As filed with the Securities and Exchange Commission on July 21, 2000
Registration No. 333-31678
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

Amendment No. 2
to
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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PLACEWARE, INC.
(Exact Name of Registrant as Specified in its Charter)

--------------
Delaware 7371 77-0442561
(State or Other (Primary Standard Industrial (I.R.S. Employer
Jurisdiction of Classification Code Number) Identification No.)
Incorporation or
Organization)

295 North Bernardo Avenue
Mountain View, California 94043
(650) 526-6100
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)

--------------
Barry James Folsom
Chief Executive Officer
PlaceWare, Inc.
295 North Bernardo Avenue
Mountain View, California 94043
(650) 526-6100
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)

--------------
Copies to:
Mark P. Tanoury, Esq. Gregory C. Smith, Esq.
James F. Fulton, Jr., Esq. Thomas J. Ivey, Esq.
David Y. Oh, Esq. Sanjiv Singh, Esq.
COOLEY GODWARD LLP SKADDEN, ARPS, SLATE, MEAGHER & FLOM
LLP
Five Palo Alto Square 525 University Ave.

3000 El Camino Real Suite 220

Palo Alto, California 94306 Palo Alto, California 94301
(650) 843-5000

-------------- (650) 470-4500
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement is declared effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is to register additional securities for an offering pursuant to
Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]_____________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
number for the same offering. [_]_____________
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the
same offering. [_]_____________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

--------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

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

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. The prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION, DATED JULY 21, 2000.

3,500,000 Shares

[PLACEWARE LOGO]

Common Stock

--------

Prior to this offering, there has been no public market for our common stock.
The initial public offering price of the common stock is expected to be between
$12.00 and $14.00 per share. We have applied to list our common stock on The
Nasdaq Stock Market's National Market under the symbol "PLCW."

The underwriters have an option to purchase a maximum of 525,000 additional
shares to cover over-allotments of shares.

Investing in our common stock involves risks. See "Risk Factors" on page 8.

Underwriting
Price to Discounts and Proceeds to
Public Commissions PlaceWare, Inc.
------------ ------------- ---------------

Per Share............................ $ $ $
Total................................ $ $ $

Delivery of the shares of common stock will be made on or about ,
2000.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.

Credit Suisse First Boston Robertson Stephens

U.S. Bancorp Piper Jaffray

The date of this prospectus is , 2000.

Inside Front Cover Graphics Description

[The words "A New Medium for Business-to-Business Communications: Web
Conferencing" appears at the top of the inside cover. A screen shot of the
PlaceWare presenter console appears with a photographic image of business
people working together. The text "Browser-based communications E-Service for
interactive meetings and presentations over the Internet" appears to the right
of the photograph of the business people working together. The PlaceWare logo
with the text "Web conferencing" below it appears in the lower right hand
corner. A screened back image of the character from the PlaceWare logo appears
in the background.]

Inside Gatefold Graphics Description

[The words "From small teams to global markets.....Web conferencing is here''
appears at the top of the inside gatefold. A world map appears in the center of
the gatefold, on which there is an image of ""business professionals working''
and a screen shot of the PlaceWare presenter console with arrows extending out
to all areas on the map that end in screen shot images of the PlaceWare
audience console with the numbers 1 through 5 each containing the following
text "1: A hosted E-service for instant availability; 2: Deliver any
presentation or meeting content in real time to anyone with a Web browser and a
phone; 3: Hold presentations or meetings with up to 2,500 participants;
4: Demonstrate live applications working on your desktop to any remote
audience; 5: Collaborate with participants live through visual content and
interactivity tools." The map is surrounded by five round photographs of
business people working together. In the background the words "sales training",
"new product launches", "investor relations", "customer seminars",
"press/analyst briefings", "customer communications", "customer education",
"town hall meetings", "sales meetings", "user groups/market research", "sales
training", "employee meetings", and "channel communications". On the right side
of the gatefold there is a column of black with a photo of business people
applauding. The words "PlaceWare Web conferencing is a new communications
medium for business to business communications that helps sales and marketing
professionals accelerate business processes to reduce time to market and
decrease sales cycles. Companies can conduct all types of meetings using
PlaceWare including web seminars, product rollouts, investor relations and
sales meetings" appears at the top of the black column.The PlaceWare logo with
the text "Web conferencing" below it appears in the lower right hand corner.]

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

TABLE OF CONTENTS

Page
----

Prospectus Summary....................................................... 4
Risk Factors............................................................. 8
Special Note Regarding Forward-Looking Statements........................ 17
Use of Proceeds.......................................................... 18
Dividend Policy.......................................................... 18
Capitalization........................................................... 19
Dilution................................................................. 20
Selected Consolidated Financial Data..................................... 21
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 23
Business................................................................. 34

Page
----

Management............................................................... 47
Certain Transactions..................................................... 58
Principal Stockholders................................................... 61
Description of Capital Stock............................................. 63
Shares Eligible for Future Sale.......................................... 65
Underwriting............................................................. 67
Notice to Canadian Residents............................................. 69
Legal Matters............................................................ 70
Experts.................................................................. 70
Additional Information................................................... 70
Index to Consolidated Financial Statements............................... F-1

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

You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document.

Dealer Prospectus Delivery Obligation

Until , 2000 (25 days after the commencement of this offering), all
dealers that effect transactions in these securities, whether or not
participating in this offering, may be required to deliver a prospectus. This
is in addition to the dealer's obligation to deliver a prospectus when acting
as underwriters and with respect to their unsold allotments or subscriptions.

PROSPECTUS SUMMARY

You should read this entire prospectus carefully, including the risk factors
beginning on page 8.

PlaceWare

PlaceWare is a leading provider of services and products that enable
businesses to conduct real-time, interactive meetings and presentations, or web
conferences, over the Internet. Businesses use our web conferencing services
and products as strategic tools to create new business opportunities; share and
exchange information among geographically dispersed organizations; strengthen
relationships with customers, partners, vendors and employees; enhance employee
productivity; and reduce unnecessary travel time and expenses.

At the core of our services is Conference Center 2000, the latest generation
of our technology. It enables presenters to quickly and easily upload standard
presentations and other selected file types and begin presenting in a web
conference in a relatively short period of time. Using only an Internet-enabled
personal computer and a telephone, people can attend these meetings and
presentations. Conference Center 2000 can be used to host meetings and
presentations over the Internet with up to 2,500 participants. Our web
conferencing services can be delivered either as a hosted application service
or as an in-house software application.

Forrester Research has identified web conferencing as one of the fastest
growing segments of the market for services that allow geographically dispersed
individuals to communicate, interact and work together. In their survey of
Fortune 1000 companies, 70% of all respondents indicated they would use web
conferencing by 2001. Web conferencing generally uses customers' existing voice
and data infrastructure to facilitate widespread deployment. Additionally, it
provides businesses with the ability to communicate verbally while sharing rich
visual content over Internet connections with speeds as low as 28.8Kbps. We
believe web conferencing enables businesses to increase their reach and cost-
effectively communicate time-sensitive and important information to
constituencies within and outside of an organization, thereby shortening time
to market and sales cycles.

Our services and products are designed to be:

. easy-to-use;

. highly scalable;

. simple to purchase and deploy; and

. highly interactive with support for rich visual content.

We began providing web conferencing in June 1997 and as of June 30, 2000,
had over 750 customers. Our customers consist of a diverse group of companies
operating in many industries worldwide, ranging from Fortune 100 to small
private companies. Our largest customers in their respective industry category
include Ariba, Inc., Autodesk, Inc., Cisco Systems, Inc., The Dun and
Bradstreet Corporation and International Data Corporation. In addition, we
provide co-branded web conferencing services through several third-party
service providers.

Our objective is to be the leading provider of web conferencing services.
Key elements of our strategy to achieve this objective include:

. promoting web conferencing, in general, and increasing brand
recognition;

. expanding our business development and sales and marketing efforts to
attract new customers;

. increasing our customers' utilization of our existing services and
products;

. extending and expanding our service and product offerings;

. continuing to increase the scalability and reliability of our services
and products;

. leveraging and extending our technology base to more tightly integrate
our technology with third-party services and applications; and

. pursuing strategic acquisitions.

We have incurred losses since commencing operations. In the year ended
December 31, 1999, we had a net loss of $10.9 million and as of June 30, 2000
had an accumulated deficit of $33.8 million.

Our address is 295 North Bernardo Avenue, Mountain View, CA 94043. Our
telephone number is (650) 526-6100. Our web site is located at
www.placeware.com. Information contained on our web site does not constitute
part of this prospectus.

Recent Developments

Effective June 30, 2000 we acquired Envoy i-Con, Inc. Envoy is an
application solutions provider offering a web conferencing event management
system.

The Offering

Common stock offered................................ 3,500,000 shares
Common stock to be outstanding after this offering.. 20,790,888 shares
Use of proceeds..................................... For general corporate
purposes, including
working capital, capital
expenditures, geographic
expansion and additional
sales and marketing
efforts.
Proposed Nasdaq National Market symbol.............. PLCW

The number of shares of our common stock outstanding after this offering is
based on shares outstanding as of June 30, 2000. This table excludes:

. 5,380,000 shares of series D preferred stock sold at a price of $5.00 per
share in July 2000;

. 1,706,862 shares of common stock underlying outstanding options as of
June 30, 2000 at a weighted average exercise price of $4.11 per share;

. 174,848 shares of common stock underlying outstanding options assumed
under the Envoy i-Con, Inc. 1999 stock incentive compensation plan as of
June 30, 2000 at a weighted average exercise price of $3.32 per share;

. 82,565 shares of common stock that are issuable upon the exercise of
outstanding warrants at a weighted average exercise price of $1.21 per
share;
. 3,650,000 shares reserved for issuance or future grant under our stock
option plans; and
. 500,000 shares reserved for issuance under our employee stock purchase
plan.

Summary Consolidated Financial Information

The following financial data, other than the pro forma data, include the
financial data of PlaceWare and exclude the financial data of Envoy. Our pro
forma consolidated statements of operations data give effect to our acquisition
of Envoy, which closed on June 30, 2000, as if it occurred at the beginning of
the pro forma periods presented.

Six months ended
Year Ended December 31, June 30, Pro forma
-------------------------- ----------------- ---------------------------
Year ended Six months
December 31, ended June
1997 1998 1999 1999 2000 1999 30, 2000
------- ------- -------- ------- -------- ------------ ----------
(unaudited) (unaudited)
(in thousands, except per share data)

Statement of Operations
Data:
Revenue:
Hosting and services.. $ -- $ 511 $ 2,433 $ 749 $ 4,963 $ 4,257 $ 7,382
Licensing............. 609 1,113 1,962 516 1,681 1,962 1,681
------- ------- -------- ------- -------- -------- --------
Total revenues...... 609 1,624 4,395 1,265 6,644 6,219 9,063
------- ------- -------- ------- -------- -------- --------
Operating expenses (1):
Cost of hosting and
services............. -- 3 806 47 1,742 726 1,769
Operations............ 188 214 619 155 3,120 1,314 3,741
Sales and marketing... 1,516 2,819 8,410 2,609 11,387 9,605 12,191
Research and
development.......... 1,490 2,057 2,778 1,222 2,826 3,076 2,925
General and
administrative....... 817 1,654 2,900 837 2,206 3,631 2,991
Amortization of
goodwill............. -- -- -- -- -- 2,339 1,097
------- ------- -------- ------- -------- -------- --------
Total operating
expenses........... 4,011 6,747 15,513 4,870 21,281 20,691 24,714
------- ------- -------- ------- -------- -------- --------
Operating loss.......... (3,402) (5,123) (11,118) (3,605) (14,637) (14,472) (15,651)
Other income, net....... 130 155 200 6 201 140 104
------- ------- -------- ------- -------- -------- --------
Net loss................ $(3,272) $(4,968) $(10,918) $(3,599) $(14,436) $(14,332) $(15,547)
======= ======= ======== ======= ======== ======== ========
Basic and diluted net
loss per share......... $ (4.67) $ (4.58) $ (6.41) $ (2.39) $ (5.98) $ (5.02) $ (4.37)
======= ======= ======== ======= ======== ======== ========
Shares used in computing
basic and diluted net
loss per share......... 700 1,084 1,704 1,509 2,415 2,855 3,555
======= ======= ======== ======= ======== ======== ========
Pro forma basic and
diluted net loss per
share.................. $ (1.10) $ (1.02)
======== ========
Shares used in computing
pro forma basic and
diluted net loss per
share.................. 9,937 14,195
======== ========

June 30, 2000
--------------------------------
Pro forma,
Pro forma as adjusted
Actual (unaudited) (unaudited)
------- ----------- -----------
(in thousands)

Balance Sheet Data:
Cash and cash equivalents.................... $ 6,616 $ 6,616 $47,431
Working capital (deficit).................... (3,691) (3,691) 37,124
Total assets................................. 27,031 27,031 67,846
Deferred revenue............................. 7,758 7,758 7,758
Notes payable and capital lease obligations,
less current portion........................ 2,494 2,494 2,494
Stockholders' equity......................... 6,397 6,397 47,212

The pro forma balance sheet data give effect to the conversion of all
outstanding shares of preferred stock into shares of common stock upon the
consummation of this offering. The pro forma, as adjusted, balance sheet data
give effect to the foregoing and to the sale of the 3,500,000 shares of common
stock by us in this offering at an assumed initial public offering price of
$13.00 per share, based on the mid-point of the filing range, after deducting
the underwriting discounts and commissions and estimated offering expenses and
application of the net proceeds.

See note 1 to the consolidated financial statements for a description of the
method that we used to compute the net loss per share amounts.
- -------

(1) See note 4(c) to the consolidated financial statements for a description of
stock-based compensation included in operating expenses.

RISK FACTORS

An investment in our common stock is very risky. You should carefully
consider the risks described below, together with the other information in this
prospectus, before buying shares in this offering. See "Special Note Regarding
Forward-Looking Statements."

Risks Related to our Business

We have a limited operating history, so it will be difficult for you to
evaluate an investment in our company.

We were incorporated in October 1996 and first recorded revenue in 1997. In
July 1998, we shifted the focus of our business model from sales of software
licenses to a hosted services model. In connection with this shift, we have
made changes to our services and products and have hired a significant number
of new employees, including several key members of our management team. As a
result, we have a limited relevant operating history for you to evaluate an
investment in our company, and we cannot be certain that our business model and
future operating performance will yield the results that we seek. As a company
in the new and rapidly evolving web conferencing industry, we face risks and
uncertainties relating to our ability to successfully implement our strategy.
You must consider these risks, expenses and uncertainties that a company like
ours faces in a new and rapidly evolving market such as the market for web
conferencing services. In particular, you must consider that our business model
is based on an expectation that demand for Internet-based conferencing services
will increase materially in the business community, which at present primarily
utilizes more traditional methods of communication.

You should not rely on our quarterly operating results as an indication of our
future results because they are subject to significant fluctuations.
Fluctuations in our operating results may negatively impact our stock price.

Our quarterly operating results have fluctuated in the past and we expect
them to fluctuate in the future, due to a variety of factors that could affect
our revenues or expenses in any given quarter. As such, you should not rely on
quarter-to-quarter comparisons of our results of operations as an indication of
future performance. Factors that may affect our quarterly results include:

. the inability to deliver our hosted service due to a service
interruption;
. the inability to effectively market or deliver our new product
introductions, including our Conference Center 2000 product;
. the loss of major customers or communication service providers;
. the failure to attract new customers;
. the timing of a significant marketing campaign;
. downward pressure on prices paid by our business customers, as a result
of competition or other factors, which could reduce our quarterly
revenues even if we maintain or increase the number of sales; and
. increasing costs associated with developing and maintaining our web
conferencing services, systems and infrastructure.

As a result of the factors listed above and elsewhere in this "Risk Factors"
section of the prospectus, it is possible that in some future periods our
results of operations may be below the expectations of investors and securities
analysts who may initiate coverage. This could cause our stock price to
decline. In addition, we plan to significantly increase our operating expenses
to expand our sales and marketing, administration, product development and
technology development. If revenues fall below our expectations in any quarter
and we are unable to quickly reduce our spending in response, our operating
results would be lower than expected and our stock price may fall.

Unrecognized changes in our billing practices may be seen as additional
fluctuations in our operating results, which may cause our stock price to fall.

We historically have received payments in advance for our services and
products and have deferred these revenues over a fixed period of time,
generally for a period of one year. If we modify our billing practices and

change the period of time over which we defer revenues, and if investors or
securities analysts who may initiate coverage fail to understand this
modification, such investors or analysts may perceive this change as additional
fluctuations in our operating results which may cause the price of our stock to
decrease.

We have a history of losses, we expect continuing losses and we may never
achieve profitability.

Our operating costs have exceeded our revenue in each quarter since our
inception in October 1996. We incurred cumulative losses of approximately $33.8
million from October 1996 through June 30, 2000. In addition, Envoy i-Con, Inc.
incurred cumulative losses of approximately $3.4 million from June 1998 through
June 30, 2000. We intend to increase our expenditures on marketing,
administration, product development and technology development, and such
expenditures may further contribute to our net losses. For instance, we intend
to increase our expenditures related to the PlaceWare brand, believing that
brand awareness will be critical to increasing business customer awareness and
acceptance. If we do not increase our revenues as a result of these
expenditures, we may not be able to achieve and maintain profitability and may
be unable to continue our operations.

A significant amount of our revenue comes from repeat customers, none of whom
are under an obligation to continue doing business with us. If existing
customers do not purchase additional services, our future revenue may be
limited.

A significant amount of our revenues come from repeat customers. Because our
customers are under no obligation to continue to renew their subscription to
our services and products, a failure to retain customers or maintain and
increase their utilization of our services and products, we may not be able to
generate sufficient revenues and may not achieve or sustain profitability in
the future.

If we fail to execute our growth strategy as planned, our future revenue will
be limited and our ability to achieve profitability will be harmed.

The majority of our web conferencing customers to date have been businesses
in the high technology, financial services and professional services markets.
We intend to expand our service and product offerings and to develop customer
bases in other target markets. We have had limited experience in these extended
markets and may encounter unanticipated obstacles, such as regulatory issues or
changing technical standards, which may negatively affect our growth strategy.
If we fail to gain customers in new target markets, our future revenue will be
limited and our ability to achieve profitability will be harmed.

Our competitive position could suffer if we fail to enter into acquisitions,
joint ventures or other relationships with third parties.

Part of our strategy requires us to enter into relationships with service
providers or other third parties, and we may enter into acquisitions or joint
ventures. Our failure to form beneficial relationships, or our failure to
secure terms favorable to us, may put us in a competitive disadvantage. Any
such relationship, acquisition or joint venture may:

. result in conflicts between company cultures or personnel;
. cause a disruption in our ongoing business;
. create problems incorporating other companies' technology into our
services and products, which may create additional expenses or require us
to divert our resources; or
. impair relationships with existing service providers or customers.

Any of these risks or costs that may result from entering into such
relationships, acquisitions or joint ventures could increase expenses, distract
management and harm our competitive position.

If we are unable to successfully manage growth, our ability to achieve
profitability will be harmed and the value of an investment in our stock would
decrease.

Since we began operations, we have significantly increased the size of our
operations and we plan to continue to expand our operations by hiring
additional employees and increasing the web conferencing capacity

of our hardware and software infrastructure. If we do not expand our operations
in an efficient manner, our expenses could grow disproportionately to revenues,
our revenues could decline or grow more slowly, or the quality of our services
and products may suffer, any of which could negatively affect the value of your
investment. The growth of our operations is expensive and may require us to
implement an effective planning and management process, including improved
operational, financial and managerial controls, and enhanced reporting systems
and procedures. If we do not succeed in these efforts, it could reduce our
revenues and the value of your investment.

We may be unsuccessful in integrating Envoy i-Con, Inc., a company we recently
acquired, into our operations which may affect our ability to operate our
business.

In June 2000, we acquired Envoy i-Con, Inc., an application solution
provider offering a web conferencing event management system, in an effort to
expand our services and products offerings. Unless the technology, operations
and personnel of Envoy is successfully integrated with ours, the anticipated
benefits of the acquisition will not be achieved. In order to successfully
manage the acquisition, we may be required to divert existing resources from
our current operations in order to facilitate the integration of our two
companies. This integration process may be time consuming and expensive and may
affect our ability to run our business.

We may face difficulties in attempting to expand our operations in
international markets, limiting our ability to generate revenue from
international sources, decreasing our ability to achieve profitability and
causing our stock price to decline.

One component of our strategy for growth is to expand into international
markets. We have recently commenced sales operations in the United Kingdom, and
in the future intend to expand these operations and open new offices in Asia.
It will be costly to establish international sales operations, to promote our
brand internationally, and to develop localized services and products. Revenue
from international activities may not offset the expense of establishing and
maintaining these foreign operations. In addition, we may not be successful in
marketing and distributing our services and products because we have little
experience in these markets.

Some of the factors that may impact our ability to initiate and maintain
successful operations in foreign markets include:

. adoption of new laws or changes to existing international laws;
. currency fluctuations;
. increased costs associated with opening and maintaining new hosting
facilities;
. political and economic instability;
. slower or more expensive Internet access; or
. differing technology standards.

If we are unable to profitably operate in foreign markets, our business may not
grow as anticipated, substantial resources could be drained and our stock price
could suffer.

If we fail to develop new services and products, we may fail to achieve
anticipated revenues.

In order to be successful we must be able to recognize new opportunities and
develop new services and products on a timely basis to take advantage of these
opportunities. For example, we have recently focused on, and will continue to
devote significant resources to, the development of Conference Center 2000, the
most recent version of our hosted web conferencing solution. If Conference
Center 2000 does not gain widespread market acceptance, or if we fail to
implement our planned enhancements to Conference Center 2000 on a timely basis,
such as increasing the number of supported application file types, including
word processing and spreadsheet documents, we may suffer lost sales and could
fail to achieve anticipated revenues, and our business may suffer.

Alteration of our customers' or users' firewall protection policies may reduce
the effectiveness of our services and products and lead to reduced revenues.

A key feature of our services and products is their ability to traverse
corporate network firewalls that broadly block the transmission of certain
content across organizational boundaries. Our services and products are
dependent on their ability to penetrate firewalls. Recent electronic break-ins
and hacking activities have caused companies across various industries to
re-evaluate the level of firewall protection necessary to protect their data
and computer operations. If more companies improve or substantially alter their
current firewall protection, we may lose our current ability to provide web
conferencing across most corporate firewalls, leading to a loss in revenues.

We rely heavily on the reliability, security and performance of our internally
developed systems and operations, and any difficulties in maintaining these
systems may result in service interruptions or increased expenditures.

The software and hardware configuration that underlies our service and
products, and which we market to third parties, is based on technologies that
have been developed primarily by our own engineers and employees. This
configuration is complex and requires considerable technical expertise to
maintain and the satisfactory performance, reliability and availability of this
configuration is critical to our business. Any internal system interruptions
that result in the unavailability of services or products would harm our
reputation and our ability to conduct business. The failure to develop and
execute reliability policies, procedures and tools to operate our software and
hardware infrastructure could result in intermittent to prolonged outages. Many
of the software systems we currently use will need to be enhanced over time or
replaced with equivalent commercial products, either of which could entail
considerable effort and expense.

If we are unable to maintain adequate data security, our customers may refrain
from utilizing our services and products.

Our services and products enable customers to transmit and share information
over the Internet. While we currently have security measures to prevent
unauthorized attendance and access to particular conferences, we have not
deployed any encryption technologies or similar security measures to protect
content, as it is being transmitted, from being viewed or accessed by
unauthorized users. To the extent such encryption technology and similar
security measures are required or expected by businesses for the transmission
of commercially or otherwise sensitive information, our failure to deploy such
technology and implement safeguards may result in the loss of existing
customers, the inability to attract new customers and possibly subject us to
liability for breaches of security and confidentiality.

We could lose revenues as a result of software errors or defects.

The technology underlying our services and products is complex and may
contain undetected errors when new services and products are introduced or when
new versions are released. Although we conduct extensive testing of our
services and products during development, we have in the past discovered
errors. If we market services and products that have errors or that do not
function properly, then we may experience negative publicity, loss of or delay
in market acceptance, or claims against us by customers, any of which may harm
our business.

If we are unable to scale our hosting infrastructure, we may lose market share
or experience reduced revenues.

The number of web conferences we are hosting has grown significantly. We
will need to enhance our software and hardware infrastructure to handle
anticipated increased volume in the number of events and the number of
customers using our services and products. Adding this new capacity will be
expensive, and we may not be able to do so successfully. If we are unable to
expand capacity to keep pace with our anticipated customers' demands we may
lose market share and our business may be harmed.

We may be subject to infringement claims which could harm our business.

Because we are in an industry that relies upon proprietary software and
technology to support its business, there is a substantial risk of litigation
regarding intellectual property rights in our industry. A successful
infringement claim against us and our failure or inability to license the
infringed or similar technology could harm our business. We expect that our
technologies and products may be increasingly subject to third-party
infringement claims as the number of our competitors grows. We cannot be
certain that third parties will not make a claim of infringement against us
with respect to our technologies and products. Any claims, with or without
merit, could:

. be time-consuming to defend;
. result in costly litigation;
. divert management's attention and resources;
. cause delays in delivering services and products;
. require the payment of monetary damages which may be tripled if the
infringement is found to be willful;
. require us to re-engineer our products in a non-infringing manner;
. result in an injunction which would prohibit us from offering one or more
services or products; or
. require us to enter into royalty or licensing agreements which, if
required, may not be available on acceptable terms, if at all.

In July 1999, we were contacted by legal counsel representing Pixion, Inc.,
a web conferencing provider, with allegations that we misappropriated trade
secrets under an August 1997 license and distribution agreement. Pixion
essentially alleged that we failed to destroy any shared confidential
information disclosed pursuant to the agreement, and that their confidential
information was used in the development of our LiveDemo software product.
Pixion also alleged copyright and trademark infringement. After initial
attempts to resolve this issue, Pixion has failed to respond to any of our
requests to move this issue forward, and our last contact with Pixion was in
May 2000. Although we have not received any additional communications from
Pixion, we are prepared to vigorously defend ourselves if and when such claims
are brought to court. If a lawsuit is brought to court, we may be forced to
expend time, money and resources in defending against such lawsuit, and if we
are unsuccessful in our defense, our business may be harmed. Trade secret
misappropriation cases are inherently fact-specific, making it difficult to
predict with any degree of certainty the outcome of a given dispute. This
uncertainty is heightened by the fact that such claims may be tried before a
jury, and that if the jury finds that a defendant acted willfully or in bad
faith, it may award the plaintiff punitive damages that could be substantial,
in addition to injunctive relief, damages and attorneys' fees. It is thus
difficult to quantify the potential extent of our exposure, although it could
be very substantial.

Due to the competitive labor market in Silicon Valley, we may not be able to
attract and retain sufficient qualified professionals necessary for growth.

In order for us to succeed, we must identify, attract, retain and motivate
highly-skilled technical, managerial, sales and marketing personnel. We plan to
significantly expand our operations, and we will need to hire additional
personnel as our business grows. Competition for qualified personnel is
intense, especially in Silicon Valley, and we have experienced difficulties in
hiring highly-skilled technical personnel due to significant competition for
experienced personnel in our market. In addition, we have historically relied
on the grant of stock options to employees as a key component of overall
compensation. Stock options granted after the offering may be less attractive
to prospective employees, further hindering our ability to attract new hires.
Failure to attract and retain necessary personnel could harm our ability to
meet our growth targets.

Most of our management team has only recently joined us and has little
experience working together, which could limit the team's effectiveness in
operating our business.

Our management team does not have significant experience working together,
because most members of our management team have been employed by us for a
short period of time. Specifically, three of our executive

officers joined us during 1999 and one joined in 2000. This could prevent or
limit our management team's ability to work together effectively. The failure
of our management team to work together effectively could delay efficient
decision-making and execution of business objectives, that may harm our ability
to operate our business.

The termination of our service provider relationships could reduce our future
revenues and increase our costs.

As part of our strategy, we have entered into various agreements with a
number of service providers, under which we provide co-branded web conferencing
services and receive shared revenues and increased brand recognition. If these
relationships are terminated or otherwise fail, our revenues may drop and we
may be required to devote additional resources to the sales and marketing of
our services and products. We have no long-term contracts with these service
providers and they generally are not obligated to offer our services or
products to their clients or restricted from working with our competitors.
Accordingly, our success will be affected by their willingness to devote
resources and efforts to marketing our services and products.

We have purchased and licensed third-party technologies, may enter into third-
party licenses in the future, and we face risks in doing so.

We utilize technology licensed from Xerox PARC in our web conferencing
services and products, which enables companies to hold and participate in web
conferences with others, despite the existence of corporate firewalls. The loss
of any of this licensed technology could result in materially diminished
revenue and increased costs associated with securing rights to substitute
technology. In addition to maintaining this license, we may also need to
license additional technologies to remain competitive, and may not be able to
license these technologies on commercially reasonable terms or at all. Our
inability to obtain any of these licenses could delay the development of our
services and products until equivalent technology can be identified, licensed
and integrated, which may harm our business. These licenses may also expose us
to increased risks, including risks related to the integration of or inability
to integrate new technology, the diversion of resources from the development of
our own proprietary technology and our inability to generate revenue from new
technology sufficient to offset associated acquisition and maintenance costs.

In addition, we have developed our products to be utilized by Internet
browsers capable of integrating and running applications based on the Java
software programming language. If there are fundamental changes to existing
Internet browsers such that they no longer are compatible with or capable of
running these Java-based applications, we will be forced to modify our services
and products and our business may be harmed. Similarly, if there are
fundamental changes to the Java programming language, we will be forced to
modify our services and products and our business will be harmed.

Risks Related to Our Industry

Competition in the web conferencing services industry is intense and, if we are
unable to compete effectively, the demand for, or the prices of, our services
and products may decline.

Because the market for web conferencing services is still in an early stage,
the competition between the existing businesses is intensely competitive,
rapidly evolving and subject to technological change. We expect competition to
increase significantly in the future as new and existing competitors seek to
provide web conferencing services and products.

Our principal competitors include providers of web conferencing services
such as Evoke and WebEx. We may experience additional competition from
companies that provide streaming media services, audio conferencing or video
conferencing services, or other established software or distance learning
companies that decide to enter the web conferencing market. These companies
could possess large, existing customer bases, substantial financial resources
and established distribution channels and could develop, market or resell a
number of web conferencing services. Such potential competitors may also choose
to enter the market for web

conferencing services by acquiring one of our existing competitors or by
forming strategic alliances with such competitors. Either of these occurrences
could harm our ability to compete effectively. In addition, our currently
licensed service providers may enter into similar agreements with our
competitors or develop parallel services based on their own technology. This
kind of competition from our service providers may harm our business in the
future.

The growth of our business will be diminished if web conferencing services are
not accepted as a medium for business communications.

The market for web conferencing is new and rapidly evolving and our business
will be harmed if sufficient demand for our services and products does not
develop. Our current and planned services and products are different from the
traditional meeting and presentation methods that many of our customers have
historically used to communicate with their customers, partners, vendors and
employees. Demand for our services and products may not materialize for the
following reasons:

. businesses that have already invested substantial resources in other
distance communication solutions may be reluctant to adopt our new
conferencing services and products;
. businesses may choose not to accept web conferencing as a means of
conducting business; and
. the effectiveness of web conferencing may diminish significantly if
alternative technologies or methods for distance communication develop.

If the demand for our services does not materialize, our revenues may not grow
as fast as we anticipate, if at all.

We must adopt and maintain a competitive pricing structure.

The price of Internet services and products is subject to rapid and frequent
change, and in many instances, businesses provide their services for free or on
a trial basis. Although we offer MyPlaceWare, a free service, a significant
portion of our business comes from customers that pay to obtain other enhanced
services and products. Due to competitive reasons or technical difficulties, we
may be forced to reduce or eliminate prices for certain of these revenue-
generating services or products, which may reduce revenues.

Our services and products are designed to operate in connection with the
Internet, and as such, we rely generally on the equipment and infrastructure of
the Internet and of our customers.

Our services and products are designed to operate over the Internet, as
accessed and maintained by each individual customer. As a result, the
successful use of our product will generally depend on the continued
development and maintenance of the Internet infrastructure, such as reliable
network backbones with the necessary speed, data capacity and security, and
will also depend on customers' own computer equipment, including a functional
operating system, Internet browser software and reliable connections to the
Internet. To the extent that the Internet continues to experience increased
numbers of users, a high frequency of use or increased bandwidth requirements
of users, the Internet infrastructure may not continue to be able to support
the demands placed on it by this continued growth and the performance or
reliability of the Internet may be harmed. Furthermore the Internet has
experienced a variety of outages and other delays as a result of damage to
portions of its infrastructure, and could face similar outages and delays in
the future. These outages and delays could reduce the level of Internet usage
and diminish the perception of the Internet as a viable means of communication,
such that usage of our services and products may decrease and our business may
be harmed.

Government regulations involving the transmittal of information over the
Internet are being developed and we may face liabilities in connection with the
information that is transmitted using our conferencing services.

The current legal framework that applies to the Internet is not well
developed and is continually being revised. Laws continue to be enacted that
address issues of privacy, security, pricing, taxation and quality of services
and products. Because our web conferencing services allow customers to transmit
information over the

Internet, we may be found to be liable for any improper information that our
customers transmit. We may face potential liability for defamation, negligence,
copyright, patent or trademark infringement and other claims based on the
nature and content of the materials being transmitted by our services or
products. Although we currently require customers to agree not to engage in the
transmission of such content before utilizing our services or products, there
can be no guarantee that our customers will refrain from the transmission of
such content, or that we will not be deemed responsible for the content being
transmitted or hosted using our services, products or infrastructure. These
regulations could affect the cost of communicating on the Internet and
negatively affect the demand for our web conferencing services and products,
such that our business would be harmed.

We may be subjected to new federal, state and local taxes on our use of the
Internet.

The tax treatment of activities on or relating to the Internet is also
currently unsettled. A number of proposals have been made at the federal, state
and local levels and by foreign governments that could impose taxes on the
online sale of goods and services and other Internet activities. The Internet
Tax Freedom Act of 1998 has generally imposed a U.S. moratorium through October
2001 on the imposition of some kinds of consumer-related taxes, other than
sales or use taxes, in connection with Internet access and Internet-related
sales. However, future laws imposing taxes or other regulations on commerce
over the Internet could substantially impair the growth of Internet commerce
and, as a result, decrease our revenues or make it cost-prohibitive to operate
our business.

Risks Related to this Offering

Our stock price may be highly volatile and could drop, particularly because our
business depends on the Internet.

Prior to this offering, our common stock has not been sold in a public
market. After this offering, an active trading market in our stock might not
develop. If an active trading market does develop, it may not continue.
Moreover, if an active market develops, the trading price of our common stock
may fluctuate widely as a result of a number of factors, many of which are
outside our control. In addition, the stock market has experienced extreme
price and volume fluctuations that have affected the market prices of many
technology companies, particularly Internet-related companies. Moreover, these
price and volume fluctuations have often been unrelated or disproportionate to
the operating performance of these companies. These broad market fluctuations
could adversely affect the market price of our common stock.

We have broad discretion over the use of the proceeds of this offering, and our
use of the proceeds may not produce a favorable return.

We have broad discretion to allocate the net proceeds of the offering.
Although we intend to use the net proceeds primarily for general corporate
purposes, including working capital, capital expenditures, geographic expansion
and additional sales and marketing efforts, the timing and amount of our actual
expenditures are subject to change. Factors that may affect the timing and
amount of expenditures include:

. the success of our sales and marketing efforts;
. the timing and introduction of new services and products; and
. competitive market developments.

Our management will have the sole discretion over how to allocate the net
proceeds of the offering. The failure of management to apply these funds
effectively could harm our ability to manage our business and reduce our stock
price. See "Use of Proceeds."

If our stockholders sell substantial amounts of our common stock after the
offering, the market price of our common stock may fall.

Sales of substantial numbers of shares of our common stock in the public
market after this offering, or the perception that sales could be made, could
cause the market price of our common stock to decline. Based on shares
outstanding as of June 30, 2000 following this offering, we will have
approximately 20,790,888 shares of our common stock outstanding or 21,615,888
shares if the underwriters' over-allotment option is exercised in full.
Approximately 17,290,888 shares or 75.9% of our outstanding common stock will
be subject to resale restrictions under U.S. securities laws. Holders of
substantially all of these shares have agreed not to sell these shares for at
least 180 days following the date of this prospectus, although Credit Suisse
First Boston Corporation can waive this restriction at any time at its sole
discretion and without notice. When these restrictions on resale end beginning
on March 29, 2001, assuming an effective date of September 29, 2000, the market
price for our common stock could drop significantly if holders of these shares
sell them or are perceived by the market as intending to sell them. These sales
also may create difficulties for us if we attempt to raise additional funds by
selling equity securities in the future. See "Shares Available for Future
Sale."

If we are unable to obtain the additional capital required to develop and
expand our business, we may be forced to curtail operations.

We may be required to raise additional capital through the issuance of debt
or equity securities. Depending on market conditions, we may choose to raise
additional capital sooner for our working capital requirements. The actual
amount and timing of our future capital requirements will depend upon a number
of factors, including:

. the number of new markets we enter and the timing of entry;
. new service and product deployment schedules and associated costs;
. the rate and price at which customers purchase our services and products;
. the level of marketing required to attract and retain customers in new
and existing markets; and
. opportunities to invest in or acquire complementary businesses.

The value of your investment may be diluted by our future capital raising
transactions. We also may be unsuccessful in raising sufficient capital on
terms that we consider acceptable, if at all, which would impair our ability to
continue to expand our business or respond to competitive developments.

After this offering, our executive officers, directors and principal
stockholders, whose interests may conflict with yours, will control
approximately 41.3% of our outstanding common stock.

