XML GLOBAL TECHNOLOGIES INC, 424B3, 2000-11-15

XML GLOBAL TECHNOLOGIES INC
424B3, 2000-11-15
BLANK CHECKS

Previous: ACCESS WORLDWIDE COMMUNICATIONS INC, NT 10-Q, 2000-11-15

Next: AVANI INTERNATIONAL GROUP INC //, 10QSB, 2000-11-15

<PAGE>
Filed Pursuant to Rule 424(b)(3)

Relating to Registration Statement No. 333-37802

Prospectus

XML - GLOBAL TECHNOLOGIES, INC.

24,335,000 Shares Common Stock

This is an offering of shares of the common stock of XML - Global
Technologies, Inc. by persons who were issued shares of our common stock or
warrants or options to purchase our common stock in private offerings.
Selling Securityholders holding warrants or options may sell the common stock
covered by this Prospectus when they have exercised their warrants or options
to purchase common stock.

Prior to this offering, there has been no public trading market for our
common stock.

Investing in our common stock involves a high
degree of risk. You should read the "Risk
Factors" beginning on Page 4.

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

The Date of This Prospectus is November 13, 2000.

<PAGE>
<PAGE>
Prospectus Summary

About our Company

We, together with our subsidiaries, are positioning ourselves to take
advantage of what we believe is one of the most significant trends in business
today: the adoption of a complete, e-business strategy using XML (eXtensible
Markup Language) by global businesses. XML is a markup language that is able
to add structure, intelligence and content identification to information on
the Internet or intranets. By being able to attract and retain persons who
are at the forefront of XML technology, we have been able to identify and
develop several commercial products and services that will enable us to
exploit the XML opportunities. Our primary objective is to assist businesses
in their effort to migrate from existing HTML and EDI (Electronic Data
Interchange) standards to XML. There is an emerging market for XML-based
tools such as our search engine and other e-commerce products which will be
targeted and served by our XML specialists.

Our executive offices are located at 1818 Cornwall Avenue, Suite 9, Vancouver,
British Columbia V6J 1C7 Canada. Our telephone number is (800) 201-1848. Our
Internet Website address is http://www.xmlglobal.com.

About the Offering

This is an offering of shares of our common stock by Selling Securityholders
who were issued shares of our common stock and/or warrants or options to
purchase our common stock. Selling Securityholders who were issued warrants
or options may sell the shares of common stock covered by this prospectus when
they have exercised their warrants or options to purchase common stock. We
will nor receive any proceeds from the resale of common stock by the Selling
Shareholders. The Selling Securityholders are offering 14,605,000 shares of
common stock which they already own and an additional 9,730,000 shares of
common stock that may be acquired by them upon exercise of warrants and
options which they currently hold. We are registering the common stock
covered by this Prospectus in order to fulfill the obligations we have under
agreements with the Selling Securityholders.

Shares Outstanding Before Offering: 27,505,000

Shares Outstanding After Offering: 37,235,000

Shares Offered by Selling Securityholders: 24,335,000

<PAGE>
<PAGE>
Summary Financial Data

As we have only been in operation for a brief period of time, our historical
operating information may not be indicative of our future operating results.

Statement of Operations Data: Fiscal Year Ended Period Ended
June 30, 2000 June 30, 1999
<S> <C> <C> <C>

Total Revenues $ 53,185 $ 2,137

Operating expenses 1,713,378 122,986
Net loss (1,573,241) (120,849)
Net loss applicable to
common stockholders (1,573,241) (120,849)
Basic and diluted loss
per share (0.07) (0.01)
Shares used
in computing
basic and diluted
loss per share 21,205,800 17,500,000

<CAPTION>
At June 30, 2000 At June 30, 1999
---------------- ----------------
<S> <C> <C>
Balance Sheet Data
Working capital
(deficit) $8,158,004 $ (173,092)
Total assets 10,082,007 88,052
Stockholders' equity
(deficit) 9,978,830 (111,020)

</TABLE>
________________

<PAGE>
<PAGE>
Risk Factors

An investment in our securities is speculative and involves a high degree of
risk. Please carefully consider the following risk factors, as well as the
possibility of the loss of your entire investment, before deciding to invest
in our securities.

We are an early stage company, we have a history of losses, and we expect
future losses

We have never been profitable, we expect to incur net losses for the
foreseeable future and we may never be profitable. We incurred net losses of
$1,573,241 and $120,849 for the fiscal years ended June 30, 2000 and period
ended June 30, 1999. As of June 30, 2000, we had an accumulated deficit of
$1,694,090.

We have only recently introduced our new products and services. As a
result of our limited operating history it is difficult to forecast our future
operating results. We expect to substantially increase our sales and
marketing, product development and general administrative expenses. As a
result, we will need to generate significant revenues to achieve and maintain
profitability in the future. Our future operating results will depend on many
factors, including:

* The overall growth rate for the markets in which we compete

* The level of market acceptance of, and demand for, XML technology in
general and our XML products in particular

* The level of product and price competition

* Our ability to attract, train and retain consulting, technical and
other key personnel

If the market's acceptance and adoption of XML technologies does not develop,
our future results may suffer

All of our products are based upon and rely solely upon XML technology,
which has only recently been commercially introduced. While we believe XML
has demonstrated clear advantages over HTML platforms in defining the content
of a document, the vast majority of e-commerce still uses HTML. To date,
there has not been widespread adoption of XML technology, products or
applications. Moreover, there may exist resistance among users of Internet
and intranet e-commerce to transition from HTML to XML. Conversely, new
entrants into e-commerce may be slow to adopt XML in the absence of widespread
acceptance of standards to insure compatibility. As a result, numerous
factors, many of which are not in our control, may slow the development of
market adoption for XML technology and as a result, our products and services.

We cannot be sure that XML technology will be adopted as a standard, that
XML based products will achieve broad market acceptance, that our XML products
will be accepted or that other superior technologies will not be developed.
The failure of XML technology to become a standard or the failure of our XML
products to achieve broad acceptance could adversely affect our ability to
generate revenues. The XML technology is one of several competing
technologies used in information exchange and Internet commerce.

Lack of growth or decline in Internet usage or the lack of acceptance of
commerce conducted via the Internet could be detrimental to our future
operating results

Our products enhance a company's ability to transact business and conduct
operations utilizing the Internet. Therefore, our future sales and any future
profits are substantially dependent upon the widespread acceptance and use of
the Internet as an effective medium of commerce by consumers and businesses.
Rapid growth in the use of the Internet and other online services is a recent
development, and we are unsure whether that acceptance and use will continue
to develop, or that a sufficiently broad base of consumers will adopt and
continue to use the Internet and other online services as a medium of
commerce. To be successful, we must rely on consumers and businesses, which
have historically used traditional means of commerce to purchase products,
accepting and utilizing new ways of conducting business and exchanging
information over the Internet.

In addition, the Internet may not be accepted as a viable commercial
marketplace for a number of reasons, including potentially inadequate
development of the necessary network infrastructure or delayed development of
enabling technologies and web performance improvements. If the Internet
continues to experience significant growth in the number of users, frequency
of use or an increase in bandwidth requirements, the Internet's infrastructure
may not be able to support the demands placed upon it. In addition, the
Internet could lose its viability due to delays in the development or adoption
of new standards and protocols required to handle increased levels of Internet
activity, or due to increased governmental regulation. If Congress, or other
governing bodies within and outside the United States, decide to alter
materially the current approach to, and level of, regulation of the Internet,
we may need to adapt our technology. Any required adaptation could cause us
to spend significant amounts of time and money. If use of the Internet does
not continue to grow or grows more slowly than expected, if the infrastructure
for the Internet does not effectively support growth that may occur, if
government regulations change, or if the Internet does not become a viable
commercial marketplace, our business will likely suffer.

Intense competition and increasing consolidation in our industry could create
stronger competitors and harm our business

The market for our products is intensely competitive, highly fragmented,
characterized by rapid technological change and significantly affected by new
product introductions. Recent acquisitions of several competitors by large
software companies and other market activities of industry participants have
increased the competition in our market. Our competitors consist of a number
of private and public companies, including, among others, Sequoia Software,
which markets an XML search engine called Xdex for intranet use; Inktomi,
which has already established relationships with companies such as America
Online, British Telecommunications, Cnet, Excite@Home, Intel, Microsoft, Sun
Microsystems and Yahoo, each of which uses XML for various purposes;
Ultraseek, a division of Go.com (a Disney company) whose customers include Sun
Microsystems, 3Com, Ericsson and others; and IBM, which has modified an
existing HTML search tool to accommodate XML documents. In addition, we face
competition from in-house software developers who may develop some or all of
the functionality that our products provide. Many of our competitors have
longer operating histories, significantly greater financial, technical,
marketing and other resources, greater name recognition, a broader range of
products to offer and a larger installed base of customers, any of which
factors could provide them with a significant competitive advantage.

If we fail to develop strategic relationships with industry partners, our
efforts to license our product may be unsuccessful

At the present time, we lack an existing installed customer base to which
our innovative products and services can be offered. As a result, we will
need to establish critical strategic relationships with industry partners who
have large installed customer bases to whom we can offer licenses to our
products, which may be combined or bundled, with their own software. If we are
not successful in establishing these relationships, it will be more difficult
for us to be successful in our efforts to achieve a large customer base for
our products.

In order for our business to be successful, it will be necessary to convince
businesses to adopt a new technology and platform

As we do not have an existing customer base, our success will be
dependent upon our ability to convince business to business e-commerce users
to adopt XML technology. Many business to business e-commerce users already
have long term customer agreements with our e-commerce competitors with whom
we may be unable to establish a strategic partnership. Businesses that have
made substantial up-front payments to our competitors for electronic commerce
solutions may be reluctant to replace their current solution and adopt our
solution. As a result, our efforts to create a larger customer base may be
more difficult than expected even if we are deemed to offer products and
services superior to those of our competitors. In addition, because the
business to business e-commerce market is new and underdeveloped, potential
customers in this market may be confused or uncertain about the relative
merits of each electronic commerce solution or which electronic commerce
solution to adopt, if any. Confusion and uncertainty in the marketplace may
inhibit customers from adopting our solution.

If we fail to develop new products and services in the face of our industry's
rapidly evolving technology, our future results may be adversely affected

Due to the recent emergence of the Internet and the Web as a forum for
conducting business, the market for Web application server systems in which we
participate is subject to rapid technological change, changing customer needs,
frequent new product introductions and evolving industry standards that may
render existing products and services obsolete. Our growth and future
operating results will depend in part upon our ability to enhance existing
applications and develop and introduce new applications or components that:

* meet or exceed technological advances in the marketplace
* meet changing customer requirements
* achieve market acceptance
* integrate successfully with third party software and platforms, and
* respond to competitive products.

Our product development and testing efforts have required, and we are
expected to continue to require, substantial investment. We may not possess
sufficient resources to continue to make the necessary investments in
technology.

We will continue to need significant capital, without which our business may
fail

We have required significant capital to date and will require additional
capital to implement our business plan. We are currently generating only
nominal operating revenues. We have no current arrangements with respect to
other sources of additional financing and there can be no assurance that
additional financing will be available to us on commercially reasonable terms,
or at all. None of the Selling Securityholders have committed or are
obligated to exercise any of the options or warrants that they hold. As a
result, we cannot be sure that we will generate any additional working capital
through the exercise of options or warrants. The inability to obtain
additional financing, when needed, would have a material adverse affect on us,
including possibly requiring us to curtail or cease our operations. To the
extent that future financing involves the sale of our equity securities, our
then existing stockholders, including investors in this offering, could be
substantially diluted.

We need to manage our growth effectively or we may not succeed

We are a growing company. Our ability to manage our growth will depend
in large part on our ability to generally improve and expand our operational
and sales and marketing capabilities, to develop the management skills that
our managers and supervisors, many of whom have been employed by us for a
relatively short time, and to train, motivate and manage both our existing
employees and the additional employees that may be required. Additionally, we
may not adequately anticipate all the demands that growth may impose on our
systems, procedures and structure. Any failure to adequately anticipate and
respond to these demands or manage our growth effectively would have a
material adverse affect on our future prospects.

Security risks of electronic commerce may deter future use of our products and
services

A fundamental requirement to conduct Internet based, business to business
electronic commerce is the secure transmission of confidential information
over public networks. Failure to prevent security breaches in the
marketplaces, or well-publicized security breaches affecting the Web in
general, could significantly harm our business, operating results and
financial condition. We cannot be certain that advances in computer
capabilities, new discoveries in the field of cryptography, or other
developments will not result in a compromise or breach of the algorithms we
use to protect content and transactions or proprietary information in our
databases. Anyone who is able to circumvent our security measures could
misappropriate proprietary, confidential customer information or cause
interruptions in our operations. We may be required to incur significant
costs to protect against security breaches or to alleviate problems caused by
breaches.

If we lose our key personnel or fail to attract and retain additional
personnel, the success and growth of our business may suffer

A significant portion of our management team has been in place for a
relatively short period of time. We do not have written employment agreements
with any of our key personnel. We only have a limited consulting arrangement
with Mr. David Webber, the chief technology leader of the expressXCHG product.
Our future success will also depend significantly on our ability to attract,
integrate and retain highly skilled technical personnel who are active and
highly regarded in the XML community. As XML technology is relatively new,
the degree to which it is accepted and absorbed in the marketplace is
dependent, in part, upon assembling technology personnel who have the
credibility and skills to successfully promote acceptance of our products. If
we are unable to attract, integrate and retain such persons, our business
could be adversely affected. Our chief technology officer, Duane Nickull, is
internationally recognized as a leading innovator in the field of XML
technology. While we maintain a key man life insurance policy on him in the
amount of $1,000,000, if we were to lose his services it would have a material
adverse effect upon our competitive position in the industry.

The failure to implement successfully our web software and XML search engine
could result in dissatisfied customers and limited sales

Implementation of our Web software and XML search engine involves a
significant commitment of financial and other resources by our customers. The
customer's implementation cycle can be lengthy due to the size and complexity
of their systems and operations. In addition, our customers will rely heavily
on third party systems integrators to assist them with the installation and
use of our products. Our failure or the failure of our alliance partners, our
customers or our third party integrators to implement successfully our
products could result in dissatisfied customers which could adversely affect
our reputation.

Capacity restrictions of our XML-based products could reduce the demand and
utility for our products

Concurrency restrictions can limit Internet deployment and use capacity.
The boundaries of our XML capacity, in terms of numbers of concurrent users or
interactions, are unknown because, to date, no customer or testing environment
has reached these boundaries. The XML capacity boundaries may, at some future
time, be reached and, when reached, may be insufficient to enable our
customers to achieve their desired levels of information deployment and
exchange. We may lose customers or fail to gain new customers if either of
these occurs.

<PAGE>
<PAGE>
Certain Market Information

There currently exists no public trading market for our common stock, and
there can be no assurance that a public trading market will develop or be
sustained in the future. Without an active public trading market, there can
be no assurances that you will be able to liquidate your investment without
considerable delay, if at all. If a market does develop, the price for our
securities may be highly volatile and may bear no relationship to our actual
financial condition or results of operations. Factors we discuss in this
prospectus, including the many risks associated with an investment in us, may
have a significant impact on the market price of our common stock. Also,
because of the relatively low price of our common stock, many brokerage firms
may not effect transactions in the common stock.

In addition, it is likely that our common stock will be subject to rules
adopted by the Commission regulating broker dealer practices in connection
with transactions in "penny stocks." Those disclosure rules applicable to
"penny stocks" require a broker dealer, prior to a transaction in a "penny
stock" not otherwise exempt from the rules, to deliver a standardized list
disclosure document prepared by the Commission. That disclosure document
advises an investor that investment in "penny stocks" can be very risky and
that the investor's salesperson or broker is not an impartial advisor but
rather paid to sell the shares. The disclosure contains further warnings for
the investor to exercise caution in connection with an investment in "penny
stocks," to independently investigate the security, as well as the salesperson
with whom the investor is working and to understand the risky nature of an
investment in this security. The broker dealer must also provide the customer
with certain other information and must make a special written determination
that the "penny stock" is a suitable investment for the purchaser and receive
the purchaser's written agreement to the transaction. Further, the rules
require that, following the proposed transaction, the broker provide the
customer with monthly account statements containing market information about
the prices of the securities.

These disclosure requirements may have the effect of reducing the level
of trading activity in the secondary market for our common stock. Many
brokers may be unwilling to engage in transactions in our common stock because
of the added disclosure requirements, thereby making it more difficult for
stockholders to dispose of their shares.
<PAGE>
<PAGE>
Forward-looking Statements

In General

This prospectus contains statements that plan for or anticipate the
future. Forward-looking statements include statements about the future of the
software development, computer-based project management, consulting and
strategic business consulting industries, statements about our future business
plans and strategies, and most other statements that are not historical in
nature. In this prospectus, forward-looking statements are generally
identified by the words "anticipate," "plan," "believe," "expect," "estimate,"
and the like. Although we believe that any forward-looking statements we make
in this prospectus are reasonable, because forward-looking statements involve
future risks and uncertainties, there are factors that could cause actual
results to differ materially from those expressed or implied. For example, a
few of the uncertainties that could affect the accuracy of forward-looking
statements, besides the specific factors identified above in the Risk Factors
section of this prospectus, include:

* changes in general economic and business conditions affecting the
XML and Internet industries;

* technical developments that make our products or services less
competitive or obsolete;

* changes in our business strategies;

* the level of demand for our products and services; and

* our ability to develop or maintain strategic relationships within
the XML and e-commerce industries, which are critical to gaining
market share.

In light of the significant uncertainties inherent in the forward-looking
statements made in this prospectus, particularly in view of our early stage of
operations, the inclusion of this information should not be regarded as a
representation by us or any other person that our objectives and plans will be
achieved.

No "Safe Harbor"

The Private Securities Litigation Reform Act of 1995, which provides a
"safe harbor" for similar statements by existing public companies, does not
apply to our offerings.

<PAGE>
Dividend Policy

We have not declared or paid cash dividends on our common stock in the
preceding two fiscal years. We currently intend to retain all future
earnings, if any, to fund the operation of our business, and, therefore, do
not anticipate paying dividends in the foreseeable future. Future cash
dividends, if any, will be determined by our Board of Directors, based upon
such factors as the Company's historical and projected earnings, its working
capital surplus and anticipated demands for capital expenditures.

