<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549


                                   Form 10-Q


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

                  For the quarterly period ended June 30, 2000



                       Commission file number:  000-30887

                              Accord Networks Ltd.
             (Exact name of registrant as specified in its charter)



                  Israel                          Not Applicable
       (State or other jurisdiction              (I.R.S. Employer
       of incorporation or organization)       Identification Number)

           94 Derech Em Hamoshavot, P.O.B. 3654, Petach-Tikva, ISRAEL
              (Address of registrant's principal executive office)

                                     49130
                                   (Zip Code)

              Registrant's telephone number, including area code:
                                 972-3-925-1444

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

     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          No   X
                                                      -----       -----

     As of July 31, 2000, there were 20,535,474 ordinary shares, NIS $0.01
nominal value per share, outstanding.
<PAGE>

                             ACCORD NETWORKS LTD.
              QUARTERLY REPORT FOR THE PERIOD ENDED JUNE 30, 2000

                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                        Page No.
                                                                        --------
<C>      <S>                                                            <C>
PART I.  FINANCIAL INFORMATION.......................................      2

Item 1.  Condensed Consolidated Financial Statements.................      2

         Condensed Consolidated Balance Sheets for
         June 30, 2000 and December 31, 1999.........................      2

         Condensed Consolidated Statements of Operations for
         The three months and six months ended June 30, 2000 and 1990.     3

         Condensed Consolidated Statements of Changes in Stockholders'
         Equity (Deficit) for six months ended June 30, 2000 and for
         the year ended December 31, 1999.............................     4

         Condensed Consolidated Statements of Cash Flows for the
         six months ended June 30, 2000 and 1999......................     5

         Notes to Condensed Consolidated Financial Statements.........     7

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations.....................................   10
           Overview....................................................   10
           Results of Operations.......................................   10
           Liquidity and Capital Resources.............................   12
           Forward Looking Statements..................................   13

Item 3.  Quantitative and Qualitative Disclosures About Market Risk....   13

PART II. OTHER INFORMATION.............................................   14

Item 2.  Changes in Securities and Use of Proceeds.....................   14

Item 4.  Submission of Matters to a Vote of Security Holders...........   14

Item 6.  Exhibits and Reports on Form 8-K..............................   15
</TABLE>
<PAGE>

                         PART I - FINANCIAL INFORMATION

                             ACCORD NETWORKS LTD.
                          CONSOLIDATED BALANCE SHEETS
                         (In thousands of US dollars)
<TABLE>
<S>                                                                      <C>                 <C>
                                                                              June 30,          December 31,
                                                                                2000               1999
                                                                           -------------      ---------------
                                                                            (Unaudited)          (Audited)
                                                                           -------------      ---------------
                                 ASSETS
    CURRENT ASSETS:
       Cash and cash equivalents                                             $  3,156             $  5,787
       Accounts and note receivable:
          Trade accounts receivable, net of allowance for doubtful
            accounts of $211 at June 30, 2000 ($125 at December 31, 1999)       7,162                6,012
          Trade note receivable, net of allowance for doubtful
            accounts of $213 at June 30, 2000 ($213 at December 31, 1999)         561                   80
          Receivable from sale of ordinary shares in an initial                51,150
            public offering (note 2)
          Other                                                                 2,140                1,882
       Inventories (note 3)                                                     6,391                2,786
       Prepaid expenses and other current assets                                  267                  263
                                                                      ---------------    -----------------
          Total current assets                                                 70,827               16,810
                                                                      ---------------    -----------------
    FIXED ASSETS:
       Cost                                                                     5,753                3,204
       Less - accumulated depreciation and amortization                         1,757                1,146
                                                                      ---------------    -----------------
          Total fixed assets                                                    3,996                2,058
                                                                      ---------------    -----------------
    OTHER ASSETS                                                                1,071                1,630
                                                                      ---------------    -----------------
                           Total assets                                      $ 75,894             $ 20,498
                                                                      ===============    =================

          LIABILITIES AND STOCKHOLDERS' EQUITY

    CURRENT LIABILITIES:
       Accounts payable and accruals:
          Trade                                                              $  5,221             $  2,220
          Payables in connection with settlement agreement                      6,000
          Other                                                                 6,357                3,908
                                                                      ---------------    -----------------
          Total current liabilities                                            17,578                6,128

    LONG-TERM LIABILITIES:
       Accrued severance pay                                                    1,209                  888
       Deferred revenues                                                           39                   26
       Other
                                                                      ---------------    -----------------
          Total liabilities                                                    18,826                7,042
                                                                      ---------------    -----------------

    MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED
       SHARES, NIS 0.01 par value, series A, B and C                                                25,916
                                                                                         -----------------

