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

                                    FORM 10-Q

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001

                                       OR

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from              to              .
                               ------------    -------------

                        Commission File Number: 000-31139

                                  RESONATE INC.
             (Exact name of registrant as specified in its charter)

             DELAWARE                                       94-3228496
     (State of incorporation)                            (I.R.S. Employer
                                                        Identification No.)

                             385 MOFFETT PARK DRIVE
                           SUNNYVALE, CALIFORNIA 94089
                    (Address of principal executive offices)

                                 (408) 548-5500
              (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



The number of shares outstanding of the registrant's common stock as of April
30, 2001 was 27,591,425.



<PAGE>


<TABLE>
<CAPTION>



                                  RESONATE INC.
                                      INDEX

                                                                                                    Page
                                                                                                    ----
<S>                                                                                                   <C>
PART I:  FINANCIAL INFORMATION

   Item 1.  Financial Statements:

       Condensed Consolidated Balance Sheets as of March 31, 2001 and
         December 31, 2000........................................................................... 3

       Condensed Consolidated Statements of Operations for the three month periods
         ended March 31, 2001 and 2000............................................................... 4

       Condensed Consolidated Statements of Cash Flows for the three month periods
         ended March 31, 2001 and 2000............................................................... 5

       Notes to the Condensed Consolidated Financial Statements...................................... 6

   Item 2.  Management's Discussion and Analysis of Financial Condition and Results of
        Operations................................................................................... 10
        Risk Factors................................................................................. 15

   Item 3.  Quantative and Qualititative Disclosures About Market Risks.............................. 26

PART II:  OTHER INFORMATION

   Item 1.  Legal Proceedings........................................................................ 27

   Item 2.  Changes in Securities and Use of Proceeds................................................ 27

   Item 3.  Defaults Upon Senior Securities.......................................................... 27

   Item 4.  Submission of Matters to a Vote of Security Holders...................................... 27

   Item 5.  Other Information........................................................................ 27

   Item 6. Exhibits and Reports on Form 8-K.......................................................... 27

Signatures........................................................................................... 29
</TABLE>



                                       2
<PAGE>


PART I:       FINANCIAL INFORMATION
ITEM 1:       FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                  RESONATE INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                    (in thousands, except per share amounts)
                                   (unaudited)

                                                           March 31,       December 31,
                                                             2001              2000
                                                          -----------      -----------
<S>                                                       <C>              <C>
ASSETS
Current assets:
   Cash and cash equivalents                              $    85,332      $    76,053
   Short-term investments                                      17,431           32,981
   Accounts receivable, net                                     2,766            6,189

   Prepaid expenses and other current assets                    1,064            1,413
                                                          -----------      -----------
     Total current assets                                     106,593          116,636

Property and equipment, net                                     4,781            5,089
Other assets                                                      628              218
                                                          -----------      -----------

       Total assets                                       $   112,002      $   121,943
                                                          ===========      ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable                                       $     1,306      $     1,132
   Accrued liabilities                                          2,962            3,875
   Deferred revenue                                             4,441            4,996
   Debt, current                                                2,779            2,793
   Capital lease obligation, current                              841            1,091
                                                          -----------      -----------
     Total current liabilities                                 12,329           13,887

Debt, long-term                                                 1,706            2,418
Capital lease obligation, long-term                               298              471
                                                          -----------      -----------
       Total liabilities                                       14,333           16,776
                                                          -----------      -----------

Stockholders' equity:
     Preferred stock                                               --               --
     Common stock                                                   3                3
     Additional paid-in capital                               192,487          195,120
     Notes receivable from stockholders                        (1,054)          (1,055)
     Unearned stock-based compensation                         (9,917)         (14,360)
     Accumulated deficit                                      (83,850)         (74,541)
                                                          ------------     ------------
       Total stockholders' equity                              97,669          105,167
                                                          -----------      -----------

       Total liabilities and stockholders' equity         $   112,002      $   121,943
                                                          ===========      ===========
</TABLE>

              The accompanying notes are an integral part of these
                  Condensed Consolidated Financial Statements.



                                       3
<PAGE>

<TABLE>
<CAPTION>

                                  RESONATE INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (in thousands, except per share amounts)
                                   (unaudited)


                                                          Three Months Ended
                                                               March 31,
                                                     ---------------------------
                                                          2001           2000
                                                     -----------     -----------
<S>                                                  <C>             <C>
Revenue:
   Product                                           $     1,657     $     2,732
   Services                                                1,465             937
                                                     -----------     -----------
       Total revenue                                       3,122           3,669
                                                     -----------     -----------

Cost of revenue:
   Product                                                    64              24
   Services (including stock-based compensation
           of $152 and $419, respectively)                 1,134           1,155
                                                     -----------     -----------
       Total cost of revenue                               1,198           1,179
                                                     -----------     -----------

       Gross profit                                        1,924           2,490

Operating expenses:
   Research and development (including stock-based
       compensation of $(111) and $980, respectively)      3,440           3,981
   Sales and marketing (including stock-based
       compensation of $226 and $1,389, respectively)      6,186           8,218
   General and administrative (including stock-
       based compensation of $639 and $1,149,
       respectively)                                       2,882           2,640
                                                     -----------     -----------
       Total operating expenses                           12,508          14,839
                                                     -----------     -----------

Loss from operations                                     (10,584)        (12,349)
Interest and other income                                  1,483             117
Interest and other expenses                                 (208)           (202)
                                                     ------------    -----------
Net loss                                             $    (9,309)    $   (12,434)
                                                     ============    ===========

Net loss per share:
   Basic and diluted                                 $     (0.35)    $     (2.04)
                                                     ===========     ===========
   Shares used in per share calculation                   26,431           6,086
                                                     ===========     ===========
</TABLE>

              The accompanying notes are an integral part of these
                  Condensed Consolidated Financial Statements.



                                       4
<PAGE>

<TABLE>
<CAPTION>

                                  RESONATE INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)

                                                                               Three Months Ended
                                                                                    March 31,
                                                                           --------------------------
                                                                               2001           2000
                                                                           -----------    -----------
<S>                                                                        <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss                                                              $    (9,309)    $  (12,434)
     Adjustments to reconcile net loss to net cash
       used in operating activities:
         Depreciation and amortization                                             699            382
         Provision for doubtful accounts                                           170             50
         Stock-based compensation                                                  906          3,936
         Amortization of stock options issued for services                          36            618
         Warrant related interest expense                                           31             31
         Changes in assets and liabilities:
              Accounts receivable                                                3,253            693
              Prepaid expenses and other current assets                            349            (83)
              Other assets                                                        (410)           (70)
              Accounts payable                                                     174          1,084
              Accrued liabilities                                                 (913)           778
              Deferred revenue                                                    (555)          (296)
                                                                           -----------    -----------

              Net cash used in operating activities                             (5,569)        (5,311)
                                                                           -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of property and equipment                                           (391)        (1,541)
     Purchase of short-term investments                                        (16,578)        (6,000)
     Proceeds from maturities or sales of short-term investments                32,145         10,000
                                                                           -----------    -----------

              Net cash provided by investing activities                         15,176          2,459
                                                                           -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Repayments of long-term debt                                                 (757)          (448)
     Principal payments under capital lease obligations                           (423)          (210)
     Proceeds from issuance of mandatorily redeemable
       convertible preferred stock, net of issuance costs                           --         10,000
     Payments for stock repurchases                                               (114)            --
     Proceeds from exercise of preferred stock warrants                             --              5
     Proceeds from issuance of common stock upon exercise
       of stock options and employee stock purchase plan                           966            567
                                                                           -----------    -----------

              Net cash provided by (used in) financing activities                 (328)         9,914
                                                                           -----------    -----------

Net increase in cash and cash equivalents                                        9,279          7,062

Cash and cash equivalents at beginning of period                                76,053          5,011
                                                                           -----------    -----------

Cash and cash equivalents at end of period                                 $    85,332    $    12,073
                                                                           ===========    ===========

</TABLE>

              The accompanying notes are an integral part of these
                  Condensed Consolidated Financial Statements.





                                       5
<PAGE>


                                  RESONATE INC.
            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

NOTE 1.  BASIS OF PRESENTATION

     The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, the accompanying unaudited
condensed consolidated financial statements contain all adjustments (all of
which are normal and recurring in nature) necessary to present fairly the
financial position, results of operations and cash flows of Resonate Inc. and
its subsidiaries. The results of operations for the interim periods presented
are not necessarily indicative of the results that may be expected for any
future interim periods or for the full year. These condensed consolidated
financial statements and notes thereto should be read in conjunction with the
financial statements and the notes to the financial statements contained in our
Annual Report on Form 10-K filed with the Securities and Exchange Commission.

     The condensed consolidated financial statements include our accounts and
the accounts of our wholly-owned subsidiaries. All significant intercompany
balances and transactions have been eliminated. The functional currency of our
foreign subsidiaries is the local currency. Accordingly, we apply the current
exchange rate to translate foreign subsidiaries' assets and liabilities and
weighted average exchange rates to translate our subsidiaries' revenues,
expenses, gains and losses into United States dollars. Translation adjustments
are immaterial and are included in the condensed consolidated statements of
operations.

NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     USE OF ESTIMATES

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

     REVENUE RECOGNITION

     We derive revenue from licenses of our software and related services, which
include implementation and integration services, technical services, training
and consulting. Revenue is recognized when there is persuasive evidence of an
arrangement for a fixed and determinable fee that is probable of collection and
when delivery and installation has occurred. We generally recognize revenue
under the residual method as prescribed by Statement of Position No. 97-2 "
Software Revenue Recognition" and Statement of Position No. 98-9 "Modification
of SOP No. 97-2 with Respect to Certain Transactions" whereby revenue is
allocated to each undelivered element based upon the fair value of each element
when sold separately and the residual amount is then allocated to the delivered
element.

     Product revenue from existing reseller arrangements is recognized when
reported by the reseller upon re-licensing of our software to end-users. Our
agreements with our customers and resellers do not contain product return
rights.

     For arrangements with extended payment terms, revenue is recognized at the
earlier of when the payment is due or when the cash is received.

                                       6
<PAGE>

     We also derive revenue from providing access to our products for a
specified period of time. Revenue is recognized on such arrangements as the
license fees become due and payable. Revenue recognized under such arrangements
for the period ended March 31, 2001 and 2000 was not significant.

     In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, or SAB 101, "Revenue Recognition in Financial
Statements," which provides guidance on the recognition, presentation and
disclosure of revenue in financial statements filed with the SEC. SAB 101
outlines the basic criteria that must be met to recognize revenue and provides
guidance for disclosures related to revenue recognition policies. We have
complied with the guidance in SAB 101.

     Services revenue consists of professional services and maintenance fees.
Professional services primarily consist of software installation and
integration, consulting and training. Professional services revenue is
recognized as such services are performed. Services revenue from maintenance
agreements, which include services such as technical product support and
unspecified product upgrades, is recognized ratably over the term of the
agreement, generally one year.

     CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

     We consider all highly liquid investments purchased with a maturity of
three months or less at the date of acquisition to be cash equivalents; those
with original maturities greater than three months and current maturities less
than twelve months from the balance sheet date are considered short-term
investments. Cash equivalents and short-term investments are considered
available-for-sale securities and are carried at cost, which approximates fair
value. Our investment portfolio consists of both fixed and variable rate
financial instruments, including commercial paper, money market funds,
government agency securities and highly rated corporate bonds and notes.

     CONCENTRATION OF CREDIT RISK

     Financial instruments that potentially subject us to a concentration of
credit risk consist of cash, cash equivalents, short-term investments and
accounts receivable. We limit our exposure to credit loss by placing our cash,
cash equivalents and short-term investments with major financial institutions.
Our accounts receivable are derived from revenue earned from customers located
primarily in the U.S., and to a lesser extent, in Brazil, Canada, Europe and
Asia. We perform ongoing credit evaluations of our customers' financial
condition and, generally, require no collateral from our customers. We maintain
an allowance for doubtful accounts receivable based upon the expected
collectibility of accounts receivable.

     During the three months ended March 31, 2001, no customer accounted for
more than 10% of our total revenue. During the three months ended March 31,
2000, one individual customer accounted for 16% of the Company's total revenue.

     At March 31, 2001, one customer accounted for 11% of total accounts
receivable. At December 31, 2000, no individual customer accounted for more than
10% of total accounts receivable.

     NET LOSS PER SHARE

     Basic net loss per share is computed by dividing the net loss available to
common stockholders for the period by the weighted average number of shares of
common stock outstanding during the period excluding shares of common stock
subject to repurchase. Diluted net loss per share is the same as basic net loss
per share because the calculation of diluted net loss per share excludes
potential shares of common stock since their effect is antidilutive.

     The following table sets forth the computation of basic and diluted net
loss per share available to common stockholders for the periods indicated (in
thousands, except per share amounts):



                                       7
<PAGE>

<TABLE>
<CAPTION>



                                                                Three Months Ended
                                                                     March 31,
                                                              ----------------------
                                                                2001          2000
                                                              ---------    ---------
<S>                                                           <C>          <C>
Net loss                                                      $  (9,309)   $ (12,434)
                                                              ==========   ==========

Basic and diluted:
     Weighted average shares                                     27,527        8,116
Weighted average common stock subject to repurchase              (1,096)      (2,030)
                                                              ----------   ----------
     Shares used in computing basic and diluted net
         loss per share                                          26,431        6,086
                                                              =========    =========

     Basic and diluted net loss per share                     $  (0.35)    $  (2.04)
                                                              =========    =========
</TABLE>

     The following table sets forth the weighted average potential shares of
common stock that are not included in the basic and diluted net loss per share
available to common stockholders calculation above because to do so would be
antidilutive (in thousands):
<TABLE>
<CAPTION>
                                                                Three Months Ended
                                                                     March 31,
                                                              ----------------------
                                                                2001          2000
                                                              ---------    ---------
<S>                                                               <C>         <C>
Weighted average effect of common stock equivalents:
     Preferred stock                                                 --       11,641
     Warrants                                                        --          343
     Employee stock options                                       3,061        2,813
     Common Stock subject to repurchase agreements                1,096        2,030
                                                              ---------    ---------
                                                                  4,157       16,827
</TABLE>

     COMPREHENSIVE INCOME

     We have adopted the provisions of Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income." This statement requires the
disclosure of comprehensive income and its components in a full set of
general-purpose financial statements. Comprehensive income, as defined, includes
all changes in equity (net assets) during the period from non-owner sources. To
date, we have not had any material transactions that are required to be reported
in comprehensive income.

     SEGMENT INFORMATION

     During the period presented, we operated in a single business segment
primarily in the United States. Through March 31, 2001, foreign operations were
not significant in either revenue or investment in long-lived assets.

     RECLASSICATION

     Certain reclassifications have been made to prior period financial
statements to conform to the current year presentation.




                                       8
<PAGE>


     RECENT ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, or SFAS 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS 133 establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts and for hedging activities. In July
1999, the Financial Accounting Standards Board issued SFAS No. 137, "Accounting
for Derivative Instruments and Hedging Activities - Deferral of the Effective
Date of FASB No. 133." SFAS 137 deferred the effective date of SFAS 133 until
the first quarter of the fiscal year beginning after June 15, 2000. We adopted
SFAS 133 in the quarter ended March 31, 2001. We did not engage in hedging
activities or invest in derivative instruments and accordingly, SFAS 133 did not
have an impact on our financial statements.

NOTE 2.   SUPPLEMENTAL CASH FLOW INFORMATION (IN THOUSANDS):
<TABLE>
<CAPTION>

                                                                Three Months Ended
                                                                     March 31,
                                                              ----------------------
                                                                2001          2000
                                                              ---------    ---------
<S>                                                           <C>          <C>
Supplemental cash flow information:

     Capital lease obligations                                $      --    $     322
                                                              =========    =========

     Common Stock issued in exchange for notes receivable     $      --    $     300
                                                              =========    =========
</TABLE>

NOTE 3.   LITIGATION

     On September 12, 2000, we filed a complaint for patent infringement against
Alteon Web Systems, Inc. in the United States District Court, Northern District
of California for permanent injunctive relief and damages. We believe Alteon
infringes United States Letters Patent No. 5,774,660, entitled "World-Wide Web
Server With Delayed Resource-Binding For Resource-Based Load Balancing On A
Distributed Resource Multi-Node Network," which was issued to us on June 30,
1998. Alteon served its answer to our complaint in October 2000, in which Alteon
denied our allegations and counterclaimed that our patent is invalid. In October
2000, Alteon was acquired by Nortel Networks Corporation. The litigation is
currently in the discovery phase and a trial date has been set for the summer of
2002.

     We are also involved in disputes in the normal course of business. We do
not believe that the outcome of any of these disputes will have a material
effect on our business, financial condition or results of operations.




                                       9
<PAGE>


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

     The discussion in this quarterly report on Form 10-Q contains
forward-looking statements that involve risks and uncertainties. The statements
contained in this report that are not purely historical are forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended,
including statements regarding our expectations, beliefs, intentions or
strategies regarding the future. These forward-looking statements are typically
denoted in this report by the phrases "anticipates," "believes," "expects,"
"plans," and similar phrases. All forward-looking statements included in this
report are based on information available to us on the date hereof, and we
assume no obligation to update any such forward-looking statements. Our actual
results could differ materially from those described in our forward-looking
statements. Factors that could cause or contribute to such differences are
discussed in this item under the heading "Risk Factors" on page 15 of this
report and the risks discussed in our other Securities and Exchange Commission
filings.

     The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with our condensed
consolidated financial statements and the notes thereto included under Item 1
beginning on page 3 of this report, the section entitled "Risk Factors" on page
15 in this report and our Annual Report on Form 10-K filed on March 27, 2001
with the Securities and Exchange Commission.

OVERVIEW

     We develop and market a family of software products, solutions and services
that ensure high levels of availability and performance for Internet, intranet
and extranet applications. Our family of software products and solutions
integrates network traffic management and systems monitoring and management
functions, which together provide real-time monitoring, reporting and automated
service level control of eBusiness applications. We call the collection of
capabilities that our products and solutions provide active service level
management.

