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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

(Mark One)

|/x/ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
|--- | ----------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2001

OR

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

For the transition period from  to
.

Commission file number: 000-27871

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GRIC COMMUNICATIONS, INC.(Exact Name of Registrant as Specified in Its Charter)

Delaware(State or Other Jurisdiction of Incorporation or Organization)

77-0368092(I.R.S. Employer Identification No.)


1421 McCarthy Blvd.
Milpitas, California 95035
(408) 955-1920(Address, including Zip Code, of Registrant's Principal Executive Offices
and Registrant's Telephone Number, including Area Code)

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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 / /

The
number of shares of the registrant's common stock outstanding as of April 30, 2001 was 19,797,627 shares.

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GRIC COMMUNICATIONS, INC.  Index

|                              |  |                                                                                                    |  | Page No.
|----------------------------- |  | -------------------------------------------------------------------------------------------------- |  | --------
|PART I. FINANCIAL INFORMATION
|Item 1.                       |  | Condensed Consolidated Financial Statements:                                                       |  | 3       
|                              |  | Condensed Consolidated Balance Sheets as of March 31, 2001 and December 31, 2000                   |  | 3       
|                              |  | Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2001 and 2000 |  | 4       
|                              |  | Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2001 and 2000 |  | 5       
|                              |  | Notes to Condensed Consolidated Financial Statements                                               |  | 6       
|Item 2.                       |  | Management's Discussion and Analysis of Financial Condition and Results of Operations              |  | 9       
|Item 3.                       |  | Qualitative and Quantitative Disclosures About Market Risks                                        |  | 20      
|PART II. OTHER INFORMATION   
|Item 1.                       |  | Legal Proceedings                                                                                  |  | 22      
|Item 2.                       |  | Changes in Securities and Use of Proceeds                                                          |  | 22      
|Item 3.                       |  | Defaults Upon Senior Securities                                                                    |  | 22      
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders                                                |  | 22      
|Item 5.                       |  | Other Information                                                                                  |  | 22      
|Item 6.                       |  | Exhibits and Reports on Form 8-K                                                                   |  | 22      
|SIGNATURE                     |  | 23                                                                                                

2

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PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

GRIC COMMUNICATIONS, INC.
Condensed Consolidated Balance Sheets
(in thousands)

|                                             |                                                                                                                                                                                                         | Mar. 31,
2001                              |        | Dec. 31,
2000 |       
|-------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------ | ------------- | ------
|
|ASSETS                                       |                                                                                                                                                                                                         |                                            |        |               |       
|Current assets:                              |                                                                                                                                                                                                         |                                            |        |               |       
|                                             | Cash and cash equivalents                                                                                                                                                                               |                                            | $      | 18,467        |       
|                                             | Short-term investments                                                                                                                                                                                  |                                            |        | 10,641        |       
|                                             | Accounts receivable, net of allowances of $2,655 and $1,013 at March 31, 2001 and December 31, 2000, respectively                                                                                       |                                            |        | 4,977         |       
|                                             | Prepaid expenses and other current assets                                                                                                                                                               |                                            |        | 1,222         |       
|                                             |                                                                                                                                                                                                         |                                            |        |               |       
|Total current assets                         |                                                                                                                                                                                                         |                                            | 35,307 |               |       
|Property and equipment, net                  |                                                                                                                                                                                                         |                                            | 6,090  |               |       
|Other assets                                 |                                                                                                                                                                                                         |                                            | 395    |               |       
|                                             |                                                                                                                                                                                                         |                                            |        |               |       
|                                             |                                                                                                                                                                                                         | Total assets                               |        | $             | 41,792
|                                             |                                                                                                                                                                                                         |                                            |        |               |       
|LIABILITIES AND STOCKHOLDERS' EQUITY         |                                                                                                                                                                                                         |                                            |        |               |       
|Current liabilities:                         |                                                                                                                                                                                                         |                                            |        |               |       
|                                             | Accounts payable                                                                                                                                                                                        |                                            | $      | 8,370         |       
|                                             | Accrued compensation and benefits                                                                                                                                                                       |                                            |        | 1,695         |       
|                                             | Deferred revenue                                                                                                                                                                                        |                                            |        | 2,524         |       
|                                             | Other current liabilities                                                                                                                                                                               |                                            |        | 209           |       
|                                             | Current portion of long-term debt and capital lease obligations                                                                                                                                         |                                            |        | 641           |       
|                                             |                                                                                                                                                                                                         |                                            |        |               |       
|Total current liabilities                    |                                                                                                                                                                                                         |                                            | 13,439 |               |       
|Long-term debt and capital lease obligations |                                                                                                                                                                                                         |                                            | 358    |               |       
|Commitments and contingencies                |                                                                                                                                                                                                         |                                            |        |               |       
|Stockholders' equity:                        |                                                                                                                                                                                                         |                                            |        |               |       
|                                             | Preferred stock, 5,000 shares authorized at March 31, 2001 and December 31, 2000, respectively; no shares issued and outstanding                                                                        |                                            |        |              |       
|                                             | Common stock, $0.001 par value; 50,000 shares authorized at March 31, 2001 and December 31, 2000; 19,800 and 19,597 shares issued and outstanding at March 31, 2001 and December 31, 2000, respectively |                                            |        | 20            |       
|                                             | Additional paid-in capital                                                                                                                                                                              |                                            |        | 127,207       |       
|                                             | Deferred stock-based compensation                                                                                                                                                                       |                                            |        | (946          | )     
|                                             | Accumulated deficit                                                                                                                                                                                     |                                            |        | (98,282       | )     
|                                             | Accumulated comprehensive loss                                                                                                                                                                          |                                            |        | (4            | )     
|                                             |                                                                                                                                                                                                         |                                            |        |               |       
|                                             |                                                                                                                                                                                                         | Total stockholders' equity                 |        |               | 27,995
|                                             |                                                                                                                                                                                                         |                                            |        |               |       
|                                             |                                                                                                                                                                                                         | Total liabilities and stockholders' equity |        | $             | 41,792
|                                             |                                                                                                                                                                                                         |                                            |        |               |       

