<SUBMISSION>
<ACCESSION-NUMBER>0001012870-00-000801
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>2
<PERIOD>20000102
<FILING-DATE>20000215
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>EXTREME NETWORKS INC
<CIK>0001078271
<ASSIGNED-SIC>3576
<IRS-NUMBER>770430270
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>0630
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>000-25711
<FILM-NUMBER>546267
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>10460 BANDLEY DRIVE
<CITY>CUPERTINO
<STATE>CA
<ZIP>95014-1972
<PHONE>4083420999
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>10460 BANDLEY DR
<CITY>CUPERTINO
<STATE>CA
<ZIP>95014-1972
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<DESCRIPTION>FORM 10-Q PERIOD ENDING 1/2/00
<TEXT>

<HTML>
<HEAD>
 <TITLE>FORM 10-Q PERIOD ENDING 1/2/00</TITLE>
</HEAD>
<BODY BGCOLOR="#FFFFFF">
 <P>
 <A NAME="TopOfPage"> </A>
 <FONT SIZE="2"></FONT></P>
 <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="2"><P>&nbsp; </P>
 <P ALIGN=left> <DIV ALIGN="center"><B><FONT SIZE="+2">UNITED STATES SECURITIES
   AND EXCHANGE COMMISSION
 <BR>
 </FONT></B><B>Washington, D. C. 20549</B></DIV>
 <P ALIGN="center"> <B><FONT SIZE="+2">Form 10-Q </FONT></B></P>
 <P>(Mark One) </P>
 <TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
  <TR>
   <TD WIDTH="4%" VALIGN="top"><U>X </U></TD>
   <TD WIDTH="96%">QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES
   <BR>
   EXCHANGE ACT OF 1934 </TD>
  </TR>
 </TABLE>
 <P>For the quarter ended January 2, 2000 OR</P>
 <TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
  <TR>
   <TD WIDTH="4%" VALIGN="top">[_]</TD>
   <TD WIDTH="96%"> TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES
   <BR>
   EXCHANGE ACT OF 1934</TD>
  </TR>
 </TABLE>
 <P> For the transition period from __________ to __________ </P>
 <P ALIGN=CENTER>Commission file number 000-25711</P>
 <P ALIGN="center"><B><FONT SIZE="+2">EXTREME NETWORKS, INC.
 <BR>
 </FONT></B><B>(Exact name of Registrant as specified in its charter)</B></P>
 <TABLE WIDTH="98%" BORDER="0" CELLSPACING="0" CELLPADDING="0">
  <TR VALIGN="bottom" ALIGN="center">
   <TD WIDTH="39%" HEIGHT="48"> DELAWARE <HR NOSHADE ALIGN="center"
     WIDTH="100%" SIZE="1"> </TD>
   <TD WIDTH="20%" HEIGHT="48"> <DIV ALIGN="center"></DIV>
   </TD>
   <TD WIDTH="41%" HEIGHT="48"> 77-0430270 <HR NOSHADE ALIGN="center"
     WIDTH="100%" SIZE="1"> </TD>
  </TR>
  <TR>
   <TD WIDTH="39%"> <DIV ALIGN="center">[State or other jurisdiction
   <BR>
   of incorporation or organization] </DIV>
   </TD>
   <TD WIDTH="20%">&nbsp;</TD>
   <TD WIDTH="41%" VALIGN="top"> <DIV ALIGN="center">[I.R.S. Employer
     Identification No.]</DIV>
   </TD>
  </TR>
  <TR>
   <TD WIDTH="39%">&nbsp;</TD>
   <TD WIDTH="20%">&nbsp;</TD>
   <TD WIDTH="41%">&nbsp;</TD>
  </TR>
 </TABLE>
 <P ALIGN="center">&nbsp;</P>
 <TABLE WIDTH="98%" BORDER="0" CELLSPACING="0" CELLPADDING="0">
  <TR ALIGN="center">
   <TD WIDTH="39%" HEIGHT="52" VALIGN="bottom"> 3585 Monroe Street
   <BR>
   Santa Clara, California <HR NOSHADE ALIGN="center" WIDTH="100%" SIZE="1">
     </TD>
   <TD WIDTH="20%" HEIGHT="52"> <DIV ALIGN="center"></DIV>
   </TD>
   <TD WIDTH="41%" HEIGHT="52" VALIGN="bottom"> 95051 <HR NOSHADE
     ALIGN="center" WIDTH="100%" SIZE="1"> </TD>
  </TR>
  <TR>
   <TD WIDTH="39%" NOWRAP> <DIV ALIGN="center">[Address of principal executive
     offices]</DIV>
   </TD>
   <TD WIDTH="20%">&nbsp;</TD>
   <TD WIDTH="41%"> <DIV ALIGN="center">[Zip Code]</DIV>
   </TD>
  </TR>
  <TR>
   <TD WIDTH="39%">&nbsp;</TD>
   <TD WIDTH="20%">&nbsp;</TD>
   <TD WIDTH="41%">&nbsp;</TD>
  </TR>
 </TABLE>
 <P ALIGN="center"><B><FONT SIZE="+2"> </FONT></B></P>
 <P ALIGN="center"> Registrant's telephone number, including area code: (408)
   579-2800 </P>
 <P>Indicate by check mark whether the Registrant (1) has filed all reports
   required to be filed by Section 13 or 15(d) of the Securities Exchange Act
   of 1934 during the preceding 12 months (or for such shorter period that the
   Registrant was required to file such reports), and (2) has been subject to
   such filing requirements for the past 90 days.</P>
 <P ALIGN="center">Yes&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U> X</U>&nbsp;&nbsp;&nbsp;
   &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; No <P ALIGN="center">&nbsp;&nbsp;&nbsp;&nbsp;
   &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The number of shares of the Registrant
   &#146;s Common Stock, $.001 par value,
 <BR>
 outstanding at February 1, 2000 was 52,664,391.</P>
 <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="2"> <P></P>
 <P></P>
 <P ALIGN="CENTER"><FONT FACE="Times">EXTREME NETWORKS, INC.
 <BR>
 </FONT><FONT FACE="Times">FORM 10-Q
 <BR>
 </FONT><FONT FACE="Times">QUARTERLY PERIOD ENDED JANUARY 2, 2000</FONT></P>
 <P ALIGN="CENTER"><B><FONT FACE="Times">INDEX</FONT></B></P>
 <P>
 <TABLE WIDTH="652" CELLPADDING="0" CELLSPACING="0" ALIGN="center">
  <TR>
   <TD VALIGN="TOP" COLSPAN="2">&nbsp;</TD>
   <TD VALIGN="TOP" WIDTH="123"> <P ALIGN="CENTER"><FONT
     FACE="Times">PAGE</FONT></P>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="TOP" COLSPAN="2">&#160; </TD>
   <TD VALIGN="TOP" WIDTH="123">&#160; </TD>
  </TR>
  <TR>
   <TD VALIGN="TOP" COLSPAN="3"> <FONT FACE="Times">PART I. CONDENSED
     CONSOLIDATED FINANCIAL INFORMATION</FONT> &#160; </TD>
  </TR>
  <TR>
   <TD VALIGN="TOP" WIDTH="46">&#160; </TD>
   <TD VALIGN="TOP" WIDTH="464" NOWRAP>&nbsp;</TD>
   <TD VALIGN="TOP" WIDTH="123" ALIGN="left"> <DIV ALIGN="center">&#160; </DIV>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="TOP" WIDTH="46" HEIGHT="20"> <P><FONT FACE="Times">Item 1.
     </FONT></P>
   </TD>
   <TD VALIGN="TOP" WIDTH="464" HEIGHT="20" NOWRAP><FONT FACE="Times">Condensed
     Consolidated Financial Statements (Unaudited):</FONT></TD>
   <TD VALIGN="TOP" WIDTH="123" ALIGN="left" HEIGHT="20"> <DIV ALIGN="center">
     &#160; </DIV>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="TOP" WIDTH="46" HEIGHT="18"> <TD VALIGN="TOP" WIDTH="464"
     HEIGHT="18" NOWRAP><FONT FACE="Times"> </FONT></TD>
  <TD HEIGHT="18" WIDTH="123">&nbsp; </TR>
  <TR>
   <TD VALIGN="TOP" WIDTH="46">&nbsp; </TD>
   <TD VALIGN="TOP" WIDTH="464" NOWRAP> <P><FONT FACE="Times">
   <A HREF="#ltx3">Condensed Consolidated Balance Sheets
   <BR>
   December 31, 1999 and June 30, 1999</A>
   </FONT></P>
   </TD>
   <TD VALIGN="bottom" WIDTH="123" ALIGN="left"> <P ALIGN="center"><FONT
     FACE="Times">3</FONT></P>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="TOP" WIDTH="46"> <P>&nbsp;</P>
   </TD>
   <TD VALIGN="TOP" WIDTH="464" NOWRAP><FONT FACE="Times"> </FONT></TD>
   <TD VALIGN="bottom" WIDTH="123" ALIGN="left"> <DIV ALIGN="center"></DIV>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="TOP" WIDTH="46"> <P>&nbsp;</P>
   </TD>
   <TD VALIGN="TOP" WIDTH="464" NOWRAP><FONT FACE="Times">
   <A HREF="#ltx4">Condensed Consolidated Statements of Operations
   <BR>
   Three months ended and six months ended
   <BR>
   December 31, 1999 and December 31, 1998</A>
   </FONT></TD>
   <TD VALIGN="bottom" WIDTH="123" ALIGN="left"> <P ALIGN="center"><FONT
     FACE="Times">4</FONT></P>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="TOP" WIDTH="46">&nbsp; </TD>
   <TD VALIGN="TOP" WIDTH="464" NOWRAP> <P><FONT FACE="Times"> </FONT></P>
   </TD>
   <TD VALIGN="bottom" WIDTH="123" ALIGN="left"> <DIV ALIGN="center">&#160;
     </DIV>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="TOP" WIDTH="46">&nbsp; </TD>
   <TD VALIGN="TOP" WIDTH="464" NOWRAP> <P><FONT FACE="Times">
   <A HREF="#ltx5">Condensed Consolidated Statements of Cash Flows
   <BR>
   Six months ended December 31, 1999 and December 31, 1998</A>
   </FONT></P>
   </TD>
   <TD VALIGN="bottom" WIDTH="123" ALIGN="left"> <P ALIGN="center"><FONT
     FACE="Times">5</FONT></P>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="TOP" WIDTH="46">&#160; </TD>
   <TD VALIGN="TOP" WIDTH="464" NOWRAP>&nbsp;</TD>
   <TD VALIGN="bottom" WIDTH="123" ALIGN="left"> <DIV ALIGN="center">&#160;
     </DIV>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="TOP" WIDTH="46" HEIGHT="21">&nbsp; </TD>
   <TD VALIGN="TOP" WIDTH="464" NOWRAP HEIGHT="21"> <P><FONT FACE="Times">
   <A HREF="#ltx6">Notes to Unaudited Condensed Consolidated Financial
     Statements</A>
   </FONT></P>
   </TD>
   <TD VALIGN="bottom" WIDTH="123" ALIGN="left" HEIGHT="21"> <P
     ALIGN="center"><FONT FACE="Times">6</FONT></P>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="TOP" WIDTH="46">&#160; </TD>
   <TD VALIGN="TOP" WIDTH="464" NOWRAP>&nbsp;</TD>
   <TD VALIGN="bottom" WIDTH="123" ALIGN="left"> <DIV ALIGN="center">&#160;
     </DIV>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="TOP" WIDTH="46"> <P><FONT FACE="Times">Item 2. </FONT></P>
   </TD>
   <TD VALIGN="TOP" WIDTH="464" NOWRAP><FONT FACE="Times">
   <A HREF="#ltx11">Management's Discussion and Analysis of Financial Condition
     and Results of Operations</A>
   </FONT></TD>
   <TD VALIGN="bottom" WIDTH="123" ALIGN="left"> <DIV ALIGN="center"><FONT
     FACE="Times">11</FONT></DIV>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="TOP" WIDTH="46"> <P><FONT FACE="Times"> </FONT></P>
   </TD>
   <TD VALIGN="TOP" WIDTH="464" NOWRAP>&nbsp;</TD>
   <TD VALIGN="bottom" WIDTH="123" ALIGN="left"> <P ALIGN="center">&nbsp;</P>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="TOP" WIDTH="46">&#160; </TD>
   <TD VALIGN="TOP" WIDTH="464" NOWRAP>&nbsp;</TD>
   <TD VALIGN="bottom" WIDTH="123" ALIGN="left"> <DIV ALIGN="center">&#160;
     </DIV>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="TOP" WIDTH="46"> <P><FONT FACE="Times">Item 3. </FONT></P>
   </TD>
   <TD VALIGN="TOP" WIDTH="464" NOWRAP><FONT FACE="Times">
   <A HREF="#ltx27">Quantitative and Qualitative Disclosures About Market
     Risk</A>
   </FONT></TD>
   <TD VALIGN="bottom" WIDTH="123" ALIGN="left"> <P ALIGN="center"><FONT
     FACE="Times">27</FONT></P>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="TOP" WIDTH="46">&#160; </TD>
   <TD VALIGN="TOP" WIDTH="464" NOWRAP>&nbsp;</TD>
   <TD VALIGN="bottom" WIDTH="123" ALIGN="left"> <DIV ALIGN="center">&#160;
     </DIV>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="TOP" COLSPAN="3"> <FONT FACE="Times">PART II. OTHER
     INFORMATION</FONT> &#160; </TD>
  </TR>
  <TR>
   <TD VALIGN="TOP" WIDTH="46">&#160; </TD>
   <TD VALIGN="TOP" WIDTH="464" NOWRAP>&nbsp;</TD>
   <TD VALIGN="bottom" WIDTH="123" ALIGN="left"> <DIV ALIGN="center">&#160;
     </DIV>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="TOP" WIDTH="46"> <P><FONT FACE="Times">Item 1. </FONT></P>
   </TD>
   <TD VALIGN="TOP" WIDTH="464" NOWRAP><FONT FACE="Times">Legal
     Proceedings</FONT></TD>
   <TD VALIGN="bottom" WIDTH="123" ALIGN="left" NOWRAP> <P ALIGN="center"><FONT
     FACE="Times">Not Applicable</FONT></P>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="TOP" WIDTH="46">&#160; </TD>
   <TD VALIGN="TOP" WIDTH="464" NOWRAP>&nbsp;</TD>
   <TD VALIGN="bottom" WIDTH="123" ALIGN="left" NOWRAP> <DIV ALIGN="center">
     &#160; </DIV>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="TOP" WIDTH="46"> <P><FONT FACE="Times">Item 2. </FONT></P>
   </TD>
   <TD VALIGN="TOP" WIDTH="464" NOWRAP><FONT FACE="Times">Changes in
     Securities</FONT></TD>
   <TD VALIGN="bottom" WIDTH="123" ALIGN="left" NOWRAP> <P ALIGN="center"><FONT
     FACE="Times">Not Applicable</FONT></P>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="TOP" WIDTH="46">&#160; </TD>
   <TD VALIGN="TOP" WIDTH="464" NOWRAP>&nbsp;</TD>
   <TD VALIGN="bottom" WIDTH="123" ALIGN="left" NOWRAP> <DIV ALIGN="center">
     &#160; </DIV>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="TOP" WIDTH="46"> <P><FONT FACE="Times">Item 3. </FONT></P>
   </TD>
   <TD VALIGN="TOP" WIDTH="464" NOWRAP><FONT FACE="Times">Defaults Upon Senior
     Securities</FONT></TD>
   <TD VALIGN="bottom" WIDTH="123" ALIGN="left" NOWRAP> <P ALIGN="center"><FONT
     FACE="Times">Not Applicable</FONT></P>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="TOP" WIDTH="46">&#160; </TD>
   <TD VALIGN="TOP" WIDTH="464" NOWRAP>&nbsp;</TD>
   <TD VALIGN="bottom" WIDTH="123" ALIGN="left" NOWRAP> <DIV ALIGN="center">
     &#160; </DIV>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="TOP" WIDTH="46"> <P><FONT FACE="Times">Item 4. </FONT></P>
   </TD>
   <TD VALIGN="TOP" WIDTH="464" NOWRAP><FONT FACE="Times">Submission of Matters
     to a Vote of Security Holders</FONT></TD>
   <TD VALIGN="bottom" WIDTH="123" ALIGN="left" NOWRAP> <P ALIGN="center"><FONT
     FACE="Times">Not Applicable</FONT></P>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="TOP" WIDTH="46">&#160; </TD>
   <TD VALIGN="TOP" WIDTH="464" NOWRAP>&nbsp;</TD>
   <TD VALIGN="bottom" WIDTH="123" ALIGN="left" NOWRAP> <DIV ALIGN="center">
     &#160; </DIV>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="TOP" WIDTH="46"> <P><FONT FACE="Times">Item 5. </FONT></P>
   </TD>
   <TD VALIGN="TOP" WIDTH="464" NOWRAP><FONT FACE="Times">Other
     Information</FONT></TD>
   <TD VALIGN="bottom" WIDTH="123" ALIGN="left" NOWRAP> <P ALIGN="center"><FONT
     FACE="Times">Not Applicable</FONT></P>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="TOP" WIDTH="46">&#160; </TD>
   <TD VALIGN="TOP" WIDTH="464" NOWRAP>&nbsp;</TD>
   <TD VALIGN="bottom" WIDTH="123" ALIGN="left"> <DIV ALIGN="center">&#160;
     </DIV>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="TOP" WIDTH="46"> <P><FONT FACE="Times">Item 6. </FONT></P>
   </TD>
   <TD VALIGN="TOP" WIDTH="464" NOWRAP><FONT FACE="Times">
   <A HREF="#ltx28">Exhibits and Reports on Form 8-K</A>
   </FONT></TD>
   <TD VALIGN="bottom" WIDTH="123" ALIGN="left"> <P ALIGN="center"><FONT
     FACE="Times">28</FONT></P>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="TOP" WIDTH="46">&#160; </TD>
   <TD VALIGN="TOP" WIDTH="464" NOWRAP>&nbsp;</TD>
   <TD VALIGN="bottom" WIDTH="123" ALIGN="left"> <DIV ALIGN="center">&#160;
     </DIV>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="TOP" COLSPAN="2" HEIGHT="20"> <P><FONT FACE="Times">
   <A HREF="#ltx29">Signatures</A>
   </FONT></P>
   </TD>
   <TD VALIGN="bottom" WIDTH="123" ALIGN="left" HEIGHT="20"> <P
     ALIGN="center"><FONT FACE="Times">29</FONT></P>
   </TD>
  </TR>
 </TABLE>
 <P>&nbsp;</P>

