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 quarterly period ended June 30, 2001

                                       or

            TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

            For the transition period from ___________ to __________


                         Commission File Number: 0-31093

                             VINA TECHNOLOGIES, INC.
             (Exact name of registrant as specified in its charter)

            Delaware                                       77-0432782
(State or other jurisdiction of                (IRS Employer Identification No.)
 incorporation or organization)


                      39745 Eureka Drive, Newark, CA 94560
                    (Address of principal executive offices)

                                 (510) 492-0800
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
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

The number of outstanding shares of the registrant's  Common Stock,  $0.0001 par
value, was 36,998,723 as of June 30, 2001.


<PAGE>


                             VINA TECHNOLOGIES, INC.

                                      INDEX
<TABLE>

<CAPTION>

                                                                                                     Page
Part I:  FINANCIAL INFORMATION

<S>     <C>                                                                                           <C>
   Item 1 Condensed Consolidated Financial Statements (Unaudited)......................................3

          Condensed Consolidated Balance Sheets as of December 31, 2000 and June 30, 2001..............3

          Condensed Consolidated Statements of Operations for the three months and six
          months ended June 30, 2000 and 2001 .........................................................4

          Condensed Consolidated Statements Of Cash Flows for the three months and six
          months ended June 30, 2000 and 2001 .........................................................5

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

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

   Item 3 Quantitative and Qualitative Disclosures About Market Risk..................................24

Part II:  OTHER INFORMATION

   Item 1  Legal Proceedings..........................................................................25

   Item 2  Changes in Securities and Use of Proceeds..................................................25

   Item 4  Submission of Matters to a Vote of Security Holders........................................26

   Item 6  Exhibits and Reports on Form 8-K...........................................................26

   Signatures.........................................................................................27


</TABLE>


<PAGE>



   PART I:  FINANCIAL INFORMATION

Item 1   Condensed Consolidated Financial Statements

                             VINA TECHNOLOGIES, INC.
                      Condensed Consolidated Balance Sheets
               (in thousands, except share and per share amounts)
<TABLE>

<CAPTION>
                                   (unaudited)


                                                                   December 31,   June 30,
                                                                       2000         2001
                                                                       ----         ----
ASSETS
Current assets:
<S>                                                                  <C>         <C>
  Cash and cash equivalents ........................................ $  7,740    $   5,767
  Short-term investments ...........................................   36,759       21,612
  Accounts receivable, net .........................................    5,243        8,087
  Inventories ......................................................    1,973        4,803
  Prepaid expenses and other .......................................    2,649        2,403
                                                                     --------    ---------
      Total current assets .........................................   54,364       42,672
Property and equipment, net ........................................    4,096        4,509
Other assets .......................................................       76          202
Acquired intangibles, net ..........................................       --        4,470
Goodwill, net ......................................................       --       32,565
                                                                     --------    ---------
      Total assets ................................................. $ 58,536    $  84,418
                                                                     =========   =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable ................................................. $  8,536    $  12,719
  Accrued compensation and related benefits ........................    2,588        2,211
  Accrued warranty .................................................      686          766
  Other current liabilities ........................................    1,897        1,841
                                                                     --------    ---------
      Total current liabilities ....................................   13,707       17,537
                                                                     --------    ---------
Deferred income taxes ..............................................       --        1,966
                                                                     --------    ---------

Stockholders' equity:
Convertible preferred stock; $0.0001 par value; 5,000,000 shares
authorized; none issued and outstanding.............................       --           --
Common stock; $0.0001 par value; 125,000,000 shares authorized;
     shares outstanding: 2000, 32,546,845; 2001, 36,998,723 ........        3            4
  Additional paid-in capital .......................................  144,708      184,462
  Deferred stock compensation ......................................  (26,386)     (15,477)
  Accumulated other comprehensive income ...........................       48           44
  Accumulated deficit ..............................................  (73,544)    (104,118)
                                                                     --------    ---------
      Total stockholders' equity ...................................   44,829       64,915
                                                                     --------    ---------
      Total liabilities and stockholders' equity ................... $ 58,536    $  84,418
                                                                     ========    =========
</TABLE>

            See notes to condensed consolidated financial statements


<PAGE>


                             VINA TECHNOLOGIES, INC.
                 Condensed Consolidated Statements of Operations
                    (in thousands, except per share amounts)
                                   (unaudited)
<TABLE>

<CAPTION>

                                                        Three Months Ended      Six Months Ended
                                                            June 30,                June 30,
                                                            --------                --------

                                                         2000        2001       2000         2001
                                                         ----        ----       ----         ----

<S>                                                    <C>         <C>         <C>         <C>
Net revenue ........................................   $  6,869    $ 12,028    $ 12,056    $ 23,057
Cost of revenue
  (excluding stock-based compensation) .............      4,220       7,070       7,459      15,316
                                                       --------    --------    --------    --------
Gross profit
  (excluding stock-based compensation) .............      2,649       4,958       4,597       7,741
                                                       --------    --------    --------    --------
Costs and expenses:
  Research and development
    (excluding stock-based compensation) ...........      2,708       4,839       5,213       9,544
  Selling, general and administrative
    (excluding stock-based compensation) ...........      4,828       6,441       8,549      12,952
 Stock-based compensation* .........................      7,036       3,482      10,689       8,326
  In-process research and development ..............         --          --          --       5,081
  Amortization of intangible assets ................         --       2,574          --       3,404
                                                       --------    --------    --------    --------
      Total costs and expenses .....................     14,572      17,336      24,451      39,307
                                                       --------    --------    --------    --------
Loss from operations ...............................    (11,923)    (12,378)    (19,854)    (31,566)
Interest income, net ...............................        270         380         396         992
                                                       --------    --------    --------    --------
Net loss ...........................................   ($11,653)   ($11,998)   ($19,458)   ($30,574)
                                                       ========    ========    ========    ========

Net loss per share, basic and diluted ..............   ($  1.50)   ($  0.34)   ($  2.64)   ($  0.89)
                                                       ========    ========    ========    ========
Shares used in computation, basic and diluted ......      7,794      35,589       7,376      34,186
                                                       ========    ========    ========    ========


   ---------------------------------------------
   *  Stock-based compensation:
      Cost of revenue ...........................      $    554    $    255    $    708    $    614
      Research and development ..................         2,074       1,438       3,233       3,027
      Selling, general and administrative .......         4,408       1,789       6,748       4,685
                                                       --------    --------    --------    --------
                                                       $  7,036    $  3,482    $ 10,689    $  8,326
                                                       --------    --------    --------    --------

</TABLE>





            See notes to condensed consolidated financial statements


<PAGE>


                             VINA TECHNOLOGIES, INC.
                 Condensed Consolidated Statements Of Cash Flows
                                 (in thousands)
                                   (unaudited)
<TABLE>

<CAPTION>

                                                                           Six Months Ended
                                                                               June 30,
                                                                          2000        2001
                                                                          ----        ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                     <C>         <C>
  Net loss ..........................................................   $(19,458)   $(30,574)
  Reconciliation of net loss to net cash used in operating
       activities:
    Depreciation and amortization ...................................        427       4,285
    Stock-based compensation ........................................     10,689       8,326
    In-process research and development .............................         --       5,081
    Provision for inventory order commitment ........................         --       1,800

  Changes in operating assets and liabilities:
    Accounts receivable .............................................        320      (2,838)
    Inventories .....................................................       (354)     (4,286)
    Prepaid expenses and other ......................................       (294)        374
    Other assets ....................................................       (965)        (65)
    Accounts payable ................................................        731       3,627
    Accrued compensation and related benefits .......................        335        (921)
    Accrued warranty ................................................         52          80
    Other current liabilities .......................................        616      (1,077)
                                                                        --------    --------
     Net cash used in operating activities ..........................     (7,901)    (16,188)
                                                                        --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property and equipment ...............................     (1,456)       (756)
  Acquisition of business, net of cash acquired .....................         --        (454)
  Purchases of short-term investments ...............................    (15,247)       (550)
  Proceeds from sales/maturities of short-term investments ..........      1,970      15,693
                                                                        --------    --------
     Net cash provided by (used in) investing activities ............    (14,733)     13,933
                                                                        --------    --------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net proceeds from sale of convertible preferred stock .............     23,821          --
  Proceeds from sale of common stock ................................      1,881         822
  Repurchase of common stock ........................................       (171)       (540)
  Proceeds from issuance of long-term debt ..........................        375          --
  Repayments on long-term debt ......................................       (260)         --
                                                                        --------    --------
     Net cash provided by financing activities ......................     25,646         282
                                                                        --------    --------

NET CHANGE IN CASH AND CASH EQUIVALENTS .............................      3,012      (1,973)

CASH AND CASH EQUIVALENTS, Beginning of period ......................      2,568       7,740
                                                                        --------    --------

CASH AND CASH EQUIVALENTS, End of period ............................   $  5,580    $  5,767
                                                                        ========    ========
</TABLE>


            See notes to condensed consolidated financial statements

<PAGE>


                             VINA TECHNOLOGIES, INC.
              Notes to Condensed Consolidated Financial Statements
                                   (unaudited)

1. Unaudited Interim Financial Information

Business - VINA  Technologies,  Inc. (the Company),  incorporated  in June 1996,
designs,   develops,   markets   and   sells   multiservice   broadband   access
communications  equipment that enables  telecommunications  service providers to
deliver  bundled voice and data services.  The Company has incurred  significant
losses since  inception and expects that net losses and negative cash flows from
operations will continue for the foreseeable future.

Basis of Presentation - The condensed  consolidated financial statements include
the accounts of the Company and its wholly owned  subsidiaries.  All significant
intercompany  accounts and transactions  have been eliminated in  consolidation.
The  accompanying  interim  financial  information  is  unaudited  and has  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,  it does not include all of the  information  and
notes required by generally accepted accounting  principles for annual financial
statements.  In the opinion of management,  such unaudited  information includes
all adjustments  (consisting only of normal recurring adjustments) necessary for
a fair presentation of the interim information.  Operating results for the three
and six months ended June 30, 2001 are not necessarily indicative of the results
that  may be  expected  for the year  ending  December  31,  2001.  For  further
information,  refer to the  Company's  reports  filed  with the  Securities  and
Exchange Commission, including its Annual Report on Form 10-K for the year ended
December 31, 2000.

