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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    Form 10-Q

[X]   Quarterly Report pursuant to Section 13 or 15(d) of the
      Securities Exchange Act of 1934
      For the quarterly period ended March 31, 2001

[ ]   Transition Report Pursuant to Section 13 or 15(d) of the
      Securities Exchange Act of 1934
      For the transition period from                     to                   .


Commission File Number 0-22521


                              NETSPEAK CORPORATION
                            (Exact Name of Registrant
                          as Specified in Its Charter)


                   Florida                                65-0627616
      (State or Other Jurisdiction of                  (I.R.S. Employer
       Incorporation or Organization)                 Identification No.)


                         902 Clint Moore Road, Suite 104
                            Boca Raton, Florida 33487
                                  561-998-8700

                   (Address, including zip code, and telephone
                  number (including area code) of registrant's
                           principal executive office)


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 last 90 days. [X] YES [ ] NO

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

           Class                           Shares Outstanding at April 30, 2001
----------------------------               ------------------------------------
Common Stock, $.01 par value                          14,284,031

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                              NETSPEAK CORPORATION
                                      INDEX


PART I - FINANCIAL INFORMATION
------------------------------

                                                                        Page No.
                                                                        --------

    Item 1. Financial Statements

Condensed Consolidated Balance Sheets as of December 31, 2000
   and March 31, 2001 (unaudited) .......................................... 3

Condensed Consolidated Statements of Operations for the three
   months ended March 31, 2000 and 2001 (unaudited) ........................ 4

Condensed Consolidated Statements of Cash Flows for the three
   months ended March 31, 2000 and 2001(unaudited) ......................... 5

Notes to Condensed Consolidated Financial Statements (unaudited) ........... 6


    Item 2. Management's Discussion and Analysis of Financial Condition
            and Results of Operations....................................... 8


PART II - OTHER INFORMATION
---------------------------

Other Information.......................................................... 11

Signatures................................................................. 12


                                       2

<PAGE>

PART I - FINANCIAL INFORMATION
------------------------------

         Item 1.  FINANCIAL STATEMENTS

                       NETSPEAK CORPORATION AND SUBSIDIARY
                      CONDENSED CONSOLIDATED BALANCE SHEETS
               (In thousands, except share and per share amounts)
                                   (unaudited)


                                                         December 31,  March 31,
                                                             2000        2001
                                                         ------------  ---------
ASSETS

Cash and cash equivalents                                  $ 29,876    $ 25,606
Short-term investments                                           17          17
Accounts receivable, net                                      5,538       5,033
Prepaid and other current assets                              1,012         764
                                                           --------    --------
          Total current assets                               36,443      31,420

Property and equipment, net                                   2,245       1,985
Other assets                                                    906         914
                                                           --------    --------
                                                           $ 39,594    $ 34,319
                                                           ========    ========

LIABILITIES AND SHAREHOLDERS' EQUITY

Accounts payable                                           $    913    $    348
Accrued compensation                                          2,416       1,491
Other accrued expenses                                          483         586
Unearned revenue                                                861         664
                                                           --------    --------
          Total current liabilities                           4,673       3,089
                                                           --------    --------

Commitments and contingencies                                    --          --

Shareholders' equity:
Preferred stock: 1,000,000 shares of $.01 par value
   authorized; no shares issued or outstanding
Common stock: 75,000,000 shares of $.01 par value
   authorized; 14,232,949 and 14,284,031 issued and
   outstanding at December 31, 2000 and March 31, 2001,
   respectively                                                 142         143
Additional paid-in capital                                   73,024      73,092
Accumulated deficit                                         (38,245)    (42,005)
                                                           --------    --------
          Total shareholders' equity                         34,921      31,230
                                                           --------    --------
                                                           $ 39,594    $ 34,319
                                                            ========    ========

     See accompanying notes to condensed consolidated financial statements.