 <A NAME="ltx3"></A>
 <P></P>
 <P><B><FONT FACE="Times">Part I. Financial Information
 <BR>
 </FONT></B><FONT FACE="Times">Item 1. Financial Statements</FONT></P>
 <P ALIGN="CENTER"><B><FONT FACE="Times">EXTREME NETWORKS, INC.
 <BR>
 </FONT></B><B><FONT FACE="Times">CONDENSED CONSOLIDATED BALANCE SHEETS
 <BR>
 </FONT></B><FONT FACE="Times">(In thousands)</FONT></P>
 <P> <P><P><P><P>
 <TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600" ALIGN="center">
  <TR VALIGN="BOTTOM">
   <TH COLSPAN="2"></TH>
   <TH COLSPAN="2"></TH>
   <TH COLSPAN="2"></TH>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD WIDTH="58%" ALIGN="LEFT">&nbsp;</TD>
   <TD WIDTH="3%" ALIGN="LEFT">&nbsp;</TD>
   <TH WIDTH="16%" ALIGN="center">December 31,
   <BR>
   1999 <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TH>
   <TH WIDTH="2%" ALIGN="center">&nbsp;</TH>
   <TH WIDTH="15%" ALIGN="center">June 30,
   <BR>
   1999 <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TH>
   <TD WIDTH="6%" ALIGN="center">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD WIDTH="58%" ALIGN="LEFT">&nbsp;</TD>
   <TD WIDTH="3%" ALIGN="LEFT">&nbsp;</TD>
   <TH WIDTH="16%" ALIGN="center">(Unaudited)</TH>
   <TH WIDTH="2%" ALIGN="center">&nbsp;</TH>
   <TH WIDTH="15%" ALIGN="center">(Note 1)</TH>
   <TD WIDTH="6%" ALIGN="center">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="center"><B>Assets</B></TD>
   <TD ALIGN="center">&nbsp;</TD>
   <TD ALIGN="center">&nbsp;</TD>
   <TD ALIGN="center">&nbsp;</TD>
   <TD ALIGN="center">&nbsp;</TD>
   <TD WIDTH="6%" ALIGN="center">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD WIDTH="58%" ALIGN="center">&nbsp;</TD>
   <TD WIDTH="3%" ALIGN="LEFT">&nbsp;</TD>
   <TH WIDTH="16%" ALIGN="center"></TH>
   <TH WIDTH="2%" ALIGN="center">&nbsp;</TH>
   <TH WIDTH="15%" ALIGN="center"></TH>
   <TD WIDTH="6%" ALIGN="center">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD WIDTH="58%" ALIGN="LEFT">Current assets:</TD>
   <TD WIDTH="3%" ALIGN="LEFT">&nbsp;</TD>
   <TD WIDTH="16%" ALIGN="RIGHT"></TD>
   <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD>
   <TD WIDTH="15%" ALIGN="RIGHT"></TD>
   <TD WIDTH="6%" ALIGN="LEFT">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="58%">&nbsp;&nbsp;&nbsp;Cash and cash equivalents</TD>
   <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="16%">$&nbsp;108,447</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="15%">$&nbsp;107,143</TD>
   <TD ALIGN="LEFT" WIDTH="6%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="58%">&nbsp;&nbsp;&nbsp;Short-term investments</TD>
   <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="16%">122,818</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="15%">16,422</TD>
   <TD ALIGN="LEFT" WIDTH="6%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" HEIGHT="16" WIDTH="58%">&nbsp;&nbsp;&nbsp;Accounts
     receivable, net</TD>
   <TD ALIGN="LEFT" HEIGHT="16" WIDTH="3%">&nbsp;</TD>
   <TD ALIGN="RIGHT" HEIGHT="16" WIDTH="16%">28,861</TD>
   <TD ALIGN="LEFT" HEIGHT="16" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" HEIGHT="16" WIDTH="15%">20,797</TD>
   <TD ALIGN="LEFT" HEIGHT="16" WIDTH="6%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="58%">&nbsp;&nbsp;&nbsp;Inventories</TD>
   <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="16%">3,290</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="15%">2,626</TD>
   <TD ALIGN="LEFT" WIDTH="6%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="58%">&nbsp;&nbsp;&nbsp;Other current assets</TD>
   <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="16%">3,982</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="15%">1,978</TD>
   <TD ALIGN="LEFT" WIDTH="6%">&nbsp;</TD>
  </TR>
  <TR>
   <TD HEIGHT="16" WIDTH="58%">&nbsp; </TD>
   <TD HEIGHT="16" WIDTH="3%">&nbsp;</TD>
   <TD HEIGHT="16" WIDTH="16%"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="1"> </TD>
   <TD HEIGHT="16" WIDTH="2%">&nbsp;</TD>
   <TD HEIGHT="16" WIDTH="15%"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="1"> </TD>
   <TD HEIGHT="16" WIDTH="6%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="58%">Total current assets</TD>
   <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="16%">267,398</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="15%">148,966</TD>
   <TD ALIGN="LEFT" WIDTH="6%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="58%">Property and equipment, net</TD>
   <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="16%">11,010</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="15%">6,506</TD>
   <TD ALIGN="LEFT" WIDTH="6%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="58%">Investments</TD>
   <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="16%">89,064</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="15%">16,097</TD>
   <TD ALIGN="LEFT" WIDTH="6%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="58%">Other assets</TD>
   <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="16%">481</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="15%">234</TD>
   <TD ALIGN="LEFT" WIDTH="6%">&nbsp;</TD>
  </TR>
  <TR>
   <TD WIDTH="58%">&nbsp; </TD>
   <TD WIDTH="3%">&nbsp;</TD>
   <TD WIDTH="16%"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TD>
   <TD WIDTH="2%">&nbsp;</TD>
   <TD WIDTH="15%"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TD>
   <TD WIDTH="6%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="58%">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="16%">$&nbsp;367,953</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="15%">$&nbsp;171,803</TD>
   <TD ALIGN="LEFT" WIDTH="6%">&nbsp;</TD>
  </TR>
  <TR>
   <TD WIDTH="58%">&nbsp;</TD>
   <TD WIDTH="3%">&nbsp;</TD>
   <TD WIDTH="16%"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="2"> </TD>
   <TD WIDTH="2%">&nbsp;</TD>
   <TD WIDTH="15%"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="2"> </TD>
   <TD WIDTH="6%">&nbsp;</TD>
  </TR>
  <TR>
   <TD WIDTH="94%" COLSPAN="5"> <DIV ALIGN="center"></DIV>
   </TD>
   <TD WIDTH="6%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="center"><B>Liabilities and stockholders' equity</B> </TD>
   <TD ALIGN="center">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="center" WIDTH="58%">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="58%">Current liabilities:</TD>
   <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="58%">&nbsp;&nbsp;&nbsp;Accounts payable</TD>
   <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="16%">$&nbsp;&nbsp;&nbsp;14,150</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="15%">$&nbsp;&nbsp;&nbsp;13,418</TD>
   <TD ALIGN="LEFT" WIDTH="6%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="58%">&nbsp;&nbsp;&nbsp;Accrued compensation</TD>
   <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="16%">5,442</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="15%">4,100</TD>
   <TD ALIGN="LEFT" WIDTH="6%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="58%">&nbsp;&nbsp;&nbsp;Accrued warranty</TD>
   <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="16%">4,417</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="15%">1,400</TD>
   <TD ALIGN="LEFT" WIDTH="6%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="58%">&nbsp;&nbsp;&nbsp;Deferred revenue</TD>
   <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="16%">7,681</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="15%">1,717</TD>
   <TD ALIGN="LEFT" WIDTH="6%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="58%">&nbsp;&nbsp;&nbsp;Other accrued liabilities</TD>
   <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="16%">4,656</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="15%">5,994</TD>
   <TD ALIGN="LEFT" WIDTH="6%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="58%">&nbsp;&nbsp;&nbsp;Income taxes payable</TD>
   <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="16%">2,189</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="15%">1,650</TD>
   <TD ALIGN="LEFT" WIDTH="6%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="58%">&nbsp;&nbsp;&nbsp;Capital lease obligations,
     current portion</TD>
   <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="16%">&#151;</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="15%">1,648</TD>
   <TD ALIGN="LEFT" WIDTH="6%">&nbsp;</TD>
  </TR>
  <TR>
   <TD WIDTH="58%">&nbsp; </TD>
   <TD WIDTH="3%">&nbsp;</TD>
   <TD WIDTH="16%"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TD>
   <TD WIDTH="2%">&nbsp;</TD>
   <TD WIDTH="15%"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TD>
   <TD WIDTH="6%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="58%">Total current liabilities</TD>
   <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="16%">38,535</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="15%">29,927</TD>
   <TD ALIGN="LEFT" WIDTH="6%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="58%">Stockholders' equity:</TD>
   <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="58%">&nbsp;&nbsp;&nbsp;Common stock</TD>
   <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="16%">52</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="15%">49</TD>
   <TD ALIGN="LEFT" WIDTH="6%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="58%">&nbsp;&nbsp;&nbsp;Additional paid-in
     capital</TD>
   <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="16%">342,961</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="15%">165,618</TD>
   <TD ALIGN="LEFT" WIDTH="6%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="58%">&nbsp;&nbsp;&nbsp;Deferred stock
     compensation</TD>
   <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="16%">(131</TD>
   <TD ALIGN="LEFT" WIDTH="2%">)</TD>
   <TD ALIGN="RIGHT" WIDTH="15%">(197</TD>
   <TD ALIGN="LEFT" WIDTH="6%">)</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="58%">&nbsp;&nbsp;&nbsp;Accumulated other
     comprehensive loss</TD>
   <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="16%">(390</TD>
   <TD ALIGN="LEFT" WIDTH="2%">)</TD>
   <TD ALIGN="RIGHT" WIDTH="15%">(118</TD>
   <TD ALIGN="LEFT" WIDTH="6%">)</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="58%">&nbsp;&nbsp;&nbsp;Accumulated deficit</TD>
   <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="16%">(13,074</TD>
   <TD ALIGN="LEFT" WIDTH="2%">)</TD>
   <TD ALIGN="RIGHT" WIDTH="15%">(23,476</TD>
   <TD ALIGN="LEFT" WIDTH="6%">)</TD>
  </TR>
  <TR>
   <TD WIDTH="58%">&nbsp; </TD>
   <TD WIDTH="3%">&nbsp;</TD>
   <TD WIDTH="16%"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TD>
   <TD WIDTH="2%">&nbsp;</TD>
   <TD WIDTH="15%"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TD>
   <TD WIDTH="6%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="58%">Total stockholders' equity</TD>
   <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="16%">329,418</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="15%">141,876</TD>
   <TD ALIGN="LEFT" WIDTH="6%">&nbsp;</TD>
  </TR>
  <TR>
   <TD WIDTH="58%">&nbsp; </TD>
   <TD WIDTH="3%">&nbsp;</TD>
   <TD WIDTH="16%"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TD>
   <TD WIDTH="2%">&nbsp;</TD>
   <TD WIDTH="15%"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TD>
   <TD WIDTH="6%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="58%">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="3%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="16%">$&nbsp;367,953</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="15%">$&nbsp;171,803</TD>
   <TD ALIGN="LEFT" WIDTH="6%">&nbsp;</TD>
  </TR>
  <TR>
   <TD WIDTH="58%">&nbsp; </TD>
   <TD WIDTH="3%">&nbsp;</TD>
   <TD WIDTH="16%"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="2"> </TD>
   <TD WIDTH="2%">&nbsp;</TD>
   <TD WIDTH="15%"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="2"> </TD>
   <TD WIDTH="6%">&nbsp;</TD>
  </TR>
  <TR>
   <TD COLSPAN="6">&nbsp; </TD>
  </TR>
 </TABLE>
 <DIV ALIGN="center"> <P>&nbsp; </P>
 <P ALIGN="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
   &nbsp;&nbsp;See accompanying notes to the unaudited condensed consolidated
   financial statements. </P>
 </DIV>
 <P><P>
 <A NAME="ltx4"></A>
 <P></P>
 <P>&nbsp;</P>
 <P ALIGN="CENTER"><B><FONT FACE="Times">EXTREME NETWORKS, INC.
 <BR>
 </FONT></B><B><FONT FACE="Times">CONDENSED CONSOLIDATED STATEMENTS OF
   OPERATIONS
 <BR>
 </FONT></B><FONT FACE="Times">(In thousands, except per share amounts)
 <BR>
 </FONT><FONT FACE="Times">(Unaudited)</FONT></P>
 <P ALIGN="CENTER">&nbsp;</P>
 <TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="650">
  <TR VALIGN="BOTTOM">
   <TH COLSPAN="2"></TH>
   <TH COLSPAN="2"></TH>
   <TH COLSPAN="2"></TH>
   <TH COLSPAN="2"></TH>
   <TH COLSPAN="2"></TH>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD WIDTH="41%" ALIGN="LEFT">&nbsp;</TD>
   <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD>
   <TH ALIGN="RIGHT" COLSPAN="3"> <DIV ALIGN="center"><FONT SIZE="-1">Three
     Months Ended </FONT> </DIV>
   <HR NOSHADE ALIGN="center" WIDTH="100%" SIZE="1"> <TH ALIGN="RIGHT"
     WIDTH="1%"> <TH COLSPAN="4"><FONT SIZE="-1">Six Months Ended</FONT> <HR
     NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TH>
   <TH>&nbsp;</TH>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD WIDTH="41%" ALIGN="LEFT" HEIGHT="49" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="2%" ALIGN="LEFT" HEIGHT="49">&nbsp;</TD>
   <TH ALIGN="RIGHT" HEIGHT="49" WIDTH="13%"> <DIV ALIGN="center"><FONT
     SIZE="-1">December 31,
   <BR>
   1999</FONT> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </DIV>
   </TH>
   <TH ALIGN="RIGHT" HEIGHT="49" WIDTH="1%">&nbsp;</TH>
   <TH ALIGN="RIGHT" HEIGHT="49" WIDTH="14%"> <DIV ALIGN="center"><FONT
     SIZE="-1">December 31,
   <BR>
   1998</FONT> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </DIV>
   </TH>
   <TH ALIGN="RIGHT" HEIGHT="49" WIDTH="1%">&nbsp;</TH>
   <TH ALIGN="RIGHT" HEIGHT="49" WIDTH="13%"> <DIV ALIGN="center"><FONT
     SIZE="-1">December 31,
   <BR>
   1999</FONT> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </DIV>
   </TH>
   <TH ALIGN="RIGHT" HEIGHT="49" WIDTH="1%">&nbsp;</TH>
   <TH ALIGN="RIGHT" HEIGHT="49" WIDTH="13%"> <DIV ALIGN="center"><FONT
     SIZE="-1">December 31,
   <BR>
   1998</FONT> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </DIV>
   </TH>
   <TH ALIGN="RIGHT" HEIGHT="49" WIDTH="1%">&nbsp;</TH>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD WIDTH="41%" ALIGN="LEFT" VALIGN="bottom">Net revenue</TD>
   <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD>
   <TD WIDTH="13%" ALIGN="RIGHT" VALIGN="bottom">$&nbsp;55,006</TD>
   <TD WIDTH="1%" ALIGN="LEFT" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD WIDTH="14%" ALIGN="RIGHT" VALIGN="bottom">$&nbsp;17,959</TD>
   <TD WIDTH="1%" ALIGN="LEFT" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD WIDTH="13%" ALIGN="RIGHT" VALIGN="bottom">$102,224</TD>
   <TD WIDTH="1%" ALIGN="LEFT" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="13%" ALIGN="RIGHT" VALIGN="bottom">$&nbsp;30,851</TD>
   <TD WIDTH="1%" ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="41%" VALIGN="bottom">Cost of revenue</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">26,160</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="14%" VALIGN="bottom">9,069</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">48,777</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">15,605</TD>
   <TD ALIGN="LEFT" WIDTH="1%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR>
   <TD WIDTH="41%" VALIGN="bottom">&nbsp; </TD>
   <TD WIDTH="2%">&nbsp;</TD>
   <TD WIDTH="13%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="1"> </TD>
   <TD WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD WIDTH="14%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="1"> </TD>
   <TD WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD WIDTH="13%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="1"> </TD>
   <TD WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="13%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="1"> </TD>
   <TD WIDTH="1%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="41%" VALIGN="bottom">Gross profit</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">28,846</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="14%" VALIGN="bottom">8,890</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">53,447</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">15,246</TD>
   <TD ALIGN="LEFT" WIDTH="1%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="41%" VALIGN="bottom">Operating expenses:</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="13%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="14%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="13%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="13%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="1%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="41%" VALIGN="bottom">&nbsp;&nbsp;&nbsp;Research and
     development</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">7,780</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="14%" VALIGN="bottom">3,043</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">14,679</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">6,580</TD>
   <TD ALIGN="LEFT" WIDTH="1%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="41%" VALIGN="bottom">&nbsp;&nbsp;&nbsp;Sales and
     marketing</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">12,302</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="14%" VALIGN="bottom">5,441</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">23,382</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">10,203</TD>
   <TD ALIGN="LEFT" WIDTH="1%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="41%" VALIGN="bottom">&nbsp;&nbsp;&nbsp;General and
     administrative</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">2,764</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="14%" VALIGN="bottom">1,579</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">5,297</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">2,793</TD>
   <TD ALIGN="LEFT" WIDTH="1%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR>
   <TD WIDTH="41%" VALIGN="bottom">&nbsp; </TD>
   <TD WIDTH="2%">&nbsp;</TD>
   <TD WIDTH="13%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="1"> </TD>
   <TD WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD WIDTH="14%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="1"> </TD>
   <TD WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD WIDTH="13%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="1"> </TD>
   <TD WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="13%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="1"> </TD>
   <TD WIDTH="1%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="41%" VALIGN="bottom">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;&nbsp;Total operating expenses</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">22,846</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="14%" VALIGN="bottom">10,063</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">43,358</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">19,576</TD>
   <TD ALIGN="LEFT" WIDTH="1%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR>
   <TD WIDTH="41%" HEIGHT="24" VALIGN="bottom">&nbsp; </TD>
   <TD WIDTH="2%" HEIGHT="24">&nbsp;</TD>
   <TD WIDTH="13%" HEIGHT="24" VALIGN="bottom"> <HR NOSHADE ALIGN="right"
     WIDTH="100%" SIZE="1"> </TD>
   <TD WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD WIDTH="14%" HEIGHT="24" VALIGN="bottom"> <HR NOSHADE ALIGN="right"
     WIDTH="100%" SIZE="1"> </TD>
   <TD WIDTH="1%" HEIGHT="24" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD WIDTH="13%" HEIGHT="24" VALIGN="bottom"> <HR NOSHADE ALIGN="right"
     WIDTH="100%" SIZE="1"> </TD>
   <TD WIDTH="1%" HEIGHT="24" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="13%" HEIGHT="24" VALIGN="bottom"> <HR NOSHADE ALIGN="right"
     WIDTH="100%" SIZE="1"> </TD>
   <TD WIDTH="1%" HEIGHT="24"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="41%" VALIGN="bottom">Operating income (loss)</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">6,000</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="14%" VALIGN="bottom">(1,173</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left">)</DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">10,089</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">(4,330</TD>
   <TD ALIGN="LEFT" WIDTH="1%"> <DIV ALIGN="left">)</DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="41%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="14%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="1%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="41%" VALIGN="bottom">Interest and other income,
     net</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">3,747</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="14%" VALIGN="bottom">(81</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left">)</DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">5,439</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">94</TD>
   <TD ALIGN="LEFT" WIDTH="1%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR>
   <TD WIDTH="41%" VALIGN="bottom">&nbsp; </TD>
   <TD WIDTH="2%">&nbsp;</TD>
   <TD WIDTH="13%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="1"> </TD>
   <TD WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD WIDTH="14%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="1"> </TD>
   <TD WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD WIDTH="13%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="1"> </TD>
   <TD WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="13%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="1"> </TD>
   <TD WIDTH="1%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="41%" VALIGN="bottom">Income (loss) before income
     taxes</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">9,747</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="14%" VALIGN="bottom">(1,254</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left">)</DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">15,528</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">(4,236</TD>
   <TD ALIGN="LEFT" WIDTH="1%"> <DIV ALIGN="left">)</DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="41%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="14%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="1%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="41%" VALIGN="bottom">Provision for income taxes</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">3,392</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="14%" VALIGN="bottom">700</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">5,126</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">700</TD>
   <TD ALIGN="LEFT" WIDTH="1%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR>
   <TD WIDTH="41%" VALIGN="bottom">&nbsp; </TD>
   <TD WIDTH="2%">&nbsp;</TD>
   <TD WIDTH="13%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="1"> </TD>
   <TD WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD WIDTH="14%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="1"> </TD>
   <TD WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD WIDTH="13%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="1"> </TD>
   <TD WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="13%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="1"> </TD>
   <TD WIDTH="1%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="41%" VALIGN="bottom">Net income (loss)</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">$&nbsp;&nbsp;&nbsp;6,355</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="14%" VALIGN="bottom">$(1,954</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left">)</DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">$&nbsp;&nbsp;10,402</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">$(4,936</TD>
   <TD ALIGN="LEFT" WIDTH="1%"> <DIV ALIGN="left">)</DIV>
   </TD>
  </TR>
  <TR>
   <TD WIDTH="41%" VALIGN="bottom">&nbsp; </TD>
   <TD WIDTH="2%">&nbsp;</TD>
   <TD WIDTH="13%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD WIDTH="14%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD WIDTH="13%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="13%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD WIDTH="1%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="41%" VALIGN="bottom">Basic net income (loss) per
     common share</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">$&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;0.13</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="14%" VALIGN="bottom">$&nbsp;&nbsp;(0.27</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left">)</DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;0.21</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">$&nbsp;&nbsp;(0.72</TD>
   <TD ALIGN="LEFT" WIDTH="1%"> <DIV ALIGN="left">)</DIV>
   </TD>
  </TR>
  <TR>
   <TD WIDTH="41%" VALIGN="bottom">&nbsp; </TD>
   <TD WIDTH="2%">&nbsp;</TD>
   <TD WIDTH="13%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD WIDTH="14%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD WIDTH="13%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="13%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD WIDTH="1%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR>
   <TD WIDTH="41%" VALIGN="bottom">&nbsp; </TD>
   <TD WIDTH="2%">&nbsp;</TD>
   <TD WIDTH="13%" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD WIDTH="14%" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD WIDTH="13%" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="13%" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="1%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="41%" VALIGN="bottom">Diluted net income (loss) per
     common share</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">$&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;0.11</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="14%" VALIGN="bottom">$&nbsp;&nbsp;(0.27</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left">)</DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;0.19</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">$&nbsp;&nbsp;(0.72</TD>
   <TD ALIGN="LEFT" WIDTH="1%"> <DIV ALIGN="left">)</DIV>
   </TD>
  </TR>
  <TR>
   <TD WIDTH="41%" VALIGN="bottom">&nbsp; </TD>
   <TD WIDTH="2%">&nbsp;</TD>
   <TD WIDTH="13%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD WIDTH="14%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD WIDTH="13%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="13%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD WIDTH="1%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="41%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="41%" VALIGN="bottom"> Weighted average shares
     outstanding used in computing basic net income (loss) per share</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">50,181</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="14%" VALIGN="bottom">7,180</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">48,604</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">6,867</TD>
   <TD ALIGN="LEFT" WIDTH="1%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR>
   <TD WIDTH="41%" VALIGN="bottom">&nbsp; </TD>
   <TD WIDTH="2%">&nbsp;</TD>
   <TD WIDTH="13%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD WIDTH="14%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD WIDTH="13%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="13%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD WIDTH="1%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="41%" VALIGN="bottom"> Weighted average shares
     outstanding used in computing diluted net income (loss) per share</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">55,863</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="14%" VALIGN="bottom">7,180</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">54,704</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">6,867</TD>
   <TD ALIGN="LEFT" WIDTH="1%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR>
   <TD WIDTH="41%" VALIGN="bottom">&nbsp; </TD>
   <TD WIDTH="2%">&nbsp;</TD>
   <TD WIDTH="13%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD WIDTH="14%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD WIDTH="13%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="13%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD WIDTH="1%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR>
   <TD WIDTH="41%" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="2%">&nbsp;</TD>
   <TD WIDTH="13%" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="14%" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="13%" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="13%" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="1%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="41%" VALIGN="bottom">Pro forma basic and diluted
     loss per share</TD>
   <TD ALIGN="LEFT" WIDTH="2%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom"></TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="14%" VALIGN="bottom">$&nbsp;&nbsp;(0.05</TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left">)</DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom"></TD>
   <TD ALIGN="LEFT" WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="13%" VALIGN="bottom">$&nbsp;&nbsp;(0.14</TD>
   <TD ALIGN="LEFT" WIDTH="1%"> <DIV ALIGN="left">)</DIV>
   </TD>
  </TR>
  <TR>
   <TD WIDTH="41%" VALIGN="bottom">&nbsp; </TD>
   <TD WIDTH="2%">&nbsp;</TD>
   <TD WIDTH="13%" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD WIDTH="14%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD WIDTH="13%" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="13%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD WIDTH="1%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR>
   <TD WIDTH="41%" VALIGN="bottom"> Shares used in computing pro forma basic
     and diluted net loss per common share </TD>
   <TD WIDTH="2%">&nbsp;</TD>
   <TD WIDTH="13%" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD WIDTH="14%" VALIGN="bottom"> <DIV ALIGN="right">36,242</DIV>
   </TD>
   <TD WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD WIDTH="13%" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="13%" VALIGN="bottom"> <DIV ALIGN="right">35,929</DIV>
   </TD>
   <TD WIDTH="1%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR>
   <TD WIDTH="41%" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="2%">&nbsp;</TD>
   <TD WIDTH="13%" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD WIDTH="14%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD WIDTH="1%" VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD WIDTH="13%" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
   <TD WIDTH="13%" VALIGN="bottom"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD WIDTH="1%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
 </TABLE>
 <P ALIGN="CENTER">&nbsp;</P>
 <P> <P ALIGN="left"><FONT FACE="Times">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
   &nbsp;&nbsp;See accompanying notes to the unaudited condensed consolidated
   financial statements.</FONT></P>
 <P ALIGN="CENTER">&nbsp;</P>

