                                                                                 |                                            | 831     |          |        |               | 790     |    
|                                               | Long-term investments                                        |                                                                                                                 |                                            |        |          |        |               | 5,284   |    
|                                               | Other long-term assets                                       |                                                                                                                 |                                            | 427     |          |        |               | 370     |    
|                                               |                                                              |                                                                                                                 |                                            |         |          |        |               |        
|                                               |                                                              |                                                                                                                 | Total assets                               |         | $        | 92,052 |               |         | $   | 77,799 | 
|                                               |                                                              |                                                                                                                 |                                            |         |          |        |               |        
|LIABILITIES AND STOCKHOLDERS EQUITY           |                                                              |                                                                                                                 |                                            |         |          |        |               |        
|Current liabilities:                           |                                                              |                                                                                                                 |                                            |         |          |        |               |        
|                                               | Accounts payable                                             |                                                                                                                 | $                                          | 703     |          |        | $             | 399     |    
|                                               | Accrued payroll and related expenses                         |                                                                                                                 |                                            | 2,715   |          |        |               | 1,595   |    
|                                               | Accrued expenses                                             |                                                                                                                 |                                            | 1,496   |          |        |               | 1,194   |    
|                                               | Note payable to shareholder                                  |                                                                                                                 |                                            | 1,500   |          |        |               |        |    
|                                               | Deferred revenue                                             |                                                                                                                 |                                            | 3,044   |          |        |               | 1,046   |    
|                                               | Current portion of capital lease obligations                 |                                                                                                                 |                                            | 131     |          |        |               | 240     |    
|                                               | Income taxes payable                                         |                                                                                                                 |                                            | 311     |          |        |               | 3       |    
|                                               |                                                              |                                                                                                                 |                                            |         |          |        |               |        
|                                               |                                                              |                                                                                                                 | Total current liabilities                  |         |          | 9,900  |               |         |     | 4,477  | 
|Long-term portion of capital lease obligations |                                                              |                                                                                                                 |                                           |         |          |        | 5             |        
|Deferred tax liabilities                       |                                                              |                                                                                                                 | 1,365                                      |         |          |        |              |        
|Other liabilities                              |                                                              |                                                                                                                 | 1,000                                      |         |          |        |              |        
|                                               |                                                              |                                                                                                                 |                                            |         |          |        |               |        
|                                               |                                                              |                                                                                                                 | Total liabilities                          |         |          | 12,265 |               |         |     | 4,482  | 
|Stockholders equity:                          |                                                              |                                                                                                                 |                                            |         |          |        |               |        
|                                               | Common stock, $.001 par value:                               |                                                                                                                 |                                            |         |          |        |               |         |    
|                                               |                                                              | Authorized
shares  150,000,000 at June 30, 2002
and September 30, 2001, respectively                           |                                            |         |          |        |               |         |     |       
|                                               |                                                              | Issued and outstanding shares  20,862,140 and
20,061,095 at June 30, 2002 and September 30,
2001, respectively |                                            |         | 20       |        |               |         | 20  |       
|                                               | Additional paid-in capital                                   |                                                                                                                 |                                            | 109,024 |          |        |               | 96,855  |    
|                                               | Accumulated other comprehensive income                       |                                                                                                                 |                                            | (8      | )        |        |               | 109     |    
|                                               | Notes receivable from stockholders                           |                                                                                                                 |                                            | (94     | )        |        |               | (1,044  | )  
|                                               | Deferred stock-based compensation                            |                                                                                                                 |                                            | (4,770  | )        |        |               | (3,398  | )  
|                                               | Accumulated deficit                                          |                                                                                                                 |                                            | (24,385 | )        |        |               | (19,225 | )  
|                                               |                                                              |                                                                                                                 |                                            |         |          |        |               |        
|                                               |                                                              |                                                                                                                 | Total stockholders equity                 |         |          | 79,787 |               |         |     | 73,317 | 
|                                               |                                                              |                                                                                                                 |                                            |         |          |        |               |        
|                                               |                                                              |                                                                                                                 | Total liabilities and stockholders equity |         | $        | 92,052 |               |         | $   | 77,799 | 
|                                               |                                                              |                                                                                                                 |                                            |         |          |        |               |        



(1) Derived from audited financial statements

See accompanying notes to unaudited condensed consolidated financial statements.

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VIRAGE LOGIC CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)

|                                                                                                                         |           |                                                                                                                                  |        |                          |       |                    |        |                   |       |      |        |        |       |   |        |        |       |  |        | 
|------------------------------------------------------------------------------------------------------------------------ | --------- | -------------------------------------------------------------------------------------------------------------------------------- | ------ | ------------------------ | ----- | ------------------ | ------ | ----------------- | ----- | ---- | ------ | ------ | ----- | - | ------ | ------ | ----- |  | ------ | 
|                                                                                                                         |           |                                                                                                                                  |        |                          |       | Three Months Ended |        | Nine Months Ended
|                                                                                                                         |           |                                                                                                                                  |        |                          |       | June 30,           |        | June 30,         
|                                                                                                                         |           |                                                                                                                                  |        |                          |       |                    |        |                  
|                                                                                                                         |           |                                                                                                                                  |        |                          |       | 2002               |        | 2001              |       | 2002 |        | 2001  
|                                                                                                                         |           |                                                                                                                                  |        |                          |       |                    |        |                   |       |      |        |       
|Revenue:                                                                                                                 |           |                                                                                                                                  |        |                          |       |                    |        |                   |       |      |        |        |       |   |        |       
|                                                                                                                         | License   |                                                                                                                                  | $      | 11,798                   |       |                    | $      | 8,319             |       |      | $      | 31,331 |       |   | $      | 21,817 |      
|                                                                                                                         | Royalties |                                                                                                                                  |        | 435                      |       |                    |        | 164               |       |      |        | 1,196  |       |   |        | 861    |      
|                                                                                                                         |           |                                                                                                                                  |        |                          |       |                    |        |                   |       |      |        |        |       |   |        |       
|Revenues                                                                                                                 |           |                                                                                                                                  | 12,233 |                          |       |                    | 8,483  |                   |       |      | 32,527 |        |       |   | 22,678 |       
|Cost of revenues (exclusive of amortization of
deferred stock compensation of $287, $284,
$654 and $1,148, respectively) |           |                                                                                                                                  | 2,463  |                          |       |                    | 1,698  |                   |       |      | 6,562  |        |       |   | 4,588  |       
|                                                                                                                         |           |                                                                                                                                  |        |                          |       |                    |        |                   |       |      |        |        |       |   |        |       
|                                                                                                                         |           |                                                                                                                                  |        | Gross profit             |       |                    | 9,770  |                   |       |      | 6,785  |        |       |   | 25,965 |        |       |  | 18,090 | 
|Operating expenses:                                                                                                      |           |                                                                                                                                  |        |                          |       |                    |        |                   |       |      |        |        |       |   |        |       
|                                                                                                                         |           | Research and development (exclusive of
amortization of deferred stock compensation
of $416, $408, $942 and $1,753,
respectively) |        |                          | 3,575 |                    |        |                   | 2,440 |      |        |        | 9,443 |   |        |        | 6,969 | 
|                                                                                                                         |           | Sales and marketing (exclusive of
amortization of deferred stock compensation
of $363, $388, $831 and $1,389,
respectively)      |        |                          | 3,115 |                    |        |                   | 2,320 |      |        |        | 8,340 |   |        |        | 5,775 | 
|                                                                                                                         |           | General and administrative (exclusive of
amortization of deferred stock compensation
of $141, $192, $332 and $815, respectively) |        |                          | 1,206 |                    |        |                   | 1,148 |      |        |        | 3,336 |   |        |        | 3,289 | 
|                                                                                                                         |           | Stock-based compensation                                                                                                         |        |                          | 1,207 |                    |        |                   | 1,272 |      |        |        | 2,759 |   |        |        | 5,105 | 
|                                                                                                                         |           | In-process research and development                                                                                              |        |                          | 1,100 |                    |        |                   |      |      |        |        | 1,100 |   |        |        |      | 
|                                                                                                                         |           |                                                                                                                                  |        |                          |       |                    |        |                   |       |      |        |        |       |   |        |       
|                                                                                                                         |           |                                                                                                                                  |        | Total operating expenses |       |                    | 10,203 |                   |       |      | 7,180  |        |       |   | 24,978 |        |       |  | 21,138 | 
|                                                                                                                         |           |                                                                                                                                  |        |                          |       |                    |        |                   |       |      |        |        |       |   |        |       
|Operating income (loss)                                                                                                  |           |                                                                                                                                  | (433   | )                        |       |                    | (395   | )                 |       |      | 987    |        |       |   | (3,048 | )     
|Interest income and other expense, net                                                                                   |           |                                                                                                                                  | 250    |                          |       |                    | 678    |                   |       |      | 948    |        |       |   | 2,469  |       
|Impairment of investment                                                                                                 |           |                                                                                                                                  | (5,284 | )                        |       |                    |       |                   |       |      | (5,284 | )      |       |   |       |       
|                                                                                                                         |           |                                                                                                                                  |        |                          |       |                    |        |                   |       |      |        |        |       |   |        |       
|Income (loss) before taxes                                                                                               |           |                                                                                                                                  | (5,467 | )                        |       |                    | 283    |                   |       |      | (3,349 | )      |       |   | (579   | )     
|Income tax provision                                                                                                     |           |                                                                                                                                  | 537    |                          |       |                    | 586    |                   |       |      | 1,811  |        |       |   | 1,709  |       
|                                                                                                                         |           |                                                                                                                                  |        |                          |       |                    |        |                   |       |      |        |        |       |   |        |       
|Net loss                                                                                                                 |           | $                                                                                                                                | (6,004 | )                        |       | $                  | (303   | )                 |       | $    | (5,160 | )      |       | $ | (2,288 | )     
|                                                                                                                         |           |                                                                                                                                  |        |                          |       |                    |        |                   |       |      |        |        |       |   |        |       
|Basic and diluted net loss per share                                                                                     |           | $                                                                                                                                | (0.30  | )                        |       | $                  | (0.02  | )                 |       | $    | (0.27  | )      |       | $ | (0.12  | )     
|                                                                                                                         |           |                                                                                                                                  |        |                          |       |                    |        |                   |       |      |        |        |       |   |        |       
|Shares used in computing per share amounts:                                                                              |           |                                                                                                                                  |        |                          |       |                    |        |                   |       |      |        |        |       |   |        |       
|                                                                                                                         |           |                                                                                                                                  |        | Basic and diluted        |       |                    | 20,039 |                   |       |      | 18,954 |        |       |   | 19,355 |        |       |  | 18,726 | 

See accompanying notes to unaudited condensed consolidated financial statements.