     Resonate was founded in July 1995 and began substantive operations in April
1996. From April 1996 through the first quarter of 1997, we primarily engaged in
research activities, developing our products and building our business
infrastructure. We began shipping our first software product, Central Dispatch,
and first generated revenue from software license fees and implementation and
consulting fees in the first quarter of 1997. We released our Global Dispatch
software product in the first quarter of 1998 and our Commander software product
in the third quarter of 1999. In the three months ended March 31, 2001, we
derived approximately 65% of our product revenue from our Central Dispatch
product. We have incurred significant costs to develop our technology, products,
solutions and services, to continue the recruitment of research and development
personnel, to build a sales force and a professional services organization, and
to expand our general and administrative infrastructure. Our total headcount was
236 at March 31, 2001.

     We market and sell our software products and solutions through our direct
sales force and indirect channels. Our indirect channels consist of server
systems vendors, independent software vendors, value added resellers, web
hosting services and system integrators. Our current relationships with these
system integrators typically are structured as non-exclusive co-marketing and
resale arrangements. In addition, we have entered into a limited number of
reseller arrangements in which our products are embedded in the reseller's
products, for which we receive a royalty from the reseller. We derived revenue
of $170,000 from these reseller arrangements in the three months ended March 31,
2001.



                                       10
<PAGE>


RESULTS OF OPERATIONS

     The following table sets forth financial data as a percentage of total
revenue.

                                                  Three Months Ended
                                                       March 31,
                                                 ----------------------
                                                  2001         2000
                                                 --------     ---------
Revenue:
   Product                                           53.1%         74.5%
   Services                                          46.9          25.5
                                                 --------     ---------
       Total revenue                                100.0         100.0
                                                 --------     ---------
Cost of revenue:
   Product                                            2.0           0.7
   Services                                          36.3          31.4
                                                 --------     ---------
       Total cost of revenue                         38.3          32.1
                                                 --------     ---------
Gross profit                                         61.7          67.9
                                                 --------     ---------
Operating expenses:
   Research and development                         110.2         108.5
   Sales and marketing                              198.1         224.0
   General and administrative                        92.3          72.0
                                                 --------     ---------
       Total operating expenses                     400.6         404.5
                                                 --------     ---------
Loss from operations                               (338.9)       (336.6)
Interest and other income                            47.5           3.2
Interest and other expenses                          (6.7)         (5.5)
                                                 ---------      --------
Net loss                                           (298.1)%      (338.9)%
                                                 =========    ==========


REVENUE AND REVENUE RECOGNITION POLICY

     Our total revenue was $3.1 million for the three months ended March 31,
2001 and $3.7 million for the three months ended March 31, 2000. Total revenue
was comprised of sales of software products and solutions and related service
fees from implementation, consulting, training and support.

     Product revenue was $1.7 million or 53.1% of total revenue for the three
months ended March 31, 2001 and $2.7 million or 74.5% of total revenue for the
three months ended March 31, 2000. Services revenue was $1.5 million or 46.9% of
total revenue for the three months ended March 31, 2001 and $937,000 or 25.5% of
total revenue for the three months ended March 31, 2000. The decrease in our
revenue was primarily due to a general slowdown in the domestic economy
beginning in the second half of 2000 and accelerating in 2001, resulting in
delays or cancellations in anticipated sales to new and existing customers. Our
revenue mix changed from prior periods as a result of generating higher revenues
from renewals of our maintenance contracts compared to new sales of products and
services to new and existing customers during the three months ended March 31,
2001. We believe our revenue mix will consists of 55-60% product revenue and
40-45% service revenue.

     Revenue is recognized when there is persuasive evidence of an arrangement
for a fixed and determinable fee that is probable of collection and when
delivery and installation has occurred. We generally recognize revenue under the
residual method as prescribed by Statement of Position No. 97-2 "Software
Revenue Recognition" and Statement of Position No. 98-9 "Modification of SOP No.
97-2 with Respect for Certain Transactions" whereby revenue is allocated to each
undelivered element based upon the fair value of each element when sold
separately and the residual amount is then allocated to the delivered element.

     In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, or SAB 101, "Revenue Recognition in Financial
Statements," which provides guidance on the recognition, presentation and


                                       11
<PAGE>

disclosure of revenue in financial statements filed with the SEC. SAB 101
outlines the basic criteria that must be met to recognize revenue and provides
guidance for disclosures related to revenue recognition policies. We have
complied with the guidance in SAB 101.

     Product revenue from existing reseller arrangements is recognized when
reported by the reseller upon re-licensing of our software to end-users. Our
agreements with our customers and resellers do not contain product return
rights.

     For arrangements with extended payment terms, revenue is recognized at the
earlier of when the payment is due or when the cash is received.

     We also derive revenue from providing access to our products for a
specified period of time. Revenue is recognized on such arrangements as the
license fees become due and payable.

     Services revenue consists of professional services and maintenance fees.
Professional services primarily consist of software installation and
integration, consulting and training. Professional services revenue is
recognized as such services are performed. Services revenue from maintenance
agreements, which include services such as technical product support and
unspecified product upgrades, is recognized ratably over the term of the
agreement, generally one year.

     During the three months ended March 31, 2001, no customer accounted for
more than 10% of our total revenue. During the three months ended March 31,
2000, one individual customer, Vignette, accounted for 16% of our total revenue.


COST OF REVENUE

     Cost of revenue was $1.0 million for the three months ended March 31, 2001
and $760,000 for the three months ended March 31, 2000, excluding stock-based
compensation charges of $152,000 in 2001 and $419,000 in 2000. The increase in
our cost of revenue is primarily attributed to personnel related expenses for
our professional services organization. Our professional services headcount
increased from 17 at March 31, 2000 to 20 at March 31, 2001. Cost of revenue as
a percentage of total revenue was 38.3% for the three months ended March 31,
2001 and 32.1% in the three months ended March 31, 2000. The increase is
attributed to lower revenue in the three months ended March 31, 2001, compared
to the three months ended March 31, 2000, as the United States economy began
slowing down in the second half of 2000 and continued into the first quarter of
2001. Our cost of product revenue includes expenses incurred to manufacture,
package and distribute software products and solutions and related
documentation. Our cost of services revenue includes salaries and related
expenses for our implementation, consulting support, and training organizations
and an allocation of facilities and communications expenses. Our negative gross
margins from services for the three months ended March 31, 2000 was attributed
primarily to stock-based compensation of $419,000. We believe that our cost of
revenue, excluding stock-based compensation charges, will be consistent with
current levels, as we expect our existing professional services organization to
support new and existing customers. Cost of revenue as a percentage of total
revenue may fluctuate from period to period.


OPERATING EXPENSES

     Research and Development

     Research and development expenses were $3.6 million for the three months
ended March 31, 2001 and $3.0 million for the three months ended March 31, 2000,
excluding stock-based compensation charges of $(111,000) in 2001 and $980,000 in
2000. Research and development expenses as a percentage of total revenue was
110.2% for the three months ended March 31, 2001 and 108.5% in the three months
ended March 31, 2000. Substantially all of the increase in research and
development expenses was related to an increase in the number of software
engineers and other technical staff. Research and development personnel grew


                                       12
<PAGE>

from 64 at March 31, 2000 to 77 at March 31, 2001. We believe that research and
development expenses, excluding stock-based compensation charges, will be
consistent with current levels as we expect to develop new products,
applications, and product enhancements with our investments to date. Research
and development expenses as a percentage of total revenue may fluctuate from
period to period.

     Sales and Marketing

     Sales and marketing expenses were $6.0 million for the three months ended
March 31, 2001 and $6.8 million for the three months ended March 31, 2000,
excluding stock-based compensation charges of $226,000 in 2001 and $1.4 million
in 2000. Sales and marketing expenses as a percentage of total revenue were
198.1% for the three months ended March 31, 2001 and 224.0% in the three months
ended March 31, 2000. The decrease in sales and marketing expenses is attributed
primarily to more targeted marketing activities than in prior periods and
reduced spending on agency fees, third-party recruitment fees and sales
commissions. These decreases were offset by increases in salaries, travel and
entertainment and office expenses related to an increased number of remote
offices domestically and internationally. Sales and marketing personnel
increased from 90 at March 31, 2000 to 103 at March 31, 2001. The decrease in
sales and marketing expenses as a percentage of total revenue was attributed
primarily to a decrease in stock-compensation charges. We believe that sales and
marketing expenses, excluding stock-based compensation charges, will be
consistent with current levels as we expect to sell and market our products and
solutions with the investments made to date. Sales and marketing expenses as a
percentage of total revenue may fluctuate from period to period.

