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 JUNE 30, 2001

                                       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: 000-29059

                                 ELOQUENT, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

            DELAWARE                                             94-3221868
(STATE OR OTHER JURISDICTION OF                                (IRS EMPLOYER
 INCORPORATION OR ORGANIZATION)                              IDENTIFICATION NO.)

                      2000 ALAMEDA DE LAS PULGAS, SUITE 100
                           SAN MATEO, CALIFORNIA 94403
                                 (650) 294-6500

    (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,  $0.001 par
value, was 18,533,675 at July 31, 2001.
<PAGE>
                                 ELOQUENT, INC.

                                      INDEX

                                                                            PAGE
                                                                            ----
PART I:   FINANCIAL INFORMATION

Item 1.   Financial Statements

          Condensed Balance Sheets as of June 30, 2001
          and December 31, 2000.............................................   3

          Condensed Statements of Operations for the Three
          and Six Months Ended June 30, 2001 and 2000.......................   4

          Condensed Statements of Cash Flows for the Six Months Ended
          June 30, 2001 and 2000............................................   5

          Notes to Condensed Financial Statements...........................   6

Item 2.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations.........................................  10

Item 3.   Quantitative and Qualitative Disclosures about Market Risk........  21

PART II:  OTHER INFORMATION

Item 1.   Legal Proceedings ................................................  21

Item 2.   Changes in Securities and Use of Proceeds.........................  22

Item 4.   Submission of Matters to a Vote of Security Holders ..............  22

Item 5.   Other Information ................................................  22

Item 6.   Exhibits and Reports on Form 8-K .................................  22

Signature ..................................................................  24

                                        2
<PAGE>
                          PART I: FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS
                                 ELOQUENT, INC.
                            CONDENSED BALANCE SHEETS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)


<TABLE>
<CAPTION>
                                                                JUNE 30,     DECEMBER 31,
                                                                 2001           2000
                                                               ---------      ---------
ASSETS                                                        (unaudited)
<S>                                                            <C>            <C>
Current assets:
  Cash and cash equivalents                                    $   5,658      $   4,519
  Short-term investments                                          26,615         35,937
  Accounts receivable, net of allowances for
    doubtful accounts of $599 for both periods                       898          2,768
  Deferred production costs                                           41            147
  Prepaid expenses                                                   557            223
                                                               ---------      ---------
            Total current assets                                  33,769         43,594
Property and equipment, net                                        2,649          3,348
Other assets                                                       1,051          2,651
                                                               ---------      ---------
            Total assets                                       $  37,469      $  49,593
                                                               =========      =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable and other liabilities                       $   4,449      $   7,726
  Capital lease obligation - current portion                         423            709
  Deferred revenue                                                   835          1,128
                                                               ---------      ---------
            Total current liabilities                              5,707          9,563
Capital lease obligation, net of current portion                      74            230
Long-term liabilities                                              1,700             --

Commitments and contingencies                                         --             --

Stockholders' equity:
Preferred stock, $0.001 par value; 10,000 shares
  authorized and no shares outstanding                                --             --
Common stock, $0.001 par value; 40,000 shares authorized;
  18,288 and 17,837 shares outstanding, respectively                  18             18
Additional paid-in capital                                       128,426        128,150
Unearned stock-based compensation                                 (1,469)        (2,462)
Other comprehensive income: unrealized gain on investments           170            193
Accumulated deficit                                              (96,998)       (86,099)
Treasury stock, at cost (128 and no shares, respectively)           (159)            --
                                                               ---------      ---------
            Total stockholders' equity                            29,988         39,800
                                                               ---------      ---------
            Total liabilities and stockholders' equity         $  37,469      $  49,593
                                                               =========      =========
</TABLE>

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

                                        3
<PAGE>
                                 ELOQUENT, INC.
                       CONDENSED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                              THREE MONTHS ENDED JUNE 30,    SIX MONTHS ENDED JUNE 30,
                                              ---------------------------    -------------------------
                                                  2001          2000            2001          2000
                                                --------      --------        --------      --------
<S>                                             <C>           <C>             <C>           <C>
Revenue:
  Software licenses and maintenance             $    642      $  2,113        $  1,169      $  3,617
  Content production services                        914         2,664           2,377         5,260
  Professional services                               54           430              69           956
                                                --------      --------        --------      --------
          Total revenue                            1,610         5,207           3,615         9,833
                                                --------      --------        --------      --------
Cost of revenue:
  Software licenses and maintenance                  406           277             773           704
  Content production services                        729         1,575           1,504         2,716
  Professional services                               72           595             242         1,238
  Stock-based compensation                           (30)           76             (51)          174
                                                --------      --------        --------      --------
          Total cost of revenue                    1,177         2,523           2,468         4,832
                                                --------      --------        --------      --------
  Gross margin                                       433         2,684           1,147         5,001
                                                --------      --------        --------      --------
Operating expenses:
  Research and development:
    Other research and development                 1,405         1,267           2,964         2,157
    Stock-based compensation                         135           149             200           436
                                                --------      --------        --------      --------
                                                   1,540         1,416           3,164         2,593
                                                --------      --------        --------      --------
  Sales and marketing:
    Other sales and marketing                      2,514         5,473           4,801         9,503
    Stock-based compensation                          --           452              25         1,032
                                                --------      --------        --------      --------
                                                   2,514         5,925           4,826        10,535
                                                --------      --------        --------      --------
  General and administrative:
    Other general and administrative               1,097         1,257           2,191         2,201
    Stock-based compensation                         333         1,349             766         2,866
                                                --------      --------        --------      --------
                                                   1,430         2,606           2,957         5,067
                                                --------      --------        --------      --------
  Restructuring expense:
    Other restructuring expense                    1,400            --           1,400            --
    Stock-based compensation                          --            --              --            --
                                                --------      --------        --------      --------
                                                   1,400            --           1,400            --
                                                --------      --------        --------      --------

          Total operating expenses                 6,884         9,947          12,347        18,195
                                                --------      --------        --------      --------
Loss from operations                              (6,451)       (7,263)        (11,200)      (13,194)
Interest expense and other charges                   (15)         (190)            (75)       (1,239)
Impairment of investment                            (759)           --            (759)           --
Interest and other income                            532           948           1,135         1,424
                                                --------      --------        --------      --------
Net loss before extraordinary item                (6,693)       (6,505)        (10,899)      (13,009)
Extraordinary loss on extinguishment of debt          --            --              --        (7,453)
                                                --------      --------        --------      --------
Net loss                                        $ (6,693)     $ (6,505)       $(10,899)     $(20,462)
                                                ========      ========        ========      ========
Basic and diluted net loss per share:
  Net loss before extraordinary item            $  (0.37)     $  (0.39)       $  (0.61)     $  (0.98)
  Extraordinary loss                                  --            --              --         (0.56)
                                                --------      --------        --------      --------
  Net loss                                      $  (0.37)     $  (0.39)       $  (0.61)     $  (1.54)
                                                ========      ========        ========      ========
Shares used in computing basic and diluted
  net loss per share                              17,936        16,831          17,860        13,265
                                                ========      ========        ========      ========
</TABLE>

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

                                        4
<PAGE>
                                 ELOQUENT, INC.
                       CONDENSED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                    SIX MONTHS ENDED
                                                                                        JUNE 30,
                                                                                  --------------------
                                                                                    2001        2000
                                                                                  --------    --------
<S>                                                                               <C>         <C>
Cash flows from operating activities:
  Net loss                                                                        $(10,899)   $(20,462)
  Adjustments to reconcile net loss to net cash used in operating activities:
    Extraordinary loss on extinguishment of debt                                        --       7,453
    Depreciation and amortization                                                      902         715
    Amortization of discount on long-term notes payable                                 --         478
    Amortization of deferred charges                                                    14         196
    Amortization of stock-based compensation                                           940       4,508
    Impairment of equity investment - eSpoc Inc.                                       759          --
    Loss on equity investment - Rebop Media, Inc.                                      796          --
    Changes in operating assets and liabilities:
      Accounts receivable                                                            1,870      (2,499)
      Deferred production cost                                                         106         (83)
      Prepaid expenses                                                                (334)       (124)
      Other assets                                                                      31          80
      Accounts payable and other liabilities                                        (1,577)       (125)
      Deferred revenue                                                                (293)        754
                                                                                  --------    --------
          Net cash used in operating activities                                     (7,685)     (9,109)
                                                                                  --------    --------
Cash flows from investing activities:
  Net proceeds from (purchases of) short-term investment                             9,299     (27,772)
  Purchase of long-term investment                                                      --      (3,000)
  Acquisition of property and equipment                                               (203)     (1,612)
                                                                                  --------    --------
          Net cash provided by (used in) investment activities                       9,096     (32,384)
                                                                                  --------    --------
Cash flows from financing activities:
  Repayment of borrowings under bank line of credit                                     --      (3,000)
  Repayment of subordinated notes                                                       --     (20,000)
  Proceeds from issuance of common stock, net of repurchases and offering costs        329      76,035
  Treasury stock purchase                                                             (159)         --
  Proceeds from capital lease financing                                                 --         277
  Payment of principal on capital lease financing                                     (442)       (379)
                                                                                  --------    --------
          Net cash (used in) provided by financing activities                         (272)     52,933
                                                                                  --------    --------

Net increase (decrease) in cash and cash equivalents                                 1,139      11,440

Cash and cash equivalents, beginning of period                                       4,519      17,174
                                                                                  --------    --------
Cash and cash equivalents, end of period                                          $  5,658    $ 28,614
                                                                                  ========    ========
Supplementaldisclosure of cash flow information:
  Cash paid during the period for:
    Interest                                                                      $     68    $    545
                                                                                  ========    ========
  Non-cash transactions:
    Stock-based compensation, net of cancellations                                $     53    $  3,022
                                                                                  ========    ========
</TABLE>

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

                                        5
<PAGE>
                                 ELOQUENT, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)

Note 1 - The Company and Basis of Presentation

Eloquent,  Inc.  ("Eloquent" or the "Company") provides a rich media application
(Eloquent  LaunchForce)  that helps companies  communicate  critical new product
information  to globally  based  employees,  partners and customers  quickly and
cost-effectively.  Eloquent  LaunchForce manages an enterprise's complex product
launches,  enabling organizations to deliver clear,  consistent messages through
interactive  presentations that incorporates video, audio, slides,  demos, text,
and Q&A  sessions.  Eloquent  also  produces  rich media  solutions  through the
combination of video, audio, graphics and text in a synchronized, searchable and
navigable  format.  These  rich media  presentations  can be  delivered  via the
Eloquent LaunchForce application or CD-ROMs.

