<PAGE>


                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                              Washington D.C. 20549

                                    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 September 30, 2000

                                       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: 1-12491

                              LARSCOM INCORPORATED
             (Exact name of registrant as specified in its charter)



<TABLE>
<CAPTION>
             DELAWARE                                 94-2362692
<S>                                               <C>
  (State or other jurisdiction of                   (IRS Employer
   incorporation or organization)                  Identification No.)

</TABLE>

                              1845 McCANDLESS DRIVE
                               MILPITAS, CA 95035
                                 (408) 941-4000

     (Address of principal executive offices, zip code and telephone number)

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 the registrant's shares outstanding as of October 31, 2000, was
8,689,000 of Class A Common Stock and 10,000,000 of Class B Common Stock.

<PAGE>






                              LARSCOM INCORPORATED
                                    FORM 10-Q
                                TABLE OF CONTENTS




<TABLE>

<S>                                                                                                <C>
     Part I:   Financial Information.................................................................3

     Item 1:   Financial Statements (Unaudited)......................................................3
               Condensed Consolidated Balance Sheets.................................................3
               Condensed Consolidated Statements of Operations.......................................4
               Condensed Consolidated Statements of Cash Flows.......................................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:   Quantitative and Qualitative Disclosures about Market Risk...........................15


     Part II:  Other Information....................................................................16

     Item 1:   Legal Proceedings....................................................................16

     Item 2:   Changes in Securities................................................................16

     Item 3:   Defaults upon Senior Securities......................................................16

     Item 4:   Submission of Matters to a Vote of Security Holders..................................16

     Item 5:   Other Information....................................................................16

     Item 6:   Exhibits and Reports on Form 8-K.....................................................16

               a: Exhibits..........................................................................16
               b: Reports on Form 8-K...............................................................16

</TABLE>



                                      2


<PAGE>




PART I:           FINANCIAL INFORMATION
ITEM 1:           FINANCIAL STATEMENTS

                                      LARSCOM INCORPORATED
                              CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (In thousands) (Unaudited)

<TABLE>
<CAPTION>


                                                                     SEPTEMBER 30,    DECEMBER 31,
                                                                        2000             1999
                                                                    -------------    -------------
<S>                                                              <C>               <C>
                                             ASSETS
Current assets:
     Cash and cash equivalents ...................................       $6,256       $7,009
     Short-term investments ......................................       22,245       22,199
     Accounts receivable, net ....................................        7,195        7,769
     Inventories .................................................        6,796        5,821
     Deferred income taxes .......................................        3,889        3,961
     Income taxes receivable .....................................        2,113        1,750
     Prepaid expenses and other current assets ...................        3,717        1,671
                                                                     ----------   ----------
        Total current assets .....................................       52,211       50,180
Property and equipment, net ......................................        4,017        4,781
Deferred income taxes ............................................       11,774       11,419
Other non-current assets, net ....................................          290          482
                                                                     ----------   ----------
        Total assets .............................................      $68,292      $66,862
                                                                     ==========   ==========

                              LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable ............................................       $4,135        $3,464
     Accrued expenses and other current liabilities ..............        9,528         7,728
     Due to Axel Johnson Inc. ....................................          311           341
                                                                     ----------    ----------
        Total current liabilities ................................       13,974        11,533
Other non-current liabilities ....................................          468           534
                                                                     ----------    ----------
        Total liabilities ........................................       14,442        12,067
                                                                     ----------    ----------
Commitments and contingencies (Note 5)
Stockholders' equity:
     Class A Common Stock ........................................           87            84
     Class B Common Stock ........................................          100           100
     Additional paid-in capital ..................................       82,508        81,860
     Accumulated other comprehensive loss ........................           (2)           (6)
     Accumulated deficit .........................................      (28,843)      (27,243)
                                                                     ----------    ----------
        Total stockholders' equity ...............................       53,850        54,795
                                                                     ----------    ----------
        Total liabilities and stockholders' equity ...............      $68,292       $66,862
                                                                     ==========    ==========

</TABLE>

           See accompanying Notes to Condensed Consolidated Financial Statements

                                       3


<PAGE>




                               LARSCOM INCORPORATED

                  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                  (In thousands, except per share data) (Unaudited)

<TABLE>
<CAPTION>

                                                      THREE MONTHS ENDED          NINE MONTHS ENDED
                                                         SEPTEMBER 30,              SEPTEMBER 30,
                                                  ------------------------------------------------------
                                                     2000          1999          2000          1999
                                                  ------------  ------------  ------------  ------------
<S>                                            <C>             <C>           <C>          <C>
Revenues . . . . . . . . . . . . . . . . . . . .     $ 13,793      $ 13,265      $ 41,631      $ 38,709
Cost of revenues . . . . . . . . . . . . . . . .        6,595         6,275        19,556        19,910
                                                  ------------  ------------  ------------  ------------
      Gross profit . . . . . . . . . . . . . . .        7,198         6,990        22,075        18,799
                                                  ------------  ------------  ------------  ------------
Operating expenses:
    Research and development . . . . . . . . . .        2,431         1,701         7,426         6,157
    Selling, general and administrative . . . .         6,198         5,443        18,194        16,183
                                                  ------------  ------------  ------------  ------------
      Total operating expenses . . . . . . . . .        8,629         7,144        25,620        22,340
                                                  ------------  ------------  ------------  ------------

