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

                                    FORM 10-Q

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

                For the quarterly period ended September 30, 2000

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

                        Commission File Number: 000-26387

                                 BE INCORPORATED
             (Exact name of Registrant as specified in its charter)

                               Delaware 94-3123667
       (State or other jurisdiction of (IRS Employer Identification No.)
                         incorporation or organization)

                    800 El Camino Real, Menlo Park, CA 94025
          (Address of principal executive offices, including zip code)

                                 (650) 462-4100
              (Registrant's telephone number, including area code)




Indicate by check mark whether the registrant (1) has filed all reports required
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 (1) Yes (2)

The number of shares of Common  Stock  outstanding  as of October  31,  2000 was
36,149,544.






                                 BE INCORPORATED
                                    FORM 10-Q
                                TABLE OF CONTENTS



PART I.    FINANCIAL INFORMATION
Item 1.  Condensed Financial Statements:

              Consolidated  Balance  Sheets at September 30, 2000 and
              December 31, 1999 ...............................................2

              Consolidated Statements of Operations for the three and nine
              month periods ended September 30, 2000 and September 30, 1999....3

              Consolidated  Statements  of Cash Flows for the six month
              periods ended September 30, 2000 and September 30, 1999..........4

              Notes to Condensed Consolidated Financial Statements.............5


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


     Item 3.  Quantitative and Qualitative Disclosures About Market Risk......28


PART II.   OTHER INFORMATION

     Item 1.  Legal Proceedings...............................................29

     Item 2.  Changes in Securities and Use of Proceeds ......................29

     Item 3.  Defaults upon Senior Securities ................................29

     Item 4.  Submission of Matters to a Vote of Security Holders ............29

     Item 5.  Other Information ..............................................29

     Item 6.  Exhibits and Reports on Form 8-K ...............................29

              Signatures .....................................................30

              Exhibit 27.1 - Financial Data Schedule


                                       1
<PAGE>



                         PART I - FINANCIAL INFORMATION

ITEM 1.    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                        BE INCORPORATED AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                 (in thousands)

<TABLE>
<CAPTION>

                                                      September 30, December 31,
                                                          2000          1999
                                                         ---------    ---------
                                                       (unaudited)    (audited)
<S>                                                     <C>           <C>
ASSETS
Current assets:
   Cash and cash equivalents .........................   $   9,982    $   6,500
   Short-term investments ............................       8,039       22,629
   Accounts receivable ...............................          30          167
   Prepaid and other current assets ..................         819          730
       Total current assets ..........................      18,870       30,026
                                                         ---------    ---------
Property and equipment, net ..........................         419          562
Other assets, net of accumulated amortization ........       1,127        1,722

        Total assets .................................   $  20,416    $  32,310
                                                         =========    =========
LIABILITIES AND STOCKHOLDERS' EQUITY .................
Current liabilities: .................................
   Accounts payable ..................................   $     177    $     860
   Accrued expenses ..................................       1,151        1,550
   Technology license obligations, current portion ...         310          777
   Deferred revenue ..................................          80           99
       Total current liabilities .....................       1,718        3,286
                                                         ---------    ---------
Technology license obligations, net of current portion         556          597
                                                         ---------    ---------
       Total liabilities .............................       2,274        3,883
                                                         ---------    ---------
Stockholders' Equity:
   Common stock ......................................          36           35
   Additional paid-in capital ........................     108,933      106,322
   Accumulated other comprehensive gain/(loss) .......           1          (17)
   Deferred stock compensation .......................      (1,715)      (4,690)
   Accumulated deficit ...............................     (89,113)     (73,223)
       Total stockholders' equity ....................      18,142       28,427
                                                         ---------    ---------
        Total liabilities and stockholders' equity ...   $  20,416    $  32,310
                                                         =========    =========

</TABLE>
              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                       2
<PAGE>



                        BE INCORPORATED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (in thousands, except per share amounts)
<TABLE>
<CAPTION>

                                                                     Three Months Ended       Nine Months Ended
                                                                         September 30,           September 30,
                                                                      2000          1999     2000         1999
                                                                    --------    --------    --------    --------
                                                                          (unaudited)              (unaudited)
<S>                                                                 <C>         <C>         <C>         <C>
Net revenues ....................................................   $     68    $    775    $    464    $  1,621
Cost of revenues ................................................        216         372         770         696
                                                                    --------    --------    --------    --------
Gross profit (loss) .............................................       (148)        403        (306)        925

Operating expenses:
   Research and development, excluding amortization of deferred .      2,088       2,005       6,079       5,675
     stock compensation of $159, $454, $667 and $1,558
   Sales and marketing, excluding amortization of deferred ......      1,422       2,179       5,576       6,520
     stock compensation of $121, $476, $547 and $1,375
   General and administrative, excluding amortization of deferred        880         961       2,669       2,520
     stock compensation of $227, $666, $983 and $2,041
   Amortization of deferred stock compensation ..................        507       1,596       2,197       4,974
       Total operating expenses .................................      4,897       6,741      16,521      19,689
                                                                    --------    --------    --------    --------
Loss from operations ............................................     (5,045)     (6,338)    (16,827)    (18,764)

Interest expense ................................................        (58)        (32)       (121)       (106)
Other income and expenses, net ..................................        332         316       1,058         523
                                                                    --------    --------    --------    --------
Net loss ........................................................     (4,771)     (6,054)    (15,890)    (18,347)
                                                                    --------    --------    --------    --------
Accretion of mandatorily redeemable
   convertible preferred stock ..................................   $   --      $    (28)   $   --      $   (292)

Net loss attributable to common
   stockholders .................................................   $ (4,771)   $ (6,082)   $(15,890)   $(18,639)
                                                                    ========    ========    ========    ========

Net loss per common share--basic and diluted ....................   $   (.13)   $   (.22)   $   (.45)   $  (1.56)
                                                                    ========    ========    ========    ========
Shares used in per common share
   calculation--basic and diluted ...............................     35,722      27,853      35,406      11,921
                                                                    ========    ========    ========    ========
</TABLE>


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

                                       3
<PAGE>


                        BE INCORPORATED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)

<TABLE>
<CAPTION>

                                                             Nine Months Ended
                                                                September 30,
                                                              2000        1999
                                                           --------    --------
                                                               (unaudited)
<S>                                                        <C>         <C>
Cash flows from operating activities:
   Net loss ............................................   $(15,890)   $(18,347)
   Adjustments to reconcile net loss to net
     cash used in operating activities:
       Depreciation and amortization ...................        905         721
       Amortization of discount on
        technology license obligations .................         87          93
       Compensation expense incurred on issuance
        of stock .......................................         34         506
       Amortization of deferred stock compensation .....      2,197       4,974
       Changes in assets and liabilities
          Accounts receivable ..........................        137        (341)
          Prepaid and other current assets .............        (45)       (460)
          Other assets .................................       --            64
          Accounts payable .............................       (733)        545
          Accrued expenses .............................       (519)       (240)
          Deferred revenue .............................        (19)        196
                                                           --------    --------
            Net cash used in operating activities ......    (13,846)    (12,289)
                                                           --------    --------

Cash flow provided (used in) by investing activities:
   Acquisition of property and equipment ...............       (121)       (504)
   Acquisition of licensed technology ..................       (501)       (975)
   Purchases of short-term investments .................    (55,813)    (77,554)
   Sales of short-term investments .....................     70,408      63,199
                                                           --------    --------
            Net cash provided (used in)
                 by investing activities ...............     13,973     (15,834)
                                                           --------    --------

Cash flows  provided by financing  activities:
Proceeds from issuance of common stock:
     pursuant to common stock options ..................      2,201          60
     pursuant to common stock warrants .................        455        --
     under Employee Stock Purchase Plan ................        702        --
     in initial public offering, net ...................       --        35,693
   Repurchase of common stock ..........................         (3)         (4)
                                                           --------    --------
            Net cash provided by financing activities ..      3,355      35,749
                                                           --------    --------
Net increase in cash and cash equivalents ..............      3,482       7,626
                                                           --------    --------
Cash and cash equivalents, beginning of period .........      6,500       3,394
                                                           --------    --------
Cash and cash equivalents, end of period ...............   $  9,982    $ 11,020
                                                           ========    ========
</TABLE>


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


                                       4
<PAGE>

                        BE INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

1.   Organization and Business

     Be  Incorporated  (the  "Company"  or "Be") was  founded in 1990 and offers
     software  platforms  designed for  Internet  appliances  and digital  media
     applications.  The Company's two software platforms are (i) BeIA, a turnkey
     integrated software platform and development tools that enable the creation
     of customized  Internet  appliances,  and (ii) BeOS, the Company's  desktop
     operating system optimized for digital media  applications.  Prior to 1998,
     the Company was engaged  primarily  in research  and  development,  raising
     capital and development of its markets and was in the development stage.

2.   Basis of Presentation

     The condensed consolidated financial statements include the accounts of the
     Company and its wholly owned  subsidiaries.  All  significant  intercompany
     balances and transactions have been eliminated.

     The  condensed  consolidated  financial  statements  have been  prepared in
     accordance  with the rules and  regulations  of the Securities and Exchange
     Commission  ("SEC")  applicable to interim financial  information.  Certain
     information  and  footnote  disclosures  included in  financial  statements
     prepared in accordance with Generally Accepted  Accounting  Principles have
     been  omitted in these  interim  statements  pursuant to such SEC rules and
     regulations.  Management recommends that these interim financial statements
     be read in conjunction with the audited financial statements of the Company
     for the year ended December 31, 1999 and the notes thereto contained in the
     Company's  Annual Report on Form 10-K.  Interim results are not necessarily
     indicative  of the results to be expected  for the full year.  The December
     31, 1999 balance sheet was derived from audited financial  statements,  but
     does not include all disclosures  required by Generally Accepted Accounting
     Principles.

