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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549
                            ------------------------

                                   FORM 10-K
                                ---------------

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

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
                            ------------------------

                        COMMISSION FILE NUMBER 000-23305
                            ------------------------

                                 FVC.COM, INC.

             (Exact Name of Registrant as Specified in its Charter)

<TABLE>
<S>                                            <C>
               DELAWARE                                     77-0357037
    (State or other jurisdiction of                      (I.R.S. Employer
    incorporation or organization)                     identification No.)

 3393 OCTAVIUS DRIVE, SANTA CLARA, CA                         95054
    (Address of principal executive                         (Zip code)
               offices)
</TABLE>

                                 (408) 567-7200
              (Registrant's Telephone Number, including area code)

          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
                                      None

          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                         Common Stock, $0.001 par value

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

    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendments to this Form 10-K. [X]

    As of February 29, 2000 there were 16,952,465 shares of the registrant's
common stock outstanding, and the aggregate market value of such shares held by
non-affiliates of the registrant (based upon the closing sale price of such
shares on the Nasdaq National Market on February 29, 2000) was approximately
$328 million. Shares of the registrant's common stock held by each executive
officer, director and holder of five percent or more of the registrant's common
stock outstanding as of February 29, 2000 have been excluded in that such
persons may be deemed to be affiliates. This determination of affiliate status
is not necessarily a conclusive determination for other purposes.

                      DOCUMENTS INCORPORATED BY REFERENCE

    Designated portions of the registrant's definitive proxy statement for the
2000 Annual Meeting of Stockholders are incorporated by reference into Part III
of this Form 10-K.

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                                     PART I

ITEM 1. BUSINESS.

    IN ADDITION TO THE HISTORICAL INFORMATION CONTAINED IN THIS DESCRIPTION OF
THE BUSINESS OF FVC.COM, INC. (THE "COMPANY"), THIS ITEM CONTAINS
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND SECTION 21E OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT") THAT INVOLVE RISKS AND
UNCERTAINTIES. THESE FORWARD-LOOKING STATEMENTS INCLUDE, WITHOUT LIMITATION,
STATEMENTS CONTAINING THE WORDS "BELIEVES," ANTICIPATES," "EXPECTS," AND WORDS
OF SIMILAR IMPORT. SUCH FORWARD-LOOKING STATEMENTS WILL HAVE KNOWN AND UNKNOWN
RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE THE ACTUAL RESULTS,
PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY, OR INDUSTRY RESULTS, TO BE
MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS
EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. SUCH FACTORS INCLUDE,
AMONG OTHERS, THE RISK FACTORS SET FORTH BELOW, UNDER "OVERVIEW", "RISK FACTORS"
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" AND ELSEWHERE IN THIS FORM 10-K. THE COMPANY ASSUMES NO OBLIGATION
TO UPDATE ANY FORWARD-LOOKING STATEMENTS CONTAINED HEREIN.

OVERVIEW

    Founded in 1993, FVC.COM, Inc., a Delaware corporation ("FVC" or the
"Company"), provides equipment and services to deliver video applications over
broadband communications networks. The Company combines its expertise in
networking systems and real-time video technology to deliver end-to-end video
communications solutions for a wide range of enterprise video applications,
including video calls, video conferences, video broadcast, video on demand over
converged multiservice networks. The Company's strategy is to become the leading
provider of high quality, cost-effective, video networking solutions in
broadband Internet and intranet environments for telecommunications carriers and
enterprise customers.

    With over six years of pioneering work in broadband video, FVC is a leading
provider of video networking hardware, software and services. Historically, the
Company has focused on providing video networking systems to the government,
education and healthcare markets, both through direct and indirect sales. FVC's
original equipment manufacturer ("OEM"), distribution and system integration
partners include Ameritech (a subsidiary of SBC Communications Inc.), Bell
Atlantic Corporation ("Bell Atlantic"), British Telecommunications plc ("British
Telecom" or "BT"), Cisco Systems, Inc. ("Cisco"), Electronic Data Systems
Corporation ("EDS"), France Telecom S.A. ("France Telecom"), Ingram Micro, Inc.
("Ingram Micro"), International Business Machines Corporation ("IBM"), Nortel
Networks Corporation ("Nortel"), Qwest Communications International, Inc.
("Qwest"), and Telstra Corporation Limited ("Telstra").

    The Company is leveraging its leadership position in video networking to
capitalize on the rapidly emerging opportunity to provide broadband video
services to the to the service provider market. The Company intends to address
this opportunity both by providing a full range of video network systems
solutions and through its recently introduced broadband video services offering.
Recent network systems sales announcements by the Company with
telecommunications carriers include expanded customer relationships with Bell
Atlantic and British Telecom, both of which are deploying broadband video
services using FVC's products and solutions.

    The Company's broadband video services enable telecommunications carriers to
deliver a comprehensive set of video applications over the carrier's existing
broadband networks into conference rooms, as well as to the users' desktops.
These services are delivered through the Company's Video Operations Center
("VOC"), which is located in Santa Clara, California. The Company's web-based
Video Portal serves as the user interface and is designed for the end-user's
ease-of-use.

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    The Company's management team brings significant networking and technology
industry experience to FVC was significantly strengthened during 1999. During
the past year, the Company added a new Chief Executive Officer, Richard Beyer
(the former president of VLSI Technology and Chief Operating Officer of National
Semiconductor), a new Chief Financial Officer, Truman Cole, a new Vice President
of North American Sales, Stephen Rackets, a new Vice President of Operations,
Robin Richards, and a newly appointed Vice President of Business Development,
Ruth Cox, to help execute the strategic vision of co-founders Ralph Ungermann
and Allwyn Sequeira.

INDUSTRY BACKGROUND

    In recent years, Internet infrastructure has evolved to meet the
requirements of new and emerging Internet applications, such as the integration
of voice and data. Until recently, however, the technologies employed in the
Internet infrastructure were unable to differentiate between data transmission
bursts and video streams. Therefore, the Internet was unable to support high
quality video networking applications. These hindrances have historically
limited an end user's ability to deploy and utilize interactive applications
that simultaneously involve data and high quality video applications. Over the
past six to twelve months, however, the acceleration of the following three key
market drivers has significantly enhanced the opportunity for the widespread
adoption of video networks and broadband video services by telecommunications
carriers and enterprise markets:

    - PROLIFERATION OF BROADBAND NETWORKS. According to RHK, a
      telecommunications research firm, telecommunications carriers are doubling
      network capacity every 18 to 24 months. Because of this great increase in
      network capacity, telecommunications carriers are moving rapidly to
      exploit the plentiful and inexpensive bandwidth of their networks by
      adding video services to existing voice and data offerings. In addition to
      increased quality, video transmission over broadband networks costs a
      fraction of transmission over traditional ISDN networks. According to our
      estimates, telecommunications carriers realize transmission cost savings
      of up to 70% to 80%. As a result, carriers now have greater ability to
      offer customers bandwidth-intensive applications such as
      videoconferencing, video broadcast and video on demand.

    - SIGNIFICANT DECLINE IN COST OF VIDEO ENDPOINTS. For many years, the cost
      of purchasing and maintaining a videoconferencing endpoint for a
      conference room quality system ranged from $35,000 to $50,000. Over the
      past 12 months, a number of companies have entered the market for video
      endpoints and now offer this functionality in set-top box and PC-based
      forms at prices below $5,000. Concurrently, upgrades to enable interactive
      video on desktop PCs are being sold by companies such as Intel Corporation
      for less than $1,000. As with other communications products--such as
      cellular phones, which were prohibitively expensive at the time of their
      introduction, but which dropped in price and increased in functionality
      over time--the reduction in price and increase in functionality in video
      endpoints is also driving demand for video applications.

    - EASE OF USE OF WEB BROWSERS. Historically, the interfaces used to place a
      videoconferencing call have been proprietary and difficult to use,
      requiring the user to manually input a variety of complex and
      indiscernible information about the call, including such variables as
      network type, transmission speed and connection bandwidth. The development
      of web-based user interfaces allows for the point and click simplicity of
      a typical web-based browser, simplifying the process and allowing a video
      call to be placed with a single click on a directory name, similar to the
      simple user experience of sending an email.

THE COMPANY'S PRODUCTS AND TECHNOLOGY

    The Company's strategy is to become the leading provider worldwide of high
quality, cost-effective, video networking solutions in Internet and intranet
environments for telecommunications carriers and enterprise customers.

                                       2
<PAGE>
    The Company's solutions address its customers' requirements for high quality
interactive visual communications through the following broad range of services
and products, including hardware and software:

    - BROADBAND VIDEO SERVICES. In order to fundamentally change the way video
      networking services are delivered, in September 1999, the Company
      announced its broadband video services offering that will be delivered
      through the Company's web-based Video Portal. This Video Portal changes
      the way video networking services are delivered by:

     - Expanding the potential user base from the current 200,000 room systems
       to the more than 200 million networked PCs;

     - Transitioning the user interface from various complex proprietary systems
       to a simple browser-based point and click interface; and

     - Moving video traffic delivery from a separate ISDN network to the
       existing broadband voice/ video/data network.

    This Video Portal will include a suite of real-time video applications, such
as video calls, video conferences, video mail, video events and other
value-added video services.

    In addition to its existing VOC in Santa Clara, the Company intends to
deploy several VOCs elsewhere in the United States, as well as in Europe and
other strategic locations, in order to provide its broadband video services to
telecommunications carriers globally. FVC intends to utilize the VOCs to provide
carriers with rapid market entry, state-of-the-art technology and facilities,
and attractive pricing for FVC's video service offering. The Company's recent
announcements with Qwest, Bell Atlantic and British Telecom highlight the early
success of the Company's new strategic focus on the carrier market. FVC intends
to expand these relationships and form additional relationships with
telecommunications carriers globally. In addition to next generation carriers
such as Qwest, FVC.COM is targeting competitive local exchange carriers,
regional bell operating companies, Internet service providers, Internet exchange
carriers and national post office/telephone/telegraph companies for its
broadband video services.

THE COMPANY'S STRATEGY

LEVERAGE FIRST MOVER ADVANTAGE IN MANAGED BROADBAND VIDEO SERVICES

    The Company's deployment of the first carrier-based broadband video services
offering will enable telecommunications carriers to provide enterprise customers
with high quality, affordable and easy-to-use video conferencing capabilities
both in conference rooms and on desktop PCs. The recent proliferation of
bandwidth has enabled high quality video services to the desktop mass market for
the first time. The Company believes that as broadband video services offerings
become increasingly critical for carriers, FVC's expertise in broadband video
networking, its easy-to-use web-based interface and its cost-efficient systems
solutions give the Company a significant lead over its competitors in addressing
this market opportunity.

EXPLOIT LARGE UNDER-SERVED MARKET OPPORTUNITY

    Massive infrastructure upgrades by carriers and corporations are being
driven by the growing need for bigger pipes to carry data applications, and, in
particular, Internet access. Established telecommunications and networking
companies have yet to develop a high level of expertise in broadband video
networking to service the corporate market. The Company believes that video
applications will benefit from the build-out of broadband data networks and that
these applications are likely to become a strategic revenue source for carriers
as voice and data increasingly become commodity services. Applications Service
Providers such as FVC provide the video expertise and solutions needed to
deliver video services over existing networks. As

                                       3
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one of only a limited number of companies currently focused exclusively on video
networking, the Company believes that it is well-positioned to capitalize on
this opportunity.

EXPAND DEPLOYMENT OF IP-BASED VIDEO NETWORKING PRODUCTS

    In order to capitalize on the overall growth in the networking market and
the trend towards the deployment of end-to-end IP networks, the Company has
expanded its product development focus into the IP environment. In 1998, FVC
introduced one of the first IP to ISDN to ATM gateways and an IP-based product
for video streaming and video-on-demand. The Company's current and future
product development plans reflect an increased emphasis on IP-based products.

MAINTAIN STEADY GROWTH IN CORE SYSTEMS BUSINESS

    The Company's core business of selling end-to-end broadband video solutions
has shown steady growth, with revenues increasing from $3.7 million in 1995 to
$45.7 million in 1999. FVC believes its leading position in broadband video
networking, enhanced by distribution relationships with partners such as Nortel,
Lucent Technologies Inc. and Bell Atlantic will enable the Company to continue
to grow its core business.

MARKETING, SALES AND CUSTOMER SUPPORT

    The Company believes that two significant growth areas for its video
equipment and services are: 1) telecommunications carriers and service
providers, and 2) enterprises. The Company's products take advantage of
broadband networks being implemented in these environments to achieve high
quality video transmission.

    The Company markets its products to business customers, government users and
educational providers through its internal sales force and indirect sales
channels. The Company's internal sales force uses the Company's video technology
to directly qualify and stimulate end-user demand, as well as to manage the
Company's strategic relationships with OEMs, VARs and systems integrators. A
significant portion of the Company's sales to date have been fulfilled through
the Company's OEMs, including Nortel Networks. Sales through Nortel Networks
(including Bay Networks) represented approximately 29% of the Company's total
sales in 1999, 39% in 1998 and 64% in 1997. OEMs either sell and install the
Company's products directly or work with leading systems integrators to sell and
install the Company's products. Systems integrators qualified to sell and
install the Company's products include Bell Atlantic, BT, EDS, France Telecom,
GTE Corporation, Global Telemedics, IBM, NTT, NEC Corporation and Telstra.

    The Company has sales offices in the United Kingdom, Germany, France, Italy,
Japan and Australia and distributes its products under the FVC.COM name in both
Europe and Asia through resellers and distributors in more than 25 countries.
For the years ended December 31, 1999, 1998 and 1997, approximately 14%, 21% and
20%, respectively, of the Company's sales were generated from customers outside
of the United States.

RESEARCH AND DEVELOPMENT

    Since its inception, the Company has recognized that a strong technical base
is essential to its long-term success and has made a substantial investment in
research and development. To date, the Company has aggressively brought a wide
range of products into the marketplace. The Company intends to make substantial
investments in product development and to participate in the development of
industry standards. The Company monitors changing customer needs and works
closely with its OEM partners, end-user customers and market research
organizations to track changes in the marketplace, including emerging industry
standards in both networking and video. The Company intends to maintain its
product development focus on products for the two-way video broadband networking
market.

                                       4
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    The Company's research and development expenditures totaled $10.2 million,
$9.5 million and $5.4 million for the years ended December 31, 1999, 1998 and
1997, respectively. The Company performs its research and product development
activities at its headquarters in Santa Clara.

