##### Table of Contents









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 SEPTEMBER 30, 2000

OR



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

Commission File Number: 0-27470



---

CYBERCASH, INC.

(Exact name of registrant as specified in its
charter)


|                                                                        |  |                                                
|----------------------------------------------------------------------- |  | -----------------------------------------------
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Delaware(State or other jurisdiction of
	incorporation or organization) |  | 54-1725021(I.R.S. Employer
	Identification No.)

2100 Reston Parkway, Reston, VA 20191



Registrants telephone number, including area code: 
(703) 620-4200



---

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

Indicate the number of shares outstanding of each of the
issuers classes of common stock as of the latest
practicable date.

|                                      |  |                                                   
|------------------------------------- |  | --------------------------------------------------
|                                     
|                                     
|                                     
|                                     
|Common Stock, $0.001 Par Value(Class) |  | 25,943,027 Shares(Outstanding at November 8, 2000)









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TABLE OF CONTENTS



|                                |                                                                                                |  |  |  |  |  |  | 
|------------------------------- | ---------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I -- FINANCIAL INFORMATION
|                                | Item 1. Consolidated Financial Statements                                                     
|                                | Item 2. Managements Discussion and Analysis of Financial Conditions and Results of Operations
|                                | Item 3. Qualitative and Quantitative Market Risk Disclosure                                   
|PART II -- OTHER INFORMATION   
|                                | Item 1. Legal Proceedings                                                                     
|                                | Item 2. Changes in Securities                                                                 
|                                | Item 3. Defaults upon Senior Securities                                                       
|                                | Item 4. Submission of Matters to a Vote of Security-Holders                                   
|                                | Item 5. Other Information                                                                     
|                                | Item 6. Exhibits and Reports on Form 8-K                                                      
|                                | SIGNATURES                                                                                    
|Financial Data Schedule        



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CYBERCASH, INC.

Form 10-Q


For the Quarterly Period Ended September 30, 2000


TABLE OF CONTENTS

|                              |  |                                                                                                        |    |          |    | 
|----------------------------- |  | ------------------------------------------------------------------------------------------------------ | -- | -------- | -- | 
|                              |  |                                                                                                        |    | Page No.
|                              |  |                                                                                                        |    |         
|                             
|                             
|                             
|                             
|Part I. Financial Information |  |                                                                                                        |    |         
|Item 1.                       |  | Consolidated Financial Statements                                                                      |    |          |    | 
|                             
|                             
|                             
|                             
|                              |  | Consolidated Statements of Operations for the three and nine
	months ended September 30, 2000 and 1999 |    |          | 3  | 
|                             
|                             
|                             
|                             
|                              |  | Consolidated Balance Sheets as of September 30, 2000 and
	December 31, 1999                            |    |          | 4  | 
|                             
|                             
|                             
|                             
|                              |  | Consolidated Statements of Cash Flows for the nine months ended
	September 30, 2000 and 1999           |    |          | 5  | 
|                             
|                             
|                             
|                             
|                              |  | Notes to Consolidated Financial Statements                                                             |    |          | 6  | 
|                             
|                             
|                             
|                             
|Item 2.                       |  | Managements Discussion and Analysis of Financial
	Conditions and Results of Operations                |    |          | 8  | 
|                             
|                             
|                             
|                             
|Item 3.                       |  | Qualitative and Quantitative Market Risk Disclosure                                                    |    |          | 10 | 
|                             
|                             
|                             
|                             
|Part II. Other Information    |  |                                                                                                        |    |         
|                             
|                             
|                             
|                             
|Item 1.                       |  | Legal Proceedings                                                                                      |    |          | 11 | 
|                             
|                             
|                             
|                             
|Item 2.                       |  | Changes in Securities                                                                                  |    |          | 11 | 
|                             
|                             
|                             
|                             
|Item 3.                       |  | Defaults upon Senior Securities                                                                        |    |          | 11 | 
|                             
|                             
|                             
|                             
|Item 4.                       |  | Submission of Matters to a Vote of Security-Holders                                                    |    |          | 11 | 
|                             
|                             
|                             
|                             
|Item 5.                       |  | Other Information                                                                                      |    |          | 11 | 
|                             
|                             
|                             
|                             
|Item 6.                       |  | Exhibits and Reports on Form 8-K                                                                       |    |          | 11 | 
|                             
|                             
|                             
|                             
|Signatures                    |  |                                                                                                        | 12 |         

