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

FORM 10-Q

(Mark One)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED March 31, 2001, OR
|- | -----------------------------------------------------------------------------------------------------------------------------------------

| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD ________ to ________.
|- | ----------------------------------------------------------------------------------------------------------------------------------------



Commission file number:  000-31745

THIRD WAVE TECHNOLOGIES, INC.(Exact name of registrant as specified in its charter)

|DELAWARE
(State or other jurisdiction
of incorporation or organization) | 39-1791034
(I.R.S. Employer Identification No.)
|----------------------------------------------------------------------- | -----------------------------------------------
|502 S. ROSA ROAD, MADISON, WI
(Address of principal executive offices)  |                                                

(608) 273-8933
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x
 No  ̈

The number of shares outstanding of the registrant's Common Stock, $.001 par value, as of March 31, 2001, was 38,313,746.







THIRD WAVE TECHNOLOGIES, INC. AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2001



TABLE OF CONTENTS



|                            | Page No.                                                                                             
|--------------------------- | -----------------------------------------------------------------------------------------------------
|PART I                      | FINANCIAL INFORMATION                                                                                
|                            |                                                                                                      
|                            | Item 1.   Financial Statements                                                                       
|                            |                                                                                                      
|                            | Balance Sheets as of December 31, 2000 and March 31, 2001
(unaudited)                                
|                            |                                                                                                      
|                            | Statements of Operations for the three months ended March 31, 2000 and 2001
(unaudited)              
|                            |                                                                                                      
|                            | Statements of Cash Flows for the three months ended
March 31, 2000 and 2001 (unaudited)              
|                            |                                                                                                      
|                            | Notes to Financial Statements (unaudited)                                                            
|                            |                                                                                                      
|                            | 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 | 9                                                                                                    
|                            |                                                                                                      
|                            | 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                                                             
|                            |                                                                                                      
|SIGNATURES                  | 10                                                                                                   









