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

                                    FORM 10-Q
(Mark One)
             [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                  THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
                   QUARTERLY PERIOD ENDED JUNE 30, 2000

                                       OR

            [  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                  OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
                   TRANSITION PERIOD FROM __________ TO ___________

                         Commission File Number 0-26516

                                 EUPHONIX, INC.
             (Exact name of registrant as specified in its charter)

         California                                           77-0189481
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                             Identification No.)

                     220 Portage Avenue, Palo Alto, CA 94306
                   (Address of principal executives, zip code)

                                 (650) 855-0400
              (Registrant's telephone number, including area code)

         Indicate by check mark whether the registrant has filed (1) all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                   Yes         X                      No
                         ------------                     -----------


The number of shares outstanding of the registrant's common stock as of June 30,
2000 was 12,154,000 ($0.001 par value).


<PAGE>



                                 EUPHONIX, INC.

                                    FORM 10-Q
                                TABLE OF CONTENTS


                                                                        Page
PART I.  FINANCIAL INFORMATION

ITEM 1.  Consolidated Financial Statements:

         Consolidated Balance Sheets as of
          June 30, 2000 and December 31, 1999..............................3

         Consolidated Statements of Operations for the
          three and six months ended June 30, 2000 and 1999................4

         Consolidated Statements of Cash Flows
          for the six months ended June 30, 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


PART II. OTHER INFORMATION

ITEM 4.  Submission of Matters to a Vote of Security Holders..............16

ITEM 6.  Exhibits and Reports on Form 8-K.................................16

Signatures................................................................17





                                       2
<PAGE>





PART I.           FINANCIAL INFORMATION

Item 1.           CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S>                                                     <C>       <C>

                                 EUPHONIX, INC.
                           CONSOLIDATED BALANCE SHEETS
                        (in thousands, except share data)
                                   (unaudited)

                                                          June 30,  December 31,
                                                            2000       1999
                                                            ----       ----

                              ASSETS
   CURRENT ASSETS:
    Cash and cash equivalents............................$   1,558   $     838
    Accounts receivable, (net of allowance for doubtful
     accounts of $141 in 2000 and $112 in 1999)...........   1,504       2,354
    Inventories...........................................   6,583       6,964
    Prepaid expenses and other current assets.............     235         174
                                                          ---------- ----------
   Total current assets...................................   9,880      10,330

   Property and equipment, net............................   1,198       1,881
   Deposits and other assets..............................     729          89
                                                          ---------- ----------
    Total assets..........................................$ 11,807   $  12,300
                                                          ========== ==========

               LIABILITIES AND SHAREHOLDERS' EQUITY
   CURRENT LIABILITIES:
    Accounts payable......................................$  1,088   $   2,007
    Accrued liabilities...................................     821       1,090
    Customer deposits.....................................     524         240
                                                          ---------- ----------
   Total current liabilities..............................   2,433       3,337

   Convertible notes payable..............................   4,612       2,166
                                                          ---------- ----------
    Total liabilities.....................................   7,045       5,503
                                                          ---------- ----------
   Contingencies (Note 3)

   SHAREHOLDERS' EQUITY:
   Preferred stock, $0.001 par value: 2,000,000 authorized
     shares, none issued and outstanding..................    ----        ----
   Common stock, $0.001 par value: 20,000,000 authorized
     shares, 12,154,000 and 11,591,000 shares issued and
     outstanding in 2000 and 1999, respectively...........      12          12
   Additional paid-in capital.............................  24,001      21,402
   Accumulated other comprehensive income.................      40          42
   Accumulated deficit.................................... (19,291)    (14,659)
                                                          ---------- ----------
   Total shareholders' equity.............................   4,672       6,797
                                                          ---------- ----------
    Total liabilities and shareholders' equity............$ 11,807   $  12,300
                                                          ========== ==========
</TABLE>

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


                                       3
<PAGE>
<TABLE>
<CAPTION>
<S>                                   <C>       <C>         <C>        <C>

                                 EUPHONIX, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (in thousands, except per share amounts)
                                   (unaudited)


                                         Three Months Ended    Six Months Ended
                                             June 30,              June 30,
                                          2000      1999        2000      1999
                                          ----      ----        ----      ----
Net revenues...........................$  4,241  $  2,861    $  7,076  $  5,021

Cost of revenues.......................   2,753     1,828       4,828     3,590
                                          -----     -----       -----     -----
Gross margin...........................   1,488     1,033       2,248     1,431
                                          -----     -----       -----     -----

