<PAGE>
================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   ----------

                                    FORM 10-Q

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

         FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001

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

         FOR THE PERIOD FROM _____________ TO _____________.



                        COMMISSION FILE NUMBER: 000-31045

                         RAINDANCE COMMUNICATIONS, INC.
             (Exact name of registrant as specified in its charter)



           DELAWARE                                      84-1407805
  (State or jurisdiction of              (I.R.S. employer identification number)
 incorporation or organization)

                               1157 CENTURY DRIVE
                              LOUISVILLE, CO 80027
          (Address, including zip code, of principal executive offices)

                                 (800) 878-7326
              (Registrant's telephone number, including area code)

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

         Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date.


Common Stock, $0.0015 Par Value      --       47,739,014 as of October 31, 2001.


================================================================================



<PAGE>



                         RAINDANCE COMMUNICATIONS, INC.

                                      INDEX


<Table>
<Caption>
                                                                                                                       PAGE
                                                                                                                       ----
<S>                                                                                                                     <C>
PART I.          FINANCIAL INFORMATION

ITEM 1.          FINANCIAL STATEMENTS

                 Condensed Consolidated Balance Sheets as of December 31, 2000 and September 30, 2001 (unaudited).....   3

                 Condensed Consolidated Statements of Operations for the three and nine months ended
                      September 30, 2000 and 2001 (unaudited).........................................................   4

                 Condensed Consolidated Statements of Cash Flows for the nine months ended
                      September 30, 2000 and 2001 (unaudited).........................................................   5

                 Notes to the Condensed Consolidated Financial Statements (unaudited).................................   6

ITEM 2.          Management's Discussion and Analysis of Financial Condition and Results of Operations................  12

                 Additional Risk Factors that May Affect Our Operating Results and The
                      Market Price of Our Common Stock................................................................  19

ITEM 3.          Quantitative and Qualitative Disclosures About Market Risk...........................................  26

PART II.         OTHER INFORMATION

ITEM 1.          Legal Proceedings....................................................................................  28

ITEM 2.          Changes in Securities and Use of Proceeds............................................................  28

ITEM 3.          Defaults Upon Senior Securities......................................................................  28

ITEM 4.          Submission of Matters to a Vote of Security Holders..................................................  28

ITEM 5.          Other Information....................................................................................  28

ITEM 6.          Exhibits and Reports on Form 8-K.....................................................................  28

SIGNATURES............................................................................................................  29
</Table>



                                       2
<PAGE>



                          PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                         RAINDANCE COMMUNICATIONS, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<Table>
<Caption>
                                                                                      DECEMBER 31, 2000   SEPTEMBER 30, 2001
                                                                                      -----------------   ------------------
                                                                                                              (UNAUDITED)
<S>                                                                                   <C>                 <C>
ASSETS
Current assets:
   Cash and cash equivalents ........................................................      $    43,311       $    29,135
   Investment .......................................................................              196                --
   Accounts receivable, net of allowance for doubtful accounts of
      $765 and $700 at December 31, 2000 and September 30, 2001, respectively .......            4,891             6,297
   Prepaid expenses and other current assets ........................................            3,825             1,542
                                                                                           -----------       -----------
Total current assets ................................................................           52,223            36,974
Property and equipment, net .........................................................           35,330            27,682
Goodwill, net .......................................................................           65,157            45,278
Due from affiliate ..................................................................            4,744             2,853
Other assets ........................................................................            1,370             1,200
                                                                                           -----------       -----------
Total Assets ........................................................................      $   158,824       $   113,987
                                                                                           ===========       ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable .................................................................      $     5,919       $     5,473
   Current portion of long-term debt ................................................            1,505               973
   Accrued expenses .................................................................            3,638             2,460
   Restructuring reserve ............................................................            1,412               894
   Deferred revenue .................................................................              878               728
                                                                                           -----------       -----------
Total current liabilities ...........................................................           13,352            10,528
Long-term debt, less current portion ................................................              810               224
Restructuring reserve, less current portion .........................................            2,952             1,013
Other ...............................................................................               --                25
                                                                                           -----------       -----------
Total Liabilities ...................................................................           17,114            11,790
                                                                                           -----------       -----------
Stockholders' Equity:
Undesignated preferred stock, 10,000,000 shares authorized;
none issued or outstanding ..........................................................               --                --
Common stock, par value $.0015; 130,000,000 shares authorized; 46,834,925 and
   47,437,832 shares issued and outstanding at December 31, 2000 and
    September 30, 2001, respectively ................................................               70                71
   Additional paid-in capital .......................................................          269,466           265,346
   Accumulated other comprehensive (loss) income ....................................             (862)              135
   Note receivable from officer .....................................................             (483)               --
   Unearned stock option compensation ...............................................          (10,659)           (4,353)
   Accumulated deficit ..............................................................         (115,822)         (159,002)
                                                                                           -----------       -----------
   Total Stockholders' Equity .......................................................          141,710           102,197
                                                                                           -----------       -----------
Commitments and contingencies
Total Liabilities and Stockholders' Equity ..........................................      $   158,824       $   113,987
                                                                                           ===========       ===========
</Table>


      See accompanying notes to condensed consolidated financial statements



                                       3
<PAGE>



                         RAINDANCE COMMUNICATIONS, INC.
                 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            2001            2000             2001
                                                                   -----------     -----------     -----------     -----------
<S>                                                                <C>             <C>             <C>             <C>
Revenue .......................................................    $     5,574     $    10,050     $    10,325     $    28,177
Cost of revenue:
   (exclusive of stock-based compensation expense of
   $117, $52, $241 and $167, respectively, shown below) .......          4,673           5,089          10,809          16,859
                                                                   -----------     -----------     -----------     -----------
Gross profit (loss) ...........................................            901           4,961            (484)         11,318
                                                                   -----------     -----------     -----------     -----------

Operating expenses:
   Sales and marketing (exclusive of stock-based
      compensation expense of $238, $124, $848 and $414,
      respectively, shown below) ..............................         14,867           4,799          41,204          15,974
   Research and development (exclusive of stock-based
      compensation expense of $225, $158, $649 and
      $465, respectively, shown below) ........................          2,368           1,433           5,288           4,153
   General and administrative, (exclusive of
      stock-based compensation expense of $980, $299,
      $5,437 and $1,019, respectively, shown below) ...........          2,723           1,769           5,962           5,819
   Amortization of goodwill ...................................          6,708           6,626           7,826          19,879
   Stock-based compensation expense ...........................          1,560             633           7,175           2,065
   Asset impairment charges ...................................             --           1,736              --           4,530
   Restructuring charges and contract termination expenses ....             --             316              --           1,570
                                                                   -----------     -----------     -----------     -----------
      Total operating expenses ................................         28,226          17,312          67,455          53,990
                                                                   -----------     -----------     -----------     -----------
      Loss from operations ....................................        (27,325)        (12,351)        (67,939)        (42,672)
   Other income (expense) .....................................            925              82           2,501            (509)
                                                                   -----------     -----------     -----------     -----------
   Net loss ...................................................        (26,400)        (12,269)        (65,438)        (43,181)
Preferred stock dividends and accretion to preferred stock
   redemption value ...........................................            231              --           1,725              --
                                                                   -----------     -----------     -----------     -----------
Net loss attributable to common stockholders ..................    $   (26,631)    $   (12,269)    $   (67,163)    $   (43,181)
                                                                   ===========     ===========     ===========     ===========

Loss per share-basic and diluted ..............................    $     (0.74)    $     (0.26)    $     (5.16)    $     (0.92)
                                                                   ===========     ===========     ===========     ===========
Weighted average number of common shares
   outstanding-basic and diluted ..............................         36,094          47,201          13,007          47,084
                                                                   ===========     ===========     ===========     ===========
</Table>




     See accompanying notes to condensed consolidated financial statements.



                                       4
<PAGE>



                         RAINDANCE COMMUNICATIONS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (IN THOUSANDS)
                                   (UNAUDITED)


<Table>
<Caption>
                                                                                        NINE MONTHS ENDED
                                                                                           SEPTEMBER 30,
                                                                                    ---------------------------
                                                                                       2000            2001
                                                                                    -----------     -----------
<S>                                                                                 <C>             <C>
Cash flows from operating activities:
Net loss .......................................................................    $   (65,438)    $   (43,181)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization ..................................................         13,525          26,785
Loss on disposition of short-term investment ...................................             --           1,195
Asset impairment charges .......................................................             --           6,318
Stock-based compensation .......................................................          7,175           2,065
Other ..........................................................................             83             260
Changes in operating assets and liabilities:
Accounts receivable ............................................................         (3,274)         (1,406)
Prepaid expenses and other current assets ......................................         (4,835)          1,343
Other assets ...................................................................         (5,746)            250
Accounts payable and accrued expenses ..........................................          5,068          (4,993)
                                                                                    -----------     -----------
Net cash used by operating activities ..........................................        (53,442)        (11,364)
                                                                                    -----------     -----------
Cash flows from investing activities:
Purchase of property and equipment .............................................        (24,486)         (2,093)
Proceeds from disposition of equipment .........................................             77             133
Proceeds from sales and maturities of investment securities ....................            648              --
Purchase of short-term investment ..............................................         (2,000)             --
Loan to Contigo Software, Inc. .................................................           (300)             --
Cash paid for acquisition of Contigo, net of cash acquired .....................         (2,622)             --
                                                                                    -----------     -----------
Net cash used by investing activities ..........................................        (28,683)         (1,960)
                                                                                    -----------     -----------
Cash flows from financing activities:
Net proceeds from issuance of preferred stock ..................................          5,013              --
Net proceeds from issuance of common stock .....................................         52,421             265
Payments on debt ...............................................................           (995)         (1,117)
Preferred stock dividend .......................................................           (150)             --
                                                                                    -----------     -----------
Net cash provided (used) by financing activities ...............................         56,289            (852)
                                                                                    -----------     -----------
Decrease in cash and cash equivalents ..........................................        (25,836)        (14,176)
Cash and cash equivalents at beginning of period ...............................         89,234          43,311
                                                                                    -----------     -----------
Cash and cash equivalents at end of period .....................................    $    63,398     $    29,135
                                                                                    ===========     ===========
Supplemental cash flow information - interest paid in cash .....................    $       315     $       167
                                                                                    ===========     ===========
Supplemental disclosure of noncash investing and financing activities:
Loan to officer for common stock purchase ......................................    $     1,125     $        --
                                                                                    ===========     ===========
Accounts payable incurred for purchases of property and equipment ..............    $     3,871     $     1,117
                                                                                    ===========     ===========
Exchange of investment for forgiveness of debt .................................    $        --     $       157
                                                                                    ===========     ===========
</Table>


     See accompanying notes to condensed consolidated financial statements.



                                       5
<PAGE>



                         RAINDANCE COMMUNICATIONS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) BASIS OF PRESENTATION

         Raindance Communications, Inc., (the "Company"), was incorporated under
the laws of the State of Delaware on April 17, 1997. The Company provides Web
and phone conferencing services that offer a continuum of real-time, interactive
communications tools for businesses, including automated phone conferencing with
online controls, Web conferencing for Web presentations, and advanced
collaboration tools, which allow users, among other things, to share
applications, tour the Web and whiteboard ideas online. The Company operates in
a single segment. The condensed consolidated financial statements include the
accounts of Raindance Communications and its wholly-owned subsidiary. All
significant intercompany transactions and balances have been eliminated.