Loss from operations . . . . . . . . . . . . . .       (1,431)         (154)       (3,545)       (3,541)
      Interest and other income . . . . . . . .           463           295         1,300           814
                                                  ------------  ------------  ------------  ------------
Income/(loss) before income taxes . . . . . . .          (968)          141        (2,245)       (2,727)
      Income tax provision/ (benefit) . . . . .          (268)          169          (645)         (978)
                                                  ------------  ------------  ------------  ------------
Net loss . . . . . . . . . . . . . . . . . . . .     $   (700)      $   (28)     $ (1,600)     $ (1,749)
                                                  ============  ============  ============  ============

Basic and diluted net loss per share . . . . . .     $  (0.04)      $  0.00      $  (0.09)     $  (0.10)
                                                  ============  ============  ============  ============

Basic and diluted weighted average shares . . .        18,635        18,348        18,554        18,320
                                                  ============  ============  ============  ============


</TABLE>



         See accompanying Notes to Condensed Consolidated Financial Statements

                                      4


<PAGE>




                                         LARSCOM INCORPORATED

                           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                      (In thousands) (Unaudited)

<TABLE>
<CAPTION>

                                                                               NINE MONTHS ENDED
                                                                                 SEPTEMBER 30,
                                                                       ----------------------------------
                                                                           2000              1999
                                                                       --------------    --------------
<S>                                                                   <C>               <C>
Cash flows from operating activities:
    Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . .       $  (1,600)        $  (1,749)
    Depreciation and amortization . . . . . . . . . . . . . . . . . .          1,855             2,513
    (Increase)/decrease in deferred income taxes . . . . . . . . . .            (283)              187
    Net (increase)/decrease in other working capital accounts. . . .            (317)            3,055
                                                                       --------------    --------------
Net cash provided/(used) by operating activities . . . . . . . . . .            (345)            4,006
                                                                       --------------    --------------

Cash flows from investing activities:
    Purchases of property and equipment . . . . . . . . . . . . . . .           (939)             (604)
    Purchases of short-term investments . . . . . . . . . . . . . . .        (22,049)          (28,918)
    Sales of short-term investments . . . . . . . . . . . . . . . . .         20,302            20,318
    Maturities of short-term investments . . . . . . . . . . . . . .           1,700             2,300
                                                                       --------------    --------------
Net cash used by investing activities . . . . . . . . . . . . . . . .           (986)           (6,904)
                                                                       --------------    --------------

Cash flows from financing activities:
    Repayments to Axel Johnson Inc. . . . . . . . . . . . . . . . . .            (30)             (706)
    Payment of capital lease obligations . . . . . . . . . . . . . .             (47)             (161)
    Proceeds from issuances of Class A Common Stock . . . . . . . . .            651               202
                                                                       --------------    --------------
Net cash provided/(used) by financing activities . . . . . . . . . .             574              (665)
                                                                       --------------    --------------
Effect of foreign exchange rates on cash . . . . . . . . . . . . . .               4                (3)
                                                                       --------------    --------------
Decrease in cash and cash equivalents . . . . . . . . . . . . . . . .           (753)           (3,566)
Cash and cash equivalents at beginning of period . . . . . . . . . .           7,009            10,265
                                                                       --------------    --------------
Cash and cash equivalents at end of period . . . . . . . . . . . . .       $   6,256         $   6,699
                                                                       ==============    ==============

Supplemental disclosure of cash flow information
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . .        $     5          $     20
                                                                       --------------    --------------
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . .       $     71          $    148
                                                                       --------------    --------------

</TABLE>


      See accompanying Notes to Condensed Consolidated Financial Statements

                                       5

<PAGE>



                              LARSCOM INCORPORATED

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--BASIS OF PRESENTATION:

     The condensed consolidated financial statements for the nine months ended
September 30, 2000 and 1999 presented in this Quarterly Report on Form 10-Q are
unaudited. In the opinion of management, these statements include all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair statement of the results for the interim periods presented. The condensed
consolidated financial statements should be read in conjunction with the audited
consolidated financial statements and notes thereto included in the Larscom
Incorporated ("Larscom") Report on Form 10-K for the year ended December 31,
1999. The results of operations for the first nine months of 2000 are not
necessarily indicative of the results to be expected for the full year.