COMPETITION

    The video networking industry is becoming increasingly competitive. Some of
these competitors offer video networking over the data network using the
asynchronous transfer mode (ATM) protocol, including FORE Systems, Inc. and
Newbridge Networks Corporation. The Company's video networking products also
compete with systems based on other technologies, such as ISDN-based video
networking products. The Company's video access products, when sold by its
distribution partners such as Nortel, are used to compete with products sold by
companies such as Cisco and 3Com Corporation. In the interactive video area, the
Company's technology licensing agreement with IBM has resulted in products that
compete with products sold in the high-end H.310 videoconferencing market. In
video storage, the Company's V-Cache products face competition from companies
that offer high-performance servers that can store video. In the video broadcast
area, the Company's products compete with system and software products of
companies that provide "streamed" video over IP/Ethernet networks. The Company
faces potential competition from large companies that have products in related
areas. The Company could encounter new competition if companies which distribute
the Company's products, or whose interactive video equipment is used together
with the Company's products, develop or acquire video networking technologies or
products. Further, although currently there are no major competitors in the
broadband video services area, a number of the Company's competitors in other
areas have expressed an interest in developing their own broadband video
services. In particular, there is no assurance that telecommunications service
providers will not develop internally the capability to offer broadband video
services. There can be no assurance that the Company will be able to compete
successfully in this environment.

    In order to compete effectively, the Company must offer an end-to-end
solution, provide high-performance products and services that comply with
applicable standards and are easy to use, and expand its product distribution
channels domestically and internationally. In addition, the Company expects
price competition to escalate in the video networking industry which may force
the Company in the future to lower product prices on a regular basis and add new
products and features without increasing prices. There can be no assurance that
the Company will be able to compete successfully in such a price competitive
environment.

MANUFACTURING

    The Company uses third-party manufacturers to perform materials planning,
production scheduling, mechanical assembly, board testing, system integration,
burn-in, final system testing and distribution of its products to customers. The
Company's operations staff develops manufacturing strategies and qualifies
manufacturing processes and suppliers. The Company and its contract
manufacturers work together to reduce manufacturing costs and to resolve quality
control issues. The Company's manufacturing strategy enables it to leverage the
manufacturing capabilities of its third-party manufacturers, while allowing the
Company to focus on its core competencies of rapid product development and
deployment. If one or more of the Company's manufacturers experiences quality or
other problems, product shipments by the Company may be delayed. If the Company
is required to replace its manufacturers, such a change could result in
short-term cost increases and delays in delivery that could have a material
adverse effect on the Company's business, financial condition and results of
operations. The Company's supply chain, including reserve inventory buffer stock
of critical components, may not be sufficient to meet increases in demand
occurring simultaneously with delayed deliveries from manufacturers. There can
be no assurance that the Company will be able to negotiate acceptable
arrangements with its existing or future manufacturers, or if negotiated, that
such arrangements will be on terms favorable to the Company.

                                       5
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EMPLOYEES

    As of February 29, 2000, the Company employed approximately 130 individuals
full-time. In addition, the Company employs a number of temporary contract
employees. The Company's employees are not represented by a collective
bargaining agreement and the Company believes its relationships with its
employees are good.

RISK FACTORS

    In addition to the other information provided in this report, the following
risk factors should be considered in evaluating the Company and its business.

LIMITED OPERATING HISTORY: CUMULATIVE LOSSES; STOCK PRICE

    The Company has a limited operating history upon which an evaluation of the
Company and its prospects can be based. The Company was incorporated in
October 1993, first shipped its video networking products in 1995 and first
announced its video services business in 1999. The Company's prospects must be
considered in light of the risks, expenses and difficulties encountered by
companies in their early stage of development, particularly companies in new and
rapidly evolving markets and companies experiencing rapid growth and expansion.
To address these risks, the Company must, among other things, continue to
achieve market acceptance for its products, maintain technological leadership,
respond to evolving markets and competition, and attract, retain and motivate
qualified employees. There can be no assurance that the Company will be
successful in addressing these risks.

VOLATILITY OF STOCK PRICE

    The Company's stock price, like that of other technology companies, is
subject to significant volatility. If revenues or earnings in any quarter fail
to meet the investment community's expectations, there could be an immediate
impact on the company's stock price and a resulting securities class action
suit. The stock price may also be affected by broader market trends unrelated to
the Company's performance. Past financial performance should not be considered a
reliable indicator of future performance, and investors should not use
historical trends to anticipate results or trends in future periods.

POTENTIAL FLUCTUATIONS IN OPERATING RESULTS

    The Company has experienced, and is likely to experience in the future,
fluctuations in revenues, gross margins and operating results. Various factors
contribute to the fluctuations in revenues, gross margins and operating results,
including the Company's success in developing its video services business and in
developing, introducing and shipping new products and product enhancements, the
Company's success in accurately forecasting demand for new orders (which may
have short lead-times before required shipment), product mix, percentage of
revenues derived from OEMs versus distributors or resellers, new product
introductions and price reductions by its competitors, the efforts of OEMs,
distributors, resellers, and other third parties on behalf of the Company, the
Company's ability to attract, retain and motivate qualified personnel, the
timing and amount of research and development and selling, general and
administrative expenditures, and general economic conditions.

    Further, a significant portion of the Company's expenses are fixed. The
Company expects that operating expenses will increase in the future to fund
expanded operations, including the launch and expansion of the Company's
broadband video services to telecommunications carriers. To the extent these
increased expenses are not accompanied by an increase in revenues or gross
margin, as is expected to be the case as the Company expands its broadband video
services business, the Company's business, financial condition and results of
operations would be materially adversely affected. Due to all the foregoing
factors, it is likely that in some future quarter, the Company's results of
operations will be below the expectations of public market analysts and
investors.

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MARKET ACCEPTANCE OF VIDEO NETWORKING AND BROADBAND VIDEO SERVICES

    The Company's success depends on the market acceptance of video networking
and broadband video services. Potential end-users must accept video applications
as a viable alternative to face-to-face meetings and conventional classroom
based learning. New applications, such as the use of video in marketing, selling
and manufacturing, are still in the development stage. Additionally, the
Company's broadband video services are still in the development stage. The
Company has only recently entered into its first contracts with
telecommunications service providers to provide broadband video services and
does not expect any material revenues from these services to be generated until
the second half of 2000. If video networking and broadband video services fail
to achieve broad commercial acceptance or such acceptance is delayed, the
Company's business, financial condition and results of operations would be
materially adversely affected.

DEPENDENCE ON THIRD PARTY RELATIONSHIPS

    The Company currently outsources the manufacturing of its products. The
Company relies on several vendors, to manufacture certain of its products. If
one or more of these manufacturers experiences quality or other problems,
product shipments by the Company may be delayed. If the Company is required to
find replacements for its manufacturers, such change could result in short-term
cost increases and delays in delivery, which could have a material adverse
effect on the Company's business, financial condition and results of operations.
There also can be no assurance that the Company will be able to continue to
negotiate arrangements with its existing or any future manufacturers on terms
favorable to the Company.

    The Company currently sells its products through OEMs, distributors and
resellers ("distribution relationships"). The Company's future performance will
depend in large part on sales of its products through its distribution
relationships, such as Nortel, Bell Atlantic and other key partners. For the
year ended December 31, 1999, Nortel (including Bay Networks) was the Company's
most significant customer, representing 29% of the Company's revenues for that
period. However, such past performance should not be considered a reliable
indicator of future performance. Agreements with Nortel and other distribution
partners generally provide for discounts based on the Company's list prices, and
do not require minimum purchases or restrict development or distribution of
competitive products. Therefore, some of the entities that distribute the
Company's products may compete with the Company. The Company also cannot assure
that an OEM, distributor or reseller will dedicate sufficient resources or give
sufficient priority to selling the Company's products. The Company additionally
depends on its distribution relationships for most customer support, and expends
significant resources to train its OEMs, distributors and resellers to support
their customers. These entities can generally terminate the distribution
relationship upon 30 days notice for a material breach. The loss of a
distribution relationship or a decline in the efforts of a material distributor,
or loss in business or cancellation of orders from, significant changes in
scheduled deliveries to, or decreases in the prices of products sold to, any of
these distribution relationships, could have a material adverse effect on the
Company's results of operations.

LIMITED NUMBER OF LARGE PROJECTS; LENGTHY SALES AND IMPLEMENTATION CYCLE

    The Company depends on a limited number of large end-user projects for a
majority of its revenues, which has resulted in, and may in the future result
in, significant fluctuations in quarterly revenues. The Company expects that
revenues from the sale of products to large end-users will continue to account
for a significant percentage of its revenues in any particular quarter for the
foreseeable future. Additionally, a significant portion of the Company's sales
of video networking products has historically been to government-related
agencies, such as military and educational institutions, or third parties using
the Company's products on behalf of government agencies. Such government-related
customers are often subject to budgetary pressures and may from time to time
reduce their expenditures and/or cancel orders. The loss of any major customer,
or any reduction or delay in orders by such customer, or the failure of the
Company or its distribution partners to market the Company's products
successfully to new customers could have a material adverse effect on the
Company's business, financial condition and results of operations.

                                       7
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    Sales of the Company's products require an extended sales effort. The
Company must first train the entities with which it has distribution
relationships to market the Company's products. The period from an initial sales
call to an end-user agreement typically ranges from six to twelve months, and
can be longer. Therefore, the timing of revenues may be unpredictable. This
could have a material adverse effect on the Company's business, financial
condition and results of operations.

RAPID TECHNOLOGICAL CHANGE; INDUSTRY STANDARDS AND REGULATIONS

    Rapid technological change and evolving industry standards characterize the
market for the Company's products. The Company's success will depend, in part,
on its ability to maintain its technological leadership and enhance and expand
its existing product and services offerings. The Company's success also will
depend in part upon its ability and the ability of its strategic partners to
comply with evolving industry standards. The Company's products must meet a
significant number of domestic and international video, voice and data
communications regulations and standards, some of which are evolving as new
technologies are deployed. The Company's products are currently in compliance
with applicable regulatory requirements. However, as standards evolve, the
Company must modify its products, or develop and support new versions of its
products. In addition, telecommunications service providers require that
equipment connected to their networks comply with their own standards, which may
vary from industry standards.

    The Company's ability to compete successfully also is dependent upon the
continued compatibility and interoperability of its products with products and
architectures offered by various vendors. The Company's business, financial
condition and results of operations would be materially adversely affected if it
were unable in a timely manner to comply with evolving industry standards or
address compatibility issues. In addition, from time to time, the Company may
announce new products, capabilities or technologies that have the potential to
replace or shorten the life cycle of the Company's existing product offerings.
The announcement of product enhancements or new product or service offerings
could cause customers to defer purchasing the Company's products. In addition,
the Company has experienced delays in the introduction of new products in the
past and may experience such delays in the future. The failure of the Company to
introduce successfully new products, product enhancements or services, or
customer delays in purchasing products in anticipation of new product
introductions or because of changes in industry standards, could have a material
adverse effect on the Company's business, financial condition and results of
operations.

DEPENDENCE ON SUPPLIERS

    Several critical components used in the Company's products, including
certain custom and programmable semiconductors are currently available only from
single suppliers. The Company does not have long-term agreements with these
suppliers, and they are not obligated to provide components to the Company for
any specific period, in any specific quantity or at any specific price, except
as may be provided in a particular purchase order. Qualifying additional
suppliers is a time consuming and expensive process, and there is a greater
likelihood of problems arising during a transition period to a new supplier.
There can be no assurance that the existing suppliers will continue to meet the
Company's requirements for these components. Any interruption in the supply of
these components, or the inability of the Company to procure these components
from alternate sources at acceptable prices and within a reasonable period of
time, or any excessive rework costs associated with defective components or
process errors, could have a material adverse effect on the Company's business,
financial condition and results of operations.

    The Company uses a product sales forecast based on anticipated product
orders to determine its components requirements. As a result of the relatively
short lead-time on certain orders, however, this forecast may not be accurate.
Failure of the Company to predict accurately its required quantities of these
components has resulted and could result in the future in shortages of or excess
inventory and higher component costs, as well as cause the Company to delay
shipments of its products in response to orders, which could have a material
adverse effect on the Company's business, financial condition and results of
operations.

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<PAGE>
COMPETITION; INDUSTRY CONSOLIDATION

    Many of the Company's actual and potential competitors have greater name
recognition; a larger installed base of networking products and strong
relationships with end users; more extensive engineering, manufacturing,
marketing and distribution capabilities; and greater financial, technological
and personnel resources than the Company. The networking industry is undergoing
a period of consolidation in which companies, including some of the Company's
competitors, are participating in business combinations, resulting in
competitors with larger market shares, customer bases, sales forces, product
offerings and technology and marketing expertise. In addition, there can be no
assurance that products or technologies developed by others will not render the
Company's products and services noncompetitive or obsolete.

RELIANCE ON INTELLECTUAL PROPERTY

    The Company's success and ability to compete in the video networking
industry depends, in part, upon its ability to protect its proprietary
technology and to operate without infringing the proprietary rights of others.
The Company does not rely on patent protection for, and does not hold, any
patents relating to its products, although it is engaged in preparing patent
applications related to its recently developed video services technology. The
Company's adherence to industry-wide technical standards and specifications may
limit the Company's opportunities to provide proprietary product features. The
Company currently licenses certain technology from third parties and plans to
continue to do so in the future. The commercial success of the Company will
depend, in part, on its ability to continue to obtain licenses to third-party
technology for use in its products.

    The Company currently relies upon a combination of trade secret, copyright
and trademark laws and contractual restrictions to establish and protect
proprietary rights in its products. The Company also enters into confidentiality
and invention assignment agreements with its employees and enters into
non-disclosure agreements with its suppliers, distributors and customers to
limit access to and disclosure of its proprietary information. There can be no
assurance that the pending patent applications will be successful, or that these
statutory and contractual arrangements will be sufficient to deter
misappropriation of the Company's proprietary technologies or that independent
third parties will not develop similar or superior technologies. The development
of alternative technologies by third parties could adversely affect the
competitiveness of the Company's products. In addition, the laws of some
countries do not provide the same degree of protection of the Company's
proprietary information as do the laws of the United States.

    The commercial success of the Company will also depend, in part, on the
Company not breaching its current and future licenses of third-party technology
used in certain of the Company's products. The Company is, however, subject to
the risk of litigation alleging infringement of third party intellectual
property rights from both its licensed and proprietary technology. A number of
companies have developed technologies or received patents on technologies that
may be related to or be competitive with the Company's technologies. The Company
has not conducted a patent search relating to the technology used in its
products. In addition, since patent applications in the United States are not
publicly disclosed until the patent issues, applications may have been filed
which, if issued as patents, would relate to the Company's products. Given the
rapid development of technology in the video networking industry, there can be
no assurance that the Company's existing or future products will not infringe
upon the existing or future proprietary rights of others. Also, the Company's
lack of patents may inhibit the Company's ability to negotiate or obtain
licenses from or oppose patents of third parties, if necessary. Further, the
Company is subject to the risk of litigation alleging infringement of third
party intellectual property rights from both its licensed and proprietary
technology. The Company could incur substantial costs in defending itself and
its customers against any such claims, regardless of the merits of such claims.
The Company may be required by contract or by statutory implied warranties to
indemnify its distribution partners and end-users against third-party
infringement claims. Parties making such claims may be able to obtain injunctive
or other equitable relief which could effectively block the Company's ability to
sell its products in the United States and abroad, and could result in an award
of substantial damages. In the event of a successful claim of infringement, the
Company, its customers and end-users may be required to obtain one or more
licenses

                                       9
<PAGE>
from third parties. There can be no assurance that the Company or its customers
could obtain necessary licenses from third parties at a reasonable cost, or at
all. The defense of any lawsuit could result in time-consuming and expensive
litigation, damages, license fees, royalty payments and restrictions on the
Company's ability to sell its products, any of which could have a material
adverse effect on the Company's business, financial condition, and results of
operations.