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VIRAGE LOGIC CORPORATION
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)

|                                                 |                                                     |                                                                                          |                                              |                                                              |        |                   |         |         |        |   |        |  
|------------------------------------------------ | --------------------------------------------------- | ---------------------------------------------------------------------------------------- | -------------------------------------------- | ------------------------------------------------------------ | ------ | ----------------- | ------- | ------- | ------ | - | ------ | -
|                                                 |                                                     |                                                                                          |                                              |                                                              |        | Nine Months Ended
|                                                 |                                                     |                                                                                          |                                              |                                                              |        | June 30,         
|                                                 |                                                     |                                                                                          |                                              |                                                              |        |                  
|                                                 |                                                     |                                                                                          |                                              |                                                              |        | 2002              |         | 2001   
|                                                 |                                                     |                                                                                          |                                              |                                                              |        |                   |         |        
|Operating activities                             |                                                     |                                                                                          |                                              |                                                              |        |                   |         |        
|                                                 |                                                     | Net loss                                                                                 |                                              | $                                                            | (5,160 | )                 |         | $       | (2,288 | )
|                                                 |                                                     | Adjustments to reconcile net income (loss) to net cash
provided by operating activities: |                                              |                                                              |        |                   |         |         |        |  
|                                                 |                                                     |                                                                                          |                                              | Provision for doubtful accounts                              |        |                   | 130     |         |        |   |       |  
|                                                 |                                                     |                                                                                          |                                              | Depreciation and amortization                                |        |                   | 2,896   |         |        |   | 1,931  |  
|                                                 |                                                     |                                                                                          |                                              | Amortization of intangible asset                             |        |                   | 140     |         |        |   | 162    |  
|                                                 |                                                     |                                                                                          |                                              | Consulting expense related to options granted                |        |                   | 136     |         |        |   |       |  
|                                                 |                                                     |                                                                                          |                                              | Impairment of investment                                     |        |                   | 5,284   |         |        |   |       |  
|                                                 |                                                     |                                                                                          |                                              | Amortization of stock-based compensation                     |        |                   | 2,759   |         |        |   | 5,105  |  
|                                                 |                                                     |                                                                                          | Changes in operating assets and liabilities: |                                                              |        |                   |         |         |        |   |       
|                                                 |                                                     |                                                                                          |                                              | Accounts receivable                                          |        |                   | (3,547  | )       |        |   | (3,125 | )
|                                                 |                                                     |                                                                                          |                                              | Costs in excess of related billings on uncompleted contracts |        |                   | 26      |         |        |   | (333   | )
|                                                 |                                                     |                                                                                          |                                              | Prepaid expenses and other                                   |        |                   | 132     |         |        |   | (2,272 | )
|                                                 |                                                     |                                                                                          |                                              | Taxes receivable                                             |        |                   | 872     |         |        |   | (321   | )
|                                                 |                                                     |                                                                                          |                                              | Deferred tax assets                                          |        |                   | (41     | )       |        |   | (560   | )
|                                                 |                                                     |                                                                                          |                                              | Other assets                                                 |        |                   | (42     | )       |        |   | 97     |  
|                                                 |                                                     |                                                                                          |                                              | Accounts payable                                             |        |                   | 7       |         |        |   | 381    |  
|                                                 |                                                     |                                                                                          |                                              | Accrued payroll and related expenses                         |        |                   | 1,119   |         |        |   | 424    |  
|                                                 |                                                     |                                                                                          |                                              | Accrued expenses                                             |        |                   | (83     | )       |        |   | 216    |  
|                                                 |                                                     |                                                                                          |                                              | Deferred revenue                                             |        |                   | 1,998   |         |        |   | 851    |  
|                                                 |                                                     |                                                                                          |                                              | Income taxes payable                                         |        |                   | 234     |         |        |   |       |  
|                                                 |                                                     |                                                                                          |                                              |                                                              |        |                   |         |        
|                                                 | Net cash provided by operating activities           |                                                                                          |                                              | 6,860                                                        |        |                   |         | 268     |       
|Investing activities                             |                                                     |                                                                                          |                                              |                                                              |        |                   |         |        
|                                                 | Purchase of property, plant and equipment           |                                                                                          |                                              | (3,483                                                       | )      |                   |         | (2,839  | )     
|                                                 | Purchase of investments                             |                                                                                          |                                              | (20,268                                                      | )      |                   |         | (24,341 | )     
|                                                 | Proceeds from maturities of investments             |                                                                                          |                                              | 41,950                                                       |        |                   |         |        |       
|                                                 | Acquisition of business, net of cash acquired       |                                                                                          |                                              | (2,919                                                       | )      |                   |         |        |       
|                                                 |                                                     |                                                                                          |                                              |                                                              |        |                   |         |        
|                                                 | Net cash provided by (used) in investing activities |                                                                                          |                                              | 15,280                                                       |        |                   |         | (27,180 | )     
|Financing activities                             |                                                     |                                                                                          |                                              |                                                              |        |                   |         |        
|                                                 | Net proceeds from issuance of common stock          |                                                                                          |                                              | 1,066                                                        |        |                   |         | 614     |       
|                                                 | Repayment from stockholders                         |                                                                                          |                                              | 950                                                          |        |                   |         | 519     |       
|                                                 | Principal payments on capital lease obligations     |                                                                                          |                                              | (114                                                         | )      |                   |         | (252    | )     
|                                                 |                                                     |                                                                                          |                                              |                                                              |        |                   |         |        
|                                                 | Net cash provided by financing activities           |                                                                                          |                                              | 1,902                                                        |        |                   |         | 881     |       
|Net increase in cash and cash equivalents        |                                                     |                                                                                          | 24,042                                       |                                                              |        |                   | (26,031 | )      
|Cash and cash equivalents at beginning of period |                                                     |                                                                                          | 27,868                                       |                                                              |        |                   | 58,596  |        
|                                                 |                                                     |                                                                                          |                                              |                                                              |        |                   |         |        
|Cash and cash equivalents at end of the period   |                                                     | $                                                                                        | 51,910                                       |                                                              |        | $                 | 32,565  |        
|                                                 |                                                     |                                                                                          |                                              |                                                              |        |                   |         |        

See accompanying notes to unaudited condensed consolidated financial statements.

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VIRAGE LOGIC CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

Note 1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. The preparation of financial statements and
related disclosures requires management to make estimates and assumptions that
affect the amounts reported in the condensed consolidated financial statements
and accompanying notes. Actual results could differ from these estimates. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three and nine month periods ended June 30, 2002 are
not necessarily indicative of the results that may be expected for the year
ending September 30, 2002. For further information refer to the Managements
Discussion and Analysis of Financial Condition and Results of Operations under
Item 2 below.

The accompanying unaudited condensed consolidated financial statements should
be read in conjunction with the audited consolidated financial statements of
Virage Logic Corporation (the Company) for the year ended September 30, 2001,
which are included in the Companys Form 10-K filed with the Securities and
Exchange Commission, Registration No. 000-31089.

The unaudited condensed consolidated financial statements include the accounts
of the Company and its wholly-owned subsidiaries, Virage Logic International
and In-Chip Systems, Inc. Intercompany balances and transactions have been
eliminated.

Note 2. Net Income (Loss) Per Share

Basic and diluted net income (loss) per share is presented in conformity with
Statement of Financial Accounting Standards No. 128, Earnings Per Share
(SFAS 128).

Basic income (loss) per share has been computed using the weighted average
number of shares of common stock outstanding during the period, less weighted
average shares outstanding that are subject to repurchase by the Company.

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Diluted income per share is computed using the weighted average number of
outstanding shares of common stock and, when dilutive, potential common shares
from options and warrants to purchase common stock subject to repurchase using
the treasury stock method.

The following table presents the computation of basic and diluted net loss per
share applicable to common stockholders (in thousands, except per share
amounts):

|                                                              |                                                     |   |                    |        |                   |   |        |        |      |   |        |        |   |   |        |        |  
|------------------------------------------------------------- | --------------------------------------------------- | - | ------------------ | ------ | ----------------- | - | ------ | ------ | ---- | - | ------ | ------ | - | - | ------ | ------ | -
|                                                              |                                                     |   | Three Months Ended |        | Nine Months Ended
|                                                              |                                                     |   | June 30,           |        | June 30,         
|                                                              |                                                     |   |                    |        |                  
|                                                              |                                                     |   | 2002               |        | 2001              |   | 2002   |        | 2001
|                                                              |                                                     |   |                    |        |                   |   |        |        |     
|Net loss                                                      |                                                     | $ | (6,004             | )      |                   | $ | (303   | )      |      | $ | (5,160 | )      |   | $ | (2,288 | )     
|                                                              |                                                     |   |                    |        |                   |   |        |        |      |   |        |        |   |   |        |       
|Basic:                                                        |                                                     |   |                    |        |                   |   |        |        |      |   |        |        |   |   |        |       
|                                                              | Weighted average shares of common stock
outstanding |   |                    | 20,524 |                   |   |        | 19,973 |      |   |        | 20,281 |   |   |        | 19,929 |  
|                                                              | Less weighted average shares subject to
repurchase  |   |                    | (485   | )                 |   |        | (1,019 | )    |   |        | (926   | ) |   |        | (1,203 | )
|                                                              |                                                     |   |                    |        |                   |   |        |        |      |   |        |        |   |   |        |       
|Shares used in computing basic and
diluted net loss per share |                                                     |   | 20,039             |        |                   |   | 18,954 |        |      |   | 19,355 |        |   |   | 18,726 |       
|                                                              |                                                     |   |                    |        |                   |   |        |        |      |   |        |        |   |   |        |       
|Basic and diluted net loss per share                          |                                                     | $ | (0.30              | )      |                   | $ | (0.02  | )      |      | $ | (0.27  | )      |   | $ | (0.12  | )     
|                                                              |                                                     |   |                    |        |                   |   |        |        |      |   |        |        |   |   |        |       

The number of potential common shares that were
anti-dilutive was 1,249,000
and 1,727,000 shares for the three and nine months ended June 30, 2002,
respectively, and 2,106,000 and 2,331,000 shares for the three and nine months
ended June 30, 2001, respectively.

Note 3. Comprehensive Income (Loss)

In June 1997, the Financial Accounting Standards Board released Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income (SFAS
130). SFAS 130 established standards for the reporting and display of
comprehensive income (loss) and its components. Total comprehensive income
(loss), related primarily to the change in unrealized gains and losses on
investments, was not materially different from net income (loss) incurred for
the three and nine month periods ended June 30, 2002 and 2001.

Note 4. Segment Information

The Company operates in one business segment, the sale of semiconductor
intellectual property for the silicon infrastructure containing
memory and logic elements of systems-on-a-chip, which it
sells to fabless semiconductor companies as well as integrated device
manufacturers.

Segment selection is based upon the internal organization structure, the manner
in which these operations are managed and their performance evaluated by
management, the availability of separate financial information and overall
materiality considerations.

Long-lived assets are located primarily in North America with insignificant
amounts held at our foreign locations. The Company has only one product line,
therefore disclosure by product groupings is not applicable.