 <A NAME="ltx5"></A>
 <P></P>
 <H2 ALIGN=LEFT>&nbsp;</H2>
 <P ALIGN="CENTER"><B><FONT FACE="Times">EXTREME NETWORKS, INC.
 <BR>
 </FONT></B><B><FONT FACE="Times">CONDENSED CONSOLIDATED STATEMENTS OF CASH
   FLOWS
 <BR>
 </FONT></B><FONT FACE="Times">(In thousands)
 <BR>
 </FONT><FONT FACE="Times">(Unaudited)</FONT></P>
 <TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="606" ALIGN="center">
  <TR VALIGN="BOTTOM">
   <TH COLSPAN="2"></TH>
   <TH COLSPAN="2"></TH>
   <TH COLSPAN="2"></TH>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD WIDTH="56%" ALIGN="LEFT" HEIGHT="31">&nbsp;</TD>
   <TD WIDTH="4%" ALIGN="LEFT" HEIGHT="31">&nbsp;</TD>
  <TH ALIGN="center" COLSPAN="4" VALIGN="bottom" HEIGHT="31"> Six Months Ended
    <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TR>
  <TR VALIGN="BOTTOM">
   <TD WIDTH="56%" ALIGN="LEFT" HEIGHT="37">&nbsp;</TD>
   <TD WIDTH="4%" ALIGN="LEFT" HEIGHT="37">&nbsp;</TD>
   <TH ALIGN="RIGHT" COLSPAN="2" VALIGN="bottom" HEIGHT="37"> <DIV
     ALIGN="center">December 31,
   <BR>
   1999
   <BR>
   </DIV>
   <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> <TH COLSPAN="2"
     VALIGN="bottom" HEIGHT="37">December 31,
   <BR>
   1998 <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TH>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD WIDTH="56%" ALIGN="LEFT">Operating activities:</TD>
   <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
   <TD WIDTH="14%" ALIGN="RIGHT"> <DIV ALIGN="right"></DIV>
   </TD>
   <TD WIDTH="6%" ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD WIDTH="14%" ALIGN="RIGHT"> <DIV ALIGN="right"></DIV>
   </TD>
   <TD WIDTH="6%" ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="56%">&nbsp;&nbsp;&nbsp;Net income (loss)</TD>
   <TD ALIGN="LEFT" WIDTH="4%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">$&nbsp;&nbsp;
     &nbsp;10,402</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">$(4,936</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left">)</DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="56%">&nbsp;&nbsp;&nbsp;Adjustments to reconcile net
     income to net cash
   <BR>
   &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; provided by (used for) operating
     activities:</TD>
   <TD ALIGN="LEFT" WIDTH="4%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="56%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;Depreciation and amortization</TD>
   <TD ALIGN="LEFT" WIDTH="4%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">3,659</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">1,622</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="56%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;Amortization of deferred stock compensation</TD>
   <TD ALIGN="LEFT" WIDTH="4%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">66</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">93</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="56%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;Changes in assets and liabilities:</TD>
   <TD ALIGN="LEFT" WIDTH="4%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="56%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable</TD>
   <TD ALIGN="LEFT" WIDTH="4%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">(8,064</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left">)</DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">(610</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left">)</DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="56%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories</TD>
   <TD ALIGN="LEFT" WIDTH="4%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">(664</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left">)</DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">(236</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left">)</DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="56%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other current and noncurrent assets</TD>
   <TD ALIGN="LEFT" WIDTH="4%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">(2,226</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left">)</DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">(234</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left">)</DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="56%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable</TD>
   <TD ALIGN="LEFT" WIDTH="4%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">732</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">(5,134</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left">)</DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="56%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued compensation</TD>
   <TD ALIGN="LEFT" WIDTH="4%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">1,342</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">399</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="56%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued warranty</TD>
   <TD ALIGN="LEFT" WIDTH="4%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">3,017</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">(49</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left">)</DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="56%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue</TD>
   <TD ALIGN="LEFT" WIDTH="4%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">5,964</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">&#151;</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="56%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other accrued liabilities</TD>
   <TD ALIGN="LEFT" WIDTH="4%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">(1,338</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left">)</DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">1,790</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="56%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income taxes payable</TD>
   <TD ALIGN="LEFT" WIDTH="4%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">539</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">700</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR>
   <TD WIDTH="56%">&nbsp; </TD>
   <TD WIDTH="4%">&nbsp;</TD>
   <TD WIDTH="14%"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TD>
   <TD WIDTH="6%">&nbsp;</TD>
   <TD WIDTH="14%"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TD>
   <TD WIDTH="6%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="56%">&nbsp;&nbsp;&nbsp;Net cash provided by (used
     for) operating activities</TD>
   <TD ALIGN="LEFT" WIDTH="4%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">13,429</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">(6,595</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left">)</DIV>
   </TD>
  </TR>
  <TR>
   <TD WIDTH="56%">&nbsp; </TD>
   <TD WIDTH="4%">&nbsp;</TD>
   <TD WIDTH="14%"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TD>
   <TD WIDTH="6%">&nbsp;</TD>
   <TD WIDTH="14%"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TD>
   <TD WIDTH="6%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="56%">Investing activities:</TD>
   <TD ALIGN="LEFT" WIDTH="4%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="56%">&nbsp;&nbsp;&nbsp;Capital expenditures</TD>
   <TD ALIGN="LEFT" WIDTH="4%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="14%">(8,163</TD>
   <TD ALIGN="LEFT" WIDTH="6%">)</TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">(2,325</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left">)</DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="56%">&nbsp;&nbsp;&nbsp;Purchases / Maturities of
     investments, net</TD>
   <TD ALIGN="LEFT" WIDTH="4%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="14%">(179,660</TD>
   <TD ALIGN="LEFT" WIDTH="6%">)</TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">4,174</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR>
   <TD WIDTH="56%">&nbsp; </TD>
   <TD WIDTH="4%">&nbsp;</TD>
   <TD WIDTH="14%"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TD>
   <TD WIDTH="6%">&nbsp;</TD>
   <TD WIDTH="14%"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TD>
   <TD WIDTH="6%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="56%">&nbsp;&nbsp;&nbsp;Net cash provided by (used
     for) investing activities</TD>
   <TD ALIGN="LEFT" WIDTH="4%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="14%">(187,823</TD>
   <TD ALIGN="LEFT" WIDTH="6%">)</TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">1,849</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR>
   <TD WIDTH="56%">&nbsp; </TD>
   <TD WIDTH="4%">&nbsp;</TD>
   <TD WIDTH="14%"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TD>
   <TD WIDTH="6%">&nbsp;</TD>
   <TD WIDTH="14%"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TD>
   <TD WIDTH="6%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="56%">Financing activities:</TD>
   <TD ALIGN="LEFT" WIDTH="4%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="56%">&nbsp;&nbsp;&nbsp;Proceeds from issuance of
     common stock</TD>
   <TD ALIGN="LEFT" WIDTH="4%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="14%">177,346</TD>
   <TD ALIGN="LEFT" WIDTH="6%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">714</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="56%">&nbsp;&nbsp;&nbsp;Proceeds from notes
     payable</TD>
   <TD ALIGN="LEFT" WIDTH="4%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="14%">&#151;</TD>
   <TD ALIGN="LEFT" WIDTH="6%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">505</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="56%">&nbsp;&nbsp;&nbsp;Principal payments on notes
     payable</TD>
   <TD ALIGN="LEFT" WIDTH="4%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="14%">&#151;</TD>
   <TD ALIGN="LEFT" WIDTH="6%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">(147</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left">)</DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="56%">&nbsp;&nbsp;&nbsp;Principal payments of capital
     lease obligations</TD>
   <TD ALIGN="LEFT" WIDTH="4%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="14%">(1,648</TD>
   <TD ALIGN="LEFT" WIDTH="6%">)</TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">(44</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left">)</DIV>
   </TD>
  </TR>
  <TR>
   <TD WIDTH="56%">&nbsp; </TD>
   <TD WIDTH="4%">&nbsp;</TD>
   <TD WIDTH="14%"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TD>
   <TD WIDTH="6%">&nbsp;</TD>
   <TD WIDTH="14%"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TD>
   <TD WIDTH="6%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="56%">&nbsp;&nbsp;&nbsp;Net cash provided by
     financing activities</TD>
   <TD ALIGN="LEFT" WIDTH="4%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="14%">175,698</TD>
   <TD ALIGN="LEFT" WIDTH="6%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">1,028</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR>
   <TD WIDTH="56%">&nbsp; </TD>
   <TD WIDTH="4%">&nbsp;</TD>
   <TD WIDTH="14%"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TD>
   <TD WIDTH="6%">&nbsp;</TD>
   <TD WIDTH="14%"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TD>
   <TD WIDTH="6%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="56%">Net increase (decrease) in cash and cash
     equivalents</TD>
   <TD ALIGN="LEFT" WIDTH="4%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="14%">1,304</TD>
   <TD ALIGN="LEFT" WIDTH="6%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">(3,718</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left">)</DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="56%">Cash and cash equivalents at beginning of
     period</TD>
   <TD ALIGN="LEFT" WIDTH="4%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="14%">107,143</TD>
   <TD ALIGN="LEFT" WIDTH="6%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">9,510</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR>
   <TD WIDTH="56%">&nbsp; </TD>
   <TD WIDTH="4%">&nbsp;</TD>
   <TD WIDTH="14%"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TD>
   <TD WIDTH="6%">&nbsp;</TD>
   <TD WIDTH="14%"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TD>
   <TD WIDTH="6%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="56%">Cash and cash equivalents at end of period</TD>
   <TD ALIGN="LEFT" WIDTH="4%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="14%">$&nbsp;108,447</TD>
   <TD ALIGN="LEFT" WIDTH="6%">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="14%"> <DIV ALIGN="right">$&nbsp;5,792</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="6%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR>
   <TD WIDTH="56%">&nbsp; </TD>
   <TD WIDTH="4%">&nbsp;</TD>
   <TD WIDTH="14%"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="2"> </TD>
   <TD WIDTH="6%">&nbsp;</TD>
   <TD WIDTH="14%"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="2"> </TD>
   <TD WIDTH="6%"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
 </TABLE>
 <P ALIGN="CENTER">&nbsp;</P>
 <P ALIGN="left"><FONT FACE="Times">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
   &nbsp;&nbsp;See accompanying notes to the unaudited condensed consolidated
   financial statements.</FONT></P>
 <P ALIGN="CENTER">&nbsp;</P>
 <FONT SIZE="+1"><B></B></FONT>
 <A NAME="ltx6"></A>
 <H2 ALIGN=LEFT><B></B></H2>
 <DIV ALIGN="center"><FONT SIZE="+1"><B>EXTREME NETWORKS, INC.
 <BR>
 </B> <B>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
   </B></FONT> </DIV>
 <P>&nbsp;</P>
 <TABLE WIDTH=600 BORDER=0 CELLPADDING=0 CELLSPACING=0>
  <TR VALIGN=TOP>
   <TD WIDTH=3%>1. </TD>
   <TD WIDTH=3%></TD>
   <TD WIDTH=94%>BASIS OF PRESENTATION</TD>
  </TR>
 </TABLE>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The condensed
   consolidated financial statements have been prepared by Extreme Networks,
   Inc., pursuant to the rules and regulations of the Securities and Exchange
   Commission and include the accounts of Extreme Networks, Inc. and its
   wholly-owned subsidiaries (&#147;Extreme&#148; or collectively, the
   &#147;Company&#148;). Certain information and footnote disclosures, normally
   included in financial statements prepared in accordance with generally
   accepted accounting principles, have been condensed or omitted pursuant to
   such rules and regulations. In the opinion of the Company, the unaudited
   financial statements reflect all adjustments, consisting only of normal
   recurring adjustments, necessary for a fair presentation of the financial
   position at December 31, 1999 and the operating results and cash flows for
   the six months ended December 31, 1999 and December 31, 1998. The condensed
   balance sheet at June 30, 1999 has been derived from audited financial
   statements as of that date. These financial statements and notes should be
   read in conjunction with the Company&#146;s audited consolidated financial
   statements and notes thereto for the year ended June 30, 1999, included in
   the Company&#146;s Form 10-K filed with the Securities and Exchange
   Commission.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The results of
   operations for the three and six months ended December 31, 1999 are not
   necessarily indicative of the results that may be expected for the future
   quarters or the fiscal year ending June 30, 2000. Certain items previously
   reported in specific financial statement captions have been reclassified to
   conform to the 2000 presentation.</P>
 <P ALIGN=LEFT>2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</P>
 <P ALIGN=LEFT><I> Nature of Operations</I></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Extreme was
   incorporated in California on May 8, 1996 and was reincorporated in Delaware
   on March 31, 1999. The Company is a leading provider of high-performance,
   multilayer network switching solutions for the Internet economy. We have not
   achieved profitability on a fiscal year basis and although our revenue has
   grown in recent quarters, we cannot be certain that we will realize
   sufficient revenue to achieve profitability on a fiscal year basis. Extreme
   incurred net losses of $7.9 million from inception through June 30, 1997,
   $13.9 million for fiscal 1998 and $1.6 million for fiscal 1999. As of
   December 31, 1999, we had an accumulated deficit of $13.1 million.</P>
 <P ALIGN=LEFT><I> Fiscal Year</I></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective July
   1, 1999, Extreme changed its fiscal year from June 30<SUP>th</SUP>
 to a 52/53-week fiscal accounting year. The December 31, 1999 quarter closed
   on January 2, 2000 and comprised 13 weeks of revenue and expense
   activity.</P>
 <P ALIGN=LEFT><I> Principles of Consolidation</I></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
   consolidated financial statements include the accounts of Extreme and its
   wholly-owned subsidiaries. All significant inter-company balances and
   transactions have been eliminated. Assets and liabilities of foreign
   operations are translated to U.S. dollars at current rates of exchange, and
   revenues and expenses are translated using weighted average rates. Foreign
   currency transaction gains and losses have not been material. Gains and
   losses from foreign currency translation are included as a separate
   component of comprehensive income.</P>
 <P><I>Accounting Estimates</I></P>
 <P></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The preparation
   of financial statements in conformity with generally accepted accounting
   principles requires management to make estimates and assumptions that
   materially affect the amounts reported in the financial statements. Actual
   results could differ materially from these estimates.</P>
 <P ALIGN=LEFT><I> Cash Equivalents and Short-Term Investments</I></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Extreme
   considers all highly liquid investment securities with maturity from date of
   purchase of three months or less to be cash equivalents and investment
   securities with maturity from date of purchase of more than three months but
   less than one year, to be short-term investments.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management
   determines the appropriate classification of debt and equity securities at
   the time of purchase and reevaluates this designation as of each balance
   sheet date. To date, all marketable securities have been classified as
   available-for-sale and are carried at fair value, with unrealized gains and
   losses, when material, reported net-of-tax as a separate component of
   comprehensive income. Realized gains and losses on available-for-sale
   securities are included in interest income. The cost of securities sold is
   based on specific identification. Premiums and discounts are amortized over
   the period from acquisition to maturity and are included in investment
   income, along with interest and dividends.</P>
 <P ALIGN=LEFT><I> Inventories</I></P>
 <P ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
   &nbsp;Inventories consist of raw materials and finished goods and are stated
   at the lower of cost or market (on a first-in, first-out basis).</P>
 <P ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
   &nbsp;Inventories consist of:</P>