DEPENDENCE ON KEY PERSONNEL; ABILITY TO ATTRACT AND RETAIN PERSONNEL

    The Company's success is significantly dependent on the contributions of a
number of its key personnel. The loss of the services any of its key personnel
could have a material adverse effect on the Company. The Company believes that
its future success also will depend upon its ability to attract and retain
additional highly skilled technical, managerial, manufacturing, sales and
marketing personnel. Competition for these personnel is intense. There can be no
assurance that the Company will be able to anticipate accurately, or to obtain,
the personnel that it may require in the future.

CONTROL BY INSIDERS

    As of March 16, 2000, the Company's executive officers, directors and their
affiliates beneficially owned approximately 3,122,274 shares or 17.6% of the
outstanding shares of the Company's common stock. As a result, these persons may
have the ability to effectively control the Company and direct its affairs and
business, including the election of directors and approval of significant
corporate transactions. This concentration of ownership may also have the effect
of delaying, deferring or preventing a change in control of the Company, and
making certain transactions more difficult or impossible absent the support of
these stockholders, including proxy contests, mergers involving the Company,
tender offers, open-market purchase programs or other purchases of common stock
that could give stockholders of the Company the opportunity to realize a premium
over the then prevailing market price for shares of common stock.

FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FINANCING

    The Company currently anticipates that its available cash resources combined
with funds from the Company's existing line of credit, will be sufficient to
meet its presently anticipated working capital, capital expenditure requirements
and general corporate purposes, including expansion of the Company's broadband
video services, for at least the next 12 months. However, in order to
aggressively pursue business opportunities in the video services business, have
the ability to respond to competitive pressures and have increased flexibility
to take advantage of other business opportunities that are not yet known, the
Company is currently seeking equity investments from a number of strategic
partners and potential strategic partners. If additional funds are raised
through the issuance of equity securities, the percentage ownership of the
stockholders of the Company will be reduced, stockholders may experience
additional dilution, or such equity securities may have rights, preferences or
privileges senior to those of the holders of the Company's common stock. Should
the Company be unsuccessful in its current efforts to raise equity from
strategic partners, it may seek additional capital from the public and/or
private equity markets that will likely result in dilution of the Company's
current stockholders. There can be no assurance that additional financing will
be available when needed on terms favorable to the Company or at all. If
adequate funds are not available or are not available on acceptable terms, the
Company may be unable to develop or enhance its services, take advantage of
future opportunities or respond to competitive pressures, which could have a
material adverse effect on the Company's business, financial condition or
operating results.

ITEM 2. PROPERTIES.

    The Company is headquartered in Santa Clara, California, where it leases
approximately 48,000 square feet of space that houses administrative, sales and
marketing, customer service and product development activities. The space is
occupied pursuant to an operating lease that expires in 2009. Additionally, the
Company has rental agreements for small sales offices in the United States,
Europe and Asia. Rental expense under these facility leases for the year ended
December 31, 1999 was approximately $1.1 million. The Company believes that its
existing facilities are adequate to meet current needs.

                                       10
<PAGE>
ITEM 3. LEGAL PROCEEDINGS.

    On or about April 9, 1999, several purported class action suits were filed
in the United States District Court for the Northern District of California
alleging violations of the federal securities laws against the Company and
certain of its officers and directors in connection with the Company's reporting
of its financial results for the period ended December 31, 1998. These actions
were dismissed by the court without leave to amend on February 14, 2000.

                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

    The Company's common stock is traded on the Nasdaq National Market under the
symbol "FVCX." Public trading of the common stock commenced on April 29, 1998.
Prior to that, there was no public market for the common stock. The following
table sets forth, for the periods indicated, the high and low sale price per
share of the common stock on the Nasdaq National Market.

<TABLE>
<CAPTION>
                                                                  HIGH            LOW
                                                              -------------   ------------
<S>                                                           <C>             <C>
1998
  Second Quarter (from April 29, 1998)......................  $17             $9 1/2
  Third Quarter.............................................  $17 3/4         $7 1/2
  Fourth Quarter............................................  $19             $7 13/16

1999
  First Quarter.............................................  $15 3/8         $10
  Second Quarter............................................  $13 3/4         $3 3/4
  Third Quarter.............................................  $15 5/16        $6
  Fourth Quarter............................................  $15 15/16       $9
</TABLE>

    As of February 29, 2000, there were approximately 244 holders of record of
the Company's common stock. On February 29, 2000, the last sale price reported
on the Nasdaq National Market System for the Company's common stock was $19.375
per share.

    The Company has never declared or paid any cash dividends on its capital
stock. The Company intends to retain any future earnings to support operations
and to finance the growth and development of the Company's business and does not
anticipate paying cash dividends for the foreseeable future.

RECENT SALES OF UNREGISTERED SECURITIES

    On December 8, 1999, the Company issued to each of Mr. Ugo Assi and Kiwi
Ventura Servicos SA, in exchange for the share capital of FVC.COM BV held by
each of them, a warrant for the purchase of 30,833 shares of the Company's
common stock, at an exercise price of $12.00 per share. The warrants expire on
December 31, 2002. The warrants were issued pursuant to Regulation S under the
Securities Act of 1933, as amended.

                                       11
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA

    The following table presents summary selected historical data of the Company
as of and for each of the five years in the period ended December 31, 1999.

<TABLE>
<CAPTION>
                                                             YEAR ENDED DECEMBER 31
                                              ----------------------------------------------------
                                                1999       1998       1997       1996       1995
                                              --------   --------   --------   --------   --------
                                                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S>                                           <C>        <C>        <C>        <C>        <C>
Revenues....................................  $ 45,700   $ 37,251   $ 18,771   $ 12,093   $ 3,670
Cost of revenues............................    28,851     19,220     10,466      6,547     2,874
                                              --------   --------   --------   --------   -------
  Gross profit..............................    16,849     18,031      8,305      5,546       796
                                              --------   --------   --------   --------   -------

Operating expenses:
  Research and development..................    10,170      9,463      5,420      2,930     2,582
  Selling, general and administrative.......    21,633     11,878      6,997      4,886     3,603
  Acquired in-process research and
    development.............................        --      4,664         --         --        --
                                              --------   --------   --------   --------   -------
    Total operating expenses (1)............    31,803     26,005     12,417      7,816     6,185
                                              --------   --------   --------   --------   -------
Operating loss..............................   (14,954)    (7,974)    (4,112)    (2,270)   (5,389)

Other income (expense), net.................       646        (42)      (216)        27        79
Minority interest in consolidated
  subsidiary................................       (20)        --         --         --        --
                                              --------   --------   --------   --------   -------
Net loss....................................  $(14,328)  $ (8,016)  $ (4,328)  $ (2,243)  $(5,310)
                                              ========   ========   ========   ========   =======

Net loss per share:
  Basic and diluted (2).....................  $  (0.87)  $  (0.69)  $  (1.44)  $  (1.14)  $ (5.30)

Shares used to compute net loss per share:
  Basic and diluted (2).....................    16,433     11,541      3,012      1,974     1,001
</TABLE>

<TABLE>
<CAPTION>
                                                                  DECEMBER 31
                                              ----------------------------------------------------
                                                1999       1998       1997       1996       1995
                                              --------   --------   --------   --------   --------
                                                                 (IN THOUSANDS)
<S>                                           <C>        <C>        <C>        <C>        <C>
Cash, cash equivalents and short-term
  investments...............................  $  8,821   $ 26,748   $  2,500   $    676   $ 2,787
Working capital.............................    21,878     32,939      1,891      1,046     1,452
Total assets................................    40,199     51,165     11,104      5,432     4,516
Total debt..................................       228      1,665      3,466      1,312       392
Accumulated deficit.........................   (36,878)   (22,550)   (14,534)   (10,206)   (7,963)
Total stockholders' equity..................    27,812     38,613      1,909      2,074     2,017
</TABLE>

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

(1) Operating expenses included non-cash employee stock compensation charges of
    $493,000, $1.2 million, $1.1 million, and $339,000 for the years ended
    December 31, 1999, 1998, 1997 and 1996, respectively.

(2) See Note 1 to the consolidated financial statements for an explanation of
    the computation of net loss per share

                                       12
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS

    THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF THE COMPANY SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
STATEMENTS AND THE NOTES THERETO INCLUDED IN ITEM 8 OF THIS FORM 10-K. IN
ADDITION TO THE HISTORICAL INFORMATION CONTAINED IN THIS ITEM, THIS ITEM
CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE
SECURITIES ACT AND SECTION 21E OF THE EXCHANGE ACT THAT INVOLVE RISKS AND
UNCERTAINTIES. THESE FORWARD-LOOKING STATEMENTS INCLUDE, WITHOUT LIMITATION,
STATEMENTS CONTAINING THE WORDS "BELIEVES," ANTICIPATES," "EXPECTS," AND WORDS
OF SIMILAR IMPORT. SUCH FORWARD-LOOKING STATEMENTS WILL HAVE KNOWN AND UNKNOWN
RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE THE ACTUAL RESULTS,
PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY, OR INDUSTRY RESULTS, TO BE
MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS
EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. SUCH FACTORS INCLUDE,
AMONG OTHERS, THE RISK FACTORS SET FORTH ABOVE IN "BUSINESS--OVERVIEW",
"BUSINESS--RISK FACTORS," THE RISK FACTORS SET FORTH IN THIS ITEM AND ELSEWHERE
IN THIS FORM 10-K. THE COMPANY ASSUMES NO OBLIGATION TO UPDATE ANY
FORWARD-LOOKING STATEMENTS CONTAINED HEREIN.

OVERVIEW

    The Company provides equipment and services that enable the delivery of
video applications over broadband communications networks. In 1999, the Company
recorded $45.7 million in net revenues, an increase of 23% compared to the
previous year. The Company was incorporated in California in October 1993 and
reincorporated in Delaware in December 1997. The Company first shipped its video
networking products in 1995 and announced its video services product offering in
September 1999.

    The Company's revenues in 1999 resulted from the sale of video networking
systems to enterprise customers and to telecommunications service providers. The
Company's internal sales force qualifies and stimulates end-user demand, and
manages the Company's strategic relationships with its distribution partners:
OEMs, VARs and systems integrators. In 1999, more than 75% of the company's
revenue was derived through its distribution partners, including Ameritech (a
subsidiary of SBC Communications Inc.), Bell Atlantic, BT, Cisco, EDS, France
Telecom, Ingram Micro, IBM, Nortel, Qwest and Telstra.

    The Company maintains sales offices in the United Kingdom, Germany, France,
Italy, Japan and Australia and distributes its products under the FVC.COM name
in both Europe and Asia through resellers and distributors in more than 25
countries. For the years ended December 31, 1999, 1998 and 1997 approximately
14%, 21% and 20%, respectively, of the Company's sales were generated from
customers outside of the United States. The Company expects that sales from
shipments to customers outside of the United States will continue to represent a
significant portion of its future revenues. In addition, the Company believes
that a small portion of its sales through Nortel and other distribution partners
is sold to international end-users. Revenues from the Company's international
operations are subject to various risks. To date, the Company has not engaged in
any foreign currency hedging activity.

    In September 1999, the Company introduced its broadband video services
offering that will enable telecommunications carriers to provide broadband video
services to the enterprise market. No revenues were recorded from this service
offering in 1999.

    Revenues are recognized upon shipment of products to customers, provided no
significant obligations remain, collectibility is probable and returns are
estimable. Revenues from sales to certain of the Company's resellers are subject
to agreements allowing rights of return and price protection. In these cases,
the Company provides reserves for estimated future returns and allowances upon
revenue recognition. These reserves are estimated based upon historical rates of
returns and allowances, reseller inventory levels, the Company's estimates of
sell through by resellers and other related factors. Actual results could differ
from these estimates. In the event of the inability to estimate returns from any
reseller, the Company defers revenue recognition until the reseller has sold
through the products.

                                       13
<PAGE>
    Advance payments received from customers and gross margin deferred with
respect to sales to resellers wherein the Company does not have the ability to
estimate returns are recorded as deferred revenue. At December 31, 1999,
deferred revenue was $1.7 million, the majority of which related to inventory
held at Nortel.

RESULTS OF OPERATIONS

    The following table sets forth certain items from the Company's Consolidated
Statements of Operations as a percentage of total revenues for the periods
indicated. The data set forth below should be read in conjunction with the
Company's Consolidated Financial Statements and Notes thereto.

<TABLE>
<CAPTION>
                                                                        YEAR ENDED DECEMBER 31
                                                           ------------------------------------------------
                                                                1999             1998             1997
                                                           --------------   --------------   --------------
<S>                                                        <C>              <C>              <C>
Revenues.................................................           100.0%           100.0%           100.0%
Cost of revenues.........................................            63.1             51.6             55.8
                                                           --------------   --------------   --------------
  Gross profit...........................................            36.9             48.4             44.2
                                                           --------------   --------------   --------------
Operating expenses:
  Research and development...............................            22.3             25.4             28.9
  Selling, general and administrative....................            47.3             31.9             37.2
  Acquired in-process research and development...........              --             12.5               --
                                                           --------------   --------------   --------------
    Total operating expenses (1).........................            69.6             69.8             66.1
                                                           --------------   --------------   --------------
Operating loss...........................................           (32.7)           (21.4)           (21.9)

Other income (expense), net..............................             1.4             (0.1)            (1.2)
                                                           --------------   --------------   --------------
Net loss.................................................           (31.4)%          (21.5)%          (23.1)%
                                                           ==============   ==============   ==============
</TABLE>

    REVENUES.  Revenues increased 23%, to $45.7 million in 1999, from
$37.3 million in 1998 and $18.8 million in 1997. The increase in revenues in
both 1999 and 1998 resulted from higher unit shipments due to wider acceptance
of the Company's products primarily as a result of marketing efforts of the
Company and its strategic partners. Sales through Nortel (including Bay
Networks) represented 29% of total sales in 1999, compared to 39% and 64% in
1998 and 1997, respectively. The reduction in concentration of revenues with
Nortel resulted from changes in Nortel's strategic direction, including the
merger of Northern Telecom and Bay Networks in 1998, and the intention of the
Company to broaden its customer base.

    GROSS PROFIT.  Gross profit consists of revenues less the cost of revenues,
which includes the costs associated with the manufacture of the Company's
products by outside manufacturers and related costs of freight, inventory
obsolescence, royalty and warranty. These manufacturers procure the majority of
materials, except for certain key components that the Company purchases from
third-party vendors.