PART I - FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

THIRD WAVE TECHNOLOGIES, INC.
Balance Sheets



|Assets                                                                                                                                       | March 31,
        2001
        (Unaudited)
        ------------------ | December 31,
        2000
        (Audited)
        -------------------
|-------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------- | -----------------------------------------------------------------------
|                                                                                                                                             |                                                                       |                                                                        
|Current assets:                                                                                                                              |                                                                       |                                                                        
|Cash and cash equivalents                                                                                                                    | $    1,766,680                                                        | $ 14,046,484                                                           
|Short-term investments                                                                                                                       | 104,494,743                                                           | 33,132,144                                                             
|Receivables                                                                                                                                  |                                                                       |                                                                        
|Trade, net of allowance for doubtful accounts of
       $64,000 and $59,000 at March 31, 2001 and December
       31, 2000                   | 10,897,410                                                            | 1,371,553                                                              
|Accounts receivable from related party                                                                                                       | 55,195                                                                | 22,290                                                                 
|Inventories                                                                                                                                  | 1,937,242                                                             | 760,851                                                                
|Prepaid expenses and other                                                                                                                   | 1,879,010                                                             | 1,731,004                                                              
|                                                                                                                                             |                                                                       | -------------                                                          
|Total current assets                                                                                                                         |                                                                       | 121,030,280                                                            
|Equipment and leasehold improvements                                                                                                         |                                                                       |                                                                        
|Machinery and equipment                                                                                                                      | 25,834,206                                                            | 19,194,828                                                             
|Leasehold improvements                                                                                                                       | 2,581,040                                                             | 2,481,222                                                              
|                                                                                                                                             |                                                                       | -------------                                                          
|                                                                                                                                             |                                                                       | 28,415,246                                                             
|Less accumulated depreciation                                                                                                                | 5,622,193                                                             | 4,430,927                                                              
|                                                                                                                                             |                                                                       | -------------                                                          
|                                                                                                                                             |                                                                       | 22,793,053                                                             
|Intangible assets                                                                                                                            |                                                                       | 10,588,731                                                             
|Other assets                                                                                                                                 |                                                                       | 3,735,423                                                              
|                                                                                                                                             |                                                                       | -------------                                                          
|Total assets                                                                                                                                 | $  158,147,487                                                        | $   83,193,010                                                         
|                                                                                                                                             |                                                                       | =============                                                          
|Liabilities and Shareholders' Equity                                                                                                         |                                                                       |                                                                        
|                                                                                                                                             |                                                                       |                                                                        
|Current liabilities:                                                                                                                         |                                                                       |                                                                        
|Accounts payable                                                                                                                             | $    7,555,411                                                        | $    9,358,200                                                         
|Accrued expenses and other liabilities                                                                                                       | 10,284,612                                                            | 4,076,060                                                              
|Deferred revenue                                                                                                                             | 4,918,663                                                             | 1,711,450                                                              
|Long-term debt due within one year                                                                                                           | 4,822,940                                                             | 6,796,234                                                              
|                                                                                                                                             |                                                                       | -------------                                                          
|Total current liabilities                                                                                                                    |                                                                       | 27,581,626                                                             
|Deferred revenue                                                                                                                             |                                                                       | 1,666,667                                                              
|Long-term debt                                                                                                                               |                                                                       | 1,879,190                                                              
|Convertible note payable                                                                                                                     |                                                                       | --                                                                     
|Other                                                                                                                                        |                                                                       | 200,000                                                                
|                                                                                                                                             |                                                                       |                                                                        
|                                                                                                                                             |                                                                       |                                                                        
|Shareholders' equity (deficit):                                                                                                              |                                                                       |                                                                        
|Convertible preferred stock, $.001 par value, 14,780,400 shares
     authorized:                                                             |                                                                       |                                                                        
|Series A, 1,131,600 shares issued and outstanding                                                                                            | --                                                                    | 1,132                                                                  
|Series B, 600,000 shares issued and outstanding                                                                                              | --                                                                    | 600                                                                    
|Series C, 560,400 shares issued and outstanding                                                                                              | --                                                                    | 560                                                                    
|Series D, 1,185,600 shares issued and outstanding                                                                                            | --                                                                    | 1,186                                                                  
|Series E, 5,190,000 shares issued and outstanding                                                                                            | --                                                                    | 5,190                                                                  
|Series F, 5,444,400 shares issued and outstanding                                                                                            | --                                                                    | 5,444                                                                  
|Common stock, $.001 par value, 36,000,000 shares
     authorized, 38,313,746 and 15,633,800 shares issued
     and outstanding, respectively | 38,314                                                                | 15,634                                                                 
|Common stock to be issued, 116,855 shares                                                                                                    | --                                                                    | 856,800                                                                
|Additional paid-in capital                                                                                                                   | 184,508,811                                                           | 98,871,975                                                             
|Deferred stock compensation                                                                                                                  | (3,712,963)                                                           | (4,570,364)                                                            
|Accumulated deficit                                                                                                                          | (54,014,158)                                                          | (48,148,969)                                                           
|                                                                                                                                             |                                                                       | ----------------                                                       
|Total shareholders' equity                                                                                                                   | 126,820,004                                                           | 47,039,188                                                             
|                                                                                                                                             |                                                                       | ----------------                                                       
|Total liabilities and shareholders' equity                                                                                                   | $     158,147,487                                                     | $  83,193,010                                                          
|                                                                                                                                             |                                                                       | ================                                                       

See accompanying notes to financial statements.





THIRD WAVE TECHNOLOGIES, INC.

Statements of Operations
(unaudited)