Operating expenses:
  Research and development.............     847     1,143       1,757     2,368
  Sales and marketing..................   1,414     1,437       2,706     2,666
  General and administrative...........     566       121         925       661
                                          -----     -----       -----     -----
Total operating expenses...............   2,827     2,701       5,388     5,695
                                          -----     -----       -----     -----

Operating loss.........................  (1,339)   (1,668)     (3,140)   (4,264)

Interest and other income..............      40      ----          41        10
Interest expense and other charges.....    (101)      (27)     (1,499)      (24)
                                          ------    -----       -----     -----

Loss before equity in net loss of investee(1,400)  (1,695)     (4,598)   (4,278)
Equity in net loss of investee.........      (34)    ----         (34)     ----
                                          ------    -----       -----     -----
Net loss...............................$  (1,434) $(1,695)   $ (4,632)  $(4,278)
                                          =======  =======     =======   =======

Basic and diluted net loss per share...$   (0.12) $ (0.21)   $  (0.39)  $ (0.55)
                                          =======  =======     =======   =======

Shares used in computing
 basic and diluted net loss per share. 12,021,111 7,956,508 11,869,837 7,772,786
                                       ========== ========= ========== =========

</TABLE>

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




                                       4
<PAGE>

<TABLE>
<CAPTION>
<S>                                                       <C>        <C>

                                EUPHONIX, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)
                                                               Six Months Ended
                                                                   June 30,
                                                               2000       1999
                                                               ----       ----

Cash flows from operating activities:
------------------------------------
Net loss..................................................  $ (4,632)  $ (4,278)
                                                            ---------  ---------
Adjustments to reconcile net loss to net cash used in
operating activities:
  Depreciation and amortization...........................       317        286
  Write-off of property and equipment.....................        30        ---
  Allowance for doubtful accounts.........................        29        (99)
  Beneficial conversion feature on convertible notes payable   1,279        ---
  Deferred compensation amortization......................        58         45
  Transfer of demonstration equipment to inventory........       253        ---
  Transfer of property and equipment to investee..........       152        ---
  Changes in assets and liabilities:
    Accounts receivable...................................       821        180
    Inventory.............................................       381       (715)
    Prepaid expenses and other assets.....................      (343)      (170)
    Accounts payable......................................      (919)       205
    Accrued liabilities...................................      (124)      (343)
    Customer deposits.....................................       284        483
                                                            ---------   --------
Total adjustments.........................................     2,218       (128)
                                                            ---------   --------

Net cash used in operating activities.....................    (2,414)    (4,406)
                                                            ---------    -------

Cash flows from investing activities:
------------------------------------
Proceeds from sales of available-for-sale securities......       ---        601
Purchase of property and equipment........................       (68)      (584)
                                                            ----------   -------
Net cash (used in) provided by investing activities.......       (68)        17
                                                            ----------   -------

Cash flows from financing activities:
------------------------------------
Proceeds from issuance of convertible notes...............      2,300     2,000
Proceeds from sale of common stock........................        800     1,304
Proceeds from exercise of stock options...................        102       ---
                                                            -----------  -------
Net cash provided by financing............................      3,202     3,304
                                                            -----------  -------

Net  increase (decrease) in cash and cash equivalents.....        720    (1,085)
Cash and cash equivalents at beginning of period..........        838     1,637
                                                            -----------  -------
Cash and cash equivalents at end of period................  $   1,558  $    552
                                                            =========== ========

</TABLE>

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



                                       5
<PAGE>



                                 EUPHONIX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


1.       The Company and Summary of Significant Accounting Policies

         The Company

         Euphonix,  Inc. (the "Company") was incorporated on July 6, 1988 in the
state of California.  Euphonix  develops,  manufactures  and supports  networked
digital audio systems for music, film and TV post production,  broadcast,  sound
reinforcement and multimedia applications.

         Basis of Presentation

         The accompanying  unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q. 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 only of normal recurring  adjustments)
considered  necessary  for a fair  presentation  have been  included.  Operating
results  for the  six-month  period  ended  June 30,  2000  are not  necessarily
indicative  of the  results  that may be  expected  for the entire  year  ending
December 31, 2000.

         For further information,  refer to the audited financial statements and
footnotes  thereto  included in the Company's annual report on Form 10-K for the
year ended December 31, 1999.

         Recently Issued Accounting Pronouncements

         In June 1998, the Financial Accounting Standards Board issued Statement
of  Financial   Accounting   Standards  No.  133,   "Accounting  for  Derivative
Instruments  and  Hedging  Activities" ("SFAS  133"),  which is  required to be
adopted in years  beginning after June 15, 2000. The adoption of SFAS 133 is not
expected to materially  impact the Company's  results of  operations,  financial
position or cash flows.

