# UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

# FORM 10-Q

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

|For the quarter ended September 30, 1999 | Commission file number 000-25475
|---------------------------------------- | --------------------------------



---

# LATITUDE COMMUNICATIONS, INC.



|Delaware                                                       | 94-3177392                          
|-------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.)

2121 Tasman Drive, Santa Clara, CA 95054
(Address of principal executive offices, including zip code)

(408) 988-7200
(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

As of November 5, 1999, there
were 18,858,376 shares of the registrants Common Stock outstanding.

# INDEX

## PART I.     FINANCIAL INFORMATION

## Item 1.     Financial Statements.

Condensed consolidated balance sheets at September 30, 1999 and December 31, 1998

Condensed consolidated statements of operations for the three months ended September 30, 1999 and 1998;
          and the nine months ended September 30, 1999 and 1998

Condensed consolidated statements of cash flows for the nine months ended September 30, 1999 and 1998

Notes to condensed consolidated 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.

## SIGNATURES

## PART I.    FINANCIAL INFORMATION

## Item 1.     Financial Statements.

# LATITUDE COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

|                                           | September 30,1999 |            | December 31,1998
|------------------------------------------ | ----------------- | ---------- | ----------------
|
|ASSETS                                     |                   |            |                 
|Current assets:                            |                  
|Cash and cash equivalents                  |                   | $   8,775  |                 
|Short-term marketable securities           |                   | 25,164     |                 
|Trade accounts receivable, net             |                   | 5,822      |                 
|Inventory                                  |                   | 749        |                 
|Prepaids and other assets                  |                   | 1,196      |                 
|                                          
|Total current assets                       |                   | 41,706     |                 
|Property and equipment, net                |                   | 1,985      |                 
|Long-term marketable securities            |                   | 6,287      |                 
|Deposits and other long-term assets        |                   | 195        |                 
|                                          
|Total assets                               |                   | $ 50,173   |                 
|                                          
|                                           |                   |            |                 
|LIABILITIES AND STOCKHOLDERS EQUITY       |                  
|Current liabilities:                       |                  
|Accounts payable                           |                   | $      557 |                 
|Accrued expenses                           |                   | 3,015      |                 
|Deferred revenue                           |                   | 4,447      |                 
|Current portion of long-term debt          |                   | 514        |                 
|                                          
|Total current liabilities                  |                   | 8,533      |                 
|Long-term debt                             |                   | 431        |                 
|                                          
|Total liabilities                          |                   | 8,964      |                 
|                                          
|Stockholders equity:                      |                  
|Preferred stock                            |                   |           |                 
|Common stock                               |                   | 19         |                 
|Additional paid-in capital                 |                   | 55,721     |                 
|Notes receivable from common stockholders  |                   | (110       | )               
|Deferred stock compensation                |                   | (2,076     | )               
|Accumulated other comprehensive loss       |                   | (126       | )               
|Accumulated deficit                        |                   | (12,219    | )               
|                                          
|Total stockholders equity                 |                   | 41,209     |                 
|                                          
|Total liabilities and stockholders equity |                   | $ 50,173   |                 
|                                          

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

# LATITUDE COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)

|                                             | Three MonthsEndedSeptember 30, |            | Nine MonthsEndedSeptember 30,
|-------------------------------------------- | ------------------------------ | ---------- | -----------------------------
|
|
|
|Revenue:                                     |                                |            |                              
|Product                                      |                                | $   6,312  |                              
|Service                                      |                                | 2,400      |                              
|                                            
|Total revenue                                |                                | 8,712      |                              
|Cost of revenue:                             |                               
|Product                                      |                                | 1,046      |                              
|Service                                      |                                | 1,324      |                              
|                                            
|Total cost of revenue                        |                                | 2,370      |                              
|                                            
|Gross profit                                 |                                | 6,342      |                              
|                                            
|Operating expenses:                          |                               
|Research and development                     |                                | 1,021      |                              
|Marketing and sales                          |                                | 3,811      |                              
|General and administrative                   |                                | 641        |                              
|Amortization of deferred stock compensation  |                                | 183        |                              
|                                            
|Total operating expenses                     |                                | 5,656      |                              
|                                            
|Income from operations                       |                                | 686        |                              
|Interest income (expense), net               |                                | 475        |                              
|                                            
|Income before provision for income taxes     |                                | 1,161      |                              
|Provision for income tax                     |                                | (67        | )                            
|                                            
|Net income                                   |                                | $   1,094  |                              
|                                            
|Other comprehensive, net of tax              |                               
|Unrealized gain (loss) on securities         |                                | 25         |                              
|                                            
|Comprehensive income                         |                                | $   1,119  |                              
|                                            
|Net income per sharebasic                   |                                | $     0.06 |                              
|                                            
|Shares used in per share calculationbasic   |                                | 18,590     |                              
|                                            
|Net income per sharediluted                 |                                | $     0.05 |                              
|                                            
|Shares used in per share calculationdiluted |                                | 20,051     |                              
|                                            

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

# LATITUDE COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)

|                                                    | Nine Months EndedSeptember 30,
|--------------------------------------------------- | ------------------------------
|
|
|
|Cash flows from operating activities:               |                               
|Net income                                          |                               
|Adjustments to reconcile net income to net cash     |                               
|provided by operating activities:                   |                               
|Depreciation and amortization                       |                               
|Provision for excess and obsolete inventory         |                               
|Amortization of deferred stock compensation         |                               
|Changes in operating assets and liabilities         |                               
|                                                   
|Net cash  provided by operating activities          |                               
|                                                   
|Cash flows from investing activities:               |                               
|Purchases of property and equipment                 |                               
|Purchases of available for sale securities          |                               
|Maturities of available for sale securities         |                               
|Other                                               |                               
|                                                   
|Net cash used in investing activities               |                               
|                                                   
|Cash flows from financing activities:               |                               
|Proceeds from issuance ofnotes payable              |                               
|Payment of notes payable                            |                               
|Proceeds from issuance of common stock             |                               
|Initial Public Offering, net                        |                               
|Other                                               |                               
|                                                   
|Net cash provided by (used in) financing activities |                               
|                                                   
|Net increase in cash and cash equivalents           |                               
|Cash and cash equivalents, beginning of period      |                               
|                                                   
|Cash and cash equivalents, end of the period        |                               
|                                                   

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

# LATITUDE COMMUNICATIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

## Note 1  The Company and Basis of Presentation

Latitude Communications, Inc.
(the Company) is a leading provider of integrated voice and data
conferencing solutions for geographically dispersed organizations. The Company
develops, markets and supports its MeetingPlace system, which allows companies
to conduct voice and data conferences which emulate face-to-face meetings, or
what we call virtual meetings, and extend real-time decision making processes
irrespective of the geographic location of participants. With MeetingPlace,
participants can schedule and attend a meeting, share and edit documents, and
capture and retrieve meeting content. MeetingPlace is designed to be an
enterprise-wide resource and to leverage existing technologies such as
telephones, cellular phones and personal computers.