    STOCKHOLDERS' EQUITY (DEFICIT):
       Ordinary shares of NIS 0.01 par value                                       56                    6
       Warrants and options                                                       149                   95
       Additional paid-in capital                                              75,474                  159
       Accumulated deficit                                                    (18,611)             (12,720)
                                                                      ---------------    -----------------
          Total stockholders' equity (deficit)                                 57,068              (12,460)
                                                                      ---------------    -----------------
                                                                      ---------------    -----------------
                                                                             $ 75,894             $ 20,498
                                                                      ===============    =================
</TABLE>

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

                                      -2-
<PAGE>

                              ACCORD NETWORKS LTD.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (In thousands)
<TABLE>
<CAPTION>

                                        Three Months Ended          Six Months Ended
                                             June 30,                   June 30,
                                     ------------------------  -------------------------
                                         2000        1999           2000        1999
                                     -----------  -----------   ----------- ------------
                                     (Unaudited)  (Unaudited)   (Unaudited)  (Unaudited)
<S>                                  <C>          <C>           <C>          <C>
REVENUES:
   Product sales                     $    8,994   $     5,259   $   16,768   $    9,822
   Support revenues                         577           287        1,062          554
                                     ----------   -----------   ----------   ----------
     Total  revenues                      9,571         5,546       17,830       10,376
                                     ----------   -----------   ----------   ----------
COST OF REVENUES:
   Product sales                          2,083         1,178        3,890        2,155
   Support revenues                         787           494        1,421          925
                                     ----------   -----------   ----------   ----------
     Total cost of revenues               2,870         1,672        5,311        3,080
                                     ----------   -----------   ----------   ----------

GROSS PROFIT                              6,701         3,874       12,519        7,296

OPERATING EXPENSES:
   Research and development, net          1,736           889        3,253        1,970
   Selling and marketing, net             3,270         1,861        6,055        3,653
   General and administrative             1,275           931        2,554        1,688
   Litigation settlement costs            6,500                      6,500
                                     ----------   -----------   ----------   ----------
     Total operating expenses            12,781         3,681       18,362        7,311
                                     ----------   -----------   ----------   ----------

OPERATING INCOME (LOSS)                  (6,080)          193       (5,843)         (15)

INTEREST AND OTHER
EXPENSES, net                               (31)          (16)         (48)         (47)
                                     ----------   -----------   ----------   ----------

NET INCOME (LOSS) FOR THE PERIOD     $   (6,111)  $       177   $   (5,891)  $      (62)
                                     ==========   ===========   ==========   ==========

Earning (loss) per share:
   Basic                             $    (3.17)  $      0.14    $   (3.11)  $    (0.05)
                                     ==========   ===========   ==========   ==========
   Diluted                           $    (3.17)  $      0.01    $   (3.11)  $    (0.05)
                                     ==========   ===========   ==========   ==========

Weighted average number of shares
 outstanding during the period:
   Basic                              1,925,819     1,277,067    1,891,827    1,277,067
                                     ==========   ===========   ==========   ==========
   Diluted                            1,925,819    14,739,239    1,891,827    1,277,067
                                     ==========   ===========   ==========   ==========
</TABLE>

                                      -3-
<PAGE>

                             ACCORD NETWORKS LTD.
                     CONSOLIDATED STATEMENTS OF CHANGES IN
                        STOCKHOLDERS' EQUITY (DEFICIT)
                                (In thousands)
<TABLE>
<CAPTION>

                                            Mandatorily
                                             Redeemable
                                            Convertible                Additional     Warrants
                                             Preferred     Ordinary      Paid-in        and       Accumulated
                                               Shares       Shares       capital      options       deficit        Total
                                           -------------  -----------  -----------  ------------  ------------  ------------
<S>                                         <C>           <C>          <C>          <C>           <C>           <C>
BALANCE AT JANUARY 1, 2000 (AUDITED)           $ 25,916           $ 6      $   159         $ 95      $(12,720)     $(12,460)

CHANGES DURING THE SIX MONTHS ENDED JUNE
 30, 2000 (UNAUDITED):
  Issuance of series B participating
   preferred shares, net of share
   issue expenses                                 1,165                                      (1)                         (1)
  Issuance of ordinary shares, net of
   share issue expenses                         (27,081)           50       75,315           (3)                     75,362
  Amounts assigned to options granted to
   non-employees                                                                             58                          58
  Net loss                                                                                             (5,891)       (5,891)
                                              ---------      ---------    ---------    ---------     ---------     ---------

BALANCE AT JUNE 30, 2000 (UNAUDITED)                  -            56       75,474          149       (18,611)       57,068
                                              =========      ========    =========    =========     =========      ========

BALANCE AT JANUARY 1, 1999 (AUDITED)             19,415             4            -            7       (13,084)      (13,073)

CHANGES DURING THE YEAR ENDED DECEMBER
 31, 1999 (AUDITED):
  Issuance of ordinary shares, net of
   share issue expenses                                             2          159                                      161
  Issuance of series A,B and C
   participating preferred shares, net
   of share issue expenses                        6,501
  Amounts assigned to warrants and
   options granted to non-employees                                                          88                          88
       Net income                                                                                         364           364
                                              ---------      ---------    ---------    ---------     ---------     ---------

