CORECHANGE INC, S-1, 2000-05-31

CORECHANGE INC
S-1, 2000-05-31

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 31, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933
--------------------------
CORECHANGE, INC.

(Exact Name of Registrant as Specified in its Charter)

<TABLE>
<S> <C> <C>
DELAWARE 7372 04-3367581
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>

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260 FRANKLIN STREET, SUITE 1890
BOSTON, MASSACHUSETTS 02110
(617) 204-3300
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
------------------------------

ULF ARNETZ
PRESIDENT AND CHIEF EXECUTIVE OFFICER
CORECHANGE, INC.
260 FRANKLIN STREET, SUITE 1890
BOSTON, MASSACHUSETTS 02110
(617) 204-3300
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
------------------------------

COPIES TO:

<TABLE>
<S> <C>
PETER B. TARR, ESQ. STEVEN R. FINLEY, ESQ.
STUART M. FALBER, ESQ. GIBSON, DUNN & CRUTCHER LLP
HALE AND DORR LLP 200 PARK AVENUE
60 STATE STREET NEW YORK, NEW YORK 10166-0193
BOSTON, MASSACHUSETTS 02109 (212) 351-4000
(617) 526-6000
</TABLE>

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

Approximate date of commencement of proposed sale to the public: AS SOON AS
PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / ________

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ________

If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ________

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
TITLE OF EACH CLASS OF PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED AGGREGATE OFFERING PRICE (1) REGISTRATION FEE (2)
<S> <C> <C>
Common Stock, par value $.01 per share...................... $50,000,000 $13,200
</TABLE>

(1) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(o).

(2) Calculated pursuant to Rule 457(a) based on an estimate of the proposed
maximum aggregate offering price.
--------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(A),
MAY DETERMINE.

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<PAGE>
SUBJECT TO COMPLETION--MAY 31, 2000
WE WILL AMEND AND COMPLETE THE INFORMATION IN THIS PROSPECTUS. ALTHOUGH WE ARE
PERMITTED BY U.S. FEDERAL SECURITIES LAW TO OFFER THESE SECURITIES USING THIS
PROSPECTUS, WE MAY NOT SELL THEM OR ACCEPT YOUR OFFER TO BUY THEM UNTIL THE
DOCUMENTATION FILED WITH THE SEC RELATING TO THESE SECURITIES HAS BEEN DECLARED
EFFECTIVE BY THE SEC. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES
OR OUR SOLICITATION OF YOUR OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION
WHERE THAT WOULD NOT BE PERMITTED OR LEGAL.
<PAGE>
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PROSPECTUS
, 2000

corechange

SHARES OF COMMON STOCK

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THE COMPANY:

- We develop, market and support software that provides enterprises with a
framework to manage access to business information and applications using
the internet and wireless internet technology.

- Corechange, Inc.
260 Franklin Street, Suite 1890
Boston, Massachusetts 02110

PROPOSED SYMBOL AND MARKET:

- CRCH/Nasdaq National Market

THE OFFERING:

- We are offering shares of our common stock.

- The underwriters have an option to purchase up to an additional
shares from us to cover over-allotments.

- This is the initial public offering of our common stock.

- We anticipate that the initial public offering price will be between $
and $ per share.

- Closing: , 2000.

<TABLE>
<S> <C> <C> <C>
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Per Share Total
-----------------------------------------------------------------------------------------------------
Public offering price: $ $
Underwriting fees:
Proceeds to Corechange:
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</TABLE>

THIS INVESTMENT INVOLVES RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 6.

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NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS DETERMINED WHETHER THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE, NOR HAVE THEY MADE, NOR WILL THEY MAKE, ANY
DETERMINATION AS TO WHETHER ANYONE SHOULD BUY THESE SECURITIES. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------------------------------------------------------------------------

DONALDSON, LUFKIN & JENRETTE

SG COWEN

PRUDENTIAL VOLPE TECHNOLOGY

A UNIT OF PRUDENTIAL SECURITIES

DLJDIRECT INC.
<PAGE>
[ARTWORK]

The top of the page shows several of the typical sources of information that
feed the Coreport framework:

Document Management; Communities of Practice; eMail/Newsfeeds; Enterprise
Applications; Back-end Business Applications; Internet & Intranet; News &
Stock Tickers; Data Warehouse.

Each of these sources is shown feeding into the center of the page where a
graphic shows the Coreport Access Framework for E-Business Solutions as follows:

The framework graphic shows an organization structure with several role
definitions (e.g., sales representative), several individual names
associated with a role and finally the information sources that have been
granted to that role.

Below the framework graphic are images of three devices that are shown being fed
with information from the framework as follows:

A laptop personal computer, showing a full screen display of a Coreport
interface with several business applications including a sales pie chart.

A wireless application protocol-enabled cellular phone showing a business
application on its display.

A wireless hand-held portable computing device showing a business
application (pie chart) on its display.

At the bottom of the page the following words:

One Framework...Any Application...Anywhere
<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
<S> <C>
Prospectus Summary.................... 3

Risk Factors.......................... 6

Special Note Regarding Forward-Looking 17
Statements..........................

Use of Proceeds....................... 18

Dividend Policy....................... 18

Corporate Information................. 18

Capitalization........................ 19

Dilution.............................. 20

Selected Consolidated Financial 21
Data................................

Management's Discussion and Analysis 23
of Financial Condition and Results
of Operations.......................
</TABLE>

Business.............................. 32

Management............................ 42

Principal Stockholders................ 54

Description of Capital Stock.......... 56

Shares Eligible for Future Sale....... 60

Underwriting.......................... 61

Legal Matters......................... 63

Experts............................... 64

Change in Accountants................. 64

Additional Information................ 64

Index to Consolidated Financial F-1
Statements..........................
</TABLE>
<PAGE>
PROSPECTUS SUMMARY

YOU SHOULD READ THE FOLLOWING SUMMARY TOGETHER WITH THE MORE DETAILED
INFORMATION REGARDING CORECHANGE AND THE COMMON STOCK BEING SOLD IN THIS
OFFERING IN OUR CONSOLIDATED FINANCIAL STATEMENTS AND THE RELATED NOTES
APPEARING ELSEWHERE IN THIS PROSPECTUS.

CORECHANGE

We develop, market and support software that provides enterprises with a
framework to manage access to business information and applications using the
internet and wireless internet technology. Our access framework software,
Coreport, enables enterprises to provide their employees, customers, suppliers
and business partners with an internet-based interface to easily access and
manipulate the information they require to conduct e-business. In addition,
Coreport's wireless capabilities allow users to access relevant information and
conduct e-business anytime, anywhere.

Coreport's extensive functionality provides enterprises with the following
business benefits:

- Provides relevant, personalized business information and applications;

- Facilitates mobile e-business;

- Enables more informed and timely business decisions;

- Promotes rapid implementation of enterprises' e-business strategies; and

- Enhances e-business relationships.

Coreport's role-based administration enables enterprises to rapidly define
categories of users and provides these users with access to information and
applications specific to their business needs and roles. Our software provides
users with a secure, single sign-on to access all relevant business information
and applications. Coreport integrates out-of-the-box with many types and sources
of information and is designed to easily scale to large numbers of users.

Today, enterprises are increasingly using the internet to share business
information and create new business opportunities. Forrester Research estimates
that worldwide electronic commerce will increase from $657 billion in 2000 to
$6.8 trillion in 2004. In order to capitalize on e-business opportunities,
enterprises must extend their business applications to the internet and
seamlessly integrate their business processes with those of their customers,
suppliers and business partners. Furthermore, advances in wireless
communications and the increasing use of web-enabled wireless devices are
creating new ways to access information and conduct business anytime, anywhere.
Ovum estimates that the market for mobile electronic commerce will grow to over
$200 billion by 2005. In addition, ARC Group estimates that by 2005 over
1.0 billion people will access the internet using wireless devices compared to
650 million people using personal computers.

In today's e-business environment, access to the right information at the
right time is a significant competitive advantage. Although the internet and
wireless communications are making information more readily available, the
proliferation of business applications and other sources of information is
making it difficult for enterprises to aggregate and provide efficient access to
all relevant information. As enterprises increasingly adopt e-business
strategies, we believe that they will require a solution to efficiently and
effectively provide their employees, customers, suppliers and business partners
with access to information and applications specific to their business needs.

Our objective is to be the leading provider of access framework software.
Key elements of our strategy include capitalizing on wireless opportunities,
targeting Global 2000 enterprises and leveraging our customer base. We also
intend to continue to expand our distribution channels, develop additional
strategic relationships and expand our international presence.

To date, we have licensed our Coreport software to domestic and
international customers including ABN AMRO, Braathens Airways, Children's
Hospital of Philadelphia, Credit Suisse First Boston and Philips Electronics.

3
<PAGE>
THE OFFERING

<TABLE>
<S> <C>
Common stock offered....................................... shares

Common stock to be outstanding after this offering......... shares

Use of proceeds............................................ Working capital and other general
corporate purposes, including the
expansion of sales and marketing
as well as research and
development activities

Proposed Nasdaq National Market symbol..................... CRCH
</TABLE>

The common stock outstanding after the offering is based on the number of
shares outstanding as of May 25, 2000, and does not include:

- 1,497,818 shares issuable upon exercise of outstanding options with a
weighted average exercise price of $3.25 per share;

- 1,910,083 additional shares available for issuance and grant under our
stock incentive plans; and

- 120,191 shares issuable upon exercise of an outstanding warrant to
purchase shares at an exercise price of $4.99 per share.

Unless otherwise indicated, all information in this prospectus:

- assumes that the underwriters will not exercise their over-allotment
option; and

- gives effect to the conversion of all outstanding shares of preferred
stock into 6,881,389 shares of common stock upon the completion of this
offering.