2



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##### Table of Contents






PART I  FINANCIAL INFORMATION




Item 1.  Consolidated Financial
Statements

CYBERCASH, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


|                                 |                             |                    |            |                   |           |      |             |           |           |   |             |            |            |   |             |            |            | 
|-------------------------------- | --------------------------- | ------------------ | ---------- | ----------------- | --------- | ---- | ----------- | --------- | --------- | - | ----------- | ---------- | ---------- | - | ----------- | ---------- | ---------- | 
|                                 |                             |                    |            |                  
|                                 |                             | Three months ended |            | Nine months ended
|                                 |                             | September 30,      |            | September 30,    
|                                 |                             |                    |            |                  
|                                 |                             | 2000               |            | 1999              |           | 2000 |             | 1999     
|                                 |                             |                    |            |                   |           |      |             |          
|Revenues                         |                             | $                  | 5,804,232  |                   |           | $    | 5,099,528   |           |           | $ | 17,525,176  |            |            | $ | 13,991,649  |           
|                                
|                                
|                                
|                                
|Less: returns and allowances     |                             |                    | 85,572     |                   |           |      | 107,980     |           |           |   | 433,069     |            |            |   | 376,059     |           
|                                 |                             |                    |            |                   |           |      |             |           |           |   |             |            |            |   |             |           
|                                 |                             | Net revenues       |            |                   | 5,718,660 |      |             |           | 4,991,548 |   |             |            | 17,092,107 |   |             |            | 13,615,590 | 
|                                
|                                
|                                
|                                
|Cost of revenues                 |                             |                    | 3,215,194  |                   |           |      | 2,959,735   |           |           |   | 9,689,507   |            |            |   | 8,011,845   |           
|                                 |                             |                    |            |                   |           |      |             |           |           |   |             |            |            |   |             |           
|                                 |                             | Gross profit       |            |                   | 2,503,466 |      |             |           | 2,031,813 |   |             |            | 7,402,600  |   |             |            | 5,603,745  | 
|                                
|                                
|                                
|                                
|Costs and expenses:              |                             |                    |            |                   |           |      |             |           |           |   |             |            |            |   |             |           
|                                
|                                
|                                
|                                
|                                 | Research and development    |                    |            | 1,927,886         |           |      |             | 2,904,705 |           |   |             | 6,275,375  |            |   |             | 7,847,419  |           
|                                
|                                
|                                
|                                
|                                 | Sales and marketing         |                    |            | 3,798,002         |           |      |             | 8,785,564 |           |   |             | 11,303,195 |            |   |             | 17,695,996 |           
|                                
|                                
|                                
|                                
|                                 | General and administrative  |                    |            | 2,190,466         |           |      |             | 2,439,807 |           |   |             | 7,776,636  |            |   |             | 6,403,985  |           
|                                
|                                
|                                
|                                
|                                 | Amortization of intangibles |                    |            | 2,379,887         |           |      |             | 2,234,468 |           |   |             | 7,112,537  |            |   |             | 6,107,510  |           
|                                 |                             |                    |            |                   |           |      |             |           |           |   |             |            |            |   |             |           
|Loss from operations             |                             |                    | (7,792,775 | )                 |           |      | (14,332,731 | )         |           |   | (25,065,143 | )          |            |   | (32,451,165 | )         
|                                
|                                
|                                
|                                
|Interest and other income        |                             |                    | 204,230    |                   |           |      | 132,202     |           |           |   | 585,239     |            |            |   | 395,412     |           
|                                
|                                
|                                
|                                
|Loss from investments            |                             |                    |           |                   |           |      |            |           |           |   |            |            |            |   | (1,000,000  | )         
|                                 |                             |                    |            |                   |           |      |             |           |           |   |             |            |            |   |             |           
|Net loss                         |                             | $                  | (7,588,545 | )                 |           | $    | (14,200,529 | )         |           | $ | (24,479,904 | )          |            | $ | (33,055,753 | )         
|                                 |                             |                    |            |                   |           |      |             |           |           |   |             |            |            |   |             |           
|Basic and diluted loss per share |                             | $                  | (0.29      | )                 |           | $    | (0.65       | )         |           | $ | (0.97       | )          |            | $ | (1.61       | )         
|                                 |                             |                    |            |                   |           |      |             |           |           |   |             |            |            |   |             |           

See accompanying notes.

3



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##### Table of Contents



CYBERCASH, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)


