<PAGE>

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

                            ------------------------

                                    FORM 10-Q

                            -------------------------

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

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000

                                       OR

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

                         FOR THE TRANSITION PERIOD FROM
                                         TO
                         ---------------    ---------------

                        COMMISSION FILE NUMBER: 000-25399
                            ------------------------
                                     HEARME

             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

            DELAWARE                               94-3217317
 (STATE OR OTHER JURISDICTION OF       (IRS EMPLOYER IDENTIFICATION NO.)
  INCORPORATION OR ORGANIZATION)

                                685 CLYDE AVENUE
                         MOUNTAIN VIEW, CALIFORNIA 94043
                                 (650) 429-3900

   (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
                 THE REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

                            ------------------------

Indicate by check mark whether the registrant (1) has filed all reports required
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. [X] Yes [ ] No

     The number of outstanding shares of the registrant's Common Stock, $0.00005
par value, was 26,884,014 as of May 9, 2000

                -----------------------------------------------
                -----------------------------------------------


                                       1
<PAGE>

                                     HEARME

                                      INDEX

                                                                           PAGE

PART I: FINANCIAL INFORMATION
Item 1. Financial Statements

        Consolidated Balance Sheets - March 31, 2000 (unaudited)
             and December 31, 1999........................................... 3
         Unaudited Consolidated Statements of Operations - Three Months
             Ended March 31, 2000 and 1999................................... 4
         Unaudited Condensed Consolidated Statements of Cash Flows
             Three Months Ended March 31, 2000 and 1999...................... 5
         Notes to Consolidated Financial Statements.......................... 6
Item 2. Management's Discussion and Analysis of Financial Condition
              and Results of Operations...................................... 9
Item 3. Qualitative and Quantitative Disclosure about Market Risk............17

PART II: OTHER INFORMATION
Item 1. Legal Proceedings....................................................17
Item 2. Changes in Securities and Use of Proceeds............................17
Item 3. Defaults Upon Senior Securities......................................18
Item 4. Submission of Matters to a Vote of Security Holders..................18
Item 5. Other Information....................................................18
Item 6. Exhibits and Reports on Form 8-K.....................................18
        Signatures...........................................................19


                                       2
<PAGE>


                                     HEARME

                           CONSOLIDATED BALANCE SHEETS

                                 (IN THOUSANDS)
<TABLE>

                                                                                            MARCH 31,       DECEMBER 31,
                                                                                              2000          1999
                                                                                              ----          ----
                                                                                          (UNAUDITED)
                                          ASSETS
<S>                                                                                          <C>            <C>
Current assets:
     Cash and cash equivalents..........................................................     $ 2,420        $  2,568
         Short-term investments.........................................................      57,629          66,756
     Accounts receivable, net of allowance for doubtful accounts of $412 and
        $415, respectively..............................................................       5,782           5,767
     Interest and other receivable......................................................         955             946
     Prepaid expenses and other current assets..........................................       4,508           1,697
                                                                                          -------------  ---------------
          Total current assets..........................................................      71,294          77,734
Restricted cash.........................................................................         170             170
Property and equipment, net.............................................................       5,206           4,500
Intangible assets.......................................................................       3,578           4,153
Goodwill   .............................................................................      15,256          17,708
Other assets............................................................................         482             291
                                                                                          -------------  ---------------
          Total assets..................................................................    $ 95,986       $ 104,556
                                                                                          =============  ===============
                           LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable...................................................................    $  1,752         $   557
     Accrued payroll and related expenses...............................................       3,220           2,829
     Accrued expenses...................................................................       2,729           2,637
     Current portion of capital lease obligations.......................................         206             322
     Deferred revenue...................................................................         571             396
     Notes payable......................................................................         178             255
     Deferred rent......................................................................         134             112
                                                                                          -------------  ---------------
          Total current liabilities.....................................................       8,790           7,108
Deferred tax liability..................................................................       1,431           1,661
Capital lease obligations, net of current portion.......................................           7              19
                                                                                          ------------- ----------------
          Total liabilities.............................................................      10,228           8,788
                                                                                          -------------  ---------------
Redeemable common stock.................................................................       2,000           2,000
Stockholders' equity:
     Common stock warrants..............................................................           2               2
     Common stock.......................................................................           1               1
     Additional paid-in capital.........................................................     183,459         182,589
     Unrealized gain....................................................................         630             614
     Deferred stock based compensation..................................................      (8,492)         (9,027)
     Notes receivable from stockholders.................................................      (2,313)         (2,325)
     Accumulated deficit................................................................     (89,529)        (78,086)
                                                                                          -------------  ---------------
          Total stockholders' equity....................................................      83,758          93,768
                                                                                          -------------  ---------------
          Total liabilities and stockholders' equity ...................................   $  95,986       $ 104,556
                                                                                          =============  ===============
</TABLE>


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

                                       3
<PAGE>


                                     HEARME

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

                                   (UNAUDITED)

<TABLE>
                                                                                             THREE MONTHS ENDED
                                                                                             -------------------
                                                                                                  MARCH 31,
                                                                                                  ---------
                                                                                            2000             1999
                                                                                            ----             ----
<S>                                                                                        <C>              <C>
Net revenues:
     Live Communities................................................................      $  2,949         $ 1,120
     HearMe Technology Products......................................................         2,911           1,008
                                                                                       ----------------  --------------
          Total revenues.............................................................         5,860           2,128

Cost of net revenues:
     Live Communities................................................................         1,702             810
       Live Communities - warrant expense............................................             -             849
     Technology Products.............................................................           224             231
                                                                                       ----------------  --------------
          Total cost of revenues.....................................................         1,926           1,890
                                                                                       ----------------  --------------
               Gross profit .........................................................         3,934             238
                                                                                       ----------------  --------------
Operating expenses:
     Research and development........................................................         2,784           1,543
     Sales and marketing.............................................................         6,900           2,331
     General and administrative......................................................         2,886           1,438
     Amortization of intangibles and goodwill........................................         2,797               -
     Stock based compensation........................................................           886             936
                                                                                       ----------------  --------------
               Total operating expenses..............................................        16,253           6,248
                                                                                       ----------------  --------------
                    Loss from operations.............................................       (12,319)         (6,010)
     Interest and other income, net..................................................           875              34
                                                                                       ----------------  --------------
               Loss before provision for income taxes................................       (11,444)         (5,976)
Provision for income taxes...........................................................             -              -
                                                                                       ----------------  --------------
                    Net loss.........................................................     $ (11,444)       $ (5,976)
                                                                                       ================  ==============
Net loss per common share:
     Basic and diluted...............................................................     $    (.50)       $  (1.89)
                                                                                       ================  ==============
     Pro forma.......................................................................     $    (.50)       $   (.38)
                                                                                       ================  ==============
Weighted average shares outstanding:
     Basic and diluted...............................................................        23,109           3,169
     Pro forma.......................................................................        23,109          15,731
                                                                                       ================  ==============
</TABLE>

