FORM 10-Q

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

(Mark One)

[X]     QUARTERLY  REPORT  PURSUANT  TO SECTION  13 OR 15 (d) OF THE  SECURITIES
        EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2000

                                       OR

[ ]     TRANSITION  REPORT  PURSUANT  TO SECTION 13 OR 15 (d) OF THE  SECURITIES
        EXCHANGE ACT OF 1934


Commission file number 0-24701

                       CATAPULT COMMUNICATIONS CORPORATION
             (Exact name of Registrant as specified in its charter)


               Nevada                                     77-0086010
  (State or other jurisdiction of                      (I.R.S. Employer
   incorporation or organization)                   Identification Number)

                             160 South Whisman Road
                         Mountain View, California 94041

                                 (650) 960-1025

          (Address, including zip code, and telephone number, including
                   area code, of principal executive offices)



         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

         As of March 31, 2000, there were 12,798,343  shares of the Registrant's
Common Stock, $0.001 par value, outstanding.


<PAGE>


                       CATAPULT COMMUNICATIONS CORPORATION
                                    FORM 10-Q
<TABLE>
<CAPTION>
                                      INDEX
<S>                                                                                               <C>
Part I--Financial Information                                                                     Page

Item 1.  Condensed Consolidated Financial Statements (unaudited)

Condensed Consolidated Balance Sheets at March 31, 2000 and September 30, 1999                        3

Condensed Consolidated Income Statements for the three and six months ended
         March 31, 2000 and 1999                                                                      4

Condensed Consolidated Statements of Cash Flow for the six months ended
         March 31, 2000 and 1999                                                                      5

Notes to Condensed Consolidated Financial Statements                                                  6

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations        8

Item 3.  Quantitative and Qualitative Disclosures About Market Risk                                  16

Part II--Other Information

Item 2.  Changes in Securities and Use of Proceeds                                                   16

Item 6.  Exhibits and Reports on Form 8-K                                                            16

Signatures                                                                                           17
</TABLE>


                                       2
<PAGE>


Part I.  Financial Information

Item 1.  Financial Statements

                       CATAPULT COMMUNICATIONS CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                        (In thousands, except share data)
                                   (unaudited)

                                                       March 31     September 30
                                                         2000           1999
                                                      --------      -----------
                                ASSETS

Current Assets:
   Cash and cash equivalents ......................   $  5,771         $  8,486
   Short-term investments .........................     39,672           33,168
   Accounts receivable, net .......................      4,936            5,852
   Inventories, net ...............................        763              705
   Deferred income taxes ..........................        890              890
   Prepaid expenses ...............................        711              349
                                                      --------         --------
      Total current assets ........................     52,743           49,450
Property and equipment, net .......................      1,100              998
Other assets ......................................        205              219
                                                      --------         --------
      Total assets ................................   $ 54,048         $ 50,667
                                                      ========         ========


             LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
   Accounts payable ...............................   $    767         $    444
   Accrued liabilities ............................      4,386            4,782
   Deferred revenue ...............................      2,455            1,852
                                                      --------         --------
      Total current liabilities ...................      7,608            7,078
                                                      --------         --------
Stockholders' Equity:
   Common stock ...................................         13               13
   Additional paid-in capital .....................     20,219           20,040
   Deferred compensation ..........................        (96)            (132)
   Retained earnings ..............................     26,239           23,796
   Accumulated other comprehensive income .........        365              172
   Treasury stock (50,000 shares at cost) .........       (300)            (300)
                                                      --------         --------
      Total stockholders' equity ..................     46,440           43,589
                                                      --------         --------
      Total liabilities and stockholders' equity ..   $ 54,048         $ 50,667
                                                      ========         ========

           See Notes to condensed consolidated financial statements.


                                       3
<PAGE>
<TABLE>
                             CATAPULT COMMUNICATIONS CORPORATION
                          CONDENSED CONSOLIDATED INCOME STATEMENTS

                       (In thousands, except share and per share data)
                                         (unaudited)
<CAPTION>
                                     Three months ended            Six months ended
                                          March 31                      March 31
                                ----------------------------   ----------------------------
                                    2000            1999           2000            1999
                                ------------    ------------   ------------    ------------
<S>                             <C>             <C>            <C>             <C>
Revenues:
   Product sales ............   $      5,560    $      9,066   $      9,432    $     13,590
   Services .................          1,131             686          2,243           1,391
                                ------------    ------------   ------------    ------------
     Total revenues .........          6,691           9,752         11,675          14,981
                                ------------    ------------   ------------    ------------

Cost of revenues:
   Product sales ............            435             788            895           1,399
   Services .................            254             202            566             391
                                ------------    ------------   ------------    ------------
     Total cost of revenues .            689             990          1,461           1,790
                                ------------    ------------   ------------    ------------
Gross profit ................          6,002           8,762         10,214          13,191
                                ------------    ------------   ------------    ------------
Operating expenses:
   Research and development .            694             744          1,309           1,297
   Sales and marketing ......          2,413           1,302          4,403           2,494
   General and administrative            911             734          1,608           1,313
                                ------------    ------------   ------------    ------------
     Total operating expenses          4,018           2,780          7,320           5,104
                                ------------    ------------   ------------    ------------
Operating income ............          1,984           5,982          2,894           8,087

Interest income .............            682             251          1,286             402
Other income (expense) ......            (28)             54           (215)           (112)
                                ------------    ------------   ------------    ------------

Income before taxes .........          2,638           6,287          3,965           8,377
Provision for taxes .........          1,037           2,703          1,547          (3,602)
                                ------------    ------------   ------------    ------------

Net income ..................   $      1,601    $      3,584   $      2,418    $      4,775
                                ============    ============   ============    ============