4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Set forth below are summary statement of operations data for the years ended
December 31, 1997, 1998 and 1999 and the three months ended March 31, 1999 and
2000 and summary balance sheet data as of March 31, 2000. With respect to the
statement of operations data, the pro forma basic and diluted net loss per
common share has been calculated assuming the conversion of all outstanding
shares of convertible preferred stock into shares of common stock, as if the
shares had converted immediately upon issuance. The balance sheet data are
presented on an actual basis and on a pro forma as adjusted basis to give effect
to the conversion of all outstanding shares of our convertible preferred stock
into shares of common stock upon the closing of this offering and also to
reflect the sale of shares of our common stock in this offering at
an assumed initial public offering price of $ per share after deducting
underwriting discounts and estimated offering expenses.

The following data should be read with "Selected Consolidated Financial
Data," "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and our consolidated financial statements, including the related
notes, included elsewhere in this prospectus.

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------ -------------------
1997 1998 1999 1999 2000
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Software licenses........................... $ 1,054 $ 1,004 $ 926 $ 204 $ 601
Services.................................... 1,864 4,657 4,340 1,079 546
------- ------- ------- ------- -------
Total revenues............................ 2,918 5,661 5,266 1,283 1,147
Gross profit.................................. 1,312 1,915 2,141 490 674
Operating loss................................ (8,780) (7,659) (4,787) (997) (2,370)
Net loss...................................... (8,975) (7,429) (4,782) (985) (2,327)
Pro forma basic and diluted net loss per
common share................................ $ (0.63) $ (0.69)
Shares used in computing pro forma basic and
diluted net loss per common share........... 7,589 9,358
</TABLE>

<TABLE>
<CAPTION>
AS OF MARCH 31, 2000
----------------------
PRO FORMA
ACTUAL AS ADJUSTED
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................. $ 13,144
Working capital........................................... 12,888
Total assets.............................................. 15,040
Redeemable convertible preferred stock.................... 32,659
Total stockholders' equity (deficit)...................... (19,216)
</TABLE>

5
<PAGE>
RISK FACTORS

YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISKS AND THE OTHER INFORMATION
IN THIS PROSPECTUS, INCLUDING OUR CONSOLIDATED FINANCIAL STATEMENTS AND THE
RELATED NOTES, BEFORE INVESTING IN OUR COMMON STOCK. IF ANY OF THE FOLLOWING
RISKS ACTUALLY OCCUR, OUR BUSINESS, OPERATING RESULTS OR FINANCIAL CONDITION
WOULD LIKELY SUFFER. AS A RESULT, THE TRADING PRICE OF OUR COMMON STOCK COULD
DECLINE, AND YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT.

RISKS RELATED TO OUR BUSINESS

OUR LIMITED OPERATING HISTORY MAKES IT DIFFICULT FOR YOU TO EVALUATE OUR
BUSINESS AND PROSPECTS.

We commenced our operations in 1996, shipped our first product and began
delivering professional services in late 1996 and introduced Coreport in
August 1999. However, we did not recognize any material revenues from Coreport
until the first quarter of 2000. Accordingly, we have a limited operating
history upon which you can evaluate our business and our prospects. In addition,
our prospects must be considered in light of the risks encountered by early
stage companies in new and rapidly evolving markets. Some of the risks we face
include our ability to:

- successfully achieve market acceptance for Coreport;

- attract and retain customers;

- hire aggressively to expand our sales, marketing, services and development
efforts;

- adapt to meet changes in our markets, customer demands and competitive and
regulatory developments;

- continue to update our technology to enhance the features and
functionality of our software products and services;

- negotiate and maintain favorable strategic relationships; and

- plan and manage our growth effectively.

If we fail to manage these risks successfully, our business could be materially
and adversely affected.

WE DEPEND ON COREPORT FOR SUBSTANTIALLY ALL OF OUR REVENUES AND IF IT DOES NOT
ACHIEVE BROAD MARKET ACCEPTANCE, OUR REVENUES COULD DECLINE.

We introduced Coreport in August 1999 and currently derive substantially all
of our revenues from licensing Coreport and providing related services to
Coreport customers. We expect that we will continue to derive substantially all
of our revenues from Coreport for the foreseeable future. The failure of
Coreport to achieve broad market acceptance, the failure of the market for
Coreport to grow or to grow at the rate we anticipate, or a decline in the price
of, or demand for, Coreport, could seriously harm our business and results of
operations.

WE HAVE A HISTORY OF LOSSES, AND WE EXPECT TO INCUR LOSSES IN THE FUTURE.

Our operations have never been profitable. We have incurred net losses in
every fiscal period since we began our operations. We incurred net losses of
$4.8 million for the year ended December 31, 1999 and $2.3 million for the three
months ended March 31, 2000. As of March 31, 2000 our accumulated deficit was
$25.7 million. We expect to substantially increase our sales personnel,
marketing expenses, and services and operations expenses. As a result, we will
need to generate significant additional revenues to achieve and maintain
profitability in the future. We are not certain when we will become profitable,
if ever. Even if we do achieve profitability, we may not sustain or increase
profitability on a

6
<PAGE>
quarterly or annual basis. Failure to achieve or maintain profitability will
materially and adversely affect the market price of our common stock.

WE HAVE NOT BEEN ABLE TO FUND OUR OPERATIONS FROM CASH GENERATED BY OUR
BUSINESS, AND IF WE CANNOT MEET OUR FUTURE CAPITAL REQUIREMENTS, WE MAY NOT BE
ABLE TO DEVELOP OR ENHANCE OUR SOLUTION, TAKE ADVANTAGE OF BUSINESS
OPPORTUNITIES AND RESPOND TO COMPETITIVE PRESSURES.

We have principally financed our operations to date through the private
placement of shares of our preferred stock. If we do not generate sufficient
cash resources from our business to fund operations, our growth could be limited
unless we are able to obtain additional capital through equity or debt
financings. Our inability to grow as planned may reduce our chances of achieving
profitability, which, in turn, could have a material adverse effect on the
market price of our common stock.

We currently anticipate that our existing cash and cash equivalents and cash
from operations, together with the net proceeds from this offering, will be
sufficient to meet our anticipated needs for working capital and capital
expenditures for at least the next 12 months. The time period for which we
believe our capital is sufficient is an estimate. The actual time period may
differ materially as a result of a number of factors, risks and uncertainties.

We anticipate that we will need to raise additional funds in the future
through public or private debt or equity financings. Any additional financing we
may need in the future may not be available on terms favorable to us, if at all.
If adequate funds are not available or are not available on acceptable terms, we
may not be able to take advantage of opportunities, develop new solutions or
otherwise respond to unanticipated competitive pressures. In such case, our
business, operating results and financial condition could be harmed. Moreover,
additional financing may cause dilution to existing stockholders.

IF WE DO NOT EXPAND THE NUMBER OF LICENSES USED BY OUR CUSTOMERS, WE MAY NOT
ACHIEVE GROWTH IN OUR REVENUES.

In order to increase our revenues, we will depend on customers to purchase
additional licenses of Coreport. Our sales strategy involves the licensing of
Coreport to customers on a limited basis in order to familiarize customers with
the benefits provided by Coreport, which we refer to as our initial rollout
strategy. Most of our customers have only licensed Coreport on an initial
rollout basis. In order to convert customers beyond the initial rollout stage
and to have customers expand their licensing of Coreport, it is important that
our customers are satisfied with Coreport and that they believe that expanded
use of Coreport will provide them with additional benefits. Customers may choose
not to license Coreport beyond the initial rollout stage or expand the use of
our product. If we do not increase sales to customers, we may not be able to
achieve anticipated revenue growth.

WE MAY EXPERIENCE DIFFICULTIES IN INTRODUCING NEW PRODUCT ENHANCEMENTS AND
UPDATES WHICH COULD RESULT IN NEGATIVE PUBLICITY, LOSS OF SALES, DELAY IN MARKET
ACCEPTANCE OR CUSTOMER DISSATISFACTION.

Our future financial performance depends on the successful and timely
development, introduction and market acceptance of new product enhancements and
updates. We find it difficult to predict the life cycle of our product because
the market for our product is new and emerging and is characterized by rapid
technological change, changing customer needs and evolving industry standards.
The introduction of products or computer systems employing new technologies and
emerging industry standards could render our existing product obsolete and
unmarketable. The introduction of enhancements to our product may also cause
customers to defer orders for our existing products. We may experience
difficulties that could delay or prevent the successful development,
introduction or marketing of new product enhancements and updates in the future.
Without these enhancements and updates, Coreport may not meet the requirements
of the marketplace or achieve market acceptance.

7
<PAGE>
New product enhancements and updates may not be released according to schedule
which could result in negative publicity, loss of sales, delay in market
acceptance of our products or customer claims against us.

In March 2000, we introduced version 3.0 of Coreport with additional
functionality, including wireless capabilities. To date, no customer has
implemented the wireless capabilities of version 3.0 on a wide-scale basis. To
successfully implement these wireless capabilities, customers will need to
integrate these capabilities with the wide variety of complex systems currently
used by customers. If Coreport's wireless capabilities cannot be implemented on
a wide-scale basis due to technological obstacles or otherwise or the ease and
speed of this implementation does not meet the expectations of our customers,
our reputation and ability to sell Coreport will be harmed.

DELAYS OR PROBLEMS IN IMPLEMENTATION OF COREPORT COULD CAUSE OUR OPERATING
RESULTS TO SUFFER.

The implementation of Coreport requires internal quality assurance testing
and customer testing which may reveal performance issues that could lead to
delays in setting up our solution for customers. In addition, the reallocation
of resources associated with any postponement could cause delays in the
implementation of our product at other customer sites and may adversely affect
or delay our ability to develop and release future enhancements to our existing
product as well as new products. Any such delays could harm our operating
results.

FLUCTUATIONS IN OUR QUARTERLY FINANCIAL RESULTS MAY ADVERSELY AFFECT THE TRADING
PRICE OF OUR COMMON STOCK.