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


                                       4
<PAGE>


                                     HEARME

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)
<TABLE>

                                                                                                  THREE MONTHS ENDED
                                                                                                        MARCH 31,
                                                                                                        ---------
                                                                                                 2000           1999
                                                                                                 ----           ----
<S>                                                                                           <C>            <C>

Cash used in operating activities...........................................................   $ (8,255)     $ (2,761)

Cash flows from investing activities:
     Acquisition of property and equipment..................................................     (1,200)         (850)
                                                                                             -------------- -------------
                  Net cash used in investing activities.....................................     (1,200)         (850)
                                                                                             -------------- -------------
Cash flows from financing activities:
     Payments of notes payable..............................................................        (77)       (1,563)
     Payments under capital lease obligations...............................................       (128)         (114)
     Proceeds from exercise of common stock options, net of repurchase......................        380           142
     Proceeds from issuance of Series E preferred stock, net................................           -       18,802
                                                                                             -------------- -------------
                  Net cash provided by financing activities.................................        175        17,267
                                                                                             -------------- -------------
                  Net increase (decrease) in cash and cash equivalents......................
                                                                                                 (9,280)       13,656
                                                                                             -------------- -------------
Cash and cash equivalents, beginning of period..............................................     69,329         1,114
                                                                                             -------------- -------------
Cash and cash equivalents, end of period....................................................   $ 60,049      $ 14,770
                                                                                             ============== =============

</TABLE>


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


                                       5
<PAGE>


                                     HEARME
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000
                                   (UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and in accordance with 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 generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) necessary for a fair presentation of
the financial statements at March 31, 2000 and 1999 have been included.

The condensed consolidated financial statements include those of the company and
its wholly-owned subsidiaries. Inter-company balances and transactions have been
eliminated in consolidation.

Results for the three months ended March 31, 2000 are not necessarily indicative
of results for the entire fiscal year or future periods. These financial
statements should be read in conjunction with the consolidated financial
statements and the accompanying notes included in the Company's Form 10-K dated
March 30, 2000 as filed with the Securities and Exchange Commission.

Certain prior year amounts have been reclassified for consistency with current
year financial statement presentation.

NET LOSS PER SHARE

Historical basic and diluted earnings per share are calculated using the average
shares of common stock outstanding, reduced for shares subject to repurchase by
the Company. Preferred stock, stock options, warrants and unvested common stock
are excluded from the calculation of diluted net loss per share since their
effect would be antidilutive.

PRO FORMA NET LOSS PER SHARE

Pro forma net loss per share is computed using the weighted average number of
common shares outstanding, including the pro forma effects of the automatic
conversion of the Company's Series A, Series B, Series C, Series D and Series E
preferred stock into shares of the Company's common stock effective upon the
closing of the Company's initial public offering as if such conversion occurred
on January 1, 1999 for Series A, B, C and D and on January 19, 1999 for Series
E. Pro forma common equivalent shares, comprised of unvested common stock, and
incremental common shares issuable upon the exercise of stock options and
warrants, are not included in pro forma diluted net loss per share because they
would be anti-dilutive.

ACCOUNTING FOR DERIVATIVES

In June 1998, the Financial Accounting Standard Board (FASB) issued Statement of
Financial Accounting Standards No. 133 (SFAS 133), "Accounting for Derivative
Instruments and Hedging Activities." SFAS 133 establishes accounting and
reporting standards for derivative instruments and for hedging activities. SFAS
133 is effective for fiscal years beginning after June 15, 1999. In July 1999,
FASB issued SFAS No. 137 (SFAS 137), "Accounting for Derivative Instruments and
Hedging Activities-Deferral of the Effective Date of SFAS No. 133." SFAS 137
deferred the effective date of SFAS 133 until the first fiscal quarter beginning
after June 15, 2000. The Company does not believe the adoption of SFAS 133 and


                                       6
<PAGE>

SFAS 137 will have a material effect on the Company's consolidated results of
operations or financial condition.

REVENUE RECOGNITION IN FINANCIAL STATEMENTS

In December 1999, the Securities and Exchange Commission Staff issued Bulletin
No. 101, "Revenue Recognition in Financial Statements" (SAB No 101), which
pertains to guidance on the recognition presentation and disclosure on revenue
in financial statements. The Company is currently evaluating the impact of SAB
101.

2. SEGMENT INFORMATION

Operating losses for the Company's two segments, the Live Communities segment
and the HearMe Technology Products segment, were as follows:

                                               THREE MONTHS ENDED MARCH 31,
                                               ----------------------------
                                                 2000               1999
                                                 ----               ----
Live Communities                               ($6,966)            ($3,790)
HearMe Technology Products                      (1,670)             (1,283)
                                               --------             -------
Total Operating Loss                           ($8,636)            ($5,073)
                                               ========            ========

3. ACQUISITION:

RESOUNDING ACQUISITION:

       On October 20, 1999, the Company completed its acquisition of Resounding
Technology, Inc ("RTI"), a Delaware corporation. This acquisition was
accomplished by the statutory merger (the "Merger") of RTI Acquisition Corp., a
Delaware corporation and a wholly owned subsidiary of the Company, with and into
Resounding. The acquisition is being accounted for under the purchase method of
accounting.