NOTE 2--INVENTORIES:

     Inventories consist of the following (in thousands):

<TABLE>
<CAPTION>


                                                                     SEPTEMBER 30,   DECEMBER 31,
                                                                        2000            1999
                                                                    -------------   -------------
<S>                                                              <C>              <C>
Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . .       $  3,126        $  1,884
Work-in-process . . . . . . . . . . . . . . . . . . . . . . . . .          1,884           1,847
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . .         1,786           2,090
                                                                    ------------    ------------
                                                                        $  6,796        $  5,821
                                                                    =============   =============

</TABLE>

NOTE 3--NET LOSS PER SHARE:

     Basic net loss per share is computed using the weighted-average number of
common shares outstanding during the period. Diluted net loss per share is
computed using the weighted-average number of common shares outstanding and the
dilutive effect of options to purchase common shares. The effect of options to
purchase common shares is excluded from the computation as their effect is
antidilutive.

     The following table shows how basic and diluted net loss per share are
computed (in thousands, except per share data):

<TABLE>
<CAPTION>


                                                            THREE MONTHS ENDED       NINE MONTHS ENDED
                                                               SEPTEMBER 30,           SEPTEMBER 30,
                                                         ----------------------------------------------
                                                           2000        1999        2000        1999
                                                         ----------  ----------  ----------  ----------
<S>                                                   <C>           <C>         <C>         <C>
Net loss . . . . . . . . . . . . . . . . . . . . . . .     $  (700)     $  (28)    $ (1,600)   $ (1,749)
                                                         ==========  ==========  ==========  ==========

Weighted average Class A and B
     Common Stock outstanding . . . . . . . . . . . . .     18,635      18,348      18,554      18,320

Basic and diluted loss per share . . . . . . . . . . .     $ (0.04)     $ 0.00     $ (0.09)    $ (0.10)
                                                         ==========  ==========  ==========  ==========

</TABLE>

NOTE 4--COMPREHENSIVE INCOME:

     "Comprehensive income" includes all changes in equity from non-owner
sources during the period. The only item of comprehensive income for the periods
presented related to foreign currency translation adjustments. Such amounts were
immaterial for the periods presented.

                                       6

<PAGE>

NOTE 5--COMMITMENTS AND CONTINGENCIES:

     At the end of 1998, vendors of three integrated circuits ("ICs") notified
us regarding their intent to cease production. Because of anticipated continued
usage of these ICs, we entered into purchase commitments of approximately
$1,250,000 in aggregate, representing between one and two years expected demand
for these components. As of September 30, 2000, we are obligated to purchase
$286,000 of these ICs by December 2000.

     On September 21, 2000, we signed a five-year software license agreement
with 3NO Systems, Inc. Under the terms of the agreement, we acquired the
exclusive rights in North America and Western Europe and nonexclusive rights
elsewhere to Broadband Remote Access Server ("B-RAS") technology developed by
3NO Systems, Inc. We intend to use this technology to design and market new
Internet subscriber management products. We have paid an upfront nonrefundable
license fee of $2,000,000. If products shipped utilizing the 3NO System Inc.
B-RAS technology exceed the allocation provided by the upfront fee, a quarterly
payment will be made to 3NO Systems Inc. based on a percentage of net sales for
these products.

     We typically indemnify our customers for any expenses or liabilities
resulting from claims by third parties that our products infringe the patents,
trademarks or copyrights of third parties.

NOTE 6--ACQUISITION:

     We acquired NetEdge Systems Inc. ("NetEdge"), by merger on December 31,
1997. We paid total merger consideration of $25,793,000 in cash, incurred
acquisition costs of $1,182,000 and assumed liabilities of $9,782,000.

     Of the total purchase consideration, $6,300,000 was put into escrow pending
resolution of certain matters including purchase price adjustments and other
representations and warranties. In 1999, $2,147,000 was released to the
shareholders of NetEdge. In 1998, $600,000 of the escrow amount was released to
us and $400,000 was released to the shareholders of NetEdge. There remained
$3,559,000 in escrow on September 30, 2000, representing principal and accrued
interest, which is expected to be released by December 31, 2000.

                                       7

<PAGE>





NOTE 7--GEOGRAPHIC INFORMATION:

     Revenue and long-lived assets related to operations in the United States
and other countries as of the three and nine months ended September 30, 2000 and
September 30, 1999 are as follows (in thousands):

<TABLE>
<CAPTION>

                                                                  REVENUES (A)
                                           ----------------------------------------------------------
                                                 THREE MONTHS ENDED            NINE MONTHS ENDED
                                                   SEPTEMBER 30,                 SEPTEMBER 30,
                                           ----------------------------------------------------------
                                               2000           1999           2000           1999
                                           -------------  -------------   ------------  -------------
<S>                                     <C>              <C>             <C>           <C>
United States                                  $ 11,777       $ 11,337        $36,031        $33,534
Other countries                                   2,016          1,928          5,600          5,175
                                           ------------   ------------    ------------  -------------
Total                                          $ 13,793       $ 13,265        $41,631        $38,709
                                           =============  =============   ============  =============

</TABLE>

(a) Revenues are reported by shipment to the final destination as determined by
records required to comply with US Department of Commerce regulations.


