UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-Q

                                   (Mark One)

[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
                                   Act of 1934

                   For the Quarterly Period Ended May 31, 2002

                                       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: 000-22565

                              INGENUUS CORPORATION

             (Exact name of registrant as specified in its charter)

                                    Delaware
                         (State or other jurisdiction of
                         incorporation or organization)

                        7455 Longard Road, Livermore, CA
                    (Address of principal executive offices)
                                   77-0298386
                                (I.R.S. Employer
                             Identification Number)

                                      94550
                                   (Zip Code)

       Registrant's telephone number, including area code: (925) 605-2600

Indicate by check mark  whether the  Registrant  (1) has filed all reports to be
filed by Section 13 or 15(d) of the  Securities  Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports),  and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]

The number of shares of the Registrant's  common stock outstanding as of May 31,
2002, was 38,638,062.

<PAGE>

                              INGENUUS CORPORATION

                                    FORM 10-Q
                       FOR THE QUARTER ENDED MAY 31, 2002

                                TABLE OF CONTENTS

                                                                           Page
                                                                           -----
                          PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

   a) Condensed Consolidated Statements of Operations for the three and
      six months ended May 31, 2002 and 2001 ..............................    1

   b) Condensed Consolidated Balance Sheets at May 31, 2002 and
      November 30, 2001 ...................................................    2

   c) Condensed  Consolidated  Statements of Cash Flows for the six months
      ended May 31, 2002 and 2001 .........................................    3

   d) Notes to Condensed Consolidated Financial Statements ................    4

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

Item 3. Quantitative and Qualitative Disclosure About Market Risk .........   21

                           PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K ..................................   22

SIGNATURES ................................................................   22

<PAGE>

                          PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                              INGENUUS CORPORATION

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (in thousands, except per share amounts)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                              Quarter ended May 31,        Six Months Ended May 31,
                                                                           ------------------------        ------------------------
                                                                             2002            2001            2002            2001
                                                                           ------------------------        ------------------------
<S>                                                                        <C>             <C>             <C>             <C>
Revenue                                                                    $    111        $    507        $    317        $    953
Cost of revenue                                                                 352             687             763           1,424
                                                                           --------        --------        --------        --------
Gross profit(loss)                                                             (241)           (180)           (446)           (471)
                                                                           --------        --------        --------        --------

Operating expenses:
  Research and development                                                      596             615           1,073           1,398
  Sales and marketing                                                           717           1,829           1,511           2,754
  General and administrative                                                    637           1,254           1,274           2,488
  Amortization of goodwill and other intangible assets                          768             835           1,536           1,669
  Impairment of assets                                                        7,433            --             7,433            --
                                                                           --------        --------        --------        --------
       Total operating expenses                                              10,151           4,533          12,827           8,309
                                                                           --------        --------        --------        --------

(Loss) from operations                                                      (10,392)         (4,713)        (13,273)         (8,780)

Gain (loss) on sale of investment                                              --             3,512            --             5,892
Interest and other, net                                                           2              76             133             165
                                                                           --------        --------        --------        --------
(Loss) from continuing operations                                           (10,390)         (1,125)        (13,140)         (2,723)
Gain on disposal of discontinued operation                                     --                85                              85
Income (Loss) from discontinued operations                                     --              (481)           --              (464)
                                                                           --------        --------        --------        --------
Income (loss) before income taxes                                           (10,390)         (1,521)        (13,140)         (3,102)
Income tax provision                                                           --                 2            --                 2
                                                                           --------        --------        --------        --------
Net income (loss)                                                           (10,390)         (1,523)        (13,140)         (3,104)
                                                                           --------        --------        --------        --------
Net (loss) attributable to common stockholders                             $(10,390)       $ (1,523)       $(13,140)       $ (3,104)
                                                                           ========        ========        ========        ========

EARNINGS (LOSS) PER SHARE -- BASIC AND DILUTED
Continuing operations                                                      $  (0.27)       $  (0.03)       $  (0.34)       $  (0.07)
Discontinued operations                                                        --             (0.01)           --             (0.01)
Net (loss) per share attributable to common stockholders                   $  (0.27)       $  (0.04)       $  (0.34)       $  (0.08)
Shares used in basic and diluted per share calculation                       38,633          36,831          38,628          36,818
</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements


                                       1
<PAGE>

                              INGENUUS CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                    (in thousands, except per share amounts)

                                                          May 31,   November 30,
                                                         ----------------------
                                                            2002         2001
                                                         ----------------------
                                                        (Unaudited)
                                     ASSETS
Current assets:
  Cash and cash equivalents                              $   1,395    $   5,496
  Accounts receivable, (net of allowance)                      135          549
  Income taxes receivable                                     --            609
  Loan to related party, (net of allowance)                     12           62
  Prepaid expenses and other current assets                    408          245
                                                         ---------    ---------
       Total current assets                                  1,950        6,961

Property and equipment, net                                    134          858
Goodwill and other intangible assets                         1,192        9,590
Restricted cash                                                125          125
Investments and other assets                                    73          114
                                                         ---------    ---------
       Total assets                                      $   3,474    $  17,648
                                                         =========    =========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                       $     603    $     865
  Accrued liabilities                                        1,945        2,386
  Deferred revenue                                             207          539
                                                         ---------    ---------
       Total current liabilities                             2,755        3,790
                                                         ---------    ---------
       Total liabilities                                     2,755        3,790
                                                         ---------    ---------

Commitments and contingencies (Note 12)
  Stockholders' equity:
  Common stock                                             103,473      103,472
  Treasury stock                                            (3,254)      (3,254)
  Accumulated deficit                                      (99,500)     (86,360)
                                                         ---------    ---------
       Total stockholders' equity                              719       13,858
                                                         ---------    ---------
       Total liabilities and stockholders' equity        $   3,474    $  17,648
                                                         =========    =========

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


                                       2
<PAGE>

                              INGENUUS CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                               Six Months Ended
                                                                                                           ------------------------
                                                                                                                    May 31,
                                                                                                           ------------------------
                                                                                                             2002            2001
<S>                                                                                                        <C>             <C>
Cash flows from operating activities:
Net loss                                                                                                   $(13,140)       $ (3,104)
Adjustments to reconcile net loss to net cash provided by (used for) operating activities:
 Realized gain on sale of Virage Logic shares                                                                  --            (5,892)
 Write-off of fixed assets                                                                                      (13)           --
 Depreciation and amortization                                                                                1,995           2,463
 Gain(Loss) on sale of fixed assets                                                                            --                 3
 Gain(Loss) on disposal of fixed assets                                                                           8            --
 Impairment of fixed assets                                                                                     906            --
 Impairment of intangible assets                                                                              6,527            --
 Cumulative translation adjustment                                                                             --               (37)
 Changes in assets and liabilities, net of assets and liabilities acquired/disposed of:
   Accounts receivable                                                                                          494            (199)
   Allowance for doubtful accounts                                                                              (80)           --
   Income tax receivable                                                                                        609            --
   Loan to related party                                                                                         10            --
   Allowance for loan to related party and other receivable                                                      46            --
   Prepaid expenses and other current assets                                                                   (169)           (314)
   Restrict cash                                                                                                --              (19)
   Other assets                                                                                                  41            --
   Accounts payable                                                                                            (262)           (507)
   Accrued liabilities                                                                                         (441)         (2,082)
   Deferred revenue                                                                                            (332)             33
                                                                                                           --------        --------
     Net cash used for operating activities                                                                  (3,801)         (9,655)
                                                                                                           --------        --------

Cash flows from investing activities:
 Purchases of property and equipment                                                                           (301)            (35)
 Sales of fixed assets                                                                                         --                 3
 Proceeds from  Sales of available-for-sale securities                                                         --             6,692
                                                                                                           --------        --------
     Net cash provided by (used for) investing activities                                                      (301)          6,660
                                                                                                           --------        --------

Cash flows from financing activities:
 Proceeds from issuance of common stock, net                                                                      1              14
 Repurchase of common stock                                                                                     --             (149)
                                                                                                           --------        --------
     Net cash provided by (used for) financing activities                                                         1            (135)
                                                                                                           --------        --------

 Net proceeds from the sale of discontinued operations                                                         --             2,000
                                                                                                           --------        --------

Net (decrease) increase in cash and equivalents                                                              (4,101)         (1,130)
Cash and equivalents, beginning of period                                                                     5,496           8,789
                                                                                                           --------        --------
Cash and cash equivalents, end of period                                                                   $  1,395        $  7,659
                                                                                                           ========        ========

</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


                                       3
<PAGE>
                              INGENUUS CORPORATION

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

The  accompanying  consolidated  financial  statements have been prepared by the
Company  pursuant to the rules and  regulations  of the  Securities and Exchange
Commission for interim financial statements.  Therefore, they do not include all
the disclosures presented in the Company's Form 10-K. These financial statements
do not  include  all  disclosures  required  by  generally  accepted  accounting
principles and accordingly,  should be read in conjunction with the consolidated
financial  statements  and notes  included as part of the Company's  latest Form
10-K for the fiscal year ended November 30, 2001.