The accompanying unaudited
condensed consolidated financial statements reflect all adjustments which, in
the opinion of management, are necessary for a fair presentation of the results
for the periods shown. The results of operations for such periods are not
necessarily indicative of the results expected for the full fiscal year or for
any future period. The balance sheet at December 31, 1998 was derived from
audited financial statements, however, it does not include all disclosures
required by generally accepted accounting principles. The financial statements
and related disclosures have been prepared with the presumption that users of
the interim financial information have read or have access to the audited
financial statements for the preceding fiscal year. Accordingly, these
financial statements should be read in conjunction with the audited financial
statements and the related notes thereto contained in the Company's Prospectus
dated May 6, 1999.

## Note 2  Inventory

|                | September 30,1999 |      | December 31,1998
|--------------- | ----------------- | ---- | ----------------
|
|Raw materials   |                   | $589 |                 
|Work in process |                   |     |                 
|Finished goods  |                   | 160  |                 
|               
|                |                   | $749 |                 
|               

## Note 3  Recent Accounting Pronouncements

In December 1998, AcSEC released
Statement of Position 98-9, or SOP 98-9, Modification of SOP 97-2, "Software
Revenue Recognition," with Respect to Certain Transactions. SOP 98-9
amends SOP 97-2 to require that an entity recognize revenue for multiple
element arrangements by means of the "residual method" when (1) there
is vendor-specific objective evidence ("VSOE") of the fair values of
all the undelivered elements that are not accounted for by means of long-term
contract accounting, (2) VSOE of fair value does not exist for one or more of
the delivered elements, and (3) all revenue recognition criteria of SOP 97-2
(other than the requirement for VSOE of the fair value of each delivered
element) are satisfied. The provisions of SOP 98-9 that extend the deferral of
certain paragraphs of SOP 97-2 became effective December 15, 1998. These
paragraphs of SOP 97-2 and SOP 98-9 will be effective for transactions that are
entered into in fiscal years beginning after March 15, 1999. Retroactive
application is prohibited. The Company is evaluating the requirements of SOP
98-9 and the effects, if any, on the Company's current revenue recognition
policies.

In June 1998, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standards
No. 133, or SFAS 133, Accounting for Derivative Instruments and Hedging
Activities. SFAS 133 establishes new standards of accounting and
reporting for derivative instruments and hedging activities. SFAS 133 requires
that all derivatives be recognized at fair value in the statement of financial
position, and that the corresponding gains or losses be reported either in the
statement of operations or as a component of comprehensive income, depending on
the type of hedging relationship that exists. In July 1999, the FASB issued
SFAS 137 Accounting for Derivative Instruments and Hedging Activities
 Deferral of the Effective Date of SFAS 133. SFAS 137 defers the
effective date of SFAS 133 to fiscal quarters and years beginning after June
15, 2000. The Company does not currently hold derivative instruments or engage
in hedging activities.

## Note 4  Net Income Per Share

Basic net income per share is
computed by dividing net income available to common stockholders by the
weighted average number of vested common shares outstanding for the period.
Diluted net income per share is computed giving effect to all dilutive
potential common shares, including options, warrants and preferred stock.

A reconciliation of the
numerator and denominator of basic and diluted EPS is provided as follows (in
thousands, except per share amounts).

|                                                     | Three Months EndedSeptember 30, |           | Nine Months EndedSeptember 30,
|---------------------------------------------------- | ------------------------------- | --------- | ------------------------------
|
|
|
|
|Net income per share, basic and diluted:             |                                 |           |                               
|Numerator for net income, basic and diluted          |                                 | $  1,094  |                               
|                                                    
|Denominator for basic net income per share:          |                                
|Weighted average vested common shares outstanding    |                                 | 18,590    |                               
|                                                    
|Net income per share basic                           |                                 | $    0.06 |                               
|                                                    
|Denominator for diluted earnings per share:          |                                
|Weighted average vested common shares outstanding    |                                 | 18,590    |                               
|Effect of dilutive securities:                       |                                
|Nonvested common shares                              |                                 | 205       |                               
|Common stock options                                 |                                 | 1,217     |                               
|Warrants                                             |                                 | 39        |                               
|Convertible preferred stock                          |                                 |          |                               
|                                                    
|Weighted average common and common equivalent shares |                                 | 20,051    |                               
|                                                    
|Net income per share diluted                         |                                 | $    0.05 |                               
|                                                    

## 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 and
other parts of this Form 10-Q contain 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. These statements
are not guarantees of future performance and are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
expressed or forecasted. Factors that might cause such a difference include,
but are not limited to, those discussed in the section entitled Factors
That May Affect Future Results and those appearing elsewhere in this Form
10-Q. 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 such forward-looking statements.

## Overview

We are a leading provider of
integrated voice and data conferencing solutions for geographically dispersed
organizations. We develop, market and support our MeetingPlace system, which
allows companies to conduct virtual meetings and extend real-time decision
making processes irrespective of the geographic location of participants. With
MeetingPlace, participants can schedule and attend a meeting, view, share and
edit documents, and capture and retrieve meeting content. MeetingPlace is
designed to be an enterprise-wide resource and to leverage existing
technologies such as telephones, cellular phones and personal computers.

