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 September 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 37,196,521 as of September 30, 2001.


<PAGE>

<TABLE>

<CAPTION>


                             VINA TECHNOLOGIES, INC.


                                      INDEX
                                                                                      Page
                                                                                      ----


<S>                                                                                    <C>
PART I:  FINANCIAL INFORMATION..........................................................3


 Item 1.  Condensed Consolidated Financial Statements...................................3


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


          Consolidated Statements of Operations for the three months and nine
          months ended September 30, 2000 and 2001......................................4


          Condensed Consolidated Statements of Cash Flows for the three
          months and nine months ended September 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...................................................................11


 Item 3.  Quantitative and Qualitative Disclosures About Market Risk...................27


PART II: OTHER INFORMATION.............................................................28


 Item 1.  Legal Proceedings............................................................28


 Item 2.  Changes in Securities and Use of Proceeds....................................28


 Item 6.  Exhibits and Reports on Form 8-K.............................................28


 Signatures............................................................................29


</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)
                                   (unaudited)
<TABLE>

<CAPTION>

                                                                        December 31,  September 30,
                                                                            2000         2001
                                                                        -----------   ------------
ASSETS

Current assets:
<S>                                                                      <C>          <C>
   Cash and cash equivalents .........................................   $   7,740    $  19,115
   Short-term investments ............................................      36,759          500
   Accounts receivable, net ..........................................       5,243        9,431
   Inventories .......................................................       1,973        4,943
   Prepaid expenses and other ........................................       2,649        2,048
                                                                         ---------    ---------

     Total current assets ............................................      54,364       36,037

Property and equipment, net ..........................................       4,096        4,258
Other assets .........................................................          76          363
Acquired intangibles, net ............................................          --        4,137
Goodwill, net ........................................................          --       28,513
                                                                         ---------    ---------

     Total assets ....................................................   $  58,536    $  73,308
                                                                         =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable ..................................................   $   8,536    $  10,437
   Accrued compensation and related benefits .........................       2,588        1,914
   Accrued warranty ..................................................         686          792
   Other current liabilities .........................................       1,897        2,302
                                                                         ---------    ---------

     Total current liabilities .......................................      13,707       15,445
                                                                         ---------    ---------

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, 37,196,521 ..................           3            4
   Additional paid-in capital ........................................     144,708      178,526
   Deferred stock compensation .......................................     (26,386)      (9,330)
   Accumulated other comprehensive income ............................          48           --
   Accumulated deficit ...............................................     (73,544)    (111,337)
                                                                         ---------    ---------

     Total stockholders' equity ......................................      44,829       57,863
                                                                         ---------    ---------

     Total liabilities and stockholders' equity ......................   $  58,536    $  73,308
                                                                         =========    =========
</TABLE>


                 See notes to consolidated financial statements
<PAGE>


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

<CAPTION>




                                                 Three Months Ended      Nine Months Ended
                                                   September 30,            September 30,
                                              ----------------------- -----------------------
                                                   2000       2001        2000        2001
                                              ------------ ---------- ----------- -----------

<S>                                             <C>         <C>         <C>         <C>
Net revenue .................................   $  9,174    $ 13,010    $ 21,230    $ 36,067

Cost of revenue
   (excluding stock-based compensation) .....      5,451       7,799      12,910      23,115
                                                --------    --------    --------    --------

Gross profit
   (excluding stock-based compensation) .....      3,723       5,211       8,320      12,952
                                                --------    --------    --------    --------

Costs and expenses:

   Research and development
     (excluding stock-based compensation) ...      3,420       4,244       8,633      13,788

   Selling, general and administrative
     (excluding stock-based compensation) ...      6,156       4,998      14,705      17,950

   Stock-based compensation, net* ...........      7,074          55      17,763       8,381

   In-process research and development ......         --          --          --       5,081

   Amortization of intangible assets ........         --       2,419          --       5,823

   Restructuring expenses
     (excluding stock-based compensation) ...         --         991          --         991
                                                --------    --------    --------    --------

       Total costs and expenses .............     16,650      12,707      41,101      52,014
                                                --------    --------    --------    --------

Loss from operations ........................    (12,927)     (7,496)    (32,781)    (39,062)

Interest income, net ........................        485         277         881       1,269
                                                --------    --------    --------    --------

Net loss ....................................   ($12,442)   ($ 7,219)   ($31,900)   ($37,793)
                                                ========    ========    ========    ========