See
accompanying notes

3

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GRIC COMMUNICATIONS, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)

|                                                            |                                              | Three Months Ended       |        
|----------------------------------------------------------- | -------------------------------------------- | ------------------------ | -------
|
|Revenues:                                                   |                                              |                          |        
|                                                            | Settlement                                   |                          | $      
|                                                            | Software and other                           |                          |        
|                                                            |                                              |                          |        
|                                                            |                                              | Total revenues           |        
|Costs and expenses:                                         |                                              |                          |        
|                                                            | Cost of settlement revenues                  |                          |        
|                                                            | Network and operations                       |                          |        
|                                                            | Research and development                     |                          |        
|                                                            | Sales and marketing                          |                          |        
|                                                            | General and administrative                   |                          |        
|                                                            | Amortization of stock-based compensation (1) |                          |        
|                                                            | Restructuring charge                         |                          |        
|                                                            |                                              |                          |        
|                                                            |                                              | Total costs and expenses |        
|                                                            |                                              |                          |        
|Operating loss                                              |                                              |                          | (18,361
|Interest income and other, net                              |                                              |                          | 332    
|Interest expense                                            |                                              |                          | (38    
|                                                            |                                              |                          |        
|Operating loss before income taxes                          |                                              |                          | (18,067
|Provision for income taxes                                  |                                              |                          | (23    
|                                                            |                                              |                          |        
|Net loss                                                    |                                              | $                        | (18,090
|                                                            |                                              |                          |        
|Basic and diluted net loss per share                        |                                              | $                        | (0.92  
|                                                            |                                              |                          |        
|Shares used to compute basic and diluted net loss per share |                                              |                          | 19,697 
|                                                            |                                              |                          |        

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See
accompanying notes

4

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GRIC COMMUNICATIONS, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

|                                                   |                                                                             | Three Months Ended                                      |                                      
|-------------------------------------------------- | --------------------------------------------------------------------------- | ------------------------------------------------------- | -------------------------------------
|
|Cash flows from operating activities:              |                                                                             |                                                         |                                      
|Net loss                                           |                                                                             | $                                                       | (18,090                              
|                                                   | Adjustments to reconcile net loss to net cash used in operating activities: |                                                         |                                      
|                                                   |                                                                             | Depreciation and amortization of property and equipment |                                      
|                                                   |                                                                             | Amortization of stock-based compensation                |                                      
|                                                   |                                                                             | Loss on asset revaluation                               |                                      
|                                                   |                                                                             | Noncash portion of restructuring charge                 |                                      
|                                                   |                                                                             | Noncash warrant expensespreferred stock                |                                      
|                                                   |                                                                             | Noncash warrant expenses  common stock                 |                                      
|                                                   | Net changes in assets and liabilities:                                      |                                                         |                                      
|                                                   |                                                                             | Accounts receivable                                     |                                      
|                                                   |                                                                             | Prepaid expenses and other current assets               |                                      
|                                                   |                                                                             | Other assets                                            |                                      
|                                                   |                                                                             | Accounts payable                                        |                                      
|                                                   |                                                                             | Accrued compensation and benefits                       |                                      
|                                                   |                                                                             | Deferred revenue                                        |                                      
|                                                   |                                                                             | Other current liabilities                               |                                      
|                                                   |                                                                             | Other long-term liabilities                             |                                      
|                                                   |                                                                             |                                                         |                                      
|                                                   |                                                                             |                                                         | Net cash used in operating activities
|                                                   |                                                                             |                                                         |                                      
|Cash flows from investing activities:              |                                                                             |                                                         |                                      
|Available-for-sale investments:                    |                                                                             |                                                         |                                      
|                                                   |                                                                             | Purchases                                               |                                      
|                                                   |                                                                             | Maturities                                              |                                      
|Proceeds from sale of fixed assets                 |                                                                             |                                                         | 22                                   
|Capital expenditures                               |                                                                             |                                                         | (1,988                               
|                                                   |                                                                             |                                                         |                                      
|                                                   |                                                                             |                                                         | Net cash used in investing activities
|                                                   |                                                                             |                                                         |                                      
|Cash flows from financing activities:              |                                                                             |                                                         |                                      
|Payments of debt                                   |                                                                             |                                                         | (166                                 
|Proceeds from sales of common stock, net           |                                                                             |                                                         | 423                                  
|                                                   |                                                                             |                                                         |                                      
|Net cash provided by financing activities          |                                                                             |                                                         | 257                                  
|                                                   |                                                                             |                                                         |                                      
|Net decrease in cash and cash equivalents          |                                                                             |                                                         | (10,853                              
|Cash and cash equivalents at beginning of quarter  |                                                                             |                                                         | 29,320                               
|                                                   |                                                                             |                                                         |                                      
|Cash and cash equivalents at end of quarter        |                                                                             | $                                                       | 18,467                               
|                                                   |                                                                             |                                                         |                                      
|Supplemental disclosures of cash flow information: |                                                                             |                                                         |                                      
|Income taxes paid                                  |                                                                             | $                                                       | 2                                    
|Interest paid                                      |                                                                             | $                                                       | 39                                   

See
accompanying notes

5

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GRIC COMMUNICATIONS, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements, with the exception of the December 31, 2000 consolidated balance sheet which was
derived from the audited consolidated financial statements included in the GRIC Communications, Inc. (the "Company") Annual Report on Form 10-K, have been prepared in
accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring accruals and restructuring accruals) considered necessary for a fair representation have been included. The results for the three
months ended March 31, 2001 are not necessarily indicative of the results that may be expected for future periods. The following information should be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2000.

2.  Summary of Significant Accounting Policies



Net loss per common share for the three months ended March 31, 2001 and 2000 was computed by dividing the net loss by the weighted average shares
outstanding during the period in accordance with Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share". In accordance with SFAS No. 128, basic and diluted
net loss per share has been computed using the weighted-average number of shares of common stock outstanding during the period. Potentially dilutive securities have
been excluded from the computation of basic and diluted net loss per share, as their effect is antidilutive.

Weighted-average
options outstanding to purchase approximately 157,000 shares and 2.0 million shares of common stock for the three months ended March 31, 2001 and 2000,
respectively, were not included in the computation of diluted net loss per share because the effect would be antidilutive. Such securities, had they been dilutive, would have been included in the
computation of diluted net loss per share using the treasury stock method.