         In  December  1999,  the SEC staff  issued  Staff  Accounting  Bulletin
("SAB") No. 101,  "Revenue  Recognition." The SEC staff addresses several issues
in SAB No.  101,  including  the timing for  recognizing  revenue  derived  from
selling arrangements that involve contractual customer acceptance provisions and
installation  of the product  occurs after  shipment and transfer of title.  The
Company's  existing revenue  recognition  policy is to recognize  revenue at the
time the customer takes title to the product, generally at the time of shipment,
because the Company has routinely met its installation  obligations and obtained
customer acceptance. Applying the requirements of SAB No. 101 to the present
selling arrangements used by the Company  for the  sale of  equipment  may  re-
quire  a  change  in the  Company's accounting policy for revenue recognition
and the deferral of the recognition of revenue from such equipment sales until
installation is complete and accepted by the  customer.  The effect of such a
change, if any, must be  recognized  as a cumulative  effect of a change in
accounting no later than the Company's fourth quarter of its fiscal year ending
on December 31, 2000. The Company is currently evaluating the impact.



                                       6
<PAGE>





                                 EUPHONIX, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -(Continued)
                                   (unaudited)

        In March 2000, the Financial Accounting Standards Board issued Interpre-
tation No. 44 ("FIN 44") "Accounting for Certain Transactions Involving Stock
Compensation, an Interpretation of APB Opinion No. 25." FIN 44 clarifies the
application of Opinion No. 25 for (a) the definition of employee for purposes of
applying Opinion No. 25, (b) the criteria for determining whether a plan quali-
fies as a  noncompensatory  plan, (c) the accounting consequences of various
modifications to the terms of a previously fixed stock option or award,  and (d)
the  accounting  for an exchange of stock compensation awards in a business
combination. FIN 44 is effective July 1, 2000, but certain  conclusions cover
specific events that occur after either December 15, 1998, or January 12, 2000.
Management does not expect that the adoption of FIN 44 will have a material
effect on the financial statements.
<TABLE>
<CAPTION>
<S>                                                   <C>        <C>


2.     Balance Sheet Components (in thousands):
       (a) Inventories:

                                                         June 30,  December 31,
                                                         --------  -----------
                                                           2000        1999
                                                           ----        ----
           Raw materials...............................$   2,173   $   2,878
           Work-in-process.............................    2,391       1,494
           Finished goods..............................    2,019       2,592
                                                       ----------  -----------
                                                       $   6,583   $   6,964
                                                       ==========  ===========

(b)     Accrued liabilities:
                                                         June 30,  December 31,
                                                         --------  -----------
                                                           2000        1999
                                                           ----        ----
           Accrued compensation and related............$     318   $     429
           Accrued warranty............................       97         244
           Accrued commissions.........................      100          83
           Sales tax payable...........................       61          91
           Other.......................................      245         243
                                                       ----------  -----------
                                                       $     821   $   1,090
                                                       ==========  ===========
</TABLE>

(c)     Convertible notes payable:

On February  22,  2000,  the Company  executed  promissory  notes with  existing
investors under which the Company borrowed $1,500,000. The notes accrue interest
at 10% per annum with  principal and accrued  interest due at February 22, 2001.
The  assets of the  company  are  pledged  as  collateral.  The notes  contain a
conversion feature, to allow the holder to convert the note into common stock of
the Company at a rate of $2 17/32 per share. In addition this note provides that
upon conversion,  if such conversion  occurs, the Company will issue warrants to
purchase  1,185,185  shares of common stock at prices ranging from $3 to $5. The
warrants,  if issued,  will be  exercisable at any time and from time to time in
part or in full on or before  February  1, 2003.  At the date of issuance of the
note,  the quoted  market  price of the  Company's  common  stock was $2.531 per
share, resulting in a beneficial conversion feature in the amount of $1,279,000.



                                       7
<PAGE>


                                 EUPHONIX, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -(Continued)
                                  (unaudited)

The beneficial  conversion was recorded as a credit to equity and
a charge to interest expense at the time the notes were issued.

On April 14, 2000, the Company executed promissory notes with existing investors
under which the Company borrowed $800,000.  The notes accrue interest at 10% per
annum with principal and accrued  interest due at January 1, 2001. The assets of
the company are pledged as collateral.  The notes contain a conversion  feature,
which is subject to shareholder approval, and if approved, will allow the holder
to convert  the note into  common  stock of the  Company at a rate of $3 5/8 per
share. Shareholder approval had not been obtained as of June 30, 2000.