       The Merger was accomplished pursuant to an Agreement and Plan of Merger
dated as of September 27, 1999, among the Company, Resounding and RTI
Acquisition Corp. and a related Certificate of Merger, following approval by the
stockholders of Resounding and satisfaction of other closing conditions. The
acquisition was paid through the issuance of 1,585,488 shares of the Company
common stock, the assumption of 153,048 stock options and payment in cash to
certain of Resounding's stockholders in the amount of $175,000. The portion of
the consideration in the form of the Company stock was distributed using an
exchange ratio of .331 for each share or option of Resounding. Of the 1,585,488
shares of common stock, 317,098 shares are held by an escrow agent to serve as
security for the indemnity provided by certain shareholders of Resounding. The
Company accounted for this acquisition in the fourth quarter of fiscal 1999.

       The purchase price of approximately $23,485,000 includes $22,601,000 of
stock, issued at fair value (fair value being determined as the average price of
the HearMe stock for a period three days before and after the announcement of
the merger) less a discount of $1,479,000 due to the restricted nature of the
stock, $1,908,000 in RTI stock option costs (being determined under the Black
Scholes formula), $175,000 in cash and $280,000 in estimated expenses of the
transaction. The purchase price was allocated as follows: $260,000 to the
estimated fair value of RTI net tangible assets purchases (as of September 27,
1999), $2,600,000 to purchased existing technology, ($1,840,000) to establish
deferred tax liabilities associated with certain intangibles acquired, $850,000
to purchased in-processed research and development, $700,000 to
workforce-in-place, $1,300,000 to non-compete agreements and $19,615,000 to
goodwill. The allocation of the purchase price to intangibles was based upon an
independent, third party appraisal and management's estimate. The intangible
assets and goodwill acquired have estimated useful lives of 2 years.


                                       7
<PAGE>


       Pro forma condensed results of operations for the combined company as if
the transaction had consummated at the beginning of the earliest period
presented and carried forward into 2000 are as follows:

                                     HEARME
              PROFORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
                                                                                              QUARTER ENDED
                                                                                                MARCH 31,
                                                                                         ------------------------
                                                                                              2000         1999
                                                                                         -----------  -----------
                                                                                          (Actual)    (Pro forma)
                                                                                         -----------  -----------
       <S>                                                                              <C>           <C>

       Revenues......................................................................    $    5,860   $    2,128
       Cost of revenues..............................................................         1,926        1,890
                                                                                         -----------  -----------
       Gross profit..................................................................         3,934          238
                                                                                         -----------  -----------
         Loss from operations..........................................................     (12,319)     (12,005)
            Net loss.................................................................    $  (11,444)  $  (11,971)
                                                                                         ===========  ===========
         Net loss per common share:

          Basic......................................................................    $     (.50)  $    (3.48)
                                                                                         ===========  ===========
          Diluted....................................................................    $     (.50)  $     (.75)
                                                                                         ===========  ===========
       Weighted average shares outstanding:

          Basic......................................................................        23,109        3,439
                                                                                         ===========  ===========
          Diluted....................................................................        23,109       16,001
                                                                                         ===========  ===========
</TABLE>

There were no transactions between the Company and RTI during the periods
presented.

4. SUBSEQUENT EVENTS

         On April 3, 2000, the Company completed its acquisition of AudioTalk
Networks, a California corporation. The Merger Agreement provided for the merger
of a newly formed wholly owned subsidiary of HearMe with and into AudioTalk.
AudioTalk became a wholly owned subsidiary of HearMe. The merger is being
accounted for under the purchase method of accounting. The merger was
consummated on April 3, 2000.

         The purchase price of approximately $116.7 million comprised
approximately $100.5 million of common stock, $10.0 million in cash, $5.7
million in options to purchase common stock issued to AudioTalk employees, and
$500,000 in estimated expenses. The purchase price was allocated as follows:
$5.0 million to the estimated fair value of AudioTalk net tangible assets,
$580,000 to purchased technology, $550,000 to purchased in-process research and
development, $900,000 to existing sales contracts, $1,250,000 to
workforce-in-place and $109.5 million to goodwill. The allocation of the
purchase price to intangibles was based upon an independent, third party
appraisal and management's estimates. The portion of the consideration in the
form of HearMe stock was distributed using an exchange ration of 3.42 for each
share or option of AudioTalk. Of the 4,520,327 shares of common stock, 523,645
shares are held by an escrow agent to serve as security for the indemnity
provided by certain shareholders of AudioTalk. The company will evaluate the
allocation of the purchase price to the net assets acquired, which include
in-process technology which will be written-off in the period acquired. Goodwill
and other intangibles will be amortized over their benefit period ranging from
two to three year.

         This information should be read in conjunction with the Company's Form
8-K/A dated May 5, 2000 as filed with the SEC.


                                       8

<PAGE>


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," "believes,
"plans," "expects," "future," "intends", and similar expressions identify
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 "Certain Business Risks" 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. We assume no obligation to update these forward-looking
statements to reflect actual results or changes in factors or assumptions
affecting forward-looking statements.

OVERVIEW

       The Company develops, licenses and operates technologies that enable us
and other Internet sites to create and manage voice-enabled real time
interactive experiences. We were incorporated and commenced operations in
January 1995. From inception through September 1996, our activities primarily
consisted of recruiting employees and raising capital, performing product and
technology development, engaging in marketing activities and negotiating
strategic relationships. In November 1995, we entered into an agreement with
PSINet, Inc. for the deployment of a low-latency network, which provided a
platform for launching and operating the MPLAYER.COM service. Testing of the
MPLAYER.COM service began in February 1996 and the service was launched
commercially in October 1996. In April 1996, we licensed our Live Community
software and network services to SegaSoft Networks, Inc., which occurred
concurrently with an equity investment by affiliates of SegaSoft's parent, CSK
Corporation. In January 1999, we launched HEARME.COM, our second Live Community
service. During the period from January 1995 to March 31, 1999, we raised gross
proceeds of approximately $54.9 million from the sale of equity securities to
venture capital investors and strategic partners. The proceeds from these
financings were primarily used to finance our research and development and the
sales and marketing of our products and services. In May and June 1999, we
raised gross proceeds of approximately $80.7 million from the sales of common
stock through the initial public offering. A portion of the proceeds from this
offering is being used to finance research and development and sales and
marketing activities.

       In September 1999, we announced that we would commence doing business
under the name HearMe.