Earnings per share:
   Basic ....................   $       0.13    $       0.31   $       0.19    $       0.43
                                ============    ============   ============    ============

   Diluted ..................   $       0.12    $       0.30   $       0.18    $       0.41
                                ============    ============   ============    ============

Weighted average shares:
   Basic ....................     12,798,000      11,636,000     12,762,000      11,076,000
                                ============    ============   ============    ============

   Diluted ..................     13,113,000      12,073,000     13,077,000      11,513,000
                                ============    ============   ============    ============

<FN>
                 See Notes to condensed consolidated financial statements.
</FN>
</TABLE>



                                       4
<PAGE>
<TABLE>

                       CATAPULT COMMUNICATIONS CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (Unaudited)

                                                                        Six months ended
                                                                            March 31

                                                                       2000        1999
                                                                     --------    --------
<CAPTION>
Cash flows from operating activities:
<S>                                                                  <C>         <C>
Net income .......................................................   $  2,418    $  4,775
Adjustments to reconcile net income to net cash provided (used) by
   operating activities:
Depreciation and amortization ....................................        222         156
Amortization of deferred stock compensation ......................         36         100
   Gain on sale of fixed assets ..................................       --             3
   Change in current assets and liabilities:
      Accounts receivable ........................................        916      (4,077)
      Inventories ................................................        (58)        (16)
      Prepaid expenses ...........................................       (362)       (253)
      Other assets ...............................................         14         (27)
      Accounts payable ...........................................        323        (129)
      Accrued liabilities ........................................       (396)      2,207
      Deferred revenue ...........................................        603         293
                                                                     --------    --------
        Net cash provided by operating activities ................      3,716       3,032
                                                                     --------    --------
Cash flows from investing activities:
   Purchases of investments, net .................................     (6,504)    (16,710)
   Purchase of property and equipment ............................       (299)       (190)
                                                                     --------    --------
        Net cash used by investing activities ....................     (6,803)    (16,900)
                                                                     --------    --------
Cash flows from financing activities:
   Stock issuances ...............................................        179      19,240
   Purchase of treasury stock ....................................       --          (300)
                                                                     --------    --------
        Net cash provided by financing activities ................        179      18,940
                                                                     --------    --------

Effect of exchange rates on cash and cash equivalents ............        193         (33)
                                                                     --------    --------

Increase (decrease) in cash and cash equivalents .................     (2,715)      5,039
Cash and cash equivalents, beginning of period ...................      8,486      15,229
                                                                     --------    --------

Cash and cash equivalents, end of period .........................   $  5,771    $ 20,268
                                                                     ========    ========
<FN>

                      See Notes to consolidated financial statements.
</FN>
</TABLE>


                                             5
<PAGE>


                       CATAPULT COMMUNICATIONS CORPORATION

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE 1--THE COMPANY AND BASIS OF PRESENTATION:

         Catapult Communications Corporation, (the "Company") designs, develops,
manufactures,  markets  and  supports  an  advanced  software-based  test system
offering  an   integrated   suite  of  testing   applications   for  the  global
telecommunications  industry.  The Company's  advanced  test systems  assist its
customers in the design,  integration,  installation and acceptance testing of a
broad range of digital  telecommunications  equipment and services.  The Company
has been  incorporated in Nevada since June 19,1998.  The Company has operations
in the United States, Canada, the United Kingdom,  Europe and Japan. The Company
conducts its business within one industry segment.

         These  accompanying  condensed  consolidated  financial  statements and
related  notes  are  unaudited.  However,  in the  opinion  of  management,  all
adjustments,  (consisting  only of  normal  recurring  adjustments),  which  are
necessary for the fair  presentation  of the  financial  position and results of
operations for the interim periods presented have been included.  The results of
operations  for such  periods are not  necessarily  indicative  of results to be
expected  for any future  period or the fiscal year ending  September  30, 2000.
These  financial  statements  including  the  notes  thereto  should  be read in
conjunction with the audited  financial  statements for the year ended September
30, 1999,  which were  included as part of the  Company's  Annual Report on Form
10-K for the year ended  September 30, 1999.

NOTE 2 - RECENT ISSUED ACCOUNTING STANDARDS

         In June 1998, the Financial  Accounting Standards Board issued SFAS No.
133,  "Accounting  for Derivative  Instruments  and Hedging  Activities"  ("SFAS
133").  SFAS 133  establishes  accounting and reporting  standards of derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts,  and for hedging activities.  In July 1999, the Financial  Accounting
Standards Board issued SFAS No. 137, "Accounting with Derivative Instruments and
Hedging  Activities  Deferral of the Effective  Date of FASB  Statement No. 133"
("SFAS  137").  SFAS 137  deferred  the  effective  date until the first  fiscal
quarter  ending  June 15,  2000.  The Company  will adopt SFAS 133 in 2001.  The
Company continues  assessing the effect of FAS 133 on the financial position and
results of operations of the Company.

         In December  1999, the SEC issued Staff  Accounting  Bulletin (SAB) No.
101 "Revenue Recognition in Financial Statements" which provides guidance on the
recognition,  presentation  and  disclosure  of revenue in financial  statements
filed with the SEC.  SAB 101  outlines  the basic  criteria  that must be met to
recognize  revenue and  provides  guidance  for  disclosures  related to revenue
recognition  policies.  SAB 101 is effective  for fiscal years  beginning  after
December 15, 1999. The Company has not yet  determined the impact,  if any, that
the adoption  will have on the  financial  position and results of operations of
the Company.