|                                     |                                                                                                                                                                                                                                                   |                                            |            |              |            |  |            |              |             | 
|------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ---------- | ------------ | ---------- |  | ---------- | ------------ | ----------- | 
|                                     |                                                                                                                                                                                                                                                   | September 30,                              |            | December 31,
|                                     |                                                                                                                                                                                                                                                   | 2000                                       |            | 1999        
|                                     |                                                                                                                                                                                                                                                   |                                            |            |             
|                                    
|                                    
|                                    
|                                    
|ASSETS                              
|                                    
|                                    
|                                    
|                                    
|Current assets:                      |                                                                                                                                                                                                                                                   |                                            |            |              |            |  |            |             
|                                    
|                                    
|                                    
|                                    
|                                     | Cash and cash equivalents                                                                                                                                                                                                                         |                                            | $          | 10,373,356   |            |  | $          | 18,176,010   |            
|                                    
|                                    
|                                    
|                                    
|                                     | Restricted cash                                                                                                                                                                                                                                   |                                            |            | 358,738      |            |  |            | 354,936      |            
|                                    
|                                    
|                                    
|                                    
|                                     | Accounts receivable, net                                                                                                                                                                                                                          |                                            |            | 3,905,758    |            |  |            | 3,394,091    |            
|                                    
|                                    
|                                    
|                                    
|                                     | Prepaid expenses and other current assets                                                                                                                                                                                                         |                                            |            | 1,171,131    |            |  |            | 1,029,631    |            
|                                     |                                                                                                                                                                                                                                                   |                                            |            |              |            |  |            |             
|                                     |                                                                                                                                                                                                                                                   | Total current assets                       |            |              | 15,808,983 |  |            |              | 22,954,668  | 
|                                    
|                                    
|                                    
|                                    
|Property and equipment, net          |                                                                                                                                                                                                                                                   |                                            | 8,366,656  |              |            |  | 9,965,802  |             
|                                    
|                                    
|                                    
|                                    
|Investments                          |                                                                                                                                                                                                                                                   |                                            | 8,009,476  |              |            |  | 8,009,476  |             
|                                    
|                                    
|                                    
|                                    
|Other long-term assets               |                                                                                                                                                                                                                                                   |                                            | 401,717    |              |            |  | 448,979    |             
|                                    
|                                    
|                                    
|                                    
|Intangibles, net                     |                                                                                                                                                                                                                                                   |                                            | 60,753,657 |              |            |  | 67,326,739 |             
|                                     |                                                                                                                                                                                                                                                   |                                            |            |              |            |  |            |             
|                                     |                                                                                                                                                                                                                                                   | Total assets                               |            | $            | 93,340,489 |  |            | $            | 108,705,664 | 
|                                     |                                                                                                                                                                                                                                                   |                                            |            |              |            |  |            |             
|                                    
|                                    
|                                    
|                                    
|LIABILITIES AND STOCKHOLDERS EQUITY
|                                    
|                                    
|                                    
|                                    
|Current liabilities:                 |                                                                                                                                                                                                                                                   |                                            |            |              |            |  |            |             
|                                    
|                                    
|                                    
|                                    
|                                     | Accounts payable                                                                                                                                                                                                                                  |                                            | $          | 2,205,410    |            |  | $          | 1,714,934    |            
|                                    
|                                    
|                                    
|                                    
|                                     | Accrued employee benefits and bonus                                                                                                                                                                                                               |                                            |            | 1,623,016    |            |  |            | 1,268,047    |            
|                                    
|                                    
|                                    
|                                    
|                                     | Other accrued expenses                                                                                                                                                                                                                            |                                            |            | 1,749,615    |            |  |            | 2,320,242    |            
|                                    
|                                    
|                                    
|                                    
|                                     | Deferred revenue                                                                                                                                                                                                                                  |                                            |            | 931,039      |            |  |            | 1,212,847    |            
|                                     |                                                                                                                                                                                                                                                   |                                            |            |              |            |  |            |             
|                                     |                                                                                                                                                                                                                                                   | Total current liabilities                  |            |              | 6,509,080  |  |            |              | 6,516,070   | 
|                                    
|                                    
|                                    
|                                    
|Stockholders equity:                |                                                                                                                                                                                                                                                   |                                            |            |              |            |  |            |             
|                                    
|                                    
|                                    
|                                    
|                                     | Common stock, $.001 par value; 80,000,000 shares authorized;
        25,889,034 shares issued and 25,869,034 outstanding as of
        September 30, 2000 and 24,701,542 shares issued and
        24,681,542 outstanding as of December 31, 1999 |                                            |            | 25,889       |            |  |            | 24,702       |            
|                                    
|                                    
|                                    
|                                    
|                                     | Additional paid-in capital                                                                                                                                                                                                                        |                                            |            | 250,063,478  |            |  |            | 241,053,526  |            
|                                    
|                                    
|                                    
|                                    
|                                     | Accumulated deficit                                                                                                                                                                                                                               |                                            |            | (162,492,197 | )          |  |            | (138,012,293 | )          
|                                    
|                                    
|                                    
|                                    
|                                     | Treasury stock, at cost, 20,000 shares                                                                                                                                                                                                            |                                            |            | (120,000     | )          |  |            | (120,000     | )          
|                                    
|                                    
|                                    
|                                    
|                                     | Accumulated other comprehensive loss                                                                                                                                                                                                              |                                            |            | (645,761     | )          |  |            | (487,432     | )          
|                                    
|                                    
|                                    
|                                    
|                                     | Receivable from sale of common stock                                                                                                                                                                                                              |                                            |            |             |            |  |            | (268,909     | )          
|                                     |                                                                                                                                                                                                                                                   |                                            |            |              |            |  |            |             
|                                     |                                                                                                                                                                                                                                                   | Total stockholders equity                 |            |              | 86,831,409 |  |            |              | 102,189,594 | 
|                                     |                                                                                                                                                                                                                                                   |                                            |            |              |            |  |            |             
|                                     |                                                                                                                                                                                                                                                   | Total liabilities and stockholders equity |            | $            | 93,340,489 |  |            | $            | 108,705,664 | 
|                                     |                                                                                                                                                                                                                                                   |                                            |            |              |            |  |            |             

See accompanying notes.

