<PAGE>

                                  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 March 31, 1999

  / /          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: 0-23247

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

         DELAWARE                                            94-3142791        
--------------------------------                        -------------------
(State or other jurisdiction of                          (I.R.S. employer
 incorporation or organization)                         identification no.)

                       4 MAGUIRE ROAD, LEXINGTON, MA 02421
                    ---------------------------------------
                    (Address of principal executive offices
                             including zip code)

                                 (781) 280-7800
                         ------------------------------
                         (Registrant's telephone number
                              including area code)

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 of time that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for at least the past 90 days.

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

As of April 30, 1999, the Registrant had 13,403,227 shares of Common Stock
outstanding.

<PAGE>

                                   FOCAL, INC.
                 Form 10-Q for the Quarter Ended March 31, 1999

                                      INDEX

<TABLE>
<CAPTION>

                                                                    PAGE NUMBER

<S>                                                                <C>
   INDEX                                                                      2

   PART I - FINANCIAL INFORMATION

   ITEM 1 - FINANCIAL STATEMENTS

         Condensed Balance Sheets at December 31, 1998
             and March 31, 1999                                               3

         Condensed Statements of Operations for the Three
            Months Ended March 31, 1998 and 1999                              4

         Condensed Statements of Cash Flows for the Three
            Months Ended March 31, 1998 and 1999                              5

         Notes to Condensed Financial Statements                              6

   ITEM 2 - Management's Discussion & Analysis of Financial                   8
         Condition and Results of Operations


   PART II - OTHER INFORMATION

   ITEMS 1 - 6                                                                14

   SIGNATURES                                                                 15

   EXHIBIT INDEX                                                              16

</TABLE>

                                       2

<PAGE>

                                   FOCAL, INC.
                            CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                           DECEMBER 31,           MARCH 31,
                                                               1998                  1999
                                                          -------------        -------------
<S>                                                     <C>                   <C>
ASSETS                                                                           (Unaudited)
Current assets:                                                              
     Cash and cash equivalents                            $  8,516,936         $  6,596,856
     Marketable securities                                  16,829,291           13,856,557
     Inventories                                               937,017            1,117,363
     Accounts receivable and prepaid expenses                1,199,377            1,485,692
                                                          -------------        -------------
Total current assets                                        27,482,621           23,056,468
                                                                             
Notes receivable from related parties                          282,442              272,257
                                                                             
Property, plant & equipment, net                             2,682,398            2,849,312
                                                                             
Other assets                                                    13,368               13,469
                                                          -------------        -------------
Total assets                                              $ 30,460,829         $ 26,191,506
                                                          -------------        -------------
                                                          -------------        -------------
LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities:                      
     Accounts payable and accrued liabilities             $  3,857,944           $3,682,075
     Deferred revenue                                          550,000                 --
     Current portion of capital lease obligations              886,517              895,714
                                                          -------------        -------------
Total current liabilities                                    5,294,461            4,577,789
                                                                             
Capital lease obligations                                    1,390,821            1,315,431
                                                                             
Stockholders' equity:                                                        
     Common stock                                              133,678              133,996
     Additional paid-in capital                             84,884,786           85,002,318
     Notes receivable from related parties                  (1,443,133)          (1,032,829)
     Deferred compensation                                    (464,206)            (388,041)
     Accumulated other comprehensive income                     (8,218)              (7,063)
     Accumulated deficit                                   (59,327,360)         (63,410,095)
                                                          -------------        -------------
Total stockholders' equity                                  23,775,547           20,298,286
                                                          -------------        -------------
Total liabilities and stockholders' equity                $ 30,460,829         $ 26,191,506
                                                          -------------        -------------
                                                          -------------        -------------

</TABLE>

SEE ACCOMPANYING NOTES.

