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 March 31, 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) No (2)

The  number  of  shares of Common  Stock  outstanding  as of April 30,  2000 was
35,855,601.


<PAGE>


                                 BE INCORPORATED

                                    FORM 10-Q

                                TABLE OF CONTENTS

                                                                            PAGE
PART I.    FINANCIAL INFORMATION

     Item 1.    Condensed Financial Statements:

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

                Consolidated Statements of Operations for the three month
                periods ended March 31, 2000 and March 31, 1999 ...............3

                Consolidated Statements of Cash Flows for the three month
                periods ended March 31, 2000 and March 31, 1999 ...............4

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


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


     Item 3.    Quantitative and Qualitative Disclosures About Market Risk ...25

PART II.   OTHER INFORMATION

     Item 1.    Legal Proceedings ............................................26

     Item 2.    Changes in Securities and Use of Proceeds ....................26

     Item 3.    Defaults upon Senior Securities ..............................26

     Item 4.    Submission of Matters to a Vote of Security Holders ..........26

     Item 5.    Other Information ............................................26

     Item 6.    Exhibits and Reports on Form 8-K .............................26

                Signatures ...................................................27

                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>
                                                         March 31,  December 31,
                                                           2000         1999
                                                         ---------    ---------
<S>                                                     <C>           <C>
                                                               (unaudited)
ASSETS
Current assets:
   Cash and cash equivalents .........................   $  14,882    $   6,500
   Short-term investments ............................      11,854       22,629
   Accounts receivable ...............................          72          167
   Prepaid and other current assets ..................         624          730
                                                         ---------    ---------
       Total current assets ..........................      27,432       30,026

Property and equipment, net ..........................         544          562
Other assets, net of accumulated amortization ........       1,549        1,722
                                                         ---------    ---------
        Total assets .................................   $  29,525    $  32,310
                                                         =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable ..................................   $     515    $     860
   Accrued expenses ..................................       1,306        1,550
   Technology license obligations, current portion ...         696          777
   Deferred revenue ..................................          80           99
                                                         ---------    ---------
       Total current liabilities .....................       2,597        3,286

Technology license obligations, net of current portion         491          597
                                                         ---------    ---------
       Total liabilities .............................       3,088        3,883
                                                         ---------    ---------
Stockholders' Equity:
   Common stock ......................................          36           35
   Additional paid-in capital ........................     108,578      106,322
   Accumulated other comprehensive loss ..............          (9)         (17)
   Deferred stock compensation .......................      (2,945)      (4,690)
   Accumulated deficit ...............................     (79,223)     (73,223)
       Total stockholders' equity ....................      26,437       28,427
                                                         ---------    ---------
        Total liabilities and stockholders' equity ...   $  29,525    $  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
                                                                    -------------------
                                                                          March 31,
                                                                      2000       1999
                                                                    --------    -------
                                                                         (unaudited)
<S>                                                                 <C>         <C>

Net revenues ....................................................   $    254    $   309
Cost of revenues ................................................        293         85
                                                                    --------    -------
Gross profit (loss) .............................................        (39)       224

Operating expenses:
   Research and development, excluding amortization of deferred
    stock compensation of $312 in 2000 and $650 in 1999 .........      2,148      1,887
   Sales and marketing, excluding amortization of deferred
    stock compensation of $237 in 2000 and $394 in 1999 .........      2,171      1,882
   General and administrative, excluding amortization of deferred
 stock compensation of $484 in 2000 and $621 in 1999 ............        950        737
   Amortization of deferred stock
     compensation ...............................................      1,033      1,665
                                                                    --------    -------
       Total operating expenses .................................      6,302      6,171
                                                                    --------    -------
Loss from operations ............................................     (6,341)    (5,947)

Interest expense ................................................        (34)       (36)
Other income and expenses, net ..................................        375        137
                                                                    --------    -------
Net loss ........................................................     (6,000)    (5,846)
                                                                    --------    -------
Other comprehensive income

   Unrealized gains on investments ..............................          9       --

