Delaware		77-0421089
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

800 Chesapeake Drive, Redwood City, CA		94063
(Address of principal executive offices)		(Zip Code)

PART I.     FINANCIAL INFORMATION				1
ITEM 1.		FINANCIAL STATEMENTS (unaudited)		1
		Condensed Consolidated Balance Sheets as of June 30, 2002 and December 31, 2001		1
		Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2002 and 2001		2
		Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2002 and 2001		3
		Notes to Condensed Consolidated Financial Statements		4
ITEM 2.		MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		13
ITEM 3.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		34
PART II.     OTHER INFORMATION				35
ITEM 1.		LEGAL PROCEEDINGS		35
ITEM 2.		CHANGES IN SECURITIES AND USE OF PROCEEDS		36
ITEM 4.		SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS		37
ITEM 5.		OTHER INFORMATION		37
ITEM 6.		EXHIBITS AND REPORTS ON FORM 8-K		37
SIGNATURES				40

		June 30, 2002				December 31, 2001
Assets
Current assets:
Cash and cash equivalents		$	81,018			$	91,594
Accounts receivable, net			115				130
Other current assets			718				1,099
Total current assets			81,851				92,823
Restricted cash			826				826
Property and equipment, net			2,391				3,603
Other assets			73				163
Total assets		$	85,141			$	97,415
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable		$	1,110			$	1,107
Accrued liabilities			2,140				3,821
Deferred revenue			109				122
Capital lease obligations			11				28
Equipment loan			—				169
Note payable to related party			376				343
Total current liabilities			3,746				5,590
Stockholders’ equity:
Common stock			23				23
Additional paid-in capital			203,065				202,969
Unearned compensation			(9	)			(43	)
Accumulated other comprehensive loss			(55	)			(30	)
Accumulated deficit			(121,629	)			(111,094	)
Total stockholders’ equity			81,395				91,825
Total liabilities and stockholders’ equity		$	85,141			$	97,415

		Three Months Ended June 30,								Six Months Ended June 30,
		2002				2001				2002				2001
Net revenues:
License		$	40			$	194			$	76			$	484
Services			111				362				210				787
Business development (related party)			—				468				—				1,414
Total net revenues			151				1,024				286				2,685
Cost of net revenues:
License			84				128				181				287
Services			174				364				302				1,075
Non-cash cost of revenue			36				98				69				181
Total cost of net revenues			294				590				552				1,543
Gross profit (loss)			(143	)			434				(266	)			1,142
Operating expenses:
Sales and marketing			1,027				3,061				2,185				7,717
Non-cash sales and marketing			(32	)			(72	)			(21	)			(63	)
Research and development			2,914				4,731				5,937				9,961
Non-cash research and development			3				(26	)			8				(17	)
General and administrative			1,905				3,078				3,011				6,272
Non-cash general and administrative			—				(21	)			—				(16	)
Strategic marketing—equity instruments			—				340				—				652
Restructuring			—				3,672				—				3,672
Total operating expenses			5,817				14,763				11,120				28,178
Loss from operations			(5,960	)			(14,329	)			(11,386	)			(27,036	)
Other income (expense), net			318				1,176				851				2,835
Net loss in equity investment			—				(881	)			—				(1,100	)
Net loss		$	(5,642	)		$	(14,034	)		$	(10,535	)		$	(25,301	)
Net loss per share:
Basic and diluted		$	(0.25	)		$	(0.62	)		$	(0.46	)		$	(1.12	)
Weighted average shares			22,737				22,593				22,723				22,563

		Six Months Ended June 30,
		2002				2001
Cash flows from operating activities:
Net loss		$	(10,535	)		$	(25,301	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			1,279				2,193
Amortization of unearned compensation			(13	)			(101	)
Allowance for doubtful accounts and sales returns reserve			—				1,055
Net loss in equity investment			—				1,100
Strategic marketing-equity instruments			—				652
Non-cash cost of revenue			69				186
Loss on disposal of and write-down of property and equipment			—				1,742
Changes in assets and liabilities:
Accounts receivable from third parties			15