<PAGE>   1

                                  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, 2001

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


                              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, 2001 there were 20,001,778 shares of the Registrant's Common
Stock outstanding.


                                       1
<PAGE>   2


                            VIRAGE LOGIC CORPORATION

                                    FORM 10-Q

                                      INDEX


<TABLE>
<CAPTION>
                                                                                     Page
                                                                                     ----
<S>                                                                                  <C>
PART I -- Financial Information

ITEM 1 -- Financial Statements
        Condensed Consolidated Balance Sheets as of June 30, 2001
           and September 30, 2000 ..............................................       3
        Condensed Consolidated Statements of Operations for the
           three and nine months ended June 30, 2001 and 2000 ..................       4
        Condensed Consolidated Statements of Cash Flows for the
           nine months ended June 30, 2001 and 2000 ............................       5
        Notes to Condensed Consolidated Financial Statements ...................       6
ITEM 2 -- Management's Discussion and Analysis of Financial Condition
             and Results of Operations .........................................      10
ITEM 3 -- Quantitative and Qualitative Disclosures about Market Risk ...........      16

PART II -- Other Information

ITEM 1 -- Legal Proceedings ....................................................      17
ITEM 2 -- Changes in Securities and Use of Proceeds ............................      17
ITEM 3 -- Defaults upon Senior Securities ......................................      17
ITEM 4 -- Submission of Matters to a Vote of Security Holders ..................      17
ITEM 5 -- Other Information ....................................................      17
ITEM 6 -- Exhibits and Reports on Form 8-K .....................................      17

Signatures .....................................................................      18
</TABLE>



                                       2
<PAGE>   3



                            VIRAGE LOGIC CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                 (In thousands)

                                     ASSETS

<TABLE>
<CAPTION>
                                                                JUNE 30,       SEPTEMBER 30,
                                                                  2001            2000(1)
                                                                ---------       ---------
                                                               (UNAUDITED)
<S>                                                             <C>            <C>
Current assets:
  Cash and cash equivalents ..............................      $  32,565       $  58,596
  Investments ............................................         24,467               -
  Accounts receivable, net ...............................          9,248           6,123
  Costs in excess of related billings on uncompleted
    contracts ............................................            597             264
  Prepaid expenses and other .............................          3,208             936
  Taxes receivable .......................................            613             292
                                                                ---------       ---------
    Total current assets .................................         70,698          66,211
  Property, equipment and leasehold improvements, net ....          5,071           4,163
  Intangible assets, net of amortization .................            324             486
  Deferred tax assets ....................................          1,406             846
  Other long term assets .................................            318             415
                                                                ---------       ---------
    Total assets .........................................      $  77,817       $  72,121
                                                                =========       =========

               LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable .......................................      $     805       $     424
  Accrued payroll and related expenses ...................          1,628           1,204
  Accrued expenses .......................................          1,426           1,210
  Current portion of capital lease obligations ...........            232             283
  Deferred revenue .......................................          2,656           1,805
                                                                ---------       ---------
      Total current liabilities ..........................          6,747           4,926
Long-term portion of capital lease obligations ...........             72             273
                                                                ---------       ---------
      Total liabilities ..................................          6,819           5,199
Stockholders' equity:
  Common stock, $.001 par value:
    Authorized shares -- 150,000,000 at June 30, 2001
     and September 30, 2000,
    Issued and outstanding shares -- 19,988,228 and
     19,909,501 at June 30, 2001 and September 30,
     2000, respectively ..................................             20              20
  Additional paid-in capital .............................         95,957          95,703
  Accumulated other comprehensive income .................            126               -
  Notes receivable from stockholders .....................         (1,081)         (1,600)
  Deferred stock-based compensation ......................         (4,565)        (10,030)
  Accumulated deficit ....................................        (19,459)        (17,171)
                                                                ---------       ---------
      Total stockholders' equity .........................         70,998          66,922
                                                                ---------       ---------
      Total liabilities and stockholders' equity .........      $  77,817       $  72,121
                                                                =========       =========
</TABLE>
------------------------

   (1) Derived from audited financial statements

            See notes to condensed consolidated financial statements.