Comprehensive loss ..............................................   $ (5,991)   $(5,846)
                                                                    ========    =======
Accretion of mandatorily redeemable
   convertible preferred stock ..................................   $   --      $  (133)
                                                                    ========    =======
Net loss attributable to common
   stockholders .................................................   $ (6,000)   $(5,979)
                                                                    ========    =======
Net loss per common share--basic and diluted ....................   $   (.17)   $ (1.54)
                                                                    ========    =======
Shares used in per common share
   calculation--basic and diluted ...............................     34,999      3,881
                                                                    ========    =======
</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>


                                                             Three Months Ended
                                                                  March 31,
                                                              2000       1999
                                                            --------    -------
                                                                (unaudited)
<S>                                                         <C>         <C>

Cash flows from operating activities:
   Net loss .............................................   $ (6,000)   $(5,846)
   Adjustments to reconcile net loss to net
     cash used in operating activities:
       Depreciation and amortization ....................        266        188
       Amortization of discount on
        technology license obligations ..................         33         36
       Compensation expense incurred on issuance
        of stock ........................................         33        494
       Amortization of deferred stock compensation ......      1,033      1,665
       Changes in assets and liabilities
          Accounts receivable ...........................         95        123
          Prepaid and other current assets ..............        106        (40)
          Other assets ..................................         41         12
          Accounts payable ..............................       (395)       (38)
          Accrued expenses ..............................       (244)       (42)
          Deferred revenue ..............................        (19)       355
                                                            --------    -------
            Net cash used in operating activities .......     (5,051)    (3,093)
                                                            --------    -------
Cash flow provided by investing activities:
   Acquisition of property and equipment ................        (66)       (75)
   Acquisition of licensed technology ...................       (220)      (196)
   Purchases of short-term investments ..................    (17,304)    (1,043)
   Sales of short-term investments ......................     28,087      2,017
                                                            --------    -------
            Net cash provided by investing activities ...     10,497        703
                                                            --------    -------
Cash flows  provided by financing  activities:
   Proceeds from issuance of common stock:
     pursuant to common stock options ...................      2,140         26
     pursuant to common stock warrants ..................        430       --
     under Employee Stock Purchase Plan .................        369       --
   Repurchase of common stock ...........................         (3)        (3)
                                                            --------    -------
            Net cash provided by financing activities ...      2,936         23
                                                            --------    -------
Net increase (decrease) in cash and cash equivalents ....      8,382     (2,367)

Cash and cash equivalents, beginning of period ..........      6,500      3,394
                                                            --------    -------
Cash and cash equivalents, end of period ................   $ 14,882    $ 1,027
                                                            ========    =======
</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.

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
     quarters of all 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.

                                       5
<PAGE>

     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 for the
     second quarter of the fiscal year ended December 31, 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  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 is
     effective July 1, 2000, but certain  conclusions cover specific events that
     occur after either  December 15, 1998, or January 12, 2000. We believe that
     the  impact  of FIN 44 will not have a  material  effect  on our  financial
     position or results of operations.

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,  warrants and  preferred  stock.  Options,  warrants and preferred
     stock 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
                                                                 March 31,
                                                             2000        1999
                                                           --------    --------
                                                                (unaudited)
<S>                                                        <C>         <C>

Historical net loss per common share, basic and diluted:
   Net loss ............................................   $ (6,000)   $ (5,846)
   Accretion of mandatorily redeemable
     convertible preferred stock .......................       --          (133)
                                                           --------    --------
   Numerator for net loss, basic and diluted ...........     (6,000)     (5,979)

   Denominator for basic and
    diluted loss per common share:
     Weighted average common shares
       outstanding .....................................     34,999       3,881
                                                           ========    ========
   Net loss per common share basic and diluted .........   $   (.17)   $  (1.54)
                                                           ========    ========
   Antidilutive securities:
     Options to purchase common stock ..................      6,116       1,943
     Common stock not yet vested .......................        403       1,089
     Preferred stock ...................................       --        22,499
     Warrants ..........................................      2,155       2,870
                                                           --------    --------
                                                              8,674      28,401
                                                           ========    ========
</TABLE>

                                       6
<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 ABOVE 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. 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 and distributors, and direct sales of BeOS to
end  users  through  our  BeDepot.com  Web site.  We also  generate  revenue  by
collecting commission from sales of third party software through our BeDepot.com
Web site. In January 2000, we announced  that we would be shifting our resources
to focus primarily on the market for Internet appliances. We also announced that
a version of BeOS would be made  available  for  personal use at no charge and a
more  fully  featured  version  would  only be  available  through  third  party
publishers.  We  have  very  little  or no  influence  over  the  marketing  and
promotional  efforts of these third party publishers and we may not generate any
meaningful  revenues  from  sales  of  BeOS  through  these  publishers  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 systems and hardware manufacturers incorporating BeIA into
their products.  We do not expect the revenues,  if any, from BeIA to offset the
loss of revenues from sales of BeOS in the foreseeable future and, as previously
announced,  we expect that our revenues and cash flow for the future  periods to
be negatively impacted.