       We generate our revenues from two business units, Live Communities and
HearMe Technology Products. With respect to Live Communities, we derive the
majority of revenues from advertising fees. While the MPLAYER.COM and the
HEARME.COM services are free to all registered members, until September 1999,
some users also paid subscription fees to us in exchange for access to premium
services such as special events, rankings and ratings, contests, magazine
subscriptions, special features and exclusive games. We also had a subscription
plan that allowed the members to purchase a year's subscription up front at a
discounted rate. As of September 1999, we terminated the subscription fee
program and extended our services free to all of our members. Additionally, we
have begun to derive revenues from e-commerce activities, including fees from
special event promotions and merchandise sales and from opt-in e-mail programs.
Advertising revenue is recognized ratably over the term of each particular
advertising agreement. E-commerce revenue is recognized when notification of
shipment has taken place and the revenue has been earned. Subscription revenue
through September 1999 was recognized ratably over the related subscription
period. Any unearned but paid member subscription fees remaining at September
30, 1999 were reimbursed to the members in October 1999. With respect to HearMe
Technology Products, we derive revenues from licensing fees for our technology,
including our Voice Server, Voice Creator and Voice Network products and POP.X
product that enables others to create live communities and related services. We
also derive incremental HearMe Technology Products revenues from service,
maintenance and upgrade fees. Service revenues are recognized over the period in
which services are provided. Development revenue


                                       9
<PAGE>

is recognized at the time services are completed or as development milestones
are achieved. License revenue is recognized in the period earned. Deferred
revenue consists primarily of monthly service revenue billed and paid in
advance.

       Since we launched our first Live Community service in October 1996 and
began negotiating certain license agreements through the HearMe Technology
Products business unit, we have generated $32.3 million in net revenues through
March 31, 2000. For the period from inception to March 31, 2000 we have incurred
a cumulative net loss of $89.5 million, of which $14.5 million came from a
one-time write-off of goodwill and in-process research and development expenses
associated with our acquisition of Catapult and $3.0 million from a write-off of
goodwill and in-process research and development expenses associated with our
acquisition of RTI.

       Cost of net revenues for Live Communities consists primarily of the cost
of operating the network infrastructure and royalties paid to third party
content providers. Cost of net revenues for HearMe Technology Products consists
primarily of network operating expenses in conjunction with providing services
to certain HearMe Technology Products customers.

       The Company's operating expenses consist of sales and marketing expenses,
research and development expenses and general and administrative expenses. Sales
and marketing expenses consist principally of salaries paid to employees in
sales and marketing activities, advertising, promotional materials and programs,
public relations costs and travel. Research and development expenses consist
principally of salaries and compensation paid to employees and consultants
engaged in research and development activities and product testing. General and
administrative expenses consist principally of salaries and compensation paid to
employees and consultants in the administrative departments including finance,
human resources and legal and costs relating to facilities, infrastructure and
related depreciation, in-house and outside legal and accounting fees and related
costs and travel. All operating costs are expensed as incurred.

       We have a limited operating history upon which an evaluation of our
current business and our prospects can be based. In addition, our revenue model
is evolving and relies substantially upon the licensing of our technology and
the sale of advertising on our MPLAYER.COM and HEARME.COM services. Our business
must be considered in light of the risks, expenses and problems frequently
encountered by companies in their early stages of development, particularly
companies in new and rapidly evolving markets such as the Internet. Our results
of operations and financial condition may be subject to volatility in future
periods.

RESULTS OF OPERATIONS

   THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THE THREE MONTHS ENDED
   MARCH 31, 1999

       NET REVENUES. The Company's total net revenues increased by 175% from
$2.1 million for the three months ended March 31, 1999 to $5.9 million for the
three-month ended March 31, 2000. Live Communities net revenues grew by $1.8
million or 163% from $1.1 million as of March 31, 1999 to $2.9 million as of
March 31, 2000. This increase was primarily driven by growth in advertising
revenues associated with an expanding number of advertisers and the growth of
traffic and usage time in our Live Communities. HearMe Technology Products net
revenues grew by $1.9 million or 189% from $1.0 million as of March 31, 1999 to
$2.9 million as of March 31, 2000. The increase was due to increased technology
licensing fees earned from both new and existing customers during the periods.

       COST OF NET REVENUES. Live Communities cost of net revenues primarily
consists of the cost of operating the network infrastructure and royalties paid
to third party content providers. Cost of net revenues for HearMe Technology
Products consists primarily of network operating expenses in conjunction with
providing services to certain HearMe Technology Products customers. The
Company's cost of net revenues were $1.9 million for the period ended March 31,
2000, or 33% of net revenues, as compared to $1.9 million or 89% of net revenues
for the period ended March 31, 1999. Cost of net revenues decreased as a
percentage of net revenues primarily due to advertising revenues growing faster
than the related server and


                                       10
<PAGE>

network costs within the Live Communities segment. The absolute increase in cost
of net revenues was due to the significant increase in Live Communities
subscriber usage and the resulting increase in server and network costs between
March 31, 1999 and March 31, 2000. Technology Products cost of net revenues
remained fairly flat and was attributable to server costs associated with
hosting services provided to certain HearMe Technology Products customers. Also
included in costs for 1999 was an $849,000 expense incurred in connection with a
warrant for 120,000 shares granted to an Internet service provider in 1995, the
terms of which were finalized during the year ended December 31, 1999.

      RESEARCH AND DEVELOPMENT. Research and development expenses were $2.8
million, or 48% of net revenues for the period ended March 31, 2000 compared to
$1.5 million or 73% of net revenues for the period ended March 31, 1999.
Research and development expenses consist primarily of employee compensation
relating to developing and enhancing the features and functionality of HearMe's
technology and consumer websites. The increase in research and development
expenses was primarily due to an increase in salary expense in 2000 as
additional engineers were hired to support the development of the Company's new
Voice Products, POP.X technology and enhancements to the Company's Live
Communities websites and to additional consulting fees and software expenditures
associated with these projects. The Company believes that significant
investments in product development are required to remain competitive.
Consequently, the Company expects to incur increased product development
expenditures in absolute dollars in future periods. As a percentage of net
revenues, the Company anticipates that research and development expenses will
range from 40% to 50% during 2000, however, anticipated spending levels may vary
as a results of acquisitions and future business combinations.