                                       3
<PAGE>   4



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

<TABLE>
<CAPTION>
                                                               THREE MONTHS ENDED               NINE MONTHS ENDED
                                                                     JUNE 30,                        JUNE 30,
                                                             -------------------------       -------------------------
                                                               2001            2000            2001            2000
                                                             ---------       ---------       ---------       ---------
<S>                                                          <C>             <C>             <C>             <C>
Revenue:
  License .............................................      $   8,319       $   5,116       $  21,817       $  13,913
  Royalties ...........................................            164              26             861              35
                                                             ---------       ---------       ---------       ---------
        Total revenues ................................          8,483           5,142          22,678          13,948
Cost of revenues (exclusive of amortization of
    deferred stock compensation of $284 and
    $432 for the three months ended, and
    $1,148 and $882 for the nine months ended
    June 30, 2001 and 2000, respectively) .............          1,698           1,260           4,588           3,540
                                                             ---------       ---------       ---------       ---------
        Gross profit ..................................          6,785           3,882          18,090          10,408
Operating expenses:
  Research and development (exclusive of
    amortization of deferred stock
    compensation of $408 and $683 for
    the three months ended, and $1,753
    and $1,524 for the nine months
    ended June 30, 2001 and 2000, respectively) .......          2,440           1,669           6,969           4,702
  Sales and marketing (exclusive of amortization
    of deferred stock compensation of $388 and
    $373 for the three months ended, and
    $1,389 and $982 for the nine months ended
    June 30, 2001 and 2000, respectively) .............          2,320           1,481           5,775           3,584
  General and administrative (exclusive of
    amortization of deferred stock compensation
    of  $192 and $727 for the three months
    ended, and $815 and $1,062 for the nine months
    ended June 30, 2001 and 2000, respectively) .......          1,148             488           3,289           1,634
  Stock-based compensation ............................          1,272           2,215           5,105           4,450
                                                             ---------       ---------       ---------       ---------
        Total operating expenses ......................          7,180           5,853          21,138          14,370
                                                             ---------       ---------       ---------       ---------
Operating loss ........................................           (395)         (1,971)         (3,048)         (3,962)
Interest income .......................................            696              98           2,537             212
Interest expense ......................................            (18)            (60)            (68)           (218)
                                                             ---------       ---------       ---------       ---------
Income (loss) before taxes ............................            283          (1,933)           (579)         (3,968)
Income tax provision ..................................            586              93           1,709             206
                                                             ---------       ---------       ---------       ---------
Net loss ..............................................           (303)         (2,026)         (2,288)         (4,174)
Deemed dividend on Series C redeemable
convertible preferred stock ...........................              -               -               -         (10,104)
                                                             ---------       ---------       ---------       ---------
Net loss applicable to common stockholders ............      $    (303)      $  (2,026)      $  (2,288)       $ (14,278)
                                                             =========       =========       =========       =========
Basic and diluted net loss per share
applicable to common stockholders .....................      $   (0.02)      $   (0.32)      $   (0.12)      $   (2.47)
                                                             =========       =========       =========       =========
Shares used in computing basic and diluted net
loss per share ........................................         18,954           6,289          18,726           5,791
                                                             =========       =========       =========       =========
</TABLE>

            See notes to condensed consolidated financial statements.


