UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K/A
                                (AMENDMENT NO. 2)

(Mark One)

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

                   For the fiscal year ended December 31, 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: 0-31903

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

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

  39745 Eureka Drive, Newark, CA 94560                  (510) 492-0800
(Address of principal executive offices)       (Registrant's telephone number,
                                                       including area code)

Securities registered to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:
                    Common Stock, par value $.0001 per share
                                (Title of Class)

     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 [ ]

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein,
and will not be contained,  to the best of registrant's knowledge, in definitive
proxy or information  statements  incorporated  by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]

     The aggregate  market value of Common Stock held by  non-affiliates  (based
upon the closing sale price on the Nasdaq National Market on March 26, 2002) was
approximately $10,667,745.00. As of March 26, 2002, there were 62,259,271 shares
of Common Stock, $0.0001 per share par value, outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

None


<PAGE>

                                Explanatory Note

     The  Registrant   previously  announced  on  July  18,  2002  that  is  was
undertaking a review of its financial  results from prior  quarters  because the
Registrant had become aware of an issue of whether some revenue recognized by it
in the fourth quarter of 2001 may have been more properly recognized in 2002. As
a result of its internal  review,  the Registrant has restated  fiscal year 2001
and first quarter 2002 financial  statements  because a product shipment in late
December 2001 lacked a component  required by the customer and therefore did not
meet the  Registrant's  criteria for  recognition of revenue upon shipment.  The
product was delivered  with the missing  component and payment was received from
the customer  during the first quarter of 2002.  The amount of revenue  involved
was  approximately  $1.5  million.  In addition,  the  Registrant  independently
discovered  a  $256,000  data  entry  error  related  to a fourth  quarter  2001
transaction.  This  adjustment had previously been recorded in the first quarter
2002 financial  results.  This data entry error was corrected in the restatement
and resulted in a decrease in fourth  quarter  2001 revenue and a  corresponding
increase in first quarter 2002 revenue.

     General  information  in the  originally  filed Form 10-K, as amended,  was
presented  as of the April 1, 2002  filing  date or  earlier.  Unless  otherwise
stated herein,  such  information  has not been updated in this amended  filing.
This  Annual  Report on Form  10-K/A  amends  Item 1 of Part I, Items 6, 7 and 8
(including  the financial  statements) of Part II, and Item 14 of Part IV of the
Registrant's  original  Form  10-K for the year  ended  December  31,  2002,  as
amended, to reflect and conform to the restatement.

                                     PART I

Item 1. Business

When  used  in  this  report  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 extent of fluctuations
in gross margins, the adequacy of capital resources,  growth in operations,  the
ability to integrate  companies  and  operations  that we may acquire,  expected
reduction of operation  costs,  the timing and magnitude of cost  reductions and
associated charges resulting from our restructuring plan, our ability to reach a
cash flow  break-even  position,  our  strategy  with regard to  protecting  our
proprietary   technology,   the   ability  to  compete   and  respond  to  rapid
technological change, the extent to which we can develop new products,  expected
customer  concentration,  ability to execute our business  plan,  the ability to
resolve the software  issues and related  applications  deficiencies  of our MBX
product and the expected date to ship the MBX  products,  the extent to which we
can maintain relationships with vendors of emerging technologies,  the extent to
which and at what rate demand for our  services  increases,  the extent to which
the telecommunications industry experiences consolidation, our ability to expand
our international  operations and enter into new markets, the extent to which we
and our ability to actively  participate in marketing,  business development and
other programs, the extent to which we can expand our field sales operations and
customer support  organizations and build our infrastructure,  the extent we can
build market awareness of our company and our products,  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 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,  our ability to execute our business  plan,  and the risks set forth
below under Item 7, "Management's Discussion and Analysis of Financial Condition
and Results of  Operations  -- Other  Factors  That May Affect  Results."  These
forward-looking  statements  speak  only as of the  date  hereof.  We  expressly
disclaim  any  obligation  or  undertaking  to release  publicly  any updates or
revisions  to any  forward-looking  statements  contained  herein to reflect any
change  in our  expectations  with  regard  thereto  or any  change  in  events,
conditions or circumstances on which any such statement is based.


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<PAGE>

     In this report, all references to "VINA" "we," "us," "our" or the "Company"
mean VINA Technologies, Inc. and its subsidiaries, except where it is made clear
that the term means only the parent company.

     This Form 10-K/A  includes the following  registered  trademarks as well as
filed  applications  to  register  trademarks  of VINA  Technologies  including:
Integrator-300,  VINA,  VINA  Technologies,  eLink-100,  Multiservice  Broadband
Xchange,  MX-500,  MX-550,  and Multiservice  Xchange.  All other trademarks and
trade names  appearing in this Form 10-K/A are the property of their  respective
holders;  for example,  SLC,  ConnectReach and AnyMedia are trademarks and trade
names of Lucent Technologies.  The inclusion of other companies' brand names and
products in this Form 10-K/A is not an endorsement of VINA.

Overview

     VINA  Technologies  develops  and  markets  multiservice  broadband  access
communications  equipment that enable  telecommunications  service  providers to
deliver  bundled  voice  and  data  services.  Our  products  integrate  various
broadband  access   technologies,   including  both  circuit-  and  packet-based
technologies,  onto a single platform and ease capacity constraints in the first
mile of  communications  networks by integrating  multiple lines for voice, data
and video onto one broadband connection. We believe that, by converging formerly
discrete  services  and by  simultaneously  concentrating  voice and  data,  our
solutions  lower capital and  operational  expenses for service  providers.  Our
products  also add  revenue  opportunities  for  telecommunications  carriers by
enabling them to quickly and cost-effectively deploy bundled broadband services.
These  services  include local and  long-distance  telephony,  high-speed  data,
Internet access,  business-to-business  electronic commerce, extended local area
networks,  outsourced  applications  services and messaging.  By supporting both
circuit-  and  packet-based  technologies,  our products  also  protect  service
providers'  investments in existing  circuit-switched  networks and offer them a
cost-effective  migration  path to  emerging  packet-based  networks.  They also
facilitate  seamless  and  remote  upgrades  and  service  provisioning  by  our
customers.

     We sell our products to competitive local exchange carriers,  interexchange
carriers and incumbent  local exchange  carriers  through our direct sales force
and value added  resellers and as an original  equipment  manufacturer.  Our OEM
customers and largest service provider  customers  include Lucent  Technologies,
Allegiance Telecom, Nuvox Communications, Advanced TelCom Group, and BellSouth.

Industry Background

     Increasing Demand for Broadband Access

     The volume of Internet  and other data  traffic has grown  quickly over the
past  several  years,  due  primarily  to  increased  numbers  of users  and the
proliferation of bandwidth intensive  applications such as  business-to-business
electronic commerce, web hosting and remote access for telecommuters. Electronic
business  applications  have become  critical  business  tools and, as a result,
businesses of all sizes increasingly  require their  telecommunications  service
provider to deliver constant broadband connections at affordable rates.

     The First Mile Bottleneck

     Although service providers have deployed emerging packet-based technologies
to  expand  the speed and  capacity  of long  distance  networks,  more  limited
investment  has been made in local  networks,  or the first mile, to address the
substantial  increase  in  traffic.  As a result,  the first mile has become the
telecommunication infrastructure's principal bottleneck, limiting the ability of
service providers to deliver broadband services to the market.

     Difficulty of Profitably Connecting Customers to Metro Access Networks

     In the past,  carriers have lacked the  technological  means to concentrate
voice and data in the same platform.  Instead, they purchased separate pieces of
equipment  for each,  resulting in an  increased  burden that  multiplied  their
hardware costs and  consumption of precious  space in  co-locations  and central
office facilities.  Further aggravating the companies' capital  expenditures was
the longstanding  need to invest  extensively in specialized  telecommunications
devices such as digital loop carriers,  digital access cross-connect systems and
Frame Relay switches.  To regain control over expenses,  service  providers have
focused on limiting  the  concentration  of their voice and data to a relatively
few large locations such as central offices and thus minimizing  their number of
purchases  devices.  But the decision to locate the  equipment in sites that lie
far from customer  premises  compounded the carriers'  requirements for backhaul
transport and all its associated costs.


                                       3
<PAGE>

     Deregulation is Accelerating  Competition and the Introduction of Broadband
Access

     Historically,   in  the  United  States,   dominant  telephone   companies,
principally Regional Bell Operating  Companies,  were the exclusive operators of
first mile  communications  networks.  The U.S.  Telecommunications  Act of 1996
opened the local  communications  market to new entrants.  The 1996 Act required
the dominant local  carriers,  known as incumbent  local exchange  carriers,  or
ILECs,  to lease  portions of their networks to other carriers to compete in the
first mile.  These new entrants are referred to as  competitive  local  exchange
carriers,  or CLECs.  Expanded competition has accelerated the deployment of new
technologies,  including  digital  subscriber  line,  or DSL,  digital cable and
broadband  fixed  wireless,  into the local  market.  To date,  these  broadband
solutions have been introduced as parallel data networks,  co-existing alongside
the voice infrastructure controlled by ILECs, complicating the network.

     While  both  CLECs and ILECs  have  introduced  services  in the  market to
address  competition  and the  need for  broadband  access,  each of them  faces
significant challenges in their respective markets.

     CLECs. CLECs have targeted the large business market in particular and have
gained market share from ILECs in recent years.  Most CLECs have provided either
voice or data  services and are facing  numerous  challenges  as they attempt to
achieve  profitability.  CLECs  are  seeking  to  decrease  network  expense  by
improving  bandwidth  management and reducing customer  turnover.  They are also
seeking to  increase  revenue  per  customer by  introducing  bundled  suites of
enhanced  voice and data services,  such as long  distance,  local call routing,
Internet access, business-to-business electronic commerce and web hosting. CLECs
have also taken the lead in offering bundled voice and data services to small to
medium  size  businesses,  a market  which we believe  has been  dominated,  but
underserved,  by ILECs.  These  businesses  often do not have the  financial  or
technical  resources of large businesses to invest in and manage costly parallel
voice and data networks. We believe that small to medium size businesses present
an opportunity for CLECs to substantially grow their customer base. According to
the Yankee Group, at the end of 2001 the U.S. alone contained  approximately 6.3
million small and medium-sized businesses that ranged from two to 499 employees.

     ILECs.  Historically,  ILECs have faced strict  regulations  limiting their
investment  returns  in the  voice  market  by  tying  those  returns  to  their
infrastructure  and other costs.  ILECs now seek to introduce  new enhanced data
services in  deregulated  markets  where their  returns are not so  constrained.
Although  ILECs have  traditionally  dominated the first mile market,  they have
lost  substantial  market share to CLECs in the large  business  market and have
begun to lose market share in the small to medium size business  market  because
CLECs have been able to deliver more cost-effective services. In order to defend
their  customer  base in the small to medium  size  business  market,  ILECs are
seeking to provide bundled voice and data services to their customers. ILECs are
also  experiencing  a copper  wire  telecommunication  lines  shortage  in major
metropolitan  areas  because  there has been an  increase in the number of phone
lines installed in customer premises for a variety of applications.  Due to this
shortage,  ILECs face pressure to more efficiently utilize their copper wires to
meet the increasing demand for voice and high-speed data access.

     Convergence of Voice and Data Networks

     Voice and data networks  have evolved into  parallel  networks as broadband
access  networks  include both  circuit-based  networks  utilizing time division
multiplexing, or TDM, and packet-based networks utilizing various protocols such
as  asynchronous  transfer  mode, or ATM,  internet  protocol,  or IP, and frame
relay.  The  deployment  of equipment  dedicated to  circuit-based  networks and
packet-based  networks  has  resulted  in  the  creation  of  a  highly  complex
telecommunications  infrastructure  comprised of multiple networks  dedicated to
support various  protocols.  As a result,  service providers are subject to high
network operating costs due to the redundancy of operating parallel networks and
limited  equipment  compatibility.  In order for  service  providers  to deliver
cost-effective,  bundled  voice and data  services,  we believe  these  parallel
networks need to be integrated and simplified.

     Limitations  Constraining  the  Deployment  of  Converged   Next-Generation
Network Solutions

     While  many  service  providers  desire to provide  bundled  voice and data
services,  they have been limited in their ability to deliver their  services by
the following:

     o    Uncertain  migration path. Service providers have invested billions of
          dollars in circuit-based  networks. They recognize that separate voice
          and data networks must be converged  because separate networks are not
          cost-effective  in the long term.  Service  providers require products
          that support both networks and offer a  cost-effective  migration path
          from circuit-based networks to emerging packet-based networks.

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<PAGE>

     o    Multiple Equipment and Protocol Types.  Addressing  multiple protocols
          has historically  required  service  providers to tap multiple vendors
          and  equipment  types,  and  has  resulted  in  confusion  as  well as
          unnecessary network complexity and expense.  Service providers require
          multiservice  access  solutions  that  integrate  readily  into  their
          existing  networks,  maintain  compatibility  with other components of
          their  network  and  provide  remote,  dynamic  bandwidth  and service
          provisioning,  eliminating the need for expensive manual  provisioning
          and installation.

     o    Inefficient use of network bandwidth. The rapid increase in demand for
          bandwidth  and the  limited  capacity  available  in the first mile of
          telecommunications  networks  have  strained  the  level  of  services
          provided  to end  users.  Service  providers  require  more  efficient
          multiservice access solutions that minimize network expense,  maximize
          bandwidth and are deliverable over a single copper line.

     o    Operational  challenges to  infrastructure  deployment.  The scope and
          complexity of existing  communication  networks pose unique challenges
          to  service   providers  in  recruiting  and  training  the  necessary
          personnel  to deploy,  scale,  provision  and  maintain  the  network.
          Simplified  network  solutions are needed to help reduce the number of
          personnel and technical expertise required.

     In order to address  these  challenges,  several  communications  equipment
companies have introduced  broadband  integrated access devices,  or IADs. First
generation  IADs are  circuit-based.  As service  providers plan their converged
next-generation  networks,  they have become increasingly reluctant to invest in
communication  equipment  that  cannot  support  asynchronous  transfer  mode or
Internet  protocol  traffic.  In  response,   several  vendors  have  introduced
packet-based IADs.  However,  we believe these new products have not been widely
adopted  because  service  providers have invested  billions of dollars in their
circuit-based  networks,  which they are unwilling to abandon. The transition to
converged,  next-generation  networks is a costly and complex  process that will
take many years to complete.  Therefore, service providers are seeking broadband
access  solutions that operate in both circuit- and  packet-based  environments,
enabling them to protect their investment in existing equipment while ensuring a
cost-effective migration path to converged, packet-based networks. This solution
must be affordable, scalable and easy to install and operate.

The VINA Solution

     We develop  and  market  broadband  access  communications  equipment  that
offers,  in one  product,  access to circuit-  and  packet-based  networks.  Our
products enable service providers to offer a complete suite of bundled voice and
data services to end users,  including customer premise,  voice, video, data and
Internet  services,  such as  business-to-business  electronic  commerce and web
hosting.  Using our products,  service  providers  may remotely and  dynamically
customize the services they deliver to individual  customers.  Furthermore,  our
customer premise products allow service  providers to  cost-effectively  deliver
bundled  offerings from a single vendor with a single bill. Our customer premise
products require little or no information technology expertise on the end users'
part and allow  service  providers to deliver  products for the first mile which
reduce  the  cost and  complexity  associated  with  purchasing,  operating  and
maintaining their networks.

     We  believe  that  our  products  offer  service  providers  the  following
benefits:

     o    Defined  Network  Migration  Path.  Our products offer a seamless path
          from the circuit-based  network  environment to packet-based voice and
          data network environment.  We utilize software to migrate our products
          to packet-based  networks,  minimizing or eliminating costly equipment
          upgrades.  Our equipment is currently being installed in both circuit-
          and packet-based networks.

     o    Reduced Network  Complexity and Operating  Costs.  Our  platform-based
          solution  integrates  multiple products,  such as routers,  firewalls,
          channel  banks,  modems and features of private branch  exchanges,  or
          PBXs,   which  reduce  the  operating  costs  and  the  complexity  of
          delivering bundled voice and data services. Service providers are able
          to  operate  more   responsively   and  to  roll  out  services  on  a
          cost-effective  basis through our software-based  remote bandwidth and
          service provisioning.

     o    Increased Value-Added Services.  Our solution allows service providers
          to enhance  revenue  derived  from their  installed  customer  base by
          selling additional  software-enabled  services,  such as a firewall or
          local call routing.  Our  platform-based  solution is designed to work
          with a broad range of first mile transport technologies.


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<PAGE>

     o    Ease of Deployment. Our hardware products incorporate a software-based
          management system,  including a graphical user interface to facilitate
          installation  and use and to allow our service  provider  customers to
          remotely  manage their product  offerings  and  upgrades.  Our product
          solution,  combined with our extensive service program, simplifies and
          accelerates the deployment of bundled voice and data services.

     o    Robust Service Platform. Our products provide telecommunications grade
          quality and  reliability.  We offer  robust  solutions  that have been
          designed  to  navigate  the  unpredictable  course of  technology  and
          standards development.  We design our products to allow software-based
          upgrades for anticipated future network transport technologies.

     Our customer premise  solutions accept multiple  transport  services into a
single broadband access product.  By incorporating  various  functions,  such as
firewall,  channel bank and features of a private branch  exchange onto a single
platform,  we enable our service  provider  customers to reduce their  equipment
costs and network  complexity,  ease  migration  from  circuit- to  packet-based
networks, and enhance revenue opportunity from their installed customer base.

Our Products

     We offer a family of products for the first mile designed to allow carriers
to  cost-effectively  and quickly  deliver  bundled voice and data services over
broadband connections in the local loop and in metro access networks.

     Integrator-300

     Our  Integrator-300  is a hardware  platform  solution that allows  service
providers  to  integrate  their  customers'  voice,  data,  video  and  Internet
requirements  onto a single T1 connection.  The  multiservice  broadband  access
products  provide  toll-quality  voice service in both circuit- and packet-based
networks. In addition, it supports software-based value-added features including
intelligent local call routing,  firewalls,  service level agreement  statistics
and Business OfficeXchange, which enables our products to operate as stand-alone
PBX systems.  Consequently,  the multiservice broadband access products not only
lower deployment costs and streamline provisioning,  but also enable our service
providers  to  differentiate  themselves  in the market and  address  end users'
service requirements.

     Our Integrator-300's  channel bank function converts a T1 digital line into
24  individual   analog  telephone   circuits.   In  addition,   its  integrated
multiplexing  and routing  functionality  allows the  allocation of channels for
video and personal computers, or PCs, as well as high-speed,  dedicated Internet
and frame relay access. The  Integrator-300  also supports standard channel bank
functionality and local call routing, which enables 911, 411 and local toll-free
calls to be  switched  to  ILECs  and  provides  redundancy  in the  event of an
interruption in T1 service.