Net loss per share, basic and diluted .......   ($  0.60)   ($  0.20)   ($  2.71)   ($  1.08)
                                                ========    ========    ========    ========

Shares used in computation, basic and diluted     20,571      36,139      11,774      34,837
                                                ========    ========    ========    ========

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

    *    Stock-based compensation, net

         Cost of revenue ...................    $    587    $    219    $  1,295    $    833

         Research and development ..........       2,472         897       5,705       3,924

         Selling, general and administrative       4,015       1,508      10,763       6,193

         Restructuring benefit .............          --      (2,569)         --      (2,569)
                                                --------    --------    --------    --------

                                                $  7,074    $     55    $ 17,763    $  8,381
                                                --------    --------    --------    --------

</TABLE>

                 See notes to consolidated financial statements


<PAGE>


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

<CAPTION>


                                                                             Nine Months Ended
                                                                               September 30,
                                                                        -------------------------
                                                                           2000         2001
                                                                        ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                       <C>         <C>
   Net loss ...........................................................   $(31,900)   $(37,793)

   Reconciliation of net loss to net cash used in operating activities:
     Depreciation and amortization ....................................        692       7,182
     Stock-based compensation, net ....................................     17,763       8,381
     In-process research and development ..............................         --       5,081
     Provision for inventory order commitment .........................         --       1,800

   Changes in operating assets and liabilities:
     Accounts receivable ..............................................     (2,070)     (4,182)
     Inventories ......................................................       (909)     (4,426)
     Prepaid expenses and other .......................................       (395)        729
     Other assets .....................................................        (91)       (226)
     Accounts payable .................................................      2,342       1,345
     Accrued compensation and related benefits ........................        927      (1,218)
     Accrued warranty .................................................        134         106
     Other current liabilities ........................................      2,090        (616)
                                                                          --------    --------

       Net cash used in operating activities ..........................    (11,417)    (23,837)
                                                                          --------    --------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of property and equipment ................................     (2,696)       (983)
   Acquisition of business, net of cash acquired ......................         --        (454)
   Purchases of short-term investments ................................    (45,695)     (1,050)
   Proceeds from sales/maturities of short-term investments ...........      1,524      37,261
                                                                          --------    --------

     Net cash provided by (used in) investing activities ..............    (46,867)     34,774
                                                                          --------    --------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Net proceeds from sale of convertible preferred stock ..............     23,821          --
   Proceeds from sale of common stock .................................     36,502         760
   Proceeds from exercise of stock options ............................      3,558         256
   Repurchase of common stock .........................................       (207)       (578)
   Proceeds from issuance of long-term debt ...........................        375          --
   Repayments on long-term debt .......................................     (1,429)         --
                                                                          --------    --------

     Net cash provided by financing activities ........................     62,620         438
                                                                          --------    --------

NET CHANGE IN CASH AND CASH EQUIVALENTS ...............................      4,336      11,375

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

CASH AND CASH EQUIVALENTS, End of period ..............................   $  6,904    $ 19,115
                                                                          ========    ========
</TABLE>


                 See notes to 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 nine months ended September 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 nine months
ended September 30, 2000 and 2001 was the same as net loss.

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 $27.6
million at  December  31,  2001 and annual  amortization  of $8.8  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.


In August 2001,  the FASB issued SFAS No. 144,  "Accounting  for  Impairment  or
Disposal  of  Long-Lived  Assets".   SFAS  No.  144  supersedes  SFAS  No.  121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed  Of," and  addresses  financial  accounting  and  reporting  for the
impairment or disposal of  long-lived  assets.  This  statement is effective for

<PAGE>

fiscal years  beginning after December 15, 2001. VINA will adopt SFAS No. 144 on
January  1,  2002 and has not yet  determined  the  impact of  adopting  of this
statement.


2. INVENTORIES

Inventories consist of the following (in thousands):



                                      December 31,   September 30,
                                         2000            2001
                                      -----------    ------------

      Raw materials and subassemblies   $1,034          $2,587
      Finished goods ................      939           2,356
                                        ------          ------
      Inventories ...................   $1,973          $4,943
                                        ======          ======

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     Nine Months Ended
                                                          September 30,          September 30,
                                                     ----------------------- ----------------------
                                                          2000       2001       2000       2001
                                                     ------------ ---------- ---------- -----------