Following this offering, our executive officers and directors and principal
stockholders together will beneficially own approximately 41.3% of the total
voting power of our company. These stockholders, as a group, will be able to
determine the composition of our board of directors, will retain the voting
power to approve all matters requiring stockholder approval and will continue
to have significant influence over the company. This concentration of control
could delay or prevent a change in control of our company or otherwise
discourage a potential acquirer from attempting to obtain control of our
company, which in turn could significantly lower the market price of our common
stock or prevent our stockholders from realizing a premium over the market
prices for their shares of common stock. We also plan to reserve up to 5% of
the shares offered in this offering under a directed share program in which our
executive officers, directors, principal stockholders, employees, business
associates and related persons may be able to purchase shares in this offering
at the initial public offering price. This program may further increase the
amount of stock held by persons whose interests are closely aligned with
management's interests.

We have anti-takeover provisions which may make it difficult for a third party
to acquire us.

Our corporate documents and Delaware law contain provisions that might
enable our management to resist a change in control of our company. These
provisions might discourage, delay or prevent a change in our management. These
provisions could also discourage a proxy contest and make it more difficult for
you and

other stockholders to elect directors and take other corporate actions. The
existence of these provisions could limit the price that investors might be
willing to pay in the future for shares of common stock and could deprive you
of an opportunity to receive a premium for your common stock as part of a sale.
These provisions include:

. authorizing the issuance of "blank check" preferred stock that could be
issued by our board of directors to increase the number of outstanding
shares and thwart a takeover attempt;

. prohibiting cumulative voting in the election of directors, which would
allow less than a majority of stockholders to elect director candidates;

. limiting the ability of stockholders to call special meetings of
stockholders;

. prohibiting stockholder action by written consent, thereby requiring all
stockholder actions to be taken at a meeting of our stockholders;

. establishing advance notice requirements for nominations for election to
the board of directors or for proposing matters that can be acted upon
by stockholders at stockholder meetings; and

. Section 203 of the Delaware General Corporation Law, which could thwart
a takeover attempt. See "Description of Capital Stock--Delaware Anti-
Takeover Law and Certain Charter and Bylaw Provisions."

Investors will experience immediate dilution.

Investors in common stock in the offering will experience immediate and
substantial dilution in the net tangible book value of their shares. At the
assumed initial public offering price of $13.00 per share, based on the mid-
point of the filing range, dilution to new investors will be $10.73 per share,
based on the shares outstanding on June 30, 2000, which excludes the sale of
Series D preferred stock in July 2000. Additional dilution will occur upon
exercise of outstanding stock options. See "Dilution" on page 20.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus, including the sections entitled Prospectus Summary, Risk
Factors, Management's Discussion and Analysis of Financial Condition and
Results of Operations, and Business, contains forward-looking statements. These
statements relate to future events or our future financial performance and
involve known and unknown risks, uncertainties and other factors that may cause
our or our industry's actual results, levels of activity, performance or
achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by the forward-
looking statements. These risks and other factors include those listed under
Risk Factors and elsewhere in this prospectus. In some cases, you can identify
forward-looking statements by terminology such as may, will, should, expects,
plans, intends, anticipates, believes, estimates, predicts, potential or
continue, or the negative of these terms or other comparable terminology. These
statements are only predictions. In evaluating these statements, you should
specifically consider various factors, including risks outlined under Risk
Factors.

Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements.

Except as otherwise indicated, information in this prospectus is based on
the following assumptions:

. the conversion of each outstanding share of our convertible preferred
stock into one share of common stock immediately before completion of
this offering;

. no exercise of the underwriters' over-allotment option; and

. the filing of our amended and restated certificate of incorporation.

PlaceWare, MyPlaceWare, Web Conferencing is Here, iVault, Envoy and
Envoyglobal.com are our trademarks. Other trademarks or service marks appearing
in this prospectus are trademarks or service marks of the companies that use
them.

USE OF PROCEEDS

Our net proceeds from the sale of the 3,500,000 shares of common stock we
are offering in this prospectus at an assumed initial public offering price of
$13.00 per share, based on the mid-point of the filing range, are estimated to
be $45,500,000, or $52,325,000 if the underwriters' over-allotment option is
exercised in full and after deducting the underwriting discounts and
commissions and estimated offering expenses.

At this time the principal purposes of this offering are to obtain
additional capital to increase our financial flexibility and to create a public
market for our common stock. We intend to use the net proceeds from this
offering over the next year as follows:

. an estimated $20 million to $24 million for sales and marketing expenses
which include expansion of our sales and marketing organizations and
marketing activities;

. an estimated $8 million to $10 million for hosting, services and
operations expenses;

. an estimated $5 million to $7 million for research and development;

. an estimated $3 million to $5 million for capital expenditures; and

. the remainder for working capital and general corporate purposes.

These estimates, however, may not be accurate and our actual use of proceeds
may vary from these estimates. Our management will have broad discretion in the
application of the net proceeds of this offering.

From time to time, we may evaluate opportunities to acquire or invest in
complimentary business, technologies or products and may use a portion of the
net proceeds from this offering to enter into these types of transactions. We
do not have any understanding, commitments or agreements with respect to any
material acquisitions.

DIVIDEND POLICY

We have never declared or paid any dividends on our capital stock. We
currently intend to retain all future earnings, if any, for use in the
operation and expansion of our business and do not anticipate declaring or
paying cash dividends for the foreseeable future. Any determination to pay
dividends in the future will be at the discretion of our board of directors and
will depend upon our financial condition, operating results and capital
requirements. Our existing line of credit prohibits the payment of cash
dividends.

CAPITALIZATION

The following table sets forth the following information:

. the actual capitalization of PlaceWare as of June 30, 2000;

. the pro forma capitalization of PlaceWare after giving effect to the
automatic conversion, upon completion of this offering, of all
outstanding shares of convertible preferred stock into 11,896,574 shares
of common stock and the filing of our amended and restated certificate of
incorporation; and

. the pro forma as adjusted capitalization to give effect to the sale of
3,500,000 shares of common stock at an assumed initial public offering
price of $13.00 per share in this offering, based on the mid-point of the
filing range, less underwriting discounts and commissions and estimated
offering expenses payable by PlaceWare.

June 30, 2000
---------------------------------
Pro Forma
Pro Forma As Adjusted
Actual (unaudited) (unaudited)
-------- ----------- -----------
(in thousands)

Notes payable and capital lease obligations,
less current portion........................ $ 2,494 $ 2,494 $ 2,494
Stockholders' equity:
Convertible preferred stock, $0.0001 par
value; actual--17,805,000 shares
authorized, 11,896,574 shares issued and
outstanding, aggregate liquidation
preference of $31,357; pro forma--
50,000,000 shares authorized, no shares
issued or outstanding; pro forma as
adjusted--50,000,000 shares authorized; no
shares issued or outstanding.............. 1 -- --
Common stock, $0.0001 par value; actual--
30,000,000 shares authorized; 5,394,314
shares issued and outstanding; pro forma--
300,000,000 shares authorized; 17,290,888
shares issued and outstanding; pro forma
as adjusted 300,000,000 authorized;
20,790,888 shares issued and outstanding.. 1 2 2
Additional paid-in capital................. 44,981 44,981 85,796
Notes receivable from stockholders......... (1,631) (1,631) (1,631)
Deferred stock-based compensation.......... (3,116) (3,116) (3,116)
Accumulated deficit........................ (33,839) (33,839) (33,839)
-------- -------- --------
Total stockholders' equity............... 6,397 6,397 47,212
-------- -------- --------
Total capitalization................... $ 8,891 $ 8,891 $ 49,706
======== ======== ========

The share amounts in this table are based on shares outstanding as of June
30, 2000. This table excludes:

. 5,380,000 shares of Series D preferred stock sold at a price of $5.00 per
share in July 2000.

. 1,706,862 shares of common stock underlying outstanding options as of
June 30, 2000 at a weighted average exercise price of $4.11 per share;

DILUTION

If you invest in our common stock, your interest will be diluted by the
difference between the initial public offering price per share of our common
stock and the pro forma as adjusted net tangible book value per share of common
stock after this offering. The pro forma net tangible book value as of June 30,
2000 was $6,397,000 or approximately $0.37 per share of common stock. Pro forma
as adjusted net tangible book value per share represents the amount of our
total tangible assets less total liabilities, divided by the total number of
shares of common stock outstanding after the offering, which will include the
conversion of all outstanding shares of convertible preferred stock into shares
of common stock. Dilution in net tangible book value per share represents the
difference between the amount per share paid by purchasers of shares of our
common stock in this offering and the net tangible book value per share of our
common stock immediately following this offering.

After giving effect to our sale of the 3,500,000 shares of common stock
offered by this prospectus and after deducting the estimated underwriting
discounts and commissions and estimated offering expenses payable by us, our
pro forma as adjusted net tangible book value as of June 30, 2000 would have
been $47,212,000, or approximately $2.27 per share. This represents an
immediate increase in net tangible book value of $1.90 per share to existing
stockholders and an immediate dilution in net tangible book value of $10.73 per
share to new investors. The following table illustrates this dilution on a per
share basis:

Assumed public offering price per share......................... $13.00
Pro forma as adjusted net tangible book value per share as of
June 30, 2000................................................ $ 0.37
Increase per share attributable to new investors.............. 1.90
------
Pro forma as adjusted net tangible book value per share after
the offering................................................... 2.27
------
Dilution in pro forma as adjusted net tangible book value per
share to new investors......................................... $10.73
======

The following table sets forth, on a pro forma as adjusted basis as of June
30, 2000, the differences between the number of shares of common stock
purchased from us, the total price and average price per share paid by existing
investors and by the new investors, before deducting the estimated underwriting
discounts and commissions and estimated offering expenses payable by us, at the
assumed initial public offering price of $13.00 per share, based on the mid-
point of the filing range.

Shares Purchased Total Consideration
--------------------- ---------------------- Average Price
Number Percentage Amount Percentage Per Share
---------- ---------- ----------- ---------- -------------

Existing shareholders... 17,290,888 83.2% $32,307,000 41.5% $ 1.87
New investors........... 3,500,000 16.8 45,500,000 58.5 $ 13.00
---------- ----- ----------- -----
Total................... 20,790,888 100.0% $77,807,000 100.0% $ 3.74
========== ===== =========== =====

Except as noted above, the foregoing tables and discussion assume no
exercise of any stock options or warrants outstanding at June 30, 2000 and
exclude 5,380,000 shares of Series D preferred stock sold in July 2000. As of
June 30, 2000, there were options outstanding to purchase 1,706,862 shares of
common stock at a weighted average exercise price of $4.11 per share, and
warrants to purchase 82,565 shares of common stock at a weighted average
exercise price of $1.21 per share. PlaceWare has also assumed options to
purchase shares of common stock under Envoy i-Con's 1999 stock incentive
compensation plan, and as of June 30, 2000 there were 174,848 options
outstanding at a weighted average exercise price of $3.32 per share. To the
extent that any of these options and warrants are exercised, there will be
further dilution to investors purchasing our common stock.

SELECTED CONSOLIDATED FINANCIAL DATA

This section presents our historical financial data. You should read
carefully the consolidated financial statements included in this prospectus,
including the related notes and "Management's Discussion and Analysis of
Financial Condition and Results of Operations." The selected data in this
section is not intended to replace the consolidated financial statements.

We derived the statement of operations data for the years ended December 31,
1997, 1998 and 1999 and the consolidated balance sheet data as of December 31,
1998 and 1999 from the audited consolidated financial statements included
elsewhere in this prospectus, which have been audited by KPMG LLP, independent
auditors. The consolidated balance sheet data as of December 31, 1997 is
derived from audited consolidated financial statements not included elsewhere
in this prospectus. The statement of operations data for the period from
inception to December 31, 1996, and the balance sheet data as of December 31,
1996 are derived from unaudited financial statements not included elsewhere in
this prospectus. The unaudited consolidated statement of operations data for
the six months ended June 30, 1999 and June 30, 2000, and the unaudited balance
sheet data as of June 30, 2000, are derived from unaudited consolidated
financial statements included elsewhere in this prospectus. We have prepared
the unaudited information on the same basis as the audited consolidated
financial statements and have included all adjustments, consisting only of
normal recurring adjustments, necessary to present fairly our financial
position and operating results set forth therein. The historical results are
not necessarily indicative of results to be expected in any future period and
results for the six months ended June 30, 2000 are not necessarily indicative
of results to be expected for the full fiscal year.

The unaudited pro forma combined condensed statement of operations data are
derived from our consolidated statement of operations for the year ended
December 31, 1999, combined with the statement of operations of Envoy i-Con,
Inc. for the year ended December 31, 1999, and from our condensed consolidated
statement of operations for the six months ended June 30, 2000, combined with
the statement of operations for Envoy i-Con, Inc. for the six months ended June
30, 2000 giving effect to our acquisition of Envoy i-Con, Inc. as if it had
occurred on January 1, 1999. The unaudited pro forma combined condensed
statement of operations data should be read in conjunction with, and are
qualified by reference to, the pro forma combined condensed statements of
operations and related notes and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

The unaudited pro forma combined condensed statement of operations is
presented for illustrative purposes only and is not necessarily indicative of
the operating results that would have occurred if the transactions had been
consummated at the dates indicated, nor is it necessarily indicative of the
future operating results of the combined companies.

See notes to the consolidated financial statements for an explanation of the
method used to determine the number of shares used in computing pro forma basic
and diluted loss per share.

From Six months ended
Inception Year Ended December 31, June 30, Pro forma
to -------------------------- ----------------- -----------------------
December 31, Year ended Six months
1996 December 31, ended June
(unaudited) 1997 1998 1999 1999 2000 1999 30, 2000
------------ ------- ------- -------- ------- -------- ------------ ----------
(unaudited) (unaudited)
(in thousands, except per share data)

Statement of Operations
Data:
Revenues:
Hosting and services.. $ -- $ -- $ 511 $ 2,433 $ 749 $ 4,963 $ 4,257 $ 7,382
Licensing............. -- 609 1,113 1,962 516 1,681 1,962 1,681
------ ------- ------- -------- ------- -------- -------- --------
Total revenues....... -- 609 1,624 4,395 1,265 6,644 6,219 9,063
------ ------- ------- -------- ------- -------- -------- --------
Operating expenses (1):
Cost of hosting and
services............... -- -- 3 806 47 1,742 726 1,769
Operations............ -- 188 214 619 155 3,120 1,314 3,741
Sales and marketing... -- 1,516 2,819 8,410 2,609 11,387 9,605 12,191
Research and
development.......... 196 1,490 2,057 2,778 1,222 2,826 3,076 2,925
General and
administrative....... 49 817 1,654 2,900 837 2,206 3,631 2,991
Amortization of
goodwill and
intangibles.......... -- -- -- -- -- -- 2,339 1,097
------ ------- ------- -------- ------- -------- -------- --------
Total operating
expenses............ 245 4,011 6,747 15,513 4,870 21,281 20,691 24,714
------ ------- ------- -------- ------- -------- -------- --------
Operating loss.......... (245) (3,402) (5,123) (11,118) (3,605) (14,637) (14,472) (15,651)
------ ------- ------- -------- ------- -------- -------- --------
Other income (expense):
Interest income....... -- 130 172 309 54 309 309 313
Interest expense and
other................ -- -- (17) (109) (48) (108) (169) (209)
------ ------- ------- -------- ------- -------- -------- --------
Total other income,
net................. -- 130 155 200 6 201 140 104
------ ------- ------- -------- ------- -------- -------- --------
Net loss................ $ (245) $(3,272) $(4,968) $(10,918) $(3,599) $(14,436) $(14,332) $(15,547)
====== ======= ======= ======== ======= ======== ======== ========
Basic and diluted net
loss per share......... $(0.49) $ (4.67) $ (4.58) $ (6.41) $ (2.39) $ (5.98) $ (5.02) $ (4.37)
====== ======= ======= ======== ======= ======== ======== ========
Shares used in computing
basic and diluted net
loss per share......... 496 700 1,084 1,704 1,509 2,415 2,855 3,555
====== ======= ======= ======== ======= ======== ======== ========
Pro forma basic and
diluted net loss per
share (unaudited)...... $ (1.10) $ (1.02)
======== ========
Shares used in computing
pro forma basic and
diluted net loss per
share (unaudited)...... 9,937 14,195
======== ========

- --------

(1) See note 4(c) to the consolidated financial statements for a description of
stock-based compensation included in operating expenses.

December 31,
--------------------------------- June 30,
1996 2000
(unaudited) 1997 1998 1999 (unaudited)
----------- ------ ------ ------- -----------
(in thousands)

Balance Sheet Data:
Cash and cash equivalents....... $1,112 $2,230 $3,155 $14,591 $ 6,616
Working capital (deficit)....... 968 2,404 2,826 10,152 (3,691)
Total assets.................... 1,165 3,039 4,907 21,136 27,031
Notes payable and capital lease
obligations, less current
portion........................ -- -- 613 503 2,494
Stockholders' equity............ 1,007 2,708 2,819 12,891 6,397

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with
Selected Consolidated Financial Data and our financial statements and the
related notes included elsewhere in the prospectus. Except for historical
information, the discussion in this report contains forward-looking statements
that involve risks and uncertainties. These forward-looking statements include,
among others, those statements including the words, expects, anticipates,
intends, believes and similar language. Our actual results could differ
materially from those discussed herein. Factors that could cause or contribute
to such differences include, but are not limited to the risks discussed in the
section titled Risk Factors in this prospectus. See "Special Note Regarding
Forward-Looking Statements."

Overview

Since our incorporation in October 1996, our primary activities have
consisted of the following:

. developing our services and products to enable businesses to conduct
real-time interactive meetings and presentations over the Internet;
. establishing relationships with major service providers;
. creating and expanding our web conferencing services and products and
Internet infrastructure;
. expanding our direct sales force; and
. assembling an experienced management team.

We have incurred losses since commencing operations and as of June 30, 2000,
we had an accumulated deficit of $33.8 million. We have not achieved
profitability on a quarterly or annual basis. We intend to invest significantly
in promoting web conferencing, in general, and increasing our brand
recognition; expanding our business development and sales and marketing
efforts; increasing our customers' utilization of our existing services and
products; extending our services and products; increasing the scalability and
reliability of our operations infrastructure and leveraging and extending our
technology base. As a result, we expect to continue to incur losses for at
least the next two years. We will need to generate significantly higher
revenues to support expected increases in expenses and to achieve and maintain
profitability.

We generate revenues by providing businesses with web conferencing services
and products that can be delivered either as a hosted application service or as
an in-house software application product. In July 1998, we shifted the focus of
our business model from sales of software licenses to a hosted services model.
We offer our customers the ability to purchase our hosted application service
as an annual subscription based on the maximum number of concurrent users
available to a customer and as an event service to meet their web conferencing
demands. The in-house software application is sold as a licensed software
product for our customers wishing to deploy our web conferencing software
inside their company, and for service providers wishing to host their own web
conferencing services.

Revenues generated from hosting and services, which include hosting
services, event services, revenue sharing arrangements and technical support
and maintenance services, accounted for 55% of total revenues for the year
ended December 31, 1999. Revenues from hosting services are recognized ratably
over the hosting period. Revenues from event services are recognized as the
event takes place. Revenues from revenue sharing arrangements are recognized as
earned. Revenues from technical support and maintenance services are recognized
ratably over the term of the support period.

Licensed software product revenues are generated from the sale of time-based
licenses and perpetual licenses and represented 45% of the total revenues for
the year ended December 31, 1999. Time-based revenues are recognized ratably
over the time period. Perpetual license revenues are recognized when the
following criteria are met: persuasive evidence of an arrangement exists;
delivery has occurred; the fee is fixed or determinable; collectibility is
probable; and evidence of the fair value is determinable for all undelivered
components of the arrangement.

Our cost of hosting and services consists primarily of computer equipment
depreciation charges, network connectivity, royalties, co-location costs and
costs of third-party service providers, including audio conferencing, streaming
audio and event services providers. Our network connectivity expense, co-
location costs and costs to third-party service providers are variable and
correlate to the use of our services. Our depreciation charges generally
increase as we increase our capacity and build our infrastructure.

Our operations expenses consist primarily of compensation and related costs
for management personnel, technical support employees and consultants who
manage and maintain our service operations.

Our sales expenses consist primarily of compensation and related cost for
sales personnel. We sell our services and products through both our direct
sales organization and our service providers. Our direct sales force is
headquartered in Mountain View, California and supported by sales
representatives based in several cities throughout North America and in our
European sales office in the United Kingdom. Our European sales office is
responsible for all European, Middle Eastern and African sales opportunities.
The direct sales force consists of inside and outside sales representatives and
is primarily responsible for expanding our customer base.

Our marketing expenses consist primarily of the salaries and benefits for
our advertising and promotions, marketing personnel, consulting fees and direct
marketing expenses.

Our research and development expenses consist primarily of salaries and
benefits for research and development personnel, consulting fees, and
development and test-related infrastructure. We expense research and
development costs as they are incurred.

Our general and administrative expenses consist primarily of expenses for
finance, human resources, office operations, administrative and general
management activities, including legal, accounting and other professional fees,
travel expenses and other general corporate expenses.

In connection with the granting of stock options to, and restricted stock
purchases by, our employees through June 30, 2000, we recorded deferred stock-
based compensation totaling approximately $6.3 million. This amount represents
the difference between the exercise or purchase price, as applicable, and the
fair market value of our common stock on the date these stock options were
granted or purchase agreements were signed. This amount is included as a
component of stockholders' equity and is being amortized on an accelerated
basis by charges to operations over the vesting period of the options
consistent with the method described in Financial Accounting Standards Board
Interpretation No. 28. The stock options and restricted stock purchases
generally vest at a rate of 25% upon the first anniversary of the option grant
date or restricted stock purchase date and 2.083% each month thereafter for
three years. We expect to record additional substantial stock-based
compensation for stock options granted subsequent to June 30, 2000.
Amortization of the balance of deferred stock-based compensation of $3.1
million as of June 30 will result in charges to total operating expense of
$1.2 million in the second half of 2000, $1.2 million in 2001, $0.6 million in
2002 and $0.1 million in 2003.

Envoy Acquisition

Effective June 30, 2000, we acquired Envoy i-Con, Inc. Envoy is an
application solutions provider offering a web conferencing event management
system. Envoy is based in Portland, Oregon, with approximately 40 employees.

We issued 1,034,473 shares of common stock and 116,789 shares of preferred
series D stock in exchange of all outstanding shares of Envoy capital stock and
reserved 218,143 shares for issuance upon the exercise of Envoy options and
warrants we assumed in connection with the acquisition. We have accounted for
the acquisition using the purchase method of accounting. Accordingly, we have
recorded approximately $6.7 million of goodwill and other intangible assets as
of June 30, 2000 that will significantly reduce our earnings and profitability
for the foreseeable

future. These intangible assets will generally be amortized over a three-year
period. To the extent we do not generate sufficient cash flow to recover the
amount of the investment recorded, the investment may be considered impaired
and could be subject to earlier write-off. We further expect our operating
expenses to increase due to the associated increase in personnel and expense
related to the integration of Envoy's operations with our operations.

Since its inception in 1998, Envoy has incurred significant operating
losses. During the year ended December 31, 1999, Envoy recorded total revenues
of $2.6 million, and recorded a net loss of $1.1 million. During this time,
Envoy earned approximately $0.6 million of their revenues from us, which
accounted for 24% of Envoy's revenues and paid operating expenses to us of
approximately $0.1 million. During the six months ended June 30, 2000, Envoy
recorded total revenues of $3.3 million, and recorded a net loss of $2.0
million. During this time, Envoy earned approximately 18% of their revenues
from us and paid operating expenses to us of approximately $0.2 million. During
1999, Envoy incurred total operating expenses of $3.7 million, which consisted
primarily of general and administrative, and network and telephone expenses.
During the six months ended June 30, 2000, Envoy incurred total operating
expenses of $5.1 million, of which approximately $1.9 million related to
acquisition costs, including professional fees, and loss on sale of investment
in subsidiary. At December 31, 1999, Envoy had a working capital deficit of
$0.7 million and a total accumulated deficit of $1.4 million. At June 30, 2000,
Envoy had a working capital deficit of $1.3 million and a total accumulated
deficit of $3.4 million. The results presented below do not include financial
data for Envoy.

Results of Operations

The following table sets forth certain statement of operations data for the
periods indicated as a percentage of total revenues.

Six Month
Period
Year Ended Ended
December 31, June 30,
------------------ -----------
1997 1998 1999 1999 2000
---- ---- ---- ---- ----

Statement of Operations Data:
Revenues:
Hosting and services...................... --% 31% 55% 59% 75%
Licensing................................. 100 69 45 41 25
---- ---- ---- ---- ----
Total revenues.......................... 100 100 100 100 100
---- ---- ---- ---- ----
Operating expenses:
Cost of hosting and services.............. -- -- 18 4 26
Operations................................ 31 13 14 12 47
Sales and marketing....................... 249 174 191 206 171
Research and development.................. 245 127 63 97 43
General and administrative................ 134 101 67 66 33
---- ---- ---- ---- ----
Total operating expenses................ 659 415 353 385 320
---- ---- ---- ---- ----
Operating loss.............................. (559) (315) (253) (285) (220)
---- ---- ---- ---- ----
Other income (expense):
Interest income........................... 22 11 7 4 5
Interest expense and other................ -- (2) (2) (4) (2)
---- ---- ---- ---- ----
Total other income (expense)............ 22 9 5 0 3
---- ---- ---- ---- ----
Net loss.................................... (537)% (306)% (248)% (285)% (217)%
==== ==== ==== ==== ====

Six months ended June 30, 1999 and 2000

Revenues. Revenues increased $5.3 million from $1.3 million in 1999 to $6.6
million in 2000. Of this amount, hosting and services revenues increased $4.2
million in 2000 primarily due to our continued focus and increased sales and
marketing of our web conferencing hosted service model. This focus was
primarily responsible for the increase in our customer count to over 750 at
June 30, 2000. The continued decline in percentage of licensing revenue is in
line with our continued emphasize to sell our hosted services. During the six
months ended June 30, 2000, we earned $0.2 million in revenues earned from
Envoy.

Cost of hosting and services. Cost of hosting and services increased $1.7
million from a nominal amount in 1999 to $1.7 million in 2000. The hosting
services model required an increase in equipment purchases, network
connectivity and co-location costs. We expect significant increases in all
these expenses as we continue to build our customer service and technical
support departments in anticipation of increased demand for our services. Cost
of hosting and services in 2000 included $0.1 million in royalty expense
pursuant to the terms of our technology assignment from Xerox PARC, which
provides for a royalty payment equal to 2% of total revenues, up to a maximum
royalty of $1 million. We expect this royalty expense to continue to increase
substantially in 2000. Cost of hosting and services also includes $0.6 million
related to Envoy.

Operations. Operations costs increased $3.0 million from $0.2 million in
1999 to $3.2 million in 2000. Excluding the $0.4 million increase in charges
due to stock-based compensation, the remaining increase was primarily due to an
increase in compensation and related costs for management personnel, technical
support employees and consultants who manage and maintain our service
operations. We expect significant increases in operations costs to support
increased utilization by our customers.

Sales and marketing. Sales and marketing costs increased $8.9 million from
$2.6 million in 1999 to $11.5 million in 2000. Excluding the $0.5 million
increase due to stock-based compensation, the remaining increase was a result
of the growth in the number of sales and marketing employees, the establishment
of our European sales office as well as an increase in the amount of
advertising and promotional spending. We expect significant increases in our
sales and marketing expenses as we expand our North American and international
sales organizations, increase advertising and promotional activities, add
marketing personnel and increase marketing programs.

Research and development. Research and development costs increased $1.7
million from $1.2 million in 1999 to $2.9 million in 2000. Excluding the $0.3
million increase due to stock-based compensation, the remaining increase was
associated with increases in hiring additional engineers as well as product
expansion and new product development. We intend to continue to make
substantial investments in research and development and anticipate that these
expenses will continue to increase.

General and administrative. General and administrative costs increased $1.2
million from $0.8 million in 1999 to $2.0 million in 2000. Excluding the $0.9
million increase due to stock-based compensation, the remaining increase was
associated with the increase in employees, increased consulting services, the
costs associated with the addition of office space, and equipment purchases. We
expect increases in general and administrative expenses as we expand executive
management, finance, and human resources required to support business and
operate as a public company.

As indicated above, stock-based compensation amortization expense increased
$2.1 million from approximately $0.1 million in 1999 to $2.2 million in 2000.
Amortization of the June 30, 2000 balance of $3.1 million deferred stock-based
compensation will be approximately $1.2 million in the second half of 2000,
$1.2 million in 2001, $0.6 million in 2002 and $0.1 million in 2003.

Interest income, net. Interest income, net, increased $0.2 million from nil
in 1999 to $0.2 million in 2000. While interest income increased as a result of
increased funds from fund raising activities, this increase was mostly offset
by interest expense from equipment financing activities.

Years ended December 31, 1999 and 1998

Revenues. Revenues increased $2.8 million from $1.6 million in 1998 to $4.4
million in 1999. Of this amount, hosting and services revenues increased $1.9
million in 1999 primarily due to the launch of our new web conferencing hosted
service model in July 1998. The full year availability of the hosted service
model was primarily responsible for the increase in our customer count to
approximately 490 at the end of 1999. Prior to launching the hosted service
model, we sold perpetual software licenses for our web conferencing product,
which included annual support and maintenance.

Cost of hosting and services. Cost of hosting and services increased $0.8
million from a nominal amount in 1998 to $0.8 million in 1999. The increase was
substantially due to the launch of our hosting model in July 1998. The new
model required an increase in equipment purchases, network connectivity and
co-location costs. We expect significant increases in all these expenses as we
continue to build our customer service and technical support departments in
anticipation of increased demand for our services. Cost of hosting and services
in 1999 included a nominal royalty expense pursuant to the terms of our
technology assignment from Xerox PARC.

Operations. Operations costs increased $0.4 million from $0.2 million in
1998 to $0.6 million in 1999. Excluding the $0.1 million in charges due to
stock-based compensation, the remaining increase was primarily due to an
increase in compensation and related costs for management personnel, technical
support employees and consultants who manage and maintain our service
operations.

Sales and marketing. Sales and marketing costs increased $5.6 million from
$2.8 million in 1998 to $8.4 million in 1999. Excluding the $0.6 million
increase due to stock-based compensation, the remaining increase was a result
of the growth in the number of sales and marketing employees, the establishment
of our European sales office as well as an increase in the amount of
advertising and promotional spending. Sales and marketing costs in 1999 also
include a one-time charge associated with a warrant granted in connection with
a marketing arrangement.

Research and development. Research and development costs increased $0.7
million from $2.1 million in 1998 to $2.8 million. Excluding the $0.1 million
increase due to stock-based compensation, the remaining increase was associated
with increases in hiring additional engineers as well as product expansion and
new product development.

General and administrative. General and administrative costs increased $1.2
million from $1.7 million in 1998 to $2.9 million in 1999. Excluding the $0.3
million increase due to stock-based compensation, the remaining increase was
associated with the growth in employees, increased consulting services, the
costs associated with the addition of office space, and equipment purchases.

As indicated above, we recorded approximately $1.1 million of stock-based
compensation amortization expense, of which $0.1 million was included in
operations costs, $0.6 million in sales and marketing expenses, $0.1 million in
research and development expenses, and $0.3 million in general and
administrative expenses. Amortization of the December 31, 1999 balance of
deferred stock-based compensation will be approximately $1.9 million in 2000,
$0.8 million in 2001, $0.3 million in 2002 and $0.1 million in 2003.

Interest income, net. Interest income, net, remained constant at $0.2
million in 1998 and 1999. While interest income increased as a result of
increased funds from fund raising activities, this increase was fully offset by
higher interest expense from equipment financing activities.

Years ended December 31, 1998 and 1997

Revenues. Revenues increased $1.0 million from $0.6 million in 1997 to $1.6
million in 1998. Revenues for 1997 were primarily generated from our software
product license. The growth in revenues was due to increases in the number of
customers and the launch of our hosted service model. Licensing revenues
accounted for 69% of total revenues for 1998.

Cost of Hosting and Services. Cost of hosting and services were nominal in
both 1997 and 1998 as our primary business was the sale of software product
licenses.

Operations. Operations costs remained constant at $0.2 million in both 1997
and 1998.

Sales and Marketing. Sales and marketing costs increased $1.3 million from
$1.5 million in 1997 to $2.8 million in 1998. The increase was a result of the
growth in the number of sales and marketing employees as well as an increase in
the amount of advertising and promotional spending.

Research and Development. Research and development costs increased $0.6
million from $1.5 million in 1997 to $2.1 million in 1998. The increase was
associated with increases in hiring as well as product expansion and new
product development.

General and Administrative. General and administrative costs increased $0.9
million from $0.8 million in 1997 to $1.7 million in 1998. The increase was
associated with the growth in employees, addition of office space and the costs
associated with equipment purchases.

Stock-based compensation included in general and administrative expenses was
nominal in both 1997 and 1998.

Interest income, net. Interest income, net, increased $0.1 million from $0.1
million in 1997 to $0.2 million in 1998. The increase was a result of increased
funds from fund raising activity, partially offset by higher interest expense
from equipment financing activities.

Quarterly Operating Results

The following table presents our historical unaudited quarterly results of
operations for our most recent six quarters. This data has been prepared on the
same basis as our annual consolidated financial statements and includes all
adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the financial results set forth therein. Our results of
operations have fluctuated and are likely to continue to fluctuate
significantly from quarter to quarter. Results of operations for any previous
periods are not necessarily comparable to future periods.

Quarter Ended
----------------------------------------------------------
Mar. 31, Jun. 30, Sep. 30, Dec. 31, Mar. 31, Jun. 30,
1999 1999 1999 1999 2000 2000
-------- -------- -------- -------- -------- --------
(in thousands)

Statement of Operations
Data:
Revenues:
Hosting and services... $ 299 $ 451 $ 609 $ 1,074 $ 1,804 $ 3,159
Licensing.............. 147 368 726 721 862 819
------- ------- ------- ------- ------- -------
Total revenues....... 446 819 1,335 1,795 2,666 3,978
------- ------- ------- ------- ------- -------
Operating expenses (1):
Cost of hosting and
services.............. 11 35 239 521 848 894
Operations............. 69 86 148 316 942 2,178
Sales and marketing.... 1,284 1,325 2,062 3,739 5,156 6,231
Research and
development........... 577 645 755 801 1,231 1,595
General and
administrative........ 452 387 587 1,474 1,176 1,030
------- ------- ------- ------- ------- -------
Total operating
expenses............. 2,393 2,478 3,791 6,851 9,353 11,928
------- ------- ------- ------- ------- -------
Operating loss........... (1,947) (1,659) (2,456) (5,056) (6,687) (7,950)
------- ------- ------- ------- ------- -------
Other income (expense):
Interest income........ 31 24 62 192 184 125
Interest expense....... (23) (26) (30) (30) (21) (55)
Other income
(expense)............. -- -- -- -- 31 (63)
------- ------- ------- ------- ------- -------
Total other income
(expense)........... 8 (2) 32 162 194 7
------- ------- ------- ------- ------- -------
Net loss................. $(1,939) $(1,661) $(2,424) $(4,894) $(6,493) $(7,943)
======= ======= ======= ======= ======= =======

- --------
(1)Includes charges for stock-based compensation.

Quarter Ended
-----------------------------------------------------
Mar. 31, Jun. 30, Sep. 30, Dec. 31, Mar. 31, Jun. 30,
1999 1999 1999 1999 2000 2000
-------- -------- -------- -------- -------- --------

As a Percentage of Total
Revenues:
Revenues:
Hosting and services.. 67 % 55 % 46 % 60 % 68 % 79 %
Licensing............. 33 45 54 40 32 21
---- ---- ---- ---- ---- ----
Total revenues...... 100 100 100 100 100 100
---- ---- ---- ---- ---- ----
Operating expenses:
Cost of hosting and
services............. 3 4 18 29 32 22
Operations............ 15 11 11 18 35 55
Sales and marketing... 289 162 154 208 194 157
Research and
development.......... 129 79 57 45 46 40
General and
administrative....... 101 47 44 82 44 26
---- ---- ---- ---- ---- ----
Total operating
expenses............ 537 303 284 382 351 300
---- ---- ---- ---- ---- ----
Operating loss.......... (437) (203) (184) (282) (251) (200)
---- ---- ---- ---- ---- ----
Other income (expense):
Interest income....... 7 3 4 11 7 3
Interest expense...... (5) (3) (2) (2) (1) (1)
Other income
(expense)............ -- -- -- -- 1 (2)
---- ---- ---- ---- ---- ----
Total other income
(expense).......... 2 -- 2 9 7 --
---- ---- ---- ---- ---- ----
Net loss................ (435)% (203)% (182)% (273)% (244)% (200)%
==== ==== ==== ==== ==== ====

Revenues have increased in each consecutive quarter presented. The growth in
revenues during the second, third and fourth quarters of 1999 was primarily due
to higher hosting and services revenues as we substantially increased our sales
and marketing activities. The decline in licensing revenue in the first two
quarters of 2000 reflected our continued emphasis on selling our hosted
services model.

Operating expenses have generally increased in each quarter to support
increased utilization of services and products by our customers. Sales and
marketing expenses increased in each consecutive quarter due to increased
direct marketing and consulting expenses along with increased personnel.
General and administrative expenses increased in the fourth quarter of 1999 and
the first quarter of 2000, primarily due to investments in administrative
infrastructure to support increased utilization of our services. Amortization
of stock-based compensation was mostly recognized in the fourth quarter of 1999
and the first two quarters of 2000, resulting in further increases in sales and
marketing expenses and general and administrative expenses.