     Multiservice Xchange product family

     Our  Multiservice  Xchange product family  includes the MX-500,  MX-550 and
MX-400.  The  MX-500  and  MX-550 are  compact,  multiservice  broadband  access
platforms that deliver circuit- and packet-based voice, data, video and Internet
access  services.  The MX-500  supports  up to a maximum of two T1 lines and the
MX-550  supports an  international  equivalent,  E1 line.  The MX-500 and MX-550
provide  support for the  circuit-  based TDM network to deliver  voice and data
access services.  The MX-500 and MX-550 also support asynchronous transfer mode,
or ATM,  voice and data  services.  Accordingly,  the MX-500 and MX-550 meet the
needs of both service  providers who have  implemented ATM networks,  as well as
providers  who intend to migrate  from  existing  circuit-  to ATM  packet-based
networks.  The MX-500 provides  toll-quality  voice service in both circuit- and
packet-based networks. The MX-550 also supports telecommunication protocols used
in major international markets.  Consequently,  the MX-500 and MX-550 enable our
service  provider  customers  to realize  savings in  deployment,  facility  and
maintenance costs,  streamline provisioning and expand the range of services our
customers are able to offer to end users.

     We  recently  introduced  the MX-400,  a product  originally  developed  by
Woodwind  Communications  Systems.  The MX-400 is  designed  to provide a single
point of connectivity  for the delivery of integrated  network  services.  These
services  include  broadband  access,  continuous  Internet  access,  public and
private  voice/facsimile  services and private data services  using Frame Relay,
ATM or IP over SDSL or T1 delivery  technologies.  The MX-400 also enables Voice
over IP, or VoIP, with Media Gateway Control  Protocol,  or MGCP. The ability to
offer MGCP  functionality  allows  service  providers  to take  advantage of the
revenue  generating  benefits of deploying VoIP services to the small and medium
sized business market.


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<PAGE>

     Our  eLink  product  family  of  integrated  access  devices  includes  the
eLink-108,  -208 and -216. VINA's eLink family,  first shipped in November 2000,
currently  offers a choice of up to eight or 16 analog phone ports and converges
parallel voice, data, video and Internet  transmissions over TDM and Frame Relay
on one T1 connection.  Both the eLink-208 and -216 further come with an Ethernet
port for data and form a complete  solution  in one  space-saving  footprint  by
marrying a channel  bank,  IP router,  DHCP server,  CSU/DSU and  firewall  with
Network Address Translation.

     The eLink-108,  previously named the eLink-100, provides eight analog voice
ports and integrates voice,  data, video and Internet traffic over ATM and Frame
Relay on one Synchronous  Digital Subscriber Line connection at 2.3 megabits per
second. The eLink-108 is designed to do the work of multiple  telecommunications
devices  such as a channel  bank and  router  and  supports  voice-over-Internet
Protocol, MGCP and standards-based quality of service.

     Multiservice Broadband Xchange

     Designed for installation in sites such as central offices or co-locations,
the  Multiservice  Broadband  Xchange is designed to allow  providers  to deploy
bundled voice and data services over T1 connections in metro access networks.

     Installed in central office and  co-locations,  the Multiservice  Broadband
Xchange, or MBX, is a multiservice platform designed to enable service providers
to deploy  bundled  voice  and data  services  to the first  mile or edge of the
network.  The MBX platform  provides a  software-based  migration  path from TDM
technology to ATM switching.  This platform is designed for options that include
DSL, fiber optics and service mediation with IP services.

     The MBX  platform  is  designed  to  consolidate  the  voice  concentration
functionality  of a digital loop  carrier,  the data  aggregation  and switching
capabilities  of a  multiservice  ATM switch,  and the  voice/data  interworking
functions of a media  gateway.  The MBX provides  flexibility  in its support of
traditional  concentration  of voice lines with the added support of frame relay
switching.  Recently  it was  discovered  that the MBX failed to meet all of its
specified applications. We have temporarily suspended deployment of the MBX. The
MBX is still available to customers that require only limited  applications.  We
are  currently  working  to  resolve  the  software  issues  and expect to begin
reshipments  of the MBX in the second quarter of 2002.  However,  we can give no
assurances  that we will meet this goal or that we will be able to  resolve  all
the software issues and application  deficiencies  presented by the MBX. Failure
to resolve the issues with our MBX product in a timely  manner  could  result in
the loss of customers and a decrease in net revenue and market share.

Sales and Marketing

     Sales

     We sell our products to service providers directly through our sales force,
and indirectly  through our original equipment  manufacturer,  or OEM, customers
and value added  resellers,  or VARs. We have established OEM customer and other
marketing  relationships  in order to serve  particular  markets and provide our
service  provider  customers  with  opportunities  to purchase  our  products in
conjunction with complementary products and services.

     o    Direct. Direct sales have represented, and we believe will continue to
          represent,   the  majority  of  our  sales.  We  believe  that  direct
          interaction with service providers offers us the best understanding of
          the  business  models and  technical  requirements  of our  customers.
          Further,   we   believe   that   the   competitive   nature   of   the
          telecommunications  equipment  industry requires us to reduce costs by
          eliminating intermediate steps in the distribution chain.

     o    OEM.  OEM  sales,   in   particular   with  Lucent  are  an  important
          distribution  channel for us in the United States. We believe Lucent's
          relationships  with  CLECs,  ILECs  and  small  independent  operating
          companies  will  continue  to enhance  our ability to reach this large
          customer  base.   Lucent  uses  our  products  to  deliver   complete,
          end-to-end  solutions that are installed and  field-serviced  by their
          technical  support  organizations.  We plan to  initiate  and  develop
          relationships with additional leaders in the communications  equipment
          industry as potential OEM customers.

     o    Value-Added  Resellers.  In  addition  to  direct  sales  and  our OEM
          customers,  we have  existing  relationships  with VARs focused on the
          service  provider  market.  We intend to  leverage  our  existing  VAR
          relationships  to seek new  opportunities  for the  deployment  of our

                                       7
<PAGE>

          products.  In addition to the VARs we work with in the United  States,
          we are developing relationships with VARs in Europe, Latin America and
          South America.

     Whether we ship our products directly or through our OEM customers or VARs,
maintaining a direct relationship with each of our service provider customers is
an important  part of our sales  strategy.  Since  establishing a strong working
relationship  with our customers is critical to sales success and future product
development, we strive to maintain strong visibility across our service provider
customer base,  regardless of the distribution channel. As of December 31, 2001,
our sales organization consisted of 43 employees.

     Marketing

     Our marketing  objectives  include building market awareness and acceptance
of our company and our products, as well as generating qualified customer leads.
To  accomplish  these  objectives,   our  marketing  activities  include  public
relations,  communications,  research,  sales support,  direct marketing,  a web
presence, product marketing, as well as channel marketing. We work directly with
service  providers to help them develop  business  models and introduce  product
packages,  promotional programs and pricing strategies,  all designed to promote
the delivery of multiple voice and data services over a single  broadband access
facility.  In  addition,  we actively  work with a number of industry  and trade
publications  and  industry  analysts  to educate  service  providers  on how to
deploy,  and the benefits of,  multiservice  broadband  access  networks.  As of
December 31, 2001, our marketing organization consisted of 10 employees.

Customer Service and Support

     Our customer service organization maintains and supports products sold to
service providers and offers technical support to our OEM customer and VARs. We
also assist our OEM customer and VARs in offering installation, maintenance and
support services to their customers for our products. We handle questions and
problems over the Internet, telephone and e-mail. We continually update our
website to enable our direct and indirect customers to download the latest
technical information and tips, along with firmware, software and product
manuals.

Customers

     We  primarily  sell to CLECs,  ILECs and  independent  operating  companies
through  direct sales and  indirectly  through our OEM  customer  and VARs.  The
following  is a list  of  some  of our  direct  and  indirect  service  provider
customers:

o Allegiance Telecom     o e.spire Communications  o Nuvox Communications
o Advanced TelCom Group  o FiberNet                o TelePacific Communications
o BellSouth              o KMC Telecom             o Time Warner Telecom.
o Broadwing              o MCI WorldCom

     Our top three customers,  including Lucent, accounted for approximately 77%
of our net revenue for the year ended December 31, 2001, of which Lucent,  Nuvox
Communications, and Advanced TelCom Group accounted for 44%, 21%, and 12% of our
net revenue, respectively.

     For the year ended December 31, 2000,  sales to Lucent accounted for 31% of
our net revenue.  Five customers,  including Lucent Technologies,  accounted for
approximately  75% of our net revenue for the year ended  December 31, 2000,  of
which sales to Lucent and Nuvox Communications  accounted for 31% and 28% of our
net revenue, respectively.

     For the year ended December 31, 1999,  sales to Lucent accounted for 46% of
our net revenue. Five customers,  including Lucent,  accounted for approximately
83% of our net revenue for the year ended December 31, 1999.

Strategic Relationships

     A  key  element  of  our  plan  is  to  expand  our  sales,  marketing  and
distribution channels through strategic relationships.  We have established, and
will  continue to pursue,  these  strategic  relationships  in order to grow net
revenues, and to provide indirect sales and marketing of our solutions.


                                       8
<PAGE>

     Lucent  Technologies.  In May 1998, we entered into an OEM  agreement  with
Lucent, which we restated in May 1999. The Lucent agreement expires in May 2002.
The agreement may be terminated by Lucent at any time upon 60 days' notice.  Our
working  relationship  with  Lucent  offers  each of us a  number  of  strategic
advantages. Lucent uses our products to offer a complete end-to-end solution for
the  first  mile  integrating  voice  and data  traffic.  In  turn,  we have the
opportunity   to  leverage   Lucent's   extensive   sales  force  and  marketing
relationships to reach new customers and markets.

     Lucent  incorporates  our  Integrator-300  and MX-500 into its ConnectReach
product  family.  ConnectReach  consists  of our  Integrator-300  and a seamless
connection to Lucent's SLC-2000 Access System, a digital loop carrier,  enabling
the two  products  to  function  as a single,  integrated  voice and data access
system.  ConnectReach  also  interconnects  with the AnyMedia  Access System,  a
next-generation digital loop carrier. Lucent's ConnectReach Plus consists of our
MX500 with a seamless  connection with either Lucent's SLC-2000 Access System or
AnyMedia  access  system.  Designed  to offer  cost-effective  enhanced  bundled
services  to  branch  offices  and  small  and  medium  sized  businesses,   the
ConnectReach Plus seamlessly  integrates voice, data, video, and Internet access
over a common T1, E1 or DSL network  connection.  The  ConnectReach  Plus can be
deployed today in a TDM network to provide support for existing services such as
TDM voice,  data, and Internet access. The same ConnectReach Plus chassis can be
configured  for voice over ATM,  providing a smooth  migration  path for service
providers.

     Interoperability Relationships

     Maintaining  product  compatibility with a broad range of equipment vendors
and central office gateway protocols is critical to our success as a supplier of
first mile solutions. These relationships allow us to work with other vendors to
develop  solutions  that continue to simplify the network and enhance our market
position  with  service  providers.   We  have  entered  into   interoperability
agreements with three vendors in the voice over DSL market--CopperCom, Jetstream
and  Tollbridge.  These  agreements  help  minimize the  technology  risk to our
service provider customers.

Technology

     Our  products  and  technology  enable  multiservice  access  over a single
broadband  network  with an open  architecture.  The open nature of our products
allows  our  solution  to  be  seamlessly   integrated  into  the  existing  TDM
infrastructure  to deliver  enhanced bundled services while offering the ability
to migrate the network through hardware or software upgrades, to an asynchronous
transfer mode, or ATM network,  and subsequently to an Internet protocol,  or IP
network. We have developed extensive core competencies.

     Asynchronous Transfer Mode and Frame Relay Expertise

     We have developed  expertise in packetized voice and data  technology.  The
two widely deployed and proven packet-based technologies that can be utilized to
integrate  voice  and data  over a  single  line are ATM and  frame  relay.  Our
expertise with  packet-based  technology  stems from developing  advanced system
functions such as digital signal  processing,  echo  cancellation,  dynamic call
setup and  virtual  circuit  switching,  as well as class of service  management
capabilities.

     Digital Subscriber Line Expertise

     DSL has emerged as the most  attractive  first mile access  technology  for
providing high bandwidth data access over existing  copper  telephone  lines. In
addition to high-speed access,  DSL technology lowers access costs,  compared to
equivalent T1 lines. Several versions of DSL are being implemented for differing
applications,  including  synchronous digital subscriber line, or SDSL, high-bit
rate digital subscriber line, or HDSL, and HDSL2 for business  applications.  We
have  designed  our  products to scale  quickly and easily add new  transmission
technologies.  We have implemented HDSL in our  Integrator-300  product line and
implemented SDSL in our eLink-100 product line.

     Internet and Internet Protocol Expertise

     Demand  for  Internet  services  has grown  exponentially.  These  services
require  an all IP  infrastructure,  especially  in the access  network  for Web
applications  and use,  e-commerce  and email.  Our products  incorporate  an IP
router  which  offers  firewall  options that  include  circuit  level  security
technology and packet filtering, as well as network address translation, or NAT,
and a software-based  dynamic host control protocol, or DHCP, to provide dynamic
IP address  management.  These IP elements are necessary to ensure  reliable and
secure  Internet  access.  Our products  offer our customers a fully  integrated
Internet access solution.


                                       9
<PAGE>

     Time Division Multiplexing Expertise

     Most  carrier  networks  use  high  bit  rate  digital  systems   employing
time-division  multiplexing,  or TDM. With  extensive  deployment of T1, digital
local offices and optical  transmission,  TDM became  economically viable in the
1980s and  1990s.  The  existing  telephone  network is  predominantly  based on
digital time division switching, transmission and signaling over the out-of-band
control  network.  Our family of products  has been  designed to allow  seamless
integration into existing TDM networks and to offer a migration path to emerging
technologies such as ATM or IP.

     Hardware Design

     Our customers favor telecommunications grade hardware designs. Thus we have
avoided hardware design technology commonly used in the PC industry. Instead our
designs incorporate  microprocessors  specifically  developed for communications
applications and for high  reliability and high  availability  environments.  We
utilize design  techniques that result in over-design of our digital  circuitry,
analog circuitry,  cooling and power systems.  We incorporate field programmable
gate array logic  components  where  possible  to  simplify  designs and improve
reliability.  Our interface  designs  incorporate  popular standard  chipsets in
order to assure compatibility with other carrier equipment. Our hardware designs
include many maintenance features that help our customers reduce their operating
costs.  Service  providers,  for  example,  can use our  equipment to test their
analog lines while the line is not  inoperable.  We design our  hardware  with a
high  degree of  modularity  that gives the company  the  flexibility  to create
solutions on short notice. Our highly modular designs also produce  efficiencies
that allow us to reduce manufacturing costs. We perform extensive  environmental
testing on all of our  products  and most of our  products  are designed for and
meet network equipment building systems, or NEBs,  requirements  adopted by most
carriers. Our products are also designed to meet the European telecommunications
and  physical  standards.  We  believe  that  all our  designs  meet  applicable
Underwriters Labs and Federal Communications Commission standards.

Research and Development

     We believe  that our  success  is, to a large  extent,  dependent  upon our
responsiveness  to the  continued  technological  migration  of  our  customers'
networks.  Our  research  and  development  group  works  closely  with  our OEM
customer,  our customer  steering  committee,  and our marketing  department for
product definition and to assure compatibility with central office equipment.

     Research and development expenses, including stock-based compensation,  all
product development,  system testing and documentation,  were approximately $7.8
million in 1999,  $20.6  million in 2000 and $23.3  million in 2001.  All of our
product  development  costs have been  expensed as  incurred.  We have  licensed
certain  commercially  available  software  from third  parties.  We conduct the
majority of our research and development at our Newark,  California headquarters
and are in the process of establishing  additional  centers in the United States
and internationally.  As of December 31, 2001, we had 103 full-time employees in
research and development.

     While we develop some custom  products for our OEM  customers,  most of our
research  and  development  efforts are focused on  standard  products.  We have
significant  hardware  and  software  expertise  in both  TDM  and  ATM  network
technologies.  We place  heavy  emphasis on our design  verification  processes,
which  include  extensive  testing  at our  Newark,  California  facilities  and
significant interoperability testing at partner sites.

Manufacturing

     We  outsource  our  manufacturing   operations  to  Benchmark  Electronics.
Benchmark  is  located  in  Angleton,   Texas.   We  believe   outsourcing   our
manufacturing  enables us to benefit from the component purchasing  capabilities
of a global contract manufacturer that can accommodate  significant increases in
production  volume and product  mix,  as  necessary.  We use a rolling  12-month
forecast  based  on   anticipated   product  orders  to  determine  our  product
requirements. We, in turn, provide these forecasts to the contract manufacturer,
which  purchases  the  components  for our  products and  assembles  them to our
specifications.

     Benchmark  performs board assembly,  systems  configuration and testing and
product  shipping.  We have  developed  comprehensive  inspection  tests and use
statistical  process  controls  to assure  the  reliability  and  quality of our
products. Our manufacturing engineers develop all test procedures and design and
build all  equipment and stations  required to test our  products.  We integrate
these manufacturing tests with our contract manufacturer's build processes.  Our

                                       10
<PAGE>

manufacturing  personnel  work closely  with our design  engineers to design for
manufacturability,  and to  ensure  that  our test  methods  remain  current  as
broadband access technologies evolve.

     We obtain several of the key components used in our products 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.  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.  The  suppliers of our  components
range from small vendors to large established companies. Components for which we
currently have only a single source include  subscriber line interface  circuits
that we purchase  from  Advanced  Micro  Devices,  and  microprocessors  that we
purchase  from  Motorola  Corporation.  Components  for which we currently  have
limited sources include digital signal processors, DSL modules and flash memory.
We purchase most components on a purchase order basis and do not have guaranteed
supply  arrangements  with  most  of  our  key  suppliers.  We or  our  contract
manufacturer may not be able to obtain necessary supplies in a timely manner.

     We  select   manufacturers  and  suppliers  on  the  basis  of  technology,
manufacturing capacity,  materials management,  quality and cost. We may, in the
future,  seek  additional  manufacturers  and suppliers to meet our  anticipated
requirements  and  lower the cost of our  products.  We  obtained  International
Standards Organization, or ISO, 9001 certification in 2000.