4



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##### Table of Contents



CYBERCASH, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


|                                                                                            |                                                                                              |                                           |                                           |           |          |             |             |           |          |             |  
|------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------- | ----------------------------------------- | ----------------------------------------- | --------- | -------- | ----------- | ----------- | --------- | -------- | ----------- | -
|                                                                                            |                                                                                              |                                          
|                                                                                            |                                                                                              | Nine months ended                        
|                                                                                            |                                                                                              | September 30,                            
|                                                                                            |                                                                                              |                                          
|                                                                                            |                                                                                              | 2000                                      |                                           | 1999     
|                                                                                            |                                                                                              |                                           |                                           |          
|Operating Activities                                                                        |                                                                                              |                                           |                                           |           |          |             |             |          
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Net loss                                                                                    |                                                                                              | $                                         | (24,479,904                               | )         |          | $           | (33,055,753 | )        
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Adjustments to reconcile net loss to net cash used in operating
        activities:         |                                                                                              |                                           |                                           |           |          |             |             |          
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Depreciation                                                                                 |                                           |                                           | 3,132,751 |          |             |             | 2,807,096 |         
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Amortization                                                                                 |                                           |                                           | 7,112,537 |          |             |             | 6,107,510 |         
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Loss from write-off of investment                                                            |                                           |                                           |          |          |             |             | 1,000,000 |         
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Expense recognized in association with issuance of stock, stock
        options and warrants |                                           |                                           | 2,207,078 |          |             |             | 1,300,468 |         
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Loss on disposal of assets                                                                   |                                           |                                           | 10,190    |          |             |             | 165,007   |         
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Accrued interest on receivable from sale of Common Stock                                     |                                           |                                           | (2,545    | )        |             |             | (11,434   | )       
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Changes in operating assets and liabilities:                                                 |                                           |                                           |           |          |             |             |           |         
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            |                                                                                              | Restricted cash                           |                                           |           |         |             |             |           | (7,203   | )          
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            |                                                                                              | Accounts receivable                       |                                           |           | (562,157 | )           |             |           | 720,589  |            
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            |                                                                                              | Prepaid expenses and other current assets |                                           |           | (181,070 | )           |             |           | (293,839 | )          
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            |                                                                                              | Other long-term assets                    |                                           |           | 26,262   |             |             |           | 118,036  |            
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            |                                                                                              | Accounts payable and accrued expenses     |                                           |           | 159,922  |             |             |           | (635,812 | )          
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            |                                                                                              | Deferred revenue                          |                                           |           | (281,808 | )           |             |           | 481,413  |            
|                                                                                            |                                                                                              |                                           |                                           |           |          |             |             |          
|                                                                                            |                                                                                              |                                           | Net cash used in operating activities     |           |          | (12,858,744 | )           |           |          | (21,303,922 | )
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Investing Activities                                                                        |                                                                                              |                                           |                                           |           |          |             |             |          
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Acquisitions, net of cash received                                                          |                                                                                              |                                           | (335,000                                  | )         |          |             | (634,782    | )        
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Investment                                                                                  |                                                                                              |                                           |                                          |           |          |             | (3,500,000  | )        
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Purchases of property and equipment                                                         |                                                                                              |                                           | (1,658,462                                | )         |          |             | (3,564,739  | )        
|                                                                                            |                                                                                              |                                           |                                           |           |          |             |             |          
|                                                                                            |                                                                                              |                                           | Net cash used in investing activities     |           |          | (1,993,462  | )           |           |          | (7,699,521  | )
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Financing Activities                                                                        |                                                                                              |                                           |                                           |           |          |             |             |          
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Proceeds from sale of common stock                                                          |                                                                                              |                                           | 5,350,000                                 |           |          |             | 29,890,818  |          
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Proceeds from receivable from sale of common stock                                          |                                                                                              |                                           | 267,653                                   |           |          |             | 14,170      |          
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Proceeds from the issuance of common stock through the Employee
        Stock Purchase Plan |                                                                                              |                                           | 122,334                                   |           |          |             | 238,840     |          
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Proceeds from the issuance of common stock through the Employee
        Stock Option Plan   |                                                                                              |                                           | 1,331,727                                 |           |          |             | 1,426,640   |          
|                                                                                            |                                                                                              |                                           |                                           |           |          |             |             |          
|                                                                                            |                                                                                              |                                           | Net cash provided by financing activities |           |          | 7,071,714   |             |           |          | 31,570,468  |  
|                                                                                            |                                                                                              |                                           |                                           |           |          |             |             |          
|Effect of exchange rate changes on cash and cash equivalents                                |                                                                                              |                                           | (22,162                                   | )         |          |             | (63,341     | )        
|                                                                                            |                                                                                              |                                           |                                           |           |          |             |             |          
|Net increase/ (decrease) in cash and cash equivalents                                       |                                                                                              |                                           | (7,802,654                                | )         |          |             | 2,503,684   |          
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Cash and cash equivalents at beginning of period                                            |                                                                                              |                                           | 18,176,010                                |           |          |             | 10,902,532  |          
|                                                                                            |                                                                                              |                                           |                                           |           |          |             |             |          
|Cash and cash equivalents at end of period                                                  |                                                                                              | $                                         | 10,373,356                                |           |          | $           | 13,406,216  |          
|                                                                                            |                                                                                              |                                           |                                           |           |          |             |             |          
|Supplemental disclosure of acquisition activities:                                          |                                                                                              |                                           |                                           |           |          |             |             |          
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Assets and intangibles acquired                                                             |                                                                                              | $                                         | 335,000                                   |           |          | $           | 12,739,809  |          
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Liabilities                                                                                 |                                                                                              |                                           |                                          |           |          |             | (163,731    | )        
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Common Stock and stock options                                                              |                                                                                              |                                           |                                          |           |          |             | (11,326,496 | )        
|                                                                                            |                                                                                              |                                           |                                           |           |          |             |             |          
|Net assets acquired                                                                         |                                                                                              |                                           | 335,000                                   |           |          |             | 1,249,582   |          
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Less: cash received                                                                         |                                                                                              |                                           |                                          |           |          |             | 614,800     |          
|                                                                                            |                                                                                              |                                           |                                           |           |          |             |             |          
|Cash paid                                                                                   |                                                                                              | $                                         | 335,000                                   |           |          | $           | 634,782     |          
|                                                                                            |                                                                                              |                                           |                                           |           |          |             |             |          

See accompanying notes.

5



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##### Table of Contents



CYBERCASH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  Organization And Nature Of Operations

CyberCash, Inc. (CyberCash or the
Company) was incorporated on August 29, 1994 in the
state of Delaware. CyberCash is the worlds leading
provider of Internet payment services and electronic payment
software.