      SALES AND MARKETING. Sales and marketing expenses were $6.9 million for
the period ended March 31, 2000 or 118% of net revenues compared to $2.3 million
or 110% of net revenues for the period ended March 31, 1999. Sales and marketing
expenses consist primarily of advertising and other marketing-related expenses,
compensation and employee-related expenses, sales commission and travel costs.
Sales and marketing expenses increased as a percentage of net revenues from 1999
to 2000 primarily due to the initiation of outbound advertising and marketing
campaigns to promote the Company's brands. The absolute increase in sales and
marketing expenses was due to the cost of developing the outbound advertising
and marketing campaigns to promote the Company's brands, an increase in
headcount in the marketing group, increases in advertising sales headcount and
related commissions, travel expenses and an increase in headcount of the HearMe
Technology Products marketing and sales force and related commissions. As a
percentage of net revenues, the Company currently anticipates that annual sales
and marketing expenses will range from 100% to 120% during 2000 due to announced
marketing plans.

      GENERAL AND ADMINISTRATIVE. General and administrative expenses were $2.9
million, or 49% of net revenues for the period ended March 31, 2000, compared to
$1.4 million or 68% of net revenues for the period ended March 31, 1999. General
and administrative costs increased primarily due to higher salary expenses
resulting from additional headcount in the finance, administrative and
operations area required to support our expanded infrastructure and additional
costs relating to the costs of maintaining the Company as a public entity. The
Company believes that the absolute dollar level of general and administrative
expenses will increase in future periods, as a result of an increase in
personnel and increased fees for professional services. As a percentage of net
revenues, the Company currently anticipates that general and administrative
expenses will approximate 30% during 2000, however, anticipated spending levels
may vary as a result of acquisitions and future business combinations.

      AMORTIZATION OF INTANGIBLES. As part of the Resounding acquisition, the
Company recorded amortization of intangible assets consisting primarily of
goodwill in the amount of $2.8 million for the period ended March 31, 2000. The
related assets are being amortized over a 2-year period beginning October 1999.

      STOCK BASED COMPENSATION. Stock based compensation expenses were $0.9
million, or 15% of net revenues for period ended March 31, 2000 comparied to
$0.9 million for the period ended March 31, 1999. The slight decrease relates to
a decrease in the number of options outstanding as some of the earlier option
grants became fully vested.


                                       11
<PAGE>

      INTEREST AND OTHER INCOME, NET. Interest and other income (expense), net
includes interest income earned on the short-term investment of cash and
interest expense primarily related to capital lease and debt obligations.

LIQUIDITY AND CAPITAL RESOURCES

       HearMe invests excess cash in debt instruments that are highly liquid, of
high-quality investment grade and predominantly have maturities of less then one
year with the intent to make such funds readily available for operating
purposes. At March 31, 2000, the Company had cash and cash equivalents and
investments in marketable debt securities totaling $60.0 million compared to
$69.3 million at December 31, 1999.

       For the period ended March 31, 2000 net cash used in operating activities
was primarily a result of funding ongoing expansion of our research and
development and sales and marketing efforts and the resulting larger
infrastructure and support functions. For the year ended December 31, 1999, cash
used in operating activities was primarily a result of funding ongoing
operations.

       Net cash used in investing activities was $1.2 million for the period
ended March 31, 2000 compared to $.9 million for the period ended March 31,
1999. Net cash used in investing activities in each period was primarily related
to purchases of property and equipment. Capital expenditures have generally been
comprised of purchases of computer hardware and software as well as leasehold
improvements related to leased facilities and are expected to increase in future
periods.

       Net cash provided by financing activities for the period ended March 31,
2000 was $0.2 million as compared to net cash provided by financing activities
for the period ended March 31, 1999 of $17.3 million. The major sources of
financing activities during the period ended March 31, 2000 was proceeds from
stock option exercises in the amount of $.4 million as compared to the period
ended March 31, 1999 from which the sale of Series E preferred stock generated
net proceeds of approximately $18.8 million.

       In 1995, we entered into a capital lease agreement with an investor group
and drew down all available funds of approximately $1.5 million. We entered into
a Loan and Security Agreement with a financial institution in July 1998. The
agreement consisted of a term loan for $1.5 million, an accounts receivable
revolving line of credit for $1.5 million and a capital equipment loan of $1.0
million. Amounts borrowed under these agreements are collateralized by
substantially all our assets, bear interest at the prime rate plus two percent
and were scheduled to mature on June 30, 1999. By December 1998, we had drawn
down $1.5 million against the term loan agreement and approximately $1.0 million
against the capital equipment agreement. In January 1999, we fully repaid the
term loan with a portion of the net proceeds from the sale of our Series E
Preferred Stock in January 1999. In May 1999 we fully repaid the equipment loan
from the proceeds of the IPO.

       We currently anticipate that the net proceeds of $73.9 million from the
public offering which we completed in May 1999 and from the issuance of the
underwriters' overallotment in June 1999, together with our existing lines of
credit and available funds will be sufficient to meet our anticipated needs for
working capital and capital expenditures for at least the next 12 months. We may
need to raise additional funds in the future in order to fund more aggressive
brand promotions and more rapid expansion, to develop newer or enhanced products
or services, to fund acquisitions, to respond to competitive pressures, or to
acquire complementary businesses, technologies or services. There can be no
assurance that additional financing will be available on terms favorable to us,
or at all.

      CERTAIN BUSINESS RISKS

       We have a limited operating history making it difficult or impossible for
us to predict future results of operations. As a result, you should not expect
future revenue growth to be comparable to our recent revenue growth. We believe
that comparing different periods of our operating results is not meaningful, as
you should not rely on the results for any period as an indication of our future
performance. We did not begin generating advertising or licensing revenues until
October 1996. Some of the risks and difficulties


                                       12
<PAGE>

that we face as an early stage company in a new and rapidly evolving market
include our ability to maintain and to increase levels of traffic on our Live
Communities, our ability to increase demand for our products and services and
our ability to develop and extend the HEARME, HEARME.COM AND MPLAYER.COM brands.