                                       3

<PAGE>

                                   FOCAL, INC.
                       CONDENSED STATEMENTS OF OPERATIONS
                                   (unaudited)

<TABLE>
<CAPTION>

                                           THREE MONTHS
                                          ENDED MARCH 31,
                                    ----------------------------
                                         1998           1999
                                    -------------   ------------
<S>                               <C>              <C>
REVENUES:
     Collaborative R&D revenues     $  1,228,607    $    608,160
     Product revenues                    712,220         717,832
                                    -------------   ------------
        Total revenues                 1,940,827       1,325,992

COSTS AND EXPENSES:
     Cost of product revenues            729,990         921,236
     Research & development            3,957,765       3,726,720
     General & administrative            934,903       1,011,740
                                    -------------   ------------
        Total costs and expenses       5,622,658       5,659,696

Interest income (net)                    452,859         250,970
                                    -------------   ------------

NET LOSS                            ($ 3,228,972)   ($ 4,082,734)
                                    -------------   ------------
                                    -------------   ------------
Basic and diluted net loss
   per share                        ($      0.24)   ($      0.30)
                                    -------------   ------------
                                    -------------   ------------
Shares used in computing net loss
   per share                          13,216,817      13,391,484
                                    -------------   ------------
                                    -------------   ------------

</TABLE>

SEE ACCOMPANYING NOTES.


                                       4

<PAGE>

                                   FOCAL, INC.

                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                            THREE MONTHS ENDED MARCH 31,
                                                            -----------------------------
                                                                 1998           1999
                                                            -------------   -------------
<S>                                                        <C>            <C> 
OPERATING ACTIVITIES
Net income (loss)                                           ($ 3,228,972)   ($ 4,082,734)
Adjustments to reconcile net loss to
     net cash provided by (used in) operating activities:
        Depreciation and amortization                            260,071         303,961
        Amortization of deferred
           compensation                                           76,165          76,165
        Interest accrued on notes receivable                     (28,342)        (17,625)
        Increase (decrease) in cash arising
           from changes of operating assets
           and liabilities:
            Inventories                                         (827,463)       (180,346)
            Accounts receivable and prepaid expenses           1,216,028        (286,315)
            Accounts payable and accrued liabilities            (171,591)       (175,869)
            Deferred revenue                                        --          (550,000)
            Other assets                                            (159)           (101)
            Notes receivable                                        --            27,810
                                                            -------------   -------------
Net cash used in operating activities                         (2,704,263)     (4,885,054)

INVESTING ACTIVITIES
Purchase of marketable securities                            (10,314,298)     (2,077,345)
Sale of marketable securities                                  4,453,450       5,051,233
Purchase of property and equipment                              (343,939)       (470,875)
                                                            -------------   -------------
Net cash provided by (used in) investing activities           (6,204,787)      2,503,013

FINANCING ACTIVITIES
Proceeds from equity financings,
     net of issuance costs                                     3,549,500            --
Proceeds from exercise of
     stock options                                                 6,801         120,405
Principal payments on notes receivable                              --           407,749
Proceeds from lease financing                                    241,525         198,896
Principal payments on capital lease
     obligations                                                (272,619)       (265,089)
                                                            -------------   -------------
Net cash provided by financing
     activities                                                3,525,207         461,961
Net decrease in cash and cash
     equivalents                                              (5,383,843)     (1,920,080)
Cash and cash equivalents at
     beginning of the period                                  26,810,777       8,516,936
                                                            -------------   -------------
Cash and cash equivalents at
     end of the period                                      $ 21,426,934    $  6,596,856
                                                            -------------   -------------
                                                            -------------   -------------

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
     INFORMATION:
        Property acquired under capital
            lease obligations                               $       --
                                                            -------------   -------------
                                                            -------------   -------------
        Interest paid                                       $     54,115    $      50,897
                                                            -------------   -------------
                                                            -------------   -------------

</TABLE>

SEE ACCOMPANYING NOTES.

                                       5

<PAGE>

                                   FOCAL, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                 MARCH 31, 1999
                                   (UNAUDITED)

NOTE 1. BASIS OF PRESENTATION

Focal, Inc. develops, manufactures and commercializes synthetic, absorbable,
liquid surgical sealants, tissue coatings and local drug delivery products,
based on its proprietary polymer technology. The Company's family of surgical
sealant products is being developed for use inside the body to seal air and
fluid leaks resulting from lung, neurological, cardiovascular and
gastrointestinal surgery.

The accompanying unaudited, condensed financial statements have been prepared by
the Company in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, the accompanying financial statements include all
adjustments, including normal recurring accruals, considered necessary for a
fair presentation of the financial position, results of operations, and cash
flows for the periods presented.

The results of operations for the three months ended March 31, 1999 are not
necessarily indicative of the results that may be expected for the entire fiscal
year ended December 31, 1999.

These financial statements should be reviewed in conjunction with the audited
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1998.