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

         The accompanying condensed consolidated financial statements as of
September 30, 2001, and for the three and nine months ended September 30, 2000
and 2001, are unaudited and have been prepared in accordance with generally
accepted accounting principles on a basis consistent with the December 31, 2000
audited financial statements and include normal recurring adjustments which are,
in the opinion of management, necessary for a fair statement of the results of
these periods. These consolidated statements should be read in conjunction with
our financial statements and notes thereto included in our Form 10-K/A
(Commission File No. 000-31045), filed on May 2, 2001. Operating results for the
three and nine months ended September 30, 2001 are not necessarily indicative of
the results that may be expected for the full year.

(b) CASH, CASH EQUIVALENTS AND INVESTMENT

         All highly liquid investments purchased with original maturities of
three months or less are considered to be cash equivalents. Cash equivalents
consist of money market accounts at two financial institutions and high quality
commercial paper. Current investment consisted of an equity investment in a
public company. This investment was classified as "available for sale" in
accordance with Statement of Financial Accounting Standards No. 115, "Accounting
for Certain Investments in Debt and Equity Securities." This investment was
carried at fair market value with any unrealized gain or loss recorded as a
separate element of stockholders' equity. In March 2001, as partial
consideration for terminating a software license agreement, the Company returned
its investment in the software company's common stock, which resulted in the
recognition of a realized loss of $1.2 million in the first quarter of 2001.

(c) GOODWILL

         Goodwill is being amortized using the straight-line method over an
estimated useful life of three years. In July 2001, the Financial Accounting
Standards Board (FASB) issued Statement of Financial Accounting Standards No.
142 (SFAS 142), "Goodwill and Other Intangible Assets." SFAS 142 requires that
goodwill no longer be amortized, but instead will be reviewed for impairment on
an on-going basis. The amortization of goodwill will cease upon adoption of the
Statement, which will be January 1, 2002. SFAS 142 requires a different method
of determining impairment than is currently being used by the Company. The
effect of this change on the financial statements of the Company has not yet
been determined.



                                       6
<PAGE>



(d) REVENUE RECOGNITION

         The Company's Web and Phone Conferencing customers are charged a
per-minute fee based on each phone participant's and Web participant's actual
time on the conference, which is recognized as revenue upon completion of the
conference. Customers are charged a fee to upload visuals or record Webcasts for
phone conferences, which is also recognized as revenue upon completion of the
conference. Revenue from initial set-up fees is recognized ratably over the
initial term of the contract.

         The Company's Collaboration customers are charged either a concurrent
user and usage fee in addition to event fees or, in more limited cases, a
software license fee. Revenue from concurrent user fees is recognized monthly
regardless of usage, while usage fees are based upon either monthly connections
or minutes used. Event fees are generally hourly charges that are recognized as
the events take place. Revenue from initial set-up fees is recognized ratably
over the initial term of the contract. Revenue from software license agreements
is recognized upon shipment of the software when all the following criteria have
been met: persuasive evidence of an arrangement exists; delivery has occurred;
the fee is fixed or determinable; collectibility is probable; and vendor
specific objective evidence is available for the fair value of all undelivered
elements.

         The Company's Webcasting customers were charged for content encoding
and hosting. Content encoding is the conversion of the customer's media into
formats that can be accessed over the Internet using widely available media
players and, for some customers, indexing the media to facilitate search and
reporting capabilities. Revenue from content encoding was recognized when the
content was available for viewing over the Internet. Hosting is the maintenance
of the content on the Company's servers and, for some customers, providing
access to information about content usage. Revenue related to content hosting
was recognized ratably over the hosting period.

         The Company's Talking Email customers were charged based on prices and
specific service terms, which were negotiated in advance of service delivery.
Revenue was recognized, including any setup fees, ratably over the life of the
contract.

         As part of a restructuring announced in January 2001, the Company
indicated its intent to focus primarily on its core service offerings of Web and
Phone Conferencing and Collaboration. Accordingly, Webcasting and Talking Email
generated a minimal amount of revenue through the second quarter of 2001 as the
Company satisfied certain customer commitments. The second quarter of 2001 was
the final quarter in which revenue was generated from these services.

(e) LOSS PER SHARE

         Loss per share is presented in accordance with the provisions of
Statement of Financial Accounting Standards No. 128, Earnings Per Share (SFAS
128). Under SFAS 128, basic earnings (loss) per share (EPS) excludes dilution
for potential common stock and is computed by dividing income or loss
attributable to common stockholders by the weighted average number of common
shares outstanding for the period. Diluted EPS reflects the potential dilution
that could occur if securities or other contracts to issue common stock were
exercised or converted into common stock. Potential common shares are comprised
of shares of common stock issuable upon the exercise of stock options and
warrants and are computed using the treasury stock method. Basic and diluted EPS
are the same for the three and nine months ended September 30, 2000 and 2001 as
all potential common stock instruments are antidilutive.



                                       7
<PAGE>



         The following table sets forth the calculation of earnings per share
for the three and nine months ended September 30, 2000 and 2001 (in thousands,
except per share amounts):

<Table>
<Caption>
                                                                             THREE MONTHS ENDED            NINE MONTHS ENDED
                                                                                 SEPTEMBER 30,                SEPTEMBER 30,
                                                                             2000           2001           2000           2001
                                                                          ----------     ----------     ----------     ----------
<S>                                                                       <C>            <C>            <C>            <C>
Net loss attributable to common stockholders .........................    $  (26,631)    $  (12,269)    $  (67,163)    $  (43,181)
                                                                          ==========     ==========     ==========     ==========
Common shares outstanding:
  Historical common shares outstanding at beginning of period ........         5,709         47,094            576         46,835
  Weighted average common shares issued during period ................        30,385            107         12,431            249
                                                                          ----------     ----------     ----------     ----------
  Weighted average common shares at end of period - basic and diluted         36,094         47,201         13,007         47,084
                                                                          ==========     ==========     ==========     ==========
Loss per share - basic and diluted ...................................    $    (0.74)    $    (0.26)    $    (5.16)    $    (0.92)
                                                                          ==========     ==========     ==========     ==========
</Table>


         The following potential common shares have been excluded from the
computation of diluted net loss per share for the nine months ended September
30, 2000 and 2001 because their effect would have been antidilutive:

<Table>
<Caption>
                                                          AS OF SEPTEMBER 30,
                                                      --------------------------
                                                         2000            2001
                                                      -----------    -----------
<S>                                                   <C>            <C>
Shares issuable under stock options ..............      7,060,669      8,677,989
Shares issuable pursuant to warrants .............        652,790        652,790
</Table>

         The weighted-average exercise price of stock options outstanding as of
September 30, 2000 and 2001 was $5.87 and $3.19, respectively. The
weighted-average exercise price of warrants outstanding as of September 30, 2000
and 2001 was $ 7.35.

(2) JOINT VENTURES AND ACQUISITIONS

         On June 9, 2000, the Company entered into an agreement with @viso
Limited, a European-based venture capital firm, to form Evoke Communications,
B.V., a Netherlands' corporation ("Evoke Communications Europe"). Pursuant to
this agreement, the Company made net cash payments of approximately $4.6 million
to Evoke Communications Europe, approximately $4.5 million of which, after
foreign currency adjustments, are to be repaid under the terms of a promissory
note, granted a technology license to Evoke Communications Europe and was issued
common stock representing 51% ownership in Evoke Communications Europe. The
Company uses the equity method of accounting for this investment as @viso
Limited was granted participating rights that significantly affect the Company's
ability to control Evoke Communications Europe. The specific rights that prevent
the Company from controlling Evoke Communications Europe include approval and
compensation level for the position of the Chief Executive Officer; approval of
detailed operating budgets of Evoke Communications Europe; any acquisition or
capital expenditure that involves an amount exceeding 10% of the assets of the
company; any sale, lease or other disposition of assets that involves an amount
exceeding 5% of the assets of the company; the incurrence, guarantee or
otherwise becoming liable with respect to any indebtedness for borrowed money in
an amount exceeding 10% of the assets of the company; the execution of any
strategic contract, or the incurrence of any obligation, with a commitment of an
amount exceeding 10% of the assets of the company; any declaration or payment of
any dividend or other distribution, direct or indirect, on account of any shares
or any redemption, retirement, purchase or other acquisition, direct or
indirect, by the company of any shares; and the adoption of any stock option or
award plan for employees, directors or consultants. The Company has recorded
losses, which have reduced the Company's equity investment in Evoke
Communications Europe to zero. The Company has no obligations to fund future
operating losses of Evoke Communications Europe. In the third quarter of 2001
the board of directors of Evoke Communications Europe unanimously approved a
plan of liquidation and dissolution and, as a result, Evoke Communications
Europe will be liquidated and its operations will cease. In connection with the
liquidation, the Company anticipates receiving prior to December 31, 2001 cash
and equipment valued at approximately $2.8 million. Accordingly, the Company
recorded an impairment charge of $1.7 million in the third quarter of 2001,
which represents the excess of the note receivable over the cash and equipment
we expect to receive. The receivable, net of the impairment charge, is reflected
in the balance sheet in long term assets as due from affiliate.

         On June 16, 2000, the Company acquired Contigo Software, Inc.
("Contigo") for cash of $6.1 million and 4,425,176 shares of common stock in
exchange for all the outstanding shares of Contigo capital stock. The Company
also issued 1,574,831 common stock options in exchange for outstanding Contigo
stock options. The purchase price of the acquisition was $83.9



                                       8
<PAGE>



million based on the fair value of the consideration paid plus direct
acquisition costs. The acquisition has been accounted for using the purchase
method. Accordingly, the results of operations of Contigo subsequent to June 16,
2000 have been included in the Company's statements of operations for the three
and nine months ended September 30, 2000 and 2001. The purchase price allocation
is as follows:

<Table>
<Caption>
                                                                                                           (IN MILLIONS)
<S>                                                                                                        <C>
Tangible net assets.....................................................................................   $        2.8
Assumed unearned stock option compensation..............................................................            0.6
Goodwill and other intangible assets....................................................................           80.5
                                                                                                           ------------
Total purchase price....................................................................................   $       83.9
                                                                                                           ============
</Table>

         The summary table below, prepared on an unaudited pro forma basis,
presents the Company's consolidated results of operations with Contigo's results
of operations as if the acquisition took place on January 1, 2000 (in thousands,
except per share data).


<Table>
<Caption>
                                                               NINE MONTHS ENDED SEPTEMBER 30,
                                                               -------------------------------
                                                                    2000               2001
                                                                -----------     -----------
<S>                                                             <C>             <C>
Revenue ....................................................    $    12,308     $    28,177
Net loss ...................................................        (69,715)        (43,181)
Basic and diluted net loss per share .......................          (4.44)          (0.92)
</Table>

         The pro forma results for the nine months ended September 30, 2000
combine the Company's results for the nine months ended September 30, 2000 with
the results of Contigo for the period from January 1, 2000 through the date of
acquisition (June 16, 2000). The pro forma results are not necessarily
indicative of the results of operations that would have occurred if the
acquisition had been consummated on January 1, 2000. In addition, they are not
intended to be a projection of future results and do not reflect any synergies
that might be achieved from the combined operations.