In the opinion of management,  the consolidated financial statements include all
adjustments  (consisting  only of normal  recurring  adjustments)  necessary  to
present fairly the consolidated  financial  position,  results of operations and
cash flows for the interim period.  The results of operations  presented are not
necessarily  indicative  of the results to be expected  for the full year or for
any other period.

The accompanying  consolidated  financial statements have been prepared assuming
that  Ingenuus  Corporation  will continue as a going  concern.  The Company has
suffered  recurring  losses from  operations and has an  accumulated  deficit of
$99.5 million.  In the first quarter of fiscal 2000, the Company purchased Inbox
Software,  Inc, and this acquisition has yet to generate  significant  revenues.
The Company's  continued  existence depends on its ability to achieve profitable
operations.  If this does not happen,  the Company will need to raise additional
capital  to  fund  its  operations.  There  is  substantial  doubt  that,  as  a
stand-alone  entity, the Company will either achieve  profitability,  or that it
will be  successful  in  raising  additional  funding  if  profitability  is not
achieved. Even though the Company had a strong pipeline and prospects going into
the  second  quarter of 2002,  the  Company  was not able to meet its  projected
revenue in the second  quarter of 2002.  There were no new software sales in the
second quarter of 2002.

The  Company  evaluated  its assets to  determine  if they were  impaired  under
Financial  Accounting Standards Board ("FASB") Statement of Financial Accounting
Standards  No. 121 ("SFAS  121") at November  30, 2001 and again at February 28,
2002, using  undiscounted  cash flows.  These projected  undiscounted cash flows
were based on a  sixty-month  forecast.  Although  these  cash flow  projections
reflected  decreasing  cash flows during fiscal year 2002,  there was sufficient
cash available during the entire  forecasted  period.  Hence,  based on the fact
that the Company had some strong  prospects  in sales  pipeline,  the  improving
economic condition, and the Company's ability to further restructure to preserve
cash  and be able to fund its  operations,  we  concluded  the  assets  were not
impaired.

Management noted the following factors during the second quarter of 2002:

     *   certain  sales  expected  for  the  second  quarter  of  2002  had  not
         materialized;

     *   certain sales  projected for the  third quarter and  substantially  all
         for the second quarter of 2002 have been  canceled  or  extended to the
         fourth quarter of 2002 or beyond;

     *   overall economic  conditions had not improved to the extent that it was
         forecasted in fiscal 2001 and the first quarter of fiscal 2002; and

     *   based upon the revised cash flow projections,  the Company would use in
         operations  all  remaining  cash by  September  2002 unless  additional
         funding becomes available.

While the Company is aggressively pursuing a sales goal of at least $600,000, in
the third  quarter  of 2002,  without  significant  improvement  in the  overall
economy, our ability to close these accounts is substantially at risk.

Due to the factors  outlined  above,  the cash flow forecast  projects a deficit
cash balance during September 2002. Accordingly, the Company determined it is no
longer appropriate to include projected undiscounted cash flows beyond September
2002 for the purposes of determining asset impairment under SFAS 121.

We concluded  that with no revenue in the second and third quarters of 2002 from
Ingenuus software, and given the fact that the Company's prospects keep delaying
capital  purchases, there is a strong  possibility  that the Company will not be
able to generate enough revenue and cash to continue  operations.  Hence,  using
SFAS 121, we concluded the assets and the intangibles are impaired and should be
written-down to the estimated fair value.

Based on current cash flows,  and on the assumption that the Company will be out
of funds by  September  2002,  several  intangible  and fixed assets were deemed
impaired. The total impairment of assets was $7.4 million.


                                       4
<PAGE>
The Company recognized an impairment of $59,000 for intangible assets related to
developed  technology of the Novo  maintenance  business since the Company is no
longer engaged in that business,  including in Japan,  where as of May 31, 2002,
the Company gave notice to its employees and partners to cease operations at the
end of July 2002.

The Company recognized an impairment of $6,468,000 for intangible  assets,  down
to their estimated fair value, based on the fact that if the Company is not able
to raise any additional  funds,  it will run out of cash by September  2002. The
intangible  assets included $115,000 related to the core technology of Inbox and
$6,353,000 related to the goodwill from Inbox.

The Company  recognized an  impairment  of $856,000 for leasehold  improvements,
down to their  estimated  fair  value,  based on the fact  that  there is a high
vacancy  rate in  Livermore,  and that  there  are empty  buildings  surrounding
Ingenuus's  premises.  The Company  believes that it may be able to sublease the
building at the same rent that the Company is currently  paying,  but may not be
able to recover any costs related to the leasehold improvements.

The Company  recognized an  impairment of $32,000 for computer  software down to
its estimated fair value.

The Company recognized an impairment for furniture and fixtures in the amount of
$15,000, down to their estimated fair value.

The Company  recognized an impairment of $2,000 for its automobile,  down to its
estimated fair value.

Certain  reclassifications  have been made to 2001  amounts to conform  with the
2002 presentation. These reclassifications had no effect on net loss.

2. Discontinued Operations

In February 2000, the Company entered into an asset purchase  agreement with DII
Semiconductor,  Inc. ("DII"),  whereby the Company's Semiconductor  Intellectual
Property  ("SIP")  business  would  be sold,  subject  to  Board  approval.  The
agreement was ratified in March 2000.

On April 6, 2000,  the Company  sold the SIP  business to DII for $11.3  million
($5.5 million in cash and approximately $1 million due quarterly through October
2001).  As a result,  the operations of the SIP business have been classified as
discontinued  operations in the accompanying  Condensed  Consolidated  Financial
Statements and related Notes.

At November  30,  2001,  the $11.3  million for the sale of the SIP business had
been collected in full.

The  Company  was  unsuccessful  in  selling  Verilux  Design  Technology,  Inc.
("Verilux"), the Electronic Design Automation ("EDA") segment of the Company. On
May 15, 2001, the Company notified Verilux  employees of its intent to terminate
their  employment  with the  Company  in one  hundred  twenty  days and  accrued
termination  benefits of $226,000 in the second  quarter.  On June 18, 2001, the
Company  adopted a plan to dispose of the assets of  Verilux.  In the event that
the  assets  of  Verilux  could  not be  sold,  the  Verilux  business  would be
discontinued  effective August 31, 2001. As a result,  the operations of the EDA
business have been  classified as  discontinued  operations in the  accompanying
Condensed Consolidated Financial Statements and related Notes.

Revenue for the EDA business were $0 for the quarter and six-month ended May 31,
2002 and $7,000 for the  quarter  ended May 31,  2001 and  $268,000  for the six
months ended May 31, 2001.

3. Earnings Per Share (EPS) Disclosures

Basic EPS excludes dilution and is computed by dividing net income  attributable
to common  stockholders  by the weighted  average of common  shares  outstanding
(excluding  shares  subject to  repurchase  rights) for the period.  Diluted EPS
reflects  the  potential  dilution  that  could  occur  if  securities  or other
contracts to issue common stock were exercised or converted into common stock.

4. Recent Accounting Pronouncements


                                       5
<PAGE>

                              INGENUUS CORPORATION

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS --(Continued)

In July 2001,  the FASB  issued two  statements,  Statement  No.  141, "Business
Combinations" ("SFAS No.  141"),  and  Statement  No. 142,  "Goodwill  and Other
Intangible Assets" ("SFAS No. 142"). SFAS No. 141 revises  accounting  treatment
for  business  combinations   requiring  the  use  of  purchase  accounting  and
prohibiting  the  use  of  the  pooling-of-interests  method  for  all  business
combinations  initiated  after  June 30,  2001 and  broadens  the  criteria  for
recording intangible assets separate from goodwill for all business combinations
completed  after June 30, 2001. SFAS No. 142 revises the accounting for goodwill
and other  intangible  assets  by not  allowing  amortization  of  goodwill  and
establishing  accounting for impairment of goodwill and other intangible assets.
SFAS No. 142 will be effective  for fiscal years  beginning  after  December 15,
2001,  with early  adoption  allowed for companies  with a fiscal year beginning
after March 15, 2001.  The Company did not early adopt SFAS 142.  Companies with
fiscal  year ending  after  December  15,  2001 are  required to adopt SFAS 142.
Companies with fiscal year ending after March 15, 2001 can early adopt SFAS 142.
The Company will adopt SFAS 142 in fiscal year 2003, beginning December 1, 2002.
The Company has not yet  determined  what effects  these changes may have on its
consolidated financial statements.