NOTE 2. NET LOSS PER SHARE

Basic and diluted net loss per share is computed using the weighted average
number of shares of common stock and convertible preferred stock outstanding,
assuming conversion of preferred stock at date of issuance. The effect of stock
options and warrants are excluded in the diluted calculation, as their effect is
antidilutive.

NOTE 3. REVENUE RECOGNITION FOR PRODUCT SALES

Revenues from product sales are recorded in full as product shipments are made,
as there are no contractual right of return or stock rotation privileges. All
product revenues recorded during the three month periods ended March 31, 1998
and 1999 were attributable to sales of surgical sealant products to Ethicon
Inc., a Johnson & Johnson company.

                                       6

<PAGE>

NOTE 4. INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out method) or
market. At December 31, 1998 and March 31, 1999, inventories consisted of the
following:

<TABLE>
<CAPTION>

                                                  December 31,        March 31,
                                                     1998               1999
                                                 -------------        ----------
<S>                                            <C>                <C>
Raw materials                                    $  219,298           $  188,895
Work in process                                     672,928              857,247
Finished goods                                       44,791               71,221
                                                 -------------        ----------
                                                 $  937,017           $1,117,363
                                                 -------------        ----------
                                                 -------------        ----------

</TABLE>

NOTE 5. COMPREHENSIVE INCOME (LOSS)

The components of comprehensive income for the three month periods ended March
31, 1998 and 1999 are as follows:

<TABLE>
<CAPTION>

                                                  Three months ended March 31,
                                                     1998              1999 
                                                 ------------       ------------
<S>                                           <C>                 <C>
Net loss                                         $(3,228,972)       $(4,082,734)

Other comprehensive income:
Change in unrealized loss
      on marketable securities                   $    (6,009)       $     1,115
                                                 -------------        ----------
Comprehensive loss                               $(3,234,981)       $(4,081,619)
                                                 -------------        ----------
                                                 -------------        ----------

</TABLE>






                                       7

<PAGE>

MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS:

The following discussion should be read in conjunction with the accompanying
unaudited, condensed financial statements and the related footnotes thereto,
appearing elsewhere in this report. This Management's Discussion and Analysis
contains certain forward-looking statements regarding future events with respect
to the Company. For this purpose, any statements contained herein that are not
statements of historical fact may be deemed to be forward-looking statements.
Without limiting the foregoing, the words "believes," "anticipates," "plans,"
"expects," "intends," and similar expressions are intended to identify
forward-looking statements. There are a number of important factors that could
cause the Company's actual results to differ materially from those indicated in
such forward-looking statements. These factors are set forth under the captions
"Business -Patents and Proprietary Rights," "-Government Regulation," "-Sales
and Marketing," "-Manufacturing," "-Competition and Technological Change,"
"-Third Party Reimbursement" and "Factors Affecting Operating Results" in the
Company's Annual Report on Form 10-K for the year ended December 31, 1998, which
captioned discussion is expressly incorporated herein by reference.

OVERVIEW

The Company was founded in 1991, and is focused on the development, manufacture
and commercialization of synthetic, absorbable, liquid surgical sealants, tissue
coatings and local drug delivery products, based on the Company's proprietary
polymer technology. Since inception, the Company has funded its operations
primarily through the private placement of equity securities and most recently,
in December 1997, through an initial public offering of common stock. In
addition, the Company has entered into strategic alliances with corporate
partners and has recorded revenues totaling $27.3 million through March 31,
1999, in conjunction with these alliances.

The Company has incurred net losses in each year since its inception, including
net losses of approximately $4.1 million for the three months ended March 31,
1999. At March 31, 1999, the Company had an accumulated deficit of $63.4
million. The Company's operating losses have resulted primarily from expenses
incurred in connection with the Company's research and development activities,
including preclinical and clinical trials, development of manufacturing
processes and general and administrative expenses. The Company expects to incur
net losses at least through the first half of 2000 and may incur net losses in
subsequent periods although the amount of future net losses and time required by
the Company to reach profitability are highly uncertain. The Company is
dependent upon corporate partners for funding of a significant portion of
research and development expenses. If the Company does not continue to receive
funding from its current corporate 

                                       8

<PAGE>

partners, or is unable to otherwise obtain third party funding, net losses will
continue to increase.