(3) RESTRUCTURING

         The Company recorded charges totaling $9.5 million in 2000 and $0.8
million in the first quarter of 2001 for restructuring activities. In addition,
as described in Note 4, the Company incurred contract termination expenses of
$1.8 million in the first quarter of 2001. In the second quarter of 2001 the
Company incurred severance charges of $0.1 million and recorded a favorable
restructuring reserve adjustment of $1.4 million primarily due to successfully
sub-leasing several remote offices with terms more favorable than originally
anticipated and also consummating an early termination settlement of a
telecommunications contract cancellation charge. In the third quarter of 2001,
the Company recorded a net restructuring charge of $0.3 million which consisted
of a $0.5 million charge to close two additional remote sales offices and
additional charges associated with offices that remain vacant while we continue
our attempts to sublease these facilities and a $0.2 million favorable
restructuring adjustment as a result of successfully terminating two facility
lease commitments with terms more favorable than originally anticipated. The
Company's restructuring activities included workforce reductions, the sale or
disposition of assets, contract cancellations and the closure of several remote
sales offices.

         Restructuring reserves and activity for the first nine months of 2001
are detailed below (in thousands):

<Table>
<Caption>
                                                                     RESTRUCTURING
                                             RESERVE BALANCE            RESERVE                              RESERVE BALANCE
                                            DECEMBER 31, 2000         ADJUSTMENTS           PAYMENTS       SEPTEMBER 30, 2001
                                            ------------------    ------------------     --------------    ------------------
<S>                                         <C>                   <C>                    <C>               <C>
Consulting fees ........................    $              155    $               --     $          155    $               --
Contract cancellation charges ..........                   819                  (546)               168                   105
Closure of remote sales facilities .....                 3,390                  (702)               886                 1,802
                                            ------------------    ------------------     --------------    ------------------
Totals .................................    $            4,364    $           (1,248)    $        1,209    $            1,907
                                            ==================    ==================     ==============    ==================
</Table>



                                       9
<PAGE>



         The Company expects to utilize the reserve balance for contract
cancellation charges in December 2001. Facility reserves may increase or
decrease based on the ability to sublease vacant spaces, which are under
non-cancelable operating leases expiring at various dates through 2005. Through
September 30, 2001, the Company has been successful in sub-leasing three
facilities and terminating four facility lease commitments. As of September 30,
2001, the facility reserve was comprised of seven offices. The actual cost
savings the Company anticipated as a result of our restructuring efforts have
been generally realized with the exception of the restructuring costs associated
with the closure of remote sales facilities. Due to the real estate market that
currently exists, it has taken the Company longer than expected to sub-lease or
otherwise terminate its lease obligations in certain cities. However, we
continually monitor and adjust, as warranted, our restructuring reserve
associated with remote sales facilities based on current facts and
circumstances. A failure to reduce or eliminate our commitment on the seven
remaining offices in a timely fashion will cause us to make unfavorable
adjustments to the restructuring reserve in subsequent quarters. Additionally,
we will continue to expend cash on our monthly commitment on these facilities.

(4) CONTRACT TERMINATION EXPENSES

         On March 30, 2001, the Company agreed to terminate a software license
agreement. In connection with the termination, the Company incurred a charge of
approximately $1.8 million in the first quarter of 2001, primarily related to
the unamortized cost of the software license. Part of the consideration given by
the Company to terminate the license agreement was the return of an investment
in the software company's common stock, which resulted in the recognition of an
additional realized loss of $1.2 million on the investment in the first quarter
of 2001.

(5) ASSET IMPAIRMENT CHARGE

         In the third quarter of 2001 the board of directors of Evoke
Communications Europe unanimously approved a plan of liquidation and dissolution
and, as a result, Evoke Communications Europe will be liquidated and its
operations will cease. In connection with the liquidation, the Company
anticipates receiving cash and equipment valued at approximately $2.8 million.
The equipment will be transferred to the Company at net book value. Accordingly,
the Company recorded an impairment charge of $1.7 million in the third quarter
of 2001, which represents the excess of the balance of the note receivable over
the cash and the net book value of the equipment we expect to receive.

(6) COMMITMENTS AND CONTINGENCIES

(a) OPERATING LEASES

         The Company leases office facilities under various operating leases
that expire through 2009. Two of the office facilities are leased from entities
that are controlled by either directors or former directors of the Company. Most
of the remaining facilities are satellite sales offices. As indicated in Note 3,
the Company is in the process of attempting to sublease or otherwise minimize
its net commitment with respect to seven offices. Through September 30, 2001, we
have been successful in terminating four facility leases and subleasing three
facilities. Total future minimum lease payments, not including any reductions
for executed sub-leases and other potential reductions, under all operating
leases, approximate $13.4 million at September 30, 2001. Future minimum sublease
receivables for the three subleased facilities, as of September 30, 2001,
approximate $2.0 million to be received by the Company through August 2005.

(b) PURCHASE COMMITMENTS

         The Company has commitments for bandwidth usage and telephony services
with various service providers. The total commitment as of September 30, 2001 is
approximately $25.0 million to be expended through 2005. Some of these
agreements may be amended to either increase or decrease the minimum commitments
during the life of the contract.

(c) EMPLOYMENT CONTRACTS

         The Company has an employment agreement with one of its executive
officers. The agreement continues until terminated by the executive or the
Company, and provides for a termination payment under certain circumstances. As
of



                                       10
<PAGE>



September 30, 2001, the Company's liability would be approximately $322,500 if
the officer had been terminated under certain conditions (as defined in the
agreement).

(d) SEVERANCE

         The Company has made commitments to executives who are no longer with
the Company including certain executives of Contigo Software, Inc. As of
September 30, 2001, the Company's total future severance liability to these
executives was approximately $216,000.

(e) LITIGATION

         From time to time, the Company has been subject to legal proceedings
and claims in the ordinary course of business. Currently, we are not aware of
any legal proceedings or claims that we believe will have, individually or in
the aggregate, a material adverse effect on the Company's financial position,
results of operations or liquidity.

(7) SUBSEQUENT EVENT

         On October 9, 2001, the Company entered into a Loan and Security
Agreement with a bank that consisted of a $7.25 million revolving line of credit
and a $5.0 million term loan. Advances under the revolving line of credit bear
interest at the bank's prime rate and are limited to $7.25 million or 80% of
eligible accounts receivable as defined in the agreement. The revolving line of
credit is available through February 28, 2003. Advances under the revolving line
of credit may be repaid and reborrowed at any time prior to the maturity date.
On October 12, 2001 the Company received $5.0 million pursuant to the term loan
referenced above. The term loan will be repaid with monthly principal payments
of $139,000 plus interest at 8% over 36 months. The Loan and Security Agreement
is collateralized by substantially all tangible and intangible assets of the
Company and is subject to compliance with covenants, including minimum liquidity
coverage, minimum quick ratio and maximum quarterly operating losses adjusted
for interest, taxes, depreciation, amortization and other non-cash charges.

(8) RECENT ACCOUNTING PRONOUNCEMENTS

         In July 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 141 and 142 (SFAS 141 and SFAS
142), "Business Combinations" and "Goodwill and Other Intangible Assets",
respectively. SFAS 141 requires that all business combinations be accounted for
under a single method - the purchase method. Use of the pooling-of-interests
method is no longer permitted. SFAS 141 requires that the purchase method be
used for business combinations initiated after June 30, 2001. SFAS 142 requires
that goodwill no longer be amortized to earnings, but instead will be reviewed
for impairment on an on-going basis. The amortization of goodwill will cease
upon adoption of the Statement, which will be January 1, 2002. At September 30,
2001 the Company had goodwill of $45.3 million on its balance sheet, net of
$34.4 million in accumulated amortization. We will record $6.6 million in
goodwill amortization in the fourth quarter of 2001.



                                       11
<PAGE>



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

         This Report on Form 10-Q contains forward-looking statements, including
without limitation, statements containing the words "believes," "anticipates,"
"expects," and words of similar import and statements regarding our strategy,
financial performance, and our operations that involve risks and uncertainties.
Our actual results may differ significantly from the results discussed in the
forward-looking statements. Factors that might cause such a difference include,
but are not limited to, those discussed in the subsection entitled "Additional
Risk Factors that May Affect Our Operating Results and The Market Price of Our
Common Stock." Readers are urged to carefully review and consider the various
disclosures made in this report and in our other reports filed with the SEC that
attempt to advise interested parties of certain risks and factors that may
affect our business. This analysis should be read in conjunction with our
Management's Discussion and Analysis of Financial Condition and Results of
Operations included in our Form 10-K/A (Commission File No. 000-31045), filed on
May 2, 2001. You should also read this analysis in conjunction with our
condensed consolidated financial statements and related notes that begin on page
3.

OVERVIEW

         We provide Web and phone conferencing services that offer simple,
reliable and cost-effective tools for everyday business meetings and events.
These services offer a continuum of real-time, interactive communications tools
for businesses, including automated phone conferencing, Web conferencing for Web
presentations with online controls and advanced collaboration tools, which allow
users, among other things, to share applications, tour the Web and whiteboard
ideas online. Our business model is largely usage-based, which generally means
that our customers only pay for the services they use. We sell these services to
large and medium-sized corporations in various markets, as well as to resellers
of conferencing and communications services through our direct and indirect
sales channels.

         We have incurred losses since commencing operations and, as of
September 30, 2001, we had an accumulated deficit of $159.0 million. Our net
loss was $26.6 million and $12.3 million for the three months ended September
30, 2000 and 2001, respectively, and $67.2 million and $43.2 million for the
nine months ended September 30, 2000 and 2001, respectively. We have not
achieved profitability on a quarterly or annual basis. We expect to continue to
incur losses at least through 2002, particularly due to significant non-cash
charges for amortization of unearned stock option compensation and depreciation
expense. In addition, we will record approximately $6.6 million of goodwill
amortization in the fourth quarter of 2001. Despite the progress we have made in
managing and controlling expenses, we will need to generate higher revenue to
support expected expenses and to achieve and sustain profitability.

         On June 16, 2000, we acquired Contigo Software, Inc. We have included
the results of operations of Contigo subsequent to June 16, 2000 in our
statements of operations. This acquisition was accounted for using the purchase
method of accounting and we recorded $80.5 million of goodwill in the quarter
ending June 30, 2000, which we are amortizing over a period of three years. For
the three and nine months ended September 30, 2001, amortization expense
pertaining to goodwill was $6.6 million and $19.9 million, respectively. To the
extent we do not generate sufficient cash flow to recover the amount of the
investment recorded, the investment may be considered impaired and could be
subject to earlier write-off. In July 2001, the Financial Accounting Standards
Board issued two pronouncements that affect business combinations going forward
and amortization of goodwill and other intangible assets for previously recorded
business combinations. As a result of this new guidance, effective January 1,
2002 we will no longer be recording amortization on our acquired goodwill. SFAS
142 requires a different method of determining impairment than is currently
being used by the Company. The effect of this change on the financial statements
of the Company has not yet been determined.