 <TABLE BORDER="0" WIDTH="600" ALIGN="center">
  <TR VALIGN="BOTTOM">
   <TH COLSPAN="2"></TH>
   <TH WIDTH="132">December 31, 1999 <HR NOSHADE SIZE=1 WIDTH="100%"> </TH>
   <TH WIDTH="107">June 30, 1999 <HR NOSHADE SIZE=1> </TH>
  </TR>
  <TR VALIGN="BOTTOM">
   <TH COLSPAN="2"></TH>
   <TH></TH>
   <TH></TH>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" COLSPAN="2">Raw materials</TD>
   <TD WIDTH="132" ALIGN="RIGHT">$1,782</TD>
   <TD WIDTH="107" ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;700</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" COLSPAN="2">Finished goods</TD>
   <TD ALIGN="RIGHT" WIDTH="132">1,508</TD>
   <TD ALIGN="RIGHT" WIDTH="107">1,926</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="176">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="141">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="132"> <HR NOSHADE ALIGN="center" WIDTH="100%"
     SIZE="1"> </TD>
   <TD ALIGN="RIGHT" WIDTH="107"> <HR NOSHADE SIZE=1 WIDTH="100%"> </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" COLSPAN="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;&nbsp;&nbsp;Total</TD>
   <TD ALIGN="RIGHT" WIDTH="132">$3,290</TD>
   <TD ALIGN="RIGHT" WIDTH="107">$2,626</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="176">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="141">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="132"> <HR NOSHADE SIZE=1 WIDTH="100%"> </TD>
   <TD ALIGN="RIGHT" WIDTH="107"> <HR NOSHADE SIZE=1 WIDTH="100%"> </TD>
  </TR>
 </TABLE>
 <P>&nbsp;&nbsp;</P>
 <P><I>Concentration of Credit Risk, Product and Significant Customers</I></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial
   instruments that potentially subject Extreme to concentration of credit risk
   consist principally of marketable investments and accounts receivable.
   Extreme has placed its investments with high-credit quality issuers. Extreme
   will not invest an amount exceeding 10% of the corporation&#146;s combined
   cash, cash equivalent, short-term and long-term investments, in the
   securities of any one obligor or maker, except for obligations of the United
   States, obligations of United States agencies and money market accounts.
   Extreme sells its products primarily to United States corporations in the
   technology marketplace. Extreme performs ongoing credit evaluations of its
   customers and generally does not require collateral. To date, credit losses
   have been immaterial and within management&#146;s expectations. Extreme
   operates solely within one business segment, the development and marketing
   of switching solutions for the Internet economy. Significant customer
   concentration is summarized below. No other customer accounts for more than
   10% of Extreme&#146;s net revenue.</P>
 <TABLE BORDER="0" WIDTH="600" ALIGN="center">
  <TR VALIGN="BOTTOM">
   <TH COLSPAN="2"></TH>
   <TH COLSPAN="4">Three Months Ended
   <BR>
   <HR NOSHADE SIZE=1 WIDTH="100%"> </TH>
   <TH COLSPAN="4">Six Months Ended
   <BR>
   <HR NOSHADE SIZE=1 WIDTH="100%"> </TH>
  </TR>
  <TR VALIGN="BOTTOM">
   <TH COLSPAN="2">Customer</TH>
   <TH COLSPAN="2" NOWRAP>December 31,
   <BR>
   1999
   <BR>
   <HR NOSHADE SIZE=1 WIDTH="100%"> </TH>
   <TH COLSPAN="2" NOWRAP>December 31,
   <BR>
   1998
   <BR>
   <HR NOSHADE SIZE=1 WIDTH="100%"> </TH>
   <TH COLSPAN="2" NOWRAP>December 31,
   <BR>
   1999
   <BR>
   <HR NOSHADE SIZE=1 WIDTH="100%"> </TH>
   <TH COLSPAN="2" NOWRAP>December 31,
   <BR>
   1998
   <BR>
   <HR NOSHADE SIZE=1 WIDTH="100%"> </TH>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD WIDTH="108" ALIGN="LEFT">Compaq</TD>
   <TD WIDTH="28" ALIGN="LEFT">&nbsp;</TD>
   <TD WIDTH="82" ALIGN="RIGHT">&#151;</TD>
   <TD WIDTH="16" ALIGN="LEFT">&nbsp;</TD>
   <TD WIDTH="87" ALIGN="RIGHT">22</TD>
   <TD WIDTH="25" ALIGN="LEFT">%</TD>
   <TD WIDTH="98" ALIGN="RIGHT">14</TD>
   <TD WIDTH="16" ALIGN="LEFT">%</TD>
   <TD WIDTH="82" ALIGN="RIGHT">17</TD>
   <TD WIDTH="48" ALIGN="LEFT">%</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="108">Hitachi Cable</TD>
   <TD ALIGN="LEFT" WIDTH="28">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="82">10</TD>
   <TD ALIGN="LEFT" WIDTH="16">%</TD>
   <TD ALIGN="RIGHT" WIDTH="87">16</TD>
   <TD ALIGN="LEFT" WIDTH="25">%</TD>
   <TD ALIGN="RIGHT" WIDTH="98">11</TD>
   <TD ALIGN="LEFT" WIDTH="16">%</TD>
   <TD ALIGN="RIGHT" WIDTH="82">11</TD>
   <TD ALIGN="LEFT" WIDTH="48">%</TD>
  </TR>
 </TABLE>
 <P><I>Revenue Recognition</I></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Extreme
   generally recognizes product revenue at the time of shipment, unless Extreme
   has future obligations for installation or has to obtain customer
   acceptance, in which case revenue is deferred until these obligations have
   been satisfied. Amounts billed in excess of revenue recognized are included
   as deferred revenue in the accompanying consolidated balance sheets. Extreme
   has established a program which, under specified conditions, enables third
   party resellers to return products to us. The amount of potential product
   returns is
 estimated and provided for in the period of the sale. Revenue from service
   obligations is recognized ratably over the term of the contract period,
   which is typically 12 months. The Company makes certain sales to partners in
   two-tier distribution channels. These customers are generally given
   privileges to return a portion of inventory and participate in various
   cooperative marketing programs. The Company defers recognition of revenue on
   such sales until the product is sold by the distributors and also maintains
   appropriate accruals and allowances for all other programs.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon shipment
   of products to its customers, Extreme provides for the estimated cost to
   repair or replace products that may be returned under warranty. Extreme
   &#146;s warranty period is typically 12 months from the date of shipment to
   the end user.</P>
 <P ALIGN=LEFT><I> Foreign Operations</I></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Extreme&#146;s
   foreign offices consist of sales, marketing and support activities through
   its foreign subsidiaries and an overseas reseller network. Operating income
   (loss) generated by the foreign operations of Extreme and their
   corresponding identifiable assets were not material in any period
   presented.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Extreme&#146;s
   export sales represented 47% and 56% of net revenue in the six months ended
   December 31, 1999 and December 31, 1998, respectively. All of the export
   sales to date have been denominated in U.S. Dollars and were derived from
   sales to Europe and Asia.</P>
 <P ALIGN=LEFT><I> Net Income (Loss) Per Share</I></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic net
   income (loss) per share and diluted net income (loss) per share are
   presented in conformity with Financial Accounting Standards Board&#146;s (
   &#147;FASB&#148;) Statement of Financial Accounting Standards (SFAS) No.
   128, &#147;Earnings Per Share,&#148; for all periods presented. Basic net
   income (loss) was computed by dividing income available to common
   shareholders by the weighted-average number of common shares outstanding for
   the period ended December 31, 1999. Diluted net income (loss) reflects the
   potential dilution that would occur from any instrument or options, which
   could result in the issuance of additional common shares.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance
   with SFAS No. 128, proforma basic and diluted net income (loss) per share
   have been computed using the weighted-average number of shares of common
   stock outstanding during the period ended December 31, 1998, less shares
   subject to repurchase for the period ended December 31, 1998. Basic and
   diluted pro forma net income (loss) per share also gives effect to the
   conversion of the convertible preferred stock (using the if-converted
   method) from the original date of issuance.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following
   table presents the calculation of basic and diluted and pro forma basic and
   diluted net income (loss) per common share (unaudited in thousands, except
   per share data):</P>
 <P>&nbsp;</P>
 <TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="645">
  <TR VALIGN="BOTTOM">
   <TH COLSPAN="3"></TH>
   <TH COLSPAN="2"></TH>
   <TH COLSPAN="2"></TH>
   <TH COLSPAN="2"></TH>
   <TH COLSPAN="2"></TH>
  </TR>
  <TR VALIGN="BOTTOM">
   <TH COLSPAN="3"></TH>
   <TH COLSPAN="2"></TH>
   <TH COLSPAN="2"></TH>
   <TH COLSPAN="2"></TH>
   <TH COLSPAN="2"></TH>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD WIDTH="32" ALIGN="LEFT" HEIGHT="54">&nbsp;</TD>
   <TD WIDTH="281" ALIGN="LEFT" HEIGHT="54">&nbsp;</TD>
   <TD WIDTH="21" ALIGN="LEFT" HEIGHT="54">&nbsp;</TD>
   <TH ALIGN="RIGHT" COLSPAN="3" HEIGHT="54"> <DIV ALIGN="center"><FONT
     SIZE="-1">Three Months Ended
   <BR>
   December 31,</FONT> </DIV>
   <HR NOSHADE ALIGN="center" WIDTH="100%" SIZE="1"> </TH>
   <TD WIDTH="16" ALIGN="LEFT" HEIGHT="54">&nbsp;</TD>
   <TH ALIGN="RIGHT" COLSPAN="3" HEIGHT="54"> <DIV ALIGN="center"><FONT
     SIZE="-1">Six Months Ended
   <BR>
   December 31, </FONT> </DIV>
  <HR NOSHADE ALIGN="center" WIDTH="100%" SIZE="1"> <TH ALIGN="RIGHT"
    HEIGHT="54" WIDTH="15">&nbsp; </TR>
  <TR VALIGN="BOTTOM">
   <TD WIDTH="32" ALIGN="LEFT">&nbsp;</TD>
   <TD WIDTH="281" ALIGN="LEFT">&nbsp;</TD>
   <TD WIDTH="21" ALIGN="LEFT">&nbsp;</TD>
   <TH WIDTH="64" ALIGN="RIGHT" VALIGN="bottom"> <DIV ALIGN="center"><FONT
     SIZE="-1">1999 </FONT> </DIV>
   <HR NOSHADE ALIGN="center" WIDTH="100%" SIZE="1"> <TH WIDTH="10"
     VALIGN="bottom"> <DIV ALIGN="center"></DIV>
   </TH>
   <TH WIDTH="66" ALIGN="LEFT" VALIGN="bottom"> <DIV ALIGN="center"><FONT
     SIZE="-1">1998 </FONT> </DIV>
   <HR NOSHADE ALIGN="center" WIDTH="100%" SIZE="1"> <TH WIDTH="16"><FONT
     SIZE="-1"></FONT> <DIV ALIGN="center"></DIV>
   </TH>
   <TH WIDTH="65" ALIGN="RIGHT" VALIGN="bottom"> <DIV ALIGN="center"><FONT
     SIZE="-1">1999</FONT> </DIV>
   <HR NOSHADE ALIGN="center" WIDTH="100%" SIZE="1"> <TH WIDTH="11"> <DIV
     ALIGN="center"></DIV>
   </TH>
   <TH WIDTH="64" ALIGN="LEFT" VALIGN="bottom"> <DIV ALIGN="center"><FONT
     SIZE="-1">1998</FONT> </DIV>
   <HR NOSHADE ALIGN="center" WIDTH="100%" SIZE="1"> <TH WIDTH="15"> <DIV
     ALIGN="center"></DIV>
   </TH>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" COLSPAN="2">Net income (loss)</TD>
   <TD WIDTH="21" ALIGN="LEFT">&nbsp;</TD>
   <TD WIDTH="64" ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;6,355</TD>
   <TD WIDTH="10" ALIGN="LEFT">&nbsp;</TD>
   <TD WIDTH="66" ALIGN="RIGHT">$(1,954</TD>
   <TD WIDTH="16" ALIGN="LEFT">)</TD>
   <TD WIDTH="65" ALIGN="RIGHT">$&nbsp;10,402</TD>
   <TD WIDTH="11" ALIGN="LEFT">&nbsp;</TD>
   <TD WIDTH="64" ALIGN="RIGHT">$(4,936</TD>
   <TD ALIGN="LEFT" WIDTH="15">)</TD>
  </TR>
  <TR>
   <TD WIDTH="32" HEIGHT="18">&nbsp; </TD>
   <TD WIDTH="281" HEIGHT="18">&nbsp;</TD>
   <TD WIDTH="21" HEIGHT="18">&nbsp;</TD>
   <TD WIDTH="64" HEIGHT="18"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="2">
     </TD>
   <TD WIDTH="10" HEIGHT="18">&nbsp;</TD>
   <TD WIDTH="66" HEIGHT="18"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="2">
     </TD>
   <TD WIDTH="16" HEIGHT="18">&nbsp;</TD>
   <TD WIDTH="65" HEIGHT="18"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="2">
     </TD>
   <TD WIDTH="11" HEIGHT="18">&nbsp;</TD>
   <TD WIDTH="64" HEIGHT="18"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="2">
     </TD>
   <TD WIDTH="15" HEIGHT="18">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="32">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="281">Weighted-average shares of common &nbsp;
     &nbsp;stock&nbsp;outstanding</TD>
   <TD ALIGN="LEFT" WIDTH="21">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="32">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="281">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="21">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64">51,994</TD>
   <TD ALIGN="LEFT" WIDTH="10">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="66">11,700</TD>
   <TD ALIGN="LEFT" WIDTH="16">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="65">50,772</TD>
   <TD ALIGN="LEFT" WIDTH="11">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64">11,599</TD>
   <TD ALIGN="LEFT" WIDTH="15">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="32">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="281">Less: Weighted-average shares subject to &nbsp;
     &nbsp;repurchase</TD>
   <TD ALIGN="LEFT" WIDTH="21">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64">(1,813</TD>
   <TD ALIGN="LEFT" WIDTH="10">)</TD>
   <TD ALIGN="RIGHT" WIDTH="66">(4,520</TD>
   <TD ALIGN="LEFT" WIDTH="16">)</TD>
   <TD ALIGN="RIGHT" WIDTH="65">(2,168</TD>
   <TD ALIGN="LEFT" WIDTH="11">)</TD>
   <TD ALIGN="RIGHT" WIDTH="64">(4,732</TD>
   <TD ALIGN="LEFT" WIDTH="15">)</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="32">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="281">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="21">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD ALIGN="LEFT" WIDTH="10">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="66"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD ALIGN="LEFT" WIDTH="16">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="65"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD ALIGN="LEFT" WIDTH="11">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD ALIGN="LEFT" WIDTH="15">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="32">&nbsp;&nbsp;&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="281">Weighted-average shares used in computing &nbsp;
     &nbsp;basic&nbsp;net income (loss) per common share</TD>
   <TD ALIGN="LEFT" WIDTH="21">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64">50,181</TD>
   <TD ALIGN="LEFT" WIDTH="10">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="66">7,180</TD>
   <TD ALIGN="LEFT" WIDTH="16">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="65">48,604</TD>
   <TD ALIGN="LEFT" WIDTH="11">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64">6,867</TD>
   <TD ALIGN="LEFT" WIDTH="15">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="32">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="281">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="21">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD ALIGN="LEFT" WIDTH="10">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="66"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD ALIGN="LEFT" WIDTH="16">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="65"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD ALIGN="LEFT" WIDTH="11">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD ALIGN="LEFT" WIDTH="15">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="32">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="281">Incremental shares using the treasury stock
     &nbsp;&nbsp;method</TD>
   <TD ALIGN="LEFT" WIDTH="21">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64">5,682</TD>
   <TD ALIGN="LEFT" WIDTH="10">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="66">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="16">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="65">6,100</TD>
   <TD ALIGN="LEFT" WIDTH="11">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="32" HEIGHT="45" NOWRAP>&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="281" HEIGHT="45" NOWRAP>Weighted-average shares used
     in computing &nbsp;&nbsp;diluted net income (loss) per common &nbsp;
     &nbsp;share</TD>
   <TD ALIGN="LEFT" WIDTH="21" HEIGHT="45">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64" HEIGHT="45">55,863</TD>
   <TD ALIGN="LEFT" WIDTH="10" HEIGHT="45">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="66" HEIGHT="45">7,180</TD>
   <TD ALIGN="LEFT" WIDTH="16" HEIGHT="45">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="65" HEIGHT="45">54,704</TD>
   <TD ALIGN="LEFT" WIDTH="11" HEIGHT="45">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64" HEIGHT="45">6,867</TD>
   <TD ALIGN="LEFT" WIDTH="15" HEIGHT="45">&nbsp;</TD>
  </TR>
  <TR>
   <TD WIDTH="32">&nbsp; </TD>
   <TD WIDTH="281">&nbsp;</TD>
   <TD WIDTH="21">&nbsp;</TD>
   <TD WIDTH="64"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="2"> </TD>
   <TD WIDTH="10">&nbsp;</TD>
   <TD WIDTH="66"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="2"> </TD>
   <TD WIDTH="16">&nbsp;</TD>
   <TD WIDTH="65"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="2"> </TD>
   <TD WIDTH="11">&nbsp;</TD>
   <TD WIDTH="64"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="2"> </TD>
   <TD WIDTH="15">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" COLSPAN="2">Basic net income (loss) per common share</TD>
   <TD ALIGN="LEFT" WIDTH="21">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.13</TD>
   <TD ALIGN="LEFT" WIDTH="10">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="66">$&nbsp;&nbsp;(0.27</TD>
   <TD ALIGN="LEFT" WIDTH="16">)</TD>
   <TD ALIGN="RIGHT" WIDTH="65">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.21</TD>
   <TD ALIGN="LEFT" WIDTH="11">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64">$&nbsp;&nbsp;(0.72</TD>
   <TD ALIGN="LEFT" WIDTH="15">)</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" COLSPAN="2">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="21">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD ALIGN="LEFT" WIDTH="10">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="66"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD ALIGN="LEFT" WIDTH="16">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="65"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD ALIGN="LEFT" WIDTH="11">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD ALIGN="LEFT" WIDTH="15">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" COLSPAN="2">Diluted net income (loss) per common share</TD>
   <TD ALIGN="LEFT" WIDTH="21">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.11</TD>
   <TD ALIGN="LEFT" WIDTH="10">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="66">$&nbsp;&nbsp;(0.27</TD>
   <TD ALIGN="LEFT" WIDTH="16">)</TD>
   <TD ALIGN="RIGHT" WIDTH="65">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.19</TD>
   <TD ALIGN="LEFT" WIDTH="11">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64">$&nbsp;&nbsp;(0.72</TD>
   <TD ALIGN="LEFT" WIDTH="15">)</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" COLSPAN="2">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="21">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD ALIGN="LEFT" WIDTH="10">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="66"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD ALIGN="LEFT" WIDTH="16">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="65"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD ALIGN="LEFT" WIDTH="11">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD ALIGN="LEFT" WIDTH="15">&nbsp; </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" COLSPAN="2">Pro forma:</TD>
   <TD ALIGN="LEFT" WIDTH="21">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="32">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="281">Net loss</TD>
   <TD ALIGN="LEFT" WIDTH="21">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="10">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="66">$(1,954</TD>
   <TD ALIGN="LEFT" WIDTH="16">)</TD>
   <TD ALIGN="RIGHT" WIDTH="65">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="11">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64">$(4,936</TD>
   <TD ALIGN="LEFT" WIDTH="15">)</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" COLSPAN="2">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="21">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64">&nbsp; </TD>
   <TD ALIGN="LEFT" WIDTH="10">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="66"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD ALIGN="LEFT" WIDTH="16">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="65">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="11">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD ALIGN="LEFT" WIDTH="15">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="32">&nbsp;&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="281">Shares used above</TD>
   <TD ALIGN="LEFT" WIDTH="21">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="10">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="66">7,180</TD>
   <TD ALIGN="LEFT" WIDTH="16">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="65">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="11">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64">6,867</TD>
   <TD ALIGN="LEFT" WIDTH="15">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="32">&nbsp;&nbsp;&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="281">Pro forma adjustment to reflect weighted &nbsp;
     &nbsp;effect of assumed conversion of convertible &nbsp;&nbsp;preferred
     stock</TD>
   <TD ALIGN="LEFT" WIDTH="21">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="10">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="66">29,062</TD>
   <TD ALIGN="LEFT" WIDTH="16">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="65">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="11">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64">29,062</TD>
   <TD ALIGN="LEFT" WIDTH="15">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="32">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="281">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="21">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64">&nbsp; </TD>
   <TD ALIGN="LEFT" WIDTH="10">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="66"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD ALIGN="LEFT" WIDTH="16">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="65">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="11">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD ALIGN="LEFT" WIDTH="15">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="32" HEIGHT="44">&nbsp;&nbsp; </TD>
   <TD ALIGN="LEFT" WIDTH="281" HEIGHT="44">Shares used in computing pro forma
     basic&nbsp;&nbsp; &nbsp;&nbsp;and diluted net loss per common share &nbsp;
     &nbsp;(unaudited)</TD>
   <TD ALIGN="LEFT" WIDTH="21" HEIGHT="44">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64" HEIGHT="44">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="10" HEIGHT="44">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="66" HEIGHT="44">36,242</TD>
   <TD ALIGN="LEFT" WIDTH="16" HEIGHT="44">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="65" HEIGHT="44">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="11" HEIGHT="44">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64" HEIGHT="44">35,929</TD>
   <TD ALIGN="LEFT" WIDTH="15" HEIGHT="44">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" HEIGHT="44" COLSPAN="2">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="21" HEIGHT="44">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64" HEIGHT="44">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="10" HEIGHT="44">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="66" HEIGHT="44"> <HR NOSHADE ALIGN="right"
     WIDTH="100%" SIZE="2"> </TD>
   <TD ALIGN="LEFT" WIDTH="16" HEIGHT="44">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="65" HEIGHT="44">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="11" HEIGHT="44">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64" HEIGHT="44"> <HR NOSHADE ALIGN="right"
     WIDTH="100%" SIZE="2"> </TD>
   <TD ALIGN="LEFT" WIDTH="15" HEIGHT="44">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="32">&nbsp;&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="281">Pro forma basic and diluted net loss &nbsp;
     &nbsp;per&nbsp;common share (unaudited)</TD>
   <TD ALIGN="LEFT" WIDTH="21">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="10">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="66">$&nbsp;&nbsp;(0.05</TD>
   <TD ALIGN="LEFT" WIDTH="16">)</TD>
   <TD ALIGN="RIGHT" WIDTH="65">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="11">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64">$&nbsp;&nbsp;(0.14</TD>
   <TD ALIGN="LEFT" WIDTH="15">)</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" COLSPAN="2">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="21">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="10">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="66"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD ALIGN="LEFT" WIDTH="16">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="65">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="11">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="64"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD ALIGN="LEFT" WIDTH="15">&nbsp;</TD>
  </TR>
 </TABLE>
 <P>&nbsp;</P>
 <P>&nbsp;</P>
 <P></P>
 <P><I>Recently Issued Accounting Standard</I></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June 1997,
   the FASB issued SFAS No. 131, &#147;Disclosures about Segments of an
   Enterprise and Related Information&#148; effective for financial statements
   for periods beginning after December 15, 1997. SFAS No. 131 establishes
   standards for the way that public business enterprises report financial and
   descriptive information about reportable operating segments in annual
   financial statements and interim financial reports issued to shareholders.
   SFAS No. 131 supersedes SFAS No. 14, &#147;Financial Reporting for Segments
   of a Business Enterprise,&#148; but retains the requirement to report
   information about major customers. Extreme adopted FAS 131 effective for its
   fiscal year ending June 30, 1999. Extreme has determined that it has a
   single reportable segment. Management uses one measurement of profitability
   and does not disaggregate its business for internal reporting.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June 1998,
   the FASB issued SFAS No. 133, &#147;Accounting for Derivative Instruments
   and Hedging Activities.&#148; Extreme is required to adopt SFAS No. 133 for
   the fiscal year ending June 30, 2002. SFAS No. 133 establishes methods of
   accounting for derivative financial instruments and hedging activities
   related to those instruments as well as other hedging activities. Because
   Extreme currently holds no derivative financial instruments and does not
   currently engage in hedging activities, adoption of SFAS No. 133 is expected
   to have no material impact on Extreme&#146;s financial condition or results
   of operations.</P>

 <TABLE WIDTH=600 BORDER=0 CELLPADDING=0 CELLSPACING=0>
  <TR VALIGN=TOP>
   <TD WIDTH=3%>3. </TD>
   <TD WIDTH=3%></TD>
   <TD WIDTH=94%>COMMITMENTS</TD>
  </TR>
 </TABLE>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Extreme had
   outstanding purchase order commitments for materials of approximately $45.4
   million and $26.4 million at December 31, 1999 and June 30, 1999,
   respectively. Extreme expects these purchase orders to be fulfilled and the
   related invoices to be paid in fiscal year 2000. Of the $45.4 million
   outstanding at December 31, 1999, the Company has accrued and expensed
   approximately $0.6 million of the outstanding purchase order commitments for
   materials due to obligations to suppliers as of December 31, 1999. This
   expense is included within cost of revenue for the six months ended December
   31, 1999.</P>

 <TABLE WIDTH=600 BORDER=0 CELLPADDING=0 CELLSPACING=0>
  <TR VALIGN=TOP>
   <TD WIDTH=3%>4. </TD>
   <TD WIDTH=3%></TD>
   <TD WIDTH=94%>INCOME TAXES</TD>
  </TR>
 </TABLE>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has
   recorded a tax provision of $5.1 million for the six months ended December
   31, 1999. The provision for income taxes consists primarily of federal
   taxes, foreign taxes and state income taxes.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FASB Statement
   No. 109 provides for the recognition of deferred tax assets if realization
   of such assets is more likely than not. Based upon the weight of available
   evidence, which includes the Company&#146;s historical operating performance
   and the reported cumulative net losses in all prior years, the Company has
   provided a full valuation allowance against its net deferred tax assets. The
   Company will continue to evaluate the realizability of the deferred tax
   assets on a quarterly basis.</P>

 <TABLE WIDTH=600 BORDER=0 CELLPADDING=0 CELLSPACING=0>
  <TR VALIGN=TOP>
   <TD WIDTH=3%>5. </TD>
   <TD WIDTH=3%></TD>
   <TD WIDTH=94%>COMPREHENSIVE INCOME (LOSS)</TD>
  </TR>
 </TABLE>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Extreme adopted
   SFAS No. 130, &#147;Reporting Comprehensive Income&#148; at December 31,
   1998. SFAS 130 establishes new rules for the reporting and display of
   comprehensive income and its components; however, it had no impact on the
   Company&#146;s net income (loss) or stockholders&#146; equity. SFAS 130
   requires unrealized gains or losses on the Company&#146;s available-for-sale
   securities and foreign currency translation adjustments to be included
 in other comprehensive income. Prior to adoption of SFAS 130, the Company had
   no unrealized gains or losses on available-for-sale securities or foreign
   currency translation adjustments.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following
   are the components of accumulated other comprehensive loss (in
   thousands):</P>