BALANCE AT DECEMBER 31, 1999 (AUDITED)         $ 25,916           $ 6      $   159         $ 95      $(12,720)     $(12,460)
                                               ========           ===      =======         ====      ========      ========
</TABLE>

                                      -4-
<PAGE>

                             ACCORD NETWORKS LTD.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In thousands)

<TABLE>
<CAPTION>
                                                                                             Six Months Ended
                                                                                 ----------------------------------------
                                                                                  June 30, 2000             June 30, 1999
                                                                                 --------------             -------------
<S>                                                                              <C>                        <C>
                                                                                                (Unaudited)
                                                                                                -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss for the period                                                           $ 5,891                     $    62
                                                                                  ---------                   ---------
  Adjustments required to reconcile net loss to
   net cash provided by (used in) operating activities:
  Depreciation and amortization                                                         623                         399
  Provision for doubtful accounts                                                        86
  Increase in provision for vacation
    and recreation pay                                                                  360                         113
  Accrued severance pay - net                                                           138                         114
  Amounts assigned to options and
   warrants granted to non-employees                                                     58                          34
  Gain on sale of fixed assets                                                           (1)
  Changes in operating asset and liability items:
   Increase in accounts receivable                                                   (1,979)                     (3,821)
   Increase in Payables in connection with
    settlement agreement                                                              6,000
   Increase in accounts payable and accruals                                          3,689                       1,055
   Increase (decrease) in inventories                                                (3,605)                         13
   Increase in deferred revenues                                                        555                         178
                                                                                  ---------                   ---------
                                                                                      5,924                      (1,915)
                                                                                  ---------                   ---------

  Net cash provided by (used in) operating activities                                    33                      (1,977)
                                                                                  ---------                   ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of fixed assets                                                           (2,339)                       (349)
  Amounts placed in deposits                                                           (105)                        (94)
  Proceeds from sale of fixed assets                                                     17
                                                                                  ---------                   ---------
  Net cash used in investing activities                                              (2,427)                       (443)
                                                                                  ---------                   ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Issue of mandatorily redeemable convertible preferred
   shares at a premium, net of share issue expenses                                   1,165                           1
  Issue of ordinary shares                                                                4
  Offering costs (carried to deferred charges)                                       (1,406)
  Short term credit from bank                                                                                     1,723
                                                                                  ---------                   ---------
  Net cash provided by (used in) financing activities                                  (237)                       1,724
                                                                                  ---------                   ---------

DECREASE IN CASH AND CASH EQUIVALENTS                                                (2,631)                       (696)
BALANCE OF CASH AND CASH EQUIVALENTS
  AT BEGINNING OF PERIOD                                                              5,787                       1,436
                                                                                  ---------                   ---------
BALANCE OF CASH AND CASH EQUIVALENTS
  AT END OF PERIOD                                                                  $ 3,156                     $   740
                                                                                  =========                   =========
</TABLE>

                                      -5-
<PAGE>

Supplementary information on investing and financing activities not involving
cash flow.

1. On June 28, 2000 the Company sold 5,000,000 ordinary shares for $48,277,000
   ($55,000,000 gross less share issue expenses of $2,873,000 and underwriting
   fees of $3,850,000) which was received in July 2000.

2. On June 28, 2000, 13,011,211 mandatorily redeemable convertible preferred
   shares in the amount of $27,081,000 were converted into ordinary shares.

3. The amounts not yet paid to suppliers, aggregating $279,000 at June 30, 2000,
   ($41,000 at December 31, 1999) will be included in the statements of cash
   flows upon payment, under investing or financing activities, based on the
   related credit period.

4. Deferred charges amounting $220,000, ($150,000 not paid as of December 31,
   1999) not paid as of June 30, 2000, will be included in the statements of
   cash flows upon payment.

                                      -6-
<PAGE>

                              ACCORD NETWORKS LTD.
                         Notes to Financial Statements


NOTE 1 - BASIS OF PRESENTATION

Accord Networks Ltd. (the "Parent") and its wholly-owned subsidiaries - in the
United States and the United Kingdom (collectively, the "Company"), are engaged
in the business of development, manufacturing and distributing of an
advanced networking and switching system that allows for real-time interactive
visual communications. The Parent commenced selling its system in 1997.  The
accompanying unaudited consolidated financial statements have been prepared
based upon the Securities and Exchange Commission (the "SEC") rules that permit
reduced disclosure for interim periods. In management's opinion, these
statements include all adjustments necessary for a fair presentation of the
results of the interim periods shown. All adjustments are of a normal recurring
nature unless otherwise disclosed. Revenues, expenses, assets and liabilities
are likely to vary from quarter to quarter. Therefore, the results and trends in
these interim financial statements may not be the same as those for the full
year. For a more complete discussion of the Company's significant accounting
policies and other information, this report should be read in conjunction with
the audited consolidated financial statements.