In the opinion of management,  the accompanying  unaudited  condensed  financial
statements  include all adjustments,  consisting only of normal recurring items,
necessary for their fair  presentation in conformity with accounting  principles
generally  accepted in the United  States of America.  The results of operations
for the interim periods presented are not necessarily  indicative of the results
for any future interim period or for the entire year. The  information  included
in this Form 10-Q should be read in conjunction with Management's Discussion and
Analysis  and  financial  statements  and notes  thereto  included in our Annual
Report on Form 10-K/A for the year ended December 31, 2000.

The preparation of condensed  financial  statements  requires management to make
estimates  and  assumptions  that affect the  recorded  amounts  reported in the
unaudited condensed financial statements and accompanying notes. A change in the
facts and circumstances  surrounding these estimates could result in a change to
the estimates and impact future operating results.

Note 2 - Equity Transactions

Common Stock and Conversion of Preferred Stock:

In February 2000, the Company  completed its initial public  offering and issued
5,175,000 shares of its common stock at a price of $16.00 per share. The Company
received  approximately  $75.4 million in cash, net of  underwriting  discounts,
commissions  and other offering  costs.  Simultaneously  with the closing of the
initial public offering,  each outstanding share of convertible  preferred stock
was automatically converted into one share of common stock.

Stock Repurchase Program

In May 2001,  Eloquent's  Board of Directors  authorized the repurchase of up to
250,000 shares of the Company's  outstanding common stock. At June 30, 2001, the
Company had purchased 128,000 shares at an average price of $1.24 per share.

Stock-Based Compensation:

Eloquent accounts for stock-based compensation issued to employees in accordance
with the  provisions  of  Accounting  Principles  Board  Opinion  (APB) No.  25,
"Accounting  for Stock Issued to  Employees",  and complies with the  disclosure
provisions  of  Statement  of  Financial  Accounting  Standards  (SFAS) No. 123,
"Accounting for Stock-Based Compensation." Under APB No. 25, expense is based on
the difference,  if any, on the date of grant,  between the fair value of common
stock and the exercise price.  Stock issued to non-employees  has been accounted
for in  accordance  with  SFAS  No.  123  and  valued  using  the  Black-Scholes
option-pricing model.

Note 3 - Net Loss per Share

Eloquent computes net loss per share in accordance with SFAS No. 128,  "Earnings
Per  Share."  Under the  provisions  of SFAS No. 128 basic net loss per share is
computed by dividing the net loss for the period by the weighted  average number
of vested  common  shares  outstanding  during the period.  Diluted net loss per
share is  computed  by  dividing  the net loss for the  period  by the  weighted
average number of common and common stock equivalent shares  outstanding  during
the period. Common equivalent shares are composed of common shares issuable upon
conversion of convertible  preferred stock (using the  if-converted  method) and
shares issuable upon the exercise of stock options and warrants and are included
in the diluted net loss per share to the extent that they are dilutive.

                                        6
<PAGE>
The following table sets forth the computation of basic and diluted net loss per
share for the periods indicated (in thousands, except per share data):

<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED JUNE 30,    SIX MONTHS ENDED JUNE 30,
                                                        ---------------------------    -------------------------
                                                            2001          2000            2001          2000
                                                          --------      --------        --------      --------
<S>                                                       <C>           <C>             <C>           <C>
Numerator:
  Net loss before extraordinary item                      $ (6,693)     $ (6,505)       $(10,899)     $(13,009)
  Extraordinary loss on extinguishment of debt                  --            --              --        (7,453)
                                                          --------      --------        --------      --------
Net loss                                                  $ (6,693)     $ (6,505)       $(10,899)     $(20,462)
                                                          ========      ========        ========      ========
Denominator:
  Weighted average common stock outstanding                 17,967        16,998          17,903        13,445
  Weighted average common stock subject to repurchase          (31)         (167)            (43)         (180)
                                                          --------      --------        --------      --------
Denominator  for basic and diluted calculation              17,936        16,831          17,860        13,265
                                                          ========      ========        ========      ========

Basic and diluted net loss per share                      $  (0.37)     $  (0.39)       $  (0.61)     $  (1.54)
                                                          ========      ========        ========      ========
Antidilutive securities:
  Options to purchase common stock                           4,420         4,393           4,420         4,393
  Warrants                                                     309           721             309           721
                                                          --------      --------        --------      --------
                                                             4,729         5,114           4,729         5,114
                                                          ========      ========        ========      ========
</TABLE>

Note 4 - Strategic Investments

ESPOC INC.

In March 2000,  Eloquent and eSpoc Inc.  ("eSpoc"),  a provider of an electronic
marketplace for the purchase and liquidation of medical  equipment and supplies,
entered into a strategic  relationship.  As part of this relationship,  Eloquent
purchased  461,538  shares  of eSpoc  preferred  stock  for $3.0  million.  This
investment is being accounted for using the cost method.

During the fourth  quarter of 2000,  Eloquent  performed  an  evaluation  of the
carrying value of this investment.  Eloquent considered current financial market
conditions for raising capital and reviewed the financial  position,  cash flows
and operating  results of the entity.  Eloquent  concluded that the  unfavorable
financial  market  conditions  as they relate to entities  engaged in electronic
commerce  are not  temporary.  Accordingly,  the  carrying  value of the  equity
investment in eSpoc was  determined  to be impaired.  A loss of $2.3 million was
recognized  based on the amount by which the  carrying  value  exceeded the fair
value of  Eloquent's  proportionate  share of the net  assets of  eSpoc.  In the
second  quarter of 2001,  the Company  re-evaluated  the  carrying  value of its
investment in eSpoc.  Eloquent  concluded that eSpoc was no longer  pursuing its
original  business plan and that eSpoc's current  business plan would not result
in any  return to  investors.  Accordingly,  Eloquent  recognized  as a loss the
remaining carrying value of $759,000.

REBOP MEDIA, INC.

In  October  2000,  Eloquent  and  Rebop  Media,  Inc.  ("Rebop"),  a  new  live
video-based  Web  conferencing  company,  entered into a strategic  relationship
where-by Eloquent invested  approximately  $1.5 million in Rebop. The investment
was for Series A preferred  stock and represented  approximately  18% of Rebop's
capital  stock,  on an as-if  converted  basis.  Eloquent  also held the  right,
subject to Eloquent's  Board of Directors'  approval,  to acquire Rebop if Rebop
successfully  installed its product in three customer sites.  Eloquent exercised
this right on April 21, 2001.  Rebop's Web conferencing  solution is designed to
integrate with Eloquent's Enterprise Communications Server software. Cliff Reid,
Eloquent's  Chief  Executive  Officer,  serves as President and Chief  Executive
Officer of Rebop. This investment is being accounted for using the equity method
and accordingly,  the investment has been written down by the losses,  excluding
stock-based compensation charges,  incurred by Rebop, of $1.3 million.  Eloquent
recognized the operating  expenses incurred by Rebop of $1.7 million,  including
stock-based  compensation  charges of  $358,000,  as  research  and  development
expense.

In June 2001, Eloquent agreed in principal to acquire all the outstanding shares
of Rebop's  common  stock for  approximately  $3.8  million in cash and  850,000
shares of Eloquent's  common stock with the value of $935,000.  The  acquisition
was finalized on July 5, 2001. At the closing of the acquisition, ten percent of

                                        7
<PAGE>
the stock to be issued and cash to be paid to the former  shareholders  of Rebop
was placed in escrow to secure certain indemnification  obligations contained in
them merger agreement.

Note 5 - Long-term Notes Payable and  Extraordinary  Loss on  Extinguishment  of
Debt

In October 1999,  Eloquent sold  convertible  notes and  detachable  warrants to
purchase 1.5 million shares of common stock for aggregate gross consideration of
$20.0  million.  The notes provided that they were to mature on October 20, 2004
and bore interest at 12% per annum.  The warrants  expire the earlier of 5 years
after the  repayment of the notes or October 20, 2006. In  conjunction  with the
sale of the notes Eloquent incurred  approximately $1.5 million in debt issuance
costs. In accordance with the terms of the notes, all amounts  outstanding under
the notes were repaid upon consummation of Eloquent's initial public offering on
February 23, 2000.

The gross consideration  received from the notes was allocated between the notes
and the warrants in accordance with Accounting  Principles  Board Opinion No. 14
"Accounting for Convertible  Debt and Debt Issued with Stock Purchase  Warrants"
as follows (in thousands):

                    Long-term notes payable          $12,500
                    Warrants                           7,500
                                                     -------
                    Gross consideration              $20,000
                                                     =======

The notes provided that after December 31, 2000, the investors, at their option,
could  convert  the notes to Series E preferred  stock at an initial  conversion
rate of $8 per share,  subject to certain  anti-dilutive  provisions.  This gave
rise to a beneficial conversion feature of $5.0 million, based on the fair value
of common  stock at the date of the sale of the notes and  detachable  warrants.
This  beneficial  conversion  feature was recorded as a further  discount on the
sale of the notes.

The debt  issuance  costs and the  discount  resulting  from the issuance of the
warrants  were being  amortized to interest  expense over the life of the notes.
The beneficial  conversion  feature was being amortized over the one-year period
up to the earliest conversion date. Upon repayment of the notes, the unamortized
portion of the discount resulting from the issuance of the warrants and the debt
issuance costs were recorded as an extraordinary loss on the  extinguishments of
debt.  In November  2000,  the  Emerging  Issues Task Force  reached a consensus
regarding accounting for securities  involving  beneficial  conversion features.
The consensus  requires a cumulative  adjustment for certain  securities  issued
after May 1999. As outlined in EITF No. 00-27,  the Task Force  determined  that
the  conversion  price used to calculate the intrinsic  value should be based on
the proceeds allocated to the convertible  instrument.  The financial  statement
impact  to  Eloquent  of this  requirement  is that  the  additional  beneficial
conversion feature calculated under the new regulations of $7.5 million has been
recorded in the fourth  quarter 2000  statement of operations as the  cumulative
effect of accounting change -- beneficial conversion feature.

Note 6 - Restructuring Activities

In December  2000,  Eloquent  announced a plan to  restructure  operations  that
resulted in a one-time  charge  totaling  $4.0  million.  The  restructuring  is
intended to better align Eloquent with future market opportunities brought about
by its new  product  introductions  and to  reduce  cash  expenditures  prior to
revenue growth.  Under the plan, Eloquent gave notice of termination in December
2000 to 80 employees and  consultants  and recorded  approximately  $1.4 million
related to salary and termination  benefits.  The restructuring  charge includes
$356,000 for the buy-out of capital  leases  related to impaired  equipment  and
elimination of maintenance  contracts for impaired  software.  Eloquent plans to
reduce  expenditures  for  office  space  and  is  actively   negotiating  lease
terminations, where feasible, and pursuing sub-leases where lease termination is
not  feasible for  identified  properties.  The  restructuring  charge  includes
approximately  $1.8 million for lease  expense.  This charge  reflects  payments
required during lease  termination  notice periods,  estimates of lease payments
prior to sub-letting  space and estimates of any rent  differential  between the
contractual liability of Eloquent and current market rates.