Competition

     The  market  for  multiservice   broadband  access  products  is  extremely
competitive.  We believe that  competition  will increase  substantially  as the
introduction of new technologies,  deployment of broadband access networks,  and
potential  regulatory  changes  create new  opportunities  for  established  and
emerging  companies.  Furthermore,  DSL- and  T1-based  solutions  compete  with
broadband wireless and cable offers. We face competition primarily in two areas:
equipment  manufacturers,  such as Accelerated Networks,  Adtran, Carrier Access
Corporation,   Polycom  and  Zhone   Technologies   and  diversified   equipment
manufacturers such as Cisco Systems,  Lucent, Siemens, and Alcatel. In addition,
we  may  in  the  future   compete  with  SS7  gateway   suppliers  as  well  as
Voice-over-DSL, or VoDSL, suppliers.

     The  principal  competitive  factors for  products  utilized in our markets
include:

     o    pricing;
     o    product features;
     o    reliability and scalability;
     o    performance;
     o    compatibility with other products;
     o    ease of installation and use;
     o    customer relationships, service and support; and
     o    brand recognition.

     Some of our competitors have greater  financial and other resources than do
we. With greater resources, our competitors may be able to take better advantage
of new competitive  opportunities,  including offering lease and other financing
programs. In addition, the rapid technological  developments in our industry can
result in frequent  changes to our group of  competitors.  Consolidation  in our
industry may also affect our ability to compete. Acquisitions may strengthen our
competitors'  financial,  technical and marketing  resources and provide greater
access to customers or new technologies.  As a result,  these competitors may be
able to devote greater resources than we can to the development, promotion, sale
and support of their products.

Intellectual Property

     We rely on a combination of copyright,  patent, trademark, trade secret and
other intellectual property laws,  nondisclosure agreements and other protective
measures  to  protect  our  proprietary   rights.  We  also  utilize  unpatented
proprietary know-how and trade secrets and employ various methods to protect our
trade secrets and know-how.  We currently have four patent applications pending,
and another patent  application in process,  but no issued patents.  Although we
employ a variety of intellectual  property in the development and  manufacturing
of  our  products,  we  believe  that  none  of  our  intellectual  property  is

                                       11
<PAGE>
individually critical to our current operations.  However,  taken as a whole, we
believe our  intellectual  property  rights are significant and that the loss of
all or a substantial portion of such rights could have a material adverse effect
on our results of operations.  Our intellectual property protection measures may
be insufficient  to prevent  misappropriation  of our  technology.  From time to
time,  third  parties  may  assert  patent,   copyright,   trademark  and  other
intellectual  property  rights to  technologies,  processes  or rights  that are
important to our business.  These assertions may result in litigation  requiring
us to pay substantial damages or to redesign or stop selling our products. Also,
even if we were to prevail, litigation could be time-consuming and expensive and
could  divert our time and  attention.  In  addition,  the laws of many  foreign
countries do not protect our  intellectual  properties to the same extent as the
laws of the United  States.  We may desire or be  required to renew or to obtain
licenses from others in order to further develop and market  commercially viable
products effectively.  Any necessary licenses may not be available on reasonable
terms.

Employees

     As of December 31, 2001, we employed 186 full-time  employees  including 53
in sales and marketing, 11 in operations,  103 in research and development,  and
19 in  finance  and  administration.  Our  employees  are  not  covered  by  any
collective-bargaining  agreements,  and  we  consider  our  relations  with  our
employees to be good.

                                     PART II

Item 6. Selected Consolidated Financial Data , As Restated

     The following  selected  consolidated  financial data has been derived from
the  audited  consolidated  financial  statements.  When you read this  selected
consolidated financial data, it is important that you also read the consolidated
financial  statements and related notes included in this Form 10-K/A, as well as
the section of this Form 10-K/A entitled  "Management's  Discussion and Analysis
of Financial  Condition and Results of Operations."  Our historical  results are
not necessarily indicative of our future results.
<TABLE>
<CAPTION>
                                                                   Years Ended December 31,
                                                 -----------------------------------------------------------
                                                    1997         1998        1999         2000        2001
                                                 ----------   ----------  -----------   ---------- ---------
                                                            (in thousands, except per share data)
Consolidated Statements of Operations Data:                                                     (As restated)(2)
<S>                                                <C>         <C>        <C>          <C>         <C>
Net revenue..................................      $   579     $ 4,393    $  12,700    $  32,078   $  45,112
Cost of revenue (excluding stock-based
  compensation)..............................          542       2,054        7,713       19,240      28,714
                                                   -------     -------    ---------    ---------   ---------
Gross profit (excluding stock-based
compensation)................................           37       2,339        4,987       12,838      16,398
Costs and expenses:
  Research and development (excluding stock-
    based compensation)......................        1,906       4,174        6,690       12,609      18,841
  Selling, general and administrative
    (excluding stock-based compensation).....        2,532       6,414       10,881       21,124      22,697
  Stock-based compensation, net (*).........            79         154        4,715       24,169      10,570
  In-process research and development.......            --          --           --           --       5,081
  Amortization of intangible assets.........            --          --           --           --       8,243
  Restructuring expenses (excluding
    stock-based compensation)...............            --          --           --           --         991
                                                   -------     -------    ---------    ---------   ---------
       Total costs and expenses..............        4,517      10,742       22,286       57,902      66,423
                                                   -------     -------    ---------    ---------   ---------
Loss from operations.........................       (4,480)     (8,403)     (17,299)     (45,064)    (50,025)
Other income, net............................          165         413          223        1,732       1,383
                                                   -------     -------    ---------    ---------   ---------
Net loss.....................................      $(4,315)    $(7,990)   $ (17,076)   $ (43,332)  $ (48,642)
                                                   =======     =======    =========    =========   =========
Net loss per share, basic and diluted(1).....      $ (4.83)    $ (2.63)   $   (3.30)   $   (2.63)  $   (1.31)
                                                   =======     ========   =========    =========   =========
Shares used in computation, basic and
diluted(1)...................................          894       3,038        5,169       16,467      37,121
                                                   =======     =======    =========    =========   =========
(*) Stock-based compensation, net:

Cost of revenue..............................      $    --     $     2    $     152    $   1,855   $   1,016
Research and development.....................           36          78        1,098        7,985       4,446
Selling, general and administrative..........           43          74        3,465       14,329       7,677
Restructuring benefit........................           --          --           --           --      (2,569)
                                                   -------     -------    ---------    ---------   ---------
Total........................................      $    79     $   154    $   4,715    $  24,169   $  10,570
                                                   =======     =======    =========    =========   =========



                                       12
<PAGE>

                                                                        December 31,
                                                 -----------------------------------------------------------
                                                   1997        1998        1999        2000         2001
                                                 -------     --------    --------    --------     --------


                                                                       (in thousands)
Consolidated Balance Sheet Data                                                                   (As restated)(2)

Cash, cash equivalents and short-term
investments................................        $ 3,543     $11,359      $ 2,568     $ 44,499     $16,305
Working capital (deficit)..................          2,896      11,058         (492)      40,657      27,812
Total assets...............................          4,524      14,456        6,673       58,536      78,964
Long-term debt, less current portion.......            400         655          534           --          --
Total stockholders' equity.................          3,233      11,549          348       44,829      65,528
</TABLE>
--------------------
(1)  The diluted net loss per share  computation  excludes  potential  shares of
     common stock issuable  pursuant to convertible  preferred stock and options
     to purchase  common  stock,  as well as common stock  subject to repurchase
     rights held by us, as their effect would be antidilutive. See Notes 1 and 9
     of notes to consolidated financial statements for a detailed explanation of
     the  determination  of the shares used in  computing  basic and diluted net
     loss per share.

(2)  See Note 16 of the notes to the consolidated financial statements regarding
     the restatement of the Company's 2001 financial statements.




                                       13
<PAGE>


Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operations

     This  section  and  other  parts  of this  report  contain  forward-looking
statements that involve risks and uncertainties. Our actual results could differ
materially  from  those  anticipated  in  forward  looking  statements  for many
reasons,  including but not limited to the risks  discussed in this report under
the heading  "Other Factors That May Affect  Results." The following  discussion
and analysis should be read in conjunction with "Selected Consolidated Financial
Data" and the  Consolidated  Financial  Statements  and related  notes  included
elsewhere in this Annual Report on Form 10-K/A.

Subsequent  to the  issuance  of our  financial  statements  for the year  ended
December 31, 2001, we discovered a transaction  for which we recognized  revenue
in the fourth  quarter of 2001 which we reviewed for whether that revenue should
have been recognized in the first quarter of 2002. As a result of our review, we
have restated our financial  statements  for the fourth  quarter of 2001 and the
first quarter of 2002 to properly  reflect the timing of  recognition of revenue
from the  reviewed  transaction  and to also  correct a data  entry  error  that
resulted in  overstated  revenue  from an  unrelated  transaction  in the fourth
quarter of 2001 and  corresponding  understated  revenue in the first quarter of
2002. Accordingly,  the accompanying consolidated financial statements have been
restated to properly  reflect our revenue  recognition  policies.  Our review of
this matter was supervised by the Audit Committee of the Board of Directors. The
effects  of the  restatement  are  presented  in  Note  16 to  the  consolidated
financial statements and have been reflected herein.

Recent Developments

     On  February  27,  2001,   we  completed   the   acquisition   of  Woodwind
Communications  Systems, Inc., a provider of  voice-over-broadband  network edge
access  solutions.  We issued 4.1 million  shares of common  stock and paid $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 1.1 million shares of VINA
common stock. The transaction was accounted for as a purchase.

     During July 2001, we announced and completed a restructuring  plan intended
to better align our operations with the changing market conditions. This plan is
designed  to  prioritize  VINA's  higher  growth  areas  of  business,  focus on
opportunities for profit  contribution and reduce expenses.  This  restructuring
included workforce  reduction of approximately 40 employees across all functions
and an operational  reorganization.  During the quarter ended December 31, 2001,
we sold  approximately  22.2  million  shares of common  stock and  warrants  to
purchase  approximately  7.1  million  shares of our  common  stock in a private
offering,  resulting in the receipt of gross  proceeds by VINA of  approximately
$14.2 million.  The warrants  issued  pursuant to this offering 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 this
offering for working  capital,  research and development  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 December 2001, we acquired optical concentration  technology and related
equipment  business of  Metrobility  Optical  Systems.  In connection  with this
acquisition we issued to the Sierra Ventures  entities 2.2 million shares of our
common stock valued at $2.5 million on the  purchase  date.  The total  purchase
price  (including  $676,000 in direct  acquisition  expenses) was allocated on a
fair value basis resulting in $1.9 million of intellectual  property (intangible
assets) and $1.3 million of fixed assets.

Overview

     VINA  Technologies,  Inc. 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
Multiservice  Integrator-300  product  family in March  1997,  our  Multiservice

                                       14
<PAGE>

Xchange  product  in May 1999  and our MBX  product  in  September  2001.  Since
inception,  we have incurred significant losses, and as of December 31, 2001, we
had an accumulated deficit of $122.2 million.

     We market and sell our  products and  services  directly to  communications
service providers and through OEM customers and value-added resellers,  or VARs.
The Company  recognizes  revenue  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.  Product revenue is
generated from the sale of communications  equipment embedded with software that
is essential to its  functionality,  and  accordingly,  the Company accounts for
these  transactions in accordance with SEC Staff  Accounting  Bulletin (SAB) No.
101,  Revenue  Recognition  in Financial  Statements,  and Statement of Position
(SOP) 97-2, Software Revenue Recognition. Product revenue is recognized when all
SAB No. 101 and SOP 97-2 criteria are met which generally  occurs at the time of
shipment.  In multiple element arrangements where there are undelivered elements
at the time of shipment,  product  revenue is recognized at the time of shipment
as the residual value of the arrangement  after  allocation of fair value to the
undelivered elements based on vendor specific objective evidence (VSOE). Service
revenue is generated from the sale of  installation,  training and  postcontract
customer support (PCS) agreements related to the communications  equipment.  The
Company also accounts for these  transactions in accordance with SAB No. 101 and
SOP  97-2,  and as such  recognizes  revenue  when  all of the  related  revenue
recognition  criteria  are met which  is:  (i) at the time the  installation  or
training  service  is  delivered;  and  (ii)  ratably  over  the term of the PCS
agreement. In multiple element arrangements where these services are undelivered
when the communications  equipment is shipped, the Company defers the fair value
of  these  undelivered  elements  based on VSOE and  recognizes  revenue  as the
services  are  delivered.  The  Company  additionally  records a  provision  for
estimated  sales returns and warranty  costs at the time the product  revenue is
recognized.

     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 year  ended  December  31,  2001,  sales to our three  largest
customers  accounted for approximately 77% of our net revenue, of which sales to
Lucent  Technologies,  Nuvox  Communications and Advanced TelCom Group accounted
for 44%, 21% and 12% of our net revenue, respectively.  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 a significant portion of our revenue
from sales made to our OEM customers. A significant increase in revenue to these
OEM customers would adversely reduce our gross margin percentage.

     Research and development  expenses consist primarily  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 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 the grant of the  option and the  exercise  prices of these
options.  We are amortizing  deferred stock compensation using a multiple option

                                       15
<PAGE>

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  December 31, 2001, was $10.3 million in 2001
and is expected to be $5.0  million in 2002,  $1.7  million in 2003 and $406,000
thereafter.

     Other 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.

     From  inception  through  December  31,  2001,  we incurred  net losses for
federal and state  income tax purposes  and have not  recognized  any income tax
provision or benefit.  As of December 31, 2001,  we had $72.0 million of federal
and $26.0 million of state net  operating  loss  carryforwards  to offset future
taxable  income  that  expire  in  varying   amounts   through  2020  and  2005,
respectively.  Given our limited  operating history and losses incurred to date,
coupled  with  difficulty  in  forecasting  future  results,  a  full  valuation
allowance  has been  provided  against  deferred tax assets.  Furthermore,  as a
result of changes in our equity ownership from our preferred stock offerings and
initial public offering, utilization of net operating losses and tax credits may
be  subject  to  substantial  annual  limitations  due to the  ownership  change
limitations  as defined by Section 382 of the Internal  Revenue Code and similar
state  provisions.  The annual  limitation  may result in the  expiration of net
operating losses and tax credits before utilization.

Results of Operations

     The  following  table  sets  forth  selected  consolidated   statements  of
operations  data as a percentage of net revenue for the periods  indicated.  For
purposes of this table, cost of revenue, gross profit, research and development,
and selling,  general and administrative  amounts and restructuring  expenses do
not include stock-based compensation.

     As a result of the  restatement of the Company's  financial  statements for
2001, certain financial statement and related disclosures contained in this item
reflect,  where  appropriate,  changes from that which appeared in the Company's
originally filed Form 10-K in order to reflect the restatement.


                                                     Years Ended December 31,
                                                 -----------------------------
                                                   1999       2000      2001
                                                 --------   --------  --------
                                                                   (As restated)
                                                                        (1)
Net revenue ...................................    100.0%    100.0%    100.0%
Cost of revenue (excluding stock-based
   compensation) ..............................     60.7      60.0      63.7
                                                   -----     -----     -----
Gross profit (excluding stock-based
   compensation) ..............................     39.3      40.0      36.3
                                                   -----     -----     -----
Costs and expenses:
   Research and development (excluding stock-
      based compensation) .....................     52.7      39.3      41.7
   Selling, general and administrative
      (excluding stock-based compensation) ....     85.7      65.9      50.3
   Stock-based compensation, net (*) ..........     37.1      75.3      23.4
   In-process research and development ........       --        --      11.3
   Amortization of intangible assets ..........       --        --      18.3
   Restructuring expenses (excluding stock-
       based compensation) ....................       --        --       2.2
                                                   -----     -----     -----
Total costs and expenses ......................    175.5     180.5     147.2
                                                   -----     -----     -----
Loss from operations ..........................   (136.2)   (140.5)   (110.9)
                                                   -----     -----     -----
Other income, net .............................      1.8       5.4       3.1
                                                   -----     -----     -----
Net loss ......................................   (134.4)%  (135.1)%  (107.8)%
                                                   =====     =====     =====

     (*) Stock-based compensation, net:
     Cost of revenue..........................       1.2%      5.8%      2.3%
     Research and development.................       8.6%     24.9%      9.8%
     Selling, general and administrative......      27.3%     44.6%     17.0%
     Restructuring expenses...................        --        --      (5.7%)
                                                   -----     -----     -----
     Total....................................      37.1%     75.3%      23.4%
                                                   =====     =====     ======

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<PAGE>

(1)  See Note 16 of the notes to the consolidated financial statements regarding
     the restatement of the Company's 2001 financial statements.


Fiscal Years Ended December 31, 2001, 2000 and 1999

     Net revenue.  Net revenue was $45.1 million in 2001,  $32.1 million in 2000
and $12.7  million in 1999.  The 41%  increase in net revenues in 2001 over 2000
was primarily due to increased unit sales of Integrator-300's and eLink products
to existing  customers.  The 153%  increase in net revenue in 2000 over 1999 was
primarily  due to increased  unit sales to existing  customers  and sales to new
customers.

     Cost of revenue.  Cost of revenue  including  stock-based  compensation was
$29.7  million in 2001,  $21.1  million in 2000 and $7.9 million in 1999.  Gross
profit  including  stock-based  compensation  increased to $15.4 million in 2001
from $11.0  million in 2000 and $4.8  million in 1999.  Gross  margin  including
stock-based  compensation remained flat at 34% in 2001 and 2000 primarily due to
a reduction in stock-based compensation to $1.0 million in 2001 compared to $1.9
million in 2000.  Gross  margin was further  impacted in 2001 by a $1.8  million
charge for excess inventory purchase commitment incurred 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,   or  TDMnetwork
equipment.  Gross margin including stock-based  compensation decreased to 34% in
2000 from 38% in 1999  primarily due to increased  stock-based  compensation  in
cost of revenue.  We anticipate  that our gross margin may continue to fluctuate
due to many factors,  including  competitive pricing pressures,  fluctuations in
manufacturing  volumes,  costs of components and  subassemblies,  costs from our
contract  manufacturers,  the mix of products or system  configurations sold and
changes in our mix of distribution channels.

     Research  and  development  expenses.  Research  and  development  expenses
including stock-based compensation increased to $23.3 million in 2001 from $20.6
million in 2000 and $7.8  million in 1999.  These  increases  were  primarily  a
result of  additional  personnel  costs,  higher  prototype  expenses and higher
consulting  costs  associated  with  our  continuing  research  and  development
efforts. We believe continued investment in research and development is critical
to attaining  our  strategic  product and cost  reduction  objectives,  and as a
result,  we expect  these  research  and  development  expenses  to  increase in
absolute  dollars in the future.  Research and  development  expenses  including
stock-based compensation have changed as a percentage of net revenue from 61% in
1999  to 64% in  2000  and 52% in  2001.  The  increase  from  1999 to 2000  was
primarily due to an increase of $6.9 million stock-based  compensation  expense.
The decrease from 2000 to 2001 was due primarily due to a $3.5 million  decrease
in stock-based compensation expense.