Our quarterly operating results are difficult to predict. Due to any number
of factors, our future quarterly operating results may fluctuate and may not
meet the expectations of investors or securities analysts who may initiate
coverage, which may cause the price of our common stock to decline. Some of the
factors that may contribute to fluctuations in our operating results include
the following:

.the inability to deliver our hosted service;
.the loss of a major customer or communication service provider or the
failure to attract new customers;
.many of our expenses, such as salaries, rent, advertising and hosting
facilities, have fixed minimums;
. lower revenues than expected;
. downward pressure on prices paid by our business customers, as a result
of competition or other factors, which could reduce our quarterly
revenues even if we maintain or increase the number of sales;
. our ability to upgrade, develop, maintain and have available our
services, systems and infrastructure in a timely manner, and the related
costs and expenditures related to such activities; and
. the timing of a significant marketing campaign.

Because our customers do not have long-term obligations to purchase services
from us, our revenues and operating results depend upon the volume and timing
of customer orders and payments. We historically have received payments in
advance for our services and products and have deferred these revenues over a
fixed period of time, generally for a period of one year. If we modify our
billing and payment practices, or our periods of services to cycles shorter
than one year, the resulting effect would be to reduce deferred revenue, and if
investors or securities analysts who may initiate coverage fail to understand
this modification, such investors or analysts may perceive this change as
additional fluctuations in our operating results which may cause the price of
our stock to decrease.

Provisions for Income Taxes

No provision for federal and state income taxes was recorded as we incurred
net operating losses from inception through June 30, 2000. Due to the
uncertainty regarding the ultimate utilization of the net operating loss carry
forwards, we have not recorded any benefit for losses and a valuation allowance
has been recorded for the entire amount of the net deferred tax asset. In
addition, sales of our stock, including shares sold in this offering, may
further restrict our ability to utilize our net operating loss carry forwards.

Liquidity and Capital Resources

Since inception, we have financed our operations primarily from the sale of
our preferred stock and, to a lesser extent, proceeds from bank loans and
equipment financing. During 1997 we sold $5.0 million in series B preferred
stock. During 1998 we sold an additional $5.0 million in series B preferred
stock. During 1999 we sold an additional $0.2 million in series B preferred
stock. In September 1999, we sold $18.8 million in series C preferred stock.
Subsequent to June 30, 2000, we sold $26.9 million in series D preferred stock.

Net cash used by operating activities was $3.6 million in 1997, $4.3 million
in 1998, $4.7 million in 1999 and $10.2 million in the first half of 2000. In
1997 and 1998, net cash used was primarily due to our 1997 net loss of $3.3
million and our 1998 net loss of $5.0 million. In 1999, net cash used was
primarily due to a net loss of $10.9 million and an increase in accounts
receivable of $2.3 million, partially offset by increases of $4.5 million in
deferred revenue and $1.2 million in accounts payable. A significant portion of
the outstanding accounts receivable at year end was billed during the last
quarter for services which will occur generally over a one-year period from the
date of billing, resulting in a corresponding increase in deferred revenue.
During the first half of 2000, net cash used was primarily due to a net loss of
$14.4 million, partially offset by increases of $2.3 million in deferred
revenues and $2.5 million in accounts payable.

Net cash used for investing activities was $0.2 million in 1997, $0.1
million in 1998, $2.6 million in 1999 and $2.4 million in the first half of
2000. The cash used in investing activities related to purchases of property
and equipment. The equipment was primarily for computer workstations used for
product development, product demonstrations and customer support, facilities
improvements and infrastructure and equipment required for hosting our
services.

Net cash from financing activities was $5.0 million in 1997, $5.4 million in
1998, $18.8 million in 1999 and $4.7 million in the first half of 2000. Cash
provided by financing activities resulted primarily from proceeds of preferred
stock sales and borrowings under notes payable and a line of credit.

As of June 30, 2000, we had fully drawn $2.5 million on a bank revolving
line of credit that bears interest at the bank's prime rate plus 1% per annum,
which was 10.5% as of June 30, 2000 and had a maturity date of January 24,
2001. Borrowings from the line is collateralized by substantially all of our
assets.

Envoy has a $500,000 line of credit with a financial institution that bears
interest at prime plus 3%, which was 12.0% as of June 30, 2000, and expires
October 31, 2000. Borrowings from the line are collateralized by substantially
all of Envoy's assets. There was no outstanding balance at June 30, 2000 as the
financial institution had suspended the usage of the line of credit for a
minimum of 90 days effective June 30, 2000 pending financial review of the
Envoy acquisition.

As of June 30, 2000, we had $1.1 million available under an arrangement with
a financing corporation for a lease line of credit. We have financed the
acquisition of property and equipment, primarily computer hardware and software
for our increasing employee base, as well as for our management information
systems, primarily through capital leases. We currently expect capital
expenditures of between $3 million and $4 million through December 31, 2000. As
of June 30, 2000, we had no material commitments for capital expenditures.

We expect to continue to experience growth in our operating expenses. We
anticipate that operating expenses and planned capital expenditures will
continue to be a material use of our cash resources, including a significant
use of the cash raised in this offering. In addition, we may utilize cash
resources to fund acquisitions or investments in other businesses or
technologies. We believe that available cash and cash equivalents and the net
proceeds from the sale of the common stock in this offering will be sufficient
to meet our working capital and operating expense requirements for at least the
next 12 months. After that period, we may require additional funds to support
our working capital and operating expense requirements or for other purposes
and may seek to raise these additional funds through public or private debt or
equity financings. There can be no assurance that this additional financing
will be available, or if available, will be on reasonable terms.

Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for
Derivative Instruments and Hedging Activities. SFAS No. 133 establishes
accounting and reporting standards for derivative financial instruments and
hedging activities related to those instruments, as well as other hedging
activities. Because we do not currently hold any derivative instruments and do
not engage in hedging activities, we expect that the adoption of SFAS No. 133
will not have a material impact on our consolidated financial position, results
of operations, or cash flows. We will be required to adopt SFAS No. 133 in
fiscal 2001.

In March 2000, the Emerging Issues Task Force (EITF) published their
consensus on EITF No. 00-2, Accounting for Web Site Development Costs, which
require the following accounting for costs related to development of web sites:

. Costs incurred in the planning stage, regardless of whether the planning
activities relate to software, should be expensed as incurred;

. Costs incurred during the development of web site applications and
infrastructure involve acquiring or developing hardware and software to
operate the web site, including graphics that affect the look and feel
of the web page. All costs relating to software used to operate a web
site should be accounted for under Statement of Position 98-1,
Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use, (SOP 98-1). However, if a plan exists or is being
developed to market the software externally, the costs relating to the
software should be accounted for pursuant to FASB Statement No. 86,
Accounting for the Costs of Computer Software to Be Sold, Leased or
Otherwise Marketed (SFAS No. 86);

. Costs paid for web site hosting services generally would be expensed
over the period of benefit; and

. Costs incurred in operating the web site, including training,
administration, maintenance, and other costs, should be expensed as
incurred. However, costs incurred in the operation stage that involved
providing additional functions or features to the web site should be
accounted for as new software. Such costs should be capitalized or
expensed based on the requirements of SOP 98-1 or SFAS No. 86, as
applicable.

We will be required to adopt EITF No. 00-2 in fiscal quarters beginning
after June 30, 2000, although earlier application is encouraged. To date, we
have not entered into activities covered by EITF No. 00-2, as all software
developed internally has been offered under license to customers.

In March 2000, the EITF published their consensus on EITF No. 00-3,
Application of AICPA Statement of Position 97-2, Software Revenue Recognition,
to Arrangements That Include the Right to Use Software Stored on Another
Entity's Hardware. EITF No. 00-3 states that a software element covered by SOP
97-2 is only present in a hosting arrangement if the customer has the
contractual right to take possession of the software at any time during the
hosting period without significant penalty and it is feasible for the customer
to either run the software on its own hardware or contract with another party
unrelated to the vendor to host the software. Our hosting arrangements
generally do not allow customers the contractual right to take possession of
the software without significant penalty. We do not expect that the adoption of
EITF No. 00-3 will have a material impact on its consolidated financial
position or results of operations.

In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 (SAB 101), Revenue Recognition in Financial
Statements, as amended by SAB 101A and SAB 101B, 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 disclosure related to revenue
recognition policies. In June 2000, the SEC issued SAB 101B that delayed the
implementation of SAB 101. We must adopt SAB 101 no later than the fourth
quarter of 2000. We have not determined the impact that SAB 101 will have on
our financial statements and believe that such determination will not be
meaningful until closer to the date of initial adoption.

In March 2000, the FASB issued Interpretation No. 44, Accounting for Certain
Transactions Involving Stock Compensation, an interpretation of APB Opinion No.
25. This Interpretation clarifies the application of Opinion 25 for certain
issues including: (a) the definition of employee for purposes of applying
Opinion 25, (b) the criteria for determining whether a plan qualifies as a
noncompensatory plan, (c) the accounting consequence of various modifications
to the terms of a previously fixed stock option or award, and (d) the
accounting for an exchange of stock compensation awards in a business
combination. In general, this interpretation is effective July 1, 2000.
Management does not expect the adoption of Interpretation No. 44 to have a
material effect on the Company's consolidated financial position or results of
operations.

Quantitative and Qualitative Disclosure About Market Risk

The primary objective of our investment activities is to preserve principal
while at the same time maximizing the income we receive from our investments
without significantly increasing risk. Some of the securities that we may
invest in may be subject to market risk. This means that a change in prevailing
interest rates may cause the principal amount of the investment to fluctuate.
For example, if we hold a security that was issued with a fixed interest rate
at the then-prevailing rate and the prevailing interest rate later rises, the
principal amount of our investment will probably decline. To minimize this risk
in the future, we intend to maintain our portfolio of cash equivalents and
short-term investments in a variety of securities, including commercial paper,
money market funds and government and non-government debt securities. In
general, money market funds are not subject to market risk because the interest
paid on such funds fluctuates with the prevailing interest rate. As of June 30,
2000, all of our cash and cash equivalents were in money market and checking
funds.

We have operated primarily in the United States, and all sales have been
made in U.S. dollars. Accordingly, we have not had any material exposure to
foreign currency rate fluctuations.

BUSINESS

Overview

PlaceWare enables businesses to conduct real-time, interactive
communications, or web conferences, over the Internet. Businesses use our web
conferencing services and products as strategic tools to improve productivity
and efficiency, and enhance business opportunities.

Industry Background

Business-to-Business Communications

Businesses today are operating in an environment that can be characterized
by rapid change and increasingly complex business interactions with customers,
partners, vendors and employees. Advances in technology have created broad
market opportunities, but have also accelerated the pace at which competitors
have entered the market. True global competition has emerged and businesses are
required to bring new services and products to market faster and provide
superior customer support to remain competitive. To successfully compete in
this new environment, businesses must effectively communicate with their
geographically distributed base of customers, partners, vendors and employees.

Companies have historically relied on in-person meetings and traditional
business collaboration technologies, such as audio conferencing and video
conferencing, to communicate. These means of communication, either individually
or in combination, have a number of limitations, including:

Opportunity Cost of In-person Meetings. As customers, partners, vendors and
employees grow increasingly distributed geographically, holding in-person
meetings with these constituencies requires greater travel time and expense.
While actual travel expenses are not insignificant, the time lost to travel may
represent the true opportunity cost to a company. When personnel are travelling
to or from meetings, businesses lose opportunities to engage in the type of
collaborative and real-time interactions with others that are necessary to
build and strengthen customer and partner relationships and improve employee
productivity.

Lack of Visual Content in Audio Conferencing. While audio conferencing
offers broad accessibility and real-time interaction, it supports only voice
communication and lacks support for other critical elements of effective
business collaboration, including rich visual content necessary to better
comprehend information that participants are attempting to convey. In addition,
as content becomes more complicated and the number of people participating on a
conference call increases, it becomes difficult to follow the presenter,
increasing confusion and hindering participant interaction. Finally, real-time
collaboration is difficult since any changes or clarifications discussed
verbally cannot be visually incorporated and reviewed by the group in real-
time.

Limited Availability, Complexity and Expense of Video Conferencing. The lack
of widespread availability, technical limitations, such as minimum bandwidth
requirements, latency and limited resolution of visual content limit the
effectiveness of video conferencing. In addition, video conferencing is costly
and complex to install, implement and maintain, and often requires a dedicated
video conferencing hosting facility and internal technical assistance, further
limiting the number of occasions in which it can be used.

The Emergence of the Internet as a Tool for Business-to-Business Communications

The Internet has emerged as a global medium for communication and commerce.
According to International Data Corporation, or IDC, the number of web users
worldwide is expected to grow from 239 million at the end of 1999 to 602
million by the end of 2003. Since the Internet has become more accessible,
functional and widely used, it has emerged as an effective communications and
collaboration vehicle for businesses of all sizes to create new revenue
opportunities by enhancing their interaction with new and existing customers.
IDC estimates that worldwide commerce over the Internet conducted by businesses
is

expected to increase from approximately $97 billion in 1999 to $1.4 trillion in
2003. As such, businesses are increasing resources devoted to applications that
enable businesses to leverage the power and accessibility of the Internet to
communicate more effectively with customers, partners, vendors and employees.

The Internet possesses a number of unique characteristics that differentiate
it from traditional media. It allows users to communicate or access information
from almost anywhere, use interactive content on a real-time basis and
communicate instantaneously with individuals or groups. Despite the
availability and use of Internet-based communications tools, such as e-mail,
instant messaging and webcasting, these tools have several important
limitations when used for business-to-business communications:

E-Mail. E-mail is widely used as a tool for asynchronous business
communications. However, it is primarily a text-based solution with a limited
ability to facilitate real-time interactive collaboration.

Instant Messaging. Instant messaging is used primarily as a mechanism for
consumer communications. Its ability to enable business communications is
limited, because it is text-only and designed to work effectively only for one-
to-one or one-to-few communications.

Webcasting. Broadcasting of audio and video content over the Internet for
larger group communications through streaming media has become popular in
consumer applications. Its limitations include a lack of two-way interactivity,
limited resolution of visual content, high production costs, difficulty in
traversing corporate firewalls and limited reliability for bandwidth intensive
audio and video streaming.

Trend Towards Outsourced Applications

In addition to facilitating communications, the Internet has created
widespread opportunities for software companies to host applications from a
centrally managed facility. This allows customers to avoid the need to devote
internal resources to install, maintain and continually upgrade applications.
By outsourcing these applications, businesses can more quickly realize the
benefits that they offer. Forrester Research estimates that the market for
application hosting services will increase from $933 million in 1999 to over
$11 billion in 2003.

Market Opportunity

According to IDC, one of the most rapidly growing segments of the
application services market is collaboration services, or services that allow
geographically dispersed individuals to communicate, interact and work
together. Collaboration services combine Internet-based communications with
dynamic and interactive content on a real-time basis. The web-based hosted
model is well suited for collaboration services largely due to the fact that it
enables businesses to deploy these services rapidly without requiring valuable
internal resources.

Forrester Research has identified web conferencing as one of the fastest
growing segments of the collaboration services market. In their survey of
Fortune 1000 companies, 70% of all respondents indicated they would use web
conferencing by the year 2001. Web conferencing leverages customers existing
voice and data infrastructure, which facilitates widespread deployment. It
provides businesses with the ability to communicate verbally while sharing rich
visual content on a real-time basis over Internet connections with speeds as
low as 28.8Kbps. Web conferencing enables businesses to increase their reach
and cost-effectively communicate time-sensitive and important information to
constituencies within and outside the company.

The PlaceWare Solution

We are a leading provider of comprehensive web conferencing services and
products that enable businesses to conduct real-time, interactive meetings and
presentations over the Internet. Our services and products are designed to
overcome some of the limitations of traditional business collaboration
technologies and today's Internet-based communications tools. Some of the ways
in which our customers utilize our services include sales and marketing
activities, such as new product launches, seminars and product demonstrations
and corporate communications, such as investor communications and employee
meetings.

We provide our customers with web conferencing services that can be
delivered either as a hosted application service or as an in-house software
application. Though our acquisition of Envoy i-Con, Inc., we enhanced our
ability to provide event services, enabling customers to purchase discrete web
conferences managed by us. Customers that choose to host their applications on
the web are not required to install, maintain and upgrade software. Our hosted
service and event services are designed to reduce customers' administrative
burden of utilizing web conferencing. We also offer event services, which
provide the ability to purchase a single event or a series of events from us,
rather than an ongoing software environment or hosted service.

Strategic Benefits

Extend Communications Reach. Our services enable users to reach people
located at a distance, and to reach more people in total, because of a
reduction in the time required for travel.

Enhance Communications Effectiveness. The visual component and real-time
interactive nature of our services are intended to improve the understanding
and retention of meeting content.

Shorten Sales Cycles and Accelerate Time To Market. Our services enable
customers to communicate more quickly and effectively with both internal and
external parties, and streamline and accelerate sales and other business
processes throughout an entire organization. This can mean shorter sales
cycles, quicker time to market for product development efforts, faster sales
and distribution channel training and more effective customer communication.

Services and Products Benefits

Ease of Use. Our services are designed to be easy to use both by our
customers and their conference participants. Presenters who are accustomed to
using standard presentation software and end-users who are familiar with web
browsers are able to use our services without the need to install additional
software or hardware. Moreover, our services operate effectively without
requiring high-speed access to the Internet.

Highly Scalable and Reliable. Our proprietary hosting infrastructure
technology, iVault, is designed to be highly scalable and reliable and to
enable us to quickly react to the increasing demands of our clients. Our system
is designed to be expanded to enable thousands of concurrent meetings and up to
2,500 users in a single web conference. We have designed our services to enable
content to be presented securely and viewed only by individuals and
organizations that are authorized to have access to it. Our services enable
business users to communicate through most corporate firewalls and participate
in web conferences without requiring any policy changes or physical changes to
the firewalls or proxy servers.

Simple to Purchase and Deploy. Our hosted services rely upon the existing
infrastructure that is generally ubiquitous throughout an organization,
including an Internet-enabled personal computer and a telephone. Users can
subscribe to some of our services, schedule meetings, load content and conduct
meetings within minutes without the assistance of a customer service or
technical support representative.

Real-Time Interactivity with Rich Visual Content. We provide customers with
the ability to conduct web conferences in real-time using rich visual content.
Real-time interactivity includes shared whiteboard with annotations, polling
and the ability to have multiple presenters and moderators answering questions
from conference participants.

The PlaceWare Strategy

Our objective is to be the leading provider of web conferencing services.
Key elements of our strategy to achieve this objective include:

Promote web conferencing and increase our brand recognition. Our goal is to
promote web conferencing, in general, and to establish our services as the most
reliable and well-known web conferencing services for business communications.
We are promoting web conferencing and intend to increase our brand

awareness through the use of our web site, branding campaigns and selected
media events. We have also established relationships with major audio
conference service providers, Internet portals and application service
providers that offer our services through co-branding arrangements, thereby
enhancing the recognition of our brand and increasing our customer base. We
plan to increase our co-branding relationships and continue to promote our
client success stories through the use of case studies, technical papers and
regular briefings with industry analysts.

Expand our business development and sales and marketing efforts. We have
relationships with a number of major Internet, communications and conferencing
service providers, including Conference Plus, Inc., General Dynamics
Corporation, Hewlett-Packard Company, Premiere Conferencing and Sprint. These
service providers offer our services to their customers either as an
independent, value-added service or as a bundled service to their own product
offerings. We intend to continue to expand the scope of our existing
relationships and build additional relationships to leverage their strong
sales, marketing and engineering capabilities as well as their large,
established customer bases. We also intend to broaden our sales and marketing
efforts by increasing the size and geographic reach of our direct sales force
and adding additional sales and marketing personnel to focus on further
penetration of our existing customer base.

Increase our customers' utilization of our existing services. We have over
750 direct customers. In addition, our services are used by the customers of
our service providers. Our web conferencing services are typically used for
medium to large size meetings and presentations, such as sales training, new
product launches and web seminars, and have typically been adopted by one or
more departments within each customer's enterprise. We intend to increase the
utilization of our services by existing customers by promoting the services to
other groups and departments within those existing customers and by
demonstrating the benefits of our services and products for medium and smaller
group meetings.

Extend and expand our service offerings. We intend to leverage our web
conferencing, collaborative computing and technology expertise to develop new
services, applications and features that will enable us to make online meetings
and presentations as effective as in-person meetings. Our recently introduced
Conference Center 2000 contains a number of enhancements designed to make our
services both easier to use and administer. With our acquisition of Envoy i-
Con, Inc., we enhance our ability to provide event services. We intend to
continue to enhance our services while maintaining and improving their
usability, scalability and reliability. We plan to make it even easier for
customers to subscribe to our services by introducing self-service tools to
enable our customers to pay for web conferencing services over the Internet.

Continue to increase the scalability and reliability of our web conferencing
services. Our proprietary hosting infrastructure technology is designed to be
expanded to enable thousands of concurrent meetings and up to 2,500 users in a
single web conference. We intend to continue to invest in our hosting
infrastructure and related services to maintain and enhance the usability,
scalability, security and reliability of our services as well as increase the
aggregate number of customers who can attend conferences simultaneously. We
intend to add industry standard encryption support.

Leverage and extend our technology base. Current efforts are underway to
more tightly integrate our technology with third party services and
applications, including streaming audio and video, audio bridges, e-mail and
scheduling and reservation applications. We also plan to integrate Internet
protocol voice and video when they become more reliable for business
communication use. In addition, we intend to integrate the Forum technology
recently acquired in the Envoy i-Con, Inc. acquisition and offer it as a hosted
service for our corporate customers. Forum offers front-end registration
services, advanced calendaring and scheduling capability, and event
confirmation and reminder services, all delivered in a co-branded environment.

Pursue Strategic Acquisitions. We intend to pursue acquisitions of
businesses, products, services, technologies, and distribution channels that
are complementary to our existing business to expand our position in the web
conferencing market. Although we have no present commitments or agreements
regarding any acquisitions, we believe that there are many acquisition
candidates that could enhance our position in this market.

Services, Products and Capabilities

Our web conferencing services enable our customers with an Internet-enabled
personal computer and a telephone to conduct real-time interactive meetings and
presentations with rich visual content over the Internet. Web conferencing
enables effective communication, coordination and collaboration among
customers, partners, vendors and employees in many sales, marketing and other
business contexts. We provide a comprehensive suite of services and products
that offer web conferencing capabilities to companies, individuals, Internet
portals, service providers and resellers. Our suite of services are currently
based on our Conference Center 2000 technology and our proprietary iVault
hosting infrastructure technology.

[CHART APPEARS HERE]

Web conferencing Corporate Event Service Portal MyPlaceWare
services E-Service Services Provider E-Service
E-Service

Technology Conference Center 2000

Hosting iVault Hosting Infrastructure
environment

Service Offerings

We offer customers and service providers the option to subscribe to an
annual hosted service or to rent our software for their web conferencing
requirements. We also give our customers the opportunity to purchase discrete
web conferencing event services. Our services are delivered to customers in
five separate editions: Corporate E-Service; Event Services; Service Provider
E-Service; Portal E-Service; and MyPlaceWare.

Corporate E-Service. Our Corporate E-Service enables businesses of all sizes
to use web conferencing as a new medium for business communications. The
Corporate E-Service is a multi-user version of the service. An administrator
can authorize as many users of the system as appropriate. Users are then able
to access the full capabilities of the Corporate E-Service, including meeting
provisioning, scheduling and reports.

Event Services. Our Event Services enable businesses to purchase a single
web conference or series of web conferences for special events. Our event
services include front-end registration and scheduling, presenter training,
event moderation and technical support. Our event services can be customized
and co-branded to fit each customer's needs.

Service Provider E-Service. Our Service Provider E-Service enables service
providers, such as audio conference service providers or streaming audio
providers, to bundle web conferencing with their existing services, and offer a
co-branded solution. The Service Provider E-Service offers a software
programming interface that enables service providers to integrate our web
conferencing service with existing proprietary reservations, scheduling and
billing systems. Conference Plus, Inc., General Dynamics Corporation, Hewlett-
Packard Company, Premiere Conferencing and Sprint have licensed our software
and deliver a co-branded web conferencing service to their customers.

Portal E-Service. Our Portal E-Service enables an Internet portal to
incorporate a self-service, web conferencing capability to its existing suite
of services. The Portal E-Service allows for co-branding and also varying
levels of service integration, including billing, user registration and login.
For example, Autodesk is offering a co-branded service to enable their
authorized training centers to deliver training courses over the Internet.

MyPlaceWare. MyPlaceWare is a self-service, web conferencing service that
offers many of the features available through Corporate E-Service. MyPlaceWare
enables registered members to host web conferences with up to five people and
is currently offered free of charge. Over 35,000 people have subscribed to this
service since its launch in October 1999. We intend to enhance MyPlaceWare to
enable members to subscribe to a paid service. This service will enable
customers to host meetings and presentations with more than five people and
have enhanced features, including the ability to store and retrieve
presentation materials and record actual meetings and presentations for future
viewing.

Technology Infrastructure

These service offerings are primarily based on our Conference Center 2000
technology.

Conference Center 2000. Conference Center 2000, the latest generation of
our technology, became generally available in April 2000. It is offered as a
hosted communications e-service that can be turned on the same day as receipt
of an order. It enables a presenter to quickly and easily upload any standard
presentation or other supported file type on their computer and begin
presenting in a web conference. Individuals authorized on Conference Center
2000 can use the service to hold meetings and presentations over the Internet
with up to 2,500 participants.

Conference Center 2000 offers two virtual meeting environments that address
different meeting and presentation needs. Web Meeting Places are designed for
small group collaborative meetings and enable some or all of the participants
to collaborate on a real-time basis. Auditorium Places are uniquely designed to
meet the needs of large group presentations and include real-time interactive
features, such as audience feedback indicators and text chat and other features
which enable polling of participants and moderated questions and answers.

Conference Center 2000 features include:

. Real-time Interactive Meetings with Rich Visual Content. Conference
Center 2000 enables presenters to deliver real-time, interactive
presentations with rich visual content over the Internet.

. Scheduling, Invitation and Personal Calendar. Scheduling and invitation
features enable authorized users to quickly and easily schedule web
conferences, and together with the customers' e-mail system, generate
meeting-specific invitations to send to audience members. The invitation
feature integrates with e-mail tools, such as Microsoft Outlook, or
other browser-based, e-mail programs. A personal calendar of meetings
scheduled by the user is the default home page for each user.

. Meeting Provisioning. Users can set up as many meetings as needed to
fulfill their specific requirements. Users can customize each meeting
for the number of attendees, time, date, time zone, type of meeting room
and type of security policy.

. Content Persistence and Security. All presentation material uploaded
into our service remains available until the user chooses to delete it,
enabling them to reuse content for multiple presentations. Web Meeting
Places or Auditorium Places are protected by a variety of user specified
security policies which prevent unauthorized users from viewing content.

. Meeting Reports. Users can obtain detailed meeting reports, including
reports for individual meetings and summary level reports on meetings
scheduled, users, attendance, capacity utilization and future
reservations. These reports can be exported to third party applications,
such as Excel or corporate sales or marketing databases.

. Record and Playback of Meeting Content. The audio and visuals of any
meeting can be recorded for later playback by those who could not attend
or want additional reinforcement. Recordings can have security controls
to permit access to authorized personnel only.

Conference Center 2000 is based on the iVault hosting infrastructure, which
is designed to deliver reliable, highly scalable, fault-tolerant web-based
services.

iVault Hosting Infrastructure. Our hosted servers are physically located at
Exodus Communications in Santa Clara, California. Exodus provides fully
redundant Internet access with an aggregate network capacity of over 17
gigabits per second. Additionally, Exodus provides power, climate control and
monitoring services 24 hours per day, seven days per week. We intend to add a
similar facility in Europe within the next 12 months. Our internal network
operations are managed by experienced personnel who provide operations and
database administration support 24 hours per day.

Our proprietary technology leverages our scalable architecture and runs on
Sun Microsystems and Hewlett-Packard, Intel-based servers. These servers are
connected to the Internet through several 100-megabit network connections. Our
production and internal networks are protected by a firewall system. We have
also implemented a secure link between our hosting service and our corporate
office facility that allows direct access to our data center systems, enabling
timely system administration.

PlaceWare Forum. We acquired a license to Forum as a part of the Envoy i-
Con, Inc. acquisition. Forum is a web conferencing software application that is
delivered as a hosted service, together with PlaceWare web conferencing Event
Services.

Forum automates and streamlines the process of creating an event or series
of events for our corporate customers and improves their ability to generate
and extract useful sales and marketing data from the event. Forum offers front-
end registration services, advanced calendaring and scheduling capability, and
event confirmation and reminder services. It also delivers comprehensive back-
end reporting capabilities with data that can be exported to third party
databases. It also enables customers to customize the look and feel of an
event.

Meeting Center. Meeting Center is a product that was acquired as part of the
Envoy i-Con, Inc. acquisition. It combines our web conferencing service with
the ability to automatically provision a corresponding audio conference.

Conference Center 3.5. Conference Center 3.5 was until recently our flagship
service and product offering. Conference Center 3.5 is currently available to
our customers seeking to obtain the software for deployment within their
organization, and for service providers wishing to host their own web
conferencing service.

PlaceWare Development Kit. Our PlaceWare Development Kit is an application
developer's kit that enables resellers to build web-based collaborative
applications on top of our technology. Two resellers, General Dynamics and
Hewlett-Packard, have developed applications based on this technology, which
they license into targeted market segments. General Dynamics builds
InfoWorkSpace, a collaborative application, licensed to the Department of
Defense. Hewlett-Packard has developed the HP Virtual ClassRoom application
which they offer as a service to the corporate training market.

Customer Support

We offer online classes and on-demand recordings using our services to
provide knowledge and skills to successfully deploy, use and maintain our
services and products. These training classes include material presenters,
moderators, event managers and system administrators.

Our hosted service agreement and annual maintenance agreement provide
customers access to new product enhancements and technical support. We also
offer customer support to resolve technical and user issues by phone and e-
mail.

Customers

We began providing web conferencing in June 1997 and as of June 30, 2000,
had over 750 customers. Our customers consist of a diverse group of companies
operating in many industries worldwide, ranging from Fortune 1000 to small
private companies. In addition, we provide co-branded web conferencing
technology and services to our communications service providers. During 1999,
General Dynamics accounted for 27% of our revenues. No other customer accounted
for more than 10% of our revenues in 1999.

Below is a list of our top customers as of June 30, 2000, based on the
number of authorized concurrent users in each of the categories listed below:

Internet Software and Rational Software DHL Worldwide Express
Services Corporation Dow Jones & Company,
AltaVista Company Remedy Corporation Inc.
Ariba, Inc. SalesLogix Corporation Dun & Bradstreet
AXENT Technologies, Inc. Symantec Corporation Corporation
BEA Systems, Inc. Veritas Software FedEx Corporation
Corporation

BroadVision, Inc. Computer Hardware, Ingram Micro, Inc.
CacheFlow Inc. Semiconductors and Network World, Inc.
Excite@Home Network Networking Rosenbluth
Hyperion Solutions Corp. Amdahl Corporation International
PC Week

Netscape/AOL-America Cisco Systems, Inc.
Online, Inc. EMC Corporation Manufacturing/Other
USWeb/CKS Corporation Encanto Networks, Inc. Child Health
Vignette Corporation Hewlett-Packard Company Corporation
Web Hire, Inc. of America

International Business
Financial Services Machines Corporation Epic Learning, Inc.
American International Motorola, Inc. General Dynamics
Group, Inc. Sun Microsystems, Inc. Corporation
Bank of Montreal Unisys Corporation General Electric
Bank One Corporation Xilinx Inc. Plastics

The Charles Schwab Professional Services GTE Corporation
Corporation Andersen Consulting KnowledgeNet
Dain Rauscher Andersen Worldwide KRM Information
Corporation The Boston Consulting Services, Inc.
J.P. Morgan & Co. Group Morrison Knudsen
Incorporated Gartner Group, Inc. Corporation
Morgan Stanley Dean GIGA Information Group, The Procter & Gamble
Witter & Co. Inc. Company
Paine Webber Group Inc. Grant Thornton Telcordia Technologies
T Rowe Price Associates, International Inc.
Inc. Xerox Corporation

International Data
TD Waterhouse Group, Corporation
Inc.

Service Providers
Computer Software Lippert/Heilshorn & Activate.net
Autodesk, Inc. Associates Corporation
Cadence Design Systems, Mainspring Conference Plus, Inc.
Inc. Communications, Inc. Gemisis
Eprise Corporation Miller Shandwick Geoconference
Technologies

Informix Corporation Business Services Hugin Expert
J.D. Edwards & Company ABC Radio MCI WorldCom, Inc.
JetForm Corporation Corporate Software and
Microsoft Corporation Technology, Inc. Premiere Conferencing

Oracle Corporation Sprint
Parametric Technology
Corporation

Selected Customer Profiles

Customer Profile
- -------------------------------------------------------------------------------

Autodesk Autodesk initially selected our services to deliver real-
time web seminars for marketing its geographic information
system software solutions. Their first web conference
series consisted of 24 real-time online seminars conducted
twice per week. Since September 1999, Autodesk has reached
over 4,500 people around the world, and has had
approximately 500 people in a single web seminar. Most of
these attendees were people who otherwise would not take
the time to attend a seminar in-person.

Autodesk currently uses our services for distribution
channel, partner and customer communications in its
learning and training department. Autodesk selected our
service as its enterprise-wide web conferencing standard in
February 2000. They have also selected our Portal E-Service
as the basis for a co-branded service endorsed by the their
learning and training department for the delivery of
eLearning courses through their authorized training centers
and distribution channel partners.

- -------------------------------------------------------------------------------
International Data IDC, a division of International Data Group, selected our
Corporation (IDC) services in May 1999, as their new medium for delivering
customer research presentations online through web
conferences. IDC used our service to train their lead
analysts in more than 40 countries worldwide as well as
their sales and marketing teams. IDC then launched a
monthly web conference series, where IDC's leading industry
analysts speak to a worldwide audience of as many as 300
people over the Internet.

- -------------------------------------------------------------------------------
GTE GTE uses our services in numerous ways to enhance its
ability to communicate with its customers, investors and
employees. GTE has selected our services to deliver real-
time presentations of financial information to its global
audience of investors and analysts. GTE held its first
investor web conference to describe its $3.27 billion
acquisition of Ameritech's wireless assets last year, and
has used our services in several subsequent analyst
briefings. These real-time, dynamic events attracted a
number of key GTE investors and analysts. GTE currently
uses our services to facilitate communications among
employees within the company.

Sales and Marketing

We sell our services and products through both a direct sales organization
and our service providers. We target companies looking to enhance their
business-to-business communications effectiveness. Our direct sales force is
headquartered in Mountain View, California, and we have sales representatives
based in several cities throughout North America. Our sales and marketing
organization for the Event Services division is primarily located in our
Portland, Oregon office. We have a European sales office located in the United
Kingdom that is responsible for all European, Middle East and African sales
opportunities. Asian sales opportunities are handled through our headquarters.
The direct sales force consists of inside and outside sales representatives and
is responsible for acquiring new customers. We intend to increase the size of
our domestic and international sales force.

We also sell through our service providers, which include Conference Plus,
Inc., General Dynamics Corporation, Hewlett-Packard Company, Premiere
Conferencing, and Sprint. These companies maintain direct sales organizations
that sell our services, often bundled with audio conferencing or other
services. We have sales personnel who help our service providers in selling our
services.

Our marketing strategy is to build and promote our brand, to grow awareness
and demand for the web conferencing category and to generate qualified leads
for our sales force. We focus our marketing efforts on sales, marketing and
corporate communications applications inside high technology, financial
services and

professional services companies. We rely on a range of available marketing
avenues to pursue our objectives and educate our target markets, including
print advertisements, billboards, online seminars, e-mail newsletters,
targeted permission-based e-mail and web banners, targeted direct mail, trade
shows, marketing promotions, press and industry analyst relations programs,
our web site and selected media events. We publish collateral materials to
support the sales process, including a company brochure, feature data sheets,
technology white papers and customer case studies.

As of June 30, 2000, we had 62 sales and marketing professionals, including
sales engineers, account managers and service provider sales executives.

Research and Development and Operations

We have assembled a team of skilled operations and engineering personnel
with extensive experience in the fields of software development, applications
and user interface design and testing, Internet software, collaborative
computing, network system design and network operations.

Our research and development process is driven by the availability of new
technology, market demand and customer feedback. We have invested significant
time and resources in creating a structured process for undertaking all
development projects. This process involves all functional groups and all
levels in the company. Following an assessment of market demand, our research
and development team develops a full set of comprehensive functional product
specifications based on input from the product management and sales
organizations. We are continuing to invest in the development of the
Conference Center 2000 web conferencing service and our iVault hosting
infrastructure.

Our operations team designs, monitors, and supports the iVault hosting
infrastructure. They specify network system design, architect and build the
network operations center, and provide ongoing 24 hours per day, seven days
per week support. The operations team also provides technical support for our
customers.

As of June 30, 2000, we employed 30 people in research and development, and
33 people in operations.

Technology

Our web conferencing technology was originally developed at Xerox PARC and
was assigned to us in 1996. Our web conferencing technology enables a wide
variety of business collaboration applications. It is designed to deliver
scalable, reliable, real-time interactivity with minimal latency over the
Internet. Our technology is designed to accommodate the transmission of data
and voice over the Internet at connection speeds as low as 28.8Kbps and to
support user access through corporate firewalls and web proxy servers. Our
technology efforts focus on developing the key proprietary components of the
underlying communication and collaboration infrastructure. In addition, we
utilize existing products and services and industry standards when appropriate
to enhance our services.

Real-time Collaboration Technology: PSOM.

Persistent Shared Object Messaging is the set of core proprietary component
technologies our applications are built upon. PSOM is an object-oriented
technology with several unique advantages over other contemporary development
technologies. PSOM was specifically architected for enabling scalable,
reliable, secure, real-time interaction and collaboration over the often
congested Internet.

PSOM offers the following advantages:

Persistence. PSOM objects automatically have persistence, thus the objects
are preserved with no additional programming efforts across different
invocations of the application and across service interruptions. This
capability enables faster development times of real-time collaborative
applications and increases our service reliability by ensuring key information
and content is preserved.