The Company implemented SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities,"as of the beginning of 2001. As the Company does not
currently engage in derivatives or hedging transactions, there has been no impact on the Company's results of operations, financial position or cash flows, as a result of adopting SFAS No. 133.

6

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3.  Comprehensive Loss

The components of comprehensive loss for the three months ended March 31, 2001 and 2000 are as follows:

Three months endedMar. 31,
2001

Mar. 31,
2000(in thousands)Net loss

$
(18,090
)
$
(6,918
)Other comprehensive loss:Unrealized gain (loss) on available-for-sale investments


20


(18
)Comprehensive loss

$
(18,070
)
$
(6,936
)


The
only component of accumulated comprehensive loss at March 31, 2001 and 2000 was unrealized gain (loss) on available-for-sale investments.

4.  Segment Information

The Company operates solely in one segment, providing a global network for Internet service providers and telecommunications companies, corporate enterprises
and newly-emerging communications service providers.

The
following is a summary of revenue and long-lived assets by geographical area for the periods presented:

Three months endedMarch 31,
2001

March 31,
2000(in thousands)Revenue by external customers:United States

$
2,892

$
2,811Southeast Asia


520


763Japan


963


472Europe


630


747China


203


193Rest of World


145


216$
5,353

$
5,202


March 31, 2001

Dec. 31, 2000(in thousands)Long-lived assets:United States

$
5,710

$
10,901Rest of World


380


577$
6,090

$
11,478


Revenue
by external customer is based on the customer's billing locations. Long-lived assets are those assets used in each geographic location.

7

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5.  Commitments and Contingencies

The Company is subject to various legal proceedings and claims arising in the normal course of business. The Company's management does not expect that the
results in any of these proceedings will have a material adverse effect on the Company's financial condition, results of operations or cash flows.

6.  Restructuring Event

In January 2001, we undertook a strategic restructuring and decided to cease providing our Internet telephony settlement services, based on an analysis
of the operating expenses required to support these services and the low gross margins associated with them, and our expectation that continued Internet telephony operations would require additional
cash infusions to the business. We ceased to provide Internet telephony services during January 2001. We anticipate the strategic restructuring to be completed within this calendar year.

In
connection with the restructuring, we incurred a total charge to operations of $7.8 million. This restructuring charge was composed of $5.6 million for the retirement
of fixed assets and $2.2 million for expected cash payments related to the termination of lease and facility obligations and employee severance costs, each of which are related to our Internet
telephony services. As of March 31, 2001, $918,000 of the $2.2 million amount had been paid. We anticipate that future cash outlays will be funded from operations.

The
net book value of retired fixed assets not identified for sale totaled approximately $5.6 million. Fixed assets that have been identified for sale have been recorded at
estimated recovery value and are classified as current assets held for sale, which are included in prepaid expenses and other current assets. We expect that these assets will be disposed of during the
second and third quarters of 2001 through sales to third parties.

The
termination of lease and facility obligations resulted in a charge of $1.5 million. We considered the costs of terminating these commitments to be related to our decision
to cease providing Internet telephony services. As of March 31, 2001, $310,000 has been paid and charged against current liabilities.

Restructuring-related
involuntary employee severance costs resulted in a charge of $708,000, pertaining to the expected termination of 67 employees, worldwide. Employees worldwide,
who were involved in providing, selling or supporting Internet telephony services or who performed related functions, were considered during the cost-cutting plan. As of March 31,
2001, a total of 56 employees had been terminated and $620,000 of severance costs had been paid and charged against current liabilities. We anticipate that all employee terminations in connection with
the restructuring plan will be completed prior to June 30, 2001.

Recognition
of settlement revenues derived from our Internet telephony settlement services during January 2001 has been deferred, due to the low probability of collection,
until such time that cash is collected. Settlement revenues include $771,000 of Internet telephony services that were collected during the three months ended March 31, 2001.

8

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

The following discussion should be read in conjunction with our condensed consolidated financial statements and accompanying notes,
which appear elsewhere in this Quarterly Report on Form 10-Q. The following discussion contains forward-looking statements, such as statements of expected revenues and expenses,
that involve risks and uncertainties. In addition, the section labeled "Factors That May Affect Future Results" consists primarily of forward-looking statements. We assume no obligation to update any
such forward-looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements. Factors that could cause or contribute to such differences
include, but are not limited to, those detailed from time to time in our filings with the Securities and Exchange Commission and those discussed below and elsewhere in this
Form 10-Q, particularly in "Factors That May Affect Future Results."

Unless expressly stated or the content otherwise requires, the terms "we", "our", "us", "the Company" and "GRIC" refer to GRIC Communications, Inc. and
its subsidiaries.

Overview

On January 30, 2001, we announced actions to focus our business on our Internet roaming service, and to cease our Internet telephony service. Following
this restructuring, we provide services and software that enable our customers to offer Internet-based mobile office communications services, such as Internet roaming, to their end users worldwide.
Our customers include telecommunications companies, Internet service providers, corporate enterprises and newly emerging communications service providers.

From
our inception until 1997 we were both an Internet service provider in Northern California and an independent software developer for the Internet service provider community. In
1997, we sold our local Internet service provider business. We first recognized settlement clearinghouse revenues in 1997, and since 1998 we have derived our revenues primarily from settlement
clearinghouse services. From late 1998 until January 2001, our settlement clearinghouse services included Internet telephony services, which are characterized by high revenues with low margins.
We no longer provide Internet telephony services as a result of our January 2001 decision to focus on globally providing Internet-based mobile office communications services.

We
generate settlement revenues when we provide settlement services to customers whose end users initiate Internet communications. For global Internet roaming transactions, our
settlement services consist of tracking usage, collecting the amount that a roamer's "home" service provider owes us, paying the appropriate amount to the service provider enabling local access, and
providing the underlying usage data to our customer to enable end user billing. Our revenues during 2000 were primarily from the settlement revenues generated from Internet telephony transactions. For
those transactions, we used our software to track the telephony call usage, settle the amounts owed to us and by us as a result of the transaction and provide the underlying usage data to our
customers to enable billing of their end users. We discontinued our Internet telephony service in January 2001.

