QUARTERLY RESULTS OF OPERATIONS
The following table presents our unaudited quarterly results of operations
for the eight quarters ended December 31, 1999 in dollars. You should read the
following table in conjunction with our financial statements and related notes
in this prospectus. We have prepared this unaudited information on the same
basis as our audited financial statements. These results include all
adjustments, consisting only of normal recurring adjustments, that we consider
necessary for a fair presentation of our operating results for the quarters
presented. You should not draw any conclusions about our future results from the
results of operations for any quarter.
<TABLE>
<CAPTION>
QUARTER ENDED
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MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31,
1998 1998 1998 1998 1999 1999 1999 1999
--------- -------- --------- -------- --------- -------- --------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue..................... $ -- $ -- $ -- $ 201 $ 737 $ 1,929 $ 3,686 $ 6,025
Cost of revenue............. -- -- -- 150 501 839 1,365 2,405
------- ------- ------- ------- ------- ------- ------- -------
Gross profit................ -- -- -- 51 236 1,090 2,321 3,620
Operating expenses:
Sales and marketing....... 255 842 919 1,058 1,298 1,837 2,536 4,248
Research and
development............. 1,276 1,526 1,398 1,702 1,342 1,452 1,682 1,962
General and
administrative.......... 157 247 258 262 350 305 405 630
Stock-based
compensation............ -- -- -- -- 104 292 328 1,619
------- ------- ------- ------- ------- ------- ------- -------
Total operating expenses.... 1,688 2,615 2,575 3,022 3,094 3,886 4,951 8,459
------- ------- ------- ------- ------- ------- ------- -------
Loss from operations........ (1,688) (2,615) (2,575) (2,971) (2,858) (2,796) (2,630) (4,839)
Interest income, net........ 102 131 100 69 100 167 147 103
------- ------- ------- ------- ------- ------- ------- -------
Net loss.................... $(1,586) $(2,484) $(2,475) $(2,902) $(2,758) $(2,629) $(2,483) $(4,736)
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
Our quarterly operating results have fluctuated significantly and we expect
that future operating results will be subject to similar fluctuations for a
variety of factors, many of which are substantially outside our control. See
"Risk Factors -- Our operating results are difficult to forecast and may
fluctuate from quarter to quarter, which may have a negative impact on the
market price of our common stock".
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