                                       4
<PAGE>   5


                            VIRAGE LOGIC CORPORATION
                        CONDENSED STATEMENT OF CASH FLOWS
                                 (In thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                NINE MONTHS ENDED
                                                                                     JUNE 30,
                                                                            -------------------------
                                                                              2001            2000
                                                                            ---------       ---------
<S>                                                                         <C>             <C>
OPERATING ACTIVITIES
  Net loss ...........................................................      $  (2,288)      $  (4,174)
  Adjustments to reconcile net loss to net cash provided by
    operating activities:
    Depreciation and amortization ....................................          1,931           1,018
    Amortization of intangible asset .................................            162             109
    Issuance of warrants for services ................................              -             286
    Amortization of stock-based compensation .........................          5,105           4,450
    Changes in operating assets and liabilities:
         Accounts receivable, net ....................................         (3,125)         (1,274)
         Costs in excess of related billings on uncompleted
           contracts .................................................           (333)           (131)
         Prepaid expenses and other ..................................         (2,272)         (1,314)
         Taxes receivable ............................................           (321)              -
         Other long-term assets ......................................             97               -
         Deferred tax assets .........................................           (560)           (671)
         Accounts payable ............................................            381             182
         Accrued payroll and related expenses ........................            424             320
         Accrued expenses ............................................            216             848
         Deferred revenue ............................................            851            (802)
         Income taxes payable ........................................              -              21
                                                                            ---------       ---------
  Net cash provided by (used in) operating activities ................            268          (1,132)
INVESTING ACTIVITIES
  Purchase of property, equipment and leasehold improvements .........         (2,839)         (2,566)
  Purchase of short-term investments .................................        (24,341)              -
                                                                            ---------       ---------
  Net cash used in investing activities ..............................        (27,180)         (2,566)
FINANCING ACTIVITIES
  Proceeds from issuance of redeemable convertible preferred
    stock ............................................................              -           9,819
  Net proceeds from issuance of preferred and common stock ...........            428             445
  Stock issuance costs ...............................................            186               -
  Repayment under line of credit .....................................              -          (1,000)
  Repayment from stockholders ........................................            519               -
  Principal payments on capital lease obligations ....................           (252)           (232)
                                                                            ---------       ---------
  Net cash provided by financing activities ..........................            881           9,032

Net increase (decrease) in cash and cash equivalents .................        (26,031)          5,334
Cash and cash equivalents at beginning of the period .................         58,596           1,513
                                                                            ---------       ---------
Cash and cash equivalents at end of the period .......................      $  32,565       $   6,847
                                                                            =========       =========
Supplemental disclosures of cash flow information

  Cash paid for interest .............................................      $      63       $     138
  Cash paid for income taxes .........................................      $   2,529       $   1,341

Supplemental schedules of noncash investing and financing activities
  Capital lease obligations incurred for the purchase of equipment ...      $       -       $     197
  Warrants issued for services .......................................      $       -       $     286
  Warrants issued for software .......................................      $       -       $     422
</TABLE>

            See notes to condensed consolidated financial statements.


                                       5
<PAGE>   6


                            VIRAGE LOGIC CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

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. 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 month and nine month periods
ended June 30, 2001 are not necessarily indicative of the results that may be
expected for the year ending September 30, 2001. 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, 2000, which
is 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 subsidiary, Virage Logic International.
Intercompany balances and transactions have been eliminated.


NOTE 2.  SEGMENT INFORMATION

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

The Chief Executive Officer has been identified as the Chief Operating Decision
Maker (CODM) because he has final authority over resource allocation decisions
and performance assessment. The CODM does not receive discrete financial
information about the individual components.



                                       6
<PAGE>   7


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


<TABLE>
<CAPTION>
                              THREE MONTHS ENDED          NINE MONTHS ENDED
                                  JUNE 30,                    JUNE 30,
                           ----------------------      ----------------------
                             2001          2000          2001          2000
                           --------      --------      --------      --------
<S>                        <C>           <C>           <C>           <C>
Revenues:
  United States .....      $  5,255      $  2,897      $ 13,992      $  6,953
  Japan .............           141           324         2,004         1,905
  Taiwan ............           556           791         2,072         1,231
  Canada ............           229           897           696         2,390
  Europe ............         2,142           107         3,181           717
  Other .............           160           126           733           752
                           --------      --------      --------      --------
     Total ..........      $  8,483      $  5,142      $ 22,678      $ 13,948
                           ========      ========      ========      ========
</TABLE>

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 losses were
not materially different from net losses incurred for the three and nine month
periods ended June 30, 2001.

NOTE 4. NET LOSS PER SHARE

Basic and diluted net loss per share is presented in conformity with Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS 128).
Pursuant to the Securities and Exchange Commission Staff Accounting Bulletin No.
98, common stock and convertible preferred stock issued or granted for nominal
consideration prior to the effective date of the Company's initial public
offering must be included in the calculation of basic and diluted net loss per
common share as if they had been outstanding for all periods presented.

In accordance with SFAS 128, basic and diluted net loss per share have 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.