The Company's ability to achieve and sustain profitability will be dependent
upon obtaining regulatory approval for and successfully commercializing its
FocalSeal surgical sealants, and developing the manufacturing capacity and sales
and marketing capability for its products. There can be no assurance that Focal
will obtain the required regulatory approvals, or successfully develop,
manufacture, commercialize and market products or that the Company will ever
achieve profitability. In addition, if the Company achieves profitability, there
can be no assurance that such profitability would be sustained.

The Company introduced its first commercial product, FocalSeal-L for lung
surgery indications, in Europe in March 1998 through its strategic marketing and
distribution alliance with Ethicon Inc., a Johnson & Johnson company. The
Company anticipates that revenues derived from European sales of the Company's
FocalSeal surgical sealants will account for a substantial majority of the
Company's near term product revenues.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998

Revenues for the three months ended March 31, 1999 decreased to $1.3 million
from $1.9 million for the three months ended March 31, 1998. Included in the
1999 quarter were product revenues of $718,000 and collaborative revenues of
$608,000 compared with $712,000 of product revenues and $1,229,000 of
collaborative revenues during the same period in 1998. The decrease in
collaborative revenue in the 1999 quarter was primarily due to the fact that the
quarterly funding under the alliance with Ethicon relating to the pulmonary and
neurological sealants ceased after the fourth quarter of 1998, per the original
contractual terms of the agreement with Ethicon. The quarter ending March 31,
1999 included $550,000 in quarterly funding relating to the cardiovascular
sealant collaboration with Ethicon.

Cost of product revenues for the quarter ended March 31, 1999 of $921,000 were
recorded relating to the commercial sales of the Company's FocalSeal-L surgical
sealant product versus cost of product revenues of $730,000 for the
corresponding quarter in 1998. Gross margins remained negative due to the
startup phase of the Company's manufacturing operations and the resulting lack
of economies of scale. Additionally, costs related to inventory costing and
inefficiencies surrounding sterile fill and finish processes further burdened
cost of product revenues for the quarter ending March 31, 1999.

Research and development expenses decreased to $3,727,000 for the quarter ended
March 31, 1999, from $3,958,000 for the quarter ended March 31, 1998. This
decrease was primarily due to lower clinical trial costs in the first quarter of
1999, compared with the same period in 1998. During the first quarter of 1998,
the Company was engaged in a pivotal U.S. 180 patient clinical trial of
FocalSeal L surgical sealant for 

                                       9

<PAGE>

lung surgery indications. This clinical trial was completed in the third quarter
of 1998. There were no ongoing clinical trails during the first quarter of 1999.

General and administrative expenses increased to $1,012,000 for the quarter
ending March 31, 1999, from $935,000 for the quarter ended March 31, 1998. The
increase in general and administrative expenses was primarily due to the
addition of certain costs related to the transition of the Company to a publicly
traded entity such as investor relations, public relations, and insurance.

Interest income, net of interest expense, decreased to $251,000 for the quarter
ended March 31, 1999, from $453,000 for the quarter ended March 31, 1998, as a
result of lower average cash balances.

The Company recorded a net loss of $(4,083,000) for the quarter ended March 31,
1999. During the same period in 1998, the Company recorded a net loss of
$(3,229,000). The increase in net loss is primarily attributed to decreasing
collaborative revenues, negative gross margins on product sales and increased
general and administrative expenses from the first quarter of 1998 to the same
period in 1999. The Company expects that it will incur net operating losses
through at least the first half of 2000.

LIQUIDITY AND CAPITAL RESOURCES

Since its inception, the Company has financed operations primarily from the sale
of preferred stock in private placements as well as the Company's December 1997
initial public offering. Through March 31, 1999, the Company has raised
approximately $83.5 million from equity financings, net of offering costs and
has received $7.2 million in equipment lease financing. In addition, the Company
has received funding from Ethicon and other corporate partners totaling
approximately $27.3 million through March 31, 1999. At March 31, 1999, the
Company had cash, cash equivalents and marketable securities of $20.5 million.

Cash used in operations totaled $4.9 million for the three months ended March
31, 1999 compared with cash used in operations of $2.7 million for the same
period in 1998. The change in cash used in operations was due to the increased
net losses generated in the three months ended March 31, 1999 and increased
investments in working capital. Cash provided by (used in) operations is equal
to the net income or loss incurred for each period, plus non-cash charges such
as depreciation and amortization of property and equipment plus any changes in
working capital.