    In 1999, gross profit declined by $1.2 million to $16.8 million, or 37% of
net revenue, compared to $18.0 million or 48% of net revenue in the previous
year. The decrease in gross profit was primarily the result of a charge for
$5.0 million related to reductions in value of certain components,
sub-assemblies and finished goods for which inventory quantities on-hand were
excessive to current demand or were obsolete, and physical inventory
adjustments. The charge for excess and obsolete inventory was primarily
associated with materials that had been acquired in early 1999 based on
projected demand for one-way, streaming video products that had been introduced
late in 1998.

    Excluding the $5.0 million charge recorded in the fourth quarter of 1999,
gross profit increased by $3.9 million to $21.9 million, or 48% of net revenue.
In 1998, gross profit increased by $9.7 million to $18.0 million, or 48% of net
revenue, from $8.3 million or 44% of net revenue, in the year ended

                                       14
<PAGE>
December 31, 1997. The increases in gross profit in 1999 over 1998 and in 1998
over 1997 were primarily attributable to increased unit volumes, changes in the
revenue mix to higher margin products, an increase in the revenues derived from
sales to service providers that carry higher margins than revenue in other
distribution channels, and decreases in costs for some of the Company's
products.

    RESEARCH AND DEVELOPMENT.  Research and development expenses consist
primarily of personnel costs, cost of contractors and outside consultants,
supplies and material expenses, equipment depreciation and overhead costs.
Research and development expenses increased to $10.2 million in 1999, an
increase of 7.0% over the $9.5 million recorded in 1998 and an increase of 75%,
or $4.0 million, compared to 1997. As a percentage of total revenues, research
and development expenses decreased to 22.3% in 1999 from 25.4% in 1998 and 28.9%
in 1997. The increases in absolute dollars were principally due to the hiring of
additional engineers and consultants for product development, including costs in
1998 associated with the acquisition of ICAST. The decrease in research and
development expenses as a percentage of revenues was due to the relatively
greater increase in revenues compared to research and development expenses. The
Company believes that research and development expenses will continue to
increase in absolute dollars for the foreseeable future. However, these expenses
will fluctuate depending on various factors, including the number and types of
development projects.

    SELLING, GENERAL AND ADMINISTRATIVE.  Selling, general and administrative
expenses (SG&A) include personnel and related overhead costs for sales,
marketing, finance, human resources and general management. These expenses also
include costs of outside contractors, advertising, trade shows and other
marketing and promotional expenses. SG&A increased 82% in 1999, to
$21.6 million, from $11.9 million in 1998. SG&A expense totaled $7.0 million in
1997. As a percentage of total revenues, SG&A decreased to 47.3% in 1999, from
31.9% in 1998 and 37.3% in 1997. The increase in absolute dollars in 1998 over
1997 and 1997 over 1996 was the result of the expansion of the Company's sales
and marketing infrastructure, as well as higher marketing costs associated with
advertising and promotional activities, and higher selling costs related to the
increases in revenues. The increase in 1998 was also attributable to a
$1.2 million increase in the provision for bad debts for accounts receivable
related to certain international customers. SG&A includes non-cash compensation
charges relating to the Company's employee stock plans of $493,000 in 1999,
$589,000 in 1998, and $631,000 in 1997. The increase in SG&A as a percentage of
revenues in 1999 compared to 1998 reflected expense increases that exceeded the
rate of revenue growth, including increased spending in administrative functions
and spending associated with activities in international markets. The decrease
in SG&A as a percentage of revenues in 1998 compared to 1997 was due to the
relatively greater increases in revenues for 1998 compared to the change in SG&A
expense levels. The Company anticipates that SG&A will continue to increase in
absolute dollars in the foreseeable future as the Company expands its selling
and marketing efforts and continues to incur the administrative costs associated
with being a publicly held company.

    ACQUIRED IN-PROCESS RESEARCH AND DEVELOPMENT.  In August 1998, the Company
acquired ICAST Corporation, a developer of software designed for Internet and
intranet broadcasting of real-time video, audio and data. The purchase price was
allocated to the assets acquired and liabilities assumed based upon their
estimated fair market values at the date of acquisition as determined by an
independent appraisal. The acquired in-process research and development
represents the estimated fair market value, using a risk-adjusted income
approach, of specifically identified technologies which had not reached
technological feasibility and had no alternative future uses.

    The purchase price, including liabilities assumed of $1.8 million,
aggregated approximately $7.6 million, of which $6.2 million was initially
allocated to acquired in-process research and development. As a result of views
expressed by the SEC staff, as discussed below, the Company subsequently reduced
its estimate of the amount allocated to in-process research and development
("IPR&D") by $1.5 million to $4.7 million for the year ended December 31, 1998
and allocated $2.5 million to goodwill and other identified intangibles. As a
result of the reduction in the IPR&D charge, amortization of intangibles

                                       15
<PAGE>
increased by $116,000 from $56,000 to $172,000 for the year ended December 31,
1998. The basic and diluted net loss per share decreased from $0.82 to $0.69 for
the year ended December 31, 1998.

    The amount allocated to IPR&D and intangible assets in the third quarter of
1998 was determined in a manner consistent with widely recognized appraisal
practices at the date of acquisition. Subsequent to the acquisition, the SEC
staff expressed views that took issue with certain appraisal practices generally
employed by companies in determining the fair value of the in-process research
and development that was the basis for the Company's measurement of its
in-process research and development charge. The charge of $6.2 million, as first
reported by the Company, was based upon the work of an independent valuation
firm that had utilized the methodologies the SEC subsequently announced it does
not consider appropriate.

    As a result of computing in-process research and development using the
current SEC preferred methodology, the Company revised the amount originally
allocated to in-process research and development.

    At the time of the acquisition, ICAST was a privately held, development
stage company involved in research and development of a low-bit rate software
product designed for Internet and intranet broadcasting of real-time video,
audio and data. The value assigned to in-process research and development was
based on this research project for which technological feasibility had not been
established. The value was determined by estimating the expected cash flows from
this project once commercially viable, discounting the net cash flows back to
their present value and then applying a percentage of completion.

    The percentage of completion for this project was determined by comparing
both effort expended and research and development costs incurred as of August
1998, to the remaining effort to be expended and research and development costs
to be incurred, based on management's estimates, to bring the project to
technological feasibility. Based on these comparisons management estimated the
project to be approximately 83% complete as of the date of acquisition. The
project was substantially completed in December 1998. The effort and costs
required to complete the project approximated the estimates made by management
at the date of acquisition.

    Management believes that the restated in-process research and development
charge of $4.7 million was valued consistently with the SEC staff's current
views regarding valuation methodologies. There can be no assurances, however,
that the SEC staff will not take issue with any assumptions used in the
Company's valuation model and require the Company to further revise the amount
allocated to in-process research and development.

    OTHER INCOME (EXPENSE), NET.  Other income (expense), net consists primarily
of interest expense relating to the Company's credit facilities and long-term
debt, offset in part by interest income earned on short term investments and
cash balances. Net other income totaled $646,000 in 1999, compared to other net
expense of $42,000 in 1998 and other net expense of $216,000 in 1997.

    The change in other income (expense) in 1999 from 1998 was primarily the
result of reduced interest expense on short term borrowings. The change from
1998 to 1997 was primarily due to interest income earned on the proceeds from
the Company's initial public offering completed in May 1998 and a reduction in
interest expense due to the repayment of borrowings under short-term credit
facilities with the proceeds from the initial public offering.

    INCOME TAXES.  As of December 31, 1999, the Company had net operating loss
carryforwards for federal tax purposes of approximately $21.0 million. These
carryforwards, if not utilized to offset future taxable income, will expire at
various dates beginning in 2010. In addition, under the Tax Reform Act of 1986,
the amount of the benefit that can be carried forward may be limited in certain
circumstances, including, but not limited to, a cumulative stock ownership
change of more than 50% over a three year

                                       16
<PAGE>
period, as defined. No benefit has been recorded for income taxes for any of the
periods presented as the Company believes that, based on the history of such
losses and other factors, the weight of available evidence indicates that it
will not be able to realize the benefit of these net operating losses. Thus, a
full valuation reserve has been recorded.

LIQUIDITY AND CAPITAL RESOURCES

    Since inception through the completion of its initial public offering in
May 1998, the Company financed its operations primarily through private
placements of equity securities and to a lesser extent through certain credit
facilities and long-term debt. As of December 31, 1999, the Company had cash,
cash equivalents and short-term investments of $8.8 million and working capital
of $21.9 million.

    The Company has used cash in its operating activities primarily to fund
losses of $36.9 million incurred through December 31, 1999 and to finance its
working capital needs.

    Cash used in operating activities totaled $16.5 million in 1999, reflecting
the net loss of $14.3 million and net increases in both inventory and accounts
receivable associated with the increase in business activity level in 1999
compared to1998.

    Cash provided by investment activities totaled $6.0 million, primarily the
proceeds from the sale of short-term investments ($8.6 million) partially offset
by the acquisition of property and equipment ($2.0 million). Capital
expenditures in 1999 were at the same level as 1998, and consisted of purchases
of computers and related equipment, furniture and fixtures necessary to support
the Company's growth. To date, the Company has not made significant outlays for
capital expenditures because of its strategy to outsource manufacturing and
certain other functions.

    Cash provided by financing activities was $1.1 million in 1999, and
consisted principally of $2.6 million in proceeds from the sale of common stock
through the Company's stock option and stock purchase plans, offset in part by
the repayment of $1.3 million in notes payable that were assumed by the Company
in the acquisition of ICAST in August 1998.

    The Company has a working capital line of credit with a bank that provides
for borrowings of up to $10 million. Borrowings under the line of credit bear
interest at the bank's prime rate (8.5% at December 31, 1999). As of
December 31, 1999, the Company had no borrowings outstanding under this line.
The line expires in June 2000.

    The Company believes that its cash, cash equivalents and short term
investments of $8.8 million at December 31, 1999, together with existing sources
of liquidity, will provide adequate cash to fund its current operations for at
least the next 12 months.

    In order to aggressively pursue business opportunities in the video services
business, however, and to have increased flexibility to take advantage of other
business opportunities that are not yet known, the Company is currently seeking
equity investments from a number of strategic partners and potential strategic
partners. Should the company be successful in selling additional equity, the
result will be some level of dilution to the Company's current stockholders.
Should the Company be unsuccessful in its current efforts to raise equity from
strategic partners, it may seek additional capital from the public and/or
private equity markets that will likely result in dilution of the Company's
current stockholders.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

    As of December 31, 1999, the Company held a total of $8.8 million of cash,
cash equivalents and short-term investments. These securities, which consist
primarily of U.S. government securities, municipal notes and corporate bonds,
are subject to interest rate risk and will decline in value if market interest
rates increase. If market interest rates were to increase immediately and
uniformly by 10 ten percent from levels as of December 31, 1999, the decline in
fair value of the portfolio would not be material.

                                       17
<PAGE>
    The Company transacts substantially all of its revenues and costs in United
States dollars and therefore is not subject to fluctuations in foreign exchange
rates. Accordingly, the Company currently does not use derivative financial
instruments. The Company has no fixed rate obligations except for capitalized
leases of approximately $228,000. As such, the fair value of the Company's fixed
rate obligations is not subject to an adverse material impact from changes in
interest rates.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

    The Company's Consolidated Financial Statements and Notes thereto appear
beginning at page F-1 of this report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
  FINANCIAL DISCLOSURE.

    There has been no change in the Company's independent accountants during the
two most recent fiscal years.

                                       18
<PAGE>
                                    PART III

    CERTAIN INFORMATION REQUIRED IN PART III OF THIS REPORT IS INCORPORATED BY
REFERENCE TO THE COMPANY'S PROXY STATEMENT (THE "PROXY STATEMENT") FOR THE
COMPANY'S 2000 ANNUAL MEETING OF STOCKHOLDERS. THE PROXY STATEMENT WILL BE FILED
WITH THE SEC IN ACCORDANCE WITH REGULATION 14A UNDER THE EXCHANGE ACT NO LATER
THAN APRIL 30, 1999.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

    (a)  Identification of Directors: The information concerning the Company's
directors and nominees is incorporated by reference from the section entitled
"Proposal I: Election of Directors" in the Proxy Statement, a copy of which will
be filed with the SEC no later than April 30, 1999.

    (b)  Identification of Executive Officers: The information concerning the
Company's Executive Officers is incorporated by reference from the section
entitled "Management" in the Proxy Statement, a copy of which will be filed with
the SEC no later than April 30, 1999.

    (c)  Compliance with Section 16(a) of the Exchange Act: Based solely upon a
review of Forms 3 and 4 and amendments thereto furnished to the Company pursuant
to Rule 16a-3(e) during the 1998 fiscal year and Form 5 and amendments thereto
furnished to the Company with respect to fiscal year 1998, no director, officer,
or beneficial owner of more than 10 percent of any class of equity security of
the Company has failed to file on a timely basis, as disclosed by the above
forms, reports required by Section 16(a) of the Exchange Act during the 1999
fiscal year or prior fiscal years.

ITEM 11. EXECUTIVE COMPENSATION

    The information required by this item is incorporated by reference from the
section entitled "Executive Compensation" in the Proxy Statement, a copy of
which will be filed with the SEC no later than April 30, 1999.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The information required by this item is incorporated by reference from the
section entitled "Security Ownership of Certain Beneficial Owners and
Management" in the Proxy Statement, a copy of which will be filed with the SEC
no later than April 30, 1999.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    The information required by this item is incorporated by reference from the
section entitled "Certain Relationships and Related Transactions" in the Proxy
Statement, a copy of which will be filed with the SEC no later than April 30,
1999.

                                       19
<PAGE>
                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL SCHEDULES AND REPORTS ON FORM 8-K

(A) THE FOLLOWING DOCUMENTS ARE FILES AS PART OF THIS REPORT

    1.  FINANCIAL STATEMENTS

    The consolidated financial statements required by this item are submitted in
    a separate section beginning on page F-1 of this report.

<TABLE>
<S>                                                           <C>
Report of Independent Accountants...........................    F-1

Consolidated Balance Sheets at December 31, 1999 and 1998...    F-2

Consolidated Statements of Operations for each of the three
years in the period ended December 31, 1999.................    F-3

Consolidated Statements of Stockholders' Equity for each of
the three years in the period ended December 31, 1999.......    F-4

Consolidated Statements of Cash Flows for each of the three
years in the period ended December 31, 1999.................    F-5

Notes to Consolidated Financial Statements..................    F-6
</TABLE>

    2.  FINANCIAL STATEMENT SCHEDULES

    Schedules are omitted because the information required to be set forth
    therein is not applicable or is included in the financial statements or
    notes thereto.

