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

**FORM 10-Q/A**

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

**For the quarterly period ended March 31, 2000**

**OR**

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

**For the transition period from ________to _________**

**Commission file number 0-22369**

**RAMP NETWORKS, INC.**
(Exact name of Registrant as specified in its charter)



|**Delaware**                                                   | **77-0366874**                         
|-------------------------------------------------------------- | ---------------------------------------
|(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number)

**3100 De La Cruz BoulevardSanta Clara, CA 95054**(Address of principal executive offices)

**(408) 988-5353**(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 reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [  ]



As of March 31, 2000, there were 21,269,331 shares of the
Registrant's Common Stock outstanding.







**Ramp Networks, Inc.
      QUARTERLY REPORT ON FORM 10-Q/A FOR THE PERIOD ENDED MARCH 31, 2000
                                TABLE OF CONTENTS**



|**PART I.   FINANCIAL INFORMATION**                                                                                   | **Page No.**
|--------------------------------------------------------------------------------------------------------------------- | ------------
|                                                                                                                      |             
|Item 1.   Interim Condensed Consolidated Financial Statements
                  (unaudited):                          |             
|                                                                                                                      |             
|Condensed Consolidated Balance Sheets at March 31, 2000 and
     December 31, 1999                                    | **          
|                                                                                                                      |             
|Condensed Consolidated Statements of Operations for the
          
    three months ended March 31, 2000 and 1999     | **          
|                                                                                                                      |             
|Condensed Consolidated Statements of Cash Flows for the
          
    three months ended March 31, 2000 and 1999     | **          
|                                                                                                                      |             
|Notes to Financial Statements                                                                                         | **          
|                                                                                                                      |             
|Item 2.   Management's Discussion and Analysis of Financial
                      Condition and Results of Operations | **          
|                                                                                                                      |             
|Item 3.   Quantitative and Qualitative Disclosures About Market Risk                                                  | **          
|                                                                                                                      |             
|**PART II.  OTHER INFORMATION**                                                                                       |             
|                                                                                                                      |             
|Item 1.   Legal Proceedings                                                                                           | **          
|                                                                                                                      |             
|Item 2.   Changes in Securities and Use of Proceeds                                                                   | **          
|                                                                                                                      |             
|Item 3.   Defaults Upon Senior Securities                                                                             | **          
|                                                                                                                      |             
|Item 4.   Submission of Matters to a Vote of Security Holders                                                         | **          
|                                                                                                                      |             
|Item 5.   Other Information                                                                                           | **          
|                                                                                                                      |             
|Item 6.   Exhibits and Reports on Form 8-K                                                                            | **          
|                                                                                                                      |             
|**Signature**                                                                                                         | **          

EXPLANATORY STATEMENT

The condensed consolidated financial statements as of March
31, 2000 and for the three months ended March 31, 2000 have been restated to
reflect various adjustments to the Company's previously reported financial
statements for the three month period ended March 31, 2000. These adjustments
reflect a cumulative effect of accounting change as of January 1, 2000 for a
change in the Company's revenue recognition policy as well as adjustments to
revenues previously recorded to reflect the revised accounting policy for
revenue recognition.

In the first quarter of 2000, the Company launched a new sales and marketing
campaign that involved sales of new technology and products to both existing and
a variety of new types of customers, including new customers serving the
relatively new Digital Subscriber Loop (DSL) market. The DSL market experienced
significant fluctuations in supply and demand in 2000. As a result, current
customers and potential customers experienced delays in the provisioning of this
marketplace which delayed demand for the Company's products. During 2000, the
Company has experienced changing business conditions and demand for product from
its distributors. Specifically, the Company experienced lower demand for both
new and existing products and a trend of increasing past due accounts receivable
from its current distributors as well as from some of the Company's new
customers. The Company has now decided that this increase in past due accounts
receivable from distributors was a result of the distributors not paying the
Company until product was ultimately "sold through" to the customer.
Additionally, certain new customers returned a significant portion of previously
sold product in amounts greater than had been estimated by the Company. In 2000,
the Company continued to apply revenue recognition accounting policies in
accordance with past practices. Revenue recognition was based on historical
experience with long-term customer payment patterns and returns and conventional
industry practices. In the third quarter of 2000, the Company reassessed its
receivable collection history and product returns history with its major
distributors as well as new customers, based upon the current market demand for
the Company's products. As a result of this reassessment, the Company determined
that the negative trends in product sales demand and delayed collection of
receivable amounts was not a temporary trend. These significant changes in
circumstances have necessitated a change in accounting policies for its current
sales activity. The Company has decided to restate earlier quarters so that the
accounting for revenue is consistent for all interim periods in 2000.

The Company determined that given the current market, a more preferable
method of revenue recognition would be to defer the recognition of revenue.
Under this new method, the Company will now record revenue on product shipped to
distributors when the product is ultimately "sold through" to the customer.
Additionally, the Company will now defer revenues for all other customers where
collection and returns history is not proven until such activity reflects the
"sell through" of products by Value Added Resellers ("VAR") and Managed Service
Providers ("MSP").

The Company has changed its revenue recognition policy retroactive to January
1, 2000. The result of the change in the revenue recognition policy was an
increase in net loss of $1.3 million and an increase in deferred revenues. This
amount represents the net amount of gross margin on shipments previously
recorded for product shipped to the distributors, but not "sold through" to
customers, as of January 1, 2000. This amount is included as a cumulative effect
of change in accounting policy in the accompanying financial statements for the
three months ended March 31, 2000. As such, the Company has restated amounts
previously recorded in its Forms 10-Q for the quarterly periods ended March 31,
2000 and June 30, 2000 to reflect the changes in the revised revenue recognition
policy and to properly account for certain third quarter 2000 returns of product
that had previously been recognized as revenue under the prior revenue
recognition policy.

---

**PART I. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**Item 1.  Financial Statements**

---

**Ramp Networks, Inc.****Condensed Consolidated Balance Sheets
                      (In thousands, except per share amounts)**

`March 31,  December 31,
                                                         2000          1999
                                                      Restated,
                                                      See Note 2
                                                     (Unaudited)
                                                     ------------  ------------

                          ASSETS
Current Assets:
  Cash and cash equivalents........................      $11,115       $12,530
  Marketable securities............................       21,537        27,590
  Accounts receivable, net.........................        6,372         4,523
  Inventory, net...................................        6,367         2,273
  Prepaid expenses and other current assets........        1,410           900
                                                     ------------  ------------
   Total current assets............................       46,801        47,816
Property and equipment, net........................        2,286         1,724
Other assets.......................................          403           375
                                                     ------------  ------------
   Total assets....................................      $49,490       $49,915
                                                     ============  ============

     LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Current portion of capital lease obligations.....         $103          $101
  Current portion of long-term debt................        2,307         2,233
  Accounts payable.................................        4,758         2,634
  Accrued liabilities..............................        2,658         3,440
  Deferred revenue.................................        5,214          --
                                                     ------------  ------------
   Total current liabilities.......................       15,040         8,408
Capital lease obligations, less
 current portion...................................          151           178
Long-term debt, less current portion...............        2,845         3,449
                                                     ------------  ------------
   Total liabilities...............................       18,036        12,035
                                                     ------------  ------------

Stockholders' equity:
  Preferred stock - 5,000 authorized, $.001
    par value, no shares issued at March
    31, 2000 and December 31, 1999.................           --            --
  Common stock - 100,000 authorized, $.001
    par value, issued and outstanding -
    21,269 and 21,097 at March 31, 2000 and
    December 31, 1999, respectively ...............           21            21
  Additional paid-in capital.......................       87,622        86,689
  Deferred stock compensation......................       (1,581)       (1,723)
  Accumulated deficit..............................      (54,608)      (47,107)
                                                     ------------  ------------
   Total stockholders' equity......................       31,454        37,880
                                                     ------------  ------------
   Total liabilities and stockholders' equity......      $49,490       $49,915
                                                     ============  ============`

See accompanying notes to condensed consolidated financial statements.