|                                                                                                                                      |                | Three months ended
        March 31,
         --------------------------------------------
|------------------------------------------------------------------------------------------------------------------------------------- | -------------- | ------------------------------------------------------------------------------------------
|                                                                                                                                      |                | 2001
        -----------------                                                            
|                                                                                                                                      |                |                                                                                           
|Revenues:                                                                                                                             |                |                                                                                           
|Product sales                                                                                                                         | $   10,173,427 | $     562,434                                                                             
|Development revenue                                                                                                                   | 860,000        | 19,022                                                                                    
|Grant revenue                                                                                                                         | 139,191        | 33,011                                                                                    
|                                                                                                                                      |                | ---------------                                                                           
|                                                                                                                                      |                | 11,172,618                                                                                
|                                                                                                                                      |                | ---------------                                                                           
|Operating expenses:                                                                                                                   |                |                                                                                           
|Cost of goods sold (including charges for stock
     compensation of 185,012 and 107,296 in 2001 and
     2000, respectively)         | 10,086,406     | 1,602,199                                                                                 
|Research and development (including charges for stock
     compensation of 91,978 and 9,334 in 2001 and
     2000, respectively)      | 2,863,842      | 1,436,249                                                                                 
|Selling and marketing (including charges for stock
     compensation of 42,963 and 106,461 in 2001 and
     2000, respectively)       | 2,371,390      | 749,908                                                                                   
|General and administrative (including charges for stock
     compensation of 640,926 and 153,330 in 2001 and
     2000, respectively) | 2,401,126      | 1,041,316                                                                                 
|Merger costs                                                                                                                          | --             | 232,807                                                                                   
|                                                                                                                                      |                | ---------------                                                                           
|Total operating expenses                                                                                                              | 17,722,764     | 5,062,479                                                                                 
|                                                                                                                                      |                | ---------------                                                                           
|Loss from operations                                                                                                                  | (6,550,146)    | (4,448,012)                                                                               
|Other income (expense):                                                                                                               |                |                                                                                           
|Interest income                                                                                                                       | 1,017,784      | 173,172                                                                                   
|Interest expense                                                                                                                      | (348,168)      | ( 85,696)                                                                                 
|Other                                                                                                                                 | 15,341         | 16,341                                                                                    
|                                                                                                                                      |                | ---------------                                                                           
|                                                                                                                                      |                | 684,957                                                                                   
|                                                                                                                                      |                | ---------------                                                                           
|Net loss attributable to common shareholders                                                                                          | $  (5,865,189) | $  (4,344,195)                                                                            
|                                                                                                                                      |                | ===============                                                                           
|Basic and diluted net loss per share attributable
     common shareholders   (note 2)                                                 | $       (0.20) | $       (0.29)                                                                            
|Pro forma, net loss per share (unaudited) -
     basic and diluted   (note 2)                                                         | $       (0.16) | $       (0.18)                                                                            
|Shares used in computing basic and
     diluted net loss per share allocable
     to common shareholders   (note 2)                   | 28,738,755     | 14,938,640                                                                                
|Shares used in computing pro-forma basic
     and diluted net loss per share   (note 2)                                               | 35,080,994     | 23,606,240                                                                                
|                                                                                                                                      |                | ===============                                                                           

See accompanying notes to financial statements.





THIRD WAVE TECHNOLOGIES, INC.

Statements of Cash Flows
(Unaudited)



|                                                                               |              | Three months ended
        March 31,
            ---------------------------------------
|------------------------------------------------------------------------------ | ------------ | ----------------------------------------------------------------------------------------
|                                                                               |              | 2001
          -----------                                                              
|                                                                               |              |                                                                                         
|Operating activities:                                                          |              |                                                                                         
|Net loss                                                                       |              | $ (5,865,189)                                                                           
|Adjustments to reconcile net loss to net cash used
   in operating activities: |              |                                                                                         
|Depreciation and amortization                                                  | 1,750,673    | 917,453                                                                                 
|Noncash stock compensation                                                     | 960,879      | 376,421                                                                                 
|Changes in operating assets and liabilities:                                   |              |                                                                                         
|Receivables                                                                    | (9,558,762)  | 128,259                                                                                 
|Inventories                                                                    | (1,176,391)  | (10,218)                                                                                
|Prepaid expenses and other assets                                              | (148,006)    | 837                                                                                     
|Accounts payable                                                               | (1,802,789)  | 280,106                                                                                 
|Accrued expenses and other liabilities                                         | 6,208,552    | 116,917                                                                                 
|Deferred revenue                                                               | 2,957,213    | (7,026)                                                                                 
|                                                                               |              | ---------------                                                                         
|Net cash used in operating activities                                          | (6,673,820)  | (2,541,446)                                                                             
|                                                                               |              | ---------------                                                                         
|Investing activities:                                                          |              |                                                                                         
|Purchases of equipment and leasehold improvements                              | (6,739,196)  | (1,603,048)                                                                             
|Purchases of licensed technology and other intangible assets                   | --           | (2,000,000)                                                                             
|Purchase of short-term investments                                             | (85,743,678) | (11,054,331)                                                                            
|Sales of short-term investments                                                | 14,381,079   | 5,350,000                                                                               
|                                                                               |              | ---------------                                                                         
|Net cash used in investing activities                                          | (78,101,795) | (9,307,379)                                                                             
|                                                                               |              | ---------------                                                                         
|Financing activities:                                                          |              |                                                                                         
|Payments on long-term debt                                                     |              | (2,189,315)                                                                             
|Proceeds from notes receivable                                                 | --           | 1,997,736                                                                               
|Proceeds from issuance of common stock, net                                    | 74,685,126   | 177,625                                                                                 
|                                                                               |              | ---------------                                                                         
|Net cash provided by financing activities                                      | 72,495,811   | 2,141,537                                                                               
|                                                                               |              | ---------------                                                                         
|Net decrease in cash and cash equivalents                                      | (12,279,804) | (9,707,288)                                                                             
|Cash and cash equivalents at beginning of period                               | 14,046,484   | 10,128,679                                                                              
|                                                                               |              | ---------------                                                                         
|Cash and cash equivalents at end of period                                     | $ 1,766,680  | $   421,391                                                                             
|                                                                               |              | =========                                                                               