3.       Contingencies

        From time to time, the Company may have certain  contingent  liabilities
that  arise in the  ordinary  course of its  business  activities.  The  Company
accrues contingent liabilities when it is probable that future expenditures will
be made and such  expenditures  can be reasonably  estimated.  In the opinion of
management,  there are no pending  claims of which the  outcome is  expected  to
result in a material  adverse  effect in the  financial  position  or results of
operations of the Company.

4.       Joint Venture

         On  February  18,  2000,  the  Company  entered  into a  joint  venture
arrangement with Audio Exports George Neumann & Company Gmbh ("Audio  Exports").
The joint venture was formed by the  contribution by the Company of property and
equipment  with a net book value of  $297,000  to its wholly  owned  subsidiary,
Euphonix Europe.  Concurrently,  Audio Exports  contributed  $680,000 in cash in
exchange  for  common  stock  of  Euphonix  Europe,   representing  70%  of  the
outstanding  common stock of Euphonix  Europe after the  transaction.  The joint
venture  arrangement  included a Shareholder  Agreement  between the Company and
Audio  Exports and a  distribution  agreement  between the Company and  Euphonix
Europe.  In  addition,  on February  18, 2000,  the  President of Audio  Exports
purchased  240,000  shares of the  Company's  common  stock from the Company for
$300,000 in cash. The sale of the 240,000 shares was at a $360,000 discount from
the quoted market price of the Company's common stock on that date. The total of
the discount and the net book value of the property and equipment contributed of
$657,000  was  recorded  as  "Investment  in  Euphonix  Europe".  The  Company's
investment  and  ownership  interest in Euphonix  Europe  represents  30% of the
outstanding  shares of Euphonix  Europe,  and was accounted for using the equity
method  commencing  April 1,  2000,  the  effective  date of the  joint  venture
arrangement.  The  Company's  equity in the net loss of investee was $34,000 for
the three months ended June 30, 2000.

5.       Sale of Common Stock

      On June 1, 2000, the Company received $500,000 from the sale to existing
investors of 147,928 shares of common stock at $3.38 per share.



                                       8
<PAGE>

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

         This Quarterly Report on Form 10-Q contains forward-looking  statements
within the meaning of Section 27A of the  Securities Act of 1933 and Section 21E
of  the  Securities  Exchange  Act of  1934.  These  forward-looking  statements
represent the Company's  expectations  or beliefs  concerning  future events and
include  statements,  among  others,  concerning  sales of the  System 5 digital
console,  sales to significant  customers,  the development of new products, the
ability to gain market share in the music market segment,  the ability to retain
key suppliers and the  availability  of future capital by way of debt and equity
financing.  The  Company's  actual  results  may differ  significantly  from the
results discussed in the  forward-looking  statements.  Factors that might cause
such a  difference  include,  but are not limited  to,  those  discussed  in the
section entitled "Factors Affecting Future Operating Results."

Results of Operations

Net Revenues

          Net revenues  increased to $4.2 million in the second  quarter in 2000
up from $2.9 million in the second quarter of 1999,  representing an increase of
48.2%. The increase in the Company's net revenues for the second quarter of 2000
as  compared  to 1999,  resulted  primarily  from the sale of  System 5  digital
consoles  from 1 unit in the  second  quarter  of 1999 to 6 units in the  second
quarter of 2000.

         Net revenues  increased to $7.1 million in the first six months of 2000
up from $5.0 million in the first six months of 1999,  representing  an increase
of 41.0%.  The increase in the Company's net revenues in the first six months of
2000 as compared to 1999,  resulted  primarily from the sale of System 5 digital
consoles  from 1 unit in the first  six  months of 1999 to 10 units in the first
six months of 2000.

          Domestic  sales of the  Company's  products for the second  quarter of
both 2000 and 1999 were $2.3 million,  comprising  approximately 55.0% and 78.8%
of the  Company's  net  revenues  for  the  second  quarter  of 2000  and  1999,
respectively.  Domestic sales of the Company's products for the first six months
of 2000 and 1999 were $4.2 million and $3.3  million,  comprising  approximately
59.1% and 66.3% of the  Company's  net revenues for the first six months of 2000
and 1999, respectively.  Export sales were $1.9 million and $607,000, comprising
approximately  45.0% and 21.2% of the Company's  revenues for the second quarter
of 2000 and 1999, respectively.  Export sales were $2.9 million and $1.7 million
comprising approximately 41.0% and 33.7% of the Company's revenues for the first
six  months of 2000 and 1999,  respectively.  Export  sales as a percent  of net
revenues  increased  in the second  quarter  and first six months of 2000 due to
increased  sales in Asia Pacific and Canada,  as compared to the second  quarter
and first six months of 1999.