Comprehensive  Loss -  Comprehensive  loss for the three  months  and six months
ended June 30, 2000 was the same as net loss.  Comprehensive  loss for the three
months  and six months  ended June 30,  2001 was  $12,054,000  and  $30,578,000,
respectively,  and  includes  net loss  for the  respective  periods  as well as
$56,000 and $4,000, respectively, of net unrealized losses on available for sale
investments

New Accounting  Standards - On January 1, 2001, the Company adopted Statement of
Financial  Accounting  Standards  (SFAS) No.  133,  "Accounting  for  Derivative
Instruments  and Hedging  Activities."  SFAS No.  133,  as amended,  establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts,  and for hedging activities.
Under  SFAS  No.  133,  certain  contracts  that  were not  formerly  considered
derivatives  may now meet the  definition of a derivative.  The adoption of SFAS
No.  133  did  not  have a  significant  impact  on the  Company's  consolidated
financial position, results of operations or cash flows.

In June 2001,  the  Financial  Accounting  Standards  Board issued SFAS No. 141,
"Business  Combinations"  and SFAS  No.  142,  "Goodwill  and  Other  Intangible
Assets".  SFAS No. 141 requires that all business  combinations  initiated after
June 30, 2001 be  accounted  for under the  purchase  method and  addresses  the
initial  recognition  and  measurement of goodwill and other  intangible  assets
acquired  in  a  business  combination.  SFAS  No.  142  addresses  the  initial
recognition and measurement of intangible  assets acquired outside of a business
combination  and  the  accounting  for  goodwill  and  other  intangible  assets
subsequent to their  acquisition.  SFAS No. 142 provides that intangible  assets
with finite useful lives be amortized and that  goodwill and  intangible  assets
with indefinite lives will not be amortized,  but will rather be tested at least
annually for impairment. The Company will adopt SFAS No. 142 for its fiscal year
beginning  January 1, 2002. Upon adoption of SFAS No. 142, the Company will stop
the  amortization  of goodwill  with an  expected  net  carrying  value of $29.2
million at  December  31,  2001 and annual  amortization  of $9.5  million  that
resulted from business combinations  initiated prior to the adoption of SFAS No.
141. Goodwill acquired subsequent to June 30, 2001 is not amortized. The Company
will evaluate  goodwill under the SFAS No. 142 transitional  impairment test and
has  not  yet  determined  whether  or not  there  is an  impairment  loss.  Any
transitional  impairment  loss  will be  recognized  as a change  in  accounting
principle.


<PAGE>



2. INVENTORIES


   Inventories consist of the following (in thousands):

                                                December 31,    June 30,
                                                    2000          2001
                                                    ----          ----


       Raw materials and subassemblies.......     $ 1,034       $ 2,487
       Finished goods........................         939         2,316
                                                  -------       -------
       Inventories...........................     $ 1,973       $ 4,803
                                                  =======       =======

3. NET LOSS PER SHARE

The  following  is a  calculation  of the  denominators  used for the  basic and
diluted net loss per share computations (in thousands):

<TABLE>

<CAPTION>
                                                  Three Months Ended                Six Months Ended
                                                       June 30,                         June 30,
                                                       --------                         --------
                                                2000              2001            2000             2001
                                                ----              ----            ----             ----

<S>                                            <C>               <C>             <C>              <C>
Weighted average common shares
outstanding.................................   10,469            36,848          10,021           35,510
Weighted average common shares outstanding
subject to repurchase.......................   (2,675)           (1,259)         (2,645)          (1,324)
                                               ------            ------          ------           ------
Shares used in computation, basic and
diluted.....................................    7,794            35,589           7,376           34,186
                                               ======            ======          ======           ======

</TABLE>

During the three months and six months ended June 30, 2000 and 2001, the Company
had securities  outstanding  which could  potentially  dilute basic earnings per
share in the future,  but were excluded in the  computation of diluted  earnings
per shares in such periods,  as their effect would have been antidilutive due to
the net loss reported in such periods.  Such outstanding  securities  consist of
the following:  June 30, 2000, 17,694,657 shares of convertible preferred stock,
2,400,091  shares of common stock subject to repurchase  and options to purchase
9,345,404 shares of common stock; June 30, 2001, options to purchase  13,424,812
shares of common stock.

4. ACQUISITION

On  February  27,  2001,  the  Company  completed  the  acquisition  of Woodwind
Communications  Systems,  Inc.  (Woodwind),  a provider of  voice-over-broadband
network edge access solutions,  based in Germantown,  Maryland.  The acquisition
was accounted for as a purchase in accordance with Accounting  Principles  Board
Opinion No. 16. Under the terms of the merger  agreement,  the Company  acquired
all  outstanding  capital  stock of Woodwind by paying $7.5  million in cash and
issuing  approximately  4.15 million shares of Company common stock. The Company
assumed  Woodwind's  outstanding  stock  options,  which,  if fully  vested  and
exercised,  would result in the issuance of approximately  1.1 million shares of
the Company's common stock. The total purchase price as of February 27, 2001 has
been  preliminarily  allocated to the assets  acquired and  liabilities  assumed
based on their respective fair values as follows (in thousands):

Total purchase price:
    Cash Consideration      $ 7,500
    Common Stock             39,465
    Options Assumed           2,591
    Acquisition Expenses        726
                            -------
                            $50,282
                            =======



<PAGE>



Purchase Price Allocation:
    Fair market value of net tangible
        assets acquired at
         February 27, 2001          $ 6,728
                                               Economic
                                                 Life
Intangible assets acquired:
  Workforce-In-Place                  1,236       3
  Tradename                             346       4
  Core technology                     3,022       4
  Current technology                    310       4
  In-process technology               5,081
  Goodwill                           35,525       4
  Deferred tax liabilities          (1,966)
                                    ------
                                    $50,282
                                    =======

The Company  recorded a one-time  charge of $5.1 million in the first quarter of
2001 for purchased  in-process  technology related to development  projects that
had not reached  technological  feasibility,  had no alternative future use, and
for  which  successful  development  was  uncertain.  The  conclusion  that  the
in-process development effort, or any material sub-component, had no alternative
future  use was  reached  in  consultation  with the  Company's  and  Woodwind's
management.

The  development  projects,  both the  ClariNet,  and the Piccolo  are  software
intensive network edge products.  Both projects are based on the same integrated
access gateway (IAG)  platform.  ClariNet is capable of providing end users with
Centrex  like  features  and is  designed  to operate as a PBX  replacement.  In
addition,  ClariNet scales in multiples of 4, to a total of 12 voice lines,  and
can be stacked to provide coverage to 24 standard voice lines.  Piccolo is being
developed  to be a lower cost  alternative  aimed at offices  that do not need a
robust  feature set for future  expansion and provides eight voice ports and one
10/100  Mbps  Ethernet  port,  but  retains  the   distributed   central  office
architecture  of the  ClariNet.  Additionally,  the Company is in the process of
enhancing  the ClariNet and Piccolo  products with next  generation  software to
enable  voice  over  internet  protocol  (VoIP)  capabilities  as  well  as  ATM
enhancements, enhanced reliability and new features. Development of ClariNet and
Piccolo will utilize the same software platform. At the time of acquisition, the
product  development was  approximately  50% complete and the estimated costs to
complete the  development of both products was expected to be an additional $1.1
million.  Management expects that products being developed will become available
for sale in fiscal  2001;  however,  no  assurances  can be given.  The  Company
expects to benefit from the acquired  research and development  related to these
products  once it begins  shipping.  Costs  incurred on the  projects  after the
acquisition date through June 30, 2001 are  approximately  $600,000.  Failure to
reach successful  completion of these projects could result in impairment of the
associated  capitalized  intangible  assets  and could  require  the  Company to
accelerate the time period over which the intangibles are being amortized, which
could  have a  material  adverse  effect on the  Company's  business,  financial
condition and results of operations.

Significant  assumptions  have been used to  determine  the value of  in-process
technology, include the following. First, an income approach that focuses on the
income producing capability of the acquired technology,  and best represents the
present value of the future economic benefits the Company expects to derive from
them.  Second,  forecasted net cash flows that the Company  expects might result
from the development  effort are determined  using  projections  prepared by the
Company's  management.  Third,  a discount rate of 25% was used,  based upon the
estimated weighted average rate of return for Woodwind, which is consistent with
the  implied  transaction  discount  rate.  Fourth,  a  premium  of 10%  for the
in-process technology was added to reflect the additional risk of the in-process
technology, thus resulting in the use of an overall 35% discount rate.

In accordance with Financial  Accounting  Standards Board Interpretation No. 44,
"Accounting for Certain Transactions  involving Stock Compensation," the Company
recorded the intrinsic value, measured as the difference between the grant price
and fair market value on the acquisition  consummation date, of unvested options
assumed in the acquisition as deferred stock  compensation.  Such deferred stock

<PAGE>

compensation,  which aggregated $588,000, is recorded as a separate component of
stockholders'  equity and will be  amortized  over the  vesting  term of related
options.  For the three and six months ended June 30, 2001, the Company recorded
compensation  expense of $14,000  and  $55,000,  respectively,  related to these
awards in the accompanying condensed consolidated statement of operations.

Pro Forma Financial Results

The following  selected  unaudited pro forma combined  results of operations for
the six months  ended June 30, 2000 and 2001 of the Company  and  Woodwind  have
been  prepared  assuming that the  acquisition  occurred at the beginning of the
periods  presented.  The  following  pro  forma  financial  information  is  not
necessarily  indicative  of  the  results  that  would  have  occurred  had  the
acquisition  been  completed at the beginning of the period  indicated nor is it
indicative of future operating results (in thousands, except per share data):

                                                             Six Months
                                                               Ended
                                                              June 30,
                                                        2000           2001
                                                        ----           ----
Net revenue                                          $12,271        $ 23,059
Net loss                                            ($26,974)       ($30,244)
Net loss per share                                    ($2.34)         ($0.85)
Shares used in calculation of net loss per share      11,525          35,523

The pro  forma  results  of  operations  give  effect  to  certain  adjustments,
including  amortization  of purchased  intangibles,  goodwill and deferred stock
compensation  associated  with the  acquisition.  The $5.1  million  charge  for
purchased  in-process  research and  development  has been excluded from the pro
forma results, as it is a material non-recurring charge.