Capital expenditures from inception through March 31, 1999 totaled $8.1 million,
representing laboratory equipment, office furniture and equipment, computers and
certain leasehold improvements. The majority of these purchases have been
financed through either direct financing leases or sale and leaseback
arrangements. Capital expenditures for the three months ended March 31, 1999
totaled $471,000. As of March 31, 1999, the Company did not have any material
commitments for future capital expenditures. The Company has commitments from
lenders in the form of 

                                       10

<PAGE>

lease lines totaling $1.5 million to provide for its expected capital needs
during 1999, and expects to secure additional lease lines to provide for its
needs in 2000 and beyond.

The Company believes that its existing capital resources, interest income and
future payments due under strategic alliances, will be sufficient to satisfy its
current and projected funding requirements for at least 12 months. Under the
Company's surgical sealant collaboration with Ethicon, Focal may receive
additional funding for research and development activities and upon achievement
of specified development milestones; however, as such payments are dependent
upon the achievement of such milestones, there can be no assurance as to the
receipt or timing of any such payments. Future milestone payments include a
payment due upon submission for CE Mark approval of FocalSeal S surgical sealant
for cardiovascular indications and a milestone payment for approval of FocalSeal
L surgical sealant in the Pacific Rim. There are currently no commitments for
additional research and development funding from Ethicon. Under certain
agreements with universities and consultants, the Company is obligated to make
payments for sponsored research and consulting services. The Company's research
funding commitments under these agreements totaled approximately $85,000 at
March 31, 1999. Payments under these agreements are typically made on a
quarterly or monthly basis.

There can be no assurance that the Company's capital resources will be
sufficient to enable the Company to conduct its research and development
programs as planned. The Company's future capital requirements will depend on
many factors, including continued progress in its research and development
programs, progress with preclinical testing and clinical trials, the time and
costs involved in obtaining regulatory approvals, if any, the costs involved in
filing and prosecuting patent applications and enforcing patent claims,
competing technological and market developments, the establishment of additional
strategic alliances, the cost of manufacturing facilities and of
commercialization activities and arrangements, and the cost of product
in-licensing and any possible acquisitions. There can be no assurance that the
Company's cash, cash equivalents and marketable securities and interest income
earned thereon, together with funding that may be received under the Company's
strategic alliances, will be adequate to satisfy its capital and operating
requirements.

The Company intends to seek additional funding through strategic alliances, and
may seek additional funding through public or private sales of the Company's
securities, including equity securities. In addition, the Company has obtained
equipment lease financing and other forms of debt financing and may continue to
pursue opportunities to obtain additional lease or debt financing in the future.
There can be no assurance, however, that additional equity or debt financing
will be available on reasonable terms, if at all. Any additional equity
financing would be dilutive to the Company's stockholders. If adequate funds are
not available, the Company may be required to curtail significantly one or more
of its research and development programs and/or obtain funds through
arrangements with corporate partners or others that may require the Company to
relinquish rights to certain of its technologies or product candidates.

                                       11

<PAGE>

Year 2000 Readiness Disclosure

The Company is preparing for the impact of the arrival of the Year 2000 on its
business, as well as on the businesses of its customers, suppliers and business
partners. The "Year 2000 Issue" is a term used to describe the problems created
by systems that are unable to accurately interpret dates after December 31,
1999. These problems are derived predominantly from the fact that many software
programs have historically categorized the "year" in a two-digit format. The
Year 2000 Issue creates potential risks for the Company, including potential
problems in the Company's products as well as in the Information Technology
("IT") and non-IT systems that the Company uses in its business operations. The
Company may also be exposed to risks from third parties with whom the Company
interacts who fail to adequately address their own Year 2000 Issues.

The Company's plan for IT systems consists of four phases: (1)
inventory-identifying all IT systems; (2) assessment - identifying IT systems
that use date functions and assessing them for Year 2000 functionality; (3)
remediation -reprogramming, or replacing where necessary, inventoried items to
ensure they are Year 2000 ready; and (4) testing and certification - testing the
code modifications and new inventory with other associated systems, including
extensive date testing and performing quality assurance testing to ensure
successful operation in the post-1999 environment.