         In  March  2000,  the  Financial   Accounting  Standards  Board  issued
Interpretation  No. 44  "Accounting  for Certain  Transactions  Involving  Stock
Compensation"  an  interpretation  of APB  Opinion  No.  25 ("FIN  44").  FIN 44
establishes  guidance for the accounting for stock option grants made after June
30, 2000.  FIN 44 also  establishes  guidance for the repricing of stock options
and  determining  whether a grantee  is an  employee,  for  which  guidance  was
effective  after  December 15, 1998 and modifying a fixed option to add a reload
feature,  for which guidance was effective  after January 12, 2000. The adoption
of certain of the  provisions  of FIN 44 prior to March 31,  2000 did not have a
material  effect on the financial  statements.  The Company does not expect that
the  adoption of the  remaining  provisions  will have a material  effect on the
financial statements.

NOTE 3--BASIC AND DILUTED EARNINGS PER SHARE
<TABLE>
         Basic earnings per share is computed using the weighted  average number
of common  shares  outstanding  during the period.  Diluted  earnings  per share
includes the effect of dilutive  potential common shares (options) issued during
the period (using the treasury stock method). The following data is presented in
thousands except per share data:
<CAPTION>
                                               Three months ended          Six months ended
                                                    March 31                    March 31
                                               2000          1999           2000         1999
                                            -----------   -----------   -----------   -----------
                                                 (in thousands, except share and per share)
<S>                                         <C>           <C>           <C>           <C>
Net income ..............................   $     1,601   $     3,584   $     2,418   $     4,775
                                            ===========   ===========   ===========   ===========

Weighted average shares outstanding .....    12,798,000    11,636,000    12,762,000    11,076,000
Dilutive options ........................       315,000       437,000       315,000       437,000
                                            -----------   -----------   -----------   -----------
Weighted average shares assuming dilution    13,113,000    12,073,000    13,077,000    11,513,000
                                            ===========   ===========   ===========   ===========

Earnings per share:
Basic ...................................   $      0.13   $      0.31   $      0.19   $      0.43
                                            ===========   ===========   ===========   ===========

Diluted .................................   $      0.12   $      0.30   $      0.18   $      0.41
                                            ===========   ===========   ===========   ===========
</TABLE>
                                       6
<PAGE>

NOTE 4--COMPREHENSIVE INCOME

         The components of comprehensive  income, net of tax, are as follows (in
thousands):

                                      Three Months Ended       Six Months Ended
                                            March 31                March 31
                                        2000      1999          2000      1999
                                      ------     ------        ------    ------
Net Income                            $1,601     $3,584        $2,418    $4,775
Currency translation adjustment           77        (33)          193       (34)
                                      ------     ------        ------    ------
Comprehensive income                  $1,678     $3,551        $2,611    $4,741
                                      ======     ======        ======    ======

NOTE 5--INVENTORIES (in Thousands)

                                                     March 31,  September 30,
                                                       2000        1999
                                                       ----        ----
Raw Materials ......................................   $673        $554
Work-in-process ....................................     40          79
Finished goods .....................................     50          72
                                                       ----        ----
                                                       $763        $705
                                                       ====        ====


NOTE 6 - SEGMENT REPORTING

         The  Company is  organized  to operate  and  service a single  industry
segment: the design, development, manufacture, marketing and support of advanced
software-based test systems globally.

         The Company's principal geographical areas of operations, sales, income
and assets by region for each fiscal year end were as follows (in thousands):

                                   North     UK and           Consolidated
                                  America    Europe     Japan     Total
                                  -------    ------     -----     -----
Six months ended March 31, 2000

Sales to unaffiliated customers   $ 3,685   $ 1,741    $ 6,249   $11,675
Net income (loss) .............     2,546      (432)       304     2,418
Total assets ..................    45,366     2,718      5,964    54,048

Six months ended March 31, 1999

Sales to unaffiliated customers   $ 1,911   $ 1,159    $11,911   $14,981
Net income (loss) .............     4,220      (185)       740     4,775
Total assets ..................    40,957       293      4,398    45,648

         The result of  operations  by geographic  region  includes  significant
sales  principally from the United States to the Company's  foreign locations at
agreed upon transfer prices.


                                       7
<PAGE>

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

         The following  discussion  and analysis  should be read in  conjunction
with  "Selected  Consolidated  Financial  Data" and the  Company's  Consolidated
Financial  Statements  and Notes  thereto  included in the Annual Report on Form
10-K. The following discussion contains statements that are not historical facts
but are forward-looking  statements. Such statements are generally identified by
the use of  forward-looking  words and phrases,  such as "intended,"  "expects,"
"anticipates" and "is (or are) expected (or anticipated)." These forward-looking
statements  include but are not limited to those  identified in this report with
an  asterisk  (*)  symbol.  Actual  results  may  differ  materially  from those
discussed in such forward-looking  statements, and the Company's stockholders of
should  carefully  review the cautionary  statements set forth in this report on
Form 10-Q,  including those set forth under the caption "Factors That May Affect
Future Results."

         The  Company  may from time to time make  additional  written  and oral
forward-looking  statements,  including  statements  contained in the  Company's
filings  with the  Securities  and  Exchange  Commission  and in its  reports to
Stockholders.  The  Company  does not  undertake  to update any  forward-looking
statements  that may be made in this  Form  10-Q and from  time to time by or on
behalf of the Company."

Overview

         The Company designs,  develops,  manufactures,  markets and supports an
advanced  software-based  test system  offering an  integrated  suite of testing
applications for the global telecommunications industry. The Company's family of
digital communication test systems is designed to enable equipment manufacturers
and network  operators to deliver complex digital  telecommunications  equipment
and services more quickly and cost-effectively.  The DCT product line performs a
variety  of test  functions,  including  simulation,  load and  stress  testing,
feature verification,  conformance testing and monitoring. The company maintains
an  extensive  library  of  software  modules  that  support  approximately  160
protocols  and  variants.  The DCT systems  consists of  advanced  software  and
hardware  running on a  third-party  UNIX-based  workstation.  In addition,  the
Company offers customer  support under software  support  contracts,  as well as
installation and training.