     General and Administrative

     General and administrative expenses were $2.2 million for the three months
ended March 31, 2001 and $1.5 million for the three months ended March 31, 2000,
excluding stock-based compensation charges of $639,000 in 2001 and $1.1 million
in 2000. The increase in general and administrative expenses is primarily
attributable to costs relating to the transition of our chief executive officer
in February 2001, additional bad debt expense and additional public company
administrative expenses such as directors' and officers' insurance and filing
fees. General and administrative personnel increased from 28 at March 31, 2000
to 35 at March 31, 2001. General and administrative expenses as a percentage of
total revenue were 92.3% for the three months ended March 31, 2001 and 72.0% in
the three months ended March 31, 2000. The increase in general and
administrative expenses as a percentage of total revenue results from total
revenue increasing at a slower rate than general and administrative expenses. We
believe that general and administrative expenses, excluding stock-based
compensation, will increase in absolute dollars in the near term as we expect to
incur additional costs for the transition of executives. General and
administrative expenses may fluctuate as a percentage of total revenue from
period to period.

     Stock-based Compensation

     Stock-based compensation consisted of amortization of unearned stock-based
compensation in connection with certain stock option grants to employees at
exercise prices below the deemed fair market value of our common stock. Of the
total unearned stock-based compensation, $906,000 was amortized in the three
months ended March 31, 2001 compared $3.9 million amortized in the three months
ended March 31, 2000. The remaining unearned stock-based compensation is
expected to be amortized as follows: $5.0 million in 2001, $3.6 million in 2002,
$1.3 million in 2003 and $48,000 in 2004.





                                       13
<PAGE>


INTEREST AND OTHER INCOME

     For the three months ended March 31, 2001, we had interest and other income
of approximately $1.5 million compared to $117,000 for the three months ended
March 31, 2000. The increase in interest and other income was primarily due to
higher cash balances from the proceeds of our sales of preferred stock in March
and July 2000 and our initial public offering in August 2000.


INTEREST AND OTHER EXPENSES

     For the three months ended March 31, 2001, we had interest and other
expenses of approximately $208,000 compared to $202,000 for the three months
ended March 31, 2000. Interest and other expenses consist primarily of interest
incurred on our outstanding debt and capital lease obligations.


LIQUIDITY AND CAPITAL RESOURCES

     We funded our operations through March 31, 2001 primarily through previous
private placements of equity securities and to a lesser extent, revenue,
subordinated debt and lines of credit. We also raised approximately $88 million,
net of issuance costs, in our initial public offering in August 2000. We did not
use any of these proceeds to fund our operations as of March 31, 2001. These
proceeds remain in cash, cash equivalents and short-term investment accounts.

     Net cash used in operating activities during the three months ended March
31, 2001 was $5.6 million and was attributable to a net loss of $8.4 million
before stock-based compensation charges of $906,000 and charges for stock
options issued for services of $36,000. Cash provided by operating activities
resulted from decreases in accounts receivable of $3.3 million and prepaid
expenses of $349,000 and increases in accounts payable of $174,000 as well as
increased depreciation and amortization of $699,000 and provision for doubtful
accounts of $170,000. Cash generated by the decrease in accounts receivable
primarily resulted from delays in anticipated sales to new and existing
customers and increased collection efforts on outstanding receivables. Cash
provided by operating activities was offset by increases in other assets of
$410,000, decreases in accrued payroll and other liabilities of $913,000 and
deferred revenue of $555,000.

     Net cash provided by investing activities during the three months ended
March 31, 2001 was $15.2 million and resulted from the purchases of $16.6
million in investments and purchases of property and equipment of $391,000,
offset by proceeds from the sale and maturities of short-term investments of
$32.1 million. The increase in net cash provided by investing activities results
primarily from the increased conversion of short-term investments to cash used
to support our operations.

     Net cash used in financing activities totaled $328,000 resulting from
repayments of debt and capital lease obligations of $1.2 million and payments
for stock repurchases of $114,000, offset by proceeds from the issuance of
common stock in connection with the exercise of stock options and purchase of
common stock through our employee stock purchase plan of $966,000.

     As of March 31, 2001, our principal sources of liquidity included $102.8
million of cash, cash equivalents and investments. We believe that our current
cash balances and cash flow from operations, if any, will be sufficient to meet
our working capital and capital expenditure requirements for at least the next
twelve months.

RECENT ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, or SFAS 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS 133 establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts and for hedging activities. In July
1999, the Financial Accounting Standards Board issued SFAS No. 137, "Accounting
for Derivative Instruments and Hedging Activities - Deferral of the Effective


                                       14
<PAGE>

Date of FASB No. 133." SFAS 137 deferred the effective date of SFAS 133 until
the first quarter of the fiscal year beginning after June 15, 2000. We adopted
SFAS 133 in the quarter ended March 31, 2001. We did not engage in hedging
activities or invest in derivative instruments and accordingly, SFAS 133 did not
have an impact on our financial statements.

RISK FACTORS

     This report contains forward-looking statements within the meaning of the
Securities Litigation Reform Act of 1995 that involve risks and uncertainties.
Our actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including those set
forth in the following risk factors and other factors discussed elsewhere in
this report. These risk factors should be considered carefully in evaluating our
business and us.

WE ONLY BEGAN SUBSTANTIVE OPERATIONS IN APRIL 1996 AND, AS A RESULT, IT IS
DIFFICULT TO FORECAST OUR FUTURE OPERATING RESULTS.

     We were incorporated in July 1995 and had no substantive operations until
April 1996. As a result, we have a limited operating history that makes it
difficult to forecast our future operating results. In addition, the revenue and
income potential of our business and market are unproven. Risks and difficulties
typically encountered by companies in their early stages of development,
particularly those in new and rapidly evolving markets such as ours, include our
ability to:

 - Successfully develop, commercialize and achieve significant market
   acceptance of our current and next generation of products and solutions

 - Develop and maintain strong relationships with server system vendors,
   independent software vendors, application service providers, web hosting
   services, value-added resellers and systems integrators to sell our products
   through indirect channels

 - Expand our domestic and international sales efforts

 - Continue to attract and retain qualified personnel

 - Manage operations

WE HAVE A HISTORY OF LOSSES, EXPECT TO CONTINUE TO INCUR SIGNIFICANT OPERATING
EXPENSES AND LOSSES IN THE FUTURE, AND MAY NEVER ACHIEVE OR SUSTAIN
PROFITABILITY.

     We have experienced operating losses in each quarterly and annual period
since our inception in 1995, and we expect to continue to incur significant
operating expenses and losses for the foreseeable future. We cannot predict when
we will be profitable, if at all. We may never achieve future revenue growth or
achieve or sustain profitability. If we do achieve profitability in any period,
we cannot be certain that we will sustain or increase such profitability on a
quarterly or annual basis. If we continue to incur net losses and never attain
profitability, our stock price will suffer.

     We intend to increase our operating expenses, particularly expenses
relating to expanding our direct sales force and increasing levels of research
and development. As a result, we will need to generate significant additional
revenue to achieve and maintain profitability in the future. Moreover, failure
to achieve and sustain significant increases in our quarterly net sales could
cause us to curtail planned increases in our operating expenses, which would
adversely impact our ability to grow our business.




                                       15
<PAGE>


OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY, AND MAY BE SUBJECT
TO SEASONALITY, WHICH MAY CAUSE OUR STOCK PRICE TO FALL.

     Our quarterly operating results have varied significantly in the past and
are likely to vary significantly in the future, which makes it difficult for us
to predict our future operating results. Factors that could cause our operating
results to fluctuate include:

 - General economic conditions specific to the active service level
   management industry or generally relating to information technology spending

 - Changes in the mix of products, solutions and services we sell

 - The timing of the development and release of enhanced versions of
   Central Dispatch, Commander, Global Dispatch and Enterprise Service Console,
   as well as future product enhancements and new products

 - Deferrals of customer orders in anticipation of product enhancements or
   new products and solutions

 - Announcement or market acceptance of new products or product enhancements
   offered by our competitors

 - Acceptance of our recently introduced Resonate Commander solutions

 - The mix of channels through which we sell our products and solutions

 - The timing and amount of orders from companies who sell our products and
   solutions through our indirect distribution channel

 - The size and timing of large transactions may yield revenue
   fluctuations that are inconsistent with prior or subsequent periods

     Because of these and possibly other factors, we believe that
period-to-period comparisons of our results of operations are not meaningful and
should not be relied upon as an indicator of our future performance. Operating
results were below expectations in the fourth quarter of 2000 and the first
quarter of 2001. Our operating results will likely also be below the
expectations of public market analysts and investors in some future quarter or
quarters. If this occurs, the price of our common stock will probably decline.

     A delay in anticipated sales beyond the end of a particular quarter may
harm our results of operations for that quarter. We experienced this type of
delay in the fourth quarter of 2000 and the first quarter of 2001. Furthermore,
we base our decisions regarding our operating expenses on anticipated revenue
trends, and our expense levels are relatively fixed. Consequently, if revenue
levels fall below our expectations, we may suffer unexpected losses because only
a small portion of our expense varies with our revenue.

     We expect to experience seasonality in the sales of our software products
and solutions. For example, we expect that sales may decline during summer
months, particularly in Europe, thereby adversely affecting sales during our
third quarter. We also anticipate that sales may be lower in our first calendar
quarter due to patterns in the capital budgeting and purchasing cycles of our
current and prospective customers. These seasonal variations in our sales may
lead to fluctuations in our quarterly operating results. Furthermore, it is
difficult for us to evaluate the degree to which this seasonality may affect our
business because the recent general economic slowdown may have largely
overshadowed this seasonality experienced in prior periods.