    3.  EXHIBITS

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                             DESCRIPTION OF DOCUMENT
---------------------                     -----------------------
<C>                     <S>
        2.1             Agreement and Plan of Merger and Reorganization among the
                        Registrant, FVC Acquisition Corp., ICAST Corporation and
                        Certain Shareholders of ICAST Corporation, dated as of July
                        30, 1998 (1)

        3.1             Amended and Restated Certificate of Incorporation of the
                        Registrant (2) (exhibit 3.3)

        3.2             Certificate of Ownership and Merger, effective August 3,
                        1998 (3) (exhibit 3.1(i))

        3.3             Bylaws of the Registrant (2) (exhibit 3.4)

        4.1             Specimen Common Stock Certificate (3)

       10.1*            1997 Equity Incentive Plan (2)

       10.2*            Form of Incentive Stock Option Grant (2)

       10.3*            Form of Nonstatutory Stock Option Grant (2)

       10.4*            1997 Employee Stock Purchase Plan (2)

       10.5*            Form of 1997 Employee Stock Purchase Plan Offering (2)

       10.6*            1997 Non-Employee Directors' Stock Option Plan (2)

       10.7*            Form of Nonstatutory Stock Option Grant (5)

       10.8*            Executive Officers' Change of Control Plan (5)

       10.9*            Non-Employee Directors' Change of Control Plan (5)

       10.10*           1999 Equity Incentive Plan

       10.11*           Form of Nonstatutory Stock Option Grant
</TABLE>

                                       20
<PAGE>

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                             DESCRIPTION OF DOCUMENT
---------------------                     -----------------------
<C>                     <S>
       10.12*           Form of Indemnification Agreement between the Registrant and
                        its directors and executive officers (2) (exhibit 10.7)

       10.13            Amended and Restated Investors' Rights Agreement, dated as
                        of April 1, 1998, among the Registrant and the investors
                        named therein (2) (exhibit 10.8)

       10.14            Lease Agreement between the Registrant and John Arrillaga,
                        or his successor Trustee, UTA 7/20/77, dated July 19, 1995
                        (the "Lease Agreement") (2) (exhibit 10.9)

       10.15            Amendment No. 1 to the Lease Agreement, dated November 7,
                        1997 (2) (exhibit10.9(i))

       10.16            Amendment No. 4 to the Lease Agreement, dated February 4,
                        1999 (5)

       10.17            Loan and Security Agreement between the Registrant and
                        Silicon Valley Bank ("SVB"), dated July 3, 1996 (2) (exhibit
                        10.10)

       10.18            Amendment to Loan and Security Agreement between the
                        Registrant and SVB, dated June 10, 1998 (3)
                        (exhibit10.10(i))

       10.19            Loan Modification Agreement between the Registrant and SVB,
                        dated as of March 10, 2000

       10.20            Master Lease Agreement between the Registrant and Comdisco,
                        Inc. ("Comdisco"), dated April 30, 1997(2) (exhibit 10.11)

       10.21            Subordinated Loan and Security Agreement between the
                        Registrant and Comdisco, dated April 30, 1997(2) (exhibit
                        10.12)

       10.22            Original Equipment Manufacturing Agreement between the
                        Registrant and Bay Networks, Inc., dated November 3, 1995 as
                        amended through April 9, 1997 (2) (exhibit 10.13)

       10.23            Fourth Amendment to OEM Agreement, between the Registrant
                        and Bay Networks, Inc., dated October 26, 1997 (2)
                        (exhibit10.13(i))

       10.24            OEM Reseller Agreement between the Registrant and Northern
                        Telecom Inc., dated May 1, 1997 (2) (exhibit 10.14)

       10.25            Development and License Agreement between the Registrant and
                        Advanced Telecommunications Modules Limited, dated February
                        25, 1994, as amended (2) (exhibit 10.15)

       10.26            Equipment Manufacturing OEM Agreement between the Registrant
                        and VTEL Corporation, dated August 20, 1997 (2) (exhibit
                        10.16)

       10.27            Technology Licensing Agreement between IBM Corporation and
                        the Registrant, dated October 16, 1997 (2) (exhibit 10.17)

       10.28            Warrant issued to SVB, dated April 11, 1997 (2) (exhibit
                        10.18)

       10.29            Subordinated Loan and Security Agreement between the
                        Registrant and Comdisco, dated October 23, 1997 (2) (exhibit
                        10.20)

       10.30            Lease Agreement between the Registrant and John Arrillaga,
                        or his successor Trustee, UTA 7/20/77, dated November 7,
                        1997 (2) (exhibit 10.22)

       10.31            Letter Agreement between IBM Corporation and the Registrant,
                        dated February 8, 1998 (2) (exhibit 10.23)

       10.37            Employment Agreement, dated as of December 14, 1998, by and
                        between the Registrant and Richard M. Beyer (5)

       10.38            Amended and Restated Promissory Note, dated December 16,
                        1998, issued in favor of the Registrant by Allwyn Sequeira
                        (5)

       11.1             Statement of Computation of Earnings (Loss) Per Share (4)

       23.1             Consent of PricewaterhouseCoopers LLP
</TABLE>

                                       21
<PAGE>

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                             DESCRIPTION OF DOCUMENT
---------------------                     -----------------------
<C>                     <S>
       24.1             Power of Attorney (included on signature page)

       27.1             Financial Data Schedule
</TABLE>

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

NOTES TO EXHIBITS

 *  Management contract or compensatory plan or arrangement.

(1) Incorporated by reference to exhibit 2.1 to the Company's Current Report on
    Form 8-K filed on September 15, 1998 (File No. 000-23305).

(2) Incorporated by reference to the corresponding or indicated exhibit in the
    Company's Registration Statement on Form S-1, as amended (File No.
    333-38755).

(3) Incorporated by reference to the corresponding or indicated exhibit in the
    Company's Quarterly Report on Form 10-Q filed on June 10, 1998 (File No.
    000-23305).

(4) See Note 1 to the consolidated financial statements.

(5) Incorporated by reference to the corresponding or indicated exhibit in the
    Company's Annual Report on Form 10-K filed on April 15, 1999 (File
    No. 333-72533)

(B) REPORTS ON FORM 8-K

    None.

                                       22
<PAGE>
                                   SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) 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, in the City of Santa
Clara, State of California, on the 29(th) day of March 2000.

<TABLE>
<S>                                                    <C>  <C>
                                                       FVC.COM, INC.,

                                                       By:             /s/ RICHARD M. BEYER
                                                            -----------------------------------------
                                                                         Richard M. Beyer
                                                              CHIEF EXECUTIVE OFFICER AND PRESIDENT
</TABLE>

                               POWER OF ATTORNEY

    KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard M. Beyer and Ralph K. Ungermann, and each
of them, his attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place, and stead, in any and all
capacities, to sign any and all amendments to this Report on Form 10-K, and to
file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission granting unto such
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming that all such attorneys-in-fact
and agents, or any of them or their or his substitute or substituted, may
lawfully do or cause to be done by virtue hereof.

    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.:

<TABLE>
<CAPTION>
                      SIGNATURE                                   TITLE                    DATE
                      ---------                                   -----                    ----
<C>                                                    <S>                          <C>
                                                       Chief Executive Officer,
                /s/ RICHARD M. BEYER                     President & Director
     -------------------------------------------         (Principal Executive         March 29, 2000
                  Richard M. Beyer                       Officer)

                                                       Vice President and Chief
                   /s/ TRUMAN COLE                       Financial Officer
     -------------------------------------------         (Principal Financial and     March 29, 2000
                     Truman Cole                         Accounting Officer)

                 /s/ RALPH UNGERMANN
     -------------------------------------------       Chairman of the Board of       March 29, 2000
                   Ralph Ungermann                       Directors

                 /s/ NEAL M. DOUGLAS
     -------------------------------------------       Director                       March 29, 2000
                   Neal M. Douglas

                 /s/ DAVID A. NORMAN
     -------------------------------------------       Director                       March 29, 2000
                   David A. Norman

                  /s/ ROBERT WILMOT
     -------------------------------------------       Director                       March 29, 2000
                    Robert Wilmot

               /s/ PIER CARLO FALOTTI
     -------------------------------------------       Director                       March 29, 2000
                 Pier Carlo Falotti
</TABLE>

                                       23
<PAGE>
                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
of FVC.COM, Inc.

    In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)(1) on page 20, present fairly, in all material
respects, the financial position of FVC.COM, Inc. and its subsidiaries at
December 31, 1999 and 1998, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1999 in
conformity with accounting principles generally accepted in the United States.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.

PricewaterhouseCoopers LLP
San Jose, California
January 25, 2000, except as to Note 13,
which is as of February 14, 2000

                                      F-1
<PAGE>
                                 FVC.COM, INC.

                          CONSOLIDATED BALANCE SHEETS

                       (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                              -------------------
                                                                1999       1998
                                                              --------   --------
<S>                                                           <C>        <C>
                           ASSETS
Current assets:
  Cash and cash equivalents.................................  $   997    $10,315
  Short-term investments....................................    7,824     16,433
  Accounts receivable, net of allowances of $1,269 and
    $168....................................................   14,066     11,221
  Inventory.................................................    8,104      6,053
  Prepaid expenses and other current assets.................    2,866      1,241
                                                              -------    -------
    Total current assets....................................   33,857     45,263

Property and equipment, net.................................    2,880      2,400
Other assets................................................    3,462      3,502
                                                              -------    -------
      Total assets..........................................  $40,199    $51,165
                                                              =======    =======
            LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Notes payable.............................................  $    --    $ 1,300
  Current portion of long-term debt.........................      143        137
  Accounts payable..........................................    6,968      5,045
  Accrued liabilities.......................................    3,123      1,937
  Deferred revenue..........................................    1,745      3,905
                                                              -------    -------
    Total current liabilities...............................   11,979     12,324
                                                              -------    -------
Long-term debt, net of current portion......................       85        228

Minority interest in consolidated subsidiaries..............      323         --

Commitments and contingencies (Notes 9 and 13)

Stockholders' equity:

  Convertible preferred stock, $.001 par value; 5,000,000
    shares authorized; no shares issued or outstanding......       --         --
  Common stock, $.001 par value; 35,000,000 shares
    authorized; 16,832,522 and 16,389,007 shares issued and
    outstanding, respectively...............................       17         16
  Additional paid-in capital................................   65,015     61,649
  Notes receivable from stockholders........................     (321)      (502)
  Cumulative translation adjustment.........................      (21)        --
  Accumulated deficit.......................................  (36,878)   (22,550)
                                                              -------    -------
    Total stockholders' equity..............................   27,812     38,613
                                                              -------    -------
                                                              $40,199    $51,165
                                                              =======    =======
</TABLE>

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

                                      F-2
<PAGE>
                                 FVC.COM, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                1999       1998       1997
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Revenues....................................................  $ 45,700   $37,251    $18,771
Cost of revenues............................................    28,851    19,220     10,466
                                                              --------   -------    -------
  Gross profit..............................................    16,849    18,031      8,305
                                                              ========   =======    =======
Operating expenses:
  Research and development..................................    10,170     9,463      5,420
  Selling, general and administrative.......................    21,633    11,878      6,997
  Acquired in-process research and development..............        --     4,664         --
                                                              --------   -------    -------
    Total operating expenses................................    31,803    26,005     12,417
                                                              --------   -------    -------
Loss from operations........................................   (14,954)   (7,974)    (4,112)

Interest expense............................................       (54)   (1,057)      (295)
Interest and other income, net..............................       700     1,015         79
Minority interest in consolidated subsidiary................       (20)       --         --
                                                              --------   -------    -------
Net loss....................................................  $(14,328)  $(8,016)   $(4,328)
                                                              ========   =======    =======

Basic and diluted net loss per share........................  $  (0.87)  $ (0.69)   $ (1.44)

Shares used to compute basic and diluted net loss per
  share.....................................................    16,433    11,541      3,012
</TABLE>

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

                                      F-3
<PAGE>
                                 FVC.COM, INC.
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                       (IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
                                          CONVERTIBLE                                                 NOTES
                                        PREFERRED STOCK           COMMON STOCK        ADDITIONAL    RECEIVABLE    CUMULATIVE
                                     ----------------------   ---------------------    PAID-IN         FROM       TRANSLATION
                                       SHARES      AMOUNT       SHARES      AMOUNT     CAPITAL     STOCKHOLDERS   ADJUSTMENT
                                     ----------   ---------   ----------   --------   ----------   ------------   -----------
<S>                                  <C>          <C>         <C>          <C>        <C>          <C>            <C>
Balance at December 31, 1996.......   7,699,635   $      7     4,863,963     $ 5        $13,192        $(924)        $  --
Issuance of Series C preferred
  stock, net.......................      20,518         --            --      --            137           --            --
Issuance of Series D preferred
  stock, net.......................     320,000          1            --      --          2,548           --            --
Exercise of stock options..........          --         --        32,700      --             77           --            --
Issuance (repurchase) of common
  stock, net.......................          --         --       (71,979)     --            176           87            --
Stock compensation charges.........          --         --            --      --          1,137           --            --
Net loss...........................          --         --            --      --             --           --            --
                                     ----------   ---------   ----------     ---        -------        -----         -----
Balance at December 31, 1997.......   8,040,153          8     4,824,684       5         17,267         (837)           --
Issuance of common stock in initial
  public offering, net.............          --         --     3,132,000       3         36,072           --            --
Conversion of preferred stock into
  common stock upon initial public
  offering.........................  (8,040,153)        (8)    8,040,153       8             --           --            --
Issuance of common stock and other
  equity instruments for business
  acquisition......................          --         --       401,389      --          5,179           --            --
Exercise of stock options..........          --         --       194,133      --            815           --            --
Issuance (repurchase) of common
  stock, net.......................          --         --      (203,352)     --           (147)         335            --
Stock compensation charges.........          --         --            --      --          2,463           --            --
Net loss...........................          --         --            --      --             --           --            --
                                     ----------   ---------   ----------     ---        -------        -----         -----
Balance at December 31, 1998.......          --         --    16,389,007      16         61,649         (502)           --
Issuance of common stock under
  stock option plans and related
  benefits.........................          --         --       409,494       1          2,090           --            --
Issuance of common stock, net......          --         --        34,021      --            491          181            --
Issuance of warrants for business
  acquisition......................          --         --            --      --            292                         --
Stock compensation charges.........          --         --            --      --            493           --            --
Cumulative translation
  adjustment.......................          --         --            --      --             --           --           (21)
Net loss...........................          --         --            --      --             --           --            --
                                     ----------   ---------   ----------     ---        -------        -----         -----
Balance at December 31, 1999.......          --         --    16,832,522     $17        $65,015        $(321)        $ (21)
                                     ==========   =========   ==========     ===        =======        =====         =====