5. SUBSEQUENT EVENTS

In July 2001,  the  Company's  Board of  Directors  declared  a dividend  of one
preferred  share purchase right (a Right) for each  outstanding  share of common
stock,  of the Company.  The dividend was payable August 6, 2001 to shareholders
of record on that date.  Each Right entitles the  registered  holder to purchase
from the Company one  one-thousandth  of a share of Series A Preferred Stock, of
the Company, at a price of $35.00 per one one-thousandth of a share,  subject to
certain antidilution  adjustment  provisions.  The Rights are exercisable in the
event that a person,  entity or group  acquires  beneficial  ownership of 20% or
more of the outstanding shares of VINA's common stock. The Rights will expire on
the earlier of (i) July 25,  2011,  (ii)  consummation  of a merger  transaction
meeting certain  requirements,  or (iii) redemption or exchange of the Rights by
the Company.

In July 2001,  the Company  announced a  restructuring  plan  intended to better
align its operations  with changing  market  conditions.  The Company expects to
reduce its operating cost structure  through a 20 percent reduction of employees
and other  expense  reductions.  As a result  of this  restructuring  plan,  the
Company  estimates it will record cash charges of approximately  $1.0 million in
the third quarter of 2001.  These charges will primarily relate to severance and
other benefits for impacted employees.

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

     When used in this discussion,  the words "may," "will," "could" and similar
expressions  are  intended to  identify  forward-looking  statements.  These are
statements  that relate to future periods and include  statements as to expected
net  losses,   expected  cash  flows,   expected   expenses,   expected  capital
expenditures,  expected  deferred  stock  compensation,  the adequacy of capital
resources,  growth  in  operations,  the  ability  to  integrate  companies  and
operations  that we may acquire,  the expected  date of and our ability to enter
into a definitive  manufacturing contract with Benchmark,  expected reduction of
operation  costs,  the timing and magnitude of cost  reductions  and  associated
charges  resulting  from our  restructuring  plan,  our strategy  with regard to
protecting  our  proprietary  technology,  the ability to compete and respond to
rapid  technological  change,  and the  performance  and utility of products and
services. Forward-looking statements are subject to risks and uncertainties that
could cause actual  results to differ  materially  from those  projected.  These
risks and uncertainties  include, but are not limited to the extent to which the
current economic environment affects our current and potential customers' demand
for  our  products,   the  effects  of  competition,   competitive  pricing  and
alternative  technological  advances,  our ability to implement successfully and
achieve  the goals of our  corporate  restructuring  plan,  our ability to raise
additional financing, our ability to design, market and manufacture successfully
products that address  market  demands,  our ability to  accurately  predict our
manufacturing  requirements,  our ability to maintain relationships with vendors
of  emerging  technologies,  changes in our  business  plans and our  ability to
execute our business plan, and the matters discussed in "Factors That May Affect
Results." These forward-looking  statements speak only as of the date hereof. We
expressly  disclaims  any  obligation  or  undertaking  to release  publicly any
updates or  revisions  to any  forward-looking  statements  contained  herein to
reflect any change in ours  expectations  with  regard  thereto or any change in
events, conditions or circumstances on which any such statement is based.

     The following  information should be read in conjunction with the unaudited
condensed  consolidated financial statements and notes thereto set forth in Item
1 of this  quarterly  report.  We also urge  readers to review and  consider our
disclosures describing various factors that could affect our business, including
the  disclosures  under  Management's   Discussion  and  Analysis  of  Financial
Condition and Results of Operations  and Risk Factors and the audited  financial
statements and notes thereto  contained in our Annual Report on Form 10-K, filed
with the Securities and Exchange Commission on April 2, 2001.

Recent Developments

     On  February  27,  2001,   we  completed   the   acquisition   of  Woodwind
Communications  Systems,  Inc.  (Woodwind),  a provider of  voice-over-broadband
network edge access  solutions.  We issued  approximately  4.2 million shares of
common  stock  and  $7.5  million  in cash  in  exchange  for all of  Woodwind's
outstanding capital stock. In addition, we assumed Woodwind's  outstanding stock
options,  which, if fully vested and exercised,  would result in the issuance of
approximately  1.1 million  shares of VINA common  stock.  The  transaction  was
accounted for as a purchase.

     In July 2001, the Company announced a restructuring plan intended to better
align its operations  with changing  market  conditions.  The Company expects to
reduce its operation cost structure  through a 20 percent reduction of employees
and other  expense  reductions.  As a result  of this  restructuring  plan,  the
Company  estimates it will record cash charges of approximately  $1.0 million in
the third quarter of 2001.  These charges will primarily relate to severance and
other benefits for impacted employees.

Overview

     VINA Technologies is a leading  developer of multiservice  broadband access
communications  equipment  that  enables  communications  service  providers  to
deliver  bundled  voice  and  data  services.  Our  products  integrate  various
broadband access  technologies,  including  existing  circuit-based and emerging
packet-based networks,  onto a single platform to alleviate capacity constraints
in communications networks.

     From our  inception  in June 1996  through  February  1997,  our  operating
activities  related  primarily to  developing  and testing  prototype  products,
commencing  the staffing of our sales and  customer  service  organizations  and
establishing  relationships  with  our  customers.  We  began  shipments  of our
Multiservice  T1 Integrator  product family in March 1997. In May 1999, we began
shipping our  Multiservice  Xchange product.  Since inception,  we have incurred
significant  losses,  and as of June 30, 2001, we had an accumulated  deficit of
$104.1 million.

     We  market  and  sell  our  products  directly  to  communications  service
providers and through OEM  customers and  value-added  resellers,  or VARs.  Our
revenue  is  recognized  when  persuasive  evidence  of an  arrangement  exists,
delivery has  occurred or services  have been  rendered,  the price is fixed and
determinable,  and collectibility is reasonably  assured.  This generally occurs
upon  commercial  shipment  of our  products  at which  time we have no  further
performance obligations to our customers. We also record a provision at the time

<PAGE>

we recognize  revenue  primarily for warranty costs. No revenue is recognized on
products  shipped on a trial  basis.  We recognize  extended  warranty and other
service  revenue  ratably  over the  respective  service  periods.  This service
revenue has not been significant to date.

     Our customer  base is highly  concentrated.  A  relatively  small number of
customers  have  accounted  for a  significant  portion  of our  historical  net
revenue.  For the six months  ended  June 30,  2001,  sales to our five  largest
customers  accounted for approximately 89% of our net revenue, of which sales to
Lucent  Technologies,  NUVOX Communications and Advanced Telecom Group accounted
for 45%, 22% and 12%, respectively, of our net revenue. While the level of sales
to any specific customer is anticipated to vary from period to period, we expect
that we will continue to experience  significant customer  concentration for the
foreseeable  future.  To date,  international  sales have not been  significant.
International  sales  have  been  denominated  primarily  in U.S.  dollars  and,
accordingly,  we have not been exposed to  significant  fluctuations  in foreign
currency exchange rates.

     Cost of revenue consists  primarily of costs of products  manufactured by a
third-party contract manufacturer, component costs, depreciation of property and
equipment,  personnel  related  costs to manage the  contract  manufacturer  and
warranty costs,  and excludes  amortization of deferred stock  compensation.  We
conduct program  management,  manufacturing  engineering,  quality assurance and
documentation  control at our facility in Newark,  California.  We outsource our
manufacturing and testing requirements to Benchmark Electronics.  Accordingly, a
significant portion of our cost of revenue consists of payments to this contract
manufacturer.

     We  expect  our gross  margin to be  affected  by many  factors,  including
competitive pricing pressures,  fluctuations in manufacturing volumes, inventory
obsolescence,  costs of components and  sub-assemblies,  costs from our contract
manufacturers   and  the  mix  of  products  or  system   configurations   sold.
Additionally,  our gross  margin  may  fluctuate  due to  changes  in our mix of
distribution  channels.  Currently,  we derive the  majority of our revenue from
sales made to our OEM customers.  A significant increase in revenue to these OEM
customers would adversely impact or reduce our gross margin.

     Research and  development  expenses  consist  primarily  of  personnel  and
related costs,  consulting  expenses and prototype  costs related to the design,
development,  testing  and  enhancement  of our  multiservice  broadband  access
products,  and excludes amortization of deferred stock compensation.  We expense
all of our research and development expenses as incurred.

     Selling, general and administrative expenses consist primarily of personnel
and related costs,  including  salaries and commissions for personnel engaged in
direct and indirect selling and marketing and other administrative functions and
promotional  costs,  including  advertising,  trade shows and related costs, and
excludes amortization of deferred stock compensation.

     Stock-based  compensation  consists  of the fair  value  of  stock  options
granted to  non-employees  for services and the  amortization  of deferred stock
compensation on stock options granted to employees.  Deferred stock compensation
represents  the  difference  between the deemed fair market  value of our common
stock at the time of option granted and the exercise prices of these options. We
are  amortizing  deferred  stock  compensation  using a  multiple  option  award
valuation approach over the vesting periods of the applicable options,  which is
generally four years.  The  amortization of deferred stock  compensation,  based
upon options  granted  through June 30, 2001,  is expected to be $6.0 million in
the last two quarters of 2001,  $6.7  million in 2002,  $2.4 million in 2003 and
$420,000 thereafter.

     Interest income,  net,  consists  primarily of interest earned on our cash,
cash equivalent and short-term  investment balances partially offset by interest
expense associated with our debt obligations.

Results of Operations

Three and Six Months Ended June 30, 2001 and 2000

     Net  revenue.  Net revenue  increased  to $23.1  million for the six months
ended June 30, 2001 from $12.1  million for the six months  ended June 30, 2000.
Net revenue  increased to $12.0 million for the quarter ended June 30, 2001 from

<PAGE>

$6.9 million for the quarter ended June 30, 2000.  The growth in net revenues is
primarily  due to increased  unit sales to existing  customers  and sales to new
customers.