     In management's  opinion, the condensed  consolidated  financial statements
     include all adjustments  necessary to present fairly the financial position
     and results of operations  for each interim period shown.  Interim  results
     are not necessarily  indicative of results to be expected for a full fiscal
     year.


     The Company  believes that existing  cash and cash  equivalents  may not be
     sufficient to meet the Company's operating and capital  requirements at its
     currently  anticipated  level of  operations  beyond  the end of the second
     quarter of 2001.  Additional  capital may be necessary in order to fund the
     Company's operations at the currently  anticipated levels beyond the second
     quarter of 2001. While the Company is actively  considering various funding
     alternatives,  the Company has not secured or entered into any arrangements
     to obtain  additional  capital  There can be no assurance  that the Company
     will be able to obtain  additional funds, on acceptable terms or at all. If
     the Company cannot raise  additional  capital to continue its present level
     of operations,  it will have to scale back its business and may not be able
     to further  develop or enhance  its product  offering,  take  advantage  of
     future  opportunities  or respond to  competitive  pressures,  any of which
     could  have a  material  adverse  effect on its  business  and  results  of
     operations.  The Company's  liquidity may also be adversely affected in the
     future  by  factors  such as higher  interest  rates,  inability  to borrow
     without  collateral,   availability  of  capital  financing  and  continued
     operating losses.


                                       5
<PAGE>

3.   Recent Accounting Pronouncements

     In June 1998, the Financial  Accounting Standards Board issued Statement of
     Financial  Accounting  Standards  No.  133,  or SFAS  133,  Accounting  for
     Derivative  Instruments  and Hedging  Activities.  SFAS 133 establishes new
     standards of  accounting  and  reporting  for  derivative  instruments  and
     hedging activities. SFAS 133 requires that all derivatives be recognized at
     fair  value  in  the  statement  of  financial   position,   and  that  the
     corresponding  gains or  losses be  reported  either  in the  statement  of
     operations or as a component of comprehensive income, depending on the type
     of hedging  relationship that exists. SFAS 133 will be effective for fiscal
     years  beginning  after June 15, 2000. The Company is currently  evaluating
     the impact of the requirements of SFAS 133 and the effects,  if any, on its
     financial  statements  and does not expect  any  material  impact  from its
     application.  The Company does not currently hold derivative instruments or
     engage in hedging activities.

     In December  1999,  the  Securities  and Exchange  Commission  issued Staff
     Accounting  Bulletin No. 101 (SAB 101),  "Revenue  Recognition in Financial
     Statements."  SAB 101  provides  guidance  for  revenue  recognition  under
     certain  circumstances.  The Company is currently  evaluating the impact of
     SAB 101 and has not yet  determined  whether  its  application  will have a
     material  impact on its  financial  position or results of  operation.  The
     accounting and  disclosures  prescribed by SAB 101 will be effective in the
     fourth quarter of 2000.

     In  March  2000,   the   Financial   Accounting   Standards   Board  issued
     Interpretation   No.44  (FIN  44)  "Accounting  for  Certain   Transactions
     involving Stock Compensation",  an interpretation of APB Opinion No.25. FIN
     44 clarifies  the  application  of Opinion 25 for (a) the  definition of an
     employee  for  purposes  of  applying  Opinion  25,  (b) the  criteria  for
     determining  whether a plan  qualifies as a  noncompensatory  plan, (c) the
     accounting  for an  exchange  of stock  compensation  awards in a  business
     combination.  FIN  44  became  effective  on  July  1,  2000,  but  certain
     conclusions  cover  specific  events that occur after  either  December 15,
     1998, or January 12, 2000. The adoption of FIN 44 in July 2000 did not have
     an impact on the Company's financial position and results of operations.



                                       6
<PAGE>

4. Net Loss Per Share

     Basic net loss per common share is computed by dividing net loss  available
     to common  stockholders  by the weighted  average  number of vested  common
     shares  outstanding  for the period.  Diluted net loss per common  share is
     computed giving effect to all dilutive  potential common shares,  including
     options  and  warrants.  Options  and  warrants  were not  included  in the
     computation  of diluted net loss per common share  because the effect would
     be antidilutive.  A reconciliation of the numerator and denominator used in
     the  calculation of basic and diluted net loss per common share follows (in
     thousands, except per share data):
<TABLE>
<CAPTION>

                                                               Three Months Ended      Nine Months Ended
                                                                     June 30,             September 30,
                                                                2000         1999       2000         1999
                                                              --------    --------    --------    --------
                                                                   (unaudited)            (unaudited)
<S>                                                            <C>         <C>        <C>         <C>
Historical net loss per common share, basic and diluted:
   Net loss ...............................................   $ (4,771)   $ (6,054)   $(15,890)   $(18,347)
   Accretion of mandatorily redeemable
     convertible preferred stock ..........................       --           (28)       --          (292)
                                                              --------    --------    --------    --------
   Numerator for net loss, basic and diluted ..............     (4,771)     (6,082)    (15,890)    (18,639)

   Denominator for basic and diluted loss per common share:
     Weighted average common shares
       outstanding ........................................     35,722      27,853      35,406      11,921
                                                              ========    ========    ========    ========

   Net loss per common share basic and diluted ............   $   (.13)   $   (.22)   $   (.45)   $  (1.56)
                                                              ========    ========    ========    ========

   Antidilutive securities:
     Options to purchase common stock .....................      1,197       6,320       5,210       6,320
     Common stock not yet vested ..........................        332         692         332         692
     Warrants .............................................      2,130       2,870       2,130       2,870
                                                              --------    --------    --------    --------
                                                                 3,659       9,882       7,672       9,882
                                                              ========    ========    ========    ========
</TABLE>


                                       7
<PAGE>

5. Comprehensive Income (loss)
   ---------------------------

     Statement of Financial  Accounting Standard No. 130 (SFAS 130),  "Reporting
     Comprehensive  Income"  establishes rules for the reporting and the display
     of  comprehensive  income (loss) and its components.  The following are the
     components of comprehensive income (loss) (in thousands):
<TABLE>
<CAPTION>

                                            Three Months Ended        Nine Months Ended
                                               September 30,            September 30,
                                             2000         1999       2000         1999
                                           --------    --------    --------    --------
                                                (unaudited)           (unaudited)
<S>                                        <C>         <C>         <C>         <C>
Net loss ...............................   $ (4,771)   $ (6,054)   $(15,890)   $(18,347)
Unrealized gain on marketable securities          5          18
                                           --------    --------    --------    --------
Comprehensive loss .....................   $ (4,766)   $ (6,054)   $(15,872)   $(18,347)
                                           ========    ========    ========    ========
</TABLE>


   The components of accumulated other income, net of related tax are as follows
(in thousands):
<TABLE>
<CAPTION>

                                                   September 30,    December 31,
                                                      2000             1999
                                                      -----           -----
                                                   (unaudited)       (audited)
<S>                                                   <C>             <C>
Unrealized gain (loss) on marketable securities.......$   1           $(17)
                                                      -----           -----
                                                      $   1           $(17)
                                                      =====           =====

</TABLE>

                                       8
<PAGE>


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

Forward Looking Statements

THIS REPORT CONTAINS FORWARD-LOOKING  STATEMENTS THAT HAVE BEEN MADE PURSUANT TO
THE PROVISIONS OF THE PRIVATE  SECURITIES  LITIGATION  REFORM ACT OF 1995.  SUCH
FORWARD-LOOKING  STATEMENTS  ARE BASED ON CURRENT  EXPECTATIONS,  ESTIMATES  AND
PROJECTIONS ABOUT THE COMPANY'S BUSINESS,  MANAGEMENT'S  BELIEFS AND ASSUMPTIONS
MADE BY MANAGEMENT.  WORDS SUCH AS "ANTICIPATES," "EXPECTS," "INTENDS," "PLANS,"
"BELIEVES,"  "SEEKS,"  "ESTIMATES,"  "LIKELY;  "  VARIATIONS  OF SUCH  WORDS AND
SIMILAR  EXPRESSIONS ARE INTENDED TO IDENTIFY SUCH  FORWARD-LOOKING  STATEMENTS.
THESE  STATEMENTS  ARE NOT GUARANTEES OF FUTURE  PERFORMANCE  AND ARE SUBJECT TO
CERTAIN  RISKS,  UNCERTAINTIES  AND  ASSUMPTIONS  THAT ARE DIFFICULT TO PREDICT;
THEREFORE,  ACTUAL  RESULTS  AND  OUTCOMES  MAY DIFFER  MATERIALLY  FROM WHAT IS
EXPRESSED OR FORECASTED IN ANY SUCH FORWARD-LOOKING  STATEMENTS.  SUCH RISKS AND
UNCERTAINTIES  INCLUDE  THOSE SET  FORTH  BELOW  UNDER  "FACTORS  AFFECTING  OUR
BUSINESS,OPERATING RESULTS AND FINANCIAL CONDITION" AND ELSEWHERE IN THIS REPORT
AS WELL AS THOSE  NOTED IN OUR  ANNUAL  REPORT ON FORM  10-K FOR THE YEAR  ENDED
DECEMBER 31, 1999 AND OUR OTHER PUBLIC  FILINGS WITH THE SECURITIES AND EXCHANGE
COMMISSION. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE PUBLICLY ANY FORWARD-
LOOKING  STATEMENTS,  WHETHER AS A RESULT OF NEW  INFORMATION,  FUTURE EVENTS OR
OTHERWISE.