         Prior to our restructuring in January 2001, we derived revenue from
services other than our Web and Phone Conferencing and Collaboration services.
Revenue attributable to our Web and Phone Conferencing and Collaboration
services represented 93%, 99% and 100% of our total revenue for the three months
ended March 31, 2001, June 30, 2001 and September 30, 2001, respectively. We
expect to derive all of our revenue in the future from these services and any
next-generation services developed from them. The following describes how we
recognize revenue for the services we have offered in 2001.

         o        Web and Phone Conferencing Revenue. Revenue for our Web and
                  Phone Conferencing service is based upon the actual time that
                  each participant is on the phone or logged onto the Web.
                  Similarly, a customer is charged a per-minute, per-user fee
                  for each participant listening and viewing a live or recorded
                  simulcast. In addition, we



                                       12
<PAGE>



                  charge customers a one-time fee to upload visuals for a phone
                  conference or a recorded simulcast. We recognize revenue from
                  our Web and Phone Conferencing services as soon as a call or
                  simulcast of a call is completed. We recognize revenue
                  associated with any initial set-up fees ratably over the
                  initial term of the contract.

         o        Collaboration Revenue. Revenue for our Collaboration service
                  is derived from either a concurrent user and usage fee in
                  addition to event fees or, in more limited cases, a software
                  license fee. Revenue from concurrent user fees is recognized
                  monthly regardless of usage, while usage fees are based upon
                  either monthly connections or minutes used. Event fees are
                  generally hourly charges that are recognized as the events
                  take place. We recognize revenue associated with any initial
                  set-up fees ratably over the initial term of the contract.
                  Revenue from software license agreements is recognized upon
                  shipment of the software when all the following criteria have
                  been met: persuasive evidence of an arrangement exists;
                  delivery has occurred; the fee is fixed or determinable;
                  collectibility is probable; and vendor specific objective
                  evidence is available for the fair value of all undelivered
                  elements.

         o       Webcasting Revenue (former service). Prices and specific
                 service terms were usually negotiated in advance of service
                 delivery. We recognized revenue from live event streaming when
                 the content was broadcast over the Internet. We recognized
                 revenue from encoding recorded content when the content became
                 available for viewing over the Internet. We recognized revenue
                 from pre-recorded content hosting ratably over the hosting
                 period.

         o       Talking Email Revenue (former service). Prices and specific
                 service terms were negotiated in advance of service delivery.
                 We recognized revenue, including any setup fees, ratably over
                 the life of the contract.

         Our cost of revenue consists primarily of telecommunication expenses,
depreciation of network and data center equipment, Internet access fees and fees
paid to network providers for bandwidth, equipment maintenance contract
expenses, compensation and benefits for operations personnel and allocated
overhead. Our telecommunication expenses are variable and directly correlate to
the use of our services. Our depreciation, Internet access and bandwidth
expenses, equipment maintenance expenses and compensation expenses generally
increase as we increase our capacity and build our infrastructure. We expect a
decreasing need for large-scale capital expenditures, thereby reducing the
amount of the increases in depreciation, Internet access and bandwidth expenses
in the near term as compared to prior quarters. We expect our capacity and
infrastructure will accommodate our revenue projections through the second
quarter of 2002.

         We incur sales and marketing expenses that consist primarily of the
salaries, commissions and benefits for our sales and marketing personnel,
consulting fees, remote sales offices expenses, advertising and promotion
expenses and allocated overhead. In the fourth quarter of 2000, and continuing
into the first quarter of 2001, we streamlined our sales force, renegotiated
certain sales and marketing commitments and consolidated certain remote sales
offices and we believe, as of September 30, 2001, that we have experienced
substantially all the benefits of these cost savings initiatives. We expect
sales and marketing expenses to increase at a lower rate than our projected
percentage revenue growth.

         We incur research and development expenses that consist primarily of
salaries and benefits for research and development personnel, consulting fees
and allocated overhead. We expense research and development costs as they are
incurred, except for certain capitalized costs associated with internally
developed software. We expect to continue to make investments in research and
development and anticipate that these expenses will remain relatively flat or
slightly increase in absolute dollars, however, we expect them to decrease as a
percentage of revenue over time.

         We incur general and administrative expenses that consist primarily of
expenses related to finance, human resources, administrative and general
management activities, including legal, accounting and other professional fees,
in addition to other general corporate expenses. We expect general and
administrative expenses to remain relatively flat in terms of absolute dollars,
however, we expect them to decrease as a percentage of revenue over time.

         Amortization of goodwill consists of goodwill acquired in business
combinations. In connection with the Contigo acquisition and as a result of the
recent change in accounting for goodwill, 2001 will be the final year in which
we record goodwill amortization. We will record $6.6 million in goodwill
amortization in the fourth quarter of 2001, which will be the last



                                       13
<PAGE>



quarter in which we will record goodwill amortization. We expect to record a
total of $26.5 million of goodwill amortization for all of 2001.

         Since our inception, we have used stock-based compensation for
employees and members of our board of directors to attract and retain strong
business and technical personnel. During the three months ended September 30,
2001, we did not record any deferred stock option compensation and we expensed
$0.6 million related to stock-based compensation. During the nine months ended
September 30, 2001, we recorded $0.9 million of deferred stock option
compensation and we expensed $2.1 million related to stock-based compensation.
Additionally, as a result of reductions and changes in our workforce, we
reversed $0.1 million and $5.1 million of deferred stock option compensation,
related to the cancellation of unvested stock options, for the three and nine
months ended September 30, 2001, respectively. Stock-based compensation amounts
are based on the excess of the fair value of our common stock on the date of
grant or sale over the option exercise price or stock purchase price.
Compensation expense related to stock options is amortized over the vesting
period of the options, which range from one to four years. We expect to incur
stock-based compensation expense of approximately $0.6 million in the fourth
quarter of 2001, $2.2 million in 2002, $1.5 million in 2003 and $0.1 million in
2004 for common stock issued or stock options awarded to our employees and
members of our board of directors through September 30, 2001 under our stock
compensation plans.

OTHER DATA

         We evaluate operating performance based on several factors, including
our primary financial measure of loss before non-cash amortization of goodwill
and other charges. Consistent with our increased focus on controlling capital
spending, we measure operating performance after charges for depreciation. This
analysis eliminates the effects of considerable amounts of non-cash amortization
of intangible assets recognized in business combinations accounted for by the
purchase method, stock based compensation and other charges.

         The calculation of loss before amortization and other charges ("LBAC"),
which excludes preferred stock dividends and accretion, is as follows:

<Table>
<Caption>
                                                 THREE MONTHS ENDED SEPTEMBER 30,    NINE MONTHS ENDED SEPTEMBER 30,
                                                 -------------------------------     -------------------------------
                                                      2000              2001              2000              2001
                                                 -------------     -------------     -------------     -------------
<S>                                              <C>               <C>               <C>               <C>
Net loss ....................................    $     (26,400)    $     (12,269)    $     (65,438)    $     (43,181)
Add: Amortization of goodwill ...............            6,708             6,626             7,826            19,879
Add: Stock-based compensation expense .......            1,560               633             7,175             2,065
Add: Loss on sale of investment .............               --                --                --             1,195
Add: Asset impairment charges ...............               --             1,736                --             4,530
Add: Restructuring charges and contract
      termination expenses ..................               --               316                --             1,570
                                                 -------------     -------------     -------------     -------------
Loss before amortization and charges ........    $     (18,132)    $      (2,958)    $     (50,437)    $     (13,942)
                                                 =============     =============     =============     =============
</Table>

         The trends depicted by the LBAC calculation indicate that we have been
successful in significantly reducing both our net loss as well as LBAC,
primarily as a result of our efforts to control operating costs while
simultaneously increasing revenues. For the three months ended September 30,
2000 as compared with the three months ended September 30, 2001, our net loss
decreased by $14.1 million and LBAC decreased by $15.1 million. For the nine
months ended September 30, 2000 as compared with the nine months ended September
30, 2001, our net loss decreased by $22.3 million and LBAC decreased by $36.4
million. Thus, LBAC indicates that although we have incurred significant
expenses for goodwill amortization, asset impairment charges and other charges,
which are partially offset by lower stock-based compensation expense, we have
significantly improved operating performance through a combination of lower
operating expenses and higher revenue. The funds depicted by LBAC are not
available for our discretionary use due to debt service, debt maturities and
other commitments that we have made. Cash flow calculated in accordance with
generally accepted accounting principles is as follows: net cash used in
operations was $53.4 million and $11.4 million for the nine months ended
September 30, 2000 and 2001, respectively; net cash used in investing activities
was $28.7 million and $2.0 million for the nine months ended September 30, 2000
and 2001, respectively; net cash provided by financing activities was $56.3
million for the nine months ended September 30, 2000 and net cash used by
financing activities was $0.9 million for the nine months ended September 30,
2001. LBAC should be considered in addition to, not as a substitute for, net
loss attributable to common stockholders and other measures of financial
performance reported in accordance



                                       14
<PAGE>



with generally accepted accounting principles. LBAC is a measure of operating
performance and liquidity that is commonly reported and widely used by analysts,
investors and other interested parties because it eliminates significant
non-cash charges and other charges to earnings. However, LBAC as used by us may
not be comparable to similarly titled measures reported by other companies.

RESULTS OF OPERATIONS

         REVENUE. Total revenue increased by $4.5 million from $5.6 million for
the three months ended September 30, 2000 to $10.1 million for the three months
ended September 30, 2001. Total revenue increased by $17.9 million from $10.3
million for the nine months ended September 30, 2000 to $28.2 million for the
nine months ended September 30, 2001. The increase was primarily due to
increased customer account penetration and the addition of new customers. In
addition, as a result of the acquisition of Contigo Software, Inc., we first
reported revenue from our Collaboration service beginning in June 2000. As part
of the restructuring announced in January 2001, we indicated our intent to
primarily focus on our core service offerings of Web and Phone Conferencing and
Collaboration. Accordingly, the second quarter of 2001 was the final quarter in
which revenue was generated from Webcasting and Talking Email as we satisfied
legacy commitments made to customers.

         COST OF REVENUE. Cost of revenue increased $0.4 million from $4.7
million for the three months ended September 30, 2000 to $5.1 million for the
three months ended September 30, 2001. Cost of revenue increased $6.1 million
from $10.8 million for the nine months ended September 30, 2000 to $16.9 million
for the nine months ended September 30, 2001. Depreciation expense decreased
$0.7 million and $0.2 million for the three and nine months ended September 30,
2001 over the respective periods in 2000 primarily due to the write-down of
particular assets to their fair value in the second quarter of 2001. We are not
recording any depreciation expense on assets no longer in use and held for
disposal. Telecommunication costs and Internet access costs increased $1.5
million in the third quarter of 2001 and $5.4 million in the nine months ended
September 30, 2001 over the respective periods in 2000. This increase resulted
from additional phone charges consistent with increased use of our Web and Phone
Conferencing service and also increased bandwidth to accommodate additional
growth in our business. Salaries and payroll related expenses decreased $0.1
million in the third quarter of 2001 over the respective periods in 2000 as a
result of reduced headcount. Salaries and payroll related expenses increased
$0.5 million in the nine months ended September 30, 2001 over the respective
periods in 2000 as we hired technical support, consulting and training personnel
to provide support services to our customers. Maintenance expense decreased $0.2
million in the third quarter of 2001 and increased $0.3 million in the nine
months ended September 30, 2001 over the respective periods in 2000. The
decrease in the quarter was primarily due to reduction of maintenance costs
associated with the equipment we took out of service in the second quarter of
2001.