We generate revenue from sales
of our MeetingPlace products and from service revenue.
Revenue derived from product sales constituted 84%, 82% and 78% of our total
revenue in 1996, 1997 and 1998 and 72% in the first nine months of 1999.
Product revenue is generally recognized upon shipment. We calculate an
allowance for returns based on historical rates. During 1998, three systems
totaling $386,000 were returned and charged to this allowance. There were no
system returns in the first nine months of 1999. Service revenue includes
revenue from implementation and integration services, system management
services, warranty coverage and customer support. Revenue from implementation
and system integration services is recognized as the services are performed,
while revenue from system management services, warranty coverage and customer
support is recognized ratably over the period of the contract.

We sell our MeetingPlace
products primarily through our direct sales force and, to a lesser extent,
through indirect distribution channels. The majority of our revenue is derived
from Fortune 1000 companies, many of which initially purchase MeetingPlace
servers and later expand deployment of our products as they require additional
capacity for voice and data conferencing. In 1997, we expanded into
international markets by opening a sales office in the United Kingdom and
establishing distributor relationships in Hong Kong and Singapore, and in 1998,
we established a distributor relationship in Australia. While we intend to
increase sales through indirect channels and internationally, we cannot assure
you that we will be successful. In 1998, we expanded the breadth of our support
services by establishing a consulting services group to provide expanded
implementation services, system management services and customized project
consulting.

Total cost of revenue consists
of component and materials costs, direct labor costs, warranty costs, royalties
and overhead related to manufacturing of our products, as well as materials,
travel and labor costs related to personnel engaged in our service operations.
Product gross margin is impacted by the proportion of product revenue derived
from software sales, which typically carry higher margins than hardware sales,
and from indirect distribution channels, which typically carry lower margins
than direct sales. Service gross margin is impacted by the mix of services we
provide, which have different levels of profitability, and the efficiency with
which we provide full care support and other services to our customers.

## Results Of Operations

The following table lists,
for the periods indicated, the percentage of total revenue of each line item from
our condensed consolidated statement of operations to total revenues:

|                                       | Three MonthsEndedSeptember 30, |     | Nine MonthsEndedSeptember 30,
|-------------------------------------- | ------------------------------ | --- | -----------------------------
|
|
|
|Revenue:                               |                                |     |                              
|Product                                |                                | 72  | .5%                          
|Service                                |                                | 27  | .5%                          
|                                      
|Total revenue                          |                                | 100 | .0%                          
|Cost of revenue:                       |                               
|Product                                |                                | 12  | .0%                          
|Service                                |                                | 15  | .2%                          
|                                      
|Total cost of revenue                  |                                | 27  | .2%                          
|                                      
|Gross profit                           |                                | 72  | .8%                          
|                                      
|Operating expenses:                    |                               
|Research and development               |                                | 11  | .7%                          
|Marketing and sales                    |                                | 43  | .7%                          
|General and administrative             |                                | 7   | .4%                          
|Amortization of deferred  stock        |                               
|compensation                           |                                | 2   | .1%                          
|                                      
|Total operating expenses               |                                | 64  | .9%                          
|                                      
|Income from operations                 |                                | 7   | .9%                          
|Interest income (expense), net         |                                | 5   | .4%                          
|                                      
|Income before provision for income tax |                                | 13  | .3%                          
|Provision for income tax               |                                | 0   | .7%                          
|                                      
|Net income                             |                                | 12  | .6%                          
|                                      

Product Revenue

Product revenue was $6.3 million
and $16.5 million for the third quarter and first nine months of 1999,
respectively, which represented increases of 48% and 40% when compared to
corresponding periods of 1998. The increases were due primarily to increased
sales of our MeetingPlace products domestically to new customers, increased
sales of additional products and features to existing customers, and, to a
lesser extent, increased international sales. International sales represented
approximately 11% and 15% of product revenue in the three months ended
September 30, 1999 and 1998 and approximately 8% and 9% of product revenue in
the nine months ended September 30, 1999 and 1998.

Service Revenue

Service revenue was $2.4 million
and $6.4 million for the third quarter and first nine months of 1999,
respectively, which represented increases of 87% and 113% when compared to
corresponding periods of 1998. The increases were attributable primarily to
growth in our customer base during these periods, which led to increased sales
of full care support services, as well as the introduction of additional
consulting services such as managed services and expanded implementation and
integration services.

Total Cost of Revenue

Total cost of revenue was $2.4
million and $6.1 million for the third quarter and first nine months of 1999,
respectively, which represented increases of 46% and 46% when compared to
corresponding periods of 1998. The increase in total cost of revenue was
attributable primarily to increased sales of our MeetingPlace products and
related services, as well as the increased size of our services staff and the
costs of providing services to support an increasingly geographically dispersed
customer base. Resulting gross profit was $6.3 million and $16.7 million for
the third quarter and first nine months of 1999, respectively, as compared to
$3.9 million and $10.6 million in corresponding periods of 1998. Gross margin
was 73% as a percentage of revenue, for both the third quarter and first
nine months of 1999, as compared to 71% and 72% for the
corresponding periods of 1998.

Product gross margin increased
slightly to 83% as a percentage of product revenue for both the third
quarter and first nine months of 1999 as compared to 79% and 82% for the
corresponding periods of 1998. We expect that product gross margin may decrease
in the future due in part to potential pricing pressure and an expected
increase in the proportion of revenue derived from indirect distribution
channels.

Service gross margin was 45% and
48% as a percentage of revenue for the third quarter and first nine months of
1999, respectively, as compared to 42% and 32% for the corresponding periods of
1998. We expect that service gross margin may decline in the future as a result
of the addition of support personnel, potential pricing pressure and an increase in the mix of
lower margin service offerings.

Research and Development Expenses

Research and development
expenses consist primarily of compensation and related costs for research and
development personnel, facilities expenses for testing space and equipment and
royalty payments. Research and development expenses were $1.0 million and $2.9
million for the third quarter and first nine months of 1999, respectively,
which represented increases of 63% and 58% when compared to corresponding
periods in 1998. As a percentage of total revenues, research and development
expenses rose from 11% in the third quarter of 1998 to 12% in the third quarter
of 1999 and from 12% to 13% in the first nine months of 1998 to the first nine
months of 1999. The increase was attributable primarily to the addition of
personnel in our research and development organization associated with product
development. We expect to continue to make substantial investments in research
and development and anticipate that research expenses will continue to increase
in absolute dollars.