Overview

     Be was founded in 1990. We offer software  platforms  designed for Internet
appliances and digital media  applications.  Our two software  platforms are (i)
BeIA, a turnkey  integrated  software platform and development tools that enable
the  creation of  customized  Internet  appliances,  and (ii) BeOS,  our desktop
operating system optimized for digital media applications.

     Revenues.  Prior to 1998, we had no revenues and our  operations  consisted
primarily of research and  development.  In December  1998, we shipped the first
version of BeOS, our desktop operating system that was targeted primarily to end
users. Prior releases of BeOS were targeted primarily to software developers. In
February of 2000, we announced the  availability of BeIA, our software  platform
intended for the Internet appliances market.

     Our  revenues  to date have been  primarily  generated  from the  following
sources:  sale of BeOS to resellers,  distributors  and  publishers,  and direct
sales of BeOS to end users  through  our former  BeDepot.com  Web site.  We also
generated  revenue by collecting  commissions from sales of third party software
through such  BeDepot.com Web site. In the first quarter of 2000, we shifted our
resources to focus  primarily on the market for Internet  appliances.  We made a
version  of BeOS  available  for  personal  use at no  charge  and a more  fully
featured  version is  available  through  third party  publishers.  The personal
edition  was  released at the end of March and  publishers  began  shipping  the
commercial  version  in April.  Since this  shift in focus,  revenues  have been
primarily  generated from royalties on sales by publishers.  We have very little
or no influence over the marketing and promotional  efforts of these third party
publishers.  To date, we have not generated any significant  revenues from sales
of BeOS through third party  publishers  and we may not generate any  meaningful
revenues  from  sales of BeOS in the  foreseeable  future.  We expect our future
revenues to be primarily  generated  through  royalty  payments and service fees
from developers and manufacturers of Internet  appliances,  and other device and
service providers incorporating BeIA into their products.

                                       9
<PAGE>

     Since  adopting  and  incorporating  BeIA as a software  platform  solution
generally   represents  a  significant   product  decision  for  developers  and
manufacturers of Internet appliances and related systems and hardware, we expect
longer sales cycles as we collaborate with and educate customers and partners on
the use and  benefits  of BeIA.  We  expect  our  revenues  in the  future to be
dependent in large part upon the success of our  customers'  products  using our
BeIA platform. We have little or no influence over the development and marketing
efforts of our customers.  Our customers are generally  under no minimum payment
obligations  or minimum  purchase  requirements.  Our customers and partners are
free to use software  platforms  developed by other  companies in their Internet
appliance  products and are under no  obligation  to develop or market  products
based on our software  platform.  As a result,  we have very limited  ability to
evaluate the success of our  partnership  efforts and predict the realization or
timing  of  any  revenues.  Similarly,  in the  desktop  market,  we are  highly
dependent on the marketing efforts and success of our third party publishers. We
have little or no influence  over these  publishers  which makes it difficult to
predict the realization or timing of any revenues from BeOS.

     It has  been  our  policy  to  record  revenues,  in  accordance  with  the
provisions of software revenue recognition rules, from sales to distributors and
resellers.  We will  apply  such a  policy  in the  future  on  sales of BeOS to
publishers  and other  partners and on royalty  payments and other fees received
for  licensing of BeIA to OEM's and other  partners.  We also defer an allocated
portion of revenues attributable to free product upgrades. We recognize revenues
from sales to distributors  and resellers when we have evidence that our product
has been sold to end users. For example,  we typically recognize revenue when we
receive  confirmation  from the  distributor  or reseller of sales to end users.
Revenues  deferred due to free product  upgrades are  recognized as upgrades are
shipped. As of September 30, 2000, we had $80,000 in deferred revenues,  related
to development work being performed for one of our customers.

     Cost of  Revenues.  Prior to the  shift  in  focus,  our  cost of  revenues
consisted   primarily   of  the  cost  of   packaging,   software   duplication,
documentation, translation and product fulfillment. We also included in the cost
of  revenues  the  amortized  costs  relating  to the  license  of  third  party
technology  used in the  development  of BeOS. In the future,  we expect cost of
revenues to be mainly related to the licensing of third party technology.

     Research and  Development.  Our research and development  expenses  consist
primarily  of  compensation  and  related  costs for  research  and  development
personnel.  We also  include in  research  and  development  expenses  the costs
relating to  licensing of  technologies  and  amortization  of costs of software
tools used in the development of our software  platforms.  Costs incurred in the
research  and  development  of new  releases  and  enhancements  are expensed as
incurred.  These  costs  include  the  cost  of  licensing  technology  that  is
incorporated  into a product  or an  enhancement  which is still in  preliminary
development and  technological  feasibility has not been  established.  Once the
product is further developed and technological feasibility has been established,
development  costs are  capitalized  until the product is available  for general
release. To date, products and enhancements have generally reached technological
feasibility and have been released for sale at  substantially  the same time. We
expect that our research and  development  expenses will continue to increase in
the future as we further  develop  and  enhance  our  products  and  develop new
products for the Internet appliances market.

     Sales and Marketing.  Our sales and marketing expenses consist primarily of
compensation  and related  costs for sales and  marketing  personnel,  marketing
programs, public relations,  promotional materials,  travel and related expenses
for attending  trade shows.  We also include costs  relating to our  development
partner program,  such as the cost of technical  support provided to partners in
our sales and marketing expenses.

                                       10
<PAGE>

     We expect  our sales and  marketing  expenses  to  increase  as we  further
promote   awareness  of  our  software   platform,   work  on  establishing  new
relationships with partners and hire new personnel. Sales and marketing expenses
will also  increase  as we further  develop  and expand our  relationships  with
existing and  potential  partners  including  expenses  related to  co-marketing
programs.

     General and  Administrative.  General and  administrative  expenses consist
primarily  of  compensation  and related  expenses  for  finance and  accounting
personnel,  professional  services and related fees,  occupancy  costs and other
expenses.  General and administrative  expenses may increase in the future as we
expand our existing facilities or relocate to new facilities that better address
any growth that we may  experience.  We also expect  general and  administrative
expenses to increase as we hire additional  personnel and incur costs related to
the anticipated growth in our business.

     We market and sell our products in the United  States and  internationally.
International sales of products accounted for approximately 30% and 21% of total
revenues for the three month period  ended  September  30, 2000 and for the nine
month period ended September 30, 2000 respectively. We have a subsidiary located
in France to market and sell our software  platforms in Europe. In addition,  we
may in the  future  open new  offices in other  countries  to market and sell in
those countries and surrounding  regions. We do not currently engage in currency
hedging activities.  Although exposure to currency fluctuations to date has been
insignificant,  future  fluctuations  in currency  exchange  rates may adversely
affect revenues from international sales.

     Amortization of Deferred Stock Compensation. From time to time in the past,
we have  granted  stock  options  to  employees,  consultants  and  non-employee
directors  and expect to continue to do so in the future.  As of  September  30,
2000,  we had recorded  deferred  compensation  related to these  options in the
total amount of $15.8 million, net of cancellations, representing the difference
between the deemed fair value of our common stock,  as determined for accounting
purposes,  and the  exercise  price of  options  at the date of  grant.  Of this
amount, $955,000 were amortized in 1996, $867,000 in 1997, $3.9 million in 1998,
$6.2 million in 1999 and $2.2  million in the nine month period ended  September
30, 2000. Future  amortization of expense arising out of options granted through
September 30, 2000 is estimated to be $417,000 in the remaining  three months of
2000, $1.0 million in 2001, $280,000 in 2002 and $7,000 in 2003. We amortize the
deferred  compensation  charge monthly over the vesting period of the underlying
option.


Comparison of the Three Month Period ended September 30, 2000 to the Three Month
Period ended September 30, 1999

     Net Revenues.  Net revenues decreased $707,000 to $68,000,  or 91%, for the
three month period ended  September  30, 2000 from  $775,000 for the three month
period ended  September  30, 1999.  This decrease is primarily  attributable  to
lower shipments of BeOS, which we believe resulted from making a version of BeOS
available  for free  download.  During the quarter  ended  September  30,  2000,
revenues  were  mainly   attributable  to  shipments  of  BeOS  to  third  party
publishers.  To date,  all of our revenues  have been  derived  from BeOS,  with
future  revenues to be dependent  primarily on BeIA,  our software  platform for
Internet appliances.

                                       11
<PAGE>

     Cost of Revenues.  Cost of revenues decreased $156,000 to $216,000, or 43%,
for the three month period ended  September 30, 2000 from $372,000 for the three
month period ended September 30, 1999.  Gross margin is negative this quarter as
a result of the continuing amortization of technology license agreements.

     Research and Development. Research and Development expenses were relatively
constant at $2.1 million for the three month period ended  September 30, 2000 as
compared with $2.0 million for the three month period ended  September 30, 1999.
Increases in payroll  expenses were due to added  headcount  and were  partially
offset by lower outside consulting expenses.