Gross Margin

          The Company's gross margin decreased to 35.1% in the second quarter of
2000 down from 36.1% in the second  quarter of 1999. For the first half of 2000,
gross margin was $2.2  million,  or 31.8% of net  revenues,  compared  with $1.4
million,  or 28.5% of net revenues,  for the first half of 1999. The decrease in
gross  margin for the second  quarter was due to a write off of  inventory.  The
increase in gross  margin in the first six months in 2000 was  primarily  due to
increased  sales of System 5, from 1 unit in 1999 to 10 units in the first  half
of 2000.


                                       9
<PAGE>

Research and Development Expenses

          Research and development  expenses decreased to $847,000 in the second
quarter of 2000, down 26.0% from $1.1 million in the second quarter of 1999. For
the first six months in 2000, research and development  expenses of $1.8 million
decreased  25.8%  from $2.4  million  in 1999.  The  decrease  in  research  and
development expenses in the second quarter and first six months of 2000 from the
corresponding  periods in 1999 was  primarily  due to the  reduction  of project
expenses  for the new R-1  Multitrack  Recorder  and the new  System  5  digital
console, and a reduction in personnel in the last quarter of 1999, as well as in
the first six months in 2000.

Sales and Marketing Expenses

         Sales and marketing expenses were $1.4 million in the second quarter of
both  2000 and 1999.  As a  percentage  of net  revenues,  sales  and  marketing
expenses  decreased  by 16.9% in the second  quarter of 2000 as  compared to the
second  quarter of 1999.  Sales and marketing  expenses were $2.7 million in the
first six months of both 2000 and 1999. As a percentage  of net revenues,  sales
and  marketing  expenses  decreased  by 14.9% in the first six months of 2000 as
compared with the first six months of 1999,  primarily due to increased revenues
in the first six months of 2000.

General and Administrative Expenses

          General  and  administrative  expenses  increased  to  $566,000 in the
second quarter of 2000 from $121,000 in the second quarter of 1999, representing
an increase of 367.8%. General and administrative expenses increased to $925,000
in the first six months of 2000 from  $661,000  in the first six months of 1999,
representing an increase of 40.0%.  The increase in the second quarter and first
six months of 2000 as compared with 1999 was  attributable  to a decrease in bad
debt expense due to a reversal of bad debt expense in the second quarter of 1999
and an increase in legal and professional fees in the first six months of 2000.

Interest expense and other charges

         Interest expense and other charges  increased to $101,000 in the second
quarter of 2000 from $27,000 in the second  quarter of 1999, due to the interest
expense on additional  convertible  notes  payable.  Interest  expense and other
charges  increased  to $1.5 million in the first six months of 2000 from $24,000
in the first six months of 1999,  due to the  beneficial  conversion  feature of
$1.3 million associated with the promissory notes issued February 22, 2000.

Equity in net loss in investee

         The  Company  recorded  a charge of  $34,000  for equity in net loss of
investee,  Euphonix  Europe,  in the second  quarter of 2000.  There was no such
charge in the second quarter of 1999.

Provision  for Income Taxes

           For the  first  six  months of 2000 and  1999,  the  Company  did not
recognize  the tax benefit of its  operating  losses.  Management  believes that
sufficient  uncertainty  exists  with regard to the  realizability  of these tax
assets such that a full valuation allowance is necessary.  These factors include
the  lack of a  significant  history  of  consistent  profits  and  the  lack of
carryback  capacity to realize these assets.  Based on this absence of objective
evidence,  management  is unable to assert  that it is more likely than not that
the Company will generate sufficient taxable income to realize the Company's net
deferred tax assets.


                                       10
<PAGE>

Liquidity and Capital Resources

         The Company has funded its  operations to date  primarily  through cash
flows from operations,  the private sale of equity  securities,  the issuance of
convertible  notes  payable and the  initial  public  offering  of Common  Stock
completed in September 1995.

         On  February  18,  2000,  the  Company  entered  into a  joint  venture
arrangement with Audio Exports George Neumann & Company Gmbh ("Audio  Exports").
The joint venture was formed by the  contribution by the Company of property and
equipment  with a net book value of  $297,000  to its wholly  owned  subsidiary,
Euphonix Europe.  Concurrently,  Audio Exports  contributed  $680,000 in cash in
exchange  for  common  stock  of  Euphonix  Europe,   representing  70%  of  the
outstanding  common stock of Euphonix  Europe after the  transaction.  The joint
venture  arrangement  included a Shareholder  Agreement  between the Company and
Audio  Exports and a  distribution  agreement  between the Company and  Euphonix
Europe.  In  addition,  on February  18, 2000,  the  President of Audio  Exports
purchased  240,000  shares of the  Company's  common  stock from the Company for
$300,000 in cash. The sale of the 240,000 shares was at a $360,000 discount from
the quoted market price of the Company's common stock on that date. The total of
the discount and the net book value of the property and equipment contributed of
$657,000  was  recorded  as  "Investment  in  Euphonix  Europe".  The  Company's
investment  and  ownership  interest in Euphonix  Europe  represents  30% of the
outstanding  shares of Euphonix  Europe,  and was accounted for using the equity
method as of April 1, 2000, the effective date of the joint venture arrangement.