Results of Operations

         The  following  table  sets  forth,  for  the  periods  indicated,  the
percentage  relationship  of  certain  items  from  the  Company's  consolidated
statements of income to total revenues.

                             For the three months ended   For the six months
                                       March 31,            ended March 31,
                                   2000      1999           2000      1999
                                  -----     -----          -----     -----

Revenues:
   Product sales ............      93.0%     93.0%          80.8%     90.7%
   Services .................      17.0       7.0           19.2       9.3
                                  -----     -----          -----     -----
     Total revenues .........     100.0     100.0          100.0     100.0
                                  -----     -----          -----     -----
Cost of revenues:
   Product sales ............       6.5       8.1            7.7       9.3
   Services .................       3.8       2.1            4.8       2.6
                                  -----     -----          -----     -----
     Total cost of revenues .      10.3      10.2           12.5      11.9
                                  -----     -----          -----     -----
Gross profit ................      89.7      89.8           87.5      88.1
                                  -----     -----          -----     -----


                                       8
<PAGE>


Operating expenses:
   Research and development .      10.4       7.6           11.2       8.7
   Sales and marketing ......      36.0      13.4           37.7      16.6
   General and administrative      13.6       7.5           13.8       8.8
                                  -----     -----          -----     -----
     Total operating expenses      60.0      28.5           62.7      34.1
                                  -----     -----          -----     -----

Operating income ............      29.7      61.3           24.8      54.0
Interest income .............      10.2       2.6           11.0       2.7
Other income (expense) ......      (0.4)      0.6           (1.8)     (0.8)
                                  -----     -----          -----     -----

Income before taxes .........      39.5      64.5           34.0      55.9
                                  -----     -----          -----     -----
Provision for taxes .........      15.5      27.7           13.3      24.0
                                  -----     -----          -----     -----

Net income ..................      24.0%     36.8%          20.7%     31.9%
                                  =====     =====          =====     =====

Gross margin on product sales      92.2%     91.3%          90.5%     89.7%
                                  =====     =====          =====     =====

Gross margin on services ....      77.5%     70.6%          74.8%     71.9%
                                  =====     =====          =====     =====


Three Months Ended March 31, 2000 and 1999

         Revenues. Revenues decreased by approximately 32% from $9.8 million for
the three months ended March 31, 1999 to $6.7 million for the three months ended
March 31, 2000. Over the same period,  product sales decreased by  approximately
39%  from  $9.1  million  to  $5.6  million.   Services  revenue   increased  by
approximately  60% from $686,000 to $1.1 million.  The decrease in product sales
was  primarily  attributable  to a one time  $3.5  million  sale to an  existing
customer in Japan in 1999. The increase in services revenue was primarily due to
sales of software support contracts  associated with new system sales as well as
support  contract  renewals and customer  training.  Services  revenue will vary
depending in part on the relative  contribution of each sales region.  In Japan,
the Company has  historically  received lower services  revenue in proportion to
its product sales,  principally  due to market factors  affecting the pricing of
such services.

         Subsequent  to the fiscal year ended  September  30, 1999,  the Company
received  information that sales to NTT, a major customer in Japan, would likely
be  significantly  reduced  beginning in fiscal 2000. The Company believes it is
likely that sales to NTT will no longer represent as large a percentage of total
revenue,  and this will likely have a negative effect on the Company's long term
growth  expectations.*  Accordingly,  results  for  quarter and fiscal 2000 will
likely  be  significantly  reduced  and  different  in terms  of total  revenue,
earnings per share,  geographic sales mix and customer concentration from fiscal
1999.

         Cost of revenues.  Cost of product sales consists of the costs of board
assembly by independent contractors,  purchased components, payroll and benefits
for personnel in product testing, purchasing, shipping and inventory management,
as well as supplies,  media and freight.  Cost of services consists primarily of
the costs of payroll and benefits for customer support  personnel,  installation
and training.  Cost of revenue  decreased 30% from $990,000 for the three months
ended March 31, 1999 to $689,000 for the three months ended March 31 2000.  Over
the same period,  product sales decreased by approximately 39% while the cost of
product sales decreased by 45%. Product gross margin for product sales increased
from  91.3% to 92.2%  over this same  period  as the  Company's  sales mix had a
greater  proportion of higher  margin  products.  Cost of services  increased by
approximately  26% from  $202,000  for the three  months ended March 31, 1999 to
$254,000 for the three  months  ended March 31, 2000 due  primarily to personnel
and increased  compensation costs. Over the same period, service gross margin on
services  increased from 70.6% to 77.5% due to increased  service  revenues from
service contract renewals in North America.