---

**Ramp Networks, Inc.****Condensed Consolidated Statements of Operations
                 (Amounts in thousands, except per share data)
                                (unaudited)**

`Three Months Ended
                                              March 31,
                                         -------------------
                                            2000      1999
                                         Restated,
                                         See Note 2
                                         --------- ---------
Revenue................................    $3,531    $3,883
Cost of revenue........................     2,452     2,612
                                         --------- ---------
Gross margin...........................     1,079     1,271
                                         --------- ---------

Operating expenses:
  Research and development
    (excluding amortization of
    deferred stock compensation of
    $58 in 2000 and $166 in 1999)......     1,662     1,258
  Sales and marketing
    (excluding amortization of
    deferred stock compensation of
    $51 in 2000 and $135 in 1999)......     4,560     2,097
  General and administrative
    (excluding amortization of
    deferred stock compensation of
    $33 in 2000 and $75 in 1999).......     1,132       471
  Amortization of deferred
     compensation......................       142       376
                                         --------- ---------
Total operating expenses...............     7,496     4,202
                                         --------- ---------
Loss from operations...................    (6,417)   (2,931)
Interest expense.......................      (283)      (34)
Other income (expense).................       506       (24)
                                         --------- ---------
Loss before cumulative effect of
  change in accounting policy..........    (6,194)   (2,989)

Cumulative effect of change in
  accounting policy....................    (1,307)       --
                                         --------- ---------
Net loss...............................   ($7,501)  ($2,989)
                                         ========= =========

Basic and diluted loss per common
  share before cumulative effect
  of change in accounting policy........   ($0.29)   ($0.71)
                                         ========= =========
Basic and diluted net loss per
  common share..........................   ($0.35)   ($0.71)
                                         ========= =========
Shares used in computing basic and
  diluted net loss per common share.....   21,183     4,232
                                         ========= =========`

See accompanying notes to condensed consolidated financial statements.

---

**Ramp Networks, Inc.****Condensed Consolidated Statements of Cash Flows****(Amounts in thousands)
                               (Unaudited)**

`Three Months Ended
                                                                 March 31,
                                                          ----------------------
                                                              2000        1999
                                                          Restated,
                                                          See Note 2
                                                          ----------  ----------
Operating activities:
  Net loss.............................................     ($7,501)    ($2,989)
  Adjustments to reconcile net loss to net cash
   used in operating activities:
    Depreciation.......................................         190         141
    Gain on disposal of fixed assets...................         --          (19)
    Noncash compensation expense.......................         181         484
    Changes in operating assets and liabilities:
      Accounts receivable..............................      (1,849)       (808)
      Inventory........................................      (4,094)     (1,049)
      Prepaid expenses and other assets................        (538)       (130)
      Accounts payable.................................       2,124         721
      Accrued liabilities..............................        (124)        492
      Deferred revenues................................       5,214         --
                                                          ----------  ----------
        Net cash used in operating activities..........      (6,397)     (3,157)
                                                          ----------  ----------
Investing activities:
  Purchase of property and equipment...................        (752)       (128)
  Proceeds from sale of assets.........................         --           44
  Maturities of short term investments.................      11,000         --
  Purchases of short term investments..................      (4,947)        --
                                                          ----------  ----------
        Net cash provided (used) by investing
          activities...................................       5,301         (84)
                                                          ----------  ----------
Financing activities:
  Principal payments on capital lease obligations......         (25)        (30)
  Borrowings under long term debt agreements...........         --        4,303
  Repayments of long term debt.........................        (530)        (94)
  Net proceeds from issuance of common stock...........         236          45
                                                          ----------  ----------
        Net cash (used) provided by financing
          activities...................................        (319)      4,224
                                                          ----------  ----------
Net (decrease) increase in cash and cash equivalents...      (1,415)        983
Cash and cash equivalents, beginning of period.........      12,530       3,764
                                                          ----------  ----------
Cash and cash equivalents, end of period...............     $11,115      $4,747
                                                          ==========  ==========`

See accompanying notes to condensed consolidated financial statements.

---

**Ramp Networks, Inc.

            NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

1. Nature of Operations

Ramp Networks, Inc. ("Ramp"), formerly Trancell Systems, Inc., a
California
corporation, was incorporated on February 17, 1994 and re-incorporated in
Delaware in June 1999. Ramp develops, designs, manufactures and markets multi-user
Internet access devices designed for small business and home use. Ramp
sells its products through distributors and value added resellers and to
original equipment manufacturers located in the United States and abroad.

2. Summary of Significant Accounting Policies:

Basis of Presentation

The condensed consolidated financial statements have been
prepared by Ramp, pursuant to the rules and regulations of the Securities and
Exchange Commission and include the accounts of Ramp Networks, Inc., and its
wholly-owned subsidiary (collectively the "Company"). Certain information and
footnote disclosures, normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States,
have been condensed or omitted pursuant to such rules and regulations. In the
opinion of the Company, the unaudited financial statements reflect all
adjustments, consisting of normal recurring adjustments, and adjustments to
reflect the restatement of amounts for changes in revenue recognition as noted
below which are necessary for a fair presentation of the financial position at
March 31, 2000, and the operating results and cash flows for the three months
ended March 31, 2000 and 1999.

The condensed consolidated balance sheet at December 31, 1999
is from audited financial statements as of that date. These financial statements
and notes should be read in conjunction with the Company's audited consolidated
financial statements and notes thereto, included in the Company's Form 10-K
filed with the Securities and Exchange Commission.

The results of operations for the three months ended March
31, 2000 are not necessarily indicative of the results that may be expected for
future quarters or the year ending December 31, 2000.

Revenue Recognition, Cumulative Effect of Change in Accounting and
Restatement

Ramp's revenue consists principally of amounts earned from the sale of
manufactured products. Historically, revenue has been recognized by the Company
upon transfer of title and risks of ownership, which generally occurred upon
product shipment. Certain agreements with distributors and retailers provide for
rights of return, co-op advertising, price protection, and stock rotation
rights. Under the guidelines and requirements of Statement of Financial
Accounting Standards ("SFAS") No. 48, "Revenue Recognition When Right of Return
Exists", the Company had previously concluded that it had sufficient history and
experience to quantify reserves required for these provisions. Accordingly, Ramp
provided an allowance for returns and price adjustments and provided a warranty
reserve at the point of revenue recognition. These reserves have been adjusted
periodically based upon historical experience and anticipated future returns,
price adjustments, and warranty costs.

The impact on the Company's Statements of Operations and Balance Sheets for
the change in the Company's revenue recognition policy and the restatement of
certain third quarter returns is summarized as follows (in thousands except per
share amounts):

`Three Months Ended
                                                 March 31, 2000
                                            -----------------------
                                            As Reported As Amended
                                            ----------- -----------
Statement of Operations:
  Revenue................................       $5,583      $3,531
  Cumulative accounting change...........          --       (1,307)
  Net loss...............................       (5,530)     (7,501)
  Net loss per share.....................       ($0.26)     ($0.35)

Balance Sheet:
  Accounts receivable, net...............        6,100       6,372
  Inventory..............................        3,396       6,367
  Deferred revenue.......................          --        5,214`

The restatement of items related to revenues are summarized into the
following categories for the periods presented (in thousands):

`Three
                                            Months Ended
                                             March 31,
                                               2000
                                            -----------
Revenues, as reported....................       $5,583

Summary of Adjustments:
(1) Adjustments to reflect the change
    to a preferable revenue
    recognition policy
    related to distributors..............       (1,092)

(2) Revision of revenue recognition
    policy related to new customers......         (960)

                                            -----------
Revenues, as restated....................       $3,531
                                            ===========`

1. This adjustment represents the impact of the Company revising its revenue
recognition policy. Previously the Company had reported revenue upon transfer of
title and risk of ownership, which generally occurred upon product shipment.
Provisions were also made for estimated normal returns. The adjustment
represents the net effect of changing the revenue recognition method to a
preferable method of recording revenue after the distributor has "sold through"
the product to the ultimate end user. The Company believes this method more
accurately reflects revenue due to the changes in market conditions and actual
payment patterns of distribution customers using the criteria set forth under
the SAB No. 101 interpretations and the requirements of SFAS No. 48.
2. This adjustment represents the net impact of the Company revising its
revenue recognition policy related to new customers. Previously the Company had
reported revenue upon transfer of title and risk of ownership, which generally
occurred upon product shipment. In the third quarter of 2000, the Company
experienced negative trends of collections for one of its newer customers and
determined that its past collection history with other customers was not a
sufficiently reliable indicator of future collections on current shipments to new customers.
In addition, during the third quarter, another customer returned product it
had purchased in the first quarter in amounts significantly greater than the Company
had provided for at the time of sale.
As collectibility could not be reasonably assured, the Company has revised its
revenue recognition policy for new customers to defer revenue until amounts are
collected and a customer specific collection history has been established.