                                       7
<PAGE>

     Since adopting and incorporating  BeIA as the software  platform  generally
represents a significant  product  decision for developers and  manufacturers of
Internet  appliances  and related  systems and hardware,  we expect longer sales
cycle 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 of
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 and which makes it difficult to predict the
realization or timing of any revenues from BeOS.

     It has been our policy to defer revenues, in accordance with the provisions
of software revenue  recognition rules, from sales to distributors and resellers
and 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 March 31, 2000, we had $80,000 in deferred  revenues,  related to development
work being performed for one of our customers.

     To date, our cost of revenues consists  primarily of the cost of packaging,
software duplication, documentation, translation and product fulfillment. We use
a third  party  fulfillment  house to  store,  package  and ship  BeOS in retail
channels.  We also include 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 sales to be mainly  related to the licensing of third
party technology.

     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 operating  system.  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 research and development expenses
will increase substantially in the future as we further develop and enhance BeOS
and develop new products  including  those intended for the Internet  appliances
market.

                                       8
<PAGE>

     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  third  party  application
developers,  such as the cost of technical support provided to them in our sales
and marketing expenses.

     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  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 and cost of operating as a public company.

     We market and sell our products in the United  States and  internationally.
International sales of products accounted for approximately 27% and 61% of total
revenues  for the three  month  periods  ended March 31, 2000 and March 31, 1999
respectively.  We have a  subsidiary  located  in France to market  and sell our
software platform 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. The expansion of our existing  international  operations and entry into
additional  international markets will require significant  management attention
and  financial  resources  and we  cannot be  certain  that our  investments  in
establishing offices in other countries will produce desired levels of revenues.
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.

     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 March 31, 2000, we had recorded deferred  compensation  related to
these  options  in the total  amount  of $15.9  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 option 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 $1.0 million in the three
month period ended March 31, 2000. Future amortization of expense arising out of
options  granted  through  March 31, 2000 is estimated to be $1.6 million in the
remaining nine months of 2000, $1.1 million in 2001, $292,000 in 2002 and $7,000
in 2003. We amortize the deferred  compensation  charge monthly over the vesting
period of the underlying option.

                                       9
<PAGE>

Comparison  of the Three  Month  Period  ended March 31, 2000 to the Three Month
Period ended March 31, 1999

     Net  Revenues.  Net  revenues  decreased  $55,000 to $254,000 for the three
month period ended March 31, 2000 from $309,000 for the three month period ended
March 31, 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.  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 $208,000 to $293,000 for the
three month  period ended March 31, 2000 from $85,000 for the three month period
ended March 31, 1999.  Gross margin is negative  this quarter as a result of the
continuing amortization of technology license agreements.

     Research and Development.  Research and Development  increased $261,000, or
14%, to $2.1  million for the three month  period ended March 31, 2000 from $1.9
million for the three month period ended March 31,  1999.  The increase  results
primarily  from  increases  of  approximately  $310,000 in  personnel  expenses,
primarily  attributable  to the hiring of  additional  research and  development
personnel.

     Sales and Marketing.  Sales and Marketing  expenses  increased  $289,000 to
$2.2 million,  or 15%, for the three month period ended March 31, 2000 from $1.9
million  for the three  month  period  ended March 31,  1999.  This  increase is
primarily attributable to the hiring of additional sales and marketing personnel
net of one-time expenses in 1999 and to the development of marketing activities.
Personnel expenses increased by $250,000, before the effect of a one-time charge
of $347,000  relating to the grant of immediately  vested stock options in 1999.
The  development  of  marketing  activities  resulted in  increases  in expenses
related to customer  service  efforts,  market  research,  public  relations and
trade-show participation, for a total increase of approximately $460,000.