Marketing and Sales Expenses

Marketing and sales expenses
consist primarily of promotional expenditures and compensation and related
costs for marketing and sales personnel. Marketing and sales expenses were $3.8
million and $10.1 million for the third quarter and first nine months of 1999,
respectively, which represented increases of 49% and 47% when compared to
corresponding periods in 1998. As a percentage of total revenues, marketing and
sales expenses declined from 46% in the third quarter of 1998 to 44% in the
third quarter of 1999 and from 47% to 44% in the first nine months of 1998 to
the first nine months of 1999. The decrease in marketing and sales expenses as
a percentage of revenue was due primarily to increased revenue. The increases
in absolute dollars of $1.2 million for the third quarter and $3.2 million for
the first nine months, reflected the addition of personnel in our sales and
marketing organizations, as well as costs associated with
increased selling efforts to develop market awareness of our products and
services.

General and Administrative Expenses

General and administrative
expenses consist primarily of personnel expenses, legal and accounting expenses
and other general corporate expenses. General and administrative expenses were
$641,000 and $1.6 million for the third quarter and first nine months of 1999,
respectively, which represented increases of 56% and 29% when compared to
corresponding periods in 1998. As a percentage of total revenues, general and
administrative expenses were constant at 7% in the third quarter of 1998 and
1999 and decreased from 8% to 7% in the first nine months of 1998 to the first
nine months of 1999. The increase in absolute dollars was attributable
primarily to the addition of personnel in our general and administrative
organization and expenses in connection with being a public company. The
decrease as a percentage of total revenues is due primarily to greater
efficiencies of scale. We expect general and administrative expenses to
increase in absolute dollars as we add personnel and incur additional costs
related to the anticipated growth of our business and operation as a public
company.

Amortization of Deferred Stock
   Compensation

In connection with the
completion of our initial public offering in May 1999, options granted in the
last quarter of 1997, 1998 and the first quarter of 1999 have been considered
to be compensatory. Total deferred stock compensation associated with these
options as of September 30, 1999 amounted to $3.0 million, of which $2,000,
$299,000 and $600,000 had been amortized to expense in 1997, 1998 and the first
nine months of 1999. These amounts are being amortized based on the vesting
period of these options, most of which are over 48 months. Of the total
deferred stock compensation, $183,000 was amortized in the third quarter of
1999. We expect amortization of approximately $781,000 in 1999, $726,000 in
2000, $724,000 in 2001 and $444,000 in 2002 related to the options presently outstanding.

Interest Income (Expense), Net

Interest income, net of interest
expense, was $475,000 and $713,000 for the third quarter and first nine months
of 1999, respectively, compared to interest expense, net of interest income, of
$13,000 and $34,000 for the corresponding periods in 1998. Interest expense was
related to obligations under capital leases and equipment loans. The increase
in net interest income was attributable primarily to interest income earned on
higher cash and marketable securities average balances in the third quarter of
1999, primarily from net proceeds from our initial public offering in May 1999.

Income Taxes

For the quarter ended September
30, 1999, the provision for income tax was $67,000, compared to $10,000 in the
quarter ended September 30, 1998. For the first nine months of 1999, the
provision for income tax was $137,000, compared to $20,000 in the first nine
months of 1998. Our effective tax rate was approximately 6% for the third
quarter and first nine months of 1999 and approximately 4% for the same periods
in 1998. These rates were lower than the statutory U.S. federal rate due
primarily to the utilization of net operating loss carryforwards.

## Management Changes

During the quarter ended
September 30, 1999 and since that time, we have had several changes in the
executive officers of the corporation.

Effective July 1999, Stephen S.
Pao was appointed to the newly created position of vice president, product
management. Mr. Pao had previously served as our director of product marketing
from April 1997 to July 1999 and as a product manager from November 1994 to
April 1997. Before Latitude, Mr. Pao was a product manager at Visioneer, Inc.
from September 1993 to October 1994 and Oracle Corporation from August 1990 to
September 1993. Mr. Pao holds a B.S. degree in electrical sciences and
engineering and a M.S. degree in electrical engineering and computer science
from the Massachusetts Institute of Technology.

Effective September 1999, R.
Dixon Speas, Jr. was appointed to the newly created position of vice president,
worldwide sales and support. From March 1989 to September 1999, Mr. Speas
served in various management positions with Aspect Telecommunications
Corporation, a provider of call center systems, most recently vice president,
Asia Pacific and Latin America. From November 1978 to March 1989, Mr. Speas was
employed with ROLM Corporation in a series of positions in manufacturing and
then customer support. Prior to ROLM, Mr. Speas was employed by Ernst & Ernst
as an auditor and consultant. Mr. Speas holds a B.S. degree in industrial
engineering, an M.S. degree in operations research from Stanford University
and an M.B.A degree from the Stanford Graduate School of Business.

Effective October 1999, Glenn A.
Eaton resigned as vice president, international to pursue other interests. Mr.
Speas will serve as acting vice president, international until this position
is filled permanently.

Effective October 1999, Roberta
H. Gray resigned as vice president, marketing to pursue other interests. Also
effective in October 1999, Robert D. Tate was appointed to the position of vice president,
marketing. From August 1994 to May 1999, Mr. Tate served in various management
positions with Vantive Corporation, a customer relationship management software
company, including vice president, channel marketing from July 1998 to May
1999, vice president, field marketing from January 1997 to June 1998 and vice
president, corporate marketing from April 1995 to May 1996. Prior to Vantive,
Mr. Tate held various marketing management positions at Aspect from January
1989 to August 1994. Mr. Tate holds a B.S. degree from the University of
Southern California and an M.B.A degree from the Fuqua School of Business, Duke
University.

## Liquidity and Capital Resources

In May 1999, we completed an
initial public offering of common stock, resulting in net proceeds to us
of approximately $33.8 million. As of September 30, 1999, we had $40.2
million of cash, cash equivalents and investments, which represented 80.2% of
total assets.

Cash provided by operating
activities was $4.6 million in the first nine months of 1999, compared to
$889,000 in the same period of 1998. Cash provided by operating activities in
1999 was due to net income plus adjustments for non-cash items and an increase
in deferred revenue.