Capitalization

The following table sets forth our capitalization as of June 30, 2000 on
an actual basis. This section should be read in conjunction with the
consolidated financial statements and related notes contained elsewhere in
this prospectus.

<TABLE>
<CAPTION>
As of June 30, 2000
-------------------
<S> <C>
Stockholders' Equity
Preferred Stock, $.01 par value,
100,000,000 shares authorized;
no shares outstanding $ -
Common Stock, $.0001 par value;
authorized 500,000,000 shares:
27,505,000 issued and outstanding
shares 2,751

Additional paid-in capital 11,675,258

Accumulated other comprehensive income
(loss) (5,089)
Accumulated deficit (1,694,090)
--------------

Total stockholders' equity and capitalization $ 9,978,830
==============

</TABLE>

These amounts do not include 4,000,000 shares of common stock we may
issue upon exercise of options which may be granted under our Equity Incentive
Plan. Currently under the Plan we have issued 1,551,000 options which are
subject to outstanding and unexercised options having exercise prices between
$1.00 and $5.00 per share. In addition, we have committed to certain persons
to issue an additional 1,075,000 options at exercise prices ranging between
$1.50 and $2.00 share. Of the 1,551,000 options outstanding, 206,000 options
are currently not exercisable by the holder but will vest in the future,
subject to the holder's continuing employment.

<PAGE>
<PAGE>
Selected Financial Data

We have set forth below certain selected financial data. This financial
data was derived from the consolidated financial statements and notes thereto
included elsewhere in this prospectus.

Fiscal Years Ended June 30,
2000 1999
------- -------
<S> <C> <C>
Statement of Operations Data
Revenues $ 53,185 $ 2,137
Operating Expenses 1,713,378 122,986
Operating Loss (1,660,193) (120,849)
Other Income (Expenses) 94,161 -
Net Income (Loss) (1,573,241) (120,849)
Net (Loss) Per Share (0.07) (0.01)
Average Common Shares
Outstanding 21,205,800 17,500,000

<CAPTION>
At June 30, 2000 At June 30, 1999
---------------- ----------------
<S> <C> <C>
Balance Sheet Data
Total assets $ 10,082,007 $ 88,052
Working Capital (deficiency) 8,158,004 (173,092)
Total Liabilities 103,177 199,072
Accumulated Deficit (1,694,090) (120,849)
Stockholders' Equity 9,978,830 (111,020)

</TABLE>

___________________

<PAGE>
<PAGE>
Management's Discussion and Analysis of Financial Condition and
Results of Operations of XML - Global Technologies, Inc.

The following discussion and analysis should be read in conjunction with
the Financial Statements and Notes thereto appearing elsewhere in this
Prospectus. Unless otherwise noted, references to "we," "our," and "us" refer
to XML-Global Technologies, Inc. and its subsidiaries.

Operations

Effective August 27, 1999, XML-Technologies, Inc. and International
Capital Funding, Inc. (ICF) entered into an agreement and plan of
reorganization. In accordance with the plan of reorganization, the
shareholders of XML-Technologies, Inc. received 12.5 million shares of ICF
stock in exchange for the 12.5 million outstanding shares of XML-Technologies,
Inc. The shareholders of ICF retained 5 million shares in exchange for no
assets and the assumption of $2,671 of liabilities of ICF by XML-Technologies,
Inc. The transaction was accounted for as a recapitalization of XML-
Technologies, Inc.

The founders of the Company began working with XML in early 1998 and
began to develop software as a group in the fall of 1998. The Company was
formed in May 1999 to develop commercial applications using the founders' XML
expertise. In July 1999, we commenced sales of Cartnetwork, our proprietary
e-commerce software and in September 1999, we announced GoXML, which we
believe is the world's first XML search engine. On September 29, 1999, we
filed an application with the United States Patent Office in respect of our
GoXML search engine under the title "Authoring, altering, indexing, storing
and retrieving electronic documents embedded with contextual markup".

We continue to develop proprietary XML-based solutions for the Internet-
based economy with a focus on e-commerce and the conversion of data from
legacy formats to XML. As an adjunct to our e-commerce business, we develop
Websites for our clients. Our main sources of revenue are currently from the
development of Websites and the licensing of our e-commerce software.

1999 Equity Incentive Plan

On October 19, 1999 the shareholders approved the 1999 Equity Incentive
Plan (the "1999 Plan") which provides for the grant of:

* incentive and nonstatutory stock options,
* stock bonuses,
* rights to purchase restricted stock and
* stock appreciation rights.

Our Board of Directors adopted the 1999 Plan on September 15, 1999. The Plan
provides a means by which selected officers and employees of and consultants
may be given an opportunity to purchase our stock, to assist in attracting and
retaining employees holding key positions and to provide incentives for such
persons to exert maximum efforts. The 1999 Plan is administered by our Board
of Directors, which has exclusive power over the granting of options and their
vesting provisions. We have reserved a total of 4,000,000 shares of common
stock for issuance under the 1999 Plan, of which 1,551,000 options have been
granted to employees, directors and consultants at exercise prices of between
$1.00 per share and $5.00 per share. In addition, we have made commitments to
grant an additional 1,075,000 options at exercise prices ranging between $1.50
per share and $2.00 per share.

Plan of Operations

To date, we have raised gross proceeds of approximately $11 million
through private offerings of equity securities. We expect that funds
remaining from these offerings, which amounted to $8.2 million at September
30, 2000, will be sufficient to fund our operating and investing activities
for at least the next twelve months. Accordingly, we have no plans to raise
additional funds during the next twelve months.

We are developing expressXCHG Version 1.0, a data transformation engine,
which we expect to release in December 2000, and the next release of our goXML
search engine which we plan to release in February 2001. We plan to continue
developing these products and to undertake development of new products
including a version of Ceremony(-TM-), a system for authenticating online
transactions, which we have licensed from PenOp Ltd.

We plan to help companies implement XML solutions using our products and
are completing work under a contract with a Korean company that is setting up
an Internet-based business-to-business marketplace to serve the Korean market.
The contract value is $950,000 and the work is to be completed by December
2000. The full contract value may be subject to withholding taxes by the
Korean tax authorities at a rate of 16.5%. We will be able to apply these
withholding taxes against United States income taxes otherwise payable, should
we become taxable in the future.

We do not expect to undertake any significant purchases or sales of plant
and equipment during the next twelve months. We will continue to acquire
computer hardware and software and office furniture in the ordinary course as
we hire new employees.

At the date of this Registration Statement, we employ approximately 48
staff. We plan to hire an additional 25 employees over the next year,
consisting of 15 software engineers, five implementation specialists and five
sales and marketing personnel. The actual number of staff that we hire will
be dependent on how our business develops and will be subject to our ability
to find qualified individuals on mutually acceptable terms.

Results of Operations

REVENUE. Revenue consists of fees received from the sale of e-commerce
solutions, the design and Web site development, implementation and support.
Revenue was $53,200 for the year ended June 30, 2000, compared to $2,100 for
the previous fiscal year. The increase was due to the longer fiscal period,
sales of software products under development during the previous fiscal period
and a generally increased scale of operations.

RESEARCH AND DEVELOPMENT EXPENSES. Product and content development costs
include expenses we incur to develop our technology and our clients' web
sites. These costs consist primarily of salaries and fees paid to employees
and consultants to develop and maintain software and web sites. For the year
ended June 30, 2000 and 1999, these costs were $774,100 and $49,800
respectively. The increased expenditures in the year just ended, reflect
increased staffing levels to accelerate development of existing and new
products.

SALES AND MARKETING EXPENSES. Marketing, sales and client services costs
include expenses we incur to obtain and maintain client relationships. These
costs include fees paid to contractors and consultants, related travel and
incidental costs and occupancy costs for our Seattle sales office. For the
year ended June 30, 2000, sales and marketing expenses were $218,700. Sales
and marketing expenses in the previous period were not material. The increase
is due to the addition of staff and corporate identity and sales initiatives
undertaken in the current year.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
consist primarily of salaries, contractor fees and related costs for general
corporate functions, including travel, finance, accounting and legal expenses.
For the year ended June 30, 2000, general and administrative expenses were
$629,100, up from $70,100 in previous year. The increase reflects the longer
fiscal period, increased staff, travel costs and professional fees associated
with licensing our products and defending our intellectual property.

DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation expense reflects
depreciation of computer hardware, software and equipment over their estimated
useful lives of between two and three years. Depreciation expense was $35,600
and $3,100 respectively for the years ended June 30, 2000 and 1999. The
company recorded only nominal amortization expense in regard to trademarks and
patents as these costs largely relate to applications that had not been
granted at June 30, 2000.

FAIR VALUE OF STOCK OPTIONS. The Company reports the financial impact of stock
options issued to employees using APB-25. We record the estimated fair value
of stock options granted to non-employees as an operating expense at the date
the services were performed. During the year ended June 30, 2000 we granted
275,000 options to non-employees at exercise prices of $1.00 per share. We
estimate that the fair value of each of these options was approximately $0.22.
We have recorded an expense of $55,900 in respect of options that have vested;
25,000 of the options granted to non-employees were forfeited during the
period. There was no corresponding expense in the prior year, as we had not
issued any stock options.

INTEREST INCOME. During the year ended June 30, 2000, the company earned
interest income of $94,200. We did not earn any interest income in the year
ended June 30, 1999. Interest income has been earned on funds received from
private equity placements which have exceeded operating expenditures to date
with the result that cash and cash equivalents increased in the period.

Liquidity and Capital Resources

Since inception, we have financed our operations primarily through the
placement of equity securities and advances from our principal stockholder. In
the year ended June 30, 2000, we received net proceeds of approximately
$10,612,300 from private offerings of equity securities including the
extinguishment of a note payable to a stockholder. Issue costs associated with
these offerings, which have been offset against the net proceeds of the
offering, were $840,200. As of June 30, 2000 we had $7,535,900 in cash and
cash equivalents and $1,000,000 in short term investments.

Since August 1999, we have received gross proceeds of $11,452,500 from
the private placement of equity securities and the exercise of stock purchase
warrants.

Number of Gross
Date Units Sold $/unit Proceeds
---- ---------- ------ --------
<S> <C> <C> <C> <C>
Private Placements
August, 1999 2,330,000 1.00 $ 2,330,000
January, 2000 500,000 2.00 1,000,000
February and April,
2000 1,000,000 1.00 1,000,000
February 2000 50,000 1.00 50,000
March, 2000 4,625,000 1.50 6,937,500
April, 2000 100,000 1.00 100,000
-----------
$11,417,500

Exercise of Warrants
March, 2000 500,000 .07 35,000
-----------
Total $11,452,500
===========

</TABLE>

Approximately $8,000,000 is currently held in short term investments.
The balance, net of issue costs, has been used as follows:

<S> <C> <C>
Research and development expenses $ 553,812
Sales and marketing expenses 173,542
General and administrative expenses 420,531
Capital assets 135,816
Trademarks and patents 39,945
Commissions, professional fees and
other offering costs 784,816
</TABLE>

We have incurred costs to design, develop and implement search engine and
electronic commerce applications and to grow our business. As a result, we
have incurred operating losses and negative cash flows from operations in each
quarter since we commenced operations. As of June 30, 2000, we had an
accumulated deficit of $1,694,100. These losses have been primarily funded
through private placement of equity securities.

To date, we have experienced negative cash flows from operating
activities. For the year ended June 30, 2000, net cash used in operating
activities was primarily attributable to our net operating loss of $1,573,200.
The net loss for the year was partially offset by non-cash depreciation and
amortization of $35,600, the fair value of options granted to non-employees of
$55,900 and a net cash outflow of $27,500 with respect to working capital
changes. For the year ended June 30, 2000, net cash used in operating
activities was therefore $1,509,300. In the year ended June 30, 1999 $63,500
was used in operating activities.

For the year ended June 30, 2000, net cash used in investing activities
was $1,434,900. We spent $129,700 on computer hardware, software and
equipment, $10,000 on leasehold improvements, $45,200 on patent and trademark
applications, $250,000 on intellectual property, and $1,000,000 on short-term
investments. The computer hardware and software purchases related to server
upgrades and computers used by programmers. The leasehold improvements relate
to our new Vancouver offices which opened in June 2000.

For the year ended June 30, 2000, net cash provided by financing
activities was $10,477,100 attributable to the private placements of equity
securities, offset by related issue costs. In addition, we acquired a 60%
interest in DataXchg, Inc. at a deemed price of $1,000,000 in exchange for the
issuance of 1,000,000 shares of common stock. In the year ended June 30,
1999, $135,100 was provided by financing activities relating to the issuance
of a note payable.

Changes in exchange rates had a net effect of decreasing our cash balance
by $6,700.

As of June 30, 2000, we had no contractual capital commitments
outstanding.

Our ability to generate significant revenue is uncertain. We incurred net
losses of approximately $1,573,200 during the year ended June 30, 2000. We
expect losses from operations and negative cash flow to continue for the
foreseeable future, at least through fiscal 2001, as a result of our expansion
plans and our expectation that operating expenses will increase significantly
in the next several years. The rate at which these losses will be incurred is
likely to increase from current levels. Although we have experienced revenue
growth, revenues have been substantially less than expenses and may not
increase in the future. If our revenue does not increase and if our spending
levels are not adjusted accordingly, we may not generate sufficient revenue to
achieve profitability, which would have a materially adverse effect on our
business, financial condition and results of operations. Even if we achieve
profitability, we may not sustain or increase profitability on a quarterly or
annual basis in the future.

Our working capital requirements depend on numerous factors. We have
experienced increased expenditures since inception, consistent with growth in
our operations and staffing, and expect that this trend will continue for the
foreseeable future. We anticipate incurring additional expenses to increase
our marketing and sales efforts, for software and infrastructure development.
Additionally, we will continue to evaluate possible investments in businesses,
products and technologies, the expansion of our marketing and sales programs
and brand promotions. If we experience a shortfall in revenue in relation to
expenses, or if our expenses precede increased revenue, our business,
financial condition and results of operations could be materially and
adversely affected

We currently estimate that available cash resources at June 30, 2000 will
be sufficient to meet our anticipated needs for working capital and capital
expenditures through June 2001. We may need to raise additional funds,
however, in order to fund more rapid expansion, to develop new or enhance
existing services or products, to respond to competitive pressures or to
acquire complementary products, businesses or technologies. There can be no
assurance that any required additional financing will be available on terms
favorable to us, or at all. If additional funds are raised by the issuance of
equity securities, stockholders may experience dilution of their ownership
interest and these securities may have rights senior to those of the holders
of the common stock. If additional funds are raised by the issuance of debt,
we may be subject to certain limitations on our operations, including
limitations on the payment of dividends. If adequate funds are not available
or are not available on acceptable terms, we may be unable to fund our
expansion, successfully promote our brand name, take advantage of acquisition
opportunities, develop or enhance services or respond to competitive
pressures, any of which could have a materially adverse effect on our
business, financial condition and results of operations.

Some of our revenues are earned and a substantial portion of our payroll
and other expenses are paid outside the United States in currencies other than
US dollars. Because our financial results are reported in US dollars, they are
affected by changes in the value of the various foreign currencies in which we
make payments in relation to the US dollar. We do not cover known or
anticipated currency fluctuation exposures through foreign currency exchange
option or forward contracts. The primary currency for which we have foreign
currency exchange rate exposure is the Canadian dollar. Our financial
instruments, including cash, accounts receivable, accounts payable and accrued
liabilities are carried at cost which approximates their fair value because of
the short-term maturity of these instruments.

<PAGE>
<PAGE>
Business

Overview

We, together with our subsidiaries, are positioning ourselves to take
advantage of what we believe is one of the most significant trends in business
today: the adoption of a complete, e-business strategy using XML (eXtensible
Markup Language) by global businesses. XML is a markup language that is able
to add structure, intelligence and content identification to information on
the Internet or Intranets. By being able to attract and retain persons who
are at the forefront of XML technology, we have been able to identify and
develop several commercial products and services that will enable us to
exploit the XML opportunities. Our primary objective is to assist businesses
in their effort to migrate from existing HTML and EDI standards to XML. There
is an emerging market for XML-based tools such as our search engine and other
e-commerce products which will be targeted and served by our XML specialists.

About XML

Previously Web pages have been written on HTML (HyperText Mark-up
Language). HTML is essentially a presentation technology, concerned with how
a browser should arrange text and graphics on a page.

HTML was never designed or intended to accommodate the complexity and
quantity of information on the Web. HTML browsers cannot identify or
determine the meaning of a word or presentation on a page. For example, if
you were looking for a book authored by a person named "Gold," you may search
terms such as "gold" and "book." Yet, an HTML browser cannot differentiate
between "books by Gold" and "books about gold" and therefore might present the
searcher with irrelevant information.

In response to this acknowledged difficulty, the World Wide Web
Consortium ("W3C"), the industry association that promotes standards for the
evolution of the Web, defined a new mark-up standard known as XML. XML is a
very simple and flexible text format which, like HTML, is tag based and saves
its information in plain text files. However, while HTML defines a set of
tags used for formatting and displaying text, XML defines a set of tags used
for representing text as pieces of information. XML was originally designed
to meet the challenges of large-scale electronic publishing. However, with
new XML tools, products and services being introduced, we believe that the
greatest potential for XML will be related to business-to-business
applications and, in particular, order processing and order fulfillment.

XML allows individual users to easily customize the presentation of their
data to meet their specific needs. XML overcomes the limitation of HTML in
that it:

* Provides metadata, or data about information, that will help people
find information and help information producers and users find each
other.

* Delivers information to users in a form that allows automatic
processing after receipt.

* Enables media independent international electronic publishing.

* Makes it easy for users to process data using inexpensive software.

* Allows users to display information in any form.

The advantages flow from the fact that XML allows each writer to define
the tags that mark up and identify the type of data contained in a particular
document. Commerce on the Internet is undergoing global changes, including a
shift in mark-up language technology. HTML based e-commerce systems have
severe limitations in terms of portability, data recognition and integration
with back-end systems, and generally fail to provide a streamlined client-
friendly approach to e-commerce. XML addresses these limitations, primarily
through its inherent extensibility and is therefore ideal for creating
industry wide shopping systems.