See accompanying notes to financial statements.







THIRD WAVE TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS
March 31, 2000 and 2001
(unaudited)



(1)   Basis of Presentation



The accompanying unaudited financial statements of Third Wave Technologies, Inc. have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.  In the opinion
of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included.  Interim results are not necessarily indicative of results that may be expected for the year ending December 31,
2001.



The balance sheet at December 31, 2000, has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United
States for complete financial statements.



The accompanying unaudited financial statements should be read in conjunction with the audited financial statements and footnotes thereto included in our Registration Statement on Form S-1 filed with the Securities and Exchange
Commission and declared effective on February 9, 2001.



(2)   Net Loss Per Share



In accordance with accounting principles generally accepted in the United States, basic and diluted net loss per share has been computed using the weighted-average number of shares of common stock outstanding during the respective
periods.  Shares associated with stock options, convertible preferred stock, and convertible note payable, are not included because they are antidilutive for the periods presented.



Unaudited pro forma net loss per share, as presented, is computed using the weighted average number of shares of common stock outstanding, assuming that the shares associated with the preferred stock and convertible note payable were
converted to common stock upon issuance.  It also excludes from the numerator the interest expense on the convertible note payable.







The following table presents the calculation of basic, diluted and pro forma basic and diluted net loss per share.

|                                                                                                                            | For three months ended
     March 31,
------------------------------------------
|--------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------
|                                                                                                                            | 2001                                                                            
|Basic and diluted                                                                                                           |                                                                                 
|Net loss                                                                                                                    | $(5,865,189)                                                                    
|Weighted average shares of common stock outstanding-
   basic and diluted                                                   | 28,738,755                                                                      
|Basic and diluted net loss per share                                                                                        | $(0.20)                                                                         
|                                                                                                                            |                                                                                 
|Pro forma                                                                                                                   |                                                                                 
|Net loss                                                                                                                    | $(5,677,689)                                                                    
|Shares used above                                                                                                           | 28,738,755                                                                      
|Pro forma adjustment to reflect weighted effect
       of conversion of preferred stock and
       convertible note payable | 6,342,239                                                                       
|Shares used in computing pro forma basic and diluted
     net loss per share                                                | 35,080,994                                                                      
|Pro forma basic and diluted net loss per share                                                                              | $(0.16)                                                                         



(3)   Initial Public Offering

In February 2001, we completed our initial public offering of 7,500,000 shares of common stock at a price of $11.00 per share (excluding underwriters' discounts and commissions), generating gross proceeds of approximately $82.5 million
and net proceeds of approximately $74.6 million, after deducting an aggregate of $7.9 million in underwriting discounts, commissions, and other offering related expenses.  All shares of Series A Convertible Preferred Stock, Series B Convertible Preferred
Stock, Series C Convertible Preferred Stock, Series D Convertible Preferred Stock, Series E Convertible Preferred Stock, and Series F Convertible Preferred Stock outstanding as of the closing date of the offering were automatically converted into shares
of common stock.  No dividends were paid on any of the Series A, B, C, D, E, or F Convertible Preferred Stock.  We expect to use the proceeds from the offering for capital expenditures, including facilities expansion and purchases of equipment, and
general corporate purposes, including working capital and research and development activities.