<S>                                                      <C>        <C>        <C>        <C>
Weighted average common shares outstanding ..........    23,099     37,133     14,380     36,051
Weighted average common shares outstanding subject to
   repurchase .......................................    (2,528)      (994)    (2,606)    (1,214)
                                                        -------    -------    -------    -------
Shares used in computation, basic and diluted .......    20,571     36,139     11,774     34,837
                                                        =======    =======    =======    =======
</TABLE>



During the three months and nine months ended  September 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 at: September 30, 2000,  2,173,016 shares of
common stock subject to repurchase and options to purchase  9,692,395  shares of
common  stock;  September  30, 2001,  877,874  shares of common stock subject to
repurchase and options to purchase 13,554,695 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  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 a 1.1 million  shares of the  Company's  common
stock.  The total  purchase  price as of February 27, 2001 has been 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 during the next 12 months;  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 September 30, 2001 are approximately $630,000.  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;  and 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
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 nine months ended  September  30, 2001,  the Company

<PAGE>

recorded  compensation expense of $38,000 and $93,000  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 nine months  ended  September  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):

                                                       Nine Months Ended
                                                         September 30,
                                                    -------------------------
                                                      2000           2001
                                                    ------------ ------------

Net revenue                                         $  21,468      $  36,069
Net loss                                             ($43,764)      ($37,491)
Net loss per share                                     ($2.75)        ($1.05)
Shares used in calculation of net loss per share       15,923         35,728


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. RESTRUCTURING CHARGE

During the quarter ended September 30, 2001, the Company announced and completed
a  restructuring  plan intended to better align its operations with the changing
market conditions.  This plan is designed to prioritize VINA's high growth areas
of  business,   focus  on  profit   contribution  and  reduce   expenses.   This
restructuring  includes workforce reduction and other operating  reorganization.
As a result of the restructuring  efforts,  the Company reduced its workforce by
approximately 20%.

A summary of the  restructuring  benefit and expenses for the three months ended
September 30, 2001 is as follows (in thousands):

                             Restructuring                       Accrual at
                               Provision        Utilized     September 30, 2001
                            --------------- -------------- ---------------------

Stock compensation benefit    $   (2,569)     $       --         $       --
Workforce reduction                  991             760                231
                              ----------      ----------         ----------
Restructuring benefit, net
                              $   (1,578)     $      760         $      231
                              ===========      =========         ==========

Workforce  reduction -- The  restructuring  program resulted in the reduction of
approximately 40 employees across all functions..  As of September 30, 2001, the
Company made $760,000 in severance  payments.  The remaining balance of $231,000
related to severance and fringe  benefits is expected to be disbursed in full by
the first quarter of 2002.

Restructuring  benefit, net -- In connection with the workforce  reduction,  the
Company recorded a net benefit of $2.6 million. This net benefit resulted from a
$3.0  million  benefit  for  the  reversal  of  prior  period   estimated  stock
compensation  expense on  forfeited  stock  options  offset by $431,000 of stock
compensation  expense  resulting from the acceleration of unvested stock options
in accordance with employee separation agreements.

6. SUBSEQUENT EVENTS

On October 17, 2001, the Company entered into a definitive agreement to complete
a  private  equity  financing  which  would  generate  gross  proceeds  of up to
approximately  $24.3  million.  Under the  securities  purchase  agreement,  the

<PAGE>

Company will sell up to 25.3 million shares of  unregistered  common stock, at a
price of  approximately  $0.64 per  share,  and  warrants  to  acquire  up to an
additional 8.1 million shares of the Company's  common stock at $1.00 per share.
The warrants become  exercisable for a period of three years upon the closing of
each of the two stages of the private  placement of common  stock.  The warrants
are  subject  to  early  expiration  if the  Company's  share  price  exceeds  a
predefined trading price over a period of time.