Business strategy

Our marketing strategy

We intend to pursue the global business-to-business e-commerce market
with our search engine and software tools. Our initial marketing strategy
will focus on forming partnerships and affiliations with leading software and
XML companies.

GoXML.com and expressXCHG marketing strategy

* Corporate Partnerships and Affiliations. We are developing strategic
alliances with businesses offering complementary software; for
example, database vendors, and related services and system
integrators.

* License GoXML. We will target companies in industry segments, such
as publishing and education, that need to search for information from
many disparate sources. We believe that these companies are likely
to be early adopters of XML and they will find it more cost effective
to license a search engine than develop one. We have recently
licensed GoXML to a Korean company. Direct sales, telesales and e-
support for the marketing campaign form the basis of our licensing
strategy.

* License expressXCHG. We will target companies that wish to adopt an
e-business strategy using their existing computer systems, and
businesses setting up "net markets" that allow online trading between
many unrelated companies. As with GoXML, these businesses are likely
to be early adopters and many of these companies will be potential
customers for both GoXML and expressXCHG. For the foreseeable future
we will rely on direct sales to promote expressXCHG operations.

* Develop the convert2xml.com Website. This Website will be an
important source of technical information, instructions and tutorials
on how to write XML and will provide free software for converting
simple HTML to XML.

* XSLT.com. We developed this Website to advance XSLT and promote
technical contributions. XSLT is at the recommendation stage of the
W3C and is expected to become the dominant language for template-
based stylizing of XML documents.

XML CommercePro marketing strategy

The end-users for our XML CommercePro software are small and medium e-
commerce businesses seeking an XML-enabled e-commerce solution. In order to
effectively reach such businesses, we market XML CommercePro to e-commerce
hosting businesses, such as ISPs, ASPs and server farms that have multiple e-
commerce clients. By using XML CommercePro, the hosting businesses offer
their clients the ability to XML-enable their e-commerce Websites.

Our sales and marketing approach combines direct sales through our
Seattle and Vancouver offices with a web presence at our CartNetwork site.
The basic software for XML CommercePro is available as a free download at the
CartNetwork site allowing both web hosting businesses and end-users to sample
the software before committing to a purchase.

By allowing free downloads (averaging 100 per week) of the LeCart
shopping cart program, we believe that we will expose our XML CommercePro to
its intended audience of small to medium e-commerce providers. XML
CommercePro is XML enabled and appeals to individuals and corporations that
want to be able to sell online and utilize our XML e-commerce solution. The
product is currently being re-branded to focus on the XML capability of the
product as well as to use it as a link to the GoXML.com site and to promote
our core XML products.

Our strategic relationships

We have developed important relationships with many of the leading XML
firms and we are also maintaining an active role in associations and industry
consortiums that are considered leaders in the development of XML standards.

Corporate relationships

We have agreements or are in negotiation with a number of major software
companies for the exchange, development and cross-license of XML and other
applications. We consider the creation and maintenance of these relationships
to be important to our business development and future success.

* PenOp, Ltd.

In May, 2000, we purchased from PenOp, Ltd. a non-exclusive license to
use its patented technology that permits verifiable electronic signatures for
a wide range of eBusiness and web-based systems. Known as "Ceremony," the
technology allows individuals to sign and secure electronic transactions with
an electronic signature that replaces ink signatures for paper transactions.
We paid a total of $250,000 for the license. We intend to incorporate
Ceremony into several of our proprietary XML applications.

* B2B Internet, Inc.

In June 2000, we entered into a software development and license
agreement with B2B Internet, Inc., a Korean Internet software and technology
company. Under the agreement, we are developing a net market solution using
our GoXML and expressXCHG products. The product is scheduled to be completed
in December 2000 for a total development fee of $950,000. When completed, the
software will be owned by B2B Internet and will be part of an integrated
online marketplace that allows buyers and sellers to better communicate and
transact business. Under the agreement we will receive sublicense fees when
B2B Internet sublicenses our products in Korea where they will have exclusive
distribution rights for four years.

Standards associations

* XML EDI. This is a consortium of over 1,500 of the world's leading
technology-based companies co-founded and directed by David Webber,
one of our Directors. Its purpose is to promote the exchange of
information and technology among participants in the XML-EDI
industry.

* ebXML. This is an association sponsored by the United Nations and
OASIS whose mandate is to develop standards for businesses to use the
Internet for the exchange of data and e-commerce and business-to-
business transactions using XML. Duane Nickull, our Chief Technology
Officer, is Editor of the Technical Architectural Committee of ebXML.

* OASIS. OASIS is a non-profit international consortium of users and
vendors dedicated to the promotion of open specifications for the
exchange of structured data. It is focused on the definition and
implementation of XML communication.

In addition, we maintain ongoing dialogues with many technology and software
companies that are involved in the growing XML industry. These discussions
and relationships have not resulted in specific business arrangements or
revenues, but rather they position us to capture possible future opportunities
should they arise.

Products

We have developed and are using our proprietary technology to
commercialize a suite of applications for e-business to help companies convert
from HTML to XML. We believe that this technology, together with technology
we currently have under development, will allow existing businesses to
successfully adopt XML database structures:

* GoXML - is, we believe, the first context XML search engine, allowing
users to search for terms according to the type of information they
are looking for. Version 1.0 of GoXML was launched in July 1999 and
was designed to handle over 60 million documents. It is based on our
proprietary technology that is patent pending, and uses a proprietary
spidering program that scans the Internet to find and index XML data.
We released Version 2.0 together with a software developer kit in
August 2000. Version 2.0 is designed to handle up to 200 million
complex documents. One application for the search engine product is
for corporate intranets of companies that have already converted
databases to XML. The Internet-based version of the search engine
has been showcasing our technology since July 1999.

* expressXCHG - is a patented data transformation tool under final
development that allows direct interface between different systems
including EDI, HTML, EDIFACT / X12, SAP BAPIs with an expected
release in November, 2000. We are developing expressXCHG to be able
to effect the conversion between all of these standards and XML. We
believe this to be a key component to the migration and interchange
of business data on the Internet.

* XML CommercePro - is an XML enabled multi-user shopping cart system
designed for ISPs (Internet Service Providers), CSPs (Commerce
Service Providers) and ASPs (Application Service Providers). It was
first launched in June 1999 but one of its components, LeCart, has
been commercially available since September 1998. Its setup-once,
run-anywhere design means it not only enables hosted clients'
Websites for e-commerce, but any Website on the Internet as well.
The software has a simple browser-based administration interface
which will allow users to sign up manually or online, thereby
becoming e-commerce enabled immediately.

* XML Data Conversions - XML Global is developing solutions to enable
Websites to seamlessly integrate an XML-based solution into their Web
presence. One such solution is eXtensible Object Server Pages (XOSP).
XOSP is the XML equivalent to the ASP (Active Server Pages) standard
which was developed by Microsoft. This software allows web masters
and ISPs to mark up HTML documents with XML, thus providing all of
the retrieval benefits of XML to HTML documents. XOSP will be used
along with our other tools to develop other XML-based business
applications.

Competition in general

As in most technology-based industries, competitive advantages in our
industry are gained by speed of market entry, availability of working capital,
scope and scalability of software functionality, adaptability to different
applications, existence or access to distribution channels and, of course,
technological innovation and related patent protection. Our greatest
advantage is in our patented technology; however, many of our competitors have
better finances and have better access to channels of distribution. Each of
these factors applies to our business, which is quickly evolving.

Our competitors are frequently quite secretive about their development
efforts, but because of the rapid evolution of XML technology, we expect new
competitive product releases will appear quickly and frequently.

Competition with GoXML search engine

Our competition comes from a variety of companies who have adopted XML
and are using various XML-based products for commercial purposes.

Private search engines

* Sequoia Software has what we believe to be the only other pure XML
search engine which is called "Xdex." This is for use in intranet
applications with very small businesses. To our knowledge, the
product has not yet been commercially launched, and its future
release date is unknown.

* Inktomi has an HTML search engine created at the University of
California at Berkeley. It develops and markets software design for
Internet infrastructure and media companies. It works with leading
companies including America On Line, British Telecommunications,
Cnet, Excite@Home, Intel, Microsoft, Real Networks, Sun Microsystems
and Yahoo. The Inktomi search engine is licensed to both public
search portals and private corporations for their intranets. There
is no public portal for a direct query of the Inktomi index directly.
We believe that Inktomi is the industry leader in search engine
licensing. Based on published reports, it reported 1999 revenues of
$71,000,000 and handled 2.9 billion queries in the fourth quarter
alone.

* Ultraseek, as a division of Go.com (a Disney company), launched its
Ultraseek server in 1997 and now claims customers such as Sun
Microsystems, 3Com and Ericsson. Ultraseek's 3.0 version provides
support for indexing and search of XML documents. They have modified
their HTML search engine to recognize XML documents. Ultraseek is
not actively marketed and, to our knowledge, is not a context-based
search engine.

* IBM, like Ultraseek, has modified an existing HTML search tool to
accommodate XML documents. This product has not been commercially
launched to date.

Commercial search engines

We believe that eventually our GoXML.com search engine will compete with
the large Web-based search portals. To date, there are not a sufficient
number of XML documents to make a commercial Internet XML portal competitive
with HTML search portals, and we are not presently capable of competing with
the HTML-based search portals. However, we believe that we ultimately may
compete with the larger HTML based search portals such as Alta Vista, Ask
Jeeves, Excite, Go.com, Goto.com, Google, HotBot, Look Smart, Snap and Yahoo.

Competition with expressXCHG

Several companies have developed XML/EDI translation systems that compete
with our expressXCHG transformation software:

* XML Solutions offers its XEDI translator which can convert EDI
documents to XML documents for transmission over the public Internet
or private networks.

* EComXML offers secure EDI/Backoffice integration. Its EComTalk
Server is a secure e-commerce gateway for the exchange of transaction
documents.

* IBM has recently moved into a beta testing stage for its new EDI to
XML translator. When fully deployed, IBM has estimated substantial
savings for its internal systems resulting from a broad
implementation of this translator.

Competition with XML CommercePro

There are many e-commerce shopping cart programs available for sale, and
a growing number available for free on the Internet. Although certain of
these programs directly compete with our bolt-on capability, none of these
programs, we believe, compete with us in being able to input and output XML
product data. We intend to continue to sell and license our product to be
sublicensed, in many cases at very competitive prices. If the use of XML
increases and e-commerce applications begin utilizing XML, we would expect to
experience increased competition.

Intellectual property

Patents and licenses

We have filed a 51 point patent with the United States Patent and
Trademark Office on our XML search engine and are in the process of preparing
two other patents relating to our proprietary technologies. We also have a
perpetual worldwide exclusive license to use and sublicense and make, use and
sell products based on the expressXCHG technology, including, without
limitation, the patented "expressXCHG" software. No assurance can be given
that any patent will be issued or that the scope of any patent protection will
exclude competitors or that any patent, if issued, will be held valid if
subsequently challenged.

We have recently licensed Ceremony from PenOp, Ltd., a technology-based
electronic signature product. This capability will be incorporated into
several of our XML applications.

Other intellectual property

As we discussed under the section "Risk Factors," we have applied with
the United States Patent and Trademark Office to register the following
trademarks all of which are still pending:

* GoXML
* XOSP
* XHML
* LeCart
* XOP

In addition we have registered the following domain names:

* www.GoXML.com
* www.lecart.com
* www.cartnetwork.com.
* www.cartnetwork.net
* www.convert2xml.com
* www.findxml.com
* www.xslt.com
* www.xosp.com
* www.xosp.net
* www.xosp.org
* www.walkaboutwebs.com
* www.xmldirectory.com

Our trademarks and domain names play an important role in expanding the
awareness of our products on the Internet and developing partnerships between
those who use the Internet to retrieve information and many providers of
products and services available on the web. While we have applied for
registration of the foregoing trademarks and registered domain names in an
effort to protect them, our efforts may be inadequate to prevent others from
claiming violations of their marks and may be inadequate to protect our use of
those names as unique. In addition, trademark protection and the uncertainty
surrounding the legal protections of domain names may be unenforceable or
limited in other countries, and the global nature of the Internet makes it
impossible to control the ultimate destination of our communications. The
regulation of web addresses in the United States and in foreign countries is
subject to change. As a result, we may not be able to acquire or maintain our
web addresses in the future. Furthermore, the relationship between
regulations governing such addresses and the laws protecting trademarks is
unsettled.

In fact, we are aware of a German company that has been using the name
"Go-XML" for its Website. We have made a demand that it cease and desist from
such use, but there can be no assurance that we will be able to prevent or
limit this conflicting and competing use. If we are unsuccessful in these
efforts, our use of the trademark "Go-XML" may be limited or restricted, or,
at the very least, may become so diluted as to lose its value, in which case
we may have to consider rebranding the product.

Despite our efforts to protect our proprietary rights, unauthorized
parties may attempt to copy aspects of our products or obtain and use
information that we regard as proprietary. Policing unauthorized use of our
products is difficult and, though we are unable to determine the extent to
which piracy of our software products exists, we expect software piracy to be
a problem. In addition, the laws of some foreign countries do not protect
our proprietary rights to the same extent as the laws of the United States and
Canada (where XML Research is located). Furthermore, our competitors may
independently develop technology similar to ours. The number of intellectual
property claims in our industry may increase as the number of computing
products grows and the functionality of products in different industry
segments overlaps. Although we are not aware that any of our products or
other intellectual property infringe upon the proprietary rights of third
parties, there can be no assurance that third parties will not claim
infringement by us with respect to current or future products. Any of these
claims, with or without merit, could be time consuming to address, result in
costly litigation, cause product shipment delays or require us to enter into
royalty or license agreements. These royalty or license agreements might not
be available on terms acceptable to us or at all, which could have a material
adverse affect on our business.

Research and development

We have 33 full time software engineers and architects devoted to
software research and development and Website development. In the period ended
June 30, 1999, and the year ended June 30, 2000, we expended approximately
$49,800 and $774,100 respectively, for research and development costs related
to our products.

General Risks of Our Business

We are vulnerable to general Internet systems failures or interruptions of our
service

Our success depends on the capacity, reliability and security of our
networking hardware, software and telecommunications infrastructure. Despite
precautions taken by us, our system is susceptible to natural and man-made
disasters. Telecommunications failures, computer viruses, electronic break-
ins or other similar disruptive problems could adversely affect the operation
of our systems. Any such technical failure or security problems could harm
our business, financial condition and results of operations. Periodically, we
may experience unscheduled system downtime that may result in our Website
being inaccessible to customers, or we may experience slow response times
which may result in decreased traffic to our Websites. If these problems
arise, they could materially and adversely affect our business, results of
operations and financial condition.

Additional government regulations may adversely affect our business

The laws governing Internet transactions remain largely unsettled. The
adoption or modification of laws or regulations relating to the Internet could
harm our business, operating results and financial condition by increasing our
costs and administrative burdens. It may take years to determine whether and
how existing laws such as those governing intellectual property, privacy,
libel, consumer protection and taxation apply to the Internet. Laws and
regulations directly applicable to communications or commerce over the
Internet are becoming more prevalent. We must comply with new regulations in
Europe, Canada and the United States, as well as any other regulations adopted
by other countries where we may do business. The growth and development of
the market for online commerce may prompt calls for more stringent consumer
protection laws, both in the United States and abroad, as well as new laws
governing the taxation of Internet commerce. Compliance with any newly
adopted laws may prove difficult for us and may harm our business, operating
results and financial condition.

In 1998 the United States Government enacted a three-year moratorium
preventing states and local governments from imposing new taxes on electronic
commerce transactions. Upon expiration of this moratorium, if it is not
extended, states or other governments might levy sales or use taxes on
electronic commerce transactions. An increase in taxation of electronic
commerce transactions might also make the Internet less effective for
consumers and businesses.

We may be subject to future product liability claims and our products'
reputations may suffer

Many of our installations will involve projects that are critical to the
operations of our customers' business and provide benefits that may be
difficult to quantify. Any failure in a customer's system could result in a
claim for substantial damages against us, regardless of our responsibility for
the failure. Although our license agreements with our customers will contain
provisions designed to limit contractually our liability for damages arising
from negligent acts, errors, mistakes or omissions, it is possible that these
provisions will not be enforceable in certain instances or would otherwise not
protect us from liability for damages. Although we maintain general liability
insurance coverage, this coverage may not continue to be available on
reasonable terms or at all, or may be insufficient to cover one or more large
claims. Moreover, such insurance coverage may not provide benefits for
certain product liability claims.

In addition, we plan to enter into agreements with our strategic alliance
partners whereby we license our products for integration with the alliance
partners' products. If an alliance partners' product fails to meet customer
expectations or causes a failure in its customer's systems, the reputation of
our products could be materially and adversely affected, even if our products
performed in accordance with their functional specifications.

Employees

We now have 48 full time employees most of whom are located at our principal
office in Vancouver, British Columbia. In addition, we also have an
additional labor pool consisting of contract professionals that are hired on a
part-time basis.

Facilities

Our principal executive offices are located in Vancouver, British
Columbia. This office consists of 8,100 square feet which we hold on a five-
year lease expiring on May 31, 2005 with a monthly rent beginning at $5,500
and increasing to $6,300 after two years with triple net adjustments and a
total commitment, including deposits and excluding operating costs, of $28700.

Our Seattle, Washington office consists of 500 square feet which we
occupy on a month-to-month basis. The monthly rent at that location is $350,
including common area costs.

Legal proceedings

A German company, Software AG has a Website using the title "Go-XML"
which we believe violates our pending "GoXML" trademark. We have exchanged
correspondence with Software AG but have not initiated legal proceedings. At
the date of this report, there are no pending legal proceedings in which we
are a party and, with the exception of the Software AG matter, we are not
aware of any threatened legal proceedings.