     Sales and Marketing.  Sales and Marketing  expenses  decreased  $757,000 to
$1.4 million,  or 35%, for the three month period ended  September 30, 2000 from
$2.2 million for the three month period ended  September 30, 1999. This decrease
is primarily  attributable to our decision to reallocate capital to focus on the
Internet appliances market,  shifting our potential customer base from end users
to  OEM's  (original   equipment   manufacturers)  and  ODM's  (original  design
manufacturers).  Additionally,  the Web site technology purchased in 1998 is now
fully amortized.

     General and Administrative.  General and administrative  expenses decreased
$81,000 to $880,000,  or 8%, for the three month period ended September 30, 2000
from $961,000 for the three month period ended September 30, 1999. This reflects
a decrease in the  allocation  of  facilities  expenses  partially  offset by an
increase in personnel  expenses,  and expenses  related to the  activities  of a
public company.

     Amortization of Deferred Stock Compensation. Amortization of deferred stock
compensation  decreased  $1.1  million,  or 68%, to $507,000 for the three month
period ended  September  30, 2000,  from $1.6 million for the three month period
ended September 30, 1999. The decrease is  attributable  to the  cancellation of
options  and  to the  amortization  methodology.  These  amounts  represent  the
allocated portion of the difference  between the deemed fair value of our common
stock  and the  exercise  price of stock  options  granted  by us to  employees,
consultants and non-employee directors.

     Other Income  (Expense),  Net. Net other income  expenses  were  relatively
constant at $274,000  for the three month  period  ended  September  30, 2000 as
compared  with  $284,000 for the three month period  ended  September  30, 1999.
These amounts mainly  represent the interest income  generated by our investment
portfolio.


Comparison  of the Nine Month Period ended  September 30, 2000 to the Nine Month
Period Ended September 30, 1999

     Net Revenues.  Net revenues decreased $1.2 million to $464,000 for the nine
month  period  ended  September  30,  2000 from $1.6  million for the nine month
period ended  September  30, 1999.  This decrease is primarily  attributable  to
lower  shipments of BeOS,  which we believe  resulted from our  announcement  in
January 2000 to make a version of BeOS available for free  download.  During the
second and third  quarter  of 2000,  revenues  were  primarily  attributable  to
shipments  of BeOS to third party  publishers,  while in the first  quarter they
were generated from revenue deferred in previous  quarters.  To date, all of our
revenues  have been  derived  from BeOS,  with future  revenues to be  dependent
primarily on BeIA, our software platform for Internet appliances.

     Cost of Revenues.  Cost of revenues  increased  $74,000 to $770,000 for the
nine month  period  ended  September  30, 2000 from  $696,000 for the nine month
period ended  September  30,  1999.  Gross margin is negative for the nine month
period ended  September 30, 2000 as a result of the continuing  amortization  of
technology license agreements.

                                       12
<PAGE>

     Research and Development.  Research and Development  increased $404,000, or
7%, to $6.1 million for the nine month period ended September 30, 2000 from $5.6
million for the nine month period ended September 30,1999.  The increase results
primarily  from an  increase  in  personnel  expenses  following  the  hiring of
additional staff and in the allocation of facilities expenses.

     Sales and Marketing.  Sales and Marketing  decreased  $944,000,  or 14%, to
$5.6  million  for the nine month  period  ended  September  30,  2000 from $6.5
million for the nine month  period ended  September  30,1999.  This  decrease is
primarily  attributable  to the impact of  refocusing  of  marketing  activities
initiated in the first  quarter of 2000,  net of an increase in personnel  costs
following the hiring of additional sales and marketing personnel. The refocusing
of marketing  activities  resulted in a decrease in public relations  activities
and other  outside  programs  and a decrease in the costs  relating to our third
party developer.  Personnel expenses increased by $380,000, before the effect of
a one-time charge of $347,000 relating to the grant of immediately  vested stock
options in 1999.

     General and Administrative.  General and administrative  expenses increased
$149,000,  or 6%, to $2.7 million for the nine month period ended  September 30,
2000 from $2.5 million for the nine month period ended  September 30, 1999.  The
increase  results  primarily  from  increases  in personnel  expenses,  premiums
related to insurance  coverage  obtained  concurrently  with the initial  public
offering  and  expansion  of leased  facilities,  net of a decrease  in expenses
incurred in preparation of the initial public offering process in 1999.

     Amortization of Deferred Stock Compensation. Amortization of deferred stock
compensation  decreased $2.8 million, or 56%, to $2.2 million for the nine month
period ended  September  30,  2000,  from $5.0 million for the nine month period
ended September 30, 1999. The decrease is  attributable  to the  cancellation of
options  and  to the  amortization  methodology.  These  amounts  represent  the
allocated portion of the difference  between the deemed fair value of our common
stock  and the  exercise  price of stock  options  granted  by us to  employees,
consultants and non-employee directors.

     Other  Income  (Expense),  Net.  Net other  income  increased  $520,000  to
$937,000 for the nine month period ended  September  30, 2000 from  $417,000 for
the nine month  period  ended  September  30,  1999.  The  increase is primarily
attributable to the increase in interest income due to the increased balances in
our investment portfolio following our initial public offering.


Liquidity and Capital Resources

     Since our inception,  we have financed our operations primarily through the
sale of our equity securities and through borrowing arrangements.  Cash and cash
equivalents and short-term investments decreased  approximately $11.1 million to
$18.0  million at September  30, 2000,  from $29.1 million at December 31, 1999.
This decrease is primarily  attributable to the amounts used to fund operations,
net of the proceeds of stock-option exercises.

     Cash used in operating  activities  increased $1.6 million to $13.8 million
for the nine month period ended  September 30, 2000 as compared to $12.2 million
for the nine month period ended  September 30, 1999.  This increase is primarily
attributable to the increase in the net loss, net of non-cash items,  and to the
decrease in payables balances,  during the nine month period ended September 30,
2000.

     Cash provided by investing  activities was approximately  $14.0 million for
the nine month period  ended  September  30, 2000 as compared  with cash used in
investing  activities of $15.8 million for the nine month period ended September
30,  1999.  This change is  primarily  attributable  to net sales of  short-term
investments  in the nine  month  period  ended  September  30,  2000 and the net
purchases of short-term investments following our initial public offering in the
nine month period ended September 30, 2000 .

                                       13
<PAGE>

     Cash  provided by  financing  activities  for the nine month  period  ended
September 30, 2000 was approximately $3.4 million as compared with $35.8 million
in the nine month period  ended  September  30,  1999.  This change is primarily
attributable  to the proceeds of $35.7 million  received from our initial public
offering in the third quarter of 1999.

     We require substantial working capital to fund our operations. We expect to
continue to  experience  losses from  operations  and negative cash flows for at
least the next twelve month period. In the first quarter of 2000, we shifted our
resources to focus  primarily on the market for Internet  appliances.  We made a
version  of BeOS  available  for  personal  use at no  charge  and a more  fully
featured  version is  available  through  third party  publishers.  The personal
edition  was  released at the end of March and  publishers  began  shipping  the
commercial  version  in April.  Sales of BeOS have  been our  primary  source of
revenue in the past.  We have  little or no  influence  over the  marketing  and
promotional efforts of third party publishers and their success,  and we may not
generate any  meaningful  revenues from sale of BeOS in the future through these
publishers.

     We  expect  our  revenues  and  cash  flow  for the  future  periods  to be
negatively impacted as a result of providing a version of BeOS for free. In July
1999,  we completed the initial  public  offering of our common stock and raised
approximately  $32.2 million in net cash proceeds.  We raised an additional $3.1
million in net proceeds in August 1999 upon the underwriters'  exercise of their
over-allotment  option. The proceeds of the initial public offering are and will
be used for working  capital  and  general  corporate  purposes,  including  any
expansion  of our  sales  and  marketing  efforts,  increases  in  research  and
development activities, and licensing and acquisition of new technologies. Since
inception, we have experienced losses and negative cash flow from operations and
expect  to  continue  to  experience  significant  negative  cash  flow  in  the
foreseeable future.

     We believe that existing cash and cash equivalents may not be sufficient to
meet operating and capital  requirements at our currently  anticipated  level of
operations beyond the end of the second quarter of 2001.  Additional capital may
be necessary in order to fund our  operations  at currently  anticipated  levels
beyond the second  quarter of 2001.  While we are actively  considering  various
funding  alternatives,  we have not secured or entered into any  arrangements to
obtain  additional  capital.  There can be no assurance  that we will be able to
obtain  additional  funds,  on  acceptable  terms or at all. If we cannot  raise
additional capital to continue our present level of operations,  we will have to
scale back our  business  and may not be able to further  develop or enhance our
product  offering,   take  advantage  of  future  opportunities  or  respond  to
competitive pressures,  any of which could have a material adverse effect on our
business and results of operations. Our liquidity may also be adversely affected
in the future by factors  such as higher  interest  rates,  inability  to borrow
without  collateral,  availability of capital financing and continued  operating
losses.

                                       14
<PAGE>

FACTORS AFFECTING OUR BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION

The following is a discussion of certain risks,  uncertainties and other factors
that  currently  impact or may impact Be's  business,  operating  results and/or
financial  condition.  Anyone making an investment decision with respect to Be's
Common  Stock or other  securities  of the  Company is  cautioned  to  carefully
consider these factors, along with the "Risk Factors" discussed in the Company's
Annual  Report on Form 10-K for the year ended  December  31, 1999 and our other
public filings with the Securities and Exchange Commission.


We have incurred significant net losses and we may never achieve profitability.