 <TABLE BORDER="0" WIDTH="627" ALIGN="center">
  <TR VALIGN="BOTTOM">
   <TH COLSPAN="2"></TH>
   <TH COLSPAN="2"></TH>
   <TH COLSPAN="2"></TH>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD WIDTH="288" ALIGN="LEFT">&nbsp;</TD>
   <TD WIDTH="37" ALIGN="LEFT">&nbsp;</TD>
   <TH WIDTH="144" ALIGN="center">December 31, 1999 <HR NOSHADE ALIGN="center"
     WIDTH="100%" SIZE="1"> </TH>
   <TH WIDTH="18" ALIGN="LEFT">&nbsp;</TH>
   <TH WIDTH="120" ALIGN="center">June 30, 1999 <HR NOSHADE ALIGN="center"
     WIDTH="100%" SIZE="1"> </TH>
   <TH WIDTH="20" ALIGN="LEFT">&nbsp;</TH>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD WIDTH="288" ALIGN="LEFT" HEIGHT="18">Unrealized loss on investments</TD>
   <TD WIDTH="37" ALIGN="LEFT" HEIGHT="18">&nbsp;</TD>
   <TD WIDTH="144" ALIGN="right" HEIGHT="18">$(409</TD>
   <TD WIDTH="18" ALIGN="left" HEIGHT="18">)</TD>
   <TD WIDTH="120" ALIGN="right" HEIGHT="18">$(112</TD>
   <TD WIDTH="20" ALIGN="left" HEIGHT="18">)</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="288">Foreign currency translation adjustments</TD>
   <TD ALIGN="LEFT" WIDTH="37">&nbsp;</TD>
   <TD ALIGN="right" WIDTH="144">19</TD>
   <TD ALIGN="left" WIDTH="18">&nbsp;</TD>
   <TD ALIGN="right" WIDTH="120">(6</TD>
   <TD ALIGN="left" WIDTH="20">)</TD>
  </TR>
  <TR>
   <TD>&nbsp; </TD>
   <TD>&nbsp;</TD>
   <TD> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TD>
   <TD>&nbsp;</TD>
   <TD> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TD>
   <TD>&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="288">&nbsp;&nbsp;&nbsp;Accumulated other
     comprehensive loss</TD>
   <TD ALIGN="LEFT" WIDTH="37">&nbsp;</TD>
   <TD ALIGN="right" WIDTH="144">$(390</TD>
   <TD ALIGN="left" WIDTH="18">)</TD>
   <TD ALIGN="right" WIDTH="120">$(118</TD>
   <TD ALIGN="left" WIDTH="20">)</TD>
  </TR>
  <TR>
   <TD>&nbsp; </TD>
   <TD>&nbsp;</TD>
   <TD> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="2"> </TD>
   <TD>&nbsp;</TD>
   <TD> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="2"> </TD>
   <TD>&nbsp;</TD>
  </TR>
 </TABLE>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following schedule of other
   comprehensive loss shows the gross current-period loss and the
   reclassification adjustment (in thousands): </P>
 <P>&nbsp;</P>
 <TABLE BORDER="0" ALIGN="center">
  <TR>
   <TD>&nbsp;</TD>
   <TH COLSPAN="3" ALIGN="center">Three Months Ended <HR NOSHADE ALIGN="center"
     WIDTH="100%" SIZE="1"> </TH>
   <TH COLSPAN="4" ALIGN="center">Six Months Ended <HR NOSHADE ALIGN="center"
     WIDTH="100%" SIZE="1"> </TH>
  </TR>
  <TR>
   <TD>&nbsp;</TD>
   <TH ALIGN="center">December 31, 1999 <HR NOSHADE ALIGN="center" WIDTH="100%"
     SIZE="1"> </TH>
   <TH>&nbsp;</TH>
   <TH ALIGN="center">December 31, 1998 <HR NOSHADE ALIGN="center" WIDTH="100%"
     SIZE="1"> </TH>
   <TH ALIGN="center">&nbsp;</TH>
   <TH ALIGN="center">December 31, 1999 <HR NOSHADE ALIGN="center" WIDTH="100%"
     SIZE="1"> </TH>
   <TH>&nbsp;</TH>
   <TH ALIGN="center">December 31, 1998 <HR NOSHADE ALIGN="center" WIDTH="100%"
     SIZE="1"> </TH>
  </TR>
  <TR>
   <TD>Unrealized loss on investments:</TD>
   <TD ALIGN="right">&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
   <TD ALIGN="right">&nbsp;</TD>
   <TD ALIGN="right">&nbsp;</TD>
   <TD> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="right">&nbsp;</TD>
  </TR>
  <TR>
   <TD NOWRAP>&nbsp;&nbsp;&nbsp;Unrealized loss on available-for-
   <BR>
   &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;sale securities</TD>
   <TD ALIGN="right" VALIGN="bottom"> <DIV ALIGN="right">$&nbsp;&nbsp;&nbsp;
     &nbsp;&nbsp;&nbsp;(317</DIV>
   </TD>
   <TD VALIGN="bottom"> <DIV ALIGN="left">)</DIV>
   </TD>
   <TD ALIGN="right" VALIGN="bottom">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;&nbsp;&#151;</TD>
   <TD ALIGN="right" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="right" VALIGN="bottom"> <DIV ALIGN="right">&nbsp;&nbsp;&nbsp;
     &nbsp;&nbsp;&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(358</DIV>
   </TD>
   <TD VALIGN="bottom"> <DIV ALIGN="left">)</DIV>
   </TD>
   <TD ALIGN="right" VALIGN="bottom">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;&nbsp;&#151;</TD>
  </TR>
  <TR>
   <TD>&nbsp;&nbsp;&nbsp;Less: reclassification adjustment
   <BR>
   &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;for gain realized in net loss</TD>
   <TD ALIGN="right" VALIGN="bottom"> <DIV ALIGN="right">37</DIV>
   </TD>
   <TD VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="right" VALIGN="bottom">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;&nbsp;&nbsp;&nbsp;&#151;</TD>
   <TD ALIGN="right" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="right" VALIGN="bottom"> <DIV ALIGN="right">61</DIV>
   </TD>
   <TD VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="right" VALIGN="bottom">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;&nbsp;&nbsp;&nbsp;&#151;</TD>
  </TR>
  <TR>
   <TD>&nbsp;</TD>
   <TD ALIGN="right"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TD>
   <TD> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="right"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TD>
   <TD ALIGN="right">&nbsp;</TD>
   <TD ALIGN="right"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TD>
   <TD> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="right"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TD>
  </TR>
  <TR>
   <TD NOWRAP>&nbsp;&nbsp;&nbsp;Net unrealized loss on investments</TD>
   <TD ALIGN="right"> <DIV ALIGN="right">(280</DIV>
   </TD>
   <TD> <DIV ALIGN="left">)</DIV>
   </TD>
   <TD ALIGN="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;&nbsp;&#151;</TD>
   <TD ALIGN="right">&nbsp;</TD>
   <TD ALIGN="right"> <DIV ALIGN="right">(297</DIV>
   </TD>
   <TD> <DIV ALIGN="left">)</DIV>
   </TD>
   <TD ALIGN="right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;&nbsp;&#151;</TD>
  </TR>
  <TR>
   <TD>&nbsp;&nbsp;&nbsp;Foreign currency translation
   <BR>
   &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;adjustments</TD>
   <TD ALIGN="right" VALIGN="bottom"> <DIV ALIGN="right">(2</DIV>
   </TD>
   <TD VALIGN="bottom"> <DIV ALIGN="left">)</DIV>
   </TD>
   <TD ALIGN="right" VALIGN="bottom">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;&nbsp;&nbsp;&nbsp;&#151;</TD>
   <TD ALIGN="right" VALIGN="bottom">&nbsp;</TD>
   <TD ALIGN="right" VALIGN="bottom"> <DIV ALIGN="right">25</DIV>
   </TD>
   <TD VALIGN="bottom"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="right" VALIGN="bottom">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;&nbsp;&nbsp;&nbsp;&#151;</TD>
  </TR>
  <TR>
   <TD>&nbsp;</TD>
   <TD ALIGN="right"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TD>
   <TD> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="right"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TD>
   <TD ALIGN="right">&nbsp;</TD>
   <TD ALIGN="right"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TD>
   <TD> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="right"> <HR NOSHADE ALIGN="right" WIDTH="100%" SIZE="1"> </TD>
  </TR>
  <TR>
   <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other comprehensive loss</TD>
   <TD ALIGN="right"> <DIV ALIGN="right">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;(282</DIV>
   </TD>
   <TD> <DIV ALIGN="left">)</DIV>
   </TD>
   <TD ALIGN="right">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &#151;</TD>
   <TD ALIGN="right">&nbsp;</TD>
   <TD ALIGN="right"> <DIV ALIGN="right">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;(272</DIV>
   </TD>
   <TD> <DIV ALIGN="left">)</DIV>
   </TD>
   <TD ALIGN="right">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &#151;</TD>
  </TR>
  <TR>
   <TD HEIGHT="23">&nbsp;</TD>
   <TD ALIGN="right" HEIGHT="23"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD HEIGHT="23"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="right" HEIGHT="23"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD ALIGN="right" HEIGHT="23">&nbsp;</TD>
   <TD ALIGN="right" HEIGHT="23"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
   <TD HEIGHT="23"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="right" HEIGHT="23"> <HR NOSHADE ALIGN="right" WIDTH="100%"
     SIZE="2"> </TD>
  </TR>
 </TABLE>
 <P>&nbsp;</P>
 <TABLE WIDTH=600 BORDER=0 CELLPADDING=0 CELLSPACING=0>
  <TR VALIGN=TOP>
   <TD WIDTH=3%>6. </TD>
   <TD WIDTH=4%></TD>
   <TD WIDTH=93%>TRANSFER OF FINANCIAL ASSETS</TD>
  </TR>
 </TABLE>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company
   from time to time transfers specifically identified accounts receivable
   balances from customers to financing institutions, on a non-recourse basis.
   The Company records such transfers as sales of the related accounts
   receivable when it is considered to have surrendered control of such
   receivables under the provisions of Statement of Financial Accounting
   Standards No. 125, &#147;Accounting for Transfers and Servicing of Financial
   Assets and Extinguishments of Liabilities.&#148; The impact of the above
   transaction reduced receivables and increased cash flows from operating
   activities in the consolidated statements of cash flows.</P>

 <TABLE WIDTH=600 BORDER=0 CELLPADDING=0 CELLSPACING=0>
  <TR VALIGN=TOP>
   <TD WIDTH=3%>7. </TD>
   <TD WIDTH=4%></TD>
   <TD WIDTH=93%>SECONDARY PUBLIC OFFERING</TD>
  </TR>
 </TABLE>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On October 20,
   1999, the Company announced the completion of a secondary public offering of
   approximately 7.5 million shares (including the underwriters&#146;
   over-allotment provision) of its common stock at a price of $77.00 per
   share. Of these shares, the Company sold 2,372,708 shares and existing
   stockholders sold 5,102,292 shares. The Company raised approximately $175
   million net of offering costs.</P>

 <A NAME="ltx11"></A>
 <P></P>
 <P><B>Part I. Financial Information</B>
 <BR>
 <B></B>Item 2. Management's Discussion and Analysis of
 <BR>
 Financial Condition and Results of Operations <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
   &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;When used in this discussion and elsewhere in
   this Form 10-Q, the words &#147;may,&#148; &#147;should,&#148;
   &#147;believes,&#148; &#147;expects,&#148; &#147;anticipates,&#148;
   &#147;estimates&#148; and similar expressions are intended to identify
   forward-looking statements. Such statements, which include statements
   concerning the availability and functionality of products under development,
   product mix, pricing trends, the mix of export sales, sales to significant
   customers and the availability and cost of products from the Company&#146;s
   suppliers, are subject to risks and uncertainties, including those set forth
   below under &#147;Factors That May Affect Our Results.&#148; Our actual
   results could differ materially from those projected in these
   forward-looking statements which could have a material adverse effect on our
   business, operating results and financial condition. These forward-looking
   statements speak only as of the date hereof and actual outcomes will be
   affected by events in the future that we are not able to predict accurately
   or over which we have no control.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following
   information should be read in conjunction with the &#147;Management&#146;s
   Discussion and Analysis of Financial Condition and Results of Operations
   &#148; in the Company&#146;s annual report on Form 10-K for the fiscal year
   ended June 30, 1999.</P>
 <P><B>Overview</B></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From our
   inception in May 1996 through September 1997, our operating activities
   related primarily to developing a research and development organization,
   testing prototype designs, building an ASIC design infrastructure,
   commencing the staffing of our marketing, sales and field service and
   technical support organizations, and establishing relationships with
   resellers and OEMs. We commenced volume shipments of our Summit1 and
   Summit2, the initial products in our Summit stackable product family, in
   October 1997, and we began shipping our BlackDiamond modular product family
   in September 1998. We incurred losses through fiscal 1999.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our revenue is
   derived primarily from sales of our Summit and BlackDiamond product families
   and fees for services relating to our products, including maintenance and
   training. The level of sales to any customer may vary from period to period;
   however, we expect that significant customer concentration will continue for
   the foreseeable future. See<B> </B>&#147;Factors That May Affect Our Results
   &#151;If a Key Reseller, OEM or Other Significant Customer Cancels or Delays
   a Large Purchase, Extreme&#146;s Revenues May Decline and the Price of Its
   Stock May Fall.&#148; Significant customer concentration as a percentage of
   net revenue is summarized below:</P>