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Revenues by geographic region were as follows (in thousands):

|          |               |       |   |                    |        |                   |   |       |       |      |   |        |        |  |   |        |        | 
|--------- | ------------- | ----- | - | ------------------ | ------ | ----------------- | - | ----- | ----- | ---- | - | ------ | ------ |  | - | ------ | ------ | 
|          |               |       |   | Three Months Ended |        | Nine Months Ended
|          |               |       |   | June 30,           |        | June 30,         
|          |               |       |   |                    |        |                  
|          |               |       |   | 2002               |        | 2001              |   | 2002  |       | 2001
|          |               |       |   |                    |        |                   |   |       |       |     
|Revenues: |               |       |   |                    |        |                   |   |       |       |      |   |        |        |  |   |       
|          | North America |       | $ | 7,119              |        |                   | $ | 5,484 |       |      | $ | 19,638 |        |  | $ | 14,688 |       
|          | EMEA          |       |   | 2,837              |        |                   |   | 2,302 |       |      |   | 7,516  |        |  |   | 3,914  |       
|          | Asia Pacific  |       |   | 2,277              |        |                   |   | 697   |       |      |   | 5,373  |        |  |   | 4,076  |       
|          |               |       |   |                    |        |                   |   |       |       |      |   |        |        |  |   |       
|          |               | Total |   | $                  | 12,233 |                   |   | $     | 8,483 |      |   | $      | 32,527 |  |   | $      | 22,678 | 
|          |               |       |   |                    |        |                   |   |       |       |      |   |        |        |  |   |       

For the three months ended June 30, 2002, Agere Systems generated 14% of
revenues. No other customers generated greater than 10% of revenues during the
quarter.

Note 5. Impairment of Investment

During the third quarter of 2002, we determined that the recoverability of our
strategic investment was not certain, and the investment was impaired. This resulted in a charge to non-operating expenses of $5.3 million
during the third quarter of fiscal 2002.

Note 6. Recently Issued Accounting Pronouncements

In accordance with Financial Accounting Standards Board Statement (SFAS)
No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible
Assets, goodwill and intangible assets deemed to have indefinite lives will no
longer be amortized, but instead will be subject to annual impairment tests.
At June 30, 2002 the Company had a net intangible balance of $162,000 related
to goodwill, workforce and customer list purchased on
December 1, 1999, $3.5 million related to technology
acquired through the acquisition of In-Chip Systems, Inc.
(In-Chip) and
$9.8 million of goodwill related to the acquisition of In-Chip Systems, Inc. In
connection with the adoption of SFAS No. 142, the Company determined that there
was no impairment of goodwill.

In October 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets. SFAS No. 144 addresses significant issues
relating to the implementation of SFAS No. 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, and develops
a single accounting method under which long-lived assets that are to be
disposed of by sale are measured at the lower of book value or fair value less
cost to sell. Additionally, SFAS No. 144 expands the scope of discontinued
operations to include all components of an entity with operations that (1) can
be distinguished from the rest of the entity and (2) will be eliminated from
the ongoing operations of the entity in a disposal transaction. SFAS No. 144 is
effective for financial statements issued for fiscal years beginning after
December 15, 2001, and its provisions are to be applied prospectively. The
Company does not expect the adoption will have an impact on its financial
position and results of operations.

In June 2002, the FASB issued SFAS No. 146, Accounting for Exit or Disposal
Activities (SFAS 146). SFAS 146 addresses significant issues regarding the
recognition, measurement and reporting of costs that are associated with exit
and disposal
activities, including restructuring activities that are currently accounted for
under EITF No. 94-3, Liability Recognition for Certain Employee Termination
Benefits and Other Costs

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to Exit an Activity (including Certain Costs Incurred
in a Restructuring). The scope of SFAS 146 also includes costs related to
terminating a contract that is not a capital lease and termination benefits
that employees who are involuntarily terminated receive under the terms of a
one-time benefit arrangement that is not an ongoing benefit arrangement or an
individual deferred-compensation contract. SFAS 146 will be effective for exit
or disposal activities that are initiated after December 31,
2002, and early
application is encouraged. The Company will adopt SFAS 146 for our fiscal year
beginning October 1, 2002 and we do not expect that the adoption will have a
material impact on its financial position, results of operation or cash
flows.

Note 7. Acquisition

On May 24, 2002, the Company acquired In-Chip Systems, Inc. (In-Chip), a
privately-held corporation, based in Sunnyvale, California. Under the terms of the agreement, all outstanding
shares of In-Chip common stock were exchanged for an aggregate of 528,547
shares of Virage Logic common stock. The acquisition is expected to strengthen the
Companys position in the semiconductor intellectual property market by
providing customers logic platforms along with embedded memory technology. In
addition, the acquisition brings to the Company complementary technology and a
skilled workforce. The transaction was accounted for under the purchase method
of accounting and accordingly the results of operations of In-Chip have been
included in the Companys financial statements since the date of acquisition.

The unaudited pro forma combined financial statements reflect an estimated
purchase price of approximately $17.0 million, measured using the average fair
market value of Virage Logics common stock from May 3, 2002 to May 9, 2002,
the five trading days surrounding the date the acquisition agreement with
In-Chip was announced, plus the fair value of the options to be issued by
Virage Logic in the acquisition, and other costs directly related to the
acquisition as follows (in thousands):

|                                  |  |   |        | 
|--------------------------------- |  | - | ------ | 
|Cash payment                      |  | $ | 5,500  | 
|Fair market value of common stock |  |   | 8,940  | 
|Fair market value of options      |  |   | 1,769  | 
|Estimated acquisition costs       |  |   | 825    | 
|                                  |  |   |        | 
|                                  |  | $ | 17,034 | 
|                                  |  |   |        | 

The final purchase price allocation will be determined upon finalization of the
closing balance sheet, finalization of estimates for direct acquisition costs
and a comprehensive final evaluation of the fair value of all assets and
liabilities. The preliminary purchase price allocation, which is subject to
change based on the Companys final analysis, is as follows (in thousands):

|                                    |  |   |        |  
|----------------------------------- |  | - | ------ | -
|Tangible assets acquired            |  | $ | 2,067  |  
|Liabilities assumed                 |  |   | (1,923 | )
|Deferred compensation               |  |   | 3,873  |  
|In
process research and development |  |   | 1,100  |  
|Intangible assets                   |  |   | 3,500  |  

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|                       |  |   |        |  
|---------------------- |  | - | ------ | -
|Goodwill               |  |   | 9,782  |  
|Deferred tax liability |  |   | (1,365 | )
|                       |  |   |        |  
|Total consideration    |  | $ | 17,034 |  
|                       |  |   |        |  

The purchase price includes $5.5 million of cash to be paid out, of which $4.0
million, net of acquisition costs of $151,000 paid by the Company on behalf of
the In-Chip shareholders, was paid out to the In-Chip shareholders as of June
30, 2002, with the remaining $1.5 million to be paid out over 3 years in
accordance with the acquisition agreement. Deferred compensation recorded
in connection with the acquisition will be amortized over the original vesting
period of the options assumed.

Tangible assets were valued at their respective carrying amounts as we believe
that these amounts approximate their current fair values. The valuation of the
acquired intangible assets was based on managements estimates using a
preliminary valuation report prepared by an independent third-party valuation
consultant and consists of existing technology. Acquired intangible assets will
be amortized over their estimated useful life of 5 to 10 years
(weighted-average useful life of 9.5 years). In accordance with SFAS 142,
goodwill is not amortized and will be tested for impairment at least annually.

The value of the purchased in-process research and
development was determined by estimating the projected net cash flows
related to the products, including costs to complete the development
of the technology and the future revenues to be earned upon
commercialization of the products. These cash flows were then
discontinued back to their net present value. The projected net cash
flows from the projects were based on management's estimates of
revenues and operating profits related to the projects.

The following pro forma summary is provided for illustrative purposes only and
is not necessarily indicative of the consolidated results of operations for
future periods or that actually would have been realized had the Company and
In-Chip been a consolidated entity during the periods presented. The following
unaudited proforma information presents a summary of the results of operations
of the Company assuming the acquisition of In-Chip occurred at the beginning of
each period presented (unaudited, in thousands, except per share amounts):

|                      |  |                             |        |                            |  |      |        |      |  |   |        |   |  |   |        |  
|--------------------- |  | --------------------------- | ------ | -------------------------- |  | ---- | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                      |  | Three months ended June 30, |        | Nine months ended June 30,
|                      |  |                             |        |                           
|                      |  | 2002                        |        | 2001                       |  | 2002 |        | 2001
|                      |  |                             |        |                            |  |      |        |     
|Revenues              |  | $                           | 13,703 |                            |  | $    | 8,582  |      |  | $ | 35,270 |   |  | $ | 25,659 |  
|Net Loss              |  |                             | (5,312 | )                          |  |      | (1,449 | )    |  |   | (7,110 | ) |  |   | (4,998 | )
|Basic
and diluted EPS |  | $                           | (0.26  | )                          |  | $    | (0.07  | )    |  | $ | (0.36  | ) |  | $ | (0.26  | )

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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Statements made in this Managements Discussion and Analysis of Financial
Condition and Results of Operations, other than statements of historical fact,
are forward-looking statements that involve risks and uncertainties. These
statements relate to future events or our future financial performance,
including statements relating to products, customers, business prospects and
effects of acquisitions. In some cases, forward-looking statements can be
identified by terminology such as may, will, should, expect,
anticipate, intend, plan, believe, estimate, potential, or
continue, the negative of these terms or other comparable terminology. These
statements involve a number of risks and uncertainties, including our ability
to overcome the challenges associated with establishing licensing relationships
with semiconductor companies, our ability to obtain royalty revenues from
customers in addition to license fees, business and economic conditions
generally and in the semiconductor industry in particular, competition in the
market for embedded memories and logic platforms, the ability to integrate
In-Chip and its products into the Company and to maintain and develop
relationships with existing In-Chip customers, and other risk and uncertainties
including those set forth below under Risk Factors that could cause actual
events or results to differ materially from any forward-looking statement.
These forward-looking statements speak only as of the date hereof, we expressly
disclaim any obligation or undertaking to release publicly any updates or
revisions to any forward-looking statements contained herein. The following
information should be read in conjunction with the Managements Discussion and
Analysis of Financial Condition and Results of Operations on pages 15-20 of
the Companys Form 10-K for the fiscal year ended September 30, 2001 filed with
the Securities and Exchange Commission on December 19, 2001.

Overview

Virage Logic provides
silicon infrastructure in the form of semiconductor IP containing
embedded memory and logic elements for systems-on-a-chip integrated circuits. These chips
are used in communications equipment, computer and consumer products, such as
cellular and digital phones, pagers, digital cameras, DVD players, switches and
modems. Our memories are optimized for our customers manufacturing processes
and are pre-tested through actual manufacture of silicon chips at third-party
foundries.

Revenues consist of license fees for our memories, standard and custom
memory compilers, software development tools, logic components and royalties
from certain third-party semiconductor foundries on their sales of silicon
chips manufactured for our fabless customers. Licensing of our intellectual
property involves a sales cycle of three to nine months. Our memories,
compilers and logic components can be customized for our customers specific manufacturing processes
and requirements. A custom contract would typically call for milestone payments
that are defined in the statement of work and program schedule that accompany a
master license agreement. Milestone deliveries generally occur over three to
nine months as various phases of product development and/or services are
completed.

Recently we entered
into agreements with certain customers that provide for payment of a
project fee each time the customer completes a design incorporating
our intellectual property. No revenue related to such project fees has been
recorded to date.