                                       16
<PAGE>

IF WE FAIL TO SUCCESSFULLY EDUCATE POTENTIAL CUSTOMERS REGARDING THE BENEFITS OF
OUR ACTIVE SERVICE LEVEL MANAGEMENT SOLUTIONS, OUR ABILITY TO SELL OUR PRODUCTS
AND SOLUTIONS AND GROW OUR BUSINESS WILL BE SEVERELY LIMITED.

     Our future success depends on widespread commercial acceptance of our
products and solutions. The market for active service level management solutions
is relatively new and rapidly evolving. If we are unable to educate our
potential customers, and the market in general, of the advantages of our
software-based active service level management solutions over hardware-based
server load balancing products and network system management products, our
ability to sell our products and solutions will be severely limited. Rather than
utilizing comprehensive active service level management solutions, most web data
center administrators manage their services by adding servers and
interconnecting a variety of single function systems and traffic management
tools. In addition, our competitors offer a wide variety of hardware or software
products that purport to serve the needs addressed by our products and
solutions. Our ability to increase revenue in the future depends on the extent
to which our potential customers recognize the value of our integrated active
service level management solutions. The acceptance of our products and services
may also be hindered by:

 - The reluctance of our prospective customers to replace or supplement
   their current networking products, which may be supplied by more established
   vendors, with our products and solutions

 - The emergence of new technologies or industry standards, which could
   cause our products and solutions to be less competitive or become obsolete

     In addition, because the market for active service level management
solutions is in an early stage of development, we cannot accurately assess the
size of the market, and we have limited insight into trends that may emerge and
affect our business. For example, we may have difficulty in predicting customer
needs, developing products and solutions that could address those needs and
establishing a distribution strategy for these products and solutions.

IF OUR CENTRAL DISPATCH, COMMANDER, GLOBAL DISPATCH OR ENTERPRISE SERVICE
CONSOLE PRODUCTS, RESONATE COMMANDER SOLUTIONS OR OTHER NEW PRODUCTS AND
SOLUTIONS, PRODUCT ENHANCEMENTS OR SERVICES FAIL TO ACHIEVE CUSTOMER ACCEPTANCE,
OUR GROWTH AND REVENUE WILL BE LIMITED.

     Rapid technological change, frequent new product and solution introductions
and enhancements, changes in customer demands and evolving industry standards
characterize our industry. Our existing products and solutions will be rendered
less competitive or obsolete if we fail to introduce new products, solutions or
product enhancements that anticipate the features and functionality that
customers demand or ensure that they interoperate with current and emerging
networking technologies. The success of our products and solutions will depend
on factors including:

 - Their ability to meet customer needs and expectations regarding features
   and performance

 - Our ability to accurately anticipate industry trends and changes in
   technology standards

 - Timely completion and introduction of new product designs and features

     Further, because the market is new for products and solutions that
facilitate the efficient processing of data and transactions across computer
networks, potential customers in this market may be confused or uncertain about
the relative merits of these products and solutions or which products and
solutions to adopt, if any. Confusion and uncertainty in the marketplace may
inhibit customers from purchasing our products and solutions, which could limit
our revenue growth.

OUR REVENUES MAY BE HARMED IF GENERAL ECONOMIC CONDITIONS CONTINUE TO WORSEN.

     Our revenues are dependent on the health of the economy and the growth of
our customers and potential future customers. If the growth of the economy
remains stagnant or declines, our customers may continue to reduce their


                                       17
<PAGE>

spending on active service level management solutions that we offer or defer
purchases of our products and solutions until general economic conditions
improve. If that happens, our revenues could suffer and our stock price may
decline. Further, if the economic conditions in the United States worsen or if a
wider or global economic slowdown occurs, we may experience a material adverse
impact on our business, operating results and financial condition.

     Our software products, solutions and services are designed for customers
that use the Internet and Internet-based technologies to conduct business. While
growth of electronic business has been rapid, many companies within the Internet
sector have experienced a slowdown beginning in the second quarter of 2000 and
accelerating in 2001. Slowdowns in the Internet sector have adversely affected
the ability of some of our customers to timely fulfill their payment obligations
to us. To the extent we are required to write off more accounts receivable,
sales cycles lengthen or customers cancel orders, our results of operations will
be harmed.

OUR SALES OF CENTRAL DISPATCH GENERATED APPROXIMATELY 65% OF OUR PRODUCT REVENUE
IN THE FIRST QUARTER OF 2001, AND A DECLINE IN OUR SALES, IN ABSOLUTE DOLLARS,
OF CENTRAL DISPATCH COULD MATERIALLY HARM OUR RESULTS OF OPERATIONS.

     During the three months ended March 31, 2001, we derived approximately 65%
of our product revenue from sales of our Central Dispatch product, and we expect
to derive a significant portion of our revenue from sales of Central Dispatch
for at least the next eighteen months. Our ability to sell Central Dispatch
depends upon its ability to solve critical network performance and availability
problems of our customers. If Central Dispatch is unable to solve these problems
for our customers, our ability to maintain our existing customer base and to
obtain new customers for Central Dispatch will be adversely impacted, which
would result in a substantial loss of revenue or an inability to grow our
revenue.

OUR ABILITY TO GROW OUR BUSINESS DEPENDS UPON INCREASED DEMAND FOR OUR PRODUCTS
AND SOLUTIONS FROM CORPORATE ENTERPRISES AND THE EXTENT TO WHICH OUR PRODUCTS
AND SOLUTIONS CAN ACCOMMODATE THE NEEDS OF CORPORATE ENTERPRISES.

     We cannot assure you that corporate enterprises, who typically operate in
complicated information technology environments, will widely adopt active
service level management solutions to facilitate their data and transaction
processing needs. Our ability to grow our business will depend upon the extent
to which corporate enterprises adopt active service level management solutions.
Moreover, if corporate enterprises require significantly different product
features for our active service level management solutions, whether as a result
of choosing to outsource some or all of their applications to application
service providers or otherwise, we will be required to enhance or modify our
products and solutions in this manner. As a result, we could incur delays in
introducing enhanced or modified versions of our products and solutions, delays
in capturing enterprise customers and significant expense. Any of these
alternatives will limit our ability to grow our business and could result in
higher net losses.

WE DERIVE SUBSTANTIALLY ALL OF OUR REVENUE THROUGH THE SALE OF UPFRONT LICENSES
OF OUR SOFTWARE PRODUCTS AND SOLUTIONS, AND ALTERNATIVE BUSINESS MODELS EMPLOYED
BY COMPETITION COULD ERODE OUR PRODUCT PRICING.

     If alternative business methods of delivering the capabilities of our
software products and solutions are developed by competition, they may
substantially erode the price which we can charge for our products and
solutions. These alternative methods include bundling these capabilities through
a subscription model by application service providers.

     Similarly, we frequently compete in the traffic management market against
vendors of hardware products. As the prices of the hardware products are reduced
over time, the prices for our software products and solutions could become less
competitive, and the ensuing competition could also erode the price we can
charge for our products and solutions.

                                       18
<PAGE>

OUR MARKETS ARE HIGHLY COMPETITIVE, OUR CUSTOMERS MAY CHOOSE TO PURCHASE OUR
COMPETITORS' PRODUCTS, AND WE CANNOT ASSURE YOU THAT WE WILL BE ABLE TO COMPETE
EFFECTIVELY.

     Our markets are new, rapidly evolving and highly competitive, and we expect
competition to persist and intensify in the future. Our principal competitors
for our Central Dispatch and Global Dispatch products include several companies
offering hardware-based server load balancing such as Alteon Web Systems (Nortel
Networks), Cisco Systems, F5 Networks, Foundry Networks and Microsoft. These
competitors have significantly greater financial, technical, marketing, service
and other resources than we do.

     In the future, increased competition for our Commander and Enterprise
Service Console products and Resonate Commander solutions may come from
providers of systems management products, including Tivoli Systems, BMC Software
and others, and from providers of network management products, such as Micromuse
and Visual Networks. As these providers enhance their products to meet the needs
and requirements of Internet deployed applications and services, potential
customers may choose their products over our solutions.

     We expect to continue to face additional competition as new participants
enter the active service level management markets. In addition, other large
companies with significant resources, brand recognition and sales channels may
form alliances with or acquire competing traffic management solutions and emerge
as significant competitors. Potential competitors may bundle their products or
incorporate a load balancing or traffic management component into existing
products in a manner that discourages users from purchasing our products and
solutions. In addition, our competitors may choose to significantly reduce their
prices and we may be forced to match their price reductions in order to remain
competitive. Price reductions could significantly lower our revenue and increase
our operating losses.

     Our competitors may respond more quickly to emerging technologies than we
do. We may lose customers to competitors if we are not able to respond to
requests for additional features in a timely fashion. We may not be able to
maintain or improve our competitive position against current or potential
competitors, especially those with greater resources.