(4)  Inventory

Inventories, consisting mostly of raw materials, are carried at the lower of cost or market using the first-in, first-out (FIFO) method for determining cost.

Inventory consists of the following:

|                  | March 31                            |  | December 31,                   
|----------------- | ----------------------------------- |  | -------------------------------
|                  | 2001                                |  | 2000                           
|                  |                                     |  |                                
|Raw material      | $1,761,964                          |  | $579,075                       
|Work in process   | 2,364                               |  | 36,270                         
|Finished products | 172,914
------------------------    |  | 145,506
---------------------- 
|                  |                                     |  |                                
|Total inventory   | $1,937,242
------------------------ |  | $760,851
----------------------







THIRD WAVE TECHNOLOGIES, INC.

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

This Management's Discussion and Analysis of Financial Condition and Results of Operations as of March 31, 2001, and for the three months ended March 31, 2001 and 2000 should be read in conjunction with the sections of our Registration
Statement on Form S-1 filed with the Securities and Exchange Commission and declared effective on February 9, 2001, as amended, entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations."  In this Form 10-Q, the terms
"we", "us", "our", and "Third Wave" each refer to Third Wave Technologies, Inc.  The following discussion of the financial condition and results of our operations should be read in conjunction with our Financial
Statements, including the Notes thereto, included elsewhere in this Form 10-Q.  This Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act
of 1933, as amended.  When used in this report or elsewhere by management from time to time, the words "believe," "anticipates," "intends," "plans," "estimates," and similar expressions are forward-looking statements.  Such forward-looking statements
contained herein are based on current expectations.  Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties.  Actual events or results may differ materially
from those discussed in the forward-looking statements as a result of various factors.  For a more detailed discussion of such forward-looking statements and the potential risks and uncertainties that may affect their accuracy, see the "Forward-Looking
Statements" section of this Management's Discussion and Analysis of Financial Condition and Results of Operations and also the potential risks and uncertainties set forth in the "Overview" section hereof and in the "Risk Factors" section of our final
prospectus dated February 9, 2001, comprising a part of our Registration Statement on Form S-1 filed with the Securities and Exchange Commission.  Except as required by law, we undertake no obligation to update any forward-looking statements.  You should
also carefully consider the factors set forth in other reports or documents that we file from time to time with the Securities and Exchange Commission.

OVERVIEW

Third Wave is a leading provider of products for analyzing genetic variations. A large suite of turn-key Invader Operating System products will be available for genotyping and gene expression analysis for research and clinical
applications.  These products will be available in flexible formats and will include various densities of chromosome-specific panels and genome-wide screening panels, medically-associated variation panels including disease area-specific panels,
micro-satellite replacement panels, and assays for quantitation and detection of a number of infectious diseases and mRNA transcripts including drug metabolizing enzymes, cytokines, chemokines, growth factors, housekeeping and reporter genes.



Third Wave's patented Invader genetic analysis products offer numerous advantages over conventional genetic analysis technologies. These products produce highly accurate results, are easy to use and eliminate the need for making
multiple copies of the genetic sample, saving the user time and money while significantly reducing the risks associated with sample contamination. Additionally, the Invader products are compatible with existing automation processes and detection platforms
and are available in convenient, ready-to-use formats. These advantages make the Invader products ideally suited for large-scale genetic analysis for both research and clinical applications, including drug discovery and development and patient diagnosis
and treatment. These proprietary products and technologies position us to exploit the growing market opportunity for genetic analysis products.

Our financial results may vary significantly from quarter to quarter due to fluctuations in the demand for our products, timing of new product introductions and deliveries made during the quarter, the timing of research, development
and grant revenues, and increases in spending, including expenses related to our ongoing scale up of  product development and manufacturing capabilities.





RESULTS OF OPERATIONS

Three Months Ended March 31, 2001 and 2000

Revenues.  Revenues for the three months ended March 31, 2001 of $11.2 million represents an increase of $10.6 million as compared to revenues of $0.6 million for the corresponding period of 2000.