                                       3

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                       NETSPEAK CORPORATION AND SUBSIDIARY
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share amounts)
                                   (unaudited)


                                              Three months ended
                                                   March 31,
                                            ----------------------
                                               2000         2001
                                            --------      --------

Net revenues                                $  4,380      $  2,002

Operating expenses:
    Cost of revenues                             503           345
    Research and development                   1,932         2,553
    Sales and marketing                        2,390         2,360
    General and administrative                 1,258           906
                                            --------      --------
               Total operating expenses        6,083         6,164

Loss from operations                          (1,703)       (4,162)

Interest and other income                        452           402
                                            --------      --------

Loss before income taxes                      (1,251)       (3,760)

Income taxes                                      --            --
                                            --------      --------

Net loss                                    $ (1,251)     $ (3,760)
                                            ========      ========

Net loss per share (basic and diluted)      $  (0.09)     $  (0.26)
                                            ========      ========

Weighted-average shares outstanding           13,626        14,282
                                            ========      ========

     See accompanying notes to condensed consolidated financial statements.

                                       4

<PAGE>


                       NETSPEAK CORPORATION AND SUBSIDIARY
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                Three months ended
                                                                                     March 31,
                                                                              ----------------------
                                                                                 2000         2001
                                                                              --------      --------
<S>                                                                           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                                      $ (1,251)     $ (3,760)
Adjustments to reconcile net loss to net cash
   used in operating activities:
     Depreciation                                                                  439           413
     Changes in assets and liabilities:
          Accounts receivable                                                   (1,126)          505
          Prepaid and other current assets                                         231           248
          Other assets                                                             135            (8)
          Accounts payable                                                         (87)         (565)
          Accrued compensation                                                      42          (925)
          Other accrued expenses                                                   115           103
          Unearned revenue                                                         144          (197)
                                                                              --------      --------
               Net cash used in operating activities                            (1,358)       (4,186)
                                                                              --------      --------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment                                                             (172)         (153)
Purchase of short-term investments                                              (1,998)         --
Maturities and sales of short-term investments                                   6,451          --
                                                                              --------      --------
               Net cash provided by (used in) investing activities               4,281          (153)
                                                                              --------      --------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock under employee stock purchase plan         --              69
Proceeds from exercises of employee stock options                                1,202          --
                                                                              --------      --------
               Net cash provided by financing activities                         1,202            69
                                                                              --------      --------

Net increase (decrease) in cash and cash equivalents                             4,125        (4,270)

Cash and cash equivalents, beginning of period                                  23,109        29,876
                                                                              --------      --------

Cash and cash equivalents, end of period                                      $ 27,234      $ 25,606
                                                                              ========      ========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       5

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                       NETSPEAK CORPORATION AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

1.   BASIS OF PRESENTATION

     The interim condensed consolidated financial statements of NetSpeak
Corporation and subsidiary (the "Company") as of March 31, 2001 and for the
three months ended March 31, 2000 and 2001 are unaudited. Such interim condensed
consolidated financial statements have been prepared on the same basis as the
audited consolidated financial statements and, in the opinion of management,
reflect all adjustments (consisting only of normal recurring accruals) necessary
for a fair presentation of the financial position, results of operations and
cash flows for the interim periods presented. The results of operations for the
interim periods presented are not necessarily indicative of the results to be
expected for the full year. The interim condensed consolidated financial
statements should be read in conjunction with the audited consolidated financial
statements and notes thereto, contained in the Company's 2000 Form 10-K.

2.   REVENUE RECOGNITION

     The Company recognizes revenue in accordance with the American Institute of
Certified Public Accountants ("AICPA") Statement of Position ("SOP") 97-2,
"Software Revenue Recognition", and SOP 98-9, "Modification of SOP 97-2, With
Respect to Certain Transactions". The Company generates revenues from product
licenses and fees for services. Product license revenues are generally
recognized upon product shipment provided that no significant post-delivery
obligations exist and payment is due within one year. Service revenues include
fees for customer support, product maintenance and professional engineering
services. Service revenues for customer support and product maintenance are
recognized ratably over the term of the maintenance period, which is typically
twelve months. Service revenues for professional engineering services are
generally recognized when the services are performed. Product license and
service revenues are recognized upon customer acceptance, if required. Advance
payments of product licenses and services are reported as unearned revenue until
all conditions for revenue recognition are met.

     In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB
101") providing guidance with respect to revenue recognition issues and
disclosures. The Company believes that its existing accounting policies comply
with the requirements of this published guidance.