Shared objects. Every client and the server have a copy of each shared
object, thereby allowing any change to an object to be immediately displayed
and quickly sent to all other copies of the object. Changes made to a shared
object at the same time by different users are quickly exchanged over the
Internet and synchronized at each client. This capability enables the delivery
of real-time interactivity with minimal latency over the Internet.

Messaging. The messaging subsystem automatically adapts to both the type of
firewall connections and speed of the connections. Messages between the
browser-based client and the server are grouped together and immediately sent
over the Internet without waiting for the results from prior sent messages to
be returned. This capability enables the traversal of firewalls, minimizes
bandwidth utilization, optimizes performance based on the speed of each
individual connection, and supports our ability to scale up to 2,500
simultaneous users.

We utilize a number of industry standard technologies including Java, C++,
JavaScript, Visual Basic, and HTML languages, widely used Internet network
protocols, audio and video streaming technologies from Microsoft and
RealNetworks, and Microsoft Internet Explorer and Netscape Navigator browsers.
Use of Java on browsers provides audience members with both universal
accessibility and immediate access because no software needs to be installed on
an Internet-enabled personal computer prior to using the service to attend a
meeting or a presentation.

Scalable, Reliable Infrastructure: iVault.

iVault is the proprietary carrier-class architecture our applications run on
to deliver our services to our hosted customers and service providers. The
architecture divides the applications processing into several functions, with
each function running on a separate set of servers, including one or more
backup units. This architecture enables the service to provide redundancy in
the event of a server failure by diverting to a backup unit and allows us to
incrementally increase service capacity by adding additional servers as the
usage of our service increases.

iVault uses off-the-shelf networking systems including Cisco Systems
routers, switches and local director, Sun Solaris on Sun Microsystems Unix-
bases servers, Windows NT on Hewlett-Packard, Intel-based servers, and content
storage on Network Appliance file servers. This equipment is physically located
at our set of cages at Exodus Communications Internet co-location facility in
Santa Clara, California. Exodus provides our data center redundancy through
multiple Internet connections, fully redundant power on the premises, multiple
backup generators, and around-the-clock systems management with onsite
personnel trained in the areas of networking, Internet, and systems management.
Use of these products and services helps to ensure the best overall service
levels are supplied to our customers and service providers.

Competition

The market for web conferencing services is intensely competitive, rapidly
evolving and subject to technological change. We expect competition to increase
significantly in the future as new and existing competitors seek to provide web
conferencing services and products.

We believe the principal factors affecting the competitive environment
include a significant base of referenceable customers, the quality and
performance of the service, including scalability, reliability and security,
product features, customer service, core technology, the quality of the event
services offering, price and the value of a given service. Although we believe
that our services and products currently compete favorably with respect to
these factors, our market is relatively new and is evolving rapidly. We may not
be able to maintain our competitive position against current and potential
competitors.

services. Such potential competitors may also choose to enter the market for
web conferencing services by acquiring one of our existing competitors or by
forming strategic alliances with such competitors. Either of these occurrences
could harm our ability to compete effectively. In addition, our currently
licensed service providers may enter into similar agreements with our
competitors or develop parallel services based on their own technology. This
kind of competition from our service providers may harm our business in the
future.

Many of our potential competitors have longer operating histories, greater
name recognition, larger customer bases, more diversified lines of services and
products and significantly greater resources than we have. These competitors
may be able to undertake more extensive marketing campaigns, adopt more
aggressive pricing policies and deliver superior solutions. In addition, many
of our current or potential competitors have broad distribution channels that
may be used to bundle competing services or products directly to end-users or
purchasers. If such competitors bundle competing services or products for their
customers, the demand for our services and products could substantially
decline. As a result of the above factors, we cannot assure you that we will
compete effectively with the current or future competitors or that competitive
pressures will not harm our business.

Intellectual Property Rights

Our success and ability to compete are substantially dependent upon our
technology and intellectual property. While we rely on copyright, trade secret
and trademark law to protect our technology, we believe that factors such as
the technological and creative skills of our personnel, new product and service
developments, frequent product and service enhancements and reliable product
and service maintenance are more essential to establishing and maintaining an
intellectual property leadership position. We have no patents to date. We have
three patent applications pending. Others may develop services and products
that are similar or superior to ours.

PlaceWare and Envoy are registered trademarks in the United States. We have
applied for trademark applications on the following terms: MyPlaceWare, Web
Conferencing is Here, Real Meetings No Travel, iVault and envoyglobal.com.

We will continue to assess appropriate occasions for seeking patent and
other intellectual property protections for those aspects of our technology
that we believe constitute innovations providing significant competitive
advantage. The pending and future applications may or may not result in the
issuance of valid patents and trademarks.

We generally enter into confidentiality or non-disclosure agreements with
our employees, consultants and others, and generally control access to and
distribution of our products, 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, services or
technology. Policing unauthorized use of our proprietary information is
difficult, and the steps we have taken might not prevent misappropriation of
our technology, particularly in foreign countries where the laws may not
protect our proprietary rights as fully as do the laws of the United States.

Substantial litigation regarding intellectual property rights exists in the
technology industry. From time to time, third parties have asserted and may
assert exclusive patent, copyright, trademark and other intellectual property
rights to technologies and related standards that are important to us. We
expect that we may increasingly be subject to infringement claims as the number
of competitors in our industry grows and the functionality of products in
different industries overlap. In addition, our competitors may have filed or
intend to file patent applications covering aspects of their technology that
they may claim our intellectual property infringes. Although we have not been
party to any litigation asserting claims that allege infringement of
intellectual property rights, we cannot assure you that we will not be a party
to litigation in the future. Any third party claims, with or without merit,
could be time-consuming to defend, result in costly litigation, divert
management's attention and resources, cause product shipment delays or require
us to enter into royalty or licensing agreements. Such royalty or licensing
agreements, if required, may not be available on terms acceptable to us, if at
all. A successful claim of product infringement against us could harm our
business. See "Business--Legal Proceeding."

Employees

As of June 30, 2000, we had 153 employees, including 62 in sales and
marketing, 30 in research and development, 33 in operations and 28 in general
and administrative functions. We are not subject to any collective bargaining
agreements and believe that our employee relations are good. Competition for
employees in our industry is intense and our future success depends on our
ability to attract, retain and motivate highly-skilled employees.

Facilities

Our executive offices are located in Mountain View, California, where we
lease approximately 40,000 square feet under the terms of a lease that expires
in August 2002. Our Event Services Division is located in Portland, Oregon and
we are currently negotiating a long-term lease. We believe that these existing
facilities are adequate to meet current foreseeable requirements or that
suitable additional or substitute space will be available on commercially
reasonable terms.

Legal Proceedings

MANAGEMENT

Executive Officers and Directors

The following table sets forth information with respect to our executive
officers and directors as of June 30, 2000:

Name Age Position(s)
- ---- --- -----------

Barry James Folsom...... 52 President, Chief Executive Officer and Director

Kevin R. Evans.......... 43 Chief Financial Officer and Secretary

Kathy Hearn Bosse....... 50 Vice President, e-Business

Stephen C. Brown........ 43 Vice President, Worldwide Sales

William G. Glazier...... 41 Vice President, Marketing

James A. Hogan.......... 42 Vice President, Business Development

Michael R. Jordan....... 50 Vice President, Engineering

Edwin J. O'Mara......... 44 Vice President and General Manager, Event Services Division

J. Phillip Samper....... 65 Chairman of the Board of Directors

Lon H. H. Chow.......... 35 Director

Philip T. Gianos........ 50 Director

Domenic J. LaCava....... 59 Director

Richard P. Magnuson..... 44 Director

Rory T. O'Driscoll...... 35 Director

Barry James Folsom has served as our president, chief executive officer and
a director since October 1997. From September 1996 to August 1997, Mr. Folsom
served as a consultant and vice president of sales and marketing for Exodus
Communications, an Internet hosting company. From January 1995 to August 1996,
Mr. Folsom served as chief executive officer and president of Vivid Business
Systems, an e-commerce tools company. Prior to that, Mr. Folsom served in
various capacities at Spectrum Holobyte, Radius, Focus Systems, Sun
Microsystems and Digital Equipment Corporation. Mr. Folsom holds a B.S. degree
in electrical engineering and a M.S. degree in computer science from the
Georgia Institute of Technology.

Kevin R. Evans has served as our chief financial officer and secretary since
November 1999. From January 1998 to June 1999, Mr. Evans served as the chief
financial officer of Sequel, Inc., a computer service and support company. From
December 1995 to October 1997, Mr. Evans served as chief financial officer of
Madge Networks, N.V., a networking company. From May 1990 to November 1995, Mr.
Evans served as Vice President of Merisel, Inc., a computer equipment and
software distribution company. Prior to that, Mr. Evans served in various
capacities at Kerr Glass Group, Wells Fargo Bank and ARA Services, Inc. Mr.
Evans holds a dual B.A. degree in economics and management from Sonoma State
University and a M.B.A. degree from San Diego State University.

Kathy Hearn Bosse has served as our vice president of e-Business since
November 1999. From November 1997 to October 1999, Ms. Bosse served as vice
president of operations at UpShot.com, an Internet-based sales tool provider.
From August 1995 to August 1997, Ms. Bosse worked as a director of channel
marketing with Remedy, an enterprise software company. From October 1993 to
March 1995, Ms. Bosse worked as a director of worldwide sales support with
Network General Corporation, a network equipment company. Prior to that, Ms.
Bosse worked in various capacities at Network Equipment Technologies,
Ungermann-Bass and Tymnet. Ms. Bosse holds a B.S. degree in Mathematics and a
M.A.S. degree in Computer Science from Southern Methodist University.

Stephen C. Brown has served as our vice president of worldwide sales since
June 1999. From August 1998 to May 1999, Mr. Brown served as director of
business development with Tumbleweed Software, an Internet messaging company.
From July 1997 to July 1998, Mr. Brown was a private investor. From June 1995
to

June 1997, Mr. Brown served as vice president of sales with QRS Corporation, an
electronic commerce information services company. From December 1984 to June
1995, Mr. Brown served in various sales management capacities with Federal
Express, a global transportation and logistics information company. Mr. Brown
holds a B.A. degree in political science from California State University at
Long Beach.

William G. Glazier has served as our vice president of marketing since
January 1999. From June 1997 to October 1998, Mr. Glazier served as vice
president of marketing with Eloquent, Inc., an internet software and services
firm. From April 1995 to June 1997, Mr. Glazier served as a director of the
workstations business with Digital Equipment Corporation, a computer company.
From October 1989 to April 1995, Mr. Glazier served as director of marketing at
Silicon Graphics Inc., a computer company. Prior to that, Mr. Glazier served in
various capacities at Bain and Company. Mr. Glazier holds a B.A. degree in
government and economics from Harvard College and a M.B.A. degree from Stanford
University.

James A. Hogan has served as our vice president of business development
since March 1999. From July 1998 to February 1999, Mr. Hogan served as
president and chief executive officer of Silicon Systems and Technologies, a
systems software company. From October 1996 to July 1998, Mr. Hogan served as
general manager and corporate vice president of worldwide marketing and sales
for Zitel Corporation, a systems software and services company. From November
1995 to October 1996, Mr. Hogan served as a senior director of market
development with NETCOM On-Line Communications Services, Inc., an Internet
access provider. From January 1995 to November 1995, Mr. Hogan served as vice
president of marketing and sales at CyberSource Corporation, an Internet-based
software distribution company. Prior to that, Mr. Hogan served in various
capacities at CompuServe, Inc. and IBM Corporation. Mr. Hogan holds a B.B.A.
degree and a M.B.A. degree from the University of Michigan.

Michael R. Jordan has served as our vice president of engineering since
November 1996. From May 1994 to September 1996, Mr. Jordan served as a director
and as a vice president of console software at 3DO, a software development
company. Prior to that, Mr. Jordan served in various capacities at NCD, Ridge &
Gavilan, Stratus & Tandem and GE/Honeywell. Mr. Jordan holds a B.S.E.E. from
Arizona State University.

Edwin J. O'Mara has served as vice president and general manager of the
PlaceWare event services division since the acquisition of Envoy in June 2000.
From July 1999 to June 2000, Mr. O'Mara served as the president and chief
operating officer of Envoy i-Con., Inc., a web conferencing service provider.
From July 1997 to March 1999, Mr. O'Mara served as senior vice president and
corporate secretary for Claremont Technology Group, a national systems
integration IT company. From December 1994 to March 1997, Mr. O'Mara served as
vice president, strategic marketing and planning, retail division for
PacifiCorp, a large electric utility in Portland, Oregon. Prior to that, Mr.
O'Mara served in various capacities at Sprint Communications, MCI
Communications and Xerox Corporation. Mr. O'Mara holds a B.A. degree in History
from Lehigh University.

J. Phillip Samper has served as the chairman of the board of directors of
PlaceWare since December 1998. Mr. Samper is currently a managing director of
Gabriel Venture Partners, L.L.C., a venture capital firm, and has been a member
of that firm since January 1999. From November 1997 to June 1998, Mr. Samper
served as chief executive officer and president of Avistar Systems Corporation,
a video collaboration company. From 1996 to 1997, Mr. Samper served as
chairman, chief executive officer and president of Quadlux, Inc., a commercial
and residential cooking appliances company. From May 1995 to March 1996, Mr.
Samper served as chairman and chief executive officer of Cray Research, Inc., a
computer products company. From January 1994 to March 1995, Mr. Samper served
as president and chief executive of Sun Microsystems Computer Corporation.
Prior to that, Mr. Samper served as managing partner of FRN Group, a private
investment consulting firm. Mr. Samper currently serves on the boards of iTango
Systems, Inc. and SalesHound.com, Inc., each of which is a privately-held
company, and the Interpublic Group of Companies, Inc. Mr. Samper holds a B.S.
degree from the University of California, Berkeley, a B.F.T. from the American
Graduate School of International Management and a M.S.M from the Massachusetts
Institute of Technology.

Lon H. H. Chow has served as a director of PlaceWare since April 1999. Mr.
Chow is currently a general partner with Apex Investment Partners, a venture
capital firm, and has been a member of that firm since October 1997. From
September 1993 to October 1997, Mr. Chow was a management consultant with
Mercer Management Consulting (formerly Strategic Planning Associates). Prior to
that, Mr. Chow served in various operating management roles at Pacific Telesis.
Mr. Chow holds a B.A. degree in international relations from the University of
California, Davis and an M.B.A. degree from the Wharton School.

Philip T. Gianos has served as a director of PlaceWare since September 1999.
Mr. Gianos is currently a general partner with InterWest Partners, a venture
capital firm, and has been a member of that firm since 1982. Prior to joining
InterWest Partners, Mr. Gianos was with IBM Corporation. Mr. Gianos is a board
member of Xilinx, Ramp Networks, T/R Systems and the Western Association of
Venture Capitalists. Mr. Gianos holds a B.S. degree and an M.S. degree in
electrical engineering from Stanford University and an M.B.A. degree from
Harvard University.

Domenic J. LaCava has served as a director of PlaceWare since November 1998.
Mr. LaCava is currently the president of Eastman Software, Inc., and has been
with that company since November 1999. From November 1997 to October 1999, Mr.
LaCava worked with several emerging growth companies. From January 1997 to
October 1997, Mr. LaCava served as president and chief operating officer of
PictureTel Corporation, a video conferencing company. From December 1993 to
December 1996, Mr. LaCava served as a vice president of PictureTel Corporation.
Prior to that, Mr. LaCava served in various capacities at PowerOpen
Association, Digital Equipment Corporation and IBM. Mr. LaCava holds an
A.S.E.E. degree from the Wentworth Institute of Technology.

Richard P. Magnuson has served as a director of PlaceWare since November
1996. Mr. Magnuson is currently a private venture capital investor in a number
of emerging growth companies, and has been engaged in this activity since
January 1996. From 1982 to December 1996, Mr. Magnuson was a general partner
and associate with Menlo Ventures, a venture capital firm. Mr. Magnuson
currently serves on the boards of AVCOM Technologies, Inc., eSavingsCenter,
Inc. HealthAnswers, Inc. and Paramark, Inc. each of which is a privately-held
company, and California Water Service Group. Mr. Magnuson holds a B.A degree in
economics, a J.D. degree and an M.B.A. degree from Stanford University.

Rory T. O'Driscoll has served as a director of PlaceWare since September
1999. Mr. O'Driscoll is currently a vice president and general partner of
BankAmerica Ventures, a venture capital firm, and has served in this capacity
since September 1993. Mr. O'Driscoll serves on the boards of netGenesis, a
business intelligence software and services provider, and several privately
held companies. Mr. O'Driscoll holds a B.Sc. degree in economics from the
London School of Economics.

Board Composition

We currently have authorized seven directors. Our certificate of
incorporation provides for a classified board of directors consisting of three
classes of directors, each serving staggered three-year terms. As a result, a
portion of the board of directors will be elected each year. To implement the
classified structure, prior to the consummation of the offering, two of the
nominees will be elected to one-year terms, two will be elected to a two-year
term and three will be elected to three-year terms. Thereafter, directors will
be elected for three-year terms. Lon H. H. Chow and Rory T. O'Driscoll have
been designated Class I directors whose term expires at the 2001 annual meeting
of stockholders. Philip T. Gianos and Richard P. Magnuson have been designated
Class II directors whose term expires at the 2002 annual meeting of
stockholders. Barry James Folsom, Domenic J. LaCava and J. Phillip Samper have
been designated Class III directors whose term expires at the 2003 annual
meeting of stockholders. There are no family relationships among any of our
directors, officers or key employees.

Board Committees

Our Board of Directors has an audit committee and a compensation committee.

Our audit committee reviews, acts on and reports to our Board of Directors
with respect to various auditing and accounting matters, including the
selection of our independent accountants, the scope of our annual audits, fees
to be paid to the independent accountants, the performance of our independent
accountants and our accounting practices. Domenic J. LaCava, Richard P.
Magnuson and J. Phillip Samper are the members of our audit committee.

Our compensation committee establishes salaries, incentives and other forms
of compensation for officers and other employees. This committee also
administers our incentive compensation and benefit plans. Lon H. H. Chow, Rory
T. O'Driscoll and J. Phillip Samper are the members of the compensation
committee. Barry James Folsom, our chief executive officer, will participate in
all discussions and decisions regarding salaries and incentive compensation for
all of our employees and consultants, except that he will be excluded from
decisions regarding his own compensation.

Director Compensation

Our directors do not currently receive any cash compensation for services on
the board of directors or any committee of our board, but directors may be
reimbursed for certain expenses in connection with attendance at board of
directors and committee meetings. All directors are eligible to participate in
our 2000 Equity Incentive Plan. Non-employee directors are eligible to
participate in our 2000 Non-Employee Directors' Stock Option Plan.

Compensation Committee Interlocks and Insider Participation

None of the members of our compensation committee is one of our officers or
employees. No interlocking relationship exists between our Board of Directors
or compensation committee and the board of directors or compensation committee
of any other company, nor has such an interlocking relationship existed in the
past.

Executive Compensation

The following table sets forth information concerning the compensation
earned that we paid during the year ended December 31, 1999 to our chief
executive officer and the four next most highly compensated executive officers
whose aggregate cash compensation exceeded $100,000 during that fiscal year.
All option grants were made under our 1997 Stock Plan.

Summary Compensation Table

Long-Term
Annual Compensation Compensation
--------------------- ------------
Securities
Other Annual Underlying
Name and Principal Position Salary($) Bonus($) Compensation Options
- --------------------------- ---------- --------- ------------ ------------

Barry James Folsom
President and Chief Executive Officer.. 175,012 46,579 -- 228,500

Kevin R. Evans
Chief Financial Officer and Secretary.. 30,775 10,000 -- 210,000

Stephen C. Brown
Vice President, Worldwide Sales........ 91,809 24,577 $27,397 135,000

William G. Glazier
Vice President, Marketing.............. 143,298 39,383 -- 200,000

Michael R. Jordan
Vice President, Engineering............ 139,510 38,722 -- 10,000

Mr. Evans joined us in November 1999, Mr. Brown joined us in June 1999 and
Mr. Glazier joined us in January 1999.

Option Grants in 1999

The following table sets forth summary information regarding the option
grants made to our chief executive officer and each of our four other most
highly paid executive officers during 1999. Options granted to purchase shares
of our common stock under our 1997 Stock Plan are generally immediately
exercisable by the optionee but are subject to a right of repurchase pursuant
to the vesting schedule of each specific grant. In the event that a purchaser
ceases to provide service to us and our affiliates, we have the right to
repurchase any of that person's unvested shares of common stock at the original
option exercise price. Generally, 25% of each option vests on the one year
anniversary of employment and the remainder vest in a series of equal monthly
installments beginning on the one year anniversary of employment and continuing
over the next three years of service. The exercise price per share is equal to
the fair market value of our common stock on the date of grant as determined by
our board of directors.

The percentage of total options was calculated based on options to purchase
an aggregate of 1,973,883 shares of common stock granted under our 1997 Stock
Plan in 1999. The potential realizable value is calculated by assuming that the
initial public offering price of $13.00 per share, based on the mid-point of
the filing range, appreciates at the indicated rate for the remaining term of
the option and that the option is exercised at the exercise price and sold on
the last day of its term at the appreciated price. The potential realizable
value computation is net of the applicable exercise price, but does not take
into account applicable federal or state income tax consequences and other
expenses of option exercises or sales of appreciated stock. The values shown do
not consider non-transferability or termination of the options upon termination
of such employment with us. These assumed rates of appreciation comply with the
rules of the Securities and Exchange Commission and do not represent our
estimate of future stock prices. Actual gains, if any, on stock option
exercises will be dependent on the future performance of our common stock. See
"Compensation Plans" for a description of the material terms of these options.

Individual Grants
--------------------------------------------
% of Total
Number of Options Potential Realizable
Securities Granted to Value at Assumed
Underlying Employees Exercise Annual Rates of Stock
Options In Last Price Expiration Price Appreciation
Name Granted (#) Fiscal Year ($/share) Date for Option Term
- ---- ----------- ----------- --------- ---------- ----------------------
5% 10%

Barry James Folsom...... 228,500 11.6% $2.00 12/30/09 4,381,631 7,247,712
Kevin R. Evans.......... 210,000 10.6% $1.00 11/23/09 4,236,882 6,870,917
Stephen C. Brown........ 135,000 6.8% $0.20 6/09/09 2,831,710 4,525,018
William G. Glazier...... 200,000 10.1% $0.20 2/10/09 4,195,126 6,703,730
Michael R. Jordan....... 10,000 0.4% $0.20 7/14/09 209,756 335,187

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values

The following table sets forth, as to the named executive officers,
information concerning stock options granted during the fiscal year ended
December 31, 1999.

The information regarding the value realized reflects the fair market value
of our common stock underlying the option of date of exercise minus the
aggregate exercise price of the option.

The information regarding the value of unexercised in-the-money options is
based on a value of $13.00 per share, the assumed initial public offering
price, minus the per share exercise price, multiplied by the number of shares
underlying the option.

Certain of the shares held by Mr. Evans and Mr. Brown are subject to our
right to repurchase them at cost.

Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options at
Shares Fiscal Year End (#) Fiscal Year End ($)
Acquired on Value -------------------------------------------------
Name Exercise (#) Realized ($) Vested Unvested Exercisable Unexercisable
- ---- ------------ ------------ ---------- ------------------------ -------------

Barry James Folsom...... -- -- -- 228,500 2,513,500 --
Kevin R. Evans.......... 210,000 2,520,000 -- -- -- --
Stephen C. Brown........ 135,000 1,728,000 -- -- -- --
William G. Glazier...... -- -- -- 200,000 2,560,000 --
Michael R. Jordan....... 10,000 128,000 -- -- -- --

Compensation Plans

1997 Stock Plan

In March 1997 the board of directors adopted, and the stockholders approved,
the 1997 stock plan. Our 1997 stock plan was amended in July 1998 and the
stockholders approved the amendment. The incentive stock option plan was again
amended in July 1999 and the stockholders approved this second amendment. The
plan was further amended in December 1999 and the stockholders approved this
third amendment. The plan was amended again in June 2000 and the stockholders
approved this fourth amendment. An aggregate of 6,399,890 shares of common
stock currently are authorized for issuance under the plan. The plan will
terminate as of the effective date of the initial public offering. The
termination of the plan will have no effect on the options that have been
granted thereunder.

The plan permits the grant of stock options to employees, non-employee
directors and consultants. Stock options may be either incentive stock options
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended, or nonstatutory stock options. In addition, the plan permits the award
or sale of shares of our common stock.

The plan is administered by our board of directors. Our board of directors
may delegate its authority to administer the plan to a committee of one or more
Board members appointed by our board of directors.

In the event of certain changes in control in our beneficial ownership, all
outstanding stock awards under the 1997 stock plan may be assumed, continued or
substituted for by any surviving entity. If the surviving entity determines not
to assume, continue or substitute for such awards, then for those optionholders
in our service at that time, the vesting of such stock awards will be
accelerated and such stock awards will be terminated upon the change in control
if not previously exercised.

Our board of directors may amend or modify the plan at any time. However, no
amendment or modification shall adversely affect the right and obligations with
respect to options or unvested awards unless the participant consents to the
amendment or modification. In addition, our board of directors shall not,
without the approval of the stockholders,

. increase the maximum number of shares issuable under the 1997 Plan
(except for permissible adjustments in the event of certain changes in
the company's capitalization); or

. materially change the class of persons who are eligible for the grants
of the incentive stock options.

Envoy i-Con, Inc. 1999 Stock Incentive Compensation Plan

In June 2000, in connection with our acquisition of Envoy i-Con, Inc., each
outstanding option granted by Envoy i-Con, Inc. was assumed by us and
automatically converted into an option to purchase shares of our common stock,
pursuant to a fixed exchange ratio at the same aggregate exercise price. In
connection with the option assumption, each optionholder was also credited with
an additional one year of vesting.

2000 Equity Incentive Plan

In February 2000, our board of directors adopted our 2000 equity incentive
plan and it was approved by our stockholders on April 11, 2000. The 2000 plan
will be effective on the effective date of this initial public offering. The
2000 plan is intended to replace and supersede the 1997 stock plan. A total of
3,000,000 shares of our common stock have been reserved for issuance under the
2000 plan. When a stock award expires or is terminated before it is exercised,
the shares not acquired pursuant to the stock awards shall again become
available for issuance under the 2000 plan. No optionee may be granted options
covering more than 1,500,000 shares during any calendar year. In no event may
an option be exercised following its expiration date.

The 2000 plan permits the grant of options to employees, directors and
consultants. Options may be either incentive stock options within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended, or
nonstatutory stock options. In addition, the 2000 plan permits the grant of
stock bonuses and rights to purchase restricted stock.

The 2000 plan is administered by our board of directors. The board of
directors may delegate its authority to administer the 2000 plan to a committee
of two or more board members appointed by the board of directors. The
administrator has the authority to select the eligible persons to whom award
grants are to be made, to designate the number of shares to be covered by each
award, to determine whether an option is to be an incentive stock option or
nonstatutory stock option, to establish vesting schedules, to specify the
exercise price of options and the type of consideration to be paid upon
exercise and to specify other terms of awards.

In general, the terms of stock options granted under the 2000 plan may not
exceed 10 years. An optionholder may not transfer a stock option other than by
will or the laws of descent and distribution. The exercise price for an
incentive stock option cannot be less than 100% of the fair market value of the
common stock on the date of grant. The exercise price for a nonstatutory stock
option cannot be less than 85% of the fair market value of the common stock on
the date of grant. In the event the optionholder is a 10% stockholder, then the
exercise price per share shall not be less than 110% of the fair market value
of common stock on the date of grant.

Unless the terms of an optionholder's stock option agreement provide for
earlier termination, in the event an optionholder's service relationship with
us, or any affiliate of ours, ceases due to death, the optionholder's
beneficiary may exercise any vested options up to 18 months after the date such
service relationship ends. In the event an optionholder's service relationship
with us, or any affiliate of ours, ceases due to disability, the optionholder
may exercise any vested option up to 12 months after the cessation of service.
If an optionholder's relationship with us, or any affiliate of ours, ceases for
any reason other than disability or death, the optionholder may (unless the
terms of the stock option agreement provide for earlier termination) exercise
any vested options up to 3 months after cessation of service.

Incentive stock options may be granted only to our employees. The aggregate
fair market value, determined at the time of grant, of shares of our common
stock with respect to which incentive stock options are exercisable for the
first time by an optionholder during any calendar year under all of our stock
plans may not exceed $100,000. No incentive stock option may be granted to any
person who at, the time of the grant, owns or is deemed to own stock possessing
more then 10% of our total combined voting power unless the term of the
incentive stock option award does not exceed five years from the date of grant.

In the event of certain changes in control in our beneficial ownership all
outstanding stock awards under the 2000 plan may be assumed, continued or
substituted for by any surviving entity. If the surviving entity determines not
to assume, continue or substitute for such awards, then for those optionholders
in our service at that time, the vesting of such stock awards will be
accelerated and such stock awards will be terminated upon the change in control
if not previously exercised.

The terms of any stock bonuses or restricted stock purchase awards granted
under the 2000 plan will be determined by the administrator. The administrator
may award stock bonuses in consideration of past services without a purchase
payment. Shares sold or awarded under the 2000 plan may be subject to
repurchase by the company. The purchase price of restricted stock under any
restricted stock purchase agreement will not be less than 85% of the fair
market value of the company's common stock on the date of grant.

Our board of directors may amend or modify the 2000 plan at any time.
However, no amendment or modification shall adversely affect the right and
obligations with respect to options or unvested awards unless the participant
consents to the amendment or modification. In addition, the board of directors
shall not, without the approval of the stockholders, (i) increase the maximum
number of shares issuable under the 2000 plan (except for permissible
adjustments in the event of certain changes in the company's capitalization),
materially modify the eligibility requirements for participation or (ii)
materially increase the benefits accruing to participants.

2000 Employee Stock Purchase Plan

In February 2000, the board of directors adopted our 2000 employee stock
purchase plan and it was approved by our stockholders on April 11, 2000. A
total of 500,000 shares of common stock have been authorized for issuance under
the purchase plan. As of each December 31st, beginning with December 31, 2001
and continuing through and including December 31, 2008 the share reserve will
increase by the least of the following:

. 1% of our total outstanding common stock;

. 250,000 shares of common stock; or

. a lesser amount as determined by our board of directors. The purchase
plan is intended to qualify as an employee stock purchase plan within
the meaning of Section 423 of the Internal Revenue Code of 1986, as
amended.

Under our purchase plan, eligible employees will be able to purchase common
stock at a discount price in periodic offerings not to exceed twenty-seven
months in length. The purchase plan will commence on the effective date of this
initial public offering. The first offering period is scheduled to commence
with our initial public offering and end on April 30, 2002.

Unless otherwise determined by the board of directors, all employees are
eligible to participate in the purchase plan so long as they are employed by us
(or a subsidiary designated by the board of directors) for at least 20 hours
per week and are customarily employed by us (or a subsidiary designated by the
board of directors) for at least five months per calendar year.

Under the purchase plan, employees who participate in an offering may have
up to 15% of their earnings for the period of that offering withheld. The
amount withheld is used on each purchase date of the offering period to
purchase shares of common stock. The price paid for common stock on the
purchase dates will equal the lower of

85% of the fair market value of the common stock first day of the offering
period or 85% of the fair market value of the common stock on the purchase
date. Employees may end their participation in the offering at any time during
the offering period, and participation ends automatically on termination of
employment.

Upon a change in control of the beneficial ownership of our outstanding
stock or substantially all of our assets, the board of directors has discretion
to provide that each right to purchase common stock will be assumed or an
equivalent right substituted by the successor entity, or the board of directors
may provide for all sums collected by payroll deductions to be applied to
purchase stock immediately prior to the effective date of the change in control
transaction.

Our board of directors has the authority to amend or terminate the purchase
plan; provided, however, that no amendment or termination of the purchase plan
may adversely affect any outstanding rights to purchase common stock.
Amendments will generally be submitted for stockholder approval only to the
extent required by law.

2000 Non-Employee Directors' Stock Option Plan

In February 2000, our board of directors adopted our 2000 non-employee
directors' stock option plan and it was approved by our stockholders on April
11, 2000. The non-employee directors' plan will be effective on the effective
date of this initial public offering. A total of 650,000 shares of our common
stock have been reserved for issuance under our non-employee directors' plan.
When a stock option expires or is terminated before its is exercised, the
shares not acquired pursuant to the stock option shall again become available
for issuance under the non-employee directors' plan.

Our non-employee directors' plan permits the grant of nonstatutory options
to non-employee directors. Our non-employee directors' plan is administered by
the board of directors, however; the grant of stock options is automatic, as
described below:

. Upon the completion of the initial public offering, each non-employee
director who was a non-employee director as of the date of the initial
public offering or who is first elected or appointed after the date of
the prospectus as a non-employee director will automatically be granted
an option to purchase 30,000 shares of common stock. Such option shall
vest ratably over 36 months. Notwithstanding the foregoing, Messrs.
LaCava and Samper are not eligible for this initial grant.

. On the date of each annual meeting of our stockholders, commencing with
our annual meeting in 2001, each non-employee director will
automatically receive an option to purchase 10,000 shares of our common
stock; provided, however, that if the person has not been serving as a
non-employee director for the entire period since the preceding annual
meeting, then the number of shares subject to the grant will be reduced
pro rata for each full quarter prior to the date of grant during which
such person did not serve as a non-employee director. Such option will
vest ratably over 12 months.

. Upon the completion of the initial public offering each non-employee
director who is then the chairman of a primary committee will
automatically be granted an option to purchase 3,000 shares of common
stock. Any non-employee director who is appointed or elected chairman of
a primary committee after the completion of the initial public offering,
commencing with our annual meeting in 2001, will automatically be
granted an option to purchase 3,000 shares of common stock on the date
of each annual meeting. Each such option shall vest ratably over 12
months. Primary committees consist of the compensation committee, audit
committee, and any other committee designated as a primary committee by
the board of directors.

In general, the terms of stock options granted under the non-employee
directors' plan may not exceed 10 years. An optionholder may not transfer a
stock option other than by will or the laws of descent and distribution. The
exercise price for nonstatutory stock options will be 100% of the fair market
value of the common stock on the date of grant.

In the event a non-employee director, who first became a non-employee
director prior to the initial public offering, is terminated in connection with
certain changes in control in our beneficial ownership, the vesting of 100% of
the unvested options held by such non-employee director shall accelerate. In
the event a non-employee director, who first became a non-employee director on
after the initial public offering, is terminated within 12 months of certain
changes in control in our beneficial ownership, the vesting of 100% of the
unvested options held by such non-employee director shall accelerate.

The board of directors may amend or modify the non-employee directors' plan
at any time. However, no such amendment or modification shall adversely affect
the right and obligations with respect to options unless the participant
consents to such an amendment or modification.

401(k) Plan

We sponsor a 401(k) plan, a defined contribution plan intended to qualify
under Section 401(a) of the Internal Revenue Code of 1986, as amended. All
employees are eligible to participate. Participants may make pre-tax
contributions to the 401(k) plan of up to 25% of their eligible earnings,
subject to a statutorily prescribed annual limit ($10,500 in calendar year
2000). Under the 401(k) Plan, each employee is fully vested in his or her
deferred salary contributions. Employee contributions are held and invested by
the 401(k) Plan's trustee. The 401(k) Plan also permits us to make matching
contributions and profit-sharing contributions, subject to established limits.

Each participant's contributions, and the corresponding investment earnings,
are generally not taxable to the participants until withdrawn. Individual
participants may direct the trustee to invest their accounts in authorized
investment alternatives.

Executive Severance Benefit Plan

Currently, Kathy Bosse, Stephen Brown, Kevin Evans, Barry James Folsom,
William Glazier, James Hogan, Michael Jordan and Edwin O'Mara are participants
in our executive severance benefit plan . Under the plan, we agreed that in the
event the executive's employment is terminated without cause, we would;

. continue the base salary of the executive for three (3) months (or such
longer period as we determine, in our sole discretion); and

. if the executive elects COBRA coverage, pay the continued cost for such
coverage for a number of months equal to the number of months of the
salary continuation payments under the plan.

In addition, if the executive's employment is terminated without cause or
the executive terminates employment for good reason, in either event within 13
months following a change in control in our beneficial ownership, we would

. accelerate 100% of the vesting all of such executive's unvested stock
options,

. continue the base salary of the executive for at least three (3) months;
and

. if the executive elects COBRA coverage, pay the continued cost for the
such coverage for a number of months equal to the number of months of
the salary continuation payments under the executive severance benefit
plan.

Limitations on Liability and Indemnification of Directors and Officers

Our certificate of incorporation limits the liability of directors to the
maximum extent permitted by Delaware law. Delaware law provides that directors
of a corporation will not be personally liable for monetary damages for breach
of their fiduciary duties as directors, except liability for:

. any breach of their duty of loyalty to the corporation or its
stockholders;

. acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;

. unlawful payments of dividends or unlawful stock repurchases or
redemption; or

. any transaction from which the director derived an improper personal
benefit.

This limitation of liability does not apply to liabilities arising under the
federal securities laws and does not affect the availability of equitable
remedies such as injunctive relief or rescission.

Our certificate of incorporation and bylaws provide that we shall indemnify
our directors and executive officers and may indemnify other officers and
employees and our agents to the fullest extent permitted by law. We believe
that indemnification under our bylaws covers at least negligence and gross
negligence on the part of indemnified parties. Our bylaws also permit us to
secure insurance on behalf of any officer, director, employee or other agent
for any liability arising out of his or her actions in such capacity,
regardless of whether the bylaws would permit indemnification.

We have entered into agreements to indemnify our directors and executive
officers, in addition to indemnification provided for in our bylaws. These
agreements, among other things, provide for indemnification of our directors
and executive officers for expenses, including attorneys' fees, judgments,
fines and settlement amounts incurred by any such person in any action or
proceeding, including any action by or in the right of PlaceWare, arising out
of such person's services as a director or executive officer of ours, any
subsidiary of ours or any other company or enterprise to which the person
provides services at our request. We believe that these provisions and
agreements are necessary to attract and retain qualified persons as directors
and executive officers.