In June 2001, Eloquent recorded an additional $1.4 million  restructuring charge
for lease expense as a result of  deteriorating  real estate  market  conditions
resulting  in  lower  facility  lease  rates  than  estimated  for  the  initial
restructuring charge.

At June 30, 2001  Eloquent had made  payments of $1.4 million  related to salary
and  termination  benefits,  $915,000  related to lease  arrangements  and other
expenses and had a remaining accrual balance of approximately  $918,000 in short
term liabilities and $1.7 million in long-term liabilities.

                                        8
<PAGE>
Note 8 - Derivative Instruments

Effective  January 1, 2001,  Eloquent  adopted the  provisions  of SFAS No. 133,
"Accounting for Derivative  Instruments and Hedging  Activities",  as amended by
SFAS No. 137,  "Accounting for Derivative  Instruments and Hedging Activities --
Deferral  of the  Effective  Date of FASB  Statement  No.  133".  SFAS  No.  133
establishes  methods of accounting  for  derivative  financial  instruments  and
hedging  activities  related  to  those  instruments  as well as  other  hedging
activities.  Adoption of the statement did not  materially  affect the financial
statement presentation.

Note 9 - Reclassifications

Certain amounts reported in the previous year have been  reclassified to conform
to the  current  year  presentation.  The  reclassification  did not  affect the
previously reported net loss.

Note 10 - Recent Accounting Pronouncements

Business Combinations

In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 141 ("SFAS 141"), "Business Combinations."
SFAS 141 requires the purchase  method of accounting  for business  combinations
initiated  after June 30, 2001 and eliminates the  pooling-of-interests  method.
Eloquent  believes  that the  adoption  of SFAS 141 will not have a  significant
impact on its financial statements.

Goodwill and Other Intangible Assets

In July 2001, the FASB issued  Statement of Financial  Accounting  Standards No.
142 ("SFAS 142"), "Goodwill and Other Intangible Assets", which is effective for
fiscal years  beginning  after March 15, 2001.  SFAS 142  requires,  among other
things, the discontinuance of goodwill  amortization.  In addition, the standard
includes  provisions upon adoption for the  reclassification of certain existing
recognized intangibles as goodwill, reassessment of the useful lives of existing
recognized   intangibles,   reclassification   of  certain  intangibles  out  of
previously reported goodwill and the testing for impairment of existing goodwill
and  other  intangibles.  Eloquent  is  currently  assessing  but  has  not  yet
determined  the  impact of SFAS 142 on its  financial  position  and  results of
operations.

Note 11 - Subsequent Events: Litigation

Eloquent, certain of its directors and officers, and certain underwriters of its
initial public offering are among the defendants  named in three purported class
action  complaints  filed in July 2001 in  federal  district  court on behalf of
persons and  entities  who  acquired  the  Eloquent's  common  stock on or after
February 17, 2000. The  complaints  allege that the  registration  statement and
prospectus  issued  by  Eloquent  in  connection  with the  public  offering  of
Eloquent's  common  stock  contained  untrue  statements  of  material  fact  or
omissions  of  material  fact  in  violation  of  securities  laws  because  the
registration  statement and  prospectus  failed to disclose that the  offering's
underwriters  had  allegedly  solicited  and received  additional  and excessive
compensation and benefits beyond those listed in the registration  statement and
prospectus and that the offering's underwriters had entered into tie-in or other
arrangements  with certain of their customers  which were allegedly  designed to
maintain, distort and/or inflate the market price of the Eloquent's common stock
in the  aftermarket.  The actions seek  unspecified  monetary  damages and other
relief. Eloquent anticipates that these cases will be consolidated into a single
class  action.  Eloquent  believes  that these  lawsuits  are without  merit and
intends to vigorously defend against them.

In addition to the  foregoing  matters,  from time to time,  Eloquent may become
involved in various lawsuits and legal  proceedings  which arise in the ordinary
course of business.  However,  litigation is subject to inherent  uncertainties,
and an adverse  result in this or other matters may arise from time to time that
may harm our business.

                                        9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

This 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,  which are subject to the "safe  harbor"  created by those
sections.  These forward-looking  statements involve risks and uncertainties and
relate to our future plans,  objectives,  beliefs,  expectations and intentions.
These statements include, but are not limited to: statements related to industry
trends  and  future  growth  in  the  markets  for  rich  media   solutions  for
business-to-business communications; our strategies for reducing the cost of our
products;  our product development efforts; our future research and development;
the  timing of our  introduction  of new  products;  the  timing  and  extent of
deployment of our products by our  customers;  and future  profitability.  These
statements   may  be   identified  by  the  use  of  words  such  as  "expects,"
"anticipates,"  "believes,"  "intends,"  "plans"  and similar  expressions.  Our
actual   results  may  differ   significantly   from  those   projected  in  the
forward-looking  statements.  Factors  that may cause  future  results to differ
materially from those projected in the forward-looking  statements include,  but
are not limited to,  those  discussed in "Risk  Factors"  and  elsewhere in this
report.

The  following  should  be  read  in  conjunction  with  the  audited  financial
statements  and the notes thereto and  Management's  Discussion  and Analysis of
Financial  Condition and Results of Operations  included in our Annual Report on
Form 10-K/A for the year ended December 31, 2000.

OVERVIEW

We incorporated in Delaware in March 1995. In February 1996, we launched Version
1.0 of our solutions platform,  which included the essential elements of content
production and navigation,  including  synchronized video,  audio,  graphics and
text as well as  searchable  transcripts,  for delivery on CD-ROM only.  In July
1996, we launched Version 2.0, which expanded delivery from CD-ROM to intranets,
included  searchable slides and added variable speed playback.  In November 1997
we  launched  Version  3.0.  It  further  expanded  delivery  options to include
Web-based  transmissions  at 28.8  Kbps and added  tracking  and  reporting  and
software  demonstrations.  In April 1998,  we  introduced  our  content  hosting
service and software.  In January 1999,  we launched our  professional  services
organization to provide integration  services and professional media development
services.  In April 1999,  we launched  Version 4.0 of our  solutions  platform,
which added support for  high-resolution  video and the ability for  application
developers to customize  certain  aspects of our software.  In December 1999, we
launched Version 5.0, which offers advanced  integration,  search navigation and
analysis  features.  In August  2000,  we launched  Version  6.0,  which  allows
enterprises to organize,  manage,  secure,  personalize  and enrich all forms of
streaming content. In May 2001, we introduced Eloquent LaunchForce, a rich media
application  that helps  organizations  manage their  complex  product  launches
through interactive  presentations that incorporate video, audio, slides, demos,
text, and Questions & Answers  (Q&A).  The  presentations  can be created by our
customer with the application or created by Eloquent.

We  generate  revenue  through  software   licenses  and  maintenance,   content
production  services and professional  services.  Our software  licenses revenue
consists  of  one-time  fees  charged  for the  use of our  desktop  player  and
applications  server  software  and  monthly  fees  for  content  hosting.   Our
maintenance revenue consists of prepaid contracts related to software, which are
recognized over the contract term, usually one year. For each content production
transaction,  we charge our  customers a fee for each hour of finished  content.
Our professional  services revenue is from contracted  services to customize the
content and  software  for our  customers.  Most of our revenue to date has been
from our content production  services.  We expect content production services to
produce the largest  portion of our revenue for the foreseeable  future,  but we
intend to increase sales of our applications server software and content hosting
so that software  license  revenue  constitutes an increasing  percentage of our
revenue.   The  gross  margin   attributable  to  software  license  revenue  is
significantly  higher than that of our content  production  services.  We cannot
assure you that we will be able to increase the  proportion of software  license
revenue  and,  therefore,  we  cannot  assure  you  that  we  will  be  able  to
proportionally improve our gross margin.

We generally  recognize  content  production  revenue upon shipment of the final
rich media event to the customer and software  license  revenue upon delivery of
software to the customer.  Content  production  service revenue includes revenue
for  CD-ROM  duplication.  We  recognize  this  revenue  upon  shipment  of  the
duplicated  CD-ROMs.  The  revenue for  software  licenses  is  recognized  upon
shipment or notification by the customer,  depending on the delivery medium.  We
recognize revenue for maintenance and content hosting ratably over the period of
the maintenance or content hosting contract. We recognize  professional services
revenue on a percentage of completion basis as services are performed.

A  limited  number of large  customers  have  accounted  for a  majority  of our
revenue,  and will continue to do so for the  foreseeable  future.  One customer
accounted for more than 10% of our total revenue for the three months ended June
30,  2001 and 2000.  Two  customers  accounted  for more than 10% of our revenue

                                       10
<PAGE>
during the six months ended June 30, 2001. One customer  accounted for more than
10% of our revenue for the six months ended June 30, 2000. To date,  most of our
customers  have  been  in  the  telecommunications,   software,  high-technology
manufacturing, financial services and pharmaceuticals industries.

Stock-based  compensation  charges  consist  primarily of charges related to the
difference between employee option exercise prices and deemed fair market values
on the date of grant  amortized over the vesting period of the options.  Through
June  30,  2001,  we have  recorded  a total  of $13.4  million  in  stock-based
compensation charges in connection with stock option grants to our employees and
consultants,   which  is  being  amortized   using  an  accelerated   method  of
amortization as described in Financial Accounting Standards Board Interpretation
No. 28, over the vesting periods of the options, generally four to five years.

We have not achieved profitability on a quarterly or annual basis to date and we
anticipate that we will continue to incur net losses for the foreseeable future.
As of June 30, 2001, we had an accumulated deficit of $97.0 million. In December
2000,  we  announced  a plan  to  restructure  operations  and  gave  notice  of
termination to 80 employees and  consultants.  The  restructuring is intended to
better align Eloquent with future market opportunities  brought about by its new
product  introductions and to reduce cash expenditures  prior to revenue growth.
We expect to increase our  operating  expenses  commensurate  with  increases in
revenue.  If we are not  able  to  increase  revenue,  our  business,  financial
condition and operating results would suffer.

We have  experienced  and expect to continue to  experience  seasonality  in our
business.  Due to the marketing  cycles of our  customers,  sales of our content
production services generally tend to be lower in the fourth calendar quarter of
each year. Because the market for rich media business-to-business communications
using the Web is still new,  additional seasonal and other patterns in the usage
of our products and services may emerge as the market matures.

RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
                                              THREE MONTHS ENDED JUNE 30,    SIX MONTHS ENDED JUNE 30,
                                              ---------------------------    -------------------------
                                                  2001          2000            2001          2000
                                                 ------        ------          ------        ------
<S>                                              <C>           <C>             <C>           <C>
Revenue:
  Software licenses and maintenance                  40%           41%             32%           37%
  Content production services                        57            51              66            53
  Professional services                               3             8               2            10
                                                 ------        ------          ------        ------
          Total revenue                             100           100             100           100
                                                 ------        ------          ------        ------
Cost of revenue:
  Software licenses and maintenance                  25             5              21             7
  Content production services                        45            30              42            28
  Professional services                               4            11               7            13
  Stock-based compensation                           (2)            1              (1)            2
                                                 ------        ------          ------        ------
          Total cost of revenue                      72            47              69            50
                                                 ------        ------          ------        ------
  Gross margin                                       28            53              31            50
                                                 ------        ------          ------        ------
Operating expenses:
  Research and development:
    Other research and development                   87            24              82            22
    Stock-based compensation                          8             3               6             4
                                                 ------        ------          ------        ------
                                                     95            27              88            26
                                                 ------        ------          ------        ------
  Sales and marketing:
    Other sales and marketing                       156           105             133            97
    Stock-based compensation                         --             9               1            10
                                                 ------        ------          ------        ------
                                                    156           114             134           107
                                                 ------        ------          ------        ------
  General and administrative:
    Other general and administrative                 68            24              61            22
    Stock-based compensation                         21            26              21            29
                                                 ------        ------          ------        ------
                                                     89            50              82            51
                                                 ------        ------          ------        ------
</TABLE>

                                       11
<PAGE>
<TABLE>
<CAPTION>
                                              THREE MONTHS ENDED JUNE 30,    SIX MONTHS ENDED JUNE 30,
                                              ---------------------------    -------------------------
                                                  2001          2000            2001          2000
                                                 ------        ------          ------        ------
<S>                                              <C>           <C>             <C>           <C>
  Restructuring expense:
    Other restructuring expense                      87            --              39            --
    Stock-based compensation                         --            --              --            --
                                                 ------        ------          ------        ------
                                                     87            --              39            --
                                                 ------        ------          ------        ------

          Total operating expenses                  427           191             343           184
                                                 ------        ------          ------        ------
Loss from operations                               (399)         (138)           (312)         (134)
Interest expense and other charges                   (1)           (4)             (2)          (13)
Impairment of investment                            (47)           --             (21)           --
Interest and other income                            33            18              31            14
                                                 ------        ------          ------        ------
Net loss before extraordinary item                 (416)         (125)           (301)         (132)
Extraordinary loss on extinguishment of debt         --            --              --           (76)
                                                 ------        ------          ------        ------
Net loss                                           (416)%        (125)%          (301)%        (208)%
                                                 ======        ======          ======        ======
</TABLE>

THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000

Revenue. Total revenue decreased to $1.6 million for the three months ended June
30, 2001 from $5.2  million for the same period in 2000.  Total  revenue for the
six months  ended June 30, 2001  decreased to $3.6 million from $9.8 million for
the  comparable  period in 2000.  The  decreases  in revenue for both periods is
attributable  to a  decrease  in the  number  and  average  size of sales of our
products and services.

Software   licenses  and  maintenance.   Revenue  from  software   licenses  and
maintenance  decreased to $642,000 for the three months ended June 30, 2001 from
$2.1 million for the same period in 2000.  For the  six-month  periods,  revenue
decreased to $1.2 million in 2001 from $3.6 million in 2000.  The decreases were
due to fewer sales of our software.

Content production  services.  Content production  services revenue decreased to
$914,000 for the three months ended June 30, 2001 from $2.7 million for the same
period in 2000.  The  decrease in revenue was due to fewer  number of rich media
events  produced,  decreasing  to 36 from 105. For the six months ended June 30,
2001,  revenue was $2.4 million  compared to $5.3 million for the same period in
2000. The number of rich media events  produced fell to 105 from 190 for the six
months comparable periods.

Professional  services.  Professional services revenue was $54,000 for the three
months  ended June 30, 2001 and  $430,000  for the three  months  ended June 30,
2000.  Revenue was  recognized on 2  professional  services  engagements  in the
second quarter of 2001 compared to 20 professional  services engagements for the
same period in 2000.  Professional services revenue decreased to $69,000 for the
six months ending June 30, 2001 from $956,000 for the six months ending June 30,
2000.  Revenue was  recognized on 3  professional  services  engagement  for the
six-month period in 2001 compared to 20 engagements in 2000.

Cost of revenue.  Cost of revenue  consists  primarily of software  licenses and
maintenance costs,  content  production costs, and professional  services costs.
Cost of software  licenses  and  maintenance  consists  of customer  support and
content  hosting  personnel  and royalty  payments due to the owners of licensed
third-party  software.  Cost of content production  consists of event production
costs and direct personnel expenses associated with event production,  with some
fixed overhead  components for facilities and  infrastructure  support  charges.
Direct labor costs associated with content production are deferred until revenue
is  recognized,  at which time they are  expensed  as cost of  revenue.  Cost of
professional  services  consists of direct labor costs associated with providing
professional services, which are deferred until revenue is recognized,  at which
time they are expensed as cost of revenue.

Software licenses and maintenance. Cost of software licenses and maintenance was
$406,000 in the three  months  ended June 30, 2001  compared to $277,000 for the
same period in 2000.  Cost of software  licenses  and  maintenance  increased to
$773,000 for the six months ended June 30, 2001 from $704,000 for the six months
ended  June 30,  2000.  The  increases  for both the  three  month and six month
periods are attributable to the higher payroll and overhead expenses  associated
with the introduction of application hosting.

Content  production  services.  Cost of content  production was $729,000 for the
three months ended June 30, 2001 compared to $1.6 million for the same period in
2000.  For the  six-month  period  ended  June 30,  cost of  content  production
decreased to $1.5 million in 2001 from $2.7  million in 2000.  The  decreases in
expenses  were  primarily  due to the  restructuring  initiatives  undertaken in
December 2000. The restructuring  included the termination of numerous employees
and temporary employees.  Accordingly,  the decrease is due to reduced personnel
expenses and related facilities and infrastructure and support charges.

Professional services.  Cost of professional services was $72,000 for the second
quarter in 2001  compared to $595,000  for the second  quarter in 2000.  Cost of
professional  services  was  $242,000  for the six months  ended  June 30,  2001
compared to $1.2 million for the six months ended June 30, 2000. The majority of
the  decreases  for both the  three  and six month  periods  are due to  reduced
personnel and  recruiting  costs as a result of the December 2000  restructuring

                                       12
<PAGE>
initiatives.  Professional  services  activities  resulted  in a negative  gross
margin in the current  period as Eloquent  retained  redundant  staff to fulfill
customer  commitments.  The negative  gross margin in the prior period is due to
start-up activities in the professional services organization. We are continuing
to redefine  its  professional  services  product  offerings  in response to the
introduction of the Eloquent LaunchForce application.

Operating expenses. For the three months ended June 30, 2001, operating expenses
were $6.9  million  compared to $9.9 million for the three months ended June 30,
2000. Without the effect of stock-based compensation charges, operating expenses
for the second  quarter in 2001 and 2000 would have been $6.4  million  and $8.0
million,  respectively.  For the six  months  ended  June  30,  2001,  operating
expenses were $12.3  million  compared to $18.2 million for the six months ended
June 30, 2000. Without the effect of stock-based compensation charges, operating
expenses  for the six months in 2001 and 2000 would have been $11.4  million and
$13.7 million, respectively.

Other  research and  development.  Research  and  development  expenses  consist
primarily of personnel expenses associated with software  development.  Research
and  development  expenses were $1.4 million for the three months ended June 30,
2001  compared to $1.3 million for the three  months  ended June 30,  2000.  The
increase reflects  $310,000 in expenses incurred by Rebop,  which due to certain
accounting  requirements  is required to be included in our  operating  results.
This  increase  was  partially  offset by a  decrease  in  contractor  expenses.
Research  and  development  expenses  were $3.0 million for the six months ended
June 30, 2001 and $2.2 million for the six months ended June 30, 2000.  Over 90%
of the increase  reflects  expenses  incurred by Rebop.  In June 2001,  Eloquent
agreed in principal to acquire all the outstanding  shares of Rebop common stock
for  approximately  $3.8 million in cash and 850,000 shares of Eloquent's common
stock with the value of $935,000. The acquisition was finalized on July 5, 2001.
We expect research and development  expenses to increase in absolute  dollars as
we seek to increase the functionality of our solutions platforms.

Other sales and marketing.  Sales and marketing  expenses  consist  primarily of
personnel  expenses  associated  with the sale of our  products and services and
personnel and marketing  materials and expenses associated with the marketing of
our products and services.  Sales and  marketing  expenses were $2.5 million for
the three  months  ended June 30, 2001  compared  to $5.5  million for the three
months ended June 30, 2000.  Sales and marketing  expenses were $4.8 million for
the six months  ended June 30, 2001  compared to $9.5  million in June 30, 2000.
Over 60% of the  decreases  for both the three and six month periods were due to
reduced personnel expenses and recruiting costs associated with the reduction in
our  sales  force  and  marketing  staff  as  a  result  of  the  December  2000
restructuring  initiatives as well as the reduced travel and entertainment costs
associated with fewer personnel.  The remainder of the decrease is primarily due
to  reduced  spending  on  marketing  programs.  We expect  sales and  marketing
expenses to increase at a rate commensurate with increases in revenue.

Other general and  administrative.  General and administrative  expenses consist
primarily of administrative personnel expenses, professional fees and facilities
costs.  General  and  administrative  expenses  were $1.1  million for the three
months  ended June 30, 2001  compared to $1.3 million for the three months ended
June 30, 2001. This decrease reflects reduced personnel  expenses as a result of
the  December  2000  restructuring  initiatives  as well as  lower  professional
services fees. General and administrative expenses were $2.2 million for the six
months  ended June 30, 2001 and 2000.  The  decrease in  personnel  expenses was
offset by the increase in non-personnel expenses.