3.   NET LOSS PER SHARE

     The Company computes net loss per share under Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings Per Share", which requires a
dual presentation of basic and diluted earnings per share on the face of the
income statement. Basic earnings per share excludes dilution and is computed by
dividing income or loss attributable to common shareholders by the
weighted-average number of common shares outstanding for the period. Diluted
earnings per share reflects the potential dilution that could occur if
securities or other contracts to issue common stock were converted into common
stock, but such securities or contracts are excluded if their effects would be
anti-dilutive. The Company excluded stock options and warrants to purchase
2,984,000 and 2,260,000 common shares from the weighted-average shares
outstanding calculation for the three months ended March 31, 2000 and 2001,
respectively, as their effect was anti-dilutive.

                                       6

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4.   COMMITMENTS AND CONTINGENCIES

     LITIGATION - In February 2000, the Company entered into an original
equipment manufacturing ("OEM") agreement with Fujitsu Business Communications
Systems ("Fujitsu"). Under the agreement, Fujitsu committed to purchase a
minimum of $15.0 million of the Company's products over a three-year period. The
purchase commitment was payable on a quarterly basis. For the three months ended
December 31, 2000 and March 31, 2001, Fujitsu did not purchase any of the
Company's products in accordance with its purchase commitment. NetSpeak and
Fujitsu have attempted to redefine a mutually beneficial relationship. In March
2001 NetSpeak commenced legal action against Fujitsu to enforce its rights under
the OEM agreement, since the companies could not reach a mutual agreement.

     The Company may, from time to time, be involved in certain legal actions
arising in the ordinary course of business. In the opinion of management, the
outcome of such actions known to date will not have a material adverse effect on
the Company's financial position or results of operations.

     At present, there are few laws or regulations that specifically address
access to or commerce on the Internet. The increasing popularity and use of the
Internet, however, enhances the risk that the governments of the United States
and other countries, in which the Company sells or expects to sell its products,
will seek to regulate computer telephony and the Internet with respect to, among
other things, user privacy, pricing and the characteristics and quality of
products and services. The Company is unable to predict the impact, if any, that
future legislation, legal decisions or regulations may have on its business,
financial condition, results of operations or cash flows.

5.   TOTAL COMPREHENSIVE LOSS


                                         Three months ended
                                              March 31,
                                        --------------------
                                          2000         2001
                                        -------      -------

Net loss                                $(1,251)     $(3,760)

Adjustment to reconcile net loss to
  total comprehensive loss:

     Unrealized gain on investments          42           --
                                        -------      -------

Comprehensive loss                      $(1,209)     $(3,760)
                                        =======      =======

6.   RECENT ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Financial
Instruments and for Hedging Activities" ("SFAS 133") which provides a
comprehensive standard for the recognition and measurement of derivatives and
hedging activities. SFAS 133 is effective for fiscal years beginning after June
15, 2000. The adoption of SFAS 133 did not have an impact on the Company's
results of operations or financial condition as the Company holds no derivative
financial instruments and does not currently engage in hedging activities.

                                       7

<PAGE>


Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

     NetSpeak Corporation and subsidiary ("NetSpeak" or the "Company") cautions
readers that certain important factors may affect the Company's actual results
and could cause such results to differ materially from any forward-looking
statements which may be deemed to have been made in this report or which are
otherwise made by or on behalf of the Company. The forward-looking statements
are based on management's beliefs as well as on a number of assumptions
concerning future events. For this purpose, any statements contained in this
Form 10-Q that are not statements of historical fact may be deemed to be
forward-looking statements. Without limiting the generality of the foregoing,
words such as "may", "will", "expect", "believe", "anticipate", "intend",
"could", "would", "estimate", or "continue" or other negative variations thereof
or comparable terminology are intended to identify forward-looking statements.
Factors which may affect the Company's results include, but are not limited to,
the Company's ability to expand its customer base, the Company's ability to
develop additional and leverage its existing distribution channels for its
products and solutions, dependence on strategic and channel partners including
their ability to distribute the Company's products and meet or renew their
financial commitments, the Company's ability to address international markets,
the effectiveness of the Company's sales and marketing activities, the
acceptance of the Company's products in the marketplace, the timing and scope of
deployments of the Company's products by customers, fluctuations in customer
sales cycles, customers' ability to obtain additional funding, technical
difficulties with respect to the Company's products or products in development,
the need for ongoing product development in an environment of rapid
technological change, the emergence of new competitors in the marketplace, the
Company's limited operating history, the Company's ability to compete
successfully against more established competitors with greater resources, the
timing of new product announcements and releases by the Company and its
competitors, the uncertainty of future governmental regulation, the Company's
ability to manage growth, obtain patent protection, and obtain additional funds,
general economic conditions and other risks discussed in this Report and in the
Company's other filings with the Securities and Exchange Commission.