On October 17, 2001, the Company entered into a merger  agreement to acquire MOS
Acquisition  Corporation.  MOS  Acquisition was formed solely to purchase assets
from Metrobility Optical Systems, Inc., which recently filed for bankruptcy. The
sale of the  assets  to MOS  Acquisition  is  dependent  upon  bankruptcy  court
approval,  as well as satisfaction of other conditions.  If the bankruptcy court
does not  approve  the  purchase  of the  assets by MOS  Acquisition,  then VINA
Technologies will not acquire MOS Acquisition.  The assets consist of all of the
assets and  technology  currently  used by  Metrobility  in connection  with its
development  of optical  concentration  products.  MOS  Acquisition  is owned by
Sierra Ventures VII, L.P. and Sierra Ventures  Associates VII, LLC. These Sierra
Ventures entities, affiliates of a member of our Board of Directors, Mr. Jeffrey
M.  Drazan,   are  both  substantial   stockholders  and  secured  creditors  of
Metrobility.  Pursuant to the merger,  assuming the Company obtains  stockholder
approval  before  the  closing  occurs,  the  Company  will  issue to the Sierra
Ventures entities  2,217,527 shares of common stock. If the merger closes before
the Company  obtains  stockholder  approval for the issuance of the shares,  the
Company will issue  promissory  notes in the aggregate  principal amount of $2.0
million  with  an  interest  rate  of 6% per  year.  These  notes  will  convert
automatically into 2,217,527 shares of common stock upon stockholder approval of
the issuance of the shares.  If the  stockholders do not approve the issuance of
the shares,  the principal  amount and all interest on the promissory notes will
be due and payable one year from the date the notes are issued.


<PAGE>


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, our ability to obtain stockholder  approval for the
sale of shares of our common stock in our contemplated  private  financing,  the
ability to obtain  bankruptcy  approval  for the  acquisition  of certain of the
assets of  Metrobility  Optical  Systems,  Inc., our ability to locate and lease
suitable research and development facilities in New Hampshire, expected customer
concentration, ability to execute our business plan, our ability to reach a cash
flow break even  position  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, the extent to which our current and future
products  compete with the products of our  customers,  our ability to implement
successfully  and achieve the goals of our  corporate  restructuring  plan,  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, our ability to obtain  stockholder
approval for the sale of shares of our common stock in our contemplated  private
financing,  the ability to obtain  bankruptcy  approval for the  acquisition  of
certain  of the assets of  Metrobility  Optical  Systems,  Inc.,  whether  other
potential buyers will acquire the assets of Metrobility  Optical  Systems,  Inc.
under the bankruptcy  court's bidding  procedures,  our ability to integrate the
former  employees of Metrobility  Optical  Systems,  Inc. into our company,  our
ability to retain and attract  highly  skilled  engineers  for our  research and
development  activities,  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.

     During the quarter  ended  September  30, 2001 we announced and completed a
restructure  plan  intended to better  align our  operations  with the  changing
market conditions.  This plan is designed to prioritize VINA's high growth areas
of business,  focus on profit contribution and reduce expenses. This restructure
includes  workforce  reduction.  As a result  of the  restructuring  efforts  we
reduced our workforce by approximately 40 employees across all functions.

     On  October  17,  2001,  we  announced   that  we  intend  to  sell  up  to
approximately 25.3 million shares of common stock and warrants to purchase up to
8.1 million shares of our common stock in a private offering. The financing will
consist of a two-stage private placement of common stock. The first stage, which
closed on October  19,  2001,  involved  the sale of  approximately  5.6 million
shares at a price of  approximately  $0.64 per share and  warrants  to  purchase
1,795,283 shares of common stock,  resulting in the receipt of gross proceeds by
VINA of  approximately  $3.6 million.  The second stage of the  investment  will
require stockholder approval under the Nasdaq Stock Market Rules, since it would

<PAGE>

result  in the  issuance  by VINA of more  than 20  percent  of our  outstanding
shares.  Subject to stockholder  approval and other  customary  conditions,  the
second stage would  involve the private  placement of up to an  additional  19.7
million shares at a price of approximately  $0.64 per share,  expected to result
in gross proceeds to us of up to $12.6 million.  On October 19, 2001, we entered
into a separate  securities  purchase agreement with an additional  investor for
the sale of 1,524,390 shares of common stock,  plus warrants to purchase 500,000
shares  of  common  stock,  at a price per  share of  approximately  $0.66.  The
offering is expected  to result in gross  proceeds to us of $1.0  million and is
also subject to stockholder  approval  under the Nasdaq Stock Market Rules.  The
warrants  issued and to be issued  pursuant to these  offerings have an exercise
price of $1.00  per  share,  and have a  three-year  term,  subject  to  earlier
termination if our share price equals or exceeds $2.00 for a period of 20 out of
any 30  consecutive  trading  days.  We expect to use the net  proceeds of these
offerings for working capital and general corporate purposes.  Proceeds may also
be used  to  make  strategic  investments,  acquire  or  license  technology  or
products, or acquire businesses that may complement our business.

     In addition, if we consummate the merger with MOS Acquisition  Corporation,
acquiring certain assets of Metrobility Optical Systems,  Inc., described below,
a  portion  of the  proceeds  may  also  be used in  connection  with  increased
personnel  and  research  and  development  costs  associated  with the acquired
assets.