                                       9
<PAGE>


         Research and  development.  Research and development  expenses  consist
primarily  of the  costs of  payroll  and  benefits  for  engineers,  materials,
equipment and consulting services.  The Company's policy is to evaluate software
development  projects for  technological  feasibility  to determine if they meet
capitalization  requirements.  To date, all software development costs have been
expensed  as  research  and  development  expenses  as  incurred.  Research  and
development  expenses  decreased  slightly by approximately 7% from $744,000 for
the three  months  ended March 31, 1999 to $694,000  for the three  months ended
March 31, 2000.  As a percentage  of total  revenues,  research and  development
expenses  slightly  increased  from  7.6% to 10.4%  over the  same  period.  The
decrease in absolute  dollars was due primarily to timing and to a lesser extent
a decrease  in  variable  compensation  expense in the  engineering  group.  The
Company expects that research and development expenses will increase in absolute
dollars for the foreseeable  future as the Company intends to continue to invest
in product development.*

         Sales and marketing.  Sales and marketing expenses consist primarily of
the costs of payroll, benefits, commissions and bonuses, occupancy costs, travel
and promotional expenses,  such as product brochures and trade show costs. Sales
and marketing  expenses  increased  84.6% from $1.3 million for the three months
ended March 31, 1999 to $2.4  million for the three months ended March 31, 2000.
As a percentage of total revenues,  sales and marketing  expenses increased from
13.4% for the three  months  ended March 31, 1999 to 36.0% for the three  months
ended March 31, 2000.  The increase in absolute  dollars was due primarily to an
increase in marketing  personnel and the  expansion of the  Company's  sales and
support  offices.  The Company  expects that sales and  marketing  expenses will
increase in absolute  dollars for the foreseeable  future as the Company intends
to invest in its sales and marketing capabilities.*

         General and administrative. General and administrative expenses include
costs associated with the Company's general and risk management,  meeting public
company reporting  requirements,  employee  recruitment and retention,  investor
relations and finance functions.  General and administrative  expenses increased
24.1% from  $734,000  for the three  months ended March 31, 1999 to $911,000 for
the three  months ended March 31, 2000 due  primarily to an overall  increase in
temporary  staffing  costs,  recruiting  costs and public  company  costs.  As a
percentage of total revenues, general and administrative expenses increased from
7.5% to 13.6% over the same period.

         Interest income.  Interest income consists primarily of interest earned
on cash  and  cash  equivalents  and  short-term  investments.  Interest  income
increased  from  $251,000  for the three months ended March 31, 1999 to $682,000
for the three months  ended March 31, 2000 due to investing  the increase in the
Company's cash and cash equivalent balances and short-term investments primarily
from the  proceeds  of the  February  1999 public  offering  and cash flows from
profitable operations.

         Other  income   (expense),   net.  Other  income  (expense)   primarily
represents  realized  gains and losses from  fluctuations  in exchange  rates on
transactions denominated in foreign currencies. Other income was $54,000 for the
three  months  ended  March 31,  1999.  Other  expense was $28,000 for the three
months  ended  March 31,  2000 due to the change in foreign  exchange  gains and
losses  realized and premiums paid for forward  contracts  entered into to hedge
transactions denominated in currencies other than the US dollar.

         Provision  for income  taxes.  Provision  for income  tax  consists  of
federal,  state and international income taxes. The Company's effective tax rate
was 43.0%  for the three  months  ended  March 31,  1999 and 39.0% for the three
months ended March 31, 2000.  These tax rates primarily  reflect the anticipated
percentages of revenues derived by the Company from international operations and
a decrease in the top tax rate in Japan. The Company expects that its future tax
rate may vary  depending  in part on the  relative  income  contribution  by its
domestic and foreign operations.*


                                       10
<PAGE>


Six Months Ended March 31, 2000 and 1999

Revenues. Revenues decreased by approximately 22% from $15 million in six months
ended March 31, 1999 to $11.7  million in the six months  ended March 31,  2000.
Over the same period,  product sales decreased by  approximately  31% from $13.6
million to $9.4 million.  Services revenue  increased by approximately  57% from
$1.4  million in the six months  ended March 31, 1999 to $2.2 million in the six
months  ended  March  31,  2000.  The  decreased  product  sales  was  primarily
attributable  to the large  one-time  sale to a customer  in Japan in the second
quarter of 1999. The increase in services  revenue was primarily due to sales of
software support contracts  associated with new system sales as well as contract
renewals.  Services  revenue  will  vary  depending  in  part  on  the  relative
contributions  of each sales  region.  In Japan,  the Company  has  historically
received lower services revenue in proportion to its product sales,  principally
due to market factors affecting the pricing of such services.

Cost of Revenues.  Cost of product sales decreased  approximately  36% from $1.4
million in the six months ended March 31, 1999 to $0.9 million in the six months
ended  March  31,  2000.  Over the  same  period,  product  sales  decreased  by
approximately 31% during the period.. As a result,  over the same period,  gross
margin for product sales increased from 89.7% to 90.5% as the Company's hardware
sales in the first six  months of 2000 had a higher  proportion  of high  margin
products.  Cost of services  increased by approximately 45% from $391,000 in the
six months  ended March 31,  1999 to $566,000 in the six months  ended March 31,
2000.  Over the same period,  gross margin on services  increased  from 71.9% to
74.8%, as support contract  renewals  increased.

Research and  Development.  Research and development  expenses were flat at $1.3
million in the six months  ended March 31, 1999  compared to $1.3 million in the
six months ended March 31, 2000. As a percentage of total revenues, research and
development  expenses  increased  from 8.7% to 11.2% over the same  period.  The
increase in absolute  dollars was due  primarily  to an increase in  engineering
compensation cost.

Sales and Marketing. Sales and marketing expenses increased by approximately 76%
from $2.5  million in the six months ended March 31, 1999 to $4.4 million in the
six months ended March 31, 2000.  As a percentage of total  revenues,  sales and
marketing  expenses  increased  from  16.6% to 37.7% over the same  period.  The
increases  were due  primarily  to an  overall  increase  in  personnel  and the
expansion of the Company's sales and support  offices.  The Company expects that
sales  and  marketing  expenses  will  increase  in  absolute  dollars  for  the
foreseeable  future as the Company  intends to invest in its sales and marketing
capabilities.*


General and  administrative.  General and  administrative  expenses increased by
approximately  23% from $1.3  million in the six months  ended March 31, 1999 to
$1.6 million in the six months ended March 31,  2000.  As a percentage  of total
revenues,  general and administrative expenses increased from 8.8% to 13.8% over
the same period. The increase in absolute dollars is due primarily to an overall
increase in personnel and the costs associated with being a public company.