INTRODUCTION

     The Company generates revenues from product licenses and fees for services.
The principal end-users of the Company's products and solutions are service
providers, including traditional and new telecommunications carriers, Internet
service providers and cable companies. The Company distributes its products
through its direct sales force, value-added resellers ("VARs"), system
integrators ("SIs") and original equipment manufacturers ("OEMs"). Product
license revenues are generally recognized upon product shipment provided that no
significant post-delivery obligations exist and payment is due within one year.
Service revenues include fees for customer support, product maintenance and
professional engineering services. Service revenues for customer maintenance and
support are recognized ratably over the term of the maintenance period, which is
typically 12 months. Professional engineering service revenues are generally
recognized when the services are performed. Product license and service revenues
are recognized upon customer acceptance, if required. Advance payments of
product licenses and services are reported as unearned revenue until all
conditions for revenue recognition are met. All research and development costs
to date have been expensed as incurred.

     The Company generates a significant percentage of its revenues through
several of its strategic partners and, as a result, is highly dependent upon the
sales and marketing activities of these partners for its products. For the three
months ended March 31, 2001 and 2000, the Company had one and three customers,
respectively, that each accounted for more than 10% of the Company's sales.
Collectively, these partners and customers accounted for 82% and 73% of the
Company's total sales for the three months ended March 31, 2001 and 2000,
respectively. Motorola, the Company's primary OEM partner,


                                       8
<PAGE>

represented 82% and 33% of the Company's net revenues for three months ended
March 31, 2001 and 2000, respectively.

     The market for the Company's products and solutions is characterized by
rapid technological change, evolving industry standards, changes in end-user
requirements, intense competition by more established industry participants and
frequent new product introductions and enhancements. As is typical in the case
of new and rapidly emerging technologies, demand and market acceptance are
subject to a high level of uncertainty. Broad acceptance of the Company's
products by customers and end-users is critical to the Company's success and
ability to generate revenues. The Company has a limited operating history upon
which an evaluation of the Company and its prospects can be based. As of March
31, 2001, the Company had an accumulated deficit of $42.0 million. Due to the
Company's limited operating history and the lack of maturity in the industry,
the Company's operating results are difficult to predict and may fluctuate
significantly in the future as a result of a variety of factors, many of which
are outside the Company's control. These factors include, but are not limited
to, those set forth above.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2001 AND 2000

     Net revenues for the three months ended March 31, 2001 were $2.0 million as
compared to $4.4 million for the three months ended March 31, 2000.

     Sales of call management products for the three months ended March 31, 2001
and 2000 accounted for 69% of net revenues. The reduction in call management
product sales was due to the Company obtaining fewer new service provider
customers as a result of the economic slowdown in the telecommunications
industry. The Company's OEM sales also declined significantly from the first
quarter of 2000, as the Company did not receive any purchases from Fujitsu
Business Communications Systems ("Fujitsu") for the three months ended December
31, 2000 and March 31, 2001 in accordance with their purchase commitment.
NetSpeak and Fujitsu have attempted to redefine a mutually beneficial
relationship. However, as they were unable to do so, NetSpeak commenced legal
action against Fujitsu in March 2001 to enforce its rights under the OEM
agreement.

     Professional services accounted for 31% of net revenues for the three
months ended March 31, 2001 and 2000. In the first quarter of 2000, the Company
performed a significant professional services engagement that was completed in
the second quarter of 2000 and, as a result, professional services revenue
declined in the first quarter of 2001.

     The majority of the Company's sales for the three months ended March 31,
2001 and 2000 were domestic.