<CAPTION>

                                                       TOTAL
                                     ACCUMULATED   STOCKHOLDERS'
                                       DEFICIT        EQUITY
                                     -----------   -------------
<S>                                  <C>           <C>
Balance at December 31, 1996.......   $(10,206)       $ 2,074
Issuance of Series C preferred
  stock, net.......................         --            137
Issuance of Series D preferred
  stock, net.......................         --          2,549
Exercise of stock options..........         --             77
Issuance (repurchase) of common
  stock, net.......................         --            263
Stock compensation charges.........         --          1,137
Net loss...........................     (4,328)        (4,328)
                                      --------        -------
Balance at December 31, 1997.......    (14,534)         1,909
Issuance of common stock in initial
  public offering, net.............         --         36,075
Conversion of preferred stock into
  common stock upon initial public
  offering.........................         --             --
Issuance of common stock and other
  equity instruments for business
  acquisition......................         --          5,179
Exercise of stock options..........         --            815
Issuance (repurchase) of common
  stock, net.......................         --            188
Stock compensation charges.........         --          2,463
Net loss...........................     (8,016)        (8,016)
                                      --------        -------
Balance at December 31, 1998.......    (22,550)        38,613
Issuance of common stock under
  stock option plans and related
  benefits.........................         --          2,091
Issuance of common stock, net......         --            672
Issuance of warrants for business
  acquisition......................         --            292
Stock compensation charges.........         --            493
Cumulative translation
  adjustment.......................         --            (21)
Net loss...........................    (14,328)       (14,328)
                                      --------        -------
Balance at December 31, 1999.......   $(36,878)       $27,812
                                      ========        =======
</TABLE>

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

                                      F-4
<PAGE>
                                 FVC.COM, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                    YEAR ENDED DECEMBER 31,
                                                              ------------------------------------
                                                                1999          1998          1997
                                                              --------      --------      --------
<S>                                                           <C>           <C>           <C>
Cash flows from operating activities:
  Net loss..................................................  $(14,328)     $(8,016)      $(4,328)
  Adjustments to reconcile net loss to net cash used in
    operating activities:
    Depreciation and amortization...........................     2,118        1,961           566
    Stock compensation......................................       493        1,250         1,137
    Acquired in-process research and development............        --        4,664            --
    Other...................................................       306          (44)          215
    Changes in assets and liabilities net of effects of
     acquisitions:
      Accounts receivable...................................    (2,345)      (8,591)         (347)
      Inventory.............................................    (2,551)      (1,839)       (2,948)
      Prepaid expenses and other assets.....................    (1,144)      (1,308)         (580)
      Accounts payable......................................     1,923          843         3,012
      Accrued liabilities...................................     1,186          468           689
      Deferred revenue......................................    (2,160)       3,643           (18)
                                                              --------      -------       -------
        Net cash used in operating activities...............   (16,502)      (6,969)       (2,602)
                                                              --------      -------       -------

Cash flows from investing activities:
  Acquisition of businesses, net of cash received...........      (750)        (360)           --
  Acquisition of property and equipment.....................    (2,000)      (1,987)         (451)
  Purchase of short-term investments........................        --      (16,433)           --
  Proceeds from sale of short term investments..............     8,609           --            --
  Repayment of shareholder notes receivable.................       181           --            --
                                                              --------      -------       -------
        Net cash provided by (used in) investing
        activities..........................................     6,040      (18,780)         (451)
                                                              --------      -------       -------

Cash flows from financing activities:
  Borrowings under short-term credit facilities.............        --        3,600           801
  Repayment of short-term credit facilities.................        --       (4,905)         (494)
  Proceeds from long-term debt..............................        --           --         2,250
  Repayment of long-term debt...............................        --       (2,015)         (235)
  Repayment of notes payable................................    (1,300)          --            --
  Proceeds from issuance of stock, net......................     2,581       37,078         2,793
  Repayment of capital lease obligations....................      (137)        (194)         (238)
                                                              --------      -------       -------
        Net cash provided by financing activities...........     1,144       33,564         4,877
                                                              --------      -------       -------

Net (decrease) increase in cash and cash equivalents........    (9,318)       7,815         1,824
Cash and cash equivalents at beginning of period............    10,315        2,500           676
                                                              --------      -------       -------
Cash and cash equivalents at end of period..................  $    997      $10,315       $ 2,500
                                                              ========      =======       =======
Supplemental cash flow information:

  Cash paid for interest....................................  $     54      $   206       $   248
  Equipment acquired under capital lease obligations........        --          203            --
  Issuance of options and warrants to third parties.........        70        1,213           233
  Common stock issued and options and warrants issued or
    assumed in connection with acquisitions.................       292        5,179            --
  Debt assumed in connection with acquisition of ICAST......        --        1,300            --
</TABLE>

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

                                      F-5
<PAGE>
                                 FVC.COM, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--THE COMPANY AND A SUMMARY OF ITS SIGNIFICANT ACCOUNTING POLICIES:

THE COMPANY

    FVC.COM, Inc. (the "Company") was incorporated in California in
October 1993 and subsequently reincorporated in Delaware in December 1997 as
First Virtual Corporation. In July 1998, the Company changed its name to
FVC.COM, Inc. The Company is engaged in developing, manufacturing and marketing
video networking systems for use in business, government and educational
environments. The Company sells its products worldwide through original
equipment manufacturers ("OEM partners"), distributors and resellers.

    The Company has one reporting segment based on its management structure.

USE OF ESTIMATES

    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

PRINCIPLES OF CONSOLIDATION

    The consolidated financial statements include the accounts of the Company
and its subsidiaries. Investments in entities of which the Company owns between
20% and 50% and entities on which the Company has the ability to exercise
significant influence but not control are accounted for under the equity method.
All significant intercompany accounts and transactions have been eliminated.

    Minority interest reflects the interest of minority shareholders in the
operating results of consolidated subsidiaries.

CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

    The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents and those with maturities
greater than three months are considered short-term investments. The Company has
classified all short-term investments as available-for-sale. Short-term
investments held at December 31, 1999 and 1998 have been presented at cost,
which approximates fair value.

INVENTORY

    Inventory is stated at the lower of cost or market. Cost is determined using
the first-in, first-out method. During the quarter ended December 31, 1999, the
Company recorded an inventory related charge of $5.0 million. These charges
related to the write down of inventories for certain excess and obsolete
products and to record physical inventory adjustments. The charge has been
included in cost of revenues.

PROPERTY AND EQUIPMENT

    Property and equipment are stated at cost and are depreciated on a
straight-line basis over the estimated useful lives of the assets, generally
three years. Leasehold improvements are amortized using the straight-line method
over the shorter of the estimated useful lives of the assets or the remaining
lease term.

                                      F-6
<PAGE>
                                 FVC.COM, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1--THE COMPANY AND A SUMMARY OF ITS SIGNIFICANT ACCOUNTING POLICIES:
(CONTINUED)
When property or equipment is retired or otherwise disposed of, the Company
removes the asset and accumulated depreciation from its records and recognizes
any related gain or loss in the determination of income.

GOODWILL AND OTHER PURCHASED INTANGIBLE ASSETS

    Goodwill, representing the excess of purchase price and acquisition costs
over the fair value of net assets of businesses acquired, and other purchased
intangibles are amortized on a straight-line basis over the estimated economic
lives, which range from 4 to 5 years. Amortization expense relating to goodwill
and other intangible assets was $601,000 for 1999 and $172,000 for 1998.

LONG-TERM ASSETS

    The Company periodically reviews the recoverability of long-term assets
whenever events or changes in circumstances indicate that the carrying amount of
an asset might not be recoverable.

REVENUE RECOGNITION

    Revenues are recognized upon shipment of product to customers, provided no
significant obligations remain, collectibility is probable and returns are
estimable. Revenues from sales to certain of the Company's resellers are subject
to agreements allowing rights of return and price protection. In such cases, the
Company provides reserves for estimated future returns and credits for price
protection upon revenue recognition. Such reserves are estimated based on
historical rates of return and allowances, reseller inventory levels, the
Company's estimates of expected sell through by resellers and other related
factors. Actual results could differ from these estimates. In the event of
inability to estimate returns from any reseller, the Company defers revenue
recognition until the reseller has sold through the products.

    Advance payments received from customers and gross margin deferred with
respect to sales to resellers wherein the Company does not have the ability to
estimate returns are recorded as deferred revenue.

    The Company on occasion receives nonrecurring engineering funding for
development projects. Revenues from such funding are recognized over the term of
the respective contract using the percentage of completion method. Amounts
received under such projects have not been material to date.

    A provision is made upon revenue recognition for the estimated cost to
repair or replace products under warranty arrangements. The Company provides a
limited amount of telephone technical support to customers. These activities are
generally considered insignificant customer support obligations and related
costs are accrued upon revenue recognition.

SOFTWARE DEVELOPMENT COSTS

    Software development costs incurred prior to the establishment of
technological feasibility are included in research and development and are
expensed as incurred. Software development costs incurred subsequent to the
establishment of technological feasibility through the period of general market
availability of the product are capitalized, if material. To date, all software
development costs have been expensed as incurred.

                                      F-7
<PAGE>
                                 FVC.COM, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1--THE COMPANY AND A SUMMARY OF ITS SIGNIFICANT ACCOUNTING POLICIES:
(CONTINUED)
STOCK-BASED COMPENSATION

    The Company accounts for employee stock-based compensation using the
intrinsic value method prescribed in Accounting Principles Board Opinion (APB)
No. 25, "Accounting for Stock Issued to Employees," and related interpretations
thereof. Options and warrants granted to non-employees are accounted for using
the fair value method prescribed by Statement of Financial Accounting Standards
No. 123 ("FAS 123)," "Accounting for Stock-Based Compensation." The Company also
has adopted the disclosure only provisions of FAS 123.

INCOME TAXES

    Income taxes are accounted for using an asset and liability approach. The
asset and liability approach requires the recognition of taxes payable or
refundable for the current year and deferred tax liabilities and assets for the
future tax consequences of events that have been recognized in the Company's
financial statements or tax returns. The measurements of current and deferred
tax liabilities and assets are based on provisions of currently enacted tax law;
the effects of future changes in tax laws or rates are not anticipated. The
measurement of deferred tax assets is reduced, if necessary, by the amount of
any tax benefits that, based on available evidence, are not expected to be
realized.

EARNINGS PER SHARE

    Basic earnings (loss) per share is based on the weighted-average number of
common shares outstanding excluding contingently issuable or returnable shares,
such as shares of unvested restricted common stock. Diluted earnings (loss) per
share is based on the weighted-average number of common shares outstanding and
dilutive potential common shares outstanding. As a result of the losses incurred
by the Company during 1999, 1998 and 1997, all potential common shares were
anti-dilutive and excluded from the diluted net loss per share calculations.

    The following table summarizes securities outstanding as of each period end
which were not included in the calculation of diluted net loss per share since
their inclusion would be anti-dilutive:

<TABLE>
<CAPTION>
                                                                       DECEMBER 31,
                                                              ------------------------------
                                                                1999       1998       1997
                                                              --------   --------   --------
                                                                      (IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
Unvested restricted common stock............................      56        492      1,198
Preferred stock.............................................      --         --      8,040
Warrants....................................................     307        290         61
Stock options...............................................   4,729      3,322      2,129
</TABLE>

    Unvested restricted common stock represents stock that has been issued but
which is subject to repurchase to the extent the holder does not remain
associated with the Company until such shares are vested.

CONCENTRATION OF CREDIT RISK AND GEOGRAPHIC DISTRIBUTION OF REVENUES

    Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash and cash equivalents,
short-term investments and accounts receivable. The

                                      F-8
<PAGE>
                                 FVC.COM, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1--THE COMPANY AND A SUMMARY OF ITS SIGNIFICANT ACCOUNTING POLICIES:
(CONTINUED)
Company invests its excess cash in a variety of financial instruments such as
U.S. government securities, municipal notes and corporate bonds. The Company, by
policy, limits the amount of credit exposure to any one financial institution or
commercial issuer, and restricts the placement of funds to financial
institutions evaluated as highly credit-worthy. The Company sells its products
to original equipment manufacturers, distributors, value-added resellers and
end-user customers throughout the world. The Company performs ongoing credit
evaluations of its customers' financial condition and generally requires no
collateral from its customers. The Company provides an allowance for
uncollectible accounts receivable based upon the expected collectibility of such
receivables. For the years ended December 31, 1999, 1998 and 1997, the allowance
for doubtful accounts was increased for additions of $1,201,000, $136,000, and
$240,000, respectively, and reduced for deductions of $100,000, $183,000, and
$25,000, respectively.

    In 1999, 1998 and 1997 revenues from one customer represented 29%, 39% and
64%, respectively, of total revenues, and a second customer represented 10% of
total revenues in 1999.

    The following table summarizes the percentage of total revenues by
geographic area based on the destination of the related shipments:

<TABLE>
<CAPTION>
                                                                        YEAR ENDED
                                                                       DECEMBER 31,
                                                              ------------------------------
                                                                1999       1998       1997
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
United States...............................................     86%        79%        80%
Asia........................................................      5          9          8
Europe......................................................      9         12         12
                                                                ---        ---        ---
Total.......................................................    100%       100%       100%
                                                                ===        ===        ===
</TABLE>

    At December 31, 1999, outstanding receivables from two customers represented
14% and 13% of accounts receivable. At December 31, 1998, outstanding
receivables from two customers represented 29% and 10% of accounts receivable.

FAIR VALUE OF FINANCIAL INSTRUMENTS

    The carrying amounts of cash and cash equivalents, short-term investments
and other current assets and liabilities such as accounts receivable, accounts
payable and accrued liabilities, as presented in the consolidated financial
statements, approximate fair value because of their short maturities. The
recorded amount of long-term debt approximates fair value as the actual interest
rates approximate current competitive rates.

COMPREHENSIVE INCOME

    Under Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" ("FAS 130"), the Company is required to report
comprehensive income, which includes the company's net income, as well as
changes in equity from other sources. FAS 130 requires that comprehensive income
be reported in a financial statement that is displayed with the same prominence
as other financial statements that constitute a full set of financial
statements. Prior to 1999, the adoption of this standard had no effect on the
Company's consolidated financial statements because none of its transactions to
date had resulted in any material items meeting the definition of components of
comprehensive income. Accordingly, the Company's reported net loss approximated
its comprehensive net loss for 1998 and 1997. The Company's comprehensive net
loss for 1999 was $14,349,000.

                                      F-9
<PAGE>
                                 FVC.COM, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1--THE COMPANY AND A SUMMARY OF ITS SIGNIFICANT ACCOUNTING POLICIES:
(CONTINUED)

RECLASSIFICATIONS

    Certain prior year amounts have been reclassified to conform to the current
year presentation. These reclassifications had no impact on previously reported
results of operations or stockholders' equity.

NEW ACCOUNTING PRONOUNCEMENTS

    In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS No. 133"). The new standard requires
companies to record derivatives on the balance sheet as assets or liabilities,
measured at fair value. Under SFAS No. 133, gains or losses resulting from
changes in the values of derivatives are to be reported in the statement of
operations or as a deferred item, depending on the use of the derivatives and
whether they qualify for hedge accounting. The key criterion for hedge
accounting is that the derivative must be highly effective in achieving
offsetting changes in fair value or cash flows of the hedged items during the
term of the hedge. In June 1999, the FASB issued SFAS No. 137, "Deferral of the
Effective Date of FASB Statement Number 133," to defer for one year the
effective date of implementation of SFAS No. 133. SFAS No. 133, as amended by
SFAS No. 137, is effective for fiscal years beginning after June 15, 2000, with
earlier application encouraged. To date, the Company has not engaged in any
foreign currency hedging activity and does not expect adoption of this new
standard to have a significant impact on the Company.