<TABLE>
<CAPTION>

                                                  LONG-LIVED ASSETS
                                           -------------------------------
                                                         AS OF
                                            SEPTEMBER 30,     DECEMBER 31,
                                               2000              1999
                                           -------------     -------------
<S>                                     <C>                 <C>
United States                                   $ 4,291           $ 5,249
Other countries                                      16                14
                                           ------------      ------------
Total                                           $ 4,307           $ 5,263
                                           =============     =============


</TABLE>

NOTE 8--RECENT ACCOUNTING PRONOUNCEMENTS:

     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133
"Accounting for Derivative Instruments and Hedging Activities." 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 value of the 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. We are required to
adopt SFAS No. 133 in the first quarter of 2001. To date, we have not engaged in
any hedging activity and do not expect adoption of this new standard to have a
significant impact on us.

     In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin ("SAB") 101, "Revenue Recognition" which provides
guidance on recognition, presentation, and disclosure of revenue in financial
statements filed with the SEC. SAB 101 outlines the basic criteria that must be
met to recognize revenue and provides guidance for disclosure related to revenue
recognition policies. We have analyzed SAB 101 and do not expect its adoption to
result in a material effect on our financial position or results of operations.


                                       8

<PAGE>


                              LARSCOM INCORPORATED

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

RESULTS OF OPERATIONS

     REVENUES. Revenues of $13,793,000 for the third quarter ended September 30,
2000 represent a 4% increase over 1999's third quarter revenues of $13,265,000.
The Orion 2000, which is designed for ATM Inverse Multiplexing, was a major
contributor to the third-quarter revenue growth over last year as market demand
for fractional T3 applications continued to grow. Partially offsetting this
increase were revenue declines in the Multiplexer, ATM Access and CSU/DSU
product groups. For the nine months ending September 30, 2000, revenues totaled
$41,631,000 or an increase of 8% over the comparable nine-month period of 1999
when total revenues were $38,709,000. The Orion 2000 was the major contributor
to the nine-month increase over last year.

     The combined revenues from MCI WorldCom and AT&T, our two largest
customers, accounted for 37% of revenues for the third quarter of 2000 and 38%
of revenues for the first nine months of 2000 versus 42% for the third quarter
and first nine months of 1999. The revenue improvement for the first nine months
of 2000 versus the comparable period of 1999 came from our domestic distributor
channels, direct sales to network service providers (NSPs) and shipments to
international markets. Shipments to international locations represented 14% of
total revenues during the first nine months of 2000 and were 8% greater than the
same period of 1999. This increase over last year is attributed to our
investment in expanding our international presence.

     GROSS PROFIT. As a percentage of revenues, gross profit for the third
quarter of 2000 was 52% versus 53% in the third quarter of 1999. For the nine
months ended September 30, 2000, gross profit margins were 53% or 4 percentage
points better than the same nine-month period of 1999. The lower gross margin
percentage in the third quarter of 2000 versus 1999 was primarily due to an
increase in volume of lower-margin Inverse Multiplexing products. The
improvement in nine-month gross profit margin from 1999 was primarily the result
of lower expenses related to excess and obsolete inventory, improved
manufacturing variances and lower warranty-related costs.

     RESEARCH AND DEVELOPMENT. Research and development expenses increased by
43% to $2,431,000 in the three months ended September 30, 2000, from $1,701,000
in the comparable three-month period in 1999. This brought R&D spending for the
first nine months of 2000 to $7,426,000, or 21% greater than last year's
nine-month spending of $6,157,000. Higher R&D spending in both the three- and
nine-month periods is primarily due to increased headcount, higher average pay
per employee and an increase in recruiting costs. The increased spending
reflects our strategic initiative to grow the business through investment in new
product development.

     SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses increased 14% to $6,198,000 during the three months ended September 30,
2000, as compared to $5,443,000 in the same period of 1999. For the nine months
ended September 30, 2000, selling, general and administrative expenses totaled
$18,194,000, a 12% increase over the 1999 nine-month expense of $16,183,000.
These increases in spending were due primarily to our investment in the
international sales force, higher sales commissions, recruiting costs and higher
outside services and consulting fees.

     Selling, general and administrative expenses include charges from our
majority stockholder, Axel Johnson Inc. ("Axel Johnson"), for legal, accounting,
tax, treasury, human resources and administrative services. Charges for these
services were $113,000 and $339,000 for the third quarter and first nine months
of 2000 as compared to $110,000 and $329,000 for the third quarter and first
nine months of 1999.

     INTEREST AND OTHER INCOME. Interest and other income was $463,000 and
$1,300,000 for the third quarter and first nine months of 2000 as compared to
$295,000 and $814,000 for the same periods of 1999. Interest income, which is
the major component of Interest and Other Income, was $484,000 for the three
months ended September 30, 2000, as compared to $313,000 for the same period in
1999. For the first nine months of 2000, interest income

                                       9

<PAGE>


amounted to $1,361,000 versus $870,000 for the first nine-month period of
1999. The increase in interest income over the third quarter and nine-month
period of 1999 was due to higher average market interest rates in 2000. Our
investment portfolio is generally comprised of commercial paper rated A1/P1,
bank certificates of deposit rated AA or better and corporate medium-term
notes rated AA or better.