<PAGE>
<PAGE>
Corporate Organization

Our Company is comprised of a series of corporations organized in a
multi-tiered arrangement depicted in the following schematic:

The functions and relationships of these entities to one another can be
summarized as follows:

* XML - Global Technologies, Inc., a Colorado corporation, ("XML
Global") is the parent corporation whose shares of common stock are
registered under the Exchange Act. XML Global is primarily involved
in capital formation and marketing and sales efforts for the
Company's products. In addition, it holds intellectual property
rights, including trademark registration applications, our pending
patent applications and an exclusive license from DataXchg, Inc. to
market the expressXCHG product to end users. In addition, upon
completion of the merger of XML Nevada with and into XML Global
(described below), XML Global will hold all intellectual property and
other technology rights previously held by XML Nevada, including,
without limitation, the pending patents and patent applications in
preparation. XML Global has a professional services agreement with
XML Research (described below) pursuant to which XML Global has been
assigned the right to all technology and intellectual property rights
owned by XML Research.

* XML Technologies, Inc., a Nevada corporation, ("XML Nevada") is a
wholly owned subsidiary of XML Global. Founded in 1999, XML Nevada
holds the assignment of all of the past and future intellectual
property rights developed by our technology founders, Duane Nickull,
Matthew MacKenzie, Jamie Hoglund and Michael Palethorpe, including
the pending patent and agreement with XML Research described above.
XML Nevada was acquired by XML Global in a reorganization in August
1999. In that transaction, the shareholders of XML Nevada were
issued 12,500,000 shares of our common stock in exchange for 100% of
the outstanding common stock of XML Nevada. As a result of this
share exchange, the shareholders of XML Nevada acquired 71% of our
total outstanding shares.

* XML Global Research, Inc., a British Columbia corporation, ("XML
Research") is a wholly-owned British Columbian subsidiary of XML
Nevada. XML Research performs the technology research and
development under contract with XML Nevada. XML Research operates
out of its Vancouver, British Columbia offices and was created to
ensure that the intellectual property developed by the Company's
Canadian-based technology employees is made available to and owned by
XML Nevada.

* Walkabout Website Designs, Ltd.., a British Columbia corporation,
("Walkabout") was acquired by XML Research in May 1999 in order to
obtain a client base to be used for beta testing of its technology.
At the present time, Walkabout has no separate employees, offices or
corporate functions.

* DataXchg, Inc., a Delaware corporation, ("DataXchg") was formed by
XML Global and David Webber, a director of the Company in October
1999. Initially, DataXchg was 40% owned by XML Global and 60% owned
by David Webber. In exchange for 60% of the outstanding shares of
DataXchg, David Webber assigned to DataXchg all of his right, title
and interest in and to the intellectual property rights and
underlying technology owned, developed or conceived of by them
pertaining to business-to-business solutions and EDI and XML-EDI
solutions, including, without limitation, the e-business solutions
known as "BizTokens" and the software product known as "expressXCHG",
which offers the ability to convert standard EDI documents into XML
format. DataXchg also granted to XML Global an exclusive perpetual
worldwide license to use and sublicense and make, use and sell
products based on the technology and associated intellectual property
rights owned by DataXchg, in consideration for a variable royalty.
In June 2000, we acquired Mr. Webber's 60% interest in DataXchg, Inc.
in consideration of issuing to Mr. Webber 1,000,000 shares of our
common stock. As a result of this transaction, DataXchg became our
wholly-owned subsidiary.

We plan to simplify our corporate organization by completing a statutory
merger: the merger of Walkabout with and into XML Research, with XML Research
to be the surviving corporation. The effect of these mergers will be to
consolidate all of our intellectual property and other technology rights, and
marketing and sales activity, in XML Global. XML Research will continue to
perform technology research and development functions under its agreement with
XML Nevada which XML Global will succeed to as a result of the merger.
<PAGE>
<PAGE>
Management

Directors, executive officers and key employees

Our executive officers, key employees and outside Directors and their
respective ages and positions are set forth below:

Name Age Position
<S> <C> <C> <C>

Peter Shandro 56 Chairman of the Board, Chief Executive
Officer, President and Director
Duane Nickull 36 Chief Technology Officer and Director
Simon Anderson 39 Chief Financial Officer and Director
Matt MacKenzie 22 Vice President Research and Development
Jamie Hoglund 29 Vice President E-Commerce
Gordon Ebanks 39 Vice President of Sales and Marketing
David Webber 46 Director
Dick Hardt 37 Director
Laurie Horvath 25 Controller and Principal Accounting Officer

</TABLE>

Peter Shandro has been our CEO and a Director since June 1999 and
President since June 2000. He was an initial founder of XML Technologies,
Inc., the Nevada corporation, and supervised its reorganization with the
Company in August 1999. From 1970 to 1982, he was a Partner and Vice President
of Marketing with FMH Canada, Ltd., a leisure products distribution company.
Since 1992, through his privately owned companies, Noram Capital Partners and
Wes-Sport Holdings, Ltd., he has arranged private debt and equity as well as
bank financing for both public and private companies. He is currently the
owner, President and Director of Spectrum BioTech, Inc., a private company
that holds the patents to a unique self-destructing safety syringe. This
company is not currently active. He is also a partner in Production Finance,
Inc., a merchant trade finance company specializing in financing companies in
the leisure and lifestyle products industry. From 1982 to 1991, he provided
management and marketing services for Noram Recreation, Ltd., a company
engaged in the development, financing and operation of eight aquatic
recreation businesses.

Duane Nickull has been a Director since August 1999, was President from
August 1999 to June 2000 and has been Chief Technology Officer since June
2000. He has worked with computers for 19 years and is a certified level 2
HTML Designer with application skills in Javascript and DHTML. Prior to
helping form and organize XML, from 1986 to 1999 he was President of Nickull-
Dowdall Sales, Ltd., a cosmetics manufacturer.

Simon Anderson has been Chief Financial Officer and Director since June
1999. Mr. Anderson is also a 50% owner and Vice President of MCSI Consulting
Services Inc. from 1996 to present, to which he devotes about half of his time
and attention. Mr. Anderson is both a Chartered Accountant and a Chartered
Business Valuator and from 1994 to 1996 was a partner with BDO Dunwoody, an
international accounting and consulting firm, where he specialized in mergers,
acquisitions and valuations. From 1999 to June 2000, he was a director of mv
Video, a Vancouver-based post production facility. From 1999 to 2000 he was
Treasurer of MC2 Learning Systems, Inc. He was also a director of Trade Wind
Communications, Ltd. from March 1997 to June 1999 and a director of
Flexemessaging.com, Inc. from March 1999 to June 1999. Mr. Anderson received
a Bachelor of Commerce in Accounting and Management Information Systems from
the University of British Columbia in May 1983 and was admitted as a member of
the Institute of Chartered Accountants in British Columbia in 1986. He is
also a Chartered Business Valuator.

Matthew MacKenzie has been our Vice President of Research and Development
since August 1999. Mr. MacKenzie attended the University of New Brunswick
from September 1996 to April 1999, majoring in Sociology. Prior to 1996, Mr.
MacKenzie was a high school student.

Jamie Hoglund has been our Vice President of E-Commerce since August 1999
and a Director of XML Nevada since August 1999. Beginning in 1998, he began
independently collaborating with Matt MacKenzie on the development of our
technology. Prior to that, he was employed by Carghill Agricultural
Enterprises for several years. Mr. Hoglund developed his software programming
skills through independent study and work.

Gordon Ebanks has been our Executive Vice President of Sales and
Marketing since November 2000. Prior to that, he was employed with Gelco
Information Network, which had acquired Performance Wave, Inc., where Mr.
Ebanks served as President and Chief Operating Officer. From 1989 to 1997, he
was employed with Tambrands Corporation, a leading global consumer goods
manufacturer, where he served as Chief Technology Officer. Mr. Ebanks is a
1983 graduate of Southbank University in London, England where he received
Bachelor of Arts degrees in both Computer Science and Mathematics. He also
holds an M.B.A. in Finance from the same university which he obtained in 1988.

David R. R. Webber has been a Vice President of DataXchg and Director of
the Company since October 1999. Mr. Webber is co-founder of the XML/EDI
Group, a consortium which provides technical support to the advancement of
XML/EDI technologies as an emerging worldwide standard. In January 1999, he
founded Gnosis, Inc., a computer consulting firm which he continues to serve
as President. From January 1997 to January 1999, he was a Senior Engineer
with Elumen Solutions, a health care management information systems firm.
From September 1994 to January 1997, he was Project Manager for LNK
Corporation, an information technology research firm. From March 1994 to
September 1994, he was an EDI specialist with DynCorpViar. Mr. Webber has a
degree in Physics with Computing from the University of Kent at Canterbury, UK
which was received in 1976.

Dick Hardt has been a Director since October 2000. He is currently Chief
Executive Officer of ActiveState Tool Corporation, which he founded in July
1997 with O'Reilly and Associates. Prior to that, he formed hip
communications, inc., a company that became one of the larger web development
and hosting companies in western Canada. Mr. Hardt sold his interest in hip
communications, inc. in 1997 before founding ActiveState Tool Corporation.
From 1993 he was employed by Paradigm Development (now known as Schema
Software, Inc.) as a software architect manager until his founding of hip
communications, inc. From 1986 to 1993, he was employed by Consumer Software
where he was responsible for porting one of the first LAN e-mail packages.
Mr. Hardt serves as a member of the Board of Directors of BC TIA and the
Advisory Board of AceTech Early Stage, Inc.

Laurie Horvath has been our Controller and Principal Accounting Officer
since May 2000. Ms. Horvath was an Accountant with Martin Meeres, Chartered
Accountants from 1994 to 1998 and a Financial Analyst in Corporate Accounting
with Canadian Airlines International Ltd. from 1998 to May 2000. She was
admitted as a member of the Certified General Accountants Association of
Canada and British Columbia in August 1999.

No family relationship exists between any of our directors or executive
officers.

Our directors each serve for a term of one year and are elected at each
annual meeting of our shareholders.

We have an agreement with XML Fund, LLC, one of our principal
shareholders, that its managing director, David Pool, will join as a member of
our board of directors at some point in the future, subject to our obtaining
director and officer liability insurance. The following sets forth
information with respect to Mr. Pool:

David Pool founded XML Fund, LLC in 1999 as a private investment fund
that makes equity investments in companies involved in the development of XML
technology. From October 1996 to the present, he has been a director of
Aventail Corporation, a managed service provider of secured partner networks.
From September 1995 to the present, he has been a director of ASC Network,
Inc., an on-line network for the United States ambulatory surgery center
market. In October 1996, he founded DataChannel, Inc. which he served as
President and CEO from October 1996 to January 2000 and which he has served as
a director since October 1996. DataChannel is a provider of XML-based
enterprise information portal products. From May 2000 to the present, he has
been a director of Intalio, Inc., a business process management system
provider, and from January 2000 to August 2000, he served as director of
Fishmonger, Inc., and on-line marketplace for the seafood industry. From
August 2000 to the present, he has been a director of WorldCatch, Inc., an on-
line marketplace for the seafood industry; from May 2000 to the present, he
has served as a director of Entricom, Inc., a provider of operations support
systems to communications services providers; from September 2000 to the
present, he has been a director of XYZFind Corporation, a provider of search
engines for database and XML data; from January 2000 to the present, he has
served as a director of Thinkview, Inc., a media syndication group; and from
February 2000 to June 2000, he served as a director Live Software, Inc., a
java software developer.

Currently, we do not have standing Audit, Compensation or Nominating
Committees of the Board of Directors. We do plan to form an Audit Committee
at the earliest opportunity. No member of the Audit Committee will receive
any additional compensation for his service as a member of that Committee and
members of this committee will be primarily comprised of non-officer
directors. The Audit Committee will be responsible for providing assurance
that financial disclosures made by management reasonably portray our financial
condition, results of operations, plan and long-term commitments. To
accomplish this, the Audit Committee will oversee the external audit coverage,
including the annual nomination of the independent public accountants, review
accounting policies and policy decisions, review the financial statements,
including interim financial statements and annual financial statements,
together with auditor's opinions, inquire about the existence and substance of
any significant accounting accruals, reserves or estimates made by management,
review with management the Management's Discussion and Analysis section of the
Annual Report, review the letter of management representations given to the
independent public accountants, meet privately with the independent public
accountants to discuss all pertinent matters, and report regularly to the
Board of Directors regarding its activities.

We also plan to form a Compensation Committee during as soon as possible.
No member of the Compensation Committee will receive any additional
compensation for his service as a member of that Committee. The Compensation
Committee will be responsible for reviewing pertinent data and making
recommendations with respect to compensation standards for our executive
officers, including the President and Chief Executive Officer, establishing
guidelines and making recommendations for the implementation of management
incentive compensation plans, reviewing the performance of the President and
CEO, establishing guidelines and standards for the grant of incentive stock
options to key employees under our Equity Incentive Plan, and reporting
regularly to our Board of Directors with respect to its recommendations.

Advisory Board

In February 2000, our Board of Directors authorized the establishment of
an Advisory Board whose members consist of persons who possess particular
expertise in one or more disciplines that we believe are relevant to our
strategic plan, business development and core technologies. To date, four
persons have agreed to serve as members of the Advisory Board: Scott Briggs,
Mark Van der Griend, Ken Holman and Greg Celmainis. The members of the
Advisory Board do not exercise or possess any of the authority of members of
our Board of Directors, but are merely advisors to our board.

1999 Equity Incentive Plan

On September 15, 1999, the Board of Directors authorized, and on October
19, 1999, our stockholders approved, the 1999 Equity Incentive Plan for our
executive and other employees, plus a limited number of outside consultants
and advisors. Under the Equity Incentive Plan, our employees, outside
consultants and advisors may receive awards of non-qualified options and
incentive options, stock appreciation rights or restricted stock. A maximum
of 4,000,000 shares of our common stock are subject to the Equity Incentive
Plan. As of the date of this Memorandum, no stock appreciation rights or
restricted stock has been granted under the Equity Incentive Plan, and options
to purchase 1,591,000 shares of our common stock have been granted, including
options to purchase 125,000 shares which have been granted to each of our non-
employee directors and 30,000 options granted to each member of our Advisory
Board. To date, no restricted shares have been issued pursuant to the Plan.
The purpose of the Equity Incentive Plan is to provide employees, including
our officers and employee directors, and non-employee consultants and
advisors, with an increased incentive to make significant and extraordinary
contributions to our long-term performance and growth, to join their interests
with the interests of our shareholders, and to facilitate attracting and
retaining employees of exceptional ability.

The Equity Incentive Plan may be administered by the Board, or in the
Board's sole discretion by the Compensation Committee of the Board or such
other committee as may be specified by the Board to perform the functions and
duties of the Committee under the Equity Incentive Plan. Subject to the
provisions of the Equity Incentive Plan, the Committee and the Board shall
determine, from those eligible to be participants in the Plan, the persons to
be granted stock options, stock appreciation rights and restricted stock, the
amount of stock or rights to be optioned or granted to each such person, and
the terms and conditions of any stock option, stock appreciation rights and
restricted stock.

Under the Equity Incentive Plan, in the event there occurs a change of
control of the company, all outstanding and unexercised options granted to our
key employees, officers, directors and consultants will at once become
immediately vested and exercisable. This provision of the Plan could deter
suitors from seeking business combinations with us that might otherwise be
beneficial to our shareholders.

Director compensation

Under our Equity Incentive Plan, upon their election to our Board of
Directors, non-employee directors are entitled to receive a grant of non-
qualified stock options exercisable to purchase 125,000 shares of our common
stock at an exercise price equal to the market value of our common stock on
the date of grant.

Executive compensation

The following table and discussions summarizes all compensation earned by
or paid to our Chief Executive Officer ("CEO") and the other most highly
compensated executive officers for all services rendered in all capacities to
us and our subsidiaries for each of our last three fiscal years. However, no
disclosure has been made for any executive officer, other than the CEO, whose
total annual salary and bonus is less than $100,000.

<PAGE>
<PAGE>
<TABLE>
TABLE 1
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term Compensation
----------------------------------
Annual Compensation(1) Awards Payouts
-------------------------- --------------------- -------
Other All
Annual Restricted Other
Name and Compen- Stock LTIP Compen-
Principal Salary Bonus sation Award(s) Options/ Payouts sation
Position Year ($) ($) ($)(2) ($) SARs ($)(#) ($)
--------------- ------- -------- ----- --------- ---------- -------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>

Peter Shandro, CEO 1999 $96,000 -0- -0- -0- 125,000 -0- -0-
---------------------------------------------------------------------------------------
</TABLE>

<PAGE>
<PAGE>
Employment agreements

To date, we do not have any written employment agreements with any of our
key personnel. It is our intent to enter into such agreements with our key
employees: Messrs. Shandro, Nickull, MacKenzie and Hoglund, as soon as
possible.

We have entered into lock-up and vesting agreements with certain key
personnel pursuant to which their shares of common stock are subject to
vesting over a two year period ending August 2001. It is our intent that
these agreements will provide additional incentive to those employees to
continue devoting their efforts and resources to our success until such time
as their shares of our common stock have become fully vested.

Indemnification and limitation on liability of directors

Our Articles of Incorporation provide that we shall indemnify, to the
fullest extent permitted by Colorado law, any of our directors, officers,
employees or agents who are made, or threatened to be made, a party to a
proceeding by reason of the former or present official position of the person,
which indemnity extends to any judgments, penalties, fines, settlements and
reasonable expenses incurred by the person in connection with the proceeding
if certain standards are met. At present, there is no pending litigation or
proceeding involving any of our directors, officers, employees or agents where
indemnification will be required or permitted. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be permitted to our
directors, officers and controlling persons pursuant to the foregoing
provisions, or otherwise, we have been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.

Our Articles of Incorporation limit the liability of our directors to the
fullest extent permitted by the Colorado Business Corporation Act.
Specifically, our directors will not be personally liable for monetary damages
for breach of fiduciary duty as directors, except for:

* any breach of the duty of loyalty to us or our stockholders,
* acts or omissions not in good faith or that involved intentional
misconduct or a knowing violation of law,
* dividends or other distributions of corporate assets that are in
contravention of certain statutory or contractual restrictions,
* violations of certain laws, or
* any transaction from which the director derives an improper personal
benefit.

Liability under federal securities law is not limited by the Articles.