     Cost of revenue.  Cost of revenue  increased  to $15.3  million for the six
months  ended June 30, 2001 from $7.5  million for the six months ended June 30,
2000.  Cost of revenue  increased to $7.1 million for the quarter ended June 30,
2001 from $4.2  million  from the  quarter  ended June 30,  2000.  Gross  profit
increased  to $7.7  million  for the six months  ended  June 30,  2001 from $4.6
million for the six months ended June 30, 2000.  Gross profit increased to $ 5.0
million for quarter  ended June 30, 2001 from $2.6 million for the quarter ended
June 30, 2000.  Gross profit as a percentage  of net revenue  decreased to 33.6%
for the six months  ended June 30, 2001 from 38.1% for the six months ended June
30,  2000.  This  decrease in gross  margin was due  primarily to an expense for
excess  inventory  purchase  commitments of $1.8 million in the first quarter of
2001. The provision for the excess inventory purchase  commitments was primarily
a result  of a shift  in one of our  customer's  demands  from  next  generation
network   equipment  to  traditional  Time  Division   Multiplex  (TDM)  network
equipment.  Gross profit as a percentage  of net revenue  increased to 41.2% for
the quarter  ended June 30, 2001 from 38.6% for the quarter ended June 30, 2000.
This  increase in gross profit was due to higher  percentage of revenue mix from
TDM based products and cost reductions.

     Research  and  development  expenses.  Research  and  development  expenses
increased  to $9.5  million for the six months  ended June 30,  2001,  from $5.2
million for the six months ended June 30, 2000. Research and development expense
increased to $4.8 million for the quarter  ended June 30, 2001 from $2.7 million
for the quarter  ended June 30,  2000.  Research and  development  expenses as a
percentage of net revenue  decreased  from 43.2% in the first six months of 2000
to 41.4% in the first six months of 2001,  as our revenue  increased at a faster
rate than research and  development  expenses.  The increases in absolute dollar
amounts were primarily a result of additional personnel costs,  prototype costs,
consulting  costs,  depreciation  costs as well as facility  related  costs.  We
believe that  continued  investment in research and  development  is critical to
attaining our strategic product and cost reduction objectives. In July 2001, the
company  announced a restructuring  plan intended to better align its operations
with  changing  market  conditions,  and as a  result,  we expect  research  and
development expenses to decrease slightly in absolute dollar amounts in the next
quarter.

     Selling,  general  and  administrative   expenses.   Selling,  general  and
administrative expenses increased to $13.0 million for the six months ended June
30, 2001 from $8.5  million  for the six months  ended June 30,  2000.  Selling,
general and  administrative  expenses  increased to $6.4 million for the quarter
ended June 30, 2001 from $4.8 million for the quarter ended June 30, 2000.  This
increase was primarily attributable to increased personnel costs, consulting and
professional  costs,  depreciation  costs  as well as  facility  related  costs.
Selling,  general and  administrative  expenses as a  percentage  of net revenue
decreased to 56.2% for the first six months of 2001 from 70.9% for the first six
months of 2000, as our revenue increased at a faster rate than selling,  general
and administrative expenses. In July 2001, the company announced a restructuring
plan intended to better align its operations  with changing  market  conditions,
and as a  result,  we expect  research  and  development  expenses  to  decrease
slightly in absolute dollar amounts in the next quarter.

     Stock-based  compensation.  Stock-based  compensation  expense decreased to
$8.3 million for the six months  ended June 30, 2001 from $10.7  million for the
six months ended June 30, 2000.  Stock-based  compensation  expense decreased to
$3.5  million  for the  quarter  ended June 30,  2001 from $7.0  million for the
quarter  ended June 30, 2000.  The  decrease is due  primarily to our use of the
multiple option award approach for the amortizing  deferred stock  compensation,
which  resulted in  accelerated  amortization.  Based on stock  options  granted
through  June 30,  2001,  we expect to record $6.0  million of  amortization  of
stock-based compensation in the six months ending December 31, 2001.

     Interest income,  net.  Interest income,  net for the six months ended June
30, 2001  increased to $1.0 million from  $396,000 for the six months ended June
30, 2000.  Interest income, net for the quarter ended June 30, 2001 increased to
$380,000 from $270,000 for the quarter ended June 30, 2000. These increases were
primarily  attributable  to  interest  earned on higher  average  cash  balances
throughout the relevant period.

Liquidity and Capital Resources

     Net cash used in  operating  activities  for the six months  ended June 30,
2001 was $16.2  million and $7.9 million for the six months ended June 30, 2000.

<PAGE>

Cash  used in  operating  activities  for the six  months  ended  June 30,  2001
resulted  primarily  from the net loss  from  operations  of $30.6  million,  an
increase  in  accounts  receivable,  inventory,  and  accounts  payable  of $2.8
million, $4.3 million, and $3.6 million, respectively, off-set by a net decrease
in  accrued  liabilities  of $1.9  million  and  non-cash  activities  including
depreciation and amortization of fixed assets, goodwill and intangible assets of
$4.3 million,  stock-based compensation of $8.3 million, in-process research and
development of $5.1 million and an inventory  commitment purchase charge of $1.8
million.

     Net cash  provided by investing  activities  was $13.9  million for the six
months ended June 30, 2001 and net cash used in investing  activities  was $14.7
million for the six months  ended June 30,  2000.  Cash  provided  by  investing
activities  for the six months  ended  June 30,  2001 was  primarily  due to net
proceeds from the sale or maturity of short-term  investments  of $15.1 million,
offset by net cash used for the  acquisition of Woodwind,  net of cash acquired,
of $454,000 and purchase of property and equipment of $756,000.

   Net cash provided by financing activities was $282,000 for the six months
ended June 30, 2001 and $25.6 million for the six months ended June 30, 2000.
Cash provided by financing activities for the six months ended June 30, 2001 was
primarily due to net proceeds from issuances of common stock.

     We anticipate that operating expenses will constitute a material use of our
cash resources.  In addition,  we may use cash resources,  to fund  acquisitions
such  as  our  recent  acquisition  of  Woodwind,  or  invest  in  complementary
businesses,  technologies or products.  We believe that our cash on hand will be
sufficient to meet our working capital and capital expenditure  requirements for
at least the next 12 months.

     In July 2001 after careful consideration, we announced a restructuring plan
intended to better align our  operations  with changing  market  conditions.  We
expect to reduce our operating cost structure  through a 20 percent reduction of
employees and other expense  reductions.  With our cost reduction efforts, if we
successfully  execute our business  plan,  we believe we will be able to reach a
cash flow break even position with our current capital  resources.  However,  we
will from time to time review and may pursue additional financing opportunities.
If we are unable to execute our business plan as  anticipated  or do not realize
our  expected  operation  cost  reductions,  we will need to  obtain  additional
funding  during  2002,  and we may  seek  to  sell  additional  equity  or  debt
securities  or  secure  a bank  line of  credit.  Currently,  we  have no  other
immediately  available  sources of liquidity.  The sale of additional  equity or
other  securities  could  result in  additional  dilution  to our  stockholders.
Arrangements  for  additional  financing  may not be  available in amounts or on
terms acceptable to us, if at all.


                         FACTORS THAT MAY AFFECT RESULTS

     The risks and  uncertainties  described  below are not the only ones facing
our company.  Additional  risks and  uncertainties  not presently known to us or
that we currently deem  immaterial may also impair our business  operations.  If
any of the following risks actually occur, our business, financial condition and
results of operations could be materially and adversely affected.

                          Risks Related To Our Business

Because we have a limited  operating  history  and  operate in a new and rapidly
evolving  telecommunications  market,  you may  have  difficulty  assessing  our
business and predicting our future financial results.

     We were  incorporated  in June 1996 and did not begin shipping our products
until March 1997.  Due to our limited  operating  history,  it is  difficult  or
impossible for us to predict our future results of operations.

We have a history of losses, we expect future losses,  and we may not be able to
generate   sufficient   net   revenue  in  the  future  to  achieve  or  sustain
profitability.

     We have incurred significant losses since inception and expect that our net
losses and negative cash flow from  operations will continue for the foreseeable
future.  We incurred net losses of  approximately  $8.0  million in 1998,  $17.1

<PAGE>

million  in 1999,  $43.3  million in 2000 and $30.6  million  for the six months
ended June 30,  2001.  As of June 30,  2001,  we had an  accumulated  deficit of
approximately $104.1 million. To achieve profitability, we will need to generate
and sustain  substantially higher net revenue while maintaining  reasonable cost
and expense  levels.  We expect to continue to incur  significant  expenses  for
research and  development,  sales and marketing,  customer  support,  developing
direct sales and distribution channels, and general and administrative expenses.

We  rely on a small  number  of  telecommunications  customers  for  substantial
portions of our net revenue.  If we lose one of our  customers  or  experience a
delay or  cancellation  of a  significant  order or a  decrease  in the level of
purchases  from any of our  customers,  our net  revenue  could  decline and our
operating results and business could be harmed.

     We derive almost all of our net revenue from direct sales to a small number
of   telecommunications   customers  and  our  indirect   sales  through  Lucent
Technologies,  our original equipment manufacturer,  or OEM, customer that sells
and markets our products.  If we lose one of our customers or experience a delay
or cancellation  of a significant  order or a decrease in the level of purchases
from any of our  customers,  our net revenue  could  decline  and our  operating
results and business could be harmed.  Our five largest customers  accounted for
approximately  89% of our net revenue for the six months ended June 30, 2001, of
which sales to Lucent Technologies,  Nuvox Communications,  and Advanced Telecom
Group  accounted  for  45%,  22% and  12%,  respectively.  We  expect  that  the
telecommunications industry will continue to experience consolidation. If any of
our  customers  is  acquired  by a  company  that  is one  of  our  competitors'
customers,  we may  lose its  business.  In  addition,  if our OEM  customer  is
acquired, we could lose that customer. For example,  Intermedia  Communications,
one of our service provider  customers,  was recently  acquired by MCI WorldCom.
Also, the ultimate  business success of our direct service  provider  customers,
our OEM customer and VARs, and our indirect  customers who purchase our products
through an OEM customer and VARs,  could affect the demand for our products.  In
addition,  any difficulty in collecting  amounts due from one or more of our key
customers could harm our operating  results and financial  condition.  If any of
these events occur, our net revenue could decline and our operating  results and
business could be harmed.