OUR SALES CYCLE IS LENGTHY AND UNPREDICTABLE, INVOLVING SIGNIFICANT EXPENSE AND
EFFORT BY US IN ADVANCE OF PRODUCT ORDERS, AND MAY CAUSE OUR OPERATING RESULTS
TO FLUCTUATE, WHICH COULD RESULT IN VOLATILITY IN OUR STOCK PRICE.

     The typical sales cycle of our active service level management products and
solutions can be lengthy and unpredictable and involves significant capital
investment decisions by prospective customers, as well as education of potential
customers regarding the benefits of our software-based solutions. The sales
cycle for our products and solutions has ranged from one to three months for
sales to smaller customers to up to one year or more for sales to large,
established enterprises. As we increasingly target enterprise customers, we
expect our average sales cycle to lengthen. If sales forecasted from specific
customers for a particular quarter are not realized in that quarter, we may be
unable to compensate for the revenue shortfall causing our operating results to
vary significantly from quarter to quarter. A significant variation in our
quarterly results could result in volatility in our stock price.

     Customers frequently begin by evaluating our products and solutions on a
limited basis before deciding to purchase them. Generally, customers consider a
wide range of issues before committing to purchase our products and solutions,
including benefits, ability to interoperate with their networking equipment and
product reliability. While potential customers are evaluating a purchase of our
products and solutions, we may incur substantial sales and marketing expenses
and expend significant management effort. The result of making these
expenditures with no corresponding revenue in any given quarter could further
exacerbate our quarterly fluctuations and our stock price volatility.




                                       19
<PAGE>



WE RELY ON OUR RELATIONSHIPS WITH A LIMITED NUMBER OF THIRD PARTIES TO IMPLEMENT
AND PROMOTE OUR SOFTWARE PLATFORM, AND IF THESE RELATIONSHIPS FAIL, OUR REVENUE
OR OUR ABILITY TO GROW OUR REVENUE MAY DECREASE.

     We depend upon our relationships with Hewlett-Packard, IBM and Sun
Microsystems to help distribute and market our products. Although we have
developed distribution and marketing relations with these three companies and a
limited number of other server system vendors, independent software vendors,
application service providers, value-added resellers, systems integrators and
web hosting services, we cannot control the amount or timing of resources that
these third parties devote to our business. We cannot assure you that the third
parties who currently market our products will do so effectively, and we may not
be able to maintain our existing relationships with these third parties. In
addition, our arrangements with third parties typically do not restrict them
from working with our competitors. In the event one or more of these third
parties were to acquire or significantly increase their relationships with one
or more of our competitors, their incentive to continue to devote their
resources to selling our products could decline and our revenue could suffer
accordingly. If any of these relationships is terminated, we may not be able to
develop or maintain substitute marketing and distribution relationships.

IF WE DO NOT DEVELOP OUR DIRECT AND INDIRECT SALES CHANNELS EFFECTIVELY, OUR
ABILITY TO SUSTAIN OR INCREASE OUR SALES WILL BE HARMED.

     In order to increase the sales of our products, solutions and services, we
need to develop our direct and indirect sales channels effectively. If we are
unable to develop both our direct and indirect sales channels effectively, our
ability to increase revenue could be seriously harmed. In North America, we
currently sell our products and solutions directly and through companies with
whom we have established indirect sales channel relationships. Our sales and
distribution strategy depends principally on:

 - Developing our indirect sales and distribution channels by
   establishing relationships with leading server system vendors, independent
   software vendors, application service providers, web hosting services,
   value-added resellers and systems integrators

 - Developing our direct sales organization by providing adequate training
   and technical marketing materials

     Outside North America, we derive a significant portion of our revenue
through our indirect sales channels. To achieve broader distribution of our
products and solutions outside North America, we expect to continue to invest in
the development of indirect sales channels.

     If we fail to develop and maintain relationships with significant server
system vendors, independent software vendors, application service providers, web
hosting services, value-added resellers and systems integrators, or if these
third parties are not successful in their sales efforts or if we fail to develop
our direct sales organization effectively, sales of our products, solutions and
services may decrease or fail to increase.

OUR RECENT EXPANSION INTO INTERNATIONAL MARKETS MAY NOT SUCCEED AND WILL EXPOSE
US TO RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS AND RESULT IN HIGHER
PERSONNEL COSTS.

     We recently expanded our sales efforts in international markets by hiring
additional sales personnel to sell our products and solutions outside North
America. We have only limited experience in marketing, selling and supporting
our products and solutions internationally. Prior to 1998, we had no revenue
from sales to customers located outside North America. Sales to customers
located outside North America represented 13% of our revenue for the three
months ended March 31, 2001.

     In order to increase our international sales, we intend to expand the
number of relationships with third parties who sell our products and solutions
internationally and have our international sales force target customers directly
as well. We have incurred higher personnel costs establishing international
offices and hiring international sales staff. Our investment in expanding our
international sales efforts may not result in an increase in our revenue. We may


                                       20
<PAGE>

not be able to maintain our operating margins for international sales due to the
higher costs of these sales.

     In order to increase our revenue outside of North America, our
international operations in European and Asian countries need to operate
effectively. If our international operations are unable to operate effectively,
our business and results of operations may be seriously harmed. Such efforts may
be more difficult or take longer than we anticipate, and we may not be able to
successfully market, sell, deliver and support our products and solutions
internationally. Our international operations could also be affected by a number
of risks and uncertainties, including:

 - The difficulties and significant costs of staffing and managing foreign
   operations

 - Unexpected changes in regulatory requirements

 - Legal uncertainties regarding liability, export and import restrictions,
   tariffs and other trade barriers

 - Reduced protection of intellectual property in other countries

 - Longer collection cycles and increased difficulty in collecting delinquent
   or unpaid accounts

 - Fluctuations in the value of the U.S. dollar relative to other currencies

 - Potentially adverse tax consequences

 - Political and economic instability

 - Costs relating to the granting of equity to international employees

Any of these factors could impair our ability to operate effectively in these
international markets and generate significant revenue.

WE MAY NOT BE ABLE TO ATTRACT, TRAIN OR RETAIN QUALIFIED PERSONNEL.

     Our future success will depend in large part on our ability to hire and
retain a significant number of qualified personnel. Our inability to hire and
retain qualified personnel may harm our results of operations and our ability to
maintain or increase market share.

OUR INTELLECTUAL PROPERTY COULD BE USED BY OTHERS WITHOUT OUR CONSENT BECAUSE
PROTECTION OF OUR INTELLECTUAL PROPERTY IS LIMITED.

     We rely on a combination of patent, copyright, trademark and trade secret
laws and restrictions on disclosure to protect our intellectual property rights.
We also enter into confidentiality or license agreements with our employees,
consultants and corporate partners, and control access to and distribution of
our software, documentation and other proprietary information. Despite our
efforts to protect our proprietary rights, unauthorized parties may attempt to
copy or otherwise obtain and use our products or technology. In addition, other
parties may breach confidentiality agreements or other protective contracts we
have entered into, and we may not be able to enforce our rights in the event of
these breaches. Any actions taken by us to enforce our intellectual property
rights could result in significant expense to us and the diversion of management
time and other resources.

     In September 2000, we filed a lawsuit for patent infringement against
Alteon Websystems, which has since been acquired by Nortel Networks. This action
could require us to expend significant financial resources to protect our
intellectual property, and may consume valuable management time. The litigation
is currently in the discovery phase and a trial date has been set for the summer
of 2002.

                                       21
<PAGE>

     Monitoring use of our products and solutions is difficult and we cannot be
certain that the steps we have taken will prevent unauthorized use of our
technology, particularly in foreign countries where the laws may not protect our
proprietary rights as fully as in the United States.

OUR RECENT GROWTH HAS PLACED A SIGNIFICANT STRAIN ON OUR MANAGEMENT, SYSTEMS AND
RESOURCES, AND WE MAY EXPERIENCE DIFFICULTIES MANAGING OUR FUTURE GROWTH, IF
ANY.

     Since the introduction of our product line, we have experienced a period of
rapid growth and expansion that has placed, and continues to place, a
significant strain on all of our management, systems and resources. We have
increased the number of our employees from 69 at December 31, 1998 to 236 at
March 31, 2001. We expect our recent growth to continue to strain our
management, operational and financial resources. For example, we may not be able
to install adequate financial control systems in an efficient and timely manner,
and our current or planned information systems, procedures and controls may be
inadequate to support our future operations. The difficulties associated with
installing and implementing new systems, procedures and controls may place a
significant burden on our management and our internal resources. If we are
unable to manage our growth effectively, our business and results of operations
may be seriously harmed.

WE DEPEND ON OUR KEY PERSONNEL AND LOSS OF ANY KEY PERSONNEL MAY HARM OUR
BUSINESS AND RESULTS OF OPERATIONS.

     Our success depends to a significant degree upon the continued
contributions of our key management, product development, sales and marketing
and finance personnel, many of whom would be difficult to replace. Competition
for qualified key personnel is intense, especially in Northern California where
we are headquartered, and we may not be able to hire the quality of key
personnel we are targeting. If we were to lose the services of key personnel, we
may not be able to successfully execute our new product strategies, sales and
marketing initiatives and financial business models. In particular, we rely on
our President and Chief Executive Officer, Peter Watkins. If we were to lose the
services of Mr. Watkins, our business and results of operations could be harmed.
Other than Mr. Watkins, we do not maintain employment agreements for any of our
key personnel. We do not maintain key person life insurance for any of our
personnel.