        On February 22, 2000,  the Company  executed  promissory  notes with
existing investors under which the Company borrowed $1,500,000. The notes accrue
interest at 10% per annum with  principal  and accrued  interest due at February
22, 2001. The assets of the company are pledged as collateral. The notes contain
a conversion  feature, to allow the holder to convert the note into common stock
of the Company at a rate of $2 17/32 per share.  In addition  this note provides
that upon conversion, if such conversion occurs, the Company will issue warrants
to purchase  1,185,185  shares of common stock at prices  ranging from $3 to $5.
The warrants,  if issued,  will be exercisable at any time and from time to time
in part or in full on or before February 1, 2003. At the date of issuance of the
note,  the quoted  market  price of the  Company's  common  stock was $2.531 per
share, resulting in a beneficial conversion feature in the amount of $1,279,000.
The beneficial  conversion was recorded as a credit to equity and a charge to
interest expense at the time the notes were issued.

        On April 14, 2000, the Company executed promissory notes with existing
investors under which the Company borrowed  $800,000.  The notes accrue interest
at 10% per annum with principal and accrued interest due at January 1, 2001. The
assets of the Company are pledged as  collateral. The notes contain a conversion
feature,  which is subject to shareholder approval,  and if approved, will allow
the holder to convert the note into common  stock of the Company at a rate of
$3 5/8 per share. Shareholder approval had not been obtained as of June 30,
2000.

        On June 1, 2000,  the Company  received  $500,000 from the sale to
existing  investors of 147,928 shares of common stock at $3.38 per share.



                                       11
<PAGE>

         For the second quarter ended June 30, 2000,  cash and cash  equivalents
increased by $720,000 to approximately  $1.6 million.  Also, during this period,
working capital increased by $454,000 to approximately $7.4 million.

         The Company's  operating  activities  used cash of  approximately  $2.4
million  and $4.4  million  for the six  months  ended  June 30,  2000 and 1999,
respectively. Cash used in operating activities for 2000 was comprised primarily
of net loss and a beneficial conversion feature on notes payable, an increase in
prepaid  expenses and other assets, a decrease in accounts payable and other
accrued liabilities, offset partially by depreciation and  amortization,  an
increase in accounts  receivable,  inventory and customer deposits. Cash used in
operating activities for 1999 was comprised primarily of net loss and an
increase in inventories,  prepaid  expenses and other assets,  a decrease in
other accrued liabilities, offset partially by  depreciation and amortization,
an  increase  in  accounts  receivable,  an  increase in accounts payable,  and
customer deposits.

         The Company's  investing  activities  used cash of $68,000 and provided
cash of  $17,000  in the  first  six  months  ended  June  30,  2000  and  1999,
respectively.  In the first six  months of 2000,  $68,000  was used to  purchase
property  and  equipment.  In the first  six  months  of 1999 the  Company  used
$584,000 to purchase property and equipment and the Company received $601,000 in
proceeds from the sales of short term investments.

         The Company's  financing  activities  provided cash of $3.2 million and
$3.3 million in the first six months of 2000 and 1999, respectively. The Company
received  $2.3  million in  proceeds  from the  issuance of  convertible  notes,
$800,000  from the sale of common stock and $102,000  from the exercise of stock
options.  For the six months ended June 30, 1999,  proceeds from the issuance of
convertible  notes  provided  $2.0 million and proceeds  from the sale of common
stock provided $1.3 million.

         Management  intends  to  rely  upon  internally   generated  cashflows.
However, should there be a decline in revenues, the Company would either have to
cut expenses or go to outside  sources of  financing.  There can be no assurance
that outside sources of financing would be available to the Company.

Factors Affecting Future Operating Results

         You should  carefully  consider the risks described below before making
an investment decision. The risks and uncertainties  described below are not the
only ones facing us.  Additional risks and  uncertainties not presently known to
us or that we currently deem  immaterial may also impair the Company's  business
operations.  If  any  of the  following  risks  actually  occur,  the  Company's
business,  results of operations or cash flows could be adversely  affected.  In
these cases,  the trading price of our common stock could  decline,  and you may
lose all or part of your investment.