Stock-based  compensation  expense.  Stock-based  compensation  expense consists
primarily of charges related to the difference  between employee option exercise
prices and deemed fair  market  values on the date of grant  amortized  over the
vesting period of the options. Stock-based compensation expense was $438,000 for
the second  quarter of 2001  compared to $2.0 million for the second  quarter of
2000.  Stock-based  compensation  expense was  $940,000 for the six months ended
June 30, 2001  compared to $4.5  million for the six months ended June 30, 2000.
The decrease in expense for both periods was due to accelerated vesting in prior
periods and the reversal of amortized  stock-based  compensation expense related
to cancellations,  due to employee  terminations  during 2001, of unvested stock
options  previously  granted.  Stock-based  compensation  charges are  presented
within  the  relevant  functional  expenses  and are  being  amortized  using an
accelerated  method  of  amortization  as  described  in  Financial   Accounting
Standards Board  Interpretation No. 28, over the vesting periods of the options,
generally four to five years.

Restructuring   expense.  In  June  2001,  Eloquent  recorded  $1.4  million  in
additional  restructuring  expense  relating to various office leases as part of
our  December  2000  restructuring  plan.  The  restructuring   charge  reflects
estimates of lease payments prior to sub-letting space and estimates of any rent
differential  between the  contractual  liability of Eloquent and current market
rates.  Also see Note 6  -Restructuring  Activities to the  condensed  financial
statements.

Interest  expense and other  charges.  Interest  expense and other  charges were
$15,000 for the second quarter in 2001 and $190,000 for the  comparable  quarter
in 2000. The decrease is  attributable  to the expiration of several lease lines
and the bank line of credit.  Interest  expense  and other  charges  for the six

                                       13
<PAGE>
months  ended June 30, 2001  decreased  to $75,000 from $1.2 million for the six
months  ended June 30,  2000.  Interest  expense  and other  charges for the six
months ended June 30, 2000 consisted primarily of interest paid and amortization
of the debt  issuance  costs  and the  discount  related  to the  $20.0  million
subordinated  notes and warrants.  The  subordinated  notes were repaid upon our
initial public offering in February 2000.

Impairment on investment.  In March 2000, Eloquent and eSpoc Inc.  ("eSpoc"),  a
provider of an  electronic  marketplace  for the  purchase  and  liquidation  of
medical equipment and supplies, entered into a strategic relationship.  See Note
4 - Strategic Investments to the condensed financial  statements.  In the second
quarter  of  2001,  Eloquent  re-evaluated  the  carrying  value  in  eSpoc  and
determined the investment to be fully  impaired.  Eloquent  recognized as a loss
the remaining carrying value of $759,000.

Interest  income and other  income.  Interest  income and other income  consists
primarily of interest  earnings on our cash,  cash  equivalents  and  short-term
investments.  Interest income and other income was $532,000 for the three months
ended June 30, 2001  compared to $948,000  for the three  months  ended June 30,
2000. Interest income and other income was $1.1 million for the six months ended
June 30, 2001 compared to $1.4 million for the  comparable  period in 2000.  The
decreases  for both the three and six month  periods  were due to lower  average
cash balances.

Extraordinary  loss  on  extinguishment  of  debt.  In  October  1999,  we  sold
convertible notes and detachable warrants to purchase 1,500,000 shares of common
stock for aggregate gross  consideration  of $20.0 million.  In conjunction with
the sale of the notes, we incurred  approximately  $1.5 million in debt issuance
costs. In accordance with  applicable  accounting  rules, we allocated the gross
proceeds among the notes,  the beneficial  conversion  feature of the notes, and
the  warrants.  As a result of that  allocation,  the  subordinated  notes  were
originally  recorded on our balance sheet at a discounted value of approximately
$7.5 million.  The $7.5 million discount resulting from the issuance of warrants
was being  amortized  over the five-year  term of the notes and the $5.0 million
discount  resulting from the beneficial  conversion  feature was being amortized
over the period from issuance to December 31, 2000,  during which the note could
not be  converted.  In  accordance  with the  terms of the  notes,  all  amounts
outstanding  under the notes were repaid upon consummation of our initial public
offering.  Because  the notes were repaid  prior to the end of their  term,  the
unamortized  portion of the discount resulting from the issuance of the warrants
and debt issuance costs was recorded as an extraordinary  loss on extinguishment
of debt.

In November 2000, the Emerging  Issues Task Force reached a consensus  regarding
accounting  for  securities  involving  beneficial   conversion  features.   The
consensus  requires a cumulative  adjustment for certain securities issued after
May 1999.  As outlined in EITF No.  00-27,  the Task Force  determined  that the
conversion  price used to calculate the  intrinsic  value should be based on the
proceeds allocated to the convertible instrument. The financial statement impact
to Eloquent of this  requirement  is that the additional  beneficial  conversion
feature  calculated  under the new regulations of $7.5 million has been recorded
in the fourth quarter 2000  statement of operations as the cumulative  effect of
accounting change -- beneficial conversion feature.

LIQUIDITY AND CAPITAL RESOURCES

Since our inception,  we have financed our operations  through  private sales of
preferred  stock,  our initial public  offering of common stock and, to a lesser
extent,  borrowings under lines of credit.  Net proceeds from our initial public
offering of common stock were approximately  $75.4 million. At June 30, 2001, we
had  approximately  $32.3  million  of cash,  cash  equivalents  and  short-term
investments.

Net cash used in operating  activities was $7.7 million for the six months ended
June 30, 2001 and $9.1 million for the six months ended June 30, 2000.  Net cash
used in operating  activities in 2001 was primarily  attributable  to net losses
and a reduction in accounts payable and accrued liabilities.  This was partially
offset by a reduction in accounts receivable as we actively pursued collections.
Net cash used in operating activities in 2000 was primarily  attributable to net
losses.

Net cash  provided by  investing  activities  was $9.1 million in the six months
ended June 30, 2001  compared to net cash used in investing  activities of $32.4
million for the six months ended June 30, 2000.  Net cash  provided by investing
activities was primarily related tothe sale of short-term marketable securities.
Net  cash  used  in  investing  activities  in 2000  was  related  primarily  to
investments in short-term marketable securities and investment in eSpoc.

Net cash used in financing activities was $272,000 for the six months ended June
30, 2001 compared to net cash provided by financing  activities of $52.9 million
for the six ended June 30, 2000.  Net cash used in financing  activities in 2001
resulted  primarily  from  principal  payments  on our  capital  leases  and the
repurchase of Eloquent common stock.  Net cash provided by financing  activities
in 2000 resulted  primarily  from the sale of common stock in our initial public
offering, partially offset by repayment of borrowings.

                                       14
<PAGE>
We believe that our current cash and cash equivalents will be sufficient to meet
our anticipated  cash needs for working capital and capital  expenditures for at
least  the next 12  months.  We may need to raise  additional  funds  thereafter
through public or private  financings,  or other  arrangements.  There can be no
assurance that such additional financings, if needed, will be available on terms
attractive to us, if at all. Our failure to raise capital when needed could have
a material  adverse  effect on our business,  financial  condition and operating
results.  If  additional  funds  are  raised  through  the  issuance  of  equity
securities, the percentage ownership of our then-current,  stockholders would be
reduced.  Furthermore,  such equity  securities may have rights,  preferences or
privileges senior to those of our common stock.

RISK FACTORS

Our business, financial condition or operating results could be seriously harmed
by any of the  following  risks.  In addition,  the trading  price of our common
stock could decline due to any of the following  risks,  and you may lose all or
part of your investment.

RISKS RELATED TO OUR BUSINESS

BECAUSE WE HAVE A LIMITED  OPERATING  HISTORY,  IT MAY BE  DIFFICULT  FOR YOU TO
EVALUATE OUR BUSINESS AND PROSPECTS.

Eloquent was formed in March 1995.  Thus, we have a limited  operating  history,
which may make it difficult for you to evaluate our business. In part because we
are subject to the risks, expenses and uncertainties  frequently  encountered by
companies in new and rapidly  evolving  technology and Web-related  markets,  we
cannot be sure that our business  model and future  operating  performance  will
yield the results that we seek.  Moreover,  because these markets are constantly
changing,  we may need to change our  business  model to adapt.  We have not yet
proven our ability, on a sustained basis, to achieve the following:

     *    maintain and expand our customer base;

     *    identify new applications for our existing products;

     *    expand and enhance our customer solutions;

     *    maintain market prices for our solutions despite competition;

     *    effectively integrate any acquired businesses or technologies with our
          operations;

     *    prevent  technologies  we  use  in  our  operations  from  failing  or
          operating poorly, and

     *    identify, attract, retain and motivate qualified personnel.

We may not be successful in achieving these  objectives on a long-term basis. If
we are unable to do so, our business,  financial condition and operating results
would suffer.

WE EXPECT  TO  CONTINUE  TO INCUR  LOSSES,  AND AS A RESULT  WE MAY NOT  ACHIEVE
PROFITABILITY.

We have not achieved profitability on a quarterly or annual basis to date and we
anticipate that we will continue to incur net losses for the foreseeable future.
Our failure to achieve profitability could deplete our current capital resources
and reduce our ability to raise  additional  capital.  We incurred a net loss of
approximately  $10.9  million in the six months ended June 30, 2001  compared to
$20.5 million in the six months ended June 30, 2000. As of June 30, 2001, we had
an accumulated  deficit of  approximately  $97.0  million.  In December 2000, we
announced a plan to restructure operations. The plan is intended to better align
us  with  future  market   opportunities   brought  about  by  our  new  product
introductions and to reduce cash expenditures prior to revenue growth. Under the
plan,  we gave notice of  termination  in December 2000 to over 80 employees and
consultants.  This resulted in excess  equipment and furniture and unused leased
facilities.  Accordingly,  we plan to reduce  expenditures  for office space and
have written-off the carrying value of excess equipment and furniture, abandoned
leasehold improvements and certain software and technology assets. In June 2001,
we recorded additional  restructuring  expense relating to various office leases
as part of our  December  2000  restructuring  plan.  The  restructuring  charge
reflects estimates of lease payments prior to sub-letting space and estimates of
any rent differential between the contractual  liability of Eloquent and current

                                       15
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market rates. Although we have initiated actions to reduce cash expenditures and
expenses,  there can be no assurance  that we will be  successful  in generating
additional revenue or achieving profitability.

OUR QUARTERLY OPERATING RESULTS ARE SUBJECT TO SIGNIFICANT FLUCTUATIONS,  AND AN
UNANTICIPATED DECLINE IN REVENUE MAY CAUSE OUR STOCK PRICE TO FALL.