The difficulties  experienced by many of our current  customers have had and are
expected to continue to have an adverse effect on our business.

     To date, we have sold the majority of our products to CLEC customers. CLECs
have  experienced   extreme   difficulties  in  obtaining  financing  for  their
businesses.  As a result,  CLECs have been forced to scale back their operations
or terminate their operations. If our customers become unable to pay for shipped
products,  we may be required to write-off  significant  amounts of our accounts
receivable.  Similarly,  if our  customers  order  products  and then suspend or
cancel the orders prior to  shipping,  we will not  generate  revenues  from the
products we build. In such  circumstances,  our inventories may increase and our
expenses will increase.  Further,  we may incur  substantially  higher inventory
carrying  costs and excess  inventory  that could become  obsolete over time. We
expect that our  business  will  continue  to be  significantly  and  negatively
affected  unless and until there is  substantial  improvement  in the ability of
CLECs to finance their businesses.

Our net revenue could decline  significantly if our relationship  with our major
OEM customer deteriorates.

     A  significant  portion of our net revenue is derived  from sales to Lucent
Technologies,  our OEM  customer.  Our  agreement  with our OEM  customer is not
exclusive and does not contain minimum volume  commitments.  Lucent Technologies
accounted  for  approximately  45% of our net  revenues for the six months ended
June  2001.  Our OEM  agreement  with  Lucent  expires  in May 2002.  Lucent may
terminate  the agreement  earlier upon 60 days'  notice.  At any time or after a
short period of notice,  our OEM  customer  could elect to cease  marketing  and
selling our products.  They may so elect for a number of reasons,  including the
acquisition  by our OEM  customer  of one or more of our  competitors  or  their
technologies,  or because one or more of our competitors  introduces superior or
more cost-effective  products.  In addition, we intend to develop and market new
products that may compete directly with the products of our OEM customer,  which
may also harm our relationships with this customer. For example, our MBX product
may compete with  products  offered by our OEM customer,  which could  adversely
affect our relationship with that customer.  Our existing  relationship with our
OEM customer could make it harder for us to establish similar relationships with

<PAGE>

our OEM customer's  competitors.  Any loss, reduction,  delay or cancellation in
expected  sales to our OEM  customer,  or our  inability  to  establish  similar
relationships with new OEM customers in the future,  would hurt our business and
our ability to increase net revenues  and could cause our  quarterly  results to
fluctuate significantly.

Our products  require  substantial  investment  over a long product  development
cycle, and we may not realize any return on our investment.

     The  development  of new or enhanced  products  is a complex and  uncertain
process.  We and our OEM  manufacturers  have in the past and may in the  future
experience  design,  manufacturing,  marketing and other difficulties that could
delay or prevent the development,  introduction or marketing of new products and
enhancements. For example, we had expected to begin shipments of our MBX product
in the second  quarter of 2001,  but the schedule for these  shipments  has been
delayed to the third  quarter of 2001 because of continued  development  issues.
Development  costs and expenses are incurred before we generate any net revenues
from sales of products  resulting from these  efforts.  We intend to continue to
incur substantial research and development expenses, which could have a negative
impact on our earnings in future periods.

Our  failure to enhance our  existing  products  or develop  and  introduce  new
products that meet changing  customer  requirements and  technological  advances
would limit our ability to sell our products.

     Our ability to increase net revenue will depend significantly on whether we
are  able to  anticipate  or  adapt to  rapid  technological  innovation  in the
telecommunications  industry and to offer, on a timely and cost-effective basis,
products  that meet changing  customer  demands and industry  standards.  If the
standards  adopted  are  different  from those  which we have chosen to support,
market acceptance of our products may be significantly reduced or delayed.

     Developing new or enhanced  products is a complex and uncertain process and
we may not have sufficient  resources to successfully and accurately  anticipate
technological  and market trends,  or to  successfully  manage long  development
cycles. We must manage the transition from our older products to new or enhanced
products to minimize  disruption in customer  ordering  patterns and ensure that
adequate supplies of new products are available for delivery to meet anticipated
customer  demand.  Any  significant  delay or failure to release new products or
product  enhancements  on a  timely  and  cost-effective  basis  could  harm our
reputation   and   customer   relationships,   provide  a   competitor   with  a
first-to-market  opportunity  or allow a competitor  to achieve  greater  market
share.

Since the telecommunications  industry is characterized by large purchase orders
placed on an irregular basis, it is difficult to accurately  forecast the timing
and size of orders. Accordingly,  our net revenue and operating results may vary
significantly and unexpectedly from quarter to quarter.

     We may  receive  purchase  orders  for  significant  dollar  amounts  on an
irregular basis depending upon the timing of our customers'  network  deployment
and sales and marketing  efforts.  Because orders we receive may have short lead
times, we may not have sufficient  inventory to fulfill these orders, and we may
incur  significant  costs in attempting to expedite and fulfill these orders. In
addition,  orders  expected in one quarter could shift to another because of the
timing  of  our   customers'   purchase   decisions  and  order   reductions  or
cancellations.  Under our OEM agreement, our OEM customer has the right to delay
previously placed orders for any reason.  The time required for our customers to
incorporate  our products  into their own can vary  significantly  and generally
exceeds several  months,  which further  complicates our planning  processes and
reduces  the  predictability  of our  operating  results.  Accordingly,  our net
revenue and  operating  results may vary  significantly  and  unexpectedly  from
quarter to quarter.

     Our  customers  have  in the  past  built,  and  may in the  future  build,
significant   inventory  in  order  to  facilitate  more  rapid   deployment  of
anticipated  major projects or for other  reasons.  After building a significant
inventory  of our  products,  these  parties  may be faced with  delays in these
anticipated  major  projects  for various  reasons.  As a result,  Lucent may be
required to maintain a significant  inventory of our products for longer periods
than they originally  anticipated,  which would reduce further purchases.  These

<PAGE>

reductions,  in  turn,  could  cause  fluctuations  in  our  future  results  of
operations and severely harm our business and financial condition.

If we do not predict our manufacturing  requirements accurately,  we could incur
additional costs and suffer manufacturing delays.

     We currently provide  forecasts of our demand to our contract  manufacturer
12 months prior to scheduled  delivery of products to our customers.  Lead times
for the materials and components that we order vary  significantly and depend on
numerous factors, including the specific supplier, contract terms and demand for
a component at a given time. If we overestimate our  manufacturing  requirements
or a product  in our  manufacturing  forecast  becomes  obsolete,  our  contract
manufacturer may have purchased excess or obsolete  inventory.  For example,  in
March 2001 we expensed $1.8 million for excess inventory  purchase  commitments.
For those parts that are unique to our products, we could be required to pay for
these excess or obsolete parts and recognize related inventory write-offs. If we
underestimate our requirements, our contract manufacturer may have an inadequate
inventory,  which could  interrupt  manufacturing  of our products and result in
delays in shipments and net revenue.

Telecommunications  networks  are  comprised  of multiple  hardware and software
products from multiple  vendors.  If our products are not compatible  with other
companies'  products within our customers'  networks,  orders will be delayed or
cancelled.

     Many of our  customers  require  that our products be designed to work with
their existing  networks,  each of which may have different  specifications  and
utilize  multiple   protocols  that  govern  the  way  devices  on  the  network
communicate  with each other.  Our  customers'  networks  may  contain  multiple
generations of products from different vendors that have been added over time as
their networks have grown and evolved. Our products may be required to work with
these  products as well as with future  products in order to meet our customers'
requirements. In some cases, we may be required to modify our product designs to
achieve a sale, which may result in a longer sales cycle, increased research and
development  expense,  and reduced  operating  margins.  If our products are not
compatible with existing equipment in our customers'  networks,  whether open or
proprietary, installations could be delayed, or orders for our products could be
cancelled.

If we  fail  to  win  contracts  at  the  beginning  of  our  telecommunications
customers'  deployment  cycles,  we may not be able to sell  products  to  those
customers for an extended period of time, which could inhibit our growth.

     Our existing and potential  telecommunications customers generally select a
limited number of suppliers at the beginning of a deployment cycle. As a result,
if we are not selected as one of these suppliers, we may not have an opportunity
to sell products to that customer until its next purchase cycle, which may be an
extended period of time. In addition,  if we fail to win contracts from existing
and potential  customers  that are at an early stage in their design cycle,  our
ability to sell  products  to these  customers  in the  future may be  adversely
affected  because  they may prefer to continue  purchasing  products  from their
existing  vendor.  Since we rely on a small number of customers for the majority
of our  sales,  our  failure  to  capitalize  on  limited  opportunities  to win
contracts with these customers could severely harm us.

Since the sales cycle for our products is typically long and  unpredictable,  we
have difficulty predicting future net revenues and our net revenue and operating
results may fluctuate significantly.

     A customer's decision to purchase our products often involves a significant
commitment of its resources and a lengthy  evaluation and product  qualification
process.  Our sales cycle vary from a few months to over a year. As a result, we
may incur  substantial  sales and  marketing  expenses  and  expend  significant
management  effort  without  any  assurance  of a sale.  A long sales cycle also
subjects us to other risks, including customers' budgetary constraints, internal
acceptance reviews and order reductions or cancellations. Even after deciding to
purchase our products, our customers often deploy our products slowly.

<PAGE>

We have a limited order  backlog.  If we do not obtain  substantial  orders in a
quarter, we may not meet our net revenue objectives for that quarter.

     Since inception, our order backlog at the beginning of each quarter has not
been  significant,  and we expect  this trend to  continue  for the  foreseeable
future.  Accordingly,  we must obtain substantial additional orders in a quarter
for shipments in that quarter to achieve our net revenue  objectives.  Our sales
agreements allow  purchasers to delay scheduled  delivery dates without penalty.
Our customer  purchase  orders also allow  purchasers  to cancel  orders  within
negotiated time frames without significant penalty. In addition,  due in part to
factors such as the timing of product release dates, purchase orders and product
availability,  significant volume shipments of our products could occur near the
end of our fiscal quarters. If we fail to ship products by the end of a quarter,
our operating results could be adversely affected for that quarter.