     PROVISION FOR INCOME TAXES. The effective tax benefit rate was 28% for the
three months ended September 30, 2000 and 29% for the first nine months of 2000.
The nine-month tax rate differs from the federal statutory rate primarily
because of state income taxes.

     At September 30, 2000, we had deferred tax assets of $15,663,000. These
assets primarily relate to expected future tax benefits from the amortization of
intangible assets. The amortization of the intangible assets is deductible for
tax purposes in equal amounts over the next 12 years. The remaining deferred tax
assets relate to inventory reserves and accrued expenses. We have not taken a
valuation allowance (for financial reporting purposes) against the deferred tax
assets because we believe it is more likely than not that the benefits are
realizable. However, realization of these assets depends on our ability to
generate taxable income in the future. Our belief in the likelihood of being
able to use the deferred tax assets is based on the following factors:

     -    A significant portion of the deferred tax assets is deductible over
          the next 12 years.
     -    Tax losses can be carried forward for 20 years.
     -    A small portion of the losses can be carried back to prior years.

     If we were to significantly reduce our estimate of future taxable income,
we would have to record an allowance against our deferred tax asset. Such a
change could have a materially adverse effect on our reported results of
operations and financial condition.

LIQUIDITY AND CAPITAL RESOURCES

     Operating activities used cash of $345,000 in the first nine months of
2000. Our net loss was more than offset by non-cash items consisting of
depreciation and amortization. Working capital increased primarily due to higher
prepaid royalties and inventories partially offset by an increase in accrued
liabilities.

     Capital expenditures in the first nine months of 2000 were $939,000. These
expenditures consisted principally of the purchase of computers, software and
test equipment. We anticipate capital expenditures to total $1,600,000 in 2000.

     We extended our revolving line of credit of $15,000,000 with Axel Johnson
(the "Credit Agreement"), which now expires in December 2001. The Credit
Agreement contains various representations, covenants and events of default
typical for financing a business of our size and nature. Upon an event of
default, any borrowings under the line of credit shall become payable in full.
To date we have not found it necessary to use this line of credit. In addition
to the Credit Agreement, we have an administrative service agreement and a tax
sharing agreement with Axel Johnson, which regulates the on-going relationship
between the two entities.

     At September 30, 2000, we had cash and cash equivalents of $6,256,000 and
short-term investments of $22,245,000. We believe that working capital, together
with our line of credit and funds generated from operations, will provide
adequate liquidity to meet our operating and capital requirements at least
through 2001. Nonetheless, future events, such as the potential use of cash to
fund any significant losses that we might incur or acquisitions we might
undertake, might require us to seek additional capital. In that event, it is
possible we would not be able to obtain adequate capital on terms acceptable to
us, or at all.

CERTAIN FACTORS AFFECTING FUTURE OPERATING RESULTS

     THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS CERTAIN FORWARD-LOOKING
STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933 AND
SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934. OUR ACTUAL RESULTS MAY
DIFFER MATERIALLY FROM THOSE INDICATED IN ANY FORWARD-LOOKING STATEMENTS DUE TO
THE RISKS AND UNCERTAINTIES SET FORTH BELOW AS WELL AS OTHER RISKS AND
UNCERTAINTIES WE MAY DESCRIBE FROM TIME TO TIME IN OTHER

                                      10

<PAGE>


FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. WE UNDERTAKE NO
OBLIGATION TO REVISE ANY FORWARD-LOOKING STATEMENTS IN ORDER TO REFLECT
EVENTS OR CIRCUMSTANCES THAT MAY ARISE AFTER THE DATE OF THIS REPORT. YOU ARE
URGED TO REVIEW CAREFULLY AND CONSIDER THE VARIOUS RISKS AND UNCERTAINTIES
DESCRIBED IN THIS REPORT AND IN OTHER REPORTS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION.

     CUSTOMER CONCENTRATION. We believe that our relationship with large
customers, particularly NSPs and Internet service providers (ISPs), will be
critical to our future success. During 1999, 1998 and 1997, two customers, MCI
WorldCom and AT&T, together accounted for 41%, 44% and 55% of our revenues,
respectively. Accordingly, our revenues are currently highly dependent on
continued orders from these two large customers.

     None of our customers are contractually obligated to purchase any quantity
of products in any particular period, and product sales to major customers have
varied widely from quarter to quarter and year to year. Our current customers
might not continue to place orders with us, orders from existing customers might
not continue at the levels of previous periods and we might not be able to
obtain orders from new customers. Loss of, or a material reduction in, orders
from one or more of our major customers could have a material adverse effect on
our business and operating results.