Cash used in investing
activities in the first nine months of 1999 was $33.2 million, which consisted
primarily of the purchase of marketable securities of $40.9 million and
purchase of property and equipment of $1.6 million, partially offset by
maturities of marketable securities. For the first nine months in 1998, cash
used in investing activities of $594,000 consisted primarily of the purchase of
property and equipment.

Cash provided by financing
activities in the first nine months of 1999 of $33.4 million consisted
primarily of proceeds from our initial public stock offering. For the first
nine months of 1998, cash used by financing activities of $11,000 primarily
consisted of payments on obligations under capital leases and notes payable of
$381,000, partially offset by the proceeds from issuance of notes payable.

We believe that our current
cash, cash equivalents and marketable securities will be sufficient to meet our
anticipated cash needs for working capital and capital expenditures for at
least the next 12 months.

## Year 2000 Readiness Disclosure

Many currently installed
computer systems and software products are coded to accept only two digit
entries in the date code field. As a result, software that records only the
last two digits of the calendar year may not be able to distinguish between
twentieth and twenty-first century dates. This may result in software failures
or the creation of erroneous results.

We have conducted the first
phases of a Year 2000 readiness review for the current versions of our
products. The review includes assessment, implementation activities such as
remediation, upgrading and replacement of product versions, validation testing,
and contingency planning. We continue to respond to customer questions about
prior versions of our products on a case-by-case basis.

We have completed all phases of
this plan for the current versions of our products. As a result, all current
versions of our products are "Year 2000 Compliant," as defined below,
when configured and used in accordance with the related documentation, and
provided that the underlying operating system of the host machine and any other
software used with or in the host machine or our products are also Year 2000
Compliant. We have not tested our products on all platforms or all versions of
operating systems that we currently support.

We have defined "Year 2000
Compliant" as the ability to:

- correctly handle date information needed for the December 31, 1999 to January 1, 2000 date change;
- function according to the product documentation provided for this date change, without changes in
operation resulting from the advent of a new century, assuming correct
configuration;
- where appropriate, respond to two-digit date input in a disclosed, defined, and predetermined manner to
unambiguously indicate the century referred to;
- if the date elements in interfaces and data storage specify the century, store and provide output of
unambiguous date information; and recognize the year 2000 as a leap year.

We have tested software obtained
from third parties, including licensed software, shareware, and freeware, that
is incorporated into our products, and we are seeking assurances from our
vendors that licensed software is Year 2000 Compliant. Despite testing by us
and by current and potential clients, and assurances from developers of
products incorporated into our products, our products may contain undetected
errors or defects associated with Year 2000 date functions. Known or unknown
errors or defects in our products could result in delay or loss of revenue,
diversion of development resources, damage to our reputation, or increased
service and warranty costs, any of which could materially adversely affect our
business, operating results or financial condition. Some commentators have
predicted significant litigation regarding Year 2000 compliance issues, and we
are aware of these types of lawsuits against other software vendors. Because of
the unprecedented nature of Year 2000 litigation, it is uncertain whether or to
what extent we may be affected by it.

Our internal systems include
both our information technology, or IT, and non-IT systems. We have completed
assessment of our material internal IT and non-IT systems, including both our own
software products and third-party software and hardware technology. To the
extent that we are not able to test
the technology provided by third-party vendors, we are seeking assurances from
vendors that their systems are Year 2000 Compliant. We are not currently aware
of any material operational issues or costs associated with preparing our
internal IT and non-IT systems for the Year 2000. However, we may experience
material unanticipated problems and costs caused by undetected errors or
defects in the technology used in our internal IT and non-IT systems.

We currently have information
concerning the Year 2000 compliance status of some but not all of our customers. If our
current or future customers fail to achieve Year 2000 compliance or if they
divert technology expenditures, especially technology expenditures that were
reserved for conferencing products, to address Year 2000 compliance problems,
our business could suffer.

To date, we have incurred
expenses of approximately $65,000 for Year 2000 compliance activities. We will
incur additional costs related to the Year 2000 plan for administrative
personnel to manage the project, outside contractor assistance, technical
support for our products, product engineering and customer satisfaction. We
estimate that these additional costs will total less than $100,000. However, we
may experience material problems and costs with Year 2000 compliance not
currently identified in our Year 2000 plan that could adversely affect our
business, results of operations, and financial condition. Finally, we are also
subject to external forces that might generally affect industry and commerce,
such as utility or transportation company Year 2000 compliance failures and
related service interruptions.

## Impact of Recently Issued Accounting Standards

In December 1998, AcSEC released
Statement of Position 98-9, or SOP 98-9, Modification of SOP 97-2, "Software
Revenue Recognition," with Respect to Certain Transactions. SOP 98-9
amends SOP 97-2 to require that an entity recognize revenue for multiple
element arrangements by means of the "residual method" when (1) there
is vendor-specific objective evidence of the fair values of all the undelivered
elements that are not accounted for by means of long-term contract accounting,
(2) vendor-specific objective
evidence of fair value does not exist for one or more of the delivered
elements, and (3) all revenue recognition criteria of SOP 97-2, other than the
requirement for vendor-specific objective evidence of the fair value of each
delivered element, are satisfied. The provisions of SOP 98-9 that extend the
deferral of the second sentence of paragraphs 10, 37, 41 and 57 of SOP 97-2
became effective December 15, 1998. These paragraphs of SOP 97-2 and SOP 98-9
will be effective for transactions that are entered into in fiscal years
beginning after March 15, 1999. Retroactive application is prohibited. We are
evaluating the requirements of SOP 98-9 and the effects, if any, on our current
revenue recognition policies.

In June 1998, the FASB issued
Statement of Financial Accounting Standards No. 133, or SFAS 133, Accounting
for Derivative Instruments and Hedging Activities. SFAS 133 establishes new
standards of accounting and reporting for derivative instruments and hedging
activities. SFAS 133 requires that all derivatives be recognized at fair value
in the statement of financial position, and that the corresponding gains or
losses be reported either in the statement of operations or as a component of
comprehensive income, depending on the type of hedging relationship that
exists. In July 1999, the FASB issued SFAS 137 Accounting for Derivative
Instruments and Hedging Activities  Deferral of the Effective Date of
SFAS 133. SFAS 137 defers the effective date of SFAS 133 to fiscal
quarters and years beginning after June 15, 2000. We do not currently hold
derivative instruments or engage in hedging activities.