     On October 17,  2001,  we entered  into a merger  agreement  to acquire MOS
Acquisition  Corporation.  MOS  Acquisition was formed solely to purchase assets
from Metrobility Optical Systems, Inc., which recently filed for bankruptcy. The
sale of the  assets  to MOS  Acquisition  is  dependent  upon  bankruptcy  court
approval,  as well as satisfaction of other conditions.  If the bankruptcy court
does not  approve  the  purchase  of the  assets by MOS  Acquisition,  then VINA
Technologies will not acquire MOS Acquisition.  The assets consist of all of the
assets and  technology  currently  used by  Metrobility  in connection  with its
development  of optical  concentration  products.  MOS  Acquisition  is owned by
Sierra Ventures VII, L.P. and Sierra Ventures  Associates VII, LLC. These Sierra
Ventures entities, affiliates of a member of our Board of Directors, Mr. Jeffrey
M.  Drazan,   are  both  substantial   stockholders  and  secured  creditors  of
Metrobility.  Pursuant to the merger,  assuming we obtain  stockholder  approval
before  the  closing  occurs,  we will  issue to the  Sierra  Ventures  entities
2,217,527  shares of our common  stock.  If the merger  closes  before we obtain
stockholder  approval for the issuance of the shares,  we will issue  promissory
notes in the aggregate principal amount of $2.0 million with an interest rate of
6% per year.  These notes will convert  automatically  into 2,217,527  shares of
common stock upon  stockholder  approval of the  issuance of the shares.  If our
stockholders do not approve the issuance of the shares, the principal amount and
all interest on the  promissory  notes will be due and payable one year from the
date we issue the notes.

     In contemplation  of the acquisition of the Metrobility  assets pursuant to
the merger,  in late September and early October 2001 we hired  approximately 28
former  employees of  Metrobility,  most of whom are engineers,  to continue the
research  and  development  of  optical   concentration   products   started  at
Metrobility.  VINA has entered into a joint services agreement with Metrobility,
which has been  approved by the  bankruptcy  court and allows VINA and its newly
hired engineers and other personnel access to the Metrobility  facilities and to
the assets and technology used in Metrobility's optical  concentration  products
currently under  development in advance of the consummation of their sale to MOS
Acquisition.  If the asset sale is not approved by the  bankruptcy  court,  VINA
will have expended a significant amount of time and money evaluating and working
with these assets and  technology  without  gaining any rights to use the assets
and  technology in the future.  If the asset sale is approved by the  bankruptcy
court and the sale of the  assets is  consummated,  VINA will need to locate new
facilities  in New Hampshire to house its new employees and continue the optical
concentration research and development activities.

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  shipping  our

<PAGE>

Multiservice  T1  Integrator  product  family in March  1997,  our  Multiservice
Xchange  product  in May 1999  and our MBX  product  in  September  2001.  Since
inception, we have incurred significant losses, and as of September 30, 2001, we
had an accumulated deficit of $111.3 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
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 nine months ended September 30, 2001, sales to our five largest
customers  accounted for approximately 91% of our net revenue, of which sales to
Lucent  Technologies,  NUVOX Communications and Advanced Telecom Group accounted
for 49%,  20%, and 15%,  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  September 30, 2001, is expected to be $2.1 million
in the last  quarter of 2001,  $5.1  million in 2002,  $1.8  million in 2003 and
$330,000 thereafter.

<PAGE>

     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 Nine months Ended September 30, 2001 and 2000