     FLUCTUATIONS IN QUARTERLY OPERATING RESULTS; ABSENCE OF SIGNIFICANT
BACKLOG. Our operating results have fluctuated significantly in the past and may
fluctuate in the future on a quarterly and annual basis as a result of a number
of factors, many of which are beyond our control. A small number of customers
have accounted for a significant percentage of our sales. Therefore, sales for a
given quarter generally depend to a significant degree upon orders received from
and product shipments to a limited number of customers. Sales to individual
large customers are often related to the customer's specific equipment
deployment projects, the timing of which is subject to change on limited notice,
in addition to the effect of competitors' product offerings. We have experienced
both acceleration and slowdown in orders related to such projects, causing
changes in the sales level of a given quarter relative to both the preceding and
subsequent quarters. Since most of our sales are in the form of large orders
with short delivery times to a limited number of customers, our backlog and
consequent ability to predict revenues will continue to be limited. In addition,
announcements by us or our competitors of new products and technologies could
cause customers to defer, limit, or end purchases of our existing products. In
the event that we were to lose one or more large customers, anticipated orders
from major customers were to fail to materialize, delivery schedules were to be
deferred or canceled as a result of the above factors or other unanticipated
factors, then our business and operating results would be materially adversely
affected. Consequently, we believe that period-to-period comparisons of our
operating results are not necessarily meaningful and should not be relied upon
as indicative of future performance.

     Results in any period could also be affected by changes in market demand,
competitive market conditions, market acceptance of new or existing products,
increasing sales channel development costs, the cost and availability of
components, the mix of our customer base and sales channels, the mix of products
sold, our sales promotion activities, our ability to expand our sales and
marketing organization effectively, our ability to attract and retain key
technical and managerial employees and general economic conditions. Because of
all of the foregoing factors, our operating results in one or more future
periods may be subject to significant fluctuations. In the event these factors
result in our financial performance being below the expectations of public
market analysts and investors, the price of our Class A Common Stock could be
materially adversely affected.

     Although gross profit margins in 2000 may be higher than in 1999,
particularly due to the impact in 1999 of additional expenses related to excess
and obsolete inventory, we do not expect gross margins to reach the levels
achieved before 1998 primarily due to increased competition. In addition, we are
currently developing an indirect distribution channel, which typically yields
lower margins on sales than direct sales. A number of additional factors could
cause gross profits to fluctuate as a percentage of revenue, including changes
in product mix, price discounts given, costs of components, manufacturing costs
and production volume.

     We established our expense levels for product development and other
operating expenses based on projected sales levels and margins, but expenses are
relatively fixed in the short term. Accordingly, if sales are below expectations
in any given period, our inability to adjust spending in the short term may
exacerbate the adverse impact of a revenue shortfall on our operating results.
Moreover, the Board of Directors, on November 17, 1999, approved funding for an
aggressive program to develop new products and expand into new markets. We have
reported

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operating losses for the first nine months of 2000 partly as a result of
these strategic initiatives. Our continued emphases on new product
development and expansion into new markets are likely to result in continued
losses for the balance of the year 2000 and into 2001.

     DEPENDENCE ON RECENTLY INTRODUCED PRODUCTS AND PRODUCTS UNDER DEVELOPMENT.
We expect sales of our established products to decline over time. Therefore, our
future operating results are highly dependent on market acceptance of our
recently introduced products and products that may be introduced in the future.
These include, for example, the WANmaker CSU/DSU products, the Orion 2000 and
iPLEX 6000, which have only recently been introduced, and our proposed future
"intelligent access" products. There can be no assurance that such products will
achieve widespread market acceptance. In addition, we have, in the past,
experienced delays in the development of new products and the enhancement of
existing products, and such delays may occur in the future. Inability to develop
and introduce new products or product versions in a timely manner, due to
resource constraints or technological or other reasons, or to achieve timely and
widespread market awareness and acceptance of our new products or releases would
have a material adverse effect on our business and operating results.

     DEPENDENCE ON COMPONENT AVAILABILITY AND KEY SUPPLIERS. On-time delivery of
our products depends upon the availability of components and subsystems used in
our products. We depend upon our suppliers to manufacture, assemble and deliver
components in a timely and satisfactory manner. We obtain components and license
certain embedded software from numerous single sources. We do not believe we
would be able to develop alternative sources for certain essential components
used in our products. In addition, while we believe we would be able to develop
alternative sources for most of the other components and software used in our
products without incurring substantial additional costs, there can be no
assurance that we would be able to do so, if required. Any inability by our
suppliers to meet our demand or any prolonged interruption in supply or a
significant price increase of one or more components or software would likely
have a material adverse effect on our business and operating results. We
generally do not have any long-term contracts with our suppliers. It is possible
that our suppliers will not continue to be able and willing to meet our future
requirements.

     At the end of 1998, vendors of three integrated circuits ("ICs") notified
us regarding their intent to cease production. Because of anticipated continued
usage of these ICs, we entered into purchase commitments of approximately
$1,250,000 in the aggregate, representing between one and two year's expected
demand for these components. As of September 30, 2000, we are obligated to
purchase $286,000 of these ICs by December 2000. We are in the process of
redesigning our products to replace those ICs. We have attempted to take into
account factors such as the ability to replace the particular IC with a similar
part and the estimated life of our products in determining the quantities to
purchase. Although we believe that we will use all the quantities we have agreed
to purchase, there can be no assurance that our estimates are correct. If our
estimates are not correct and requirements for these ICs are less or more than
anticipated, it could have a material adverse effect on our business and results
of operations.