NOTE 2 - SALES OF SHARES IN INITIAL PUBLIC OFFERING

On June 28, 2000, the Company executed an underwriting agreement selling
5,000,000 ordinary shares at an offering price of $11.00 per share for gross
proceeds to be paid to the Company of $55.0 million. The gross proceeds were
offset by underwriting fees payable to the underwriting firms of $3.9 million,
with the Company receiving $51.1 million. The Company received the proceeds
subsequent to June 30, 2000, on July 5, 2000. The financial statements reflect
this amount as "receivable from the sale of ordinary shares in an initial public
offering". The net proceeds received were further reduced by offering expenses
of $2.9 million.

NOTE 3 - INVENTORIES
                          June 30, 2000   December 31,1999
                          -------------   ----------------
                           (unaudited)        (audited)
                           -----------        ---------
                          (In thousands)   (In thousands)

Inventories:
Materials and supplies        $3,183             $1,498
Products in process              418                197
Finished products              2,790              1,091
                              ------             ------
                               6,391              2,786
                              ======             ======

                                      -7-
<PAGE>

NOTE 4 - EARNINGS PER SHARE

Basic earnings per share are computed based on the weighted average number of
shares outstanding during each period.  In computing the diluted earnings per
share, account was taken of the dilutive effect of the outstanding stock
options, using the treasury stock method.

Following are data relating to the weighted average number of shares for the
purpose of computing earning per share:

<TABLE>
<CAPTION>

                                                          Three months ended June 30,   Six months ended June 30,
                                                          ---------------------------  --------------------------
                                                               1999         2000           1999          2000
                                                          -------------  ------------  -----------  -------------
                                                           (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
                                                           -----------   -----------   -----------   -----------
<S>                                                          <C>          <C>          <C>            <C>
Weighted average number of shares issued and outstanding-
 used in computation of basic earnings per share             1,277,067     1,925,819    1,277,067      1,891,827
 Effect of dilutive securities:
  Convertible preferred shares                              10,042,280    12,051,404    9,845,653     11,964,465
   Warrants to stockholders                                    610,342       959,800      610,342        985,434
    Warrants to consultants                                     21,520       101,826       20,476         93,174
  Employee stock options and invested shares                 2,788,030     3,132,240    2,627,288      2,944,508
  Non employee director                                                       11,364                       5,154
                                                           -----------   -----------   -----------   -----------
Weighted average number of shares issued and outstanding-
 used in computation of diluted earnings per share          14,739,239    18,182,453    14,380,826    17,884,562
                                                           ===========   ===========   ===========   ===========
</TABLE>

NOTE 5 - LEGAL PROCEEDINGS

On November 20, 1998, VideoServer, Inc., now known as Ezenia! Inc., filed a
patent infringement claim against the U.S. subsidiary, Accord Networks, Inc., in
the United States District Court, District of Massachusetts, alleging that the
subsidiary had and was willfully and deliberately infringing on one of Ezenia!
Inc.'s patents. The plaintiff later amended its complaint to allege that the
subsidiary also had and was willfully and deliberately infringing on other
patents. On June 10, 1999, the Parent was added as a defendant in the lawsuit.
On June 16, 2000, the Parent, the subsidiary and the plaintiff entered into a
written settlement agreement and the court entered an order dismissing the case.
The settlement agreement includes the following terms:

 . The Company paid Ezenia! Inc. $500,000 when the settlement agreement was
  signed, and will pay an additional $6.0 million upon demand. The Company is
  prepared to make payment of this obligation immediately, but has not been
  requested by Ezenia! Inc. to make such payment due to foreign tax withholding
  considerations.

 . The Company, its subsidiary and Ezenia! Inc. have executed mutual releases of
  all claims concerning the lawsuit that the Company may now have or ever had
  against each other.

 . Ezenia! Inc. agrees it will not sue the Company, its subsidiary or any of the
  Company's customers for infringement of any patents involved in the
  litigation; and

 . The Company, its subsidiary and Ezenia! Inc. agree not to sue one another or
  any of each other's customers for infringement of any other patents held by
  the Company, its subsidiary or Ezenia! Inc. for three years from the date of
  the written settlement agreement. The Company, its subsidiary and Ezenia! Inc.
  also agree not to later sue one another for any alleged infringement claims or
  damages for alleged infringement that may arise during those three years.