We
have incurred substantial losses since our inception as a result of expenses associated with building our GRIC Alliance and related network infrastructure and developing our
software products. As of March 31, 2001, we had an accumulated deficit of approximately $98.3 million. We expect to incur additional losses for the foreseeable future, and we cannot
assure you that we will achieve or sustain profitability. See "Factors That May Affect Future ResultsWe have not been profitable to date and we anticipate continued losses during 2001."

Our
business model has evolved in the course of our development and we believe that period-to-period comparisons of our operating results should not be relied
upon as indicative of future

9

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performance. Our future prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in the early stages of development, particularly companies in
new and rapidly evolving markets. See "Factors That May Affect Future ResultsOur operating history is more limited than that of many other companies, so you may find it difficult to
evaluate our business in making an investment decision."

Results of Operations

First Quarter Ended March 31, 2001 Compared to First Quarter Ended March 31, 2000

Revenues

Total revenues increased 3% to $5.4 million for the three months ended March 31, 2001 from $5.2 million for the three months ended
March 31, 2000.

Settlement Revenues.Settlement revenues increased to $5.2 million in the three months ended March 31,
2001 from $5.0 million in the three months ended March 31, 2000, an increase of 5%. The increase reflects higher volumes of Internet roaming minutes, offset by lower revenues from our
Internet telephony settlement services, due to our January 2001 restructuring. Recognition of settlement revenues derived from our Internet telephony settlement services during
January 2001 has been deferred, due to the low probability of collection, until such time that cash is collected. Settlement revenues include $771,000 of Internet telephony services that were
collected during the three months ended March 31, 2001. We expect settlement revenues from Internet roaming to increase in each quarter of 2001, and we expect total settlement revenues in 2001
to exceed total settlement revenues in 2000.

Software and Other Revenues.Software, hardware and maintenance and services revenues decreased to $145,000 in the
three months ended March 31, 2001 from $234,000 in the three months ended March 31, 2000, a decrease of 38%. The decrease was primarily due to lower sales of Internet roaming software
and maintenance and lower sales of prepaid Internet telephony software services and maintenance. We expect software and other revenues to constitute an insignificant component of total revenues in
2001.

Costs and Expenses

Cost of Settlement Revenues.Cost of settlement revenues consists of amounts we pay to access the Internet in order to
provide our services. Cost of settlement revenues decreased to $3.8 million in the three months ended March 31, 2001 from $4.6 million in the three months ended March 31,
2000, a decrease of 17%. The decrease was primarily due to a decrease in telephony settlement costs as a result of ceasing to provide our low margin Internet telephony services during the first
quarter of 2001. The decrease in Internet telephony settlement costs was partially offset by an increase in Internet roaming costs due to increased volumes of Internet roaming minutes. We expect that
for 2001 the cost of settlement revenues will decline as a percentage of total settlement revenues as a result of our ceasing to provide Internet telephony service.

Network and Operations.Network and operations expenses include salaries, benefits, allocated facility and management
information systems costs, costs of co-location of network equipment and leased telecommunication lines, and depreciation on network equipment. Network and operations expenses increased to
$1.8 million in the three months ended March 31, 2001 from $1.3 million in the three months ended March 31, 2000, an increase of 36%. This increase was due to higher costs
associated with the expansion of our customer support and network operation centers to support our customers
on a 24 hours-a-day, seven days-a-week basis. This increase was partially offset by lower co-location and bandwidth costs. We expect
that network and operations expenses will decrease in the three month period ending June 30, 2001, compared to the three month period ended March 31, 2001,

10

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and remain relatively flat during the last two quarters of 2001, as a result of our ceasing to provide Internet telephony service in January 2001.

Research and Development.Research and development expenses include salaries, benefits and recruiting costs of
employees and outside consultants, quality assurance, allocated facility, management information systems and depreciation costs. Research and development expenses decreased to $2.4 million in
the three months ended March 31, 2001 from $2.5 million in the three months ended March 31, 2000, a decrease of 1%. We expect to reduce overall research and development costs
during 2001, as a result of the decreased complexity of our settlement services model following our January 2001 restructuring of operations. We also intend to reduce costs by licensing
commercially available third-party software to supplement our internal efforts to develop and maintain our proprietary settlement software. Further, we expect our recently established development
center in India to assist us in reducing our research and development expenses in 2001 due to the favorable costs of obtaining engineering talent in India compared to the San Francisco Bay area.

Sales and Marketing.Sales and marketing expenses include salaries, benefits and commissions earned by sales and
marketing personnel, allocated facility, management information systems and depreciation costs, costs for marketing and promotional programs, and costs associated with our domestic and international
sales offices. Sales and marketing expenses increased to $3.9 million in the three months ended March 31, 2001 from $2.9 million in the three months ended March 31, 2000,
an increase of 33%. The increase reflects our investments in marketing and promotional campaigns to promote our brand identity. The increase also reflects the recruitment and hiring of additional
personnel to expand our geographic coverage and to support the growth of our global Internet roaming services. We expect sales and marketing expenses to remain relatively flat, with increases in
advertising offset by lower expenses due to our decision to cease providing Internet telephony services and focus on our Internet roaming services.

General and Administrative.General and administrative expenses consist of general corporate and facility costs as well
as salary, benefits and related costs for executive, finance, legal, administrative, human resources, investor relations and management information systems functions, and provisions for uncollectible
receivables. General and administrative expenses increased to $3.9 million in the three months ended March 31, 2001 from $1.7 million in the three months ended March 31,
2000, an increase of 124%. The increase is primarily due to a larger reserve on uncollected Internet telephony receivables. The increase also reflects the hiring of additional personnel and
consultants to provide the infrastructure to support future growth, as well as increases in our professional service fees. We expect general and administrative expenses, excluding the reserve for
uncollected Internet telephony receivables, to increase in 2001, but at a substantially lower rate of increase than we experienced in 2000.