         SALES AND MARKETING. Sales and marketing expense decreased $10.1
million from $14.9 million for the three months ended September 30, 2000 to $4.8
million for the three months ended September 30, 2001. Sales and marketing
expense decreased $25.2 million from $41.2 million for the nine months ended
September 30, 2000 to $16.0 million for the nine months ended September 30,
2001. Expenses related to advertising and promotion decreased $6.0 million in
the third quarter of 2001 and $18.9 million in the nine months ended September
30, 2001 over the respective periods in 2000 as we reduced our advertising in
anticipation of changing our name in the second quarter of 2001. The decreased
spending on advertising and promotional campaigns continued through the third
quarter of 2001. Salaries, commissions and payroll related expenses decreased
$3.2 and $4.7 million for the three and nine months ended September 30, 2001
over the three and nine months ended September 30, 2000 primarily related to the
reduction in sales force as a result of our corporate restructuring in the first
quarter of 2001. Bad debt expense increased $0.1 million in the third quarter of
2001 and $0.5 million in the nine months ended September 30, 2001 over
respective periods in 2000. This increase was related to incremental charges to
our bad debt reserve as our revenue increases. The remainder of the expenses
that decreased for the three and nine months ended September 30, 2001 over the
three and nine months ended September 30, 2000 are office rent, recruiting,
telecommunications and Internet access costs, travel, and trade show related
expenditures consistent with the reduction in our workforce, office closures and
cost containment initiatives that took place in the first quarter of 2001.

         RESEARCH AND DEVELOPMENT. Research and development expense decreased
$0.9 million from $2.3 million for the three months ended September 30, 2000 to
$1.4 million for the three months ended September 30, 2001. Research and
development expense decreased $1.1 million from $5.3 million for the nine months
ended September 30, 2000 to $4.2 million for the nine months ended September 30,
2001. Personnel and payroll related expenses decreased $0.6 and $0.5 million for
the three and nine months ended September 30, 2001 as compared with the three
and nine months ended September 30, 2000 primarily as a result of



                                       15
<PAGE>



reduced headcount associated with our restructuring, which took place in January
2001, and an increase in capitalized salaries related to internally developed
software. The remainder of the decrease for the three and nine months ended
September 30, 2001 over the respective periods in 2000 is explained by $0.1 and
$0.2 million decreases in outside services, as well as decreases in
telecommunications and Internet access costs, office rent, moving expenses and
supplies.

         GENERAL AND ADMINISTRATIVE. General and administrative expense
decreased $0.9 million from $2.7 million for the three months ended September
30, 2000 to $1.8 million for the three months ended September 30, 2001. Expenses
for legal fees, recruiting, and travel decreased $0.4, $0.2 and $0.1 million,
respectively, in the third quarter of 2001 as compared with the third quarter of
2000. Royalty expense decreased $0.2 million for the three months ended
September 30, 2001 as compared with the three months ended September 30, 2000 as
our royalty commitment ceased in the first quarter of 2001. General and
administrative expense decreased $0.1 million from $5.9 million for the nine
months ended September 30, 2000 to $5.8 million for the nine months ended
September 30, 2001. Overall, expenses remained flat, however, as several
accounts experienced fluctuations that offset one another. Expenses for legal
fees, recruiting, and travel decreased $0.7, $0.5 and $0.3 million,
respectively, for the nine months ended September 30, 2001 as compared with the
nine months ended September 30, 2000, while personnel and payroll related
expenses, insurance premiums associated with our director's and officer's
liability insurance, and consulting fees increased $0.6, $0.5 and $0.3,
respectively, for the same period.

         AMORTIZATION OF GOODWILL. Amortization of goodwill was $6.6 and $19.9
million for the three and nine months ended September 30, 2001 as result of our
acquisition of Contigo in June 2000. In July 2001, the Financial Accounting
Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS)
142, "Goodwill and Other Intangible Assets." We will continue to record
amortization of goodwill through December 31, 2001 and upon adoption of this
pronouncement on January 1, 2002 we will no longer be required to amortize our
goodwill. SFAS 142 requires a different method of determining impairment than we
currently use. The effect of this change on our financial statements has not yet
been determined. At September 30, 2001, we had goodwill of $45.3 million on our
balance sheet, net of $34.4 million in accumulated amortization. We will record
$6.6 million in goodwill amortization in the fourth quarter of 2001, which will
be the last quarter in which we will record goodwill amortization.

         STOCK-BASED COMPENSATION EXPENSE. Stock-based compensation expense
decreased $0.9 million from $1.5 million for the three months ended September
30, 2000 to $0.6 million for the three months ended September 30, 2001.
Stock-based compensation expense decreased $5.1 million from $7.2 million for
the nine months ended September 30, 2000 to $2.1 million for the nine months
ended September 30, 2001. Prior to our initial public offering, options and
stock purchase rights were granted at less than the estimated initial public
offering price resulting in deferred compensation charges, which are being
recognized over vesting periods ranging from one to four years. During the three
months ended September 30, 2001, we did not record any deferred stock option
compensation and we expensed $0.6 million related to stock-based compensation.
During the nine months ended September 30, 2001, we recorded $0.9 million of
deferred stock option compensation and we expensed $2.1 million related to
stock-based compensation. Additionally, as a result of reductions and changes in
our workforce, we reversed $0.1 and $5.1 million of deferred stock option
compensation related to the cancellation of unvested stock options for the three
and nine months ended September 30, 2001.

         ASSET IMPAIRMENT CHARGES. We have previously recorded losses that have
reduced the Company's investment in Evoke Communications Europe to zero. We have
no obligations to fund future operating losses of Evoke Communications Europe.
We have advanced Evoke Communications Europe approximately $4.5 million, after
foreign currency adjustments. In the third quarter of 2001, the board of
directors of Evoke Communications Europe unanimously approved a plan of
liquidation and dissolution and, as a result, Evoke Communications Europe will
be liquidated and will be ceasing operations. In connection with the
liquidation, we anticipate receiving cash and equipment valued at approximately
$2.8 million. The equipment will be transferred to us at net book value. As a
result of the impending liquidation, we recorded an impairment charge of $1.7
million in the third quarter of 2001, which represents the excess of the note
receivable over the cash and equipment we expect to receive.

         In the second quarter of 2001, we performed a strategic review of our
fixed assets and adopted a plan to dispose of excess equipment. This review
consisted of identifying areas where we had excess capacity and, as a result,
excess equipment. This review was prompted by the slowdown in general economic
conditions that continued through the second quarter of 2001. We expect that the
sale and disposal of the assets will be completed in 2001. In connection with
the plan of disposal, we determined that the carrying values of some of the
underlying assets exceeded their fair values, and, as a result, we recorded an



                                       16
<PAGE>



impairment loss of $2.7 million in the second quarter of 2001. We determined the
asset write-offs under the held for disposal model. In addition, we wrote off
approximately $0.1 million in intangible assets primarily related to trademarks
associated with our previous name.

         RESTRUCTURING CHARGES. In the fourth quarter of 2000 we began an
assessment of our cost structure and in December 2000, our board of directors
approved a plan of restructuring, which was announced in January 2001. Our
efforts were directed toward our core service offerings, Web and Phone
Conferencing and Collaboration, which also included reductions of non-core
services. Additionally, in connection with streamlining operations, we refocused
our marketing strategy, reduced our workforce and closed several leased office
facilities. In connection with actions taken to streamline operations, we
recorded restructuring charges in the first quarter of 2001 of $0.8 million. In
the second quarter of 2001, we incurred severance charges of $0.1 million and
incurred a favorable restructuring reserve adjustment of $1.4 million primarily
due to successfully leasing several remote offices with terms more favorable
than originally anticipated, and also consummated an early termination
settlement of a contract cancellation charge. In the third quarter of 2001, we
recorded a net restructuring charge of $0.3 million consisting of a $0.5 million
charge to close two additional remote sales offices and additional charges
associated with offices that remain vacant while we continue our attempts to
sublease these facilities and a $0.2 million favorable restructuring adjustment
as a result of successfully terminating two facility lease commitments with
terms more favorable than originally anticipated. At September 30, 2001, our
restructuring reserves total $1.9 million, of which $0.9 is current and
principally relates to lease and other contract cancellation costs, which will
be relieved as payments are made. Through September 30, 2001, we have been
successful in sub-leasing three facilities and terminating facility lease
commitments on four facilities. As of September 30, 2001, the restructuring
reserve for facilities was comprised of seven offices. The remaining balances
may be adjusted as we continue in our efforts to sublease or otherwise minimize
our commitments on our remaining remote sales offices.

         CONTRACT TERMINATION CHARGES. In March of 2001, we agreed to terminate
a software license agreement. In connection with the termination, we incurred a
charge of approximately $1.8 million, primarily related to the unamortized cost
of the software license. Additionally, as part of the consideration to terminate
the license agreement, we returned an investment in the software company's
common stock, which resulted in the recognition of an additional realized loss
of $1.2 million on the investment, which is reflected in Other Income (Expense)
as noted below.

         OTHER INCOME (EXPENSE). Interest income decreased $0.7 million from
$1.0 million for the three months ended September 30, 2000 to $0.3 million for
the three months ended September 30, 2001. Interest income decreased $1.7
million from $2.8 million for the nine months ended September 30, 2000 to $1.1
million for the nine months ended September 30, 2001. The decrease was related
to higher average cash balances in 2000 compared to 2001 due to the private
equity financing we completed in the fourth quarter of 1999 and first quarter of
2000 that was utilized in operations over the course of 2000 and into 2001. The
decrease is also due to lower rates of return on our cash reserves in 2001 as
compared to 2000. Interest expense remained flat at $0.1 million for the
quarters ended September 30, 2000 and 2001 and decreased $0.1 million from $0.3
million for the nine months ended September 30, 2000 to $0.2 million for the
nine months ended September 30, 2001. Loss on the sale of fixed assets was $0.1
million for the three months ended September 30, 2001. Loss on the sale of fixed
assets was $0.2 million for the nine months ended September 30, 2001. In the
first quarter of 2001, we recorded a $1.2 million realized loss on the sale of
an investment (see contract termination charges above).

LIQUIDITY AND CAPITAL RESOURCES

         As of September 30, 2001, cash and cash equivalents were $29.1 million,
a decrease of $14.2 million compared with cash and cash equivalents held as of
December 31, 2000. Net cash expended in the third quarter of 2001 was $1.1
million.

         Net cash used in operations was $53.4 and $11.4 million for the nine
months ended September 30, 2000 and 2001, respectively. This decrease was the
result of our restructuring and cost containment initiatives and an increase in
revenue and related cash collections. We expect cash flows from operating
activities to be negative through the end of 2001.

         Net cash used by investing activities was $28.7 and $2.0 million for
the nine months ended September 30, 2000 and 2001, respectively. Net cash used
by investing activities in 2000 primarily related to capital expenditures for
equipment and software used in our data operations center from which we operate
our Internet communication platform, and the purchase of



                                       17
<PAGE>



stock in a company from which we licensed software. Net cash used by investing
activities in 2001 primarily related to capital expenditures for equipment
upgrades and enhancements. Capital expenditures decreased significantly in the
first three quarters of 2001 from 2000 and we expect capital expenditures to
continue to decrease in the fourth quarter of 2001, as compared to the fourth
quarter of 2000.