                                      -8-
<PAGE>

NOTE 6 - SUBSEQUENT EVENTS

a.  On July 6, 2000 the Company received $51.1 million proceeds from the sale of
    ordinary shares pursuant to an initial public offering net of underwriting
    fees of $3.9 million.

b.  On July 17, 2000 the Company's underwriters exercised the option to purchase
    653,000 additional ordinary shares from the Company and 97,000 ordinary
    shares from two selling shareholders at the initial public offering price of
    $11 per share in order to cover over-allotments. The closing of the over-
    allotment option occurred on July 20, 2000, at an aggregate offering price
    to the public of $8,250,000. The net offering proceeds to the Company from
    the sale of the additional 653,000 ordinary shares was $6,680,190, after
    deducting the underwriting fees. The over-allotment option was granted to
    the underwriters in connection with the Company's initial public offering.

                                      -9-
<PAGE>

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

     The following discussion and other sections of this Form 10-Q may contain
forward-looking statements that involve risks and uncertainties.  All statements
regarding future events, future financial performance and operating results,
business strategy and financing plans are forward-looking statements.  In many
cases, you can identify forward-looking statements by terminology, such as
"may," "will," "should," "expects," "intends," "plans," "anticipates,"
"believes," "estimates," "predicts," "potential," or "continue," or the negative
of such terms and other comparable terminology.  These statements are only
predictions.  Known and unknown risks, uncertainties and other factors could
cause the Company's actual results to differ materially from those projected in
the forward-looking statements.  An additional statement made pursuant to the
Private Securities Litigation Reform Act of 1995 and summarizing certain of the
principal risks and uncertainties inherent in the Company's business is included
herein under the caption "Forward Looking Statements."  You are encouraged to
read this statement carefully.

Overview

General. Accord develops, manufactures, markets and supports an advanced
visual communications networking system. The Company's MGC-100 and MGC-50
systems allow multiple parties to engage in visual communications across and
between different types of networks, transmission protocols and endpoints. The
Company's systems allow users to connect to broadband and narrowband, circuit-
switched and packet-based networks and they support endpoints utilizing Internet
protocol, or IP, asynchronous transfer mode, or ATM, and integrated service
digital network, or ISDN. The Company's systems are designed to provide maximum
reliability, scalability and ease of use.

Accord was incorporated under the laws of the State of Israel in 1992. From the
Company's incorporation until 1997, it was a development-stage company primarily
engaged in research and development, establishing relationships with suppliers
and potential customers and recruiting personnel. The Company incorporated a
subsidiary, Accord Networks, Inc., in the United States in 1995, and a
subsidiary, Accord Networks (UK) Limited, in the United Kingdom in 1998. The
Company established offices in Beijing and Shanghai, China in 1999. The
Company's research and development and manufacturing facilities are located in
Petach Tikva, Israel, a suburb of Tel Aviv. The executive offices and North
American sales, marketing and customer support operations are located in
Atlanta, Georgia, and its international sales, marketing and customer support
operations are located in London, England.

Results Of Operations

Total Revenues. Total revenues increased 72.6% to $9.6 million in the quarter
ended June 30, 2000 from $5.5 million in the quarter ended June 30, 1999.
Increased revenues were due to sales to new customers as well as increased sales
to existing customers.

Gross Profit and gross margin. Our gross profit increased to $6.7 million for
the quarter ended June 30, 2000 from $3.9 million for the quarter ended June 30,
1999. Our gross profit increased to $12.5 million for the six months ended June
30, 2000 from $7.3 million for the six months ended June 30, 1999. Our total
gross margin for the second quarter 2000 was 70.0% and for the

                                     -10-
<PAGE>

six months ended June 30, 2000 was 70.2% compared to 69.9% for the second
quarter of 1999 and compared to 70.3% for the six months ended June 30, 1999.

Research and Development Expenses, Net.  Research and development expenses were
$1.7 million for the second quarter 2000 compared to $889,000 for the second
quarter 1999. For the six months ended June 30, 2000, research and development
expenses were $3.3 million compared to $1.9 million for the six months ended
June 30, 1999. Research and development expenses were 18.1% of total revenues
for the second quarter 2000 compared to 16.0% of total revenues for the second
quarter of 1999. For the comparable six-month periods, the research and
development expense net percentage decreased to 18.2% from 19.0%. The increase
in absolute dollars was due primarily to the addition of personnel in our
research and development organization.

Selling and Marketing Expenses, Net.  Selling and marketing expenses  were $3.3
million for the second quarter 2000 compared to $1.9 million for the second
quarter 1999. For the six months ended June 30, 2000, selling and marketing
expenses were $6.1 million compared to $3.7 million for the six months ended
June 30, 1999. Selling and marketing expenses were 34.2% of total revenues for
the second quarter 2000 compared to 33.6% of total revenues for the second
quarter of 1999. For the comparable six-month periods, the selling and marketing
expenses net percentage decreased to 34.0% from 35.2%.  The increase in absolute
dollars reflects a higher selling and marketing headcount, higher compensation
costs, including commissions.