Product revenues increased to $10.2 million  for the quarter ended March 31, 2001 from $0.6 million in the quarter ended March 31, 2000.  The increase in product sales was the result of increasing sales of the Invader Operating System
products, which are consumable tests and reagents used for DNA and RNA analysis in research and clinical applications.  Product sales during the quarter were several million dollars above expectations as our largest customer accelerated its purchases of
our proprietary Cleavase enzyme.  The customer will use the enzyme in conjunction with previously delivered Invader SNP probes sets, as well as those planned to be delivered over the remainder of the project.



Development revenues increased to $0.9 million for the three months ended March 31, 2001 from less than $0.1 million for the three months ended March 31, 2000.  The increase is primarily due to development work being done on a
development and commercialization agreement with BML, Inc. (BML).  Under the agreement, we will develop assays in accordance with a mutually agreed development program for use in clinical applications by BML; such development is expected to be complete by
the end of 2003.

Cost of Goods Sold.  Cost of goods sold consists of materials used in the manufacture of product, depreciation on manufacturing capital equipment, salaries and related expenses for management and personnel associated with our
manufacturing and quality control departments and amortization of licenses and settlement fees.  For the three months ended March 31, 2001, cost of goods sold increased to $10.1 million compared to $1.6 million for the corresponding period of 2000. The
increase was primarily due to the increased material expenses as a result of higher product sales and costs incurred as we put in place additional manufacturing capacity to meet accelerating demand for our Invader products.

Research and development expenses.  Research and development expenses consist primarily of salaries and related personnel costs, material costs for assays and product development, fees paid to consultants, depreciation and
facilities costs and other expenses related to the design, development, testing and enhancement of our products and acquisition of technologies used or to be used in our products.  Research and development costs are expensed as they are incurred.
Research and development expenses for the three months ended March 31, 2001, were $2.9 million, compared to $1.4 million for the corresponding period of 2000.  The increase in research and development expenses of $1.5 million, was primarily attributable
to increased expenses because we hired additional research and development personnel, increased purchases of laboratory supplies, increased equipment depreciation and deferred compensation amortization and increased facilities expenses in connection with
the expansion of our internal and collaborative research efforts.



Selling and Marketing Expenses.  Selling and marketing expenses consist primarily of salaries and related personnel costs for our sales and marketing management and field sales force, office support and related costs and travel
and entertainment. Selling and marketing expenses for the three months ended March 31, 2001, were $2.4 million, an increase of $1.6 million, as compared to $0.8 million for the corresponding period of 2000. We attribute this increase to the hiring of
additional personnel and increased costs associated with establishing and expanding our clinical and research businesses.

General and Administrative Expenses.  General and administrative expenses consist primarily of salaries and related expenses for executive, finance, and other administrative personnel, legal and professional fees, office support
and depreciation.  General and administrative expenses increased to $2.4 million in the quarter ended March 31, 2001, from $1.0 million for the corresponding period in 2000.  The increase is due to the hiring of additional personnel to support our growing
business activities and increased costs associated with operating a public company.

Interest income.  Interest income for the three months ended March 31, 2001, was $1.0 million, compared to approximately $0.2 million for the corresponding period of 2000. This increase was primarily due to interest received on
larger cash, cash equivalent and short-term investment balances, which we held as a result of our private placement of Series F Convertible Preferred Stock in July 2000 and our initial public offering in February 2001, offset by amounts used to fund
operating activities.

Interest expense.  Interest expense for the three months ended March 31, 2001 was approximately $0.4 million compared to $0.1 million in the corresponding period in 2000.  This was due to increased debt  related to the capital
equipment financing completed in June 2000 and the convertible note payable from December 2000.



LIQUIDITY AND CAPITAL RESOURCES

Since our inception, we have financed our operations primarily through private placements of equity securities, research grants from Federal and State government agencies, payments from strategic collaborators, equipment loans, capital
leases, sales of products, a convertible note and an initial public offering.  As of March 31, 2001, we had cash and cash equivalents and short term investments of $106.3 million.

In February 2001, we completed our initial public offering of 7,500,000 shares of common stock at a price of $11.00 per share (excluding underwriters' discounts and commissions), generating net proceeds of approximately $74.6 million.