In some future quarter,  our operating  results may be below the expectations of
public market analysts and investors,  which would cause the price of our common
stock to fall.  The factors that may cause our  quarterly  operating  results to
fall short of expectations include:

     *    delays  of  large  customer  orders,   which  could  prevent  us  from
          recognizing revenue until later quarters;

     *    seasonal trends in sales of our solutions, which could result in lower
          quarterly revenue in the fourth quarter;

     *    downward  pressure  on prices  paid by our  customers,  as a result of
          competition or other factors, which could reduce our quarterly revenue
          even if we maintain or increase the number of sales;

     *    new product and service introductions by our competitors,  which could
          cause our  competitors to capture revenue that we otherwise could have
          received;

     *    increased  costs  incurred  as  we  expand  operations,  increase  our
          marketing efforts or undertake other  initiatives,  which could reduce
          our profit margin if not matched by a corresponding growth in revenue;
          and

     *    technical  difficulties or system downtime affecting the Web generally
          or the operation of our network or servers, which could cause customer
          dissatisfaction and reduce our revenue.

We have  experienced  and expect to continue to  experience  seasonality  in our
business.  Due to the marketing  cycles of our  customers,  sales of our content
production services generally tend to be lower in the fourth calendar quarter of
each year. Because the market for rich media business-to-business communications
using the Web is still new,  additional seasonal and other patterns in the usage
of our products and services may emerge as the market matures.

Our  quarterly  operating  results  may  fluctuate  significantly  in the future
because of a variety of factors,  many of which are outside  our  control.  As a
result,  operating  results for any particular  quarter may not be indicative of
future operating results.

WE DEPEND ON A LIMITED NUMBER OF LARGE  CUSTOMERS FOR A MAJORITY OF OUR REVENUE,
SO THE LOSS OF OR DELAY IN PAYMENT FROM ONE OR A SMALL NUMBER OF CUSTOMERS COULD
HAVE A LARGE IMPACT ON OUR REVENUE AND OPERATING RESULTS.

If we  were  to lose a key  customer,  our  business,  financial  condition  and
operating  results would  suffer.  In addition,  if a key customer  fails to pay
amounts  it owes us, or does not pay those  amounts  on time,  our  revenue  and
operating  results  would  suffer.  A  limited  number of large  customers  have
accounted  for a majority  of our  revenue  and will  continue  to do so for the
foreseeable  future.  For example,  our top 10  customers  during the six months
ended June 30, 2001  accounted for a majority of our revenue during that period.
Due to our limited number of large  customers,  the  cancellation  or delay of a
customer order during a given quarter is likely to significantly  reduce revenue
for the quarter.

THE LENGTH OF OUR SALES CYCLE IS UNCERTAIN AND THEREFORE COULD CAUSE SIGNIFICANT
VARIATIONS IN OUR OPERATING RESULT.

Because our customers are typically large corporations,  the length of our sales
cycle -- the time between an initial  customer  contact and completing a sale --
can be  unpredictable.  The time between the date of our initial  contact with a
potential new customer and the execution of a sales  contract with that customer
ranges from less than two weeks to more than three months, depending on the size
of the customer,  the  application of our solution and other factors.  Our sales
cycle is also  subject to delays as a result of  customer-specific  factors over
which we have little or no control, including budgetary constraints and internal
acceptance  procedures.  During the sales cycle, we may expend substantial sales
and management resources without generating  corresponding  revenue. Our expense
levels  are  relatively  fixed in the  short  term and are  based in part on our
expectations  of our future revenue.  As a result,  any delay in our sales cycle

                                       16
<PAGE>
could  cause  significant  variations  in our  operating  results,  particularly
because a relatively small number of customer orders  represents a large portion
of our revenue.

WE MAY NOT BE ABLE TO BUILD AN EFFECTIVE SALES ORGANIZATION, WHICH WOULD PREVENT
US FROM  ACHIEVING  THE  INCREASED  SALES  VOLUME  NECESSARY  FOR US TO  ACHIEVE
PROFITABILITY.

In order to increase our revenue, we must build an effective sales organization.
If we do not do so, we will not be able to increase  our sales  sufficiently  to
achieve profitability.  In connection with our recent restructuring,  we reduced
the size of our sales  organization.  Our future  success will depend in part on
our ability to recruit and retain  additional,  qualified sales personnel and to
train  and  motivate  such  personnel.  In the  past,  we  have  had  difficulty
recruiting,   retaining  and  managing  qualified  sales  personnel.  We  cannot
guarantee  that  we will  not  encounter  similar  difficulties  in the  future.
Competition for personnel,  particularly in the San Francisco Bay Area, where we
are located,  is intense.  Many of the companies competing with us for qualified
sales  personnel  are larger and more  established  than we are and have greater
financial  resources  than we do. This may make it even more difficult for us to
recruit and retain such personnel.

Our operational history suggests that the level of sales we achieve is generally
determined by the number of sales  personnel we employ.  In 1998 and early 1999,
we suffered a  significant  decline in sales to customers in the western  United
States  primarily  due to  attrition  in  our  West  Coast  sales  force.  If we
experience  turnover in our sales force in the future,  our business,  financial
condition  and  operating  results  will  suffer.  Newly hired  sales  personnel
generally do not become fully productive until they have worked for at least two
quarters.  Because of the time  required to recruit new sales  personnel and for
them to become fully productive,  an unanticipated loss of sales personnel could
result  in an under  productive  sales  organization  and  reduced  sales  for a
significant period of time.

WE FACE INTENSE  COMPETITION  FOR  PERSONNEL,  WHICH COULD IMPAIR OUR ABILITY TO
RECRUIT AND RETAIN KEY PERSONNEL.

Our  ability to  develop,  market and sell our  solutions  and to  maintain  our
competitive  position  depends on our  ability to attract,  retain and  motivate
highly skilled  technical,  sales and marketing and other personnel.  There is a
limited number of people with the necessary  technical skills and understanding,
and competition for their services,  particularly in the San Francisco Bay Area,
is  intense.  If we fail to recruit or retain  these  personnel,  our ability to
develop, market and sell our solutions will suffer.

WE DEPEND ON  TECHNOLOGY  LICENSED FROM OTHER  COMPANIES.  WE MAY NOT BE ABLE TO
RENEW THESE LICENSES AS THEY EXPIRE FROM TIME TO TIME, AND WE MAY NOT BE ABLE TO
REPLACE THE  LICENSED  TECHNOLOGY  WITHOUT  SIGNIFICANT  EXPENSE OR  ENGINEERING
EFFORTS, IF AT ALL.

Our desktop player  software,  which runs on an end user's personal  computer to
allow  the  user to view an  event,  and our  Enterprise  Communications  Server
product,  which enables  customers to deliver  events to their target  audiences
through  Web-based  channels,  include  technologies  that other  companies have
licensed to us. If we are unable to maintain or renew these  licenses  when they
expire,  we would be forced to remove these  technologies  from our products and
develop or  license  comparable  technologies.  This  could  require  additional
license fees or extensive  engineering  efforts,  or significantly  decrease our
products'  functionality,  either of which  could harm our  business,  financial
condition and operating results.

In addition, we have developed our products to integrate well with the Microsoft
Windows NT operating system,  the operating system used by most of our customers
to run our software.  If the Windows NT operating system is changed by Microsoft
so that it no  longer  integrates  well  with our  products,  or if  Windows  NT
experiences technical problems, the operation of our software could be impaired.
In that event, our business,  financial condition and operating results could be
harmed.  Microsoft is not  obligated to ensure that Windows NT  integrates  well
with our products.

We may be required to obtain  licenses  from third  parties to refine,  develop,
market and deliver new products.  We may be unable to obtain any needed  license
on commercially reasonable terms or at all and rights granted under any licenses
may not be valid and enforceable.

                                       17
<PAGE>
WE OPERATE IN MARKETS  THAT WILL BECOME  INCREASINGLY  COMPETITIVE,  WHICH COULD
LEAD TO DECREASING PRICES AND REDUCED PROFITABILITY.

The market for rich media  business-to-business  communications solutions is new
and rapidly  evolving.  We expect that  competition  will  intensify.  Increased
competition could lead to decreasing prices and  profitability.  We compete with
companies   that  offer   components   of  a  rich  media   business-to-business
communications solution, including:

     *    providers of rich media software tools;

     *    multimedia content production and delivery companies;

     *    companies  that  provide  content  hosting  services,   which  include
          storing, delivering and tracking the distribution of content; and

     *    traditional business-to-business  communications and learning solution
          companies that offer live meeting and seminar services.

In  addition,  our  customers  and  potential  customers  represent  a source of
competition to the extent they decide to develop  in-house  business-to-business
communications solutions.

Many of our current and potential  competitors have longer operating  histories,
significantly greater financial, technical and marketing resources, greater name
recognition and larger existing customer bases than we do. These competitors may
also be able to undertake  more extensive  marketing  campaigns for their brands
and services,  adopt more aggressive  pricing  policies and make more attractive
offers  to  potential  employees  and  partners.  We may be  unable  to  compete
successfully  against current or future competitors,  and competitive  pressures
may cause our business to suffer.

OUR  MANAGEMENT  TEAM HAS LITTLE  EXPERIENCE  WORKING  TOGETHER IN THEIR CURRENT
POSITIONS, WHICH COULD LIMIT THE TEAM'S EFFECTIVENESS IN OPERATING OUR BUSINESS.

Our management team does not have  significant  experience  working  together at
Eloquent in their current positions.  This could prevent or limit our management
team's ability to work together effectively.  The failure of our management team
to work together effectively could delay efficient decision-making and execution
of business  objectives,  which would negatively impact our business,  financial
condition and operating results.

WE MAY NOT BE ABLE TO  ADEQUATELY  MANAGE OUR  ANTICIPATED  GROWTH,  WHICH COULD
IMPAIR OUR EFFICIENCY AND NEGATIVELY IMPACT OUR OPERATIONS.

We may not be able to manage  our growth  effectively,  which  could  impair our
efficiency,  reduce the quality of our solutions, impair further growth and harm
our  business,   financial  condition  and  operating  results.  If  we  do  not
effectively  manage this growth,  we will not be able to operate  efficiently or
maintain the quality of our  products.  Either  outcome would harm our operating
results.  In the past, we have experienced rapid growth, and we plan to continue
to expand our  operations.  This expansion is expensive and places a significant
strain on our personnel and other resources.  To manage our expanded  operations
effectively,  we will need to further  improve our  operational,  financial  and
management  systems  and  successfully  hire,  train,  motivate  and  manage our
employees.

WE PLAN TO EXPAND OUR BUSINESS INTO INTERNATIONAL  MARKETS,  IN WHICH WE HAVE NO
PRIOR EXPERIENCE. INTERNATIONAL EXPANSION WILL REQUIRE SIGNIFICANT RESOURCES AND
WILL  SUBJECT US TO NEW RISKS THAT MAY LIMIT OUR RETURN  FROM OUR  INTERNATIONAL
SALES EFFORTS.