     Selling,  general  and  administrative   expenses.   Selling,  general  and
administrative  expenses including stock based  compensation  decreased to $30.4
million in 2001 from $35.5  million  in 2000 due to a  decrease  in  stock-based
compensation  of $6.7 million  partially  offset by a $1.8  million  increase in
other general costs. The increase in expense from $14.3 million in 1999 to $35.5
million in 2000 was primarily due to an increase in stock-based  compensation of
$10.9 million,  increased personnel costs,  including hiring of additional sales
and key  management  personnel,  as  well  as  increased  recruiting  costs  and
increased promotional expenses, including trade shows and advertising.  Selling,
general and administrative expenses including stock-based compensation decreased
as a  percentage  of net  revenue  from  113% in 1999 to 111% in 2000 and 67% in
2001.  These decreases were a result of net revenue  increasing at a rate faster
than  selling,   general  and   administrative   expenses  and  fluctuations  in
stock-based   compensation  expenses.  We  intend  to  actively  participate  in
marketing,  business development  activities,  selling and promotional programs,
expand our field sales operations and customer support  organizations  and build
our infrastructure to support our anticipated business growth and operation as a
public company.  As a result,  we expect  expenses  related to these programs to
continue to increase substantially in absolute dollars in the future.

     Stock-based  compensation.  Stock-based  compensation  expense decreased to
$10.6  million  for 2001 from $24.2  million  for 2000 and  increased  from $4.7
million for 1999.  The increase from 1999 to 2000 is due to an increased  number
of options  issued in 2000 with an exercise  price below fair market value.  The
decrease  from  2000 to 2001 is due to using  the  multiple-award  approach  for
amortizing  stock-based  compensation coupled with the net restructuring benefit
of $2.6 million  associated  with the reversal of prior period  estimated  stock
compensation  expense on previously  amortized unvested stock options.  Based on
stock  options  granted   through   December  31,  2001,  we  expect  to  record
amortization of stock  compensation  expense of $5.0 million and $1.7 million in
2002 and 2003, respectively, and $406,000 thereafter.


                                       17
<PAGE>

     In-process research and development. On February 27, 2001, we completed the
acquisition of Woodwind  Communications  Systems,  Inc., or Woodwind. In 2001 we
recorded  a  one-time  charge  of  $5.1  million  for the  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 our management, and Woodwind's management.

     Amortization  of intangible  assets.  On February 27, 2001 we completed the
acquisition of Woodwind  Communications  Systems,  Inc., or Woodwind. As part of
the  acquisition,  we acquired  goodwill  and other  intangible  assets of $38.5
million. In December 2001 we also purchased optical concentrator technology.  As
part  of the  purchase,  we  acquired  $1.9  million  of  intellectual  property
(intangible  assets).  These assets are being  amortized based on their expected
useful lives. The expense recorded in the year 2001 was $8.2 million.

     Restructuring  expenses.  Restructuring  expenses,  excluding the impact of
stock-based  compensation,  of  $991,000  for the year ended  December  31, 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 year ended  December 31, 2001.  As of December 31, 2001, we made
$945,000 in severance  payments.  The  remaining  balance of $46,000  related to
severance  and fringe  benefits is expected to be disbursed in the first quarter
of 2002.

     Other  income,  net.  Interest  and other  income,  net  decreased  to $1.4
million,  in 2001 from $1.7 million in 2000.  This decrease was primarily due to
lower cash  balances  resulting  in lower  interest  earned.  Interest and other
income,  net,  increased  to $1.7  million in 2000 from  $223,000 in 1999.  This
increase was primarily  attributable to higher cash balances resulting in higher
interest  income  earned  offset by interest  expense on bank loans  incurred in
1999.

Liquidity and Capital Resources

     Cash and cash equivalents at December 31, 2001 were $15.8 million, compared
to $7.7  million  at  December  31,  2000.  The  increase  of $8.1  million  was
attributable to cash provided by investing  activities of $33.8 million and cash
provided  by  financing  activities  of $4.6  million  offset  by  cash  used in
operating activities of $30.4 million. Cash provided by investing activities was
primarily  attributable to proceeds from sales of short-term securities and cash
provided by financing  activities was attributable to net proceeds from the sale
of common stock.  Cash used in operating  activities of $30.4 million  consisted
primarily of the net loss of $48.6 million,  an increase in accounts  receivable
of $2.8 million,  an increase in inventory of $3.4 million  partially  offset by
non-cash  charges of $10.1  million for  depreciation  and  amortization,  $10.6
million for stock-based  compensation  and $5.1 million for in-process  research
and development. We anticipate 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  Communications  Systems
and of certain assets of Metrobility Optical Systems, or invest in complementary
businesses,  technologies  or  products.  We  believe  our cash on hand  will be
sufficient to meet our working capital and capital expenditure  requirements for
at least the next 12 months.

     During July 2001,  we  announced 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 flow  break-even  position.  However,  we will from time to
time review and may pursue additional financing  opportunities.  For example, to
provide for additional  working capital needs, in the quarter ended December 31,
2001,  we issued  approximately  22.2  million  shares and  warrants to purchase
approximately  7.1 million  shares of common stock,  resulting in the receipt of
gross proceeds of $14.2  million.  If we are unable to execute our business plan
as anticipated 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.

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

                                       18
<PAGE>

definition of a derivative.  The adoption of SFAS No. 133 did not have an impact
on the Company's consolidated financial position,  results of operations or cash
flows as the Company  does not utilize  free-standing  and  embedded  derivative
instruments.

     In June 2001, the Financial  Accounting  Standards Board (FASB) 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 not be amortized, but will 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  intangible  assets  with  indefinite  lives  (goodwill,  which
includes the reclass of workforce-in-place,  and tradenames) with a 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. The Company has evaluated  goodwill  under SFAS No. 142 and has
determined the adoption of this statement will not result in an impairment.

     In August 2001, the FASB issued SFAS No. 144, Accounting for the 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 the
Company on January 1, 2002.  Management  believes the adoption of this statement
will not have an impact on the financial position, results of operations or cash
flows of the Company.

     In November 2001,  consensus was reached by the Emerging  Issues Task Force
(EITF) on EITF No. 01-09,  Accounting for  Consideration  Given by a Vendor to a
Customer or a Reseller of the Vendor's  Products.  The EITF is effective for the
Company  on January 1, 2002.  Management  has not yet  determined  the impact of
adoption on the consolidated financial statements.

                                  RISK FACTORS

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  $17.1 million in 1999,  $43.3
million in 2000 and $48.6  million in 2001.  As of December 31, 2001,  we had an
accumulated deficit of approximately  $122.2 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, one of our original equipment manufacturer, or OEM, customers that
sell and market 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 three  largest  customers

                                       19
<PAGE>

accounted for  approximately  77% of our net revenue for the year ended December
31, 2001, specifically sales to Lucent Technologies,  Nuvox Communications,  and
Advanced  TelCom Group accounted for 44%, 21% and 12%,  respectively.  We expect
that the telecommunications  industry will continue to experience consolidation.
If any of our customers is acquired by a company that is one of our competitors'
customers,  we may  lose  its  business.  In  addition,  if an 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
customers and value added  resellers,  or 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 and potential CLEC 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  competitive  local
exchange  carrier,  or CLEC,  customers,  either  directly  or  through  our OEM
customers.  CLECs have experienced  extreme  difficulties in obtaining financing
for their  businesses.  As a result,  CLECs have been forced to scale back their
operations or terminate their operations.  If our customers become unable to pay
for shipped products, we may be required to write-off significant amounts of our
accounts receivable. Similarly, if our customers order products and then suspend
or cancel the orders prior to shipping,  we will not generate  revenues from the
products we build. In such  circumstances,  our inventories may increase and our
expenses will increase.  Further,  we may incur  substantially  higher inventory
carrying  costs and excess  inventory  that could become  obsolete over time. We
expect that our  business  will  continue  to be  significantly  and  negatively
affected  unless and until there is  substantial  improvement  in the ability of
CLECs to finance their businesses.

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.  For example, under our OEM agreement with Lucent, Lucent 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. For example, 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.

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

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


                                       20
<PAGE>

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  customers  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 expected to begin shipment of our MBX product in
the second quarter of 2001, but the schedule for these  shipments was delayed to
the third  quarter of 2001  because  of  continued  development  issues and then
suspended  temporarily  due to the MBX's  failure  to meet all of its  specified
applications. Development costs and expenses are incurred before we generate any
net revenue 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.

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,
demand  for  our  products  are  lower  than  forecasted,  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,
which could negatively affect our net revenue in such periods.

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, some of 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.  For example,  following deployment of our MBX product it
was discovered that the MBX failed to meet all of its specified applications. We
have temporarily  suspended deployment of the MBX. The MBX is still available to
customers that require only limited  applications.  We are currently  working to
resolve the software  issues and expect to begin  reshipments  of the MBX in our
second  quarter of 2002.  However,  we can give no assurances  that we will meet
this  goal or that we will be  able  to  resolve  all the  software  issues  and
application  deficiencies  presented  by the MBX.  Failure to resolve the issues
with our MBX product in a timely  manner  could  result in the loss of customers
and a decrease in net revenue and market share.  In addition,  our customers may
use our products in conjunction  with products from other vendors.  As a result,
when problems  occur, it may be difficult to identify the source of the problem.
Any defects or errors in our products  discovered in the future,  or failures of
our  customers'  networks,  whether  caused by our products or another  vendor's
products,  could  result in loss of  customers  or  decrease  in net revenue and
market share.

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

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

                                       21
<PAGE>

could cause  significant  variations  in our  operating  results from quarter to
quarter and could result in substantial operating losses.

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,  one of our  OEM  customers.  Our  agreement  with  Lucent  is not
exclusive and does not contain minimum volume  commitments.  Lucent Technologies
accounted for  approximately  44% of our net revenue for the year ended December
31, 2001.  Our OEM agreement with Lucent expires in May 2002, and we can give no
assurances that we will be able to extend the term of our contract or enter into
a new contract with Lucent.  Lucent may terminate the agreement  earlier upon 60
days' notice. At any time or after a short period of notice,  Lucent could elect
to cease  marketing and selling our products.  They may so elect for a number of
reasons,  including the  acquisition by Lucent 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 Lucent, which
may  also  harm  our  relationships  with  this  customer.   For  example,   our
Multiservice  Broadband  Xchange,  or MBX,  product  may compete  with  products
offered by our OEM customers, including Lucent, which could adversely affect our
relationship  with that customer.  Our existing  relationship  with Lucent could
make  it  harder  for  us  to  establish  similar  relationships  with  Lucent's
competitors. Any loss, reduction, delay or cancellation in expected sales to our
OEM customers, the inability to extend our contract or enter into a new contract
with  Lucent  on  favorable  terms,  or  our  inability  to  establish   similar
relationships with new OEM customers in the future,  would hurt our business and
our ability to increase  net  revenue and could cause our  quarterly  results to
fluctuate significantly.

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

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

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  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

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<PAGE>

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 revenue 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 varies 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,   Benchmark  Electronics,   or
Benchmark,  to build our  products.  Effective  April 1,  2001,  we  transferred
primary   manufacturing   responsibility   of  our  products  from   Flextronics
International  Limited,  or Flextronics  to Benchmark.  Under our agreement with
Benchmark,  Benchmark  may  cancel  the  contract  on  short  notice  and is not
obligated  to supply  products to us for any  specific  period,  in any specific
quantity or at any  specific  price,  except as may be provided in a  particular
purchase order. Our reliance on Benchmark involves a number of risks,  including
the lack of operating history between us and Benchmark,  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  our  agreement  or
relationship  with  Benchmark  is  terminated,   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


                                       23
<PAGE>

changes in demand for these  components  could limit the  availability  of these
components  to us at  acceptable  prices and on a timely  basis,  if at all. Any
interruption or delay in the supply of any of these components, or our inability
to obtain these  components  from  alternate  sources at  acceptable  prices and
within a reasonable  amount of time,  would limit our ability to meet  scheduled
product  deliveries  to our  customers or force us to  reengineer  our products,
which may hurt our gross margins and our ability to deliver products on a timely
basis, if at all. A substantial period of time could be required before we would
begin receiving adequate supplies from alternative suppliers,  if available.  In
addition,  qualifying  additional  suppliers is time consuming and expensive and
exposes us to potential supplier production difficulties or quality variations.

The 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  covering the United Kingdom
and Latin America and have initiated  distribution  relationships in Europe.  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.

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  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


                                       24
<PAGE>

base  salaries and cash bonuses to attract and retain these  individuals,  which
payments  could harm our  operating  results.  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 four U.S. patent applications  pending, but no issued
patents.  Despite  our  efforts  to protect  our  proprietary  rights,  existing
copyright,  trademark and trade secret laws afford only limited  protection.  In
addition,  the laws of many  foreign  countries  do not protect our  proprietary
rights to the same extent as do the laws of the United  States.  Attempts may be
made to copy or reverse  engineer  aspects of our  products or to obtain and use
information  that we regard as proprietary.  Accordingly,  we may not be able to
protect our proprietary rights against  unauthorized third party copying or use.
Furthermore,  policing  the  unauthorized  use of  our  products  is  difficult.
Litigation may be necessary in the future to enforce our  intellectual  property
rights,  to protect our trade  secrets or to determine the validity and scope of
the proprietary  rights of others.  This litigation  could result in substantial
costs and diversion of resources and may not ultimately be successful.

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

     Our industry is characterized by frequent  intellectual property litigation
based on allegations of infringement of intellectual property rights. >From time
to time,  third  parties have  asserted,  and may assert in the future,  patent,
copyright,  trademark and other intellectual  property rights to technologies or
rights that are  important to our  business.  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,  result in costly  litigation  and  divert  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 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.

        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, Alcatel,  Carrier Access, Cisco Systems, Lucent Technologies,
Siemens,  Zhone  Technologies  and  Polycom.  Many of our current and  potential
competitors  have  longer  operating   histories,   greater  name   recognition,


                                       25
<PAGE>

significantly   greater   selling  and  marketing,   technical,   manufacturing,
financial,   customer  support,   professional  services  and  other  resources,
including  vendor-sponsored  financing programs.  As a result, these competitors
are able to devote greater  resources to the  development,  promotion,  sale and
support of their products to leverage  their customer bases and broaden  product
offerings to gain market share.  In addition,  our  competitors  may foresee the
course of market  developments  more accurately than we do and could develop new
technologies  that  compete  with  our  products  or even  render  our  products
obsolete.  We may  not  have  sufficient  resources  to  continue  to  make  the
investments  or  achieve  the  technological   advances   necessary  to  compete
successfully with existing or new competitors.  In addition,  due to the rapidly
evolving  markets in which we compete,  additional  competitors with significant
market    presence   and   financial    resources,    including    other   large
telecommunications  equipment  manufacturers,  may enter our markets and further
intensify competition.

     We believe that our existing OEM customers continuously evaluate whether to
offer their own  multiservice  broadband  access  devices.  If our OEM customers
decide to internally  design and sell their own  multiservice  broadband  access
devices,  or acquire one or more of our  competitors or their  broadband  access
technologies,  they could eliminate or  substantially  reduce their purchases of
our  products.  One of our OEM  customers,  Lucent  Technologies,  accounted for
approximately  44% of our net revenue for the year ended  December 31, 2001.  In
addition,  our current growth may cause our OEM customers,  including Lucent, to
view us as greater competition. Our OEM relationships 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 Lucent, which could adversely affect our relationship with that customer.  We
cannot assure you that our OEM customers  will continue to rely, or expand their
reliance, on us as an external source of supply for their multiservice broadband
access devices. Because we rely on one OEM customer for a substantial portion of
our net revenue,  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,  now known as the  Integrator-300,  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    the ability of  competitive  local  exchange  carriers,  or CLECs,  to
          obtain sufficient funding and to successfully grow their businesses.

     o    cost constraints,  such as installation,  space and power requirements
          at the central offices of incumbent local exchange carriers, or ILECs;


                                       26
<PAGE>

     o    compatibility  of equipment from multiple  vendors in service provider
          networks;

     o    evolving   industry   standards  for  transmission   technologies  and
          transport protocols;

     o    varying  and  uncertain  conditions  of  the  communications   network
          infrastructure,   including   quality   and   complexity,   electrical
          interference,   and  crossover   interference   with  voice  and  data
          telecommunications services;

     o    domestic and foreign government regulation; and

     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,
in February 2001 we acquired Woodwind  Communications  Systems, Inc., a provider
of voice-over-broadband  network edge access solutions,  and in December 2001 we
acquired certain assets of Metrobility  Optical Systems,  Inc., in both cases in
exchange for shares of our common  stock.  The issuance of equity  securities in
connection with future  acquisitions or investments could  significantly  dilute
our investors. If we incur or assume debt in connection with future acquisitions
or investments,  we may incur interest charges that could increase our net loss.
We have little  experience in  evaluating,  completing,  managing or integrating
acquisitions and strategic  investments.  Acquisitions and strategic investments
may entail numerous integration risks and impose costs on us, including:

     o    difficulties  in  assimilating  acquired  operations,  technologies or
          products including the loss of key employees;

     o    unanticipated costs;

     o    diversion of management's attention from our core business concerns;



                                       27
<PAGE>

     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 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.  Since February 20,
2002, the closing bid price per share for our common stock has been 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 the quarter  ended  December 31, 2001 we sold  22,150,369  shares of our
common stock and warrants to purchase  7,090,000  shares of our common stock for
approximately $14.2 million. 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.

Our stock price may be volatile, and you may not be able to resell our shares at
or above the price you paid, or at all.

     In August 2000 we  completed  our  initial  public  offering.  Prior to our
initial public offering there had not been a public market for our common stock.
The stock  market in  general,  and the Nasdaq  National  Market and  technology
companies in particular,  have experienced extreme price and volume fluctuations
that have often been unrelated or disproportionate to the operating  performance
of companies. The trading prices and valuations of many technology companies are
substantially  above historical levels.  These trading prices and valuations may
not be  sustainable.  These broad market and  industry  factors may decrease the
market  price  of  our  common  stock,   regardless  of  our  actual   operating
performance.

Substantial  future sales of our common  stock in the public  market could cause
our stock price to fall.

     Additional  sales of our  common  stock in the  public  market  after  this
offering,  or the perception that such sales could occur, could cause the market
price of our common stock to decline.

Many corporate actions would be controlled by officers, directors and affiliated
entities, if they acted together, regardless of the desire of other investors to
pursue an alternative course of action.