In August 2001,  the FASB issued  Statement of  Financial  Accounting  Standards
No.144 ("SFAS 144"),  "Accounting  for the  Impairment or Disposal of Long-Lived
Assets",  effective for financial  statements  issued for fiscal years beginning
after December 15, 2001 and interim periods within those fiscal years.  SFAS 144
addresses  financial  accounting and reporting for the impairment or disposal of
long-lived assets and replaces SFAS 121 while retaining the substantive aspects,
and amends certain accounting and reporting  provisions of APB Opinion No.30 and
ARB  No.51.  The new rule  removes  goodwill  from  its  scope  and,  therefore,
eliminates the requirement of SFAS 121 to allocate goodwill to long-lived assets
to be tested for impairment.  It also  establishes  guidance and criteria beyond
that  previously   specified  in  SFAS  121,  including  guidance  on  reporting
discontinued  operations.  The Company  did not early adopt SFAS 144.  Companies
with fiscal year ending after  December 15, 2001 are required to adopt SFAS 144.
The Company will adopt SFAS 144 in fiscal year 2003, beginning December 1, 2002.
The  Company  will  apply  the new  rule on  accounting  for  long-lived  assets
beginning in the first quarter of 2003 and has not yet  determined the extent of
such effects on the Company's financial statements.

5. Comprehensive Income (Loss)

The Company  follows the  provisions of SFAS No. 130,  "Reporting  Comprehensive
Income."  This  statement   requires   companies  to  classify  items  of  other
comprehensive income by their components in the financial statements and display
the accumulated balance of other  comprehensive  income separately from retained
earnings in the equity section of a statement of financial position.

                              INGENUUS CORPORATION

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS --(Continued)

The Company's total comprehensive income (loss) was as follows (in thousands):

<TABLE>
<CAPTION>
                                                                             Quarter Ended                     Six Months Ended
                                                                                 May 31,                            May 31,
                                                                        -------------------------         -------------------------
                                                                          2002             2001             2002             2001
                                                                        --------         --------         --------         --------
<S>                                                                      <C>               <C>            <C>              <C>
Net Loss                                                                $(10,390)        $ (1,523)        $(13,140)        $ (3,104)
Other comprehensive income:
Realized gain--previously recognized                                        --             (4,071)           (--)            (6,013)
Unrealized holding gain on available--for sale
marketable securities                                                       --                (43)           (--)             1,195
                                                                        --------         --------         --------         --------
Comprehensive Income/(Loss)                                             $(10,390)        $ (5,637)        $(13,140)        $ (7,922)
</TABLE>


                                       6
<PAGE>

6. Investments

Investment in Virage Logic

In fiscal 1998,  the Company made a private  equity  investment  in Virage Logic
Corp.  ("Virage"),  for an aggregate cost of $840,000.  As of November 30, 1999,
this  investment  was  carried  at cost in the  balance  sheet as the  Company's
ownership  interest in Virage was less than 20%. Since August 2000,  when Virage
completed an initial public offering of its common stock, the equity  securities
have been publicly traded.  As of November 30, 2001, the Company sold all of the
Virage  shares held  (525,000)  for $7.0  million at a cost of  $840,000,  which
resulted in a gain of $6.2  million.  $5.9  million of this gain was included in
income from operations for the six months ended May 31, 2001.

Impairment of Investment in Slim Technology

During the first quarter of fiscal 1999, the Company purchased a 40% interest in
Slim  Technology Co, Ltd., a Korean  company,  ("Slim Tech"),  at a cost of $2.3
million. Slim Tech performs  semiconductor design services for Korean customers.
With the disposal of the SIP business in April 2000 and the  Company's new focus
as  a  software   business-to-business   collaborative   commerce  company,  the
investment in Slim Tech was no longer strategic to the Company's operations, and
as  a  result,  the  Board  of  Directors  authorized  management  to  sell  the
investment.  Based on a number of factors, including the failure to find a buyer
for the investment and recurring operating losses generated from the investment,
management assessed that there had been a permanent decline in the value of this
investment.  An impairment charge of $1.7 million was recorded in fiscal 2000 to
write down the value of the investment to zero.

The Company has continued its efforts to sell its  investments  in Slim Tech. As
of July 9, 2002, the Company has not entered into any definite agreement to sell
its investments in Slim Tech.

7. Sale of Chip & Chip, Inc.

On June 13, 2000, the Company entered into an Asset Purchase  Agreement with the
management of Chip & Chip Inc., ("Chip & Chip"),  part of the EDA segment of the
Company.  Chip & Chip Management purchased the assets and certain liabilities of
Chip & Chip for $2.58 million (payable in three  installments  over the next two
years).  The proceeds are secured by 1,000,000  Ingenuus shares and fully vested
options to purchase 700,000 shares held by Chip & Chip management, and 1,000,000
shares of Chip & Chip.  The gain of $292,000 from the sale has been deferred and
will be recognized as the payments are received.

The first installment of the sales consideration was paid on the due date in the
fourth  quarter of fiscal 2000,  $242,000 in cash and  $633,000 by  surrendering
500,000  shares of Ingenuus  stock to the Company.  Chip & Chip defaulted on the
second  payment of $850,000 due in October  2001.  Subsequent  to the default of
payment by Chip & Chip, it was also noted that Chip & Chip was not able to raise
enough capital to continue as a going-concern  and/or be able to repay the notes
to the Company. The second and third payments were deemed uncollectible and were
written-off on November 30, 2001.

8. Segment and Geographic Information

As of May 31,  2002,  the Company  operated as only one  segment.  This  segment
includes the  business-to-business  collaborative commerce solutions, as well as
the hardware and software maintenance services. The EDA segment was discontinued
as of August 31, 2001.

Enterprise-wide information is provided in accordance with SFAS No. 131. Revenue
is reported by country,  based on the location of the customer. All property and
equipment,  except for an immaterial  amount, is based in the U.S. and therefore
is not disclosed below.  Geographic  revenue for each of the three month periods
ended May 31, 2002 and May 31, 2001 is as follows (in thousands):

                                                               QUARTER ENDED
                                                          ----------------------
                                                          May 31,        May 31,
                                                           2002            2001
                                                           ----            ----
United States ................................             $ 62            $245
Asia .........................................               49             242
Other International ..........................              --               20
                                                           ----            ----
   Total .....................................             $111            $507
                                                           ====            ====


                                       7
<PAGE>

Major  Customers.
-----------------

For the quarter ended May 31, 2002,  four customers  accounted for 17%, 14%, 11%
and 10% for a total 52% of revenue.  For the quarter  ended May 31,  2001,  four
customers accounted for 21%, 15%, 11%, and 10% for a total of 57% of revenue.

9. Stock Repurchase Program

In March 2001, the Company  approved a stock  repurchase  program in which up to
$1,500,000  of its  common  stock may be,  from time to time,  purchased  by the
Company in the open market  depending  upon market  conditions,  share price and
other factors.  As of November 30, 2001, Ingenuus had repurchased 482,200 shares
of its common stock under this  program at a total cost of $169,200.  There were
no repurchases of common stock in the quarter and six months ended May 31, 2002.
We repurchased 395,500 shares of common stock at a total cost of $149,300 in the
quarter and six months ended May 31, 2001.

10. Repricing of Stock Option

In January 2001,  the Board of Directors  approved a  proposition  to reduce the
exercise price of all outstanding  employees' and consultants'  stock options to
$0.375 per share,  the fair market  value of the  Company's  common  stock as of
January 8, 2001.  On  September  24,  2001,  the Board of  Directors  approved a
proposition again to reduce the exercise price of all outstanding employees' and
consultants'  stock  options to $0.11 per share,  the fair  market  value of the
Company's  common  stock  as  of  September  25,  2001.  As  a  result  of  such
modification,  all options  eligible for the offer are subject to variable  plan
accounting  until the option is  exercised,  cancelled  or  expired.  Any future
increase in stock market price will result in additional compensation expense.