Interest Income. Interest income increased from $402,000 in the six months ended
March 31,  1999 to $1.3  million in the six months  ended  March 31, 2000 due to
investing of the increase in the Company's cash and cash equivalent balances and
short-term investments.

Other Income (expense). Other expense was $112,000 in the six months ended March
31, 1999 and was $215,000 in the six months  ended March 31, 2000.  The increase
was due to exchange losses related to transactions


                                       11
<PAGE>


denominated in foreign currencies.

Provision  for income taxes.  The Company's  effective tax rate was 43.0% in the
six months  ended March 31, 1999 and was 39.0% in the six months ended March 31,
2000. These tax rates primarily reflect the anticipated  percentages of revenues
derived by the Company from  international  operations and a decrease in the top
tax rate in Japan.

Liquidity and Capital Resources

         Historically,  the  Company  has  financed  its  operations,  including
increases in account  receivable and capital equipment  acquisitions,  primarily
through cash  generated from  operations,  cash proceeds from its initial public
offering of common stock,  profitable  operations,  investment  earnings and the
exercise of employee stock options.

         The Company's  operating  activities  provided cash of $3.0 million and
provided  $3.7 million in the six month  period  ending March 31, 1999 and 2000,
respectively.  The cash provided in the Company's  operations for the six months
ended March 31 1999 was primarily  attributable  to its net income and increased
accrued  expenses  offset by a  significant  increase  in  account  receivables,
specifically  in Japan from a large  one-time  sale and a reduction  in accounts
payable.  The cash provided in the Company's operations for the six months ended
March 31, 2000 was  primarily  attributable  to its net income and  decreases in
account  receivable  offset  by a  decrease  in  accrued  expenses  and  prepaid
expenses.  Investing activities,  consisted primarily of purchases of short-term
investments  and to a lesser extent  additions to property and equipment,  using
cash of $16.9  million and $6.8 million in the six months  ending March 31, 1999
and 2000, respectively.  Financing activities in the six months ending March 31,
1999 and 2000 were  attributable  to proceeds from the initial public  offering,
and the exercise of employee stock options.

         As of March 31, 2000, the Company had working capital of $45.1 million,
cash and cash  equivalents of $5.8 million and  short-term  investments of $39.7
million.  As of March 31,  2000,  the  Company had no bank  indebtedness  and no
long-term  commitments  other than  operating  lease  obligations.  The  Company
expects  that  capital  expenditures  will total  approximately  $1.0 million in
fiscal 2000.*

         The  Company  believes  that  cash  and  cash  equivalents,  short-term
investments  and funds  generated from  operations will provide the Company with
sufficient funds to finance its operations for at least the next 12 months.* The
Company may require additional funds to support its working capital requirements
or for other purposes.  There can be no assurance that additional financing will
be available or that if available,  such  financing  will be obtainable on terms
favorable to the Company or its stockholders.

Factors That May Affect Future Operating Results

Fluctuations in Quarterly Operating Results; Lengthy Sales Cycle

         The Company has  experienced,  and anticipates that it will continue to
experience,   significant  fluctuations  in  quarterly  revenues  and  operating
results.  The Company's revenues and operating results are relatively  difficult
to forecast for a number of reasons,  including (i) the variable size and timing
of  individual  purchases by customers,  (ii)  seasonal  factors that may affect
capital spending by customers, such as the varying fiscal year ends of customers
and  the  reduction  in  business   during  the  summer   months,   particularly
Internationally,  (iii) the  relatively  long  sales  cycles  for the  Company's
products,  (iv) the timing of hiring sales and technical personnel,  (v) changes
in the timing  and  amount of sales  incentive  compensation,  (vi)  competitive
conditions in the Company's markets,  (vii) exchange rate  fluctuations,  (viii)
changes in the mix of products  sold,  (ix) the timing of the  introduction  and
market  acceptance of new products or product  enhancements by the Company,  its
customers,  competitors or suppliers,  (x) costs  associated with developing and
introducing new products,  (xi) product life cycles,  (xii) changes in the level
of operating  expenses  relative to revenues,  (xiii) software defects and other
product quality problems,  (xiv) customer order deferrals


                                       12
<PAGE>


in anticipation of new products, (xv) delays in purchasing decisions or customer
orders due to customer consolidation, (xvi) supply interruptions, (xvii) changes
in the regulatory environment and (xviii) changes in global or regional economic
conditions or in the telecommunications industry.

         The  Company's  revenues  in any period  generally  have been,  and are
likely to continue to be,  derived from  relatively  small  numbers of sales and
service transactions with relatively high average revenues per order. Therefore,
the loss of any orders or delays in closing such transactions  could have a more
significant impact on the Company's quarterly revenues and results of operations
than on those of companies with relatively high volumes of sales or low revenues
per order.  The Company's  products are generally  shipped  within 15 to 30 days
after  orders are received and  revenues  are  recognized  upon  shipment of the
products,  provided no significant  vendor  obligations remain and collection of
the related  receivable is deemed probable.  As a result,  the Company generally
does not have a significant  backlog of orders,  and revenues in any quarter are
substantially dependent on orders booked and shipped in that quarter.