The   telecommunications   industry  is   characterized   by  rapidly   changing
technologies.  If we are unable to develop and maintain strategic  relationships
with vendors of emerging  technologies,  we may not be able to meet the changing
needs of our customers.

     Our success  will depend on our ability to develop and  maintain  strategic
relationships  with  vendors  of  emerging  technologies.  We  depend  on  these
relationships   for  access  to  information  on  technical   developments   and
specifications that we need to develop our products.  We also may not be able to
predict which existing or potential  partners will develop leading  technologies
or  industry  standards.  We may not be able to  maintain  or develop  strategic
relationships or replace strategic  partners that we lose. If we fail to develop
or maintain  strategic  relationships  with  companies  that  develop  necessary
technologies or create industry  standards,  our products could become obsolete.
We could  also be at a  competitive  disadvantage  in  attempting  to  negotiate
relationships with those potential  partners in the future. In addition,  if any
strategic partner breaches or terminates its relationship with us, we may not be
able to sustain or grow our business


We  depend  upon a  single  contractor  for  most  of our  manufacturing  needs.
Termination of this relationship  could impose significant costs on us and could
harm or interfere with our ability to meet scheduled product deliveries.

     We do not have  internal  manufacturing  capabilities  and  have  generally
relied primarily on a contract manufacturer,  Flextronics International Limited,
to  build  our  products.  Effective  April  1,  2001,  we  transferred  primary
manufacturing  responsibility  of our  products  from  Flextronics  to Benchmark
Electronics.  We do not yet have a signed definitive manufacturing contract with
Benchmark.  We expect to have a signed formal  contract by September 2001. If we
execute a formal contract with  Benchmark,  we anticipate that Benchmark will be
able to cancel the  contract on short notice and will not be obligated to supply
products  to us for any  specific  period,  in any  specific  quantity or at any
specific price,  except as may be provided in a particular  purchase order.  Our
reliance  on  Benchmark  involves  a  number  of  risks,  including  the lack of
operating  history between us and Benchmark,  the current absence of any written
contract, absence of control over our manufacturing capacity, the unavailability
of, or interruptions in, access to process technologies and reduced control over
component availability,  delivery schedules,  manufacturing yields and costs. If
we are unable to successfully negotiate a contract with Benchmark that will meet
our manufacturing needs, we will not have a primary manufacturing  contract with
any third party.  We will have to  immediately  identify and qualify one or more
acceptable  alternative   manufacturers,   which  could  result  in  substantial
manufacturing  delays and cause us to incur  significant  costs.  It is possible
that an  alternate  source  may not be  available  to us when  needed or be in a
position  to  satisfy  our  production  requirements  at  acceptable  prices and
quality. Any significant interruption in manufacturing would harm our ability to
meet our scheduled product deliveries to our customers,  harm our reputation and
could  cause the loss of  existing or  potential  customers,  any of which could
seriously harm our business and operating results.

We depend on sole source and limited source suppliers for key components.  If we
are unable to buy  components on a timely basis,  we will not be able to deliver
our products to our customers on time which could cause us to lose customers. If
we purchase  excess  components  to reduce this risk,  we may incur  significant
inventory costs.

     We obtain  several of the key  components  used in our products,  including
interface  circuits,   microprocessors,   digital  signal  processors,   digital

<PAGE>

subscriber  line  modules and flash  memory,  from single or limited  sources of
supply. We have encountered,  and expect in the future to encounter,  difficulty
in obtaining  these  components from our suppliers.  For example,  in the fourth
quarter of 1999, we experienced a severe  shortage of  components,  particularly
subscriber line interface circuits, which jeopardized our ability to deliver our
products in a timely  fashion.  We purchase most  components on a purchase order
basis and we do not have  guaranteed  supply  arrangements  with most of our key
suppliers. Financial or other difficulties faced by our suppliers or significant
changes in demand for these  components  could limit the  availability  of these
components  to us at  acceptable  prices and on a timely  basis,  if at all. Any
interruption or delay in the supply of any of these components, or our inability
to obtain these  components  from  alternate  sources at  acceptable  prices and
within a reasonable  amount of time,  would limit our ability to meet  scheduled
product  deliveries  to our  customers or force us to  reengineer  our products,
which may hurt our gross margins and our ability to deliver products on a timely
basis, if at all. A substantial period of time could be required before we would
begin receiving adequate supplies from alternative suppliers,  if available.  In
addition,  qualifying  additional  suppliers is time consuming and expensive and
exposes us to potential supplier production difficulties or quality variations.

The competition for qualified personnel is particularly  intense in our industry
and  in  Northern  California.  If we are  unable  to  attract  and  retain  key
personnel, we may not be able to sustain or grow our business.

     Our  success   depends  to  a   significant   degree  upon  the   continued
contributions of the principal members of our sales, marketing,  engineering and
management  personnel,  many of whom would be difficult to replace.  None of our
officers or key employees is bound by an  employment  agreement for any specific
term,  and we do not have "key person" life insurance  policies  covering any of
our employees.  The competition for qualified personnel is particularly  intense
in our industry and in Northern California,  where there is a high concentration
of established and emerging growth technology companies.  This competition makes
it more  difficult  to  retain  our key  personnel  and to  recruit  new  highly
qualified  personnel.  To attract  and  retain  qualified  personnel,  we may be
required to grant large option or other stock-based  incentive awards, which may
be highly  dilutive  to  existing  shareholders.  We may also be required to pay
significant  base  salaries  and  cash  bonuses  to  attract  and  retain  these
individuals,  which payments could harm our operating results. In particular, we
have  experienced  difficulty  in hiring  software,  hardware  and  system  test
engineers and engineers with voice and data experience.  We believe that we will
continue  to  experience   difficulty  in  recruiting  and  retaining  qualified
personnel in the future.  If we are not able to attract and retain the necessary
personnel,  we could face delays in developing our products and implementing our
sales and marketing plans, and we may not be able to grow our business.

We plan to invest a significant amount of our resources to fund the development,
marketing  and sale of our  products.  However,  if we are  unable to expand our
sales and marketing  operations,  we will not be able to achieve brand awareness
for our products and generate additional sales.

     We plan to incur significant  amount of operating  expenses to fund greater
levels of research and development,  expand our sales and marketing  operations,
broaden our customer support capabilities and develop new distribution channels.
We also plan to expand our general and  administrative  capabilities  to address
the demands  resulting from this offering and the expected  continued  growth of
our business.  Our operating expenses are largely based on anticipated personnel
requirements and net revenue trends,  and a high percentage of our expenses are,
and will  continue to be, fixed.  In addition,  we may be required to spend more
for research and  development  than  originally  budgeted in order to respond to
industry trends. As a result, any delay in generating or recognizing net revenue
could cause  significant  variations  in our  operating  results from quarter to
quarter and could result in substantial operating losses.

We have rapidly and significantly expanded our operations in recent periods. Our
business  will be  harmed  if we fail to manage  effectively  the  growth of our
operations.

     We have  rapidly  and  significantly  expanded  our  operations  in  recent
periods. This expansion  significantly  strains our managerial,  operational and
financial  resources.  Some of our senior management  personnel joined us within
the last 18  months.  To  manage  the  expected  growth  of our  operations  and
personnel, we will be required to:

<PAGE>

     o    improve  existing  and  implement  new   operational,   financial  and
          management controls, reporting systems and procedures;
     o    hire, train, motivate and manage additional qualified personnel;
     o    expand access to additional manufacturing capacity;
     o    effectively   manage  multiple   relationships   with  our  customers,
          suppliers, distributors and other third parties; and
     o    coordinate our domestic and international operations and establish the
          necessary infrastructure to implement our international strategy.

     If we are not able to manage the growth of our  operations  in an efficient
and timely manner, our business will be severely harmed.

The telecommunications  market is becoming increasingly global. While we plan to
expand  internationally,  we have limited experience  operating in international
markets.  In our efforts to expand  internationally,  we could become subject to
new  risks  which  could  hamper  our  ability  to  establish   and  manage  our
international operations.

     We have sales and customer support personnel in the United Kingdom and have
initiated distribution  relationships in Europe. We intend to further expand our
international  operations  and enter new markets.  This  expansion  will require
significant  management  attention  and  financial  resources.  We have  limited
experience in marketing and  distributing  our products  internationally  and in
developing  versions  of our  products  that  comply  with local  standards.  In
addition, our international  operations will be subject to other inherent risks,
including:

     o    the  failure  to  adopt   regulatory   changes  that   facilitate  the
          provisioning of competitive communications services;
     o    difficulties adhering to international protocol standards;
     o    expenses associated with customizing products for other countries;
     o    protectionist   laws  and   business   practices   that  favor   local
          competition;
     o    reduced protection for intellectual property rights in some countries;
     o    difficulties  enforcing  agreements through other legal systems and in
          complying with foreign laws;
     o    fluctuations in currency exchange rates;
     o    political and economic instability; and
     o    import or export licensing requirements.

If our products contain  undetected  software or hardware errors, we could incur
significant  unexpected expenses,  experience product returns and lost sales and
be subject to product liability claims.

     Our products are highly  technical  and are designed to be deployed in very
large and complex  networks.  While our products  have been  tested,  because of
their  nature,  they can only be fully  tested when  deployed  in networks  that
generate high amounts of voice or data traffic.  Because of our short  operating
history,  our products  have not yet been broadly  deployed.  Consequently,  our
customers  may discover  errors or defects in our products  after they have been
broadly deployed. In addition, our customers may use our products in conjunction
with products from other vendors.  As a result,  when problems  occur, it may be
difficult to identify  the source of the  problem.  Any defects or errors in our
products  discovered  in the future,  or failures  of our  customers'  networks,
whether  caused by our products or another  vendor's  products,  could result in
loss of customers or decrease in net revenue and market share.

     We may be subject to significant  liability claims because our products are
used in connection with critical  communications  services.  Our agreements with
customers  typically  contain  provisions  intended  to limit  our  exposure  to
liability  claims.  However,  these  limitations  may not preclude all potential
claims  resulting from a defect in one of our products.  Liability  claims could
require  us to  spend  significant  time  and  money  in  litigation  or to  pay

<PAGE>

significant  damages.  Any of these  claims,  whether or not  successful,  could
seriously damage our reputation and business.