At March 31, 2000 the Company has recorded deferred revenue of $5.2 million.
The deferred revenue represents shipments of product to customers where title has passed
and the Company has invoiced the customer.  However, to
the extent that product is returned to the Company or credits are approved,
this deferred revenue will not result in revenue to the Company. As stated, this
deferred revenue will result in revenue when sold through by the distributors or
to the extent VAR's and MSP's pay on their account based on sales to their
customers.

The SEC had issued SAB No. 101, "Revenue Recognition in Financial
Statements." SAB No. 101 and related interpretations summarize the SEC's view in
applying generally accepted accounting principles to selected revenue
recognition issues. The Company believes that its revised accounting policy
complies with the provisions of SAB No. 101.

Use of Estimates in Preparation of Condensed Consolidated Financial
Statements

The preparation of condensed consolidated financial statements in
conformity with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements, and reported amounts of
revenues and expenses during the reporting period. Actual results may differ
from those estimates.

Comprehensive Loss

In June 1997, the Financial Accounting Standards Board issued SFAS No.
130, "Reporting Comprehensive Income," which Ramp adopted beginning on January
1, 1998. SFAS No. 130 establishes standards for reporting and display of
comprehensive income and its components in a full set of general-purpose
financial statements. The objective of SFAS No. 130 is to report a measure of
all changes in equity of an enterprise that result from transactions and other
economic events of the period other than transactions with shareholders
("comprehensive loss"). Comprehensive loss is the total of net loss and all
other non-owner changes in equity. For the three month period ended March 31,
2000 and 1999, the Company's comprehensive loss was equal to its net loss.

Net Loss Per Common Share

Basic net loss per common share is computed using the weighted average
number of shares of common stock outstanding. The Company issued 3,853,000
shares of common stock and converted all of its outstanding redeemable
convertible preferred stock to common stock on June 22, 1999, the date of the
Company's initial public offering. Additionally, in July 1999, the underwriters
of the initial public offering exercised their over-allotment option to purchase
600,000 shares of the Company's common stock.

Basic and diluted net loss per common share are the same in the accompanying
condensed consolidated statements of operations since potential common shares
from conversion of preferred stock and warrants, prior to their conversion to
common stock, stock options and shares subject to repurchase are anti-dilutive
for computing diluted net loss per common share. The Company evaluated the
requirements of the Securities and Exchange Commission (SAB) No. 98 and
concluded that there are no nominal issuances of common stock or potential
common stock which would be required to be shown as outstanding for all periods
as outlined in SAB No. 98.

Segment and Significant Customer Reporting

During 1998, Ramp adopted SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information." SFAS No. 131 requires a new basis of
determining reportable business segments, i.e., the management approach.
This
approach requires that business segment information used by management to
assess performance and manage company resources be the source for information
disclosure.

On this basis, Ramp is organized and operates as one business segment, the
design, development, manufacture, and marketing of multi-user internet access
devices designed for small business and home use.

Revenue by region as a percentage of total revenue is as follows:

`Three Months Ended
                                                    March 31,
                                            -----------------------
                                                2000        1999
                                             Restated,
                                            See Note 2
                                            ----------- -----------
   North America.........................           76%         88%
   Pacific Rim...........................           10%          7%
   Europe................................           14%          5%
                                            ----------- -----------
      Total revenue......................          100%        100%
                                            =========== ===========`

The Company's customers representing 10% or more of total revenues were as
follows:

`Three Months Ended
                                                    March 31,
                                            -----------------------
                                                2000        1999
                                             Restated,
                                            See Note 2
                                            ----------- -----------
   Customer A............................           28%         26%
   Customer B............................           17%         18%
   Customer C............................          --           11%`

Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization
for all property and equipment is computed using the straight-line method over
the estimated useful lives of the assets, generally one to five years. Leasehold
improvements and other leased assets are amortized over the shorter of their
useful lives or the term of the lease. Repairs and maintenance costs are
expensed as incurred.



Accounting For Derivative Instruments and Hedging Activities

In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities," which
requires companies to record derivative financial instruments on the balance
sheet as assets or liabilities, measured at fair value. Gains or losses
resulting from changes in the values of those derivatives would be accounted for
depending on the use of the derivative and whether it qualifies for hedging
accounting. The key criterion for hedge accounting is that the hedging
relationship must be highly effective in achieving offsetting changes in fair
value or cash flows. SFAS No. 133 is effective for all fiscal quarters of all
fiscal years beginning after June 15, 2000. Management does not believe this
Statement will have a material impact on the financial condition or results of
the operations as the Company does not currently hold any derivative instruments
and does not engage in hedging activities.

Reclassifications

Certain prior year amounts may have been reclassified to conform to the
current year presentation.



NOTE 3. INVENTORY

Inventory, net of reserves, consisted of the following (in
thousands):

`March 31,  December 31,
                                               2000        1999
                                             Restated,
                                            See Note 2
                                            ----------- -----------
   Raw materials...........................       $554        $699
   Finished goods, including $3.0
    million of inventory related to
    deferred revenue as of March 31, 2000..      5,813       1,574
                                            ----------- -----------
         Total inventory...................     $6,367      $2,273
                                            =========== ===========`

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



Certain statements in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations" are forward-looking statements that involve
risks and uncertainties. Words such as "anticipates", "expects", "intends",
"plans", "believes", "seeks", "estimates", and similar expressions identify such
forward-looking statements. The forward-looking statements contained herein are
based on current expectations and entail various risks and uncertainties that
could cause actual results to differ materially from those expressed in such
forward-looking statements. Factors that might cause such a difference include,
among other things, those set forth under "Overview", "Liquidity and Capital
Resources" and "Risk Factors" included in this section and those appearing
elsewhere in this Form 10-Q/A. Readers are cautioned not to place undue reliance
on these forward-looking statements, which reflect management's analysis only as
of the date hereof. The Company assumes no obligation to update these forward-looking
statements to reflect actual results or changes in factors or
assumptions affecting forward-looking statements.



OVERVIEW

Ramp Networks is a leading provider of easy-to-use, reliable and
affordable shared Internet access solutions for the small office market, which
includes small businesses, remote and branch offices of large corporations, and
home offices. Our WebRamp product family allows multiple users in a small office
to share the same Internet connection simultaneously while optimizing each
user's access speed. Our WebRamp product family is a flexible and scalable
platform that provides software-based routing and bridging functionality to
deliver Internet-enabled applications and services. Our products support
existing analog phone lines, as well as ISDN and security/VPN and increasingly
support access technologies such as DSL and cable modems. Our Connection
Optimized Link Technology enables multiple users to access the Internet
simultaneously through regular phone lines and analog modems at up to three
times the access speed of a single analog connection.

We were incorporated in California in February 1994 and reincorporated in
Delaware in June 1999. Our wholly-owned subsidiary, Ramp Networks Private
Limited, is incorporated in India and performs research and development for us.
From our inception in February 1994 through early 1995, we were focused on
developing products for the asynchronous transfer mode market. We subsequently
licensed this technology to a related party and focused on the small office
market for shared Internet access solutions. From early 1995 through May 1996,
our operating activities were related primarily to developing, prototyping and
testing our first WebRamp product, staffing our administrative, sales and
marketing and operations organizations and establishing relationships with
VAR's, Internet Service Providers (ISP) and mail order catalogs for the
distribution of our products. In June 1996, we commenced shipments of our first
ISDN-based WebRamp product. The quarter ended March 31, 2000 was the first
quarter that the Company shipped volume production units of all its DSL
products, namely; ADSL - WebRamp 600I , SDSL WebRamp 500I and WebRamp 510I, and
IDSL - WebRamp 450i.

Our revenue is derived primarily from the sale of our WebRamp family of
products. We market and sell our products via a two-tier distribution system
primarily to distributors, such as Ingram Micro and Tech Data (in North
America), who then resell our products to VAR's, selected retail outlets, mail
order catalogs and ISP's. These VAR's then sell our products to end-users.
Additionally, we also sell our products to Original Equipment Manufacturers
(OEM) and with the advent of our DSL portfolio sell to VAR's, Managed Service
Providers and ISP's that work directly with DSL service providers or carriers.