<PAGE>
Certain Relationships And Related Transactions

Founders - XML - Global

When we were first organized in 1991, we issued a total of 500,000 shares
of our common stock to a total of 11 investors in consideration of a purchase
price of $.0003 per share. The following sets forth the names and the number
of shares, giving retroactive effect to a 10-for-1 forward split, received by
persons who would be considered promoters:

Name Number of Shares
<S> <C> <C>
Matthew J. Kavanaugh 2,550,000
Terry Whiteside 500,000
Marshal Griffin 500,000
Equitas Corp. 900,000

</TABLE>

Founders - XML Nevada; the reorganization

In May 1999, XML Nevada was organized through the issuance of 12,500,000
shares of common stock and the simultaneous acquisition of certain
intellectual property and other assets. XML Nevada also formed a wholly owned
subsidiary, XML Research, which in turn acquired 100% of the outstanding stock
of Walkabout Websites. The purpose of these transactions was to consolidate
all of the intellectual property and other assets contributed by Messrs.
Nickull, MacKenzie, Hoglund and Palethorpe into one entity, XML Nevada. The
persons who would be deemed founders of XML Nevada, and the number of shares
of common stock received by each, is set forth below:

<TABLE>
<CAPTION>
Name Number of Shares
<S> <C> <C>

Duane Nickull 2,000,000 *
Matt MacKenzie 1,500,000 *
Jamie Hoglund 1,500,000 *
Peter Shandro 735,000
Simon Anderson 200,000
Michael Palethorpe 200,000 **

</TABLE>

_________________

* Subject to vesting agreements over a two year period ending August 2001.
** Mr. Palethorpe left the Company in February 2000 and surrendered 600,000
of his shares for cancellation.

In August 1999, XML Global (then known as International Capital Funding,
Inc.) acquired 100% of the issued and outstanding shares of common stock of
XML Nevada. In that transaction, all 12,500,000 shares of XML Nevada were
exchanged on a one-for-one basis for 12,500,000 shares of XML Global, which
then represented approximately 71% of the total issued and outstanding shares
of common stock of XML Global.

DataXchg, Inc.

In 1999, we formed and organized a new company called DataXchg, Inc. 40%
of the equity securities of DataXchg, Inc. was held by us and 60% was held by
David Webber. At that time, David Webber also became a member of our Board of
Directors and a consultant.

Upon its organization, David Webber assigned to DataXchg, Inc. all of the
patents, patent rights and other intellectual property owned by them related
to the Xchg product, an e-business to e-business interchange solution that
permits the conversion of standard EDI documents into an XML format. As part
of the arrangement, DataXchg, Inc. granted to XML Global an exclusive
worldwide license to market, sell and sublicense the expressXCHG product to
end users, for which DataXchg, Inc. is entitled to a variable royalty
depending upon the nature and configuration of the product marketed and sold.

In June, 2000, we acquired the remaining 60% of DataXchg, Inc. in
exchange for the issuance to Mr. Webber of 1,000,000 shares of our common
stock.

XMLFund, LLC

In January 2000, we sold to XMLFund, LLC an unrelated party, a total of
500,000 Units of our securities at a price of $2.00 per Unit, for a total cash
consideration of $1,000,000. Each Unit consisted of two shares of our common
stock, one Warrant exercisable for three years to purchase an additional share
of common stock at an exercise price of $2.00 per share, and a second Warrant
exercisable for 60 days to purchase an additional share of our common stock at
an exercise price of $.07 per share. In March 2000, XMLFund, LLC exercised
warrants to purchase 500,000 shares of our common stock at an exercise price
of $.07 per share. The managing partner of XMLFund, David Pool agreed to
become a member of our Board of Directors subject to our obtaining directors
and officers liability insurance. In addition, XMLFund, LLC was granted a
limited preemptive right on certain future financings that we may undertake.
By virtue of this limited preemptive right, XMLFund, LLC purchased in April
2000 100,000 units at a price of $1.00 per unit, each unit consisting of one
share of our common stock and one warrant exercisable until December 31, 2000
to purchase an additional share of common stock at an exercise price of $4.00
per share. Further, pursuant to the preemptive right, in April 2000 XMLFund,
LLC purchased 8.5 units at a price of $75,000 per unit, each unit consisting
of 50,000 shares of our common stock and warrants exercisable to purchase an
additional 50,000 shares of our common stock for 18 months at an initial
exercise price of $4.00 per share. This preemptive right will terminate upon
our completion of an initial public offering.

<PAGE>
<PAGE>
Security Ownership of Management And Principal Stockholders

The following table sets forth information with respect to beneficial
ownership of our common stock by:

* each person who beneficially owns more than 5% of the common stock;
* each of our executive officers named in the Management section;
* each of our Directors; and
* all executive officers and Directors as a group.

The table shows the number of shares owned as of November 1, 2000 and the
percentage of outstanding common stock owned as of November 1, 2000. Each
person has sole voting and investment power with respect to the shares shown,
except as noted.

<TABLE>
<CAPTION>
Percentage of Outstanding
Shares Owned(2)
-------------------------
Number of Shares
of Common Stock
Name and Address Beneficially Current
of Beneficial Owner Owned (as of 9/1/00)
------------------- ----------------- -------------------------
<S> <C> <C>

Duane Nickull 2,125,000 7.7%

Peter Shandro 860,000 3.1%

Simon Anderson 325,000 1.2%

Matt MacKenzie 1,625,000 5.9%

Jamie Hoglund 1,600,000 5.8%

Gordon Ebanks -0- -0-

Dick Hardt 125,000 nil

Matthew J. Kavanaugh
3140 South Peoria Street
Unit K-230
Aurora, Colorado 80014 1,950,000 7.1%

XML Fund, LLC
777 108th Avenue, N.E.,
Suite 1800
Bellevue, WA 98004 3,050,000 11.1%

All Officers and Directors
as a Group (7 persons) 6,655,000 23.8%

</TABLE>

Beneficial ownership is based on information provided to us, and the
beneficial owner has no obligation to inform us of or otherwise report any
changes in beneficial ownership. Except as indicated, and subject to
community property laws when applicable, the persons named in the table above
have sole voting and investment power with respect to all shares of common
stock shown as beneficially owned by them.

The percentages shown are calculated based upon 27,505,000 shares of
common stock outstanding on September 1, 2000. In calculating the percentage
of ownership, unless as otherwise indicated, all shares of common stock that
the identified person or group had the right to acquire within 60 days of
September 1, 2000 upon the exercise of options and warrants are deemed to be
outstanding for the purpose of computing the percentage of shares of common
stock owned by such person or group, but are not deemed to be outstanding for
the purpose of computing the percentage of the shares of common stock owned by
any other person.

Unless otherwise stated, the beneficial owner's address is 1818 Cornwall
Avenue, Suite 9, Vancouver, British Columbia V6J 1C7 Canada.

We have granted options to purchase shares of our common stock to our
executive officers. Mr. Nickull was granted options to purchase 125,000
shares, Mr. Shandro was granted options to purchase 125,000, Mr. Anderson was
granted options to purchase 125,000 shares, Mr. MacKenzie was granted options
to purchase 125,000 shares and Mr. Hoglund was granted options to purchase
100,000 shares. The number of shares of common stock shown on the foregoing
table as being beneficially owned by each of these persons includes the shares
of common stock underlying these options.

XML Fund, LLC is a private investment fund that has warrants to purchase
500,000 shares of common stock at an exercise price of $2.00 per share.
Voting and investment power with respect to its Securities is exercised by
David Pool, the Manager of the Fund. The Fund's ownership includes warrants to
purchase an additional 100,000 of common stock at an exercise price of $4.00
per share and Warrants exercisable to purchase an additional 425,000 shares of
common stock at an initial exercise price of $4.00 per share until April 6,
2001 and thereafter at an exercise price of $6.00 per share.

Mr. David Pool, the Manager of XML Fund, has agreed to become a director
subject to our obtaining directors' and officers' liability insurance. Upon
his election and including the securities owned by XML Fund, the directors and
officers of the company as a group will consist of six persons, and will be
the beneficial owners of 9,585,000 shares, representing 34.8% of the total
issued and outstanding shares of our common stock.

Lock-up and Vesting Agreements

Messrs. Nickull, Shandro, MacKenzie and Hoglund have each entered into a
Lock-up and Vesting Agreement pursuant to which all of the shares of our
common stock which they own are subject to being returned and forfeited if
their employment terminates. Under the vesting schedule, their shares will
vest on August 29, 2001. Until the shares are vested, they may not be sold.
If the person's employment with the company is terminated before the vesting
date, all unvested shares will be forfeited and revert to our authorized but
unissued shares of common stock.

<PAGE>
<PAGE>
Additional Information

We file annual, quarterly and special reports, proxy statements and other
information with the Commission. You may read and copy any document we file
at the Commission's Public Reference Rooms in Washington, D.C., New York, New
York, and Chicago, Illinois. Please call the Commission at 1-800-SEC-0330 for
further information on the Public Reference Rooms. You can also obtain copies
of our Commission filings by going to the Commission's Website at
http://www.sec.gov.

We have filed with the Commission a Registration Statement on Form SB-2
to register the shares of our common stock and common stock warrants to be
sold by the Selling Securityholders and issued pursuant to the exercise of the
warrants. This Prospectus is part of that Registration Statement and, as
permitted by the Commission's rules, does not contain all of the information
set forth in the Registration Statement. For further information about us or
our common stock, you may refer to the Registration Statement and to the
exhibits filed as part of the Registration Statement. You can review a copy
of the Registration Statement and its exhibits at the public reference rooms
maintained by the Commission and on the Commission's Website as described
above.

<PAGE>
<PAGE>
Selling Securityholders

The Selling Securityholders are offering to sell 24,335,000 shares of our
common stock. None of the Selling Securityholders has, or within the past
three years has had, any position, office or other material relationship with
us or any of our predecessors or affiliates, except as noted.

Of the securities being offered,

* 5,000,000 shares of common stock are being offered by Selling
Securityholders who were the original shareholders of ICF prior to
the reverse merger and reorganization, and their assignees,

* 2,330,000 shares of common stock and warrants to purchase an
additional 2,330,000 shares of common stock were sold in a private
offering which closed in August 1999,

* warrants to purchase 200,000 shares of common stock were issued to a
consultant,

* 1,600,000 shares of common stock and warrants to purchase an
additional 600,000 shares of common stock were issued to the XML
Fund, LLC, an institutional investor,

* 1,050,000 shares of our common stock and warrants to purchase an
additional 1,050,000 shares of our common stock were issued in a
private transaction to a private trust and an individual investor,

* 4,625,000 shares of our common stock and warrants to purchase an
additional 4,625,000 shares of our common stock were sold to 50
accredited investors in a private offering which was completed in
April 2000 and

* 462,500 shares of common stock and an additional 462,500 shares of
common stock issuable upon exercise of warrants included in 9.25
units of our securities which may be purchased by Westminster
Securities Corp. upon exercise of its unit purchase option granted
in connection with a private offering which we completed in April
2000.

The following table lists the Selling Securityholders eligible to sell
shares of common stock under this Prospectus, the number of shares
beneficially owned by each Selling Securityholder prior to this offering, and
the maximum number of shares each Selling Securityholder may sell under this
Prospectus. We will not receive any of the proceeds from the sale of our
common stock by the Selling Securityholders. The number of shares owned by
each Selling Securityholder after the offering will depend upon the number of
shares actually sold by each Selling Securityholder.

Number of Maximum Number of
Shares Number of Shares
Beneficially Shares to be Beneficially
Owned Prior Sold in Owned after
to Offering(1) Offering Offering Percent
------------- ----------- ----------- -------
<S> <C> <C> <C> <C>
Amherst Group 500 500 -0- 0%

AMRO International,
SA(7) 1,300,000 1,300,000 -0- 0%
Antilles Partners,
LP(7) 200,000 200,000 -0- 0%

Aspen Gold Group,
Inc.(7) 50,000 50,000 -0- 0%

Austost Anstalt
Schaan(7) 500,000 500,000 -0- 0%

Glenn Bailey(4) 50,000 50,000 -0- 0%

Balmore, SA(7) 500,000 500,000 -0- 0%

Bank Von Ernst(4) 260,000 260,000 -0- 0%

Banqe Ippa & Associes,
Luxemberg(4) 70,000 70,000 -0- 0%

Banque Julius Baer & Co.
Ltd., Zurich(4) 80,000 80,000 -0- 0%

Bruce Barr(4) 200,000 200,000 -0- 0%

John Barsoli(7) 50,000 50,000 -0- 0%

Chris Battensbury 500 500 -0- 0%

Bayonet Capital,
LLC(7) 1,000,000 1,000,000 -0- 0%

Aleta M. and Layton M.
Bennett, JTRS(7) 50,000 50,000 -0- 0%

John Bradley 500 500 -0- 0%

Carolyn Brewer 500 500 -0- 0%

Mark Brewer 500 500 -0- 0%

Brewin Nominees
Ltd.(4) 40,000 40,000 -0- 0%

Whitney Briscoe 500 500 -0- 0%

Steve Calandrella 500 500 -0- 0%

Darryl S. Caplan(7) 200,000 200,000 -0- 0%

Vincent Capodanno(7) 100,000 100,000 -0- 0%

Ronald Carlile 500 500 -0- 0%

Susan Carlile 500 500 -0- 0%

Stuart Carmichael 500 500 -0- 0%

Shannon Carthy 1,000 1,000 -0- 0%

Patrick Churchill(4) 120,000 120,000 -0- 0%

Glen Roth, Inc.(7) 50,000 50,000 -0- 0%

Richard Cober 500 500 -0- 0%

Jonathan Cohen 200,000 200,000 -0- 0%

Credit Suisse
(Guernsey) Ltd.(4) 160,000 160,000 -0- 0%

Crypto Corporation(7) 100,000 100,000 -0- 0%

CSPS, Inc.(7) 100,000 100,000 -0- 0%

Cycad Limited(7) 200,000 200,000 -0- 0%

Mark DeGeorge(7) 50,000 50,000 -0- 0%

Mark DeStefano(7) 50,000 50,000 -0- 0%

Jim Dixon 500 500 -0- 0%

Randy Doherty 500 500 -0- 0%

Thomas Donino(7) 100,000 100,000 -0- 0%

Don Elving 500 500 -0- 0%

Jennifer Enslein
Trust(7) 50,000 50,000 -0- 0%

Equitas Corp. 900,000 900,000 -0- 0%

Karen Ewenson 500 500 -0- 0%

Harry Faircloth 500 500 -0- 0%

Charles Fowler(4) 50,000 50,000 -0- 0%

Scott Bradley
Frisoli(7) 100,000 100,000 -0- 0%

Golden Securities(4) 400,000 400,000 -0- 0%

Norman Goldstein &
James Jorasch,
JTEN(7) 50,000 50,000 -0- 0%

Anthony Griffin 10,000 10,000 -0- 0%

Dan Griffin 500 500 -0- 0%

Gayle Griffin 500 500 -0- 0%

Marshal Griffin 500,000 500,000 -0- 0%

George E.
Groehsl (7) 50,000 50,000 -0- 0%

Ms. H.R. Griffiths 1,000 1,000 -0- 0%

Rick Griffiths 500 500 -0- 0%

Egbert Hardenbol(4) 70,000 70,000 -0- 0%

Paul Hazlett 500 500 -0- 0%

HB Trading, Inc.(7) 100,000 100,000 -0- 0%

Scott Hean 2,000 2,000 -0- 0%

Alex Herman 250,000 250,000 -0- 0%

Justin Hilbert(4) 50,000 50,000 -0- 0%

Sheila Hirsch 500 500 -0- 0%

Steven Hirsch(7) 100,000 100,000 -0- 0%

Richard Ilich(7) 50,000 50,000 -0- 0%

International
Distribution Corp.(4) 100,000 100,000 -0- 0%

Mike James 500 500 -0- 0%

Debra Jeske 500 500 -0- 0%

T. J. Jesky (7) 50,000 50,000 -0- 0%

Keith Johnson 10,000 10,000 -0- 0%

Matthew J. Kavanaugh 1,950,000 1,950,000 -0- 0%

Brent King 500 500 -0- 0%

Frank L. Kramer (7) 50,000 50,000 -0- 0%

Ross Kramer 500 500 -0- 0%

John Kubiak 500 500 -0- 0%

Laiy, Ltd. 600,000 600,000 -0- 0%

Ken Lee(4) 20,000 20,000 -0- 0%

Jon Lerner (7) 100,000 100,000 -0- 0%

Lloyds Bank PL1(4) 50,000 50,000 -0- 0%

Jim Locke(4) 10,000 10,000 -0- 0%

Daniel Luskind (7) 50,000 50,000 -0- 0%

Eugene & Eileen
Lynch (7) 50,000 50,000 -0- 0%

Mabcrown, Inc.(7) 600,000 600,000 -0- 0%

Magellan International,
Ltd.(7) 200,000 200,000 -0- 0%

John B. Marsala (7) 50,000 50,000 -0- 0%

William Marshall,
Jr.(4) 200,000 200,000 -0- 0%

Dan McCracken 500 500 -0- 0%

Ian McDougall 500 500 -0- 0%

Rob McKay 500 500 -0- 0%

Joseph P. McKenna 500 500 -0- 0%

Jeffrey McLaughlin (7) 50,000 50,000 -0- 0%

Melborne Investment
Ltd.(4) 300,000 300,000 -0- 0%

Stephan Moses(4) 70,000 70,000 -0- 0%

Dale B. Newburg (7) 100,000 100,000 -0- 0%

Arthur J. Niebauer (7) 50,000 50,000 -0- 0%

Rick Nilsson 500 500 -0- 0%

Nottinghill Resources,
Ltd.(4) 1,000,000 1,000,000 -0- 0%

John P. O'Shea (7) 250,000 250,000 -0- 0%

Gene Paul Percudani(7) 50,000 50,000 -0- 0%

Duane Peterson 250,000 250,000 -0- 0%

Christine Platt(9) 1,000 1,000 -0- 0%

Providence Securities
(Bahamas) Ltd.(4) 470,000 470,000 -0- 0%

M. Psarompa(4) 200,000 200,000 -0- 0%

Thomas Relling 500 500 -0- 0%

David J. Ritchie (7) 100,000 100,000 -0- 0%

Mark Robertson (7) 100,000 100,000 -0- 0%

Ropart Investments,
LLC (7) 200,000 200,000 -0- 0%

Mark C. Ross(4) 200,000 200,000 -0- 0%

Christian Russenberger 100,000 100,000 -0- 0%

Phil Sancken 500 500 -0- 0%

August B. Schwarz (7) 50,000 50,000 -0- 0%

Ralf P. Schwarz (7) 200,000 200,000 -0- 0%

Adam Shandro(9) 1,000 1,000 -0- 0%

Andrew Shandro(9) 500 500 -0- 0%

Matthew Shandro(9) 500 500 -0- 0%

Robert E. Smith 1,000 1,000 -0- 0%

Smithson Ventures (7) 100,000 100,000 -0- 0%

Troy Straith 500 500 -0- 0%

Gary Sukovaty 500 500 -0- 0%

Craig Taubman 500 500 -0- 0%

Gene Taubman 500 500 -0- 0%

Tech-Trade Capital,
LLC (7) 50,000 50,000 -0- 0%

Jay Teitelbaum (7) 100,000 100,000 -0- 0%

Genell Thorn 500 500 -0- 0%

Tomasovich Family
Trust(6) 2,000,000 2,000,000 -0- 0%

Gary Triesman 500 500 -0- 0%

Union Bancaire(4) 170,000 170,000 -0- 0%

Hans van der Griend 500 500 -0- 0%

Mark van der Griend(7) 100,000 100,000 -0- 0%

Vestcom, Ltd.(7) 50,000 50,000 -0- 0%

Willi Vogl 500 500 -0- 0%

Cameron Watt (4) 50,000 50,000 -0- 0%

Willie West, for and
on behalf of(4)
Toucan International
Investments 20,000 20,000 -0- 0%