The Company completed the inventory and assessment phases for substantially all
of its IT systems by year-end 1998. The Company's IT systems are currently in
the remediation and testing and certification phases. The Company plans to
complete the remediation of substantially all of its IT systems by June 30,
1999, and the testing and certification of all of its IT systems by September
30, 1999.

The Company also faces the risk that one or more of its critical suppliers or
customers ("external relationships") will not be able to interact with the
Company due to the third party's inability to resolve its own Year 2000 issues,
including those associated with its own external relationships.

The Company has initiated a formal process designed to determine the overall
Year 2000 readiness of its external relationships. In the case of mission
critical suppliers, the Company is engaged in discussions with those suppliers
and is attempting to obtain detailed information as to those parties' Year 2000
plans and state of readiness. The Company, however, does not have sufficient
information at the current time to predict whether its external relationships
will be Year 2000 ready. Focal's reliance on its key suppliers, and therefore on
the proper functioning of their information systems and software, is increasing,
and there can be no assurance that a vendor's failure to address year 2000
issues would not have an adverse effect on Focal.

Total Year 2000 project costs are currently estimated to be $300,000 to $400,000
in 1999. A large majority of these costs are expected to be incremental expenses
that will not recur in the Year 2000 or thereafter. The Company's current
estimates primarily reflect increased remediation and testing efforts, increased
use of outside resources, 

                                       12

<PAGE>

and certain software and hardware expenditures related to remediation. Focal is
currently evaluating fully integrated enterprise resource planning systems ("ERP
system") and expects to install such an ERP system during 1999. A key
requirement of an ERP system will be year 2000 compliance. Also, effecting the
cost estimates are expenses related to upgrading much of the company's
Analytical Chemistry equipment to full year 2000 compliance. During 1998, the
company upgraded many of the personal computers used by employees, and the
Company now believes that the majority of the computers currently in use are
year 2000 ready. The costs incurred in 1998 related to these upgrades was
approximately $200,000.

Focal is prepared to develop contingency plans to address any unresolved year
2000 issues or to address key suppliers' failure to respond to the Company's
request for state of readiness disclosure from those suppliers. Any critical
unresolved Year 2000 issues at the Company or its external relationships could
have a material adverse effect on the Company's results of operations, liquidity
or financial condition. In addition, the Company's expectations about the future
costs and timely and successful completion of its Year 2000 program are subject
to uncertainties that could cause actual results to differ materially from what
has been discussed above under "Year 2000". Factors that could influence the
amount of future costs and the completion dates and effectiveness of
remediation, testing and certification and contingency planning efforts include
the Company's success in identifying IT systems and embedded systems that
contain two-digit year codes, the nature and amount of required reprogramming,
testing and certification, the rate and magnitude of related labor and
consulting costs, the availability of qualified personnel and the success of the
Company's external relationships in addressing their own Year 2000 issues.






                                       13

<PAGE>

   PART II.  OTHER INFORMATION

   Item 1.        Legal Proceedings.                          None

   Item 2.        Changes in Securities and use of Proceeds.

         There have been no material changes in the use of proceeds from the
   sale of securities under the Company's Registration Statement on Form S-1
   (333-38379), which was declared effective on December 11, 1997, from that set
   forth in the Company's report on Form 10-K for the year ended December 31,
   1998.

   Item 3.        Defaults upon Senior Securities.   None

   Item 4.        Submission of Matters to a Vote of Security Holders.    None

   Item 5.        Other Matters.    None

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

                  (a)      Exhibits

                  The exhibits listed in the Exhibit Index are included in this
                  report.

                  (b)      Reports on Form 8-K 

                  None.

                                       14

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this 10-Q report to be signed on its behalf by the
undersigned thereunto duly authorized.

         Date:    May 14, 1999                  FOCAL, INC.

                                                By:  /s/ W. BRADFORD SMITH
                                                   ----------------------------
                                                     W. Bradford Smith,
                                                     Vice President and Chief
                                                     Financial Officer







                                       15

<PAGE>

                                  EXHIBIT INDEX


   The following exhibits are filed as part of this Quarterly Report on form
10-Q:

EXHIBIT NO.       DESCRIPTION

   27             Financial Data Schedule

   99.1           Pages 12 through 25 of the Company's Annual Report on Form
                  10-K for the year ended December 31, 1998, as filed with the
                  Securities and Exchange Commission (which pages are deemed
                  filed hereunder except to the extent that portions are not
                  expressly incorporated by reference herein)










                                       16