General and Administrative Expenses. General and administrative expenses were
$1.3 million for the second quarter 2000 compared to $931,000 for the second
quarter 1999. For the six months ended June 30, 2000, general and administrative
expenses were $2.6 million compared to $1.7 million for the six months ended
June 30, 1999. General and administrative expenses were 13.3% of total revenues
for the second quarter 2000 compared to 16.8% of total revenues for the second
quarter of 1999. For the comparable six-month periods, the general and
administrative percentage decreased to 14.3% from 16.3%. The increases in
expenditures in absolute dollars were due to the additional of staff in the
functions of finance, accounting and management information systems. These
increases were made to support our rapid growth and to prepare us to become a
public Company. General and administrative expenses also included legal fees and
other out of pocket costs associated with the legal settlement described below.

Lawsuit Settlement Cost. The lawsuit settlement cost of $6.5 million represents
a one-time charge resulting from the settlement of a patent infringement lawsuit
on June 16, 2000. Under generally accepted accounting principals and SEC
accounting pronouncements, a charge of this nature has to be presented in the
income statement as an operating expense even though it is non-recurring and a
one-time charge. Management believes that the settlement of this lawsuit is a
positive development for the Company and the fact that is was settled prior to
our initial public offering was a positive development in our being able to go
public in the second quarter 2000. The information included in this Form 10-Q on
the lawsuit should be read in conjunction with the Legal Proceedings section of
the Company's Form F-1 filing with the Securities and Exchange Commission.

                                     -11-
<PAGE>

Liquidity and Capital Resources

The Company initially financed its operations primarily through sales of equity
and the receipt of grants from OCS and BIRD to fund research and development.
Before the Company's initial public offering, it sold convertible preferred
shares in six private placement transactions realizing aggregate gross proceeds
of approximately $25.8 million in cash, including $3.8 million before 1996, $5.2
million in March 1996, $9.0 million in March 1998 and $6.5 million in August
1999. During December 1999 and January 2000, warrants to purchase 583,705 series
B preferred shares were exercised and the Company received payment of
approximately $1.3 million for those shares.  Preferred shares were
automatically converted to ordinary shares upon completion of the Company's
initial public offering.

On June 28, 2000, the Company sold 5,000,000 million shares in its initial
public offering. As the result of this transaction, all preferred shares of the
Company (Series A, B and C) were converted into ordinary shares of the Company
on a one-for-one basis. As a result of this event, the Company has only one
class of shares outstanding.

On June 28, 2000, the Company executed an underwriting agreement selling
5,000,000 shares of ordinary shares at an offering price of $11.00 per share for
gross proceeds to be paid to the Company of $55.0 million. The gross proceeds
were offset by underwriting fees payable to the underwriting firms of $3.9
million with the Company receiving $51.1 million. The Company received the
proceeds subsequent to June 30, 2000 on July 5, 2000.  The Company's financial
statements reflect this amount as a Receivable from the sale of ordinary shares
pursuant to an initial public offering. The net proceeds received were further
reduced by offering expenses of $2.9 million.

As of June 30, 2000, the Company had cash and cash equivalents of $3.2 million
which does not include the proceeds from the initial public offering as
described above.

On July 17, 2000, the Company's underwriters exercised an option to purchase
additional shares from the Company and shares from two selling shareholders
totaling fifteen percent of the ordinary shares sold in the initial public
offering. The closing of the option occurred on July 20, 2000, and the Company
received additional net proceeds of $6.7 million.

On June 16, 2000, the Company settled the lawsuit described above and in the
Company's Form F-1 filing with the SEC. As of June 30, 2000, the Company had
paid $500,000 of the settlement and owes an additional $6.0 million to the third
party. Accord is prepared to make payment of this obligations immediately but
has not been requested by the third party to make such payment due to foreign
tax withholding considerations.

The Company believes that its existing cash and cash equivalents combined with
the items described above will be sufficient to meet the Company's cash
requirements for the foreseeable future.

                                     -12-
<PAGE>

Forward-Looking Statements

     This Quarterly Report on Form 10-Q contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, that are based
on the beliefs of our management as well as assumptions that are based on the
beliefs of our management.  Forward-looking statements are inherently subject to
risks and uncertainties, many of which cannot be predicted with accuracy and
some of which might not even be anticipated.  Future events and actual results,
financial and otherwise, could differ materially from those set forth in or
contemplated by the forward-looking statements contained herein.  Readers are
referred to documents filed by us with the Securities and Exchange Commission,
including Accord Network's Registration Statement on Form F-1 (Registration No.
333-38804), as declared effective by the Securities Exchange Commission on June
28, 2000, and any additional filings, which identify important risk factors that
could cause actual results to differ from those contained in the forward-looking
statements, including: claims that the Company may be infringing intellectual
property rights of others; risks related to being an early-stage company with
limited operating history; the Company's ability to protect its proprietary
technology or maintain its technological advantages; the Company's dependence on
the development and adoption of real-time interactive visual communications
applications; the Company's ability to respond to competition; the Company's
dependence on a small number of products for all of its sales; the risks related
to technology becoming obsolete; the volatility associated with technology
companies; the dependence on sole source suppliers and a limited supply of key
components; the ability to expand international sales and operations; the
Company's ability to achieve, manage or maintain growth and execute its business
strategy successfully; the loss or reduction of government grants which the
Company receives and tax benefits to which the Company is entitled; risks
associated with tax reform in Israel; and various other factors discussed in
detail in this Form 10-Q and in the Company's Registration Statement on Form F-1
(Registration No. 333-38804), as declared effective by the SEC on June 28,
2000.