         A customer's  decision to purchase  the  Company's  products  typically
involves  a  significant  technical   evaluation,   internal  procedural  delays
associated with large capital  expenditure  approvals and testing and acceptance
of new systems  that affect key  operations.  For these and other  reasons,  the
sales cycle  associated  with the  Company's  products is typically  lengthy and
subject to a number of significant risks over which the Company has little or no
control.  Historically, the period between initial customer contact and purchase
of the  Company's  products has typically  ranged from two to nine months,  with
sales to new customers  (including new divisions  within existing  customers) at
the  longer  end of this  range.  Because  of the  lengthy  sales  cycle and the
relatively  small  number  and large  size of  customers'  orders,  if  revenues
forecast from a specific  customer for a particular  quarter are not realized in
that  quarter,  the  Company's  operating  results  for  that  quarter  could be
materially adversely affected.

         The Company's  expectations  for future revenues are  predicated,  to a
large  extent,  on  the  recruitment  and  hiring  of a  significant  number  of
employees,  particularly  experienced sales and technical personnel.  Failure to
hire, or delays in hiring, sufficient sales and technical personnel could have a
material adverse effect on the Company's results of operations for any period.

         Due to the  relatively  fixed  nature of most of the  Company's  costs,
including  personnel and facilities  costs, and because  operating  expenses are
based on anticipated revenue, a decline in revenue from even a limited number of
transactions,  failure to  achieve  expected  revenue  in any fiscal  quarter or
unanticipated  variations in the timing of recognition of specific  revenues can
cause  significant  variations in operating  results from quarter to quarter and
may in some future quarter result in losses or have a material adverse effect on
the  Company's  business,  financial  condition and results of  operations.  The
Company believes,  therefore, that period-to-period comparisons of its operating
results should not be relied upon as an indication of future performance.

         For  all of the  foregoing  factors,  as well  as  other  unanticipated
factors,  it is possible that in some future  quarter the  Company's  results of
operations  could fail to meet the  expectations  of public  market  analysts or
investors. In such event, or in the event that adverse conditions prevail or are
perceived to prevail  generally or with respect to the Company's  business,  the
price  of the  Company's  Common  Stock  will  likely  be  materially  adversely
affected.

Dependence on Limited Number of Customers

         The Company's  customer base is highly  concentrated,  and a relatively
small number of companies have accounted for  substantially all of the Company's
revenues to date. In the six months ended March 31, 2000, the Company's top four
customers represented approximately 69.5% of total revenues. The Company expects
that it will  continue to depend upon a relatively  limited  number of customers
for substantially all of


                                       13
<PAGE>


its  revenues in future  periods,  although no customer is  presently  obligated
either to purchase a specific  amount of products or to provide the Company with
binding  forecasts of purchases for any period.  The loss of a major customer or
the reduction, delay or cancellation of orders from one or more of the Company's
significant  customers could materially adversely affect the Company's business,
financial condition and results of operations.

Risks Associated with International Sales and Operations; Foreign Exchange Risk

         Company revenues from  international  customers were  approximately 70%
during  the  six  months  ended  March  31,  2000.  The  Company   expects  that
international  sales will continue to account for a  significant  portion of its
revenues in future  periods.* The Company sells its products  worldwide  through
its direct sales force.  The Company has offices located in Japan,  Canada,  the
United Kingdom,  Germany,  France and Sweden and plans to add offices, staff and
resources  worldwide from time to time.  International  sales and operations are
subject to inherent  risks,  including  difficulties  in staffing  and  managing
foreign  operations,  longer  customer  payment  cycles,  greater  difficulty in
accounts  receivable  collection,  changes  in  regulatory  requirements  or  in
economic or trade  policy,  costs  related to  localizing  products  for foreign
countries,  potentially  weaker protection for intellectual  property in certain
foreign  countries,  the burden of complying with a wide variety of foreign laws
and practices,  tariffs and other trade barriers,  and  potentially  adverse tax
consequences,  including  restrictions on  repatriation of earnings.  During the
last two  fiscal  years  and  during  the six  months  ended  March  31,  2000 a
significant  portion of the Company's  sales has been to customers in Japan.  If
economic  conditions in Japan deteriorate to a significant extent, the Company's
business,  financial  condition  and results of  operations  could be materially
adversely  affected.  In  addition,  although  the  Company  cannot  predict the
potential  consequences to the Company's business of the adoption of the Euro as
a common  currency in Europe,  the  transition  to the Euro presents a number of
risks,  including  increased  competition  from  European  firms as a result  of
increased  pricing  transparency.  An inability to obtain  necessary  regulatory
approvals  in  foreign  markets  on a timely  basis  could  also have a material
adverse  effect on the Company's  business,  financial  condition and results of
operations.

         Subsequent  to the fiscal year ended  September  30, 1999,  the Company
received  information that sales to NTT, a major customer in Japan, would likely
be  significantly  reduced  beginning in fiscal 2000. The Company believes it is
likely that sales to NTT will no longer represent as large a percentage of total
revenue,  and this will likely have a negative effect on the Company's long term
growth expectations.  Accordingly,  results for the quarter and fiscal 2000 will
likely  be  significantly  reduced  and  different  in terms  of total  revenue,
earnings per share,  geographic sales mix and customer concentration from fiscal
1999.

Rapid Technological Change; Uncertainty of Acceptance of  the Company's Products
and Services

         The market for telecommunications  test systems and services is subject
to rapid technological  change,  evolving industry  standards,  rapid changes in
customer  requirements  and  frequent  product  and  service  introductions  and
enhancements. The Company's future success will depend in part on its ability to
anticipate  and respond to these changes by enhancing its existing  products and
services  and by  developing  and  introducing,  on a timely and  cost-effective
basis,  new  products,  features  and  services  that  address  the needs of its
customer base.  There can be no assurance that the Company will be successful in
identifying,  developing and marketing new products,  product  enhancements  and
related  services  that  respond to  technological  change or evolving  industry
standards or that adequately meet new market demands

         The Company's test systems currently operate only on the UNIX operating
system.  The  Company's  current and  prospective  customers  may require  other
operating systems to be used in their  telecommunications  test systems, such as
Windows 95,  Windows NT or Windows 98 or may require  the  integration  of other
industry standards.  There can be no assurance that the Company would be able to
successfully  adapt  its  products  to such  operating  systems  on a timely  or
cost-effective  basis,  if at all.  The


                                       14
<PAGE>


failure  of the  Company to respond  to  rapidly  changing  technologies  and to
develop and  introduce new products and services in a timely manner would have a
material  adverse  effect on the  Company's  business,  financial  condition and
results of operations.