     As of December  31,  2001,  our  directors,  executive  officers  and their
affiliated  entities  beneficially owned  approximately 71.1% of our outstanding
common stock after giving effect to the stockholders  rights agreement  executed
by Jeffrey Drazan and certain entities  affiliated with Sierra  Ventures.  These
stockholders, if they acted together, could exert control over matters requiring


                                       28
<PAGE>

approval by our stockholders, including electing directors and approving mergers
or other business combination transactions.  This concentration of ownership may
also  discourage,  delay or prevent a change in control  of our  company,  which
could deprive our  stockholders of an opportunity to receive a premium for their
stock as part of a sale of our company and might reduce our stock  price.  These
actions  may be  taken  even if they  are  opposed  by our  other  stockholders,
including those who purchase shares in this offering.

Delaware law, our corporate  charter and bylaws and our stockholder  rights plan
contain  anti-takeover  provisions  that  would  delay or  discourage  take over
attempts that stockholders may consider favorable.

Provisions in our restated  certificate of incorporation and bylaws may have the
effect  of  delaying  or  preventing  a change  of  control  or  changes  in our
management. These provisions include:

     o    the  right of the board of  directors  to elect a  director  to fill a
          vacancy created by the expansion of the board of directors;

     o    the  ability of the board of  directors  to alter our  bylaws  without
          obtaining stockholder approval;

     o    the establishment of a classified board of directors;

     o    the ability of the board of  directors to issue,  without  stockholder
          approval,  up to five million shares of preferred stock with terms set
          by the board of  directors  which  rights  could be senior to those of
          common stock; and

     o    the elimination of the right of stockholders to call a special meeting
          of stockholders and to take action by written consent.

Each of these provisions could discourage potential take over attempts and could
lower the market price of our common stock.

     We  have  adopted  a  stockholder  rights  plan  and  declared  a  dividend
distribution  of one  right  for  each  outstanding  share  of  common  stock to
stockholders  of record as of August 6,  2001.  Each  right,  when  exercisable,
entitles the  registered  holder to purchase from VINA one  one-thousandth  of a
share of a new series of preferred  stock,  designated as Series A Participating
Preferred Stock, at a price of $35.00 per one one-thousandth of a share, subject
to  adjustment.  The rights will  generally  separate  from the common stock and
become  exercisable  if any person or group acquires or announces a tender offer
to acquire 20% or more of our  outstanding  common stock  without the consent of
our board of directors.  Because the rights may  substantially  dilute the stock
ownership of a person or group  attempting  to take us over without the approval
of our board of  directors,  our  stockholder  rights  plan  could  make it more
difficult  for a third party to acquire us (or a  significant  percentage of our
outstanding capital stock) without first negotiating with our board of directors
regarding such acquisition.

     In addition,  because we are  incorporated in Delaware,  we are governed by
the  provisions of Section 203 of the Delaware  General  Corporation  Law. These
provisions may prohibit large  stockholders,  in particular  those owning 15% or
more of our outstanding  voting stock,  from merging or combining with us. These
provisions in our charter,  bylaws and under Delaware law could reduce the price
that  investors  might be willing  to pay for shares of our common  stock in the
future and result in the market price being lower than it would be without these
provisions.



                                       29
<PAGE>
Item 8. Consolidated Financial Statements

                   Index to Consolidated Financial Statements

<TABLE>
<CAPTION>
                                                                                                      Page
                                                                                                      ----

<S>                                                                                                     <C>
  Independent Auditors' Report.......................................................................   34
  Consolidated Balance Sheets as of December 31, 2000 and 2001 (As Restated).........................   35
  Consolidated Statements of Operations for the Years Ended December 31, 1999, 2000 and 2001(As         36
  Restated)..........................................................................................
  Consolidated Statements of Stockholders' Equity and Comprehensive Loss for the Years Ended
   December 31, 1999, 2000 and 2001(As Restated).....................................................   37
  Consolidated Statements of Cash Flows for the Years Ended December 31, 1999, 2000 and 2001(As         39
  Restated)..........................................................................................
  Notes to Consolidated Financial Statements.........................................................   40
</TABLE>





                                       30
<PAGE>



                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders of VINA Technologies, Inc.:

We  have  audited  the   accompanying   consolidated   balance  sheets  of  VINA
Technologies,  Inc. and its  subsidiaries  (the Company) as of December 31, 2000
and 2001, and the related consolidated  statements of operations,  stockholders'
equity and comprehensive loss, and cash flows for each of the three years in the
period  ended  December  31, 2001.  Our audits also  included  the  consolidated
financial  statement  schedule  listed  in  Item  14 (a)  (2).  These  financial
statements  and  financial  statement  schedule  are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  such consolidated  financial  statements present fairly, in all
material respects,  the financial  position of VINA  Technologies,  Inc. and its
subsidiaries at December 31, 2000 and 2001, and the results of their  operations
and their cash flows for each of the three  years in the period  ended  December
31, 2001 in conformity  with  accounting  principles  generally  accepted in the
United  States of America.  Also,  in our opinion,  the  consolidated  financial
statement schedule listed in Item 14 (a) (2), when considered in relation to the
basic consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.

As discussed in Note 16, the  accompanying  2001 financial  statements have been
restated.


/s/ DELOITTE & TOUCHE LLP

San Jose, California
January 21, 2002
(August 14, 2002 as to Note 16)




                                       31
<PAGE>




                             VINA TECHNOLOGIES, INC.
                           Consolidated Balance Sheets
               (In thousands, except share and per share amounts)

<TABLE>
<CAPTION>
                                                                                        December 31,
                                                                                  -----------------------
                                                                                     2000          2001
                                                                                  ---------     ---------
                                            ASSETS                                             (As restated)
Current assets:
<S>                                                                                <C>          <C>
   Cash and cash equivalents ...................................................   $   7,740    $  15,805
   Short-term investments ......................................................      36,759          500
   Common stock subscription receivable ........................................          --        9,589
   Accounts receivable, less allowance for doubtful accounts
     of  $335 in 2000 and $457 in 2001 .........................................       5,243        8,059
   Inventories .................................................................       1,973        5,733
   Prepaid expenses and other ..................................................       2,649        1,562
                                                                                   ---------    ---------
        Total current assets ...................................................      54,364       41,248
Property and equipment, net ....................................................       4,096        5,271
Other assets ...................................................................          76          356
Acquired intangibles, net ......................................................          --        5,663
Goodwill, net ..................................................................          --       26,426
                                                                                   ---------    ---------
        Total assets ...........................................................   $  58,536    $  78,964
                                                                                   =========    =========

                             LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable .............................................................   $   8,536    $   7,798
  Accrued compensation and related benefits ....................................       2,588        2,234
  Accrued warranty .............................................................         686          696
  Other current liabilities ....................................................       1,897        2,708
                                                                                   ---------    ---------
  Total current liabilities ....................................................      13,707       13,436
                                                                                   ---------    ---------

Commitments and Contingencies (Note 8)

Stockholders' equity:
  Convertible preferred stock; $0.0001 par value; 5,000,000 shares
      authorized; none outstanding .............................................          --           --
  Common stock; $0.0001 par value; 125,000,000 shares authorized: 2000 and 2001,
      shares outstanding: 2000, 32,546,845; 2001, 62,013,759 ...................           3            6
  Additional paid-in capital ...................................................     144,708      194,814
  Deferred stock compensation ..................................................     (26,386)      (7,106)
  Accumulated deficit ..........................................................     (73,544)    (122,186)
  Accumulated other comprehensive income .......................................          48           --
                                                                                   ---------    ---------
        Total stockholders' equity .............................................      44,829       65,528
                                                                                   ---------    ---------
        Total liabilities and stockholders' equity .............................   $  58,536    $  78,964
                                                                                   =========    =========
</TABLE>


                 See notes to consolidated financial statements

                                       32
<PAGE>




                             VINA TECHNOLOGIES, INC.
                      Consolidated Statements of Operations
                    (In thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                             Years Ended
                                                                             December 31,
                                                                             ------------

                                                                     1999        2000        2001
                                                                     ----        ----        ----
                                                                                          (As restated)
<S>                                                                <C>         <C>         <C>
Net revenue ....................................................   $ 12,700    $ 32,078    $ 45,112
Cost of revenue (excluding stock-based compensation) ...........      7,713      19,240      28,714
                                                                   --------    --------    --------
Gross profit (excluding stock-based compensation) ..............      4,987      12,838      16,398
                                                                   --------    --------    --------
Costs and expenses:
   Research and development (excluding stock-based compensation)      6,690      12,609      18,841
   Selling, general and administrative (excluding stock-based
     compensation) .............................................     10,881      21,124      22,697
   Stock-based compensation, net (*) ...........................      4,715      24,169      10,570
   In-process research and development .........................         --          --       5,081
   Amortization of intangible assets ...........................         --          --       8,243
   Restructuring expenses (excluding stock-based compensation) .         --          --         991
                                                                   --------    --------    --------
        Total costs and expenses ...............................     22,286      57,902      66,423
                                                                   --------    --------    --------
Loss from operations ...........................................    (17,299)    (45,064)    (50,025)
Interest income ................................................        355       1,757       1,486
Interest expense ...............................................       (132)        (25)         --
Other (expense) ................................................         --          --        (103)
                                                                   --------    --------    --------
Net loss .......................................................   ($17,076)   ($43,332)  ($ 48,642)
                                                                   ========    ========    ========


Net loss per share, basic and diluted ..........................   ($  3.30)   ($  2.63)   ($  1.31)
                                                                   ========    ========    ========
Shares used in computation, basic and diluted ..................      5,169      16,467      37,121
                                                                   ========    ========    ========

* Stock-based compensation, net:
      Cost of revenue...........................................   $    152    $  1,855    $  1,016
      Research and development..................................      1,098       7,985       4,446
      Selling, general and administrative.......................      3,465      14,329       7,677
     Restructuring benefit......................................         --          --      (2,569)
                                                                   --------    --------    --------
         Total..................................................   $  4,715    $ 24,169    $ 10,570
                                                                   ========    ========    ========
</TABLE>


                 See notes to consolidated financial statements


                                       33
<PAGE>
                           VINA TECHNOLOGIES, INC.
     Consolidated Statements of Stockholders' Equity and Comprehensive Loss
                      (In thousands, except share amounts)
<TABLE>
<CAPTION>
                                                  Convertible                                               Preferred
                                               Preferred Stock            Common Stock        Additional      Stock      Deferred
                                               ---------------            ------------         Paid-In    Subscription     Stock
                                             Shares        Amount     Shares        Amount     Capital     Receivable  Compensation
                                             ------        ------     ------        ------     -------     ----------  ------------

<S>                                        <C>            <C>         <C>         <C>          <C>         <C>          <C>
Balances, January 1, 1999.............     14,279,771             1   6,681,918           1      25,069           (25)         (361)
Comprehensive loss:
   Net loss ............................           --            --          --          --          --            --            --

Exercise of stock options ..............           --            --   1,608,497          --         608            --            --
Repurchase of common stock .............           --            --    (344,334)         --         (18)           --            --
Sale of common stock ...................           --            --     800,000          --         480            --            --
Sale of Series D convertible preferred
  stock.................................       10,746            --          --          --          65            --            --
Receipt of subscription receivable......           --            --          --          --          --            25            --
Issuance of non-employee stock options
  for services.......... ...............           --            --          --          --          99            --            --
Deferred stock compensation ............           --            --          --          --      17,778            --       (17,778)
Amortization of deferred stock
  compensation .........................           --            --          --          --          --            --         4,616
                                           ----------------------------------------------------------------------------------------
Balances, December 31, 1999.............   14,290,517             1   8,746,081           1      44,081            --       (13,523)
Comprehensive loss:
   Net loss ............................           --            --          --          --          --            --            --
   Other comprehensive
     income, net of tax:
   Unrealized gain on available-for-
     sale investments...................           --            --          --          --          --            --            --


     Comprehensive loss ................           --            --          --          --          --            --            --

Exercise of stock options ..............           --            --   3,081,973          --       3,573            --            --
Repurchase of common stock .............           --            --    (425,866)         --        (231)           --            --
Sale of Series E convertible preferred
  stock (net of issuance of costs of $8)    3,404,140             1          --          --      23,820            --            --
Issuance of common stock (net of
  issuance costs of $4,967).............           --            --   3,450,000          --      36,433            --            --
Issuance of non-employee stock option
  for services .........................           --            --          --          --         635            --            --
Conversion of convertible preferred
  stock ................................  (17,694,657)           (2) 17,694,657           2          --            --            --
Deferred stock compensation ............           --            --          --          --      36,397            --       (36,397)
Amortization of deferred stock
  compensation..........................           --            --          --          --          --            --        23,534
                                           ----------------------------------------------------------------------------------------
Balances, December 31, 2000.............           --            --  32,546,845           3     144,708            --       (26,386)
Comprehensive loss:
   Net loss (As restated)...............           --            --          --          --          --            --            --
   Other comprehensive
     loss, net of tax:
     Reclassification adjustment for
     gains included in net income.......           --            --          --          --          --            --            --

Comprehensive loss (As restated)........           --            --          --          --          --            --            --

Exercise of stock options ..............           --            --   1,018,448          --         485            --            --
Sale of common stock under
  employee stock purchase plan..........           --            --     287,749          --         760            --            --
Repurchase of common stock .............           --            --    (355,924)         --        (706)           --            --
Issuance of common stock in
  acquisition...........................           --            --   4,148,745           1      42,643            --          (588)
Issuance of common stock
  for asset purchase....................           --            --   2,217,527          --       2,549            --            --
Private placement of common stock
  (net of issuance costs of $505).......           --            --  22,150,369           2      11,721            --            --
Sale of warrants attached to common
  stock in private placement............           --            --          --          --       1,952            --            --
Stock-based compensation associated
  with private placement................           --            --          --          --         289            --            --
Issuance of non-employee stock option
  for services .........................           --            --          --          --           4            --            --
Net reversal of deferred stock
  compensation from forfeitures.........           --            --          --          --      (9,591)           --         9,591
Amortization of deferred stock
  compensation, net of forfeitures......           --            --          --          --          --            --        10,277
                                           ----------------------------------------------------------------------------------------
Balances, December 31, 2001 (As restated)          --       $    --  62,013,759     $     6   $ 194,814     $      --      $ (7,106)
                                           ========================================================================================
</TABLE>
                 See notes to consolidated financial statements
                                       34
<PAGE>
                              VINA TECHNOLOGIES, INC.
     Consolidated Statements of Stockholders' Equity and Comprehensive Loss
                      (In thousands, except share amounts)
<TABLE>
<CAPTION>
                                                           Accumulated
                                                              Other            Total
                                             Accumulated   Comprehensive    Stockholders'  Comprehensive
                                               Deficit        Income          Equity           Loss
                                               -------        ------          ------           ----

<S>               <C>                         <C>             <C>           <C>             <C>
Balances, January 1, 1999...............     $  (13,136)     $     --       $  11,549
Comprehensive loss:
   Net loss ............................        (17,076)           --         (17,076)      $(17,076)
                                                                                            =========
Exercise of stock options ..............             --            --             608
Repurchase of common stock .............             --            --             (18)
Sale of common stock ...................             --            --             480
Sale of Series D convertible preferred
   stock................................             --            --              65
Receipt of subscription receivable......             --            --              25
Issuance of non-employee stock
   options for service ...............               --            --              99
Deferred stock compensation ............             --            --              --
Amortization of deferred
   stock compensation...................             --            --           4,616
                                          ----------------------------------------------------

Balances, December 31, 1999.............        (30,212)           --             348
Comprehensive loss:
   Net loss ............................        (43,332)           --         (43,332)      $(43,332)
   Other comprehensive
     income, net of tax:
   Unrealized gain on available-for-
     sale investments...................             --            48              48             48
                                                                                            --------

     Comprehensive loss ................             --            --              --       $(43,284)
                                                                                            =========
Exercise of stock options ..............             --            --           3,573
Repurchase of common stock .............             --            --            (231)
Sale of Series E convertible preferred
   stock (net of issuance costs of $8)..             --            --          23,821
Issuance of common stock (net of
    issuance costs of $4,967)...........             --            --          36,433
Issuance of non-employee stock
   options for services.................             --            --             635
Conversion of convertible preferred
   stock................................             --            --              --
Deferred stock compensation ............             --            --              --
Amortization of deferred stock
   compensation.........................             --            --          23,534
                                        ------------------------------------------------------
Balances, December 31, 2000.............        (73,544)           48          44,829
Comprehensive loss:
   Net loss (As restated)...............        (48,642)           --         (48,642)      $(48,642)
   Other comprehensive
     loss, net of tax:
     Reclassification adjustment for
     gains included in net income.......             --           (48)            (48)           (48)
                                                                                             -------
Comprehensive loss (As restated)........             --            --              --       $(48,690)
                                                                                            ========
Exercise of stock options ..............             --            --             485
Sale of common stock under
  employee stock purchase plan..........             --            --             760
Repurchase of common stock .............             --            --            (706)
Issuance of common stock in
  acquisition...........................             --            --          42,056
Issuance of common stock
  for asset purchase....................             --            --           2,549
Private placement of common stock
  (net of issuance costs of $505).......             --            --          11,723
Sale of warrants attached to common
  stock in private placement............             --            --           1,952
Stock-based compensation associated
  with private placement................             --            --             289
Issuance of non-employee stock option
  for services .........................             --            --               4
Net reversal of deferred stock
  compensation from forfeitures.........             --            --              --
Amortization of deferred stock
  compensation, net of forfeitures......             --            --          10,277
                                        ------------------------------------------------------
Balances, December 31, 2001 (As restated)    $ (122,186)      $    --        $ 65,528
                                        ======================================================
</TABLE>
                 See notes to consolidated financial statements
                                       35
<PAGE>



                             VINA TECHNOLOGIES, INC.
                      Consolidated Statements of Cash Flows
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                       Years Ended December 31,
                                                                                ------------------------------------
                                                                                    1999          2000        2001
                                                                                -----------   -----------   --------
                                                                                                          (As restated)
 Cash flows from operating activities:
<S>                                                                               <C>           <C>           <C>
   Net loss................................................................       $(17,076)     $(43,332)     $(48,642)
   Reconciliation of net loss to net cash used in operating activities:
     Depreciation and amortization.........................................            640         1,042        10,080
     Stock-based compensation, net.........................................          4,715        24,169        10,570
     In-process research and development...................................             --            --         5,081
     Accrued interest income on short-term investments.....................             --        (1,180)          797
     Changes in operating assets and liabilities, net of effects from
      acquisition in 2001:
         Accounts receivable...............................................           (852)       (2,774)       (2,810)
         Inventories.......................................................            (88)       (1,877)       (3,416)
         Prepaid expenses and other........................................            160        (2,483)        1,215
         Other assets......................................................             70           (58)         (220)
         Accounts payable..................................................          2,657         5,015        (1,294)
         Accrued compensation and related benefits.........................            441         1,697          (898)
         Accrued warranty..................................................            297           237            10
         Other current liabilities.........................................            (26)        1,455          (853)
                                                                                  --------      --------      --------
             Net cash used in operating activities.........................         (9,062)      (18,089)      (30,380)
                                                                                  --------      --------      --------