Our quarterly revenues and operating results are difficult to predict. We
have experienced, and expect to continue to experience, fluctuations in revenues
and operating results from quarter-to-quarter. As a result, we believe that
quarter-to-quarter comparisons of our revenues and operating results are not
necessarily meaningful, and that such comparisons may not be accurate indicators
of future performance. Factors that may cause our revenue or operating results
to fluctuate include:

- demand for our product and services;

- the timing of sales of our product;

- the duration of the period between initial contact with a potential
customer and the license of Coreport by that customer, which typically
ranges from approximately 30 to 90 days and may be longer;

- the amount and timing of operating costs relating to the expansion of our
business operations;

- technical difficulties in our software that would delay product shipments
or increase the costs of introducing new products;

- introductions of new products or enhancements to existing products by us
or our competitors;

- our ability and the ability of our partners to implement products for our
customers;

- changes in our mix of revenues generated from new product sales and
services;

- changes in our mix of sales channels through which our product and
services are sold;

- the number and timing of new hires, particularly with respect to sales,
development and services personnel;

- the mix of domestic and international sales; and

- costs related to possible acquisitions of technologies or businesses.

8
<PAGE>
In addition, we derive the majority of our revenues from a small number of
customers. As a result, the addition or loss of one or more customers could have
a significant impact on our quarterly revenues and operating results. Our top
five customers accounted for 61% of revenues for the year ended December 31,
1999 and 56% of revenues for the quarter ended March 31, 2000.

We plan to increase our operating expenses to expand our sales and marketing
activities as well as research and development activities. Our operating
expenses are based on our expectations of future revenues and are relatively
fixed in the short term. If revenues fall below our expectations during a
quarter and we are not able to quickly reduce our spending in response, our
operating results for that quarter could be harmed. In some future quarter our
operating results may be below the expectations of securities analysts and
investors. Our failure to meet these expectations would likely cause the market
price of our common stock to decline.

WE MAY NOT BE ABLE TO INCREASE MARKET AWARENESS AND SALES OF COREPORT IF WE DO
NOT EXPAND OUR SALES AND DISTRIBUTION CAPABILITIES.

We need to substantially expand our sales and distribution efforts in order
to increase market awareness and sales of Coreport and the related services we
offer. We have recently expanded our direct sales force and plan to hire
additional sales personnel. Competition for qualified sales personnel is
intense, and we might not be able to hire and retain adequate numbers of these
personnel to maintain our growth. New hires will require training and take time
to achieve full productivity. Our competitors have attempted to hire our
employees away from us and we expect that they will continue such attempts in
the future. If we are unable to successfully grow our sales capabilities, our
revenues may decline. In addition, we intend to expand our indirect distribution
channels by establishing additional relationships with resellers, distribution
partners and other third parties. Competition for these relationships is
intense, and we may be unable to establish relationships on favorable terms, if
at all. Even if we are successful in establishing these relationships, they may
not substantially increase our revenues.

IF COREPORT IS UNRELIABLE, WE COULD LOSE CUSTOMERS AND REVENUES.

Our software is complex, and may contain undetected errors or performance
problems. Many serious defects are frequently found during the period
immediately following introduction of new software or enhancements to existing
software. Undetected errors or performance problems may be discovered in the
future and our customers may consider known errors to be more serious than we
do. This could result in lost revenues or delays in customer or market
acceptance, costly litigation, diversion of management's attention and
resources, increase in product development costs, loss of sales and could be
detrimental to our reputation, which could harm our business, operating results
and financial condition.

BECAUSE WE INTEND TO UTILIZE THIRD PARTIES TO PROMOTE, SELL AND IMPLEMENT OUR
PRODUCT, OUR REVENUES WILL LIKELY SUFFER IF WE DO NOT DEVELOP AND MAINTAIN THESE
RELATIONSHIPS.

We intend to utilize third parties to promote, sell and implement our
product. If we fail to maintain and develop these relationships, our revenues
will likely suffer. We currently utilize third parties to recommend our product
to their customers and to install our product. If we are unable to utilize these
third parties to implement our product, we will likely have to provide these
services ourselves, resulting in increased costs. As a result, our ability to
grow may be harmed. In addition, these third parties may develop, market or
recommend products that compete with our product. For this reason, we must
cultivate our relationships with these firms, and our failure to do so could
result in reduced sales revenues. Further, if these third parties fail to
implement our product successfully, our reputation may be harmed.

9
<PAGE>
OUR INDUSTRY IS HIGHLY COMPETITIVE, ITS TECHNOLOGY IS CHANGING RAPIDLY AND WE
MAY NOT BE ABLE TO COMPETE EFFECTIVELY.

The market for our software is changing rapidly and intensely competitive.
We expect competition to intensify further as the number of entrants and new
technologies increases. We may not be able to compete successfully against
current or future competitors. The competitive pressures facing us may harm our
business, operating results and financial condition.

Our current and potential competitors include, among others, both private
and public companies which are perceived as providing products similar to ours,
or which actually provide components of the product we provide. Many of our
competitors and potential competitors possess longer operating histories, larger
technical staffs, larger customer bases, more established distribution channels,
a broader range of products, greater brand recognition and greater financial,
marketing and other resources than we do. Our competitors may be able to develop
products and services that are superior to our solution, have significantly
improved functionality as compared to our existing and future solutions and
achieve greater customer acceptance. In addition, negotiating and maintaining
favorable customer and strategic relationships is critical to our business. Our
competitors may be able to negotiate strategic relationships on more favorable
terms than we are able to negotiate. Many of our competitors may also have
well-established relationships with our existing and prospective customers.
Increased competition may result in price reductions and lower profit margins
that in turn could harm our business, operating results and financial condition.
We also may face increased competition from existing large enterprise software
vendors that may broaden their product offerings to include software similar to
ours. Their significant installed customer bases and abilities to offer a broad
solution and price these new products as incremental add-ons to existing systems
could provide them with a significant competitive advantage.

OUR FUTURE SUCCESS WILL DEPEND ON THE ABILITY OF OUR PRODUCTS TO WORK WITH A
LARGE VARIETY OF HARDWARE, SOFTWARE, DATABASE AND NETWORK SYSTEMS.

We currently serve, and intend to continue to serve, a customer base with a
wide variety of hardware, software, database and networking systems. To gain
broad market acceptance, we believe that we must support an increased number of
systems in the future. We offer Coreport on Microsoft Windows NT. In addition,
we are currently adapting Coreport to be installed on other major servers, such
as Unix servers. A delay in this or any other rollout of our product onto a new
operating system could adversely affect our revenues and operating results.
There can be no assurance that we will adequately expand our offerings to
service potential customers, or that the expansion will be sufficiently rapid to
meet or exceed the offerings of our competitors. If we are unable to develop and
introduce new products or enhancements of existing products in a timely manner
or if we experience delays in the commencement of commercial shipments of new
products and enhancements, our business will suffer. If the market for the
Windows NT operating system declines or develops more slowly than we expect, our
business and operating results will be significantly harmed. Market acceptance
of the Windows NT operating system will depend on many factors, including
Microsoft's development and support of the Windows NT market. For example,
Microsoft could decide to discontinue or lessen its support of the Windows NT
market. Similarly, Microsoft could decide to shift its support to another
operating system to the detriment of Windows NT. In addition, we cannot predict
the ability of the Windows NT operating system to compete against existing and
emerging operating systems, including AIX, HP-UX, Linux and Solaris. Any decline
in the market penetration of Window NT operating systems will lead to a
shrinking market for our product.

10
<PAGE>
WE HAVE EXPERIENCED SIGNIFICANT GROWTH IN OUR BUSINESS IN RECENT PERIODS AND WE
MAY NOT BE ABLE TO MANAGE OUR FUTURE GROWTH SUCCESSFULLY.

Our ability to successfully deploy our product and implement our business
plan in a rapidly evolving market requires an effective planning and management
process. We have increased, and plan to continue to increase, the scope of our
operations at a rapid rate. The number of people we employ has grown and we
expect it to continue to grow substantially. We expanded from 57 employees as of
December 31, 1999, to 80 employees as of May 25, 2000. Future expansion efforts
could be expensive and may strain our managerial and other resources. To manage
future growth effectively, we must maintain and enhance our financial and
accounting systems and controls, integrate new personnel, build and train our
sales and marketing staff, develop our customer support capacity and manage
expanded operations. If we do not manage growth properly, it could harm our
business, operating results and financial condition.

IF WE DO NOT RETAIN OUR KEY MANAGEMENT PERSONNEL AND ATTRACT AND RETAIN OTHER
HIGHLY SKILLED EMPLOYEES, OUR BUSINESS WILL SUFFER.

Our future success depends upon the continued service of our executive
officers and other key personnel, many of whom do not have employment agreements
with us. If we lose the services of one or more of our executive officers or key
employees, or if one or more of them decide to join a competitor or otherwise
compete directly or indirectly with us, our business, operating results and
financial condition could be harmed.

Our success also depends on our ability to recruit, retain and motivate
highly skilled sales, marketing and engineering personnel. Competition for these
individuals in the software and Internet industries is intense, and we may not
be able to successfully recruit or train qualified personnel.

IF WE ARE UNSUCCESSFUL IN OUR EFFORTS TO EXPAND OUR INTERNATIONAL SALES, OUR
BUSINESS AND OPERATING RESULTS COULD BE HARMED.

We have historically generated a significant portion of our total revenues
from foreign sales and, although we anticipate that the percentage of our total
revenues from foreign sales will continue to decline in the future, we intend to
expand our international sales efforts in the future. Expansion of our
international operations will require a significant amount of attention from our
management and substantial financial resources. If we are unable to grow our
international operations successfully and in a timely manner, our business and
operating results could be harmed. In addition, doing business internationally
involves additional risks, particularly:

- unexpected changes in regulatory requirements, taxes, trade laws and
tariffs;

- restrictions on repatriation of earnings;

- differing intellectual property rights;

- differing labor regulations;

- changes in a specific country's or region's political or economic
conditions;

- greater difficulty in staffing and managing foreign operations; and

- fluctuating currency exchange rates.