For the  quarters  ending May 31,  2002 and May 31,  2001,  the  Company did not
record any compensation expenses related to repricing of stock options since the
stock market price was at or below the repriced option price.

11. Other Significant Events

In  December  2001,  the  Company  relocated  its  corporate  headquarters  from
Sunnyvale, California to 7455 Longard Road, Livermore, California, pursuant to a
new lease that expires in November 2011. We incurred  approximately  $900,000 in
capital  expenditures  related to the  interior  improvements  of our  Livermore
facility,  and approximately  $100,000 in moving and other expenses.  During the
second  quarter  of 2002,  the  Company  took a charge of  $856,000  related  to
leasehold improvements (see Note 1 - Leasehold  Improvements).  The annual lease
payments for the new facility are as follows:

   Year ended November 30, (in thousands)
   ----------------------------------------------
          2002 ...............................................    $  270
          2003 ...............................................       282
          2004 ...............................................       294
          2005 ...............................................       305
          2006 ...............................................       317
          For the years thereafter ...........................     1,782
                                                                  ------
          Total minimum lease for Livermore office ...........    $3,250

12. Committments

On May 29, 2002,  the Board of Directors  approved  further  expense  reduction,
including reduction in headcount.

As  a  result,  eleven  employees,   (two  in  professional  services,  four  in
engineering,   three  in  sales  and   marketing,   and  two  in   general   and
administrative), were terminated.

The Company accrued approximately $285,000 in severance,  which will be paid out
until  November  30, 2002.  We recorded  the expenses  related to the accrual as
follows: $18,000 in professional services/cost of sales, $23,000 in research and
developement,  $112,000  in sales and  marketing,  and  $132,000  in general and
administrative.  Payments to three  employees  accounted  for 82% of the accrued
severance. As of June 30, 2002, $206,000 remained as an accrued liability.


                                       8
<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Introduction

This  section--Management's  Discussion and Analysis of Financial  Condition and
Results of Operations--contains forward-looking statements within the meaning of
Section 27A of the  Securities  Act of 1933, as amended,  and Section 21E of the
Securities Exchange Act of 1934, as amended.  These  forward-looking  statements
are based on current  expectations  and include various risks and  uncertainties
that could cause actual results to differ materially from those projected.  Such
risks and  uncertainties  are set forth below and under "Other Factors Affecting
Future Operating Results." These forward-looking statements speak only as of the
date hereof and are expressly  qualified in their  entirety by those factors and
all related cautionary language.  The company is under no obligation (and hereby
expressly disclaims any obligation) to update these forward-looking  statements,
whether as a result of new information, future events, or otherwise.

Company Overview

Ingenuus Corporation ("the Company"),  a Delaware corporation,  was incorporated
in 1991 as Aspec  Technology,  Inc.  Until  fiscal  2000,  the  Company  derived
primarily  all of its  revenues  from its  Semiconductor  Intellectual  Property
("SIP")  business.  During fiscal 2000, the Company disposed of its SIP business
for $11.3 million and recorded a gain on disposal of discontinued  operations of
$4.4 million.

In  September  1999,  the Company  purchased  Verilux  Design  Technology,  Inc.
("Verilux")  and Chip & Chip,  Inc.  ("Chip &  Chip"),  two  start-up  companies
developing  Electronic  Design  Automation  ("EDA") tools for the  semiconductor
industry.  On June 13, 2000,  the Company  entered into an agreement to sell the
Chip & Chip  business  to the  management  of Chip & Chip  for a price of $2.58
million,  payable in three installments over two years. The first installment of
the sales consideration was paid on the due date in the fourth quarter of fiscal
2000,  $242,000 in cash and $633,000 by surrendering  500,000 shares of Ingenuus
stock to the Company.  The two remaining payments,  due in October 2001 and July
2002, were written-off in November 2001 because they were deemed  uncollectible.

The Company also attempted to sell Verilux,  but was  unsuccessful.  The Company
notified Verilux of its intent to cease operations on May 15, 2001.  Verilux was
discontinued on August 31, 2001.

In October 1999, the Company also purchased Novo Systems Corporation ("Novo"), a
company providing  maintenance  services to the semiconductor  industry and also
engaged in the development of EDA tools.

In  December  1999,  the  Company  purchased  Inbox  Software,  Inc.,  a company
providing  business-to-business  collaborative  commerce software  solutions for
manufacturers.

As of May 31,  2002,  the Company  operated as only one  segment.  This  segment
includes the  business-to-business  collaborative commerce solutions, as well as
the hardware and software maintenance services. The EDA segment was discontinued
as of August 31, 2001.

Consulting Services

While the Ingenuus  product and  maintenance  revenue is expected to be our main
revenue  source in 2002,  we also  expect to derive  revenue  from  delivery  of
consulting services.  Costs for these professional consulting services are based
on fixed hourly and/or daily rates charged by the Company.

Maintenance Services

We offer standard support services, which include product updates, telephone and
Internet support. Custom support services are also available, including standard
support  services  plus  technical   management,   application  and  educational
services.

Critical Accounting Policies

In the ordinary  course of business,  the Company has made a number of estimates
and assumptions relating to the reporting of results of operations and financial
conditions in the  preparation  of its financial  statements in conformity  with
accounting principles generally accepted in the U.S. Actual results could differ
significantly  from those estimates under different  assumptions and conditions.
The Company believes that the following  discussion addresses the Company's most
critical  accounting  policies,  which are those that are most  important to the
portrayal  of  the  Company's  financial  condition  and  results.  The  Company
constantly  re-evaluates  these significant  factors and makes adjustments where
facts and circumstances dictate. Although historically,  actual results have not
significantly  deviated  from those  determined  using the  necessary  estimates
inherent in the preparation of financial  statements,  future actual results may
vary significantly.  Estimates and assumptions  include, but are not limited to,
customer  receivables,  fixed asset lives,  contingencies  and  litigation.  The
Company has also chosen certain accounting policies when options were available,
including:

* impairment of long-lived assets, SFAS 121, to measure impairment of long-lived
assets,  identifiable intangible assets and any related goodwill. This Statement
requires that long-lived assets and certain identifiable  intangibles to be held
and used by an entity be reviewed for impairment  whenever  events or changes in
circumstances  indicate  that  the  carrying  amount  of an  asset  may  not  be
recoverable.  The  Company  recorded an  impairment  charge as  discussed  under
"Impairment of Assets."

* the intrinsic  value method,  or APB Opinion No. 25, to account for our common
stock incentive awards; and


                                       9
<PAGE>

* we record an allowance  for credit  losses  based on  estimates of  customers'
ability to pay. If the financial condition of our customers were to deteriorate,
additional allowances may be required.

These accounting policies are applied consistently for all years presented.  Our
operating results would be affected if other alternatives were used. Information
about the impact on our  operating  results is included in the  footnotes to our
consolidated financial statements.

Results of Continuing Operations

As  of  May  31,  2002,   the  Company   operated  as  only  one  segment,   the
business-to-business collaborative commerce solutions related to Inbox, hardware
and  services  related to Novo,  and  maintenance  services  related to Novo and
Inbox. The Ingenuus segment's  activities for the three and six months ended May
31,  2002 and 2001,  excluding  amortization  of  goodwill,  involved  primarily
activities  surrounding  product  revenues  from  the  Inbox  business,   system
maintenance   revenue  from  the  Novo   business,   research  and   development
expenditures, sales and marketing, and general and administrative expenses.

The EDA segment,  which included the  development and sale of software tools for
EDA, related to Verilux, was discontinued as of August 31, 2001.