The level of sales to any customer may vary from quarter to quarter. However,
we expect that sales to Ingram Micro and Tech Data will continue to represent a
significant portion of our revenue. Revenue from the Company's customers
representing 10% or more of total revenues are summarized in Item 1, Notes to
Condensed Consolidated Financial Statements, under "Segment and Significant
Customer Reporting".

The Company's international sales currently are U.S. dollar-denominated. As a
result, an increase in the value of the U.S. dollar relative to foreign
currencies, particularly in China, could make our products less competitive in
international markets. In the future, we may elect to invoice some of our
international customers in local currency. Doing so will expose us to losses due
to fluctuations in exchange rates between the U.S. dollar and the particular
local currency. We may choose to limit any currency exposure through the
purchase of forward foreign exchange contracts or other hedging strategies, but
such strategies may not be successful in avoiding exchange-related losses. See
"Risk Factors . If We Are Not Successful in Expanding Our Business in
International Markets, Our Growth Will Suffer". Revenue by geographical region
as a percentage of the Company's total revenue is summarized in Item 1 Notes to
Condensed Consolidated Financial Statements, under "Segment and Significant
Customer Reporting".

We generally expect to experience price pressure due to the impact of
competition. Average selling prices have varied considerably in the past based
on such price pressure and also on the mix of the various products shipped by
the Company. Additionally, OEM unit pricing is generally significantly lower
than distribution pricing. Pricing in the OEM market depends on the specific
features and functional content of the products sold, the degree of integration
with the OEM's products, purchase volumes and the level of sales and service
support.

The Company uses "turn-key" suppliers for the purchase, assembly and
packaging of all products sold that require hardware components. From time to
time the Company has made strategic purchases of material components from
vendors to ensure supply of critical components for its products. Significant
portions of the critical components used in the Company's products are multi-source to ensure
adequate supply to our turn-key vendors. Key components such as
processors and certain types of memory, including "flash" memory, are and have
been a consistent variable in the marketplace for both supply and price. As
such, the Company continually manages such supply with vendors to meet the
requirements of its own demand for finished products.



Results of Operations

The following table sets forth certain financial data for the periods
indicated as a percentage of revenue.

`Three Months Ended
                                              March 31,
                                         -------------------
                                            2000      1999
                                         Restated,
                                         See Note 2
                                         --------- ---------
Revenue................................     100.0 %   100.0 %
Cost of revenue........................      69.4      67.3
                                         --------- ---------
Gross margin...........................      30.6      32.7
                                         --------- ---------

Operating expenses:
  Research and development.............      47.1      32.4
  Sales and marketing..................     129.1      54.0
  General and administrative...........      32.1      12.1
  Amortization of deferred
     compensation......................       4.0       9.7
                                         --------- ---------
Total operating expenses...............     212.3     108.2
                                         --------- ---------
Loss from operations...................    (181.7)    (75.5)
Interest expense.......................      (8.0)     (0.9)
Other income (expense).................      14.3      (0.6)
Cumulative effect of change in
  accounting policy....................     (37.0)      0.0
                                         --------- ---------
Net loss ..............................    (212.4)%   (77.0)%
                                         ========= =========`

Three Months Ended March 31, 2000 (As restated, See
Note 2) and 1999

Revenue. Revenue decreased 9% to $3.5 million in the
three months ended March 31, 2000 from $3.9 million in the three months ended
March 31, 1999. The decrease was primarily a result of lower revenues in U.S.
distribution coupled with lower revenue to resellers in the U.S. and Asia. U.S.
revenue reduction reflects the transition in the market place of a move by
customers to the purchase of Broadband / DSL technologies.

Gross margin. The Company's total gross margin
decreased from $1.3 million, or 33% of revenue, for the three months ended March
31, 1999 to $1.1 million, or 31% of revenue, for the three months ended March
31, 2000. The decline in gross margin as a percentage of revenue reflects lower
selling prices on Dial products and a higher mix of lower margin analog
products.

Research and development expenses. Research and
development expenses increased from $1.3 million, or 32% of revenue, for the
three months ended March 31, 1999 to $1.7 million, or 47% of revenue, for the
three months ended March 31, 2000. This increase reflects significant activity
on engineering projects associated with the introduction of the Company's DSL
products as well as efforts focused on "voice-over-DSL" technologies. The
Company expects research and development expenditures to increase in the future
as the Company continues to invest in new technologies.

Sales and marketing expenses. Sales and marketing
expenses increased from $2.1 million, or 54% of revenue, for the three months
ended March 31, 1999 to $4.6 million, or 129% of revenue, for the three months
ended March 31, 2000. Sales and marketing expenses for the three months ended
March 31, 2000 reflects increased selling expenditures for the hire of new
support staff for the carrier organization to support the expansion into the DSL
market. Additionally, the Company has expanded its advertising, promotions and
marketing support efforts in both Europe and the Pacific Rim region to develop
further markets for the Company's products.

General and administrative expenses. General and
administrative expenses increased from $0.5 million, or 12% of revenue, for the
three months ended March 31, 1999 to $1.1 million, or 32% of revenue, for the
three months ended March 31, 2000. General and administrative expenses increased
primarily due to the addition of certain finance and administrative personnel,
including a Chief Financial Officer. Additionally, the Company incurred costs
for recruiting, reflecting its active hiring program and the general high cost
of recruiting in the current market environment.

Amortization of deferred compensation. Amortization of
deferred compensation was $0.1 million and $0.4 million for the three months
ended March 31, 2000 and 1999, respectively. This amortization is associated
with recorded deferred compensation of $2.5 million related to stock options
granted in the year ended December 31, 1998 and during the three months ended
March 31, 1999 at less than their deemed fair market value. The Company
amortizes the deferred compensation over the vesting periods of the applicable
options.

Cumulative effect of change in accounting policy. The
results of operations for the three months ended March 31, 2000 include a $1.3
million increase in net loss as a result of a cumulative change in accounting
policy. See Note 2.

LIQUIDITY AND CAPITAL RESOURCES (March 31, 2000
amounts are restated. See Note 2)

Our principal sources of liquidity as of March 31, 2000 consisted of
$32.7 million in cash equivalents and marketable securities, a $1.0 million
fixed asset lease line, a working capital credit facility with a borrowing limit
of up to the lower of $5.0 million or 100% of eligible accounts receivable and
50% of inventory and a $3.0 million bridge loan facility. As of March 31, 2000,
the Company had outstanding obligations of $0.3 million and $5.2 million under
the fixed asset lease line and working capital and bridge loan facilities,
respectively. Borrowings under the fixed asset lease line bear interest at 7.5%,
are payable ratably over a 36 month term, are subject to a 15% termination
payment and are secured by the fixed assets that are leased under the line.
Borrowings under the working capital credit facility bear interest at 8.4%, are
payable ratably over a 36 month term, are subject to a termination payment of
12.5% and are secured by our receivables and inventory. Borrowings under the
bridge loan facility bear interest at 14.6% and are payable ratably over a
36month term. Certain of these debt agreements contain provisions that limit the
payment of cash dividends.

Since inception, we have financed our operations primarily through the sale
of stock, capital equipment lease lines and working capital lines of credit.

Net cash used in operating activities was $6.4 million and $3.2 million in
the three months ended March 31, 2000 and 1999, respectively. The cash utilized
in both periods was attributable primarily to net losses and working capital
required to fund the Company's growth in operations, including inventory and
accounts receivable.

Net cash provided by investing activities was $5.3 million for the three
months ended March 31, 2000, consisting primarily of $6.1 million in maturities
of marketable securities net of purchases of new marketable securities.
Additionally, the cash provided by investing activities for the three months
ended March 31, 2000 consisted of the purchase of $0.8 million in property and
equipment. Cash used in investing activities was $0.1 million for the three
months ended March 31, 1999 and reflected the purchase of property and
equipment. The Company has planned capital commitments of approximately $2.5
million for the year ending December 31, 2000.

Net cash used in financing activities was $0.3 million for the three months
ended March 31, 2000 reflecting $0.5 million in the scheduled pay down of the
Company's debt offset by $0.2 million in cash generated from the issuance of
common stock associated with the exercise of employee stock options. Net cash
provided by financing activities for the three months ended March 31, 1999 was
$4.2 million and primarily reflected borrowings under the Company's debt
agreements.

The Company believes that its current cash equivalents, marketable securities
and debt facilities together with anticipated future revenues will be sufficient
to meet its anticipated cash needs for working capital and capital expenditures
for at least the next 12 months. See "Risk Factors - We expect to Continue to
Experience Negative Cash Flow From Operations and Maybe Unable to Meet Our
Future Capital Requirements Through the Issuance of Additional Securities".



ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK

Our interest income is sensitive to changes in the general level of U.S.
interest rates, particularly since the majority of our investments are in short-term
instruments. Due to the nature of our short-term investments, we have
concluded that there is no material interest rate risk exposure and no
quantitative tabular disclosures are required.



Risk Factors

We Have a Limited Operating History and Consequently Our Future Prospects are
Difficult to Evaluate

We were incorporated in February 1994 and began shipping our products
commercially in April 1996. We have shipped products in volume since the second
quarter of 1997. We have limited operating history and the uncertain nature of
the rapidly changing markets in which we serve, makes the prediction of future
results of operations difficult or impossible. Furthermore, our prospects must
be evaluated in light of the risks, uncertainties, and difficulties frequently
encountered by companies in the early stage of development. We may not be
successful in addressing these risks and our business strategy may not be
successful.

We Have a History of Losses, We Expect Future Losses and We Cannot Assure
You That We Will Achieve or Maintain Profitability

We have incurred losses since we commenced operations in February 1994.
We incurred net losses of $6.3 million in 1996, $11.5 million in 1997, $13.4
million in 1998 and $13.2 million in 1999. As of March 31, 2000, we had an
accumulated deficit of $54.6 million. We have not achieved profitability and our
revenue has not grown in recent quarters. As such, we cannot be certain that we
will realize sufficient revenue to achieve profitability. Even if we do achieve
profitability, we cannot assure you that we can sustain or increase
profitability on a quarterly or annual basis in the future. We may not generate
a sufficient level of revenue to offset these expenditures or be able to adjust
spending in a timely manner to respond to any unanticipated decline in revenue.
If revenue does not grow as we anticipate, if gross margins do not improve or if
operating expenditures exceed our expectations or cannot be adjusted
accordingly, we may continue to experience significant losses on a quarterly and
annual basis.

We Expect to Continue to Experience Negative Cash Flow From Operations and
May Be Unable to Meet Our Future Capital Requirements Through the Issuance of
Additional Securities

Since inception, we have experienced negative cash flow from operations
and we expect to continue to experience negative cash flow from operations for
the foreseeable future. Therefore, we have relied primarily on issuances of
equity securities to fund our operations to date. We currently anticipate that
our existing cash balances and available lines will not be sufficient to meet
our anticipated needs for working capital and capital expenditures through the
next 12 months and we will need to raise additional funds prior to the
expiration of such period. We cannot be certain that additional financing,
through the issuance of equity securities or otherwise, will be available to us
on favorable terms, or at all. If adequate funds are not available, or are not
available on acceptable terms, we may not be able to take advantage of market
opportunities, develop new products or otherwise respond to competitive
pressures which could adversely affect our ability to achieve and sustain
positive cash flow and profitability in the future. Furthermore, without new
funds, the Company may not be able to continue as a going concern.

Our Financial Results from Period to Period May Fluctuate as a
Result of Several Factors, Any of Which Could Adversely Affect Our Stock Price

We believe that period-to-period comparisons of our operating results are
not a good indication of our future performance. In past periods our operating
results have been below the expectations of public market analysts and investors
and the price of our common stock has fallen. It is possible that this may also
occur in future periods. Our revenue and operating results may vary
significantly from period to period due to a number of factors, many of which
are not in our control. These factors include:

> continued market acceptance of our products;fluctuations in demand for our products and services;variations in the timing of orders and shipments of our products;the timing of new product and service introductions by us or our
>      competitors;the mix of products sold and the mix of distribution channels through which
> they are sold;our ability to obtain sufficient supplies of sole or limited source
> components for our products;unfavorable changes in the prices of the components we purchase;our ability to achieve required cost reductions;our ability to attain and maintain production volumes and quality levels
> for our products; andour ability to integrate new technologies we develop or acquire into our
> products.

The amount and timing of our operating expenses generally will vary from
quarter to quarter depending on the level of actual and anticipated business
activities. Research and development expenses will vary as we develop new
products. Sales and marketing expense fluctuations in past periods have been due
primarily to the level of sales and marketing expenses associated with new
product introductions. General and administrative expense fluctuations in past
periods have been due primarily to increases in personnel expense as we hire new
employees and build the Company infrastructure. In the past, we have experienced
fluctuations in operating results. We have experienced sharply increased revenue
in periods that involved new product introductions and significant sales to
OEMs, with equally sharp decreases in revenue in subsequent periods as
distributors and OEMs complete their inventory build-up process. Furthermore, we
have a limited backlog of orders, and revenue for any future quarter is
difficult to predict. Supply, manufacturing or testing constraints could result
in delays in the delivery of our products. Any delay in the product deployment
schedule of one or more of our new products would likely adversely affect our
operating results for a particular period.

We cannot assure you that we will be able to sustain or improve our gross
margins in the future, or that we will be able to offset future price declines
with cost reductions. As a result, we may experience substantial period-to-period fluctuations
in future operating results and declines in gross margins. A
variety of factors affect our gross margins, including the following:

> the type of distribution channel through which we sell our products;the volume of products manufactured;our product sales mix;the average selling prices of our products; andthe effectiveness of our cost reduction efforts.

We also anticipate that orders for our products may vary significantly from
period to period. As a result, operating expenditures and inventory levels in
any given period could be disproportionately high. In some circumstances,
customers may delay purchasing our current products in favor of next-generation
products, which could affect our operating results in any given period.



We May Experience Significant Variability in Our Quarterly Revenue Due to
Our Reliance on Indirect Sales Channels and the Variability of Our Sales Cycles

The timing of our revenue is difficult to predict because of our reliance
on indirect sales channels and the length and variability of our sales cycle.
The length of our sales cycle may vary substantially from customer to customer
depending upon the size of the order and the distribution channel through which
our products are sold. Sales from our distributors to our VARs typically take
one month to complete. Sales to our larger end-user accounts, who buy larger
quantities of our products for distribution to their multiple offices, typically
take two to three months to complete and it typically takes nine months or more
to establish volume sales contracts with our OEMs. Furthermore, the purchase of
our products by end-users often represents a significant and strategic decision
regarding their communications infrastructures and typically involves
significant internal procedures associated with the evaluation, testing,
implementation and acceptance of new technologies. This evaluation process
frequently results in a lengthy sales process which is often subject to
significant delays as a result of our customers' budgetary constraints and
internal acceptance reviews. If orders forecasted for a specific customer in a
particular quarter do not occur in that quarter, our operating results for that
quarter could be adversely affected.

If a Distributor, OEM or Reseller Cancels or Delays a Large Purchase, Our
Revenue May Decline and the Price of Our Stock May Fall

To date, a limited number of customers have accounted for a significant
portion of our revenue. If any of our major customers stops or delays its
purchase of our products, our revenue and profitability would be adversely
affected. We anticipate that sales of our products to relatively few customers
will continue to account for a significant portion of our revenue. In the three
month period ended March 31, 2000, customers totaling 10% or more of revenue
accounted for 45% of our revenue. We cannot assure you that our current
customers will continue to place orders with us, that orders by existing
customers will continue at the levels of previous periods or that we will be
able to obtain orders from new customers.

Because our expense levels are based on our expectations as to future revenue
and to a large extent are fixed in the short term, a substantial reduction or
delay in sales of our products, unexpected returns from resellers or the loss of
any significant distributor, reseller or OEM could adversely affect our
operating results and financial condition. Although our financial performance
depends on large orders from a few key distributors, resellers and OEMs, we do
not have binding commitments from any of them. For example:

> our distributors, resellers and OEMs can stop purchasing or marketing our
> products at any time;our reseller agreements generally are not exclusive and are for one year
> terms, with no obligation of the resellers to renew their agreements with us;our reseller agreements provide for discounts based on expected or actual
> volumes of products purchased or resold in a given period;our reseller and OEM agreements generally do not require minimum purchases;
> andour customers may, under certain circumstances, return products to us.

If We Fail to Enhance Our Existing Products or Develop and Introduce New
Products and Features in a Timely Manner to Meet Changing Customer Requirements
and Emerging Industry Standards, Our Ability to Grow Our Business Will
Suffer

The market for shared Internet access solutions is characterized by
rapidly changing technologies and short product life cycles. Our future success
will depend in large part upon our ability to:

> identify and respond to emerging technological trends in the market;develop and maintain competitive products;enhance our products by adding innovative features that differentiate our
> products from those of our competitors;bring products to market on a timely basis at competitive prices;respond effectively to new technological changes or new product
> announcements by others; andrespond to emerging broadband access technologies including DSL and cable
> modems.