         Net cash provided by financing activities was $56.3 million for the
nine months ended September 30, 2000 and net cash used by financing was $0.9
million for the nine months ended September 30, 2001. Cash provided by financing
activities in 2000 was primarily from the sale of our Series E preferred stock
and the sale of common stock, net of payments made under our debt financing
arrangements. Cash used by financing activities in 2001 was primarily due to
payments made under our debt financing arrangements, net of proceeds from the
sale of common stock.

         As of September 30, 2001, we had approximately $1.2 million in total
debt obligations outstanding, of which approximately $1.0 million was current.

         In October 2001, the Company entered into a Loan and Security Agreement
that consisted of a $7.25 million revolving line of credit and a $5.0 million
term loan. Advances under the revolving line of credit are limited to $7.25
million or 80% of eligible accounts receivable as defined in the agreement. In
October 2001, the Company borrowed $5.0 million pursuant to the term loan
component of the Loan and Security Agreement. The term loan will be repaid with
monthly principal payments of $139,000 plus interest at 8% over 36 months.

         We also receive funds from time to time from the exercise of options or
similar rights to purchase shares of our common stock. We have no other material
external sources of liquidity.

         As of September 30, 2001, our purchase commitments for bandwidth usage
and telephony services were approximately $25.0 million and will be expended
over the next five years. Some of these agreements may be amended to either
increase or decrease the minimum commitments during the lives of the contract.

         We lease office facilities under various operating leases that expire
through 2009. A large number of these facilities are satellite sales offices
that typically average 3,000 square feet. Total future minimum lease payments,
under all operating leases, as of September 30, 2001 approximate $13.4 million.
We are in the process of attempting to sublease or otherwise minimize our
commitment with respect to seven offices, and to the extent we are successful in
subleasing or otherwise relieving ourselves of the lease obligations, these
facility lease commitments, net of any subleases, will decrease. Through
September 30, 2001, we have been successful in terminating four facility leases,
thereby relieving ourselves of any future obligation, and we have been
successful in subleasing three facilities. Future minimum sublease receivables
for the three subleased facilities, as of September 30, 2001, approximate $2.0
million that we will receive through August 2005.

         We expect that existing cash resources and the credit facility we
obtained in October 2001 will be sufficient to fund our anticipated working
capital and capital expenditure needs for at least the next twelve months. We
expect our cash flow to continue to improve and enable us to approach positive
cash flow from operations in the first quarter of 2002, and that existing cash
reserves will therefore be sufficient to meet our capital requirements during
this period. We base our expenses and expenditures in part on our expectations
of future revenue levels. If our revenue for a particular period is lower than
expected, we may take steps to reduce our operating expenses accordingly. If
cash generated from operations is insufficient to satisfy our liquidity
requirements, we may seek to sell additional public or private equity securities
or obtain additional debt financing. Additional financing may not be available
at all or, if available, may not be obtainable on terms favorable to us. If we
are unable to obtain additional financing, we may be required to reduce the
scope of our planned technology and product development and sales and marketing
efforts, which could harm our business, financial condition and operating
results. Additional financing may also be dilutive to our existing stockholders.



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<PAGE>



ADDITIONAL RISK FACTORS THAT MAY AFFECT OUR OPERATING RESULTS AND THE MARKET
PRICE OF OUR COMMON STOCK

         You should carefully consider the risks described below. The risks and
uncertainties described below are not the only ones we face. If any of the
following risks actually occur, our business, financial condition or results of
operations could be materially and adversely affected. In that case, the trading
price of our common stock could decline, and you may lose all or part of your
investment.

WE HAVE A HISTORY OF LOSSES, WE EXPECT SIGNIFICANT CONTINUING LOSSES AND WE MAY
NEVER ATTAIN PROFITABILITY.

         If we do not achieve or sustain profitability in the future, we may be
unable to continue our operations. Our operating costs have exceeded our
revenues in each quarter since our inception in April 1997. We have incurred
cumulative net losses of approximately $159.0 million from our inception through
September 30, 2001 and we anticipate net losses through at least 2002. Our
revenues may not continue to grow and we may not achieve or maintain
profitability in the future. In addition, we expect to incur significant sales
and marketing, research and development, and general and administrative expenses
in the future. Accordingly, we must significantly increase our revenue to
achieve and maintain profitability and to continue our operations.

WE HAVE A LIMITED OPERATING HISTORY, WHICH MAKES IT DIFFICULT TO EVALUATE OUR
BUSINESS.

         We have a limited operating history and you should not rely on our
recent results as an indication of our future performance. We were incorporated
in April 1997 and first recorded revenue in January 1998. We only began
commercially offering our flagship Web and Phone Conferencing service in April
1999 and our Collaboration service since our acquisition of Contigo Software,
Inc. in June 2000. In January 2001, we restructured our company to focus solely
on these services. In connection with this restructuring, we made significant
changes to our services and growth strategies, our sales and marketing plans,
and other operational matters, including a significant reduction in our employee
base. As a result, we have a limited relevant operating history and it may be
difficult to evaluate an investment in our company, and we cannot be certain
that our business model and future operating performance will yield the results
that we intend. In addition, the rapidly changing nature of the Web conferencing
market makes it difficult or impossible for us to predict future results, and
you should not expect our future revenue growth to equal or exceed our recent
growth rates. Our business strategy may be unsuccessful and we may be unable to
address the risks we face in a cost-effective manner, if at all.

WE MAY FAIL TO MEET MARKET EXPECTATIONS BECAUSE OF FLUCTUATIONS IN OUR QUARTERLY
OPERATING RESULTS, WHICH WOULD CAUSE OUR STOCK PRICE TO DECLINE.

         As a result of our limited operating history, increased competition,
the rapidly changing market for our services and the other risks described in
this section, our quarterly operating results have varied significantly from
period to period in the past and are likely to continue to vary significantly in
future periods. For example, our quarterly net loss ranged between $12.3 million
and $33.3 million in the four quarters ended September 30, 2001. Our quarterly
revenues ranged between $7.7 million and $10.1 million in the four quarters
ended September 30, 2001. Many of the factors that may cause fluctuations in our
quarterly operating results are beyond our control, such as increased
competition and market demand for our services. As a result of these factors and
other risks described in this section, our quarterly operating results are
difficult to predict and may not meet the expectations of securities analysts or
investors. If this occurs, the price of our common stock would decline.

         Additionally, we expect our results will fluctuate based on seasonal
sales patterns. Our operating results have shown decreases in the use of our
usage-based services around the Spring, Thanksgiving, December and New Year
holidays. We expect that our revenues during these holiday seasons and during
the summer vacation period will not grow at the same rates as compared to other
periods of the year because of decreased use of our services by business
customers.



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<PAGE>



WE DEPEND ON SINGLE SOURCE SUPPLIERS FOR KEY COMPONENTS OF OUR INFRASTRUCTURE,
THE LOSS OF WHICH COULD CAUSE SIGNIFICANT DELAYS AND COSTS IN PROVIDING SERVICES
TO OUR EXISTING AND PROSPECTIVE CUSTOMERS.

         We purchase key components of our telephony hardware infrastructure
from a single supplier. Any extended reduction, interruption or discontinuation
in the supply of these components would cause significant delays and costs in
providing services to our existing and prospective customers. These components
form the basis of our audio conferencing infrastructure, upon which the majority
of our services rely. In order to continue to expand our infrastructure
capacity, we must purchase additional components from this supplier. Because we
do not have any guaranteed supply arrangements with this supplier, it may
unilaterally increase its prices for these components, and as a result, we could
face higher than expected operating costs and impaired operating results. In
addition, this supplier could cease supplying us with these components. We could
also experience difficulties in obtaining alternative sources on commercially
reasonable terms, if at all, or in integrating alternative components into our
technology platform if our single source ceased supplying us with these
components. We also rely on a single supplier for the majority of our storage
hardware, which store critical operations data and maintain the reliability of
our services. If we are required to find alternative sources for such equipment,
we may experience difficulty in integrating them into our infrastructure.

A HIGH PERCENTAGE OF OUR REVENUE IS ATTRIBUTABLE TO REPEAT CUSTOMERS, NONE OF
WHOM ARE OBLIGATED TO CONTINUE TO USE OUR SERVICES. THE FAILURE OF CONTINUED USE
OF OUR SERVICES BY EXISTING CUSTOMERS COULD HARM OUR OPERATING RESULTS AND CAUSE
OUR STOCK PRICE TO DECLINE.

         A high percentage of our revenue is attributable to repeat customer
usage of our services. Our customers are not obligated to continue to use our
services as we provide our services largely on a usage-based model. As a result,
the failure of repeat customer usage, or our inability to retain existing
customers and sustain or increase their usage of our services could result in
lower than expected revenue, and therefore, harm our ability to become
profitable and cause our stock price to decline. In addition, because our
customers have no continuing obligations with us, we may face increased downward
pricing pressure that could cause a decrease in our gross margins. Our customers
depend on the reliability of our services and we may lose a customer if we fail
to provide reliable services for even a single communication event.

THE GROWTH OF OUR BUSINESS SUBSTANTIALLY DEPENDS ON OUR ABILITY TO SUCCESSFULLY
DEVELOP AND INTRODUCE NEW SERVICES AND FEATURES IN A TIMELY MANNER.

         Our growth depends on our ability to develop leading-edge Web and phone
conferencing services and features. For example, in November 2001, we will
commercially release our Web Conferencing Pro 5.0 service, an upgrade to the
current 4.6 version of our Collaboration service. We may not successfully
identify, develop and market Web Conferencing Pro and other new services and
features in a timely and cost-effective manner. If the services and features we
develop fail to achieve widespread market acceptance or fail to generate
significant revenues to offset development costs, our net losses will increase
and we may not be able to achieve or sustain profitability. In addition, our
ability to introduce new services and features may depend on us acquiring
technologies or forming relationships with third parties and we may be unable to
identify suitable candidates or come to terms acceptable to us for any such
acquisition or relationship. We may not successfully alter the design of our
systems to quickly integrate new technologies.

         In addition, we have experienced development delays and cost overruns
in our development efforts in the past and we may encounter these problems in
the future. Delays and cost overruns could affect our ability to respond to
technological changes, evolving industry standards, competitive developments or
customer requirements.

COMPETITION IN THE WEB CONFERENCING SERVICES MARKET IS INTENSE AND WE MAY BE
UNABLE TO COMPETE SUCCESSFULLY.

         The market for Web conferencing services is relatively new, rapidly
evolving and intensely competitive. Competition in our market will continue to
intensify and may force us to reduce our prices, or cause us to experience
reduced sales and margins, loss of market share and reduced acceptance of our
services.



                                       20
<PAGE>



         Many of our current and potential competitors have larger and more
established customer bases, longer operating histories, greater name
recognition, broader service offerings, more employees and significantly greater
financial, technical, marketing, public relations and distribution resources
than we do. As a result, these competitors may be able to spread costs across
diversified lines of business, and therefore, adopt aggressive strategies, such
as pricing structures and marketing campaigns, that reduce our ability to
compete effectively. Telecommunication providers, for example, enjoy lower
per-minute long distance costs as a result of their ownership of the underlying
telecommunication network. We expect that many more companies will enter this
market and invest significant resources to develop Web conferencing services.
These current and future competitors may also offer or develop products or
services that perform better than ours.