Results of Operations

The following tables set forth selected  statements of operations data expressed
both in dollars (in  thousands) and as a percentage of revenue for the three and
six  month  periods  ending  May 31,  2002  compared  to the three and six month
periods ending May 31, 2001:


                                       10
<PAGE>

                              INGENUUS CORPORATION
                      CONSOLIDATED STATEMENT OF OPERATIONS
                                 (in thousands)
                                   (Unaudited)

                                                           Quarter Ended May 31,
                                                           --------------------
                                                             2002        2001
                                                           --------    --------
                                                           Ingenuus    Ingenuus
                                                           --------    --------
CONSOLIDATED STATEMENT OF INCOME DATA:
Revenue                                                    $    111    $    507
Cost of revenue                                                 352         687
                                                           --------    --------
Gross profit (loss)                                            (241)       (180)

  Operating expenses:
    Research and development                                    596         615
    Sales and marketing                                         717       1,829
    General and administrative                                  637       1,254
    Amortization of goodwill and other intangible assets        768         835
    Impairment of assets                                      7,433        --
                                                           --------    --------
      Total operating expenses                               10,151       4,533
                                                           --------    --------

 (Loss) from operations:                                    (10,392)     (4,713)

  Gain(loss) on sale of investment                             --         3,512
  Interest and other, net                                         2          76
                                                           --------    --------

 (Loss) from continuing operations                          (10,390)     (1,125)
 Gain on disposal of discontinued operations                   --            85
 Income (loss) from discontinued operations                    --          (481)
                                                           --------    --------
 Income (loss) before income taxes                          (10,390)     (1,521)
 Income tax provision                                          --             2
                                                           --------    --------
 Net income (loss)                                         $(10,390)   $ (1,523)
                                                           ========    ========

See accompanying notes to condensed consolidated financial statements.


                                       11
<PAGE>

                              INGENUUS CORPORATION
                      CONSOLIDATED STATEMENT OF OPERATIONS
                             (percentage of revenue)
                                   (Unaudited)

                                                          Quarter Ended May 31,
                                                         ----------------------
                                                           2002           2001
                                                         --------      --------
                                                         Ingenuus      Ingenuus
                                                         --------      --------
CONSOLIDATED STATEMENT OF INCOME DATA:
Revenue                                                      100%          100%
Cost of revenue                                              317           136
                                                          ------        ------
Gross profit (loss)                                         (217)          (36)

Operating expenses:
  Research and development                                   537           121
  Sales and marketing                                        646           361
  General and administrative                                 574           247
  Amortization of goodwill and other intangible assets       692           165
  Impairment of assets                                     6,696           --
                                                          ------        ------
    Total operating expenses                               9,145           894
                                                          ------        ------

(Loss) from operations:                                   (9,362)         (930)

Gain (loss) on sale of investment                           --             693
Interest and other, net                                        2            15
                                                          ------        ------

(Loss) from continuing operations                         (9,360)         (222)
Gain on disposal of discontinued operations                 --              17
Income (loss) from discontinued operations                  --             (95)
                                                          ------        ------
Income (loss) before income taxes                         (9,360)         (300)
Income tax provision                                        --             --
                                                          ------        ------
Net income (loss)                                         (9,360)%        (300)%
                                                          ======        ======

See accompanying notes to condensed consolidated financial statements.

                                       12
<PAGE>

                              INGENUUS CORPORATION
                      CONSOLIDATED STATEMENT OF OPERATIONS
                                 (in thousands)
                                   (Unaudited)

                                                        Six Months Ended May 31,
                                                        ------------------------
                                                            2002        2001
                                                          --------    --------
Revenue                                                   $    317    $    953
Cost of revenue                                                763       1,424
                                                          --------    --------
Gross profit (loss)                                           (446)       (471)
                                                          --------    --------

Operating expenses:
  Research and development                                   1,073       1,398
  Sales and marketing                                        1,511       2,754
  General and administrative                                 1,274       2,488
  Amortization of goodwill and other intangible assets       1,536       1,669
  Impairment of assets                                       7,433        --
                                                          --------    --------
       Total operating expenses                             12,827       8,309
                                                          --------    --------

(Loss) from operations                                     (13,273)     (8,780)

Gain(loss) on sale of investment                              --         5,892
Interest and other, net                                        133         165
                                                          --------    --------

(Loss) from continuing operations                          (13,140)     (2,723)
                                                              --            85
Income (Loss) from discontinued operations                    --          (464)
                                                          --------    --------
Income (loss) before income taxes                          (13,140)     (3,102)
Income tax provision                                          --             2
                                                          --------    --------
Net income (loss)                                         $(13,140)   $ (3,104)
                                                          ========    ========

See accompanying notes to condensed consolidated financial statements.


                                       13
<PAGE>

                              INGENUUS CORPORATION
                      CONSOLIDATED STATEMENT OF OPERATIONS
                                 (in thousands)
                                   (Unaudited)

                                                        Six Months Ended May 31,
                                                        ------------------------
                                                             2002      2001
                                                           --------  --------
                                                           Ingenuus  Ingenuus
                                                           --------  --------
CONSOLIDATED STATEMENT OF INCOME DATA:
Revenue                                                        100%      100%
Cost of revenue                                                241       149
                                                            ------    ------
Gross profit (loss)                                           (141)      (49)
  Operating expenses:
    Research and development                                   338       147
    Sales and marketing                                        477       289
    General and administrative                                 402       261
    Amortization of goodwill and other intangible assets       485       175
    Impairment of assets                                     2,345       --
                                                            ------    ------
      Total operating expenses                               4,047       872
                                                            ------    ------
  (Loss) from operations:                                   (4,188)     (921)

  Gain(loss) on sale of investment                             --        618
  Interest and other, net                                       42        17
                                                            ------    ------
 (Loss) from continuing operations                          (4,146)     (286)
 Gain on disposal of discontinued operations                   --          9
 Income (loss) from discontinued operations                    --        (49)
                                                            ------    ------
  Income (loss) before income taxes                         (4,146)     (326)
  Income tax provision                                         --        --
                                                            ------    ------
  Net income (loss)                                         (4,146)%    (326)%
                                                            ======    ======

See accompanying notes to condensed consolidated financial statements.


                                       14
<PAGE>

Revenue.
--------

Product  revenue  primarily  consisted of engineering and  manufacturing  change
management  software  licenses  sold to  companies.  Service  revenue  primarily
consisted of Novo  maintenance  services for  third-party  hardware and software
products as well as maintenance services related to Inbox products.

Revenue  decreased  78% to  $111,000  in the  quarter  ended  May 31,  2002 from
$507,000 in the quarter ended May 31, 2001 and revenue decreased 67% to $317,000
in the six months  ended May 31, 2002 from  $953,000 in the six months ended May
31, 2001.  Product  revenue  decreased to $19,000 from  $105,000,  while service
revenue  decreased to $92,000 from  $402,000 in the quarters  ended May 31, 2002
and May 31,  2001,  respectively.  Product  revenue  decreased  to $21,000  from
$146,000,  while service revenue  decreased to $296,000 from $807,000 in the six
months  ended May 31, 2002 and May 31,  2001,  respectively.  This  decrease was
primarily attributable to lower demand for our products and services. Such lower
demand  is  the  result  of  both  our  deteriorating  financial  condition  and
deteriorating economic conditions in the overall economy.

Revenue  from the EDA segment for the quarter and six months  ended May 31, 2001
was $7,000 and $268,000,  respectively.  The EDA segment was  discontinued as of
August 31, 2001.

International  revenue for the Company  accounted for 44% and 57% of revenue for
the quarter and six months ended May 31, 2002, respectively.

Cost of Revenues.
-----------------

Cost of  revenues  primarily  consists  of the  costs  of  products,  personnel,
amortization of acquired Inbox technology and other operating  expenses incurred
in providing  services to the customers.  Cost of revenues for Ingenuus  segment
decreased 49% to $352,000 in the quarter ended May 31, 2002 from $687,000 in the
quarter ended May 31, 2001. Cost of revenue decreased 46% to $763,000 in the six
months  ended May 31,  2002 from $1.4  million in the six  months  ended May 31,
2001.  The  decrease in cost of revenues was mainly due to decreases in salaries
and benefits of $137,000 and $331,000  from the quarter and six months ended May
31, 2002, as compared to the same periods in 2001. These reductions  occurred as
a result of a reduction in  headcount.  The decrease of $136,000 and $208,000 in
cost of revenues in our Japan  office from the quarter and six months  ended May
31, 2002,  as compared to the same periods in 2001 was due to reduced  revenues,
which resulted in the reduction of  subcontractor  costs.  Cost of revenues as a
percentage  of revenue was 317% and 136% in the quarters  ended May 31, 2002 and
May 31, 2001 and 241% and 149% for the six months ended May 31, 2002 and May 31,
2001,  respectively.  Cost of revenues for the EDA segment was immaterial in the
quarter and six months ended May 31, 2001.  EDA segment was  discontinued  as of
August 31, 2001.