We will not be competitive unless we continually introduce new products and
product enhancements that meet these emerging standards. In the future, we may
not be able to effectively address the compatibility and interoperability issues
that arise as a result of technological changes and evolving industry standards.

The technical innovations required for us to remain competitive are
inherently complex, require long development cycles and are dependent in some
cases on sole source suppliers. We will be required to continue to invest in
research and development in order to attempt to maintain and enhance our
existing technologies and products, but we may not have the funds available to
do so. Even if we have sufficient funds, these investments may not serve the
needs of customers or be compatible with changing technological requirements or
standards. Most development expenses must be incurred before the technical
feasibility or commercial viability of new or enhanced products can be
ascertained. Revenue from future products or product enhancements may not be
sufficient to recover the associated development costs.

If We Fail To Develop and Expand Our Indirect Distribution Channels, Our
Business Could Suffer

Our product distribution strategy focuses primarily on continuing to
develop and expand our indirect distribution channels through distributors,
resellers and OEMs, as well as focusing our field sales organization in the
broadband security market. If we fail to develop and cultivate relationships
with significant resellers, or if these resellers are not successful in their
sales efforts, our product sales may decrease and our operating results may
suffer. Many of our resellers also sell products that compete with our products.
In addition, our operating results will likely fluctuate significantly depending
on the timing and amount of orders from our resellers. We cannot assure you that
our resellers will market our products effectively or continue to devote the
resources necessary to provide us with effective sales, marketing and technical
support.

In order to support and develop leads for our indirect distribution channels,
we plan to focus our efforts on target accounts with a specialized team of sales
and support staff. We cannot assure you that this will be successfully
completed, that the cost of this team will not exceed the revenue generated or
that our expanded sales and support staff will be able to compete successfully
against the significantly more extensive and well-funded sales and marketing
operations of many of our current or potential competitors. Our inability to
effectively establish our distribution channels or manage the sales and support
staff would adversely affect our ability to grow and increase revenue.



Average Selling Prices of Our Products May Decrease, Which May Affect Our
Gross Margins

The average selling prices for our products may be lower than expected as
a result of competitive pricing pressures, promotional programs and customers
who negotiate price reductions in exchange for longer term purchase commitments.
The pricing of products sold to our OEMs depends on the specific features and
functions of the product, the degree of integration with the OEM's products,
purchase volumes and the level of sales and service support. Generally, the
market has reflected pricing pressures for both ISDN and analog based products
and we expect such price pressures from competition to continue in the future.
Additionally, we are experiencing aggressive pricing in the market for
Broadband-based products and with the higher cost per unit to manufacture than
the ISDN and analog products, we may experience gross margin percentage
reductions as we continue to move our portfolio of products to a higher mix of
Broadband-based products. As such, we cannot assure you that we will be
successful in developing and introducing on a timely basis new products with
enhanced features that can be sold at higher gross margins.

If We Are Unable to Lower the Cost of Our Products, Purchasers May Buy
From Our Competitors and Our Financial Results Would Suffer

Certain of our competitors currently offer Internet access products at
prices lower than ours. Market acceptance of our products will depend in part on
reductions in the unit cost of our products. Our cost reduction efforts may not
allow us to keep pace with competitive pricing pressures or lead to improved
gross margins. Many of our competitors are larger and manufacture products in
significantly greater quantities than we intend to for the foreseeable future.
Consequently, these competitors have more leverage in obtaining favorable
pricing from suppliers and manufacturers. In order to remain competitive, we
must reduce the cost of manufacturing our products through design and
engineering changes. We may not be successful in redesigning our products. Even
if we are successful, our redesign may be delayed or may contain significant
errors and product defects. In addition, any redesign may not result in
sufficient cost reductions to allow us to significantly reduce the list price of
our products or improve our gross margins. Reductions in our manufacturing costs
will require us to use more highly integrated components in future products and
may require us to enter into high volume or long-term purchase or manufacturing
agreements. Volume purchase or manufacturing agreements may not be available on
acceptable terms. We could incur expenses without related revenue if we enter
into a high volume or long-term purchase or manufacturing agreement and then
decide that we cannot use the products or services offered by such agreement.

Our Market Continues to Develop and Our Products May Not Achieve
Widespread Market Acceptance

Our success will depend upon the widespread commercial acceptance of
shared Internet access products by small offices. Small offices are deploying
shared Internet access products, and the market for these products is continuing
to develop. If the single Internet access devices, such as analog modems or
ISDN, DSL and cable modems, currently utilized by many small offices are deemed
sufficient even though they do not enable shared access, then the market
acceptance of our products may be slower than expected. Potential users of our
products may have concerns regarding the security, reliability, cost, and ease
of use and capability of our products. We cannot accurately predict the future
growth rate or the ultimate size of the small office market for shared Internet
access solutions.

We Depend on Contract Manufacturers for Substantially All of Our
Manufacturing Requirements and We May Be Unable to Successfully Expand Our
Manufacturing Operations as We Grow

We have developed a highly out-source contract manufacturing capability
for the production of our products. Therefore, we rely on third party contract
manufacturers to procure components, assemble, test and package our products.
Our primary turn-key manufacturing partners are Micron Custom Manufacturing
Services, Inc., Delta Networks, Inc., Discopy Labs Corporation and SMT
Unlimited, Inc. Any interruption in the operations of one or more of these
contract manufacturers or delays in their shipment of products would adversely
affect our ability to meet scheduled product deliveries to our customers.

We intend to regularly introduce new products and product enhancements that
will require that we rapidly achieve volume production by coordinating our
efforts with those of our suppliers and contract manufacturers. The inability of
our contract manufacturers to provide us with adequate supplies of high quality
products or the loss of any of our contract manufacturers would cause a delay in
our ability to fulfill orders while we obtain a replacement manufacturer. In
addition, our inability to accurately forecast the actual demand for our
products could result in supply, manufacturing or testing capacity constraints.
These constraints could result in delays in the delivery of our products or the
loss of existing or potential customers.

Although we perform random spot testing on manufactured products, we rely on
our contract manufacturers for assembly and primary testing of our products. Any
product shortages or quality assurance problems could increase the costs of
manufacturing, assembling or testing our products.



We Purchase Several Key Components of Our Products from Sole or Limited
Sources and Could Lose Sales If These Sources Fail to Satisfy Our Supply
Requirements

We currently purchase several key components used in the manufacture of
our products from sole or limited sources and are dependent upon supply from
these sources to meet our needs. We are likely to encounter shortages and delays
in obtaining components in the future which could adversely affect our ability
to meet customer orders. Our principal sole sourced components include
microprocessors, line interface integrated circuits, modem integrated circuits,
DRAMs, transformers, selected other integrated circuits, and plastic tooled
enclosures.

We use a rolling six-month forecast based on anticipated product orders to
determine our material requirements. Lead times for materials and components we
order vary significantly, and depend on factors such as specific supplier,
contract terms and demand for a component at a given time. Our components that
have long lead times include power converters, ISDN integrated circuits, DSL
integrated circuits, flash memories, DRAMs and SRAMs. If orders do not match
forecasts, we may have excess or inadequate inventory of certain materials and
components, which could harm our business.

Although we enter, either directly or through our contract manufacturers,
into purchase orders with our suppliers for components based on our forecasts,
we do not have any guaranteed supply arrangements with these suppliers. Any
extended interruption in the supply of any of the key components currently
obtained from a sole or limited source could affect our ability to meet
scheduled product deliveries to customers. We cannot assure you that, as our
demand for these components increases, we will be able to obtain these
components in a timely manner in the future. In addition, financial or other
difficulties facing our suppliers or significant worldwide demand for the
components they provide could adversely affect the availability of these
components. If we are unable to obtain, either directly or through our contract
manufacturers, a sufficient supply of components from our current sources, we
could experience difficulties in obtaining alternative sources or in altering
product designs to use alternative components. Resulting delays or reductions in
product shipments could damage customer relationships. Further, we may also be
subject to increases in component costs.