     Net revenue.  Net revenue  increased  to $36.1  million for the nine months
ended  September 30, 2001 from $21.2 million for the nine months ended September
30, 2000. Net revenue increased to $13.0 million for the quarter ended September
30, 2001 from $9.2 million for the quarter ended  September 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  including  stock-based  compensation
increased  to $23.9  million for the nine months ended  September  30, 2001 from
$14.2  million for the nine months ended  September  30,  2000.  Cost of revenue
including  stock  based-compensation  increased  to $8.0 million for the quarter
ended  September 30, 2001 from $6.0 million from the quarter ended September 30,
2000. Gross profit including stock-based compensation increased to $12.1 million
for the nine months  ended  September  30,  2001 from $7.0  million for the nine
months ended September 30, 2000. Gross profit including stock based compensation
increased to $5.0  million for the quarter  ended  September  30, 2001 from $3.1
million for the  quarter  ended  September  30,  2000.  Gross  profit  including
stock-based  compensation as a percentage of net revenue  increased to 33.6% for
the nine months  ended  September  30, 2001 from 33.1% for the nine months ended
September  30,  2000.  This  increase  was  due to a  reduction  in  stock-based
compensation  from $1.3 for the nine months ended September 30, 2000 compared to
$800,000 for the nine months ended September 30, 2001,  offset by a $1.8 million
expense for excess inventory  purchase  commitment in the first quarter of 2001.
The provision for the excess  inventory  purchase  commitments was primarily the
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  including  stock-based  compensation  as a  percentage  of  net  revenue
increased to 38.4% for the quarter  ended  September 30, 2001 from 34.2% for the
quarter  ended  September  30,  2000 as a result of a  decrease  in  stock-based
compensation  from  $587,000  for the three  months  ended  September  30,  2000
compared to $219,000 for the three months ended  September  30, 2001,  offset by
higher average cost of sales and lower average sale price.

     Research  and  development  expenses.  Research  and  development  expenses
including  stock-based  compensation  increased  to $17.7  million  for the nine
months ended  September  30, 2001,  from $14.3 million for the nine months ended
September  30, 2000.  Research and  development  expense  including  stock based
compensation  decreased to $5.1 million for the quarter ended September 30, 2001
from $5.9  million  for the quarter  ended  September  30,  2000.  Research  and
development expenses including  stock-based  compensation as a percentage of net
revenue  decreased  to 49.1% in the first nine  months of 2001 from 67.5% in the
first  nine  months  of 2000 as our  revenue  increased  at a faster  rate  than
research and development expenses and our stock-based  compensation decreased to
$3.9 million for the nine months ended  September 30, 2001 from $5.7 million for
the nine months ended  September  30, 2000.  Research and  development  expenses
including  stock-based  compensation as a percentage of net revenue decreased to
39.5% for the quarter ended September 30, 2001 compared to 64.2% for the quarter
ended September 30, 2000 as our revenue increased at a faster rate than research
and development expenses and our stock-based  compensation decreased to $897,000
for the quarter ended September 30, 2001 from $2.5 million for the quarter ended
September 30, 2000.

     In late  September  and early  October  2001,  we hired 28 new employees in
anticipation  of our  acquisition  of  certain  assets  of  Metrobility  Optical
Systems,   Inc.  pursuant  to  our  contemplated  merger  with  MOS  Acquisition
Corporation.  If we acquire the assets pursuant to the merger,  we plan to lease
facilities in New Hampshire  where the newly hired  personnel and the assets are
located. As a result of this, we believe that research and development  expenses
excluding  stock-based  compensation will increase in absolute dollar amounts in
the next quarter.

     Selling,  general  and  administrative   expenses.   Selling,  general  and
administrative  expenses including stock-based  compensation  decreased to $24.1
million for the nine months ended  September 30, 2001 from $25.5 million for the
nine months  ended  September  30,  2000.  Selling,  general and  administrative
expenses  including stock based  compensation  decreased to $6.5 million for the
quarter  ended  September  30, 2001 from $10.2  million  for the  quarter  ended

<PAGE>

September 30, 2000. Selling, general and administrative expenses including stock
based  compensation  as a percentage  of net revenue  decreased to 66.9% for the
first nine  months of 2001 from 120% for the first nine  months of 2000,  as our
revenue  increased  at a faster rate than  selling,  general and  administrative
expenses and the value of stock-based compensation decreased to $6.2 million for
the nine months ended  September 30, 2001 from $10.8 million for the nine months
ended September 30, 2000. Selling, general and administrative expenses including
stock-based compensation as a percentage of net revenue decreased to 50% for the
three  months  ended  September  30, 2001 from 110.9% for the three months ended
September  30, 2000,  as our revenue  increased  at a faster rate than  selling,
general and  administrative  expenses and the value of stock-based  compensation
decreased to $1.5 million for the three months ended September 30, 2001 compared
to $4.0 million for the three months ended September 30, 2000.