        Historically,  the Company has derived  virtually all of its revenues
from sales of its digitally  controlled  audio mixing console  system,  which is
based  upon its  hardware  platform.  The  Company  believes  that sales of this
system,  along with enhancements  thereof, and the R-1 recorder and new System 5
digital  console  will  continue  to  constitute  a  significant  portion of the
Company's  revenues.  It is expected that in the foreseeable  future,  a greater
portion  of the  Company's  revenue  will  come  from the new  System 5  digital
console.  Accordingly, any factor adversely affecting the Company's base system,
whether  technical,  competitive  or  otherwise,  could have a material  adverse
effect on the Company's business and results of operations.


                                       12
<PAGE>


       The Company has expended and will continue to expend  substantial funds
to introduce its new System 5 digital  console  around the world.  The Company's
ability to fund operations  through June 30, 2001 is dependent upon  achievement
of its  operating  plan.  If the Company did not attain its  operating  plan, it
would have to obtain additional financing or cut expenses.  The Company believes
that  additional  debt or  equity  financing  will be  available  from  existing
investors  and others.  However,  there can be no  assurance as to the terms and
conditions of any such  financing and no certainty that funds would be available
when needed. The inability to obtain additional  financing,  if needed, would be
likely to have a material adverse effect on the Company.  To the extent that any
future  financing  involves the sale of the  Company's  equity  securities,  the
Company's then existing shareholders could be substantially diluted.

      A limited  number of the Company's  system sales  typically  account for a
substantial  percentage  of  the  Company's  quarterly  revenue  because  of the
relatively  high average  sales price of such systems.  Moreover,  the Company's
expense  levels  are  based  in  part on its  expectations  of  future  revenue.
Therefore, if revenue is below expectations, the Company's operating results are
likely  to be  adversely  affected.  In  addition,  the  timing  of  revenue  is
influenced  by a number of other  factors,  including  the timing of  individual
orders and shipments,  industry trade shows,  seasonal customer buying patterns,
changes in product  development  and sales and  marketing  expenditures,  custom
financing arrangements, production limitations and international sales activity.
Because the Company's operating expenses are based on anticipated revenue levels
and a high  percentage of the  Company's  expenses are  relatively  fixed in the
short  term,  variations  in the timing of  recognition  of revenue  could cause
significant  fluctuations  in operating  results from quarter to quarter and may
result in unanticipated quarterly earnings shortfalls or losses.

      The  markets  for the  Company's  system  are  characterized  by  changing
technologies  and new product  introductions.  The Company's future success will
depend in part upon its  continued  ability  to  enhance  its base  system  with
features  including new software and hardware  add-ons and to develop or acquire
and  introduce  new  products  and  features  which meet new market  demands and
changing  customer  requirements  on a timely  basis.  The Company is  currently
designing  and  developing  new  products,  primarily in the areas of recording,
editing  and mixing  functions  of sound  production  as well as  digital  audio
processing and networking systems.  In addition,  there can be no assurance that
products  or  technologies  developed  by others  will not render the  Company's
products or technologies non-competitive or obsolete.

      Historically,  the Company's  primary market success has been in the music
segment of the professional  audio market. In order for the Company to grow, the
Company  believes that it must continue to gain market share in the music market
segment,  as well as in its other  targeted  markets.  There can be no assurance
that the Company will be able to compete  favorably in all market segments.  The
Company's inability to compete favorably could have a material adverse effect on
its business and results of operations.  The markets for the Company's  products
are intensely  competitive and characterized by significant  price  competition.
The Company believes that its ability to compete depends on elements both within
and  outside  its  control,  including  the  success  and timing of new  product
development  and  introduction  by the  Company  and  its  competitors,  product
performance  and price,  distribution,  availability of lease or other financing
alternatives, resale of used systems and customer support.


                                       13
<PAGE>

      Currently, the Company uses many sole or limited source suppliers, certain
of which are critical to the integrated  circuits included in the Company's base
system. Major delays or terminations in supplies of such components could have a
significant  adverse  effect on the Company's  timely  shipment of its products,
which in turn would  adversely  affect the  Company's  business  and  results of
operations.  The Company  also  relies on single  vendors to  manufacture  major
subassemblies for its products.  Any extended  interruption in the future supply
or increase in the cost of  subassemblies  manufactured  by its primary or other
third  party  vendors  could have a  material  adverse  effect on the  Company's
business and results of operations.

      In  addition,  as  different  electrical,  radiation  or  other  standards
applicable  to the Company's  products are adopted in  countries,  including the
United  States,  or groups of countries in which the Company sells its products,
the failure of the Company to modify its products, if necessary,  to comply with
such standards would likely have an adverse effect on the Company's business and
results of operations.