     We incurred  significant net losses of approximately $10.4 million in 1997,
$16.9  million in 1998,  $24.5  million in 1999 and $15.9  million  for the nine
month  period ended  September  30, 2000.  As of September  30, 2000,  we had an
accumulated   deficit  of  approximately  $89.1  million.  We  expect  to  incur
significant  additional losses and continued  negative cash flow from operations
in 2000 and beyond and we may never become profitable.

     We expect to continue to incur  significant  sales and marketing,  research
and  development  and general and  administrative  expenses.  Sales of BeOS, our
desktop  operating system, to resellers and distributors and direct sales to end
users have  accounted  for the primary  source of our  revenues to date.  In the
first quarter of 2000, we shifted our resources to focus primarily on the market
for Internet appliances. We made a version of BeOS available for personal use at
no charge and a more fully  featured  version is available  through  third party
publishers. The personal edition was released at the end of March and publishers
began shipping the commercial version in April. As a result, we may not generate
any meaningful  revenues from sales of BeOS in the foreseeable future. Our shift
to focus  primarily on the market for Internet  appliances may not result in any
increase in our  revenues or any  improvement  in our  operations  or  financial
condition  and may not offset the loss of revenues  from sales of BeOS.  We will
need to generate  significant  revenues to achieve  profitability  and  positive
operating cash flows. Even if we do achieve profitability and positive operating
cash flow, we may not be able to sustain or increase  profitability  or positive
operating cash flow on a quarterly or annual basis.

We will need to raise additional capital that may not be available to us.

We believe that existing cash and cash equivalents may not be sufficient to meet
operating  and  capital  requirements  at our  currently  anticipated  level  of
operations beyond the end of the second quarter of 2001.  Additional capital may
be necessary in order to fund our  operations  at currently  anticipated  levels
beyond the second  quarter of 2001.  While we are actively  considering  various
funding  alternatives,  we have not secured or entered into any  arrangements to
obtain  additional  capital.  There can be no assurance  that we will be able to
obtain  additional  funds,  on  acceptable  terms or at all. If we cannot  raise
additional capital to continue our present level of operations,  we will have to
scale back our  business  and may not be able to further  develop or enhance our
product  offering,   take  advantage  of  future  opportunities  or  respond  to
competitive pressures,  any of which could have a material adverse effect on our
business and results of operations. Our liquidity may also be adversely affected
in the future by factors  such as higher  interest  rates,  inability  to borrow
without  collateral,  availability of capital financing and continued  operating
losses.  If  additional  capital  is  raised  through  the  issuance  of  equity
securities,  our stockholders'  percentage ownership of the common stock will be
reduced  and our  stockholders  may  experience  dilution  in net book value per
share, or the new equity  securities may have rights,  preferences or privileges
senior to those of our  stockholders.  Any debt  financing,  if  available,  may
involve   covenants   limiting  or   restricting   our   operations   or  future
opportunities.

                                       15
<PAGE>

We  have  recently  shifted  our  resources  to  focus  primarily  on a new  and
undeveloped market.

     In the first quarter of 2000,  we shifted our resources to focus  primarily
on the market for Internet  appliances and the further development and marketing
of BeIA,  our software  platform  intended for  Internet  appliances.  We may be
unsuccessful  in our  attempt  to  focus  primarily  on  this  market  and  face
significant  challenges often encountered with companies  undergoing a strategic
reorganization, which include:

o    inability  to  effectively   shift   existing   product   development   and
     engineering,  sales and marketing and management  resources to focus on the
     market for Internet appliances;

o    management distraction and loss of key personnel as we focus on this market
     and shift  resources  towards the development and marketing of our software
     platform for Internet appliances market;

o    inadequacy  of  our  existing   resources  to  understand   the  needs  and
     requirements of developers and manufacturers of Internet appliances;

o    inability  to train  existing  personnel  or hire and train  new  qualified
     personnel to address the market for Internet appliances; and

o    failure to adapt to new and evolving trends in Internet appliances.

     We may not successfully meet any or all of these challenges. Our failure to
meet one or more of these  challenges  could  materially  adversely  affect  our
business and  prospects.  In addition,  our  business and  prospects  are highly
dependent on the  development and market  acceptance of Internet  appliances and
our  ability to  successfully  market  BeIA as a viable  software  platform  for
Internet  appliances.  The market for Internet  appliances is new,  unproven and
subject to rapid  technological  change.  This  market may never  develop or may
develop  at a slower  rate than we  anticipate.  In  addition,  our  success  in
marketing BeIA as a software platform for Internet  appliances is dependent upon
developing and  maintaining  relationships  with  industry-leading  computer and
consumer electronics companies, system and hardware manufacturers,  and Internet
service  and content  providers.  Our failure to  establish  relationships  with
companies that offer Internet appliances and establish BeIA in this market would
have a material adverse effect on our business and prospects.


We face intense competition from companies with significantly greater financial,
marketing, and technical resources.

     There is  already  intense  competition  to develop  and  market  operating
systems. This competition exists in the market for desktop operating systems, as
well as  operating  systems and  software  platforms  intended  for the Internet
appliances  market.  Companies such as Microsoft  Corporation,  Apple  Computer,
Inc., QNX Software  Systems Ltd., Palm,  Inc.,  vendors of UNIX-based  operating
systems such as Linux, and vendors of embedded operating systems, have operating
systems that are being used or may be used for Internet appliances. We also face
competition from vendors of embedded browsers and manufacturers of set-top boxes
and terminals.  Many of these  companies have an  established  market  presence,
relationships  with OEMs and  consumer  electronic  manufacturers  such as those
developing and marketing Internet  appliances,  and have  significantly  greater
financial,  marketing and technical  resources  than we do. As a result,  we may
have difficulty  attracting  manufacturers  and developers to create devices and
software that will use our software platform.  These more established companies,
together with a large number of smaller  companies who offer software  platforms
that may be used for Internet  appliances,  may capture a larger  portion of the
market  than we do.  We also  expect  to face  increased  competition  from  new
entrants offering software platforms intended for use on Internet appliances.

                                       16
<PAGE>

     We expect our  competitors to continue to improve and enhance their current
products and to introduce new products and software platforms,  especially those
intended for the Internet  appliances market.  Successful product  introductions
and product  improvements  by our  competitors  could  reduce or  eliminate  any
perceived  advantages in our software  platform over these competitors and could
reduce market acceptance for our software  platform and make it obsolete.  To be
competitive,  we must continue to invest  significant  resources in research and
development,  sales and  marketing,  and  continue  to enhance  and  improve our
software platform. We may have insufficient  resources to make these investments
and may be unable to make the advances necessary to be competitive.  Our failure
to  compete  successfully  against  current or future  competitors  would have a
material adverse effect on our business and prospects.

Our  success  depends  on  our  ability  to  establish  and  maintain  strategic
relationships, and the loss of any of our strategic relationships could harm our
business and have an adverse impact on our revenue.

     Our success  depends in large part on our ability to establish and maintain
strategic  relationships with industry-leading  computer and consumer electronic
companies, hardware and systems manufacturers,  and Internet service and content
providers.  In the Internet  appliance  market,  we have  agreements with Compaq
Computer Corporation and Qubit Technology,  and collaboration  arrangements with
National  Semiconductor,  Inc., First International  Computer, Inc. (FIC), Arima
Computer Corporation (Arima) and DT Research,  Inc. We cannot be certain that we
will be able to reach  agreements with additional  partners on a timely basis or
at all, or that these  partners  will devote  adequate  resources to promote our
software platform. We may be unable to enter into new agreements with additional
partners on terms favorable to us or at all. The market for Internet  appliances
is  new  and  subject  to  rapid  technological  change.  We may  be  unable  to
successfully meet the requirements of existing or future strategic partners.  As
a result, we may be unable to maintain  strategic  relationships with developers
and  manufacturers  of  Internet  appliances  and  Internet  service and content
providers.  If we are unable to develop or maintain relationships with strategic
partners  and  customers,  we will have  difficulty  selling and gaining  market
acceptance  for our products and our business and results of operations  will be
materially adversely affected.

Agreements  with  strategic  partners  may not  result  in any  increase  in our
revenues or improvement in our operations or financial conditions.

     Existing agreements with OEM customers,  for example, those with Compaq and
Qubit, and arrangements  with our other strategic  partners  including  National
Semiconductor,  FIC and Arima,  generally  do not contain  any minimum  purchase
commitments or minimum  payment  obligations.  Similarly,  new  agreements  with
additional OEM customer and arrangements  with new strategic  partners,  may not
contain  any  minimum  purchase  commitments  or  minimum  payment  obligations.
Agreements with existing and new OEM customers may be limited to a pilot or test
program.  These partners are free to use software  platforms  developed by other
companies in their  Internet  appliance  products and are under no obligation to
develop or market  products  based on our software  platform.  In addition,  our
arrangements  with  existing  and new  strategic  partners may not result in the
marketing or shipment of any  commercial  products  based on our platform or may
include only a limited number of  demonstration  models.  As a result,  existing
arrangements  and new  arrangements,  if any,  with  strategic  partners may not
result in any actual sales, any increase in our revenues,  or any improvement in
our operations or financial condition.

                                       17
<PAGE>

We are  dependent  upon the success of the products and services  offered by our
partners and customers in the Internet appliances market.