     Cost of revenues for the three months ended March 31, 2001 was $345,000, or
17% of net revenues, as compared to $503,000, or 11% of net revenues, for the
three months ended March 31, 2000. The increase in cost of revenues as a
percentage of net revenues was primarily due to lower gross margins associated
with the Company's professional services revenues.

     Research and development expenses for the three months ended March 31, 2001
were $2.6 million as compared to $1.9 million for the three months ended March
31, 2000. The increase in research and development expenses for the three months
ended March 31, 2001 was primarily due to the expansion of the Company's
research and development staff over the previous year. During the quarter, the
Company reduced its engineering staff below the level at March 31, 2000 and
incurred severance costs associated with the reduction. All research and
development costs have been expensed as incurred. The Company


                                       9
<PAGE>

anticipates that research and development expenses will decline slightly in the
near-term due to the staff reduction and various other cost-cutting initiatives
performed during the quarter.

     Sales and marketing expenses for the three months ended March 31, 2001 and
2000 were $2.4 million. The Company anticipates that sales and marketing
expenses will decline slightly in the near-term due to a reduction in the
Company's marketing staff and various other cost-cutting initiatives implemented
during the quarter.

     General and administrative expenses for the three months ended March 31,
2001 were $906,000 as compared to $1.3 million for the three months ended March
31, 2000. The decrease in general and administrative expenses was primarily due
to non-recurring severance related expenses incurred during 2000.

     Interest and other income for the three months ended March 31, 2001 and
2000 was $402,000 and $452,000, respectively. The reduction in interest and
other income in 2001 was due to a decrease in the Company's cash and short-term
investment balances.

LIQUIDITY AND CAPITAL RESOURCES

     Since its inception, the Company has financed its operations through sales
of equity securities. The Company has raised $65.1 million, net of offering
costs, including $47.2 million in sales of private securities and $17.9 million
in the Company's initial public offering. As of March 31, 2001, the Company had
$25.6 million in cash, cash equivalents and short-term investments. The Company
currently does not have any available lines of credit.

     Net cash used in operating activities during the three months ended March
31, 2001 and 2000 was $4.2 million and $1.4 million, respectively. Net cash used
in operating activities related to funding of the Company's research and
development, sales, marketing and administrative activities.

     Net cash used in investing activities during the three months ended March
31, 2001 was $153,000 and was related to purchases of computer equipment. Net
cash provided by investing activities during the three months ended March 31,
2000 was $4.3 million and primarily represented $4.5 million in net sales of
short-term investments offset by $172,000 in purchases of computer equipment.

     Net cash provided by financing activities during the three months ended
March 31, 2001 and 2000 was $69,000 and $1.2 million, respectively. For the
three months ended March 31, 2001, net cash provided by financing activities
represented the issuance of common stock under the employee stock purchase plan
for 51,000 shares of common stock. For the three months ended March 31, 2000,
net cash provided by financing activities represented proceeds received from
exercises of employee stock options for 445,492 shares of common stock.

     The Company has no material commitments other than those under office and
equipment operating leases. Capital expenditures may increase in future periods
primarily due to the Company moving its corporate facilities. The Company
anticipates that, based on its present plans and assumptions, the current cash
balances will be sufficient to enable it to sustain its current and planned
operations for a period of at least 12 months. If the Company's estimates or
assumptions prove to be incorrect, the Company may require additional capital.
Additional funding, whether obtained through public or private debt or equity
financing, or from strategic alliances, may not be available when needed or may
not be available on terms acceptable to the Company. Failure to secure
additional financing, if and when needed, may have a material adverse effect on
the Company's business, financial condition, results of operations and cash
flows.


                                       10
<PAGE>


     PART II - OTHER INFORMATION
--------------------------------

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

     (a)  Exhibits. None

     (b)  Reports on Form 8-K. None.




                                       11
<PAGE>

                                   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.


                              NETSPEAK CORPORATION
                              --------------------
                                  (Registrant)




Date: May 14, 2001                     By: /s/ MICHAEL R. RICH
                                       -----------------------------------------
                                       Michael R. Rich
                                       Chairman of the Board and Chief Executive
                                       Officer and President


                                       By: /s/ JOHN W. STATEN
                                       -----------------------------------------
                                       John W. Staten
                                       Chief Financial Officer (Principal
                                       Financial and Accounting Officer)



                                       12