The accompanying condensed consolidated financial statements and
notes thereto have been prepared in accordance with generally
accepted accounting principles for interim financial information
and should be read in conjunction with the Companys
consolidated financial statements found in the Companys
Annual Report on Form 10-K for the period ending
December 31, 1999. In the opinion of management, all
adjustments (consisting only of normal, recurring adjustments)
considered necessary to reflect fairly the Companys
consolidated financial position and consolidated results of
operations have been included. The preparation of financial
statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. The results
of operations and cash flows for the three and nine month
periods ended September 30, 2000 and 1999 are not
necessarily indicative of the results for the full year. Certain
previously reported amounts have been reclassified to conform to
the current period presentation. These reclassifications had no
affect on the previously reported net income (loss).

2.  Stockholders Equity

On July 26, 2000, the Company and the Buyers under the
securities purchase agreement, dated
August 19, 1999 (the Agreement), amended the agreement postponing the date
on which the One Year Price (as defined in the Agreement)
applicable to the Common Stock, par value $0.001, was to be
determined from August 19, 2000 to October 19, 2000.
The date on which the One Year Price applicable to the Warrants
would be determined was not postponed. On August 19, 2000, the
exercise price of the warrants was reduced to the One Year Price
of $4.16563 per share and the number of shares underlying the
warrants was increased to 450,112 from 164,384. As of
October 19, 2000, the One Year Price (redefined as the Reset Price) pertaining to the
Common Stock purchased under the Agreement was $2.4345,
resulting in the Companys obligation either to make a
payment to the Buyers under the Agreement equal to $10,998,082
or issue the Buyers 4,517,594 additional shares of Common Stock.
On November 1, 2000, the Company agreed to issue
$10,998,082 aggregate principal amount of 6% subordinated
convertible notes due 2002 (the Notes)
to the Buyers in exchange for the Companys
obligations resulting from the October 19 Reset Price
determination. The Notes will be convertible at $2.4345 per
share, and callable by the Company at par at the expiration of
any 20 consecutive trading day period in which the closing bid
price for the Companys common stock exceeds $4.869 per
share. Interest payments will be payable semi-annually in arrears,
commencing May 1, 2001. The Company has agreed to register under the Securities
Act of 1933 the resale of the Company common stock to be issued
upon conversion of the Notes.

6



---



##### Table of Contents



CYBERCASH, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

3.  Net Loss Per Share

The following table sets forth the computation of basic and
diluted net loss per share:

|                                          |  |                    |            |                   |  |      |             |      |  |   |             |   |  |   |             |  
|----------------------------------------- |  | ------------------ | ---------- | ----------------- |  | ---- | ----------- | ---- |  | - | ----------- | - |  | - | ----------- | -
|                                          |  |                    |            |                  
|                                          |  | Three months ended |            | Nine months ended
|                                          |  | September 30,      |            | September 30,    
|                                          |  |                    |            |                  
|                                          |  | 2000               |            | 1999              |  | 2000 |             | 1999
|                                          |  |                    |            |                   |  |      |             |     
|Numerator:                                |  |                    |            |                   |  |      |             |      |  |   |             |   |  |   |             |  
|                                         
|                                         
|                                         
|                                         
|Net loss available to Common Stockholders |  | $                  | (7,588,545 | )                 |  | $    | (14,200,529 | )    |  | $ | (24,479,904 | ) |  | $ | (33,055,753 | )
|                                         
|                                         
|                                         
|                                         
|Denominator:                              |  |                    |            |                   |  |      |             |      |  |   |             |   |  |   |             |  
|                                         
|                                         
|                                         
|                                         
|Weighted average shares outstanding       |  |                    | 25,869,034 |                   |  |      | 21,817,468  |      |  |   | 25,136,686  |   |  |   | 20,583,300  |  
|                                          |  |                    |            |                   |  |      |             |      |  |   |             |   |  |   |             |  
|Basic and diluted loss per share          |  | $                  | (0.29      | )                 |  | $    | (0.65       | )    |  | $ | (0.97       | ) |  | $ | (1.61       | )
|                                          |  |                    |            |                   |  |      |             |      |  |   |             |   |  |   |             |  

4.  Comprehensive Loss

The components of comprehensive loss for the nine months ended
September 30, 2000 and 1999 are as follows:

|                                         |  |                    |            |                   |  |      |             |      |  |   |             |   |  |   |             |  
|---------------------------------------- |  | ------------------ | ---------- | ----------------- |  | ---- | ----------- | ---- |  | - | ----------- | - |  | - | ----------- | -
|                                         |  |                    |            |                  
|                                         |  | Three months ended |            | Nine months ended
|                                         |  | September 30,      |            | September 30,    
|                                         |  |                    |            |                  
|                                         |  | 2000               |            | 1999              |  | 2000 |             | 1999
|                                         |  |                    |            |                   |  |      |             |     
|Net loss                                 |  | $                  | (7,588,545 | )                 |  | $    | (14,200,529 | )    |  | $ | (24,479,904 | ) |  | $ | (33,055,753 | )
|                                        
|                                        
|                                        
|                                        
|Foreign currency translation adjustments |  |                    | (71,831    | )                 |  |      | 224         |      |  |   | (158,329    | ) |  |   | (63,341     | )
|                                         |  |                    |            |                   |  |      |             |      |  |   |             |   |  |   |             |  
|Comprehensive loss                       |  | $                  | (7,660,376 | )                 |  | $    | (14,200,305 | )    |  | $ | (24,638,233 | ) |  | $ | (33,119,094 | )
|                                         |  |                    |            |                   |  |      |             |      |  |   |             |   |  |   |             |  