      The Company  generally relies on a combination of trade secret,  copyright
law and trademark law, contracts and technical measures to establish and protect
its proprietary  rights in its products and technologies.  However,  the Company
believes that such measures  provide only limited  protection of its proprietary
information,  and there is no assurance  that such  measures will be adequate to
prevent misappropriation. In addition, significant and protracted litigation may
be necessary to protect the Company's intellectual property rights, to determine
the scope of the  proprietary  rights of others or to defend  against  claims of
infringement.  There  can  be no  assurance  that  third-party  claims  alleging
infringement  will not be asserted  against the Company in the future.  Any such
claims  could have a  material  adverse  effect on the  Company's  business  and
results of operations.

       The  Company's  success  depends,  in part,  on its ability to retain key
management  and in  addition,  the  Company's  ability to manage any growth will
require it to  continue to improve and expand its  management,  operational  and
financial systems and controls.  If the Company's management is unable to manage
growth  effectively,  its business and results of  operations  will be adversely
affected.

      In December 1999, the SEC staff issued Staff  Accounting  Bulletin ("SAB")
No. 101,  "Revenue  Recognition."  The SEC staff addresses several issues in SAB
No. 101,  including  the timing for  recognizing  revenue  derived  from selling
arrangements  that  involve  contractual  customer  acceptance   provisions  and
installation  of the product  occurs after  shipment and transfer of title.  The
Company's  existing revenue  recognition  policy is to recognize  revenue at the
time the customer takes title to the product, generally at the time of shipment,
because the Company has routinely met its installation  obligations and obtained
customer acceptance. Applying the requirements of SAB No. 101 to the present
selling arrangements used by the Company  for the  sale of  equipment  may
require  a  change  in the  Company's accounting policy for revenue recognition
and the deferral of the recognition of revenue from such equipment sales until
installation is complete and accepted by the  customer. The effect of such a
change,  if any,  must be  recognized  as a cumulative  effect of a change in
accounting no later than the Company's fourth quarter of its fiscal year ending
on December 31, 2000. The Company is currently evaluating the impact.


                                       14
<PAGE>

      As a result  of these and  other  factors,  the  Company  has  experienced
significant  quarterly  fluctuations in operating  results and anticipates  that
these  fluctuations  will continue in future periods.  There can be no assurance
that  the  Company  will  be   successful  in   maintaining   or  improving  its
profitability  or avoiding  losses in any future period.  Further,  it is likely
that in some future period the Company's net revenues or operating  results will
be below the expectations of public market securities analysts and investors. In
such event,  the price of the Company's  Common Stock would likely be materially
adversely affected.



























                                       15
<PAGE>


PART II.  OTHER INFORMATION

Item 4:  Submission of Matters to a Vote of Security Holders:
         ---------------------------------------------------
         The Company's Annual Meeting of Shareholders was held on June 26, 2000.
The results of the voting were as follows:
<TABLE>
<CAPTION>
<S>                                      <C>                    <C>

         Proposal 1:  Election of the Board of Directors of the Company.

                  Nominee                   Votes For         Votes Withheld

                  James Dobbie              8,812,825               24,920
                  Stephen D. Jackson        8,815,375               22,370
                  Dieter W. Meier           8,815,175               22,570

         Proposal 2:  Approval of the Company's 1999 Stock Plan.

                          Votes For:                6,610,361
                          Votes Against:              106,980
                          Votes Abstaining:             7,050
                          Broker Non-Vote:          5,151,541

         Proposal 3:  Approval of Conversions of the Secured Promissory Note.

                          Votes For:                6,639,483
                          Votes Against:               81,008
                          Votes Abstaining:             3,900
                          Broker Non-Vote:          5,151,541

         Proposal 4:  Ratification of PricewaterhouseCoopers LLP as the
                      Company's independent auditors for the fiscal year
                      ending December 31, 2000.

                          Votes For:                8,824,675
                          Votes Against:               10,370
                          Votes Abstaining:             2,700
                          Broker Non-Vote:          3,038,187
</TABLE>

Item 6:  Exhibits and Reports on Form 8-K/A

         (a) Exhibits.

                Exhibit 27 - Financial Data Schedule (page 18)

                The  exhibit  listed  on the  accompanying  index  immediately
                following the signature page is filed as part of this report.

         (b)    Reports on Form 8-K
                None.


                                       16
<PAGE>


SIGNATURES


Pursuant to the  requirements  of the  Securities  and Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



Euphonix, Inc.






Date:    August 10, 2000                           By: /s/ JAMES DOBBIE
         ------------------                            ----------------
                                                   James Dobbie, Chief Executive
                                                   Officer
























                                       17
<PAGE>