IF WE ARE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY, WE MAY LOSE A VALUABLE
ASSET, EXPERIENCE REDUCED MARKET SHARE, OR INCUR COSTLY LITIGATION TO PROTECT
OUR RIGHTS.

Our success depends, in part, upon our intellectual property rights. To
date, we have relied primarily on a combination of trade secret and trademark
laws, and nondisclosure and other

11
<PAGE>
contractual restrictions on copying and distribution to protect our proprietary
technology. Litigation to enforce our intellectual property rights or protect
our trade secrets could result in substantial costs and may not be successful.
Any inability to protect our intellectual property rights could seriously harm
our business, operating results and financial condition. In addition, the laws
of certain foreign countries may not protect our intellectual property rights to
the same extent as do the laws of the United States. Our means of protecting our
intellectual property rights in the United States or abroad may not be adequate
to fully protect our intellectual property rights. Others may develop
technologies that are similar or superior to our technology or design around the
copyrights and trade secrets we own.

THIRD-PARTY CLAIMS THAT WE INFRINGE UPON THEIR INTELLECTUAL PROPERTY RIGHTS
COULD BE COSTLY TO DEFEND OR SETTLE.

We cannot be certain that our product does not infringe upon issued patents
or other intellectual property rights of others. Because patent applications in
the United States are not publicly disclosed until the patent is issued,
applications of which we are not aware may have been filed that relate to our
software. We expect that software products may be increasingly subject to
third-party infringement claims as the number of competitors in our industry
segment grows and the functionality of products and services in different
industry segments overlaps. We may from time to time encounter disputes over
rights and obligations concerning intellectual property and third parties may
bring claims of infringement against us. These claims may or may not have merit.
Any litigation to defend against claims of infringement or invalidity could
result in substantial costs, product shipment delays and diversion of resources.
Furthermore, a party making a claim could secure a judgment that requires us to
pay substantial damages. A judgment could also include an injunction or other
court order that could prevent us from selling our product. Our business,
operating results and financial condition could be harmed if any of these events
occurred.

In addition, we have agreed, and may agree in the future, to indemnify
certain of our customers against claims that our product infringes upon the
intellectual property rights of others. We could incur substantial costs in
defending ourselves and our customers against infringement claims. In the event
of a claim of infringement, we and our customers may be required to obtain one
or more licenses from third parties. We, or our customers, may be unable to
obtain necessary licenses from third parties at a reasonable cost, or at all.

Defense of any lawsuit or failure to obtain any potentially required
licenses could harm our business, operating results and financial condition.

IF WE BECOME SUBJECT TO SERVICE-RELATED LIABILITY CLAIMS, THEY COULD BE
TIME-CONSUMING AND COSTLY TO DEFEND.

Since our customers may use our product for mission-critical applications
such as communication, internet commerce and collaboration, errors, defects or
other performance problems could result in financial or other damages to our
customers. They could seek damages for losses from us, which, if successful,
could have a material adverse effect on our business, operating results or
financial condition. Although our agreements with our customers typically
contain provisions designed to limit our exposure to service-related liability
claims, existing or future laws or unfavorable judicial decisions could negate
these limitation of liability provisions. A service-related liability claim
brought against us, even if unsuccessful, could be time-consuming and costly to
defend and could harm our reputation.

12
<PAGE>
WE HAVE NO EXPERIENCE ACQUIRING COMPANIES, AND ANY ACQUISITIONS WE UNDERTAKE
COULD LIMIT OUR ABILITY TO MAINTAIN OUR BUSINESS, RESULT IN ADVERSE ACCOUNTING
TREATMENT AND BE DIFFICULT TO INTEGRATE INTO OUR BUSINESS.

To remain competitive, we may acquire or invest in additional businesses,
products or technologies. We have no experience in acquiring businesses or
complementary technologies. Acquisitions, in general, involve numerous risks,
including:

- diversion of our management's attention;

- amortization of substantial goodwill, adversely affecting our reported
results of operations;

- inability to retain the management, key personnel and other employees of
the acquired business;

- inability to assimilate the operations, products, technologies and
information systems of the acquired business with our business; and

- inability to retain the acquired company's customers, suppliers and other
partners.

Also, if we issue additional equity securities as consideration our
stockholders could experience dilution and the market price of our stock may
decline.

RISKS RELATING TO OUR INDUSTRY

OUR MARKET IS SUBJECT TO RAPID TECHNOLOGICAL CHANGE AND OUR FUTURE SUCCESS WILL
DEPEND ON OUR ABILITY TO MEET THE CHANGING NEEDS OF OUR INDUSTRY.

Our market is characterized by rapidly changing technology, evolving
industry standards, frequent new product introductions and enhancements and
changing customer demands. To be successful, we must adapt to our rapidly
changing market by offering products and services that incorporate leading
technology and respond to technological advances and emerging industry standards
and practices on a timely cost-effective basis. Our business could be harmed if
we incur significant costs without adequate results, or if we are unable to
adapt rapidly to these changes.

OUR BUSINESS DEPENDS ON CONTINUED ADOPTION OF THE INTERNET AS A METHOD OF
CONDUCTING BUSINESS AND COMMUNICATIONS.

The market for our software is relatively new and is evolving rapidly. Our
business depends upon the widespread acceptance and use of the internet as an
effective medium for employee and business-to-business communication, commerce
and collaboration. The failure of the internet to continue to develop as a
commercial or business medium could harm our business, operating results and
financial condition. The acceptance and use of the internet for employee and
business-to-business communication, commerce and collaboration could be limited
by a number of factors, such as the growth and use of the internet in general,
the relative ease of communication, commerce and collaboration on the internet,
the efficiencies and improvements that the internet provides, concerns about
transaction security and taxation of transactions on the internet.

OUR BUSINESS DEPENDS ON THE GROWING USE OF WIRELESS DEVICES TO CONDUCT BUSINESS
AND COMMUNICATIONS.

Our future success depends in part upon the widespread acceptance and use of
wireless devices such as mobile telephones and hand-held organizers to provide
access to business information and applications. There can be no assurance that
the continuously evolving wireless technologies will be developed according to
anticipated schedules, that they will perform according to expectations or that
they will achieve commercial acceptance within the timeframe that we anticipate.
The failure of vendor performance or technology performance to meet expectations
or the failure of a technology to achieve commercial acceptance could harm our
business, operating results and financial condition. In addition,

13
<PAGE>
our future success depends upon the acceptance of emerging technical standards
for wireless technology.

WE DEPEND ON THE SPEED AND RELIABILITY OF THE INTERNET, OUR CUSTOMERS' INTERNAL
NETWORKS AND WIRELESS TRANSMISSION.

The recent growth in internet traffic and wireless data transmission has
caused frequent periods of decreased performance. If internet and wireless
device usage continue to grow rapidly, those infrastructures may not be able to
support these demands and their performance and reliability may decline. If
outages or delays on the internet occur frequently or increase in frequency,
business-to-business communication, commerce and collaboration markets could
grow more slowly or decline, which may reduce the demand for our solution. The
ability of Coreport to satisfy our customers' needs is ultimately limited by and
depends upon the speed and reliability of both the internet, our customers'
internal networks and wireless transmission.

INCREASED INFORMATION SECURITY RISKS MAY DETER FUTURE USE OF OUR PRODUCT.

A fundamental requirement to conduct internet and wireless
business-to-business communication, commerce and collaboration is the secure
transmission of confidential information over public networks. Advances in
computer capabilities, new discoveries in the field of cryptography, or other
developments may result in a compromise or breach of the security features
contained in our services or the algorithms used by our customers and their
business partners to protect content and transactions or proprietary information
in our customers' and their business partners' databases. Anyone who is able to
circumvent security measures could misappropriate proprietary, confidential
customer information or cause interruptions in our customers' and their business
partners' operations. Our customers and their business partners may be required
to incur significant costs to protect against security breaches or to alleviate
problems caused by breaches, reducing their demand for our solution. Further, a
well-publicized compromise of security could deter businesses from using the
internet to conduct transactions that involve transmitting confidential
information. The failure of the security features of our services to prevent
security breaches, or well publicized security breaches affecting the internet
in general, could significantly harm our business, operating results and
financial condition.

INTERNET-RELATED LAWS COULD LIMIT THE MARKET FOR OUR PRODUCT.

Regulation of the internet is largely unsettled. The adoption of laws or
regulations that increase taxes or other costs or administrative burdens of
doing business using the internet could cause companies to seek an alternative
means of doing business. If the adoption of new internet laws or regulations
causes companies to seek alternative methods for conducting business, the demand
for our solution could decrease and our business could be adversely affected.

RISKS RELATING TO THIS OFFERING

OUR SECURITIES HAVE NO PRIOR MARKET, AND OUR STOCK PRICE MAY DECLINE AFTER THIS
OFFERING.

Before this offering, there has not been a public market for our common
stock. An active public market for our common stock may not develop or be
sustained after this offering. The initial public offering price will be
established after negotiations with the representatives of the underwriters. The
trading prices of many technology companies' stocks reflect price to earnings
ratios substantially above historic levels. We cannot be certain that these
trading prices or price to earnings ratios will be sustained. The trading market
price of our common stock may decline below our initial public offering price.

14
<PAGE>
THE PRICE OF OUR COMMON STOCK WILL BE PARTICULARLY SUBJECT TO VOLATILITY BECAUSE
OF THE INDUSTRY THAT WE ARE IN.

The stock market, and specifically the stock prices of internet-related and
software companies, has been very volatile. This volatility is often not related
or disproportionate to the operating performance of the companies. Prices for
the common stock will be determined in the marketplace and may be influenced by
many factors, including variations in our financial results, changes in earnings
estimates by industry analysts, investors' perceptions of us and general
economic, industry and market conditions. This broad market and industry
volatility may reduce the price of our common stock, regardless of our operating
performance. Due to this volatility, the market price of our common stock could
significantly decrease.