The complex nature of our telecommunications products requires us to provide our
customers with a high level of service and support by highly trained  personnel.
If we do not expand our customer service and support  organization,  we will not
be able to meet our customers' demands.

     We currently have a small customer service and support organization, and we
will need to increase  these  resources  to support any increase in the needs of
our existing and new customers. Hiring customer service and support personnel in
our industry is very  competitive due to the limited number of people  available
with the necessary technical skills and understanding of our technologies. If we
are unable to expand or maintain our customer  service and support  organization
our  customers  may  become  dissatisfied  and we could lose  customers  and our
reputation  could be harmed. A reputation for poor service would prevent us from
increasing sales to existing or new customers.

We rely on a combination of patent, copyright,  trademark and trade secret laws,
as well as confidentiality  agreements and licensing arrangements,  to establish
and protect our proprietary rights. Failure to protect our intellectual property
will  limit  our  ability  to  compete  and  result  in a loss of a  competitive
advantage and decreased net revenue.

     Our success and ability to compete depend  substantially on our proprietary
technology.   Any  infringement  of  our  proprietary  rights  could  result  in
significant  litigation  costs,  and  any  failure  to  adequately  protect  our
proprietary  rights could result in our competitors  offering similar  products,
potentially  resulting in loss of a  competitive  advantage  and  decreased  net
revenue. We presently have three U.S. patent applications pending, but no issued
patents.  Despite  our  efforts  to protect  our  proprietary  rights,  existing
copyright,  trademark and trade secret laws afford only limited  protection.  In
addition,  the laws of many  foreign  countries  do not protect our  proprietary
rights to the same extent as do the laws of the United  States.  Attempts may be
made to copy or reverse  engineer  aspects of our  products or to obtain and use
information  that we regard as proprietary.  Accordingly,  we may not be able to
protect our proprietary rights against  unauthorized third party copying or use.
Furthermore,  policing  the  unauthorized  use of  our  products  is  difficult.
Litigation may be necessary in the future to enforce our  intellectual  property
rights,  to protect our trade  secrets or to determine the validity and scope of
the proprietary  rights of others.  This litigation  could result in substantial
costs and diversion of resources and may not ultimately be successful.

We may be subject to intellectual  property  infringement claims that are costly
to defend and could limit our ability to use some technologies in the future.

     Our industry is characterized by frequent  intellectual property litigation
based on allegations of infringement of intellectual  property rights. From time
to time,  third  parties have  asserted,  and may assert in the future,  patent,
copyright,  trademark and other intellectual  property rights to technologies or
rights that are important to our  business.  For example,  we recently  received
letters from Sonoma Systems alleging that one of our products infringes a patent
owned by Sonoma Systems and inviting us to discuss  licensing  their patent.  In
addition,  our  agreements  may require that we indemnify  our customers for any
expenses  or  liabilities  resulting  from  claimed  infringements  of  patents,
trademarks  or  copyrights  of third  parties.  Any  claims  asserting  that our
products infringe or may infringe the proprietary rights of third parties,  with
or without merit,  could be  time-consuming,  resulting in costly litigation and
diverting the efforts of our technical and  management  personnel.  These claims
could cause us to stop selling, incorporating or using our products that use the
challenged  intellectual  property  and could also  result in  product  shipment
delays or require us to redesign or modify our products or enter into  licensing
agreements.  These licensing agreements, if required, could increase our product
costs and may not be available on terms acceptable to us, if at all.

If necessary  licenses of third-party  technology are not available to us or are
very   expensive,   we  may  be  unable  to  develop  new  products  or  product
enhancements.

     From time to time we may be  required  to  license  technology  from  third
parties to develop  new  products  or product  enhancements.  These  third-party

<PAGE>

licenses may not be available to us on commercially reasonable terms, if at all.
Our inability to obtain  necessary  third-party  licenses may force us to obtain
substitute  technology of lower quality or  performance  standards or at greater
cost, any of which could seriously harm the competitiveness of our products.

Because our headquarters are located in Northern  California,  which is a region
containing active earthquake faults and experiencing a power energy crisis, if a
natural disaster occurs or the power energy crisis continues, our business could
be shut down or severely impacted.

     Our business and operations  depend on the extent to which our facility and
products are protected  against  damage from fire,  earthquakes,  power loss and
similar events.  Despite  precautions  taken by us, a natural  disaster or other
unanticipated  problem  could,  among  other  things,  hinder our  research  and
development  efforts,  delay the shipment of our products and affect our ability
to receive and fulfill  orders.  For example,  California  power energy supplies
have  recently  been at severely low levels.  This has resulted in blackouts and
increased costs which have affected our business.

        Risks Associated With The Multiservice Broadband Access Industry

Intense  competition  in the market for our  telecommunications  products  could
prevent us from  increasing  or  sustaining  our net revenue and prevent us from
achieving or sustaining profitability.

     The  market  for   multiservice   broadband   access   products  is  highly
competitive. We compete directly with numerous companies,  including Accelerated
Networks,  ADTRAN,  Carrier Access, Cisco Systems,  Lucent Technologies,  Nortel
Networks and Polycom.  Many of our current and potential competitors have longer
operating histories, greater name recognition, significantly greater selling and
marketing, technical,  manufacturing,  financial, customer support, professional
services and other resources,  including vendor-sponsored financing programs. As
a  result,  these  competitors  are  able to  devote  greater  resources  to the
development,  promotion,  sale and support of their  products to leverage  their
customer bases and broaden product  offerings to gain market share. In addition,
our  competitors may foresee the course of market  developments  more accurately
than we do and could develop new technologies  that compete with our products or
even render our  products  obsolete.  We may not have  sufficient  resources  to
continue to make the investments or achieve the technological advances necessary
to compete  successfully with existing or new competitors.  In addition,  due to
the rapidly  evolving markets in which we compete,  additional  competitors with
significant  market  presence and  financial  resources,  including  other large
telecommunications  equipment  manufacturers,  may  enter our  markets,  thereby
further intensifying competition.

     We believe that our existing OEM customer continuously evaluates whether to
offer its own multiservice broadband access devices. If our OEM customer decides
to internally design and sell its own multiservice  broadband access devices, or
acquire one or more of our competitors or their broadband  access  technologies,
it could eliminate or substantially reduce its purchases of our products. Lucent
Technologies  accounted  for  approximately  45% of our net revenues for the six
months  ended June  2001.  In  addition,  our  current  growth may cause our OEM
customer to view us as greater  competition.  Our OEM relationship could also be
harmed as we develop and market new products that may compete  directly with the
products of our OEM  customer.  For  example,  our MBX product may compete  with
products  offered  by  our  OEM  customer,  which  could  adversely  affect  our
relationship with that customer. We cannot assure you that our OEM customer will
continue to rely, or expand its reliance,  on us as an external source of supply
for  its  multiservice  broadband  access  devices.  Because  we rely on one OEM
customer for a substantial portion of our net revenues,  a loss of sales to this
OEM customer could seriously harm our business,  financial condition and results
of operations.

Because our industry is characterized  by  consolidation,  we could  potentially
lose customers, which would harm our business.

     The  markets  in  which  we  compete  are   characterized   by   increasing
consolidation,  as exemplified by the recent or pending  acquisitions  of Sonoma
Systems  by  Nortel  Networks,   Efficient  Networks  by  Siemens  and  PairGain
Technologies  by  ADC   Telecommunications.   We  cannot  predict  how  industry
consolidation  will  affect  our  competitors  and we may not be able to compete
successfully in an increasingly consolidated industry.

<PAGE>

Our products are subject to price reduction and margin pressures. If our average
selling  prices  decline  and we  fail  to  offset  that  decline  through  cost
reductions,  our gross  margins and potential  profitability  could be seriously
harmed.

     In the past,  competitive  pressures have forced us to reduce the prices of
our  products.  In the second  quarter of 1999,  we reduced  the price of our T1
Integrator  product in response to competition,  which reduced our gross margins
in subsequent periods. We expect similar price reductions to occur in the future
in response to competitive  pressures.  In addition,  our average selling prices
decline when we negotiate  volume price  discounts  with  customers  and utilize
indirect  distribution  channels.  If our average  selling prices decline and we
fail to offset that  decline  through  cost  reductions,  our gross  margins and
potential profitability would be seriously harmed.

Sales  of  our  products  depend  on the  widespread  adoption  of  multiservice
broadband  access services and if the demand for  multiservice  broadband access
services  does not  develop,  then  our  results  of  operations  and  financial
condition could be harmed.

     Our business will be harmed if the demand for multiservice broadband access
services  does not increase as rapidly as we  anticipate,  or if our  customers'
multiservice  broadband  access  service  offerings are not well received in the
marketplace.  Critical  factors  affecting the  development of the  multiservice
broadband access services market include:

o    the  development  of a viable  business  model for  multiservice  broadband
     access  services,  including the  capability to market,  sell,  install and
     maintain these services;
o    cost constraints, such as installation, space and power requirements at the
     central offices of incumbent local exchange carriers, or ILECs;
o    compatibility  of  equipment  from  multiple  vendors in  service  provider
     networks;
o    evolving  industry  standards for  transmission  technologies and transport
     protocols;
o    varying   and   uncertain   conditions   of  the   communications   network
     infrastructure,  including quality and complexity, electrical interference,
     and crossover interference with voice and data telecommunications services;
o    domestic and foreign government regulation; and
o    the ability of competitive  local exchange  carriers,  or CLECs,  to obtain
     sufficient funding and to successfully grow their businesses.

     The market for  multiservice  broadband  access devices may fail to develop
for these or other  reasons or may develop more slowly than  anticipated,  which
could harm our business.

If we fail to comply with regulations and evolving industry standards,  sales of
our existing and future products could be harmed.

     The markets for our products are  characterized by a significant  number of
communications  regulations  and  standards,  some of which are  evolving as new
technologies are deployed. Our customers may require our products to comply with
various  standards,  including those  promulgated by the Federal  Communications
Commission,  or FCC,  standards  established by  Underwriters  Laboratories  and
Telcordia Technologies or proprietary standards promoted by our competitors.  In
addition,  our key  competitors may establish  proprietary  standards which they
might  not make  available  to us. As a  result,  we may not be able to  achieve
compatibility with their products.  Internationally,  we may also be required to
comply with standards established by  telecommunications  authorities in various
countries   as   well   as   with    recommendations    of   the   International
Telecommunications Union.