Amortization of Stock-Based Compensation.Some stock options granted through December 31, 1999 are considered
compensatory because the estimated fair value for accounting purposes was greater than the stock option exercise price as determined by the board of directors on the date of grant. As a result, we
recorded expenses of $107,000 for the three months ended March 31, 2001 relating to the amortization of deferred compensation expense and had an aggregate of $946,000 of deferred compensation
remaining to be amortized at March 31, 2001. Deferred compensation is amortized on a straight-line basis over the vesting period of the options. We expect amortization of
approximately $427,000 in each of 2001 and 2002, and $198,000 in 2003.

Restructuring Charge.In January 2001, we undertook a strategic restructuring and decided to cease providing our
Internet telephony settlement services, based on an analysis of the operating expenses required to support these services and the low gross margins associated with them, and our expectation that
continued Internet telephony operations would require additional cash infusions to the

11

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business. We ceased to provide Internet telephony services during January 2001 and we anticipate the strategic restructuring to be completed within this calendar year.

In
connection with the restructuring, we incurred a total charge to operations of $7.8 million. This restructuring charge was composed of $5.6 million for the retirement
of fixed assets and $2.2 million for expected cash payments related to the termination of lease and facility obligations and employee severance costs, each of which are related to our Internet
telephony services. As of March 31, 2001, $918,000 of the $2.2 million amount had been paid. We anticipate that future cash outlays will be funded from operations.

The
net book value of retired fixed assets not identified for sale totaled approximately $5.6 million. Fixed assets that have been identified for sale have been recorded at
estimated recovery value and are classified as current assets held for sale, which are included in prepaid expenses and other current assets. We expect that these assets will be disposed of during the
second and third quarters of 2001 through sales to third parties.

The
termination of lease and facility obligations resulted in a charge of $1.5 million. We considered the costs of terminating these commitments to be related to our decision
to cease providing Internet telephony services. As of March 31, 2001, $310,000 has been paid and charged against current liabilities.

Restructuring-related
involuntary employee severance costs resulted in a charge of $708,000, pertaining to the expected termination of 67 employees, worldwide. Employees worldwide,
who were involved in providing, selling or supporting Internet telephony services or who performed related functions, were
considered during the cost-cutting plan. As of March 31, 2001, a total of 56 employees had been terminated and $620,000 of severance costs had been paid and charged against current
liabilities. We anticipate that all employee terminations in connection with the restructuring plan will be completed prior to June 30, 2001.

Interest Income and Other, Net

Interest income and other, net, primarily represents interest income on cash balances. Interest income and other, net, decreased to $332,000 in the three
months ended March 31, 2001 from $1.1 million in the three months ended March 31, 2000. The decrease is primarily due to the higher than average cash balances during the first
quarter of 2000, resulting from our initial public offering in December 1999, and a loss of $183,000 on asset revaluation.

Interest Expense

Interest expense consists of amortization of the fair value of warrants issued in connection with our financing activities and interest expense associated with
capital leases and bridge financing. Interest expense decreased to $38,000 for the three months ended March 31, 2001 from $53,000 for the three months ended March 31, 2000.

Income Taxes

The provision for income taxes consists of foreign taxes. SFAS No. 109, "Accounting for Income Taxes," provides for the recognition of deferred tax
assets if realization of these assets is more likely than not. Based upon available evidence, which includes our historical operating performance and the reported cumulative net losses in all prior
years, we have provided a full valuation allowance against its deferred tax assets. We intend to continue to evaluate our ability to realize the deferred tax assets on a quarterly basis.

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Liquidity and Capital Resources

Operating activities.Net cash used in operating activities was $10.7 million in three months ended
March 31, 2001 and $6.2 million in the three months ended March 31, 2000. Net cash used in operating activities in the three months ended March 31, 2001 was primarily a
result of our net operating losses and our January 2001 strategic restructuring charges. Net cash used in operating activities in the three months ended March 31, 2000 was primarily the
result of our net operating losses.

Investing activities.Net cash used in investing activities was $408,000 for three months ended March 31, 2001
and $8.3 million for the three months ended March 31, 2000. Our recent capital expenditures consisted primarily of purchases of computer hardware and software, relating to our network
infrastructure. We expect that capital expenditures will decrease as we ceased providing our Internet telephony services in January 2001.

Financing activities.Net cash provided by financing activities was $257,000 in the three months ended March 31,
2001 and $56,000 in the three months ended March 31, 2000. Financing activities in the three months ended March 31, 2001 primarily consisted of proceeds from sales of common stock
through our employee stock purchase plan and exercise of stock options.

Commitments.We lease all of our facilities under operating leases that expire at various dates through 2007. As of
March 31, 2001, we had $3.9 million in future operating lease commitments and $939,000 of capital lease obligations and equipment promissory notes. We have accrued for anticipated costs
relating to our decision to cease our Internet telephony services in January 2001.

Summary of Liquidity.Our consolidated financial statements are prepared and presented on a going concern basis. At
March 31, 2001, we had an accumulated deficit of $98.3 million and incurred a net loss of $18.1 million for the three months ended March 31, 2001. We expect such losses to
continue during 2001. In January 2001, we announced certain actions to focus our efforts on our Internet roaming service and cease providing our low margin Internet telephony service. Our
restructuring plan was designed to reduce our operating expenses in 2001, primarily through anticipated savings attributable to Internet telephony related operations. The cost-cutting
plan, which includes a reduction of employee workforce, elimination of leased bandwidth to operate our Internet telephony backbone and elimination of costs to operate our Internet telephony equipment,
is expected to provide savings of approximately $7.0 million during the first year. There can be no assurance that we will be successful in reducing operating expenses in the future.

We
believe that our available cash, cash equivalents and short term investments of $29.1 million at March 31, 2001, future cash savings as a result of ceasing to provide
our Internet telephony service, and cash expected to be generated by operations during 2001 will be adequate to fund planned operations for at least the next twelve months.

We
plan to invest in expanding our Internet roaming and related services, on a global basis, by continuing to build strategic partnering relationships. This will require us to
maintain continued
favorable market acceptance and growth of our Internet roaming and related services offerings in order for us to continue our research and development activities and fund planned operating expenses.
There can be no assurance that our Internet roaming product offerings will maintain continued favorable market acceptance, growth and operating margins.