FUTURE SALES OF OUR COMMON STOCK MAY DEPRESS OUR STOCK PRICE, WHICH COULD LIMIT
OUR ABILITY TO RAISE CAPITAL AND UNDERTAKE ACQUISITIONS.

Based on the number of our shares outstanding as of May 25, 2000, we will
have shares of our common stock outstanding upon completion of this
offering. Our directors, executive officers and substantially all of our
stockholders have executed lock-up agreements that prevent them from selling
shares of our common stock for a period of 180 days after the date of this
prospectus without the prior written approval of Donaldson, Lufkin & Jenrette
Securities Corporation, subject to limited exceptions. When these lock-up
agreements expire, these shares and the shares of common stock underlying any
options held by these individuals will become eligible for sale, in some cases
subject only to the volume, manner of sale and notice requirements of Rule 144
of the Securities Act of 1933. If substantial amounts of our common stock were
to be sold in the public market following the expiration of the lock-up
agreements, the market price of our common stock could fall. These sales could
introduce a large number of sellers of our common stock into a market in which
the common stock price is already volatile, thus driving our common stock price
down. In addition, the sales could create the perception to the public of
difficulties or problems with our product. As a result, these sales could impair
our ability to raise capital through the sale of additional equity or
equity-related securities and undertake acquisitions through the issuance of
additional equity securities at a time and price that we consider appropriate.
For a more detailed discussion of shares eligible for sale after the offering,
see "Shares Eligible for Future Sale."

BECAUSE CERTAIN EXISTING STOCKHOLDERS OWN A LARGE PERCENTAGE OF OUR VOTING
STOCK, OTHER STOCKHOLDERS' VOTING POWER MAY BE LIMITED.

Following the completion of this offering, it is anticipated that our
executive officers, directors and their affiliates will beneficially own or
control approximately % of our common stock. In combination with entities
owning 5.0% or more of our outstanding shares of common stock, this group
currently beneficially owns 8,558,994 shares of common stock, or approximately
74.7% of the outstanding shares of our stock. As a result, if those stockholders
act together, they will have the ability to control all matters submitted to our
stockholders for approval, including the election and removal of directors and
the approval of any merger, consolidation or sale of all or substantially all of
our assets. These stockholders may make decisions that are adverse to your
interests. See our discussion under the caption "Principal Stockholders" for
more information about ownership of our outstanding shares.

WE HAVE BROAD DISCRETION TO USE THE OFFERING PROCEEDS AND WE HAVE NOT IDENTIFIED
THE SPECIFIC USES OF THESE FUNDS.

We currently intend to use the net proceeds from this offering for general
corporate purposes, including working capital. We may also use a portion of the
proceeds to expand our business through strategic alliances and acquisitions. We
have not yet determined the amount of net proceeds to be used for any specific
purpose. As a result, you will not have an opportunity to evaluate the economic,

15
<PAGE>
financial or other information on which we base our decisions on how to use the
proceeds from this offering. The proceeds may be invested in ways that do not
yield favorable returns. See "Use of Proceeds" for more information about how we
plan to use our proceeds from this offering.

ANTI-TAKEOVER PROVISIONS IN OUR CHARTER DOCUMENTS AND DELAWARE LAW COULD PREVENT
OR DELAY A CHANGE IN CONTROL OF OUR COMPANY.

Our amended and restated certificate of incorporation and amended and
restated bylaws may discourage, delay or prevent a merger or acquisition that a
stockholder may consider favorable by:

- authorizing the issuance of "blank check" preferred stock;

- classifying our board of directors into three classes that serve staggered
three-year terms;

- prohibiting cumulative voting in the election of directors;

- limiting the persons who may call special meetings of stockholders;

- prohibiting stockholder action by written consent; and

- establishing advance notice requirements for nominations for election to
the board of directors or for proposing matters that can be acted on at
stockholder meetings.

Some provisions of Delaware law may also discourage, delay or prevent
someone from acquiring or merging with us. For a detailed description of the
anti-takeover provisions in our charter documents, please turn to the sections
titled "Description of Capital Stock--Anti-Takeover Provisions of Delaware Law
and Charter and Bylaws Provisions."

16
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements. These statements relate
to future events or our future financial performance. We have attempted to
identify forward-looking statements by terminology including "anticipate,"
"believe," "can," "continue," "could," "estimate," "expect," "intend," "may,"
"plan," "potential," "predict," "should" or "will" or the negative of these
terms or other comparable terminology. These statements are only predictions and
involve known and unknown risks, uncertainties and other factors, including the
risks and uncertainties outlined under "Risk Factors," that may cause our or our
industry's actual results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. We are not under any duty to update any
of the forward-looking statements after the date of this prospectus to conform
these statements to actual results, unless required by law.

17
<PAGE>
USE OF PROCEEDS

Our net proceeds from the sale of the shares of common stock we are
offering, at an assumed initial public offering price of $ per share, are
estimated to be approximately $ million after deducting underwriting discounts
and estimated offering expenses payable by us. We expect to use the net proceeds
for working capital and other general corporate purposes, including the
expansion of our sales and marketing as well as research and development
activities.

The amounts and timing of our actual expenditures will depend upon numerous
factors, including the status of our product development and commercialization
efforts, the amount of proceeds actually raised in this offering, the amount of
cash generated by our operations, competition and sales and marketing
activities. We may also use a portion of the proceeds for the acquisition of, or
investment in, companies, technologies or assets that complement our business.
However, we have no present understandings, commitments or agreements to enter
into any potential acquisitions or investments. Further, we have not determined
the amounts we plan to spend on any of the areas listed above or the timing of
these expenditures. As a result, our management will have broad discretion to
allocate the net proceeds from this offering. Pending application of the net
proceeds as described above, we intend to invest the net proceeds of the
offering in short-term investment grade and U.S. government securities.

DIVIDEND POLICY

We have never paid cash dividends on our common stock or any other
securities. We anticipate that we will retain all of our future earnings, if
any, for use in the expansion and operation of our business and do not
anticipate paying cash dividends in the foreseeable future.

CORPORATE INFORMATION

We were organized in March 1996 as a Delaware limited liability company, as
an affiliate of Cambridge Technology Partners, Inc., or CTP, and were
subsequently spun off in August 1996. In May 1997, we changed our form of
organization to a corporation. Our principal executive office is located at 260
Franklin Street, Suite 1890, Boston, Massachusetts 02110, and our telephone
number is (617) 204-3300. Our web site is WWW.CORECHANGE.COM. The information
contained on our web site is not a part of this prospectus.

CORECHANGE is a registered trademark owned by us. We have filed trademark
applications for COREALIGN and COREPORT. All other trademarks and trade names
used in the prospectus are the property of their respective owners.

18
<PAGE>
CAPITALIZATION

The following table sets forth our capitalization as of March 31, 2000:

- on an actual basis; and

- on a pro forma as adjusted basis to reflect the conversion of all our
outstanding shares of convertible preferred stock into shares of common
stock and the application of the estimated net proceeds from the sale of
common stock in this offering assuming an initial public offering price of
$ per share, after deducting the underwriting discounts and estimated
offering expenses payable by us.

<TABLE>
<CAPTION>
AS OF MARCH 31, 2000
---------------------------
PRO FORMA AS
ACTUAL ADJUSTED
(IN THOUSANDS, EXCEPT SHARE
AND PER SHARE DATA)
<S> <C> <C>
Cash and cash equivalents................................... $ 13,144 $
======== ========
Notes payable, current...................................... $ 72 $
======== ========
Series A and B redeemable convertible preferred stock,
$0.01 par value; 6,884,598 shares authorized and
5,931,371 shares issued and outstanding, actual;
no shares authorized, issued or outstanding, pro forma as
adjusted.................................................. $ 32,659 $ --
Stockholders' equity (deficit):
Series I, II and III convertible preferred stock, $0.01
par value; 964,986 shares authorized and 950,018 shares
issued and outstanding, actual; no shares authorized,
issued or outstanding, pro forma as adjusted............ 6,542 --
Preferred stock, $0.01 par value; 5,000,000 shares
authorized, pro forma as adjusted; no shares issued or
outstanding, pro forma as adjusted...................... -- --
Common stock, $0.01 par value; 15,000,000 shares
authorized, 4,173,819 shares issued and outstanding,
actual; 45,000,000 shares authorized, shares
issued and outstanding, pro forma as adjusted........... 42
Additional paid-in capital.................................. 1,027
Deferred stock-based compensation........................... (1,075)
Accumulated deficit......................................... (25,706)
Cumulative translation adjustment........................... (46)
-------- --------
Total stockholders' equity (deficit)...................... (19,216) $
-------- --------
Total capitalization................................ $ 13,443 $
======== ========
</TABLE>

This table does not include:

- 975,593 shares issuable on the exercise of options outstanding as of
March 31, 2000 with a weighted average exercise price of $1.52 per share;

- 120,191 shares issuable upon exercise of an outstanding warrant at an
exercise price of $4.99 per share; or

- 27,334 additional shares available for issuance and grant under our stock
incentive plans as of March 31, 2000.

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<PAGE>
DILUTION

The pro forma net tangible book value of our common stock as of March 31,
2000 was $13.4 million, or $1.22 per share, after giving effect to the
conversion of all outstanding shares of convertible preferred stock into shares
of common stock upon the closing of this offering. Pro forma net tangible book
value per share represents the amount of our total tangible assets less total
liabilities, divided by the pro forma number of shares of common stock
outstanding, after giving effect to the conversion of all outstanding shares of
convertible preferred stock into shares of common stock. After giving effect to
the sale of the shares of common stock being offered at an assumed initial
public offering price of $ per share, and after deducting the
underwriting discounts and estimated offering expenses payable by us, our
adjusted pro forma net tangible book value at March 31, 2000 would have been
approximately $ million, or approximately $ per share. This represents
an immediate increase in pro forma net tangible book value per share of $
to existing stockholders and dilution in pro forma net tangible book value per
share of $ to new investors who purchase shares of common stock in this
offering. The following table illustrates this dilution on a per share basis:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $
Pro forma net tangible book value per share as of March 31,
2000...................................................... $1.22
Increase attributable to new investors......................
-----
Pro forma net tangible book value per share after this
offering..................................................
-----
Dilution per share to new investors......................... $
=====
</TABLE>

The following table summarizes, on a pro forma basis, as of March 31, 2000,
the differences between the number of shares of common stock purchased, the
total consideration paid and the average price per share paid by existing
stockholders and by the new investors purchasing shares in this offering. The
calculation below is based on an assumed initial public offering price of
$ per share, before deducting underwriting discounts and estimated offering
expenses.