West Capital &
Associates (7) 100,000 100,000 -0- 0%

Westminster Securities
Corp.(8) 925,000 925,000 -0- 0%

Lane Whiteside 500 500 -0- 0%

Terry Whiteside 500,000 500,000 -0- 0%

E. Evelyn Williamson(4) 200,000 200,000 -0- 0%

Ashley Wills 500 500 -0- 0%

John Wills 500 500 -0- 0%

Albert Wouters(4) 50,000 50,000 -0- 0%

XML Fund, LLC(5)(7) 3,050,000 3,050,000 -0- 0%

Louis Zauderer(7) 400,000 400,000 -0- 0%

Scott Ziegler(7) 100,000 100,000 -0- 0%

</TABLE>
___________________

(1) The number of shares indicated includes shares acquired directly from us
by the Selling Securityholders as well as shares which are issuable upon
the exercise of warrants held by the Selling Securityholders.

(2) Beneficial ownership is based on information provided to us, and the
beneficial owner has no obligation to inform us of or otherwise report
any changes in beneficial ownership. Except as indicated, and subject to
community property laws when applicable, the persons named in the table
above have sole voting and investment power with respect to all shares of
common stock shown as beneficially owned by them.

(3) The percentages shown are calculated based upon 27,505,000 shares of
common stock outstanding on September 30, 2000. In calculating the
percentage of ownership, unless as otherwise indicated, all shares of
common stock that the identified person or group had the right to acquire
within 60 days of September 30, 2000 upon the exercise of options and
warrants are deemed to be outstanding for the purpose of computing the
percentage of shares of common stock owned by such person or group, but
are not deemed to be outstanding for the purpose of computing the
percentage of the shares of common stock owned by any other person.

(4) The selling shareholder was an investor in the Company's private offering
which closed in August 1999. In the offering, the selling shareholder
purchased for $1.00 a unit consisting of one share of common stock and
one warrant exercisable to purchase an additional share of common stock
at an exercise price of $4.00 per share.

(5) XML Fund, LLC is a private investment fund whose manager is David Pool.
Mr. Pool has agreed to join our board of directors subject to our
obtaining directors and officers liability insurance. In January 2000,
the XML Fund purchased 500,000 units at a price of $2.00 per unit. Each
unit consisted of two shares of common stock, one Class A warrant and one
Class A-1 warrant. Each Class A warrant entitles XML Fund to purchase
one additional share of common stock at a price of $2.00 per share, and
each Class A-1 warrant entitled XML Fund to purchase one additional share
of common stock at a price of $0.07 per share. The term of the Class A
warrants is three years and the term of the Class A-1 warrants was 60
days. The Class A-1 warrants were exercised in March 2000. As part of
its agreement, XML Fund has a preemptive right to subscribe for and
purchase its proportionate share of future offerings in order to maintain
its percentage equity interest in the Company. In April 2000, XML Fund
purchased 100,000 units at a price of $1.00 per unit. Each unit
consisted of one share of common stock and one warrant. Each warrant
entitles XML Fund to purchase one additional share of common stock at
$4.00 per share. The warrants expire on December 31, 2000.

(6) Includes warrants exercisable until December 31, 2000 to purchase
1,000,000 shares of common stock at an exercise price of $4.00 per share.

(7) The selling shareholder was an investor in the Company's private offering
which closed in April 2000. In the offering, the selling shareholder
purchased units for $75,000 per unit, each unit consisting of 50,000
shares of common stock and 50,000 warrants. The warrants are exercisable
until October 2001 to purchase an additional share of common stock,
initially at an exercise price of $4.00 per share and beginning April
2001 and thereafter at an exercise price of $6.00 per share. As an
investor in the April 2000 private offering, the selling shareholder
agreed to the following restriction on resales of securities: Until the
earlier of three months following the date of this prospectus or
September 6, 2000, the selling shareholder agreed not to make any sales
of our securities. Thereafter, the selling shareholder agreed to limit
sales of our securities to 25% of shares of common stock purchased by the
selling shareholder in our April 2000 offering during each 90 day period.
With respect to shares of common stock which may be acquired by the
selling shareholder upon exercise of warrants, the selling shareholder
has agreed not to sell those shares of common stock until 30 days after
the date of this prospectus and thereafter limit resales of such shares
of common stock to 25% of such shares owned by the selling shareholder
during each 90 day period.

(8) Consists of shares of common stock issuable upon exercise of an option to
buy up to 9.25 of the units sold in our April 2000 offering at a price of
$75,000 per unit. Westminster was granted the option as partial
consideration of its services as our placement agent in the offering.
Does not include 175,000 shares of common stock and 175,000 warrants
owned by John P. O'Shea, a principal of Westminster, which he purchased
as an investor in our April 2000 private offering. Securities acquired
by Westminster are subject to the same restrictions on resale as apply to
securities sold in the offering and described in Note 7.

(9) The following familial relationships exist between certain selling
securityholders and the Company's management. Christine Platt is the
daughter-in-law of Peter Shandro. Adam Shandro and Patrick Churchill are
nephews of Peter Shandro. Andrew Shandro and Matthew Shandro are sons of
Peter Shandro.

We will pay all expenses to register the shares, except that the Selling
Securityholders will pay any underwriting and brokerage discounts, fees and
commissions, specified attorneys' fees and other expenses to the extent
applicable to them.

We have agreed to indemnify the Selling Securityholders and certain
affiliated parties against specified liabilities, including liabilities under
the Securities Act, as amended, in connection with this offering. The Selling
Securityholders have agreed to indemnify us and our directors and officers, as
well as any persons controlling our Company, against certain liabilities,
including liabilities under the Securities Act. Insofar as indemnification
for liabilities under the Securities Act may be permitted to our directors or
officers, or persons controlling our Company, we have been advised that in the
opinion of the SEC this kind of indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.

<PAGE>
<PAGE>
Use of Proceeds

We will not receive any proceeds when Selling Securityholders sell shares
of common stock under this Prospectus. We have previously received proceeds
from the sale of the common stock and warrants and may receive proceeds from
the exercise of the warrants.

If we receive proceeds from the exercise of warrants, it will be used for
general working capital purposes.

Plan of Distribution

This Prospectus covers the sale of shares of common stock pursuant to the
exercise of outstanding warrants held by the Selling Securityholders as well
as the resale by those Selling Securityholders of additional shares of our
common stock which they have already purchased from us.

Selling Securityholders may sell their shares of common stock either
directly or through a broker-dealer or other agent at prices related to
prevailing market prices or negotiated prices, in one or more of the
following kinds of transactions:

* Transactions in the over-the-counter market if a public trading
market develops;

* A block trade in which a broker or dealer will attempt to sell
shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction.

* Purchases by a broker or dealer as principal and resale by a broker
or dealer for its account.

* Ordinary brokerage transactions and transactions in which a broker
solicits a buyer.

* In privately negotiated transactions not involving a broker or
dealer.

Broker-dealers or agents may purchase shares directly from a Selling
Securityholder or sell shares to someone else on behalf of a Selling
Securityholder. Broker-dealers may charge commissions to both Selling
Securityholders selling common stock, and purchasers buying shares sold by a
Selling Securityholder. If a broker buys shares directly from a Selling
Securityholder, the broker may resell the shares through another broker, and
the other broker may receive compensation from the Selling Securityholder for
the resale.

To the extent required by laws, regulations or agreements we have made,
we will use our best efforts to file a Prospectus supplement during the time
the Selling Securityholders are offering or selling shares covered by this
Prospectus in order to add or correct important information about the plan of
distribution for the shares.

In addition to any other applicable laws or regulations, Selling
Securityholders must comply with regulations relating to distributions by
Selling Securityholders, including Regulation M under the Securities Exchange
Act of 1934, as amended. Regulation M prohibits Selling Securityholders from
offering to purchase or purchasing our common stock at certain periods of time
surrounding their sales of shares of our common stock under this Prospectus.

Some states may require that registration, exemption from registration or
notification requirements be met before Selling Shareholders may sell their
common stock. Some states may also require Selling Securityholders to sell
their common stock only through broker-dealers.

There is no assurance that a public market for our common stock will develop

There has been no public market for our common stock. We cannot predict
the extent to which investor interest in our common stock will lead to the
development of a trading market or how liquid that market might become,
especially if a large number of shares were introduced into the market upon
exercise of options or warrants. If a market does develop, the price for our
common stock may be highly volatile and may bear no relationship to our actual
financial condition or results of operations.

Our public trading market, if and when it develops, will likely be highly
volatile

We have applied to have our common stock quoted on the OTC Electronic
Bulletin Board, a NASD sponsored and operated quotation system for equity
securities. It is a more limited trading market than the Nasdaq SmallCap
Market, and timely, accurate quotations of the price of our common stock may
not always be available. You may expect trading volume to be low in such a
market. Consequently, the activity of only a few shares may affect the market
and may result in wide swings in price and in volume.

Once our common stock is listed on the OTC Bulletin Board, it will be
subject to the requirements of Rule 15g.9, promulgated under the Securities
Exchange Act as long as the price of our common stock is below $5.00 per
share. Under such rule, broker-dealers who recommend low-priced securities to
persons other than established customers and accredited investors must satisfy
special sales practice requirements, including a requirement that they make an
individualized written suitability determination for the purchaser and receive
the purchaser's consent prior to the transaction. The Securities Enforcement
Remedies and Penny Stock Reform Act of 1990 also requires additional
disclosure in connection with any trades involving a stock defined as a penny
stock. Generally, the Commission defines a penny stock as any equity security
not traded on an exchange or quoted on Nasdaq that has a market price of less
than $5.00 per share. The required penny stock disclosures include the
delivery, prior to any transaction, of a disclosure schedule explaining the
penny stock market and the risks associated with it. Such requirements could
severally limit the market liquidity of the securities and the ability of
purchasers to sell their securities in the secondary market.

If a public trading market does develop, the market price of our common
stock could fluctuate substantially due to:

* quarterly fluctuations in operating results
* announcements of new products or product enhancements by us or our
competitors technological innovations by us or our competitors
* general market conditions or market conditions specific to our or
our customers' industries
* changes in earnings estimates or recommendations by analysts.

Stock prices of Internet related companies have been highly volatile. In
the past, following periods of volatility in the market price of a company's
securities, securities class action litigation has at times been instituted
against that company. If we become subject to securities litigation, we could
incur substantial costs and experience a diversion of management's attention
and resources.

Future sales of our common stock and preferred stock could adversely affect
the market

Future sales of our common stock into the market may also depress the
market price of our common stock if one develops in the future. We have
issued common stock, options and warrants to purchase our common stock. Sales
of these shares of our common stock or the market's perception that these
sales could occur may cause the market price of our common stock to fall.
These sales also might make it more difficult for us to sell equity or equity
related securities in the future at a time and price that we deem appropriate
or to use equity as consideration for future acquisitions.

We have the authority to issue up to 100,000,000 shares of preferred
stock without shareholder approval. The issuance of preferred stock by our
Board of Directors could adversely affect the rights of the holders of our
common stock. An issuance of preferred stock could result in a class of
outstanding securities that would have preferences with respect to voting
rights and dividends and in liquidation over the common stock and could, upon
conversion or otherwise, have all of the rights of our common stock. Our
Board of Directors' authority to issue preferred stock could discourage
potential takeover attempts or could delay or prevent a change in control
through merger, tender offer, proxy contest or otherwise by making these
attempts more difficult or costly to achieve.

A change of control of the company will result in the vesting of all
outstanding stock options issued under our plan

Under the terms of our Equity Incentive Plan, in the event there occurs a
change of control of the Company, all outstanding and unvested stock options
previously granted to our employees, officers, directors and consultants will
immediately become vested and exercisable in their entirety. This vesting
acceleration could deter parties from pursuing business combinations with us
that might otherwise be beneficial to our shareholders.

<PAGE>
<PAGE>
Description of Securities

Common stock

We are authorized to issue 500,000,000 shares of common stock, par value
$.0001 per share. Except as otherwise expressly provided by law, and subject
to the voting rights provided to the holders of preferred stock by our
Articles of Incorporation, as amended, the common stock shall have voting
rights on all matters requiring a vote of stockholders, voting together with
the holders of preferred stock, as one class. Each share of common stock
issued and outstanding shall be identical in all respects one with the other,
and no dividends shall be paid on any shares of common stock unless the same
is paid on all shares of common stock outstanding at the time of such payment.
Except for and subject to those rights expressly granted to the holders of the
preferred stock, or except as may be provided by the laws of the State of
Colorado, the holders of common stock shall have exclusively all other rights
of stockholders. There is no cumulative voting with respect to the election
of Directors, with the result that the holders of more than 50% of the shares
voting for the election of Directors can elect all of the Directors. The
holders of common stock are entitled to receive dividends if declared by the
Board of Directors out of funds legally available for them. In the event of
liquidation, dissolution or winding up of the Company, the holders of common
stock are entitled to share ratably in all assets remaining which are
available for distribution to them after payment of liabilities and after
provision has been made for each class of stock, if any, having preference
over the common stock. Holders of shares of common stock, as such, have no
conversion, preemptive or other subscription rights, and there are no
redemption provisions applicable to the common stock.

Preferred stock

We are authorized to issue 100,000,000 shares of preferred stock, par
value $.01 per share. Our preferred stock can be issued in one or more series
as may be determined from time-to-time by our Board of Directors. In
establishing a series our Board of Directors shall give to it a distinctive
designation so as to distinguish it from the shares of all other series and
classes, shall fix the number of shares in such series, and the preferences,
rights and restrictions thereof. All shares of any one series shall be alike
in every particular. Our Board of Directors has the authority, without
stockholder approval, to fix the rights, preferences, privileges and
restrictions of any series of preferred stock including, without limitation:

* The rate of distribution
* The price at and the terms and conditions on which shares shall be
redeemed
* The amount payable upon shares for distributions of any kind
* Sinking fund provisions for the redemption of shares
* The terms and conditions on which shares may be converted if the
shares of any series are issued with the privilege of conversion
* Voting rights except as limited by law

Although we currently do not have any plans to issue shares of preferred
stock or to designate any series of preferred stock, there can be no assurance
that we will not do so in the future. As a result, we could authorize the
issuance of a series of preferred stock which would grant to holders preferred
rights to our assets upon liquidation, the right to receive dividend coupons
before dividends would be declared to common stockholders, and the right to
the redemption of such shares, together with a premium, prior to the
redemption to common stock. Our common stockholders have no redemption
rights. In addition, our Board could issue large blocks of voting stock to
fend off unwanted tender offers or hostile takeovers without further
stockholder approval.

Warrants and Options

We have outstanding warrants and options exercisable to purchase up to
10,719,000 shares of our common stock at prices that currently range from
$1.00 to $5.00 per share. Holders of the warrants and options do not possess
any rights as stockholders of the Company. Holders of the warrants and
options have no voting, preemptive, liquidation or other rights of
shareholders, and no dividends will be paid on the warrants, options or the
shares underlying the warrants or options. In the event of our liquidation,
dissolution or winding up, the holders of the warrants and options will not be
entitled to participate in the distribution of our assets.

Transfer agent

Our transfer agent is Corporate Stock Transfer, Inc., 3200 Cherry Creek
Drive South, Suite 430, Denver, Colorado 80209. Their telephone number is
(303) 282-5800.

Reports to shareholders

We intend to furnish annual reports to shareholders which will include
audited financial statements reported on by our certified public accountants.
In addition, we may issue unaudited quarterly or other interim reports to
shareholders as we deem appropriate. We will comply with the periodic
reporting requirements imposed by the Securities Exchange Act of 1934.

Legal Matters

The validity of the issuance of the common stock offered hereby will be
passed upon for us by Neuman & Drennen, LLC of Boulder, Colorado.

Experts

Our consolidated financial statements as of June 30, 2000 and 1999 and
for the year ended June 30, 2000 and the period from May 18, 1999 to June 30,
1999 have been included herein in reliance on the report of Moss Adams, LLP,
independent certified public accountants, appearing elsewhere herein, given
upon the authority of that firm as experts in auditing and accounting.