         The Company's  success will depend in part on whether a large number of
telecommunications  equipment  manufacturers and network operators  purchase the
Company's  products  and  services.  Because  the  telecommunications  market is
rapidly evolving,  it is difficult to predict the future success of products and
services in this market. The customers in this market use products from a number
of competing  suppliers  for various  testing  purposes,  and there has not been
broad  adoption of the products of one company.  There can be no assurance  that
the Company's  current or future  products or services  will achieve  widespread
acceptance among network operators,  telecommunications  equipment manufacturers
or other potential customers or that solutions developed by competitors will not
render the Company's products obsolete or uncompetitive.

Foreign Exchange Risk

         The  Company's  foreign  subsidiaries  operate  and sell the  Company's
products  in various  global  markets.  As a result,  the  Company is exposed to
changes  in  interest  rates and  foreign  currency  exchange  rates on  foreign
currency  denominated sales made to foreign  subsidiaries.  The Company utilizes
foreign currency forward exchange  contracts and options to hedge against future
movements  in  foreign  exchange  rates that  affect  certain  foreign  currency
denominated intercompany receivables.  The Company attempts to match the forward
contracts  with the  underlying  receivables  being hedged in terms of currency,
amount and maturity.  The Company does not use derivative financial  instruments
for speculative or trading purposes. Because the impact of movements in currency
exchange rates on forward  contracts offsets the related impact on the exposures
hedged,  these  financial  instruments do not subject the Company to speculative
risk that would  otherwise  result  from  changes in  currency  exchange  rates.
Realized  gains and  losses on forward  exchange  contracts  may offset  foreign
exchange  transaction  gains or losses  from  revaluation  of  foreign  currency
denominated intercompany receivable balances which otherwise would be charged to
other  income  (expense).  To date,  the Company  has not fully  hedged all risk
associated with its sales denominated in foreign currencies, and there can be no
assurance that the Company's hedging activities, if any, will be successful.

         At March 31, 2000 the Company had forward exchange  contracts  maturing
in fiscal  2000 to sell  approximately  $1.9  million in  Japanese  Yen and $1.9
million in Pounds Sterling.  The fair market value of the contracts at March 31,
2000 was immaterial.  In addition,  at March 31, 2000, the Company had a foreign
currency  option to sell  approximately  $2.0  million  Japanese Yen maturing in
fiscal 2000.  This option had an immaterial fair market value at March 31, 2000.
As of March 31, 2000 the cost of the  contracts and option have been included in
other income (expense).

         The Company has  evaluated  the  potential  near-term  losses in future
earnings,  fair values and cash flows from reasonably possible near-term changes
in  market  rates or  prices  and  believes  that any such  losses  would not be
material.*

Year 2000 Compliance

         To date, the Company has not incurred  material costs  associated  with
Year 2000 compliance nor any disruption with vendors or operations. Furthermore,
based on its  assessment  to date,  the Company  believes  that any future costs
associated with its Year 2000 compliance efforts will not be material.*

         Additional  factors that could affect future  operating  results or the
price of the Common Stock are set forth under the caption "Risk  Factors" in the
prospectus dated February 11, 1999 contained in the  Registration  Statement and
in Form 10-K.


                                       15
<PAGE>


Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

         The  Company  does  not use  derivative  financial  instruments  in its
investment  portfolio.   The  Company's  short-term  investments  are  generally
comprised of  investments  with original  maturities of less than one year.  The
investments  consist of investment quality commercial paper and corporate bonds,
collaterized  mortgage  obligations U.S. government  securities and money market
funds.  These securities are subject to interest rate risk, and could decline in
value if interest  rates  increase.  Due to the short duration of the investment
portfolio  and  conservative  nature of the  Company's  investment  policy,  the
Company  does not  expect  any  material  loss with  respect  to its  investment
portfolio.*

Foreign Currency Exchange Rate Risk

         Certain of the Company's  sales and marketing  expenses are incurred in
foreign  currencies.   As  a  result  the  Company's  international  results  of
operations  are  subject to foreign  exchange  rate  fluctuations.  The  Company
utilizes  currency  forward  exchange  contracts  and  options to hedge  against
foreign currency rate fluctuations.

Part II.  Other Information

Item 2.  Changes in Securities and Use of Proceeds

         (c)  The  following  information  relates  to  securities  sold  by the
              Company during the quarter ended March 31, 2000: NONE.

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

         (a)  Exhibits.

              27 Financial Data Schedule (Mark Please Insert)

         (b)  Reports on Form 8-K.

              No  reports on Form 8-K were filed  during the  quarter  for which
              this report on Form 10-Q is filed.


                                       16
<PAGE>


                                   SIGNATURES

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

                                           CATAPULT COMMUNICATIONS CORPORATION

Date:    May 9, 2000,                      By: /s/  Richard A. Karp
                                           -------------------------------------
                                           Richard A. Karp
                                           President and Chief Executive Officer
                                           (Principal Executive Officer)
                                           Acting Chief Financial Officer
                                           (Principal Financial Officer)



                                       17