     Stock-based  compensation.  Stock-based  compensation  expense decreased to
$8.4 million for the nine months ended September 30, 2001 from $17.8 million for
the nine months ended  September  30,  2000.  Stock-based  compensation  expense
decreased to $55,000 for the quarter ended  September 30, 2001 from $7.1 million
for the quarter ended  September 30, 2000.  The decrease is primarily due to our
use  of the  multiple  option  award  approach  for  amortizing  deferred  stock
compensation,  which  results in  accelerated  amortization  coupled  with a net
benefit  associated  with the  workforce  reduction  of $2.6  million.  This net
benefit  resulted  from a $3.0 million  benefit for the reversal of prior period
estimated  stock  compensation  expense on  forfeited  stock  options  offset by
$431,000  of stock  compensation  expense  resulting  from the  acceleration  of
unvested stock options in accordance with employee separation agreements.  Based
on stock options  granted  through  September 30, 2001, we expect to record $2.1
million of amortization  of stock-based  compensation in the three months ending
December 31, 2001.

     Restructuring  expenses.  Restructuring  expenses,  excluding the impact of
stock-based  compensation,  of  $991,000  for the  three and nine  months  ended
September 30, 2001 resulted  primarily  from  severance and  outplacement  costs
associated  with the  workforce  reduction  plan in the third  quarter  of 2001.
Including   the  impact  of   stock-based   compensation,   we  recorded  a  net
restructuring  benefit  of $1.6  million  for the  three and nine  months  ended
September  30, 2001.  As of September  30, 2001,  we made  $760,000 in severance
payments.  The  remaining  balance of $231,000  related to severance  and fringe
benefits is expected to be disbursed in full by the first quarter of 2002.

     Interest  income,  net.  Interest  income,  net for the nine  months  ended
September  30, 2001  increased to $1.3 million from $881,000 for the nine months
ended  September 30, 2000.  This increase was primarily  attributable  to higher
average cash balances.  Interest income, net for the quarter ended September 30,
2001  decreased to $277,000 from  $485,000 for the quarter  ended  September 30,
2000.  This  decreases was primarily  attributable  to interest  earned on lower
average cash balances and lower interest rates.

Liquidity and Capital Resources

     Net cash used in operating  activities for the nine months ended  September
30, 2001 was $23.8 million and $11.4 million for the nine months ended September
30, 2000. Cash used in operating  activities for the nine months ended September
30, 2001 resulted  primarily from the net loss from operations of $37.8 million,
an increase in accounts  receivable,  inventory,  and  accounts  payable of $4.2
million, $4.4 million, and $1.3 million, respectively, off-set by a net decrease
in accrued and other  current  liabilities  of $1.3  million,  a net increase in
prepaids  and other  assets  of  $$503,000  and  non-cash  activities  including
depreciation and amortization of fixed assets, goodwill and intangible assets of
$7.2 million,  stock-based compensation of $8.4 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 $34.8 million for the nine
months ended  September 30, 2001 and net cash used in investing  activities  was
$46.9  million for the nine months ended  September  30, 2000.  Cash provided by
investing  activities for the nine months ended September 30, 2001 was primarily
due to net proceeds from the sale or maturity of short-term investments of $37.3
million,  offset by purchase of short term investments of $1.1 million, net cash
used for the  acquisition  of Woodwind,  net of cash  acquired,  of $454,000 and
purchase of property and equipment of $983,000.

<PAGE>

     Net cash provided by financing  activities was $438,000 for the nine months
ended  September 30, 2001 and $62.6 million for the nine months ended  September
30,  2000.  Cash  provided by  financing  activities  for the nine months  ended
September  30, 2001 was  primarily due to net proceeds of $760,000 from the sale
of common stock for the nine months ended  September  30, 2001 compared to $36.5
million  from  the sale of  common  stock  and  $23.8  million  from the sale of
convertible preferred stock for the nine months ended September 30, 2000.

     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 and our contemplated  acquisition of
certain  assets of  Metrobility  Optical  Systems  or  invest  in  complementary
businesses, technologies or products. We believe that our cash on hand including
the $3.6 million raised in the October 2001 financing will be sufficient to meet
our working capital and capital  expenditure  requirements for at least the next
12 months.

During the quarter  ended  September  30,  2001,  we announced  and  completed a
restructuring  plan intended to better align our operations with changing market
conditions.  With our cost reduction efforts and if we successfully  execute our
business plan, we believe we will be able to reach a cash  break-even  position.
We will from time to time, however,  review and may pursue additional  financing
opportunities.  For  example,  to provide a  financial  cushion  for our working
capital needs,  in October 2001 we entered into securities  purchase  agreements
with investors to sell up to approximately $17.2 million of our common stock and
warrants to purchase  shares of our common stock. On October 19, 2001, we issued
approximately 5.6 million shares at a price of approximately $0.64 per share and
warrants to purchase approximately 1.8 million shares of common stock, resulting
in the receipt of gross proceeds by us of approximately  $3.6 million.  The sale
of the remaining  shares of common stock and warrants is subject to  stockholder
approval.  If we are unable to execute our business plan as anticipated,  do not
realize our expected  operation  cost  reductions,  or do not sell the remaining
shares  of  common  stock  referred  to above we may 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.