CERTAIN TRANSACTIONS

Other than compensation agreements and other arrangements, which are
described as required in "Management," and the transactions described below,
since October 1996, there has not been, nor is there currently proposed, any
transaction or series of similar transactions to which we were or will be a
party:

. in which the amount involved exceeded or will exceed $60,000; or

. in which any holder of more than 5% of our common stock on an as-
converted basis, director, executive officer or any member of their
immediate family had or will have a direct or indirect material interest.

Series A Preferred Stock Financing

On November 25, 1996, we issued and sold shares of our series A preferred
stock, which shares are convertible into 1,705,000 shares of our common stock,
to investors at a per share price of approximately $1.00 per common equivalent
share. The price of our series A preferred stock was determined through arms
length negotiations among us and investors not affiliated with us at the time
of this financing. Upon the closing of this offering, each share of series A
preferred stock will automatically convert into one share of common stock. At
the assumed initial public offering price of $13.00 per share, the series A
preferred stock will have a value of $22,165,000. The investors in the
financing included the following principal stockholders, officers and directors
and their related entities:

Equivalent
Common
Stock
Name Purchased
---- ----------

Xerox Corporation................................................. 455,000
Rekhi Family Trust................................................ 300,000
Magnuson Revocable Trust.......................................... 200,000

The shares issued to Xerox Corporation were issued in connection with the
execution of a software license and technology assignment agreement.

Series B Preferred Stock Financing

On April 23, 1997, May 22, 1998, June 28, 1998, March 8, 1999 and April 1,
1999, we issued and sold shares of our series B preferred stock, which shares
are convertible into 5,120,000 shares of our common stock, to investors at a
per share price of approximately $2.00 per common equivalent share. The price
of our series B preferred stock was determined through arms length negotiations
among us and investors not affiliated with us at the time of this financing.
Upon the closing of this offering, each share of series B preferred stock will
automatically convert into one share of common stock. At the assumed initial
public offering price of $13.00 per share, the series B preferred stock will
have a value of $66,560,000. The investors in the financing included the
following principal stockholders, officers and directors and their related
entities:

Equivalent
Common
Stock
Name Purchased
---- ----------

Entities affiliated with InterWest Partners....................... 1,587,500
Entities affiliated with Apex Investment Fund..................... 1,250,000
Bay Partners SBIC, L.P............................................ 1,000,000
Xerox Corporation................................................. 447,514
Magnuson Revocable Trust.......................................... 85,191
J. Phillip Samper................................................. 50,000
Domenic H. LaCava................................................. 10,000

Series C Preferred Stock Financing

On September 17, 1999, we issued and sold shares of our series C preferred
stock, which shares are convertible into 4,954,785 shares of our common stock,
to investors at a per share price of approximately $3.80 per common equivalent
share. The price of our series C preferred stock was determined through arms
length negotiations among us and investors not affiliated with us at the time
of this financing. Upon the closing of this offering, each share of series C
preferred stock will automatically convert into one share of common stock. At
the assumed initial offering price of $13.00 per share, the series C preferred
stock will have a value of $64,412,205. The investors in the financing included
the following principal stockholders, officers and directors and their related
entities:

Equivalent
Common
Stock
Name Purchased
---- ----------

BankAmerica Ventures.............................................. 1,447,368
Entities affiliated with InterWest Partners....................... 657,894
Entities affiliated with Gabriel Venture Partners................. 394,737
Bay Partners SBIC, L.P............................................ 263,157
Entities affiliated with Apex Investment Fund..................... 263,085
Xerox Corporation................................................. 131,578
Magnuson Revocable Trust.......................................... 52,631
Barry James Folsom................................................ 13,157

Series D Preferred Stock Financing

On July 21, 2000, we issued and sold shares of our series D preferred stock,
which shares are convertible into 5,380,000 shares of our common stock to
investors at a per share price of approximately $5.00 per common equivalent
share. The price of our series D preferred stock was determined through arms
length negotiations among us and investors not affiliated with us at the time
of this financing. Upon the closing of the offering, each share of series D
preferred stock will automatically convert into one share of common stock. At
the assured initial public offering price of $13.00 per share, the series D
preferred stock will have a value of $69,940,000. The investors in the
financing included the following principal stockholders, officers and directors
and their related entities:

Equivalent
Common
Stock
Purchased
----------

BankAmerica Ventures.............................................. 1,163,960
InterWest Partners VI, L.P. ...................................... 484,700
Gabriel Venture Partners L.P. .................................... 387,760
Entities affiliated with Apex Investment Fund..................... 144,560

Acquisition of Envoy i-Con, Inc.

On June 30, 2000, Envoy became a wholly owned subsidiary of PlaceWare. Upon
the closing, the shareholders of Envoy received 1,034,473 shares of PlaceWare
common stock and 116,789 shares of PlaceWare series D preferred stock. Upon the
closing of this offering, each share of series D preferred stock will
automatically convert into one share of common stock. At the assumed initial
public offering price of $13.00 per share, the common stock will have a value
of $13,448,149 and the series D preferred stock will have a value of
$1,518,257.

Investor Rights Agreement

PlaceWare and the preferred stockholders described above have entered into
an agreement, pursuant to which these and other preferred stockholders possess
registration rights with respect to their shares of common stock.

Indemnification Agreements

We have entered into indemnification agreements with our directors and our
executive officers for the indemnification of an advancement of expenses to
these persons to the fullest extent permitted by law. We also intend to enter
into indemnification agreements with our future directors and officers. See
"Management--Limitations on Liability and Indemnification of Directors and
Officers."

Employment Contracts and Change of Control Arrangements

At the time of commencement of employment, our employees generally sign
offer letters specifying basic terms and conditions of employment. In general,
our employees are not subject to written employment agreements.

On February 2, 1998, we entered into an employment offer letter with Barry
James Folsom, our president, chief executive officer and a director. The letter
was subsequently amended pursuant to the executive severance benefit plan
described below. Pursuant to such amended offer letter and in addition to any
benefits he is entitled to receive under the executive severance benefit plan,
in the event that Mr. Folsom is terminated without cause prior to February 16,
2001, he will be entitled to receive, as severance, continued payment of his
base salary and health benefits for six months. In the event that Mr. Folsom is
terminated without cause on or after February 16, 2001, he will be entitled to
receive, as severance, continued payment of his base salary and health benefits
for nine months.

On November 5, 1999, we entered into an employment offer letter with Kevin
R. Evans, our chief financial officer and secretary. The letter was
subsequently amended pursuant to the executive severance benefit plan described
below. Pursuant to such amended offer letter and in addition to any benefits he
is entitled to receive under the executive severance benefit plan, in the event
that Mr. Evans is terminated without cause, he shall be entitled to receive, as
severance, continued payment of his base salary for three months and an extra
six months of vesting. Furthermore, in the event that Mr. Evans is
constructively terminated, he shall be entitled to receive, as severance,
continued payment of his base salary and health benefits for six months and an
extra six months of vesting.

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding beneficial
ownership of our common stock as of June 30, 2000, by

. each of our directors;
. each of our named executive officers;
. all of our named executive officers and directors as a group; and
. each person known by us to be the beneficial owner of more than 5% of our
outstanding common stock.

Except as otherwise noted, the address of each person listed in the table is
c/o PlaceWare, 295 North Bernardo Avenue, Mountain View, California 94043. The
table includes all shares of common stock issuable within 60 days of June 30,
2000 upon the exercise of options and other rights beneficially owned by the
indicated stockholders on that date. Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission and
includes voting and investment power with respect to the shares.

To our knowledge, except under applicable community property laws or as
otherwise indicated, the persons named in the table have sole voting and sole
investment control with respect to all shares beneficially owned.

The applicable percentage of ownership for each stockholder is based on
17,290,888 shares of common stock outstanding as of June 30, 2000, together
with applicable options for that stockholder. Shares of common stock issuable
upon exercise of options and other rights beneficially owned are deemed
outstanding for the purpose of computing the percentage ownership of the person
holding those options and other rights, but are not deemed outstanding for
computing the percentage ownership of any other person.

Percentage
Beneficially
Number of Owned
Shares -----------------
Beneficially Prior to After
Name and Address Owned Offering Offering
- ---------------- ------------ -------- --------

Directors and named executive officers:
Philip T. Gianos(1)........................... 2,245,394 13.0% 9.9%
Lon H. H. Chow(2)............................. 1,513,085 8.8 6.6
Rory T. O'Driscoll(3)......................... 1,447,368 8.4 6.4
J. Phillip Samper(4).......................... 794,737 4.6 3.5
Richard P. Magnuson(5)........................ 371,947 2.2 1.6
Domenic J. LaCava(6).......................... 60,000 * *
Barry James Folsom(7)......................... 879,657 5.1 3.9
Kevin R. Evans(8)............................. 250,000 1.4 1.1
William G. Glazier(9)......................... 225,000 1.3 1.0
Stephen C. Brown(10).......................... 200,000 1.2 *
Michael R. Jordan(11)......................... 165,000 1.0 *
All named executive officers and directors as
a group (11 persons)......................... 8,152,188 46.3 35.8
Other 5% stockholders
Bay Partners SBIC, L.P........................ 1,263,157 7.3 5.5
10600 North DeAnza Blvd.
Cupertino, CA 95014
Xerox Corporation............................. 1,034,092 6.0 4.5
3333 Coyote Hill Road
Palo Alto, CA 94304

- ---------------------
* Less than 1% of the outstanding shares of common stock.
(1) Consists of 2,178,098 shares held by InterWest Partners VI, L.P. and 67,296
shares held by InterWest Investors VI, L.P. Philip T. Gianos, one of our
directors is a managing director of the general partner of

InterWest Partners VI, L.P. and InterWest Partners VI, L.P. The other
managing directors are Harvey B. Cash, Alan W. Crites, W. Scott Hedrick, W.
Stephen Holmes, Robert R. Momsen and Arnold L. Oronsky. Each managing
director may be deemed to share voting and investment power with respect to
these shares. Each managing director disclaims beneficial ownership of such
shares except to the extent of his pecuniary interest therein.
(2) Consists of 1,439,731 shares held by Apex Investment Fund III and 73,354
shares held by Apex Strategic Partners LLC. Lon H. H. Chow, one of our
directors, serves as a director and was an associate of Apex Investment
Partners III and Apex Strategic Partners. The other individuals with voting
and dispositive control of the shares are James A. Johnson, Brian E. Hand,
Mark T. Koulogeorge, Bret R. Maxwell and George M. Middlemas. Each such
individual may be deemed to share voting and investment power with respect
to these shares. Each such individual disclaims beneficial ownership of
such shares except to the extent of his pecuniary interest therein.

(3) Consists of 1,230,263 shares held by Bank of America Ventures and 217,105
shares held by BA Venture Partners V. Rory T. O'Driscoll, one of our
directors, is a general partner of Bank of America Ventures and BA Venture
Partners V. The other managing directors are Lou Bock, Mark Brooks, John
Dougery Jr., Kate D. Mitchell and Robert M. Obuch. Each managing director
may be deemed to share voting and investment power with respect to these
shares. Each managing director disclaims beneficial ownership of such
shares except to the extent of his pecuniary interest therein.
(4) Includes 382,272 shares held by Gabriel Venture Partners, L.P. and 12,465
shares held by Gabriel Legacy Fund, L.P. J. Phillip Samper, our chairman of
the board of directors, is a managing director of the general partner of
Gabriel Venture Partners L.P. and Gabriel Legacy Fund, L.P. The other
managing director is Frederick W.W. Bolander. Each managing director may be
deemed to share voting and investment power with respect to these shares.
Each managing director disclaims beneficial ownership of such shares except
to the extent of his pecuniary interest therein.
(5) Consists of shares held by Richard P. Magnuson, one of our directors, held
in a revocable trust.

(6) Includes 50,000 shares exercisable within 60 days of June 30, 2000.

(7) A portion of these shares are subject to a right to repurchase which lapses
over time.

(8) Includes 40,000 shares exercisable within 60 days of June 30, 2000.

(9) Includes 113,750 shares exercisable within 60 days of June 30, 2000.

(10) Includes 57,500 shares exercisable within 60 days of June 30, 2000.

(11) Includes 45,000 shares exercisable within 60 days of June 30, 2000.

DESCRIPTION OF CAPITAL STOCK

General

Upon the completion of this offering, we will be authorized to issue
300,000,000 shares of common stock, $0.0001 par value, and 50,000,000 shares of
undesignated preferred stock, $0.0001 par value. The following description of
our capital stock does not purport to be complete and is subject to and
qualified in its entirety by our certificate of incorporation and bylaws, which
are included as exhibits to the registration statement of which this prospectus
forms a part, and by the provisions of applicable Delaware law.

Common Stock

As of June 30, 2000, there were 17,290,888 shares of common stock
outstanding which were held of record by 196 stockholders.

The holders of common stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Subject to preferences that may
be applicable to any outstanding preferred stock, the holders of common stock
are entitled to receive ratably such dividends, if any, as may be declared from
time to time by the Board of Directors out of funds legally available for that
purpose. See "Dividend Policy." In the event we liquidate, dissolve or wind up,
the holders of common stock are entitled to share ratably in all assets
remaining after payment of liabilities, subject to prior distribution rights of
preferred stock, if any, then outstanding. The holders of common stock have no
preemptive or conversion rights or other subscription rights. There are no
redemption or sinking fund provisions applicable to the common stock. All
outstanding shares of common stock are fully paid and nonassessable, and the
shares of common stock to be issued upon the closing of this offering will be
fully paid and nonassessable.

Preferred Stock

Under our certificate of incorporation, the board has the authority, without
further action by stockholders, to issue up to 50,000,000 shares of preferred
stock in one or more series and to fix the rights, preferences, privileges,
qualifications and restrictions granted to or imposed upon such preferred
stock, including dividend rights, conversion rights, voting rights, rights and
terms of redemption, liquidation preference and sinking fund terms, any or all
of which may be greater than the rights of the common stock. The issuance of
preferred stock could adversely affect the voting power of holders of common
stock and reduce the likelihood that such holders will receive dividend
payments and payments upon liquidation. Such issuance could have the effect of
decreasing the market price of the common stock. The issuance of preferred
stock could also have the effect of delaying, deterring or preventing a change
in control. We have no present plans to issue any shares of preferred stock.

Warrants

In September 1997, in connection with a lease agreement, we issued a warrant
to purchase 40,625 shares of series B preferred stock at an exercise price of
$2.00 per share. These warrants are exercisable and will terminate upon the
later of September 30, 2007 or five years following the completion of this
offering or, subject to certain conditions, a change of control.

In June 2000, in connection with the acquisition of Envoy i-Con, Inc., we
assumed warrants to purchase 41,940 shares of common stock at an exercise price
of $0.45 per share. The warrants are exercisable and will terminate on
September 3, 2003.

Registration Rights

As of June 30, 2000, the holders of 11,896,574 shares of our common stock or
their transferees are entitled to rights with respect to the registration of
these shares under the Securities Act. These rights are provided under the
terms of an agreement between us and the holders of these securities. Subject
to limitations in the agreement, if we

register any of our common stock either for our own account or for the account
of other security holders, these holders are entitled to include their shares
of common stock in that registration, subject to the ability of the
underwriters to limit the number of shares included in the offering. We will be
responsible for paying all registration expenses, and the holders selling their
shares will be responsible for paying all selling expenses.

Delaware Anti-Takeover Law and Certain Charter and Bylaw Provisions

Delaware Takeover Statute

PlaceWare is subject to the provisions of Section 203 of the Delaware
General Corporation Law. In general, Section 203 prohibits a publicly held
Delaware corporation from engaging in a business combination with an interested
stockholder for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless the business
combination is approved in a prescribed manner. A business combination includes
mergers, asset sale or other transactions resulting in a financial benefit to
the stockholder. An interested stockholder is a person who, together with
affiliates and associates, owns (or within three years, did own) 15% or more of
a corporation's voting stock. The statute could have the effect of delaying,
deferring or preventing a change in control of PlaceWare.

Amended and Restated Certificate of Incorporation and Amended and Restated
Bylaws

Our amended and restated certificate specifies that our board of directors
will be classified into three classes of directors and each of the directors
may be removed from the board only for cause. In addition, the amended and
restated certificate specifies that the authorized number of directors may be
changed only by resolution of the board of directors and does not include a
provision for cumulative voting for directors. Our amended and restated
certificate also provides that any action required or permitted to be taken by
our stockholders must be effected at a duly called annual or special meeting of
stockholders and may not be effected by any consent in writing. In addition,
our amended and restated bylaws provide that special meetings of our
stockholders may be called only by the chairman of the board of directors, the
chief executive officer or the board of directors pursuant to a resolution
adopted by a majority of the total number of authorized directors, or by the
holders of 50% of the outstanding voting stock of PlaceWare. Our amended and
restated certificate may only be amended with the approval of 66 2/3% of our
outstanding voting stock and our amended and restated bylaws may be amended
either by the board or by the approval of 66 2/3% of our outstanding voting
stock. Furthermore, our amended and restated certificate requires the advance
notice of stockholders' nominations for the election of directors and business
brought before a meeting of stockholders. These provisions contained in our
amended and restated certificate and our amended and restated bylaws could
delay or discourage certain types of transactions involving an actual or
potential change in control or our management.

Transfer Agent and Registrar

The transfer agent and registrar for the common stock is ChaseMellon
Shareholder Services L.L.C.

Nasdaq Stock Market National Market Listing

We have applied to list our common stock on The Nasdaq Stock Market's
National Market under the symbol "PLCW."

SHARES ELIGIBLE FOR FUTURE SALE

Immediately prior to this offering, there was no public market for our
common stock. Future sales of substantial amounts of our common stock in the
public market could adversely affect the market price of our common stock.

Upon completion of this offering, based on shares outstanding as of June 30,
2000, we will have outstanding 22,790,888 shares of common stock, assuming (1)
the issuance of 5,500,000 shares of common stock in this offering, (2) no
exercise of the underwriters over-allotment option, and (3) no exercise of
options after June 30, 2000. All of the 5,500,000 shares sold in this offering
will be freely tradable without restriction or further registration under the
Securities Act. However, the sale of any of these share if purchased by
"affiliates" as that term is defined in Rule 144 are subject to certain
limitations and restrictions that are described below.

The remaining 17,290,888 shares of common stock held by existing
stockholders were issued and sold by us in reliance on exemptions from the
registration requirements of the Securities Act. These shares are "restricted
shares" as that term is defined in Rule 144 and therefore may not be sold
publicly unless they are registered under the Securities Act or are sold
pursuant to Rule 144 or another exemption from registration. In addition, our
directors and officers as well as substantially all of our stockholders and
optionholders have entered into "lock-up agreements" with the underwriters.
These lock-up agreements provide that, except under limited exceptions, the
stockholder may not offer, sell, contract to sell, pledge or otherwise dispose
of any of our common stock or securities that are convertible into or
exchangeable for, or that represent the right to receive, our common stock for
a period of 180 days after the effective date. Credit Suisse First Boston
Corporation, however, may in its sole discretion, at any time without notice,
release all or any portion of the shares subject to lock-up agreements.
Accordingly, of the remaining 17,290,888 shares, 17,188,230 shares will become
eligible for sale on March 29, 2001, the 181st day after the effective date
subject to Rules 144 and 701, assuming an effective date of September 29, 2000.

As of June 30, 2000, there were a total of 1,706,862 shares of common stock
subject to outstanding options, 312,027 of which were vested, and substantially
all of which are subject to lock-up agreements. PlaceWare has assumed options
under Envoy i-Con, Inc. 1997 stock incentive compensation plan, of which there
were a total of 174,848 shares of common stock subject to outstanding options,
134,394 of which were vested and substantially all of which are subject to lock
up agreements. Immediately after the completion of the offering, we intend to
file registration statements on Form S-8 under the Securities Act to register
all of the shares of common stock issued or reserved for future issuance under
Envoy's 1997 stock incentive compensation plan, our 2000 equity incentive plan,
our 2000 employee stock purchase plan and our 2000 non-employee directors'
stock option plan. On the date 180 days after the effective date of the
offering, the date that the lock-up agreements expire, a total of 620,866
shares of our common stock subject to outstanding options will be vested. After
the effective dates of the registration statements on Form S-8, shares
purchased upon exercise of options granted pursuant to our 2000 equity
incentive plan, our 2000 employee stock purchase plan and our 2000 non-employee
directors' stock option plan generally would be available for resale in the
public market.

Rule 144

In general, under Rule 144 as currently in effect beginning 90 days after
the date of this prospectus, a person who has beneficially owned shares of our
common stock for at least one year would be entitled to sell, within any three-
month period, a number of shares that does not exceed the greater of:

. 1% of the number of shares of common stock then outstanding, which will
equal approximately 227,908 shares immediately after this offering; or

. the average weekly trading volume of the common stock on the Nasdaq Stock
Market's National Market during the four calendar weeks preceding the
filing of a notice on Form 144 with respect to such sale.

Sales under Rule 144 are also subject to certain other requirements regarding
the manner of sale, notice filing and the availability of current public
information about us.

Rule 144(k)

Under Rule 144(k), a person who is not deemed to have been one of our
affiliates at any time during the 90 days preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years,
generally including the holding period of any prior owner other than an
affiliate, is entitled to sell such shares without complying with the manner of
sale, notice filing, volume limitation or notice provisions of Rule 144.
Therefore, unless otherwise restricted, 144(k) shares may be sold immediately
upon the completion of this offering.

Rule 701

In general, under Rule 701, any of our employees, directors, officers,
consultants or advisors who purchase shares from us in connection with a
compensatory stock or option plan or other written agreement before the
effective date of this offering is entitled to resell such shares 90 days after
the effective date of this offering in reliance on Rule 144, without having to
comply with certain restrictions including the holding period, contained in
Rule 144.

The Securities and Exchange Commission has indicated that Rule 701 will
apply to typical stock options granted by an issuer before it becomes subject
to the reporting requirements of the Securities Exchange Act of 1934, along
with the shares acquired upon exercise of such options (including exercises
after the date of this prospectus). Securities issued in reliance on Rule 701
are restricted securities and, subject to the contractual restrictions
described above, beginning 90 days after the date of this prospectus, may be
sold by persons other than affiliates, as defined in Rule 144, subject only to
the manner of sale provisions of Rule 144. Securities issued in reliance on
Rule 701 may be sold by affiliates under Rule 144 without compliance with its
one-year minimum holding period requirement.

UNDERWRITING

Under the terms and subject to the conditions contained in an underwriting
agreement dated , 2000, we have agreed to sell to the underwriters
named below, for whom Credit Suisse First Boston Corporation, FleetBoston
Robertson Stephens Inc. and U.S. Bancorp Piper Jaffray Inc. are acting as
representatives, the following respective numbers of shares of common stock:

Number
Underwriter of Shares
----------- ---------

Credit Suisse First Boston Corporation.............................
FleetBoston Robertson Stephens Inc. ...............................
U.S. Bancorp Piper Jaffray Inc. ...................................

---------
Total............................................................
=========

The underwriting agreement provides that the underwriters are obligated to
purchase all the shares of common stock in the offering if any are purchased,
other than those shares covered by the over-allotment option described below.
The underwriting agreement also provides that if an underwriter defaults, the
purchase commitments of non-defaulting underwriters may be increased or the
offering of common stock may be terminated.

We have granted to the underwriters a 30-day option to purchase on a pro
rata basis up to 525,000 additional shares at the initial public offering price
less the underwriting discounts and commissions. The option may be exercised
only to cover any over-allotments of common stock.

The underwriters propose to offer the shares of common stock initially at
the public offering price on the cover page of this prospectus and to selling
group members at that price less a concession of $ per share. The underwriters
and selling group members may allow a discount of $ per share on sales to
other brokers/dealers. After the initial public offering, the public offering
price and concession and discount to dealers may be changed by the
representatives.

The following table summarizes the compensation and estimated expenses we
will pay.

Per Share Total
----------------------------- -----------------------------
Without With Without With
Over-allotment Over-allotment Over-allotment Over-allotment
-------------- -------------- -------------- --------------

Underwriting Discounts
and Commissions Paid by
us..................... $ $ $ $
Expenses Paid by us..... $ $ $ $

The underwriters have informed us that they do not expect discretionary
sales to exceed 5% of the shares of common stock being offered.

We have agreed that we will not offer, sell, contract to sell, pledge or
otherwise dispose of, directly or indirectly, or file with the Securities and
Exchange Commission a registration statement under the Securities Act of 1933
relating to, any shares of our common stock or securities convertible into or
exchangeable or exercisable for any shares of our common stock, or publicly
disclose the intention to make any such offer, sale, pledge, disposition or
filing, without the prior written consent of Credit Suisse First Boston
Corporation for a period of 180 days after the date of this prospectus.

Our officers, directors, and substantially all of our shareholders and
optionees have agreed that they will not offer, sell, contract to sell, pledge
or otherwise dispose of, directly or indirectly, any shares of our common

stock or securities convertible into or exchangeable or exercisable for any
shares of our common stock, enter into a transaction which would have the same
effect, or enter into any swap, hedge or other arrangement that transfers, in
whole or in part, any of the economic consequences of ownership of our common
stock, whether any such aforementioned transaction is to be settled by delivery
of our common stock or such other securities, in cash or otherwise, or publicly
disclose the intention to make any such offer, sale, pledge or disposition, or
to enter any such transaction, swap, hedge or other arrangements, without, in
each case, the prior written consent of Credit Suisse First Boston Corporation
for a period of 180 days after the date of this prospectus.

The underwriters have reserved for sale, at the initial public offering
price up to 175,000 shares of the common stock for employees, directors and
certain other persons associated with us who have expressed an interest in
purchasing common stock in the offering. The number of shares available for
sale to the general public in the offering will be reduced to the extent such
persons purchase such reserved shares. Any reserved shares not so purchased
will be offered by the underwriters to the general public on the same terms as
the other shares.

We have agreed to indemnify the underwriters against liabilities under the
Securities Act or contribute to payments which the underwriters may be required
to make in that respect.

We have applied to list the shares of common stock on the Nasdaq Stock
Market's National Market.

Before this offering, there has been no public market for the common stock.
The initial public offering price will be determined by negotiation between us
and the underwriters. Among the principal factors to be considered in
determining the public offering price of our common stock will be:

. the information set forth in this prospectus and otherwise available to
the underwriters;

. the history and the prospectus for the industry in which we compete;

. the ability of our management;

. the prospects for future earnings, the present state of our development
and our current financial condition;

. the recent market prices of, and the demand for, publicly traded common
stock of generally comparable companies; and

. the general condition of the securities markets at the time of this
offering.

In connection with the offering the underwriters may engage in stabilizing
transactions, over-allotment transactions, syndicate covering transactions,
penalty bids and passive market making in accordance with Regulation M under
the Securities Exchange Act of 1934 (the "Exchange Act").

. Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum.

. Over-allotment involves sales by the underwriters of shares in excess of
the number of shares the underwriters are obligated to purchase, which
creates a syndicate short position. The short position may be either a
covered short position or a naked short position. In a covered short
position, the number of shares over-allotted by the underwriters is not
greater than the number of shares, which they may purchase in the over-
allotment option. In a naked short position, the number of shares
involved is greater than the number of shares in the over-allotment
option. The underwriters may close out any short position by either
exercising their over-allotment option and/or purchasing share in the
open market.

. Syndicate covering transactions involve purchases of the common stock in
the open market after the distribution has been completed in order to
cover syndicate short positions. In determining the source of shares to
close out the short position, the underwriters will consider, among other
things, the price of shares available for purchase in the open market as
compared to the price at which they may purchase shares through the over-
allotment option. If the underwriters sell more shares than could be
covered by the over-allotment option-a naked short position-that position
can only be closed out by buying shares in

the open market. A naked short position is more likely to be created if
the underwriters are concerned that there may be downward pressure on the
price of the shares in the open market after pricing that could adversely
affect investors who purchase in the offering.

. Penalty bids permit the representatives to reclaim a selling concession
from a syndicate member when the common stock originally sold by the
syndicate member is purchased in a stabilizing or syndicate covering
transaction to cover syndicate short positions.

. In passive market making, market makers in the common stock who are
underwriters or prospective underwriters may, subject to limitations,
make bids for or purchases of the common stock until the time, if any, at
which a stabilizing bid is made.

These stabilizing transactions, syndicate covering transactions and penalty
bids may have the effect of raising or maintaining the market price of the
common stock or preventing or retarding a decline in the market price of the
common stock. As a result the price of the common stock may be higher than the
price that might otherwise exist in the open market. These transactions may be
effected on The Nasdaq National Market or otherwise and, if commenced, may be
discontinued at any time.

A prospectus in electronic format may be made available on the web sites
maintained by one or more of the underwriters participating in this offering.
The representatives may agree to allocate a number of shares to underwriters
for sale to their online brokerage account holders. Internet distributions will
be allocated by the underwriters who will make Internet distributions on the
same basis as other allocations.

NOTICE TO CANADIAN RESIDENTS

Resale Restrictions

The distribution of the common stock in Canada is being made only on a
private placement basis exempt from the requirement that we prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of common stock are effected. Accordingly, any resale of the common
stock in Canada must be made in accordance with applicable securities laws
which will vary depending on the relevant jurisdiction, and which may require
resales to be made in accordance with available statutory exemptions or
pursuant to a discretionary exemption granted by the applicable Canadian
securities regulatory authority. Purchasers are advised to seek legal advice
prior to any resale of the common stock.

Representations of Purchasers

Each purchaser of common stock in Canada who receives a purchase
confirmation will be deemed to represent to us and the dealer from whom such
purchase confirmation is received that: (i) such purchaser is entitled under
applicable provincial securities laws to purchase such common stock without the
benefit of a prospectus qualified under such securities laws, (ii) where
required by law, that such purchaser is purchasing as principal and not as
agent, and (iii) such purchaser has reviewed the text above under "Resale
Restrictions."

Rights of Action (Ontario Purchasers)

The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Ontario securities law. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or recission or rights of action under the civil liability provisions
of the U.S. federal securities laws.

Enforcement of Legal Rights

All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be
possible for Canadian purchasers to effect service of process within Canada
upon the issuer of such persons. All or a substantial portion of the assets of
the issuer and such persons may be located outside of Canada and, as a result,
it may not be possible to satisfy a judgement against the

issuer or such person in Canada or to enforce a judgment obtained in Canadian
courts against such issuer or persons outside of Canada.

Notice to British Columbia Residents

A purchaser of common stock to whom the (Securities Act), British Columbia,
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
common stock acquired by such purchaser pursuant to this offering. Such report
must be in the form attached to British Columbia Securities Commission Blanket
Order BOR #95/17, a copy of which may be obtained from us. Only one such report
must be filed in respect of common stock acquired on the same date and under
the same prospectus exemption.

Taxation and Eligibility for Investment

Canadian purchasers of common stock should consult their own legal and tax
advisors with respect to the tax consequences of an investment in the common
stock in their particular circumstances and with respect to the eligibility of
the common stock for investment by the purchaser under relevant Canadian
legislation.

LEGAL MATTERS

The validity of our common stock offered hereby will be passed upon for
PlaceWare by Cooley Godward LLP, Menlo Park, California. Legal matters will be
passed upon for the underwriters by Skadden, Arps, Slate, Meagher & Flom LLP,
Palo Alto, California.

EXPERTS

The consolidated balance sheets of PlaceWare, Inc. and subsidiary as of
December 31, 1998 and 1999, and the related consolidated statements of
operations, stockholders' equity, and cash flows for each of the years in the
three-year period ended December 31, 1999, have been included herein and in the
registration statement in reliance upon the report of KPMG LLP, independent
certified public accountants, and upon the authority of said firm as experts in
accounting and auditing.

The balance sheets of Envoy i-Con, Inc. as of December 31, 1998 and 1999 and
June 30, 2000, and the related statements of operations, shareholder's equity
(deficit) and cash flows for the period from June 30, 1998 (date of inception)
through December 31, 1998, the year ended December 31, 1999 and the six months
ended June 30, 2000, have been included herein and in the registration
statement in reliance upon the report of KPMG LLP, independent certified public
accountants, and upon the authority of said firm as experts in accounting and
auditing.

ADDITIONAL INFORMATION

We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 under the Securities Act with respect to the common stock
offered hereby. This prospectus, which constitutes a part of the registration
statement, does not contain all of the information set forth in the
registration statement and the exhibits filed as a part thereof, certain parts
of which are omitted in accordance with the rules and regulations of the
Securities and Exchange Commission. For further information with respect to us
and the common stock offered hereby, reference is made to the registration
statement and to the exhibits filed as a part thereof. The registration
statement, including the exhibits and schedules thereto, may be inspected
without charge at the principal office of the Securities and Exchange
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, or at
the Regional Offices of the Securities and Exchange Commission at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven
World Trade Center, Suite 1300, New York, New York 10048. Our SEC filings are
also available to the public from the Securities and Exchange Commission's web
site at http://www.sec.gov. Copies of such material may be obtained by mail
from the Public Reference Branch of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.

PLACEWARE, INC.

TABLE OF CONTENTS

Page
----

PlaceWare, Inc. and Subsidiaries

Independent Auditors' Report............................................ F-2

Consolidated Balance Sheets............................................. F-3

Consolidated Statements of Operations................................... F-4

Consolidated Statements of Stockholders' Equity......................... F-5

Consolidated Statements of Cash Flows................................... F-7

Notes to Consolidated Financial Statements.............................. F-8

Envoy i-Con, Inc.

Independent Auditors' Report............................................ F-25

Balance Sheets.......................................................... F-26

Statements of Operations................................................ F-27

Statements of Shareholders' Equity...................................... F-28

Statements of Cash Flows................................................ F-29

Notes to Financial Statements........................................... F-30

Pro Forma Combined Condensed Statements of Operations

Introduction to Unaudited Pro Forma Combined Condensed Statements of
Operations............................................................. F-40

Unaudited Pro Forma Combined Condensed Statements of Operations......... F-41

Notes to Unaudited Pro Forma Combined Condensed Statements of
Operations............................................................. F-43

F-1

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
PlaceWare, Inc.:

We have audited the accompanying consolidated balance sheets of PlaceWare,
Inc. (the Company) and subsidiary as of December 31, 1998 and 1999, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the years in the three-year period ended December 31, 1999.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of PlaceWare,
Inc. and subsidiary as of December 31, 1998 and 1999, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1999, in conformity with generally accepted accounting
principles.

/s/ KPMG LLP

Mountain View, California
February 25, 2000, except as to

Note 9, which is as of July 21, 2000

F-2

PLACEWARE, INC.

CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)

December 31, June 30, 2000
----------------- -------------------
1998 1999 Actual Pro forma
------- -------- -------- ---------
(Unaudited)

ASSETS
Current assets:
Cash and cash equivalents............. $ 3,155 $ 14,591 $ 6,616
Accounts receivable, less allowance
for doubtful accounts of $11, $383
and $258 as of December 31, 1998 and
1999, and June 30, 2000,
respectively......................... 999 2,964 5,798
Prepaid expenses and other current
assets............................... 147 339 2,035
------- -------- --------
Total current assets................ 4,301 17,894 14,449
Property and equipment, net............. 606 2,908 5,312
Other assets............................ -- 334 7,270
------- -------- --------
Total assets........................ $ 4,907 $ 21,136 $ 27,031
======= ======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable...................... $ 65 $ 1,283 $ 3,991
Accrued employee compensation......... 124 563 907
Other accrued liabilities............. 208 239 606
Current portion of notes payable and
capital lease obligations............ 201 300 4,878
Deferred revenue...................... 877 5,357 7,758
------- -------- --------
Total current liabilities........... 1,475 7,742 18,140
Notes payable and capital lease
obligations, less current portion...... 613 503 2,494
------- -------- --------
Total liabilities................... 2,088 8,245 20,634
------- -------- --------

Stockholders' equity:
Convertible preferred stock, $0.0001
par value; actual--8,000,000,
12,305,000 and 17,805,000 shares
authorized as of December 31, 1998
and 1999, and June 30, 2000
respectively; 6,750,000, 11,779,785
and 11,896,574 shares issued and
outstanding as of December 31, 1998
and 1999, and June 30, 2000,
respectively; aggregate liquidation
preference of $11,795, $30,773 and
$31,357 as of December 31, 1998 and
1999, and June 30, 2000,
respectively; pro forma--50,000,000
shares authorized, issued, or
outstanding.......................... 1 1 1 $ --
Common stock, $0.0001 par value;
actual--20,000,000 shares authorized;
2,209,951, 3,728,750 and 5,394,314
shares issued and outstanding as of
December 31, 1998 and 1999, and June
30, 2000, respectively; pro forma--
300,000,000 shares authorized;
17,290,888 shares issued and
outstanding.......................... -- -- 1 2
Additional paid-in capital............ 11,425 36,066 44,981 44,981
Notes receivable from stockholders.... (110) (671) (1,631) (1,631)
Deferred stock-based compensation..... (12) (3,102) (3,116) (3,116)
Accumulated deficit................... (8,485) (19,403) (33,839) (33,839)
------- -------- -------- --------
Total stockholders' equity.......... 2,819 12,891 6,397 $ 6,397
========
Commitments and contingencies
------- -------- --------
Total liabilities and stockholders'
equity............................. $ 4,907 $ 21,136 $ 27,031
======= ======== ========

See accompanying notes to consolidated financial statements.

F-3

PLACEWARE, INC.