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License revenues are recognized when persuasive evidence of an agreement
exists, delivery of the product has occurred, we have no significant remaining
obligations to perform, the fee is fixed or determinable and collectibility is
probable. License revenues for certain software development tools are recorded
ratably over the maintenance term as vendor-specific objective evidence of fair
value for the maintenance portion of the revenues does not exist. License
revenues on custom memory compilers and fixed price service arrangements are
recognized using contract accounting over the period that services are
performed under the percentage-of-completion method. For such licenses, we
determine our progress-to-completion using input measures based on labor hours
incurred. A provision for estimated losses on engagements is made in the period
in which the loss becomes probable and can be reasonably estimated. To date,
no such loss provision has been necessary.

Support revenues
related to our products are
recognized ratably over the term of the agreement for all agreements entered
into after October 1, 2001. For agreements recorded in periods prior to the
first quarter of fiscal 2002, support revenues were not deferred over the term
of the license agreement but rather, recorded up front with an estimated cost
of support accrued at the time license revenue was recognized. The increasing
complexity of our products, associated with the decreasing geometries and the
greater number of processes for each geometry, and the expected increase in
estimated support costs resulted in the deferral of support revenues.

Currently, license fees represent a substantial portion of our revenues.
We have agreements with certain third-party semiconductor foundries which
require them to pay royalties on their sales of silicon chips manufactured for
our fabless customers. Beginning with our Customer-Touch STAR Memory
System, CAM technologies and more recently with the introduction of
our NOVeA technology, our license agreements provide for payment of
royalties also by our integrated device manufacturer and fabless
customers. Royalty revenues from the foundries for the three and nine months ended
June 30, 2002 totaled $435,000 and $1.2 million, respectively, as compared to
$164,000 and $861,000 for the three and nine months ended June 30, 2001. The
time delays for receiving royalty revenues are due to the typical length of
time required for the customer to incorporate our embedded memories into their
design and manufacture and bring to market a product incorporating our
memories. We believe that product output by our foundry partners is
improving
and hence, our royalties should continue its slight upward trend.

For the three months ended June 30, 2002, Agere Systems generated 14% of
revenues. No other customers generated revenues of greater than 10% for the
quarter. For the three months ended June 30, 2001, Intel Corporation, Philips
Semiconductor, and Vitesse Semiconductor each generated between 12% and 19% of
our revenues. Collectively, these companies represented 50% of total revenues
for that period.

We continue to increase our direct sales force in the North America, EMEA
and Asia Pacific regions, while also maintaining the use of distributors in
Japan and the rest of Asia. Sales to customers located outside North America
accounted for 42% and 40% of our revenues for the three and nine months ended
June 30, 2002, respectively. All revenues to date have been denominated in
U.S. dollars.

Since our inception in November 1995, cost of revenues and other expense
categories have progressively increased as we add personnel and increase the
level of our business

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activities. We intend to continue making significant expenditures
associated with research and development, sales and marketing and general and
administrative activities, and expect that costs of revenues and these expenses
will continue to be a significant percentage of revenues in future periods.

We have incurred, and will continue to incur, substantial amortization of
stock-based compensation, which represents non-cash charges incurred as a
result of the issuance of stock options and restricted stock to employees.
These charges are recorded based on the difference between the deemed fair
value of the common stock at the date of grant and the exercise price of such
options or purchase price of such restricted stock. The aggregate deferred
stock-based compensation at June 30, 2002 was $4.8 million. This amount is
presented as a reduction of stockholders equity and is being amortized over the vesting period of the applicable options or
stock, generally two to four years. Amortization of deferred stock-based
compensation for the three months ended June 30, 2002, net of cancellations,
was approximately $1,207,000. We anticipate that the amortization of
stock-based compensation for options granted and restricted stock purchased
through June 30, 2002 will equal approximately $1.1 million for the remainder
of 2002, $2.7 million in 2003, $0.7 million in 2004 and $0.3 million in 2005.

Critical Accounting Policies

The preparation of financial statements in accordance with generally accepted
accounting principles in the United States requires that we make estimates and
judgments, which affect the reported amounts of assets, liabilities, revenues
and expenses, and related disclosures of contingent assets and liabilities. On
an on-going basis, we evaluate our estimates, including those related to bad
debts, investments, intangible assets, income taxes, and contingencies such as
litigation. We base our estimates on historical experience and other
assumptions that we believe are reasonable under the circumstances. Actual
results may differ from these estimates under different assumptions or
conditions.

We have identified the following as critical accounting policies to
our company: revenue recognition, accounts receivable, valuation of
long-lived assets and investments, purchased intangibles, including
goodwill, accounting for stock options and income taxes.

Revenue recognition

Our revenues are derived from licenses of our semiconductor intellectual
property, which includes memories, standard and custom memory compilers,
software development tools and logic components. Standard memory compilers and
software development tools include a license of software and related
maintenance services. Custom memory compilers typically include a license of
software, maintenance services and customization of the software for the
customers specific applications. Logic components include licenses of
intellectual property and may include customization.

For each arrangement, we determine whether persuasive evidence of an
agreement exists, delivery of the product has occurred, there are no
significant remaining obligations on our part, the fee is fixed or
determinable, and collectibility is probable. If any of these criteria are not
met, we defer revenue recognition until such time as all criteria are met.

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Standard memory compiler and software development tool arrangements
include either a perpetual license with maintenance (telephone and email
support and the rights to unspecified upgrades on a when-and-if available
basis) or a term license with maintenance. We recognize the license fees for
perpetual licenses upon the delivery of the compiler or software and the
maintenance ratably over the maintenance period. Revenue is recognized using
the residual method for valuation of the components of the sale. Accordingly,
vendor specific objective evidence for maintenance revenue is determined based
on the stated renewal rate on each contract. For term licenses accompanied by
maintenance, we recognize the entire arrangement fee ratably over the term of
the license.

Certain agreements include project based fees which require payment
to be made when the project is taped out. This revenue stream is
dependent on the ability of semiconductor companies to successfully
design and manufacture silicon chips.

Revenues from logic components include licenses of intellectual property
and may include service revenues associated with engineering and design
services. We recognize the license fees upon contract signing where no
delivery is required or upon delivery when required. Service revenues are recognized using the percentage of completion
method based on the ratio of costs incurred to the total estimated
costs.

Revenues from custom memory compilers involve customization to the
functionality of the software and are recognized using contract accounting over
the period that services are performed under the percentage-of-completion
method. For all license and service agreements accounted for using the
percentage-of-completion method, we determine progress-to-completion using
input measures based on labor hours incurred. A provision for estimated losses
on engagements is made in the period in which the loss becomes probable and can
be reasonably estimated. Costs incurred in advance of billings are recorded as
costs in excess of related billings on uncompleted contracts. If customer
acceptance is required for completion of specified milestones, related revenue
is deferred until the acceptance criteria is met.

Customer billing occurs in accordance with contract terms. Customer
advances and amounts billed to customers in excess of revenue recognized are
recorded as deferred revenues.

Royalties are calculated based on production volumes of wafers containing
silicon chips utilizing our intellectual property. Royalty revenue is generally
determined and recognized one quarter in arrears, when a production volume
report is received from the customer or foundry. The amount of royalty revenue
is computed on either a rate per-chip or rate per-wafer basis depending upon
the terms in the respective license agreements.

Accounts Receivable

We perform ongoing credit evaluations of our customers and adjust credit
limits based upon payment history and the customers current credit worthiness,
as determined by our review of their current credit information. We
continuously monitor collections and payments from our customers and maintain a
provision for estimated credit losses based upon our historical experience and
any specific customer collection issues that we have identified. While such
credit losses have historically been within our expectations and the provisions
established, we cannot guarantee that we will continue to experience the same
credit loss rates that we have in the past. Since our accounts receivable are
concentrated in a relatively few number of customers, a significant change in
the liquidity or financial position of any one of these customers could have a
material adverse impact on the collectability of our accounts receivables and
our future operating results.

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Valuation of Long-Lived Assets and Investments

We periodically review the carrying value of our long-lived assets and
investments for continued appropriateness. This review is based upon our
projections of anticipated future cash flows from such assets and investments.
While we believe that our estimates of future cash flows are reasonable,
different assumptions regarding such cash flows could materially affect our
evaluations. During the third quarter of fiscal year 2002, due to the
uncertainty surrounding the future recoverability of our investment in Atmos
Corporation, the Company recorded an impairment charge for the entire amount of
the investment which totaled $5.3 million.

Purchased Intangibles, Including
Goodwill

In accordance with
SFAS 144, we will evaluate purchased intangibles, including goodwill,
for impairment. An assessment of goodwill is subjective by nature,
and significant management judgment is required to forecast future
operating results and projected cash flows. If our estimates or
related assumptions change in the future, these changes in conditions
could require material write-downs of net intangible assets,
including impairment charges for goodwill.

Accounting for Stock Options

We account for
outstanding stock options under Accounting Principles Board
(APB) Opinion No. 25, Accounting for Stock
Issued to Employees (APB 25), as allowed by
SFAS No. 123, Accounting compensation for Stock-Based
Compensation (SFAS 123). In accordance with
APB 25, we do not recognize compensation expense for options
granted to employees as all employee options are granted with an
exercise price equal to the fair market value of the underlying
stock.

Income taxes

Our income tax policy records the estimated future tax effects of
temporary differences between the tax bases of assets and liabilities and
amounts reported in the accompanying consolidated balance sheets. These
differences result in deferred tax assets and liabilities. Carrying value of
the Companys net deferred tax assets assumes that we will be able to generate
sufficient future taxable income in certain tax jurisdictions, based on
estimates and assumptions. Management evaluates the recoverability of the
deferred tax assets and assesses the need for additional valuation allowances
on a quarterly basis. Management believes current valuation allowance levels
are appropriate based on our assessments.

Results of Operations

The following table lists the percentage of revenues for certain items in
our consolidated statements of operations for the periods indicated:

|                            |                         |                            |       |      |                    |   |                   |      |      |   |       |     |      |   |       |       |      |   | 
|--------------------------- | ----------------------- | -------------------------- | ----- | ---- | ------------------ | - | ----------------- | ---- | ---- | - | ----- | --- | ---- | - | ----- | ----- | ---- | - | 
|                            |                         |                            |       |      | Three Months Ended |   | Nine Months Ended
|                            |                         |                            |       |      | June 30,           |   | June 30,         
|                            |                         |                            |       |      |                    |   |                  
|                            |                         |                            |       |      | 2002               |   | 2001              |      | 2002 |   | 2001 
|                            |                         |                            |       |      |                    |   |                   |      |      |   |      
|Revenue:                    |                         |                            |       |      |                    |   |                   |      |      |   |       |     |      |   |       |      
|                            |                         | License                    |       |      | 96.4               | % |                   |      | 98.1 | % |       |     | 96.3 | % |       |       | 96.2 | %
|                            |                         | Royalties                  |       |      | 3.6                |   |                   |      | 1.9  |   |       |     | 3.7  |   |       |       | 3.8  |  
|                            |                         |                            |       |      |                    |   |                   |      |      |   |       |     |      |   |       |      
|Revenues                    |                         |                            | 100.0 |      |                    |   | 100.0             |      |      |   | 100.0 |     |      |   | 100.0 |      
|Cost of revenues            |                         |                            | 20.1  |      |                    |   | 20.0              |      |      |   | 20.2  |     |      |   | 20.2  |      
|                            |                         |                            |       |      |                    |   |                   |      |      |   |       |     |      |   |       |      
|Gross profit                |                         |                            | 79.9  |      |                    |   | 80.0              |      |      |   | 79.8  |     |      |   | 79.8  |      
|Operating expenses:         |                         |                            |       |      |                    |   |                   |      |      |   |       |     |      |   |       |      
|                            |                         | Research and development   |       |      | 29.2               |   |                   |      | 28.8 |   |       |     | 29.0 |   |       |       | 30.7 |  
|                            |                         | Sales and marketing        |       |      | 25.4               |   |                   |      | 27.3 |   |       |     | 25.6 |   |       |       | 25.5 |  
|                            |                         | General and administrative |       |      | 9.9                |   |                   |      | 13.5 |   |       |     | 10.3 |   |       |       | 14.5 |  
|                            |                         | Stock-based compensation   |       |      | 9.9                |   |                   |      | 15.0 |   |       |     | 8.5  |   |       |       | 22.5 |  
|                            |                         | In-process R&D             |       |      | 9.0                |   |                   |      |     |   |       |     | 3.4  |   |       |       |     |  
|                            |                         |                            |       |      |                    |   |                   |      |      |   |       |     |      |   |       |      
|Total operating expenses    |                         |                            | 83.4  |      |                    |   | 84.6              |      |      |   | 76.8  |     |      |   | 93.2  |      
|                            |                         |                            |       |      |                    |   |                   |      |      |   |       |     |      |   |       |      
|                            | Operating income (loss) |                            |       | (3.5 | )                  |   |                   | (4.6 | )    |   |       | 3.0 |      |   |       | (13.4 | )   
|Interest and other expenses |                         |                            | 2.0   |      |                    |   | 8.0               |      |      |   | 2.9   |     |      |   | 10.9  |      
|Impairment of investment    |                         |                            | (43.2 | )    |                    |   |                  |      |      |   | (16.2 | )   |      |   |      |      
|Income tax provision        |                         |                            | (4.4  | )    |                    |   | (6.9              | )    |      |   | (5.6  | )   |      |   | (7.5  | )    
|                            |                         |                            |       |      |                    |   |                   |      |      |   |       |     |      |   |       |      
|Net loss                    |                         |                            | (49.1 | )%   |                    |   | (3.5              | )%   |      |   | (15.9 | )%  |      |   | (10.0 | )%   
|                            |                         |                            |       |      |                    |   |                   |      |      |   |       |     |      |   |       |      

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Three and Nine Months Ended June 30, 2002 and 2001

Revenues.Revenues increased 44% to $12.2 million from $8.5 million for
the three months ended June 30, 2002 and 2001, respectively. Revenues increased
43% to $32.5 million from $22.7 million for the nine months ended June 30, 2002
and 2001, respectively. The increase in revenues is primarily due to continued
sales of our embedded memory product and its different geometry
variations including the continued migration to the
0.13 micron embedded memory technologies by our customers, emerging sales
related to the 90 nanometer (nm) embedded memory technology and the expansion of our
STAR memory system product family to include the 8M SRAM and reconfigurable
variations. We have seen increased revenues from the North America and Asia
Pacific regions for the three months ended June 30, 2002 over the same period
last fiscal year, associated with our increased sales forces and continuing
market penetration in these geographies. In addition, the Company received
royalty revenues from third party foundries totaling $435,000 and $164,000 for
the three months ended June 30, 2002 and 2001, respectively, and $1.2 million
and $861,000 for the nine months ended June 30, 2002 and 2001, respectively.

Gross Profit.Gross profit is revenues less cost of revenues. Cost of
revenues consists primarily of personnel expenses and the allocated portion of
facilities and equipment expenses. Gross profit increased 44% to $9.8 million
from $6.8 million for the three months ended June 30, 2002 and 2001,
respectively. Gross profit increased 44% to $26.0 million from $18.1 million
for the nine months ended June 30, 2002 and 2001, respectively. These
increases in gross profit are primarily attributable to increased sales volume
and increased license fees from fabless semiconductor companies for standard
products that require minimal labor costs for customization. Cost of revenues
excludes $287,000 and $284,000 of amortization of stock-based compensation for
the three months ended June 30, 2002 and 2001, respectively, and $654,000 and
$1.1 million for the nine months ended June 30, 2002 and 2001, respectively.

Research and
Development Expense.Research and development expense primarily
includes personnel expenses, software maintenance, patent
amortization and depreciation associated with the development of successive generations of embedded
memory technologies and of new technologies. Research and development expense
increased 47% to $3.6 million for the three months ended June 30, 2002 from
$2.4 million for the same period last fiscal year. Research and development
expense increased 36% to $9.4 million for the nine months ended June 30, 2002
from $7.0 million for the same period last fiscal year. The increase in
research and development expense was primarily due to the increase in the
number of employees involved in research and development related to the
variations within the 90 nm, STAR memory system and NOVeA embedded memory
technologies product offerings. Also increasing is depreciation related to
capital spending for both computer hardware and software and software
maintenance fees for software technology used in the development of our
products. We anticipate that research and development expense will continue to
increase as we expand our product offerings and invest in technologies for
future delivery. Research and development expense excludes $416,000 and
$408,000 of amortization of stock-based compensation for the three months ended
June 30, 2002 and 2001, respectively, and $942,000 and $1.8 million for the
nine months ended June 30, 2002, and 2001, respectively.

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Sales and Marketing Expense.Sales and marketing expense consists
primarily of personnel, commissions, advertising, promotion and other
associated costs. Sales and marketing expense increased 34% to $3.1 million
for the three months ended June 30, 2002 from $2.3 million for the same period
last fiscal year. Sales and marketing expense increased 44% to $8.3 million
for the nine months ended June 30, 2002 from $5.8 million for the same period
last fiscal year. The increase in sales and marketing expense was due to
hiring additional personnel, advertising and promotional costs and expanded
sales and marketing activities. We anticipate that sales and marketing expense
will continue to increase as we expand our product lines and target new
customers and markets for our technologies. Sales and marketing expense
excludes $363,000 and $388,000 of amortization of stock-based compensation for
the three months ended June 30, 2002 and 2001, respectively, and $831,000 and
$1.4 million for the nine months ended June 30, 2002 and 2001, respectively.

General and Administrative Expense.General and administrative expense
consists primarily of personnel and other costs associated with the management
of our business. General and administrative expense increased 5% to
$1.2 million for the three months ended June 30, 2002 from $1.1 million for the same
period last fiscal year. General and administrative expense increased 1% to
$3.3 million for the nine months ended June 30, 2002 from $3.3 million for the
same period last fiscal year. The increase in general and administrative
expense was primarily due to increased professional service costs,
principally for legal advisory and accounting services. General and
administrative expense excludes $141,000 and $192,000 of amortization of
stock-based compensation for the three months ended June 30, 2002 and 2001,
respectively, and $332,000 and $815,000 for the nine months ended June 30, 2002
and 2001, respectively.

Stock-Based
Compensation.With respect to the grant of stock options and
restricted stock to
employees, the Company has aggregate deferred stock-based compensation of
approximately $4.8 million for the period ended June 30, 2002 and $3.4 million
for the period ended September 30, 2001. The amount of deferred stock-based
compensation is presented as a reduction of stockholders equity and is being
amortized over the vesting period of the applicable options or stock, generally two to four
years. The Company amortized, net of cancellations, $1.2 million and
$1.3 million during the three months ended June 30, 2002 and 2001, respectively, and
amortized $2.8 million and $5.1 million during the nine months ended June 30,
2002 and 2001, respectively.

Interest Income and Other Expenses.Interest income decreased to $261,000
for the three months ended June 30, 2002 from $696,000 for the same period last
fiscal year. This decrease was due to continued lower interest rates.
Interest and other expenses decreased to $11,000 for the three months ended
June 30, 2002 from $18,000 for the same period last fiscal year. This decrease
was primarily the result of the continuing repayment of the outstanding
balances under capital lease lines.

Income Tax Provision.The provision for income taxes was $537,000 and
$586,000 for the three months ended June 30, 2002 and 2001, respectively. The
provision for income taxes was approximately $1.8 million and $1.7 million for
the nine months ended June 30, 2002 and 2001, respectively. The effective tax
rates differed from the combined federal and state rates due primarily to
stock-based compensation related charges that are non-deductible for tax
purposes.

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Liquidity and Capital Resources

The Company has financed its operations from inception to June 30, 2002
from license and royalty revenue, through the issuance of notes and preferred
stock, borrowing under capital leases and the $50.7 million net proceeds from
the Companys initial public offering and simultaneous private placement
completed in August 2000. Net loss for the three months ended June 30, 2002
was $6.0 million. Net loss for the nine months ended June 30, 2002 was
$5.2 million. At June 30, 2002, the Company had $51.9 million in cash and cash
equivalents, an increase of $24.0 million from cash held at September 30, 2001.
The increase in cash balances at June 30, 2002 was primarily due to the
maturity of short-term government security investments. Operations were funded
from revenues received. We believe that our cash, cash equivalents and
short-term investments will be sufficient to meet our operating and capital
needs for at least the next 12 months.

Net cash provided by operating activities was $6.9 million for the first
nine months of fiscal 2002. Net cash provided by operating activities resulted
from net loss of $5.2 million adjusted for non-cash charges associated with the
amortization of stock-based compensation, charge for the impairment
of investment, depreciation and amortization, a decrease in taxes receivable,
an increase in accrued payroll and related expenses, an increase in deferred
revenue partially offset by an increase in accounts receivable. The increase in
accounts receivable at June 30, 2002 resulted from increased quarterly
revenues. Although accounts receivable increased, our days sales outstanding
for the quarter ended June 30, 2002 was at 102 days, showing an improvement
over 111 days from the prior quarter. We plan to continue to work days sales
outstanding down over the next couple of quarters.

Net cash provided by investing activities was $15.3 million for the first
nine months of fiscal 2002. Net cash provided by investing activities was due
to the maturity of short-term government security investments, offset by the
acquisition of a business, purchase of short-term and long-term government
investments and acquisitions of property and equipment. We intend to purchase
approximately $1.0 million of additional capital assets, primarily computer
equipment and software, during the remainder of fiscal 2002.

Net cash provided by financing activities was $1.9 million for the first
nine months of fiscal 2002. Net cash provided by financing activities is
primarily due to the repayment of borrowings by stockholders and proceeds from
the issuance of common stock.

Our future capital requirements will depend on many factors, including the
rate of sales growth, market acceptance of our existing and new technologies,
amount and timing of research and development expenditures, timing of the
introduction of new technologies, expansion of sales and marketing efforts,
potential acquisitions and changes to our working capital structure primarily
related to accounts receivable.

The Company has outstanding obligations under capital lease lines, with
payments due through June 2003. At June 30, 2002, $131,000 was outstanding
under these lines. There is no remaining availability under these capital lease
lines.