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
--------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- -------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders.... 11,055,208 % $37,724,633 % $3.41
New investors............
---------- --- ----------- ---
Total.................... 100% $ -- 100%
========== === =========== ===
</TABLE>

This discussion and the tables above assume no exercise of any stock options
or warrants outstanding as of March 31, 2000. As of March 31, 2000, there were
975,593 shares of common stock issuable upon exercise of outstanding stock
options at a weighted average exercise price of $1.52 per share and 120,191
shares of common stock issuable upon exercise of an outstanding warrant at an
exercise price of $4.99 per share. To the extent that any of these options and
warrants are exercised in the future, there will be further dilution to new
investors.

20
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA

The statements of operations data for the years ended December 31, 1997 and
1998 and the balance sheet data as of December 31, 1998 have been derived from
our audited consolidated financial statements included elsewhere in this
prospectus that have been audited by Ernst & Young LLP, independent auditors.
The statement of operations data for the year ended December 31, 1999 and
balance sheet data as of December 31, 1999 have been derived from our audited
consolidated financial statements included elsewhere in this prospectus that
have been audited by Arthur Andersen LLP, independent public accountants. The
statements of operations data for the period from our inception, March 14, 1996,
through December 31, 1996 and the balance sheet data as of December 31, 1996 and
1997 have been derived from our audited consolidated financial statements which
are not included in this prospectus. The statement of operations data for the
three months ended March 31, 1999 and 2000 and the balance sheet data as of
March 31, 2000 are derived from our unaudited consolidated financial statements
included elsewhere in this prospectus. The pro forma net loss per share data
reflect the conversion of our outstanding convertible preferred stock upon
closing of this offering. Our historical results are not necessarily indicative
of results to be expected from any future period. The data presented below have
been derived from financial statements that have been prepared in accordance
with generally accepted accounting principles and should be read with our
financial statements, including the accompanying notes, and with "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this prospectus.

<TABLE>
<CAPTION>
THREE MONTHS
PERIOD FROM ENDED
INCEPTION YEAR ENDED DECEMBER 31, MARCH 31,
THROUGH ------------------------------ -------------------
DECEMBER 31, 1996 1997 1998 1999 1999 2000
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Revenues:
Software licenses........................... $ 844 $ 1,054 $ 1,004 $ 926 $ 204 $ 601
Services.................................... 127 1,864 4,657 4,340 1,079 546
------- ------- ------- -------- ------- --------
Total revenues.......................... 971 2,918 5,661 5,266 1,283 1,147
Cost of revenues(1)........................... 1,170 1,606 3,746 3,125 793 473
------- ------- ------- -------- ------- --------
Gross profit............................ (199) 1,312 1,915 2,141 490 674
Operating expenses:
Sales and marketing(1)...................... 1,335 2,437 3,914 2,845 607 1,276
Research and development(1)................. -- 1,240 1,768 1,344 260 500
General and administrative(1)............... 610 1,915 3,489 2,531 620 1,117
Acquired in-process technologies............ -- 4,500 -- -- -- --
Stock-based compensation.................... -- -- 208 -- 151
Restructuring costs......................... -- -- 403 -- -- --
------- ------- ------- -------- ------- --------
Total operating expenses................ 1,945 10,092 9,574 6,928 1,487 3,044
------- ------- ------- -------- ------- --------
Operating loss.......................... (2,144) (8,780) (7,659) (4,787) (997) (2,370)
Interest expense.............................. (75) (219) (16) (43) (11) (45)
Interest income............................... 26 24 246 48 23 88
------- ------- ------- -------- ------- --------
Net loss................................ (2,193) (8,975) (7,429) (4,782) (985) (2,327)
Accretion and dividends on preferred stock.... -- -- (61) (61) (15) (4,460)
------- ------- ------- -------- ------- --------
Net loss attributable to common
stockholders.......................... $(2,193) $(8,975) $(7,490) $ (4,843) $(1,000) $ (6,787)
======= ======= ======= ======== ======= ========
Net loss per share:
Basic and diluted net loss per share........ $ (0.91) $ (3.36) $ (2.04) $ (1.29) $ (0.26) $ (1.65)
======= ======= ======= ======== ======= ========
Basic and diluted weighted average common
shares outstanding........................ 2,400 2,669 3,664 3,754 3,775 4,102
======= ======= ======= ======== ======= ========
Pro forma net loss per share:
Pro forma basic and diluted net loss per
share..................................... $ (0.63) $ (0.69)
======== ========
Pro forma basic and diluted weighted average
common shares outstanding................. 7,589 9,358
======== ========
</TABLE>

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

(1) Amounts exclude amortization of deferred stock-based compensation, which is
reported above as a separate operating expense.

21
<PAGE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF
---------------------------------------------- MARCH 31,
1996 1997 1998 1999 2000
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.......................... $ 68 $ 748 $ 2,890 $ 2,102 $ 13,144
Working capital.................................... (1,288) (1,561) 2,348 (1,900) 12,888
Total assets....................................... 1,589 3,423 4,866 3,644 15,040
Redeemable convertible preferred stock............. -- -- 11,573 11,634 32,659
Total stockholders' equity (deficit)............... (973) (912) (8,401) (13,018) (19,216)
</TABLE>

22
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ WITH "SELECTED
CONSOLIDATED FINANCIAL DATA" AND OUR CONSOLIDATED FINANCIAL STATEMENTS AND THE
RELATED NOTES INCLUDED ELSEWHERE IN THIS PROSPECTUS. THE DISCUSSION IN THIS
PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES, SUCH AS STATEMENTS OF OUR PLANS, OBJECTIVES, EXPECTATIONS AND
INTENTIONS. THE CAUTIONARY STATEMENTS MADE IN THIS PROSPECTUS REGARDING
FORWARD-LOOKING STATEMENTS SHOULD BE READ AS APPLYING TO ALL RELATED
FORWARD-LOOKING STATEMENTS WHEREVER THEY APPEAR IN THIS PROSPECTUS. OUR ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED HERE. FACTORS THAT COULD
CAUSE OR CONTRIBUTE TO THESE DIFFERENCES INCLUDE THOSE DISCUSSED IN "RISK
FACTORS," AS WELL AS THOSE DISCUSSED ELSEWHERE IN THIS PROSPECTUS. PLEASE READ
"RISK FACTORS" AND "SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS."

OVERVIEW

We were organized in March 1996 as an affiliate of Cambridge Technology
Partners to develop methodologies and technologies for the enterprise-wide
deployment of software applications. We were spun off in August 1996 in order to
focus exclusively on the development and commercialization of these
methodologies and technologies.

In June 1997, we introduced our initial Microsoft Windows-based software
product. This product required us to provide our customers with significant
implementation and support services. In late 1998, we shifted our efforts to the
development of internet-based solutions that would provide us with additional
growth opportunities. In August 1999, we introduced Coreport, our internet-based
software product, and in December 1999, we discontinued sales of our initial
product. We did not realize any material revenues from Coreport until the first
quarter of 2000.

Our revenues were $2.9 million, $5.7 million and $5.3 million in 1997, 1998
and 1999, respectively, and $1.1 million for the three months ended March 31,
2000 and consisted of software license revenue and services revenue. Software
license revenue is derived from licensing our software to our customers and the
customers of our distribution partners. Services revenue is attributable to the
implementation, maintenance and other support services related to the licensing
of our software.

Software license revenue is recognized upon the execution of a license
agreement, delivery of the software to a customer and determination that
collection of a fixed license fee is probable. We use the residual method when
fair value does not exist for one of the delivered elements in a license
arrangement. Under the residual method, the fair value of the undelivered
elements is deferred and subsequently recognized. We have established sufficient
vendor specific objective evidence for professional services, training and
maintenance and support services based on the price charged when these elements
are sold separately. Accordingly, software license revenue is recognized under
the residual method in arrangements in which software is licensed with
professional services, training and maintenance and support services.

Services revenue from implementation services and training is recognized as
the services are performed for time and material contracts or on a
percentage-of-completion basis for fixed-price contracts. Services revenue from
maintenance and customer support fees is recognized ratably over the term of the
maintenance contract on a straight-line basis.

We license our products to customers in the United States, Canada and
Europe. Revenue from customers in the United States represented approximately
49%, 22% and 35% of total revenues for

23
<PAGE>
1997, 1998 and 1999, respectively, and 53% for the three months ended March 31,
2000. We anticipate that revenue from customers in the United States will
represent an increasing percentage of our total revenues in the future. Our top
five customers accounted for 61% and 56% of total revenues in 1999 and for the
three months ended March 31, 2000, respectively. Manor Bakeries accounted for
40% of our total revenues in 1999, and Spartanburg Health Systems and the City
of Stockholm accounted for 20% and 13%, respectively, of our total revenues for
the three months ended March 31, 2000. We market our software and related
services primarily through our direct sales organization and have recently
established indirect distribution relationships in the United States and
internationally.

In February 1997, we acquired from CTP, for a purchase price of
$4.5 million, methodologies previously licensed from CTP relating to technology
that we used to develop our initial Microsoft Windows-based software product.
The costs of these software rights were expensed as acquired in-process
technologies because the related technology was not at the point of
technological feasibility and had no alternative future use at the date of
acquisition.