                                       7
<PAGE>   8

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

<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED               NINE MONTHS ENDED
                                                              JUNE 30,                         JUNE 30,
                                                      -------------------------       -------------------------
                                                        2001             2000            2001            2000
                                                      ---------       ---------       ---------       ---------
<S>                                                   <C>             <C>             <C>             <C>
Net loss applicable to common stockholders .....      $    (303)      $  (2,026)      $  (2,288)      $ (14,278)
                                                      =========       =========       =========       =========
Basic and diluted:
 Weighted average shares of common stock
  outstanding ..................................         19,973           7,780          19,929           6,658
 Less weighted average shares subject to
  repurchase ...................................         (1,019)         (1,491)         (1,203)           (867)
                                                      ---------       ---------       ---------       ---------
Shares used in computing basic and diluted
 net loss per share applicable to common
 stockholders ..................................         18,954           6,289          18,726           5,791
                                                      =========       =========       =========       =========
Basic and diluted net loss per share
 applicable to common stockholders .............      $   (0.02)      $   (0.32)      $   (0.12)      $   (2.47)
                                                      =========       =========       =========       =========
</TABLE>


NOTE 5. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities." (SFAS No. 133). SFAS No. 133 establishes a new model
for accounting for derivatives and hedging activities and supersedes and amends
a number of existing accounting standards. SFAS No. 133 requires that all
derivatives be recognized on the balance sheet at their fair market value, and
the corresponding derivative gains or losses be either reported in the statement
of operations or as a deferred item depending on the type of hedge relationship
that exists with respect to such derivative. SFAS No. 133, as amended by SFAS
No. 137, "Accounting for Derivative Instruments and Hedging Activities --
Deferral of Effective Date of FASB Statement No. 133," is effective for all
fiscal years beginning after June 15, 2000. We do not currently have forward
exchange contracts to hedge exposures denominated in foreign currencies or any
other derivative financial instruments for trading or speculative purposes, but
it is possible we may enter into such contracts in the future as our
international sales or operations expand.

In July 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards (SFAS) No. 141, Business Combinations, and SFAS
No. 142, Goodwill and Other Intangible Assets. The new rules require business
combinations initiated after June 30, 2001 to be accounted for using the
purchase method of accounting and goodwill acquired after this date will no
longer be amortized, but will be subject to annual impairment tests. All other
intangible assets will continue to be amortized over their estimated useful
lives. As the Company has not completed any business combinations through June
30, 2001, the Company believes that these standards will not have a material
impact on its financial position or operating results.



                                       8
<PAGE>   9

NOTE 6. SUBSEQUENT EVENTS

In July 2001, the Company completed its investment in Atmos Corporation totaling
approximately $5,300,000 through the purchase of 3,333,333 shares of Class D
Preference Shares at a price per share of $1.58 for cash consideration. This
represents approximately an 18% interest in Atmos Corporation. The Company will
account for this investment using the cost method. Atmos Corporation is a
provider of embedded dynamic random access memory (DRAM) products and associated
electronic design automation tools to system-on-a-chip and integrated circuit
designers.



                                       9
<PAGE>   10



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

Certain statements in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations" are forward-looking statements that involve
risks and uncertainties. These statements relate to future events or our future
financial performance. 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 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 15-21 and
"Risk Factors" on pages 21-26 of the Company's Form 10-K filed with the
Securities and Exchange Commission for the year ended September 30, 2000.


OVERVIEW

     Virage Logic provides semiconductor intellectual property for the memory
elements of systems-on-a-chip. These chips are used in communications equipment
and many electronic devices, 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 and software development tools 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 six months. Our memories and compilers 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 accompanies a master license
agreement. Milestone deliveries generally occur over three to six months as
various phases of product development and/or services are completed.

     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 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-

                                       10
<PAGE>   11

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 standard and custom memory compilers are not
deferred over the life of the license agreement but rather an estimated cost of
support is accrued at the time license revenues are recognized. Our experience
to date indicates that the level of resource commitment for support is not
significant. The support is provided over a period of one year or less, and
upgrades or modifications are rare. In the event that support is anticipated to
become a significant cost, our revenue recognition policy would be modified to
reflect the change.