 Cash flows from investing activities:
     Purchases of property and equipment...................................           (938)       (3,782)       (1,108)
     Purchases of short-term investments...................................         (3,994)      (50,499)       (1,050)
     Proceeds from sales/maturities of short-term investments..............          7,998        15,000        36,432
     Net cash from acquisition.............................................             --            --          (454)
                                                                                  --------      --------      --------
            Net cash provided by (used in) investing activities............          3,066       (39,281)       33,820
                                                                                  --------      --------      --------

 Cash flows from financing activities:
     Net proceeds from sale of convertible preferred stock.................             90        23,821            --
     Net proceeds from sale of common stock................................            480        36,433         4,086
     Proceeds from the sale of stock under employee stock purchase and stock
         option plans......................................................            608         3,573         1,245
     Repurchase of common stock............................................            (18)         (231)         (706)
     Proceeds from issuance of long-term debt..............................            464           375            --
     Repayments of long-term debt..........................................           (415)       (1,429)           --
                                                                                  --------      --------      --------
             Net cash provided by financing activities.....................          1,209        62,542         4,625
                                                                                  --------      --------      --------

 Net change in cash and cash equivalents...................................         (4,787)        5,172         8,065
 Cash and cash equivalents, Beginning of year..............................          7,355         2,568         7,740
                                                                                  --------      --------      --------
 Cash and cash equivalents, End of year....................................       $  2,568      $  7,740      $ 15,805
                                                                                  ========      ========      ========
 Noncash investing and financing activities:
     Deferred stock compensation, net of forfeitures.......................       $ 17,778      $ 36,397      $ (9,591)
                                                                                  ========      ========      ========
     Conversion of convertible preferred stock into common stock...........       $     --      $ 48,120      $     --
                                                                                  ========      ========      ========
     Changes in unrealized gain on available-for-sale investments                 $     --      $     80      $    (80)
                                                                                  ========      ========      ========
     Common stock subscription receivable..................................       $     --      $     --      $  9,589
                                                                                  ========      ========      ========
     Issuance of common stock in acquisition...............................       $     --      $     --      $ 42,056
                                                                                  ========      ========      ========
     Issuance of common stock for asset purchase...........................       $     --      $     --      $  2,549
                                                                                  ========      ========      ========
 Supplemental disclosures of cash flow information:
     Cash paid for interest                                                       $    103      $     64      $     --
                                                                                  ========      ========      ========
</TABLE>
                 See notes to consolidated financial statements

                                       36
<PAGE>




                             VINA TECHNOLOGIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  Years Ended December 31, 1999, 2000 and 2001

1. Business and Significant Accounting Policies

     Business - VINA Technologies,  Inc. (the Company or VINA),  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 consolidated  financial  statements include the
accounts of VINA  Technologies,  Inc.  and its wholly  owned  subsidiaries.  All
significant  intercompany  accounts and  transactions  have been  eliminated  in
consolidation.

     Use of Estimates - The  preparation  of financial  statements in conformity
with accounting  principles  generally  accepted in the United States of America
requires  management to make estimates and assumptions  that affect the reported
amounts  of assets and  liabilities  and  disclosure  of  contingent  assets and
liabilities at the date of the financial  statements and the reported amounts of
net revenues and expenses during the reporting period. Such management estimates
include an  allowance  for  doubtful  accounts  receivable,  reserves  for sales
returns, provisions for inventory to reflect the net realizable value, valuation
allowances  against  deferred income taxes and accruals for product warranty and
other liabilities. Actual results could differ from those estimates.

     Certain  Significant Risks and Uncertainties - Financial  instruments which
potentially  subject  the  Company  to  concentrations  of credit  risk  consist
primarily of cash equivalents,  short-term  investments and accounts receivable.
The Company only  invests its cash in highly  liquid and high  investment  grade
instruments.  The  Company  sells its  products  to  distributors  and end users
primarily in the United States and  generally  does not require its customers to
provide collateral or other security to support accounts  receivable.  To reduce
credit risk,  management  performs ongoing credit  evaluations of its customers'
financial  condition and maintains  allowances for estimated  potential bad debt
losses.

     The Company participates in a dynamic high technology industry and believes
that changes in any of the following areas could have a material  adverse effect
on the Company's future consolidated  financial position,  results of operations
or cash flows:  advances,  trends in new  technologies  and developing  industry
standards; competitive pressures in the form of new products or price reductions
on current  products;  changes in the overall demand for products offered by the
Company;  changes in certain strategic  relationships or customer relationships;
litigation or claims against the Company based on intellectual property, patent,
product,  regulatory or other factors;  risk associated with changes in domestic
and  international  economic and/or  political  conditions or  regulations;  the
Company's  ability  to obtain  additional  capital to  support  operations;  the
Company's ability to integrate acquired  businesses and the Company's ability to
attract and retain employees necessary to support its growth.

     Certain  components and  subassemblies  used in the Company's  products are
purchased from a sole supplier or a limited group of suppliers. In addition, the
Company  outsources  the production  and  manufacture of its access  integration
devices to a sole turnkey manufacturer.  Any manufacturing disruption,  shortage
of supply of products or components,  or the inability of the Company to procure
products or components from alternative sources on acceptable terms could have a
material  adverse  effect  on the  Company's  business,  consolidated  financial
position and results of operations.

     Cash Equivalents - The Company  classifies all investments in highly liquid
debt instruments with maturities at the date of purchase of three months or less
as cash equivalents.

     Short-Term   Investments  -  Short-term   investments  consist  of  various
instruments  with  investment  grade  credit  ratings.   All  of  the  Company's
short-term  investments  are  classified  as  "available-for-sale"  based on the
Company's  intended  use and are  stated at fair  market  value  based on quoted
market prices. The difference between amortized cost and fair value representing
unrealized  holding gains or losses is recorded as a component of  stockholders'
equity, net of tax, as accumulated other comprehensive  income. Gains and losses
on sales are determined on a specific identification basis.


                                       37
<PAGE>

     Fair Value of Financial  Instruments - The Company's financial  instruments
include cash equivalents and short-term investments. Cash equivalents are stated
at cost which  approximates  fair market  value based on quoted  market  prices.
Short-term  investments  are stated at fair market value based on quoted  market
prices.

     Inventories  -  Inventories  are  stated  at the  lower of cost  (first-in,
first-out method) or market.

     Property  and  Equipment - Property and  equipment  are stated at cost less
accumulated  depreciation and  amortization.  Depreciation is computed using the
straight-line  method  over  estimated  useful  lives of  three  to five  years.
Amortization of leasehold improvements is computed over the shorter of the lease
term or the estimated useful lives of the related assets.

     Long-Lived Assets - The Company evaluates  long-lived assets for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. An impairment loss would be recognized when the
sum of the undiscounted future net cash flows expected to result from the use of
the asset and its eventual  disposition is less than its carrying  amount.  Such
impairment loss would be measured as the difference  between the carrying amount
of the asset and its fair value based on the present  value of estimated  future
cash flows.

     Income  Taxes - The Company  accounts  for income  taxes under an asset and
liability  approach.  Deferred  income  taxes  reflect  the net tax  effects  of
temporary differences between the carrying amounts of assets and liabilities for
financial  reporting purposes and the amounts used for income tax purposes,  and
operating  loss and tax credit  carryforwards  measured  by  applying  currently
enacted tax laws.  A valuation  allowance is provided to reduce net deferred tax
assets to an amount that is more likely than not to be realized.

     Stock-Based  Compensation - The Company accounts for stock-based  awards to
employees  using the  intrinsic  value  method  in  accordance  with  Accounting
Principles Board Opinion (APB) No. 25, Accounting for Stock Issued to Employees,
and to nonemployees  using the fair value method in accordance with Statement of
Financial  Accounting  Standards  (SFAS) No.  123,  Accounting  for  Stock-Based
Compensation.

     Revenue  Recognition  - The  Company  recognizes  revenue  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.  The  Company  generates  revenue  from sale of  products  and  related
services to  communications  service  providers and through  original  equipment
manufacturers and value added resellers.

     Product  revenue is  generated  from the sale of  communications  equipment
embedded with software that is essential to its functionality,  and accordingly,
the  Company  accounts  for  these  transactions  in  accordance  with SEC Staff
Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial  Statements,
and Statement of Position  (SOP) 97-2,  Software  Revenue  Recognition.  Product
revenue is  recognized  when all SAB No. 101 and SOP 97-2 criteria are met which
generally occurs at the time of shipment. In multiple element arrangements where
there are  undelivered  elements  at the time of  shipment,  product  revenue is
recognized  at the time of shipment  as the  residual  value of the  arrangement
after  allocation  of fair  value to the  undelivered  elements  based on vendor
specific  objective  evidence  (VSOE).   There  is  no  VSOE  on  the  sales  of
communications equipment due to the wide range in customer discounts provided by
the Company.

     Service  revenue is generated from the sale of  installation,  training and
postcontract  customer  support (PCS) agreements  related to the  communications
equipment.  The Company also accounts for these  transactions in accordance with
SAB No. 101 and SOP 97-2, and as such recognizes revenue when all of the related
revenue recognition  criteria are met which is: (i) at the time the installation
or training  service is  delivered;  and (ii)  ratably  over the term of the PCS
agreement. In multiple element arrangements where these services are undelivered
when the communications  equipment is shipped, the Company defers the fair value
of  these  undelivered  elements  based on VSOE and  recognizes  revenue  as the
services are delivered.  VSOE of these  elements is based on  stand-alone  sales
(including  renewal rates of PCS  agreements)  of the services.  For all periods
presented service revenue has been less than 10% of total net revenue.

     The Company  additionally  records a provision for estimated  sales returns
and warranty costs at the time the product revenue is recognized.

     Research and  Development - Costs incurred in research and  development are
charged to operations as incurred.

     Foreign  Currency  - The  functional  currency  of  the  Company's  foreign
subsidiary is the U.S. dollar.  Transaction and  remeasurement  gains and losses
were not significant for any of the periods presented.



                                       38
<PAGE>

     Net Loss per Share - Basic earnings per share (EPS)  excludes  dilution and
is computed by dividing  net loss  attributable  to common  stockholders  by the
weighted  average number of common shares  outstanding for the period  excluding
the weighted  average common shares subject to repurchase.  Diluted EPS reflects
the potential  dilution  that could occur if  securities  or other  contracts to
issue common  stock  (convertible  preferred  stock,  common  stock  options and
warrants  using the  treasury  stock  method) were  exercised or converted  into
common  stock.  Potential  common  shares in the  diluted  EPS  computation  are
excluded in net loss periods as their effect would be antidilutive.

     Comprehensive   Loss  -  In  accordance   with  SFAS  No.  130,   Reporting
Comprehensive  Income,  the Company reports by major  components and as a single
total, the change in its net assets during the period from nonowner sources in a
consolidated  statement of  comprehensive  loss which has been included with the
consolidated statements of stockholders' equity.

     New Accounting Standards - On January 1, 2001, the Company adopted 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 an impact on the Company's
consolidated  financial  position,  results of  operations  or cash flows as the
Company does not utilize free-standing or embedded derivative instruments.

     In June 2001, the Financial  Accounting  Standards Board (FASB) 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 not be amortized, but will 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  intangible  assets  with  indefinite  lives  (goodwill,  which
includes the reclass of workforce-in-place,  and tradenames) with a 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. The Company has evaluated  goodwill  under SFAS No. 142 and has
determined the adoption of this statement will not result in an impairment.

     In August 2001, the FASB issued SFAS No. 144, Accounting for the 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 the
Company on January 1, 2002.  Management  believes the adoption of this statement
will not have an impact on the financial position, results of operations or cash
flows of the Company.

     In November 2001,  consensus was reached by the Emerging  Issues Task Force
(EITF) on EITF No. 01-09,  Accounting for  Consideration  Given by a Vendor to a
Customer or a Reseller of the Vendor's  Products.  The EITF is effective for the
Company  on January 1, 2002.  Management  has not yet  determined  the impact of
adoption on the consolidated financial statements.

2. Short-Term Investments

     The  following  table  presents  the  amortized  cost  and  fair  value  of
available-for-sale securities at December 31, 2000 (in thousands):

                             Amortized    Unrealized Holding
                               Cost            Gains          Fair Value
                               ----            -----          ----------
Corporate debt obligations    $34,781         $    74          $34,855
U.S. Government obligations     1,898               6            1,904
                              -------         -------          -------
Short-term investments ....   $36,679         $    80          $36,759
                              =======         =======          =======

     The  Company's  short-term  investments  at December 31, 2001  consisted of
certificates  of deposit in the amount of $500,000.  The  amortized  cost of the
investments is equivalent to the fair value at December 31, 2001.


                                       39
<PAGE>

     Available-for-sale   debt  securities  and   certificates  of  deposit  are
classified as current assets as all maturities are within one year.

3. Inventories

     Inventories consist of the following (in thousands):

                                                            December 31,
                                                     ----------------------
                                                         2000       2001
                                                     -----------  ---------

             Raw materials and subassemblies.......    $1,034       $1,783
             Finished goods........................       939        3,950
                                                       ------       ------
             Inventories...........................    $1,973       $5,733
                                                       ======       ======

4. Property and Equipment

     Property and equipment consists of the following (in thousands):

                                                              December 31,
                                                        -----------------------
                                                           2000         2001
                                                        ----------  -----------
         Computer equipment and software...............  $ 1,754      $ 3,066
         Machinery and equipment.......................    2,762        4,449
         Furniture and fixtures........................      890          989
         Leasehold improvements........................      626          540
                                                         -------      -------
                                                           6,032        9,044
         Accumulated depreciation and amortization.....   (1,936)      (3,773)
                                                         -------      -------
         Property and equipment, net...................  $ 4,096      $ 5,271
                                                         =======      =======

5. Acquisitions

     Woodwind Communications

     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 APB 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  4,148,745  shares of the
Company's  common  stock.  The  Company  assumed  Woodwind's  outstanding  stock
options,  which, if fully vested and exercised,  would result in the issuance of
an additional 1,106,892 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):


                                       40
<PAGE>


Total purchase price:

Cash consideration.................     $  7,500
Common stock.......................       39,465
Options assumed....................        2,591
Acquisition expenses...............          726
                                        --------
                                        $ 50,282
                                        ========
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 research
 and development...................        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 research and development 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   research  and  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 MX-400 (formerly known as ClariNet), and
the eLink-108  (formerly known as Piccolo) are software  intensive  network edge
products.  Both projects are based on the same  integrated  access gateway (IAG)
platform.  The MX-400 is  capable  of  providing  end users  with  Centrex  like
features  and is  designed to operate as a PBX  replacement.  In  addition,  the
MX-400  scales  in  multiples  of 4, to a total  of 12 voice  lines,  and can be
stacked to provide  coverage to 24 standard voice lines.  The eLink-108 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  MX-400.  Additionally,  the  Company is in the  process of
enhancing the MX-400 and the eLink-108 products with next generation software to
enable voice over internet protocol (VoIP)  capabilities as well as asynchronous
transfer mode enhancements,  enhanced reliability and new features.  Development
of the MX-400 and the eLink-108 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  December  31,  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 that were used to determine the value of in-process
technology, include the following: first, an income approach that focused on the
income producing capability of the acquired technology, and best represented the
presented value of the future economic  benefits the Company  expected to derive
from them;  second,  forecasted  net cash flows that the Company  expected might
result from the development effort were 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


                                       41
<PAGE>

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 FASB  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 the related  options.  For
the year ended December 31, 2001, the Company amortized  $125,000 as stock-based
compensation   related  to  these  options  in  the  accompanying   consolidated
statements of operations.

     The operating  results of Woodwind  have been included in the  accompanying
consolidated  statements  of  operations  since  the  date of  acquisition.  The
following  selected  unaudited pro forma combined  results of operations for the
years ended  December  31, 2000 and 2001 of the Company and  Woodwind  have been
prepared  assuming  that the  acquisition  had occurred at the  beginning of the
periods  presented.  The  following  pro  forma  financial  information  is  not
necessarily  indicative  of the actual  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):

                                                          December 31,
                                                  ----------------------
                                                     2000        2001
                                                  ---------   ----------

Net revenue ....................................   $ 32,299    $ 45,112
Net loss .......................................   $(61,469)   $(48,340)
Net loss per share .............................   $  (2.98)   $  (1.28)
Shares used in calculation of net loss per share     20,616      37,790

     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 nonrecurring charge.

     Intellectual Property and Related Assets

     In December 2001, the Company purchased optical concentrator technology and
related  equipment  from a  related  party by  issuing  2,217,527  shares of the
Company's common stock valued at $2.5 million on the purchase date. In addition,
the Company incurred  approximately $676,000 in direct acquisition expenses. The
total  purchase  price of $3.2  million  was  allocated  on a fair  value  basis
resulting in $1.9 million of intellectual  property (intangible assets) and $1.3
million of fixed assets. The acquired assets will be amortized over their useful
lives ranging from three to four years.

6. Acquired Intangibles and Goodwill, Net

     Acquired intangibles and goodwill, net consist of the following at December
31, 2001 (in thousands):

        Workforce-in-place.......................    $   1,236
        Tradename................................          346
        Core technology..........................        3,022
        Current technology.......................          310
        Intellectual property....................        1,859
                                                     ---------
                                                         6,773
        Accumulated amortization.................       (1,110)
                                                     ---------
        Acquired intangibles, net................    $   5,663
                                                     =========

        Goodwill.................................    $  33,559
        Accumulated amortization                        (7,133)
                                                     ---------
        Goodwill, net............................    $  26,426
                                                     =========

7. Restructuring

     During  the year  ended  December  31,  2001,  the  Company  announced  and
completed a restructuring  plan intended to better align its operations with the
changing  market  conditions.  This plan was designed to prioritize  VINA's high


                                       42
<PAGE>

growth areas of business, focus on profit contribution and reduce expenses. This
restructuring includes a 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 year ended
December 31, 2001 is as follows (in thousands):

                                                                 Accrual at
                                     Restructuring               December 31,
                                       Provision    Utilized         2001
                                       ---------    --------         ----

Workforce reduction...............     $   991      $  (945)         $ 46
Stock compensation benefit........      (2,569)       2,569            --
                                       -------      -------          ----

Restructuring benefit, net........     $(1,578)     $ 1,624          $ 46
                                       =======      =======          ====

     Workforce  Reduction - The restructuring  program resulted in the reduction
of approximately 40 employees across all functions. As of December 31, 2001, the
Company made $945,000 in severance and fringe benefits  payments.  The remaining
balance of $46,000  related to severance  and fringe  benefits is expected to be
disbursed in the first quarter of 2002.