THE DEVELOPMENT OF NEW OPERATING SYSTEMS, THE EMERGENCE OF NEW NETWORK STANDARDS
OR THE DISCONTINUATION OF SUPPORT FOR A GIVEN STANDARD COULD CAUSE OUR PRODUCTS
TO BECOME OBSOLETE, LESS COMPETITIVE OR REQUIRE US TO REDESIGN OUR PRODUCTS.

     Our products operate on Solaris, Windows NT, AIX, Linux and HP/UX operating
systems, and features of our products are dependent upon the network standards
used by a customer. If new operating systems are developed or new network
standards emerge, our failure to modify our products in a timely or cost
effective manner could limit our potential customer base, which would adversely
affect our ability to increase our revenue. Furthermore, we will need to modify
our products or develop new versions of our products as new versions of
operating systems are developed. Similarly, if we decide to discontinue support
of a given standard, those customers or potential customers who utilize that
standard may be unable or unwilling to buy our solutions. If we fail to continue
to develop new products to respond to changes in computer networks and operating
systems, or if we determine not to continue to support an operating system, our
ability to grow our business will suffer.

UNDETECTED SOFTWARE ERRORS IN OUR PRODUCTS COULD HARM OUR REPUTATION AND CAUSE
US TO INCUR SIGNIFICANT WARRANTY AND REPAIR COSTS.

     Software products frequently contain undetected errors when first
introduced or as new versions are released. We have experienced these errors in
the past in connection with new products and product upgrades. We expect that
these errors will be found from time to time in new or enhanced products after
commencement of commercial shipments. These problems may cause us to incur


                                       22
<PAGE>

significant warranty and repair costs, divert the attention of our engineering
personnel from our product development efforts and cause significant customer
relations problems.

BECAUSE OUR PRODUCTS COULD INTERFERE WITH THE OPERATIONS OF OUR CUSTOMERS' OTHER
SOFTWARE APPLICATIONS, WE MAY BE SUBJECT TO POTENTIAL PRODUCT LIABILITY AND
WARRANTY CLAIMS BY THESE CUSTOMERS, WHICH MAY BE COSTLY AND MAY NOT BE
ADEQUATELY COVERED BY INSURANCE.

     Our products are integrated with our customers' networks and software
applications. The sale and support of our products may entail the risk of
product liability or warranty claims. Any of these claims, even if not
meritorious, could result in costly litigation or divert management's attention
and resources. Although we carry general liability insurance, our current
insurance coverage would likely be insufficient to protect us from all liability
that may be imposed under these types of claims. A material product liability
claim may seriously harm our results of operations.

OUR PRODUCTS MAY INFRINGE THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS, AND
RESULTING CLAIMS AGAINST US COULD BE COSTLY AND REQUIRE US TO ENTER INTO
DISADVANTAGEOUS LICENSE AND ROYALTY ARRANGEMENTS.

     Our industry is characterized by the existence of a large number of patents
and frequent litigation based on allegations of patent infringement and the
violation of other intellectual property rights. We may be subject to legal
proceedings and claims for alleged infringement by us or our licensees of third
party proprietary rights, such as patents, trademarks or copyrights, from time
to time in the ordinary course of business. Any claims relating to the
infringement of third party proprietary rights, even if not meritorious, could
result in costly litigation, divert management's attention and resources, or
require us to enter into royalty or license agreements that are not advantageous
to us. In addition, parties making these claims may be able to obtain an
injunction, which could prevent us from selling our products and solutions in
the United States or abroad. Any of these results could harm our business. We
may increasingly be subject to infringement claims as the number of products and
competitors in our industry grows and functionalities of products overlap.
Former employers of our current and future employees may assert that our
employees have improperly disclosed confidential or proprietary information to
us.

OUR PRODUCTS INCORPORATE THE JAVA RUN TIME ENVIRONMENT, WHICH WE LICENSE FROM
SUN MICROSYSTEMS, AND OUR PRODUCT SHIPMENTS COULD BE DELAYED IF THAT SOFTWARE IS
NO LONGER AVAILABLE TO US.

     Our products incorporate the Java run time environment, which we license
from Sun Microsystems. This third party software may not continue to be
available to us on commercially reasonable terms. If we cannot maintain our
license to Sun's Java run time environment, shipments of our products could be
delayed until we could develop or license software to replace the functionality
provided by this license and integrate that software into our products. Delays
in product shipments could harm our revenue.

A DISASTER COULD SEVERELY DAMAGE OUR OPERATIONS BECAUSE WE DO NOT HAVE A
SEPARATE GEOGRAPHICALLY LOCATED BACKUP SYSTEM.

     We currently do not have fully redundant systems for our service at an
alternate site. All of our primary computer systems are located in our principal
headquarters in Sunnyvale, California. Sunnyvale exists on or near a known
earthquake fault zone. Although our facility which hosts our computer systems,
is designed to be fault tolerant, the system is vulnerable to damage from fire,
floods, earthquakes, power loss, telecommunications failures, and similar
events. Although we maintain general business insurance against fires, floods
and some general business interruptions, there can be no assurance that the
amount of coverage will be adequate in any particular case.

WE RELY ON A CONTINUOUS POWER SUPPLY TO CONDUCT OUR OPERATIONS, AND CALIFORNIA'S
CURRENT ENERGY CRISIS COULD DISRUPT OUR OPERATIONS AND INCREASE OUR EXPENSES.

     California is in the midst of an energy crisis that could disrupt our
operations and increase our expenses. In the event of an acute power shortage,
that is, when power reserves for the State of California fall below 1.5%,
California has on some occasions implemented, and may in the future continue to


                                       23
<PAGE>

implement, rolling blackouts throughout California. We currently do not have
backup generators or alternate sources of power in the event of a blackout, and
our current insurance does not provide coverage for any damages we or our
customers may suffer as a result of any interruption in our power supply. If
blackouts interrupt our power supply, we would be temporarily unable to continue
operations at our facilities. We experienced one such blackout during the three
months ended March 31, 2001, which resulted in several hours of lost
productivity at our corporate headquarters. Any such interruption in our ability
to continue operations at our facilities could damage our reputation, harm our
ability to retain existing customers and to obtain new customers, and could
result in lost revenue, any of which could substantially harm our business and
results of operations.

     Furthermore, the deregulation of the energy industry instituted in 1996 by
the California government has caused power prices to increase. Under
deregulation, utilities were encouraged to sell their plants, which
traditionally had produced most of California's power, to independent energy
companies that were expected to compete aggressively on price. Instead, due in
part to a shortage of supply, wholesale prices have skyrocketed over the past
year. If wholesale prices continue to increase, our operating expenses will
likely increase, as the majority of our facilities is located in California.

WE MAY NEED TO RAISE ADDITIONAL FUNDS, WHICH MAY NOT BE AVAILABLE ON TERMS
FAVORABLE TO US, IF AT ALL.

     We believe that our cash from operations and our initial public offering
will be sufficient to meet our working capital and capital expenditure needs for
at least the next twelve months. The estimate of the time period in which our
cash resources will be sufficient to meet our working capital and capital
expenditure needs is a forward looking statement that involves risks and
uncertainties. Our actual funding requirements may differ materially from this
as a result of a number of factors, including our development and introductions
of new products and expansion in the number of our personnel. We may need to
raise additional funds prior to the end of the next twelve months or at a later
date. We cannot assure you that any additional financing we may need will be
available on terms favorable to us, if at all.

     Further, if we issue additional equity securities, stockholders may
experience dilution, and the new equity securities may have rights, preferences
or privileges senior to those of existing holders of our common stock. If we
cannot raise funds on acceptable terms, we may not be able to develop new
products or enhance our existing products, take advantage of future
opportunities or respond to competitive pressures or unanticipated requirements.

OUR EXECUTIVE OFFICERS, DIRECTORS AND 5% STOCKHOLDERS AND THEIR AFFILIATES ARE
ABLE TO EXERCISE SIGNIFICANT CONTROL OVER ALL MATTERS REQUIRING STOCKHOLDER
APPROVAL.

     As of April 30, 2001, our executive officers, directors and 5% stockholders
and their affiliates beneficially own, in the aggregate, approximately 61.2% of
our outstanding common stock. As a result, these stockholders are able to
exercise significant control over all matters requiring stockholder approval,
including the election of directors and approval of significant corporate
transactions, which may have the effect of delaying or preventing a third party
from acquiring control over us even if our other stockholders believe that it is
desirable.

WE ARE AT RISK OF SECURITIES CLASS ACTION LITIGATION DUE TO OUR STOCK PRICE
VOLATILITY.

     The market price of our common stock has fluctuated and may continue to
fluctuate significantly in response to a number of factors such as changes in
accounting rules and regulations, market trends and company performance, some of
which are beyond our control. In the past, securities class action litigation
has often been brought against a company following periods of volatility in the
market price of its securities. We may in the future be the target of similar
litigation. Regardless of its outcome, securities litigation may result in
substantial costs and divert management's attention and resources, which could
harm our business and results of operations.