5.  Segment Information

The Company has three reportable segments: Internet Payment
Services, Software Payment Products, and Customization Services.
The Companys revenues in the three and nine months ended
September 30, 2000 and September 30, 1999 from these
segments were as follows:

|                       |  |                    |           |                   |  |      |  |      |           |  |  |      |  |   |            |  |  |      |  |   |            |  |  |     
|---------------------- |  | ------------------ | --------- | ----------------- |  | ---- |  | ---- | --------- |  |  | ---- |  | - | ---------- |  |  | ---- |  | - | ---------- |  |  | ----
|                       |  |                    |           |                  
|                       |  | Three months ended |           | Nine months ended
|                       |  | September 30,      |           | September 30,    
|                       |  |                    |           |                  
|                       |  |                    |           |                   |  |      |  |     
|Segment                |  | 2000               |           | 1999              |  | 2000 |  | 1999
|                       |  |                    |           |                   |  |      |  |     
|                       |  |                    |           |                   |  |      |  |      |           |  |  |      |  |   |            | 
|                      
|                      
|                      
|                      
|Internet Service       |  | $                  | 3,147,220 |                   |  | 54%  |  | $    | 1,838,182 |  |  | 36%  |  | $ | 8,334,627  |  |  | 47%  |  | $ | 4,865,288  |  |  | 35% 
|                      
|                      
|                      
|                      
|Software Product       |  |                    | 2,489,959 |                   |  | 43%  |  |      | 2,936,170 |  |  | 58%  |  |   | 8,024,896  |  |  | 46%  |  |   | 7,789,469  |  |  | 56% 
|                      
|                      
|                      
|                      
|Customization Services |  |                    | 167,053   |                   |  | 3%   |  |      | 325,176   |  |  | 6%   |  |   | 1,165,653  |  |  | 7%   |  |   | 1,336,892  |  |  | 9%  
|                       |  |                    |           |                   |  |      |  |      |           |  |  |      |  |   |            |  |  |      |  |   |            |  |  |     
|Total                  |  | $                  | 5,804,232 |                   |  | 100% |  | $    | 5,099,528 |  |  | 100% |  | $ | 17,525,176 |  |  | 100% |  | $ | 13,991,649 |  |  | 100%
|                       |  |                    |           |                   |  |      |  |      |           |  |  |      |  |   |            |  |  |      |  |   |            |  |  |     

The Company does not measure operating income by reportable
segment.

6.  Recent Accounting Pronouncements

In December 1999, the Securities and Exchange Commission
(SEC) issued Staff Accounting Bulletin No. 101
(SAB 101), as amended, Revenue Recognition in
Financial Statements. SAB 101 summarizes certain of
the SECs views for applying generally accepted accounting
principles to revenue recognition in financial statements.
SAB 101 is effective in the fourth fiscal quarter of fiscal
years beginning after December 15, 1999. The Company has
not yet determined the impact SAB 101 might have on the
Companys statement of financial position and statement of
operations, but is assessing it.

7



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##### Table of Contents








|        |                                                                                               
|------- | ----------------------------------------------------------------------------------------------
|Item 2. | Managements Discussion and Analysis of Financial
        Conditions and Results of Operations

Investors should read the following discussion in conjunction
with the accompanying consolidated financial statements and the
notes thereto. Our reported results for the third quarter of
2000, and the relationship between those results and the results
for prior periods, are not necessarily indicative of our results
in the future. This discussion contains, in addition to
historical information, forward-looking statements that reflect
our current expectations. These forward-looking statements
relate to our present plans and reflect our assumptions about
future events and contingencies. They are, therefore, subject to
numerous risks and uncertainties. The rapidly evolving industry
in which we operate necessitates managements continuous
re-evaluation of our business plans. Moreover, the outcome of
future events and our actual results cannot be predicted and
could differ significantly from our current expectations. The
section entitled Risk Factors in Item 1 of our
Annual Report on Form 10-K for 1999 describe some, but not
all, of the factors that could cause these differences.

Results of Operations

Revenues

The Companys revenue increased 14% and 25% for the three
and nine-month periods ended September 30, 2000,
respectively, over the comparable periods for 1999, with changes
by business segment as follows:

|                       |  |                    |           |      |  |                   |           |      |  |      |      |          |  |   |            |  |  |   |            |  |  |  |      |  
|---------------------- |  | ------------------ | --------- | ---- |  | ----------------- | --------- | ---- |  | ---- | ---- | -------- |  | - | ---------- |  |  | - | ---------- |  |  |  | ---- | -
|                       |  |                    |           |      |  |                   |           |     
|                       |  | Three months ended |           |      |  | Nine months ended |           |     
|                       |  | September 30,      |           |      |  | September 30,     |           |     
|                       |  |                    |           |      |  |                   |           |     
|Segment                |  | 2000               |           | 1999 |  | % Change          |           | 2000 |  | 1999 |      | % Change
|                       |  |                    |           |      |  |                   |           |      |  |      |      |         
|Internet Service       |  | $                  | 3,147,220 |      |  | $                 | 1,838,182 |      |  |      | 71%  |          |  | $ | 8,334,627  |  |  | $ | 4,865,288  |  |  |  | 71%  |  
|                      
|                      
|                      
|                      
|Software Product       |  |                    | 2,489,959 |      |  |                   | 2,936,170 |      |  |      | (15% | )        |  |   | 8,024,896  |  |  |   | 7,789,469  |  |  |  | 3%   |  
|                      
|                      
|                      
|                      
|Customization Services |  |                    | 167,053   |      |  |                   | 325,176   |      |  |      | (49% | )        |  |   | 1,165,653  |  |  |   | 1,336,892  |  |  |  | (13% | )
|                       |  |                    |           |      |  |                   |           |      |  |      |      |          |  |   |            |  |  |   |            |  |  |  |      |  
|Total                  |  | $                  | 5,804,232 |      |  | $                 | 5,099,528 |      |  |      | 14%  |          |  | $ | 17,525,176 |  |  | $ | 13,991,649 |  |  |  | 25%  |  
|                       |  |                    |           |      |  |                   |           |      |  |      |      |          |  |   |            |  |  |   |            |  |  |  |      |  