One  of  our   strategies  to  increase  our  sales   sufficiently   to  achieve
profitability  is to add an  international  sales  force  and  operations.  This
expansion will involve a significant use of management and financial  resources,
particularly   because  we  have  no  previous   experience  with  international
operations.  We may not be  successful in creating  international  operations or
sales. In addition,  international  business activities are subject to a variety
of risks,  including  the adoption of laws,  currency  fluctuations,  actions by
third parties and political and economic conditions, any of which could restrict
or eliminate our ability to do business in foreign jurisdictions.

WE WILL DEPEND ON REVENUE FROM OUR CONTENT HOSTING  BUSINESS,  WHICH WILL SUFFER
IF OUR HOSTING EQUIPMENT AND SOFTWARE EXPERIENCE SYSTEM FAILURES.

Our future  success  depends in part on our  ability  to  successfully  host our
customers'  content on our  servers.  Our ability to host content will depend on
the efficient  and  uninterrupted  operation of our computer and  communications
hardware and software  systems.  We do not have fully redundant  content hosting
systems,  a formal  disaster  recovery plan or alternative  providers of hosting
services.  We also may not have business  interruption  insurance  sufficient to
compensate us for losses that may occur.  All of our content hosting servers are

                                       18
<PAGE>
located at XO Communications, Inc.'s ("XO") facilities in Cupertino, California.
These  systems and  operations  are  vulnerable to damage or  interruption  from
earthquakes,  floods, fires, power loss,  telecommunication  failures or similar
events.  They  are  also  subject  to  computer  viruses,  break-ins,  sabotage,
intentional acts of vandalism and similar misconduct. Despite any precautions we
may take, the occurrence of a natural disaster or other  unanticipated  problems
at the XO facility could result in interruptions in our content hosting service.
In addition, the failure by XO to provide the data communications  capacity that
we require could result in  interruptions  in our content hosting  service.  Any
damage  to  or  failure  of  our  content   hosting   systems  could  result  in
interruptions in our content hosting service.  System  interruptions will reduce
our revenue and  profits,  and our future  revenue and profits will be harmed if
our customers believe that our content hosting system is unreliable.

POTENTIAL  ERRORS IN OUR SOFTWARE COULD HARM OUR REPUTATION AND REDUCE OUR SALES
AND PROFITABILITY.

Software  defects  discovered after we release our software could result in loss
of revenue, delays in market acceptance and harm to our reputation.  Any product
liability  claim against us, if successful  and of sufficient  magnitude,  could
harm our profitability and future sales. Our software has in the past contained,
and may in the future contain,  "bugs" or errors.  Although we typically  design
our customer license agreements to contain provisions that limit our exposure to
potential  product  liability  claims,  we  cannot  guarantee  that  contractual
limitations of liability would be enforceable or would otherwise protect us from
liability  for damages to a customer  resulting  from a defect in our  software.
Even  though  we  maintain  insurance  that  covers  damages  arising  from  the
implementation and use of our software,  we cannot assure you that our insurance
would cover or be sufficient to cover any product liability claims against us.

WE HAVE IN THE PAST  EXPERIENCED  RETURNS OF OUR  PRODUCTS,  AND AS OUR BUSINESS
GROWS WE MAY EXPERIENCE  INCREASED RETURNS,  WHICH COULD HARM OUR REPUTATION AND
NEGATIVELY IMPACT OUR OPERATING RESULTS.

In the past,  some of our  customers  have  returned our rich media events to us
because  they felt that  modifications  were  required  for the  product to meet
project  specifications  and the customer's  requirements.  It is likely that we
will  experience some level of returns in the future and, as our business grows,
the amount of returns may  increase  despite  our  efforts to minimize  returns.
Also,  returns may adversely affect our relationship with affected customers and
may harm our  reputation.  This could cause us to lose  potential  customers and
business in the future.

POWER OUTAGES IN CALIFORNIA MAY ADVERSELY AFFECT US.

We  conduct  most of our  operations  in the state of  California  and rely on a
continuous  power  supply to conduct  operations.  California's  current  energy
crisis could  substantially  disrupt our  operations  and increase our expenses.
California  has  recently  implemented,  and  may  in  the  future  continue  to
implement,  rolling blackouts throughout the state. Although state lawmakers are
working to minimize the impact, if blackouts  interrupt our power supply, we may
be  temporarily  unable  to  continue  operations  at our  facilities.  Any such
interruption in our ability to continue operations at our facilities could delay
the development and production of our products and disrupt  communications  with
our customers or suppliers. Future interruptions could damage our reputation and
could  result in lost  revenue,  either of which  could  substantially  harm our
business  and  results  of  operations.   Furthermore,  shortages  in  wholesale
electricity  supplies have caused power prices to increase.  If wholesale prices
continue to increase,  our operating  expenses will likely  increase  which will
have a negative effect on our operating results.

THE  FAILURE TO PROTECT OUR  INTELLECTUAL  PROPERTY  MAY IMPAIR OUR  COMPETITIVE
POSITION.

Our copyrights, service marks, trademarks, trade secrets, proprietary technology
and similar intellectual  property are critical to our success. If we are unable
to adequately  protect our rights from infringement by competitors or others, or
from misuse by our licensees,  the competitive advantage that our rights provide
will be weakened.

We  rely  on  trademark  and  copyright   law,   trade  secret   protection  and
confidentiality  and  license  agreements  with our  employees  and  independent
contractors  to protect our  proprietary  rights.  We  strategically  pursue the
registration  of  trademarks  and service marks in the United States and abroad.
Effective trademark, service mark, copyright and trade secret protection may not
be  available  in every  country in which our  products  and  services  are made
available.

                                       19
<PAGE>
We have  licensed in the past,  and expect to license in the future,  certain of
our  proprietary  rights to third parties.  The steps taken by us to protect our
proprietary  rights may not be adequate.  Although we attempt to ensure that the
quality  of our  brand is  maintained  by these  licensees,  licensees  may take
actions that may harm the value of our proprietary rights or reputation.

WE MAY BECOME  SUBJECT TO  INTELLECTUAL  PROPERTY  LITIGATION IN THE FUTURE THAT
COULD CAUSE US TO INCUR  SIGNIFICANT  EXPENSE AND COULD  REQUIRE US TO ALTER OUR
PRODUCTS.

We  may  be  subject  to  legal  proceedings  and  claims  associated  with  our
intellectual  property from time to time in the future.  These  claims,  even if
without  merit,  could cause us to expend  significant  financial and managerial
resources. Further, if these claims are successful, we may be required to change
our trademarks,  alter our copyrighted material or pay financial damages, any of
which could harm our business.  Third parties may infringe or misappropriate our
copyrights,  trademarks  or similar  proprietary  rights in the future.  In such
event,  we may be  forced to  pursue  infringement  claims  against  such  third
parties.  These claims also could cause us to expend  significant  financial and
managerial resources.

RISKS RELATED TO THE INTERNET

OUR FUTURE SUCCESS DEPENDS ON CONTINUED  GROWTH IN USE OF THE WORLD WIDE WEB FOR
BUSINESS-TO-BUSINESS COMMUNICATIONS.

Our business  could suffer if Web usage does not continue to grow. Web usage may
be inhibited for a number of reasons, including:

     *    inadequate network infrastructure;

     *    security concerns;

     *    inconsistent quality of service;

     *    lack of availability of cost-effective and high-speed service; and

     *    changes in government regulation of the Web.

If Web  usage  grows,  the Web  infrastructure  may not be able to  support  the
demands placed on it by this growth,  or its  performance  and  reliability  may
decline.  In  addition,   future  outages  and  other  interruptions   occurring
throughout  the Web  could  lead to  decreased  use of our  products  and  would
therefore harm our business.

IF WE  ARE  UNABLE  TO  KEEP  UP  WITH  THE  RAPID  TECHNOLOGICAL  CHANGES  THAT
CHARACTERIZE THE WEB, OUR BUSINESS WOULD SUFFER.

Our future  success  will  depend on our  ability  to  continually  improve  our
solutions.  To do so, we will  need to  continually  enhance  our  solutions  in
response to the rapid  technological  developments,  evolving industry standards
and user demands,  and frequent new product  introductions and enhancements that
characterize  the  market  for Web  products  and  services.  In the  event  new
multimedia  enabling  technologies  are developed and widely adopted,  we may be
required to make fundamental and costly changes in our technology. We may not be
able to make  these  enhancements  or changes in a  cost-effective  manner  fast
enough to keep up with our  competitors  or at all. In this event,  our business
would suffer.

RISKS RELATED TO OUR COMMON STOCK

OUR STOCK  PRICE  HAS BEEN  EXTREMELY  VOLATILE  IN THE PAST AND IS LIKELY TO BE
EXTREMELY VOLATILE IN THE FUTURE, WHICH COULD CAUSE YOU TO LOSE ALL OR A PART OF
YOUR INVESTMENT AND MAY RESULT IN COSTLY AND DISTRACTING SECURITIES LITIGATION.

The market price of our common stock has been volatile in the past and is likely
to be  extremely  volatile  in the  future.  In the past,  following  periods of
volatility  in the market  price of a  company's  securities,  securities  class
action litigation has often been instituted  against such a company.  Securities
litigation could result in substantial costs and a diversion of our management's
attention and resources. The stocks of Web-related and technology companies like
ours have  experienced  extreme price and volume  fluctuations in recent months,
many of which appear unrelated to the companies'  business,  financial condition
or  operating  results.  Although  the market price of our stock will in part be

                                       20
<PAGE>
based on our business, financial condition and operating results, we expect that
it will  also be  affected  to a  significant  degree by these  market-wide  and
industry-wide price and volume fluctuations.

IF WE FAIL TO MEET NASDAQ NATIONAL MARKET LISTING REQUIREMENTS, OUR COMMON STOCK
WILL BE DELISTED.

Our common stock is currently listed on the Nasdaq National  Market.  Nasdaq has
requirements  that a company  must meet in order to remain  listed on the Nasdaq
National Market.  These requirements  include maintaining a minimum bid price of
$1.00 and minimum net tangible assets of $4.0 million. The minimum bid price for
our common  stock has been below $1.00 on several  occasions  recently.  Our net
tangible assets are approximately $31.8 million at June 30, 2001, however, if we
continue  to  experience  losses  from  operations  and we are  unable  to raise
additional  funds,  our net tangible assets will decline.  If as a result of the
application of these listing  requirements,  our common stock were delisted from
the  Nasdaq  National  Market,  our  stock  would  become  hard to buy and sell.
Further,  our stock could then  potentially  be subject to what are known as the
"penny stock" rules,  which place additional  requirements on broker-dealers who
sell or make a market in such securities.  Consequently, if we were removed from
the Nasdaq National Market, the ability or willingness of broker-dealers to sell
or make a market in our Common Stock might decline. As a result, your ability to
resell your shares of our common stock could be adversely affected.