     If our stockholders sell substantial amounts of our common stock, including
shares issued upon the exercise of outstanding options, the market price of our
common stock may fall. In addition, such sales could create the perception to


                                       24
<PAGE>

the public of difficulties or problems with our products and solutions. As a
result, these sales might also make it more difficult for us to sell equity or
equity-related securities in the future at a time and price that we deem
appropriate.

WE MAY ENGAGE IN FUTURE ACQUISITIONS THAT DILUTE OUR STOCKHOLDERS, CAUSE US TO
INCUR DEBT OR ASSUME CONTINGENT LIABILITIES.

     We may acquire businesses, products or technologies that we believe may
complement our current product offerings, augment our market coverage or enhance
our technical capabilities, or that may otherwise offer growth opportunities.
While we have no current agreements with respect to any acquisitions, we may
acquire businesses, products or technologies in the future. We may not be able
to successfully integrate any businesses, products, technologies, or personnel
that we might acquire in the future, and our failure to do so could harm our
business. Furthermore, we may issue equity securities to pay for any future
acquisitions which could be dilutive to our existing stockholders.

WE HAVE BROAD DISCRETION TO USE THE PROCEEDS FROM OUR INITIAL PUBLIC OFFERING
AND MAY NOT USE THE PROCEEDS EFFECTIVELY.

     The net proceeds from our initial public offering, which closed in August
2000, are not allocated for specific uses other than working capital and general
corporate purposes. Thus, our management has broad discretion over how these
proceeds are used and could spend most of these proceeds in ways with which our
stockholders may not agree. As of March 31, 2001, we have not used any of the
proceeds from our initial public offering in August 2000.

PROVISIONS IN OUR CHARTER DOCUMENTS AND DELAWARE LAW MAY DELAY OR PREVENT AN
ACQUISITION OF OUR COMPANY.

     Our certificate of incorporation and bylaws contain provisions which could
make it harder for a third party to acquire us without the consent of our board
of directors. For example, if a potential acquiror were to make a hostile bid
for us, the acquiror would not be able to call a special meeting of stockholders
to remove members of our board of directors or act by written consent without a
meeting. In addition, our board of directors have staggered terms which makes it
difficult to remove them all at once. The acquiror would also be required to
provide advance notice of its proposal to remove directors at an annual meeting.
The acquiror also will not be able to cumulate votes at a meeting, which will
require the acquiror to hold more shares to gain representation on the board of
directors than if cumulative voting were permitted.

     Our board of directors also has the ability to issue preferred stock which
would significantly dilute the ownership of a hostile acquiror. In addition,
Section 203 of the Delaware General Corporations Law limits business combination
transactions with 15% stockholders that have not been approved by the board of
directors. These provisions and other similar provisions make it more difficult
for a third party to acquire us without negotiation. These provisions may apply
even if the offer may be considered beneficial to some stockholders.

     Our board of directors could choose not to negotiate with an acquiror that
it does not feel is in the strategic interests of Resonate. If the acquiror was
discouraged from offering to acquire us or prevented from successfully
completing a hostile acquisition by the anti-takeover measures, our stockholders
could lose the opportunity to sell their shares at a favorable price.




                                       25
<PAGE>


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     To date, all of our recognized revenue has been denominated in U.S. dollars
and primarily from customers in the United States, and our exposure to foreign
currency exchange rate changes has been immaterial. We expect, however, that an
increasing percentage of our future product and services revenue may come from
international markets and may be denominated in the currency of the applicable
market. As a result, our operating results may become subject to significant
fluctuations based upon changes in the exchange rates of some currencies in
relation to the U.S. dollar. Although we will continue to monitor our exposure
to currency fluctuations, and, when appropriate, may use financial hedging
techniques in the future to minimize the effect of these fluctuations, we cannot
assure you that exchange rate fluctuations will not adversely affect our
financial results in the future.

     We maintain an investment portfolio of various issuers, types and
maturities. Our investment portfolio consists of both fixed and variable rate
financial instruments. These securities are classified as available-for-sale,
and consequently, are recorded on the balance sheet at fair value. At any time,
a sharp rise in interest rates could seriously harm the fair value of our
investment portfolio. Conversely, declines in interest rates could seriously
harm interest earnings of our investment portfolio. Currently, we do not hedge
these interest rate exposures.

     As of March 31, 2001, we had total short-term debt outstanding of $1.1
million and long-term debt outstanding of $1.6 million, which bear interest
rates that are tied to the prime rate. Therefore, we are subject to exposure to
interest rate risk for these borrowings based on fluctuations in the prime rate.
Based upon the outstanding indebtedness under these arrangements, an increase in
the prime rate of 0.5% would cause a corresponding increase in our annual
interest expense of approximately $13,000.





                                       26
<PAGE>


PART II:     OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

     On September 12, 2000, we filed a complaint for patent infringement against
Alteon Web Systems, Inc. in the United States District Court, Northern District
of California for permanent injunctive relief and damages. We believe Alteon
infringes United States Letters Patent No. 5,774,660, entitled "World-Wide Web
Server With Delayed Resource-Binding For Resource-Based Load Balancing On A
Distributed Resource Multi-Node Network," which was issued to us on June 30,
1998. Alteon served its answer to our complaint in October 2000, in which Alteon
denied our allegations and counterclaimed that our patent is invalid. In October
2000, Alteon was acquired by Nortel Networks Corporation. The litigation is
currently in the discovery phase and a trial date has been set for the summer of
2002.

     We are also involved in disputes in the normal course of business. We do
not believe that the outcome of any of these disputes will have a material
effect on our business, financial condition or results of operations.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

     We have not yet used any funds from the initial public offering. We expect
to use the net proceeds from the initial public offering to develop products and
support activities, to expand our sales force including capital expenditures and
for working capital purposes. We may also use a portion of the net proceeds from
the offering to acquire or invest in businesses, technologies or products that
are complementary to our business. We currently have no commitments or
agreements with respect to any acquisitions or investments. We have not
determined the amounts we plan to spend on any of the uses described above or
the timing of these expenditures. Pending our use of the net proceeds, we intend
to invest them in short-term, interest-bearing, investment-grade securities.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

       Not applicable.

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

       No matters were submitted to a vote of security holders during the three
months ended March 31, 2001.

ITEM 5.  OTHER INFORMATION

       Not applicable.




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<PAGE>


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

3.1*   Restated Certificate of Incorporation of the Registrant.
3.2*   Bylaws of the Registrant.
4.1*   Form of Specimen Certificate for Registrant's common stock.
10.1*  Form of Indemnification Agreement between the Registrant and each of
       its directors and officers.
10.2*  1996 Stock Plan and form of agreement thereunder.
10.3*  2000 Stock Plan and form of agreement thereunder.
10.4*  2000 Employee Stock Purchase Plan and form of agreement thereunder.
10.5*  Fifth Amended and Restated Investor Rights Agreement dated July 6, 2000.
10.6*  Lease in Sunnyvale, California.
10.7*  Java License from Sun Microsystems, Inc.
99.1** Employment Agreement between Mr. Peter R. Watkins and Resonate Inc.

----------
*    Previously filed as an exhibit to the registrant's Registration Statement
     on Form S-1 (File No. 333-31730), declared effective on August 2, 2000.

**   Previously filed as an exhibit to the registrant's Annual Report on Form
     10-K (File No. 000-31139), filed with the Securities and Exchange
     Commission on March 27, 2001.

(b) Reports on Form 8-K

       We did not file any reports on Form 8-K during the three months ended
March 31, 2001.




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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.

                                     RESONATE INC.



Date: May 9, 2001                 /s/Peter R. Watkins
                                  --------------------------------------------
                                  Peter R. Watkins
                                  President and Chief Executive Officer


                                  /s/Robert C. Hausmann
                                  --------------------------------------------
                                  Robert C. Hausmann
                                  Vice President and Chief Financial Officer





                                       29
<PAGE>


                                INDEX TO EXHIBITS


Exhibit
Number     Description
------     -----------

3.1*       Restated Certificate of Incorporation of the Registrant.
3.2*       Bylaws of the Registrant.
4.1*       Form of Specimen Certificate for Registrant's common stock.
10.1*      Form of Indemnification Agreement between the Registrant and each
           of its directors and officers.
10.2*      1996 Stock Plan and form of agreement thereunder.
10.3*      2000 Stock Plan and form of agreement thereunder.
10.4*      2000 Employee Stock Purchase Plan and form of agreement thereunder.
10.5*      Fifth Amended and Restated Investor Rights Agreement dated
           July 6, 2000.
10.6*      Lease in Sunnyvale, California.
10.7*      Java License from Sun Microsystems, Inc.
99.1**     Employment Agreement between Mr. Peter R. Watkins and Resonate Inc.

----------
*    Previously filed as an exhibit to the registrant's Registration Statement
     on Form S-1 (File No. 333-31730), declared effective on August 2, 2000.

**   Previously filed as an exhibit to the registrant's Annual Report on Form
     10-K (File No. 000-31139), filed with the Securities and Exchange
     Commission on March 27, 2001.