Research and Development.
-------------------------

Research and development  expenses  represent the cost of engineering  personnel
and other  expenses  incurred in the  development  and  enhancement  of our core
technology  and  products.  Research and  development  expenses for the Ingenuus
segment decreased 3% to $596,000 in the quarter ended May 31, 2002 from $615,000
in the quarter  ended May 31, 2001.  The  decrease in research  and  development
expenses  in the  quarter  ended May 31,  2002 was  mainly due to  decreases  in
traveling expenses of $31,000,  and depreciation  expenses of $75,000.  This was
partially  offset  by  increases  in  salaries  of  $52,000,  as a result  of an
interdepartmental  transfer of one  employee  from  marketing  to  research  and
development,  consulting  fees of $27,000  and  facility  expenses  of  $18,000.
Research and development  expenses for Ingenuus decreased 23% to $1.1 million in
the six months  ended May 31, 2002 from $1.4 million in the six months ended May
31, 2001.  This  decrease was mostly due to  decreases in  professional  fees of
$159,000,  travel  expenses of $34,000 and  depreciation  expenses of  $149,000.
These  decreases  were partially  offset by an increase in salaries  expenses of
$42,000.  Research and development expenses as a percentage of revenue were 537%
in the quarter  ended May 31, 2002,  and 121% in the quarter ended May 31, 2001.
Research and  development  expenses as a percentage  of revenue were 338% in the
six months  ended May 31, 2002  compared to 147% in the six months ended May 31,
2001.

Research and development expenses for the EDA business were $408,000 for Verilux
in the quarter  ended May 31, 2001 and $577,000 for the six months ended May 31,
2001. The Company discontinued the operations of Verilux as of August 31, 2001.

Sales and Marketing.
--------------------

Sales and  marketing  expenses  consist of salaries  paid to internal  sales and
marketing personnel and sales  representatives and advertising costs and related
operating  expenses.  Sales and marketing  expenses decreased 61% to $717,000 in
the quarter  ended May 31, 2002 from $1.8  million in the quarter  ended May 31,
2001. The decrease of sales and marketing  expenses in the quarter ended May 31,
2002,  compared  with the quarter  ended May 31, 2001 was mainly due to $418,000
decrease in advertising  related expenses,  $381,000 in salaries expenses due to
the reduction in headcount, $130,000 in purchased services and $69,000 in travel
expenses.  Sales and  marketing  expenses  for  Ingenuus  decreased  45% to $1.5
million  in the six  months  ended May 31,  2002,  from $2.7  million in the six
months ended May 31, 2001.  The decrease in sales and marketing  expenses in the
six months ended May 31, 2002,  compared with the six months ended May 31, 2001,
was mainly due to $525,000 decrease in advertising related expenses, $240,000 in
salaries expenses due to the reduction in headcount,  and $353,000 in recruiting
expenses.  Sales and marketing expenses as a percentage of revenue were 646% and
361% in the  quarters  ended May 31,  2002,  and 2001,  respectively.  Sales and
marketing expenses,  as a percentage of revenue was 477% in the six months ended
May 31, 2002 and 289% in the six months ended May 31, 2001.

General and Administrative Expenses.
------------------------------------

General and  administrative  expenses  include  salaries and expenses related to
executives,  corporate finance, legal and human resources. These costs decreased
49% to  $637,000  in the  quarter  ended May 31,  2002 from $1.2  million in the
quarter ended May 31, 2001. The decrease in general and administrative  expenses
was  mainly  due to a  $73,000  decrease  in  salaries  expenses  as a result of
reductions in workforce,  $364,000 decrease in professional  services related to
consulting,  legal and accounting fees, and $48,000 decrease in recruiting fees.
General and  administrative  expenses,  decreased 49% to $1.3 million in the six
months  ended May 31,  2002,  from $2.5  million in the six months ended May 31,
2001.  The  decrease  in general and  administrative  expenses in the six months
ended May 31, 2002,


                                       15
<PAGE>

compared  with the six months ended May 31, 2001,  was mainly due to decrease in
salary  expenses  of $207,000  as a result of reduced  headcount  and lower fees
related to professional services and legal expenses of $629,000.  There was also
a decrease of $39,000  and  $136,000  of general  and  administrative  expenses,
related to our office in Japan,  for the  quarter  and six months  ended May 31,
2002,  compared to the same periods in 2001.  For the quarter ended May 31, 2002
as compared to the quarter ended May 31, 2001, a decrease of $32,000 in salaries
and travel  expenses was a result of the  elimination of the general manager and
other  positions,  and $7,000 decrease in common expenses due to relocating to a
smaller  facility.  For the six-month  period ended May 31, 2002, as compared to
the six month period ended May 31, 2001,  salaries and travel expenses decreased
$95,000,  while  common  expenses  decreased  $41,000.  This was also due to the
reduction in headcount and relocation.  General and administrative expenses as a
percentage of revenue were 574% and 247% in the quarters ended May 31, 2002, and
2001,  respectively.  General and  administrative  expenses as a  percentage  of
revenue  were  402% in the six  months  ended  May 31,  2002 and 261% in the six
months ended May 31, 2001.

Amortization of Goodwill and Other Intangible Assets.
------------------------------------------------------

Amortization of goodwill and other intangible assets decreased 8% to $768,000 in
the quarter  ended May 31, 2002 from $835,000 in the quarter ended May 31, 2001.
The decrease of $67,000  resulted  from the reduction of  amortization  expenses
because the acquired  workforce,  tradename of Inbox and  franchise  fee of Novo
were fully  amortized as of November 30, 2001. The  amortization of goodwill and
other intangible assets decreased 8% to $1.5 million in the six months ended May
31, 2002 from $1.7 million in the six months ended May 31, 2001. Amortization of
goodwill and other  intangible  assets as a  percentage  of revenue was 692% and
165% in the quarters  ended May 31, 2002,  and 2001 and 485% and 175% in the six
months ended May 31, 2002 and 2001, respectively.

Impairment of Assets.
---------------------

The  Company  evaluated  its assets to  determine  if they were  impaired  under
Financial  Accounting Standards Board ("FASB") Statement of Financial Accounting
Standards  No. 121 ("SFAS  121") at November  30, 2001 and again at February 28,
2002, using undiscounted cash flow. These projected undiscounted cash flows were
based on a sixty-month forecast.  Although these cash flow projections reflected
decreasing  cash flows  during  fiscal  year  2002,  there was  sufficient  cash
available during the entire forecasted period. Hence, based on the fact that the
Company has some strong  prospects in sales  pipeline.  the  improving  economic
condition, and the Company's ability to further restructure to preserve cash and
be able to fund its operations, we concluded the assets were not impaired.

Management noted the following factors during the second quarter of 2002:

     *   certain  sales  expected  for  the  second  quarter  of  2002  had  not
         materialized;

     *   certain sales  projected for the third  quarter and  substantially  all
         for the second quarter of 2002 have been  canceled  or  extended to the
         fourth quarter of 2002 or beyond;

     *   overall economic  conditions had not improved to the extent that it was
         forecasted in fiscal 2001 and the first quarter of fiscal 2002; and

     *   based upon the revised cash flow projections,  the Company would use in
         operations  all  remaining  cash by  September  2002 unless  additional
         funding becomes available.

While the Company is aggressively pursuing a sales goal of at least $600,000, in
the third  quarter  of 2002,  without  significant  improvement  in the  overall
economy, our ability to close these accounts is substantially at risk.

Due to the factors  outlined  above,  our cash flow forecast  projects a deficit
cash balance during September 2002. Accordingly, the Company determined it is no
longer appropriate to include projected undiscounted cash flows beyond September
2002 for the purposes of determining asset impairment under SFAS 121.

We concluded  that with no revenue in the second and third quarters of 2002 from
Ingenuus software, and given the fact that the Company's prospects keep delaying
capital  purchases,  there is a strong  possibility that the Company will not be
able to generate enough revenue and cash to continue  operations.  Hence,  using
SFAS 121, we concluded the assets and the intangibles are impaired and should be
written-down to the estimated fair value.

Based on current cash flows,  and on the assumption that the Company will be out
of funds by  September  2002,  several  intangible  and fixed assets were deemed
impaired. The total impairment of assets was $7.4 million.

The Company recognized an impairment of $59,000 for intangible assets related to
developed  technology of the Novo  maintenance  business since the Company is no
longer engaged in that business,  including in Japan,  where as of May 31, 2002,
the Company gave notice to its employees and partners to cease operations at the
end of July 2002.