OUR  DIRECTORS AND  EXECUTIVE  OFFICERS OWN A SIGNIFICANT  PORTION OF OUR COMMON
STOCK, WHICH ENABLES THEM TO CONTROL MATTERS DECIDED BY THE STOCKHOLDER.

Our directors and executive  officers and their  affiliates  beneficially  own a
significant  portion  of our  common  stock.  As a result  of  their  beneficial
ownership,  our directors and executive  officers,  acting alone or with others,
are able to control most matters requiring stockholder  approval,  including the
election  of  directors   and  approval  of   significant   transactions.   This
concentration  of ownership may also have the effect of delaying or preventing a
change in  control  of  Eloquent.  This  could  prevent  our  stockholders  from
realizing  a premium  over the market  price for their  shares or from  bringing
about a change in management.

ADDITIONAL DISCUSSION OF THESE AND OTHER RISK FACTORS IS DISCLOSED IN OUR ANNUAL
REPORT ON FORM  10-K/A  FOR THE YEAR ENDED  DECEMBER  31,  2000,  FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS

Our exposure to market risk is limited to interest income sensitivity,  which is
affected by changes in the general level of U.S.  interest  rates,  particularly
because the majority of our investments are in short-term debt securities issued
by corporations.  We place our investments with  high-quality  issuers and limit
the amount of credit exposure to any one issuer.  Our investments are subject to
interest rate risk, and will decline in value if interest rates increase. Due to
the nature of our investments, an immediate 10% increase in interest rates would
not have a material effect on our financial  condition or results of operations.
We do not have any foreign currency or other derivative financial instruments.

PART II: OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Eloquent, certain of its directors and officers, and certain underwriters of its
initial public offering are among the defendants  named in three purported class
action  complaints  filed in July 2001 in  federal  district  court on behalf of
persons and  entities  who  acquired  the  Eloquent's  common  stock on or after
February 17, 2000. The  complaints  allege that the  registration  statement and
prospectus  issued  by  Eloquent  in  connection  with the  public  offering  of
Eloquent's  common  stock  contained  untrue  statements  of  material  fact  or
omissions  of  material  fact  in  violation  of  securities  laws  because  the
registration  statement and  prospectus  failed to disclose that the  offering's
underwriters  had  allegedly  solicited  and received  additional  and excessive
compensation and benefits beyond those listed in the registration  statement and
prospectus and that the offering's underwriters had entered into tie-in or other
arrangements  with certain of their customers  which were allegedly  designed to
maintain, distort and/or inflate the market price of the Eloquent's common stock
in the  aftermarket.  The actions seek  unspecified  monetary  damages and other
relief. Eloquent anticipates that these cases will be consolidated into a single
class  action.  Eloquent  believes  that these  lawsuits  are without  merit and
intends to vigorously defend against them.

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<PAGE>
In addition to the  foregoing  matters,  from time to time,  Eloquent may become
involved in various lawsuits and legal  proceedings  which arise in the ordinary
course of business.  However,  litigation is subject to inherent  uncertainties,
and an adverse  result in this or other matters may arise from time to time that
may harm our business.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On July 12, 2001, the Annual Meeting of Stockholders of Eloquent,  Inc. was held
in San Mateo, California. Proxies representing 16,364,615 shares of common stock
or 91% of the total outstanding shares were voted at the meeting.

The stockholders elected one director,  Sarah M. Nolan, to hold office until the
2004  Annual  Meeting  of  Stockholders.   The  proposal   received   16,306,685
affirmative  votes and 57,930 votes were withheld.  Clifford A. Reid and Michael
E. Herman will continue in office as directors  until the 2002 Annual Meeting of
Stockholders.  Anthony P. Brenner and Terry L.  Opdendyk will continue in office
as directors until the 2003 Annual Meeting of Stockholders.

The  stockholders  approved an  amendment to the 1999 Equity  Incentive  Plan to
change the  eligibility of  non-employee  directors on the Board of Directors to
receive  automatic  initial and  automatic  annual stock option grants under the
Eloquent's 1999 Equity Incentive Plan to include all  non-employee  directors of
the Eloquent,  to increase the sizes of the automatic initial stock option grant
and  automatic  annual  stock  option  grant  under the  Eloquent's  1999 Equity
Incentive Plan from 25,000 shares and 5,000 shares of common stock to 50,000 and
10,000 shares of common stock,  respectively,  and to grant, on a one-time basis
only,  to all  current  non-employee  directors  of the  Eloquent  an  option to
purchase  50,000  shares of  common  stock.  The  proposal  received  15,926,859
affirmative votes, 429,341 negative votes and 8,415 abstentions.

The  stockholders  ratified the  appointment  of  PricewaterhouseCoopers  LLP as
independent  auditors of the  Eloquent  for the 2001 fiscal  year.  The proposal
received   16,354,188   affirmative   votes,  8,707  negative  votes  and  1,720
abstentions.

ITEM 5. OTHER INFORMATION

In June 2001, Eloquent agreed in principal to acquire all the outstanding shares
of Rebop common stock for approximately  $3.8 million in cash and 850,000 shares
of  Eloquent's  common stock with the value of  $935,000.  The  acquisition  was
finalized on July 5, 2001. At the closing of the acquisition, ten percent of the
stock to be issued and cash to be paid to the former  shareholders of Rebop, was
placed in escrow to secure certain indemnification obligations contained in them
merger agreement.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a)  Exhibits

     EXHIBIT
     NUMBER                                  DESCRIPTION
     ------                                  -----------
     3.03*          Amended  and  Restated  Certificate  of  Incorporation,   as
                    currently in effect.

     3.04*          Amended and Restated Bylaws, as currently in effect.

     4.01*          Form of Specimen Stock Certificate.

     4.02*          Fourth  Amended and Restated  Investors'  Rights  Agreement,
                    dated October 20, 1999, among Eloquent and certain investors
                    named therein.

     4.03*          Securities  Purchase  Agreement,  dated October 20, 1999, by
                    and among Eloquent and certain investors named therein.

     5.01*          Opinion of Cooley  Godward  LLP  regarding  legality  of the
                    securities being registered.

     10.01*         Form of Indemnity  Agreement  entered into by Eloquent  with
                    each of its directors and executive officers.

     10.02*         Equity Incentive Plan.

     10.03*         Form of Stock Option  Agreement  under the Equity  Incentive
                    Plan.

     10.04*         1997 Equity Incentive Plan.

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<PAGE>
     EXHIBIT
     NUMBER                                  DESCRIPTION
     ------                                  -----------
     10.05*         Form  of  Stock  Option  Agreement  under  the  1997  Equity
                    Incentive Plan.

     10.06*         1999 Equity Incentive Plan.

     10.07*         Form  of  Stock  Option  Agreement  under  the  1999  Equity
                    Incentive Plan.

     10.08*         Form of Nonstatutory Stock Option Agreement for Non-Employee
                    Director Grants under the 1999 Equity Incentive Plan.

     10.09*         1999 Employee Stock Purchase Plan.

     10.10*         Form of 1999 Employee Stock Purchase Plan Offering.

     10.11*         Employment  Agreement,  dated  December  23,  1998,  between
                    Eloquent and Abraham Kleinfeld.

     10.12*         Office Lease,  dated November 19, 1996, between Eloquent and
                    California Casualty Indemnity Exchange, as amended.

     10.13*         OEM  Agreement,  dated May 30,  1997,  between  Eloquent and
                    Verity, Inc.

     10.14*         Software  License  Agreement,  dated June 30, 1997,  between
                    Eloquent and Voxware, Inc.

     10.15*         Co-location Service Agreement, dated March 30, 1998, between
                    Eloquent and Concentric Network Corporation.

     10.16*         Sublease Agreement, dated June 1, 1999, between Eloquent and
                    California Casualty Indemnity Exchange.

     10.17*         ISV  Software  License  Agreement,  dated  August  1,  1999,
                    between Eloquent and WebXpress, Inc.

     10.18*         Assignment  of Sublease,  dated  November 24, 1999,  between
                    Eloquent and California Casualty Management Company.

     10.19**        2000 Non-Qualified Stock Plan.

     10.20***       Agreement  and  Plan of  Merger  and  Reorganization,  dated
                    October 31, 2000 among  Eloquent,  Inc.,  Rebop  Acquisition
                    Corp., Rebop Media, Inc., and Certain  Shareholders of Rebop
                    Media, Inc.

     10.21****      Employment  Agreement,   dated  December  1,  2000,  between
                    Eloquent and John Curson.

     10.22****      Confidential  Severance  Agreement,  dated November 1, 2000,
                    between Eloquent and Abraham Kleinfeld.

     10.23*****     First  Amended and  Restated  Agreement  and Plan of Merger,
                    dated June 22, 2001, by and between  Eloquent,  Rebop Media,
                    Inc., Rebop  Acquisition  Corp. and Certain  Shareholders of
                    Rebop Media, Inc.

     10.24          Employment Offer Letter, dated June 6, 2001 between Eloquent
                    and M. Edward Molkenbuhr

     10.25          Employment  Offer  Letter,   dated  June  28,  2001  between
                    Eloquent and Joseph Cortale

----------
*     Incorporated by reference to the same numbered  exhibit  previously  filed
      with  the  Company's  Regulation  Statement  on Form  S-1  (SEC  File  No.
      333-89537).
**    Incorporated  by  reference  to  exhibit  99.1  previously  filed with the
      Company's Registration Statement on Form S-8 (SEC File No. 333-34182).
***   Incorporated  by  reference  to  exhibit  99.2  previously  filed with the
      Company's  Quarterly  Report on Form 10-Q for the  quarterly  period ended
      September 30, 2000.
****  Incorporated by reference to the same numbered  exhibit  previously  filed
      with the  Company's  Annual  Report  on Form  10-K/A  for the  year  ended
      December 31, 2000.
***** Incorporated by  reference  to the exhibit 2.1  previously  filed with the
      Company's Current Report on Form 8-K filed on July 6, 2001.

(b)  Reports on Form 8-K

     The Company  did not file any  reports on Form 8-K during the three  months
ended June 30, 2001.

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<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.


Date: August 14, 2001

                                        ELOQUENT, INC.

                                        By: /s/ R. John Curson
                                            ------------------------------------
                                            R. John Curson
                                            Chief Financial Officer, Secretary
                                            and Treasurer
                                            (Principal Accounting and Financial
                                            Officer)

                                       24