     General and Administrative.  General and administrative  expenses increased
$213,000,  or 29%, to $950,000  for the three month  period ended March 31, 2000
from  $737,000 for the three month  period  ended March 31,  1999.  The increase
results  primarily  from  increases  of  approximately   $330,000  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  $632,000,  or 38%, to $1.0  million for the three month
period ended March 31, 2000,  from $1.7 million for the three month period ended
March 31, 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  $240,000  to
$331,000 for the three month  period ended March 31, 2000 from  $101,000 for the
three month period ended March 31, 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.

                                       10
<PAGE>

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 $2.4 million to
$26.7 million at March 31, 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  $2.0 million to $5.1 million
for the three month  period ended March 31, 2000 as compared to $3.1 million for
the three  month  period  ended  March 31,  1999.  This  increase  is  primarily
attributable  to  the  increase  in net  loss,  net of  non-cash  items,  and to
decreased payables balances, during the three month period ended March 31, 2000.

     Cash provided by investing activities increased  approximately $9.8 million
to $10.5  million for the three month period ended March 31, 2000 as compared to
$703,000  for the three month  period  ended March 31,  1999.  This  increase is
primarily attributable to net sales of short-term investments in the three month
period ended March 31, 2000.

     Cash  provided by  financing  activities  for the three month  period ended
March 31, 2000 was approximately  $2.9 million,  which represents a $2.9 million
increase in cash  provided by financing  activities  from the three month period
ended March 31, 1999 of $23,000. This increase is primarily  attributable to the
proceeds of $2.1 million received from the exercise of stock options..

     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 January of 2000,  we announced  that we
would be shifting our  resources  to focus  primarily on the market for Internet
appliances. We also announced that a version of BeOS would be made available for
personal use at no charge and a commercial  version will be made  available only
through third party  publishers.  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 do not expect the revenues, if any, from BeIA to offset the loss of
revenues from sales of BeOS in the  foreseeable  future.  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.  In
addition,  in the future, we may need to raise additional  capital and we cannot
be certain  that we will be able to obtain  additional  financing  on  favorable
terms, if at all. If we cannot raise additional  capital on acceptable terms, if
and when  needed,  we may not be able to further  develop or enhance our product
offering,  take  advantage  of future  opportunities  or respond to  competitive
pressures  or  unanticipated  requirements,  any of which  could have a material
adverse effect on our business and results of operations.

                                       11
<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 $6.0  million  for the three
month period ended March 31, 2000. As of March 31, 2000,  we had an  accumulated
deficit  of  approximately   $79.2  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 January
2000, we announced that we would be shifting our resources to focus primarily on
the market for Internet  appliances.  We also  announced  that a version of BeOS
would be made  available for personal use at no charge and a more fully featured
version would only be available through third party publishers.  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 have recently  announced that we will shift our resources to focus  primarily
on a new and undeveloped market.

     We have recently  announced that we will be shifting 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.

                                       12
<PAGE>

     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.

     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.

                                       13
<PAGE>

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,  Qubit  Technology  and Fountain  Technologies  Inc., and
collaboration   arrangements   with   National   Semiconductor,    Inc.,   First
International  Computer,  Inc. (FIC), 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,
Qubit and Fountain, and arrangements with our other strategic partners including
National  Semiconductor  and FIC,  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.

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 customers may fail to dedicate  adequate  resources  necessary to
successfully develop and market products based on our software platform.

                                       14
<PAGE>

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.

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,  we announced that a version of BeOS
will be made  available for personal  use.  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.

                                       15
<PAGE>

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 January 2000, we announced that a version of BeOS would be available for
personal use at no charge.  We also  announced that we would make the commercial
version of BeOS  available  through  third  party  publishers.  Our intent is to
license the commercial  version of BeOS to third party publishers and that these
publishers would be responsible for the packaging,  sales, marketing and support
related to the commercial  version.  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.

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.

                                       16
<PAGE>

     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.

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

     We currently believe that our existing capital resources, combined with the
net  proceeds  of this  offering,  will be  sufficient  to  meet  our  presently
anticipated cash requirements for at least the next 12 months.  However,  we may
need to raise  additional  capital and we cannot be certain that we will be able
to obtain additional financing on favorable terms, if at all. If we cannot raise
additional  capital on acceptable  terms, we may not be able to expand our sales
and marketing efforts,  further develop or enhance our products,  take advantage
of future  opportunities  or respond to competitive  pressures or  unanticipated
requirements.  Any of these events could have a material  adverse  effect on our
business and results of operations.  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.