In connection with certain stock option grants and restricted stock
issuances in 1999 and for the three months ended March 31, 2000, we recorded
deferred stock-based compensation totaling approximately $0.8 million and
$0.7 million, respectively. The deferred compensation represents the aggregate
difference between the option exercise price or the restricted stock issuance
price and the deemed fair value of the common stock on the date of grant for
accounting purposes. The deferred compensation will be recognized as expense
over the vesting period of the underlying stock options and restricted stock. We
recognized compensation expense of $0.2 million in 1999 and $0.2 million for the
three months ended March 31, 2000 related to these options and restricted stock.
Future non-cash amortization of the deferred compensation is expected through
2003.

In February 2000, we issued 3,046,773 shares of Series B convertible
preferred stock. Upon the closing of this offering, all outstanding shares of
Series B convertible preferred stock will automatically convert into 3,046,773
shares of common stock, resulting in an effective purchase price of $5.837 per
common share. The difference between the effective purchase price of the common
stock and the deemed fair value of the common stock on the date of issuance of
the Series B convertible preferred stock for accounting purposes resulted in a
beneficial conversion feature of $4.2 million, which is reflected as a dividend
in the three months ended March 31, 2000.

As of March 31, 2000, we had an accumulated deficit of approximately
$25.7 million. Our net loss was $9.0 million, $7.4 million and $4.8 million in
1997, 1998 and 1999, respectively, and $2.3 million for the three months ended
March 31, 2000. These losses resulted from costs incurred in the development and
sale of our products and services. We expect to increase our sales personnel,
marketing expenses and services and operating expenses. As a result, we expect
to incur additional losses and will need to generate significant additional
revenues to achieve and maintain profitability in the future.

24
<PAGE>
RESULTS OF OPERATIONS

The following table sets forth our results of operations as a percentage of
total revenues:

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
-------------------------------- --------------------
1997 1998 1999 1999 2000
<S> <C> <C> <C> <C> <C>
Revenues:
Software licenses............................ 36.1% 17.7% 17.6% 15.9% 52.4%
Services..................................... 63.9 82.3 82.4 84.1 47.6
------ ------ ------ ----- ------
Total revenues........................... 100.0 100.0 100.0 100.0 100.0
------ ------ ------ ----- ------
Cost of revenues............................... 55.0 66.2 59.3 61.8 41.2
------ ------ ------ ----- ------
Gross profit................................... 45.0 33.8 40.7 38.2 58.8
Operating expenses:
Sales and marketing.......................... 83.5 69.1 54.0 47.3 111.2
Research and development..................... 42.5 31.2 25.5 20.3 43.6
General and administrative................... 65.7 61.7 48.1 48.3 97.4
Acquired in-process technologies............. 154.2 -- -- -- --
Stock-based compensation..................... -- -- 4.0 -- 13.2
Restructuring costs.......................... -- 7.1 -- -- --
------ ------ ------ ----- ------
Total operating expenses................. 345.9 169.1 131.6 115.9 265.4
------ ------ ------ ----- ------
Operating loss................................. (300.9) (135.3) (90.9) (77.7) (206.6)
Interest income (expense), net................. (6.7) 4.1 0.1 0.9 3.7
------ ------ ------ ----- ------
Net loss....................................... (307.6)% (131.2)% (90.8)% (76.8)% (202.9)%
====== ====== ====== ===== ======
</TABLE>

THREE MONTHS ENDED MARCH 31, 1999 AND 2000

REVENUES

TOTAL REVENUES. Total revenues were $1.3 million and $1.1 million for the
three months ended March 31, 1999 and 2000, respectively, representing a
decrease of $0.2 million, or 10.6%.

SOFTWARE LICENSES. Software license revenue was $0.2 million and
$0.6 million for the three months ended March 31, 1999 and 2000, respectively,
representing an increase of $0.4 million, or 194.6%. The increase in software
license revenue was primarily due to our introduction of Coreport in the second
half of 1999.

SERVICES. Services revenue was $1.1 million and $0.5 million for the three
months ended March 31, 1999 and 2000, respectively, representing a decrease of
$0.6 million, or 49.4%. The decrease in services revenue was primarily due to
the discontinuation of implementation services for our initial product in 1999.
In future periods, we expect services revenue to continue to decrease as a
percentage of total revenues.

COST OF REVENUES

Cost of revenues consists principally of personnel costs and third-party
consulting fees associated with implementation, customization, maintenance and
other customer support services. Cost of revenues also includes the costs of the
media in which the software is delivered, although these costs are not
significant. Cost of revenues was $0.8 million and $0.5 million for the three
months ended March 31, 1999 and 2000, respectively, representing a decrease of
$0.3 million, or 40.4%. Cost of revenues was 61.8% and 41.2% of total revenues
for the three months ended March 31, 1999 and 2000, respectively. The decrease
was primarily due to reduced implementation costs associated with Coreport as
compared to our initial product.

25
<PAGE>
OPERATING EXPENSES

SALES AND MARKETING. Sales and marketing expenses consist principally of
salaries, commissions, bonuses, travel, public relations, marketing materials
and trade shows relating to the sales and marketing of our products. Sales and
marketing expenses were $0.6 million and $1.3 million for the three months ended
March 31, 1999 and 2000, respectively, representing an increase of
$0.7 million, or 110.2%. Sales and marketing expenses as a percentage of total
revenues were 47.3% and 111.2% for the three months ended March 31, 1999 and
2000, respectively. The increase in sales and marketing expenses was primarily
due to an increase in the number of sales and marketing personnel and the cost
of recruiting this personnel. We intend to continue to invest resources to
expand our direct sales force and other distribution channels, and to conduct
marketing programs to support our existing and new product offerings. As a
result, we expect sales and marketing expenses to continue to increase in future
periods.

RESEARCH AND DEVELOPMENT. Research and development expenses consist
principally of personnel and related expenses associated with the development of
new products, the enhancement of existing products and quality assurance and
testing costs incurred prior to commercial production. Research and development
expenses were $0.3 million and $0.5 million for the three months ended
March 31, 1999 and 2000, respectively, representing an increase of
$0.2 million, or 92.3%. Research and development expenses as a percentage of
total revenues were 20.3% and 43.6% for the three months ended March 31, 1999
and 2000, respectively. The increase in research and development expenses was
primarily due to an increase in the number of employees and contractors. We
anticipate that research and development expenses will increase in future
periods as we hire additional personnel and expand our product development
activities. To date, all research and development expenses have been charged as
incurred.

GENERAL AND ADMINISTRATIVE. General and administrative expenses consist
principally of salaries and other related costs for finance and human resource
employees, as well as accounting, legal and other professional fees. General and
administrative expenses were $0.6 million and $1.1 million for the three months
ended March 31, 1999 and 2000, respectively, representing an increase of
$0.5 million, or 80.2%. General and administrative expenses as a percentage of
total revenues were 48.3% and 97.4% for the three months ended March 31, 1999
and 2000, respectively. The increase in general and administrative expenses was
primarily due to increased personnel costs and associated expenses necessary to
manage and support the growth of our organization. We anticipate that our
general and administrative expenses will continue to increase as we continue to
expand our administrative staff and facilities to support our growing
operations.

STOCK-BASED COMPENSATION. We recorded deferred stock-based compensation of
$0.8 million for the three months ended March 31, 2000, relating to stock
options granted to employees and consultants. Such amounts represent the
difference between the exercise price and the deemed fair value of our common
stock at the date of grant. These amounts are being amortized over the vesting
periods of the granted options. We recognized stock-based compensation expense
of $0.2 million in the three months ended March 31, 2000. We had no deferred
stock compensation relating to stock options granted to employees or consultants
for the three months ended March 31, 1999.

INTEREST EXPENSE, NET. Interest expense, net consists of interest income,
interest expense and other non-operating expenses. Interest expense, net
fluctuates based on the amount of cash balances available for investment and
interest expense related to our notes payable.

YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999

REVENUES

TOTAL REVENUES. Total revenues were $2.9 million, $5.7 million and
$5.3 million in 1997, 1998 and 1999, respectively, representing an increase of
$2.8 million, or 94.0%, from 1997 to 1998 and representing a decrease of
$0.4 million, or 7.0%, from 1998 to 1999.

26
<PAGE>
SOFTWARE LICENSES. Software license revenue was $1.1 million, $1.0 million
and $0.9 million in 1997, 1998 and 1999, representing a decrease of
$0.1 million, or 4.7%, from 1997 to 1998 and a decrease of $0.1 million, or
7.8%, from 1998 to 1999. The decrease in software license revenue from 1997 to
1998 was primarily due to lower than expected demand for our initial product.
The decrease in software license revenue from 1998 to 1999 was primarily due to
a reduced emphasis on our initial product as we developed and introduced
Coreport.

SERVICES. Services revenue was $1.9 million, $4.7 million and $4.3 million
in 1997, 1998 and 1999, respectively, representing an increase of $2.8 million,
or 149.8%, from 1997 to 1998 and a decrease of $0.4 million, or 6.8%, from 1998
to 1999. The increase in services revenue from 1997 to 1998 was primarily due to
implementation services we provided to our customers related to our initial
product. Additionally, we began operations in the United Kingdom in late 1997,
and only began to realize material services revenue in 1998. The decrease in
services revenue from 1998 to 1999 was primarily due to reduced implementation
services provided to customers that licensed our initial product.

COST OF REVENUES

Cost of revenues was $1.6 million, $3.7 million and $3.1 million in 1997,
1998 and 1999, respectively, representing an increase of $2.1 million, or
133.3%, from 1997 to 1998 and a decrease of $0.6 million, or 16.6%, from 1998 to
1999. Cost of revenues as a percentage of total revenues in 1997, 1998 and 1999
was 55.0%, 66.2% and 59.3%, respectively. The increase in cost of revenues from
1997 to 1998 was primarily due to increases in professional services personnel,
third-party consulting expenses and customer support staffing. The decrease in
cost of revenues from 1998 to 1999 was primarily due to staff reductions in late
1998 and the reduction of implementation services provided to customers that
licensed our initial product.