         In addition, the Internet industry has recently experienced substantial
consolidation and a proliferation of strategic transactions. We expect this
consolidation and strategic partnering to continue. Acquisitions or strategic
partnerships involving our current and potential competitors could harm us in a
number of ways. For example:

         o        competitors could acquire or partner with companies with which
                  we have distribution relationships and discontinue our
                  partnership, resulting in the loss of distribution
                  opportunities for our services;

         o        a competitor could be acquired by or enter into a strategic
                  relationship with a party that has greater resources and
                  experience than we do, thereby increasing the ability of the
                  competitor to compete with our services; or

         o        a competitor could acquire or partner with one of our key
                  suppliers.

IF WE FAIL TO OFFER COMPETITIVE PRICING, WE MAY NOT BE ABLE TO ATTRACT AND
RETAIN CUSTOMERS.

         Because the Web conferencing market is relatively new and still
evolving, the prices for these services are subject to rapid and frequent
changes. In many cases, businesses provide their services at significantly
reduced rates, for free or on a trial basis in order to win customers. Due to
competitive factors and the rapidly changing marketplace, we may be required to
significantly reduce our pricing structure, which would negatively affect our
revenues, margins and our ability to achieve or sustain profitability.

OUR FAILURE TO MANAGE GROWTH COULD CAUSE SUBSTANTIAL INCREASES IN OUR OPERATING
COSTS AND HARM OUR ABILITY TO ACHIEVE PROFITABILITY AND, THEREFORE, DECREASE THE
VALUE OF OUR STOCK.

         Despite our recent restructuring in January 2001, which resulted in,
among other things, a significant reduction in the size of our workforce, we
have rapidly expanded since inception, and will continue to expand our
operations and infrastructure. This expansion has placed, and will continue to
place, a significant strain on our managerial, operational and financial
resources, particularly as a result of our recent downsizing, and we may not
effectively manage this growth. Rapidly expanding our business would require us
to invest significant amounts of capital in our operations and resources, which
would substantially increase our operating costs. As a result, our failure to
manage our growth effectively could cause substantial increases in our operating
costs without corresponding increases in our revenue, thereby harming our
ability to achieve or sustain profitability. Also, our management may have to
divert a disproportionate amount of its attention away from our day-to-day
activities and devote a substantial amount of time managing growth. In order to
rapidly expand our business we may need to raise additional funds. Any future
financing we require may not be available on a timely basis, in sufficient
amounts or on terms acceptable to us. If we cannot obtain adequate funds, we may
not be able to compete effectively.

         Additionally, our rapid growth requires us to order equipment, some of
which has substantial development and manufacturing lead times. If we do not
order equipment in a timely and efficient manner in order to support our growth,
we may not have enough capacity to support the demand for our services and the
delivery of our services may be interrupted. As a result, our operating results
and reputation would be materially harmed, which could negatively affect our
stock price.



                                       21
<PAGE>



OUR BUSINESS WILL SUFFER IF OUR SYSTEMS FAIL OR BECOME UNAVAILABLE.

         A reduction in the performance, reliability or availability of our
systems will harm our ability to distribute our services to our users, as well
as our reputation. Some of our customers have experienced interruptions in our
services in the past due to service or network outages, periodic system upgrades
and internal system failures. Similar interruptions may occur from time to time
in the future. Because our revenue depends largely on the number of users and
the amount of minutes consumed by users, our business will suffer if we
experience frequent or extended system interruptions.

         We maintain our primary data facility and hosting servers at our
headquarters in Louisville, Colorado, and a secondary data facility in Boulder,
Colorado. Our operations depend on our ability to protect these facilities and
our systems against damage or interruption from fire, power loss, water,
telecommunications failure, vandalism, sabotage and similar unexpected events.
In addition, a sudden and significant increase in traffic on our systems or
infrastructure could strain the capacity of the software, hardware and systems
that we use. This could lead to slower response times or system failures. The
occurrence of any of the foregoing risks could cause service interruptions and,
as a result, materially harm our reputation, negatively affect our revenue, and
our ability to achieve or sustain profitability.

IF OUR SECURITY SYSTEM IS BREACHED, OUR BUSINESS AND REPUTATION COULD SUFFER.

         We must securely receive and transmit confidential information over
public networks and maintain that information on internal systems. Our failure
to prevent security breaches could damage our reputation, and expose us to risk
of loss or liability. Our internal systems are accessible to a number of our
employees. Although each of these employees is subject to a confidentiality
agreement, we may be unable to prevent the misappropriation of this information.
Our servers are vulnerable to computer viruses, physical or electronic break-ins
and similar disruptions, which could lead to interruptions, delays or loss of
data. We may be required to expend significant capital and other resources to
ensure adequate encryption and additional technologies to protect against
security breaches or to alleviate problems caused by any breach. If we fail to
provide adequate security measures to protect the confidential information of
our customers, our customers may refrain from using our services, potential
customers may not want to use our services, and as a result, our operating
results would be harmed.

IF WE DO NOT INCREASE THE CAPACITY OF OUR INFRASTRUCTURE IN EXCESS OF CUSTOMER
DEMAND, CUSTOMERS MAY EXPERIENCE SERVICE PROBLEMS AND CHOOSE NOT TO USE OUR
SERVICES.

         The amount of conferencing events we host has increased significantly.
We must continually increase our capacity in excess of customer demand. To
rapidly expand our operations and to add customers requires a significant
increase in the capacity of our infrastructure. If we fail to increase our
capacity, customers may experience service problems, such as busy signals,
improperly routed calls and messages, and slower-than-expected download times.
Service problems such as these would harm our reputation, cause us to lose
customers and decrease our revenue, and therefore our ability to achieve or
sustain profitability. Conversely, if we overestimate our capacity needs, we
will pay for more capacity than we actually use, resulting in increased costs
without a corresponding increase in revenue, which would harm our operating
results.

OUR CURRENT AND ANY ADDITIONAL INTERNATIONAL EXPANSION, INCLUDING OUR JOINT
VENTURE WITH @VISO LIMITED, MAY NOT BE SUCCESSFUL, WHICH COULD HARM OUR STRATEGY
TO EXPAND INTERNATIONALLY AND CAUSE OUR OPERATING LOSSES TO INCREASE.

         We have expanded into international markets and spent significant
financial and managerial resources to do so. In particular, we formed a joint
venture European subsidiary with @viso Limited, a European-based venture capital
firm, to expand our operations to continental Europe and the United Kingdom.
Currently, this joint venture subsidiary is not generating positive cash flow
and is incurring losses and is not projecting to be cash flow positive or
profitable in the near term. As a result, the board of directors of this joint
venture unanimously approved a plan of liquidation and dissolution, and as a
result, this joint venture will be liquidated and its operations will cease.
This decision may harm our strategy to expand internationally, and we may not
realize any value from the costs associated with starting up this venture. In
addition, we may be required to expend significant costs, resources and time to
execute this dissolution and liquidation. As a result, our operating results may
be harmed and we may not achieve or sustain profitability, thereby causing our
stock price to decline.



                                       22
<PAGE>



         If we continue to expand internationally, either alone or with a
partner, we would be required to spend additional financial and managerial
resources that may be significant. We have no experience in international
operations and may not be able to compete effectively in international markets.
We face certain risks inherent in conducting business internationally, such as:

         o        difficulties in establishing and maintaining distribution
                  channels and partners for our services;

         o        varying technology standards from country to country;

         o        uncertain protection of intellectual property rights;

         o        inconsistent regulations and unexpected changes in regulatory
                  requirements;

         o        difficulties and costs of staffing and managing international
                  operations;

         o        fluctuations in currency exchange rates;

         o        linguistic and cultural differences;

         o        difficulties in collecting accounts receivable and longer
                  collection periods;

         o        imposition of currency exchange controls; and

         o        potentially adverse tax consequences.

         In addition, our expansion into international markets may require us to
develop specific technology that will allow our current systems to work with
international telephony systems. We may not develop this technology in a timely
manner, in a way to prevent service disruptions or at all.

WE MAY ACQUIRE OTHER BUSINESSES, FORM JOINT VENTURES AND MAKE INVESTMENTS IN
OTHER COMPANIES THAT COULD NEGATIVELY AFFECT OUR OPERATIONS AND FINANCIAL
RESULTS AND DILUTE EXISTING STOCKHOLDERS.

         The pursuit of additional business relationships through acquisitions,
joint ventures, or other investment prospects may not be successful, and we may
not realize the benefits of any acquisition, joint venture, or other investment.

         We have limited experience in acquisition activities and may have to
devote substantial time and resources in order to complete acquisitions. There
may also be risks of entering markets in which we have no or limited prior
experience. Further, these potential acquisitions, joint ventures and
investments entail risks, uncertainties and potential disruptions to our
business. For example, we may not be able to successfully integrate a company's
operations, technologies, products and services, information systems and
personnel into our business. An acquisition may further strain our existing
financial and managerial controls, and divert management's attention away from
our other business concerns. There may also be unanticipated costs associated
with an acquisition that may harm our operating results and key personnel may
decide not to work for us. These risks could harm our operating results and
cause our stock price to decline.

         In addition, if we were to make any acquisitions, we could:

         o        issue equity securities that would dilute our stockholders;

         o        incur debt;

         o        assume unknown or contingent liabilities; or

         o        experience negative effects on our reported results of
                  operations.



                                       23
<PAGE>



OUR WEB AND PHONE CONFERENCING SERVICE MAY BECOME SUBJECT TO TRADITIONAL
TELECOMMUNICATIONS CARRIER REGULATION BY FEDERAL AND STATE AUTHORITIES, WHICH
WOULD INCREASE THE COST OF PROVIDING OUR SERVICES AND MAY SUBJECT US TO
PENALTIES.

         We believe our Web and Phone Conferencing service is not subject to
regulation by the Federal Communications Commission or any state public service
commission because the services integrate traditional voice teleconferencing and
added value Internet services. The FCC and state public service commissions,
however, may require us to submit to traditional telecommunications carrier
regulations for our Web and Phone Conferencing service under the Communications
Act of 1934, as amended, and various state laws or regulations as a provider of
telecommunications services. If the FCC or any state public service commission
seeks to enforce any of these laws or regulations against us, we could be
prohibited from providing the voice aspect of our Web and Phone Conferencing
service until we have obtained various federal and state licenses and filed
tariffs. We believe we would be able to obtain those licenses, although in some
states, doing so could significantly delay our ability to provide services. We
also would be required to comply with other aspects of federal and state laws
and regulations. Subjecting our Web and Phone Conferencing service to these laws
and regulations would increase our operating costs, could require restructuring
of those services to charge separately for the voice and Internet components,
and would involve on-going reporting and other compliance obligations. We also
might be subject to fines or forfeitures and civil or criminal penalties for
non-compliance.

OUR COMPETITORS MAY BE ABLE TO CREATE SYSTEMS WITH SIMILAR FUNCTIONALITY TO OURS
AND THIRD-PARTIES MAY OBTAIN UNAUTHORIZED USE OF OUR INTELLECTUAL PROPERTY.