Net cash used in operations for the three months ended March 31, 2001, was approximately $6.7 million compared with approximately $2.5 million for the comparable period in 2000.  Non-cash charges in the three months ended March 31,
2001, included stock compensation expense of $1.0 million and depreciation and amortization expense of $1.8 million and a change in non-cash operating assets and liabilities of $3.5 million.  The change in non-cash operating assets included an increase in
accounts receivable of $9.6 million due to a large portion of revenues occurring at the end of the quarter, an increase in inventory of $1.2 million, offset by an increase in accounts payable and accrued liabilities of $4.4 million.  Investing activities
included $6.7 million in cash used during the three months March 31, 2001, for capital expenditures and $71.4 million for the net purchases of short term investments.  Financing activities included the use of $2.2 million to repay debt and net proceeds
from the issuance of common stock of  $74.7 million, which was primarily from our initial public offering in February 2001.

As of December 31, 2000, a valuation allowance equal to 100% of our net deferred tax assets had been recognized since our future realization is not assured.  At December 31, 2000 we had federal and state net operating loss
carryforwards of approximately $48.5 million.  The net operating loss carryforwards will expire at various dates beginning in 2008, if not utilized.  Utilization of the net operating losses and credits to offset future taxable income, may be subject to an
annual limitation due to the change of ownership provisions of federal tax laws and similar state provisions as a result of the initial public offering.

We cannot assure you that our business or operations will not change in a manner that would consume available resources more rapidly than anticipated.  We also cannot assure you that we will not require substantial additional funding
before we can achieve profitable operations.  Our capital requirements depend on numerous factors, including the following:

| | our progress with our research and development programs;our level of success in selling our products and technologies;our ability to establish and maintain successful collaborative relationships;the costs we incur in enforcing and defending our patent claims and
other intellectual property rights; andthe timing of purchases of additional capital.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------

Our exposure to market risk is currently confined to our cash equivalents and short-term investments, all of which have maturities of less than one year, and debt.  The securities in our investment portfolio are not leveraged and due
to their short-term nature, are subject to minimal interest rate risk.  We currently do not hedge interest rate exposure.  Due to the short-term maturities of our investments, we do not believe that an increase in market rates would have any negative
impact on the realized value of our investment portfolio but may negatively impact the interest expense associated with our long-term debt.



FORWARD-LOOKING STATEMENTS

This report may contain forward-looking statements.  Such statements are based on management's current expectations and are subject to a number of factors and uncertainties that could cause actual results or outcomes to differ
materially from those described in such forward-looking statements.  These statements address or may address the following subjects: results of operations; customer growth and retention; development of technology; losses or earnings; operating expenses,
including, without limitation, marketing expense and technology and development expense; and revenue growth.  We caution investors that there can be no assurance that actual results, outcomes or business conditions will not differ materially from those
projected or suggested in such forward-looking statements as a result of various factors, including, among others, our limited operating history, unpredictability of future revenues and operating results, and competitive pressures.  For further
information, refer to the more specific factors and uncertainties discussed throughout this report.



PART II - OTHER INFORMATION

|ITEM 1. | LEGAL PROCEEDINGS - None.  From time to time, we may be involved in litigation relating to claims arising out of our operations in the usual course of business.
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

|ITEM 2. | CHANGES IN SECURITIES AND USE OF PROCEEDS.                 
|------- | -----------------------------------------------------------
|        | (a)
(b)
(c)
(d)                                            
|ITEM 3. | DEFAULTS UPON SENIOR SECURITIES - None.                    
|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - None.
|ITEM 5. | OTHER INFORMATION - None.                                  
|ITEM 6. | EXHIBITS AND REPORTS ON FORM 8-K.                          
|        | (a)                                                        
|        | (b)                                                        



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.

|                   | THIRD WAVE TECHNOLOGIES, INC.                                            
|------------------ | -------------------------------------------------------------------------
|                  
|Date: May 15,2001  | By:/s/ Lance ForsLance Fors, CEO                                         
|Date: May 15,2001  | By:/s/  John ComerfordJohn Comerford, Vice President and General Counsel 
|Date: May 15, 2001 | By:/s/  Alex KasperAlex Kasper, Controller (Principal Accounting Officer)