The Market in Which We Sell Our Products is Intensely Competitive and Our
Business Would Be Adversely Affected If We Lose Market Share or Otherwise Fail
to Successfully Compete in This Market

We compete in a new, rapidly evolving and highly competitive market. We
expect competition to persist and intensify in the future. Our current and
potential competitors offer a variety of competitive products, including shared
Internet access devices such as the products offered by 3Com, thin servers, and
high-end networking equipment such as routers and switches offered by companies
such as Lucent, Cisco, Intel, Efficient and Netopia.

Many of our competitors are substantially larger than we are and have
significantly greater financial, sales and marketing, technical, manufacturing
and other resources and more established distribution channels. These
competitors may be able to respond more rapidly to new or emerging technologies
and changes in customer requirements or devote greater resources to the
development, promotion and sale of their products than we can. Furthermore, some
of our competitors may make strategic acquisitions or establish cooperative
relationships among themselves or with third parties to increase their ability
to rapidly gain market share by addressing the needs of our prospective
customers. These competitors may enter our existing or future markets with
solutions that may be less expensive, provide higher performance or additional
features or be introduced earlier than our solutions. Given the market
opportunity in the shared Internet access market, we also expect that other
companies may enter our market with better products and technologies. If any
technology that is competing with ours is more reliable, faster, and less
expensive or has other advantages over our technology, then the demand for our
products and services would decrease, which would seriously harm our business.

We expect our competitors to continue to improve the performance of their
current products and introduce new products or new technologies as industry
standards and customer requirements evolve that may supplant or provide lower
cost alternatives to our products. Successful new product introductions or
enhancements by our competitors could reduce the sales or market acceptance of
our products and services, perpetuate intense price competition or make our
products obsolete. To be competitive, we must continue to invest significant
resources in research and development, sales and marketing and customer support.
We cannot be sure that we will have sufficient resources to make such
investments or that we will be able to make the technological advances necessary
to be competitive. As a result, we may not be able to compete effectively
against our competitors. Our failure to maintain and enhance our competitive
position within the market may seriously harm our business.

Increased competition is likely to result in price reductions, reduced gross
margins, longer sales cycles and loss of market share, any of which would
seriously harm our business and results of operations. We cannot be certain that
we will be able to compete successfully against current or future competitors or
that competitive pressures will not seriously harm our business.





We Have Experienced Fluctuations in Growth in our Business in Recent
Periods and Our Failure to Effectively Manage This and Future Growth Will
Adversely Affect Our Business

We have significantly expanded and reduced our operations in recent
periods and anticipate that further significant changes will be required to
address potential growth in our customer base and market opportunities. These
changes have placed and are expected to continue to place, significant strain on
our engineering, managerial, administrative, operational, financial and
marketing resources, and increased demands on our systems and controls. To
exploit the market for our products, we must develop new and enhanced products
while managing anticipated growth in sales by implementing effective planning
and operating processes. To manage the anticipated growth of our operations, we
will need to:

> improve existing and implement new operational, financial and management
> information controls, reporting systems and procedures;hire, train and manage additional qualified personnel;continue to expand and upgrade our core technologies; andeffectively manage multiple relationships with our customers, suppliers,
> distributors and other third parties.

We cannot assure you that we will be able to effectively manage the expansion
of our operations, that our systems, procedures or controls will be adequate to
support our operations or that the executive management team will be able to
achieve the rapid execution necessary to fully exploit the market opportunity
for our products and services. Any failure to effectively manage our growth
could harm our business.

We Depend on Our Key Personnel Who May Not Continue to Work For Us

Our future success depends in large part upon the continued services of
our key technical, sales and senior management personnel who are not bound by an
employment agreement. The loss of any of our senior management or other key
research, development, sales and marketing personnel, particularly if lost to
competitors, could harm our business. In particular, the services of Mahesh
Veerina, President and Chief Executive Officer, would be difficult to replace.

If We Do Not Provide Adequate Product Support and Training to Our
Resellers Our Sales Could Be Adversely Affected

Our ability to achieve our planned sales growth, retain current and
future customers and expand our network of resellers will depend in part upon
the quality of our customer service and product support operations. We rely
primarily on our resellers to provide the product support and training required
by our customers particularly during the initial deployment and implementation
of our products. We may not have adequate personnel to provide the levels of
support and product training our resellers may require during initial product
deployment or on an ongoing basis to adequately support our customers. We also
provide direct customer service and support to the end-users of our products.
Our inability to provide sufficient support to our customers and resellers could
delay or prevent the successful deployment of our products and could reduce our
overall sales volumes. In addition, our failure to provide adequate support
could adversely impact our reputation and our relationships with customers and
resellers and could prevent us from gaining new customers or expanding our
reseller network.

If Our Products Contain Undetected Defects and Errors We Could Incur
Significant Unexpected Expenses, Experience Product Returns and Lost Sales, and
Be Subject to Product Liability Claims

Our products are complex and may contain undetected defects, errors or
failures, particularly when first introduced or as new enhancements and versions
are released. We cannot assure you that, despite our testing procedures, defects
and errors will not be found in new products or in new versions or enhancements
of existing products after commencement of commercial shipments. Any defects or
errors in our products discovered in the future could result in adverse customer
reactions, negative publicity regarding us and our products, delays in market
acceptance of our products, product returns, lost sales and unexpected expenses.

Sales and support of our products generally involve the risk of product
liability claims. Although our customer license agreements typically contain
provisions designed to limit our exposure to these claims, it is possible that
these limitation of liability provisions may not be effective as a result of
federal, state or local laws or ordinances or unfavorable judicial decisions. A
successful product liability claim brought against us could harm our business.



If We Are Not Successful in Expanding Our Business in International
Markets, Our Growth Will Suffer

As part of our strategy to address the global needs of our customers and
partners, we have committed significant resources to opening international
offices and expanding our international sales and support channels in advance of
revenue. We cannot assure you that our efforts to develop international sales
and support channels will be successful. Moreover, international sales are
subject to a number of risks, including changes in foreign government
regulations and communications standards, export license requirements, tariffs
and taxes, other trade barriers, difficulty in collecting accounts receivable,
difficulty in managing foreign operations, and political and economic
instability. To the extent our customers may be impacted by currency
devaluations or general economic crises, the ability of these customers to
purchase our products could be adversely affected. Payment cycles for
international customers are typically longer than those for customers in the
United States. We cannot assure you that foreign markets for our products will
not develop more slowly than currently anticipated. In addition, if the relative
value of the U.S. dollar in comparison to the currency of our foreign customers
should increase, the resulting effective price increase of our products to these
foreign customers could result in decreased sales.

We anticipate that our foreign sales will generally be invoiced in U.S.
dollars and, accordingly, we do not currently plan to engage in foreign currency
hedging transactions. However, as we expand our international operations, we may
allow payment in foreign currencies and exposure to losses in foreign currency
transactions may increase. We may choose to limit any currency exposure through
the purchase of forward foreign exchange contracts or other hedging strategies.
We cannot assure you that any currency hedging strategy we may adopt would be
successful in avoiding exchange related losses.





If Political, Social or Economic Developments in India Adversely Affect
Our Research and Development Operations in India, Our Ability to Introduce New
and Enhanced Products Would Be Harmed and Our Sales May Suffer

Our wholly-owned subsidiary, Ramp Networks Private Limited, is
incorporated in India and a substantial number of our research and development
personnel are located in India. Consequently, our business may be affected by
changes in exchange rates and controls, interest rates, government of India
policies, including taxation policy, as well as political, social and economic
developments affecting India.

In the past, the government of India has adopted policies that have resulted
in the nationalization of some industries. We cannot assure you that economic
policies adopted by the government of India will not result in the expropriation
of our business activities in India or otherwise impair or prohibit our current
research and development operations in India. Furthermore, there is increasing
competition for experienced engineers in India and we cannot assure you that we
will be successful in attracting and retaining sufficient engineering personnel
to support our research and development operations in India which we expect to
expand in the future.

Our Products Must Comply With Complex Government Regulations Which May
Prevent Us From Sustaining Our Revenue or Achieving Profitability

In the United States, our products must comply with various regulations
and standards defined by the Federal Communications Commission and Underwriters
Laboratories. Internationally, products that we develop may be required to
comply with standards established by telecommunications authorities in various
countries as well as with recommendations of the International
Telecommunications Union. If we fail to obtain timely domestic or foreign
regulatory approvals or certificates, we would not be able to sell our products
where these regulations apply, which may prevent us from sustaining our revenue
or achieving profitability.