If
we are unable to attain our revenue and margin goals, significant reductions in spending and the delay or cancellation of planned activities or more substantial restructuring may
be necessary to enable us to meet our cash requirements through at least March 2002. These actions could have a material adverse effect on our business, results of operations and prospects.
Furthermore, we may need to raise additional funds in future periods through public or private financing, or other arrangements to fund operations and potential acquisitions, if any. We may never
achieve profitability. Any additional

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financing, if needed, might not be available on reasonable terms or at all. Failure to raise capital when needed could seriously harm our business and results of operations. If additional funds were
raised through the issuance of equity securities, the percentage of ownership of our stockholders would be reduced. Furthermore, these equity securities might have rights, preferences or privileges
senior to our common stock.

Factors That May Affect Future Results

In addition to the information in this Quarterly Report Form 10-Q, the following should be considered in evaluating GRIC and our business.

We recently restructured our business, which makes our financial results more difficult to analyze.

In January 2001, we restructured our business by ceasing to provide our Internet telephony service and focusing on our Internet roaming service. As a
result, we reduced our employee workforce and eliminated some network and operating expenses. Further, the termination of our Internet telephony service will mean that telephony revenues will be
eliminated and our Internet roaming service will become our primary source of revenue. This concentration of our revenues makes us more dependent on the growth of the Internet roaming market in
general, and will increase the negative impact on our business if our Internet roaming product offerings do not maintain favorable market acceptance and growth or achieve our revenue and margin
targets. The restructuring may also lead to resignations by key employees, which could harm our operations and financial results.

Our financial performance and workforce reduction may adversely affect our ability to retain and hire personnel.

As a result of our January 2001 restructuring and the recent decline in price of our common stock, our personnel may seek opportunities with larger,
more established companies or companies they perceive to have better prospects. This may cause us to lose critical personnel or to increase recruiting expenses, or both.

In
order to implement our model successfully, we will need to retain and hire personnel. Specifically, our sales efforts require highly trained sales personnel. Competition for these
individuals is intense, and we may not be able to hire the type and number of sales personnel we need. Moreover, even after we hire these individuals, they require extensive training in our products
and services. If we are unable to continue to retain our current employees and train new sales personnel as rapidly as necessary, we may not be able to increase market awareness and sales of our
services, which may prevent us from generating revenue and achieving and maintaining profitability.

Our operating history is more limited than that of many other companies, so you may find it difficult to evaluate our business in making an investment decision.

We have limited experience in developing and providing our products and services. Since our inception, we have had limited revenues from our current
Internet-based communications software products and services. In the past we have undertaken development of software products which were either not completed or not delivered on time. We have also
discontinued products that did not achieve widespread market acceptance. Many members of our senior management team and other employees have worked with us for only a short period of time.
Consequently, we have not demonstrated that our business can succeed.

We have not been profitable to date and we anticipate continued losses during 2001.

To date, we have not been profitable. We cannot assure you that we will ever achieve or sustain profitability. We reported operating losses before income taxes
of $32.3 million for 2000, $22.5 million

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for 1999 and $17.9 million for 1998. As of March 31, 2001, our accumulated deficit was $98.3 million. We expect to incur operating losses during 2001. In particular, we expect to
continue to invest in research and development and sales and marketing, and we expect to face pressure to adopt new pricing arrangements, including volume discounts, that may lower our gross margins.
If revenues do not meet
levels we anticipate, or if our costs and expenses exceed our expectations, we will continue to sustain losses, and our business and the price of our common stock may be harmed.

We may require additional capital for our operations, which could have a negative effect on your investment.

We currently anticipate that our available funds will be sufficient to meet our anticipated needs for working capital and capital expenditures in the
foreseeable future. However, we may need to raise additional funds in the future in order to fund operations or acquisitions.

If
we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders will be reduced, stockholders may experience
additional dilution and these securities may have powers, preferences and rights that are senior to those of the rights of our common stock. We cannot be certain that additional financing will be
available on terms favorable to us, if at all. If adequate funds are not available or not available on acceptable terms, we may be unable to fund our business transaction, promote our brand identity,
take advantage of acquisition opportunities, develop or enhance services or respond to competitive pressures. Any inability to do so could have a negative effect on our business, revenues, financial
condition and results of operations.

Our success depends on our ability to maintain and increase our customer base.

Customers are generally free to use competing products and services, so we could face significant customer losses. Our customers are generally not obligated to
generate minimum revenues, and some generate very little revenue for us. These factors make it difficult to anticipate the level of our future revenues from existing customers. In addition, our
success depends on our ability to expand our customer base. If we lose any significant customer or are unable to expand our customer base and to increase our average revenues per customer, our
business will be harmed.

We depend on our customers to market Internet-based communications services to their end users, so our revenues depend on the activities of others and the market acceptance of
those services.

Our business depends on the efforts and success of our customers in marketing Internet-based communications services to their end users. We have little ability
to promote those services. If our customers fail to market Internet-based communications services effectively, our revenues would be reduced.

We face significant competition, including competition from larger companies.

There are low barriers to entry by businesses seeking to offer services on the Internet. As a result, our business environment is intensely competitive, highly
fragmented and rapidly changing. Competition can come from many sources. For example, we compete directly with iPass in the market for Internet roaming and related settlement services, and iPass has a
network that competes with the GRIC Alliance. Large communications service providers such as AT&T and UUNET also have the ability and resources to compete with us in the Internet-based mobile office
communications services market.

Many
of our competitors have substantially greater resources, larger customer bases, longer operating histories, greater name recognition and more established relationships in the
industry than we have. Any of these competitors may combine or form strategic partnerships, gaining competitive advantages as a result. Our competitors may be able to develop and market products and
services that

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are superior to our own in terms of features, quality, pricing or other factors. In that event, our products and services may not achieve the market acceptance necessary for us to achieve success.

If we are unable to manage growth, the GRIC Alliance and our product development efforts effectively, our business and the price of our stock will be harmed.

In recent periods, growth has strained our network operations, product development and other managerial, operating and financial resources. We expect these
strains to continue if we continue our growth, and our financial performance and our ability to compete effectively will depend, in part, on our ability to manage any future growth effectively. To
that end, we must:



If
we are not able to accomplish these tasks, our business will be harmed.