## Factors That May Affect Future Results

In addition to the other
information in this report, the following factors should be considered
carefully in evaluating the Companys business and prospects:

Our future profitability is
uncertain due to our limited operating history. We have a limited operating
history and cannot assure you that our revenue will continue to grow or that we
will maintain profitability in the future. Our financial statements must be
considered in light of the risks and uncertainties encountered by companies in
the early stages of development. We rely substantially on sales of our
MeetingPlace products, which have limited market acceptance.

In addition, we are unable to
predict our future product development, sales and marketing, and administrative
expenses. To the extent that these expenses increase, we will need to increase
revenue to sustain profitability. Our ability to increase revenue and sustain
profitability also depends on the other risk factors described in this section.

Our operating results may
fluctuate significantly. Our operating results are difficult to predict. Our
future quarterly operating results may fluctuate and may not meet the
expectations of securities analysts or investors. If this occurs, the price of
our common stock would likely decline. The factors that may cause fluctuations
of our operating results include the following:

- changes in our mix of revenues generated from product sales and services;
- changes by existing customers in their levels of purchases of our products and services;
- changes in our mix of sales channels through which our products and services are sold; and
- changes in our mix of domestic and international sales.

Orders at the beginning of each
quarter typically do not equal expected revenue for that quarter. In addition,
a significant portion of our orders is received in the last month of each
fiscal quarter. If we fail to ship products by the end of a quarter in which
the order is received, or if our prospective customers delay their orders or
delivery schedules until the following quarter, we may fail to meet our revenue
objectives.

Our market is highly
competitive. Because of intense market competition, we may not be successful.
Currently, our principal competitors include:

- major telecommunications carriers that operate service bureaus for voice conferencing, such as AT&T Corp.,
MCI Worldcom, Inc. and Sprint Corporation;
- private branch exchange, or PBX, vendors that sell systems with voice conferencing capabilities, such as Lucent
Technologies Inc. and Nortel Networks; and
- smaller start-up companies that offer web-based voice and data conferencing products.

Many of these companies have
longer operating histories, stronger brand names and significantly greater
financial, technical, marketing and other resources than we do. These companies
also may have existing relationships with many of our prospective customers. In
addition, these companies may be able to respond more quickly than we can to
new or emerging technologies and changes in customer requirements.

In addition, we expect
competition to persist and intensify in the future, which could adversely
affect our ability to increase sales, penetrate new markets and maintain
average selling prices. In the future, we may experience competition from
potential competitors that include:

- networking companies, such as Cisco Systems, Inc., 3Com Corporation, Lucent Technologies Inc. and Nortel Networks
that are focusing on enabling the transmission of voice over the Internet and that may offer voice and data conferencing functionality; and
- collaborative software providers, such as Microsoft Corporation and Lotus Development Corporation, that are focusing on
data conferencing products and that may in the future incorporate voice conferencing functionality into their products.

Our market is in an early stage
of development, and our products may not be adopted. If the market for our
integrated voice and data conferencing products fails to grow or grows more
slowly than we anticipate, we may not be able to increase revenues or remain
profitable. The market for integrated real-time voice and data conferencing is
relatively new and rapidly evolving. Our ability to remain profitable depends
in large part on the widespread adoption by end users of real-time voice and
data conferencing.

We will have to devote
substantial resources to educate prospective customers about the uses and
benefits of our products. In addition, businesses that have invested
substantial resources in other conferencing products may be reluctant or slow
to adopt our products, which might replace or compete with their existing
systems. Our efforts to educate potential customers may not result in our
products achieving market acceptance.

Rapid technological changes
could cause our products to become obsolete or require us to redesign our
products. The market in which we compete is characterized by rapid technological
change, frequent new product introductions, changes in customer requirements
and emerging industry standards. In particular, we expect that the growth of
the Internet and Internet-based telephony applications, as well as general
technology trends such as migrations to new operating systems, will require us
to adapt our product to remain competitive. This adaptation could be costly and
time-consuming. Our products could become obsolete and unmarketable if products
using new technologies are introduced and new industry standards emerge. For
example, the widespread acceptance of competing technologies, such as video
conferencing and the transmission of voice over the Internet, could diminish
demand for our current products. As a result, the life cycle of our products is
difficult to estimate.

To be successful, we will need
to develop and introduce new products and product enhancements that respond to
technological changes or evolving industry standards, such as the transmission
of voice over the Internet, in a timely manner and on a cost effective basis.
We cannot assure you that we will successfully develop these types of products
and product enhancements or that our products will achieve broad market
acceptance.

Our sales cycle is lengthy and
unpredictable. Any delay in sales of our products could cause our quarterly
revenue and operating results to fluctuate. The typical sales cycle of our
products is lengthy, generally between six to nine months, unpredictable, and
involves significant investment decisions by prospective customers, as well as
our education of potential customers regarding the use and benefits of our
products. Furthermore, many of our prospective customers have neither budgeted
expenses for voice and data conferencing systems nor have personnel
specifically dedicated to procurement and implementation of these conferencing
systems. As a result, our customers spend a substantial amount of time before
purchasing our products in performing internal reviews and obtaining capital
expenditure approvals. We cannot be certain that this cycle will not lengthen
in the future. The emerging and evolving nature of the real-time voice and data
conferencing market may lead to confusion in the market, which may cause
prospective customers to postpone their purchase decisions. In addition,
general concerns regarding Year 2000 compliance may further delay purchase
decisions by prospective customers.

If we fail to expand our sales
and distribution channels, our business could suffer. If we are unable to
expand our sales and distribution channels, we may not be able to increase
revenue or achieve market acceptance of our MeetingPlace product. We have
recently expanded our direct sales force and plan to recruit additional sales
personnel. New sales personnel will require training and take time to achieve
full productivity, and there is strong competition for qualified sales
personnel in our business. In addition, we believe that our future success is
dependent upon establishing successful relationships with a variety of
distribution partners. To date, we have entered into agreements with only a
small number of these distribution partners. We cannot be certain that we will
be able to reach agreement with additional distribution partners on a timely
basis or at all, or that these distribution partners will devote adequate
resources to selling our products. Furthermore, if our distribution partners
fail to adequately market or support our products, the reputation of our
products in the market may suffer. In addition, we will need to manage
potential conflicts between our direct sales force and third-party reselling
efforts.