     Stock  Compensation  Benefit - 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.

8. Commitments and Contingencies

     The Company  leases  office  space under  various  noncancelable  operating
leases that expire  through 2007. The Company has an option to renew the primary
facility  lease for an  additional  five years at the then current  market rent.
Future  obligations  under the  Company's  operating  leases are as follows  (in
thousands):

                  Year Ending December 31:
                  2002...................................     $ 1,159
                  2003...................................       1,087
                  2004...................................       1,069
                  2005...................................         943
                  2006...................................         976
                  Thereafter.............................         580
                                                              -------
                  Lease commitments......................     $ 5,814
                                                              =======

     Rent expense  incurred under the operating  leases for 1999,  2000 and 2001
was $302,000, $703,000 and $1.4 million, respectively.

    The Company records rent expense under noncancelable operating leases using
a straight-line method after consideration of increases in rental payments over
the lease term, and records the difference between actual payments and rent
expense as deferred rent included within the caption other current liabilities
in the accompanying consolidated balance sheets.

     The high  technology and  telecommunications  industry in which the Company
operates is  characterized by frequent claims and related  litigation  regarding
patent and other intellectual property rights. The Company is not a party to any
such litigation; however any such litigation in the future could have a material
adverse  effect on the Company's  consolidated  financial  position,  results of
operations and cash flows.

9. Stockholders' Equity

     Public Offering

     In August  2000,  the  Company  completed  its initial  public  offering of
3,450,000  shares of common stock at $12.00 per share, for net proceeds of $36.4
million.


                                       43
<PAGE>

     Convertible Preferred Stock

     In 1998, the Company issued 4,167 shares of Series D convertible  preferred
stock at $6.00 per share,  for which the proceeds  were not payable  until 1999,
and accordingly,  the Company established a $25,000  subscription  receivable at
December 31, 1998.

     In 1999,  the  Company  issued  an  additional  10,746  shares  of Series D
convertible preferred stock at $6.00 per share resulting in proceeds of $65,000.

     In 2000,  the  Company  issued  3,404,140  shares of  Series E  convertible
preferred stock at $7.00 per share resulting in net proceeds of $23.8 million.

     Upon  completion  of the initial  public  offering,  7,500,000  convertible
preferred shares of Series A, 3,000,000  convertible  preferred shares of Series
B,  3,000,000  convertible  preferred  shares of Series C,  790,517  convertible
preferred  shares  of Series D and  3,404,140  convertible  preferred  shares of
Series E were  converted into common stock on a one-to-one  basis,  resulting in
the  issuance  of  17,694,657  shares  of common  stock to the then  convertible
preferred stockholders.

     Restricted Common Stock

     Restricted  common stock issued under certain stock purchase  agreements is
subject to repurchase by the Company. The number of shares subject to repurchase
is generally  reduced over a four-year  vesting period. At December 31, 2000 and
2001, 433,334 and 260,000, respectively, were subject to repurchase.

     Stockholders' Rights Plan

     During 2001,  the Company's  Board of Directors  declared a dividend of one
preferred  share purchase right (a Right) for each  outstanding  share of common
stock,  of the Company.  Each Right entitles the  registered  holder to purchase
from the Company one  one-thousandth  of a share of Series A Preferred Stock, of
the Company, at a price of $35.00 per one one-thousandth of a share,  subject to
certain  antidilution  adjustment  provisions.   The  Rights,  as  amended,  are
exercisable  in the event  that a person,  entity or group  acquires  beneficial
ownership of 20% or more of the outstanding  shares of VINA's common stock.  The
Rights will expire on the earlier of (i) July 25, 2011,  (ii)  consummation of a
merger transaction meeting certain requirements, or (iii) redemption or exchange
of the Rights by the  Company.  At  December  31,  2001  62,013,759  Rights were
outstanding.

     Common Stock - Private Placement

     During the fourth  quarter of 2001,  the Company  completed a $14.2 million
private  placement  equity  financing.  Under the  subscription  agreement,  the
Company issued  22,150,369 shares of common stock at a weighted average price of
$0.64 per  share.  In  addition,  warrants  to acquire  7,090,000  shares of the
Company's  common  stock were  attached to the common  stock.  The  warrants are
immediately  exercisable at $1.00 per share and expire three years from the date
of  issuance or upon the  Company's  stock price  exceeding  predefined  trading
prices. All such warrants were outstanding at December 31, 2001.

     The Company allocated $2.0 million of the sales price to the warrants based
on the relative fair value of the warrants.  The fair value for the warrants was
determined  using the  Black-Scholes  option pricing model over the  contractual
term of the warrants using the following  assumptions:  stock  volatility,  75%;
risk free interest rate, 3.6% and no dividends during the expected term.

     Certain  employees  participated  in the private  placement  and  purchased
375,742  common  shares  with  120,050  attached  warrants at a price below fair
market value. The Company recorded the associated $289,000 of intrinsic value as
stock-based  compensation  in 2001.  The  intrinsic  value was  measured  as the
difference  between the equity  issuance  prices and their fair market values on
the date of issuance.


                                       44
<PAGE>


     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>

                                                                        Years Ended December 31,
                                                                 ------------------------------------
                                                                    1999         2000        2001
                                                                 ---------    ---------   -----------
<S>                                                                 <C>          <C>         <C>
       Weighted average common shares outstanding............       7,728        18,927      38,239
       Weighted average common shares outstanding subject to
          repurchase.........................................      (2,559)       (2,460)     (1,118)
                                                                   ------       -------     -------
       Shares used in computation, basic and diluted.........       5,169        16,467      37,121
                                                                   ======       =======     =======
</TABLE>

     During all periods presented,  the Company had securities outstanding which
could  potentially  dilute  basic EPS in the  future,  but were  excluded in the
computation  of diluted EPS 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: December 31, 1999,  14,290,517 shares of
convertible  preferred  stock,  2,320,548  shares of  common  stock  subject  to
repurchase and options to purchase  7,540,482  shares of common stock;  December
31, 2000,  1,859,680 shares of common stock subject to repurchase and options to
purchase 10,692,788 shares of common stock; December 31, 2001, 915,461 shares of
common stock subject to repurchase and options to purchase  13,353,743 shares of
common stock and warrants to purchase 7,090,000 shares of common stock.

     Stock Plans

     In July 2000, the Company  adopted the 2000 Stock  Incentive Plan. The 2000
Stock  Incentive Plan serves as the successor  equity  incentive  program to the
Company's  1996 Stock  Option/Stock  Issuance Plan and the 1998 Stock  Incentive
Plan,  as  amended  (the  Predecessor  Plans).  Options  outstanding  under  the
Predecessor Plans on July 11, 2000 (9,071,061 shares) were incorporated into the
2000 Stock Incentive Plan. Such incorporated  options continue to be governed by
their existing terms,  which are similar to the 2000 Stock Incentive Plan. Under
the 2000 Stock  Incentive  Plan,  the Company is authorized to provide awards in
the form of  restricted  shares,  stock  units,  options  or stock  appreciation
rights. The number of shares reserved under this plan was 7,301,873 shares which
can be increased  for  repurchases  of unvested  common  shares issued under the
Predecessor  Plans up to a total share reserve of 10,000,000  shares.  The share
reserve is automatically increased on January 1 of each calendar year, beginning
in 2001, by an amount equal to the lesser of: (i) 2,500,000  shares;  (ii) 4% of
the  outstanding  shares of stock of the Company on such date; or (iii) a lesser
amount  determined  by the  Company's  Board of Directors  (2,480,550  shares on
January 1, 2002).

     Under the 2000 Stock  Incentive  Plan,  the  Company  may grant  options to
purchase or directly  issue common stock to  employees,  outside  directors  and
consultants  at prices not less than the fair market  value at the date of grant
for incentive stock options and not less than par value at the date of grant for
nonstatutory  stock options.  These options  generally expire ten years from the
date of grant and are generally immediately exercisable. The Company has a right
to repurchase  (at the option  exercise  price) common stock issued under option
exercises for unvested  shares.  The right of repurchase  generally  expires 25%
after  the  first 12  months  from the date of  grant  and then  ratably  over a
36-month  period.  Settlement and vesting terms for awards of restricted  stock,
stock   appreciation   rights,  and  stock  units  are  governed  by  individual
agreements.  There were no awards of restricted stock, stock appreciation rights
or stock units in 2000 and 2001.


                                       45
<PAGE>
     Stock option activity under the stock plan is summarized as follows:
<TABLE>
<CAPTION>
                                                                                       OUTSTANDING OPTIONS
                                                                                       -------------------
                                                                                                      WEIGHTED
                                                                                                       AVERAGE
                                                                                   NUMBER             EXERCISE
                                                                                  OF SHARES             PRICE
                                                                               ----------------     ------------
<S>                                                                              <C>                     <C>
        Balances at January 1, 1999 (666,807 shares vested at a weighted
           average exercise price of $0.19 per share)...................           5,191,511             $ 0.34
        Granted (weighted average fair value of $3.58 per share)........           4,411,500               0.88
        Canceled........................................................            (454,032)              0.42
        Exercised.......................................................          (1,608,497)              0.38
                                                                                 -----------
        Balances at December 31, 1999 (1,163,408 shares vested at a
           weighted average exercise price of $0.33 per share)..........           7,540,482               0.64
        Granted (weighted average fair value of $6.53 per share)........           7,555,391               3.47
        Canceled........................................................          (1,321,112)              1.58
        Exercised.......................................................          (3,081,973)              1.16
                                                                                 -----------
        Balances at December 31, 2000 (1,463,399 shares vested at a
           weighted average exercise price of $0.643 per share).........          10,692,788               2.37
        Granted (weighted average fair value of $1.46 per share)........           6,802,243               1.51
        Canceled........................................................          (3,122,840)              2.74
        Exercised.......................................................          (1,018,448)              0.48
                                                                                 -----------
        Balances at December 31, 2001...................................          13,353,743             $ 1.99
                                                                                 ===========
</TABLE>

     At December 31, 2001, the Company had 4,132,334 shares available for future
grants under the 2000 Stock Incentive Plan.

     Additional  information  regarding options outstanding at December 31, 2001
is as follows:
<TABLE>
<CAPTION>

<S>                         <C>                <C>                    <C>                 <C>                      <C>
                                                OPTIONS OUTSTANDING                                  VESTED OPTIONS
                           ----------------------------------------------------------- -------------------------------------
                                                  WEIGHTED
                                                   AVERAGE              WEIGHTED                                  WEIGHTED
                                                  REMAINING              AVERAGE                                   AVERAGE
         RANGE OF               NUMBER           CONTRACTUAL            EXERCISE              NUMBER              EXERCISE
      EXERCISE PRICES         OUTSTANDING       LIFE (YEARS)              PRICE               VESTED                PRICE
   --------------------    ---------------- --------------------  -------------------- -------------------- ----------------

        $0.13 - $0.25            477,089             5.8                 $  0.21              472,380              $  0.21
        $0.35 - $0.73          2,137,299             8.6                    0.59              564,162                 0.55
        $1.00 - $2.03          7,938,298             8.6                    1.35            1,865,223                 1.26
        $2.66 - $6.50          2,767,057             8.7                    5.05              743,987                 5.14
           $16.50                 34,000             8.7                   16.50               10,624                16.50
                               ---------                                                     --------

       $0.13 - $16.50         13,353,743             8.5                 $  1.99            3,656,376              $  1.85
                              ==========                                                    =========
</TABLE>

     Employee Stock Purchase Plan

     In July 2000,  the Company  adopted the 2000 Employee  Stock  Purchase Plan
(the  ESPP).  Under the ESPP,  eligible  employees  are  allowed to have  salary
withholdings  of up to 10% of their  base  compensation  to  purchase  shares of
common  stock at a price  equal to 85% of the lower of the  market  value of the
stock at the  beginning or end of defined  purchase  periods.  Offering  periods
commence on February 1 and August 1 of each year.  One million  eighty  thousand
shares of common  stock are  reserved  for  issuance  under the ESPP and will be
increased  on the first day of each  fiscal  year,  the  lesser  of:  (a) 80,000
shares;  (b) 1% of the  Company's  outstanding  common  stock  on the day of the
increase;  or (c) a lesser number of shares determined by the Company's Board of
Directors (80,000 shares on January 1, 2002).

     Shares  issued  under the ESPP were  287,749 in 2001 at a weighted  average
price of $2.64 per share.  The  weighted  average  fair value of such shares was
$1.12 per share.  There were 792,251 shares  available for future issuance under
this plan at December 31, 2001.

     Stock Compensation

     As discussed in Note 1, the Company accounts for its stock-based  awards to
employees  using the  intrinsic  value  method in  accordance  with APB No.  25.
Accordingly,  the  Company  records  deferred  stock  compensation  equal to the
difference between the grant price and deemed fair value of the Company's common
stock on the date of grant.  The  deferred  stock  compensation  is  reduced  by

                                       46
<PAGE>

forfeitures  of  unvested   common  stock  options.   Such  net  deferred  stock
compensation  aggregated  $15.1  million,  $36.4 million and a reduction of $9.6
million in 1999, 2000 and 2001, respectively,  and is being amortized to expense
over the vesting period of the options,  generally four years,  using a multiple
option award valuation  approach,  which results in accelerated  amortization of
the expense.  Amortization  of deferred stock  compensation  is presented net of
forfeitures of unvested previously amortized stock compensation. Amortization of
deferred stock compensation,  net of forfeitures was $4.6 million, $23.5 million
and $10.3 million in 1999, 2000, and 2001 respectively.

     In 1999, the Company issued 800,000 shares of common stock to a director at
$0.60 per share  resulting in proceeds of  $480,000.  The Company has a right of
repurchase on such shares at the original  issuance  price upon  termination  of
employment.  The right of  repurchase  expires  over  four  years  with  certain
predefined  events  triggering  accelerated  vesting.  The Company recorded $2.7
million of  deferred  stock  compensation  equal to the  difference  between the
purchase  price and deemed fair value of the Company's  common stock on the date
of issuance.  Such deferred stock  compensation is amortized to expense over the
vesting period using a multiple award option valuation approach.

     During 1999,  2000 and 2001,  the Company  issued  nonstatutory  options to
nonemployees  for the  purchase of 23,000,  115,141 and 12,200  shares of common
stock at weighted average  exercise prices of $0.84,  $3.39 and $1.25 per share,
respectively. Such options were issued for services provided by the nonemployees
and were immediately vested and exercisable.  Accordingly,  the Company recorded
the  $99,000,  $635,000  and  $4,000  fair  values  of such  awards  (using  the
Black-Scholes option pricing model),  respectively,  as stock-based compensation
which was expensed on the date of grant.

     Additional Stock Plan Information

     Since the Company  accounts for its  stock-based  awards to employees using
the intrinsic  value method in accordance with APB No. 25, SFAS No. 123 requires
the  disclosure of pro forma net income  (loss) and EPS had the Company  adopted
the fair value method.  Under SFAS No. 123, the fair value of stock-based awards
is calculated through the use of option pricing models,  even though such models
were developed to estimate the fair value of freely tradable, fully transferable
options  without  vesting  restrictions,  which  significantly  differ  from the
Company's stock option awards.  The Company's  calculations  were made using the
Black-Scholes  option  pricing  model  which  requires  subjective  assumptions,
including  expected  time to exercise and future stock price  volatility,  which
greatly  affects  the  calculated   values.   The  following   weighted  average
assumptions  were used to calculate the fair value of employee  awards under the
Company's option plans:  expected life, 3.1 years in 1999, 3.2 years in 2000 and
3.2 years in 2001;  volatility,  0% in 1999,  29% in 2000 and 75% in 2001;  risk
free interest rate, 6% in 1999,  6.4% in 2000 and 4.2% in 2001; and no dividends
during the expected term. The Company's fair value  calculations  on stock-based
awards  under the ESPP in 2001 were also  made  using the  Black-Scholes  option
pricing model with the following  weighted average  assumptions:  expected life,
six months; volatility,  75%; risk free interest rate of 3.74%; and no dividends
during the expected  term.  The Company's  calculations  are based on a multiple
option award valuation and amortization  approach,  which results in accelerated
amortization  of the expense.  Forfeitures  are recognized as they occur. If the
computed fair values of the employee  awards had been  amortized to expense over
the vesting  period of the awards,  the  Company's pro forma net loss would have
been $17.4 million ($3.36 per share,  basic and diluted) in 1999,  $44.2 million
($2.69 per share, basic and diluted) in 2000 and $54.4 million ($1.47 per share,
basic and diluted) in 2001.

10. Income Taxes

     The  Company  recorded  no income tax  benefit or  provision  in any of the
periods presented.  The difference between the recorded amounts is reconciled to
the federal statutory rate as follows (in thousands):

<TABLE>
<CAPTION>

                                                                        1999        2000         2001
                                                                        ----        ----         ----

          <S>                                                         <C>         <C>          <C>
          Federal statutory tax benefit at 35%..................     $ (5,977)   $ (15,166)   $ (17,025)
          State tax benefit.....................................         (981)      (2,490)        (800)
          Research and development credits......................         (391)        (774)        (400)
          Nondeductible stock compensation......................        1,921        9,848        4,249
          In process research and development...................           --           --        2,043
          Amortization of goodwill and intangible assets........           --           --        3,313

          Change in valuation allowance.........................        5,124        8,973        8,040
          Other.................................................          304         (391)         580
                                                                     --------    ---------    ---------
          Income taxes..........................................     $     --    $      --    $      --
                                                                     ========    =========    =========
</TABLE>


                                       47
<PAGE>

     The components of net deferred tax assets are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                     December 31,
                                                                 ------------------------
                                                                    2000           2001
                                                                 ----------    ----------
          Deferred tax assets:
          <S>                                                     <C>           <C>
           Accruals and reserves not currently deductible....     $   1,145     $   2,730
           Net operating loss carryforwards..................        15,671        26,492
           Tax credit carryforwards..........................         2,233         2,423
           Identified acquisition intangibles................            --        (1,626)
           Other.............................................           643           937
                                                                  ---------     ---------
                                                                     19,692        30,956
          Valuation allowance................................       (19,692)      (30,956)
                                                                  ---------     ---------

          Net deferred tax assets............................     $      --     $      --
                                                                  =========     =========
</TABLE>

     Due to the Company's lack of earnings history,  the net deferred tax assets
have been  fully  offset  by a  valuation  allowance.  The  valuation  allowance
increased by approximately $8.0 million during 2001.  Approximately $3.2 million
of which was attributable to the Company's merger with Woodwind.