       We have had substantial losses since our inception and our operating
losses may increase in the future. Accordingly, we cannot assure you that we
will ever become or remain profitable. If our revenues fail to grow at
anticipated rates, our operating expenses increase without a commensurate
increase in our revenues or we fail to adjust operating expense levels
accordingly, our business, results of operations and financial condition will be
adversely affected. As of March 31, 2000, we had an accumulated deficit of $89.5
million. Although we have experienced growth in net revenues, members, customers
and Internet reach in recent periods, we cannot be certain that our growth rates
will continue at their current levels or increase in the future.

       We have not yet become profitable on a quarterly or annual basis and we
anticipate that we will continue to incur net losses for the foreseeable future.
The extent of these losses will be contingent, in part, on the amount of growth
in our revenues from advertising, licensing and commerce. We expect our
operating expenses to increase significantly, especially in the areas of
engineering, sales and marketing and brand promotion and, as a result, we will
need to generate increased quarterly revenues to become profitable.

      Our HearMe Technology Products revenues have accounted for a significant
portion of our revenues to date. Historically, we have received most of our
HearMe Technology Products revenues from a limited number of sales and license
agreements. Therefore, any downturn in the business of these customers or
potential customers could have a material adverse effect on our revenues and
quarterly results of operations. We believe that a customer's decision to
license our technology is relatively discretionary and, for large-scale users,
often involves a significant long-term commitment of resources. We currently
have 45 HearMe Technology Products customers.

      Our HearMe Technology Products customers often take a long time to
evaluate our products and services and many people are involved in the sales
process. The long sales and implementation cycles for our products and services
and the timing of these sales may cause license and service revenues and
operating results to vary significantly from period to period. We spend a lot of
time educating and providing information to our prospective customers regarding
the use and benefits of our products and services. Even after deciding to
license our products, our customers tend to deploy our products slowly and
deliberately depending on the expertise of the customer, the size of deployment,
the complexity of the customer's system architecture, the quantity of hardware
involved and the degree of hardware and software configuration necessary to
deploy our products.

        We derive a significant portion of our revenues from the sale of
advertising. If customers cancel or defer existing advertising or commerce
contracts or if we fail to obtain new contracts in any quarter, our business,
results of operations and financial condition for that quarter and future
periods will be adversely affected. A significant number of these advertising
sales are made under short-term contracts that average two to three months in
length. Consequently, many of our advertising customers can cease advertising on
our Web site quickly and without penalty. As a result, our quarterly revenues
and operating results depend heavily on advertising revenues from contracts
entered into within the quarter and on our ability to adjust spending in a
timely manner to compensate for any unexpected revenue shortfall.

       Furthermore, our advertising revenues are based in part on the amount of
traffic on MPLAYER.COM and HEARME.COM. Accordingly, if the amount of traffic on
our Live Communities falls below our expectations or those of existing or
potential advertisers, we may lose advertising customers. In addition,
substantially all of our advertising contracts require us to guarantee a minimum
number of impressions. In the event that we fail to deliver the minimum number
of impressions, we could be required to provide credit for additional
impressions and we may have to reduce advertising rates in order to maintain
existing advertisers and attract new advertisers.

       Our quarterly operating results may fluctuate significantly in the future
as a result of a variety of factors, many of which are outside of our control.
These fluctuations make it difficult to predict our


                                       13
<PAGE>

financial performance and may adversely affect the trading price of our common
stock. These factors include demand for and market acceptance of our products
and services and Web-based advertising, budgeting cycles of advertisers, amount
and timing of capital expenditures by our customers and other costs relating to
the expansion of our operations and future acquisitions, engineering or
development fees that we may pay for new Web site development and publishing
tools and general economic conditions.

       As a strategic response to changes in the competitive environment, we may
from time to time make certain pricing, service or marketing decisions or
business combinations that could have a material adverse effect on our business,
results of operations and financial condition. In order to accelerate the
promotion of the HEARME, HEARME.COM and MPLAYER.COM brands, we intend to
significantly increase our marketing budget. Such an increase in marketing
expenditures may adversely affect our results of operations for a number of
quarterly periods.

       Due to our relatively short operating history, we have limited meaningful
historical financial data upon which to base our planned operating expenses.
Accordingly, our expense levels are based in part on our expectations as to
future revenues from advertising, software licensing fees, commerce
revenue-sharing arrangements and our anticipated growth in memberships and to a
large extent are fixed. We cannot be certain that we will be able to accurately
predict our revenues, particularly in light of the intense competition for the
sale of Web-based advertisements, revenue-sharing opportunities and new members,
our limited operating history and the uncertainty as to the broad acceptance of
the Web as an advertising and commerce medium. We also cannot be certain as to
the broad acceptance of Voice over the Internet. If we fail to accurately
predict revenues in relation to fixed-expense levels, our business, results of
operations and financial condition could be adversely affected.

      Although we view our strategic relationships with media, Internet and
technology companies as a key factor in our overall business strategy, we cannot
be certain that we will be successful in developing new strategic relationships
or that our strategic partners will view such relationships as significant to
their own business or that they will continue their commitment to us in the
future. Our business, results of operations and financial condition and our
stock price may be materially adversely affected if any strategic partner
discontinues its relationship with us for any reason. Additionally, any party to
a strategic agreement with us may fail to perform its contractual obligations
and we cannot be certain that we could enforce any such agreement. We do not
generally establish minimum performance requirements for our strategic partners
but instead rely on their voluntary efforts. In addition, most of these
agreements may be terminated by either party with little notice. Therefore, we
cannot be certain that these relationships will be successful.

       We have derived a significant portion of our revenues to date from the
sale of advertisements and intend to continue to do so in the future. If the Web
does not continue its development as an effective advertising medium, this could
have a material adverse effect on our business, financial condition and results
of operations. Intense competition in the sale of advertising on the Web has
resulted in a wide variety of pricing models, rate quotes and advertising
services, making it difficult to project future levels of advertising revenues
and rates. It is also difficult to predict which pricing models, if any, will
achieve broad acceptance among advertisers. Our strategy is to continue to
emphasize advertising as a method of generating revenues. Our current business
model is therefore highly dependent on the amount of traffic on our Web site.
This type of business model, however, is relatively unproven. The Internet as an
advertising medium has not been available for a sufficient period of time to
gauge our effectiveness as compared with traditional advertising media. Many of
our advertisers have only limited experience with the Web as an advertising
medium, have not yet devoted a significant portion of their advertising budgets
to Web-based advertising and may not find such advertising to be effective for
promoting their products and services relative to traditional print and
broadcast media. To date, advertising on the Web represented a nominal portion
of overall advertising revenues in the United States. Our ability to generate
significant advertising revenues will also depend on, among other things, our
ability to provide advertisers with a large base of users possessing demographic
characteristics attractive to advertisers as well as our ability to develop or
acquire effective advertising delivery and measurement systems.