The Company recognized an impairment of $6,468,000 for intangible  assets,  down
to their estimated fair value, based on the fact that if the Company is not able
to raise any additional  funds,  it will run out of cash by September  2002. The
intangible  assets included $115,000 related to the core technology of Inbox and
$6,353,000 related to the goodwill from Inbox.

The Company  recognized an  impairment  of $856,000 for leasehold  improvements,
down to their  estimated  fair  value,  based on the fact  that  there is a high
vacancy  rate in  Livermore,  and that  there  are empty  buildings  surrounding
Ingenuus's  premises.  The Company  believes that it may be able to sublease the
building at the same rent that the Company is currently  paying,  but may not be
able to recover any costs related to the leasehold improvements.

The Company  recognized an  impairment of $32,000 for computer  software down to
its estimated fair value.

The Company recognized an impairment for furniture and fixtures in the amount of
$15,000, down to their estimated fair value.

The Company  recognized an impairment of $2,000 for its automobile,  down to its
estimated fair value.

Gain on Sale of Investments.
----------------------------

In the six months  ended May  31,2001 the  Company  sold  500,000 of the 525,000
shares of Virage Logic it held, for


                                       16
<PAGE>

$6.7  million,  at an aggregate  cost of  $800,000,  resulting in a gain of $5.9
million.  During fiscal year 2001, the Company sold the entire of 525,000 shares
of Virage Logic.  Gain on sale of investment,  as a percentage of revenue was 0%
and 693% in the quarters ended May 31, 2002, and 2001, respectively. For the six
months  ended  May 31,  2002  and  2001,  the gain on sale of  investment,  as a
percentage of revenue was 0% and 618%, respectively.

Interest and Other, Net.
------------------------

The interest and other,  net  decreased  97% to $2,000 in quarter  ended May 31,
2002 from $76,000 in the quarter ended May 31, 2001. The interest and other, net
decreased 19% to $133,000 in six months ended May 31, 2002, from $165,000 in the
six months ended May 31, 2001.  The decrease of $74,000 in the quarter ended May
31, 2002, compared to the quarter  ended May 31,  2001,  consisted  primarily of
$70,000 decrease in interest  income.  The decrease in the six-month period 2002
was due  mainly  to  $143,000  decrease  in  interest  and  dividend  income  on
investments,  which was partially  offset by interest of $118,000 on tax refunds
received from the IRS.  Interest and other,  net as a percentage of revenue were
2% and 15% in the quarters  ended May 31, 2002, and 2001,  respectively  and 42%
and 17% in the six months ended May 31, 2002 and 2001, respectively.

Foreign currency balance sheet accounts of the Novo foreign  subsidiary in Japan
are translated  into U.S.  dollars at exchange  rates  prevailing on the balance
sheet dates.  Revenue,  costs and expenses are translated  into U.S.  dollars at
average rates for the period.  Gains and losses  resulting from foreign exchange
transactions   are  included  in  the  statement  of  operations  and  were  not
significant during the periods presented.

Provision  for Income  Taxes.
-----------------------------

There was no provision for income taxes in the quarters and six months ended May
31, 2002, and 2001,  respectively.  There was $2,000  provision taken for income
taxes in the quarter and six months ended May 31, 2001.

The  Company  has  taken a  valuation  allowance  on the full  amount of the net
operating loss  carry-forwards and its other net deferred tax assets since it is
likely that the benefit will not be realized in the future.

Liquidity and Capital Resources.
--------------------------------

We have  funded  our  operations  primarily  from  license  revenue  and the net
proceeds of $71.9 million from the initial  public  offering of our common stock
in May 1998.

Our operating  activities  used net cash of $3.8 million and $9.7 million in the
six months ended May 31, 2002 and 2001,  respectively.  Net cash used in the six
months  ended  May 31,  2002 and 2001  were due to the  significant  net  losses
incurred  for these  periods.  During  the six  months  ended May 31,  2002,  we
received $609,000 in income tax refunds from the IRS.

Net cash (used for) and provided by investing  activities  were  ($301,000)  and
$6.7  million  in the six months  ended May 31,  2002,  and 2001,  respectively.
During  the  six  months  ended  May 31,  2002,  we used  $295,000  for  capital
expenditures related to interior  improvements to our Livermore facility. In the
six months ended May 31, 2001, we received net proceeds of $6.7 million from the
sale of 500,000 shares of Virage Logic,  Corp. and we used $35,000 for purchases
of property and equipment.

Net cash  provided  by and (used  for)  financing  activities  were  $1,000  and
($135,000) in the six month ended May 31, 2002, and 2001 respectively.  Net cash
provided by financing  activities  in the six months ended May 31, 2002 was from
the issuance of common stock under  employee  stock purchase plan. Net cash used
by financing activities in the six months ended May 31, 2001 consisted primarily
of repurchase of common stock of $149,000.

Net proceeds  from the sale of SIP business  were $2.0 million in the six months
ended May 31,  2001.  The entire  amount of $11.3  million  from the sale of SIP
business had been received as of November 30, 2001.

As of May 31,  2002,  we had cash  and  cash  equivalents  of $1.4  million,  an
accumulated deficit of $99.5 million and working capital of ($805,000).

We have suffered recurring losses in the first six months of fiscal 2002, fiscal
2001, and 2000.  Our continued  existence is dependent on our ability to achieve
profitable  operations.   If  we  achieve  profitability  or  obtain  additional
financing,  we intend to continue to invest in the  development  of new products
and  enhancements  to our existing  products.  Our future  liquidity and capital
requirements will depend upon numerous factors, including:

* the costs and timing of our  product  development  efforts  and the success of
these development efforts;

* the costs and timing of our sales and marketing activities;

* the extent to which our existing and new products gain market acceptance;

* competing technological and market developments;

* the costs  involved  in  maintaining  and  enforcing  patent  claims and other
intellectual property rights; and

* economic conditions.

Overall  weakness  in  the  general  economy  and  our  deteriorating  financial
condition  caused demand for our product to decline during the second quarter of
2002. As a result,  the Company made no software  sales in the second quarter of
2002, and therefore did not meet its revenue target for that period.


                                       17
<PAGE>

As a result,  we further  reduced  headcount and operating  expenses to preserve
cash.  However,  even without revenues,  we believe that we will be able to fund
our  operations  with  existing  cash  until  September  2002.  We need to raise
immediate  additional  funds in order to support our continued  operating losses
and to otherwise fund our  operations.  We are attempting to raise funds through
our on-going efforts to sell the Company's  products and services,  by trying to
sell off our  investments in Slim  Technology,  and by attempting to raise funds
via traditional  sources and venture  capitalists.  In addition,  the Company is
actively pursuing  strategic business  combinations with several  companies.  If
additional  funding becomes  available,  we cannot be sure that such investments
will be offered on acceptable  terms.  Also, we cannot be sure that any business
combination  will be entered  into.  If adequate  funds are not  available  or a
business  combination  is not  entered  into,  we will be  required to cease our
operations.

The amount and timing of our future capital needs will be highly  dependent upon
our ability to increase  our revenue,  control our  expenses,  and  successfully
manage the  restructuring  of our  operations.  Thus,  our current  expectations
regarding  the amount  and  timing of our  future  cash needs and cash flows are
subject to substantial  uncertainty.  If we succeed in raising  additional funds
through  the  issuance  of  equity  securities,  the  issuance  will  result  in
substantial  dilution to existing  stockholders.  If we raise  additional  funds
through the issuance of debt securities or preferred stock, these new securities
would have rights,  preferences and privileges senior to those of the holders of
our common stock. The terms of these securities may also impose  restrictions on
our operations.

Other Factors Affecting Future Operating Results

Possible Challenges to Success

We May Not Be Successful in Marketing the MCM Product

In January 2001, we formally introduced Manufacturing Change Manager TM ("MCM"),
a software program that allows all members of the manufacturing  supply chain to
communicate  and  collaborate  using  the  Internet  as a fully  integrated  and
automated system.

Our future  depends  on our  ability to  enhance  and  expand the  existing  MCM
product,  and to introduce  new products as technology  allows.  There can be no
assurance  that we will be successful in marketing the MCM product.  We may also
experience  release  delays that are costly,  and that can harm our business and
result in possible litigation.  Other possible risks affecting our product sales
include:

* manufacturers' resistance to change;

* reductions  in capital  spending  by  customers  due to  economic  downturn or
  inflation;

* miscalculations regarding the need for the MCM product;

* misappropriation of the Company's technology or copyright infringement;

* diversion of resources due to  litigation,  including  intellectual  propriety
  rights litigation; and

* lack of sales, marketing, and customer support.