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

Six month period
Year ended December 31, ended June 30,
-------------------------- -----------------
1997 1998 1999 1999 2000
------- ------- -------- ------- --------
(unaudited)

Revenues:
Hosting and services.......... $ -- $ 511 $ 2,433 $ 749 $ 4,963
Licensing..................... 609 1,113 1,962 516 1,681
------- ------- -------- ------- --------
Total revenues.............. 609 1,624 4,395 1,265 6,644
------- ------- -------- ------- --------
Operating expenses:
Cost of hosting and services.. -- 3 806 47 1,742
Operations.................... 188 214 619 155 3,120
Sales and marketing........... 1,516 2,819 8,410 2,609 11,387
Research and development...... 1,490 2,057 2,778 1,222 2,826
General and administrative.... 817 1,654 2,900 837 2,206
------- ------- -------- ------- --------
Total operating expenses.... 4,011 6,747 15,513 4,870 21,281
------- ------- -------- ------- --------
Operating loss.............. (3,402) (5,123) (11,118) (3,605) (14,637)
------- ------- -------- ------- --------
Other income (expense):
Interest income............... 130 172 309 54 309
Interest expense.............. -- (17) (109) (48) (76)
Other income, net............. -- -- -- -- (32)
------- ------- -------- ------- --------
Total other income, net..... 130 155 200 6 201
------- ------- -------- ------- --------
Net loss.................... $(3,272) $(4,968) $(10,918) $(3,599) $(14,436)
======= ======= ======== ======= ========
Basic and diluted net loss per
share.......................... $ (4.67) $ (4.58) $ (6.41) $ (2.39) $ (5.98)
======= ======= ======== ======= ========
Shares used in computing basic
and diluted net loss per
share.......................... 700 1,084 1,704 1,509 2,415
======= ======= ======== ======= ========
Pro forma basic and diluted net
loss per share (unaudited)..... $ (1.10) $ (1.02)
======== ========
Shares used in computing pro
forma basic and diluted net
loss per share (unaudited)..... 9,937 14,195
======== ========

See accompanying notes to consolidated financial statements.

F-4

PLACEWARE, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Years ended December 31, 1997, 1998, and 1999 and six months ended June 30,
2000 (unaudited)
(In thousands, except share data)

Convertible Notes
preferred stock Common stock Additional Treasury stock receivable Deferred
----------------- ---------------- paid-in ---------------- from stock-based Accumulated
Shares Amount Shares Amount capital Shares Amount stockholders compensation deficit
---------- ------ --------- ------ ---------- -------- ------ ------------ ------------ -----------

Balances as of
December 31,
1996............ 1,705,000 $ -- 1,935,000 $ -- $ 1,252 -- $ -- $ -- $ -- $ (245)
Issuance of
Series B
convertible
preferred stock,
net of $34,758
issuance costs.. 2,500,000 -- -- -- 4,965 -- -- -- -- --
Repurchase of
common stock.... -- -- -- -- -- 350,016 (4) -- -- --
Deferred stock
compensation
relating to
stock option
grants.......... -- -- -- -- 23 -- -- -- (23) --
Amortization of
stock-based
compensation.... -- -- -- -- -- -- -- -- 5 --
Non-employee
stock
compensation.... -- -- -- -- 6 -- -- -- -- --
Issuance of
common stock in
connection with
the exercise of
stock options... -- -- 22,000 -- 1 -- -- -- -- --
Net loss........ -- -- -- -- -- -- -- -- -- (3,272)
---------- ---- --------- ---- -------- -------- ---- ------ -------- ---------
Balances as of
December 31,
1997............ 4,205,000 -- 1,957,000 -- 6,247 350,016 (4) -- (18) (3,517)
Issuance of
Series B
convertible
preferred stock,
net of $46,459
issuance costs.. 2,545,000 1 -- -- 5,043 -- -- -- -- --
Repurchase of
common stock.... -- -- -- -- -- 132,617 (2) -- -- --
Amortization of
stock-based
compensation.... -- -- -- -- -- -- -- -- 6 --
Issuance of
common stock in
connection with
the exercise of
stock options... -- -- 120,901 -- 108 (482,633) 6 (96) -- --
Issuance of
common stock.... -- -- 132,050 -- 27 -- -- (14) -- --
Net loss........ -- -- -- -- -- -- -- -- -- (4,968)
---------- ---- --------- ---- -------- -------- ---- ------ -------- ---------
Balances as of
December 31,
1998............ 6,750,000 1 2,209,951 -- 11,425 -- -- (110) (12) (8,485)
Issuance of
Series B
convertible
preferred
stock........... 75,000 -- -- -- 150 -- -- (100) -- --
Issuance of
Series C
convertible
preferred stock,
net of $16,235
issuance costs.. 4,954,785 -- -- -- 18,811 -- -- -- -- --
Repurchase of
common stock.... -- -- -- -- -- 47,293 (9) -- -- --
Deferred stock
compensation
relating to
stock option
grants.......... -- -- -- -- 3,992 -- -- -- (3,992) --
Amortization of
stock-based
compensation.... -- -- -- -- -- -- -- -- 902 --
Non-employee
stock
compensation.... -- -- -- -- 226 -- -- -- -- --
Issuance of
common stock in
connection with
the exercise of
stock options... -- -- 1,518,799 -- 613 (47,293) 9 (461) -- --
Warrant granted
in connection
with marketing
arrangement..... -- -- -- -- 849 -- -- -- -- --
Net loss........ -- -- -- -- -- -- -- -- -- (10,918)
---------- ---- --------- ---- -------- -------- ---- ------ -------- ---------
Balances as of
December 31,
1999............ 11,779,785 $ 1 3,728,750 $ -- $ 36,066 -- $ -- $ (671) $ (3,102) $ (19,403)

Total
stockholders'
equity
-------------

Balances as of
December 31,
1996............ $ 1,007
Issuance of
Series B
convertible
preferred stock,
net of $34,758
issuance costs.. 4,965
Repurchase of
common stock.... (4)
Deferred stock
compensation
relating to
stock option
grants.......... --
Amortization of
stock-based
compensation.... 5
Non-employee
stock
compensation.... 6
Issuance of
common stock in
connection with
the exercise of
stock options... 1
Net loss........ (3,272)
-------------
Balances as of
December 31,
1997............ 2,708
Issuance of
Series B
convertible
preferred stock,
net of $46,459
issuance costs.. 5,044
Repurchase of
common stock.... (2)
Amortization of
stock-based
compensation.... 6
Issuance of
common stock in
connection with
the exercise of
stock options... 18
Issuance of
common stock.... 13
Net loss........ (4,968)
-------------
Balances as of
December 31,
1998............ 2,819
Issuance of
Series B
convertible
preferred
stock........... 50
Issuance of
Series C
convertible
preferred stock,
net of $16,235
issuance costs.. 18,811
Repurchase of
common stock.... (9)
Deferred stock
compensation
relating to
stock option
grants.......... --
Amortization of
stock-based
compensation.... 902
Non-employee
stock
compensation.... 226
Issuance of
common stock in
connection with
the exercise of
stock options... 161
Warrant granted
in connection
with marketing
arrangement..... 849
Net loss........ (10,918)
-------------
Balances as of
December 31,
1999............ $ 12,891

F-5

PLACEWARE, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY--(Continued)

Years ended December 31, 1997, 1998, and 1999 and six months ended June 30,
2000 (unaudited)

(In thousands, except share data)

Convertible Notes
preferred stock Common stock Additional Treasury stock receivable Deferred
----------------- ---------------- paid-in --------------- from stock-based Accumulated
Shares Amount Shares Amount capital Shares Amount stockholders compensation deficit
---------- ------ --------- ------ ---------- ------- ------ ------------ ------------ -----------

Balances as of
December 31,
1999............ 11,779,785 $ 1 3,728,750 $-- $36,066 -- $-- $ (671) $(3,102) $(19,403)
Issuance of
Series D
convertible
preferred stock
and common stock
in connection
with the
acquisition of
Envoy I-Con,
Inc.
(unaudited)..... 116,789 -- 1,034,473 -- 5,440 -- -- -- -- --
Repurchase of
common stock
(unaudited)..... -- -- -- -- -- 11,250 (2) -- -- --
Deferred stock
compensation
relating to
stock option
grants
(unaudited)..... -- -- -- -- 1,695 -- -- -- (1,695) --
Amortization of
stock-based
compensation
(unaudited)..... -- -- -- -- -- -- -- -- 1,681 --
Non-employee
stock
compensation
(unaudited)..... -- -- -- -- 571 -- -- -- -- --
Issuance of
common stock in
connection with
the exercise of
stock options
(unaudited)..... -- -- 631,091 1 1,209 (11,250) 2 (960) -- --
Net loss
(unaudited)..... -- -- -- -- -- -- -- -- -- (14,436)
---------- --- --------- --- ------- ------- --- ------- ------- --------
Balances as of
June 30, 2000
(unaudited)..... 11,896,574 $ 1 5,394,314 $ 1 $44,981 -- $-- $(1,631) $(3,116) $(33,839)
========== === ========= === ======= ======= === ======= ======= ========

Total
stockholders'
equity
-------------

Balances as of
December 31,
1999............ $ 12,891
Issuance of
Series D
convertible
preferred stock
and common stock
in connection
with the
acquisition of
Envoy I-Con,
Inc.
(unaudited)..... 5,440
Repurchase of
common stock
(unaudited)..... (2)
Deferred stock
compensation
relating to
stock option
grants
(unaudited)..... --
Amortization of
stock-based
compensation
(unaudited)..... 1,681
Non-employee
stock
compensation
(unaudited)..... 571
Issuance of
common stock in
connection with
the exercise of
stock options
(unaudited)..... 252
Net loss
(unaudited)..... (14,436)
-------------
Balances as of
June 30, 2000
(unaudited)..... $ 6,397
=============

See accompanying notes to consolidated financial statements.

F-6

PLACEWARE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

Six month period
Year ended December 31, ended June 30,
-------------------------- -----------------
1997 1998 1999 1999 2000
------- ------- -------- ------- --------
(unaudited)

Cash flows from operating activities:
Net loss................................................ $(3,272) $(4,968) $(10,918) $(3,599) $(14,436)
Adjustments to reconcile net loss to net cash used for
operating activities:
Allowance for doubtful accounts........................ -- 11 372 108 (125)
Depreciation and amortization.......................... 95 325 567 229 803
Revenue resulting from nonmonetary exchange for
computer equipment and software and services.......... (154) -- -- -- --
Amortization of stock-based compensation............... 5 6 902 95 1,681
Nonemployee stock-based compensation expense........... 6 -- 226 26 571
Warrant granted in connection with marketing
arrangement........................................... -- -- 849 -- --
Changes in operating assets and liabilities, net of
assets and liabilities assumed in the Envoy
acquisition:
Accounts receivable.................................. (403) (608) (2,337) (459) (1,805)
Prepaid expenses and other assets.................... (86) (46) (526) -- (1,861)
Accounts payable..................................... (42) (52) 1,218 350 2,541
Accrued employee compensation and other liabilities.. 134 198 470 28 92
Deferred revenue..................................... 79 798 4,480 1,659 2,305
------- ------- -------- ------- --------
Net cash used for operating activities.................. (3,638) (4,336) (4,697) (1,563) (10,234)
------- ------- -------- ------- --------
Cash flows used for investing activities:
Purchases of property and equipment....................... (207) (97) (2,648) (210) (2,591)
Cash acquired as part of Envoy acquisition.............. -- -- -- -- 160
------- ------- -------- ------- --------
Net cash used for investing activities.................. (207) (97) (2,648) (210) (2,431)
------- ------- -------- ------- --------
Cash flows from financing activities:
Repayments of capital lease obligations................. -- (19) (144) (102) (215)
Issuance of convertible preferred stock, net............ 4,961 5,044 18,861 50 --
Issuance of common stock................................ 1 31 161 28 252
Repurchase of common stock.............................. (4) (2) (9) (9) (1)
Borrowings under note payable and line of credit........ -- 333 625 563 6,451
Repayments of note payable and line of credit........... -- (29) (713) -- (1,797)
------- ------- -------- ------- --------
Net cash provided by financing activities............... 4,958 5,358 18,781 530 4,690
------- ------- -------- ------- --------
Net increase (decrease) in cash and cash equivalents...... 1,113 925 11,436 (1,243) (7,975)
Cash and cash equivalents at beginning of year/period..... 1,117 2,230 3,155 3,155 14,591
------- ------- -------- ------- --------
Cash and cash equivalents at end of year/period........... $ 2,230 $ 3,155 $ 14,591 $ 1,912 $ 6,616
======= ======= ======== ======= ========
Supplemental disclosures of noncash investing and
financing activities:
Equipment acquired under capital leases................. $ -- $ 529 $ 221 $ 162 $ --
======= ======= ======== ======= ========
Deferred stock-based compensation....................... $ 23 $ -- $ 3,992 $ 4,218 $ 1,695
======= ======= ======== ======= ========
Issuance of common stock in exchange for notes
receivable from stockholders........................... $ -- $ 110 $ 461 $ -- $ 960
======= ======= ======== ======= ========
Issuance of preferred stock in exchange for note
receivable from stockholders........................... $ -- $ -- $ 100 $ 100 $ --
======= ======= ======== ======= ========
Issuance of warrant....................................... $ -- $ -- $ 849 $ -- $ --
======= ======= ======== ======= ========
Issuance of preferred stock and common stock and the
assumption of stock options and warrants in connection
with the Envoy acquisition............................... $ -- $ -- $ -- $ -- $ 5,290
======= ======= ======== ======= ========
Assets assumed in the Envoy acquisition................... $ -- $ -- $ -- $ -- $ 1,772
======= ======= ======== ======= ========
Liabilities assumed in the Envoy acquisition.............. $ -- $ -- $ -- $ -- $ 3,058
======= ======= ======== ======= ========
Goodwill and other intangible assets acquired in the Envoy
acquisition.............................................. $ -- $ -- $ -- $ -- $ 6,726
======= ======= ======== ======= ========

See accompanying notes to consolidated financial statements.

F-7

PLACEWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 1997, 1998 and 1999 and June 30, 2000

(Information as of June 30, 2000, and for the six months ended June 30, 1999
and 2000 is unaudited)

(1) Organization and Significant Accounting Policies

(a) Description of Business

PlaceWare, Inc. (the Company) was incorporated in Delaware in 1996 to
develop and market web conferencing services and products that enable
businesses to conduct real-time, interactive meetings, and events over the
Internet.

(b) Principles of Consolidation

The accompanying consolidated financial statements include the accounts of
Placeware, Inc. and its wholly owned subsidiaries, PlaceWare Europe, Ltd. and
Envoy i-Con., Inc. All significant intercompany accounts and transactions have
been eliminated in consolidation. The Company's first three fiscal quarters end
on the Saturday of the thirteenth week of each respective quarter. For
financial statement presentation, the Company has indicated its fiscal quarters
as ending on March 31, June 30, and September 30, respectively.

The Company recognizes revenue in accordance with the provisions of
Statement of Position (SOP) 97-2, Software Revenue Recognition, as amended by
SOP 98-9 and Emerging Issues Task Force Issue (EITF) No. 00-3, Application of
AICPA Statement of Position 97-2, Software Revenue Recognition, to Arrangements
That Include the Right to Use Software Stored on Another Entity's Hardware. SOP
97-2 generally requires revenue earned on software arrangements involving
multiple elements such as software products, upgrades, enhancements, post-
contract customer support, installation, and training to be allocated to each
element based on the relative fair values of the elements. The fair value of
the element must be based on evidence that is specific to the vendor. If a
vendor does not have evidence of the fair value for all elements in a multiple-
element arrangement, all revenue from the arrangement is deferred until such
evidence exists or until all elements are delivered. The Company records
estimates for product returns and warranty costs at the time of sale.

Hosting and services revenues represent (a) revenues from post-contract
customer support services which are recognized ratably over the term of the
support period; (b) revenues from hosting arrangements where the Company's
software is resident on a Company server, which are recognized ratably over the
hosting period; (c) revenues from event services which are recognized as the
events take place; and (d) revenues from revenue sharing arrangements which are
recognized as earned. Under hosting arrangements, customers do not have the
contractual right to take possession of the software during the hosting period.
Therefore, in accordance with EITF 00-3, these arrangements are service
contracts, and recognition over the service period is appropriate. The Company
enters into revenue sharing arrangements whereby a reseller sublicenses the
Company's software to provide conferencing services to their customers, hosted
on the reseller's server. The Company receives a commission based on the
reseller's list price. Under these arrangements where the reseller acts as
principal and bears the credit risk on the receivable, the Company records
revenue at the net amount due from the reseller. The Company enters into other
revenue sharing arrangements where event management services are subcontracted
to a third party, who receives a percentage of the revenue for their services.
Under these arrangements where the Company acts as principal and bears the
credit risk on the related receivable, the Company records revenue at the gross
invoice amount.

Licensing revenues represent revenues recorded relating to perpetual and
time-based licenses for software delivered to customers for in-house
applications. Revenues from perpetual software license agreements are
recognized upon shipment of the software when all of the following criteria
have been met: persuasive

F-8

PLACEWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

evidence of an arrangement exists; delivery has occurred; the fee is fixed or
determinable; collectibility is probable; and vendor-specific objective
evidence is available of the fair value of all undelivered elements. The
Company has established sufficient vendor-specific objective evidence to
ascribe a value to standard post-contract customer support and consulting
services based on the price charged when these elements are sold separately.
Accordingly, license revenue is recorded under the residual method described in
SOP 98-9 for arrangements in which licenses are sold with consulting services,
standard post-contract customer support, or both. However, the entire fee
related to arrangements that require the Company to deliver unspecified
additional products or nonstandard post-contract customer support is deferred
and recognized ratably over the term of the contract. Time-based licenses are
recognized ratably over the license period.

Cost of hosting and services consists primarily of computer equipment
depreciation expense, network connectivity, royalties, co-location costs and
costs of third-party service providers. Operations expenses consist primarily
of compensation and related costs for management personnel, technical support
employees and consultants who manage and maintain the Company's conferencing
solutions infrastructure and support the Company's customer base. Cost of
licensing revenues are not significant.

Deferred revenue includes amounts billed to customers for which revenues
have not been recognized, which generally results from the following: (1)
deferred licensing, maintenance, and support; (2) amounts billed to customers
under hosting arrangements; (3) amounts billed to customers related to events
services where the events have not yet taken place; and (4) customer advances
received under revenue sharing arrangements.

(d) Initial Public Offering and Unaudited Pro Forma Balance Sheet
Information

In fiscal 2000, the Board of Directors authorized the filing of a
registration statement with the Securities and Exchange Commission (SEC) that
would permit the Company to sell shares of the Company's common stock in
connection with a proposed initial public offering (IPO). Following the closing
of the Company's IPO, the number of authorized shares of preferred stock and
common stock will be 50,000,000 and 300,000,000, respectively. If the offering
is consummated under the terms presently anticipated, all the then outstanding
shares of the Company's convertible preferred stock will automatically convert
into shares of common stock on a one-for-one basis upon the closing of the
proposed IPO. The pro forma balance sheet information reflects the conversion
of all of the convertible preferred stock as if it had occurred on June 30,
2000.

(e) Unaudited Interim Consolidated Financial Statements

The accompanying unaudited interim consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information. In the opinion of management, the accompanying
unaudited consolidated financial statements have been prepared on the same
basis as the audited consolidated financial statements and include all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair statement of the Company's financial position as of June 30, 2000 and its
results of operations and its cash flows for each of the six months ended June
30, 1999 and 2000.

(f) Cash and Cash Equivalents

Cash and cash equivalents consist of cash and investments in a certificate
of deposit and mutual funds with purchased maturities of less than 90 days.

(g) Accounting for Certain Investments in Debt and Equity Securities

The Company classifies its investments in debt and equity securities as
available-for-sale. Available-for-sale securities are carried at fair market
value, which approximates amortized cost. As of December 31, 1998 and 1999, and
June 30, 2000 the Company had no investments in debt or equity instruments.

F-9

PLACEWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(h) Financial Instruments and Concentration of Credit Risk

The carrying value of the Company's financial instruments, including cash
and cash equivalents, accounts receivable, accounts payable, accrued employee
compensation, other accrued liabilities and notes payable, approximates fair
market value. Cash and cash equivalents, accounts receivable, accounts payable,
accrued employee compensation and other accrued liabilities approximate fair
market value due to their short-term nature. Notes payable approximate fair
market value as interest rates on these notes approximate those currently
available in the market.

Financial instruments that subject the Company to concentration of credit
risk consist primarily of cash and cash equivalents and trade accounts
receivable. The Company is exposed to credit risk related to cash and cash
equivalents in the event of default by the financial institutions or the
issuers of these investments to the extent of the amounts recorded on the
balance sheet. Credit risk is concentrated in North America. The Company
performs ongoing credit evaluations of its customers' financial condition and,
generally, requires no collateral from its customers. The Company has had
immaterial write-offs of accounts receivable to date. Based on its ongoing
evaluations, the Company believes it has adequately provided for doubtful
accounts as of the date of each balance sheet presented herein.

(i) Property and Equipment

Property and equipment are recorded at cost less accumulated depreciation
and amortization. Depreciation is calculated using the straight-line method
over the estimated useful lives of the respective assets, generally three to
five years. Assets obtained through capital leases are amortized over the
shorter of their estimated useful lives or the lease term, generally three to
five years. Leasehold improvements are amortized over the shorter of the
estimated useful lives of the improvements or the remaining lease term.

(j) Software Development Costs

Costs related to research, design and development of products are charged to
research and development expenses as incurred until technological feasibility
has been established. Technological feasibility of products is established on
the release of a beta version of the software. Through December 31, 1999,
technological feasibility on software releases coincided with the general
release of the product for sale, because no beta version was developed. The
Company had not capitalized any software development costs since such costs
were not significant. During the six months ended June 30, 2000, the Company
capitalized costs incurred subsequent to release of a beta version in the
amount of $85,000. These costs will be amortized over a two year period from
the date of general release, which occurred on April 11, 2000. Also during the
six month period ended June 30, 2000, the Company capitalized $381,000 in
connection with activities pertaining to internal use software in accordance
with Statement of Position 98-1, Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use (SOP 98-1). These costs will be
amortized over a three-year period.

(k) Impairment of Long-Lived Assets

The Company assesses the recoverability of the carrying amount of its long-
lived assets whenever events or changes in circumstances indicate that the
carrying amount of such assets may be impaired. If the estimated future
undiscounted cash flows over the remaining useful life of the long-lived asset
is less than the carrying amount of the asset, an impairment charge would be
recognized in the statement of operations for the excess carrying amount of the
asset over its fair value.

(l) Income Taxes

Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying

F-10

PLACEWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

amounts of existing assets and liabilities and their respective tax bases and
operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date. A valuation allowance is recorded against deferred tax assets
if it is more likely than not that all or a portion of the deferred tax assets
will not be realized.

(m) Stock-Based Compensation

The Company accounts for stock option grants under Statement of Financial
Accounting Standards (SFAS) No. 123, Accounting For Stock-Based Compensation,
which permits the use of the intrinsic-value method in accordance with
Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued
to Employees, and related interpretations. Expense associated with stock-based
compensation is being amortized on an accelerated basis over the vesting period
of the individual award consistent with the method described in Financial
Accounting Standards Board (FASB) Interpretation No. 28.

(n) Comprehensive Loss

The Company did not have any significant components of other comprehensive
loss for the years ended December 31, 1997, 1998, and 1999 and the six months
ended June 30, 2000.

(o) Foreign Currency Transactions

The Company considers the functional currency of its foreign subsidiary to
be the U.S. dollar. Accordingly, this entity remeasures monetary assets and
liabilities at year-end exchange rates while nonmonetary items are remeasured
at historical rates. Income and expense accounts are remeasured at the average
rates in effect during the year, except for depreciation which is remeasured at
historical rates. Foreign currency transaction gains and losses are recognized
in income in the period of occurrence, and have not been significant to date.

(p) Net Loss Per Share

Basic net loss per share is computed using the weighted-average number of
outstanding shares of common stock, excluding shares of restricted stock
subject to repurchase summarized below. Diluted net loss per share is computed
using the weighted-average number of shares of common stock outstanding and,
when dilutive, potential common shares from options and warrants to purchase
common stock using the treasury stock method and from convertible securities
using the if-converted basis. The following potential common shares have been
excluded from the computation of diluted net loss per share for all periods
presented because the effect would have been anti-dilutive, (in thousands):

Six month
Year ended period ended
December 31, June 30,
------------------ ------------
1997 1998 1999 1999 2000
----- ----- ------ ----- ------

Shares issuable under stock options........... 456 1,079 1,278 1,107 1,707
Shares of restricted stock subject to
repurchase................................... 740 808 1,537 2,141 1,707
Shares issuable pursuant to warrants to
purchase common and convertible preferred
stock........................................ -- 41 316 41 82
Shares of convertible preferred stock on an
"as-if-converted" basis...................... 4,205 6,750 11,780 6,825 11,897

F-11

PLACEWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The weighted-average purchase price of restricted stock was $0.01, $0.11,
$0.39, $0.18 and $0.95, for the years ended December 31, 1997, 1998, and 1999,
and the six month periods ended June 30, 1999 and 2000, respectively. The
weighted-average exercise price of the warrants was $2.00, $3.57, $2.00, and
$1.21 for the years ended December 31, 1998 and 1999, and the six month periods
ended June 30, 1999 and 2000, respectively.

As of June 30, 2000, the Company also has outstanding options to purchase
174,848 shares of common stock at a weighted average exercise price of $3.32
per share, assumed as part of the Envoy acquisition.

Pro forma basic and diluted net loss per share is presented for the year
ended December 31, 1999, and the six month period ended June 30, 2000, to
reflect per share data assuming the conversion of all outstanding shares of
convertible preferred stock into common stock on a one-for-one basis, as if the
conversion had taken place at the beginning of fiscal 1997, or at the date of
issuance if later. This data is unaudited.

(q) Recent Accounting Pronouncements

In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133 establishes accounting and
reporting standards for derivative financial instruments and hedging activities
related to those instruments, as well as other hedging activities. Because the
Company does not currently hold any derivative instruments and does not engage
in hedging activities, the Company expects that the adoption of SFAS No. 133
will not have a material impact on its consolidated financial position, results
of operations, or cash flows. The Company will be required to adopt SFAS No.
133, as amended, in fiscal 2001.

In March 2000, the EITF published their consensus on EITF No. 00-2,
Accounting for Web Site Development Costs, which require the following
accounting for costs related to development of web sites:

. Costs incurred in the planning stage, regardless of whether the planning
activities relate to software, should be expensed as incurred.

. Costs incurred during the development of web site applications and
infrastructure involve acquiring or developing hardware and software to
operate the web site, including graphics that affect the look and feel
of the web page. All costs relating to software used to operate a web
site should be accounted for under SOP 98-1. However, if a plan exists
or is being developed to market the software externally, the costs
relating to the software should be accounted for pursuant to FASB
Statement No. 86, Accounting for the Costs of Computer Software to Be
Sold, Leased or Otherwise Marketed (SFAS No. 86).

. Costs paid for web site hosting services generally would be expensed
over the period of benefit.

The Company will be required to adopt EITF No. 00-2 in fiscal quarters
beginning after June 30, 2000, although earlier application is encouraged. To
date, the Company has not entered into activities covered by EITF No. 00-2, as
all software developed internally has been offered under license to customers.

In March 2000, the EITF published their consensus on EITF No. 00-3,
Application of AICPA Statement of Position 97-2, Software Revenue Recognition,
to Arrangements That Include the Right to Use Software Stored on Another
Entity's Hardware. EITF No. 00-3 states that a software element covered by SOP
97-2 is only present in a hosting arrangement if the customer has the
contractual right to take possession of the software at any time during the
hosting period without significant penalty and it is feasible for the customer
to either run the software on its own hardware or contract with another party
unrelated to the vendor to host the software. The Company's hosting
arrangements generally do not allow customers the contractual right to take
possession

F-12

PLACEWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

of the software without significant penalty. The Company does not expect that
the adoption of EITF No. 00-3 will have a material impact on its consolidated
financial position or results of operations.

In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 (SAB 101), Revenue Recognition in Financial
Statements, as amended by SAB 101A and SAB 101B, 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 disclosure related to revenue
recognition policies. In June 2000, the SEC issued SAB 101B that delayed the
implementation date of SAB 101. The Company must adopt SAB 101 no later than in
the fourth quarter of 2000. The Company has not determined the impact that SAB
101 will have on its financial statements and believes that such determination
will not be meaningful until closer to the date of initial adoption.

In March 2000, the FASB issued Interpretation No. 44, Accounting for Certain
Transactions Involving Stock Compensation, an interpretation of APB Opinion No.
25. This interpretation clarifies the application of Opinion 25 for certain
issues including: (a) the definition of employee for purposes of applying
Opinion 25, (b) the criteria for determining whether a plan qualifies as a
noncompensatory plan, (c) the accounting consequence of various modifications
to the terms of a previously fixed stock option or award, and (d) the
accounting for an exchange of stock compensation awards in a business
combination. In general, this interpretation is effective July 1, 2000.
Management does not expect the adoption of Interpretation No. 44 to have a
material effect on the Company's consolidated financial position or results of
operations.

(r) Use of Estimates

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

(s) Reclassifications

Certain balances in the accompanying 1998 and 1997 consolidated financial
statements have been reclassified in order to conform to the presentation of
the 1999 consolidated financial statements.

(2) Acquisition of Envoy i-Con, Inc.

Effective June 30, 2000, the Company completed the acquisition of Envoy i-
Con, Inc. (Envoy), a privately held application solutions provider offering a
web conferencing event management systems with private branding for online
business-to-business communities, including event coordination. This
acquisition was accounted for as a purchase. The Company issued 116,789 shares
of Series D preferred stock and 1,034,473 shares of its common stock and
assumed outstanding options and warrants of Envoy, exercisable for 174,848 and
41,940 common shares, respectively, as consideration for the purchase. The
purchase price was $5,440,000 which was derived using a $5.00 fair value for
the Company's Series D preferred stock and a $4.00 fair value for the Company's
common stock, the $568,000 fair value of the stock options and warrants assumed
(computed using the Black-Scholes option pricing model), and approximately
$150,000 of transaction costs. This amount was allocated to the tangible assets
and liabilities acquired ($1,286,000 net liabilities), and $1,375,000 to
customer base, $453,000 to assembled workforce, $302,000 to developed
technology, $145,000 to a future purchase discount, and $4,451,000 to goodwill.
Goodwill and other intangible assets will be amortized generally over a period
of three years.

Pro forma revenue, net loss attributable to common stockholders and basic
and diluted net loss per share attributable to common stockholders for the year
ended December 31, 1999 and the six months ended

F-13

PLACEWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

June 30, 2000 with respect to the Envoy acquisition are presented below. The
following pro forma financial information for the six months ended June 30,
1999 and 2000 presents the combined results of the Company and Envoy as if the
acquisition had occurred on January 1, 1999. The pro forma financial
information does not necessarily reflect the consolidated results of operations
that would have occurred had the Company and Envoy constituted a single entity
during these periods (in thousands):

Six Months Ended
June 30,
-----------------
1999 2000
------- --------

Revenue.................................................... $ 2,039 $ 9,063
Net loss attributable to common stockholders............... $(5,087) $(17,487)
Basic and diluted net loss per share attributable to common
stockholders.............................................. $ (1.91) $ (4.92)

During the year ended December 31, 1999, and the six month period ended June
30, 2000, the Company recorded hosting and services revenues from Envoy in the
amount of $82,000 and $237,000, respectively. During the year ended December
31, 1999 and the six month period ended June 30, 2000, the Company incurred
costs of hosting and services related to Envoy in the amount of $709,000 and
$596,000, respectively.

(3) Property and Equipment

Property and equipment as of December 31, 1998 and 1999, and June 30, 2000,
consisted of the following (in thousands):

December 31,
-------------- June 30,
1998 1999 2000
------ ------ --------

Computer equipment and software....................... $ 890 $2,373 $ 4,867
Office furniture and equipment........................ 73 437 710
Leasehold improvements................................ 64 1,086 1,527
------ ------ -------
1,027 3,896 7,104
Accumulated depreciation and amortization............. (421) (988) (1,792)
------ ------ -------
$ 606 $2,908 $ 5,312
====== ====== =======

As of December 31, 1998 and 1999, and June 30, 2000, equipment recorded
under capital leases was $529,000, $750,000, and $750,000, respectively, and
accumulated amortization thereon was $169,000, $344,000 and $467,000,
respectively.

(4) Stockholders' Equity

(a) Convertible Preferred Stock

Convertible preferred stock outstanding as of December 31, 1999, and June
30, 2000, is as follows:

Shares Issued and Par
designated outstanding value
---------- ----------- ------

Series:
A............................................. 1,705,000 1,705,000 $ 171
B............................................. 5,200,000 5,120,000 512
C............................................. 5,400,000 4,954,785 495
D............................................. 5,500,000 116,789 12
---------- ---------- ------
17,805,000 11,896,574 $1,190
========== ========== ======

F-14

PLACEWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The rights, preferences, and privileges of the holders of Series A, B, C,
and D, convertible preferred stock are as follows:

. Dividends are noncumulative and payable only upon declaration by the
Company's Board of Directors at a rate of $0.08, $0.16, $0.30, and $0.40
per share for Series A, B, C, and D preferred stock, respectively.

. Holders of Series A, B, C, and D preferred stock have a liquidation
preference of $1.00, $2.00, $3.80 and $5.00 per share, respectively, plus
any declared but unpaid dividends over holders of common stock.

. Each share of Series A, B, C, and D preferred stock is convertible at any
time into one share of common stock subject to certain antidilution
provisions. All shares will convert to common stock automatically on the
date the Company successfully completes an initial public offering.
. Each holder of preferred stock has voting rights equal to the number of
shares of common stock into which such shares could be converted.

(b) Stock Plans

In connection with the 1997 stock option plan (the Plan), the Company is
authorized to issue up to 6,399,890 shares of common stock to directors,
employees, and consultants. The 1997 Plan provides for the issuance of stock
purchase rights, incentive stock options, or nonstatutory stock options.

The stock purchase rights are subject to a restricted stock purchase
agreement whereby the Company has the right to repurchase the stock upon the
voluntary or involuntary termination of the purchaser's employment with the
Company at the original issuance cost. The Company's repurchase right lapses at
a rate determined by the stock plan administrator, but at a minimum rate of 20%
per year. Through June 30, 2000, the Company has issued 4,359,841 shares of
common stock to founders, employees, and consultants under restricted stock
purchase agreements and through the exercise of employee stock options. As of
June 30, 2000, the Company has repurchased 548,364 shares, and 1,707,081 shares
are subject to repurchase at a weighted-average purchase price of $0.95 per
share. The repurchase rights expire ratably through the year 2004. Certain of
these restricted shares were issued for full recourse promissory notes with
interest rates ranging from 5.28% to 6.80%, and terms of four years.

The exercise price for incentive stock options is at least 100% of the
stock's fair market value on the date of grant for individuals owning less than
10% of the voting power of all classes of stock, and at least 110% of the fair
market value on the date of grant for individuals owning more than 10% of the
voting power of all classes of stock. For nonstatutory stock options, the
exercise price is also at least 110% of the fair market value on the date of
grant for individuals owning more than 10% of the voting power of all classes
of stock and no less than 85% for individuals owning 10% or less of the voting
power of all classes of stock. Options generally expire in 10 years. Vesting
periods are determined by the Company's Board of Directors and generally
provide for shares to vest ratably over a 4-year period, with 25% vesting after
one year from date of grant and monthly thereafter.

On February 29, 2000, the Company's Board of Directors approved the 2000
Equity Incentive Plan (2000 Plan). The 2000 Plan is intended to replace and
supercede the 1997 Plan. The Plan will be effective on the effective date of
the proposed initial public offering. The Company has reserved 3,000,000 shares
of common stock for issuance under the 2000 Plan. When a stock award expires or
is terminated before it is exercised, the shares not acquired pursuant to the
stock awards shall again becomes available for issuance under the 2000 Plan.

In general, the terms of stock options under the 2000 Plan may not exceed 10
years. An option holder may not transfer a stock option other than by will or
the laws of descent and distribution. The exercise price for an incentive stock
option cannot be less than 100% of the fair market value of the common stock on
the date of grant. The exercise price for a nonstatutory stock option cannot be
less than 85% of the fair market value of the

F-15

PLACEWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

common stock on the date of grant. In the event an optionholder is a 10%
shareholder, then the exercise price per share shall not be less than 110% of
the fair market value of common stock on the date of grant.

On February 29, 2000, the Company's Board of Directors approved the
2000 Employee Stock Purchase Plan (the Purchase Plan). The Purchase Plan will
be effective on the effective date of the proposed initial public offering. A
total of 500,000 shares of common stock have been authorized for issuance under
the Purchase Plan. Each year on December 31, beginning on December 31, 2001,
the share reserve will increase by the least of the following: (1) 1% of the
total outstanding common stock of the Company; (2) 250,000 shares of common
stock; or (3) a lesser amount as determined by the Board of Directors. Under
the purchase plan, employees who participate in an offering may have up to 15%
of their earnings for the period of that offering withheld. The amount withheld
is used on each purchase date of the offering period to purchase shares of
common stock. Eligible employees will be able to purchase common stock at a
purchase price equal to the lower of 85% of the fair market value of the common
stock at the first day of the offering period or 85% of the fair market value
of the common stock on the purchase date.

On February 29, 2000, the Company's Board of Directors approved the
2000 Non-Employee Directors' Stock Option Plan (the "Non-Employee Directors'
Plan"). The Non-Employee Directors' Plan will be effective on the effective
date of the proposed initial public offering. A total of 650,000 shares of
common stock of the Company have been reserved for issuance under the Non-
Employee Directors' Plan. When a stock option expires or is terminated before
it is exercised, the shares not acquired pursuant to the stock option shall
again become available for issuance under the Non-Employee Directors' Plan. The
Non-Employee Directors' Plan is administered by the Board of Directors, however
the grant of stock options is automatic. Upon the completion of the IPO, each
non-employee director will automatically be granted an option to purchase
30,000 shares of common stock which will vest ratably over 36 months. At the
time of the annual stockholders' meeting, beginning with the annual
stockholders' meeting in 2001, each non-employee director will automatically be
granted an option to purchase 10,000 shares of common stock which will vest
ratably over 12 months. In addition, upon the completion of the initial public
offering, each non-employee director then serving as chair of either the audit
committee or the compensation committee will automatically be granted an option
to purchase 3,000 shares of common stock. Any non-employee director who is
serving as chair of the audit committee or the compensation committee on the
date of each annual meeting of stockholders, commencing with our annual meeting
in 2001, will automatically be granted an option to purchase 3,000 shares of
common stock. Each such option shall vest ratably over 12 months. Under the
Non-Employee Directors' Plan, the exercise price will be 100% of the fair
market value of the common stock on the date of grant. Generally, the options
will vest over a three year period with a third of the shares subject to the
option vesting 12 months from the date of grant and 1/36th of the shares
subject to the option vesting monthly thereafter.