The Internet Payment Service segment grew rapidly in both the
three and nine month periods ended September 30, 2000,
relative to the comparable periods in 1999. Internet Services
represented 54% of the Companys aggregate revenues for the
three-month period ended September 30, 2000, up from 36%
for the comparable period in 1999. For the nine-month period
ended September 30, 2000, this segment represented 47% of
total revenue, up from 35% in the comparable period last year.
This segments growth is driven by the installed merchant
base, which grew from 15,900 merchants at the end of the third
quarter of 1999 to nearly 26,700 at the end of
September 2000, a 68% increase. The larger merchant base
led to increased set-up fees, recurring monthly fees and per
transaction fees. Revenue from Software Products increased for
the nine-month period ended September 30, 2000 relative to
the comparable period in 1999, but decreased for the comparable
three-month period. This segment represented 43% and 46% of the
Companys aggregate revenue for the three and nine-month
periods ended September 30, 2000, respectively, and
represented 58% and 56% of total revenue, respectively for the
three and nine month periods ended September 30, 1999. The
Software Products segment serves the more mature market for
physical world payment processing software, and is  generally not
expected to grow as rapidly as the Internet business. The Company
believes the decline in software sales during the third quarter was
the result of senior sales management changes and delays in releasing
certain new versions of its IC Verify and Web Authorize software
products until late in the quarter. Revenue derived from the
Companys Customization
Services business declined for the three and nine months ended
September 30, 2000 compared to the same periods last year.
Revenues from the Customization Services business are expected
to assume a relatively minor role in results from operations in
the future as the Company places greater emphasis on its core
Internet Service and Software Product business segments.

Cost of Revenues. Cost of revenues consists primarily of
cost of operations to provide transaction processing and
customer support, and the outsourced production and distribution
costs of the tangible media and packaging for the Companys
Software Products. Cost of revenues increased $255,000 from
$2,960,000 for the three months ended September 30, 1999 to
$3,215,000 for the three months ended September 30, 2000.
Such costs increased $1,678,000 from $8,012,000 for the nine
months ended September 30, 1999 to $9,690,000 for the nine
months ended September 30, 2000. This 21% increase compares
to a 25% revenue

8



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##### Table of Contents





Research and Development. Research and development
expenses consist primarily of compensation expense and
consulting fees to support the development of our services and
technologies. Research and development expenses decreased
$977,000 from $2,905,000 for the three months ended
September 30, 1999 to $1,928,000 for the three months ended
September 30, 2000 and decreased $1,572,000 from $7,847,000
for the nine months ended September 30, 1999 to $6,275,000
for the nine months ended September 30, 2000. These
decreases are due in part to more careful management of
discretionary expenditures, renegotiation of certain vendor
agreements, and more focused development efforts. We plan to
continue making focused investments in research and development,
but do not currently foresee a significant increase in research
and development spending. We have expensed all software
development costs as incurred, and we will continue to do so
until it can be demonstrated that future benefits may be
realized from costs incurred to develop our software.

Sales and Marketing. Sales and marketing expenses consist
primarily of compensation expense and advertising and marketing
costs. Sales and marketing expenses decreased $4,988,000 from
$8,786,000 for the three months ended September 30, 1999 to
$3,798,000 for the three months ended September 30, 2000
and $6,393,000 from $17,696,000 for the nine months ended
September 30, 1999 to $11,303,000 for the nine months ended
September 30, 2000. A large portion of 1999 sales and
marketing expense was related to promoting CyberCash services
and products through a multi-media campaign. While the Company
expects to continue investing in additional sales and marketing
personnel, no similar promotional campaigns are planned for the
year ending December 31, 2000.

General and Administrative. General and administrative
expenses consist primarily of compensation expense for
management and support personnel and fees for professional
services and other expenses not attributable to a particular
source of revenue or function. General and administrative
expenses decreased $250,000 from $2,440,000 for the three months
ended September 30, 1999 to $2,190,000 for the three months
ended September 30, 2000 and increased $1,373,000 from
$6,404,000 for the nine months ended September 30, 1999 to
$7,777,000 for the nine months ended September 30, 2000.
The decrease for the three-month period is largely attributable
to a non-recurring bad debt expense recovery, while the increase
in the nine-month period is primarily non-cash compensation
expense imputed from a personal guarantee made by a principal
stockholder in the Company to the Companys Chief Executive
Officer. We anticipate that general and administrative expenses
will remain significant.

Amortization of Intangibles. The increase in amortization
expense experienced during the nine-month period ending
September 30, 2000 is the result of our acquisition of
Tellan Software, Inc. during July 1999. We accounted for
the acquisition as a purchase and accordingly, the purchase
price was allocated to the assets and liabilities acquired at
their estimated fair value as of the date of acquisition. Of the
$11.8 million purchase price, $914,000 was allocated to
Tellans net assets, and the remainder to intangible
assets. These intangible assets are being amortized using the
straight-line method over their estimated useful lives of three
to ten years.