     We expect to market BeIA  primarily  to  developers  and  manufacturers  of
Internet  appliances  and  providers  of  services  to  access  information  and
entertainment  over Internet.  Our intent is that that these  manufacturers  and
service providers will incorporate our software platform into their products and
services.  Our BeIA  customers  may include  computer  and  consumer  electronic
companies,   manufacturers   of  the  hardware  and  systems  used  in  Internet
appliances, and Internet service and content providers. As a result, our success
is  dependent  in large part on factors  which are  outside  our  control  which
include,  the  performance  of our  customers  and the market  acceptance of our
customers' products and services based on our software platform.  We have little
or no  ability  to  influence  the  development  and  marketing  efforts  of our
customers and our customers may fail to dedicate adequate resources necessary to
successfully develop and market products based on our software platform.

The demand for our software  platform is dependent on our ability to support key
industry standards and access to enabling technologies.

     The demand and  acceptance of our product is dependent  upon our ability to
support a wide range of  industry  standards  such as those  used for  streaming
media and Internet browsing and access to key enabling  technologies.  These key
technologies  include a Web browser under license from Opera Software A/S. If we
were to lose  our  rights  to this  Web  browser  or any  other  key  technology
incorporated  into our products,  we may be required to devote  significant time
and resources to replace such browser or other key  technologies.  This could in
turn be  costly,  result  in the  unavailability  or delay  the  release  of our
products,  and would  materially  adversely  affect our business  and  operating
results.  We also  license  other  enabling  technologies  for  inclusion in our
product,  such as third party compression and decompression  algorithms known as
"codecs." We may be unable to license these enabling  technologies  at favorable
terms, or at all, which may result in lower demand for our products.

We expect long sales cycles  associated with our software  platform intended for
the Internet  appliances  market and our stock price could  decline if sales are
delayed or cancelled.

     We believe that the adoption of BeIA as the software platform  represents a
significant  product  decision for the developers and  manufacturers of Internet
appliances  and we expect  long  sales  cycles  as we  collaborate  and  educate
customers  and  partners on the use and benefits of our  software  platform.  We
similarly expect that customers and partners will spend a significant  amount of
time  performing  internal  reviews  and testing our  software  platform  before
accepting  and  adopting  our product.  Any failure to gain  acceptance  for our
software  platform  and any  delays  in sales of our  product  could  cause  our
quarterly operating results to vary significantly from projected results,  which
could cause our stock price to decline.

                                       18
<PAGE>

Our products may never gain broad market acceptance.

     We have two principle  products,  BeIA, our software  platform intended for
the Internet  appliances  market and BeOS, our operating system intended for the
desktop market.  BeOS has been our primary source of revenues in the past and it
has been used  primarily  by a limited  number of  enthusiasts  and  application
developers.  Our  business and  prospects  are  dependent on the broader  market
acceptance  of our  products,  especially  the  acceptance  of BeIA as a  viable
software platform for a broad range of Internet  appliances and devices enabling
Internet-based  and digital  media  applications.  In an effort to increase  the
market  acceptance  of our  software  platform,  a version of BeOS has been made
available  for personal use for no charge.  Despite  these  efforts,  we may not
experience  any  significant  increase  in the number of BeOS users or a broader
market  acceptance  of our software  platform and  developers  may decide not to
adopt or develop products based on our software platform.

     We may be unsuccessful at marketing BeIA as the software platform of choice
for Internet appliances, and developers and manufacturers of Internet appliances
and Internet service and content  providers may not elect to incorporate BeIA in
their  products  and  services.   Potential   customers  may  not  perceive  any
significant  advantages over other operating  systems such as Microsoft  Windows
CE, QNX, the  UNIX-based  operating  systems,  Linux,  or embedded  browsers and
operating systems.  In addition,  we may be unable to demonstrate the commercial
viability and cost-effective nature of our products. If our products, especially
our software platform intended for the Internet appliances,  are not accepted or
adopted by an increasing  number of developers and  manufacturers,  our business
and prospects will be materially adversely affected.

     In addition,  traditional  operating systems could evolve and new operating
systems could emerge to more effectively  address the needs of the manufacturers
and  developers of Internet  appliances  and the digital media  requirements  of
users  and  OEMs.  For  example,  enhancements  and  features  could be added to
Microsoft's   Windows   operating   system  and   Apple's  Mac  OS  which  could
significantly  decrease the differences between our products and these operating
systems.  As a result,  any technical or marketing  advantage we may have in the
market for operating  systems could be lost and the demand and acceptance of our
products would diminish.

We are dependent  upon third party  publishers for the marketing and sale of the
commercial version of BeOS and we have little or no control over the efforts and
operation of these publishers.

     In March of 2000, a version of BeOS was made  available for personal use at
no  charge.  In April of 2000,  we also  made  the  commercial  version  of BeOS
available through third party  publishers.  Our success in the desktop market is
highly  dependent  on these  publishers'  ability  to sell and  market  BeOS and
incorporate  it as part of successful  product  offerings.  We have little or no
ability to influence the marketing and promotional  efforts of these  publishers
and  these  companies  may fail to  dedicate  adequate  resources  necessary  to
successfully market and promote the commercial version of BeOS.

                                       19
<PAGE>

We have limited  experience  marketing and selling our products,  which makes it
difficult to evaluate our business.

     We were  founded  in 1990 and  shipped  our  first  commercial  product  in
December 1998. Prior to 1998, our business was primarily focused on research and
product development  activities.  To date, we have not generated any significant
revenues  from sales of our products and this makes it difficult to evaluate our
business and  prospects.  In January 2000, we announced a shift in our resources
to focus primarily on the Internet  appliances market, a new and unproven market
and a market in which we have little  experience  competing.  Your evaluation of
our business and prospects must be made in light of the risks and  uncertainties
frequently  encountered  by  companies  in an  early  stage of  development  and
offering products in a market featuring intense  competition from companies with
substantially  greater  financial and marketing  resources.  Risks faced in this
regard include:

o    our  inability  to manage or adapt to new and  evolving  trends in Internet
     appliances  and digital  media;  o our inability to market our product as a
     viable   software   platform,   especially   to  leading   developers   and
     manufacturers of Internet appliances;

o    our  failure to gain any  sustainable  level of market  share or to compete
     with operating systems and software platforms offered by others; and

o    costs and delays in releasing new versions and product upgrades.

     We may not successfully meet any of these  challenges.  Our failure to meet
one or more of these challenges  could materially  adversely affect our business
and prospects.  It is also difficult to predict the size and future growth rate,
if any, of the market for our software platform. We have limited experience upon
which to determine or predict  trends that may emerge and  adversely  affect our
business or prospects.  The market for our software  platform may not develop or
may develop more slowly than we  anticipate,  and may never become  economically
sustainable.

We may not be able to respond to the rapid  technological  change in the markets
in which we compete.

     The markets in which we participate or seek to participate are subject to:

o    rapid technological change;

o    frequent product upgrades and enhancements;

o    changing customer requirements for new products and features; and

o    multiple, competing and evolving industry standards.

     The  introduction of software  platforms that contain new  technologies and
the emergence of new industry standards could render our products less desirable
or  obsolete.  In  particular,  we expect  that  changes  in the  Internet-based
technology  and digital  media  enabling  technology  will require us to rapidly
evolve and adapt our products to be competitive.  As a result, the life cycle of
each release of our products is difficult  to estimate.  To be  competitive,  we
will need to develop and release new  products and  software  platform  upgrades
that respond to technological changes or evolving industry standards on a timely
and cost-effective basis. We cannot be certain that we will successfully develop
and market these types of products and  software  platform  upgrades or that our
products will achieve market acceptance.  If we fail to produce  technologically
competitive  products  in a  cost-effective  manner and on a timely  basis,  our
business and results of operations could suffer materially.

                                       20
<PAGE>

Our revenues and operating  results are subject to significant  fluctuations and
our  stock  price  may fall if we fail to meet the  expectations  of the  public
market.

     Our revenues and  operating  results  will likely vary  significantly  from
period  to  period  due to a number  of  factors,  some of which  are  under our
control,  such as product  enhancements by us, and many of which are outside our
control,   such  as  new  product  releases  and  product  enhancements  by  our
competitors.  Customer  orders may be  deferred in  anticipation  of new product
releases,  product  enhancements  or  upgrades by us or by our  competitors.  In
addition, changes in the pricing policies or marketing efforts of our competitor
and our response to these  changes,  which could  include  price  reductions  or
increased  marketing  efforts by us, may cause  significant  fluctuations in our
revenues and operating results.  Based on these factors, we may fail to meet the
expectations  of the public market in any given period and our stock price would
likely be materially adversely affected.

We may be unable to adjust expenses in a timely manner to compensate for revenue
shortfalls.

     Our expense  levels are fixed and based,  in part, on our  expectations  of
future  sales.  We may be  unable  to  adjust  spending  in a timely  manner  to
compensate  for any sales  shortfall.  A  significant  portion  of our  expenses
include minimum  payments for licensed  technology  under licensing  agreements,
payment obligations under  non-cancellable  lease  arrangements,  rent and other
payments that are fixed and do not vary with  revenues.  We plan to increase our
operating expenses to:

o    expand our sales and marketing efforts;

o    fund greater levels of product development and engineering;

o    expand  and  increase  the  number  of  our  relationships  with  strategic
     partners; and

o    broaden our customer support capabilities.

     Any delay in generating  revenue could cause significant  variations in our
operating  results  from  quarter to  quarter  and could  result in  substantial
operating  losses.  If we fail to generate  sufficient sales or if our sales are
below  expectations,  operating  results are likely to be  materially  adversely
affected.