Our customers are subject to  government  regulation,  and changes in current or
future laws or regulations  that negatively  impact our customers could harm our
business.

     The jurisdiction of the FCC extends to the entire communications  industry,
including our customers.  Future FCC regulations  affecting the broadband access

<PAGE>

industry,  our customers or their service  offerings may harm our business.  For
example,  FCC  regulatory  policies  that  affect the  availability  of data and
Internet  services may impede our customers'  penetration into markets or affect
the prices that they are able to charge. In addition,  international  regulatory
bodies are beginning to adopt standards and regulations for the broadband access
industry.  If our  customers  are hurt by laws or  regulations  regarding  their
business, products or service offerings, demand for our products may decrease.

                Additional Risks That May Affect Our Stock Price

We may engage in future acquisitions or strategic investments that we may not be
able to successfully  integrate or manage, which could hurt our business.  These
acquisitions or strategic investments may also dilute our stockholders and cause
us to incur debt and assume contingent liabilities.

     We may review  acquisition  prospects and strategic  investments that could
complement our current product offerings,  augment our market coverage,  enhance
our technical capabilities or otherwise offer growth opportunities. For example,
on February 27,  2001,  we acquired  Woodwind  Communications  Systems,  Inc., a
provider of voice-over-broadband  network edge access solutions. The issuance of
equity  securities in connection with these  acquisitions  or investments  could
significantly  dilute our  investors.  If we incur or assume debt in  connection
with these acquisitions or investments, we may incur interest charges that could
increase our net loss.  We have little  experience  in  evaluating,  completing,
managing or integrating acquisitions and strategic investments. Acquisitions and
strategic  investments may entail numerous integration risks and impose costs on
us, including:

o    difficulties in assimilating acquired operations,  technologies or products
     including the loss of key employees;
o    unanticipated costs;
o    diversion of management's attention from our core business concerns;
o    adverse effects on business  relationships with our suppliers and customers
     or those of the acquired businesses;
o    risks of entering markets in which we have no or limited prior experience;
o    assumption of contingent liabilities;
o    incurrence of  significant  amortization  expenses  related to goodwill and
     other intangible assets; and
o    incurrence of significant write-offs.

Our stock has traded at or below $1.00. If the trading of our common stock falls
below $1.00 for an extended  period,  our stock may be delisted  from the Nasdaq
National Market.

     Our common stock has recently traded at or below $1.00. If our common stock
fails to maintain  Nasdaq's  minimum bid price closing  requirement of $1.00 and
this failure continues ninety days, Nasdaq may institute delisting  proceedings.
If our stock is delisted from the Nasdaq National Market, our stockholders would
find it more difficult to dispose of, and obtain  accurate  quotations as to the
market  value of, their  shares,  and the market price of our stock would likely
decline further.

We may need to raise more capital,  but the availability of additional financing
is  uncertain.  If adequate  funds are not  available  or are not  available  on
acceptable  terms,  we may be unable to  develop  or enhance  our  products  and
services,  take  advantage  of future  opportunities  or respond to  competitive
pressures, which could negatively impact our product development and sales.

     We  currently  anticipate  that we will need to obtain  additional  funding
during 2002. If our capital requirements vary significantly from those currently
planned,  we may  require  additional  financing  sooner  than  anticipated.  If
additional  funds are raised  through  the  issuance of equity  securities,  the
percentage of equity ownership of our existing  stockholders will be reduced. In
addition,  holders of these equity  securities  may have rights,  preferences or
privileges  senior to those of the holders of our common  stock.  If  additional
funds  are  raised  through  the  issuance  of  debt  securities,  we may  incur
significant   interest   charges,   and  these  securities  would  have  rights,
preferences and privileges senior to holders of common stock. The terms of these
securities  could  also  impose  restrictions  on  our  operations.   Additional
financing may not be available  when needed on terms  favorable to us or at all.
If adequate funds are not available or are not available on acceptable terms, we

<PAGE>

may be unable to develop or enhance our products and services, take advantage of
future opportunities or respond to competitive pressures, which could negatively
impact our product development and sales.

Item 3 Quantitative and Qualitative Disclosures About Market Risk

     We are exposed to  financial  market  risks  related to interest  rates and
foreign  currency  exchange rates.  Our investments in commercial paper and debt
obligations are subject to interest rate risk, but due to the short-term  nature
of these investments,  interest rate changes would not have a material impact on
their  value  as of  December  31,  2000 or at  June  30,  2001.  To  date,  our
international  sales  have  been  denominated  primarily  in U.S.  dollars,  and
accordingly, a hypothetical change of 10% in the foreign currency exchange rates
would not have a material impact on our consolidated  financial  position or the
results of operations.  The functional  currency of our subsidiary in the United
Kingdom is the U.S.  dollar and as the local  accounts are maintained in British
pounds, we are subject to foreign currency exchange rate fluctuations associated
with remeasurement to U.S. dollars. A hypothetical  change of 10% in the foreign
currency  exchange  rates would not have a material  impact on our  consolidated
financial position or the results of operations.


<PAGE>


PART II: OTHER INFORMATION

Item 1. Legal Proceedings

     From time to time,  we may be  involved  in  litigation  relating to claims
arising out of the ordinary  course of business.  As of the date of this report,
there are no material legal proceedings pending or, to our knowledge, threatened
against us.

Item 2. Changes in Securities and Use of Proceeds

     On July 25, 2001,  the Company's  Board of Directors  adopted a stockholder
rights plan,  pursuant to which one preferred  stock  purchase right (a "Right")
was  distributed  for each share of Common Stock held as of August 6, 2001. Each
Right,  when  exercisable,  will entitle the holder to purchase from the Company
one one-thousandth of a share of the Company's Series A Participating  Preferred
Stock at a price of $35.00  (the  "Purchase  Price"),  subject  to  antidilution
adjustments.

     In  general,  if  a  person  or  group  (an  "Acquiring  Person")  acquires
beneficial  ownership of 20% or more of the outstanding  shares of Common Stock,
then each Right (other than those held by an Acquiring  Person) will entitle the
holder to receive,  upon  exercise,  shares of Common Stock (or,  under  certain
circumstances,  a combination  of securities or other assets)  having a value of
twice the Purchase  Price.  In addition,  if following the  announcement  of the
existence  of  an  Acquiring  Person  the  Company  is  involved  in a  business
combination  or sale of 50% or more of its assets or earning  power,  each Right
(other  than those  held by an  Acquiring  Person)  will  entitle  the holder to
receive, upon exercise,  shares of common stock of the acquiring entity having a
value of twice the Purchase Price.  When the foregoing  rights arise, any Rights
owned  by an  Acquiring  Person  will  immediately  become  void.  The  Board of
Directors will also have the right, after there is an Acquiring Person, to cause
each Right (except those that have become void) to be exchanged for Common Stock
or substitute consideration.

     The Company may redeem the Rights at a price of $0.001 per Right before the
existence of an Acquiring  Person is  announced.  The Rights  expire on July 25,
2011.

     This summary  description of the Rights does not purport to be complete and
is qualified in its entirety by reference to the Rights Agreement,  was filed as
an exhibit to the Company's Registration Statement on Form 8-A filed on July 25,
2001.

(d)  Use of Proceeds from Sales of Registered Securities

     On August 9, 2000, the SEC declared effective our Registration Statement on
Form S-1 (No. 333-36398),  relating to the initial public offering of our common
stock.  The managing  underwriters in the offering were Lehman  Brothers,  Inc.,
Thomas Weisel  Partners LLC and U.S.  Bancorp Piper  Jaffray,  Inc. The offering
commenced on August 10, 2000,  and was closed on August 15, 2000,  after we sold
all of the 3,000,000  shares of common stock  registered  under the Registration
Statement. On September 15, 2000, the underwriters purchased 450,000 shares from
us in connection with the exercise of the underwriters'  over-allotment  option.
The initial  public  offering  price was $12 per share for an aggregate  initial
public  offering  of  $41,000,000  (including  the  450,000  shares  sold to the
underwriters upon exercise of the  over-allotment  option),  netting proceeds of
approximately  $36.5 million to us after underwriting fees of approximately $2.9
million and other offering expenses of approximately $2.0 million. None of these
fees and expenses were paid to any  director,  officer,  general  partner of the
Company or their  associates,  persons owning 10% or more of any class of equity
securities of the Company or an affiliate of the Company.

     The  net  proceeds  were  predominately  held in a money  market  fund  and
commercial   paper  and  bonds  as  of  June  30,  2001.  Of  the  net  proceeds
approximately  $7.5  million  was  used  towards  partial  consideration  of the
purchase of Woodwind  Communications  Systems,  Inc.  and $1.0  million was used
towards operating expenses of the business.

<PAGE>

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

     VINA held its  annual  meeting of  stockholders  on May 22,  2001.  At that
meeting,  two of our incumbent Class I directors were reelected to office by the
following vote:

         Name                          Votes For             Votes Withheld
         ----                      ----------------       --------------------
         Joshua W. Soske              21,026,856                 8,295
         Jeffrey M. Drazan            21,026,856                 8,295

     The stockholders  also ratified the appointment of Deloitte & Touche LLP as
independent auditors for VINA's current fiscal year, (with 21,022,629 votes for,
9,572 votes against, 2,950 votes abstaining and 0 broker non-votes).

Item 6. Exhibits and Reports on Form 8-K

     (b) The Company  filed  amended  reports on Form 8-K on May 14 and June 28,
2001 to  provide  the  details of the  acquisition  of  Woodwind  Communications
Systems, Inc.



<PAGE>


                                   Signatures

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


                                         VINA TECHNOLOGIES, INC.


Date:  August 13, 2001           By:  /s/ Steven M. Bauman
                                     ------------------------
                                     Steven M. Bauman
                                     President and Chief Executive Officer
                                     (Principal Executive Officer)




Date:  August 13, 2001           By:  /s/ Stanley E. Kazmierczak
                                     ------------------------------
                                     Stanley E. Kazmierczak
                                     Chief Financial Officer
                                     (Principal Financial and Accounting
                                     Officer)