If Internet Usage Declines or the Internet Infrastructure Is Not
Adequately Maintained and Expanded, Demand for Our Products May Decline

The Internet has recently begun to develop and is rapidly evolving. As a
result, the commercial market for products designed to enable high-speed access
to the Internet has only recently begun to develop. Our success will depend in
large part on increased use of the Internet and other networks based on Internet
protocol by corporate telecommuters and small offices. Critical issues
concerning the commercial use of the Internet remain unresolved and are likely
to affect the development of the market for our products. These issues include
security, reliability, cost, ease of access, government regulation and quality
of service. The adoption of the Internet for commerce and communications,
particularly by enterprises that have historically relied upon alternative means
of commerce and communications, generally requires the acceptance of a new
method of conducting business and exchanging information. The recent growth in
the use of the Internet has caused frequent periods of performance degradation
that have prompted efforts to upgrade the Internet infrastructure. Any perceived
degradation in the performance of the Internet as a whole could undermine the
benefits of our products. Potentially increased performance and other benefits
provided by our products and the products of others are ultimately limited by,
and are reliant upon, the speed and reliability of the Internet backbone itself.
Consequently, the emergence and growth of the market for our products will
depend on improvements being made to the entire Internet infrastructure to
alleviate overloading and congestion.



If We Are Unable to Adequately Protect Our Intellectual Property Rights
Other Companies May Use our Intellectual Property to Develop Competitive
Products that May Reduce Demand for Our Products

We rely on a combination of patent, copyright, trademark and trade secret
laws and restrictions on disclosure to protect our intellectual property rights.
We cannot assure you that any issued or pending patents will protect our
intellectual property or that they will not be challenged by third parties.
Furthermore, there can be no assurance that others will not independently
develop similar or competing technology or design around any patents that may be
issued.

We also enter into confidentiality or license agreements with our employees,
consultants and corporate partners, and control access to and distribution of
our software, documentation and other proprietary information. In addition, we
provide our products to end-users primarily under "shrink-wrap" license
agreements included in the packaging. These agreements are not negotiated with
or signed by the licensee, and thus these agreements may not be enforceable in
some jurisdictions. Despite our efforts to protect our proprietary rights,
unauthorized parties may attempt to copy or otherwise obtain and use our
products or technology. We cannot assure you that these precautions will prevent
misappropriation or infringement of our intellectual property. Monitoring
unauthorized use of our products is difficult, and we cannot assure you that the
steps we have taken will prevent misappropriation of our technology,
particularly in foreign countries where the laws may not protect our proprietary
rights as fully as in the United States.

Some of our OEM agreements also provide manufacturing rights and access to
our intellectual property and source code upon the occurrence of specified
conditions of default. If we were to default on these agreements, our OEMs could
use our intellectual property and source code to develop and manufacture
competing products, which would adversely affect our performance and ability to
compete.

We May Be Subject to Intellectual Property Infringement Claims That are
Costly to Defend and Could Limit our Ability to Use Certain Technologies in the
Future

Our industry is characterized by the existence of a large number of
patents and frequent claims and related litigation regarding patent and other
intellectual property rights. In particular, leading companies in the data
communications and networking markets have extensive patent portfolios with
respect to modem and networking technology. From time to time, third parties,
including these leading companies, have asserted and may assert exclusive
patent, copyright, trademark and other intellectual property rights to
technologies and related standards that are important to us. We expect that we
may increasingly be subject to infringement claims as the numbers of products
and competitors in the small office market for shared Internet access solutions
grow and the functionality of products overlaps.

We may in the future initiate claims or litigation against third parties for
infringement of our proprietary rights to determine the scope and validity of
our proprietary rights. Any such claims, with or without merit, could be time-consuming,
result in costly litigation and diversion of technical and management
personnel, or require us to develop non-infringing technology or enter into
royalty or licensing agreements. Such royalty or licensing agreements, if
required, may not be available on acceptable terms, if at all. In the event of a
successful claim of infringement and our failure or inability to develop non-infringing
technology or license the proprietary rights on a timely basis, our
business would be harmed.



Any Acquisitions We Make Could Adversely Affect Our Business

As part of our business strategy, we expect to review acquisition
prospects that would complement our existing business or enhance our
technological capabilities. Future acquisitions by us could result in large and
immediate write-offs, the incurrence of debt and contingent liabilities or
amortization expenses related to goodwill and other intangible assets, any of
which could materially and adversely affect our results of operations.
Furthermore, acquisitions entail numerous risks and uncertainties, including:
difficulties in the assimilation of operations, personnel, technologies,
products and the information systems of the acquired companies;

> diversion of management's attention from other business concerns;risks of entering geographic and business markets in which we have no or
> limited prior experience; andpotential loss of key employees of acquired organizations.

Although we do not currently have any agreement with respect to any material
acquisitions, we may make acquisitions of complementary businesses, products or
technologies in the future. We cannot be certain that we would be able to
successfully integrate any businesses, products, technologies or personnel that
might be acquired in the future, and our failure to do so could adversely affect
our business.

Future Issuances of Additional Securities May Adversely Affect Our
Stockholders

In the future, we will be required to raise additional funds through the
issuance of equity, equity-related or debt securities to fund our operations,
take advantage of market opportunities, develop new products, pursue acquisition
opportunities or otherwise respond to competitive pressures. The issuance of
additional securities may be dilutive to our existing stockholders. Furthermore,
securities we may issue in the future could have rights, preferences or
privileges senior to those of our existing stockholders.

Stock Market Volatility

The stock market in general, and the technology sector in particular, has
experienced volatility that often has been unrelated to the operating
performance of particular companies. These broad market and industry
fluctuations may adversely affect the trading price of our common stock,
regardless of our actual operating performance. As a result, Ramp's stock price
may be extremely volatile.



PART II.	OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See "Risk factors--We May Be Subject to
Intellectual Property Infringement Claims That are Costly to Defend and Could
Limit our Ability to Use Certain Technologies in the Future".

On October 13th, 1999, the Company and certain former employees of
the Company appeared in the United States District Court Northern District of
California in San Jose and agreed to a settlement of claims made by the former
employees in exchange for cash and shares of common stock of the Company. The
dispute between the parties was associated with the prior acquisition by the
Company of certain technologies and assets in June 1998. The estimated cost
associated with this settlement was included in the Legal and severance cost
charge included in the Statement of Operations for the year ended December 31,
1999. The parties to the dispute signed a settlement agreement on January 10,
2000 and the dispute was formally dismissed on February 7, 2000. During the
three months ended March 31, 2000 a total of 29,882 shares of stock were issued
in accordance with this settlement.

In March 1999, the Company received a letter from NovaWeb Technologies , Inc.
(NovaWeb) alleging that certain of the Company's products may have infringed on
NovaWeb's patents pertaining to intelligent modem bonding technology. On May 21,
1999, NovaWeb filed a complaint in the United States District Court Northern
District of California against the Company alleging infringement of this patent.
In February 2000, the Company and NovaWeb signed a Settlement and Patent License
Agreement whereby the Company will pay NovaWeb a 1% royalty on net sales of
certain of the Company's products commencing February 15, 2000. As
consideration, the Company paid NovaWeb $350,000 as a prepayment for future
royalties. The maximum cumulative royalty payable under this non-exclusive
worldwide license agreement is $1,500,000. In relation to this agreement NovaWeb
has filed a dismissal for all claims.

Additionally, from time to time the Company is involved in certain other
legal proceedings in the ordinary course of business. None of such proceedings
are expected to have a material adverse impact on the Company's business,
results of operations or financial condition.



ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

None.

Item 3. DEFAULTS UPON SENIOR SECURITIES

None.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF  SECURITYHOLDERS

None.

Item 5. OTHER INFORMATION

None.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

1. The following exhibits are filed as part of this report:

27.01	Financial Data schedule (For Edgar filing only)

(b) There were no other reports on Form 8-K filed during the quarter ended
March 31, 2000

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**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.

Date: November 14, 2000



| |                    
| | -------------------
| | Ramp Networks, Inc.

| |             
| | ------------
| | (Registrant)



| |     |                 
| | --- | ----------------
| | By: | /s/  PERRY GRACE

| |                                                                         
| | ------------------------------------------------------------------------
| |                                                                         
| | Perry Grace                                                             
| | Vice President Finance                                                  
| | (Duly Authorized Officer and Principal Financial and Accounting Officer)

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