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.

                                       17
<PAGE>

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.

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.

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 recently  announced that a version of BeOS will be made 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  manufactures 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.

                                       18
<PAGE>

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  announced that a version of BeOS will be
made  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 out
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.

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.

                                       19
<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.

                                       20
<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.

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 June 30, 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.

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.

                                       21
<PAGE>

We depend on key personnel  and  attracting  qualified  employees for our future
success.

     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 March 31, 2000, we had 100 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.  Competition  for  qualified  employees  is intense.  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. 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

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.

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.

                                       22
<PAGE>

     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.

We face risks relating to our online operations.

     A significant  barrier to widespread use of electronic commerce sites, such
as our BeDepot.com  Web site, is concern  regarding the security of confidential
information  transmitted  over  public  networks.  We  rely  on  encryption  and
authentication  technology  licensed  from third parties to provide the security
and  authentication  necessary to effect  secure  transmission  of  confidential
information, such as customer credit card numbers. Concerns over the security of
transactions conducted on the Internet and the privacy of users may also inhibit
the growth of online  services,  especially as a means of conducting  commercial
transactions.  Our failure to prevent any security  breaches may have a material
adverse effect on our business and results of operations.

     Despite our efforts to protect the  integrity  of our Web site and products
sold on it, a party may be able to  circumvent  our security  measures and could
misappropriate  proprietary information or cause interruptions in our operations
and  damage to our  reputation.  Any such  action  could  negatively  affect our
customers'  willingness to engage in online commerce with us. We may be required
to expend  significant  capital and other  resources  to protect  against  these
security  breaches or to alleviate  problems  caused by these  breaches.  If any
compromise of our security were to occur, it could  materially  adversely affect
our reputation and business.

Our stock price is highly volatile.

     The trading price of our common stock has fluctuated  significantly and has
ranged from $3.25 to $39.5625  over the past 10 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.

                                       23
<PAGE>

     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.

     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 six 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.

Future sales of our common stock may depress our common stock price.

     The market  price of our common  stock could drop as a result of sales of a
large  number  of shares of common  stock in the  market or in  response  to the
perception  that sales of large number of shares could occur.  No prediction can
be made  about the effect  that  future  sales of common  stock will have on the
market price of such shares.

                                       24
<PAGE>

We may engage in acquisitions that may harm our results, dilute our stockholders
and cause us to incur debt or assume contingent liabilities.

     As part of our business strategy,  we may make investments in complementary
companies, products or technologies that we believe would be advantageous to the
development  of our  business.  While we currently  have no formal  discussions,
agreements or negotiations underway with respect to any such acquisition, we may
acquire businesses, products or technologies in the future. If we buy a company,
we  could  have  difficulty  in  assimilating   that  company's   personnel  and
operations.  In addition,  the key personnel of the acquired  company may decide
not to work for us.  If we make  other  types  of  acquisitions,  we could  have
difficulty  in  assimilating  the  acquired  technology  or  products  into  our
operations.  These difficulties could disrupt our ongoing business, distract our
management  and  employees  and increase our  expenses.  Furthermore,  we may be
required  to  incur  debt or  issue  equity  securities  to pay  for any  future
acquisitions,   the  issuance  of  which  could  be  dilutive  to  our  existing
stockholders.

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 March 31, 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.




                                       25
<PAGE>

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

          In the three month period ended March 31 2000, we sold 429,903  shares
          of our  common  stock to 13  stockholders  pursuant  to  exercises  of
          warrants for an  aggregate  purchase  price of $429,903.  The sale and
          issuance of these securities was deemed to be exempt from registration
          under the Securities Act by virtue of Section 4(2) and Regulation D.

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


                                       26
<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 : May 9, 2000
      Jean-Louis F. Gassee
      President, Chief Executive Officer and Director

By:   /s/ ALBERT A. LOMBARDO                                  Date : May 9, 2000
      Albert A. Lombardo
      Vice President, Finance and Accounting


                                       27
<PAGE>