XML-Global Technologies, Inc. and Subsidiaries

Independent Auditor's Report
and
Financial Statements

June 30, 2000 and 1999
<PAGE>
<PAGE>
XML - GLOBAL TECHNOLOGIES, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

JUNE 30, 2000 AND 1999

Page

INDEPENDENT AUDITOR'S REPORT . . . . . . . . . . . . . . . . . . . . . . . F-3

CONSOLIDATED FINANCIAL STATEMENTS

Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4

Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . F-6

Statement of Stockholders' Equity (Deficit) . . . . . . . . . . . . . F-7

Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . F-9

Notes to Consolidated Financial Statements. . . . . . . . . . F-11 - F-22

<PAGE>
<PAGE>
INDEPENDENT AUDITOR'S REPORT

To the Board of Directors and Stockholders
XML - Global Technologies, Inc.

We have audited the accompanying consolidated balance sheet of XML - Global
Technologies, Inc. and subsidiaries as of June 30, 2000 and 1999, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for the year ended June 30, 2000 and the period May 18, 1999 (date of
inception) to June 30, 1999. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of XML - Global Technologies, Inc. and subsidiaries as of June 30, 2000 and
1999, and the results of their operations and their cash flows for the year
ended June 30, 2000 and the period May 18, 1999 (date of inception) to June
30, 1999 in conformity with generally accepted accounting principles.

MOSS ADAMS LLP

Bellingham, Washington
August 14, 2000
<PAGE>
<PAGE>
<TABLE>
<CAPTION>

XML - GLOBAL TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEET
JUNE 30, 2000 AND 1999

ASSETS

June 30, June 30,
2000 1999
-------- -------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 7,535,852 $ 9,581
Investments in securities available
for sale 1,000,000 -
Trade accounts receivable 17,185 8,232
Other receivable 53,653 3,509
Prepaid expenses 11,869 4,658
Deferred income taxes 2,622 -
------------- -------------
Total current assets 8,621,181 25,980

PROPERTY AND EQUIPMENT, net 158,633 54,938

INTANGIBLE ASSETS
Intellectual property rights 1,250,000 -
Trademarks and patents 52,193 7,134
------------ -------------

TOTAL ASSETS $ 10,082,007 $ 88,052
============= =============

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES

Accounts payable and accrued liabilities $ 95,999 $ 55,182
Income taxes payable 7,178 -
Due to directors - 8,755
Note payable - 135,135
------------- -------------
Total current liabilities 103,177 199,072

STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $0.01 par value
100,000,000 shares authorized,
none issued and outstanding
at June 30, 2000 and June 30, 1999 - -
Common stock, $.0001 par value,
500,000,000 shares authorized,
27,505,000 and 17,500,000 shares
issued and outstanding at June 30 2000
and June 30, 1999, respectively 2,751 1,750
Additional paid-in capital 11,675,258 8,079
Accumulated other comprehensive income
(loss) (5,089) -
Accumulated deficit (1,694,090) (120,849)
------------- ------------
Total stockholders' equity (deficit) 9,978,830 (111,020)
------------- ------------

TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 10,082,007 $ 88,052
============= =============

</TABLE>

See accompanying notes to these consolidated financial statements.

XML - GLOBAL TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2000 AND FOR THE PERIOD
MAY 18, 1999 (DATE OF INCEPTION) TO JUNE 30, 1999

2000 1999
<S> <C> <C>

REVENUE $ 53,185 $ 2,137
------------ -------------

OPERATING EXPENSES
Research and development 774,114 49,809
Marketing and selling 218,713 -
General and administrative 629,075 70,091
Fair value of options granted to
consultants 55,898 -
Depreciation and amortization 35,578 3,086
-------------- -------------
Total operating expenses 1,713,378 122,986

OPERATING LOSS (1,660,193) (120,849)

INTEREST INCOME 94,161 -
-------------- -------------

NET LOSS BEFORE PROVISION FOR INCOME
TAXES (1,566,032) (120,849)

PROVISION FOR INCOME TAXES 7,209 -
--------------- -------------

NET LOSS $ (1,573,241) $ (120,849)
=============== =============

LOSS PER SHARE
Basic $ (0.07) $ (0.01)
=============== ==============
Diluted $ (0.07) $ (0.01)
=============== ==============
</TABLE>

See accompanying notes to these consolidated financial statements.

<PAGE>
<PAGE>
<TABLE>
<CAPTION>
XML - GLOBAL TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD MAY 18, 1999 (DATE OF INCEPTION) TO JUNE 30, 1999

Accumulated
Additional Other
Common Stock Paid-in Accumulated Comprehensive
Shares Amount Capital Deficit Income (Loss) Total
------- ------ -------- ---------- --------------- -----
<S> <C> <C> <C> <C> <C> <C>
BALANCE, MAY 18, 1999
(date of inception) - $ - $ - $ - $ - $ -
Share issuances for cash 12,500,000 1,250 11,250 - - 12,500
Net loss - - - (120,849) - (12,849)
Assumption of liabilities of
International Capital
Funding, Inc. 5,000,000 500 (3,171) - - (2,671)
------------- ---------- -------------------- ---------- ----------

BALANCE, June 30, 1999 17,500,000 1,750 8,079 (120,849) - (111,020)
Share issuances for cash 8,969,865 897 10,441,250 - - 10,442,147
Share issuance for purchase
of DataXchg Inc. 1,000,000 100 999,900 - - 1,000,000
Share issuances on exercise
of warrants 500,000 50 34,950 - - 35,000
Extinguishment of note payable
to stockholder 135,135 14 135,121 - - 135,135
Return of unvested common
stock (600,000) (60) 60 - - -
Issuance of compensatory
stock options - - 55,898 - - 55,898
Foreign currency translation
adjustment, net of $2,622
of tax - - - - (5,089) (5,089)
Net loss - - - (1,573,241) - (1,573,241)
------------- ---------- ---------- ---------- ----------- -----------
Total comprehensive
income(loss) (1,578,330)
------------- ---------- ---------- ---------- ----------- -----------

BALANCE, June 30, 2000 27,505,000 $ 2,751 $11,675,258$(1,694,090)(5,089) $ 9,978,830
============ ================================ ========== ===========

</TABLE>

See accompanying notes to these consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
XML - GLOBAL TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2000 AND FOR THE PERIOD
MAY 18, 1999 (DATE OF INCEPTION) TO JUNE 30, 1999

Increase (Decrease) in Cash

2000 1999
---- -----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (1,573,241) $ (120,849)
Adjustments to reconcile net loss to net
cash used in operating activities
Stock issued in exchange for
intellectual property rights
and for services - 12,500
Depreciation and amortization 35,578 3,086
Fair value of options granted to
consultants 55,898 -
Changes in operating assets and liabilities
Trade accounts receivable (8,923) (1,661)
Other receivables (49,475) (3,509)
Prepaid expenses (7,239) (4,658)
Trade accounts payable and accrued
liabilities 39,705 50,389
Income taxes payable 7,209 -
Advances due to directors (8,796) 1,223
------------- -------------
Net cash used in operating activities (1,509,284) (63,479)
------------- -------------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investments available for
sale (1,000,000) -
Purchases of property and equipment (139,684) (55,552)
Acquisition of trademarks and patents (45,246) (7,134)
Acquisition of intellectual property (250,000) -
Acquisition of subsidiary, net of cash
acquired - 611
------------- -------------
Net cash used in investing activities (1,434,930) (62,075)
--------------- -------------

CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of capital stock and exercise
of warrants, net of issue costs 10,477,147 -
Proceeds from issuance of note payable - 135,135
--------------- -------------
Net cash provided from financing
activities 10,477,147 135,135
--------------- -------------
EFFECT OF CHANGES IN EXCHANGE RATES (6,662) -
--------------- --------------
NET CHANGE IN CASH 7,526,271 9,581

CASH AND CASH EQUIVALENTS, beginning
of period 9,581 -
--------------- --------------

CASH AND CASH EQUIVALENTS, end of period $ 7,535,852 $ 9,581
=============== ==============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Interest paid $ - $ -
=============== ==============
Income taxes paid $ - $ -
=============== ==============
SUPPLEMENTAL SCHEDULE OF NONCASH
TRANSACTION
Shares issued for acquisition of
subsidiary $ 1,000,000 $ -
=============== ==============
Extinguishment of note payable to
stockholder $ (135,135) $ -
=============== ==============
Assumption of liabilities of
International Capital Funding, Inc. $ - $ 2,671
=============== ==============

</TABLE>

See accompanying notes to these consolidated financial statements.
<PAGE>
<PAGE>
NOTE 1 - ORGANIZATION AND OPERATIONS

Organization and Development Stage Operations

Effective August 27, 1999, XML-Technologies, Inc. (XML-Technologies) and
International Capital Funding, Inc. (ICF) entered into an agreement and plan
of reorganization (the Agreement). In accordance with the Agreement, the
shareholders of XML-Technologies received 12.5 million shares of ICF stock in
exchange for the 12.5 million outstanding shares of XML-Technologies. The
stockholders of ICF retained 5 million shares in exchange for no assets and
the assumption of $2,671 of liabilities of ICF by XML-Technologies. The
transaction was accounted for as a recapitalization of XML-Technologies and
the accompanying consolidated financial statements present the financial
position, results of operations, and cash flows of XML-Technologies. After
entering into the Agreement, the ownership percentage of the original
stockholders of XML-Technologies was reduced from 100% to 71%.

ICF was organized in 1991 for the purpose of consummating a merger or
acquisition with a private entity. Prior to entering into the Agreement, it
had no material amount of assets or liabilities and no operations. Subsequent
to completing the Agreement, ICF changed its name to XML-Global Technologies,
Inc. (XML-Global Technologies or the Company) and changed its year-end to June
30.

The capital structure in the accompanying consolidated financial statements
reflects a ten for one stock split of ICF shares authorized on August 3, 1999
in anticipation of entering into the Agreement.

XML-Technologies is a Nevada corporation organized May 18, 1999 to hold either
directly or indirectly all outstanding shares of XML-Global Research, Inc. and
Walkabout Website Designs, Ltd., both of which are British Columbia
corporations. The Company and its subsidiaries engage in the business of
developing Internet based software applications using XML (eXtensible Markup
Language). XML is an abbreviated version of SGML (Standard General Markup
Language), the international standard for defining description of the
structure and content of electronic documents.

For the period May 18, 1999 through June 30, 1999, the Company and its
subsidiaries' efforts were devoted to legal formation; financial planning;
recruiting directors, advisors and employees; and raising additional
financing. Development stage operations during this period were financed with
a loan from a director of the Company. In July 1999, the Company commenced
selling its e-commerce software and, accordingly, is no longer a development
stage company.

As described in Note 3, during fiscal 2000, the Company acquired DataXchg,
Inc., a Delaware corporation that owns the rights to certain XML-based e-
commerce technology.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation - The consolidated financial statements include
the accounts of XML-Global Technologies, Inc. and its wholly-owned U.S. and
Canadian subsidiaries. All material intercompany accounts and transactions
have been eliminated in consolidation.

Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the consolidated financial
statements. Actual results could differ from those estimates.

Cash and Cash Equivalents - All highly liquid investments with a maturity of
three months or less at the time of purchase are consider to be cash
equivalents. Cash equivalents include cash on deposit with banks, money
market funds, and managed bond funds.

Investments in Securities Available for Sale - Investments in debt and equity
securities with readily determinable fair values are classified as available
for sale and reported at fair value, adjusted for other than temporary
declines in value. Realized and unrealized gains and losses are computed
using the specific identification method. Unrealized gains and losses are
included in the determination of comprehensive income, net of applicable
income taxes.

Securities available for sale consist solely of adjustable rate corporate
notes that mature in October 2003. At June 30, 2000, there are no unrealized
gains or losses on the securities.

Allowance for Doubtful Accounts - The Company considers all trade accounts
receivable to be fully collectible. Accordingly, no allowance for doubtful
accounts has been recorded.

Property and Equipment - Property and equipment is recorded at cost.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets.

Intangible Assets - Intellectual property rights consist primarily of the
rights to certain technology known as "expressXCHG," which were acquired in
connection with the business combination with DataXchg, Inc. described in Note
3. The recorded value of the rights is $1 million. Other rights relate to
certain electronic signature verification technology obtained for $250,000
cash. Both rights are being amortized using the straight-line method over
four years. The rights were acquired during June 2000, and through June 30,
2000, no amortization expense was recorded.

Legal costs associated with obtaining and protecting trademarks and patents
are capitalized and amortized over five years. As of June 30, 2000, no
trademarks or patents were perfected, and no amortization expense was
recorded.

Valuation of Long-Lived Assets - The Company periodically reviews long-lived
assets, including identifiable intangible assets, whenever events or changes
in circumstances indicate that the carrying amount of an asset may be impaired
and not recoverable. Adjustments are made if the sum of the expected future
undiscounted operating cash flows is less than the carrying amount.

Revenue Recognition - The Company recognizes revenue when earned, in
accordance with American Institute of Certified Public Accountants Statement
of Position (SOP) 97-2, Software Revenue Recognition, and SOP 98-9,
Modification of SOP 97-2 with Respect to Certain Transactions. Royalties
based upon licensees' revenues or usage are recognized as licensees' revenues
are earned or usage occurs. In the event that licensees' revenue recognition
criteria are not met, revenue is recognized when received. Maintenance and
subscription revenue is recognized ratably over the contract period. Revenue
attributable to significant undelivered elements, including maintenance and
technical support, is recognized over the contract period as elements are
delivered. Revenues from fixed-price service contracts and software
development contracts requiring significant production, modification, or
customization are recognized using the percentage-of-completion method.
Revenue from service contracts that are based on time incurred is recognized
as work is performed.

Research and Development Costs - Research and development costs are expensed
as incurred. Statement of Financial Accounting Standards No. 86, Accounting
for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed,
does not materially affect the Company.

Income Taxes - The Company accounts for income taxes using the liability
method. Deferred taxes are recognized for temporary differences between the
basis of assets and liabilities for financial and income tax purposes at
enacted tax rates. Deferred tax amounts represent the future tax consequences
of those differences, which will be either deductible or taxable when the
assets and liabilities are recovered or settled. Valuation allowances are
established when necessary to reduce deferred tax assets to the amounts
expected to be realized. The Company files a consolidated tax return in the
United States. It files separate tax returns for each of its Canadian
subsidiaries in Canada. Additionally, the Canadian subsidiaries are subject to
provincial income taxes in Canada.

Foreign Currency Translation - All asset and liability accounts of Canadian
operations are translated into U.S. dollars at current exchange rates.
Revenues and expenses are translated using the average exchange rate
prevailing during the period. Foreign currency translation adjustments are
reported as a component of accumulated other comprehensive income. Such
adjustments were not material during the period May 18, 1999 (date of
inception) to June 30, 1999.

Earnings Per Share - The Company reports earnings per share in accordance with
Statement of Financial Accounting Standards (SFAS) No. 128, Earnings Per
Share.

Segment Information - The Company reports segment information in accordance
with SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information. SFAS No. 131 requires that reportable segments be designated
using a management approach, which relies on the internal organization used by
management for making operational decisions and assessing performance. SFAS
No. 131 also requires certain disclosures about products and services,
geographic areas, and major customers.

New Accounting Standard - In June 1998, the Financial Accounting Standards
Board issued SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities. Among other provisions, SFAS No. 133 requires that entities
recognize all derivatives as either assets or liabilities in the balance sheet
and measure those financial instruments at fair value. Accounting for changes
in fair value is dependent on the use of the derivatives and whether such use
qualifies as hedging activity. The new standard, as amended, becomes effective
for the Company in fiscal 2001, and management is currently assessing the
impact, if any, it may have on financial position and results of operations.

NOTE 3 - MERGERS AND ACQUISITIONS

XML-Global Research, Inc.

Effective May 20, 1999, XML-Technologies, Inc. completed the acquisition of
XML-Global Research, Inc. (Global) by purchasing all outstanding shares of
common stock of Global for a nominal amount. Global is a British Columbia
corporation organized on February 4, 1999 for the purpose of engaging in
software development. The acquisition has been accounted for using the
purchase method of accounting for business combinations. Prior to the
acquisition, Global had no significant operations, and no goodwill was
recorded in connection with the combination.

Walkabout Website Designs, Ltd.

Effective May 27, 1999, XML-Global Research, Inc. completed the acquisition of
Walkabout Website Designs, Ltd. (Walkabout) by purchasing all outstanding
shares of common stock of Walkabout for a nominal amount. Walkabout is a
British Columbia corporation organized on September 1, 1998 for the purpose of
engaging in software development. The acquisition has been accounted for using
the purchase method of accounting for business combinations; and, accordingly,
the operating results of Walkabout have been included in the Company's
financial statements from the date of acquisition. No goodwill was recorded in
connection with the combination.

DataXchg,Inc.

In October 1999, the Company and one of its non-employee directors, David
Webber, co-founded DataXchg, Inc. ("DataXchg"), a Delaware corporation. The
Company received 40% of common shares and David Webber received the other 60%.
In exchange for the shares, the parties agreed to transfer all rights to
certain technology and other intellectual property related to certain B2B
(Business-to-Business) and XML-EDI (Electronic Data Interchange) solutions.
Neither party has a historical cost basis in the assets that were transferred
to DataXchg.

Under the terms of a licensing agreement, DataXchg granted the Company the
right to use, develop, and sublicense certain technology known as
"expressXCHG." Pursuant to the license agreement, the Company will pay
royalties to DataXchg equal to 80% of net revenues derived from the sale and
licensing of products that are either based on the technology owned by
DataXchg or jointly developed by the Company and DataXchg. The Company will
pay royalties equal to 20% of net revenues derived from third party use of the
technology and intellectual rights.

Effective June 28, 2000 the Company acquired in a tax-free exchange Mr.
Webber's 60% interest in DataXchg in exchange for the issuance of 1,000,000
shares of the Company's common stock. For financial reporting purposes, the
acquisition has been accounted for as a purchase. A $1,000,000 value was
assigned to the shares given as consideration for the purchase, based on the
share price of other issuances of Company stock during the period the parties
agreed in substance to the terms of the purchase. The purchase price was
allocated to the technology rights held by DataXchg and will be amortized over
four years. Management has reviewed the $1,000,000 carrying amount of the
technology rights and has identified no events or changes in circumstances
that would indicate that the carrying amount may not be recoverable.