<PAGE>

                         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
million in 1999,  $43.3  million in 2000 and $37.8  million  for the nine months
ended  September  30, 2001.  As of September  30,  2001,  we had an  accumulated
deficit of approximately $111.3 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 nine months  ended  September  30,
2001, of which sales to Lucent Technologies, Nuvox Communications,  and Advanced
Telecom Group accounted for 49%, 20% and 15%,  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 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  (competitive
local exchange carrier) 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

<PAGE>

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.

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

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  49% of our net revenues for the nine months ended
September 30, 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
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.

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

<PAGE>

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.

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 were 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.

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

<PAGE>

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.

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 December  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

<PAGE>

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
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.

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.
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.  Also, in recent  months we hired a new vice  president of
engineering,  and in late  September  and  early  October  2001 we  hired 28 new
employees in contemplation  of the acquisition of assets of Metrobility  Optical
Systems, Inc. To manage the expected growth of our operations and personnel,  we
will be required to:

     o    improve  existing  and  implement  new   operational,   financial  and
          management controls, reporting systems and procedures;

<PAGE>

     o    motivate, manage and cross-train existing 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,

<PAGE>

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
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.

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 remains strong 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 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

<PAGE>

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.  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
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,  Clarent, 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

<PAGE>

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  49% of our net revenues for the nine
months ended  September 30, 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.

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

<PAGE>

          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
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,  and in October
2001 we agreed to acquire certain assets of Metrobility  Optical  Systems,  Inc.
pursuant to a merger with MOS  Acquisition  Corporation.  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;

<PAGE>

     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.

     In October  2001, we entered into  agreements  to sell up to  approximately
$17.18 million of our common stock. In mid-October,  we sold  approximately $3.6
million of the stock. The sale of the remaining shares is subject to stockholder
approval.  We anticipate that if we do not obtain  stockholder  approval to sell
these remaining shares we may 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 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  September  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 October 17, 2001,  we amended our Rights  Agreement  which  contains the
terms of our  stockholder  rights plan,  under which a right is attached to each
share of our outstanding  common stock.  Amendment No. 1 to our Rights Agreement
provides that Sierra  Ventures' and its affiliates'  purchase of common stock in
the private  placement  of our shares of common  stock and  warrants to purchase
common stock pursuant to that certain Securities  Purchase Agreement dated as of
October 17, 2001 among VINA and the investors on the signature pages thereto and
the  issuance to Sierra  Ventures of the merger  consideration  described in the
October  17,  2001  Agreement  and Plan of  Merger by and  between  VINA and MOS
Acquisition Corporation will not result in the separation of the rights from our
common stock.  The percentage of our common stock which Sierra  Ventures and its
affiliates may own without  triggering the stockholder rights plan is defined in
the amendment to the Rights  Agreement.  This summary  description of the Rights
does not purport to be complete and is qualified in its entirety by reference to
Amendment  No. 1 to the  Rights  Agreement,  which  was filed as an  exhibit  to
Amendment  No. 1 to the  Company's  Registration  Statement  on Form  8-A  dated
October 24, 2001. A copy of the Rights Agreement was originally filed as Exhibit
4.1 to the Company's Registration Statement on Form 8-A dated 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  September  30,  2001.  Of the net  proceeds
approximately  $7.5  million  was  used  towards  partial  consideration  of the
purchase of Woodwind  Communications  Systems,  Inc.  and $9.4  million was used
towards operating expenses of the business.

Item 6. Exhibits and Reports on Form 8-K

     (b) The Company filed a report on Form 8-K on July 25, 2001 with respect to
the  adoption of a  stockholder  rights plan as  described in Item 5 of the Form
8-K.


<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:  November 14, 2001            By:     /s/ Steven M. Bauman
                                         -------------------------------------
                                         Steven M. Bauman
                                         President and Chief Executive Officer
                                         (Principal Executive Officer)

Date:  November 14, 2001            By:     /s/ Stanley E. Kazmierczak
                                         -------------------------------------
                                         Stanley E. Kazmierczak
                                         Chief Financial Officer
                                         (Principal Financial and Accounting
                                         Officer)