 <TABLE BORDER="0" WIDTH="650" ALIGN="center" CELLPADDING="0" CELLSPACING="0">
  <TR VALIGN="BOTTOM">
   <TH COLSPAN="2"></TH>
   <TH COLSPAN="4" VALIGN="bottom">Three Months Ended <HR NOSHADE
     ALIGN="center" WIDTH="100%" SIZE="1"> </TH>
   <TH COLSPAN="4" VALIGN="bottom">Six Months Ended <HR NOSHADE ALIGN="center"
     WIDTH="100%" SIZE="1"> </TH>
  </TR>
  <TR VALIGN="BOTTOM">
   <TH COLSPAN="2"> <DIV ALIGN="left">Customer</DIV>
   </TH>
   <TH COLSPAN="2" VALIGN="bottom">December 31,
   <BR>
   1999 <HR NOSHADE ALIGN="center" WIDTH="100%" SIZE="1"> </TH>
   <TH COLSPAN="2" VALIGN="bottom">December 31,
   <BR>
   1998 <HR NOSHADE ALIGN="center" WIDTH="100%" SIZE="1"> </TH>
   <TH COLSPAN="2" VALIGN="bottom">December 31,
   <BR>
   1999 <HR NOSHADE ALIGN="center" WIDTH="100%" SIZE="1"> </TH>
   <TH COLSPAN="2" VALIGN="bottom">December 31,
   <BR>
   1998 <HR NOSHADE ALIGN="center" WIDTH="100%" SIZE="1"> </TH>
  </TR>
  <TR VALIGN="BOTTOM">
   <TH COLSPAN="2"></TH>
   <TH COLSPAN="4">&nbsp;</TH>
   <TH COLSPAN="4">&nbsp;</TH>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD WIDTH="151" ALIGN="LEFT">&nbsp;&nbsp;Compaq</TD>
   <TD WIDTH="1" ALIGN="LEFT">&nbsp;</TD>
   <TD WIDTH="93" ALIGN="RIGHT">&#151</TD>
   <TD WIDTH="15" ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD WIDTH="76" ALIGN="RIGHT">22</TD>
   <TD WIDTH="17" ALIGN="LEFT"> <DIV ALIGN="left">%</DIV>
   </TD>
   <TD WIDTH="120" ALIGN="RIGHT">14</TD>
   <TD WIDTH="13" ALIGN="LEFT"> <DIV ALIGN="left">%</DIV>
   </TD>
   <TD WIDTH="82" ALIGN="RIGHT">17</TD>
   <TD WIDTH="46" ALIGN="LEFT"> <DIV ALIGN="left">%</DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="151">&nbsp;&nbsp;Hitachi Cable</TD>
   <TD ALIGN="LEFT" WIDTH="1">&nbsp;</TD>
   <TD ALIGN="RIGHT" WIDTH="93"> <DIV ALIGN="right">10</DIV>
   </TD>
   <TD ALIGN="LEFT" WIDTH="15">%</TD>
   <TD ALIGN="RIGHT" WIDTH="76">16</TD>
   <TD ALIGN="LEFT" WIDTH="17"> <DIV ALIGN="left">%</DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="120">11</TD>
   <TD ALIGN="LEFT" WIDTH="13"> <DIV ALIGN="left">%</DIV>
   </TD>
   <TD ALIGN="RIGHT" WIDTH="82">11</TD>
   <TD ALIGN="LEFT" WIDTH="46"> <DIV ALIGN="left">%</DIV>
   </TD>
  </TR>
 </TABLE>
 <P>&nbsp;</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We market and
   sell our products primarily through resellers, distributors and, to a lesser
   extent, OEMs and our field sales organization. We sell our products through
   more than 200 <B> </B>resellers in 40 countries. In the six months ended
   December 31, 1999, sales to customers outside of North America accounted for
   approximately 47% of our net revenue. Currently, all of our international
   sales are denominated in U.S. Dollars We generally recognize product revenue
   at the time of shipment, unless we have future obligations for installation
   or have to obtain customer acceptance, in which case revenue is deferred
   until such obligations have been satisfied. We have established a program
   which, under specified conditions, enables third party resellers to return
   products to us. The amount of potential product returns is estimated and
   provided for in the period of the sale. Service revenue is recognized
   ratably over the term of the contract period, which is typically 12
   months.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We expect to
   experience rapid erosion of average selling prices of our products due to a
   number of factors, including competitive pricing pressures, promotional
   pricing and rapid technological change. Our gross margins
 will be affected by such declines and by fluctuations in manufacturing
   volumes, component costs and the mix of product configurations sold. In
   addition, our gross margins may fluctuate due to the mix of distribution
   channels through which our products are sold, including the potential
   effects of our development of a two-tier distribution channel. We generally
   realize higher gross margins on sales to resellers than on sales through our
   OEMs. Any significant decline in sales to our OEMs or resellers, or the loss
   of any of our OEMs or resellers could materially adversely affect our
   business, operating results and financial condition. In addition, new
   product introduction may result in excess or obsolete inventories. Any
   excess or obsolete inventories may also reduce our gross margins.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We outsource
   the majority of our manufacturing and supply chain management operations,
   and we conduct quality assurance, manufacturing engineering, documentation
   control and repairs at our facility in Santa Clara, California. Accordingly,
   a significant portion of our cost of revenue consists of payments to our
   contract manufacturers, Flextronics and MCMS. We expect to realize lower per
   unit product costs as a result of volume efficiencies. However, we cannot
   assure you when or if such price reductions will occur. The failure to
   obtain such price reductions could materially adversely affect our gross
   margins and operating results.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research and
   development expenses consist principally of salaries and related personnel
   expenses, consultant fees and prototype expenses related to the design,
   development, testing and enhancement of our ASICs and software. We expense
   all research and development expenses as incurred. We believe that continued
   investment in research and development is critical to attaining our
   strategic objectives and, as a result, we expect these expenses to increase
   in absolute dollars in the future.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales and
   marketing expenses consist of salaries, commissions and related expenses for
   personnel engaged in marketing, sales and field service support functions,
   as well as trade shows and promotional expenses. We intend to pursue sales
   and marketing campaigns aggressively and therefore expect these expenses to
   increase significantly in absolute dollars in the future. In addition, we
   expect to substantially expand our field sales operations to support and
   develop leads for our resellers and distributors, which would also result in
   an increase in sales and marketing expenses.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and
   administrative expenses consist primarily of salaries and related expenses
   for executive, finance and administrative personnel, professional fees and
   other general corporate expenses. We expect general and administrative
   expenses to increase in absolute dollars as we add personnel, increase
   spending on our information systems and incur additional costs related to
   the anticipated growth of our business and operation as a public company.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During fiscal
   1998, in connection with the grant of certain stock options to employees, we
   recorded deferred stock compensation of $437,000 representing the difference
   between the exercise price and the deemed fair value of our common stock on
   the date such stock options were granted. Such amount is included as a
   reduction of stockholders&#146; equity and is being amortized by charges to
   operations on a graded vesting method. We recorded amortization of deferred
   stock compensation expense of approximately $66,000, $172,000 and $68,000
   for the six months ended December 31, 1999 and the years ended June 30, 1999
   and 1998, respectively. At December 31, 1999, we had a total of
   approximately $131,000 remaining to be amortized over the corresponding
   vesting period of each respective option, generally four years. The
   amortization expense relates to options awarded to employees in all
   operating expense categories.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Despite growing
   revenues, we have only been profitable for the last four fiscal quarters.
   Our income has not increased proportionately with the increase in our
   revenue primarily because of increased expenses relating to our growth in
   operations. Because of the lengthy sales cycle of our products, there is
   often a significant delay between the time we incur expenses and the time we
   realize any related revenue. See &#147;Factors That May Affect Our Results
   &#151;The Sales Cycle for Extreme&#146;s Products is Long and Extreme May
   Incur Substantial Non-Recoverable Expenses or Devote Significant Resources
   to Sales that Do Not Occur When Anticipated.&#148; To the extent that future
   revenues do not increase significantly in the same periods in which
   operating expenses increase, our operating results would be adversely
   affected. See &#147;Factors That May Affect Our Results &#151;A Number of
   Factors Could Cause Extreme&#146;s Quarterly Financial Results to Be Worse
   Than Expected, Resulting in a Decline in Its Stock Price.&#148;</P>
 <P></P>
 <P><B>Results of Operations</B></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following
   table sets forth for the periods indicated certain financial data as a
   percentage of net revenue:</P>
 <TABLE BORDER="0" ALIGN="center">
  <TR VALIGN="BOTTOM">
   <TH></TH>
   <TH COLSPAN="2"></TH>
   <TH COLSPAN="2"></TH>
   <TH COLSPAN="2"></TH>
   <TH COLSPAN="2"></TH>
  </TR>
  <TR VALIGN="BOTTOM">
   <TH ALIGN="LEFT">&nbsp;</TH>
   <TH ALIGN="RIGHT" COLSPAN="4"> <DIV ALIGN="center">Three Months Ended </DIV>
   <HR NOSHADE COLOR="Black" SIZE="1" ALIGN="center" WIDTH="100%"> </TH>
   <TH ALIGN="RIGHT" COLSPAN="4"> <DIV ALIGN="center">Six Months Ended </DIV>
   <HR NOSHADE COLOR="Black" SIZE="1" ALIGN="center" WIDTH="100%"> </TH>
  </TR>
  <TR VALIGN="BOTTOM">
   <TH ALIGN="LEFT">&nbsp;</TH>
   <TH ALIGN="RIGHT" COLSPAN="2"> <DIV ALIGN="center">December&nbsp;31,
   <BR>
   1999 </DIV>
   <HR NOSHADE COLOR="Black" SIZE="1" ALIGN="center" WIDTH="100%"> </TH>
   <TH ALIGN="RIGHT" COLSPAN="2"> <DIV ALIGN="center">December&nbsp;31,
   <BR>
   1998 </DIV>
   <HR NOSHADE COLOR="Black" SIZE="1" ALIGN="center" WIDTH="100%"> <TH
     ALIGN="RIGHT" COLSPAN="2"> <DIV ALIGN="center">December&nbsp;31,
   <BR>
   1999 </DIV>
   <HR NOSHADE COLOR="Black" SIZE="1" ALIGN="center" WIDTH="100%"> <TH
     ALIGN="RIGHT" COLSPAN="3"> <DIV ALIGN="center">December&nbsp;31,
   <BR>
   1998 </DIV>
  <HR NOSHADE COLOR="Black" SIZE="1" ALIGN="center" WIDTH="100%"> </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT">Net revenue</TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">100.0</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left">%</DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">100.0</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left">%</DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">100.0</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left">%</DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">100.0</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left">%</DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT">Cost of revenue</TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">47.6</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">50.5</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">47.7</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">50.6</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="top">
   <TD>&nbsp; </TD>
   <TD> <HR NOSHADE COLOR="Black" SIZE="1" ALIGN="right" WIDTH="100%"> </TD>
   <TD> <DIV ALIGN="left"></DIV>
   </TD>
   <TD> <HR NOSHADE COLOR="Black" SIZE="1" ALIGN="right"> </TD>
   <TD> <DIV ALIGN="left"></DIV>
   </TD>
   <TD> <HR NOSHADE COLOR="Black" SIZE="1" ALIGN="right"> </TD>
   <TD> <DIV ALIGN="left"></DIV>
   </TD>
   <TD> <HR NOSHADE COLOR="Black" SIZE="1" ALIGN="right"> </TD>
   <TD> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT">Gross profit</TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">52.4</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">49.5</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">52.3</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">49.4</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="top">&nbsp; </TD>
   <TD VALIGN="top"> <HR NOSHADE COLOR="Black" SIZE="1" ALIGN="right"
     WIDTH="100%"> </TD>
   <TD VALIGN="top"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD VALIGN="top"> <HR NOSHADE COLOR="Black" SIZE="1" ALIGN="right"> </TD>
   <TD VALIGN="top"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD VALIGN="top"> <HR NOSHADE COLOR="Black" SIZE="1" ALIGN="right"> </TD>
   <TD VALIGN="top"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD VALIGN="top"> <HR NOSHADE COLOR="Black" SIZE="1" ALIGN="right"> </TD>
   <TD VALIGN="top"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT">Operating expenses:</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;Research and development</TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">14.1</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">16.9</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">14.3</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">21.3</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;Sales and marketing</TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">22.4</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">30.3</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">22.9</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">33.1</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;General and administrative</TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">5.0</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">8.8</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">5.2</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">9.0</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="top">&nbsp; </TD>
   <TD VALIGN="top"> <HR NOSHADE COLOR="Black" SIZE="1" ALIGN="right"
     WIDTH="100%"> </TD>
   <TD VALIGN="top"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD VALIGN="top"> <HR NOSHADE COLOR="Black" SIZE="1" ALIGN="right"> </TD>
   <TD VALIGN="top"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD VALIGN="top"> <HR NOSHADE COLOR="Black" SIZE="1" ALIGN="right"> </TD>
   <TD VALIGN="top"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD VALIGN="top"> <HR NOSHADE COLOR="Black" SIZE="1" ALIGN="right"> </TD>
   <TD VALIGN="top"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;Total operating expenses</TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">41.5</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">56.0</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">42.4</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">63.4</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="top">&nbsp; </TD>
   <TD VALIGN="top"> <HR NOSHADE COLOR="Black" SIZE="1" ALIGN="right"
     WIDTH="100%"> </TD>
   <TD VALIGN="top"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD VALIGN="top"> <HR NOSHADE COLOR="Black" SIZE="1" ALIGN="right"> </TD>
   <TD VALIGN="top"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD VALIGN="top"> <HR NOSHADE COLOR="Black" SIZE="1" ALIGN="right"> </TD>
   <TD VALIGN="top"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD VALIGN="top"> <HR NOSHADE COLOR="Black" SIZE="1" ALIGN="right"> </TD>
   <TD VALIGN="top"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT">Operating income (loss)</TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">10.9</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">(6.5</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left">)</DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">9.9</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">(14.0</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left">)</DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT">Other income (expense), net</TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">6.8</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">(0.5</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left">)</DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">5.3</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">0.3</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="top">&nbsp; </TD>
   <TD VALIGN="top"> <HR NOSHADE COLOR="Black" SIZE="1" ALIGN="right"
     WIDTH="100%"> </TD>
   <TD VALIGN="top"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD VALIGN="top"> <HR NOSHADE COLOR="Black" SIZE="1" ALIGN="right"> </TD>
   <TD VALIGN="top"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD VALIGN="top"> <HR NOSHADE COLOR="Black" SIZE="1" ALIGN="right"> </TD>
   <TD VALIGN="top"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD VALIGN="top"> <HR NOSHADE COLOR="Black" SIZE="1" ALIGN="right"> </TD>
   <TD VALIGN="top"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" NOWRAP>Income (loss) before income taxes</TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">17.7</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">(7.0</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left">)</DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">15.2</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">(13.7</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left">)</DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT">Provision for income taxes</TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">6.1</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">3.9</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">5.0</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">2.3</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="top">&nbsp; </TD>
   <TD VALIGN="top"> <HR NOSHADE COLOR="Black" SIZE="1" ALIGN="right"
     WIDTH="100%"> </TD>
   <TD VALIGN="top"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD VALIGN="top"> <HR NOSHADE COLOR="Black" SIZE="1" ALIGN="right"> </TD>
   <TD VALIGN="top"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD VALIGN="top"> <HR NOSHADE COLOR="Black" SIZE="1" ALIGN="right"> </TD>
   <TD VALIGN="top"> <DIV ALIGN="left"></DIV>
   </TD>
   <TD VALIGN="top"> <HR NOSHADE COLOR="Black" SIZE="1" ALIGN="right"> </TD>
   <TD VALIGN="top"> <DIV ALIGN="left"></DIV>
   </TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT">Net income (loss)</TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">11.6</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left">%</DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">(10.9</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left">)%</DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">10.2</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left">%</DIV>
   </TD>
   <TD ALIGN="RIGHT"> <DIV ALIGN="right">(16.0</DIV>
   </TD>
   <TD ALIGN="LEFT"> <DIV ALIGN="left">)%</DIV>
   </TD>
  </TR>
  <TR>
   <TD VALIGN="top">&nbsp; </TD>
   <TD VALIGN="top"> <HR NOSHADE COLOR="Black" SIZE="2" ALIGN="right"
     WIDTH="100%"> </TD>
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   </TD>
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     WIDTH="100%"> </TD>
   <TD VALIGN="top"> <DIV ALIGN="left"></DIV>
   </TD>
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     WIDTH="100%"> </TD>
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     WIDTH="100%"> </TD>
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   </TD>
  </TR>
 </TABLE>
 <P>&nbsp;</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Net revenue.
   </I>Net revenue increased from $18.0 million for the three months ended
   December 31, 1998 to $55.0 million for the three months ended December 31,
   1999, an increase of $37.0 million. Net revenue increased from $30.9 million
   for the six months ended December 31, 1998 to $102.2 million for the six
   months ended December 31, 1999, an increase of $71.3 million. Net revenue
   increased primarily from increased sales of our Summit stackable products
   and our BlackDiamond modular product family.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;North America
   sales increased from $15.9 million for the six months ended December 31,
   1998 to $54.7 million for the six months ended December 31, 1999, an
   increase of $38.8 million. Sales outside North America increased from $14.9
   million for the six months ended December 31, 1998 to $47.5 million for the
   six months ended December 31, 1999, an increase of $32.6 million. The
   increases in North America sales and sales outside North America reflect the
   growth in demand for our Summit and BlackDiamond products and an increase in
   the number of resellers, offset in part by a decrease in OEM sales. We
   expect that export sales will continue to represent a significant portion of
   net revenue, although we cannot assure you that export sales as a percentage
   of net revenue will remain at current levels. All sales transactions are
   denominated in U.S. dollars.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Gross
   profit. </I>Gross profit increased from $8.9 million for the three months
   ended December 31, 1998 to $28.8 million for the three months ended December
   31, 1999, an increase of $19.9 million. Gross profit increased from $15.2
   million for the six months ended December 31, 1998 to $53.4 million for the
   six months ended December 31, 1999, an increase of $38.2 million, primarily
   due to the related increase in revenue. Gross margins increased from 49.5%
   for the three months ended December 31, 1998 to 52.4% for the three months
   ended December 31, 1999. Gross margins increased from 49.4% for the six
   months ended December 31, 1998 to 52.3% for the six months ended December
   31, 1999. The increase in gross margin resulted primarily from reductions in
   component costs, improved manufacturing efficiencies, a shift in our channel
   mix from OEMs to resellers and a shift in product mix, offset in part by
   lower average selling prices due primarily to increased competition.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Research and
   development expenses. </I>Research and development expenses increased from
   $3.0 million for the three months ended December 31, 1998 to $7.8 million
   for the three months ended December 31, 1999, an increase of $4.8 million.
   Research and development expenses increased from $6.6 million for the six
   months ended December 31, 1998 to $14.7 million for the six months ended
   December 31, 1999, an increase of $8.1
 million. The increase was primarily due to nonrecurring engineering and
   initial product verification expenses and salaries and related personnel
   expenses due to the hiring of additional engineers.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Sales and
   marketing expenses. </I>Sales and marketing expenses increased from $5.4
   million for the three months ended December 31, 1998 to $12.3 million for
   the three months ended December 31, 1999, an increase of $6.9 million. Sales
   and marketing expenses increased from $10.2 million for the six months ended
   December 31, 1998 to $23.4 million for the six months ended December 31,
   1999, an increase of $13.2 million. This increase was primarily due to the
   hiring of additional sales, marketing and customer support personnel,
   increased sales commission expenses resulting from higher sales, increased
   advertising, tradeshow and promotional expenses, and the establishment of
   new sales offices.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>General and
   administrative expenses. </I>General and administrative expenses increased
   from $1.6 million for the three months ended December 31, 1998 to $2.8
   million for the three months ended December 31, 1999, an increase of $1.2
   million. General and administrative expenses increased from $2.8 million for
   the six months ended December 31, 1998 to $5.3 million for the six months
   ended December 31, 1999, an increase of $2.5 million. This increase was due
   primarily to the hiring of additional finance, information technology and
   legal and administrative personnel and increased professional fees.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Interest
   and</I> <I>other income, net. </I>Interest and other income, net increased
   from $81,000 of expense for the three months ended December 31, 1998 to $3.7
   million of income for the three months ended December 31, 1999, an increase
   of $3.8 million. Interest and other income, net increased from $94,000 of
   income for the six months ended December 31, 1998 to $5.4 million of income
   for the six months ended December 31, 1999, an increase of $5.3 million. The
   increase was due to increased interest income earned as a result of the
   increased amount of cash and cash equivalents, short-term investments and<B>
   </B>long-term investments from the net proceeds we received from our initial
   public offering in April 1999 and our secondary public offering in October
   1999 and due to decreased interest expense as a result of the payment in
   full of notes payable and capital lease obligations.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Provision
   for income taxes</I>. We incurred significant operating losses for all
   fiscal years from inception through June 30, 1999. We recorded effective tax
   rates of approximately 35% and 33% for the three and six months ended
   December 31, 1999, respectively. The provision for income taxes consists
   primarily of federal taxes, foreign taxes and state income taxes. Our
   effective tax rate is lower than the combined federal and state statutory
   rates primarily due to the utilization of net operating loss carryforwards
   and other credit carryforwards offset by the impact of foreign taxes. FASB
   Statement No. 109 provides for the recognition of deferred tax assets if
   realization of such assets is more likely than not. Based upon the weight of
   available evidence, which includes our historical operating performance and
   the reported cumulative net losses in all prior years, we have provided a
   full valuation allowance against our net deferred tax assets as the future
   realization of the tax benefit is not sufficiently assured. We intend to
   evaluate the realizability of the deferred tax assets on a quarterly
   basis.</P>
 <P><B> Liquidity and Capital Resources</B></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At December 31,
   1999, we had $108.4 million in cash and cash equivalents, $122.8 million in
   short-term investments and $89.1 million in long-term investments. We have
   primarily financed our operations through the sale of equity securities. We
   completed our initial public offering of approximately 8 million common
   shares (including the underwriters&#146; over-allotment provision) in April
   1999 and raised approximately $125.3 million net of offering costs. On
   October 20, 1999, we completed our secondary offering of approximately 7.5
   million shares (including the underwriters&#146; over-allotment provision)
   of its common stock at a price of $77.00 per share. Of these shares, the
   Company sold 2,372,708 shares and existing stockholders sold 5,102,292
   shares. The Company raised approximately $175 million net of offering
   costs.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash provided
   by operating activities was $13.4 million for the six months ended December
   31, 1999, as compared to cash used for operating activities of $6.6 million
   for the six months ended December 31, 1998. The increase was primarily due
   to net income, increases in deferred revenue, depreciation and accrued
   warranty, offset by increases in accounts receivable, other current and
   noncurrent assets and other accrued liabilities. We
 expect that accounts receivable will continue to increase to the extent our
   revenues continue to rise. Any such increase can be expected to reduce cash,
   cash equivalents, short-term investments and long-term investments.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investing
   activities used cash of $187.8 million for the six months ended December 31,
   1999 due to capital expenditures of $8.2 million and net purchases of
   investments of $179.7 million. Investing activities provided cash of $1.8
   million for the six months ended December 31, 1998 due to maturities of
   investments of $4.2 million offset by capital expenditures of $2.3
   million.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financing
   activities provided cash of $175.7 million for the six months ended December
   31, 1999, arising primarily from proceeds from the issuance and sale of
   common stock, partially offset by principal payments on capital lease
   obligations. Financing activities provided cash of $1.0 million for the six
   months December 31, 1998, primarily from the issuance and sale of stock and
   proceeds from notes payable, partially offset by principal payments on notes
   payable and capital lease obligations.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have a
   revolving line of credit for $0.5 million with Silicon Valley Bank and a
   $2.0 million capital equipment line with Comdisco, Inc. As of December 31,
   1999, there were no outstanding borrowings under these facilities.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In February
   1999, we agreed to lease a 77,000 square foot facility in Santa Clara,
   California. The related cost of this lease is expected to be approximately
   $120,000 per month. The lease has a term of 47 months.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We require
   substantial capital to fund our business, particularly to finance
   inventories and accounts receivable and for capital expenditures. In order
   to build a sustainable business, we expect to use cash in our operations
   over the next several quarters. We are working toward a business model that
   will allow us to consistently generate cash from operations. Achieving this
   model will depend on many factors, including the rate of revenue growth, the
   timing and extent of spending to support product development efforts and
   expansion of sales and marketing, the timing of introductions of new
   products and enhancements to existing products, and market acceptance of our
   products. As a result, we could be required to raise substantial additional
   capital. To the extent that we raise additional capital through the sale of
   equity or convertible debt securities, the issuance of such securities could
   result in dilution to existing stockholders. If additional funds are raised
   through the issuance of debt securities, these securities may have rights,
   preferences and privileges senior to holders of common stock and the term of
   such debt could impose restrictions on our operations. We cannot assure you
   that such additional capital, if required, will be available on acceptable
   terms, or at all. If we are unable to obtain such additional capital, we may
   be required to reduce the scope of our planned product development and
   marketing efforts, which would materially adversely affect our business,
   financial condition and operating results.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that
   our current cash and cash equivalents, short-term investments, long-term
   investments and cash available from credit facilities and future operations
   will enable us to meet our working capital requirements for at least the
   next 12 months.</P>
 <P><B>Year 2000 Readiness Disclosure</B></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Some computers,
   software and other equipment include computer code in which calendar year
   data is abbreviated to only two digits. As a result of this design decision,
   some of these systems could fail to operate or fail to produce correct
   results if &#147;00&#148; is interpreted to mean 1900, rather than 2000.
   These problems are widely expected to increase in frequency and severity as
   the year 2000 approaches, and are commonly referred to as the &#147;year
   2000 problem.&#148;
 the end of a quarter may adversely affect our operating results. Furthermore,
   our customer agreements typically provide that the customer may delay
   scheduled delivery dates and cancel orders within specified time frames
   without significant penalty.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our quarterly
   revenue and operating results have varied significantly in the past and may
   vary significantly in the future due to a number of factors, including:</P>

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   <TD WIDTH=3%></TD>
   <TD WIDTH=95%>fluctuations in demand for our products and services,
     including seasonality, particularly in Asia and Europe;</TD>
  </TR>
 </TABLE>

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  <TR VALIGN=TOP>
   <TD WIDTH=2%>&#149;</TD>
   <TD WIDTH=3%></TD>
   <TD WIDTH=95%>unexpected product returns or the cancellation or rescheduling
     of significant orders;</TD>
  </TR>
 </TABLE>

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  <TR VALIGN=TOP>
   <TD WIDTH=2%>&#149;</TD>
   <TD WIDTH=3%></TD>
   <TD WIDTH=95%>our ability to develop, introduce, ship and support new
     products and product enhancements and manage product transitions;</TD>
  </TR>
 </TABLE>

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  <TR VALIGN=TOP>
   <TD WIDTH=2%>&#149;</TD>
   <TD WIDTH=3%></TD>
   <TD WIDTH=95%>announcements and new product introductions by our
     competitors;</TD>
  </TR>
 </TABLE>

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  <TR VALIGN=TOP>
   <TD WIDTH=2%>&#149;</TD>
   <TD WIDTH=3%></TD>
   <TD WIDTH=95%>our ability to develop and support customer relationships with
     Service providers and other potential large customers;</TD>
  </TR>
 </TABLE>

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  <TR VALIGN=TOP>
   <TD WIDTH=2%>&#149;</TD>
   <TD WIDTH=3%></TD>
   <TD WIDTH=95%>our ability to achieve required cost reductions;</TD>
  </TR>
 </TABLE>

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  <TR VALIGN=TOP>
   <TD WIDTH=2%>&#149;</TD>
   <TD WIDTH=3%></TD>
   <TD WIDTH=95%>our ability to obtain sufficient supplies of sole or limited
     sourced components for our products;</TD>
  </TR>
 </TABLE>

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  <TR VALIGN=TOP>
   <TD WIDTH=2%>&#149;</TD>
   <TD WIDTH=3%></TD>
   <TD WIDTH=95%>unfavorable changes in the prices of the components we
     purchase;</TD>
  </TR>
 </TABLE>

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  <TR VALIGN=TOP>
   <TD WIDTH=2%>&#149;</TD>
   <TD WIDTH=3%></TD>
   <TD WIDTH=95%>our ability to attain and maintain production volumes and
     quality levels for our products;</TD>
  </TR>
 </TABLE>

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  <TR VALIGN=TOP>
   <TD WIDTH=2%>&#149;</TD>
   <TD WIDTH=3%></TD>
   <TD WIDTH=95%>the mix of products sold and the mix of distribution channels
     through which they are sold; and</TD>
  </TR>
 </TABLE>

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   <TD WIDTH=2%>&#149;</TD>
   <TD WIDTH=3%></TD>
   <TD WIDTH=95%>costs relating to possible acquisitions and integration of
     technologies or businesses.</TD>
  </TR>
 </TABLE>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due to the
   foregoing factors, we believe that period-to-period comparisons of our
   operating results should not be relied upon as an indicator of our future
   performance.</P>
 <P><B>Intense Competition in the Market for Networking Equipment Could Prevent
   Extreme From Increasing Revenue and Prevent Extreme From Sustaining
   Profitability</B></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The market for
   internet switches is intensely competitive. Our principal competitors
   include Cabletron Systems, Cisco Systems, Foundry Networks, Lucent
   Technologies, Nortel Networks, and 3Com. Many of our current and potential
   competitors have longer operating histories and substantially greater
   financial, technical, sales, marketing and other resources, as well as
   greater name recognition and larger installed customer bases, than we do.
   These competitors may have developed or could in the future develop new
   technologies that compete with our products or even render our products
   obsolete.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To remain
   competitive, we believe we must, among other things, invest significant
   resources in developing new products and enhancing our current products and
   maintaining customer satisfaction. If we fail to do so, our products may not
   compete favorably with those of our competitors and our revenue and future
   profitability could be materially adversely affected.</P>
 <P><B>Extreme Expects the Average Selling Prices of Its Products to Decrease
   Rapidly Which May Reduce Gross Margins or Revenue</B></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The network
   equipment industry has experienced rapid erosion of average selling prices
   due to a number of factors, including competitive pricing pressures and
   rapid technological change. We may experience substantial period-to-period
   fluctuations in future operating results due to the erosion of our average
   selling prices. We anticipate that the average selling prices of our
   products will decrease in the future in response to competitive pricing
   pressures, increased sales discounts, new product introductions by us or our
   competitors, including, for example, competitive products manufactured with
   low cost merchant silicon, or other factors. Therefore, to maintain our
   gross margins, we must develop and introduce on a timely basis new products
   and product enhancements and continually reduce our product costs. Our
   failure to do so would cause our revenue and gross
 margins to decline, which could materially adversely affect our operating
   results and cause the price of our common stock to decline.</P>
 <P><B>Extreme's Market is Subject to Rapid Technological Change and to
   Compete, Extreme Must Continually Introduce New Products that Achieve Broad
   Market Acceptance</B></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The network
   equipment market is characterized by rapid technological change, frequent
   new product introductions, changes in customer requirements and evolving
   industry standards. If we do not address these changes by regularly
   introducing new products, our product line will become obsolete.
   Developments in routers and routing software could also significantly reduce
   demand for our product. Alternative technologies could achieve widespread
   market acceptance and displace Ethernet technology on which our product
   lines and architecture are based. We cannot assure you that our
   technological approach will achieve broad market acceptance or that other
   technologies or devices will not supplant our approach.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;When we
   announce new products or product enhancements that have the potential to
   replace or shorten the life cycle of our existing products, customers may
   defer purchasing our existing products. These actions could materially
   adversely affect our operating results by unexpectedly decreasing sales,
   increasing our inventory levels of older products and exposing us to greater
   risk of product obsolescence. The market for switching products is evolving
   and we believe our ability to compete successfully in this market is
   dependent upon the continued compatibility and interoperability of our
   products with products and architectures offered by other vendors. In
   particular, the networking industry has been characterized by the successive
   introduction of new technologies or standards that have dramatically reduced
   the price and increased the performance of switching equipment. To remain
   competitive we need to introduce products in a timely manner that
   incorporate or are compatible with these new technologies as they emerge.
   For example, this fiscal year we expect to ship new products that will
   incorporate a new chipset we are currently developing. We cannot assure you
   that these new products will be commercially successful. We have experienced
   delays in releasing new products and product enhancements in the past which
   delayed sales and resulted in lower quarterly revenue than anticipated. We
   may experience similar delays in product development in the future and any
   delay in product introduction could adversely affect our ability to compete
   and cause our operating results to be below our expectations or the
   expectations of public market analysts or investors.</P>
 <P><B>Continued Rapid Growth Will Strain Extreme's Operations and Will Require
   Extreme to Incur Costs to Upgrade Its Infrastructure</B></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since the
   introduction of our product line, we have experienced a period of rapid
   growth and expansion which has placed, and continues to place, a significant
   strain on our resources. Unless we manage such growth effectively, we may
   make mistakes in operating our business such as inaccurate sales
   forecasting, incorrect material planning or inaccurate financial reporting,
   which may result in unanticipated fluctuations in our operating results. Our
   net revenue increased significantly during the last year, and from December
   31, 1998 to December 31, 1999, the number of our employees increased from
   159 to 367. We expect our anticipated growth and expansion to strain our
   management, operational and financial resources. Our management team has had
   limited experience managing such rapidly growing companies on a public or
   private basis. To accommodate this anticipated growth, we will be required
   to:</P>

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   <TD WIDTH=95%>improve existing and implement new operational, information
     and financial systems, procedures and controls;</TD>
  </TR>
 </TABLE>

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   <TD WIDTH=2%>&#149;</TD>
   <TD WIDTH=3%></TD>
   <TD WIDTH=95%>hire, train and manage additional qualified personnel,
     including in the near future sales and marketing personnel; and</TD>
  </TR>
 </TABLE>