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Aggregate future minimum lease payments under capital leases and operating
leases as of June 30, 2002 are as follows:

|                                                   |            |   |                |     |           |   |       |     | 
|-------------------------------------------------- | ---------- | - | -------------- | --- | --------- | - | ----- | --- | 
|                                                   |            |   | Capital        |     | Operating
|                                                   |            |   | Leases         |     | Leases   
|                                                   |            |   |                |     |          
|                                                   |            |   | (in thousands)
|                                                   | 2002       |   | $              | 146 |           |   | $     | 488 | 
|                                                   | 2003       |   |                |    |           |   |       | 578 | 
|                                                   | 2004       |   |                |    |           |   |       | 217 | 
|                                                   | 2005       |   |                |    |           |   |       | 174 | 
|                                                   | 2006       |   |                |    |           |   |       | 184 | 
|                                                   | Thereafter |   |                |    |           |   |       | 648 | 
|                                                   |            |   |                |     |           |   |       |    
|Total minimum lease and principal payments         |            |   | 146            |     |           | $ | 2,289 |    
|                                                   |            |   |                |     |           |   |       |    
|Less: Amount representing interest                 |            |   | (15            | )   |           |   |       |    
|                                                   |            |   |                |     |           |   |       |    
|Present value of future lease payments             |            |   | 131            |     |           |   |       |    
|Less: Current portion of capital lease obligations |            |   | (131           | )   |           |   |       |    
|                                                   |            |   |                |     |           |   |       |    
|Long-term portion of capital lease obligations     |            | $ |               |     |           |   |       |    
|                                                   |            |   |                |     |           |   |       |    

In July 2002, the Company signed an initial contract to purchase a
building in the Republic of Armenia. The total cost of the building and
certain renovations is approximately $1.7 million. The Company plans to use the building as office space for its
engineering and design center based in Yerevan.

Risk Factors

The technology used in the semiconductor industry is rapidly changing and if we
are unable to develop new technologies and adapt our existing intellectual
property to new processes, we will be unable to attract or retain customers.

The semiconductor industry has been characterized by an increasingly rapid
rate of development of new technologies and manufacturing processes, rapid
changes in customer requirements, frequent product introductions and ongoing
demands for greater speed and functionality. Our future success depends on our
ability to develop new technologies and introduce new products to the
marketplace in a timely manner, and to adapt our existing intellectual property
to satisfy the requirements of new processes and our customers. If our
development efforts are not successful or are significantly delayed, or if the
enhancements or new generations of our products do not achieve market
acceptance, we may be unable to attract or retain customers and our operating
results could be harmed.

Our ability to continue developing technical innovations involves several
risks, including:



| |  |  | our ability to anticipate and respond in a timely manner to changes
in the requirements of semiconductor companies;                                                                                                                               
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the emergence of new semiconductor manufacturing processes and our
ability to enter into strategic relationships with third-party
semiconductor foundries to develop and test technologies for these new
processes and provide customer referrals;

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| |  |  | the significant research and development investment that we may be
required to make before market acceptance, if any, of a particular
technology;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the possibility that the industry may not accept a new technology
after we have invested a significant amount of resources to develop it;
and    
|
| |  |  | new technologies introduced by our competitors.                                                                                                  

If we are unable to adequately address these risks, our intellectual
property will become obsolete and we will be unable to sell our products.
Further, as new technologies or manufacturing processes are announced,
customers may defer licensing our intellectual property until those new
technologies become available or our intellectual property has been adopted for
that manufacturing process.

In addition, research and development requires a significant expense and
resource commitment. Since we have a limited operating history, we are unable
to predict our future resources. As a result, we may not have the financial and
other resources necessary to develop the technologies demanded in the future
and may be unable to attract or retain customers.

Our quarterly operating results may fluctuate significantly and any failure to
meet financial expectations for any fiscal quarter may cause our stock price to
decline.

Our quarterly operating results are likely to fluctuate in the future due
to a variety of factors, many of which are outside of our control. Because our
expenses are largely independent of our revenues in any particular period, we
are unable to accurately forecast our operating results. As a result, if our
revenues are below expectations in any quarter, our inability to adjust
spending in a timely manner to compensate for the revenue shortfall may magnify
the negative effect of the revenue shortfall.

Factors that could cause our revenues and operating results to vary from
quarter to quarter include:



| |  |  | large orders unevenly spaced over time;                                                   
| | - |  | ------------------------------------------------------------------------------------------
|
| |  |  | establishment or loss of strategic relationships with third-party
semiconductor foundries;
|
| |  |  | timing of new technologies and technology enhancements by us and our
competitors;         
|
| |  |  | shifts in demand for products that incorporate our intellectual property;                 
|
| |  |  | the timing and completion of milestones under customer agreements;                        
|
| |  |  | the impact of competition on license revenues or royalty rates;                           
|
| |  |  | the cyclical nature of the semiconductor industry and the general
economic environment;   

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| |  |  | changes in development schedules, research and development
expenditure levels and product support by us and our customers; and                                                                                                                                                                                                                                                                                           
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | historically, we have recorded a
significant portion of our quarterly revenues in the last month of a
quarter as a result of closing more product
orders, and therefore, a higher percentage of product shipments, in the
last month of a quarter than in the first months of a quarter. Some customers believe they can enhance their
bargaining power by waiting until the end of the quarter to finalize
negotiations.

As a result, we believe that period-to-period comparisons of our results
of operations are not necessarily meaningful and you should not rely on these
comparisons as indications of future performance. These factors make it
difficult for us to accurately predict our revenues and may cause our operating
results to be below market analysts expectations in some future quarters,
which could cause the market price of our stock to decline.

If we are unable to maintain existing relationships and develop new
relationships with third-party semiconductor manufacturers, or foundries, we
will be unable to verify our technologies on their processes and license our
intellectual property to their customers.

Our ability to verify our technologies for new manufacturing processes
depends on entering into development agreements with third-party foundries to
provide us with access to these processes. In addition, we rely on third-party
foundries to manufacture our silicon test chips and to provide referrals to
their customer base. We currently have agreements with Taiwan Semiconductor
Manufacturing Company, or TSMC, United Microelectronics Corporation, or UMC,
and Chartered Semiconductor Manufacturing or Chartered. If we are unable to
maintain our existing relationships with these foundries or enter into new
agreements with other foundries, we will be unable to verify our technologies
for their manufacturing processes. We would then be unable to license our
intellectual property to fabless semiconductor companies that use these
foundries to manufacture their silicon chips, which is a significant source of
our revenues.

If demand for products incorporating complex semiconductors and embedded
memories does not rise, our business may be harmed.

Our business and the adoption and continued use of our intellectual
property by semiconductor companies depends on the demand for products
requiring complex semiconductors and embedded memories, such as cellular and
digital phones, pagers, digital cameras, DVD players, switches and modems. The
demand for such products is uncertain and difficult to predict. A reduction in
the demand for products incorporating complex semiconductors and embedded
memories or in the general economic environment which results in the cutback of
research and development budgets or capital expenditures would likely result in
a reduction in demand for our products and could harm our business.

In addition, the semiconductor industry is highly cyclical and has
fluctuated between significant economic downturns characterized by diminished
demand, accelerated erosion of average selling prices and production overcapacity,
as well as periods of increased demand and production capacity constraints. The semiconductor
industry is currently experiencing a downturn and the U.S. economy has yet to
rise out of an economic

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slowdown that involves lower levels of expenditures by
businesses and individuals. As a result of such fluctuations in the
semiconductor industry and the general economic slowdown, we may face a reduced
number of design starts, tightening of customers operating budgets, extensions
of the approval process for new orders and projects and consolidation among our
customers, all of which may harm the demand for our embedded memories and may
cause us to experience substantial period-to-period fluctuations in our
operating results. Further, the markets for third-party semiconductor
intellectual property and embedded memories have emerged only in recent years.
Because of the recent emergence of these markets, it is difficult to forecast
whether these markets will continue to develop or grow at a rate sufficient to
support our business.

Problems associated with international business operations could affect our
ability to license our intellectual property.

Sales to customers located outside the United States accounted for 48% of
our revenues for the nine month period ended June 30, 2002, 55% of our revenues
in fiscal 2001 and between 44% to 50% of our revenues in the fiscal years 1998
to 2000. We anticipate that sales to customers located outside the United
States will increase and will continue to represent a significant portion of
our total revenues in future periods. In addition, most of our customers that
do not own their own fabrication plants rely on third-party foundries that may
be outside of the United States. Accordingly, our operations and revenues are
subject to a number of risks associated with doing business in international
markets, including the following:



| |  |  | managing foreign distributors and sales partners and sharing revenues
with such third parties;                                        
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | staffing and managing foreign branch offices and subsidiaries;                                                                        
|
| |  |  | political and economic instability;                                                                                                   
|
| |  |  | greater difficulty in collecting account receivables resulting in
longer collection periods;                                          
|
| |  |  | foreign currency exchange fluctuations;                                                                                               
|
| |  |  | changes in tax laws and tariffs;                                                                                                      
|
| |  |  | compliance with, and unexpected changes in, a wide variety of foreign
laws and regulatory environments with which we are not familiar;
|
| |  |  | timing and availability of export licenses;                                                                                           
|
| |  |  | inadequate protection of intellectual property rights in some countries; and                                                          
|
| |  |  | obtaining governmental approvals for certain technologies.                                                                            

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If these risks actually materialize, our international operations may be
adversely affected and sales to international customers, as well as those
domestic customers that use foreign fabrication plants, may decrease.

If we are unable to continue establishing relationships with semiconductor
companies to license our intellectual property, our business will be harmed.

We currently rely on license fees from the sale of perpetual licenses to
generate a large portion of our revenues. These licenses produce large amounts
of revenue in the periods in which the license fees are recognized, but are not
necessarily indicative of a commensurate level of revenue from the same
customers in future periods. In addition, our agreements with our customers do
not obligate them to license new or future generations of our intellectual
property. As a result, the growth of our business depends significantly on our
ability to expand our business with existing customers and attract new
customers.

We face numerous challenges in entering into license agreements with
semiconductor companies on terms beneficial to our business, including:



| |  |  | the lengthy and expensive process of building a relationship with a
potential licensee;
| | - |  | ---------------------------------------------------------------------------------------
|
| |  |  | competition with the internal design teams of semiconductor
companies; and             
|
| |  |  | the need to persuade semiconductor companies to rely on us for
critical technology.    

These factors may make it difficult for us to maintain our current
relationships or establish new relationships with additional licensees.
Further, there is a finite number of fabless semiconductor companies and
integrated device manufacturers to which we can license our intellectual
property. If we are unable to establish and maintain these relationships, we
will be unable to generate license fees and our revenues will decrease.

Our international operations may be adversely affected by instability in the
countries in which we operate.