In 1999 the Company granted approximately 31,000 options to nonemployees for
services rendered, which were 100% vested and nonforfeitable on the grant date.
The weighted-average exercise price of these options is $0.91. The $226,000
fair value of these options was recorded as expense in 1999. The fair value was
measured on the grant date using the Black-Scholes option pricing model and the
following weighted average assumptions: weighted average fair market value of
underlying common stock at grant date of $2.80, no dividends, 70% volatility,
6% interest rate, and 10-year contractual life.

In 1999 the Company also granted approximately 10,000 options to
nonemployees which have vesting terms generally less than one year, and vesting
dates which match milestones specific to each nonemployee. The weighted average
exercise price of these options at grant date was $0.21. The fair value of
these options was estimated as of the date of grant, and was remeasured as of
each interim balance date and each final vesting date in accordance with EITF
No. 96-18. The fair value is being recorded over the vesting period. As of
December 31, 1999, deferred stock-based compensation for the 15,000 options
that continue to vest was approximately $55,000. As of June 30, 2000,
approximately 1,000 options continue to vest.

F-16

PLACEWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

In the six month period ended June 30, 2000, the Company granted 121,548
options to nonemployees for services rendered, which were 100% vested and
nonforfeitable on the grant date. The weighted average exercise price of these
options is $4.67. The $571,000 fair value of these options was recorded as
expense in the six month period ended June 30, 2000. The fair value was
measured on the grant date using the Black-Scholes option pricing model and the
following weighted-average assumptions: weighted average fair market value of
underlying common stock at grant date of $5.05, no dividends, 90% volatility,
6.50% interest rate, and 10-year contractual life.

The Company uses the intrinsic-value method in accounting for its employee
stock-based compensation plans. Accordingly, no compensation cost has been
recognized for any of its stock options granted or restricted stock sold
because the exercise price of each option or purchase price of each share of
restricted stock equaled or exceeded the fair value of the underlying common
stock as of the grant date for each stock option or purchase date of each
restricted stock share, except for stock options granted and restricted stock
sold from January 1, 1999, through June 30, 2000. With respect to the stock
options granted and restricted stock sold from January 1, 1999, to June 30,
2000, the Company recorded deferred stock compensation of $6,259,000 for the
difference at the grant or issuance date between the exercise price of each
stock option granted or purchase price of each restricted share sold and the
fair value of the underlying common stock. This amount is being amortized on an
accelerated basis over the vesting period, generally four to five years,
consistent with the method described in FASB Interpretation No. 28.
Amortization of the June 30, 2000 balance of deferred stock-based compensation
for the years ended 2000, 2001, 2002, and 2003, would approximate $1,204,000,
$1,230,000, $562,000, and $137,000, respectively. The amortization of deferred
stock compensation, combined with the expense associated with stock options
granted to non-employees, relates to the following items in the accompanying
consolidated statements of operations (in thousands):

Six month
periods
Year ended ended June
December 31, 30,
---------------- -----------
1997 1998 1999 1999 2000
---- ---- ------ ---- ------

Operations..................................... $ -- $ -- $ 127 $ 2 $ 422
Sales and marketing............................ -- -- 586 86 607
Research and development....................... -- -- 74 9 338
General and administrative..................... 11 6 341 24 885
---- ---- ------ ---- ------
Total........................................ $ 11 $ 6 $1,128 $121 $2,252
==== ==== ====== ==== ======

Had compensation costs been determined in accordance with SFAS No. 123 for
all of the Company's stock-based compensation plans, net loss (in thousands)
and basic and diluted net loss per share would have been as follows:

Six month period
Year ended December 31, ended June 30,
-------------------------- -----------------
1997 1998 1999 1999 2000
------- ------- -------- ------- --------

Net loss:
As reported............... $(3,272) $(4,968) $(10,918) $(3,599) $(14,436)
Pro forma................. $(3,272) $(4,968) $(10,970) $(3,603) $(14,967)
Basic and diluted net loss
per share:
As reported............... $ (4.67) $ (4.58) $ (6.41) $ (2.39) $ (6.06)
Pro forma................. $ (4.67) $ (4.58) $ (6.43) $ (2.39) $ (6.18)

The fair value of each option was estimated on the date of grant using the
minimum value method with the following weighted-average assumptions: no
dividends; risk-free interest rate of 6.0% for the years ended December 31,
1997, 1998, and 1999 and 6.61% for the six month periods ended June 30, 1999
and 2000, respectively; and expected life of five years for the years ended
December 31, 1997, 1998, and 1999 and the six month periods ended June 30, 1999
and 2000.

F-17

PLACEWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

As of December 31, 1999, there were 1,341,241 shares available for grant
under the Plan. A summary of the status of the Company's stock option activity
under the Plan is as follows:

Six months period
Year ended ended June 30, 2000
------------------------------------------------------------- --------------------
1997 1998 1999
------------------ -------------------- --------------------- (unaudited)
Weighted- Weighted- Weighted- Weighted-
Number average average average average
of price per Number of price per Number of price per Number of price per
shares share shares share shares share Shares share
------- --------- --------- --------- ---------- --------- --------- ---------

Outstanding at beginning
of year/period......... -- $ -- 456,250 $0.15 1,079,094 $0.18 1,278,343 $0.94
Options granted......... 478,250 0.15 1,308,379 0.20 1,973,883 0.92 1,151,048 6.15
Options exercised....... (22,000) 0.11 (603,534) 0.19 (1,566,092) 0.39 (642,341) 1.87
Options canceled........ -- 0.00 (82,001) 0.17 (208,542) 0.21 (80,188) 0.85
------- --------- ---------- ---------
Outstanding at end of
year/period............ 456,250 0.15 1,079,094 0.18 1,278,343 0.94 1,706,862 4.11
======= ========= ========== =========
Options exercisable at
end of year/period:
Unrestricted options... 56,249 127,232 44,476 331,816
Restricted options..... 400,001 951,862 1,233,867 1,375,046
------- --------- ---------- ---------
456,250 1,079,094 1,278,343 1,706,862
======= ========= ========== =========
Weighted-average fair
value of options
granted during the
year/period with
exercise prices equal
to fair value at date
of grant............... 478,250 $0.07 1,308,379 $0.10 346,048 $2.96
======= ===== ========= ===== ========= =====
Weighted-average fair
value of options
granted during the
year/period with
exercise prices less
than fair value at date
of grant............... 1,973,883 $2.29 805,000 $3.72
========== ===== ========= =====

As of December 31, 1999, the exercise prices and weighted-average remaining
contractual life of outstanding options were as follows:

Options outstanding Options exercisable
---------------------------------- ---------------------
Weighted-
average Weighted- Weighted-
remaining average average
Exercise Number contractual exercise Number exercise
price outstanding life (years) price exercisable price
-------- ----------- ----------- --------- ----------- ---------

$0.10 15,000 7.21 $0.10 15,000 $0.10
0.20 486,000 9.10 0.20 486,000 0.20
0.38 111,343 9.69 0.38 111,343 0.38
1.00 276,000 9.87 1.00 276,000 1.00
2.00 390,000 9.99 2.00 390,000 2.00
--------- ---------
1,278,343 1,278,343
========= =========

As of June 30, 2000, the Company also has outstanding options to purchase
174,848 shares of common stock at a weighted-average exercise price of $3.32
per share, assumed as part of the Envoy acquisition.

F-18

PLACEWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(d) Warrants

During 1999, the Company issued a warrant to purchase 275,000 shares of
Series C convertible preferred stock, in connection with a marketing
arrangement. The warrant was fully vested and nonforfeitable at the time of
issuance and was exercisable on the earlier of (1) November 2009, (2) upon the
achievement of $3,000,000 in net revenue (as defined) over a one-year period or
(3) an uncured breach of contract by the Company. The warrant has an exercise
price of $3.80 and expires in November 2009. The fair value of the warrant,
$849,000, was determined using the Black-Scholes option pricing model with the
following assumptions: no dividends; 70% volatility; risk-free interest rate of
6.61%; and life of 10 years. The $849,000 warrant value has been included in
sales and marketing expense on the accompanying 1999 consolidated statement of
operations. Although the marketing arrangement associated with the warrant
permits the counterparty to cease performance at any time without cause,
management believes that the potential for increased revenue exceeds this risk.
However, in April 2000, the marketing arrangement was cancelled and the
counterparty returned the warrant unexercised to the Company.

In connection with the acquisition of Envoy, the Company assumed warrants to
purchase 41,940 shares of common stock. The warrants have an exercise price of
$0.45 and expire in September 2003. The fair value of these warrants, as
calculated using the Black-Scholes option pricing model, has been recorded as
part of the cost of the acquisition. As of June 30, 2000, the warrants remain
outstanding.

During 1997, the Company issued a warrant to purchase 40,625 shares of
Series B convertible preferred stock, in connection with a capital lease. The
warrant has an exercise price of $2.00, and expires in September 2007. The fair
value of the warrant, was not significant as determined using the Black-Scholes
option pricing model, with the following assumptions: no dividends; 70%
volatility; risk-free interest rate of 6.12%; and life of 10 years. As of
December 31, 1999, the warrant remains outstanding.

(5) Commitments and Contingencies

(a) Operating and Capital Leases

The Company occupies facilities rented under noncancelable operating leases
expiring through 2002. The Company also leases certain equipment under capital
lease arrangements that expire through 2003.

Future minimum lease payments as of December 31, 1999 are as follows (in
thousands):

Year ending Capital Operating
December 31, leases leases
------------ ------- ---------

2000...................................................... $253 $1,134
2001...................................................... 255 1,158
2002...................................................... 157 882
2003...................................................... 12 --
---- ------
Total minimum lease payments............................... 677 $3,174
======
Less amount representing interest.......................... 86
----
Present value of minimum lease payments.................... 591
Less current portion....................................... 204
----
Noncurrent portion of capital lease obligations............ $387
====

In connection with the acquisition of Envoy, the Company has assumed capital
lease obligations totaling $177,000 as of June 30, 2000, with a current portion
of $76,000. Future minimum lease payments under the assumed capital leases will
be $49,000, $88,000, $59,000 and $9,000 in 2000, 2001, 2002, and 2003,

F-19

PLACEWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

respectively. The Company also assumed a non cancelable operating lease for
office space, which expires in September 2000. Future minimum lease payments
under the assumed operating lease will be $27,000.

Rent expense for the years ended December 31, 1997, 1998, and 1999 and the
six month periods ended June 30, 1999 and 2000, was approximately $190,000,
$240,000, $508,000, $172,000 and $600,000, respectively.

(b) Royalties

The Company entered into a software license and technology assignment
agreement in 1996 with a Series A preferred stockholder ("holder"). The
agreement conveyed a non-exclusive, perpetual license for certain technologies
to the Company. The holder is entitled to a royalty payment based on two
percent of net revenues, as defined in the agreement, up to a cumulative
payment of $1,000,000. The royalty accrual commenced in 1999 in accordance with
the terms of the agreement, resulting in royalty expense of approximately
$55,000 in 1999 and $137,000 in the six month period ended June 30, 2000.

In July 1999, the Company was contacted by legal counsel representing
another web conferencing provider, with allegations of misappropriated trade
secrets by the Company under an August 1997 License and Distribution Agreement.
After initial attempts to resolve this issue, the counterparty failed to
respond to any of the Company's requests to move this issue forward. The
Company is prepared to vigorously defend itself against any claims of trade
secret misappropriation, if and when such claims are brought to court.

(6) Income Taxes

The 1997, 1998 and 1999 income tax benefit differs from the amounts computed
by applying the U. S. federal income tax rate as a result of the following (in
thousands):

1997 1998 1999
------- -------- -------

Federal benefit at statutory rate.................. $(1,112) $(1,689) $(3,712)
State taxes, net of federal income tax benefit..... -- -- 1
Net operating loss, tax credit & temporary
differences not benefitted........................ 1,062 1,624 3,569
Other.............................................. 50 65 142
------- -------- -------
Net income tax benefit............................. $ -- $ -- $ --
======= ======== =======

The tax effects of the temporary differences that give rise to significant
portions of the deferred tax assets and liabilities as of December 31, 1998 and
1999, are as follows (in thousands):

1998 1999
------ ------

Deferred tax assets:
Net operating loss carryforwards........................... $3,339 $6,049
Tax credit carryforwards................................... 487 762
Accrued liabilities not currently deductible for tax
purposes.................................................. 50 384
Fixed assets............................................... 102 191
------ ------
Total gross deferred tax assets.......................... 3,978 7,386
Less valuation allowance..................................... 3,978 7,386
------ ------
Net deferred tax assets.................................. $ -- $ --
====== ======

F-20

PLACEWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The net change in the total valuation allowance for the years ended December
31, 1998 and 1999, was a net increase of $2,305,000, and $3,408,000,
respectively.

As of December 31, 1999, the Company has net operating loss carryforwards
for federal and California income tax purposes of approximately $15,821,000 and
$12,043,000, respectively. The federal net operating loss carryforward expires
beginning in 2011 through 2019. The California net operating loss carryforward
expires primarily in 2004.

As of December 31, 1999, the Company has research and development credit
carryovers for federal and California income tax purposes of approximately
$492,000 and $270,000, respectively. The federal research and experimental
credit expires beginning in the year 2019. The California research and
experimental credit can be carried forward indefinitely.

In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management does not
believe it is more likely than not that the deferred tax assets will be
realized; accordingly, a full valuation allowance has been established and no
deferred tax asset is shown in the accompanying consolidated balance sheets.

Federal and California tax laws impose substantial restrictions on the
utilization of net operating loss carryforwards in the event of an "ownership
change" for tax purposes, as defined in Section 382 of the Internal Revenue
Code. The Company's ability to utilize its net operating loss and tax credit
carryforwards may be subject to restriction pursuant to these provisions.

(7) Notes Payable and Lease Financing

(a) Equipment Finance Arrangements

In January 1998, the Company entered into an arrangement with a financing
corporation for a lease line of credit for up to $850,000 in new equipment (see
Note 5) and for a note payable collateralized by the Company's existing assets
of up to $400,000, bearing interest at 7.5%. The lease line is no longer
available. As of December 31, 1999, $212,000 is outstanding under the note
payable and is due in equal monthly installments through January 2002. As of
December 31, 1999, future principal payments under this note payable are
$96,000, $107,000, and $9,000 for the years ending December 31, 2000, 2001, and
2002, respectively.

On March 16, 1999, the Company entered into an arrangement with another
financing corporation for a lease line of credit for up to $1,200,000 of
equipment. The line is available through September 30, 2000 and is secured by
equipment. As of December 31, 1999, and June 30, 2000, the amount available
under the line is $1,142,000.

On March 13, 2000, the Company accepted a proposal from a financing
corporation for a lease line of credit for up to $2,500,000 secured by certain
equipment, with an additional $2,500,000 available on completion of an IPO with
minimum proceeds of $50,000,000 no later than July 1, 2000. The line will bear
interest at approximately 14.5%. This line will be available through March 31,
2001. During the six month period ended June 30, 2000, the Company borrowed
approximately $2,154,000 against this line. The loan will be repaid over a
three year period.

F-21

PLACEWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(b) Revolving Line of Credit

On March 11, 1999, the Company entered into an arrangement with a bank for a
line of credit up to $750,000. In January 2000, the Company modified the
arrangement to increase the maximum borrowing capacity to $2,500,000. The
arrangement consists of a committed revolving line of credit of an amount not
to exceed the lesser of $2,500,000 or the borrowing base, as defined by the
agreement. Borrowings will be collateralized by certain assets of the Company.
Borrowings against the line of credit will bear interest at the bank's prime
rate plus 1% per annum (9.5% as of December 31, 1999 and 10.5% as of June 30,
2000). The line of credit will expire on January 24, 2001. During 1999 the
Company borrowed and repaid $625,000 under this arrangement. In the six month
period ended June 30, 2000, the Company borrowed $4,297,000 under this
arrangement and repaid $1,797,000. As of December 31, 1999, and June 30, 2000,
the amounts available under the line of credit were $750,000 and $-0-,
respectively.

The line of credit also contains certain financial ratios, of which the
Company was not in compliance as of June 30, 2000. The bank elected to waive
the covenant violation as of June 30, 2000.

In connection with the acquisition of Envoy, the Company has assumed a line
of credit of up to $500,000. The line of credit bears interest at prime plus 3%
(11.5% and 12.0% as of December 31, 1999 and June 30, 2000, respectively),
expires October 31, 2000 and is secured by accounts receivable, inventory,
equipment and general tangible assets. Advances under the line of credit are
limited to 60% of eligible accounts receivable. As of June 30, 2000, the bank
had suspended the usage of the line of credit for a minimum of 90 days pending
financial review of the acquisition of Envoy by the Company.

The line of credit also contains certain financial ratios, of which Envoy
was not in compliance as of June 30, 2000. The bank elected to waive the
covenant violation at June 30, 2000.

(d) Envoy Notes Payable

In connection with the acquisition of Envoy, the Company has assumed the
following unsecured notes payable as of June 30, 2000 (in thousands).

Note payable, bearing 8% interest...................................... $ 506
Note payable, bearing 12% interest; $15 plus accrued interest due
commencing July 15, 2000 and continuing for two months with remaining
balance plus accrued interest due on October 15, 2000................. 151
Note payable, bearing 6.53% interest; unsecured, $73 plus accrued
interest due July 2000 with remaining principal and interest due
December 31, 2000..................................................... 146
Notes payable to certain former shareholders of Envoy and warrant
holders bearing 8.69% interest; principal payments of $50 per quarter
with remaining outstanding balance due December 31, 2000.............. 401
Notes payable to certain former shareholders of Envoy and warrant
holders, 10% interest with principal and interest due December 31,
2000.................................................................. 749
------
Total notes payable.................................................. 1,953
Less current portion................................................... 1,447
------
Notes payable, less current portion.................................. $ 506
======

According to the terms of the 8% notes payable, the payment of principal is
dependent on the settlement of a pending legal proceeding between the
noteholder and a third party. The terms of the note payable include the right
for the noteholder to receive from the Company amounts the noteholder must pay
as a result of the

F-22

PLACEWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

settlement of the pending legal proceeding, up to the principal amount of the
note. Furthermore, monthly principal and interest payments of approximately
$14,000 on the notes payable to the noteholder will commence upon settlement of
the pending legal proceeding until paid in full. Management believes the
pending legal proceedings will be resolved during the third quarter of 2001.

Future minimum principal payments of the Envoy notes payable as of June 30,
2000 are as follows (in thousands):

Six months ending December 31:
2000............................................................... $1,447
Year ending December 31:
2001............................................................... 76
2002............................................................... 162
2003............................................................... 175
2004............................................................... 93
------
$1,953
======

(8) Significant Customer Information and Segment Reporting

SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information establishes standards for the manner in which public companies
report information about operating segments in annual and interim financial
statements. It also establishes standards for related disclosures about
products and services, geographic areas, and major customers. The method for
determining what information to report is based on the way management organizes
the operating segments within the Company for making operating decisions and
assessing financial performance. The Company's chief operating decision-maker
is considered to be the chief executive officer (CEO). The CEO reviews
financial information presented on a consolidated basis for purposes of making
operating decisions and assessing financial performance. The consolidated
financial information is identical to the information presented in the
accompanying consolidated statements of operations. Therefore, the Company has
determined that it operates in a single operating segment, specifically, the
providing of web-based conferencing solution.

The desegregated information reviewed on a product basis by the CEO is as
follows (in thousands):

Six month
Year ended period ended
December 31, June 30,
------------------ -------------
1997 1998 1999 1999 2000
---- ------ ------ ------ ------

Hosting and Services........................ $ -- $ 511 $2,433 $ 749 $4,963
Licensing................................... 609 1,113 1,962 516 1,681
---- ------ ------ ------ ------
$609 $1,624 $4,395 $1,265 $6,644
==== ====== ====== ====== ======

Significant customer information is as follows:

Percent of total revenue
-------------------------------------
Year ended Six month period Percent of total
December 31, ended June 30, accounts receivable
---------------- ------------------- ---------------------
December 31, June 30,
1997 1998 1999 1999 2000 1999 2000
---- ---- ---- -------- -------- ------------ --------

Customer A.......... 17% 40% 27% 22% 12% 14% 6%
Customer B.......... 24% 13% 6% 10% 3% 2% --
Customer C.......... 18% -- -- -- -- -- --
Customer D.......... 15% -- -- -- -- -- --

F-23

PLACEWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

In 1999, 6% of the Company's revenue was from two customers that are
shareholders of the Company. In the six month period ended June 30, 2000, 2% of
the Company's revenue was from two customers that are shareholders of the
Company. As of December 31, 1999 and June 30, 2000, the outstanding accounts
receivable balance related to these customers is not significant. The Company
has no significant foreign operations.

(9) Subsequent Event

Series D Preferred Stock Financing

On July 21, 2000, the Company sold 5,380,000 additional shares of Series D
convertible preferred stock at $5.00 per share for net proceeds of
approximately $26,900,000.

F-24

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Envoy i-Con, Inc.:

We have audited the accompanying balance sheets of Envoy i-Con, Inc. as of
December 31, 1998 and 1999 and June 30, 2000, and the related statements of
operations, shareholders' equity (deficit), and cash flows for the period from
June 30, 1998 (date of inception) through December 31, 1998, the year ended
December 31, 1999 and the six months ended June 30, 2000. These financial
statements are the responsibility of Envoy's management. Our responsibility is
to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Envoy i-Con, Inc. as of
December 31, 1998 and 1999 and June 30, 2000, and the results of its operations
and its cash flows for the period from June 30, 1998 (date of inception)
through December 31, 1998, the year ended December 31, 1999 and the six months
ended June 30, 2000 in conformity with generally accepted accounting
principles.

s/ KPMG LLP

Portland, Oregon
July 11, 2000

F-25

ENVOY I-CON, INC.

BALANCE SHEETS

December 31,
---------------------- June 30,
1998 1999 2000
--------- ----------- -----------

ASSETS
Current assets:
Cash and cash equivalents............... $ 344,339 $ 139,413 $ 159,874
Accounts receivable, net................ 195,904 560,250 951,756
Prepaid expenses and other current
assets................................. 1,509 36,457 44,726
--------- ----------- -----------
Total current assets.................. 541,752 736,120 1,156,356
Property and equipment, net............... 265,338 614,373 616,052
Goodwill, net............................. 172,222 105,555 72,222
Investment in subsidiary.................. -- 926,477 --
--------- ----------- -----------
$ 979,312 $ 2,382,525 $ 1,844,630
========= =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
Accounts payable........................ $ 59,816 $ 285,855 $ 213,196
Accrued payroll and related items....... 87,909 291,197 352,839
Accrued expenses........................ 12,500 165,298 266,297
Deferred revenue........................ 39,393 76,891 95,632
Current portion of obligations under
capital lease.......................... -- 50,014 75,776
Current portion of notes payable-related
parties................................ 36,500 536,926 1,447,192
--------- ----------- -----------
Total current liabilities............. 236,118 1,406,181 2,450,932
Obligations under capital lease, less
current portion.......................... -- 97,270 101,098
Notes payable-related parties, less
current portion.......................... 463,500 587,018 505,688
--------- ----------- -----------
Total liabilities..................... 699,618 2,090,469 3,057,718
--------- ----------- -----------
Commitments and contingencies (notes 7, 10
and 12)
Shareholders' equity (deficit):
Preferred stock, $0.001 par value.
Authorized 10,000,000 shares; Series A
convertible preferred stock, designated
1,000,000 shares, issued and
outstanding -0- shares in 1998, 703,534
shares in 1999 and 746,392 shares in
2000 (liquidation preference of
$1,231,185 in 1999 and $1,306,186 in
2000).................................. -- 704 747
Common stock, $0.001 par value.
Authorized 25,000,000 shares; issued
and outstanding 6,000,000 shares in
1998 and 1999 and 6,649,183 shares in
2000................................... 6,000 6,000 6,649
Additional paid-in capital.............. 577,500 1,834,781 2,208,170
Note receivable for sale of stock....... -- (41,667) --
Deferred stock compensation............. -- (62,752) --
Accumulated deficit..................... (303,806) (1,445,010) (3,428,654)
--------- ----------- -----------
Total shareholders' equity (deficit).. 279,694 (292,056) (1,213,088)
--------- ----------- -----------
$ 979,312 $ 2,382,525 $ 1,844,630
========= =========== ===========

See accompanying notes to financial statements.

F-26

ENVOY I-CON, INC.

STATEMENTS OF OPERATIONS

June 30, 1998
(date of
inception)
through Year ended Six months ended June 30
December 31, December ------------------------
1998 31, 1999 1999 2000
------------- ----------- ----------- ------------
(Unaudited)

Revenues, net............. $ 550,562 $ 2,615,388 $ 855,194 $ 3,252,042
--------- ----------- --------- -----------
Operating expenses:
Telephone and network
fees................... 129,426 623,783 216,282 772,989
Sales and marketing..... 26,448 353,522 59,396 142,424
General and
administrative......... 686,754 2,719,229 913,737 4,223,167
--------- ----------- --------- -----------
Total operating
expenses............. 842,628 3,696,534 1,189,415 5,138,580
--------- ----------- --------- -----------
Loss from operations.. (292,066) (1,081,146) (334,221) (1,886,538)
Other income (expense):
Other income............ -- 11,691 -- (1,060)
Interest income......... -- -- -- 3,974
Interest expense........ (11,740) (71,749) (17,903) (100,020)
--------- ----------- --------- -----------
Total other expense,
net.................. (11,740) (60,058) (17,903) (97,106)
--------- ----------- --------- -----------
Net loss.............. $(303,806) $(1,141,204) $(352,124) $(1,983,644)
========= =========== ========= ===========
Basic and diluted net loss
per share................ $ (0.05) $ (.19) $ (.06) $ (.32)
========= =========== ========= ===========
Shares used in computing
basic and diluted net
loss per share........... 6,000,000 6,000,000 6,000,000 6,249,763
========= =========== ========= ===========

See accompanying notes to financial statements.

F-27

ENVOY I-CON, INC.

STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)

Preferred Notes Total
stock Common stock Additional receivable Deferred shareholders'
-------------- ---------------- paid-in for sale stock Accumulated equity
Shares Amount Shares Amount capital of stock compensation deficit (deficit)
------ ------ --------- ------ ---------- ---------- ------------ ----------- -------------

Balances at June 30,
1998 (date of
inception).............. -- $ -- -- $ -- $ -- $ -- $ -- $ -- $ --
Issuance of common
stock................... -- -- 6,000,000 6,000 577,500 -- -- -- 583,500
Net loss................ -- -- -- -- -- -- -- (303,806) (303,806)
------- ---- --------- ------ ---------- -------- --------- ----------- -----------
Balances at December 31,
1998.................... -- -- 6,000,000 6,000 577,500 -- -- (303,806) 279,694
Issuance of preferred
stock, net of issuance
costs................... 703,534 704 -- -- 1,048,378 (66,667) -- -- 982,415
Deferred compensation
related to stock
options................. -- -- -- -- 208,903 -- (208,903) -- --
Amortization of deferred
stock compensation...... -- -- -- -- -- -- 146,151 -- 146,151
Payment on notes
receivable.............. -- -- -- -- -- 25,000 -- -- 25,000
Net loss................ -- -- -- -- -- -- -- (1,141,204) (1,141,204)
------- ---- --------- ------ ---------- -------- --------- ----------- -----------
Balances at December 31,
1999.................... 703,534 704 6,000,000 6,000 1,834,781 (41,667) (62,752) (1,445,010) 292,056
Payment on notes
receivable.............. -- -- -- -- -- 41,667 -- -- 41,667
Common stock issued for
exercise of options..... -- -- 299,183 299 74,496 -- -- -- 74,795
Preferred stock issued
for exercise of
warrants................ 42,858 43 -- -- 74,957 -- -- -- 75,000
Common stock issued for
consulting services..... -- -- 350,000 350 185,150 -- -- -- 185,500
Amortization of deferred
stock compensation...... -- -- -- -- -- -- 62,752 -- 62,752
Compensation expense
related to stock
options................. -- -- -- -- 24,119 -- -- -- 24,119
Issuance of warrants.... -- -- -- -- 14,667 -- -- -- 14,667
Net loss................ -- -- -- -- -- -- -- (1,983,644) (1,983,644)
------- ---- --------- ------ ---------- -------- --------- ----------- -----------
Balances at June 30,
2000.................... 746,392 $747 6,649,183 $6,649 $2,208,170 $ -- $ -- $(3,428,654) $(1,213,088)
======= ==== ========= ====== ========== ======== ========= =========== ===========

See accompanying notes to financial statements.

F-28

ENVOY I-CON, INC.

STATEMENTS OF CASH FLOWS

June 30, 1998
(date of
inception) Six months ended
through Year ended June 30,
December 31, December 31, -----------------------
1998 1999 1999 2000
------------- ------------ ----------- -----------
(Unaudited)

Cash flows from operating
activities:
Net loss............... $(303,806) $(1,141,204) $(352,124) $(1,983,644)
Adjustments to
reconcile net loss to
net cash used in
operating activities:
Depreciation and
amortization........ 78,382 242,330 100,320 190,379
Non cash compensation
related to stock
options............. -- 146,151 18,573 86,871
Provision for
doubtful accounts
and revenue
reserve............. -- 14,483 -- 43,990
Common stock issued
for consulting
services............ -- -- -- 185,500
Non-cash interest
expense............. -- 35,994 -- 78,186
Loss on sale of
subsidiary.......... -- -- -- 926,477
Changes in operating
assets and
liabilities:
Accounts receivable... (195,904) (378,829) (166,626) (435,496)
Prepaid expenses...... (1,509) (34,948) (6,418) (8,269)
Accounts payable and
accrued expenses..... 160,225 582,125 201,028 89,982
Deferred revenue...... 39,393 37,498 22,459 18,741
--------- ----------- --------- -----------
Net cash used in
operating activities.. (223,219) (496,400) (182,788) (807,283)
--------- ----------- --------- -----------
Cash flows used in
investing activities:
Purchase of property
and equipment......... (15,942) (351,532) (46,173) (105,313)
--------- ----------- --------- -----------
Cash flows from financing
activities:
Proceeds from issuance
of common stock....... 583,500 -- -- 74,795
Proceeds from issuance
of preferred stock.... -- 982,415 -- 75,000
Payments on obligations
under capital lease... -- (25,882) (8,749) (23,822)
Payments on notes
payable--related
parties............... -- (313,527) -- --
Payment on stock
subscription
receivable............ -- -- -- 41,667
Cash advance--related
party................. -- -- -- 35,417
Proceeds from issuance
of debt............... -- -- -- 730,000
--------- ----------- --------- -----------
Net cash provided by
(used in) financing
activities............ 583,500 643,006 (8,749) 933,057
--------- ----------- --------- -----------
Net change in cash and
cash equivalents...... 344,339 (204,926) (237,710) 20,461
Cash and cash
equivalents at
beginning of period... -- 344,339 344,339 139,413
--------- ----------- --------- -----------
Cash and cash
equivalents at end of
period................ $ 344,339 $ 139,413 $ 106,629 $ 159,874
========= =========== ========= ===========
Supplemental disclosure
of cash flow
information:
Cash payments during
the period for
interest.............. $ 11,740 $ 34,736 $ 17,903 $ 9,038
========= =========== ========= ===========
Supplemental schedule of
non-cash investing and
financing activities:
Purchase of assets
through capital
lease................. $ -- $ 173,166 $ 50,598 $ 53,412
Note receivable for
issuance of common
stock................. -- 66,667 66,667 --
Note payable applied to
note receivable for
sale of stock......... -- 25,000 -- --
Merger of i-Con
Holdings, Inc.
issuance of preferred
stock................. -- 173,666 -- --
Note payable for
acquisition of
assets................ 500,000 -- -- --

See accompanying notes to financial statements.

F-29

ENVOY I-CON, INC.

NOTES TO FINANCIAL STATEMENTS

(1) Description of Business

Envoy i-Con, Inc. (Envoy) was incorporated on June 30, 1998 under the laws
of the State of Oregon, and began operations in August 1998. Envoy is an
Application Solutions Provider (ASP) for Internet Conferencing. Envoy offers
companies an easy, cost-effective way to market, train and sell to their
community using the interactive communications potential of the Internet.

Through July 30, 1999, Envoy was a wholly-owned subsidiary of i-Con
Holdings, Inc. Effective July 31, 1999, Envoy merged with its parent company,
i-Con Holdings, Inc. The shareholders of i-Con Holdings, Inc. received
6,000,000 shares of common stock and 99,238 shares of preferred stock of Envoy
in exchange for their interest in i-Con Holdings, Inc. The combination of
entities under common control are accounted for at historical cost in a manner
similar to a pooling of interests. Financial statements for the period prior to
the combination have been restated using the "as if pooling" accounting method.

On June 30, 2000, all the outstanding shares of preferred and common stock
of Envoy were exchanged for preferred and common stock of PlaceWare, Inc.
(PlaceWare). Each share of Envoy preferred stock received 0.1565 shares of
PlaceWare Series D preferred stock and 0.2028 shares of PlaceWare common stock.
Each share of Envoy common stock received 0.1328 shares of PlaceWare common
stock. The balance sheet as of June 30, 2000 represents the financial position
of Envoy immediately preceding the acquisiton by PlaceWare.

(2) Summary of Significant Accounting Policies

(a) Carve-out of Wholly-owned Subsidiary

In July 1999, Envoy acquired 100% of the outstanding common stock of Envoy
Global, Inc. (EGI) which consisted of a telecommunications business. This
business was operated as a wholly-owned subsidiary. These financial statements
exclude Envoy's wholly-owned subsidiary, EGI for the period from July 31, 1999
(date of acquisition) through June 30, 2000 (date of disposal). All effects of
EGI have been carved-out, with only the debt assumed in connection with the
acquisition, and continuing with Envoy after disposal, remaining in the
accompanying financial statements.

(b) Cash and Cash Equivalents

Cash equivalents consist of highly liquid investments purchased with an
original maturity to Envoy of three months or less.

Property and equipment are stated at cost. Costs of repair and maintenance
are expensed as incurred. Depreciation is computed using the straight-line
method over the following estimated useful lives:

Leasehold improvements..................................... Life of the lease
Furniture and fixtures..................................... 5 years
Equipment.................................................. 5 years
Computer equipment and software............................ 3 years
Leased equipment........................................... Life of the lease

(d) Research and Development

Product development costs are expensed as incurred.

(e) Revenue Recognition

Envoy earns revenues from event services, customer support and hosting.
Revenues from event services are recognized as events take place. Customer
support and hosting services revenues are recognized ratably

F-30

ENVOY I-CON, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

over the support or hosting period. Envoy records revenues from revenue sharing
arrangements at the gross invoice amount only where Envoy acts as principal to
the revenue sharing transaction and Envoy bears the credit risk on the related
customer receivable.

Deferred revenue includes amounts billed to customers for which revenues
have not been recognized, which generally results from volume seat purchases
and customer deposits.

(f) Income Taxes

Envoy uses the asset and liability method to account for income taxes. Under
the asset and liability method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rate is
recognized in income in the period that includes the enactment date. A
valuation allowance is established when necessary to reduce deferred tax assets
to the amount expected to be realized.

(g) Advertising Costs

Envoy expenses the cost of advertising the first time the advertising takes
place. Advertising expense was approximately $7,000, $269,000 and $142,000 for
the period from June 30, 1998 (date of inception) through December 31, 1998,
the year ended December 31, 1999 and the six months ended June 30, 2000,
respectively.

(h) Competition and Risk of Technological Change

Envoy's business strategy is based on penetrating markets, continuously
refining and developing its products and maintaining technological competitive
advantage. In the extremely competitive environment in which Envoy operates,
marketing, distribution and development processes are uncertain and complex,
requiring accurate predictions and business decisions. Envoy's future success
will be dependent on its ability to predict and manage these changes. Failure
to do so could have long-term, adverse impacts on Envoy's growth and results of
operations.

(i) 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 consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.

(j) Fair Value of Financial Instruments

The carrying amount of cash and cash equivalents, accounts receivable and
accounts payable approximate fair value due to the short-term nature of these
instruments. The carrying amount of amounts due under the line of credit and
notes payable approximates fair value since the interest rates approximate
current rates available to Envoy.

(k) Comprehensive Income

Envoy has had no items of comprehensive income.

F-31

ENVOY I-CON, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

(l) Stock-Based Compensation

Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for
Stock-Based Compensation, defines a fair value based method of accounting for
an employee stock option or similar instrument. Under the fair value based
method, compensation cost is measured at the grant date based on the value of
the award and is recognized over the service period, which is usually the
vesting period. However, SFAS 123 also allows an entity to continue to measure
compensation cost using the intrinsic value based method of accounting
prescribed by APB Opinion No. 25 (Opinion 25), Accounting for Stock Issued to
Employees. Under the intrinsic value based method, compensation cost is the
excess, if any, of the quoted market price of the stock at grant date or other
measurement date over the amount an employee must pay to acquire the stock.
Entities electing to remain with the accounting in Opinion 25 must make pro
forma disclosures of net income (loss) and, if presented, earnings per share,
as if the fair value based method had been applied. Envoy has elected to
continue to apply the prescribed accounting in Opinion 25.

Envoy accounts for equity instruments issued to non-employees in accordance
with the provisions of SFAS 123 and other applicable accounting literature.
Equity instruments have been issued to non-employees during the periods
presented.