     Currently, license fees represent a substantial portion of our revenues. We
have agreements with certain third-party semiconductor foundries to pay
royalties on their sales of silicon chips manufactured for our fabless
customers. Royalty revenues for the three months ended June 30, 2001 totaled
$164,000 as compared to $422,000 in the second quarter of fiscal 2001. The
decrease in royalty revenues reflects the manufacturing slowdown currently
experienced by our foundry partners. The time delays for receiving royalty
revenues are due to the typical length of time required for the customer to
implement our embedded memories into their design and manufacture and bring to
market a product incorporating our memories.

     For the three months ended June 30, 2001, Intel, Philips, and Vitesse each
generated between 12 percent and 19 percent of our revenues. Collectively, these
companies represented 50 percent of total revenues for the period.

     Sales to customers located outside the United States accounted for 38% of
our revenues for the three and nine months ended June 30, 2001. In Japan and the
rest of Asia, we use both indirect sales through distributors, as well as direct
sales through sales representatives. The increase in revenues from the U.S. and
Europe reflects the increase in our direct sales force in the United States and
Europe. 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 added personnel and increased the
level of our business 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 to employees. These charges are recorded based
on the difference between the deemed fair value of the common stock and the
exercise price of such options at the date of grant. The aggregate deferred
stock-based compensation at June 30, 2001 was $4.6 million. This amount is
presented as a reduction of stockholders' equity and is being amortized using
the graded-vesting method over the vesting period of the applicable options,
generally four years. Amortization of deferred stock-based compensation for the
three months ended June 30, 2001, net of cancellations, was approximately $1.3
million.


                                       11
<PAGE>   12


We anticipate that the amortization of stock-based compensation for options
granted through June 30, 2001 will equal approximately $1.0 million in the last
three months of fiscal 2001, $2.6 million in fiscal 2002 and $1.0 in fiscal
2003.

RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
                                           THREE MONTHS ENDED               NINE MONTHS ENDED
                                                 JUNE 30,                        JUNE 30,
                                         ------------------------        ------------------------
                                           2001            2000            2001            2000
                                         --------        --------        --------        --------
<S>                                      <C>             <C>             <C>             <C>
Revenue:
   License ........................          98.1%           99.5%           96.2%           99.8%
   Royalties ......................           1.9             0.5             3.8             0.2
                                         --------        --------        --------        --------
Revenues ..........................         100.0           100.0           100.0           100.0

Cost of revenues ..................          20.0            24.5            20.2            25.4
                                         --------        --------        --------        --------
Gross profit ......................          80.0            75.5            79.8            74.6
Operating expenses:
  Research and development ........          28.8            32.4            30.7            33.7
  Sales and marketing .............          27.3            28.8            25.5            25.7
  General and administrative ......          13.5             9.5            14.5            11.7
  Stock-based compensation ........          15.0            43.1            22.5            31.9
                                         --------        --------        --------        --------
       Total operating expenses ...          84.6           113.8            93.2           103.0
                                         --------        --------        --------        --------
Operating loss ....................          (4.6)          (38.3)          (13.4)          (28.4)
Interest income ...................           8.2             1.9            11.2             1.5
Interest expense ..................          (0.2)           (1.2)           (0.3)           (1.5)
Income tax provision ..............          (6.9)           (1.8)           (7.5)           (1.5)
                                         --------        --------        --------        --------
Net loss ..........................          (3.5)%         (39.4)%         (10.0)%         (29.9)%
                                         ========        ========        ========        ========
</TABLE>

THREE AND NINE MONTHS ENDED JUNE 30, 2001 AND 2000

     Revenues. Revenues increased 65% to $8.5 million from $5.1 million for the
three months ended June 30, 2001 and 2000, respectively. Revenues increased 63%
to $22.7 million from $13.9 million for the nine months ended June 30, 2001 and
2000, respectively. The increase in revenues is primarily attributable to an
expanding customer base and an increase in license fees from existing customers
of our 0.13 micron and 0.18 micron embedded memory technologies. In addition, we
received royalty revenues from a third party foundry totaling $164,000 for the
third quarter of fiscal 2001 and $861,000 for the first nine months of fiscal
2001. Royalty revenues were $26,000 for the third quarter of fiscal 2000 and
$35,000 for the first nine months of fiscal 2000.