Our customers require a high degree of reliability in the delivery of our services, and if we cannot meet their expectations for any reason, demand for our products and
services will suffer.

Our success depends in large part on our ability to assure generally error-free clearinghouse services, uninterrupted operation of our network and
software infrastructure, and a satisfactory experience for our customers' end users. To achieve these objectives, we depend on the quality, performance and scalability of our products and services,
the responsiveness of our technical support and the capacity, reliability and security of our network operations. We also depend on third parties over which we have no control. For example, our
ability to serve approximately 60 countries is based solely on our network access agreement with one service provider and on that service provider's ability to provide reliable Internet access points
in those countries. In the past, we have experienced problems due to our inability to detect system malfunctions and due to errors in collecting or processing account usage and settlement data. Due to
the high level of performance required for critical communications traffic, any failure to deliver a satisfactory experience to end users, whether or not caused by our own failures, and any failure to
provide accurate settlement data in connection with acting as a clearinghouse, could reduce demand for our products and services.

As a clearinghouse, we have greater collection risks than many other companies.

Difficulties in collecting accounts receivable will harm our financial results, and this collection risk is inherently greater for us as a clearinghouse
service provider because we are obligated to pay amounts owed to each customer whether or not we have collected all the amounts due to us from other customers. In addition, if end users or
unauthorized third parties engage in unauthorized or otherwise fraudulent roaming activity, we may face difficulty collecting the resulting accounts receivable. If we are not able to manage this
problem, our financial results will suffer.

If we are unable to develop and introduce new products and services, we will be less likely to attract or retain customers.

We expect the market for Internet-based communications products and services to continue to change rapidly. To succeed, we will be required to adapt to those
changes by improving and enhancing our existing products and services, and developing and introducing new products and services. We have

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not demonstrated that we can consistently develop and market product enhancements and new products or services on a timely or on a cost-effective basis. On several occasions, we have
altered the course of our product development efforts or discontinued products after their introduction, which has resulted in delays and increased research and development expenses. If we fail to
produce technologically competitive products and services in a cost-effective manner and on a timely basis, our business will be harmed.

Our operating results fluctuate and are difficult to predict, so we may fail to satisfy the expectations of investors or market analysts and our stock price may decline.

Our quarterly operating results have fluctuated in the past, and we expect them to fluctuate in the future. Factors that cause these fluctuations, many of
which are beyond our control, include:



Business
models relying on the Internet to provide Internet-based communications services are still evolving. As a result, we believe that period-to-period
comparisons of our historical operating results are not meaningful. Additionally, if our operating results in one or more quarters do not meet or exceed securities analysts' or market expectations,
the price of our common stock is likely to decline.

Our long sales cycle makes it particularly difficult for us to forecast revenues, requires us to incur high costs of sales, and aggravates fluctuations in quarterly financial
results.

Our business is characterized by a long sales cycle, including contact with a potential customer, establishment of a new customer relationship, winning the new
customer and realizing significant transaction-based revenues. This makes it difficult for us to predict future revenues. In addition, we incur substantial sales costs before we win a customer or
recognize any related revenue, which increases the volatility of our results because we may have high costs without associated offsetting revenues.

Because much of our business is conducted internationally, we encounter special payment and regulatory difficulties, which may reduce our profitability and harm the price of
our common stock.

Because we generate most of our revenues from business conducted internationally, we are subject to special risks. Those risks include:



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We
are also exposed to general geopolitical risks, such as political and economic instability and changes in diplomatic and trade relationships. Any of these factors may reduce our
profitability and harm the price of our common stock.

We need to hire and retain qualified personnel to sustain the growth of our business, which is particularly difficult for us because we compete with other companies in the San
Francisco Bay area where we are based.

Our future success depends, in part, on the continued service of our key executive, management and technical personnel, and our ability to attract new skilled
employees. From time to time we have experienced difficulty in hiring and retaining highly skilled employees, and we expect to continue to experience this sort of difficulty. Competition for employees
in our industry is intense, particularly in the San Francisco Bay area where we are located, and we have experienced significant attrition, particularly after our recent restructuring of operations.
Continued declines in the market price of our common stock could also hurt employee morale and retention. If we are not able to retain our key employees or to attract, assimilate or retain other
highly qualified employees in the future, our business could be harmed because our growth might be slowed or executive leadership might be disrupted.

Litigation arising out of intellectual property infringement or other commercial disputes could be expensive and disrupt our business.

We cannot be certain that our products do not, or will not, infringe upon patents, trademarks, copyrights or other intellectual property rights held by third
parties. In addition, since we rely on third parties to help us develop, market and support our product and service offerings, we cannot assure you that litigation will not arise from disputes
involving those third parties. From time to time we have been, and we expect to continue to be, parties to disputes with these third parties. We may incur substantial expenses in defending against
these claims, regardless of their merit. Successful claims against us may result in substantial monetary liability, significantly impact our results of operations in one or more quarters or materially
disrupt the conduct of our business.

Our executive officers and directors hold a significant percentage of our stock and will be able to control matters requiring stockholder approval.

As of March 31, 2001, our executive officers and directors and their affiliated entities owned approximately 30% of our outstanding common stock.
Accordingly, these stockholders, acting together, will have a substantial influence on all matters requiring approval by our stockholders, including the election of directors and the approval of
significant corporate transactions. This concentration could also have the effect of delaying or preventing a change in control of our company.

Our certificate of incorporation and bylaws and Delaware law contain provisions that could discourage a takeover and depress our stock price.

Provisions of our certificate of incorporation, bylaws and Delaware law make it difficult for a third party to acquire us, despite the possible benefit to our
stockholders, and this may potentially lower the price of our common stock. These provisions of our certificate of incorporation and bylaws:



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In
addition, we have elected to remain subject to the anti-takeover provisions of the Delaware General Corporation Law. These factors may discourage takeover attempts.

If our common stock price falls below and remains under $1.00, or if we otherwise fail to comply with Nasdaq rules, our common stock could be delisted from The Nasdaq National
Market, which could severely limit the trading market for our common stock.