       The process of managing advertising within large, high-traffic Web sites
such as ours is an increasingly important and complex task. Any extended failure
of, or material difficulties encountered in connection with, our advertising
management system may expose us to "make good" on obligations with


                                       14
<PAGE>

our advertisers, which, by decreasing saleable advertising inventory would
reduce revenues and have a material adverse effect on our business, results of
operations and financial condition. We license our advertising sales and
management system from DoubleClick Inc. Any replacement of this system could
disrupt our ability to manage our advertising operations for a period of time.
In addition, to the extent that we encounter system failures or material
difficulties in the operation of this system, we could be unable to deliver
banner advertisements and sponsorships through our Web site.

         As part of our business strategy, we review acquisition prospects that
would complement our existing business or enhance our technological capabilities
such as our recently completed acquisition of Resounding Technology. Future
acquisitions by us could result in potentially dilutive issuances of equity
securities, large and immediate write-offs, the incurrence of debt and
contingent liabilities or amortization expenses related to goodwill and other
intangible assets, any of which could materially and adversely affect our
results of operations. Furthermore, acquisitions entail numerous risks and
uncertainties, including difficulties in the assimilation of operations,
personnel, technologies, products and the information systems of the acquired
companies, diversion of management's attention from other business concerns,
risks of entering geographic and business markets in which we have no or limited
prior experience and potential loss of key employees and customers of acquired
organizations. Other risks associated with acquisitions include those relating
to the correct assessment of the relative percentages of in-process research and
development expense which can be immediately written off as compared to the
amount which must be amortized over the appropriate life of the asset, the
failure to successfully develop and integrate acquired in-process technology
resulting in the impairment of amounts capitalized as intangible assets,
unanticipated expenses related to technology integration and the maintenance of
uniform standards, controls, procedures and policies. The Company may not be
successful in addressing these risks or any other problems encountered with such
acquisitions.

      Our future success depends in large part upon our ability to aggregate and
deliver compelling content over the Internet. If we fail to aggregate and
deliver compelling third-party content to our users, Web traffic to our site
might decrease and, as a result, advertising revenue might decrease. This could
have a material adverse effect on our business, results of operations and
financial condition. Although we create some of our own content such as poker
and chess, we also rely on third-party content providers, such as game
developers, for entertaining content. Our ability to aggregate and deliver
compelling content provided by third parties may be adversely impacted by a
number of factors, including the following: third-parties may increase the price
of the content they provide, many of our third-party content providers compete
with us for members and advertising and may decide not to provide us with
content, our contracts with third-party content providers are usually short-term
and may be canceled if we do not fulfill our obligations and our competitors and
many of our third-party content providers provide content that is similar or the
same as our content and may do so at a lower cost.

       The performance of our server and networking hardware and software
infrastructure is critical to our business and reputation and our ability to
attract Web users, advertisers, new members, technology partners and commerce
partners to use our Company's Websites and hosting services. If system failures
were sustained or repeated, our advertising and hosting revenues, our reputation
and the attractiveness of our brand name could be impaired. Because we have
incorporated third-party software into our systems and we depend upon Internet
service providers to provide consumers with access to our products and services,
we are limited in our ability to prevent system failures. We have sustained
system failures for significant periods of time and may experience similar
failures in the future. Users have also occasionally experienced difficulties
due to system failures unrelated to our systems. These system failures caused an
interruption in our Live Community services resulting in less traffic.

       Despite the implementation of security measures, our networks may be
vulnerable to unauthorized and illegal access, computer viruses and other
disruptive problems. Eliminating computer viruses and alleviating other security
problems may require interruptions, delays or cessation of service to users
accessing our Web sites, which could have a material adverse effect on our
business, results of operations and financial condition. A party who is able to
circumvent security measures could misappropriate proprietary information or
cause interruptions in our Internet operations. Internet service providers and
online service providers have in the past experienced and may in the future
experience, interruptions in


                                       15
<PAGE>

service as a result of the accidental or intentional actions of Internet users,
current and former employees or others. We may be required to expend significant
capital or other resources to protect against the threat of security breaches or
to alleviate problems caused by breaches. Although we intend to continue to
implement industry-standard security measures, we cannot be certain that
measures implemented by us will not be circumvented in the future.

      Our future success depends upon our ability to enhance our current
products and services and to develop and introduce new products and services
that will achieve market acceptance. If we do not adequately respond to the need
to develop and introduce new products or services, then our business, operating
results and financial condition will be adversely affected. The market for our
products is characterized by: rapid technological advances, evolving standards
in the Internet, communications and software markets, changes in customer
requirements and frequent new product and service introductions and
enhancements. We cannot be certain that we will be successful at integrating new
technology into the Live Communities and our HearMe Technology Products on a
timely basis. In addition, the integration of new technology may degrade the
responsiveness and speed of the Live Communities and our HearMe Technology
Products and we cannot be certain that, once integrated, the new technology will
function as expected. Major product enhancements and new products and services
often require long development and testing periods to achieve market acceptance.
In addition, our software products are complex and, despite vigorous testing and
quality control procedures, may contain undetected errors or "bugs" when first
introduced or updated. Any inability to timely deliver quality products and
services could have a material adverse effect on our business, results of
operations and financial condition.

       We currently sell the vast majority of our HearMe Technology Products and
services through our internal sales staff. If demand for our products and
services increases, however, we will need to enter into reseller arrangements
with Web development firms, enterprise applications resellers and OEM partners
to distribute our products and technologies. If we do not adequately develop and
maintain a network of resellers and OEMs, our business, results of operations
and financial condition could be adversely impacted. Resellers and OEMs
frequently have exclusive sales territories pursuant to individually negotiated
contracts, which may limit our ability to build and expand our network of
resellers and OEMs. In addition, some resellers and OEMs may offer products of
one or more of our competitors and they may emphasize our competitors' products
at the expense of our products.