     RAPID TECHNOLOGICAL CHANGE. The telecommunications equipment industry is
characterized by rapidly changing technologies and frequent new product
introductions. The rapid development of new technologies increases the risk that
current or new competitors could develop products that would reduce the
competitiveness of our products. Our success will depend to a substantial degree
upon our ability to respond to changes in technology and customer requirements.
This will require the timely development and marketing of new products and
enhancements on a cost effective basis. There can be no assurance that we will
be successful in developing, introducing or managing the transition to new or
enhanced products or that any such products will be responsive to technological
changes or will gain market acceptance. If we were to be unsuccessful or to
incur significant delays in developing and introducing such new products or
enhancements, our business and operating results could be materially adversely
affected. For example, we are aware of a competing technology with network
monitoring capabilities that can be used instead of the Split-T product that we
sell primarily to MCI WorldCom. If MCI WorldCom's customers were to opt for the
alternative technology as part of their services, our business and operating
results would be materially adversely affected.

     CONTROL BY AXEL JOHNSON. Holders of Class A Common Stock are entitled to
one vote per share and holders of Class B Common Stock are entitled to four
votes per share, subject to adjustment, to preserve the initial voting ratio.
Axel Johnson is the sole holder of the Class B Common Stock. As a result, Axel
Johnson has sufficient combined

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<PAGE>


voting power to control the direction and policies of Larscom absolutely,
including mergers, the payment of dividends, consolidations, the sale of all
or substantially all of the assets of Larscom and the election of the Board
of Directors of Larscom, and to prevent or cause a change in control of
Larscom.

     SOURCES OF ADDITIONAL FINANCE. We have access, subject to certain
conditions, to a $15,000,000 credit facility provided by Axel Johnson, which is
scheduled to expire on December 24, 2001. There can be no assurance that
alternative sources of financing will be available upon the expiration of the
Credit Agreement, or that additional sources of funding will be available on
terms favorable to us if our borrowing requirements exceed the amount of the
facility.

     MANAGEMENT OF OPERATIONS. To grow our business, we must continue to
attract, train, motivate and manage new employees successfully, integrate new
management and employees into our overall operations and continue to improve our
operational, financial and management systems. Availability of qualified sales
and technical personnel is limited, and competition for experienced sales and
technical personnel in the telecommunications equipment industry is intense. Our
failure to manage any expansion or contraction effectively could have a material
adverse effect on our business and operating results.

     RISKS ASSOCIATED WITH ENTRY INTO INTERNATIONAL MARKETS AND DEVELOPMENT OF
ALTERNATIVE DISTRIBUTION CHANNEL. Sales outside the US approximated 14% of our
revenues for the first nine months of 2000. The conduct of business outside the
US is subject to certain customary risks, including unexpected changes in
regulatory requirements and tariffs, difficulties in staffing and managing
foreign operations, longer payment cycles, greater difficulty in accounts
receivable collection, currency fluctuations, expropriation and potentially
adverse tax consequences. In addition, to sell our products internationally, we
must meet standards established by telecommunications authorities in various
countries, as well as recommendations of the International Telecommunications
Union. A delay in obtaining, or the failure to obtain, certification of our
products in countries outside the US could inhibit or preclude our marketing and
sales efforts in such countries, which could have a material adverse effect on
our business and operating results.

     We have developed an indirect distribution channel for sales to domestic
customers. This channel consists primarily of a small group of master
distributors, such as Tech Data, and a number of authorized resellers. (Sales to
large NSPs and ISPs continue to be handled by our direct sales force.) As part
of this strategy we have appointed certain sales people to sign up resellers and
assist them in their sales efforts. There are a number of risks associated with
the development of an indirect distribution channel. The risks include a
reduction in our ability to forecast sales, reduced average selling prices,
management's inexperience in establishing and managing a distribution channel,
potential reductions in customer satisfaction, loss of contact with users of our
products and new methods of advertising and promoting products which will result
in additional expenses.

     We market our products internationally through non-exclusive distribution
agreements with international distributors and systems integrators. To focus on
sales to Europe, the Middle East and Africa, we have created a regional sales
team, headquartered in the United Kingdom. The United Kingdom team focuses on
direct sales to large NSPs while also supporting its distributors for sales to
smaller customers. During the first nine months of 2000, we established direct
sales offices in Hong Kong and Singapore to focus on the Asian market. If these
initiatives are not successful, our results could be materially adversely
affected.

     COMPLIANCE WITH REGULATIONS AND EVOLVING INDUSTRY STANDARDS. The market for
our products is characterized by the need to comply with a significant number of
communications regulations and standards, some of which are evolving as new
technologies are deployed. In the US, our products must comply with various
regulations defined by the Federal Communications Commission and standards
established by Underwriters Laboratories, as well as industry standards
established by various organizations. As standards for services such as ATM and
DSL evolve, we may be required to modify our existing products or develop and
support new versions of our products. The failure of our products to comply, or
delays in compliance, with the various existing and evolving industry standards
could delay introduction of our products, which in turn could have a material
adverse effect on our business and operating results.