Our ability to expand into
international markets is uncertain. We intend to continue to expand our
operations into new international markets. In addition to general risks
associated with international expansion, such as foreign currency fluctuations
and political and economic instability, we face the following risks and
uncertainties any of which could prevent us from selling our products in a
particular country or harm our business operations once we have established
operations in that country:

- the difficulties and costs of localizing products for foreign markets, including the development of
multilingual capabilities in our MeetingPlace system;
- the need to modify our products to comply with local telecommunications certification requirements in each country; and
- our lack of a direct sales presence in other countries, our need to establish relationships with distribution partners
to sell our products in these markets and our reliance on the capabilities and performance of these
distribution partners.

If we fail to integrate our
products with third-party technology, our sales could suffer. Our products are
designed to integrate with our customers' data and voice networks, as well as
with enterprise applications such as browsers and collaborative software
applications. If we are unable to integrate our products with these networks
and systems, sales of our products could suffer.

In addition, we may be required
to engage in costly and time-consuming redesigns of our products because of
technology enhancements or upgrades of these systems. We may not be able to
redesign our products or be certain that any of these redesigns will achieve
market acceptance. In addition, we will need to continually modify our products
as newer versions of the enterprise applications with which our products
integrate are introduced. Our ability to do so largely depends on our ability
to gain access to the advanced programming interfaces for these applications,
and we cannot assure you that we will have access to necessary advanced
programming interfaces in the future.

We may experience difficulties
managing our expected growth. Our recent growth has strained, and we expect
that any future growth will continue to strain, our management systems and
resources, which could hinder our ability to continue to grow in the future. We
may also experience difficulties meeting the demand for our products and
services. If we are unable to provide training and support for our products,
the implementation process will be longer and customer satisfaction may be
lower.

We may not be able to install
management information and control systems in an efficient and timely manner,
and our current or planned personnel, systems, procedures and controls may not
be adequate to support our future operations. Competition for qualified
personnel in the San Francisco Bay area, as well as other markets in which we
recruit, is extremely intense and characterized by rapidly increasing salaries,
which may increase our operating expenses or hinder our ability to recruit
qualified candidates.

Our business could suffer if we
lose the services of our current management team. Our future success depends on
the ability of our management to operate effectively, both individually and as
a group. If we were to lose the services of any of these key employees we may
encounter difficulties finding qualified personnel to replace them. Recently, we have
had three individuals join and two individuals leave the management team.

The loss of our right to use
technology licensed to us by third parties could harm our business. We license
technology that is incorporated into our products from third parties, including
digital signal processing algorithms and the MeetingPlace server's operating
system and relational database. Any interruption in the supply or support of
any licensed software could disrupt our operations and delay our sales, unless
and until we can replace the functionality provided by this licensed software.
Because our products incorporate software developed and maintained by third
parties, we depend on these third parties to deliver and support reliable
products, enhance their current products, develop new products on a timely and
cost-effective basis and respond to emerging industry standards and other
technological changes.

Any interruption in supply of
components from outside manufacturers and suppliers could hinder our ability to
ship products in a timely manner. We rely on third parties to obtain most of
the components of the MeetingPlace server and integrate them with other
standard components, such as the central processing unit and disk drives. If
these third parties are no longer able to supply and assemble these components
or are unable to do so in a timely manner, we may experience delays in shipping
our products and have to invest resources in finding an alternative
manufacturer or manufacture our products internally.

In addition, we obtain key
hardware components, including the processors and digital signal processing
devices used in the MeetingPlace server, from sole source suppliers. In the
past, we have experienced problems in obtaining some of these components in a
timely manner from these sources, and we cannot be certain that we will be able
to continue to obtain an adequate supply of these components in a timely manner
or, if necessary, from alternative sources. If we are unable to obtain
sufficient quantities of components or to locate alternative sources of supply,
we may experience delays in shipping our products and incur additional costs to
find an alternative manufacturer or manufacture our products internally.

Our products may suffer from
defects, errors or breaches of security. Software and hardware products as
complex as ours are likely to contain undetected errors or defects, especially
when first introduced or when new versions are released. Any errors or defects
that are discovered after commercial release could result in loss of revenue or
delay in market acceptance, diversion of development resources, damage to our
customer relationships or reputation or increased service and warranty cost.
Our products may not be free from errors or defects after commercial shipments
have begun, and we are aware of instances in which some of our customers have
experienced product failures or errors.

Many of our customers conduct
confidential conferences, and transmit confidential data, using MeetingPlace.
Concerns over the security of information sent over the Internet and the
privacy of its users may inhibit the market acceptance of our products. In
addition, unauthorized users in the past have gained, and in the future may be
able to gain, access to our customers' MeetingPlace systems. Any compromise of
security could deter people from using MeetingPlace and could harm our
reputation and business and result in claims against us.

We may be unable to adequately
protect our proprietary rights, and we may be subject to infringement claims.
Unauthorized parties may copy aspects of our products and obtain and use
information that we regard as proprietary, which could cause our business to
suffer. Furthermore, the laws of many foreign countries do not protect our
intellectual property rights to the same extent as the laws of the United
States.

In the future, we may be subject
to legal proceedings and claims for alleged infringement of third party
proprietary rights. Any of these claims, even if not meritorious, could result
in costly litigation, divert management's attention and resources, or require
us to enter into royalty or license agreements which are not advantageous to
us. Parties making these claims may be able to obtain injunctive or other
equitable relief, which could prevent us from selling our products.

Dell Computer Corporation has
registered the "Latitude" mark for computers in the United States and
in other countries. Dell's United States trademark registration and Canadian
application have blocked our ability to register the "Latitude
Communications" and "Latitude" with logo marks in the United
States and the "Latitude Communications" mark in Canada. Since we
believe that we have priority of trade name usage in the United States, we have
petitioned to cancel Dell's United States registration and opposed its Canadian
application. The outcome of these proceedings is uncertain. If Dell's
registration for the "Latitude" mark is not canceled or if we are
unable to obtain consent from Dell for our registration of our marks, we may
not be able to register our marks and would have to rely solely on common law
protection for these marks. We cannot assure you that we will be free from
challenges of or obstacles to our use or registration of our marks.