     Readers are cautioned not to place undue reliance on forward-looking
statements, which speak only as of the date hereof.  We do not undertake any
obligation to release publicly any revisions to these forward-looking statements
to reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.  Subsequent written and oral forward-looking
statements attributable to us or persons acting on our behalf are expressly
qualified in their entirety by the cautionary statements contained in this
Quarterly Report on Form 10-Q.

Item 3.   Quantitative and Qualitative Disclosures About Market Risk

     The Company's exposure to market risk for changes in interest rates relates
primarily to our investment portfolio.  We do not use derivative financial
instruments in our investment portfolio.  We place our investments with high
credit quality issuers, and by policy, limit the amount of credit exposure to
any one issuer.  The portfolio includes only marketable securities with
maturities of less than 24 months and with active secondary or resale markets to
ensure portfolio liquidity.  The Company has no investments denominated in
foreign country currencies and therefore are not subject to foreign currency
risk on such investments.

                                     -13-
<PAGE>

                          PART II - OTHER INFORMATION

Item 2.  Changes in Securities and Use of Proceeds

         (d)  Use of Proceeds

     The Company's Registration Statement on Form F-1 (Registration No. 333-
38804) was declared effective on June 28, 2000 and the Company's initial public
offering commenced on June 28, 2000.  The Company received net proceeds of
approximately $48,575,000 after deducting estimated underwriting discounts,
commissions, and offering expenses.  The underwriters subsequently exercised in
full their over-allotment option to purchase additional ordinary shares.  As a
result, the Company received an additional $6,680,190.  In the aggregate, the
Company received net proceeds of approximately $55,255,190 from its initial
public offering.  The Company intends to use approximately $6,000,000 of the net
proceeds as payment for the settlement of a patent infringement lawsuit.  The
Company intends to use the remainder of the net proceeds primarily for general
corporate purposes, including working capital, additional capital expenditures,
geographic expansion and additional sales and marketing efforts.  The Company is
currently assessing the specific uses and allocations for these remaining funds.
Pending the intended uses of the net proceeds, the Company has invested the net
proceeds in short-term, interest bearing, investment-grade securities.

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

     On May 25, 2000, all the Company's shareholders approved the following
items by unanimous written consent:

     1.  The amendment to the Company's Articles of Association;

     2.  The ratification and approval of the Company's initial public offering
         and activities in connection therewith;

     3.  The amendment and restatement of the Company's Articles of Association
         and the creation of "blank check" preferred shares, both effective upon
         the closing of its initial public offering;

     4.  The amendment to the Company's Memorandum of Association;

     5.  The Second Amendment of the Company's Shareholder Rights Agreement;

     6.  The ratification and approval of the indemnification agreements entered
         into between the Company and its directors and certain officers;

     7.  The authorization for the Company's Board of Directors, or anyone
         authorized by the Board, to determine the form of share certificate to
         represent the Company's ordinary shares;

     8.  The election, appointment and designation of the following directors to
         the following classes pursuant to the amended and restated Articles of
         Association, effective upon the amended and restated Articles of
         Association becoming effective:

                                     -14-
<PAGE>

<TABLE>
<CAPTION>
Name                  Class                         Term
----------------    ---------       ------------------------------------
<S>                 <C>             <C>
Jos C. Henkens      Class I         Until Annual General Meeting in year
                                    2001
Jules L. DeVigne    Class II        Until Annual General Meeting in year
                                    2002
Sigi Gavish         Class II        Until Annual General Meeting in year
                                    2002
Matty Karp          Class III       Until Annual General Meeting in year
                                    2003
</TABLE>

     9.  The approval of the director compensation plan;

    10.  The ratification and approval of all prior issuances and transfers of
         shares, rights, options and warrants;

    11.  The determination that the exercise price for each ordinary share
         subject to the options to purchase ordinary shares granted to each of
         Jos C. Henkens and Matty Karp on March 23, 2000 pursuant to the Accord
         Networks Ltd. 2000 Non-Employee Director Stock Option Plan be $9.50 per
         share; and

    12.  The conversion of all series A preferred shares, series B preferred
         shares and series C preferred shares into ordinary shares on a 1-for-1
         basis immediately upon the closing of the initial public offering.