         The success of our business is substantially dependent on the
proprietary systems that we have developed. To protect our intellectual property
rights, we currently rely on a combination of trademarks, service marks, trade
secrets, copyrights, and confidentiality agreements with our employees and third
parties, and protective contractual provisions. We also own two patents relating
to the Web touring feature of our Collaboration service. These measures may not
be adequate to safeguard the technology underlying our Internet communication
services and other intellectual property. Unauthorized third-parties may copy or
infringe upon aspects of our technology, services or other intellectual
property. Other than the patents that we own, our proprietary systems are not
currently protected by any patents and we may not be successful in our efforts
to secure patents for our proprietary systems. Regardless of our efforts to
protect our intellectual property, our competitors and others may be able to
develop similar systems and services without infringing on any of our
intellectual property rights. In addition, employees, consultants and others who
participate in the development of our proprietary systems and services may
breach their agreements with us regarding our intellectual property and we may
not have any adequate remedies. Furthermore, the validity, enforceability and
scope of protection for intellectual property such as ours in Internet-related
industries are uncertain and still evolving. We also may not be able to
effectively protect our intellectual property rights in certain countries. In
addition, our trade secrets may become known through other means not currently
foreseen by us. If we resort to legal proceedings to enforce our intellectual
property rights, the proceedings could be burdensome and expensive and the
outcome could be uncertain.

WE MAY BE SUBJECT TO CLAIMS ALLEGING INTELLECTUAL PROPERTY INFRINGEMENT.

         We may be subject to claims alleging that we have infringed upon third
party intellectual property rights. Claims of this nature could require us to
spend significant amounts of time and money to defend ourselves, regardless of
their merit. If any of these claims were to prevail, we could be forced to pay
damages, comply with injunctions, divert management attention and resources, or
halt or delay distribution of our services while we re-engineer them or seek
licenses to necessary intellectual property, which might not be available on
commercially reasonable terms or at all. As the number of competitors in our
market grows, there is an increased risk that the proprietary systems and
software upon which our services rely may be increasingly subject to third-party
infringement claims.

IF ANY OF THE THIRD PARTY SERVICES THAT WE USE BECOME UNAVAILABLE TO US, OUR
SERVICES WOULD BE SUBJECT TO SIGNIFICANT DELAYS AND INCREASED COSTS.

         We rely on third party services, such as Internet access, transport and
long distance providers. These companies may not continue to provide services to
us without disruptions, at the current cost, if at all. The costs associated
with a transition to a new service provider would be substantial. We may be
required to reengineer our systems and infrastructure to accommodate a new



                                       24
<PAGE>



service provider, which would be both expensive and time-consuming. In addition,
in the past, we have experienced disruptions and delays in our services due to
service disruptions from these providers. Any interruption in the delivery of
our services would likely cause a loss of revenue and a loss of customers.

OUR VIRTUAL MEETING SERVICES WILL NOT GENERATE SIGNIFICANT REVENUE IF BUSINESSES
DO NOT SWITCH FROM TRADITIONAL TELECONFERENCING AND COMMUNICATION SERVICES TO
WEB CONFERENCING.

         If businesses do not switch from traditional teleconferencing and
communication services, our services will not generate significant revenue.
Businesses that have already invested substantial resources in traditional or
other methods of communication may be reluctant to adopt new Web conferencing
services. If sufficient demand for our services does not develop, we will have
difficulty selling our services and generating significant increases in revenue.
As a result, we would not achieve or sustain profitability and the price of our
common stock would decline. Growth in revenue from our services will depend in
part on an increase in the number of customers using the Web-based features in
addition to its traditional conferencing features. In the first nine months of
2001, only a small percentage of our customers of this service used the Web in
this way.

WE RELY ON THE ADOPTION OF MULTIMEDIA TECHNOLOGY BY CORPORATIONS AND OUR ABILITY
TO TRANSMIT OUR SERVICES THROUGH CORPORATE SECURITY MEASURES.

         In order to adequately access the streaming aspects of our services,
our users generally must have multimedia personal computers with certain
microprocessor requirements, at least 28.8 kbps Internet access, a standard
media player and a sound card. For our Collaboration services, minimum
requirements include a Java-enabled browser and a 56 kbps Internet connection.
If there are significant changes to Internet browsers that make them
incompatible with our Java-based Collaboration service, we may be forced to
modify the software underlying this service, which may affect our ability to
deliver quality service in a timely manner, and our business would be harmed.
Installing and configuring the necessary media components may require technical
expertise that some users do not possess. Furthermore, because of bandwidth
constraints on corporate intranets and concerns about security, some information
systems managers may block reception of media within their corporate
environments. In order for users to receive media over corporate intranets,
security measures and corporate firewalls, information systems managers may need
to reconfigure these intranets, security measures and firewalls. Widespread
adoption of media technology depends on overcoming these obstacles, improving
voice and video quality and educating customers and users in the use of media
technology.

WE ARE SUBJECT TO RISKS ASSOCIATED WITH GOVERNMENTAL REGULATION AND LEGAL
UNCERTAINTIES.

         It is likely that a number of laws and regulations may be adopted in
the United States and other countries with respect to the Internet that might
affect us. These laws may relate to areas such as:

         o        changes in telecommunications regulations;

         o        copyright and other intellectual property rights;

         o        encryption;

         o        personal privacy concerns, including the use of "cookies" and
                  individual user information;

         o        e-commerce liability; and

         o        email, network and information security.

         Changes in telecommunications regulations could substantially increase
the costs of communicating on the Internet. This, in turn, could slow the growth
in Internet use and thereby decrease the demand for our services. Several
telecommunications carriers are advocating that the Federal Communications
Commission regulate the Internet in the same manner as other telecommunications
services by imposing access fees on Internet service providers. Recent events
suggest that the FCC may



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<PAGE>



begin regulating the Internet in such a way. In addition, we operate our
services throughout the United States and state regulatory authorities may seek
to regulate aspects of our services as telecommunication activities.

         Other countries and political organizations are likely to impose or
favor more and different regulations than those that have been proposed in the
United States, thus furthering the complexity of regulation. The adoption of
such laws or regulations, and uncertainties associated with their validity and
enforcement, may affect the available distribution channels for and costs
associated with our services, and may affect the growth of the Internet. Such
laws or regulations may therefore harm our business.

WE MAY BE SUBJECT TO ASSESSMENT OF SALES AND OTHER TAXES FOR THE SALE OF OUR
SERVICES, LICENSE OF TECHNOLOGY OR PROVISION OF SERVICES, FOR WHICH WE HAVE NOT
ACCOUNTED.

         We may have to pay past sales or other taxes that we have not collected
from our customers. We do not currently collect sales or other taxes on the sale
of our services. Our business would be harmed if one or more states or any
foreign country were to require us to collect sales or other taxes from current
or past sales of services, particularly because we would be unable to go back to
customers to collect sales taxes for past sales and may have to pay such taxes
out of our own funds.

INTERNET-RELATED STOCK PRICES ARE ESPECIALLY VOLATILE AND THIS VOLATILITY MAY
DEPRESS OUR STOCK PRICE.

         The stock market in general and the stock prices of Internet-related
companies in particular, have experienced extreme price and volume fluctuations.
This volatility is often unrelated or disproportionate to the operating
performance of these companies. Because we are an Internet-related company, we
expect our stock price to be similarly volatile. These broad market and industry
factors may reduce our stock price, regardless of our operating performance.

YOU SHOULD NOT RELY ON FORWARD-LOOKING STATEMENTS BECAUSE THEY ARE INHERENTLY
UNCERTAIN.

         This document contains certain forward-looking statements that involve
risks and uncertainties. We use words such as "anticipate," "believe," "expect,"
"future," "intend," "plan" and similar expressions to identify forward-looking
statements. These statements are only predictions. Although we believe that the
expectations reflected in these forward-looking statements are reasonable, we
cannot guarantee future results, levels of activity, performance or
achievements. You should not place undue reliance on these forward-looking
statements, which apply only as of the date of this document. Our actual results
could differ materially from those anticipated in these forward-looking
statements for many reasons, including the risks faced by us and described on
the preceding pages and elsewhere in this document. We assume no obligation to
update the forward-looking statements included in this document.

         We believe it is important to communicate our expectations to our
investors. However, there may be events in the future that we are not able to
predict accurately or over which we have no control. The risk factors listed
above, as well as any cautionary language in this document, provide examples of
risks, uncertainties and events that may cause our actual results to differ
materially from the expectations we describe in our forward-looking statements.
Before you invest in our common stock, you should be aware that the occurrence
of the events described in these risk factors and elsewhere in this document
could have a material adverse effect on our business, operating results,
financial condition and stock price.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         At September 30, 2001, we had long-term debt, including current
portion, in the aggregate amount of $1.2 million with interest rates ranging
from 7.41% to 13.33% with payments due through 2003. A change in interest rates
would not affect our obligations related to long-term debt existing as of
September 30, 2001, as the interest payments related to that debt are fixed over
the term of the debt. In October 2001, the Company entered into a Loan and
Security Agreement that consisted of a $7.25 million revolving line of credit
and a $5.0 million term loan. Future advances under the revolving line of credit
will reflect interest at the bank's prime rate and therefore any advances under
this revolving line of credit would subject the Company to interest rate
fluctuations. In October 2001 the Company borrowed $5.0 million pursuant to the
term loan referenced above. The interest rate on the term loan is fixed at 8%
and accordingly interest rate fluctuations will not affect this credit facility.
Increases in interest



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<PAGE>



rates could, however, increase the interest expense associated with future
borrowings including any advances on our revolving line of credit. The Company
is exposed to foreign currency risks through a loan to its European joint
venture which is payable in Euros. The Company does not employ any risk
mitigation techniques with respect to this loan. The Company's European joint
venture is in the process of dissolution and liquidation and the Company's
foreign currency risk with respect to the loan will be eliminated when these
processes are completed. Although we do not have any investments at September
30, 2001, we may purchase investments that may decline in value as a result of
changes in equity markets and interest rates.



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<PAGE>



                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

         From time to time, we have been subject to legal proceedings and claims
in the ordinary course of business. Although we are not currently involved in
any material legal proceedings, we may in the future be subject to legal
disputes. Any claims, even if not meritorious, could result in the expenditure
of significant financial and managerial resources. We are not aware of any legal
proceedings or claims that we believe will have, individually or in the
aggregate, a material adverse effect on our business.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

         After deducting expenses of our initial public offering pursuant to a
registration statement (No. 333-30708) declared effective on July 24, 2000, we
received net offering proceeds of approximately $50.3 million. We have used the
net proceeds as follows: $21.2 million for operating expenses. The remainder of
the net proceeds is invested in short-term financial instruments.

         No payments constituted direct or indirect payments to any of our
directors, officers or general partners or their associates, to persons owning
10% or more of any class of our equity securities or to any of our affiliates.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

         None.

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

         None.

ITEM 5. OTHER INFORMATION

         None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

         (A.)     EXHIBITS

                  None

         (B.)     REPORTS ON FORM 8-K

                  None



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<PAGE>



                                   SIGNATURES

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


                                       RAINDANCE COMMUNICATIONS, INC.

Date: November 14, 2001                By: /s/ NICHOLAS J. CUCCARO
                                           -------------------------------------
                                           Chief Financial Officer
                                           (Principal Financial Officer)




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