    In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements." SAB 101 summarizes certain of the SEC's views in applying generally
accepted accounting principles ("GAAP") to revenue recognition in financial
statements. In March 1999, the SEC issued SAB 101A which deferred the Company's
required adoption of SAB 101 until the quarter beginning April 1, 2000. Although
the Company believes its revenue recognition policies are in accordance with
GAAP, the Company is currently studying SAB 101 and has not determined its
impact on the consolidated financial statements.

DEPENDENCE ON SUPPLIERS

    The Company's ability to timely deliver its products is dependent upon the
availability of quality components and subsystems used in these products. The
Company depends in part upon subcontractors to manufacture, assemble and deliver
certain items in a timely and satisfactory manner. The Company obtains certain
components and subsystems from single or a limited number of sources. A
significant interruption in the delivery of such items could have a material
adverse effect on the Company's consolidated financial condition and results of
operations.

NOTE 2--ACQUISITION OF ICAST CORPORATION

    In August 1998, the Company acquired ICAST Corporation, ("ICAST"). Since its
inception, ICAST has been developing software designed for Internet and intranet
broadcasting of real-time video, audio and data. The Company acquired all of the
outstanding stock of ICAST in exchange for 401,389 shares of FVC.COM common
stock, a cash payment of $327,000 and the assumption of certain outstanding
ICAST stock options and warrants and debt. The transaction was accounted for as
a purchase; accordingly, the purchase price was allocated to the assets acquired
and liabilities assumed based upon their estimated fair

                                      F-10
<PAGE>
                                 FVC.COM, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2--ACQUISITION OF ICAST CORPORATION (CONTINUED)
market values at the date of acquisition as determined by an independent
appraisal. The acquired in-process research and development represents the
estimated fair market value, using a risk-adjusted income approach, of
specifically identified technologies which had not reached technological
feasibility and had no alternative future uses.

IN-PROCESS RESEARCH AND DEVELOPMENT

    The purchase price, including liabilities assumed of $1.8 million,
aggregated approximately $7.6 million, of which $6.2 million was initially
allocated to acquired in-process research and development. As a result of views
expressed by the SEC as discussed below, the Company subsequently reduced its
estimate of the amount allocated to in-process research and development
("IPR&D") by $1.5 million to $4.7 million for the year ended December 31, 1998
and allocated $2.5 million to goodwill and other identified intangibles. As a
result of the reduction in the IPR&D charge, amortization of intangibles
increased by $116,000 from $56,000 to $172,000 for the year ended December 31,
1998. The basic and diluted net loss per share decreased from $0.82 to $0.69 for
the year ended December 31, 1998.

    The amount allocated to IPR&D and intangible assets in the third quarter of
1998 was determined in a manner consistent with widely recognized appraisal
practices at the date of acquisition. Subsequent to the acquisition, the SEC
expressed views that took issue with certain appraisal practices generally
employed by companies in determining the fair value of the in-process research
and development that was the basis for the Company's measurement of its
in-process research and development charge. The charge of $6.2 million, as first
reported by the Company, was based upon the work of an independent valuation
firm that had utilized the methodologies the SEC subsequently announced it did
not consider appropriate.

    As a result of computing in-process research and development using the
current SEC preferred methodology, the Company revised the amount originally
allocated to in-process research and development.

    At the time of the acquisition, ICAST was a privately held, development
stage company involved in research and development of a low-bit rate software
product designed for Internet and intranet broadcasting of real-time video,
audio and data. The value assigned to in-process research and development was
based on this research project for which technological feasibility had not been
established. The value was determined by estimating the expected cash flows from
this project once commercially viable, discounting the net cash flows back to
their present value and then applying a percentage of completion.

    The percentage of completion for this project was determined by comparing
both effort expended and research and development costs incurred as of
August 1998, to the remaining effort to be expended and research and development
costs to be incurred, based on management's estimates, to bring the project to
technological feasibility. Based on these comparisons management estimated the
project to be approximately 83% complete as of the date of acquisition. The
project was substantially completed in December 1998. The effort and costs
required to complete the project approximated the estimates made by management
at the date of acquisition.

    Management believes that the restated in-process research and development
charge of $4.7 million was valued consistently with the SEC's current views
regarding valuation methodologies. There can be no assurances, however, that the
SEC will not take issue with any assumptions used in the Company's valuation
model and require the Company to further revise the amount allocated to
in-process research and development.

                                      F-11
<PAGE>
                                 FVC.COM, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2--ACQUISITION OF ICAST CORPORATION (CONTINUED)
    The following pro forma information reflects the results of operations for
the years ended December 31, 1998 and 1997 as if the acquisition of ICAST
Corporation had occurred as of the beginning of each of the periods presented,
after giving effect to certain pro forma adjustments and excludes the charge
relating to IPR&D. These pro-forma results have been prepared for comparative
purposes only and do not purport to be indicative of what operating results
would have been had the acquisition actually taken place as of the beginning of
such periods or what operating results may occur in the future.

<TABLE>
<CAPTION>
                                                                         YEAR ENDED
                                                                        DECEMBER 31,
                                                                   -----------------------
                                                                     1998           1997
                                                                   --------       --------
                                                                         (UNAUDITED)
                                                                       (IN THOUSANDS,
                                                                   EXCEPT PER SHARE DATA)
<S>                                                                <C>            <C>
Revenues....................................................       $37,495        $18,878
Net loss....................................................       $(5,406)       $(6,722)
Net loss per share..........................................       $ (0.46)       $ (1.97)
</TABLE>

NOTE 3--ACQUISITION OF BUSINESSES

    In May 1999, the Company acquired a controlling interest in a United Kingdom
based entity which has been a distributor of the Company's products in the
United Kingdom and the Middle East. The Company acquired 52% of the outstanding
stock of a newly incorporated holding company that owns 100% of the shares of
this entity in exchange for a cash payment of $750,000. The transaction was
accounted for as a purchase; accordingly, the purchase price was allocated to
the assets acquired and liabilities assumed based upon their estimated fair
market values at the date of acquisition. Goodwill of $360,000 arising from the
acquisition is being amortized over its estimated useful life of five years.

    In December 1999, the Company acquired an entity in The Netherlands that has
been a distributor of the Company's products in Germany and Italy. The Company
acquired 80% of the outstanding stock it did not already own in exchange for
warrants valued at $292,000. The warrants give the holders the right to purchase
61,666 shares of the Company's common stock at a price of $12 per share. The
transaction was accounted for as a purchase; accordingly, the purchase price was
allocated to the assets acquired and liabilities assumed based upon their
estimated fair market values at the date of acquisition. Goodwill of $275,000
arising from the acquisition is being amortized over its estimated useful life
of five years.

NOTE 4--INITIAL PUBLIC OFFERING

    In May 1998, the Company completed its initial public offering whereby the
Company sold 3,132,000 shares of its common stock to the public at a price of
$13 per share. The Company received $36.1 million of cash, net of underwriting
discounts, commissions and other offering costs. In addition, each outstanding
share of convertible preferred stock was automatically converted into one share
of common stock (see Note 10). The Company used $6.9 million of the net proceeds
from its initial public offering to repay outstanding indebtedness, including
$2.3 million for borrowings under its working capital line of credit and
$2.6 million for the outstanding balance of a loan from Hambrecht & Quist
Guaranty Finance, LLC (see Note 6).

                                      F-12
<PAGE>
                                 FVC.COM, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 5--BALANCE SHEET COMPONENTS

<TABLE>
<CAPTION>
                                                                        DECEMBER 31,
                                                                   -----------------------
                                                                     1999           1998
                                                                   --------       --------
                                                                       (IN THOUSANDS)
<S>                                                                <C>            <C>
Inventory:
  Raw materials.............................................        $2,155         $3,176
  Finished goods............................................         5,949          2,877
                                                                    ------         ------
                                                                    $8,104         $6,053
                                                                    ======         ======
Prepaid expenses and other current assets
  Prepaid expenses..........................................        $  758         $  199
  Other receivables.........................................         2,108          1,042
                                                                    ------         ------
                                                                    $2,866         $1,241
                                                                    ======         ======
Property and equipment:
  Computers and equipment...................................        $4,788         $3,718
  Furniture and fixtures....................................         1,241            496
  Leasehold improvements....................................           346            222
                                                                    ------         ------
                                                                     6,375          4,436
  Less accumulated depreciation and amortization............        (3,495)        (2,036)
                                                                    ------         ------
                                                                    $2,880         $2,400
                                                                    ======         ======

Other assets
  Goodwill and intangible assets............................        $2,459         $2,112
  Other.....................................................         1,003          1,390
                                                                    ------         ------
                                                                    $3,462         $3,502
                                                                    ======         ======

Accrued liabilities:
  Accrued employee compensation.............................        $1,149         $  921
  Other.....................................................         1,974          1,016
                                                                    ------         ------
                                                                    $3,123         $1,937
                                                                    ======         ======
</TABLE>

    As of both December 31, 1999 and 1998, property and equipment recorded under
capital leases, consisting primarily of computers and equipment, totaled
approximately $1,053,000 and $740,000 with related accumulated amortization of
approximately $847,000 and $630,000, respectively.

NOTE 6--CREDIT FACILITIES AND NOTES PAYABLE

    The Company has a working capital line of credit agreement with a bank that
provides for borrowings of up to $10,000,000. Borrowings under the line of
credit are limited to a specified percentage of eligible accounts receivable and
inventory, and are secured by substantially all of the assets of the Company.
Interest on borrowings is set at the bank's prime rate (8.5% at December 31,
1999). Among other provisions, the Company is required to maintain certain
financial covenants and is prohibited from paying dividends. The line of credit
agreement expires in June 2000. No borrowings were outstanding under this
arrangement at December 31, 1999 and 1998.

                                      F-13
<PAGE>
                                 FVC.COM, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 6--CREDIT FACILITIES AND NOTES PAYABLE (CONTINUED)

    In February 1998, the Company entered into a transaction with Hambrecht &
Quist Guaranty Finance, LLC ("Guaranty Finance"), whereby Guaranty Finance would
loan the Company up to $5 million. Under related agreements which were executed
on March 12, 1998 and subsequently amended on April 24, 1998, (i) Guaranty
Finance agreed to lend the Company up to $5 million at an interest rate of 12%
per annum, $1.1 million of which was loaned to the Company in March 1998 and
$1.5 million of which was loaned to the Company in April 1998 (the "Loan") and
(ii) Guaranty Finance purchased from the Company for $1,250 a warrant to
purchase 125,000 shares of the Company's common stock at a per share purchase
price equal to the initial public offering price of $13.00. The warrant is
exercisable through March 1, 2003. The fair value of this warrant was estimated
to be approximately $563,000, using the Black-Scholes model, and was expensed as
an additional cost of financing in 1998. The Company also paid a $100,000 fee to
Guaranty Finance in consideration for entering into the Loan. This financing
agreement expired on December 31, 1998.

    In connection with the ICAST acquisition, the Company assumed various notes
payable aggregating $1.3 million. The notes bore interest at 6% per annum and
were repaid in the first quarter of 1999.

NOTE 7--LONG-TERM DEBT

    Long-term debt comprises:

<TABLE>
<CAPTION>
                                                                        DECEMBER 31,
                                                                   -----------------------
                                                                     1999           1998
                                                                   --------       --------
                                                                       (IN THOUSANDS)
<S>                                                                <C>            <C>
Capitalized lease obligations...............................        $ 228          $ 365
Less current portion........................................         (143)          (137)
                                                                    -----          -----
                                                                    $  85          $ 228
                                                                    =====          =====
</TABLE>

    In 1997, the Company entered into subordinated debt agreements pursuant to
which the Company borrowed $2,250,000. The debt was secured by certain assets of
the Company. The Company used part of the net proceeds from its initial public
offering to repay this 12% subordinated debt.

NOTE 8--INCOME TAXES

    No provision or benefit for income taxes has been recognized for any of the
periods presented as the Company has incurred net operating losses for income
tax purposes and had no carryback potential.

                                      F-14
<PAGE>
                                 FVC.COM, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8--INCOME TAXES (CONTINUED)
    Deferred tax assets consist of:

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                              -------------------
                                                                1999       1998
                                                              --------   --------
                                                                (IN THOUSANDS)
<S>                                                           <C>        <C>
Net operating loss carryforwards............................  $  8,013   $ 4,394
Tax credits.................................................     2,507     1,072
Accruals and reserves.......................................     4,251     2,652
                                                              --------   -------
Total deferred tax assets...................................    14,771     8,118
Less valuation allowance....................................   (14,771)   (8,118)
                                                              --------   -------
Net deferred tax assets.....................................  $     --   $    --
                                                              ========   =======
</TABLE>

    Based on a number of factors, including the lack of a history of profits and
the fact that the Company competes in a developing market that is characterized
by rapidly changing technology, management believes that the weight of available
evidence indicates that it is more likely than not that the company will not be
able to realize its deferred tax assets and thus a full valuation allowance has
been provided at December 31, 1999 and 1998.

    At December 31, 1999, the Company had net operating loss carryforwards of
approximately $21.0 million and $5.0 million for federal and state
jurisdictions, respectively, available to reduce future taxable income.
Approximately $1.8 million of the federal net operating loss carryforwards
resulted from the Company's acquisition of ICAST Corporation. The federal net
operating loss carryforwards expire from 2013 through 2019 and the state net
operating loss carryforwards expire from 2001 to 2014.

    Under the Tax Reform Act of 1986, the amount of the benefit from net
operating losses that can be carried forward may be limited in certain
circumstances including, but not limited to, a cumulative stock ownership change
of more than 50% over a three-year period, as defined. As a result of the
ownership change that occurred upon the Company's acquisition of ICAST,
utilization of the net operating loss carryforwards related to ICAST is limited
to approximately $350,000 per year.

NOTE 9--COMMITMENTS

LEASES

    The Company leases its facility under noncancelable operating lease
agreements that expire in 2005. In addition, the Company leases certain
equipment under long-term lease agreements that are classified as capital
leases. These capital leases terminate at various dates through 2002. Future
minimum lease

                                      F-15
<PAGE>
                                 FVC.COM, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9--COMMITMENTS (CONTINUED)
payments under all noncancelable operating and capital leases as of
December 31, 1999 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                              OPERATING   CAPITAL
                                                               LEASES      LEASES
                                                              ---------   --------
<S>                                                           <C>         <C>
Year ending December 31,
    2000....................................................   $ 1,328     $ 152
    2001....................................................     1,451        83
    2002....................................................     1,498         9
    2003....................................................     1,518        --
    2004....................................................     1,545        --
    Thereafter..............................................     7,502        --
                                                               -------     -----
    Total minimum lease payments............................   $14,482       244
    Less amount representing interest.......................        --       (15)
                                                               =======     =====
    Present value of capital lease obligations..............                 229
    Less current portion....................................                (143)
                                                                           -----
Lease obligations, long-term................................               $  86
                                                                           =====
</TABLE>

    Rent expense for the years ended December 31, 1999, 1998 and 1997, was
approximately $1,103,000, $583,000 and 266,000, respectively.