Item 6.  Exhibits and Reports on Form 8-K

         (a)  Exhibits

Exhibit No.                        Description
-----------                        -----------

   3.1       Articles of Association of Accord (incorporated by reference from
             Exhibit 3.1 to Accord's Registration Statement on Form F-1 (No.
             333-38804) filed with the Commission on June 8, 2000).

   3.2       Memorandum of Association of Accord (incorporated by reference from
             Exhibit 3.2 to Accord's Registration Statement on Form F-1 (No.
             333-38804) filed with the Commission on June 8, 2000).

   4.1       Specimen Ordinary Share Certificate (incorporated by reference from
             Exhibit 4.1 to Accord's Amendment No. 2 to the Registration
             Statement on Form F-1 (No. 333-38804) filed with the Commission on
             June 26, 2000).

   4.2       Stockholders Rights Agreement dated as of June 22, 1999
             (incorporated by reference from Exhibit 4.2 to Accord's
             Registration Statement on Form F-1 (No. 333-38804) filed with the
             Commission on June 8, 2000).

   4.3       Amendment to Stockholders Rights Agreement dated as of July 19,
             1999 (incorporated by reference from Exhibit 4.3 to Accord's

                                     -15-
<PAGE>

Exhibit No.                        Description
-----------                        -----------

             Registration Statement on Form F-1 (No. 333-38804) filed with the
             Commission on June 8, 2000).

   4.4       Second Amendment to Stockholders Rights Agreement dated as of May
             25, 2000 (incorporated by reference from Exhibit 4.4 to Accord's
             Registration Statement on Form F-1 (No. 333-38804) filed with the
             Commission on June 8, 2000).

  10.1       Settlement Agreement by and between Ezenia! Inc., f/k/a
             VideoServer, Inc., Accord Networks, Inc., f/k/a Accord
             Telecommunications, Inc., f/k/a Accord Video Telecommunications,
             Inc., and Accord Networks Ltd., f/k/a Accord Telecommunications
             Ltd. effective June 16, 2000 (incorporated by reference from
             Exhibit 10.17 to Accord's Amendment No. 2 to the Registration
             Statement on Form F-1 (No. 333-38804) filed with the Commission on
             June 26, 2000).

  27         Financial Data Schedule

         (b)  Reports on Form 8-K

              Accord did not file any reports on Form 8-K during the quarter
              ended June 30, 2000.


                                  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.


                                     ACCORD NETWORKS LTD.


                                     /s/ Jules L. DeVigne
                                     --------------------
                                     Jules L. DeVigne
                                     Chairman and Chief Executive Officer


                                     /s/ Jeffrey B. Bradley
                                     ----------------------
                                     Jeffrey B. Bradley
                                     Chief Financial Officer
                                     (Principal Financial and
                                     Accounting Officer)

Date:  August 14, 2000

                                     -16-
<PAGE>

                                 EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO.                          DESCRIPTION
-----------  ------------------------------------------------------------------
<C>          <S>
   3.1       Articles of Association of Accord (incorporated by reference from
             Exhibit 3.1 to Accord's Registration Statement on Form F-1 (No.
             333-38804) filed with the Commission on June 8, 2000).

   3.2       Memorandum of Association of Accord (incorporated by reference from
             Exhibit 3.2 to Accord's Registration Statement on Form F-1 (No.
             333-38804) filed with the Commission on June 8, 2000).

   4.1       Specimen Ordinary Share Certificate (incorporated by reference from
             Exhibit 4.1 to Accord's Amendment No. 2 to the Registration
             Statement on Form F-1 (No. 333-38804) filed with the Commission on
             June 26, 2000).

   4.2       Stockholders Rights Agreement dated as of June 22, 1999
             (incorporated by reference from Exhibit 4.2 to Accord's
             Registration Statement on Form F-1 (No. 333-38804) filed with the
             Commission on June 8, 2000).

   4.3       Amendment to Stockholders Rights Agreement dated as of July 19,
             1999 (incorporated by reference from Exhibit 4.3 to Accord's
             Registration Statement on Form F-1 (No. 333-38804) filed with the
             Commission on June 8, 2000).

   4.4       Second Amendment to Stockholders Rights Agreement dated as of May
             25, 2000 (incorporated by reference from Exhibit 4.4 to Accord's
             Registration Statement on Form F-1 (No. 333-38804) filed with the
             Commission on June 8, 2000).

  10.1       Settlement Agreement by and between Ezenia! Inc., f/k/a
             VideoServer, Inc., Accord Networks, Inc., f/k/a Accord
             Telecommunications, Inc., f/k/a Accord Video Telecommunications,
             Inc., and Accord Networks Ltd., f/k/a Accord Telecommunications
             Ltd. effective June 16, 2000 (incorporated by reference from
             Exhibit 10.17 to Accord's Amendment No. 2 to the Registration
             Statement on Form F-1 (No. 333-38804) filed with the Commission on
             June 26, 2000).

  27         Financial Data Schedule
</TABLE>