       Also inherent in our business are additional risks, which include, but
are not limited to: competition in the market for Internet users and for Live
Community technology and services; our ability to successfully manage our
growth, our ability to hire and retain personnel, our ability to protect our
proprietary software and intellectual property and patent, product liability and
other litigation. In addition, potential new government regulations could have
an adverse effect on our ability to target product offerings and attract
advertisers and would have a material adverse effect on our business, results of
operations and financial condition.

ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK

       The Company is exposed to the impact of interest rate changes and changes
in the market values of its investments. To date all of the Company's contracts
have been denominated in U.S. dollars and have not been subject to currency
risks.

INTEREST RATE RISK

       The Company's exposure to market rate risk for changes in interest rates
relates primarily to the Company's investment portfolio. The Company has not
used derivative financial instruments in its investment portfolio. The Company
invests its excess cash in debt instruments of the U. S. Government and its
agencies and in high-quality corporate issuers and, by policy, limits the amount
of credit exposure to any one issuer. The Company protects and preserves its
invested funds by limiting default, market and reinvestment risk.

       Investments in both fixed rate and floating rate interest earning
instruments carry a degree of interest rate risk. Fixed rate securities may have
their fair market value adversely impacted due to a rise in the


                                       16
<PAGE>

interest rates, while floating rate securities may produce less income then
expected if interest rates fall. Due in part to these factors, the Company's
future investment income may fall short of expectations due to changes in
interest rates or the Company may suffer losses in principal if forced to sell
securities which have declined in market value due to changes in interest rates.

PART II: OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     The Company has filed a patent infringement suit against Lipstream
Networks, Inc. and Lipstream Networks, Inc., dba Delaware Lipstream Networks,
Inc. in the United States District Court, Northern District of California, San
Jose Division. On October 13, 1998, the Company was issued United States Patent
No. 5,822,523, entitled "Server-Group Messaging System for Interactive
Applications". On January 26, 2000 the Company moved to amend its patent
infringement suit against Lipstream Networks, Inc. and Lipstream Networks, Inc.,
dba Delaware Lipstream Networks, Inc. to include the Company's United States
Patent No. 6,018,766 entitled "Server-Group Messaging System for Interactive
Applications". The action by the Company alleges that Lipstream infringes these
patents through the sale and licensing of its products. The Company is seeking a
court order to permanently enjoin Lipstream from further sale or licensing of
infringing products and is also seeking to recover damages, attorneys fees and
costs.

       In addition, from time to time we have been and expect to continue to be,
subject to legal proceedings and claims by third parties in the ordinary course
of business, including claims of alleged infringement of third-party trademarks
and other intellectual property rights against us or our licensees. Third party
claims like these, even if not meritorious, could result in the expenditure of
significant financial and managerial resources and could materially and
adversely affect our business, financial condition and results of operations.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

     (c) Recent Sales of Unregistered Securities.

         None

      (d) Use of Proceeds from Sales of Registered Securities.

          On May 4, 1999, the Company completed an initial public offering of
its Common Stock, $0.00005 par value. The managing underwriters in the offering
were BancBoston Robertson Stephens, Thomas Weisel Partners LLC, Warburg Dillon
Read LLC and Wit Capital Corporation (the "Underwriters"). The shares of Common
Stock sold in the offering were registered under the Securities Act of 1933, as
amended, on a Registration Statement on Form S-1 (the "Registration Statement")
(Reg. No. 333-72437) that was declared effective by the SEC on April 28, 1999.
The offering commenced on April 29, 1999, on which date, 3,900,000 shares of
Common Stock registered under the Registration Statement were sold at a price of
$18.00 per share. The Underwriters also exercised an overallotment option of
585,000 shares which closed on June 2, 1999. All 585,000 overallotment shares
were sold at a price of $18.00 per share. The aggregate price of the offering
amount registered and sold was $80,730,000. In connection with the offering, the
Company paid an aggregate of $5,651,100 in underwriting discounts and
commissions to the Underwriters. In addition, the following table sets forth the
other material expenses incurred in connection with the offering.

                                                                  AMOUNT PAID
                                                                  -----------

Securities and Exchange Commission registration fee               $50,000
NASD filing fee                                                     5,500
NASDAQ National Market listing fee                                 95,000
Printing and engraving expenses                                   245,000


                                       17
<PAGE>


Legal fees and expenses                                           361,500
Accounting fees and expenses                                      189,700
Blue Sky qualification fees and expenses                            3,000
Transfer Agent and Registrar fees                                   5,500
Miscellaneous fees and expenses                                   233,800
                                                               ----------
Total                                                          $1,189,000
                                                               ==========

         After deducting the underwriting discounts and commissions and the
offering expenses described above, the Company received net proceeds from the
offering of approximately $73,900,000. The Company has used the net proceeds
from its initial public offering of Common Stock to invest in interest bearing
investment grade instruments and to fund the general operations of the Company.
In addition, the Company currently expects to use the net proceeds primarily for
working capital and general corporate purposes, including approximately $5.0
million for funding product development and approximately $5.0 million for
expanding its sales and marketing organization. In addition, the Company may use
a portion of the net proceeds for further development of its product lines
through acquisitions of products, technologies and businesses. None of the
Company's net proceeds of the offering were paid directly or indirectly to any
director, officer, general partner of the Company or their associates, persons
owning 10% or more of any class of equity securities of the Company, or an
affiliate of the Company.

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) Exhibits

       EXHIBIT
       NUMBER                                  DESCRIPTION
       -------                                 -----------
        27.1                                   Financial Data Schedule

     (b) Reports on Form 8-K

     On April 18, 2000 the company filed a report on Form 8-K dated April 3,
         2000 with respect to Item 4 thereunder.
     On May 5, 2000 the company filed a report on Form 8-K/A dated April 3, 2000
         with respect to Item 4 thereunder.


                                       18
<PAGE>


     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.

 HEARME

   By:  /s/ LINDA R. PALMOR                                  Date: May 12, 2000
         ------------------------------------
        Linda R. Palmor
        Chief Financial Officer
       (Principal Accounting and Financial Officer)


                                       19