     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 75% to $6.8 million
from $3.9 million for the three months ended June 30, 2001 and 2000,
respectively. Gross profit increased 74% to $18.1 million from $10.4 million for
the nine months ended June 30, 2001 and 2000, respectively. These increases were
attributable to increased licensing to fabless

                                       12
<PAGE>   13

semiconductor companies of embedded memory technologies having higher margins
and that required no additional customization by us.

     Research and Development Expense. Research and development expense includes
personnel and other costs associated with the development of successive
generations of embedded memory technologies and of new technologies. Research
and development expense increased 46% to $2.4 million for the three months ended
June 30, 2001 from $1.7 million for the same period last fiscal year. Research
and development expense increased 48% to $7.0 million for the nine months ended
June 30, 2001 from $4.7 million for the same period last fiscal year. The
increase in research and development expense was primarily due to the ongoing
development of our 0.13 micron embedded memory technologies, as well as new
products such as our Custom-Touch CAM, Custom-Touch STAR Memory System and
Custom-Touch 1T-SRAM. These efforts required hiring additional personnel.

     Sales and Marketing Expense. Sales and marketing expense consists primarily
of personnel, commissions, advertising, promotion, trade show activities and
other associated costs. Sales and marketing expense increased 57% to $2.3
million for the three months June 30, 2001 from $1.5 million for the same period
last fiscal year. Sales and marketing expense increased 61% to $5.8 million for
the nine months ended June 30, 2001 from $3.6 million for the same period last
fiscal year. The increase in sales and marketing expense was due to hiring
additional personnel and expanded sales and marketing activities. We anticipate
that sales and marketing expense will continue to increase as we expand our
sales force and target new customers for our technologies.

     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 135% to $1.1
million for the three months ended June 30, 2001 from $488,000 for the same
period last fiscal year. General and administrative expense increased 101% to
$3.3 million for the nine months ended June 30, 2001 from $1.6 million for the
same period last fiscal year. General and administrative expense increased due
to the increase in the professional services and fees related to the costs of
being a publicly traded company and professional fees related to investment
activities.

     Stock-Based Compensation. With respect to the grant of stock options to
employees, the Company has deferred aggregate stock-based compensation of
approximately $4.6 million for the period ended June 30, 2001 and $10.0 million
for the period ended September 30, 2000. The amount of deferred stock-based
compensation is presented as a reduction of stockholders' equity and is being
amortized using the graded-vesting method over the vesting period of the
applicable options, generally four years. The Company amortized, net of
cancellations, $1.3 million and $2.2 million during the three months ended June
30, 2001 and 2000, respectively, and amortized $5.1 million and $4.5 million
during the nine months ended June 30, 2001 and 2000, respectively.

     Interest Income. Interest income increased to $696,000 for the three months
ended June 30, 2001 from $98,000 for the same period last fiscal year. Interest
income increased to $2.5 million for the nine months ended June 30, 2001 from
$212,000 for the same period last fiscal year. This increase was principally due
to higher average cash and investments

                                       13
<PAGE>   14

balances resulting from the net proceeds of the initial public offering.
Interest income for the three months ended June 30, 2001 was lower than in the
second quarter of fiscal 2001 due to lower interest rates.

     Interest Expense. Interest expense decreased to $18,000 for the three
months ended June 30, 2001 from $60,000 for the same period last fiscal year.
Interest expense decreased to $68,000 for the nine months ended June 30, 2001
from $218,000 for the same period last fiscal year. This decrease was the result
of the repayment of the outstanding balance under a credit line.

     Income Tax Provision. The provision for income taxes was $586,000 and
$93,000 for the three months ended June 30, 2001 and 2000, respectively. The
provision for income taxes was $1.7 million and $206,000 for the nine months
ended June 30, 2001 and 2000, respectively. Our effective tax rates were
negative and differed from the combined federal and state statutory rates due
primarily to stock-based compensation related charges that are non-deductible
for tax purposes and foreign taxes.