NOTE 10--CONVERTIBLE PREFERRED STOCK

    At December 31, 1999, the Company had authorized 5,000,000 shares of
undesignated convertible preferred stock. Prior to completion of the Company's
initial public offering, the Company had authorized 10,000,000 shares of
preferred stock, of which 4,000,000 shares had been designated Series A
convertible preferred stock ("Series A"), 2,200,000 shares had been designated
Series B convertible preferred stock ("Series B"), 1,375,000 shares had been
designated Series C convertible preferred stock ("Series C") and 687,500 shares
had been designated Series D convertible preferred stock ("Series D")
(collectively "Preferred Shares"). Holders of the Preferred Shares were entitled
to receive noncumulative, preferential dividends of $0.05, $0.15, $0.40 and
$0.80, respectively, per annum, when and if declared by the Board of Directors.
No such dividends were declared. Each Preferred Share was converted into one
share of common stock upon completion of the Company's initial public offering
in May 1998.

SERIES D PREFERRED STOCK WARRANTS

    In 1997, the Company issued warrants to purchase 60,936 shares of its
Series D preferred stock at $8.00 per share in conjunction with certain
financing arrangements. The warrants were exercisable immediately and were to
expire at various times from 3 to 4.3 years following the closing of the
Company's initial public offering. Upon closing of the offering in May 1998, the
warrants converted to warrants to purchase the same number of shares of the
Company's common stock at an exercise price of $8.00 per share. As of
December 31, 1999 and 1998, no warrants had been exercised. The aggregate value
of these warrants was estimated by the Company, using the Black-Scholes model,
at approximately $233,000 and was expensed as an additional cost of financing
over the term of the related outstanding borrowings.

                                      F-16
<PAGE>
                                 FVC.COM, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 11--STOCK PLANS

1997 EQUITY INCENTIVE PLAN

    In October 1997, the Board of Directors and stockholders approved the
consolidation and restatement of the Company's 1993 Employee, Consultant and
Director Stock Purchase Plan (the "1993 Plan") and the 1996 Stock Option Plans
(the "1996 Plans") into the 1997 Equity Incentive Plan (the "1997 Plan") which
became effective upon the closing of the Company's initial public offering. The
1997 Plan is intended to serve as the successor equity incentive program to the
1993 Plan and the 1996 Plans (the "Predecessor Plans"). Outstanding options and
stock purchase awards under the Predecessor Plans were incorporated into the
1997 Plan upon effectiveness of the initial public offering. The incorporated
options and stock purchase awards will continue to be governed by their existing
terms which are essentially the same as similar awards granted under the 1997
Plan described below. Under the 1997 Plan, as amended, an aggregate of 5,125,000
shares (500,000 of which were approved by the Board of Directors in
January 2000 and are subject to stockholder approval) of common stock may be
issued pursuant to stock awards.

    The 1997 Plan provides for the grant of stock options, stock purchase awards
and stock bonuses to employees, directors and consultants. Options granted under
the 1997 Plan are for periods not to exceed ten years, and must be issued at
prices not less than 100% and 85%, for incentive and nonqualified stock options,
respectively, of the fair market value of the stock on the date of grant.
Incentive stock options granted to stockholders who own greater than 10% of the
outstanding stock are for periods not to exceed five years and must be issued at
prices not less than 110% of the fair market value of the stock on the date of
grant. Options granted under the 1997 Plan are exercisable at such time and
under such conditions as determined by the Board of Directors, and generally
vest over four years.

    Restricted stock purchase awards under the 1997 Plan are to be issued at a
price not less than 85% of the fair market value of the stock on the date of
grant. Restricted stock purchase awards may be accompanied by a repurchase
option in favor of the Company in accordance with a vesting schedule and at a
price determined by the Board of Directors. Shares subject to stock awards that
have expired or otherwise terminated shall again become available for the grant
of awards under the 1997 Plan, including shares subject to currently outstanding
options and restricted stock issued under the 1993 Plan and the 1996 Plans. As
of December 31, 1999 and 1998, a total of 148,824 and 492,144, respectively, of
unvested shares of common stock were subject to repurchase by the Company at a
repurchase price equal to the original issuance price of such shares.

1999 EQUITY INCENTIVE PLAN

    In April 1999, the Board of Directors and stockholders approved the 1999
Equity Incentive Plan (the "1999 Plan"). Under the 1999 Plan, an aggregate of
1,000,000 shares of common stock may be issued pursuant to stock awards. In
January 2000, the Board of Directors authorized a 1,000,000 share increase in
the number of shares available for issuance under the 1999 Plan.

    The 1999 Plan provides for the grant of nonqualified stock options, stock
purchase awards and stock bonuses to selected employees and consultants. Options
granted under the 1999 Plan are for periods not to exceed ten years, and must be
issued at prices not less than 85% of the fair market value of the stock on the
date of grant. Options granted under the 1999 Plan are exercisable at such time
and under such conditions as determined by the Board of Directors, and generally
vest over four years.

    Restricted stock purchase awards under the 1999 Plan are to be issued at a
price determined by the Board of Directors. Restricted stock purchase awards may
be accompanied by a repurchase option in favor

                                      F-17
<PAGE>
                                 FVC.COM, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 11--STOCK PLANS (CONTINUED)
of the Company in accordance with a vesting schedule and at a price determined
by the Board of Directors. Shares subject to stock awards that have expired or
otherwise terminated shall again become available for the grant of awards under
the 1999 Plan. As of December 31, 1999, no unvested shares of common stock were
subject to repurchase by the Company under the Plan.

1997 NON-EMPLOYEE DIRECTOR'S STOCK OPTION PLAN

    In September 1997, the Company's Board of Directors approved the 1997
Non-Employee Director's Stock Option Plan (the "Directors' Plan") and reserved
350,000 shares (100,000 of which were approved by Board of Directors in
January 2000 and are subject to stockholder approval) of the Company's common
stock for issuance thereunder.

    The Directors' Plan provides for the grant of options to purchase 30,000
shares of common stock to each director upon initial election to the Board of
Directors and subsequent automatic grants of options to purchase 10,000 shares
of common stock on each anniversary of a previous grant.

    A summary of option activity under the 1999 Plan, the 1997 Plan and the
Directors' Plan follows:

<TABLE>
<CAPTION>
                                                                         WEIGHTED
                                                        SHARES SUBJECT   AVERAGE
                                                          TO OPTIONS     EXERCISE
                                                         OUTSTANDING      PRICE
                                                        --------------   --------
                                                         IN THOUSANDS
<S>                                                     <C>              <C>
Balance at December 31, 1996..........................         928        $ 2.60
Granted...............................................       1,285          7.79
Exercised.............................................         (33)         2.73
Cancelled.............................................         (51)         4.00
                                                            ------
Balance at December 31, 1997..........................       2,129          5.71
Granted...............................................       2,449         11.03
Exercised.............................................        (194)         4.20
Cancelled.............................................      (1,062)        10.12
                                                            ------
Balance at December 31, 1998..........................       3,322          8.30
Granted...............................................       2,666         10.74
Exercised.............................................        (409)         5.63
Cancelled.............................................        (850)         9.95
                                                            ------
Balance at December 31, 1999..........................       4,729          9.61
                                                            ======
</TABLE>

    With respect to certain options and restricted stock granted in 1996 and
1997, the Company is recognizing a compensation charge of approximately $2.1
million. Further, in early February 1998, after considering various factors
including the input provided by the Company's investment bankers, the Board of
Directors of the Company approved a plan under which 499,500 options previously
granted at prices of $10.20 and $11.00 to employees (excluding officers) were
exchanged for options at $8.50 per share, which the Board concluded was the fair
value of the Company's common stock at that time. The Company is recognizing a
compensation charge of approximately $1.3 million with respect to the 499,500
repriced stock options and 278,000 additional stock options granted in early
February 1998 at $8.50 per share, computed based on a deemed value of $10.20 per
share of common stock. The charges referred to above are being amortized over
the vesting period of the awards, which is generally five years. The Company
recognized

                                      F-18
<PAGE>
                                 FVC.COM, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 11--STOCK PLANS (CONTINUED)
$493,000, $1,250,000, and $1,137,000 of said charges as compensation expense
during the years ended December 31, 1999, 1998 and 1997 respectively. The future
compensation charges are subject to reduction for any employee who terminates
employment prior to the expiration of such employee's option vesting period and
aggregated approximately $370,000 at December 31, 1999.

    Significant option groups outstanding at December 31, 1999 and related
weighted average exercise price and contractual life information are as follows:

<TABLE>
<CAPTION>
                                                  OPTIONS OUTSTANDING                 OPTIONS EXERCISABLE
                                           ---------------------------------   ---------------------------------
                                           WEIGHTED AVERAGE      WEIGHTED                           WEIGHTED
                              NUMBER          REMAINING          AVERAGE           NUMBER       AVERAGE EXERCISE
        RANGE OF           OUTSTANDING     CONTRACTUAL LIFE   EXERCISE PRICE    EXERCISABLE          PRICE
     EXERCISE PRICES      (IN THOUSANDS)      (IN YEARS)       (PER SHARE)     (IN THOUSANDS)     (PER SHARE)
  ---------------------   --------------   ----------------   --------------   --------------   ----------------
  <S>                     <C>              <C>                <C>              <C>              <C>
  $0.34-$2.75                   593              4.06             $ 2.63             430             $ 2.65
  $3.40-$5.25                   477              8.60               4.66             127               4.30
  $5.63-$7.31                   671              9.48               6.37              52               6.01
  $8.25-$10.00                  755              8.37               9.22             238               9.07
  $10.20-$12.75                 813              8.52              11.70             232              11.26
  $13.44-$13.88                 533              9.09              13.66             114              13.86
  $14.00-$15.13                 182              9.72              14.88              --                 --
  $15.25-$16.75                 705              9.01              15.47             139              15.47
                              -----              ----             ------           -----             ------
  $0.34-$16.75                4,729              8.27             $ 9.61           1,332             $ 7.88
                              =====              ====             ======           =====             ======
</TABLE>

PRO FORMA DISCLOSURES

    Had compensation cost for the Company's stock option plans been determined
based on the value of such options at the grant dates as prescribed by FAS 123,
the Company's pro forma net loss and net loss per share would have been:

<TABLE>
<CAPTION>
                                                                  YEARS ENDED DECEMBER 31,
                                                              ---------------------------------
                                                                1999        1998        1997
                                                              ---------   ---------   ---------
                                                               (IN THOUSANDS, EXCEPT PER SHARE
                                                                            DATA)
<S>                                                           <C>         <C>         <C>
As reported:
  Net loss..................................................  $(14,328)   $ (8,016)    $(4,328)
  Net loss per share (basic and diluted)....................  $  (0.87)   $  (0.69)    $ (1.44)

Pro forma:
  Net loss..................................................  $(22,385)   $(10,247)    $(4,912)
  Net loss per share (basic and diluted)....................  $  (1.36)   $  (0.89)    $ (1.63)
</TABLE>

    The weighted-average estimated grant-date fair value of options granted
under the Company's various stock option plans during 1999, 1998 and 1997 was
$7.50, $4.03 and $1.56, respectively. For the years ended December 31, 1999 and
1998, the fair value of each option on the date of grant was determined using
the Black-Scholes model with the following assumptions: no annual dividend yield
for either period; expected volatility of 70% and 50%, respectively; risk-free
annual interest rates of 5% and 4.17% to 5.57%,

                                      F-19
<PAGE>
                                 FVC.COM, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 11--STOCK PLANS (CONTINUED)
respectively; and an expected option term of 4 and 2.98 years, respectively. For
the year ended December 31, 1997, the value of each option was estimated on the
date of grant using the minimum-value method with the following assumptions: no
annual dividend yield; risk-free annual interest rates of 5.84% to 6.61%; and an
expected option term of five years.

1997 EMPLOYEE STOCK PURCHASE PLAN

    The Company's 1997 Stock Purchase Plan (the "Purchase Plan") was approved by
the Board of Directors and stockholders in October 1997 and became effective
upon the closing of the initial public offering. Under the Purchase Plan a total
of 350,000 shares of common stock have been reserved for issuance to
participating employees who meet eligibility requirements.

    The Purchase Plan permits eligible employees to purchase common stock
through payroll deductions, which may not exceed 15% of an employee's base
compensation, including commissions, bonuses and overtime, at a price equal to
85% of the fair value of the common stock at the beginning of each offering
period or the end of the purchase period, whichever is lower. The initial
purchase period commenced on April 29, 1998. As of December 31, 1998 no shares
had been issued under the Purchase Plan. During 1999, the Company issued 59,601
shares of common stock under the Purchase Plan for aggregate proceeds of
approximately $400,000. Compensation cost (included in pro forma net loss and
net loss per share amounts only) for the years ended December 31, 1999 and 1998,
for the grant date fair value, as defined by SFAS 123, of the purchase rights
granted under the Purchase Plan was calculated using the Black-Scholes model
with the following assumptions: no annual dividend yield for either year;
expected volatility of 70% and 50%, respectively; risk-free annual interest
rates of 5% and 5.38%, respectively; and expected terms of 1 and 0.67 years,
respectively. The pro forma SFAS 123 disclosures include compensation expense
for purchase rights granted during 1998 and 1999. The weighted average estimated
grant date fair value for purchase rights granted under the Purchase Plan during
1999 and 1998 was $4.48 and $4.26, respectively.

NOTE 12--RELATED PARTY TRANSACTIONS

    During the period from January 1994 through October 1996, the Company made
full recourse loans to certain executives and employees pursuant to the
Company's 1993 Plan. The loans bear interest at rates ranging from 4.92% to
7.96% per annum and interest on the notes accrues monthly. The loans are due on
the earlier of various dates through 2001 or termination of employment.

NOTE 13--LITIGATION

    Beginning in April 1999, several purported class action suits were filed in
the U.S. District Court for the Northern District of California (the "Court")
alleging violations of the federal securities laws against the Company and
certain of its officers and directors in connection with the Company's reporting
of its financial results for the period ended December 31, 1998.

    In July 1999, the Court entered orders consolidating all existing class
actions into a single action and appointing a lead plaintiff and lead
plaintiff's co-counsel. A consolidated amended complaint was filed in
September 1999 and the Company and the individual defendants filed a motion to
dismiss the complaint on October 8, 1999.

    On February 14, 2000, the Court granted the Company's motion to dismiss the
lawsuit without leave to amend.

                                      F-20