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   <TD WIDTH=2%>&#149;</TD>
   <TD WIDTH=3%></TD>
   <TD WIDTH=95%>effectively manage multiple relationships with our customers,
     suppliers and other third parties.</TD>
  </TR>
 </TABLE>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may not be
   able to install adequate control systems in an efficient and timely manner,
   and our current or planned personnel systems, procedures and controls may
   not be adequate to support our future operations. For example, in the
   quarter ended June 30, 1998, our operating results were adversely impacted
   due to a provision of
 approximately $900,000 that we recorded for purchase order commitments for
   certain components that exceeded our estimated requirements at the end of
   that quarter. This was due primarily to an engineering change in certain of
   our Summit family of products and a reduced demand forecast from one of our
   customers. In August 1998, we installed a new management information system,
   which we may continue to modify and improve to meet the increasing needs
   associated with our growth. The difficulties associated with installing and
   implementing these new systems, procedures and controls may place a
   significant burden on our management and our internal resources. In
   addition, as we grow internationally, we will have to expand our worldwide
   operations and enhance our communications infrastructure. Any delay in the
   implementation of such new or enhanced systems, procedures or controls, or
   any disruption in the transition to such new or enhanced systems, procedures
   or controls, could adversely affect our ability to accurately forecast sales
   demand, manage our supply chain and record and report financial and
   management information on a timely and accurate basis.</P>
 <P><B>Extreme Must Develop and Expand Its Indirect Distribution Channels to
   Increase Revenues and Improve Its Operating Results</B></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
   distribution strategy focuses primarily on developing and expanding indirect
   distribution channels through resellers, distributors and, to a lesser
   extent, original equipment manufacturers, or OEMs, as well as expanding our
   field sales organization. If we fail to develop and cultivate relationships
   with significant resellers, or if these resellers are not successful in
   their sales efforts, sales of our products may decrease and our operating
   results would suffer. Many of our resellers also sell products that compete
   with our products. We are developing a two-tier distribution structure in
   Europe and the United States which has and will require us to enter into
   agreements with a small number of stocking distributors. We have recently
   entered into two-tier distribution agreements; however, we cannot assure you
   that we will continue to be able to enter into additional distribution
   agreements or that we will be able to successfully manage the transition of
   resellers to a two-tier distribution channel. Our failure to do so could
   limit our ability to grow or sustain revenue. In addition, our operating
   results will likely fluctuate significantly depending on the timing and
   amount of orders from our resellers. We cannot assure you that our resellers
   will market our products effectively or continue to devote the resources
   necessary to provide us with effective sales, marketing and technical
   support.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to
   support and develop leads for our indirect distribution channels, we plan to
   expand our field sales and support staff significantly. In addition, we need
   to continue to develop our field sales and support staff to expand our
   direct sales efforts to service providers and content providers. We cannot
   assure you that this internal expansion will be successfully completed, that
   the cost of this expansion will not exceed the revenues generated or that
   our expanded sales and support staff will be able to compete successfully
   against the significantly more extensive and well-funded sales and marketing
   operations of many of our current or potential competitors. Our inability to
   effectively establish our distribution channels or manage the expansion of
   our sales and support staff would materially adversely affect our ability to
   grow and increase revenue.</P>
 <P><B>Because Substantially All of Extreme&#146;s Revenue is Derived From
   Sales of Two Product Families, Extreme is Dependent on Widespread Market
   Acceptance of These Products; Future Performance will Depend on the
   Introduction and Acceptance of New Products</B></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We currently
   derive substantially all of our revenue from sales of our Summit and
   BlackDiamond product families. We expect that revenue from these product
   families will account for a substantial portion of our revenue for the
   foreseeable future. Accordingly, widespread market acceptance of our product
   families is critical to our future success. Factors that may affect the
   market acceptance of our products include market acceptance of switching
   products, and Gigabit Ethernet and Layer 3 switching technologies in
   particular in the enterprise, service provider and content provider markets,
   the performance, price and total cost of ownership of our products, the
   availability and price of competing products and technologies, and the
   success and development of our resellers, OEMs and field sales channels.
   Many of these factors are beyond our control. Our future performance will
   also depend on the successful development, introduction and market
   acceptance of new and enhanced products that address customer requirements
   in a cost-effective manner. We are developing products which we expect to
   introduce this fiscal year which are based on a new chip set under
   development. The introduction of new and enhanced products may cause our
   customers to defer or cancel orders for existing
 products. We have in the past experienced delays in product development and
   such delays may occur in the future. Therefore, to the extent customers
   defer or cancel orders in the expectation of any new product release, any
   delay in development or introduction could cause our operating results to
   suffer. Failure of our existing or future products to maintain and achieve
   widespread levels of market acceptance may significantly impair our revenue
   growth.</P>
 <P><B>If a Key Reseller, OEM or Other Significant Customer Cancels or Delays a
   Large Purchase, Extreme's Revenues May Decline and the Price of Its Stock
   May Fall</B></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To date, a
   limited number of resellers, OEMs and other customers have accounted for a
   significant portion of our revenue. If any of our large customers stop or
   delay purchases, our revenue and profitability would be adversely affected.
   For the six months ended December 31, 1998, Compaq and Hitachi Cable
   accounted for 17% and 11% of our net revenue, respectively, and for the six
   months ended December 31, 1999, Compaq and Hitachi Cable accounted for 14%
   and 11%<B> </B>of our net revenue, respectively. Compaq is both an OEM and
   an end-user customer. Because our expense levels are based on our
   expectations as to future revenue and to a large extent are fixed in the
   short term, a substantial reduction or delay in sales of our products to, or
   the loss of any significant reseller, OEM or other customer, or unexpected
   returns from resellers could harm our business, operating results and
   financial condition. Although our largest customers may vary from
   period-to-period, we anticipate that our operating results for any given
   period will continue to depend to a significant extent on large orders from
   a small number of customers, particularly in light of the high sales price
   per unit of our products and the length of our sales cycles.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;While our
   financial performance depends on large orders from a few key resellers, OEMs
   and other significant customers, we do not have binding commitments from any
   of them. For example:</P>

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   <TD WIDTH=95%>our service provider and enterprise network customers can stop
     purchasing and our resellers and OEMs can stop marketing our products at
     any time;</TD>
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   <TD WIDTH=95%>our reseller agreements generally are not exclusive and are
     for one year terms, with no obligation of the resellers to renew the
     agreements;</TD>
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   <TD WIDTH=95%>our reseller agreements provide for discounts based on
     expected or actual volumes of products purchased or resold by the reseller
     in a given period; and</TD>
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   <TD WIDTH=95%>our reseller and OEM agreements generally do not require
     minimum purchases.</TD>
  </TR>
 </TABLE>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have
   established a program which, under specified conditions, enables some third
   party resellers to return products to us. The amount of potential product
   returns is estimated and provided for in the period of the sale. Some of our
   OEM agreements also provide manufacturing rights and access to our source
   code upon the occurrence of specified conditions of default. If we were to
   default on these agreements, our OEMs could use our source code to develop
   and manufacture competing products, which would negatively affect our
   performance and ability to compete.</P>
 <P><B>The Sales Cycle for Extreme's Products is Long and Extreme May Incur
   Substantial Non-Recoverable Expenses or Devote Significant Resources to
   Sales that Do Not Occur When Anticipated</B></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The timing of
   our sales revenue is difficult to predict because of our reliance on
   indirect sales channels and the length and variability of our sales cycle.
   Our products have a relatively high sales price per unit, and often
   represent a significant and strategic decision by an enterprise regarding
   its communications infrastructure. Accordingly, the purchase of our products
   typically involves significant internal procedures associated with the
   evaluation, testing, implementation and acceptance of new technologies. This
   evaluation process frequently results in a lengthy sales process, typically
   ranging from three months to longer than a year, and subjects the sales
   cycle associated with the purchase of our products to a number of
   significant risks, including budgetary constraints and internal acceptance
   reviews. The length of our sales cycle also may vary substantially from
   customer to customer. While our customers are evaluating our products and
   before they may place an order with us, we may incur substantial sales and
   marketing expenses and expend significant management effort.
 Consequently, if sales forecasted from a specific customer for a particular
   quarter are not realized in that quarter, we may be unable to compensate for
   the shortfall, which could harm our operating results.</P>
 <P><B>Extreme Purchases Several Key Components for Products From Single or
   Limited Sources and Could Lose Sales if These Sources Fail to Fill Its
   Needs</B></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We currently
   purchase several key components used in the manufacture of our products from
   single or limited sources and are dependent upon supply from these sources
   to meet our needs. Certain components such as gigabit interface converter
   transceivers, or GBICs, have been and may in the future be in short supply.
   While we have been able to meet our needs to date, we are likely to
   encounter shortages and delays in obtaining these or other components in the
   future which could materially adversely affect our ability to meet customer
   orders. Our principal sole sourced components include:</P>

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   <TD WIDTH=95%>ASICs;</TD>
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   <TD WIDTH=95%>microprocessors;</TD>
  </TR>
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   <TD WIDTH=3%></TD>
   <TD WIDTH=95%>programmable integrated circuits;</TD>
  </TR>
 </TABLE>

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   <TD WIDTH=95%>selected other integrated circuits;</TD>
  </TR>
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   <TD WIDTH=95%>cables; and</TD>
  </TR>
 </TABLE>

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   <TD WIDTH=95%>custom-tooled sheet metal.</TD>
  </TR>
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 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our principal
   limited sourced components include:</P>

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   <TD WIDTH=95%>flash memories;</TD>
  </TR>
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   <TD WIDTH=95%>dynamic and static random access memories, commonly known as
     DRAMs and SRAMs, respectively; and</TD>
  </TR>
 </TABLE>

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   <TD WIDTH=3%></TD>
   <TD WIDTH=95%>printed circuit boards.</TD>
  </TR>
 </TABLE>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We use a
   rolling six-month forecast based on anticipated product orders to determine
   our material requirements. Lead times for materials and components we order
   vary significantly, and depend on factors such as the specific supplier,
   contract terms and demand for a component at a given time. If orders do not
   match forecasts, we may have excess or inadequate inventory of certain
   materials and components, which could materially adversely affect our
   operating results and financial condition. From time to time we have
   experienced shortages and allocations of certain components, resulting in
   delays in filling orders. In addition, during the development of our
   products we have experienced delays in the prototyping of our ASICs, which
   in turn has led to delays in product introductions.</P>
 <P><B>Extreme Needs to Expand Its Manufacturing Operations and Depends on
   Contract Manufacturers for Substantially All of Its Manufacturing
   Requirements</B></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the demand
   for our products grows, we will need to increase our material purchases,
   contract manufacturing capacity and internal test and quality functions. Any
   disruptions in product flow could limit our revenue, adversely affect our
   competitive position and reputation and result in additional costs or
   cancellation of orders under agreements with our customers.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We rely on
   third party manufacturing vendors to manufacture our products. We currently
   subcontract substantially all of our manufacturing to two companies
   &#151;Flextronics International, Ltd., located in San Jose, California and
   MCMS, Inc., located in Boise, Idaho. We have experienced a delay in product
   shipments from a contract manufacturer in the past, which in turn delayed
   product shipments to our customers. We may in the future experience similar
   or other problems, such as inferior quality and insufficient quantity of
   product, any of which could materially adversely affect our business and
   operating results. There can be no assurance that we will effectively manage
   our contract manufacturers or that these manufacturers will meet our future
   requirements for timely delivery of products of sufficient quality and
   quantity. We intend to regularly introduce new products
 and product enhancements, which will require that we rapidly achieve volume
   production by coordinating our efforts with those of our suppliers and
   contract manufacturers. The inability of our contract manufacturers to
   provide us with adequate supplies of high-quality products or the loss of
   either of our contract manufacturers would cause a delay in our ability to
   fulfill orders while we obtain a replacement manufacturer and would have a
   material adverse effect on our business, operating results and financial
   condition.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As part of our
   cost-reduction efforts, we will need to realize lower per unit product costs
   from our contract manufacturers as a result of volume efficiencies. However,
   we cannot be certain when or if such price reductions will occur. The
   failure to obtain such price reductions would adversely affect our gross
   margins and operating results.</P>
 <P><B>If Extreme Loses Key Personnel or is Unable to Hire Additional Qualified
   Personnel as Necessary, It May Not Be Able to Successfully Manage Its
   Business or Achieve Its Objectives</B></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our success
   depends to a significant degree upon the continued contributions of our key
   management, engineering, sales and marketing and manufacturing personnel,
   many of whom would be difficult to replace. In particular, we believe that
   our future success is highly dependent on Gordon Stitt, Chairman, President
   and Chief Executive Officer, Stephen Haddock, Vice President and Chief
   Technical Officer, and Herb Schneider, Vice President of Engineering. We
   neither have employment contracts with nor key person life insurance on any
   of our key personnel.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe our
   future success will also depend in large part upon our ability to attract
   and retain highly skilled managerial, engineering, sales and marketing,
   finance and manufacturing personnel. Competition for these personnel is
   intense, especially in the San Francisco Bay Area, and we have had
   difficulty hiring employees in the timeframe we desire, particularly
   software engineers. There can be no assurance that we will be successful in
   attracting and retaining such personnel. The loss of the services of any of
   our key personnel, the inability to attract or retain qualified personnel in
   the future or delays in hiring required personnel, particularly engineers
   and sales personnel, could make it difficult for us to manage our business
   and meet key objectives, such as product introductions, on time. In
   addition, companies in the networking industry whose employees accept
   positions with competitors frequently claim that competitors have engaged in
   unfair hiring practices. We have from time to time received claims like this
   from other companies and, although to date they have not resulted in
   material litigation, we cannot assure you that we will not receive
   additional claims in the future as we seek to hire qualified personnel or
   that such claims will not result in material litigation. We could incur
   substantial costs in defending ourselves against any such claims, regardless
   of the merits of such claims.</P>
 <P><B>Extreme&#146;s Products Must Comply With Evolving Industry Standards and
   Complex Government Regulations or Its Products May Not Be Widely Accepted,
   Which May Prevent Extreme From Sustaining Its Revenues or Achieving
   Profitability.</B></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The market for
   network equipment products is characterized by the need to support industry
   standards as different standards emerge, evolve and achieve acceptance. We
   will not be competitive unless we continually introduce new products and
   product enhancements that meet these emerging standards. In the past, we
   have introduced new products that were not compatible with certain
   technological changes, and in the future we may not be able to effectively
   address the compatibility and interoperability issues that arise as a result
   of technological changes and evolving industry standards. In addition, in
   the United States, our products must comply with various regulations and
   standards defined by the Federal Communications Commission and Underwriters
   Laboratories. Internationally, products that we develop may be required to
   comply with standards established by telecommunications authorities in
   various countries as well as with recommendations of the International
   Telecommunication Union. If we do not comply with existing or evolving
   industry standards or if we fail to obtain timely domestic or foreign
   regulatory approvals or certificates we would not be able to sell our
   products where these standards or regulations apply, which may prevent us
   from sustaining our revenues or achieving profitability.</P>
 <P></P>
 <P><B>Extreme Needs to Expand Its Sales and Support Organizations to Increase
   Market Acceptance of Its Products and If It Fails to Do So, Extreme Will Not
   Be Able to Increase Revenues</B></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our products
   and services require a sophisticated sales effort targeted at several levels
   within a prospective customer&#146;s organization. Unless we expand our
   sales force we will not be able to increase revenues. We have recently
   expanded our sales force and plan to hire additional sales personnel.
   However, competition for qualified sales personnel is intense, and we might
   not be able to hire the kind and number of sales personnel we are
   targeting.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We currently
   have a small customer service and support organization and will need to
   increase our staff to support new customers and the expanding needs of
   existing customers. The design and installation of networking products can
   be complex; accordingly, we need highly trained customer service and support
   personnel particularly for large service provider and enterprise network
   customers. Hiring customer service and support personnel is very competitive
   in our industry due to the limited number of people available with the
   necessary technical skills and understanding of our products.</P>
 <P><B>Extreme Depends Upon International Sales for Much of Its Revenue and
   Extreme's Ability to Sustain and Increase Its International Sales Depends on
   Successfully Expanding Its International Operations</B></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our ability to
   grow will depend in part on the expansion of international sales and
   operations which have and are expected to constitute a significant portion
   of our sales. Sales to customers outside of North America accounted for
   approximately 47% and 56% of our net revenue in the six months ended
   December 31, 1999 and December 31, 1998, respectively. Our international
   sales primarily depend on our resellers and OEMs. The failure of our
   resellers and OEMs to sell our products internationally would limit our
   ability to sustain and grow our revenue. In addition, there are a number of
   risks arising from our international business, including:</P>

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   <TD WIDTH=95%>difficulties in managing operations across disparate
     geographic areas;</TD>
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   <TD WIDTH=95%>difficulties associated with enforcing agreements through
     foreign legal systems;</TD>
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   <TD WIDTH=95%>payment of operating expenses in local currencies, which
     subjects us to risks of currency fluctuations;</TD>
  </TR>
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   <TD WIDTH=3%></TD>
   <TD WIDTH=95%>import or export licensing requirements;</TD>
  </TR>
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   <TD WIDTH=95%>potential adverse tax consequences; and</TD>
  </TR>
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   <TD WIDTH=95%>unexpected changes in regulatory requirements.</TD>
  </TR>
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 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
   international sales currently are U.S. dollar-denominated. As a result, an
   increase in the value of the U.S. dollar relative to foreign currencies
   could make our products less competitive in international markets. In the
   future, we may elect to invoice some of our international customers in local
   currency which will subject us to fluctuations in exchange rates between the
   U.S. dollar and the particular local currency. If we do so, we may determine
   to engage in hedging transactions to minimize the risk of such fluctuations.
   However, if we are not successful in managing such hedging transactions, we
   could incur losses from hedging activities. Because we currently denominate
   sales in U.S. Dollars, we do not anticipate that the adoption of the Euro as
   a functional legal currency of certain European countries will materially
   affect our business.</P>
 <P><B>Extreme May Engage in Future Acquisitions that Dilute the Ownership
   Interests of Our Stockholders, Cause Us to Incur Debt and Assume Contingent
   Liabilities</B></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As part of our
   business strategy, we review acquisition and strategic investment prospects
   that would complement our current product offerings, augment our market
   coverage or enhance our technical capabilities, or that may otherwise offer
   growth opportunities. We are reviewing investments in new businesses and we
   expect to make investments in and may acquire businesses, products or
   technologies in the future. In the event of any future acquisitions, we
   could:</P>
 <P></P>

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   <TD WIDTH=95%>issue equity securities which would dilute current
     stockholders' percentage ownership;</TD>
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   <TD WIDTH=95%>incur substantial debt; or</TD>
  </TR>
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   <TD WIDTH=95%>assume contingent liabilities.</TD>
  </TR>
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 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These actions
   by us could materially adversely affect our operating results and/or the
   price of our common stock. Acquisitions and investment activities also
   entail numerous risks, including:</P>

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   <TD WIDTH=95%>difficulties in the assimilation of acquired operations,
     technologies or products;</TD>
  </TR>
 </TABLE>

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   <TD WIDTH=3%></TD>
   <TD WIDTH=95%>unanticipated costs associated with the acquisition or
     investment transaction;</TD>
  </TR>
 </TABLE>

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   <TD WIDTH=3%></TD>
   <TD WIDTH=95%>diversion of management&#146;s attention from other business
     concerns;</TD>
  </TR>
 </TABLE>

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   <TD WIDTH=3%></TD>
   <TD WIDTH=95%>adverse effects on existing business relationships with
     suppliers and customers;</TD>
  </TR>
 </TABLE>

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   <TD WIDTH=3%></TD>
   <TD WIDTH=95%>risks associated with entering markets in which we have no or
     limited prior experience; and</TD>
  </TR>
 </TABLE>

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   <TD WIDTH=3%></TD>
   <TD WIDTH=95%>potential loss of key employees of acquired organizations.</TD>
  </TR>
 </TABLE>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We cannot
   assure you that we will be able to successfully integrate any businesses,
   products, technologies or personnel that we might acquire in the future, and
   our failure to do so could materially adversely affect our business,
   operating results and financial condition.</P>
 <P><B>Extreme May Need Additional Capital to Fund Its Future Operations And If
   It Is Not Available When Needed, Extreme May Need to Reduce Its Planned
   Development and Marketing Efforts, Which May Reduce Its Revenues and Prevent
   Extreme From Achieving Profitability</B></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that
   our existing working capital, proceeds from the initial public offering in
   April 1999, proceeds from the secondary offering in October 1999 and cash
   available from credit facilities and future operations will enable us to
   meet our working capital requirements for at least the next 12 months.
   However, if cash from future operations is insufficient, or if cash is used
   for acquisitions or other currently unanticipated uses, we may need
   additional capital. The development and marketing of new products and the
   expansion of reseller and distribution channels and associated support
   personnel is expected to require a significant commitment of resources. In
   addition, if the market for Layer 3 switches were to develop more slowly
   than anticipated or if we fail to establish significant market share and
   achieve a meaningful level of revenues, we may continue to utilize
   significant amounts of capital. As a result, we could be required to raise
   substantial additional capital. To the extent that we raise additional
   capital through the sale of equity or convertible debt securities, the
   issuance of such securities could result in dilution to existing
   stockholders. If additional funds are raised through the issuance of debt
   securities, such securities may have rights, preferences and privileges
   senior to holders of common stock and the term of such debt could impose
   restrictions on our operations. We cannot assure you that such additional
   capital, if required, will be available on acceptable terms, or at all. If
   we are unable to obtain such additional capital, we may be required to
   reduce the scope of our planned product development and marketing efforts,
   which would harm our business, financial condition and operating results.</P>
 <P><B>If Extreme's Products Contain Undetected Software or Hardware Errors,
   Extreme Could Incur Significant Unexpected Expenses and Lost Sales</B></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Network
   products frequently contain undetected software or hardware errors when
   first introduced or as new versions are released. We have experienced such
   errors in the past in connection with new products and product upgrades. We
   expect that such errors will be found from time to time in new or enhanced
   products after commencement of commercial shipments. These problems may
   materially adversely affect our business by causing us to incur significant
   warranty and repair costs, diverting the attention of our engineering
   personnel from our product development efforts and causing significant
   customer relations problems.</P>
 <P></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our products
   must successfully interoperate with products from other vendors. As a
   result, when problems occur in a network, it may be difficult to identify
   the source of the problem. The occurrence of hardware and software errors,
   whether caused by our products or another vendor&#146;s products, could
   result in the delay or loss of market acceptance of our products and any
   necessary revisions may result in the incurrence of significant expenses.
   The occurrence of any such problems would likely have a material adverse
   effect on our business, operating results and financial condition.</P>
 <P><B>Extreme's Limited Ability to Protect Its Intellectual Property May
   Adversely Affect Its Ability to Compete</B></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We rely on a
   combination of patent, copyright, trademark and trade secret laws and
   restrictions on disclosure to protect our intellectual property rights.
   However, we cannot assure you that the actions we have taken will adequately
   protect our intellectual property rights.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also enter
   into confidentiality or license agreements with our employees, consultants
   and corporate partners, and control access to and distribution of our
   software, documentation and other proprietary information. Despite our
   efforts to protect our proprietary rights, unauthorized parties may attempt
   to copy or otherwise obtain and use our products or technology.</P>
 <P><B>If Extreme or Its Key Suppliers and Customers Fail to Be Year 2000
   Compliant, Extreme's Business May Be Severely Disrupted And Its Revenues May
   Decline</B></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The year 2000
   computer issue creates a risk for us. If systems do not correctly recognize
   date information when the year changes to 2000, there could be an adverse
   impact on our operations. The risk exists in four areas:</P>