                                       21
<PAGE>

In our effort to increase  market  acceptance  for our  products,  we may forego
near-term  revenue by  providing  our products at little or no cost to potential
customers.

     In an attempt to increase the market  acceptance of our software  platform,
we have made a version of BeOS  available to end users for free.  In the future,
we may decide to continue to forego  immediate  revenue  potential  by providing
other  versions  of BeOS at  little  or no cost.  We may also  forego  near-term
revenue  potential  in the  Internet  appliances  market  by  providing  BeIA to
developers and manufacturers at little to no cost. Customers,  whether end-users
or the developers or manufacturers of Internet  appliances,  may be unwilling to
pay for any  upgrades or  enhanced  versions of our  products.  Our  decision to
forego near-term  revenue in expectation of increasing the users and adopters of
our  software  platform  may  not  yield  any  increase  or  sustainable  market
acceptance  for our  products  and may not  result in any  future  revenues.  In
addition,  we may reduce prices in response to competitive  factors or to pursue
new market opportunities.

Our future  success  depends  in part on our  ability to  continue  to  attract,
identify, hire and retain key personnel and qualified employees.

     Our  success   depends  to  a   significant   degree  upon  the   continued
contributions  of our  executive  management  team,  including  our  co-founders
Jean-Louis  Gassee,  our Chief  Executive  Officer and Steve Sakoman,  our Chief
Operating Officer,  and other senior level financial,  technical,  marketing and
sales  personnel.  The loss of these or other  members of our senior  management
team  could  have a  material  adverse  effect on our  business  and  results of
operations.

     As of September 30, 2000,  we had 107  employees.  We  anticipate  that the
number of employees  may  increase  during the next 12 months as we increase our
research and development activities and sales and marketing efforts. Our success
depends  upon our  ability to attract  and retain  additional  highly  qualified
senior  management  and  technical,  sales and  marketing  personnel  to support
growing  operations.  The  process of  locating  and hiring  personnel  with the
combination  of skills and  attributes  required  to carry out our  strategy  is
time-consuming and costly.

     In addition,  there is intense  competition for qualified  personnel in the
software platform and development industry. Competition is especially intense in
the San Francisco Bay Area,  where our corporate  headquarters  is located.  Our
anticipated  growth and the high costs  involved  in doing  business  in the San
Francisco Bay Area is expected to place demands on our resources and will likely
require the addition of new  management  and  personnel and the  development  of
additional  expertise  by existing  management  and  personnel.  The loss of key
personnel  or  our  inability  to  attract  additional  qualified  personnel  to
supplement  or, if  necessary,  to  replace  existing  personnel,  could  have a
material adverse effect on our business and results of operations.

Our success is dependent on the continued growth and improvement of the Internet
and adoption of Internet appliances.

     Our future  success  depends on the  continued  growth of and  reliance  by
consumers and businesses on the Internet, particularly in the Internet appliance
market.  Use and  growth of the  Internet  will  depend in  significant  part on
continued rapid growth in the number of households and  commercial,  educational
and government  institutions with access to the Internet.  The use and growth of
the Internet will also depend on the number and quality of products and services
designed  for use on the  Internet.  Because use of the  Internet as a source of
information,  products  and services is a relatively  recent  phenomenon,  it is
difficult  to predict  whether  the number of users drawn to the  Internet  will
continue to increase and whether any  significant  market for  commercial use of
the Internet will continue to develop and expand.  Either  Internet use patterns
may decline as the novelty of the medium  recedes or the quality of products and
services offered online may not support continued or increased use.

     The rapid rise in the number of Internet users and the growth of electronic
commerce and applications for the Internet has placed increasing  strains on the
Internet's  communications and transmission  infrastructure.  This could lead to
significant  deterioration  in  transmission  speeds and the  reliability of the
Internet  as a  commercial  medium and could  reduce the use of the  Internet by
businesses and individuals.  The Internet may not be able to support the demands
placed upon it by this continued growth.  Any failure of the Internet to support
growth due to inadequate  infrastructure or for any other reason would seriously
limit its development as a viable source of commercial and  interactive  content
and  services.  This could impair the  development  and  acceptance  of Internet
appliances  which could in turn  materially  adversely  affect our  business and
prospects.

                                       22
<PAGE>

We may be unable to expand our sales and support  organization to increase sales
and market awareness for our products.

     We must  expand  our sales and  marketing  efforts  aimed at  computer  and
consumer electronic companies, systems and hardware manufacturers,  and Internet
service  and  content  providers.  Without  this  increase  we may be  unable to
increase  sales and  market  acceptance  of our  software  platform.  This would
require a sophisticated sales force and the commitment of significant  financial
resources on our part.  Competition  for qualified  sales  personnel is intense,
especially those with an understanding of emerging  Internet-based  technologies
and markets.  We may not be able to hire the type and number of sales  personnel
that we require on a timely basis or at all.

     We will  need to  increase  our  staff to  support  new  customers  and the
expanding  needs of  existing  customers.  Hiring  customer  service and support
personnel  is very  competitive  in our  industry  due to the limited  number of
people  available  with the  necessary  technical  skills and  understanding  of
operating systems and  Internet-based  applications.  If we cannot hire adequate
numbers of qualified  sales,  marketing  and  customer  service  personnel,  our
business could suffer materially.

We may be unable to manage any growth that we may experience.

     To succeed in the implementation of our business strategy,  we must rapidly
execute  our sales and  marketing  strategy,  further  develop  and  enhance our
products and product  support  capabilities  especially  those  intended for the
Internet  appliance  market,  and  implement  effective  planning and  operating
processes. To manage any anticipated growth we must:

o    establish and manage multiple relationships with OEMs, Internet service and
     content providers and other third parties;

o    continue to implement and improve our operational, financial and management
     information systems; and

o    hire, train and retain additional qualified personnel.

     Our  systems,  procedures  and  controls may not be adequate to support our
operations,  and our management may not be able to perform the tasks required to
capitalize on market opportunities for our products and services.  If we fail to
manage our growth effectively, our business could suffer materially.

                                       23
<PAGE>

We expect continued erosion in the average selling prices of our products.

     We  anticipate  that  the  average  selling  prices  of our  products  will
fluctuate  and  decrease  in the  future in  response  to a number  of  factors,
including:

o    competitive pricing pressures;

o    rapid technological changes; and

o    sales discounts.

     We also  anticipate  that the average  selling  price of our products  will
decrease  as we  market  our  products  to  Internet  appliance  developers  and
manufacturers.  Therefore,  to maintain or increase our gross  margins,  we must
develop and introduce new products and product  enhancements  on a timely basis.
As our average selling prices decline, we must increase our unit sales volume to
maintain or increase our revenue.  If our average  selling  prices  decline more
rapidly than our costs,  our gross margins will decline,  which could  seriously
harm our business and results of operations.

Our success depends upon  availability of third party  applications that operate
on our software platform.

     Demand  and  market  acceptance  for our  products  will  depend  upon  the
availability of an increasing number of third party applications that operate on
our software platform.  These applications  include video and audio editing,  3D
games,  creative  audio and video  content  development  and  manipulation,  and
personal productivity applications.

     In  part  to  encourage  the   development  of  an  increasing   number  of
applications  that  operate on our  software  platform  and to  increase  market
acceptance  for our  products,  we have made a  version  of BeOS  available  for
personal use at no charge. However, providing a version of BeOS to end-users for
free may not result in any significant  increase in the number of BeOS users and
third party  developers,  which are  generally  under no  obligation  to develop
applications based on our software platform,  may not increase their development
of  applications  that run on our  products.  A  developer's  decision  to write
applications  for our software  platform is based in part on the  perception and
analysis of the relative  technical,  financial and other benefits of developing
applications  for our  platform  versus  writing  applications  for more popular
operating  systems  such as  Microsoft's  Windows,  Apple's  Mac OS, Palm OS, or
Linux. If we fail to attract a sufficient  number of application  developers who
develop and market successful  applications on our software platform, the demand
for  our  products  and  our  business  will  suffer.  Moreover,  any  delay  or
unsuccessful  release of third party  applications could have a material adverse
effect on our business and results of operations.

The recent  issuance  by the SEC of an  accounting  bulletin  related to revenue
recognition, SAB 101, may have a material impact on our financial performance.

     In December 1999, the SEC issued Staff Accounting Bulletin No. 101. Revenue
Recognition in Financial Statements,  referred to as SAB 101. SAB 101 summarizes
the SEC staff's  views in applying  generally  accounting  principles to revenue
recognition  in  financial  statements.  We  are  currently  in the  process  of
evaluating  SAB 101 and what  effect  it may have on our  financial  statements.
Accordingly,  we have not determined whether SAB 101 will have a material impact
on our  financial  position  or  results  of  operations.  In the event that the
implementation  of  SAB  101  requires  us to  report  a  change  in  accounting
principles  related to our revenue  recognition  policy, we would be required to
report  such change no later than the  quarter  ending  December  31,  2000.  In
addition to other  uncertain  risks  related to SAB 101, it is possible that SAB
101 will result in increased fluctuations in our quarterly operating results and
increase the  likelihood  that we may fail to meet  expectations  of  securities
analysts for any period.

                                       24
<PAGE>

We are dependent on third party development tools.