     Deemed Dividend. In connection with the sale of Series C redeemable
convertible preferred stock in December 1999, we recorded a non-cash charge of
$10.1 million for the nine months ended June 30, 2000 to accrete the value of
the Series C redeemable convertible preferred stock to its deemed fair value
under applicable accounting rules. This non-cash charge was recorded as an
increase in accumulated deficit with a corresponding credit to additional
paid-in capital and was recognized at the date of issuance, which was the period
in which the shares became eligible for conversion.


LIQUIDITY AND CAPITAL RESOURCES

     The Company has financed its operations from inception to June 30, 2001
from license revenue, through the issuance of notes and preferred stock,
borrowing under capital leases and the Company's initial public offering. Net
loss for the nine months ended June 30, 2001 was $2.3 million, which was
attributable primarily to a non-cash stock-based compensation charge of $5.1
million during that period. At June 30, 2001, the Company had $32.6 million in
cash and cash equivalents, a decrease of $26.0 million from cash held at the end
of last fiscal year. The decrease in cash balances at June 30, 2001 was due to
investment in short-term government and mortgage-backed securities with maturity
dates of less than one year. Operations were funded from revenues received.

     The Company has outstanding obligations under capital lease lines, with
payments due through August 2003. At June 30, 2001, $304,000 is outstanding
under these lines. The interest rate on these borrowings is variable and
dependent upon market conditions at the time a new lease obligation is executed.
There is no remaining availability under these capital lease lines.

     Net cash provided by operating activities was $268,000 for the first nine
months of fiscal 2001. Net cash provided by operating activities was due to
significant non-cash charges associated with depreciation and amortization and
the amortization of stock-based compensation, the increase in deferred revenues
and operational accruals, offset by increases in accounts receivable, prepaid
expenses and other, and deferred tax assets.

                                       14
<PAGE>   15

     Net cash used in investing activities was $27.2 million for the first nine
months of fiscal 2001. Net cash used for investing activities was due to
investment in short-term government and mortgage-backed securities with maturity
dates of less than one year and acquisitions of property and equipment,
primarily computer software and hardware. We intend to purchase approximately
$1.0 million of additional capital assets, primarily computer equipment and
software, during the remainder of fiscal 2001.

     Net cash provided by financing activities was $881,000 for the first nine
months of fiscal 2001. Net cash provided by financing activities in the first
nine months of fiscal 2001 reflects proceeds from the exercise of stock options
and repayment of borrowings by stockholders.

     On August 4, 2000 we closed our initial public offering of 3,750,000 shares
of common stock at a public offering price of $12.00 per share and a
simultaneous private placement of 403,226 shares of common stock at a price of
$11.16 per share. On August 28, 2000, we sold an additional 562,500 shares of
common stock upon the underwriters' exercise of their over-allotment option.
Through the public offering and simultaneous private placement, we received
proceeds of approximately $50.7 million after deducting underwriting discounts
and commissions and other offering expenses. Effective with the closing of the
initial public offering on August 4, 2000, all of the outstanding preferred
stock converted into 7,196,275 shares 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.



                                       15
<PAGE>   16


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.

     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 $24.5 million at June 30, 2001 consists of
instruments with original maturities of 90 days to one year. 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.

     The interest income derived from the Company's relatively large cash and
cash equivalents and investments balances represents a significant component of
net income. Due to the short-term nature of these investments, the amount of
income may vary materially from period to period.


                                       16
<PAGE>   17


                           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 and
Exchange Act of 1933 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 the
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, short-term government and mortgage-backed securities and commercial
paper.

     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 our securities, or affiliates of Virage Logic.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES

        None

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

        None

ITEM 5. OTHER INFORMATION

        None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:

        10.1   Amended and Restated 2000 Employee Stock Purchase Plan

        10.2   2001 Foreign Subsidiary Employee Stock Purchase Plan

(b) Reports on Form 8-K

        None

                                       17
<PAGE>   18



                                   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 13, 2001                       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)



                                       18
<PAGE>   19


                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit No.    Description
-----------    -----------
<S>            <C>
   10.1        Amended and Restated 2000 Employee Stock Purchase Plan

   10.2        2001 Foreign Subsidiary Employee Stock Purchase Plan
</TABLE>


                                       19