 <TABLE WIDTH=100% BORDER=0 CELLPADDING=0 CELLSPACING=0>
  <TR VALIGN=TOP>
   <TD WIDTH=2%>&#149;</TD>
   <TD WIDTH=3%></TD>
   <TD WIDTH=95%>potential warranty or other claims from our customers;</TD>
  </TR>
 </TABLE>

 <TABLE WIDTH=100% BORDER=0 CELLPADDING=0 CELLSPACING=0>
  <TR VALIGN=TOP>
   <TD WIDTH=2%>&#149;</TD>
   <TD WIDTH=3%></TD>
   <TD WIDTH=95%>systems we use to run our business;</TD>
  </TR>
 </TABLE>

 <TABLE WIDTH=100% BORDER=0 CELLPADDING=0 CELLSPACING=0>
  <TR VALIGN=TOP>
   <TD WIDTH=2%>&#149;</TD>
   <TD WIDTH=3%></TD>
   <TD WIDTH=95%>systems used by our suppliers; and</TD>
  </TR>
 </TABLE>

 <TABLE WIDTH=100% BORDER=0 CELLPADDING=0 CELLSPACING=0>
  <TR VALIGN=TOP>
   <TD WIDTH=2%>&#149;</TD>
   <TD WIDTH=3%></TD>
   <TD WIDTH=95%>the potential reduced spending by other companies on
     networking solutions as a result of significant information systems
     spending on year 2000 remediation.</TD>
  </TR>
 </TABLE>
 <P>
 <B>Provisions in Extreme's Charter or Agreements May Delay or Prevent a Change
   of Control</B></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provisions in
   our certificate of incorporation and bylaws may delay or prevent a change of
   control or changes in our management. These provisions include:</P>

 <TABLE WIDTH=100% BORDER=0 CELLPADDING=0 CELLSPACING=0>
  <TR VALIGN=TOP>
   <TD WIDTH=2%>&#149;</TD>
   <TD WIDTH=3%></TD>
   <TD WIDTH=95%>the division of the board of directors into three separate
     classes;</TD>
  </TR>
 </TABLE>

 <TABLE WIDTH=100% BORDER=0 CELLPADDING=0 CELLSPACING=0>
  <TR VALIGN=TOP>
   <TD WIDTH=2%>&#149;</TD>
   <TD WIDTH=3%></TD>
   <TD WIDTH=95%>the right of the board of directors to elect a director to
     fill a vacancy created by the expansion of the board of directors; and
     </TD>
  </TR>
 </TABLE>

 <TABLE WIDTH=100% BORDER=0 CELLPADDING=0 CELLSPACING=0>
  <TR VALIGN=TOP>
   <TD WIDTH=2%>&#149;</TD>
   <TD WIDTH=3%></TD>
   <TD WIDTH=95%>the ability of the board of directors to alter our bylaws
     without getting stockholder approval.</TD>
  </TR>
 </TABLE>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Furthermore, we
   are subject to the provisions of section 203 of the Delaware General
   Corporation Law. These provisions prohibit large stockholders, in particular
   those owning 15% or more of the outstanding voting stock, from consummating
   a merger or combination with a corporation unless this stockholder receives
   board approval for the transaction or 66 2/3% of the shares of voting stock
   not owned by the stockholder approve the merger or combination. Further, we
   have investor agreements with Compaq, Siemens and 3Com which require us to
   give these companies notice if we receive an acquisition offer or if we
   intend to pursue one.</P>
 <P ALIGN=LEFT><B><FONT FACE="Times">
 <A NAME="ltx27"></A>
 </FONT></B>Item 3. Quantitative and Qualitative Disclosures About Market
   Risk</P>
 <P ALIGN=LEFT><I> Interest Rate Sensitivity</I></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 have invested
   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, we maintain our portfolio of cash equivalents and
   short-term investments in a variety of securities, including commercial
   paper, other non-government debt securities and money market funds. In
   general, money market funds are not subject to market risk because the
   interest paid on such funds fluctuates with the prevailing interest rate.
   The following table presents the amounts of our cash equivalents, short-term
   investments and long-term investments that are subject to market risk by
   range of expected maturity and weighted-average interest rates as of
   December 31, 1999. This table does not include money market funds because
   those funds are not subject to market risk.</P>
 <TABLE BORDER="0" ALIGN="center" WIDTH="700">
  <TR VALIGN="BOTTOM">
   <TH WIDTH="217"></TH>
   <TH COLSPAN="2"></TH>
   <TH COLSPAN="2"></TH>
   <TH WIDTH="86"></TH>
   <TH WIDTH="60"></TH>
   <TH WIDTH="61"></TH>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" NOWRAP WIDTH="217"><FONT SIZE="-1"></FONT></TD>
   <TH ALIGN="RIGHT" COLSPAN="7" VALIGN="bottom"> <P ALIGN="CENTER"><FONT
     SIZE="-1">Maturing in </FONT> <HR NOSHADE ALIGN="center" WIDTH="100%"
     SIZE="1"> </TH>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" NOWRAP WIDTH="217"><FONT SIZE="-1"></FONT></TD>
   <TH ALIGN="RIGHT" COLSPAN="2" VALIGN="bottom"> <P ALIGN="CENTER"><FONT
     SIZE="-1">Three months
   <BR>
   or less </FONT> <HR NOSHADE ALIGN="center" WIDTH="100%" SIZE="1"> </TH>
   <TH ALIGN="RIGHT" VALIGN="bottom" WIDTH="92"> <P ALIGN="CENTER"><FONT
     SIZE="-1">Three months
   <BR>
   to one year </FONT> <HR NOSHADE ALIGN="center" WIDTH="100%" SIZE="1"> </TH>
   <TH ALIGN="LEFT" VALIGN="bottom" WIDTH="13"><FONT SIZE="-1"></FONT></TH>
   <TH ALIGN="RIGHT" VALIGN="bottom" WIDTH="86"> <P ALIGN="CENTER"><FONT
     SIZE="-1">Greater than
   <BR>
   one year </FONT> <HR NOSHADE ALIGN="center" WIDTH="100%" SIZE="1"> </TH>
   <TH ALIGN="RIGHT" VALIGN="bottom" WIDTH="60"> <P ALIGN="CENTER"><FONT
     SIZE="-1">Total </FONT> <HR NOSHADE ALIGN="center" WIDTH="100%" SIZE="1">
     </TH>
   <TH ALIGN="RIGHT" VALIGN="bottom" WIDTH="61"> <P ALIGN="CENTER"><FONT
     SIZE="-1">Fair
   <BR>
   Value </FONT> <HR NOSHADE ALIGN="center" WIDTH="100%" SIZE="1"> </TH>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" NOWRAP WIDTH="217"><FONT SIZE="-1"></FONT></TD>
   <TH ALIGN="RIGHT" COLSPAN="7"> <DIV ALIGN="center"><FONT SIZE="-1">(In
     thousands)</FONT></DIV>
   </TH>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" NOWRAP WIDTH="217"><FONT SIZE="-1">Included in cash and cas
     equivalents</FONT></TD>
   <TD ALIGN="RIGHT" WIDTH="80"><FONT SIZE="-1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;84,229</FONT></TD>
   <TD ALIGN="LEFT" WIDTH="13"><FONT SIZE="-1"></FONT></TD>
   <TD ALIGN="RIGHT" WIDTH="92"><FONT SIZE="-1"></FONT></TD>
   <TD ALIGN="LEFT" WIDTH="13"><FONT SIZE="-1"></FONT></TD>
   <TD ALIGN="RIGHT" WIDTH="86"><FONT SIZE="-1"></FONT></TD>
   <TD ALIGN="RIGHT" WIDTH="60"><FONT SIZE="-1">$&nbsp;&nbsp;84,229</FONT></TD>
   <TD ALIGN="RIGHT" WIDTH="61"><FONT SIZE="-1">$&nbsp;&nbsp;
     &nbsp;84,229</FONT></TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="217"><FONT SIZE="-1">&nbsp;&nbsp;Weighted average
     interest rate</FONT></TD>
   <TD ALIGN="RIGHT" WIDTH="80"><FONT SIZE="-1">6.08</FONT></TD>
   <TD ALIGN="LEFT" WIDTH="13"><FONT SIZE="-1">%</FONT></TD>
   <TD ALIGN="LEFT" WIDTH="92"><FONT SIZE="-1"></FONT></TD>
   <TD ALIGN="RIGHT" WIDTH="13"><FONT SIZE="-1"></FONT></TD>
   <TD ALIGN="LEFT" WIDTH="86"><FONT SIZE="-1"></FONT></TD>
   <TD ALIGN="LEFT" WIDTH="60"><FONT SIZE="-1"></FONT></TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="217"><FONT SIZE="-1">Included in short-term
     investments</FONT></TD>
   <TD ALIGN="RIGHT" WIDTH="80"><FONT SIZE="-1">$&nbsp;&nbsp;&nbsp;
     &nbsp;122,818</FONT></TD>
   <TD ALIGN="LEFT" WIDTH="13"><FONT SIZE="-1"></FONT></TD>
   <TD ALIGN="RIGHT" WIDTH="92"><FONT SIZE="-1"></FONT></TD>
   <TD ALIGN="LEFT" WIDTH="13"><FONT SIZE="-1"></FONT></TD>
   <TD ALIGN="RIGHT" WIDTH="86"><FONT SIZE="-1"></FONT></TD>
   <TD ALIGN="RIGHT" WIDTH="60"><FONT SIZE="-1">$122,818</FONT></TD>
   <TD ALIGN="RIGHT" WIDTH="61"><FONT SIZE="-1">$&nbsp;122,818</FONT></TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="217"><FONT SIZE="-1">&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;Weighted average interest rate</FONT></TD>
   <TD ALIGN="RIGHT" WIDTH="80"><FONT SIZE="-1">5.22</FONT></TD>
   <TD ALIGN="LEFT" WIDTH="13"><FONT SIZE="-1">%</FONT></TD>
   <TD ALIGN="LEFT" WIDTH="92"><FONT SIZE="-1"></FONT></TD>
   <TD ALIGN="LEFT" WIDTH="13"><FONT SIZE="-1"></FONT></TD>
   <TD ALIGN="RIGHT" WIDTH="86"><FONT SIZE="-1"></FONT></TD>
   <TD ALIGN="RIGHT" WIDTH="60"><FONT SIZE="-1"></FONT></TD>
   <TD ALIGN="RIGHT" WIDTH="61"><FONT SIZE="-1"></FONT></TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="217"><FONT SIZE="-1">&nbsp;&nbsp;&nbsp;
     &nbsp;Included in investments</FONT></TD>
   <TD ALIGN="RIGHT" WIDTH="80"><FONT SIZE="-1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;&nbsp;&nbsp;6,563</FONT></TD>
   <TD ALIGN="LEFT" WIDTH="13"><FONT SIZE="-1"></FONT></TD>
   <TD ALIGN="RIGHT" WIDTH="92"><FONT SIZE="-1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;&nbsp;&nbsp;&nbsp;82,501</FONT></TD>
   <TD ALIGN="LEFT" WIDTH="13"><FONT SIZE="-1"></FONT></TD>
   <TD ALIGN="RIGHT" WIDTH="86"><FONT SIZE="-1"></FONT></TD>
   <TD ALIGN="RIGHT" WIDTH="60"><FONT SIZE="-1">$&nbsp;&nbsp;89,064</FONT></TD>
   <TD ALIGN="RIGHT" WIDTH="61"><FONT SIZE="-1">$&nbsp;&nbsp;
     &nbsp;89,064</FONT></TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="217"><FONT SIZE="-1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
     &nbsp;&nbsp;Weighted average interest rate</FONT></TD>
   <TD ALIGN="right" WIDTH="80"><FONT SIZE="-1">7.39</FONT></TD>
   <TD ALIGN="left" WIDTH="13"><FONT SIZE="-1">%</FONT></TD>
   <TD ALIGN="right" WIDTH="92"><FONT SIZE="-1">6.55</FONT></TD>
   <TD ALIGN="left" WIDTH="13"><FONT SIZE="-1">%</FONT></TD>
   <TD ALIGN="RIGHT" WIDTH="86"><FONT SIZE="-1"></FONT></TD>
   <TD ALIGN="RIGHT" WIDTH="60"><FONT SIZE="-1"></FONT></TD>
  </TR>
  <TR>
   <TD WIDTH="217">&nbsp; </TD>
   <TD WIDTH="80">&nbsp; </TD>
   <TD WIDTH="13"><FONT SIZE="-1"></FONT></TD>
   <TD WIDTH="92">&nbsp; </TD>
   <TD WIDTH="13"><FONT SIZE="-1"></FONT></TD>
   <TD WIDTH="86"><FONT SIZE="-1"></FONT></TD>
   <TD WIDTH="60"><FONT SIZE="-1"></FONT></TD>
   <TD WIDTH="61"><FONT SIZE="-1"></FONT></TD>
  </TR>
 </TABLE>
 <P></P>
 <P ALIGN=LEFT><I>Exchange Rate Sensitivity</I></P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Currently, the
   majority of our sales and expenses are denominated in U.S. Dollars and as a
   result, we have experienced no significant foreign exchange gains and losses
   to date. While we have conducted some transactions in foreign currencies
   during the six months ended December 31, 1999 and expect to continue to do
   so, we do not anticipate that foreign exchange gains or losses will be
   significant. We have not engaged in foreign currency hedging activities to
   date, however, we may do so in the future.</P>
 <P><B>PART II. Other Information
 <A NAME="ltx28"></A>
 </B></P>

 <TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
  <TR VALIGN="BOTTOM">
   <TH COLSPAN="2"></TH>
   <TH COLSPAN="2"></TH>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD WIDTH="9%" ALIGN="LEFT">Item 1.</TD>
   <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
   <TD WIDTH="78%" ALIGN="LEFT">Legal Proceedings - None</TD>
   <TD WIDTH="9%" ALIGN="LEFT">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="9%">Item 2.</TD>
   <TD ALIGN="LEFT" WIDTH="4%">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="78%">Changes in Securities - None</TD>
   <TD ALIGN="LEFT" WIDTH="9%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="9%">Item 3.</TD>
   <TD ALIGN="LEFT" WIDTH="4%">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="78%">Defaults Upon Senior Securities - None</TD>
   <TD ALIGN="LEFT" WIDTH="9%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="9%">Item 4.</TD>
   <TD ALIGN="LEFT" WIDTH="4%">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="78%">Submission of Matters to a Vote of Security
     Holders. </TD>
   <TD ALIGN="LEFT" WIDTH="9%">&nbsp;</TD>
  </TR>
 </TABLE>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company
   held its Annual Meeting of Shareholders on November 16, 1999 to elect one
   class 1 director, to amend the Company's 1996 Stock Option Plan to approve
   the Section 162(m) grant limit of 2,500,000 share per employee, per fiscal
   year, to approve an anti-takeover measure under the Company's Certificate of
   Incorporation and Bylaws by limiting the ability of stockholders to call
   special meetings, and to ratify the appointment of independent auditors of
   the Company.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At the Annual
   Meeting, the following nominee was elected as follows:</P>
 <TABLE WIDTH="700" BORDER="0" ALIGN="center">
  <TR>
   <TD WIDTH="300">&nbsp;</TD>
   <TD HEIGHT="20" COLSPAN="3"> <DIV ALIGN="center"><FONT
     SIZE="-1"><B>Votes</B></FONT> <HR NOSHADE ALIGN="center" WIDTH="100%"
     SIZE="1"> </DIV>
   </TD>
  </TR>
  <TR>
   <TD WIDTH="300">&nbsp;</TD>
   <TD> <DIV ALIGN="center"><FONT SIZE="-1"><B>For</B></FONT> <HR NOSHADE
     ALIGN="center" WIDTH="100%" SIZE="1"> </DIV>
   </TD>
   <TD> <DIV ALIGN="center"></DIV>
   </TD>
   <TD> <DIV ALIGN="center"><FONT SIZE="-1"><B>Withheld</B></FONT> <HR NOSHADE
     ALIGN="center" WIDTH="100%" SIZE="1"> </DIV>
   </TD>
  </TR>
  <TR>
   <TD WIDTH="300"> <DIV ALIGN="center"><FONT SIZE="-1">Gordon L.
     Stitt</FONT></DIV>
   </TD>
   <TD WIDTH="175"> <DIV ALIGN="center"><FONT SIZE="-1">36,848,070</FONT></DIV>
   </TD>
   <TD WIDTH="50"> <DIV ALIGN="center"></DIV>
   </TD>
   <TD WIDTH="175"> <DIV ALIGN="center"><FONT SIZE="-1">219,372</FONT></DIV>
   </TD>
  </TR>
 </TABLE>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
   shareholders voted in favor of amending the Company's 1996 Stock Option Plan
   to approve the Section 162(m) grant limit of 2,500,000 shares per employee,
   per fiscal year, with voting as follows: 35,213,114 for; 1,624,680 against;
   and 229,648 abstaining.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
   shareholders also approved an anti-takeover measure under the Company's
   Certificate of Incorporation and Bylaws by limiting the ability of
   stockholders to call special meetings, with voting as follows: 28,949,962
   for; 4,250,104 against; and 773,678 abstaining.</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
   shareholders also ratified the appointment of Ernst &amp; Young LLP as
   independent auditors for the Company for the fiscal year ending July 2,
   2000, with voting as follows: 36,838,977 for; 5,640 against; and 222,825
   abstaining.</P>
 <TABLE WIDTH="600">
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="9%" NOWRAP>Item 5.</TD>
   <TD ALIGN="LEFT" WIDTH="4%">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="78%">Other Information - None</TD>
   <TD ALIGN="LEFT" WIDTH="9%">&nbsp;</TD>
  </TR>
  <TR VALIGN="BOTTOM">
   <TD ALIGN="LEFT" WIDTH="9%">Item 6.</TD>
   <TD ALIGN="LEFT" WIDTH="4%">&nbsp;</TD>
   <TD ALIGN="LEFT" WIDTH="78%" NOWRAP>Exhibits and Reports on Form 8-K</TD>
   <TD ALIGN="LEFT" WIDTH="9%">&nbsp;</TD>
  </TR>
 </TABLE>
 <P ALIGN=LEFT><B></B>(a) Exhibits</P>
 <P>27 Financial Data Schedule (filed only with the electronic submission of
   Form 10-Q in accordance with the Edgar requirements)</P>
 <P ALIGN=LEFT>(b) Reports on Form 8-K</P>
 <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No reports on Form 8-K were filed by
   the Company during the three months ended December 31, 1999.</P>
 <P>&nbsp;</P>
 <P>&nbsp;&nbsp;&nbsp; </P>
 <P><B></B></P>
 <P ALIGN="center"> <FONT SIZE="+1"><B><FONT FACE="Times">
 <A NAME="ltx29"></A>
 </FONT>SIGNATURES </B></FONT> <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
   &nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Exchange
   Act of 1934, the Registrant has duly caused this report to be signed on its
   behalf by the undersigned thereunto duly authorized.</P>
 <P>&nbsp;</P>
 <P>&nbsp;</P>
 <P ALIGN=CENTER><DIV ALIGN="center">EXTREME NETWORKS, INC.
 <BR>
 (Registrant)</DIV>
 <P ALIGN="center"> /S/ VITO PALERMO
 <BR>
 <HR NOSHADE ALIGN="center" WIDTH="25%" SIZE="1"><P ALIGN="center">&nbsp; <P
   ALIGN="center"> <B>VITO PALERMO
 <BR>
 </B>Vice President, Chief Financial Officer
 <BR>
 And Secretary <P ALIGN=CENTER>February 15, 2000</P>
 </BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27
<SEQUENCE>2
<DESCRIPTION>FINANCIAL DATA SCHEDULE
<TEXT>

<TABLE> <S> <C>

<PAGE>

<ARTICLE> 5
<MULTIPLIER> 1,000

<S>                             <C>                     <C>
<PERIOD-TYPE>                   3-MOS                   6-MOS
<FISCAL-YEAR-END>                          JUL-02-2000             JUL-02-2000
<PERIOD-START>                             OCT-04-1999             JUL-01-1999
<PERIOD-END>                               JAN-02-2000             JAN-02-2000
<CASH>                                         108,447                 108,447
<SECURITIES>                                   122,818                 122,818
<RECEIVABLES>                                   28,861                  28,861
<ALLOWANCES>                                     1,354                   1,354
<INVENTORY>                                      3,290                   3,290
<CURRENT-ASSETS>                               267,398                 267,398
<PP&E>                                          16,422                  16,422
<DEPRECIATION>                                   5,661                   5,661
<TOTAL-ASSETS>                                 367,953                 367,953
<CURRENT-LIABILITIES>                           38,535                  38,535
<BONDS>                                              0                       0
<PREFERRED-MANDATORY>                                0                       0
<PREFERRED>                                          0                       0
<COMMON>                                            52                      52
<OTHER-SE>                                     329,366                 329,366
<TOTAL-LIABILITY-AND-EQUITY>                   367,953                 367,953
<SALES>                                         55,006                 102,224
<TOTAL-REVENUES>                                55,006                 102,224
<CGS>                                           26,160                  48,777
<TOTAL-COSTS>                                   26,160                  48,777
<OTHER-EXPENSES>                                22,846                  43,358
<LOSS-PROVISION>                                     0                       0
<INTEREST-EXPENSE>                                  76                     129
<INCOME-PRETAX>                                  9,747                  15,528
<INCOME-TAX>                                     3,392                   5,126
<INCOME-CONTINUING>                              6,355                  10,402
<DISCONTINUED>                                       0                       0
<EXTRAORDINARY>                                      0                       0
<CHANGES>                                            0                       0
<NET-INCOME>                                     6,355                  10,402
<EPS-BASIC>                                       0.13                    0.21
<EPS-DILUTED>                                     0.11                    0.19


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