If the market price for our common stock falls and remains below $1.00 per share, our market capitalization falls and remains below $35 million or we
otherwise fail to meet the criteria for continued listing on The Nasdaq National Market, our common stock may be deemed to be penny stock. On April 6, 2001, the closing price of our common
stock was $0.875. If our common stock were considered penny stock, it would be subject to rules that impose additional sales practices on broker-dealers who sell our securities. For example,
broker-dealers must make a special suitability determination for the purchaser and have received the purchaser's written consent to the transaction prior to sale. Also, a disclosure schedule must be
prepared prior to any transaction involving a penny stock and disclosure is required about sales commissions payable to both the broker-dealer and the registered representative and current quotations
for the securities. Monthly statements are also required to be sent, disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock.
Because of these additional obligations, some brokers may be unwilling to effect transactions in penny stocks. This could have an adverse effect on the liquidity of our common stock and your ability
to sell the common stock.

Our stock price has been volatile and losses by investors could lead to shareholder lawsuits.

The market prices of the securities of Internet-related companies have been especially volatile recently, and often these fluctuations have been unrelated or
disproportionate to operating performance. This increases the risk that if you wish to sell our stock the market price may be lower than the price at which you purchased our stock. If the market value
of our stock experiences adverse fluctuations and we become involved in class actions lawsuits by security holders, we could incur substantial legal costs and management's attention could be diverted,
to the detriment of our operations and results.

We
expect the market price for our common stock to continue to be subject to wide fluctuations as a result of factors including:



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Future developments in Internet-based communications services, which are critical to our success, are uncertain.

For us to increase our revenues, the Internet must be validated as an effective medium for the delivery of Internet roaming and other Internet-based
communications services. The infrastructure of the public Internet may not be able to support increased demands placed on it, and the performance of the Internet may be adversely affected. Our
business will be harmed if the Internet does not continue to grow as a telecommunications medium, and that growth may be inhibited by factors such as:



Security concerns may deter the use of the Internet for Internet-based communications, which would reduce demand for our products and services.

The secure transmission of confidential information over public networks is a significant barrier to widespread adoption of electronic commerce and
communications. The Internet is a public network and information is sent over this network from many sources. Advances in computer capabilities, new discoveries in the field of cryptography or other
developments could result in compromised security on our network or the networks of others. If any well-publicized compromises of confidential information were to occur, it could reduce
demand for Internet-based communications and our products and services.

U.S. or foreign governmental regulations regarding the Internet and Internet-based services may be enacted, which could impede our business.

To date, governmental laws and regulations applicable to access to or commerce on the Internet have not materially restricted use of the Internet in our
markets. However, the legal and regulatory environment that pertains to the Internet is uncertain and may change. For example, Congress and other federal entities have adopted or are considering
legislative and regulatory proposals that would regulate the Internet and Internet-based services. The European Union has enacted several directives relating to the Internet, including one, which
affects U.S. companies that collect or transmit information over the Internet from individuals in European Union Member States. New domestic or foreign taxes could also be adopted that would apply to
the delivery or use of communications services over the Internet. Uncertainty about and adoption of new regulations could increase our costs of doing business, or prevent us from delivering our
products and services over the Internet or significantly slow the growth of the Internet. This could delay growth in demand for our products and services and harm our business.

ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISKS

FOREIGN CURRENCY RISK.  We have limited exposure to financial market risks, including changes in foreign currency
exchange rates and interest rates. Although we have foreign operations in Europe and Asia, to date, our exposure to foreign currency fluctuations has not been significant.

INTEREST RATE RISK.  Our exposure to interest rate risk relates primarily to our investment portfolio and debt
obligations. Interest rate risk occurs when we cannot hold a purchased investment to

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its maturity. We limit the weighted-average maturity of our investment portfolio to 90 days. We intend to hold our securities until maturity and, therefore, do not expect to recognize an
adverse impact on income or cash flows, although there can be no assurance of this. We have established policies and business practices regarding our investment portfolio to preserve principal while
obtaining reasonable rates of return without significantly increasing risk. We place investments with high credit quality issuers according to our investment policy. We do not use derivative financial
instruments in our investment portfolio. All investments are carried at fair market value for 2001. Due to the short-term nature of our investments and the immaterial amount of our debt
obligation, we believe that there is no material exposure to interest fluctuation. Therefore, no accompanying table has been provided.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are involved in certain claims and may in the future become involved in claims and legal preceedings arising in the normal course of business. Our
management does not expect that the outcome of these existing claims will have a material effect on our financial position, results of operations or cash flows.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

On December 14, 1999, a registration statement on Form S-1 (No. 333-87497) was declared effective by the
Securities and Exchange Commission, pursuant to which 5,290,000 shares of our common stock were offered and sold for our account at a price of $14.00 per share, generating gross proceeds of
approximately $74 million. Each outstanding share of preferred stock was automatically converted into one share of common stock upon the closing of the initial public offering. The managing
underwriters were CIBC World Markets, U.S. Bancorp Piper Jaffray and Prudential Volpe Technology.

In
connection with the offering, we incurred $5.2 million in underwriting discounts and commissions, and $2.0 million in other related expenses. The net proceeds from
the offering, after deducting the foregoing expenses, were $66.8 million. From the effective date of the registration statement through March 31, 2001, we applied $10.6 million of
the proceeds towards short-term investments, $12.8 million of the proceeds towards capital expenditures and the balance of the proceeds to working capital.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

The
following exhibits are filed herewith:

|Exhibit
Number |  | Description                                         
|-------------- |  | ----------------------------------------------------
|10.28          |  | Offer letter dated December 8, 1999 to Laura Mellow.
|10.29          |  | Offer letter dated February 13, 2001 to John Rasmus.

No
reports on Form 8-K were filed for the three months ended March 31, 2001.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, on May 14, 2001.

| |  | GRIC COMMUNICATIONS, INC.                                                                                                                      
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------
| |  | /s/JOSEPH M. ZAELITJoseph M. Zaelit
Senior Vice President, Finance and Administration and Chief Financial Officer
(Principal Financial Officer)
| |  | /s/KIM S. SILVERMANKim S. Silverman
Vice President and Corporate Controller
(Principal Accounting Officer)                                     

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