(m) Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of

Envoy accounts for long-lived assets in accordance with the provisions of
SFAS 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of. This statement requires that long-lived assets and
certain identifiable intangibles be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows expected
to be generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceeds the fair value of the assets. Assets to be
disposed of are reported at the lower of the carrying amount or fair value less
costs to sell.

(n) Goodwill

Goodwill is amortized on a straight-line basis over the estimated useful
life of three years. As of December 31, 1998 and 1999 and June 30, 2000,
accumulated amortization was $27,778, $94,445 and $127,778, respectively.

(o) Accounts Receivable

Accounts receivable is net of an allowance for doubtful accounts of $-0-,
$10,000 and $29,000 as of December 31, 1998 and 1999 and June 30, 2000,
respectively. The following table presents a rollforward of the allowance for
doubtful accounts for the indicated periods:

December 31,
------------ June 30,
1998 1999 2000
---- ------- --------

Balance as of beginning of period...................... $-- $ -- $10,000
Provision.............................................. -- 10,000 19,000
Charge offs............................................ -- -- --
--- ------- -------
Balance as of end of period............................ $-- $10,000 $29,000
=== ======= =======

(p) Concentration of Credit Risk

Financial instruments, which potentially subject Envoy to a concentration of
credit risk, consist of cash and cash equivalents and accounts receivable.
Envoy limits its exposure to credit risk associated with cash and

F-32

ENVOY I-CON, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

cash equivalents by placing its cash and cash equivalents with various high
credit quality financial institutions. Cash and cash equivalents consist of
deposits and money market funds. As of June 30, 2000, Envoy had accounts
receivable from four customers representing approximately 38% of accounts
receivable. Loss or non-performance by these significant customers could
adversely affect Envoy's financial position or results from operations.

(q) Unaudited Quarterly Information

The financial information for the six-month period ended June 30, 1999 is
unaudited. However, such information reflects all adjustments, consisting of
normal recurring adjustments, which are, in the opinion of management,
necessary for a fair presentation of the financial position, results of
operations and cash flows for the interim period.

(r) Net Loss Per Share

Envoy reports net loss per share in accordance with SFAS 128, Earnings Per
Share, and SEC Staff accounting Bulletin No. 98 (SAB 98), which requires the
presentation of both basic and diluted earnings per share. Basic earnings per
share is computed using the weighted average number of common shares
outstanding and diluted earnings per share is computed using the weighted
average number of common shares outstanding and dilutive potential common
shares assumed to be outstanding during the period using the treasury stock
method. The following weighted average potential common shares have been
excluded from the computation of diluted loss per share for the respective
periods as the effect would have been anti-dilutive:

June 30, 1998 Six months ended
(date of inception) Year ended June 30,
through December December 31, ---------------------
31, 1998 1999 1999 2000
------------------- ------------ ----------- ---------
(unaudited)

Shares issuable under
stock options and
warrants.............. -- 376,694 448,885 1,096,559
Shares of convertible
preferred stock on an
as-converted basis.... -- 305,337 -- 702,665

(3) Acquisition

Effective August 1, 1998, Envoy acquired certain assets of EGI related to
EGI's Internet conferencing business, for a $500,000 note payable. The
acquisition has been accounted for by the purchase method and accordingly, the
results of operations of EGI's Internet conferencing business have been
included in Envoy's consolidated financial statements from August 1, 1998. The
excess purchase price over the fair value of the net identifiable assets
acquired of $200,000 has been recorded as goodwill and is being amortized on a
straight-line basis over three years.

(4) Related Party Transactions

Certain directors, shareholders and executive officers of Envoy, and the
companies which they are associated, have various transactions with Envoy in
the ordinary course of business. The following is a summary of these related
transactions:

. Envoy engaged a financial advisor to raise funds, owned by two
shareholders of Envoy, in connection with preferred stock offering and
acquisition. Total fees of approximately $43,000, $115,000 and $581,000
were paid in 1998, 1999 and 2000, respectively.

. Envoy paid approximately $105,000 to a shareholder in his capacity as an
interim executive officer of Envoy during 1999. For the six-month period
ended June 30, 2000, Envoy paid approximately $57,000 to the same
shareholder for employment search fees.

F-33

ENVOY I-CON, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

. Envoy paid approximately $61,000 and $176,000 for the year ended December
31, 1999 and for the six months ended June 30, 2000, respectively, to an
employee and shareholder for services provided in development of Envoy's
web site.

. Envoy purchased telephone conferencing services from EGI in the amount of
approximately $33,000, $63,000 and $97,000 during the period from June 1,
1998 (date of inception) through December 31, 1998, year ended December
31, 1999 and the six months ended June 30, 2000, respectively.

(5) Property and Equipment

Property and equipment consist of the following:

December 31,
------------------- June 30,
1998 1999 2000
-------- --------- ---------

Computer equipment..................... $121,053 $ 447,466 $ 502,394
Software............................... 93,649 257,702 304,047
Furniture and fixtures................. 68,661 91,981 128,076
Equipment.............................. 20,579 25,046 45,808
Leasehold improvements................. 12,000 18,445 19,040
-------- --------- ---------
315,942 840,640 999,365
Less accumulated depreciation and
amortization.......................... (50,604) (226,267) (383,313)
-------- --------- ---------
Property and equipment, net.......... $265,338 $ 614,373 $ 616,052
======== ========= =========

(6) Line of Credit

Envoy has a line of credit which allows Envoy to borrow up to $500,000. The
line of credit bears interest at prime plus 3% (11.5% and 12.0% as of December
31, 1999 and June 30, 2000), expires October 31, 2000 and is secured by
accounts receivable, inventory, equipment and general tangible assets. Advances
under the line of credit are limited to 60% of eligible accounts receivable. As
of June 30, 2000, the bank had suspended the usage of the line of credit for a
minimum of 90 days pending financial review of the acquisition of Envoy by
PlaceWare. (See note 1.)

The line of credit also contains certain financial ratios, of which, Envoy
was not in compliance as of December 31, 1999 and June 30, 2000. The bank
elected to waive the covenant violation at December 31, 1999 and June 30, 2000.

(7) Notes Payable--Related Parties

Notes payable consists of the following:

December 31,
------------------ June 30,
1998 1999 2000
-------- --------- ---------

Note payable to EGI, 8% interest per year,
unsecured, see below.......................... $ -- $485,925 $505,688
Note payable to EGI, 12% interest, unsecured,
$15,000 plus accrued interest commencing July
15, 2000 and continuing for two months. Unpaid
balance plus accrued interest is due on
October 15, 2000.............................. -- 145,677 151,500
Note payable to EGI, 6.53% interest, unsecured,
$73,000 plus accrued interest due July 2000
with remaining principal and interest due
December 31, 2000............................. 500,000 110,473 145,890

F-34

ENVOY I-CON, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

December 31,
------------------- June 30,
1998 1999 2000
-------- ---------- ----------

Notes payable to certain former shareholders
and warrant holders, 8.69% interest, unsecured
with principal payments of $50,000 per
quarter, remaining outstanding balance due
December 31, 2000............................. -- 381,869 401,365
Notes payable to certain former shareholders
and warrant holders, unsecured, 10% interest
with principal and interest due December 31,
2000.......................................... -- -- 748,437
-------- ---------- ----------
Total notes payable.......................... 500,000 1,123,944 1,952,880
Less current portion........................... 36,500 536,926 1,447,192
-------- ---------- ----------
Notes payable, less current portion.......... $463,500 $ 587,018 $ 505,688
======== ========== ==========

According to the terms of the 8% note payable to EGI, the payment of
principal and interest is dependent on the settlement of a pending legal
proceeding between EGI and a third party. The terms of the note payable to EGI
require monthly principal and interest payments of approximately $14,000 on the
notes payable to EGI to commence upon settlement of the pending legal
proceeding until paid in full. Management believes the pending legal
proceedings will be resolved during the third quarter of 2001.

Future minimum principal payments as of June 30, 2000 are as follows:

Six months ending December 31:
2000.......................................................... $ 1,447,192
Year ending December 31:
2001.......................................................... 76,188
2002.......................................................... 161,802
2003.......................................................... 175,171
2004.......................................................... 92,527
-----------
$ 1,952,880
===========

(8) Shareholders' Equity

(a) Preferred Stock

Each holder of Series A preferred stock is entitled to vote on all matters
and entitled to that number of votes equal to the number of shares of common
stock into which the Series A preferred stock could be converted. Envoy must
obtain at least 75% of the outstanding Series A preferred stock shareholder
approval to, among other actions, 1) effect any sale outside the ordinary
course of business of a material amount of the assets of Envoy, 2) effect any
change in control transaction in which the shareholders will hold less than a
majority of the outstanding capital immediately subsequent to a merger,
acquisition or sale of new stock, 3) effect any public offering of Envoy's
stock, and 4) acquire assets, business or control of a company or business
where the cost would exceed $1.0 million, other than assets acquired in the
ordinary course of business.

Series A preferred stock is convertible, at the option of the holder and at
any time, into common stock at an initial ratio of one-for-one. The conversion
ratio is subject to adjustment from time to time for certain stock issuances,
adjustments for stock splits and dividends, combinations and other
distributions. As of June 30, 2000, the Series A preferred stock is convertible
into 746,392 shares of common stock. Envoy has reserved 746,392 shares of
authorized but unissued shares of common stock for purposes of effecting the
conversion.

Series A preferred stock shareholders are entitled to dividends at a rate of
7% per annum of the original issue price when and if declared by the board of
directors. Dividends are not cumulative.

F-35

ENVOY I-CON, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

Upon voluntary or involuntary dissolution, liquidation or winding up of
Envoy, the Series A preferred stock shareholders are entitled to receive first
$1.75 for each share of Series A preferred stock held by them, appropriately
adjusted for any stock dividend, split, combination or similar
recapitalization.

(b) Shareholders' Agreement

The preferred and common shareholders are subject to a shareholders'
agreement which provides, among other things, the restriction of the transfer
of shares.

As provided in the shareholders' agreement, Envoy has the right to buy back
from the shareholders shares of preferred and common stock prior to the
shareholders sale of the stock to a third party.

In connection with the acquisition of the Internet conferencing business
from EGI in 1998, Envoy issued warrants to acquire up to 315,970 shares of
common stock of Envoy to certain shareholders of EGI at an exercise price of
$0.06 per share. The warrants are exercisable immediately and expire five years
from date of issuance. The fair value of the warrants was approximately $15,000
based on a risk-free interest rate of 5.8%, the expected dividend yield of -0-
%, the contractual term of five years and 100% volatility. As of June 30, 2000,
warrants to acquire up to 315,970 shares of Envoy's common stock at $0.06 per
share are outstanding.

In connection with the bridge financing in April 2000, Envoy issued warrants
to acquire up to 161,430 shares of preferred stock of Envoy to the note holders
at an exercise price of $1.75 per share. The warrants are exercisable
immediately and expire three years from the date of issuance or upon the merger
or acquisition of Envoy. The fair value of the warrants was approximately
$15,000 based on a risk-free interest rate of 6.5%, the expected dividend yield
of -0-%, the contractual term of three years and 100% volatility. During the
six months ended June 30, 2000, warrants to acquire 42,858 shares of Envoy's
preferred stock at $1.75 per share were exercised and 118,572 expired
unexercised. As of June 30, 2000, no warrants to acquire Envoy's preferred
stock at $1.75 per share remain outstanding.

(d) Stock Option Plan

In 1999, Envoy adopted a stock option plan (the "Plan") pursuant to which
Envoy's Board of Directors may grant stock options to officers, key employees
and consultants. The Plan authorizes grants of options to purchase up to
1,700,000 shares of authorized but unissued common stock. Stock options are
generally granted with an exercise price equal to the stock's fair market value
at the date of grant. All stock options have ten year terms and generally vest
equally over a four year period from the date of grant.

Envoy applies APB Opinion No. 25 in accounting for its Plan and,
accordingly, no compensation cost has been recognized for its stock options
issued to employees at fair market value in the consolidated financial
statements. Had Envoy determined compensation cost based on the fair value at
the grant date for its stock options under SFAS 123, Envoy's net loss would
have been increased to the pro forma amount for the year ended December 31,
1999 and for the six months ended June 30, 2000 indicated below:

Year ended Six months
December ended June
31, 1999 30, 2000
----------- -----------

Net loss:
As reported...................................... $(1,141,204) $(1,983,644)
Pro forma........................................ $(1,291,204) $(2,093,644)

F-36

ENVOY I-CON, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

The fair value of compensation costs reflected in the above pro forma
amounts were determined using the Black-Scholes option pricing model and the
following weighted average assumptions for grants used in the calculation are
as follows:

1999 2000
------- -------

Risk-free interest rate.................................... 5.8% 6.5%
Expected dividend yield.................................... 0% 0%
Expected life.............................................. 5 years 5 years
Volatility................................................. 100% 100%

Under the Black-Scholes option pricing model, the weighted average fair
value of options granted during 1999 and 2000 was $.31 and $.57, respectively.

The following is a summary of stock option activity:

Weighted
average
Number of exercise
shares price
--------- --------

Options outstanding as of December 31, 1998.............. -- $ --
Granted.................................................. 2,099,500 .32
Canceled................................................. (679,500) .32
---------
Options outstanding as of December 31, 1999.............. 1,420,000 .32
Granted.................................................. 381,250 .73
Exercised................................................ (299,183) .25
Canceled................................................. (185,530) .43
---------
Options outstanding as of June 30, 2000.................. 1,316,537 $.44
=========

Options outstanding Options exercisable
-------------------------------------------------- -----------------------------
Number
Number Weighted average Exerciseable
Range of outstanding remaining Weighted average at June Weighted average
exercise prices at June 30, 2000 contractual life exercise price 30, 2000 exercise price
--------------- ---------------- ---------------- ---------------- ------------ ----------------

$ .25- .49 670,619 9.02 $.25 576,867 $.25
.50- .99 559,918 9.44 .50 275,140 .51
1.00-1.50 86,000 9.86 1.50 -- --
---------- --------- ---- ---- ------- ----
$ .25-1.50 1,316,537 9.25 $.44 852,007 $.34
========= =======

As of June 30, 2000, 197,933 shares were available for grant. Envoy has
recorded deferred stock compensation of $208,903 through June 30, 2000. This
deferred stock compensation is based on the difference between the deemed fair
market value of common stock and the exercise price of the option on stock on
the grant date. Deferred stock compensation is being amortized on an
accelerated basis over the vesting period consistent with the method described
in FASB Interpretation No. 28. Envoy recognized compensation expense of
$146,151 and $62,752 for the year ended December 31, 1999 and the six months
ended June 30, 2000, respectively.

F-37

ENVOY I-CON, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

(9) Income Taxes

Envoy incurred a loss for both financial reporting and tax return purposes
for all periods presented and, as such, there was no current or deferred tax
provision.

The significant differences between the U.S. federal statutory rate and
Envoy's effective tax rate for financial statement purposes are as follows:

June 30, 1998
(date of inception) Six months
through Year ended ended
December 31, December 31, June 30,
1998 1999 2000
------------------- ------------ ----------

Computed "expected" income tax
benefit........................... (34)% (34)% (34)%
Increases (decreases) resulting
from:
State income taxes, net of
federal tax benefit............. (4) (4) (4)
Increase in valuation allowance.. 38 39 35
Other............................ -- (1) 3
--- --- ---
Actual tax expense................. -- % -- % -- %
=== === ===

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liability are
approximately as follows:

December 31,
-------------------- June 30,
1998 1999 2000
--------- --------- -----------

Deferred tax assets:
Federal and state operating loss
carryforwards............................ $ 83,900 $ 395,400 $ 722,000
Capital loss carry forward................ -- -- 400,000
Accrued expenses and allowances........... 25,600 33,800 49,000
Amortization of intangible assets......... -- 38,000 47,000
Deferred compensation..................... -- 56,000 76,000
--------- --------- -----------
Total gross deferred tax assets......... 109,500 523,200 1,294,000
Less valuation allowance.................. (102,000) (523,200) (1,294,000)
--------- --------- -----------
7,500 -- --
Deferred tax liability:
Depreciation.............................. (7,500) -- --
--------- --------- -----------
Net deferred tax assets................. $ -- $ -- $ --
========= ========= ===========

The total valuation allowance for deferred tax assets as of June 30, 1998
was $-0-. The net change in the total valuation allowance for the years ended
December 31, 1998 and 1999 and for the six months ended June 30, 2000 was an
increase of $102,000, $421,200 and $770,800, respectively.

At June 30, 2000, Envoy has federal and state operating and capital loss
carryforwards of approximately $1,881,000 and $1,000,000, respectively. These
carryforwards will expire between 2013 and 2020 if not used by the Company to
reduce income taxes payable in future periods.

(10) Leases

Envoy has entered into various capital leases for certain machinery and
equipment that expire at various dates during the next four years. As of
December 31, 1999 and June 30, 2000, the gross amount of equipment under
capital leases was $173,164 and $226,576. Related accumulated amortization
recorded under capital leases was $18,142 and $41,183, respectively. There were
no capital leases as of December 31, 1998. Amortization of assets held under
capital leases is included with depreciation expense.

F-38

ENVOY I-CON, INC.

NOTES TO FINANCIAL STATEMENTS--(Continued)

Envoy also has a noncancelable operating lease payable to EGI for office
space. The office lease expires in September 2000 and requires Envoy to pay all
executory costs such as maintenance and insurance. Rent expense for this
operating lease for the period from June 30, 1998, the year ended December 31,
1999 and for the six months ended June 30, 2000 was approximately $30,000,
$90,000 and $54,000, respectively.

Future minimum lease payments under noncancelable operating lease and
capital leases are as of June 30, 2000 are as follows:

Capital Operating
leases lease
-------- ---------

Six months ending December 31:
2000.................................................. $ 49,324 $26,922
Year ending December 31:
2001.................................................. 87,555 --
2002.................................................. 58,500 --
2003.................................................. 9,383 --
-------- -------
Total minimum lease payments............................ 204,762 $26,922
=======
Less amount representing interest (at rates ranging from
7.0% to 10.5%) ........................................ 27,888
--------
Present value of net minimum capital lease payments..... 176,874
Less current portion of obligations under capital
leases................................................. 75,776
--------
Obligation under capital leases, less current portion... $101,098
========

(11) Segment Information

In accordance with SFAS 131, Disclosures about Segments of an Enterprise and
Related Information, Envoy has identified a single operating segment: Providing
application solutions for internet conferencing.

Revenues for significant customers, those representing approximately 10% or
more of total revenues for the periods presented, are summarized as follows:

June 30,
1998 (date
of
inception) Six months
through Year ended ended
December 31, December 31, June 30,
1998 1999 2000
------------ ------------ ----------

PlaceWare............................... -- 24.4% 18.0%
Customer A.............................. -- 11.4% 22.4%
Customer B.............................. 17.8% -- --
Customer C.............................. 15.9% -- --
Customer D.............................. 12.8% -- --
Customer E.............................. 11.7% -- --

(12) Sale of Subsidiary

On June 30, 2000, immediately preceding the sale of the preferred and common
stock of Envoy to PlaceWare (see note 1), Envoy sold 100% of the issued and
outstanding common stock of its wholly-owned subsidiary EGI to a former
shareholder of Envoy for $100. Envoy realized a loss on this transaction of
approximately $926,000 which is included in general and administrative expense
for the six months ended June 30, 2000. See note 2(a).

F-39

INTRODUCTION TO UNAUDITED PRO FORMA COMBINED
CONDENSED STATEMENTS OF OPERATIONS

The following unaudited pro forma combined condensed statements of
operations are presented for illustrative purposes only and are not necessarily
indicative of the results of operations for future periods or the results of
operations that actually would have been realized had PlaceWare and Envoy been
a combined company during the specific periods. The unaudited pro forma
combined condensed statements of operations, including the related notes, are
qualified in their entirety by reference to, and should be read in conjunction
with, the historical financial statements and related notes thereto, of
PlaceWare and Envoy, included elsewhere in this filing. The following unaudited
pro forma combined condensed statements of operations give effect to the
acquisition of Envoy by PlaceWare using the purchase method of accounting. The
unaudited pro forma combined condensed statements of operations are based on
the respective historical audited and unaudited statements of operations and
related notes of PlaceWare and Envoy.

The pro forma adjustments are preliminary and based on management's
estimates of the value of the tangible and intangible assets acquired. The
actual adjustments may differ materially from those presented in these pro
forma statements of operations. A change in the pro forma adjustments would
result in a reallocation of the purchase price affecting the value assigned to
the long-term tangible and intangible assets or, in some circumstances,
resulting in a charge to the statements of operations. The effect of these
changes on the statements of operations will depend on the nature and amounts
of the assets and liabilities adjusted.

The unaudited pro forma combined condensed statements of operations assume
the acquisitions took place on January 1, 1999 and combine PlaceWare's audited
consolidated statement of operations for the year ended December 31, 1999, with
Envoy's audited statement of operations for the year ended December 31, 1999,
and PlaceWare's unaudited consolidated statement of operations for the six
months ended June 30, 2000 with Envoy's audited statement of operations for the
six months ended June 30, 2000.

F-40

PLACEWARE, INC. AND SUBSIDIARY

UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS
Year Ended December 31, 1999

(in thousands, except per share data)

Historical Pro Forma
------------------ ----------------------
PlaceWare Envoy Adjustments Combined
--------- ------- ----------- --------

Revenue:
Hosting and services............ $ 2,433 $ 2,615 $ (791)(a) $ 4,257
Licensing....................... 1,962 -- 1,962
-------- ------- ------- --------
Total revenues................ 4,395 2,615 (791) 6,219
-------- ------- ------- --------
Operating expenses:
Cost of hosting and services.... 806 711 (791)(a) 726
Operations...................... 619 695 1,314
Sales and marketing............. 8,410 1,195 9,605
Research and development........ 2,778 298 3,076
General and administrative...... 2,900 731 3,631
Amortization of goodwill and
intangibles.................... -- 66 2,339 (b) 2,339
(66)(c)
-------- ------- ------- --------
Total operating expenses...... 15,513 3,696 1,482 20,691
-------- ------- ------- --------
Operating loss................ (11,118) (1,081) (2,273) (14,472)
-------- ------- ------- --------
Other income (expense):
Interest income................. 309 -- 309
Interest expense................ (109) (72) (181)
Other income, net............... -- 12 12
-------- ------- ------- --------
Total other income (expense).. 200 (60) 140
-------- ------- ------- --------
Net loss...................... $(10,918) $(1,141) $(2,273) $(14,332)
======== ======= ======= ========
Basic and diluted net loss per
share............................ $ (6.41) $ (5.02)
======== ========
Shares used to compute basic and
diluted net loss per share....... 1,704 1,151 (d) 2,855
======== ======= ========

F-41

PLACEWARE INC. AND SUBSIDIARY

UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS
Six Months Ended June 30, 2000

(in thousands, except per share data)

Historical Pro Forma
------------------ ----------------------
PlaceWare Envoy Adjustments Combined
--------- ------- ----------- --------

Revenue:
Hosting and services............ $ 4,963 $ 3,252 $ (833)(a) $ 7,382
Licensing....................... 1,681 -- 1,681
-------- ------- ------ --------
Total revenues................ 6,644 3,252 (833) 9,063
-------- ------- ------ --------
Operating expenses:
Cost of hosting and services.... 1,742 860 (833)(a) 1,769
Operations...................... 3,120 621 3,741
Sales and marketing............. 11,387 804 12,191
Research and development........ 2,826 99 2,925
General and administrative...... 2,206 2,722 (1,937)(e) 2,991
Amortization of goodwill and
intangibles.................... -- 33 1,097 (b) 1,097
(33)(c)
-------- ------- ------ --------
Total operating expenses...... 21,281 5,139 (1,706) 24,714
-------- ------- ------ --------
Operating loss................ (14,637) (1,887) 873 (15,651)
-------- ------- ------ --------
Other income (expense):
Interest income................. 309 4 313
Interest expense................ (76) (100) (176)
Other income, net............... (32) (1) (33)
-------- ------- ------ --------
Total other income (expense).. 201 (97) 104
-------- ------- ------ --------
Net loss...................... $(14,436) $(1,984) $ 873 $(15,547)
======== ======= ====== ========
Basic and diluted net loss per
share............................ $ (5.98) $ (4.37)
======== ========
Shares used to compute basic and
diluted net loss per share....... 2,415 1,140 (d) 3,555
======== ====== ========

F-42

PLACEWARE INC. AND SUBSIDIARY

NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED STATEMENTS OF OPERATIONS

(1) UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS

In June 2000, the Company completed the acquisition of certain assets of
Envoy i-Con, Inc., a privately held application service provider of Internet
conferencing. The Company issued 116,789 shares of Series D preferred stock and
1,034,473 shares of common stock (of which 23,358 and 206,895 shares,
respectively are to be held in escrow and become payable one year following the
closing, contingent on compliance with the terms of the Merger Agreement) in
exchange for all the outstanding shares of preferred and common stock of Envoy
and assumed all outstanding warrants and stock options of Envoy.

The pro forma combined condensed statements of operations give effect to the
acquisitions as if they had occurred on January 1, 1999, and reflect
reclassifications of Envoy's operating expense categories to reflect the
classification policies of PlaceWare.

The following adjustments have been reflected in the unaudited pro forma
combined condensed statements of operations (in thousands):

(a) Adjustment to reflect elimination of intercompany transactions between
PlaceWare and Envoy.

(b) Adjustment to record the amortization of goodwill and intangible assets
resulting from the preliminary allocation of the Envoy purchase price
calculated as follows (in thousands):

Amortization
-----------------------
Six Months
Year Ended Ended
Estimated December 31, June 30,
Value Useful Life 1999 2000
------ ----------- ------------ ----------

Developed technology.............. $ 302 3 years $ 101 $ 50
Assembled workforce............... 453 3 years 151 75
Product discount.................. 145 1 years 145 --
Customer base..................... 1,375 3 years 458 229
Goodwill.......................... 4,451 3 years 1,484 742
------ ------ ------
Total........................... $6,726 $2,339 $1,096
====== ====== ======

(c) Adjustment to reverse the amortization of goodwill recorded by Envoy
during the year ended December 31, 1999, and the six-month period ended June
30, 2000.

(d) To reflect the shares of common stock and shares of Series D preferred
stock issued as consideration for the acquisition on an "as if converted"
basis.

(e) Adjustment to reverse transaction costs incurred as a direct result of
the acquisition of Envoy by Placeware, including professional fees, totalling
$1,011,000, and the loss on sale of investment in subsidiary, a non recurring
charge, of $926,000.

F-43

The words "A PlaceWare Web Conference" appear at the top. A screen shot of
the PlaceWare presenter console with the words "Presenter View" appear below
the title. Below the presenter console is an arrow pointing down to a screen
shot of the PlaceWare audience console with the words "Audience view" below the
screen shot. The words "Show interactive visual content in real time" and a
bulleted list below it with the words "Powerpoint Presentations", "Application
Sharing", "Web Tours", White boards", "Text Slides", "SnapShots", "Polling
Slides", "Real time Annotations", "Moderated Q&A", "Audience Chat", and
"Seating Chart" appear to the right of the screen shots in a bulleted list. In
the background the words "sales training", "new product launches", "investor
relations", "customer seminars", "press/analyst briefings", "customer
communications", "customer education", "town hall meetings", "sales meetings",
"user groups/market research", "sales training", "employee meetings", and
"channel communications".

[PLACEWARE LOGO APPEARS HERE]

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

The following table sets forth all expenses, other than the underwriting
discounts and commissions, payable by the Registrant in connection with the
sale of the securities being registered. All amounts shown are estimates except
for the SEC registration fee and the NASD filing fee.

SEC registration fee............................................. $ 21,708
NASD filing fee.................................................. 9,355
NASDAQ National Market Fees...................................... 95,000
Blue Sky qualification fees and expenses......................... 10,000
Printing and engraving expenses.................................. 200,000
Accountant's fees and expenses................................... 450,000
Legal fees and expenses.......................................... 600,000
Transfer agent and registrar fees................................ 10,000
Miscellaneous.................................................... 103,937
----------
Total.......................................................... $1,500,000
==========

Item 14. Indemnification of Directors and Officers.

Section 145 of the Delaware General Corporation Law permits a corporation to
include in its charter documents, and in agreements between the corporation and
its directors and officers, provisions expanding the scope of indemnification
beyond that specifically provided by the current law.

Article VI of the Registrant's Amended and Restated Certificate of
Incorporation provides for the indemnification of directors to the fullest
extent permissible under Delaware law.

Article XI of the Registrant's Amended and Restated Bylaws provides for the
indemnification of officers, directors and third parties acting on behalf of
the Registrant if such person acted in good faith and in a manner reasonably
believed to be in and not opposed to the best interest of the Registrant, and,
with respect to any criminal action or proceeding, the indemnified party had no
reason to believe his or her conduct was unlawful.

The Registrant has entered into indemnification agreements with its
directors and executive officers, in addition to indemnification provided for
in the Registrant's Bylaws, and intends to enter into indemnification
agreements with any new directors and executive officers in the future.

Item 15. Recent Sales of Unregistered Securities.

(a) Since February 1997, the Registrant has issued and sold (without payment
of any selling commission to any person) the following unregistered securities:

(1) In July 2000, the Registrant issued and sold shares of its Series D
Preferred Stock convertible into an aggregate of 5,380,000 shares of common
stock to a total of 10 investors for an aggregate purchase price of
$26,900,000.

(2) In June 2000, the Registrant issued 1,034,473 shares of common stock
and 116,789 shares of Series D preferred stock to a total of 56 individuals
in connection with the Registrant's acquisition of Envoy i-Con, Inc.

(3) In September and November 1999, the Registrant issued and sold
shares of its Series C Preferred Stock convertible into an aggregate of
4,954,785 shares of common stock to a total of 30 investors for an
aggregate purchase price of $18,828,183.

II-1

(4) In April 1997, May and June 1998, and April 1999 the Registrant
issued and sold shares of its Series B Preferred Stock convertible into an
aggregate of 5,120,000 shares of common stock to a total of 40 investors
for an aggregate purchase price of $10,240,000.

(5) In April 1998, the Registrant issued and sold 112,500 shares of
restricted common stock to Barry James Folsom for an aggregate purchase
price of $22,500.

(6) In May 1998, the Registrant issued and sold 11,000 shares of
restricted common stock to Jeffrey Rudy for an aggregate purchase price of
$2,200.

(7) In May 1998, the Registrant issued and sold 8,550 shares of
restricted common stock to Stephen Saperstein for an aggregate purchase
price of $1,710.

(8) As of June 30, 2000, 2,841,155 shares of common stock had been
issued upon exercise of options or pursuant to restricted stock purchase
agreements, 1,706,862 shares of common stock were issuable upon exercise of
outstanding options under the Registrant's 1997 Stock Plan and 174,848
shares of common stock were issuable upon exercise of outstanding options
assumed under Envoy i-Con, Inc.'s 1997 stock incentive compensation plan.

(b) There were no underwritten offerings employed in connection with any of
the transactions set forth in Item 15(a).

The issuances described in Items 15(a)(1), 15(a)(2), (15)(a)(3), 15(a)(4),
15(a)(5), (15)(a)(6) and 15(a)(7) were deemed to be exempt from registration
under the Securities Act in reliance upon Section 4(2) thereof as transactions
by an issuer not involving any public offering. The issuances described in Item
15(a)(8) were deemed to be exempt from registration under the Securities Act in
reliance upon Rule 701 promulgated thereunder in that they were offered and
sold either pursuant to written compensatory benefit plans or pursuant to a
written contract relating to compensation, as provided by Rule 701. In
addition, such issuances were deemed to be exempt from registration under
Section (4)(2) of the Securities Act as transactions by an issuer not involving
any public offering. The recipients of securities in each such transaction
represented their intentions to acquire the securities for investment only and
not with a view to or for sale in connection with any distribution thereof and
appropriate legends were affixed to the securities issued in such transactions.
All recipients had adequate access, through their relationships with the
Company, to information about the Registrant.

Item 16. Exhibits and Financial Statement Schedules.

(a) Exhibits.

Exhibit Sequential
Number Description of Document Page No.
------- ----------------------- ----------

1.1 Form of Underwriting Agreement**
2.1 Agreement and Plan of Merger and Reorganization between
Registrant, Envoy i-Con Inc., certain key Envoy
shareholders and agents for Envoy's shareholders, dated
June 16, 2000
3.1 Restated Certificate of Incorporation of PlaceWare, dated
June 30, 2000
3.2 Form of Amended and Restated Certificate of Incorporation
of the Registrant to be filed promptly after the closing
of the offering*
3.3 Bylaws of the Registrant as currently in effect*
3.4 Bylaws of the Registrant to be in effect after the
closing of the offering*
4.1 Specimen Common Stock Certificate*
4.2 Fourth Amended and Restated Investor Rights Agreement
5.1 Opinion of Cooley Godward LLP*
10.1 Executive Severance Benefit Plan*
10.2 2000 Equity Incentive Plan*
10.3 2000 Non Employee Directors' Stock Option Plan*
10.4 2000 Employee Stock Purchase Plan*
10.5 Offer letter to Barry James Folsom, as amended*
10.6 Offer letter to Kevin R. Evans, as amended*
10.7 Sublease between Registrant and Proxim, Inc. dated August
23, 1999*

II-2

Exhibit Sequential
Number Description of Document Page No.
------- ----------------------- ----------

10.8 Software License and Technology Agreement between
Registrant and Xerox Corporation dated November 25, 1996*
10.9 Master Lease Agreement between Registrant and Comdisco,
Inc. dated September 30, 1997 and related documents*
10.10 Loan and Security Agreement between Registrant and
Silicon Valley Bank dated March 11, 1999 and related
documents*
10.11 Master Lease Agreement between Registrant and Linc
Capital, Inc. dated May 3, 1999 and related documents*
10.12 Internet Services and Products Agreement between
Registrant and Exodus Communications, Inc. dated November
27, 1996 and related documents*
21.1 Subsidiaries of the Registrant
23.1 Consent of KPMG LLP, Independent Auditors
23.2 Consent of KPMG LLP, Independent Auditors
23.3 Consent of Counsel (see Exhibit 5.1)*
24.1 Power of Attorney (see page II-4)*
27.1 Financial Data Schedules

- --------
* Previously filed

** To be filed by amendment

(b) Financial Statement Schedules.

Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.

Item 17. Undertakings.

The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreement, certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

II-3

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-1 and has duly caused this amendment to the
Registration Statement to be signed on its behalf by the undersigned,
thereunto, duly authorized, in the City of Mountain View, California, on July
20, 2000.

PLACEWARE, INC.

Barry James Folsom*
By: _________________________________
Barry James Folsom
President and Chief Executive
Officer

Pursuant to the requirements of the Securities Act of 1933, this amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

Signature Title Date
--------- ----- ----

Barry James Folsom* President, Chief Executive July 20, 2000
____________________________________ Officer and Director
Barry James Folsom

/s/ Kevin R. Evans Chief Financial Officer and July 20, 2000
____________________________________ Secretary
Kevin R. Evans

J. Phillip Samper* Chairman of the Board of July 20, 2000
____________________________________ Directors
J. Phillip Samper

Lon H. H. Chow* Director July 20, 2000
____________________________________
Lon H. H. Chow

Philip T. Gianos* Director July 20, 2000
____________________________________
Philip T. Gianos

Domenic J. LaCava* Director July 20, 2000
____________________________________
Domenic J. LaCava

Richard P. Magnuson* Director July 20, 2000
____________________________________
Richard P. Magnuson

Rory T. O'Driscoll* Director July 20, 2000
____________________________________
Rory T. O'Driscoll

/s/ Kevin R. Evans
*By: _______________________________
Kevin R. Evans
Attorney-in-fact

II-4

EXHIBIT INDEX

Exhibit Sequential
Number Description of Document Page No.
------- ----------------------- ----------

1.1 Form of Underwriting Agreement**
2.1 Agreement and Plan of Merger and Reorganization between
Registrant, Envoy i-Con, Inc., certain key Envoy
shareholders and agents for Envoy's shareholders, dated
June 16, 2000.
3.1 Restated Certificate of Incorporation of PlaceWare, dated
June 30, 2000
3.2 Form of Amended and Restated Certificate of Incorporation
of the Registrant to be filed promptly after the closing
of the offering*
3.3 Bylaws of the Registrant as currently in effect*
3.4 Bylaws of the Registrant to be in effect after the
closing of the offering*
4.1 Specimen Common Stock Certificate*
4.2 Fourth Amended and Restated Investor Rights Agreement
5.1 Opinion of Cooley Godward LLP*
10.1 Executive Severance Benefit Plan*
10.2 2000 Equity Incentive Plan*
10.3 2000 Non Employee Directors' Stock Option Plan*
10.4 2000 Employee Stock Purchase Plan*
10.5 Offer letter to Barry James Folsom, as amended*
10.6 Offer letter to Kevin R. Evans, as amended*
10.7 Sublease between Registrant and Proxim, Inc. dated August
23, 1999*
10.8 Software License and Technology Agreement between
Registrant and Xerox Corporation dated November 25, 1996*
10.9 Master Lease Agreement between Registrant and Comdisco,
Inc. dated September 30, 1997 and related documents*
10.10 Loan and Security Agreement between Registrant and
Silicon Valley Bank dated March 11, 1999 and related
documents*
10.11 Master Lease Agreement between Registrant and Linc
Capital, Inc. dated May 3, 1999 and related documents*
10.12 Internet Services and Products Agreement between
Registrant and Exodus Communications, Inc. dated November
27, 1996 and related documents*
21.1 Subsidiaries of the Registrant
23.1 Consent of KPMG LLP, Independent Auditors
23.2 Consent of KPMG LLP, Independent Auditors
23.3 Consent of Counsel (see Exhibit 5.1)*
24.1 Power of Attorney (see page II-4)*
27.1 Financial Data Schedules

- --------
* Previously filed
** To be filed by amendment