We currently have a subsidiary in Israel and Germany, and we expect to
continue expanding our direct sales force in Europe. In addition, a growing
portion of our intellectual property is being developed in development centers
located in the Republic of Armenia and India. Israel has recently faced an
increased level of violence and terror, India is experiencing an
increased level of violence and tension with its neighboring country,
Pakistan and Armenia, only independent since
1991, has suffered significant political and economic instability. Accordingly,
continued and heightened unrest in areas of the world in which we operate may
adversely affect our business in a number of ways, including the following:



| |  |  | changes in the political or economic conditions in Armenia and the
surrounding region, such as fluctuations in exchange rates, changes in
laws protecting intellectual property, the imposition of currency
transfer restrictions or limitations, or the adoption of burdensome
trade or tax policies, procedures, rules, regulations or tariffs, could
adversely affect our ability to develop new products, to take advantage
of the
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| |   |  | cost savings associated with operations in Armenia, and to
otherwise conduct business effectively in Armenia;                                                                                                                                                        
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | our ability to continue conducting business in Israel and other
countries in the normal course may be adversely affected by increased
risk of social and political instability and our employees working and
visiting in Israel may be affected by terrorist attacks;
|
| |  |  | our Israeli customers demand for our products may be adversely
affected because of negative economic consequences associated with
reduced levels of safety and security in Israel.                                                                                  

General economic conditions and recent terrorist attacks may reduce our
revenues and harm our business

As our business has grown, we have become increasingly subject to the
risks arising from adverse changes in domestic and global economic conditions.
Because of the continued economic slowdown in the United States and in other
parts of the world, many industries are delaying or reducing technology
purchases and investments and similarly, our customers may delay payment for
Virage Logic products causing our accounts receivable to increase. In addition,
the unrest in Israel and the Middle East may negatively impact the investments
our worldwide customers make in this geographic region. The impact of this
slowdown on us is difficult to predict, but if businesses or consumers defer or
cancel purchases of new products that contain embedded memories, purchases by
fabless semiconductor companies and integrated device manufacturers and
production levels by semiconductor manufacturers could decline causing our
revenues to be adversely affected, which would have an adverse effect on our
results of operations and could have an adverse effect on our financial
condition.

If we are unsuccessful in increasing our royalty based and project based
revenues, our revenues and profitability may not be as large as we anticipate.

We have historically generated revenues almost entirely from license fees.
We have agreements with certain third-party semiconductor foundries to pay us
royalties on their sales of silicon chips they manufacture for our fabless
customers. For the nine months ended June 30, 2002 and 2001, we recorded
approximately $1.2M and $861,000, respectively, of royalty revenues.
Beginning with our Custom-Touch STAR Memory System, CAM technologies and more
recently with the introduction of our NOVeA technology, in addition to
collecting royalties from third-party semiconductor foundries, we intend to
increase our royalty base by collecting royalties directly from our integrated
device manufacturer and fabless customers. The continued growth of our revenues
depends in part on increasing our royalty revenues, but we may not be
successful in convincing all customers to agree to pay us royalties.
Additionally, these royalty arrangements may not provide us with the
anticipated benefits as sales of products incorporating our intellectual
property may not offset lower license fees. Although we have the right to audit
the records of semiconductor manufacturers and fabless semiconductor companies,
we face risks relating to the accuracy and completeness of the royalty
collection process, due to our limited experience and systems in place to
conduct reviews of the accuracy of royalty reports we receive from our
customers. In addition, many factors beyond our control, such

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as fluctuating
sales volumes of products that incorporate our intellectual property,
the cyclical nature of the semiconductor industry that affect the
number of designs, commercial acceptance of these products, accuracy of revenue reports and
difficulties in the royalty collection process, limit our ability to forecast
our royalty revenues.

Recently we have
entered into agreements with certain customers that provide for a
payment of a project fee each time the customer completes a design
incorporating our intellectual property. No revenue related to project fees has
been recorded to date. This revenue stream is dependent on the ability of
semiconductor companies to successfully design and manufacture silicon chips.

We have a long and variable sales cycle, which can result in uncertainty and
delays in generating additional revenues.

Historically, because of the complexity of our products, it can take a
significant amount of time and effort to explain the benefits of our products
and to negotiate a sale. For example, it generally takes at least three to nine
months after our first contact with a prospective customer before we start
licensing our intellectual property to that customer. In addition, purchase of
our products is usually made in connection with new design starts, which are
out of our control. Accordingly, we may be unable to predict accurately the
timing of any significant future sales of software licenses. We may also spend
substantial time and management attention on potential licenses that are not
consummated, thereby foregoing other opportunities.

We rely on a small number of customers for a substantial portion of our
revenues.

We have been dependent on a relatively small number of customers for a
substantial portion of our annual revenues in each fiscal year, although the
customers comprising this group have changed from time to time. For the nine
months ended June 30, 2002, no single customer generated more than 10% of our
revenues. In fiscal 2001, Philips Electronics and Intel Corporation generated
12% and 14% of our revenues, respectively. In fiscal 2000, no single customer
generated more than 10% of our revenues. In fiscal 1999, ATI Technologies, MMC
Networks, National Semiconductor and Toshiba each generated between 10% and 18%
of our revenues for a total of 56% of our revenues. We expect a small number of
companies in the aggregate to represent between 20% to 40% of our revenues for
the foreseeable future. The license agreements we enter into with our customers
do not obligate them to license future generations of our intellectual property
and, as a result, we cannot predict the length of our relationship with any of
our significant customers. As a result of this customer concentration, we could
experience a dramatic reduction in our revenues if we lose one or more of our
significant customers and are unable to replace them.

The market for embedded memory is highly competitive, and we may lose market
share to larger competitors with greater resources and to companies that
develop their own memory technologies using internal design teams.

We face competition from both existing suppliers of embedded memories as
well as new suppliers that may enter the market. We also compete with the
internal design teams of large, integrated device manufacturers. Many of these
internal design teams have substantial programming and design resources and are
part of larger organizations with substantial financial and marketing
resources. These internal teams may develop

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technologies that compete directly
with our technologies or may actively seek to license their own technologies to
third parties.

Many of our existing competitors have longer operating histories, greater
brand recognition and larger customer bases, as well as greater financial and
marketing resources, than we do. This may allow them to respond more quickly
than we can to new or emerging technologies and changes in customer
requirements. It may also allow them to devote greater resources than we can to
the development and promotion of their products. In addition, the intense
competition in the market for embedded memory could result in pricing
pressures, reduced license revenues, reduced margins or lost market share, any
of which could harm our operating results and cause our stock price to decline.

We may be unable to attract and retain key personnel who are critical to the
success of our business.

We believe that one of our significant competitive advantages is the size
and quality of our engineering team. Our future success also depends on our
ability to attract and retain engineers and other highly skilled personnel and
senior managers. In addition, in order to meet our planned growth we must
increase our sales force, both domestic and international, with qualified
employees. Hiring qualified technical, sales and management personnel is
difficult due to a limited number of qualified professionals and competition in
our industry for these types of employees. We have in the past experienced
delays and difficulties in recruiting and retaining qualified technical and
sales personnel and believe that at times our employees are recruited
aggressively by our competitors and start-up companies. Our employees are at
will and may leave our employment at any time, and under certain
circumstances, start-up companies can offer more attractive stock option
packages than we offer. As a result, we may experience significant employee
turnover. Failure to attract and retain personnel, particularly sales and
technical personnel, would make it difficult for us to develop and market our
technologies.

In addition, our business and operations are substantially dependent on
the performance of our key personnel, including Adam A. Kablanian, our
President and Chief Executive Officer, and Alexander Shubat, our Vice President
of Engineering and Chief Technical Officer. We do not have formal employment
agreements with Mr. Kablanian or Mr. Shubat and do not maintain key man life
insurance policies on their lives. If Mr. Kablanian or Mr. Shubat were to leave
or become unable to perform services for our company, our business would be
severely harmed.

We may be unable to deliver our customized memory products in the time-frame
demanded by our customers, which could damage our reputation and future sales.

A significant portion of our contracts require us to provide customized
products within a set delivery timetable. We have experienced delays in the
progress of certain projects in the past, and we may experience such delays in
the future. Any failure to meet significant customer milestones could damage
our reputation in our industry and harm our ability to attract new customers.

We may need additional capital that may not be available to us and, if raised,
may dilute our stockholders ownership interest in us.

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We may need to raise additional funds to develop or enhance our
technologies, to fund expansion, to respond to competitive pressures or to
acquire complementary products, businesses or technologies.
Additional financing may not be available on
terms that are acceptable to us. If we raise additional funds through the
issuance of equity or convertible debt securities, the percentage ownership of
our stockholders would be reduced and these securities might have rights,
preferences and privileges senior to those of our current stockholders. If
adequate funds are not available on acceptable terms, our ability to fund our
expansion, take advantage of unanticipated opportunities, develop or enhance
our products or services, or otherwise respond to competitive pressures would
be significantly limited.

We may have difficulty achieving and sustaining profitability and may
experience additional losses in the future.

During the quarter ended June 30, 2002, we recorded a net loss of
$6.0 million. After reporting three consecutive profitable quarters (GAAP basis),
several non-operating factors including an in-process research and
development charge and deferred
compensation expenses associated with the acquisition of In-Chip Systems, Inc.
and an impairment charge associated with a strategic investment caused us to
report a net loss for the fiscal third quarter and nine months period. In order
to achieve profitability again, we will need to continue to generate new sales
while controlling our costs. As we plan on continuing the growth of our
business and expect to increase the size of our company in the next twelve
months, we may not be able to successfully generate enough revenues to remain
profitable with this growth. Any failure to increase our revenues and control
costs as we pursue our planned growth would harm our profitability and would
likely negatively affect the market price of our stock.

If we are unable to effectively manage our growth, our business may be harmed.

Our future success depends on our ability to successfully manage our
growth. Our ability to manage our business successfully in a rapidly evolving
market requires an effective planning and management process. Our customers
rely heavily on our technological expertise in designing and testing our
products. Relationships with new customers may require significant engineering
resources. As a result, any increase in the demand for our products will
increase the strain on our personnel, particularly our engineers.

We have continued to grow our headcount from 138 full-time employees at
September 30, 2000 to 202 full-time employees at September 30, 2001 to
272 full-time employees at June 30, 2002. We have continued to increase our
international presence, have increased substantially the number of our
customers and have acquired In-Chip Systems, Inc. This growth has placed, and
is expected to continue to place, significant strain on our managerial and
financial resources as well as our limited financial and management controls,
reporting systems and procedures. Although some new controls, systems and
procedures have been implemented, our future growth, if any, will depend on our
ability to continue to implement and improve operational, financial and
management information and control systems on a timely basis, together with
maintaining effective cost controls. Since our growth has occurred over such a
limited time period, we do not have sufficient

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experience managing the current
size of our business to be able to fully assess our ability to continue to
manage its growth in the future. Our inability to manage any future growth
effectively would be harmful to our revenues and profitability.

Any acquisitions we make may not provide us the expected benefits and could
disrupt our business and harm our financial condition.

We have recently acquired In-Chip Systems, Inc., and we may continue to
acquire businesses or technologies that we believe are a strategic fit with our
business. The In-Chip acquisition as well as other future acquisitions may
result in unforeseen operating difficulties and expenditures and may absorb
significant management attention that would otherwise be available for ongoing
development of our business. In addition, the integration of the business of
In-Chip and of other acquisition targets may prove to be more difficult than
expected, and we may be unsuccessful in maintaining and developing relations
with the employees, customers and business partners of In-Chip and other
acquisition targets. Since we will not be able to accurately predict these
difficulties and expenditures, it is possible that these costs may outweigh the
value we realize from a future acquisition. Future acquisitions could result
in issuances of equity securities that would reduce our stockholders ownership
interest, the incurrence of debt, contingent liabilities, deferred stock based
compensation or expenses related to the valuation of goodwill or other
intangible assets and the incurrence of large, immediate write-offs.

If we are not able to protect our intellectual property adequately, we will
have less proprietary technology to license, which will reduce our revenues and
profits.