Also, our customers are subject to:

* rapid technological change;

* frequent introductions of new products;

* short product life cycles;

* changes in customer demands and requirements; and

* evolving industry standards.

Our Ability to Continue Operations Will Depend on Our Ability to Secure Funding.

The Company made no software  sales in the quarter  ending May 31, 2002. If this
condition continues, we will not be able to continue operations beyond September
2002. As a result, the Company's short-term viability will depend on our ability
to secure an immediate  source of funding  through either the sale of additional
equity securities or a merger. If such funding or merger does not occur, we will
be forced to cease operations and/or file for bankruptcy.

The Introduction of a Competing Product by a Large Company Could Have an Adverse
Effect on Sales.

We must deliver our product in the marketplace before the competition provides a
similar whole  solution.  If a competitor with better name  recognition  were to
produce a comprehensive  manufacturing  change product,  it would likely have an
adverse effect on our financial condition.

If We Do Not Establish Our Name in the Industry, Our Business Could Be Harmed

We are a small,  relatively  unknown new entrant into the  manufacturing  change
marketplace.  Customers have been, and may continue to be, reluctant to purchase
our products because of concerns about our viability.  If customers  continue to
resist the idea of having an unknown company supply their  manufacturing  change
needs,  such  resistance  will  likely have an adverse  effect on our  financial
condition.

If We Do Not Establish a Firm Customer Base, Our Business Could Be Harmed

If our sales team is not  successful in closing sales with major  manufacturers,
this will have an adverse  effect on the overall sales plan and on the financial
condition of the company.


                                       18
<PAGE>

The Manufacturing Industry May Resist Changing to Our Platform

Manufacturers with significant investment in present systems may resist the idea
of a basic platform such as ours,  fearing that it may not be flexible enough to
meet their individual needs. Such resistance would likely have an adverse effect
on our financial condition.

Product Defects May Harm Our Business

Like any new software product,  the MCM software may have some "bugs" or defects
that could appear after a company has purchased and installed the software. Such
occurrences  could  have an adverse  effect on our  financial  condition  due to
customer dissatisfaction,  the additional labor costs involved in fixing it, and
delays in shipping additional products.

A Recession or Economic Downfall Would Harm Our Business

If current  economic  conditions  persist,  customers  may further delay capital
spending, which will have an adverse effect on our financial condition.

In addition,  terrorist acts or acts of war (wherever  located around the world)
may cause damage or disruption to the overall economy, our business,  employees,
supplies,  distributors and resellers, and customers, all of which could have an
adverse effect on our operations and financial results.

Risks Associated with Our International Sales Could Harm Our Business

We continue  to market our  products to the  international  market.  There are a
number of risks inherent in dealing with foreign companies.  Some of those risks
include:

* economic recessions and political instability;

* exchange rate fluctuations;

* extended accounts receivables and collections difficulties;

* difficulty in managing both sales representatives and distributors;

* unexpected changes in regulatory requirements;

* reduced or limited protection for intellectual property rights;

* export license requirements and documentation; and

* tariffs and possible adverse tax consequences.

Our Future Operating Results Are Expected to Fluctuate and We Depend Upon Timely
Project Completion

Our operating  results have fluctuated in the past and are expected to fluctuate
significantly  on a  quarterly  and annual  basis in the future as a result of a
number of factors including:

* the size and timing of customer orders;

* the length of our sales cycle;

* the  timing  of new  product  announcements  and  introductions  by us and our
competitors;

* our ability to  successfully  develop,  introduce  and market new products and
product enhancements;

* market acceptance of our products;

* the cancellation or delay of orders from major customers;

* the  level  of  changes  to  customer  requirements  due to  specific  changes
requested by customers;

* our ability to retain our existing  personnel and hire  additional  personnel;
and

* general economic conditions.


                                       19
<PAGE>

We Face the Risk of Losing Existing Contracts.
-----------------------------------------------

Our contracts may generally be canceled without cause, and if a customer cancels
or delays performance under any such contracts, our business,  operating results
and financial condition could be materially adversely affected.

Manufacturers May be Reluctant to Make Capital Investments.
-----------------------------------------------------------

A customer's  license of our products may involve a  significant  commitment  of
capital with the  attendant  delays  frequently  associated  with  authorization
procedures for capital expenditures within customer organizations. Our operating
expenses  will be based  in part on our  expectations  of  future  revenue  from
product licenses.  Accordingly,  if we do not realize our expected revenues, our
business,  operating  results,  and  financial  condition  could  be  materially
adversely affected.

We May Fail to  Successfully  Integrate Our Business With Merger and  Acquistion
Partners.

From time to time,  we expect to evaluate  potential  acquisitions  to build our
expertise. There can be no assurance that:

* we will be able to identify attractive acquisition candidates;

* that we will be able to successfully complete any such acquisition; or

* that we will  be  able to  integrate  any  acquired  company  with  our  other
operations.

In connection  with  potential  acquisitions,  the failure to  successfully  and
efficiently  integrate new employees and operations of the acquired company with
our existing  employees  and  operations or to  successfully  manage an acquired
company could materially  adversely effect our business,  operating results, and
financial condition.

We Depend on Key Personnel

Our  business  depends  in  significant  part on the  continued  service  of our
executive  officers and other senior  management  and key  employees,  including
certain technical,  managerial and marketing personnel. The loss of the services
of any of these  individuals  or groups of  individuals  could  have a  material
adverse effect on our business,  operating results and financial condition. None
of our  executive  officers  has an  employment  agreement  with us.  Also,  any
significant  growth of our  business and  expansion  of our customer  base would
place a significant strain on our management and operations. We believe that our
future  business  results  will depend in  significant  part upon our ability to
identify,  attract,  motivate and retain  additional  highly skilled  technical,
managerial and marketing  personnel and to hire  replacements for employees that
leave us.  Competition for such personnel in the computer  software  industry is
intense.  There  can be no  assurance  we will  be  successful  in  identifying,
attracting and retaining such  personnel,  and the failure to do so could have a
material  adverse  effect  on our  business,  operating  results  and  financial
condition.

Our Share Price Is Volatile

Since our initial public  offering in April 1998, the market price of our Common
Stock has been highly volatile and is expected to be  significantly  affected by
factors such as:

* actual or anticipated fluctuations in our operating results;

* the liquidity of our common stock;

* our failure to meet or exceed published earnings estimates;

* changes in earnings estimates or recommendations by securities analysts;

* announcements of technological innovations;

* new products or new contracts by us or our existing or potential competitors;

* developments with respect to patents, copyrights or proprietary rights;

* adoption of new accounting standards affecting the software industry; and

* general market conditions.

In  addition,  the stock  market has from time to time  experienced  significant
price and volume fluctuations that have particularly  affected the market prices
for the securities of technology  companies,  which have often been unrelated to
the operating performance of such companies. These broad market fluctuations may
materially adversely affect the market price of our Common Stock.


                                       20

<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

We  develop  products  in the U.S.  and sell them  worldwide.  As a result,  our
financial  results  could be  affected  by  factors  such as  changes in foreign
currency  exchange  rates or weak  economic  conditions in foreign  markets.  We
currently have funds in foreign currency,  which are translated to U.S. dollars.
Hence, strengthening of the dollar may result in a decrease in the value of such
foreign currency when converted to U.S. dollars.

Interest  income is sensitive to changes in the general  level of U.S.  interest
rates,   particularly  since  our  investments  are  in  short-term  instruments
calculated at variable rates.

We have  established  policies and business  practices  regarding our investment
portfolio  to preserve  principal  while  obtaining  reasonable  rates of return
without significantly increasing risk. We place our investments with high credit
quality  issuers  according to our investment  policy.  We do not use derivative
financial instruments in our investment  portfolio.  All investments are carried
at cost, which  approximates  market value. Due to the short-term  nature of our
investments and the immaterial  amount of our debt  obligation,  we believe that
there  is  no  material  exposure  to  interest   fluctuation.   Therefore,   no
accompanying table has been provided.


                                       21
<PAGE>
                           PART II. OTHER INFORMATION


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(b) Reports on Form 8-K

None.

                                   SIGNATURES

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

                              INGENUUS CORPORATION

                              BY: /s/ Randy Singh
                                  ------------------------------------
                                  Randy Singh
                                  Chief Financial Officer

Date: July 15, 2002


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