We are subject to government
regulation, and our failure to comply with these regulations could harm our
business. Our products are subject to a wide variety of safety, emissions and
compatibility regulations imposed by governmental authorities in the United
States or in other countries in which we sell our products. If we are unable to
obtain necessary approvals or maintain compliance with the regulations of any
particular jurisdiction, we may be prohibited from selling our products in that
territory. In addition, to sell our products in many international markets, we
are required to obtain certifications that are specific to the local telephony
infrastructure.

We may be subject to claims
related to Year 2000 issues, and Year 2000 concerns could adversely affect our
revenues. Many currently installed computer systems are not capable of
distinguishing 21st century dates from 20th century dates. As a result,
beginning on January 1, 2000, computer systems and software used by many
companies and organizations in a wide variety of industries, including
technology, transportation, utilities, finance and telecommunications, will
produce erroneous results or fail unless they have been modified or upgraded to
process date information correctly. Year 2000 compliance efforts may involve
significant time and expense, and uncorrected problems could materially
adversely affect our business, financial condition and operating results. We
may face claims based on Year 2000 issues arising from the integration of
multiple products within an overall system. We may also experience reduced
sales of our products as potential customers reduce their budgets for voice and
data conferencing products due to increased expenditures on their own Year 2000
compliance efforts. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Year 2000 Readiness Disclosure."

Our stock price may be volatile.
We expect that the market price of our common stock will fluctuate as a result
of variations in our quarterly operating results. These fluctuations may be
exaggerated if the trading volume of our common stock is low. In addition, due
to the technology-intensive and emerging nature of our business, the market
price of our common stock may rise and fall in response to:

- announcements of technological or competitive developments;
- acquisitions or strategic alliances by us or our competitors; or
- the gain or loss by us of significant orders.

Our executive officers and
directors and their affiliates own a large percentage of our voting stock and
could control the voting power of the common stock. Our executive officers and
directors and their affiliates beneficially own, in the aggregate, a large
percentage of our outstanding common stock. As a result, these stockholders are
able to exercise control over all matters requiring stockholder approval,
including the election of directors and approval of significant corporate
transactions. This concentration of ownership may delay, deter or prevent
transactions that would result in the change of control, which in turn could
reduce the market price of our common stock.

Future sales of our common stock
may depress our stock price. Sales of a substantial number of shares of common
stock in the public market could materially adversely affect the market price
of our common stock. All of the 3,125,000 shares issued in the initial public
offering in May 1999 are freely tradable. Upon the expiration on November 3,
1999 of arrangements between our stockholders and Latitude or the underwriters
in which our stockholders have agreed not to sell or dispose of their Latitude
common stock, the remaining 15,666,365 shares of common stock outstanding at
September 30, 1999 became eligible for sale in the public market. Of these
shares, 11,682,572 shares are subject to volume limitations under federal
securities laws.

If our stockholders sell
substantial amounts of common stock, including shares issued upon the exercise
of outstanding options and warrants, in the public market, the market price of
our common stock could fall.

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

Our exposure to market risk for
changes in interest rates relates primarily to our investment portfolio. We do
not use derivative financial instruments in our investment portfolio. We place
our investments with high credit quality issuers and, by policy, limit the
amount of credit exposure to any one issuer. The portfolio includes only
marketable securities with maturities of three to 24 months and with active
secondary or resale markets to ensure portfolio liquidity. We have no
investments denominated in foreign country currencies and therefore are not
subject to foreign currency risk on such investments.

Currently, the majority of our
sales and expenses are denominated in U.S. dollars and, as a result, we have
not experienced significant foreign exchange gains and losses to date. While we
do expect to effect some transactions in foreign currencies in the next 12
months, we do not anticipate that foreign exchange gains and losses will be
significant. We have not engaged in foreign currency hedging activities to date.

## PART II.   OTHER INFORMATION

## Item 1.      Legal Proceedings  Not Applicable.

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

On May 6, 1999, in connection
with the Companys initial public offering, a Registration Statement on
Form S-1 (No. 333-72935) was declared effective by the Securities and Exchange
Commission, pursuant to which 3,125,000 shares of the Companys Common
Stock were offered and sold for the account of the Company at a price of $12.00
per share, generating gross offering proceeds of $37.5 million. The managing
underwriters were Credit Suisse First Boston Corporation, Hambrecht & Quist
LLC and Dain Rauscher Wessels. After deducting approximately $2.6 million in
underwriting discounts and $1.1 million in other related expenses, the net
proceeds of the offering were approximately $33.8 million. The Company has not
yet used any of the funds from the initial public offering, and the $33.8
million has been invested in investment grade, interest bearing securities. The
Company intends to use such remaining proceeds for capital expenditures,
including the acquisition of redundant computer and communication systems, and
for general corporate purposes, including working capital to fund increased
accounts receivable and inventory levels.

## Item 3.      Defaults Upon Senior Securities - Not
Applicable.

## Item 4.      Submission of Matters to a Vote of Security
Holders  Not Applicable.

## Item 5.      Other Information  Not Applicable.

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

(a)      Exhibits:

10.5* - 1999 Directors Stock Option Plan and form of stock option agreement

27.1 - Financial Data Schedule

(b)      Reports on Form 8-K - None

---

* - Revised version correcting certain typographical errors in
original filed version.

# SIGNATURE

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.

| | Latitude Communications, Inc.
                                    
                                    
                                    
                                    
                                  By:     /s/     RICK M. MCCONNELL
                                  ________________________________________________
                                  Rick M. McConnell
                                  Vice President of Finance and Administration and
                                  Chief Financial Officer (Principal Financial and Accounting Officer) | 
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

Date:  November 12, 1999

# EXHIBIT INDEX

10.5 - 1999 Directors
Stock Option Plan and form of stock option agreement

27.1 - Financial Data Schedule

---

* - Revised version correcting certain typographical errors in
original filed version.