Interest Income. Interest income increased $72,000 from
$132,000 for the three months ended September 30, 1999 to
$204,000 for the three months ended September 30, 2000, and
$190,000 from $395,000 for the nine months ended
September 30, 1999 to $585,000 for the nine months ended
September 30, 2000. The increases reflect higher average
cash balances in 2000 as compared to the same prior year periods.

Loss From Investments. Loss from investments consists of
the adjustment of the carrying value of an investment in a
technology company. During the second quarter of 1999 this asset
was determined to be impaired and was written off based on the
criteria established in Statement of Financial Accounting
Standards No. 121, Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets Disposed of.

Liquidity and Capital Resources

Our cash and cash equivalents decreased by $7,803,000 from
approximately $18,176,000 at December 31, 1999 to
$10,373,000 at September 30, 2000. This decrease is
primarily due to our net loss of $24,480,000 for the nine months
ended September 30, 2000, offset by net cash of $7,072,000
provided by financing activities and non-cash expenses of
$12,460,000 for depreciation and amortization, expenses related
to the issuance of stock, warrants and options, provisions for
doubtful accounts and the disposal of property and equipment

9



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##### Table of Contents





CyberCash currently anticipates that its current available cash
resources combined with future cash flows from operations will
be sufficient to meet its presently anticipated cash needs,
including its working capital requirements into the next fiscal
year. If, however, CyberCash is unable to generate positive
earnings from its operations in the future, then the Company
will be required to raise additional funds. Moreover, CyberCash
may also need to raise additional funds in order to:



| |   |                                                  
| | - | -------------------------------------------------
| |  | fund more rapid expansion,                       
|
| |  | develop new or enhanced services,                
|
| |  | respond to competitive pressures or              
|
| |  | acquire complementary businesses or technologies.

If CyberCash does raise additional funds through the issuance of
equity securities, the percentage ownership of the stockholders
will be reduced, stockholders may experience additional
dilution, or equity securities issued may have rights,
preferences or privileges senior to those of common
stockholders. The Company cannot assure you that additional
financing will be available now or in the future. If adequate
funds are not available or are not available on acceptable
terms, the Company may be unable to develop or enhance its
services, take advantage of future opportunities, or respond to
competitive pressures, which could have a material adverse
effect on its business, financial condition or operating results.

Risks and Uncertainties

The electronic commerce market on which the Company depends
continues to grow but changes rapidly. In this environment, our
success will depend largely on our ability to continue to expand
our established payment processing service and software payments
businesses, and to develop and successfully market new products
and services in a continuously evolving, increasingly
competitive business environment. In order to become profitable,
and emerge as a viable long-term enterprise, our product and
service offerings must achieve a sufficiently widespread market
acceptance to generate an adequate return on the level of
investment made in our technology. Our future operating
performance will depend in large part on:



| |   |                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------
| |  | the rate of growth and the changes in electronic commerce market;                                    
|
| |  | our success in broadening our offerings by adding new products
        and services;                 
|
| |  | our ability to identify, develop, and deliver products and
        services that meet market demands;
|
| |  | our ability to maintain and expand our distribution channels;                                        
|
| |  | strategic decisions by major participants in the industry;                                           
|
| |  | competitive pricing pressures;                                                                       
|
| |  | legal and regulatory developments;                                                                   
|
| |  | general economic conditions; and                                                                     
|
| |  | our ability to develop and maintain key strategic and channel
        partnerships.                  




Item 3.  Qualitative and Quantitative Market Risk
Disclosure

Not Applicable.

10



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##### Table of Contents






PART II  OTHER INFORMATION




Item 1.  Legal Proceedings

None.




Item 2.  Changes in Securities

Note 2 to the Consolidated Financial Statements contained in
Part I of this Quarterly Report on Form 10-Q is
incorporated herein by reference.




Item 3.  Defaults upon Senior Securities

None.




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

None.




Item 5.  Other Information

None.




Item 6.  Exhibits and Reports on Form 8-K

(a)  Exhibits

None.

(b)  Reports on Form 8-K

On June 30, 2000, the Company filed a Form 8-K
announcing that it had entered into a subscription agreement
whereby the Company agreed to issue and sell one million shares
of the Companys common stock to the Melton Foundation.

On November 2, 2000, the Company filed a Form 8-K
announcing that it had agreed to issue $10,998,082 aggregate
principal amount of 6% subordinated convertible notes due 2002
(the Notes) in exchange for its obligations to the
buyers under that certain securities purchase agreement, dated
August 19, 1999, as amended September 7, 1999 and
July 26, 2000 (the Agreement) to deliver
additional shares of the Registrants common stock, par
value $0.001 per share, or pay cash on October 19, 2000 if
the Reset Price (as defined in the Agreement) is less than
$9.125 per share.

11



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##### Table of Contents






SIGNATURES

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



| |                                      
| | -------------------------------------
| | CyberCash, Inc.                      
| |                                      
|
| | (Registrant)                         
|
| | /s/ JAMES J. CONDON                  
|
| | James J. Condon                      
| | President and Chief Executive Officer





| |                             
| | ----------------------------
| | /s/ JOHN H. KARNES          
|
| | John H. Karnes              
| | Executive Vice President and
| | Chief Financial Officer     



12