     RISKS ASSOCIATED WITH POTENTIAL ACQUISITIONS. As part of our efforts to
grow our business, we review acquisition and strategic alliance prospects that
would potentially complement our existing product offerings, augment our market
coverage, enhance our technological capabilities or offer growth opportunities.
Any future acquisitions by us could

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result in potentially dilutive issuances of equity securities and/or the
issuances of debt and the assumption of contingent liabilities, any of which
could have a material adverse effect on our business and operating results
and/or the price of our Class A Common Stock. As a result of the ownership
interest of Axel Johnson in Larscom, we will not be able to use pooling of
interests accounting for any future acquisition. Accordingly, such
acquisitions could result in amortization of goodwill and other charges
typically associated with purchase accounting. Any future strategic alliance
may entail illiquid and risky investments in the equity of private companies,
and for the payment of substantial upfront fees to obtain rights to
technologies which have not yet been tested in the marketplace. Acquisitions
and strategic alliances entail numerous risks, including difficulties in the
assimilation of acquired operations, technologies and products, diversion of
management's attention from other business concerns, risks of entering
markets in which we have limited or no prior experience and potential loss of
key employees of acquired organizations. No assurance can be given as to our
ability to integrate any businesses, products, technologies or personnel that
might be acquired or licensed in the future successfully, and our failure to
do so could have a material adverse effect on our business and operating
results.

     LIMITED PROTECTION OF INTELLECTUAL PROPERTY; PROPRIETARY INFORMATION. We
rely upon a combination of trade secrets, contractual restrictions, copyrights,
trademark laws and patents to establish and protect proprietary rights in our
products and technologies. Although we have been issued only one US patent to
date, we believe that the success of our business depends primarily on our
proprietary technology, information, processes, and expertise, rather than
patents. Much of our proprietary information and technology is not patented and
may not be patentable. There can be no assurance that we will be able to protect
our technology or that competitors will not be able to develop similar
technology independently. We have entered into confidentiality and invention
assignment agreements with employees, and entered into non-disclosure agreements
with suppliers, distributors and appropriate customers so as to limit access to
and disclosure of our proprietary information. There can be no assurance that
these statutory and contractual arrangements will deter misappropriation of our
technologies or discourage independent third-party development of similar
technologies. In the event such arrangements are insufficient, our business and
operating results could be materially adversely affected.



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ITEM 3:     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     INTEREST RATE RISK. We do not use derivative financial instruments in our
investment portfolio. Our investment portfolio has been generally comprised of
commercial paper rated A1/P1, bank certificates of deposit rated AA or better
and corporate medium-term notes rated AA or better. These securities mature
within one year and are classified as available for sale in accordance with SFAS
115, "Accounting for Certain Investments in Debt and Equity Securities." We
place investments in instruments that meet high credit quality standards. These
securities are subject to interest rate risk, and could decline in value if
interest rates increase. Because of the short duration and conservative nature
of our investment portfolio, we do not expect any material loss with respect to
our investment portfolio.

     FOREIGN CURRENCY EXCHANGE RATE RISK. Certain of our sales and marketing
expenses are incurred in local currencies. Consequently, our international
results of operations are subject to foreign exchange rate fluctuations. We do
not currently hedge against foreign currency rate fluctuations. Gains and losses
from such fluctuations have not been material to our consolidated results.




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PART II:          OTHER INFORMATION

Item 1:           Legal Proceedings.

                          We are not currently involved in any material legal
proceedings.

Item 2:           Changes in Securities.

                           Not Applicable.

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.

                           Joseph Pendergast joined us as the Vice President of
                           Operations effective October 2, 2000. Mr. Pendergast
                           replaces Walter Tijiboy, who resigned August 8, 2000.

                           Steve Gartner resigned as Vice President of Domestic
                           Sales effective October 4, 2000.

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

                           *10.1 Software License Agreement by and between
                           Larscom Incorporated and 3NO Systems, Inc. dated
                           September 21, 2000.

                           27.1 Financial Data Schedule

                  b.       Reports on Form 8-K.

                           We filed one report on Form 8-K during the third
                           quarter of 2000, for an event of August 28, 2000. The
                           report, which was filed September 5, 2000, disclosed
                           that Jeffrey W. Reedy, Vice President of Engineering,
                           resigned as an officer and employee effective
                           September 5, 2000.

* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by an
asterisk and has been filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended, pursuant to an application for confidential treatment.


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                                   SIGNATURES

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

                                                     LARSCOM INCORPORATED




DATE     NOVEMBER 13, 2000                  By       /s/ ROBERT COACKLEY
         ---------------------------                 ---------------------------

                                                     Robert Coackley
                                                     President and Chief
                                                     Executive Officer

                                            By       /s/ DONALD W. MORGAN
                                                     ---------------------------
                                                     Donald W. Morgan
                                                     Vice President, Finance and
                                                     Chief Financial Officer






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