Our patents, copyrights, trademarks, trade secrets and other intellectual
property are critical to our success. We rely on a combination of patent,
trademark, copyright, mask work and trade secret laws to protect our
proprietary rights. We cannot be sure that the U.S. Patent and Trademark Office
will issue patents or trademark registrations for any of our pending
applications. Further, any patents or trademark rights that we hold or may hold
in the future may be challenged, invalidated or circumvented or may not be of
sufficient scope or strength to provide meaningful protection or any commercial
advantage to us. We have not attempted to secure patent protection in foreign
countries, and the laws of some foreign countries may not adequately protect
our intellectual property as well as the laws of the United States. Also, the
portion of our intellectual property developed outside of the United States may
not receive the same copyright protection that it would receive if it was
developed in the United States. As we increase our international presence, we
expect that it will become more difficult to monitor the development of
competing technologies that may infringe on our rights as well as unauthorized
use of our technologies.

We use licensing agreements, confidentiality agreements and employee
nondisclosure and assignment agreements to limit access to and distribution of
our proprietary information and to obtain ownership of technology prepared on a
work-for-hire basis. Even though we have taken all customary industry
precautions, we cannot be sure that we have taken adequate steps to protect our
intellectual property rights and deter misappropriation of these rights or that
we will be able to detect unauthorized uses and take immediate or effective
steps to enforce our rights. Since we also rely on unpatented trade secrets to
protect some of our proprietary technology, we cannot be certain that others
will not independently develop or otherwise acquire the same or substantially

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equivalent technologies or otherwise gain access to our proprietary technology
or disclose that technology. We also cannot be sure that we can ultimately
protect our rights to our unpatented proprietary technology. In addition, third
parties might obtain patent rights to
such unpatented trade secrets, which they could use to assert infringement
claims against us.

Third parties may claim we are infringing or assisting others to infringe their
intellectual property rights, and we could suffer significant litigation or
licensing expenses or be prevented from licensing our technology.

While we do not believe that any of our technology infringes the valid
intellectual property rights of third parties, we may be unaware of
intellectual property rights of others that may cover some of our technology.
As a result, third parties may claim we or our customers are infringing their
intellectual property rights. Our license agreements typically require us to
indemnify our customers for infringement actions related to our technology.

Any litigation regarding patents or other intellectual property could be
costly and time-consuming, and divert our management and key personnel from our
business operations. The complexity of the technology involved makes any
outcome uncertain. If we do not prevail in any infringement action, we may be
required to pay significant damages and may be prevented from developing some
of our technology or from licensing some of our intellectual property for
certain manufacturing processes unless we enter into a royalty or license
agreement. In addition, if challenging a claim is not feasible, we might be
required to enter into royalty or license agreements in order to settle a claim
and continue to license or develop our intellectual property, which may result
in significant expenditures. We may not be able to obtain such agreements on
terms acceptable to us or at all, and thus, may be prevented from licensing or
developing our technology.

Changes to accounting standards and rules could either delay our recognition of
revenues or reduce the amount of revenues that we may recognize at a specific
time, and thus defer or reduce our profitability. These effects on our reported
results could cause our stock price to be lower than it otherwise might have
been.

We adopted the American Institute of Certified Public Accountants
Statement of Position, or SOP, 97-2, Software Revenue Recognition, as of
October 1, 1998. In December 1998, the American Institute of Certified Public
Accountants issued SOP 98-9, Modification of SOP 97-2, Software Revenue
Recognition, with Respect to Certain Transactions. We implemented these
provisions as of October 1, 1999. In December 1999, the Securities and Exchange
Commission issued SEC Staff Accounting Bulletin No. 101, Revenue Recognition
in Financial Statements which summarizes certain of the SECs views in
applying generally accepted accounting principles to revenue recognition in
financial statements. Additional accounting guidance or pronouncements in the
future could affect the timing of our revenue recognition in the future, which
could cause our operating results to fail to meet the expectations of investors
and securities analysts. In addition, changes to accounting policies that
affect other aspects of our business, such as employee stock option grants may
adversely affect our reported financial results.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our core business, the sale of semiconductor intellectual property for the
memory elements of systems-on-a-chip, has limited exposure to financial market
risks, including changes in foreign currency exchange rates and interest rates.
A significant portion of our customers are located in Asia, Canada
and Europe. However, to date, our
exposure to foreign currency exchange fluctuations has been minimal because our
license agreements provide for payment in U.S. dollars.

Our foreign subsidiaries incur most of their expenses in the local
currency. Our international business is subject to risks typical of an
international business, including, but not limited to differing economic
conditions, changes in political climate, differing tax structures, other
regulations and restrictions and foreign exchange rate volatility.
International operations have not been material, therefore, we do not
anticipate our future results to be materially adversely impacted by changes in
these factors.

We maintain an investment portfolio of various issuers, types and
maturities. These securities are generally classified as available for sale
and, consequently, are recorded on the balance sheet at fair value with
unrealized gains or losses reported as a separate component of stockholders
equity. Our investments primarily consist of short-term money market mutual
funds, United States government obligations and mortgage-backed securities and
commercial paper. Our investments balance of $3.0 million at June 30, 2002
consists of instruments with original maturities of less than 90 days. Due to
the short-term nature of our investment portfolio and our intent to hold these
investments to maturity, we do not believe our investment balance is materially
exposed to interest rate risk.

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PART II  OTHER INFORMATION




ITEM 1. Legal Proceedings

None




ITEM 2. Changes in Securities and Use of Proceeds

Use of Proceeds From Registered Securities

Our registration statement (No. 333-36108) under the Securities Act for
our initial public offering of common stock became effective on July 31, 2000.
We sold a total of 4,312,500 shares of common stock to an underwriting
syndicate for an aggregate offering price to the public of $51,750,000. The
managing underwriters were Lehman Brothers Inc., FleetBoston Robertson Stephens
Inc. and SG Cowen Securities Corporation. 3,750,000 of these shares were sold
in an offering that commenced on July 31, 2000 and was completed on August 4,
2000. An additional 562,500 shares of common stock were sold upon the
underwriters exercise of their over-allotment option on August 28, 2000. In
connection with this offering, we incurred total expenses of approximately
$5.4 million, consisting of $3,622,500 for underwriting discounts and commissions
and approximately $1,785,000 million of other expenses. None of these expenses
were paid directly or indirectly to any of our directors, officers, or their
associates, persons owning 10% or more of any class of our securities, or
affiliates of Virage Logic. Offering proceeds, net of aggregate expenses were
approximately $46.3 million. We have applied all of the proceeds to temporary
investments in a commercial money market investment account.

None of the net offering proceeds were paid directly or indirectly to any
of our directors, officers, or their associates, persons owning 10% or more of
any class of the our securities, or affiliates of Virage Logic.

On May 24, 2002, we acquired In-Chip Systems, Inc. (In-Chip). In connection
with this acquisition, we issued a total of 528,547 shares of common stock to
the In-Chip shareholders. There were no underwriters employed in connection
with this issuance, and the issuance was exempt from registration under Rule
506, promulgated under the Securities Act of 1933.




ITEM 3. Defaults upon Senior Securities

None




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

None




ITEM 5. Other Information

On March 1, 2002 Raj
Singh joined the Company as Vice President Worldwide Sales and on May
24, 2002, following the completion of the acquisition of In-Chip
Systems, Inc., Tushar Gheewala joined the Company as Vice President
SoC Logic Platforms.

On April 11, 2002
Vincent F. Ratford, the Company's Vice President of Business
Development and Marketing, resigned from his duties as an executive
officer of the Company.




ITEM 6. Exhibits and Reports on Form 8-K

(a)   Exhibits:

| |                                                                                                                                                                                                                              |  |                                                                                                                                                     
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------
| | 2.1                                                                                                                                                                                                                          |  | Agreement and Plan of Reorganization dated May 4, 2002 by and
among Virage Logic Corporation, In-Chip Acquisition, Inc. and In-Chip
Systems, Inc.(1)
|
| | 10.32                                                                                                                                                                                                                        |  | Amended and Restated In-Chip Systems, Inc. 2001 Incentive And
Non-Statutory Stock Option Plan*                                                      
|
| | 10.33                                                                                                                                                                                                                        |  | Promissory Note granted by Raj Singh on March 12, 2002*                                                                                             
|
| | 10.34                                                                                                                                                                                                                        |  | Employment Offer Letter to Tushar Gheewala dated May 23,
2002*                                                                                      
|
| | 10.35                                                                                                                                                                                                                        |  | Master License Agreement, dated June 8, 2001 and
Exhibit No. 2 dated April 1, 2002 between Virage Logic
Corporation and STMicroelectronics S.A.#    
|
| | 99.1                                                                                                                                                                                                                         |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                              
|
| | 99.2                                                                                                                                                                                                                         |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                              
|
| | (1) Incorporated by reference to Virage Logic's
Current Report on Form 8-K filed with the Securities and Exchange
Commission on June 7, 2002.
* Indicates management contract or compensatory plan, contract or
arrangement.
| | # Confidential treatment
requested.                                                                                                                                                                                         

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|    |  |                                                                                                                                                 
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------
|(b) |  | Reports on Form 8-K:                                                                                                                            
|    |  | A Form 8-K was filed on June 7, 2002, and Form 8-K/A filed on
August 7, 2002, under Item 2, to disclose the acquisition of In-Chip
Systems, Inc.

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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.





|                      |  |                                                                                                                                         
|--------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------
|Date: August 14, 2002 |  | VIRAGE LOGIC CORPORATION                                                                                                                
|                     
|                     
|                      |  | /s/ Adam A. Kablanian
ADAM A. KABLANIAN
President, Chief Executive Officer
and Chairman of the Board                                    
|                     
|                     
|                      |  | /s/ James R. Pekarsky
JAMES R. PEKARSKY
Vice President, Finance and
Chief Financial Officer
(Principal Financial and
Accounting Officer)

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EXHIBIT INDEX

| |                                                                                                                                                                                                                              |  |                                                                                                                                                     
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------
| | 2.1                                                                                                                                                                                                                          |  | Agreement and Plan of Reorganization dated May 4, 2002 by and
among Virage Logic Corporation, In-Chip Acquisition, Inc. and In-Chip
Systems, Inc.(1)
|
| | 10.32                                                                                                                                                                                                                        |  | Amended and Restated In-Chip Systems, Inc. 2001 Incentive And
Non-Statutory Stock Option Plan*                                                      
|
| | 10.33                                                                                                                                                                                                                        |  | Promissory Note granted by Raj Singh on March 12, 2002*                                                                                             
|
| | 10.34                                                                                                                                                                                                                        |  | Employment Offer Letter to Tushar Gheewala dated May 23,
2002*                                                                                      
|
| | 10.35                                                                                                                                                                                                                        |  | Master License Agreement, dated June 8, 2001 and
Exhibit No. 2 dated April 1, 2002 between Virage Logic
Corporation and STMicroelectronics S.A.#    
|
| | 99.1                                                                                                                                                                                                                         |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                              
|
| | 99.2                                                                                                                                                                                                                         |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                              
|
| | (1) Incorporated by reference to Virage Logic's
Current Report on Form 8-K filed with the Securities and Exchange
Commission on June 7, 2002.
* Indicates management contract or compensatory plan, contract or
arrangement.
| | # Confidential treatment
requested.