     We are dependent on development tools provided by a limited number of third
party  vendors.   Development  tools  are  software   applications  that  assist
programmers in the  development of  applications.  Together with our application
developers, we primarily rely upon software development tools provided by Cygnus
Solutions and Perforce  Software.  Cygnus Solutions was recently acquired by Red
Hat Software,  one of our  competitors.  If we lose access to these  development
tools or if Cygnus or  Perforce  fail to support or maintain  these  development
tools, we will either have to devote resources to maintain and support the tools
ourselves or transition to another  vendor.  Any  maintenance  or support of the
tools by us or the transition could be costly,  time consuming,  could delay our
product  release  and upgrade  schedule,  and could  delay the  development  and
availability  of third  party  applications  used on our  products.  Failure  to
procure the needed software  development  tools or any delay in the availability
of third party  applications could negatively impact our ability and the ability
of third party  application  developers  to release  and  support  our  software
platform and the applications that run on it. These factors could negatively and
materially  affect the acceptance and demand for our products,  our business and
prospects.

Product defects may harm our business and reputation.

     Computer operating systems, such as our products, frequently contain errors
or bugs. We have detected and may continue to detect errors and product  defects
in connection with new releases and upgrades of our operating system and related
products.  Despite our  internal  testing  and testing by current and  potential
customers,  errors may be discovered  after our products or related software and
tools are installed and used by customers.  These errors could result in reduced
or lost revenue, delay in market acceptance, diversion of development resources,
damage to our reputation,  or increased service and warranty costs, any of which
could materially adversely affect our business and results of operations.

     Our products must successfully  integrate with products from other vendors,
such as third party software  applications and computer  hardware.  As a result,
when problems occur in an Internet  appliance,  a personal computer or any other
device or network using our products, it may be difficult to identify the source
of the problem.  The occurrence of hardware and software errors,  whether caused
by our products or another  vendor's  products,  may result in the  reduction or
loss of market  acceptance of our products,  and any necessary product revisions
may force us to incur  significant  expenses.  The  occurrence of these problems
could materially adversely affect our business and results of operations.

                                       25
<PAGE>

Our  success  depends on our  ability to protect  and  enforce  our  proprietary
rights.

     Our success depends significantly on our ability to protect our proprietary
rights to technologies used in our products.  We rely primarily on a combination
of  copyright,  trademark  and trade  secret  laws,  as well as  confidentiality
procedures and  contractual  provisions to protect our  proprietary  rights.  To
date,  we have no patents  and  existing  copyright  laws  afford  only  limited
protection for our software. A substantial portion of our sales are derived from
the licensing of products  under "shrink wrap" license  agreements  that are not
signed by  licensees  and,  therefore,  may be  unenforceable  under the laws of
certain  jurisdictions.  Despite any measures  taken to protect our  proprietary
rights,  attempts  may be made to copy  aspects of our  software  platform or to
obtain and use  information  that we regard as proprietary  which could harm our
business.  In addition,  the laws of some  foreign  countries do not protect our
intellectual  property to the same extent as U.S. laws. Finally, our competitors
may independently develop similar technologies.  The loss or misappropriation of
any material  trademark,  trade name,  trade  secret or  copyright  could have a
material adverse effect on our business and results of operations.

     The software  industry is  characterized by the existence of a large number
of patents and frequent litigation based on allegations of patent  infringement.
As the number of  entrants  into our market  increases,  the  possibility  of an
infringement  claim  against  us grows.  For  example,  we may be  inadvertently
infringing on a patent. In addition,  because patent  applications can take many
years to issue,  there may be a patent  application  now pending of which we are
unaware upon which will be infringing when it issues in the future.  Although we
do not believe that our products infringes on the rights of third parties, third
parties may still assert  infringement  claims against us in the future and this
could result in costly litigation and distraction of management. To address such
patent  infringement  claims,  we may have to enter into  royalty  or  licensing
agreements.  Licenses may not be available on  reasonable  terms or at all which
could have a material adverse effect on our business and results of operations.

Our stock price is highly volatile.

     The trading price of our common stock has fluctuated  significantly and has
ranged from $2.281 to $39.563 over the past 15 months  since our initial  public
offering in July 1999. In addition, many factors could cause the market price of
our common stock to fluctuate substantially, including:

o    announcement   by  us  or  our   competitors   of   significant   strategic
     partnerships,  joint ventures,  significant contracts, or acquisitions,  or
     rumors to that effect;

o    announcement  by us of loss of significant  strategic  partnerships,  joint
     ventures, significant contracts or acquisitions;

o    news and announcements  relating to the ongoing antitrust actions involving
     Microsoft;

o    announcements by us or our competitors concerning software errors or delays
     in product releases;

o    availability of key software applications developed for our products or our
     competitor's products; and

o    changes in financial estimates by securities analysts.

     Specifically,  certain  market  segments  such  as  the  computer  software
industry have experienced  dramatic price and volume  fluctuations  from time to
time. These  fluctuations may or may not be based upon any business or operating
results. Our common stock may experience similar or even more dramatic price and
volume fluctuations which may continue indefinitely.

                                       26
<PAGE>

     In the past,  securities  class  action  litigation  has often been brought
against a company  following  periods of  volatility  in the market price of its
stock.  We may in the  future be the target of  similar  litigation.  Securities
litigation  could  result in  substantial  costs  and  diversion  of  management
attention and  resources,  all of which could  materially  harm our business and
results of operation.

Our Amended and Restated Certificate of Incorporation,  bylaws, Delaware law and
change of control  agreement with some of our key employees  contain  provisions
that could discourage a third party from acquiring us and consequently  decrease
the market value of our common stock.

     Our Amended and Restated  Certificate of Incorporation  grants our board of
directors the authority to issue up to 2,000,000  shares of preferred  stock and
to  determine  the price,  rights,  preferences,  privileges  and  restrictions,
including  voting  rights of these shares  without any further vote or action by
the  stockholders.  Since  the  preferred  stock  could be issued  with  voting,
liquidation,  dividend and other rights  superior to those of the common  stock,
the  rights of the  holders  of common  stock  will be  subject  to,  and may be
adversely affected by, the rights of the holders of any preferred stock that may
be issued.  The issuance of  preferred  stock could have the effect of making it
more difficult for a third party to acquire a majority of our outstanding voting
stock which could decrease the market value of our stock. Further, provisions in
our Amended and Restated Certificate of Incorporation and bylaws and of Delaware
law could have the effect of delaying or preventing a third party from acquiring
us,  even  if a  change  in  control  would  be in  the  best  interest  of  our
stockholders.  These provisions  include the inability of stockholders to act by
written  consent  without  a  meeting  and  procedures   required  for  director
nomination and stockholder proposal.

     We have  entered  into a  Change  of  Control  Agreement  with  each of our
officers and some of our other key  employees.  These  agreements  provide that,
among other  things,  if an employee is  terminated  without  cause or otherwise
resigns for good reason during the period starting nine months prior to the date
of a change of  control  and  ending  eighteen  months  following  our change of
control,  then the employee  shall be entitled to a severance  payment,  and the
acceleration  and  immediate  exercisability  of  all  unvested  options.  These
provisions may discourage a third party from acquiring us.

                                       27
<PAGE>


ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

We considered the provision of Financial Reporting Release No. 48 "Disclosure of
Accounting  Policies  for  Derivative   Financial   Instruments  and  Derivative
Commodity   Instruments,   and  Disclosure  of   Quantitative   and  Qualitative
Information  about Market Risk  Inherent in  Derivative  Financial  Instruments,
Other Financial  Instruments and Derivative  Commodity  Instruments."  We had no
holdings of derivative financial or commodity instruments at September 30, 2000.
However, we are exposed to financial market risks,  including changes in foreign
currency  exchange  rates and  interest  rates.  Much of our revenue and capital
spending is  transacted  in U.S.  dollars.  However,  the  expenses  and capital
spending of our French  subsidiary are  transacted in French francs.  Results of
operations  from our French  subsidiary  are not  material to the results of our
operations,  therefore,  we believe that foreign currency  exchange rates should
not  materially  adversely  affect our overall  financial  position,  results of
operations  or cash  flows.  We believe  that the fair  value of our  investment
portfolio or related income would not be significantly  impacted by increases or
decreases  in  interest  rates  due  mainly  to  the  short-term  nature  of our
investment  portfolio.  However, a sharp increase in interest rates could have a
material  adverse  effect  on  the  fair  value  of  our  investment  portfolio.
Conversely,  sharp  declines in interest  rates could  seriously  harm  interest
earnings of our investment portfolio.


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PART II - OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS

         None.


ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

Sales of Registered Securities and Use of Proceeds

         None.

Sales of Unregistered Securities

         None.


ITEM 3. DEFAULT UPON SENIOR SECURITIES

         None.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None.


ITEM 5. OTHER INFORMATION

         None.


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

          (a)  Exhibits:

               3.1* Amended and Restated Certificate of Incorporation

               3.2* Bylaws

               27.1 Financial Data Schedule (EDGAR version only)

               *    Filed with the Company's Registration Statement on Form S-1,
                    Registration  No.  333-77855,   declared  effective  by  the
                    Securities  and  Exchange   Commission  on  July  20,  1999,
                    incorporated herein by reference.


          (b)  Reports on Form 8-K

               None


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<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.


BE INCORPORATED

By:   /s/ JEAN-LOUIS F. GASSEE                          Date : November 13, 2000
      Jean-Louis F. Gassee
      President, Chief Executive Officer and Director

By:   /s/ P.C. BERNDT                                   Date : November 13, 2000
      P.C. Berndt
     Chief Financial Officer




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