DataXchg has no history of operations; through June 28, 2000, it had no
revenues or expenses. Accordingly, there are no pro forma results of
operations to report for periods ended prior to that date that include
DataXchg.

Prior to the business combination with DataXchg, the Company's 40% investment
was carried at cost, adjusted for its proportionate share of undistributed
earnings or losses. Through June 28, 2000, DataXchg had no earnings or
losses.

NOTE 4 - PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

2000 1999
---- ----
<S> <C> <C>

Computer hardware $141,215 $ 50,685
Computer software 8,553 -
Leasehold improvements 9,975 -
Office equipment 37,406 7,339
---------- ----------
197,149 58,024
Accumulated depreciation (38,516) (3,086)
---------- ----------
$158,633 $ 54,938
========= ==========
</TABLE>

NOTE 5 - INCOME TAXES

Net income (loss) before provision for income taxes consists of the following:

2000 1999
---- ----
<S> <C> <C>
U.S. operations $ (1,695,101) $ -
Canadian operations 129,069 (120,849)
------------ -----------
$ (1,566,032) $ (120,849)
============= ===========

</TABLE>

The provision for income taxes consists of the following:

<TABLE>
<CAPTION>
2000 1999
----- ----
<S> <C> <C>
Current expense
Canadian $ 7,209 $ -
Deferred expense (benefit)
U.S. (576,300) -
Canadian 48,300 (48,300)
Change in valuation allowance 528,000 48,300
------------ -----------
$ 7,209 $ -
============ ===========

</TABLE>

The total provision differs from the amount computed using U.S. federal
statutory income tax rates as follows:

2000 1999
---- ----
<S> <C> <C>

Net loss before provision for
income taxes $ (1,566,032) $ (120,849)
U.S. statutory rate 34% 34%
Tax benefit at statutory rate (532,500) (41,100)
Excess income tax expense
(benefit) in Canada and other 11,709 (7,200)
Increase in valuation allowance 528,000 48,300
------------- ------------
$ 7,209 $ -
============= ============
</TABLE>

The tax effects of temporary differences that give rise to deferred tax assets
(liabilities) are as follows:

<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Assets
Net operating loss
carryforwards $ 557,300 $ 48,300
Stock-based compensation 19,000 -
Foreign currency translation
adjustment 2,622 -
Valuation allowance (576,300) (48,300)
------------ -----------
Net deferred tax asset $ 2,622 $ -
============ ===========

</TABLE>

The Company has approximately $1.6 million of U.S. net operating loss
carryforwards, which expire in 2020. Uncertainty exists surrounding
realization of the benefit of the loss carryforwards; and, accordingly, the
Company has recorded a $576,300 valuation allowance to reduce deferred tax
assets to an amount that will more likely than not be realized.

Under existing tax laws, undistributed earnings of foreign subsidiaries are
not subject to U.S. tax until distributed as dividends. Currently, the
Company's Canadian subsidiaries have no undistributed earnings. In the event
such earnings accumulate, they would be considered to be indefinitely
reinvested, and no deferred income taxes would be provided on such amounts.

NOTE 6 - EARNINGS PER SHARE

The numerators and denominators of basic and diluted earnings per share are as
follows:

2000 1999
---- ----
<S> <C> <C>
Numerator - net loss $ (1,573,241) $ (120,849)
Denominator - weighted average
number of shares outstanding 21,205,800 17,500,000

</TABLE>

As described in Note 7 and Note 8, during fiscal 2000, the Company granted
stock options and warrants to purchase up to 9,975,000 shares of common stock.
These shares were not included in computing diluted earnings per share because
their effects were antidilutive.

NOTE 7 - STOCKHOLDERS' EQUITY

Preferred Stock

The Company has 100,000,000 authorized shares of $0.01 par value preferred
stock. The Board of Directors may authorize issuance of any number of shares
in series and assign specific rights and preferences to each series without
limitation. As of June 30, 2000 and 1999, no shares have been issued.

Common Stock and Stock Warrants

The Company has a single class of $0.0001 par value common stock. Authorized
shares total 500 million. After giving effect to the Agreement discussed in
Note 1 and a ten for one stock split authorized on August 3, 1999, the Company
had 17.5 million shares issued and outstanding at June 30, 1999. At June 30,
2000, the Company had 27.5 million shares issued (or committed to be issued)
and outstanding.

During fiscal 2000, the Company entered into the equity transactions described
below. All issuances are exempt from registration in reliance on Rule 506 of
Regulation D or Section 4(2) of the Securities Act of 1933.

1) Concurrent with completing the Agreement discussed in Note 1, the
Company issued 2,330,000 units to investors at $1.00 per unit for
total proceeds of $2,330,000. Total issue costs were approximately
$173,000. Units issued consist of one common share and a stock
purchase warrant entitling the holder to acquire one common share at
an exercise price of $4.00 within the first six months following the
issue date, or $6.00 within the second six months following the issue
date. Subsequent to issuance, the terms of the warrants were modified
such that the holder may acquire one share of common stock at an
exercise price of $4.00 up until December 31, 2000.

2) Effective September 1, 1999, the Company issued a warrant that
entitles the holder to purchase 200,000 shares of common stock for
$5.00 per share. The term of the warrant is five years.

3) Effective January 13, 2000, the Company entered into a Securities
Purchase Agreement (the "Agreement") with XMLFund LLC ("XMLFund"), an
unrelated third party. Under the Agreement, XMLFund agreed to
purchase 500,000 units at a price of $2.00 per unit for total proceeds
of $1 million. Each unit consists of two shares of common stock, one
Class A warrant and one Class A-1 warrant. Each Class A warrant
entitles XMLFund to purchase one additional share of common stock at a
price of $2.00 per share, and each Class A-1 warrant entitles XMLFund
to purchase one additional share of common stock at a price of $0.07
per share. The term of the Class A warrants is three years and the
term of the Class A-1 warrants is 60 days. The Class A-1 warrants were
exercised in March 2000, from which the Company received gross
proceeds of $35,000. Although the exercise price of the Class A-1
warrants is below the fair value of the Company's stock, the warrants
were not issued in consideration of past or future services received
from XMLFund. The total estimated fair value of all equity
instruments comprising the units sold to XMLFund approximate the total
proceeds received. Accordingly, the Company has recognized no
compensation expense related to the Class A-1 warrants.

If within one year of the sale of the units (or once all warrants are
exercised, if earlier) the Company proposes to register any of its common
stock under the Securities Act of 1993 in connection with a public
offering, the Company agrees to use its best efforts to register also the
shares held by XMLFund. In the event the Company proposes to offer for
sale any new common shares or securities convertible into common shares,
or any other class of capital stock, the Company has granted XMLFund the
preemptive right to purchase additional shares necessary to maintain its
percentage interest in the Company.

4) Effective February 22, February 29, and April 7, 2000, the Company
entered into agreements to issue a total of 1,050,000 units at a price
of $1.00 per unit for total proceeds of $1,050,000. Each unit
consists of one share of common stock and one warrant. Each warrant
entitles holders to purchase one additional share of common stock at a
price of $4.00 per share. The warrants expire on December 31, 2000.
If within one year of the sale of the units the Company proposes to
register any of its common stock under the Securities Act of 1933 in
connection with a public offering, the Company agrees to use its best
efforts to register also the shares issued in these private
placements.

5) On February 24, 2000, one of the Company's founding stockholders left
the employee of the Company. The employee and the Company agreed that
he would return 600,000 of the 800,000 shares originally issued to
him, at no cost to the Company.

6) Effective April 5, 2000, the Company entered into a second Securities
Purchase Agreement (the Agreement) with XMLFund. Under this
Agreement, XMLFund agreed to purchase 100,000 units at a price of
$1.00 per unit for total proceeds of $100,000. Each unit consists of
one share of common stock and one warrant. Each warrant entitles
XMLFund to purchase one additional share of common stock at $4.00 per
share. The warrants expire on December 31, 2000. If, within one year
of the sale of the units, the Company proposes to register any of its
common stock under the Securities Act of 1933 in connection with a
public offering, the Company agrees to use its best efforts to
register also the shares held by XMLFund.

7) Effective March 3, 2000, the Company engaged Westminster Securities
Corporation (Westminster) to serve as its placement agent for the
purpose of offering up to 105 units at a price of $75,000 per unit.
Each unit consists of 50,000 shares of common stock and 50,000
redeemable warrants. During the first six months of the 18 month term
of the warrants, each warrant entitles holders to purchase one
additional share of common stock at a price of $4.00 per share.
During the following 12 months, holders are entitled to purchase
additional common shares at a price of $6.00 per share. The warrants
are redeemable by the Company at $0.01 per warrant in the event the
company (i) registers the shares to honor the warrants, (ii) the
shares are listed on a national exchange, Nasdaq, or the Over-the-
Counter Bulletin Board, (iii) the closing bid price of such shares for
the 20 trading days prior to redemption is 200% of the exercise price
of the warrants, and (iv) no lockup provisions restrict the resale of
the shares. In connection with the offering, the Company intends to
register up to 5.25 million common shares and 5.25 million warrants in
various states where such securities may be sold.

Through June 30, 2000 the Company received paid subscriptions for 92.5
units for gross proceeds of $6,937,500. Related costs of issuance were
approximately $667,000. In connection with the issuance, the Company
granted Westminster an option to purchase 9.25 of the units at the
$75,000 unit price. The term of the option is 18 months.

NOTE 8 - 1999 STOCK PLAN

On October 19, 1999, the Company adopted a stock incentive plan (the "1999
Stock Plan") to provide incentives to employees, directors and consultants.
Under the 1999 Stock Plan, the Company has reserved a total of 4,000,000
shares of Common Stock for issuance with the maximum term of options being ten
years. The Board of Directors has the exclusive power over the granting of
options and their vesting provisions. During the year ended June 30, 2000, the
Company granted 1,170,000 options to employees, directors and consultants at
an exercise price of $1.00 per share and 25,000 options to employees at an
exercise price of $1.50 per share. The options have a seven year term.

A summary of the status of the Plan during fiscal 2000 is as follows:

Weighted
Average
Number of Exercise
Options Price
-------- ---------
<S> <C> <C>
Options outstanding at June 30,
1999
Granted 1,195,000 $ 1.01
Exercised - -
Forfeited (25,000) 1.00
Options outstanding at June 30,
2000 1,170,000 1.01
=========== ===========
Options exercisable at June 30,
2000 1,140,000 $ 1.00
=========== ===========

</TABLE>

A summary of stock options outstanding at June 30, 2000 is as follows:

Options Outstanding Options
Exercisable
------------------- --------------
-------
Weighted-
Average Weighted
Range of Remaining Average
Average
Exercise Number Contractual Exercise Number
Exercise
Prices Outstanding Life Price Exercisable
Price
--------- ------------ ----------- --------- ------------ ----
-----
<S> <C> <C> <C> <C> <C>

$1.00 1,145,000 6.5 years $ 1.00 1,140,000 $
1.00
$1.50 25,000 7.0 years $ 1.50 - 1.50
----------- ------------
1,170,000 1,140,000
=========== ============

</TABLE>

The Company applies the provision of APB Opinion No. 25, Accounting for Stock
Issued to Employees, and related interpretations to account for its stock-
based awards. Accordingly, costs for employee stock options or issuance of
shares is measured as the excess, if any, of the fair value of the Company's
common stock at the measurement date over the amount the employee must pay to
acquire the stock. The cost for the issuance of options to non-employees is
based on the fair value of the options granted at the date the services were
performed using the Black-Scholes option pricing model. Stock-based
compensation expense recognized during fiscal 2000 was $55,898.

SFAS No. 123, Accounting for Stock-Based Compensation, requires disclosure of
the pro forma effect of applying the fair value method of accounting for stock
options issued to employees. The Company uses the Black-Scholes option-pricing
model to compute estimated fair value, based on the following assumptions:

<S> <C> <C>
Risk-free interest rate 6.0%
Dividend yield rate -%
Price volatility 20%
Weighted average expected life of
options 3 years

</TABLE>

In March 2000, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 44, Accounting for Certain Transactions Involving Stock
Compensation. FASB Interpretation No. 44 clarifies that non-employee members
of an entity's Board of Directors do not meet the definition of an employee,
in which case the requirements of SFAS No. 123 must be applied. However, an
exception is made to require the application of APB Opinion No. 25 to stock
compensation granted to a non-employee director for services provided as a
director if the director was (a) elected by stockholders or (b) appointed to a
board position that will be filled by stockholder election when the existing
term expires.

The pro forma effect of applying the fair value method of accounting for
options issued to employees and directors results in a $133,400 increase in
net loss and a $0.01 increase in net loss per share for the year ended
June 30, 2000.

NOTE 9 - RELATED PARTY TRANSACTIONS

During the year ended June 30, 2000, the Company extinguished a $135,135 note
payable due to a director through the issuance of common stock. The Company
also paid $184,000 in management fees to directors and to companies controlled
by directors.

NOTE 10 - CREDIT RISK

Financial instruments that potentially subject the Company to concentrations
of credit risk consist of cash and cash equivalents, securities available for
sale, and trade accounts receivable. The Company places its temporary cash
investments with major U.S. and Canadian banks and a U.S. brokerage firm.
Cash deposited with U.S. banks are insured up to $100,000. Cash deposited
with Canadian banks are insured up to Cdn $60,000. Securities, mutual funds,
money market funds, and other investments maintained with a U.S. brokerage
firm are uninsured.

The Company extends credit to customers based on evaluation of customers'
financial condition and credit history. Collateral is generally not required.
Customers include U.S., Canadian, and Korean entities engaged in e-commerce
and software development.

NOTE 11 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair values of cash, cash equivalents and trade accounts receivable and
payable, and accrued liabilities all approximate their fair value due to the
short-term nature of the instruments. Investments in securities available for
sale are reported at fair value.

NOTE 12 - SEGMENT AND GEOGRAPHIC INFORMATION AND MAJOR CUSTOMERS

The Company's operations consist of a single reportable segment. This segment
derives its revenues from sales of products and services employing XML
(eXtensible Mark-up Language) that are used by businesses to conduct e-
commerce. Through June 30, 1999, the Company's efforts were focused primarily
on development stage operations, and activities within this segment were
limited prior to that date. The following tables and schedules summarize
certain information about this segment.

XML-Based
Products and Services
---------------------
2000 1999
------ ------
<S> <C> <C>
External revenues $53,185 $ 2,137
Intersegment revenues - - Interest
expense - - Depreciation
and amortization 35,578 3,086
Segment loss before tax (1,510,228) (120,849)Segment assets
1,587,019 88,052
Expenditures for segment assets 434,930 62,686
Software rights acquired for stock 1,000,000 -

</TABLE>

Following are reconciliations to corresponding totals in the accompanying
financial statements:

2000 1999
---- ----
<S> <C> <C>
Total revenues for reportable
segments $ 53,185 $ 2,137
Less intersegment revenues - -
------------- ------------

Consolidated revenues $ 53,185 $ 2,137
============= ============

Total loss before tax for reportable
segments $(1,510,228) $ (120,849)
Corporate headquarters expense, net of
interest income 45,804 -
------------- ------------

Consolidated net loss before
provision for income taxes $(1,556,032) $ (120,849)
============= ============

Total assets for reportable segments $ 1,587,019 $ 88,052
Unallocated cash and investments 8,494,988 -
------------ ------------

Consolidated total assets $10,082,007 $ 88,052
============= ============

</TABLE>

Geographic Information

Following is a summary of revenues and long-lived assets related to the
respective countries in which the Company operates. Revenues are attributed to
countries based on location of customers.

2000 1999
----- ------
Long-Lived Long-Lived
Revenues Assets Revenues Assets -----
---- ---------- ----------------------
<S> <C> <C> <C> <C> <C>
United States $ 7,254 $ - $ - $ -
Canada 30,731 158,633 2,137 54,938
Korea 15,200 - - -
--------- ----------- ---------- ----------
Consolidated
totals $ 53,185 $ 158,633 $ 2,137 $ 54,938
========== ========== ========== ==========

</TABLE>

Major Customers

The Company currently has no major customers.

NOTE 13 - LEASE COMMITMENT

In March 2000, the Company entered into a lease agreement for a new operating
facility in Vancouver, British Columbia. Prior to entering into this
agreement, the Company had been renting its existing facility on a short-term
basis. The new lease commenced on June 1, 2000 and runs for five years. During
the first two years, monthly lease payments are $4,700. However, the facility
is provided at no charge for the first five months of each of the first two
years. During the following three years, monthly lease payments are $5,500.
The lease agreement also requires that the Company pay its proportional share
of operating costs and property taxes.

Future minimum lease payments required under the lease, excluding the
Company's share of operating costs and property taxes, are as follows:

Year Ending
June 30,
<S> <C> <C>
2001 $ 28,000
2002 38,200
2003 65,500
2004 65,500
2005 54,500
----------
$ 251,700
==========

</TABLE>

The effect of the scheduled rent increase and "rent holidays" are recognized
on a straight-line basis over the five-year term of the lease. During 2000
and 1999, rent expense was $73,700 and $5,900, respectively.

<PAGE>
<PAGE>
You should rely only on the information contained in this document or that we
have referred you to. We have not authorized anyone to provide you with
information that is different. This prospectus is not an offer to sell common
stock and is not soliciting an offer to buy common stock in any state where
the offer or sale is not permitted.

XML - Global Technologies, Inc.

24,335,000 Shares of Common Stock

November 13, 2000

Until December 8, 2000, all dealers effecting
transactions in the shares offered by this pro-
spectus - whether or not participating in the
offering - may be required to deliver a copy
of this prospectus. Dealers may also be
required to deliver a copy of this prospectus
when acting as underwriters and for their
unsold allotments or subscriptions.

TABLE OF CONTENTS
Page
Prospectus Summary 2
Risk Factors 4
Certain Market Information 14
Forward-Looking Statements 15 ____________________________
Dividend Policy 16
Capitalization 16 Prospectus
Selected Financial Data 17 ____________________________
Management Discussion 18
Business 24
Management 35
Certain Transactions 40 November 13, 2000
Principal Stockholders 42
Additional Information 44
Selling Securityholders 45
Use of Proceeds 54
Plan of Distribution 55
Description of Securities 56
Legal Matters 56
Experts 56