     As of December 31, 2001,  the Company had  available for  carryforward  net
operating  losses for federal  and state  income tax  purposes of  approximately
$72.0  million  and  $26.0  million,   respectively.  Net  operating  losses  of
approximately  $1.3  million and  $800,000  for federal and state tax  purposes,
respectively,  attributable  to the tax  benefit  relating  to the  exercise  of
nonqualified  stock options and  disqualifying  dispositions  of incentive stock
options are excluded from the components of deferred income tax assets.  The tax
benefit  associated  with  this  net  operating  loss  will  be  recorded  as an
adjustment to stockholders'  equity when the Company  generates  taxable income.
Federal net operating loss carryforwards  will expire, if not utilized,  in 2011
through  2021.  State net  operating  loss  carryforwards  will  expire,  if not
utilized, in 2002 through 2006.

     As of  December  31,  2001,  the  Company had  available  for  carryforward
purposes research and  experimentation  tax credits for federal and state income
taxes of approximately $1.4 million and $800,000, respectively. Federal research
and  experimentation tax credit  carryforwards  expire in 2011 through 2021. The
Company also had approximately $200,000 in California  manufacturers  investment
credits.

     Current federal and California tax laws include substantial restrictions on
the  utilization  of net  operating  losses  and tax  credits in the event of an
"ownership  change" of a corporation.  Use of approximately  $9.0 million of the
net  operating  loss  carryforward  of Woodwind from periods prior to the merger
with the  Company  is  limited  to  approximately  $2.8  million  per year.  The
Company's   ability  to  utilize  other  net  operating   loss  and  tax  credit
carryforwards may be further limited as a result of an ownership change.  Such a
limitation  could  result in the  expiration  of  carryforwards  before they are
utilized.

11. Customer Concentrations

     The following  table  summarizes  net revenue and accounts  receivable  for
customers which accounted for 10% or more of accounts receivable or net revenue:

<TABLE>
<CAPTION>

                                               Accounts Receivable                   Net Revenue
                                             -----------------------   ------------------------------------
                                                  December 31,                Years Ended December 31,
                                             -----------------------   ------------------------------------
                  CUSTOMER                      2000         2001         1999         2000          2001
                  --------                   ----------   ----------   ----------   ----------    ---------
             <S>                              <C>            <C>          <C>        <C>            <C>
               A.........................        --           23%          --           --            --
               B.........................        16%          12%          46%          31%           44%
               C.........................        19%          --           --           --            --
               D.........................        --           32%          --           --            --
               E.........................        46%          28%          --           28%           21%
               F.........................        --           --           --           --            12%


</TABLE>

                                       48
<PAGE>


12. Employee Benefit Plan

     The  Company  has a  401(k)  tax  deferred  savings  plan  to  provide  for
retirement  of employees  meeting  certain  eligibility  requirements.  Employee
contributions  are limited to 20% of their  annual  compensation  subject to IRS
annual limitations.  The Company may make contributions at the discretion of the
Board of Directors.  There were no discretionary  employer  contributions to the
401(k) plan in 1999, 2000 or 2001.

13. Segment Information

     As defined by the requirements of SFAS No. 131, Disclosures About Segments
of an Enterprise and Related Information, the Company operates in one reportable
segment: the design, development, marketing and sale of multiservice broadband
access communications equipment. International sales were insignificant for all
periods presented. The Company's chief operating decision maker is its chief
executive officer.

14. Subsequent Event

     On January 7, 2002,  the Company  collected  the common stock  subscription
receivable outstanding at December 31, 2001 of $9.6 million.

15. Selected Consolidated Quarterly Financial Results (Unaudited)

     The following tables set forth selected unaudited quarterly results of
operations for the years ended December 31, 2000 and 2001 (in thousands, except
per share amounts):

<TABLE>
<CAPTION>
                                                                          Quarter Ended
                                     ---------------------------------------------------------------------------------------
                                     Mar. 31,     June 30,   Sept. 30,  Dec. 31,   Mar. 31,    June 30,   Sept. 30,  Dec. 31,
                                       2000         2000       2000       2000       2001        2001       2001     2001 (1)
                                     --------    ---------  ---------  ---------  ---------   ---------  ---------  ---------

<S>                                  <C>         <C>        <C>        <C>        <C>         <C>         <C>       <C>
Net revenue.....................     $  5,187    $   6,869  $   9,174  $  10,848  $  11,029   $  12,028   $ 13,010  $   9,045

Gross profit (excluding
   stock-based compensation)....        1,948        2,649      3,723      4,518      2,783       4,958      5,211      3,446

Loss from operations............       (7,931)     (11,923)   (12,927)   (12,283)   (19,188)    (12,378)    (7,496)   (10,963)
Net loss........................       (7,805)     (11,653)   (12,442)   (11,432)   (18,576)    (11,998)    (7,219)   (10,849)
Net loss per share, basic and
   diluted......................     $  (1.12)   $   (1.50) $   (0.60) $   (0.37) $   (0.57)  $   (0.34)  $  (0.20) $   (0.25)
Shares used in computation, basic
   and diluted..................        6,958        7,794     20,571     30,545     32,783      35,589     36,139     43,974

</TABLE>

     (1)  Amounts  shown are as restated  (see Note 16).  Amounts as  previously
          reported  are  as  follows:  net  revenue  $10,829,000,  gross  profit
          (excluding stock-based compensation) $4,393,000,  loss from operations
          $(10,217,000),  net loss $(10,103,000),  net loss per share, basic and
          diluted $(0.23).

16. Restatement of Financial Statements

     Subsequent to the issuance of our financial  statements  for the year ended
December 31, 2001, we discovered a transaction  for which it recognized  revenue
in the  fourth  quarter  of 2001 and  whether  that  revenue  should  have  been
recognized  in the first  quarter of 2002.  As a result of our  review,  we have
restated our financial  statements  for the fourth quarter of 2001 and the first
quarter of 2002 to properly  reflect the timing of  recognition  of revenue from
the reviewed transaction and to also correct a data entry error that resulted in
overstated  revenue from an unrelated  transaction in the fourth quarter of 2001
and corresponding understated revenue in the first quarter of 2002. Accordingly,
the  accompanying  consolidated  financial  statements  have  been  restated  to
properly reflect our revenue recognition policies.

A summary of the  significant  effects  of the  restatement  is as  follows  (in
thousands except per share amounts):


                                       49
<PAGE>

                                                                     Year ended
                                                                    December 31,
                                                                          2001
                                                                          ----
Net revenue as previously reported .................................   $ 46,896
Net revenue as restated ............................................   $ 45,112

Cost of revenue as previously reported .............................   $ 29,551
Cost of revenue as restated ........................................   $ 28,714

Selling, general and administrative expense as previously reported .   $ 22,898
Selling, general and administrative expense as restated ............   $ 22,697

Net loss as previously reported ....................................   $(47,896)
Net loss as restated ...............................................   $(48,642)

Net loss per share, basic and dilutive as previously reported ......   $  (1.29)
Net loss per share, basic and dilutive as restated .................   $  (1.31)


                                                                        As of
                                                                    December 31,
                                                                        2001
                                                                        ----
Net accounts receivable as previously reported ..................      $  9,843
Net accounts receivable as restated .............................      $  8,059

Inventories as previously reported ..............................      $  4,903
Inventories as restated .........................................      $  5,733

Prepaid expenses and other as previously reported ...............      $  1,555
Prepaid expenses and other as restated ..........................      $  1,562

Total current liabilities as previously reported ................      $ 13,637
Total current liabilities as restated ...........................      $ 13,436

Total stockholders' equity as previously reported ...............      $ 66,274
Total stockholders' equity as restated ..........................      $ 65,528





                                       50
<PAGE>


                                    PART III

                                     PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

     (a) Documents filed as part of this report:

          (1) Consolidated Financial Statements

     Reference is made to the Index to Consolidated Financial Statements of VINA
Technologies, Inc., under Item 8 of Part II hereof.

          (2) Consolidated Financial Statement Schedule

     The  following  consolidated  financial  statement is filed as part of this
registration  statement and should be read in conjunction  with the consolidated
financial statements.

                                                                        Page
                                                                        ----

    Schedule II -- Valuation & Qualifying Accounts                       55

     Schedules other than those referred to above have been omitted because they
are not  applicable  or not  required  or because  the  information  is included
elsewhere in the  consolidated  financial  statements or the notes thereto.

     (3) Exhibits

     See Item 14(c) below.  Each  management  contract or  compensatory  plan or
arrangement required to be filed has been identified.

     (b) Reports on Form 8-K.

     The Company  filed a report on Form 8-K on October 24, 2001 with respect to
the  execution  of two  securities  purchase  agreements  to sell  shares of the
Company's  common stock and warrants to purchase shares of the Company's  common
stock as described in Item 5 of the Form 8-K.

     The Company filed a report on Form 8-K on December 24, 2001 with respect to
the  completion  of the sale of its  shares of  common  stock  and  warrants  to
purchase shares of its common stock as described in Item 5 of the Form 8-K.

(c)
  Exhibit
  Number                         Description of Document
  ------                         -----------------------

     2.1  Agreement  and Plan of Merger,  dated as of October 30,  2000,  by and
          among the Registrant,  WCS Acquisition  Subsidiary,  Inc. and Woodwind
          Communications Systems, Inc. (incorporated by reference to Exhibit 2.1
          to the  Company's  Quarterly  Report  on  Form  10-Q  filed  with  the
          Securities  and  Exchange  Commission  on  March  5,  2001  (File  No.
          000-31903)).

     2.2  Agreement  and Plan of  Merger,  dated as of October  17,  2001 by and
          between the Registrant and MOS Acquisition  Corporation  (incorporated
          by  reference  to the  exhibit  of the same  number  to the  Company's
          Registration  Statement  of Form S-1  filed  with the  Securities  and
          Exchange Commission on February 15, 2002 (File No. 833-82870)).

     3(i) Amended  and  Restated  Certificate  of  Incorporation  of  Registrant
          (incorporated   by  reference  to  Exhibit  3(i).2  to  the  Company's
          Registration Statement on Form S-1 (File No. 333-36398)).

     3(ii)Bylaws of the  Registrant,  as amended  (incorporated  by reference to
          Exhibit  3(ii).2 to the Company's  Registration  Statement on Form S-1
          (File No. 333-36398)).

                                       51
<PAGE>

     4.1  Form of Common  Stock  Certificate  (incorporated  by reference to the
          exhibit of the same number to the Company's  Registration Statement on
          Form S-1 (File No. 333-36398)).

     4.2.1Rights  Agreement  dated  as of  July  25,  2001  by and  between  the
          Registrant and American  Stock Transfer & Trust Company  (incorporated
          by reference to Exhibit 4.1 of the Company's Registration Statement on
          Form 8-A filed with the Securities and Exchange Commission on July 25,
          2001 (File No. 000-31903)).

     4.2.2Amendment  No. 1 to Rights  Agreement  dated as of October 17, 2001 by
          and between the Registrant and American Stock Transfer & Trust Company
          (incorporated  by reference to Exhibit 4.1 to the Company's  Amendment
          No. 1 to Registration  Statement on Form 8-A filed with the Securities
          and Exchange Commission on October 24, 2001 (File No. 000-31903)).

     4.3.1Securities  Purchase  Agreement  dated as of October  17,  2001 by and
          among the Registrant and the Investors named therein  (incorporated by
          reference to Exhibit 99.2 to the Company's  Current Report on Form 8-K
          filed with the Securities and Exchange  Commission on October 24, 2001
          (File No. 000-31903)).

     4.3.2Securities  Purchase  Agreement  dated as of October  19,  2001 by and
          between the Registrant and Whitman  Partners,  L.P.  (incorporated  by
          reference to Exhibit 99.3 to the Company's  Current Report on Form 8-K
          filed with the Securities and Exchange  Commission on October 24, 2001
          (File No. 000-31903)).

     4.4  Stockholders'  Agreement dated as of October 17, 2001 by and among the
          Company and the  stockholders  listed on the  signature  pages thereto
          (incorporated  by  reference to Exhibit 4.2 to the  Company's  Current
          Report on Form 8-K filed with the Securities  and Exchange  Commission
          on October 24, 2001 (File No. 000-31903)).

     4.5  Form  of  Common  Stock  Purchase   Warrant  issued  to  investors  in
          connection with the securities  purchase  agreements  (incorporated by
          reference to Exhibit 99.5 to the Company's  Current Report on Form 8-K
          filed with the Securities and Exchange  Commission on October 24, 2001
          (File No. 000-31903)).

     10.1*1996 Stock Plan and form of  agreements  thereunder  (incorporated  by
          reference  to  the  exhibit  of  the  same  number  to  the  Company's
          Registration Statement on Form S-1 (File No. 333-36398)).

     10.1.2*  Amended  and  Restated  1998  Stock  Plan and  form of  agreements
          thereunder  (incorporated  by  reference  to the  exhibit  of the same
          number to the Company's  Registration  Statement on Form S-1 (File No.
          333-36398)).

     10.1.3* 2000 Employee Stock Purchase Plan (incorporated by reference to the
          exhibit of the same number to the Company's  Registration Statement on
          Form S-1 (File No. 333-36398)).

     10.1.4* 2000 Stock Incentive Plan (incorporated by reference to the exhibit
          of the same number to the Company's Registration Statement on Form S-1
          (File No. 333-36398)).

     10.1.5* Agreement  under the 2000 Stock  Incentive  Plan  (incorporated  by
          reference  to  the  exhibit  of  the  same  number  to  the  Company's
          Registration Statement on Form S-1 (File No. 333-36398)).

     10.1.6* 1999 Stock  Option Plan of Woodwind  Communications  Systems,  Inc.
          (incorporated   by   reference   to  Exhibit  4.1  of  the   Company's
          Registration  Statement  on Form S-8  filed  with the  Securities  and
          Exchange Commission on February 27, 2001 (File No. 333-56260)).

     10.1.7* 2000 Stock  Option Plan of Woodwind  Communications  Systems,  Inc.
          (incorporated   by   reference   to  Exhibit  4.1  of  the   Company's
          Registration  Statement  on Form S-8  filed  with the  Securities  and
          Exchange Commission on February 27, 2001 (File No. 333-56256)).

                                       52
<PAGE>

     10.2+General  Agreement for the Procurement of Products and Service and the
          Licensing of Software  dated April 28, 1999 between the Registrant and
          Lucent Technologies, Inc. (incorporated by reference to the exhibit of
          the same number to the  Company's  Registration  Statement on Form S-1
          (File No. 333-36398)).

     10.3*Indemnification  Agreement between the Registrant and its officers and
          directors  (incorporated by reference to Exhibit 10.6 to the Company's
          Registration Statement on Form S-1 (File No. 333-36398)).

     10.4.1* Offer  letter by and  between  the  Registrant  and Thomas J. Barsi
          dated July 1, 1996  (incorporated  by  reference to the exhibit of the
          same number to the Company's  Registration Statement of Form S-1 filed
          with the Securities and Exchange Commission on February 15, 2002 (File
          No. 833-82870)).

     10.4.2*  Offer  letter  by  and  between  the  Registrant  and  Stanley  E.
          Kazmierczak  dated May 24,  1999  (incorporated  by  reference  to the
          exhibit of the same number to the Company's  Registration Statement of
          Form S-1 filed with the Securities and Exchange Commission on February
          15, 2002 (File No. 833-82870)).

     10.4.3* Offer  letter by and  between the  Registrant  and Steven M. Bauman
          dated August 16, 1999 (incorporated by reference to the exhibit of the
          same number to the Company's  Registration Statement of Form S-1 filed
          with the Securities and Exchange Commission on February 15, 2002 (File
          No. 833-82870)).

     10.4.4* Offer  letter by and between  the  Registrant  and T. Diane  Pewitt
          dated  January 21, 2000  (incorporated  by reference to the exhibit of
          the same number to the  Company's  Registration  Statement of Form S-1
          filed with the Securities and Exchange Commission on February 15, 2002
          (File No. 833-82870)).

     10.4.5* Offer letter by and between the Registrant and C. Reid Thomas dated
          April 7, 2000  (incorporated  by  reference to the exhibit of the same
          number to the Company's  Registration Statement of Form S-1 filed with
          the Securities and Exchange  Commission on February 15, 2002 (File No.
          833-82870)).

     10.4.6* Offer  letter by and  between  the  Registrant  and Julie P. Cotton
          dated June 8, 2000  (incorporated  by  reference to the exhibit of the
          same number to the Company's  Registration Statement of Form S-1 filed
          with the Securities and Exchange Commission on February 15, 2002 (File
          No. 833-82870)).

     10.5*Settlement  Agreement  and Release by and between the  Registrant  and
          Joshua W. Soske dated July 17, 2001  (incorporated by reference to the
          exhibit of the same number to the Company's  Registration Statement of
          Form S-1 filed with the Securities and Exchange Commission on February
          15, 2002 (File No. 833-82870)).

     23.1 Independent Auditors' Consent.

     24.1 Power of Attorney  (see page 57 of the initial  Form 10-K for the year
          ended  December  31,  2001  filed  with the  Securities  and  Exchange
          Commission on April 1, 2002).

+  Confidential  treatment has been granted with respect to certain  portions of
this agreement.

* Indicates management contract or compensatory plan or arrangement.

Schedules not listed above have been omitted because the information required to
be set forth therein is not  applicable or is shown in the financial  statements
or notes thereto.


                                       53
<PAGE>


                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934,  the Company has duly caused this report on Form 10-K/A to
be signed on its behalf by the  undersigned,  thereunto  duly  authorized in the
City of Newark, State of California on the 19th day of August 2002.

                                 VINA TECHNOLOGIES, INC.

                                 By  /s/ STANLEY E. KAZMIERCZAK
                                     ----------------------------------------
                                     STANLEY E. KAZMIERCZAK
                                     Vice President, Finance and Administration
                                     and Chief Financial Officer



                                       54
<PAGE>


                             VINA TECHNOLOGIES, INC.

                                   SCHEDULE II
                        VALUATION AND QUALIFYING ACCOUNTS
                                 (in thousands)
<TABLE>
<CAPTION>

                                                                Balance at      Charged to    Deductions-
                                                               beginning of      costs and    write-offs     Balance at
                                                                  period         expenses     of account    end of period
                                                               ------------    -----------   ------------   --------------

Allowance for doubtful accounts and sales returns
Year ended
<S>                                                               <C>             <C>           <C>             <C>
 December 31, 2001........................................        $  335          $ 222         $ 100           $ 457
 December 31, 2000........................................           221            131            17             335
 December 31, 1999........................................           109            131            19             221


Accrued warranty:
Year ended
 December 31, 2001........................................        $  686          $  68         $  58           $ 696
 December 31, 2000........................................           449            393           156             686
 December 31, 1999........................................           152            410           113             449


Inventory reserves:
Year ended
 December 31, 2001........................................        $  110          $ 577         $ 224           $ 463
 December 31, 2000........................................            90             31            11             110
 December 31, 1999........................................            --             90            --              90

</TABLE>