OPERATING EXPENSES

SALES AND MARKETING. Sales and marketing expenses were $2.4 million,
$3.9 million and $2.8 million in 1997, 1998 and 1999, respectively, representing
an increase of $1.5 million, or 60.6%, from 1997 to 1998 and a decrease of
$1.1 million, or 27.3%, from 1998 to 1999. Sales and marketing expenses as a
percentage of total revenues in 1997, 1998 and 1999 were 83.5%, 69.1% and 54.0%,
respectively. The dollar increase in sales and marketing expenses from 1997 to
1998 was primarily due to the expansion of our sales and marketing organization,
higher sales commissions associated with increased revenues and increased
marketing activities. The decrease in sales and marketing expenses from 1998 to
1999 was primarily due to the reduction in our sales and marketing personnel in
late 1998, which resulted in fewer sales and marketing personnel during 1999, as
well as our efforts to control our sales expenses.

RESEARCH AND DEVELOPMENT. Research and development expenses were
$1.2 million, $1.8 million and $1.3 million in 1997, 1998 and 1999,
respectively, representing an increase of $0.6 million, or 42.6%, from 1997 to
1998 and a decrease of $0.5 million, or 24.0%, from 1998 to 1999. Research and
development expenses as a percentage of total revenues in 1997, 1998 and 1999
were 42.5%, 31.2% and 25.5%, respectively. The dollar increase in research and
development expenses from 1997 to 1998 was primarily due to increased
development personnel and increased consulting expenses. The dollar decrease in
research and development expenses from 1998 to 1999 was primarily due to fewer
development personnel.

GENERAL AND ADMINISTRATIVE. General and administrative expenses were
$1.9 million, $3.5 million, and $2.5 million in 1997, 1998 and 1999,
respectively, representing an increase of $1.6 million, or 82.2%, from 1997 to
1998 and a decrease of $1.0 million, or 27.5%, from 1998 to 1999. General and
administrative expenses as a percentage of total revenues in 1997, 1998 and 1999
were 65.7%, 61.7% and 48.1%, respectively. The dollar increase in general and
administrative expenses from 1997 to 1998 was primarily due to the addition of
six employees in 1998 and expenses related to our expansion. The

27
<PAGE>
decrease in general and administrative expenses from 1998 to 1999 was primarily
due to headcount reductions and a greater focus on cost control across our
organization.

ACQUIRED IN-PROCESS TECHNOLOGIES. In February 1997, we acquired from CTP,
for a purchase price of $4.5 million, methodologies previously licensed from CTP
relating to technology that we used to develop our initial product. Acquired
in-process technologies expense was charged to operations, as the technologies
had not yet reached technological feasibility and did not have alternative
future uses as of the date of the acquisition.

RESTRUCTURING COSTS. In the second half of 1998, we undertook certain
actions to restructure our business and began to focus on developing an
internet-based software product. In conjunction with this restructuring, we
recorded a one-time charge to operations of $0.4 million. We reduced our staff
by 18 employees, approximately 19% of our workforce, representing a charge of
$0.3 million, and terminated a facilities lease, representing a charge of
$0.1 million.

STOCK-BASED COMPENSATION. During 1999 we recorded deferred stock-based
compensation expense of $0.8 million relating to stock options granted to
employees and consultants. We had no deferred stock compensation relating to
stock options granted to employees and consultants in 1997 or 1998. We recorded
stock-based compensation expense of $0.2 million in 1999. There was no
stock-based compensation expense recorded during 1997 or 1998.

QUARTERLY RESULTS OF OPERATIONS

The following table sets forth unaudited quarterly results of operations
data for the five quarters ended March 31, 2000, as well as such data expressed
as a percentage of our total revenues for the periods presented. The information
in the table below should be read in conjunction with our annual audited
consolidated financial statements and related notes included elsewhere in this
prospectus. We have prepared this information on the same basis as our
consolidated financial statements and the information includes all adjustments,
consisting only of normal recurring adjustments, that we consider necessary for
a fair presentation of our financial position and operating results for the
quarters presented. Our quarterly operating results have varied substantially in
the past and may vary substantially in the future. You should not draw any
conclusions about our future results for any period from the results of
operations for any particular quarter.

28
<PAGE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31,
1999 1999 1999 1999 2000
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenues:
Software licenses........... $ 204 $ 473 $ 171 $ 78 $ 601
Services.................... 1,079 1,250 1,267 744 546
------ ------ ------ ------- -------
Total revenues.......... 1,283 1,723 1,438 822 1,147
Cost of revenues(1)........... 793 856 751 725 473
Gross profit............ 490 867 687 97 674
Operating expenses:
Sales and marketing(1)...... 607 650 708 880 1,276
Research and
development(1)............ 260 276 295 513 500
General and
administrative(1)......... 620 545 611 755 1,117
Stock-based compensation.... -- 18 63 127 151
------ ------ ------ ------- -------
Total operating
expenses.............. 1,487 1,489 1,677 2,275 3,044
------ ------ ------ ------- -------
Operating loss................ (997) (622) (990) (2,178) (2,370)
Interest income (expense),
net......................... 12 9 1 (17) 43
------ ------ ------ ------- -------
Net loss...................... $ (985) $ (613) $ (989) $(2,195) $(2,327)
====== ====== ====== ======= =======
</TABLE>

<TABLE>
<CAPTION>
AS A PERCENTAGE OF TOTAL REVENUES
--------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31,
1999 1999 1999 1999 2000
<S> <C> <C> <C> <C> <C>
Revenues:
Software licenses........... 15.9% 27.5% 11.9% 9.5% 52.4%
Services.................... 84.1 72.5 88.1 90.5 47.6
------ ------ ------ ------- -------
Total revenues.......... 100.0 100.0 100.0 100.0 100.0
Cost of revenues(1)........... 61.8 49.7 52.2 88.2 41.2
Gross profit............ 38.2 50.3 47.8 11.8 58.8
Operating expenses:
Sales and marketing(1)...... 47.3 37.8 49.3 107.0 111.2
Research and
development(1)............ 20.3 16.0 20.5 62.4 43.6
General and
administrative(1)......... 48.3 31.6 42.5 91.8 97.4
Stock-based compensation.... -- 1.0 4.4 15.5 13.2
------ ------ ------ ------- -------
Total operating
expenses.............. 115.9 86.4 116.7 276.7 265.4
------ ------ ------ ------- -------
Operating loss................ (77.7) (36.1) (68.9) (264.9) (206.6)
Interest income (expense),
net......................... 0.9 0.5 0.1 (2.1) 3.7
------ ------ ------ ------- -------
Net loss...................... (76.8)% (35.6)% (68.8)% (267.0)% (202.9)%
====== ====== ====== ======= =======
</TABLE>

------------------------
(1) Amounts and percentages exclude amortization of deferred stock based
compensation, which is reported above as a separate operating expense. We
expect non-cash amortization of deferred compensation through 2003.

For each of the quarters in 1999, we derived substantially all of our
software license revenue from our initial product. In 1999, we reduced our focus
on the licensing of our initial product, which we discontinued in December 1999.
As a result of our decision to reduce our focus on and discontinue our initial
product, software license revenue decreased for the third and fourth quarters of
1999. During these two quarters, we devoted our resources to the launch of
Coreport, which we introduced in August 1999, by entering into arrangements with
third parties to assist us in our licensing efforts, training our sales force
and implementation partners in the use and benefits of Coreport and
familiarizing the

29
<PAGE>
marketplace with Coreport. We believe these activities provided the foundation
for the software license revenue generated by Coreport in the first quarter of
2000. Services revenue also decreased primarily due to reduced implementation
services resulting from the discontinuation of our initial product. We expect
software license revenue to continue to increase as a percentage of total
revenues.

Our quarterly operating results have fluctuated significantly in the past,
and will continue to fluctuate in the future, as a result of a number of
factors, many of which are outside our control. As a result of our limited
operating history, we cannot forecast operating expenses based on historical
results. Accordingly, we base our anticipated level of expense in part on future
revenue projections. Most of our expenses are fixed in the short term and we may
not be able to quickly reduce spending if revenues are lower than we have
projected. Our ability to forecast our quarterly revenues accurately is limited
given our limited operating history, the length of our sales cycle and other
uncertainties in our business. If revenues in a particular quarter do not meet
projections, our net losses in a given quarter would be greater than expected.
As a result, investors should not rely on the results of one quarter as an
indication of future performance.

LIQUIDITY AND CAPITAL RESOURCES

Since our inception, we have financed our operations primarily through the
private sale of equity securities, borrowings and the sale of our software and
services. As of March 31, 2000, we have raised approximately $34.6 million, net
of offering costs, from the issuance of preferred stock. Our cash and cash
equivalents as of March 31, 2000 were $13.1 million.

Cash used in operating activities was $4.3 million, $6.7 million and
$3.9 million for 1997, 1998 and 1999, respectively, and $2.0 million for the
three months ended March 31, 2000. Cash used in operating activities during 1997
was primarily due to a net loss of $9.0 million and an increase in accounts
receivable. Cash used in operating activities during 1998 was primarily due to a
net loss of $7.4 million, offset in part by an decrease in accounts receivable
and a decrease in deferred revenues. Cash used in operating activities during
1999 was primarily due to a net loss of $4.8 million, offset in part by
depreciation and amortization expenses. Cash used in operating activities during
the three months ended March 31, 2000 was primarily due to a net loss of
$2.3 million and an increase in accounts receivable and offset in part by
stock-based compensation.

Cash used in investing activities was $5.1 million, $0.4 million and
$0.1 million in 1997, 1998 and 1999, respectively, and $0.1 million for the
three months ended March 31, 2000. Except for 1997, cash used in investing
activities was primarily for purchases of property and equipment in each period.
In addition, cash used during 1997 included $4.5 million for the acquisition of
in-process technologies from CTP.

Cash provided by financing activities was $10.1 million, $9.3 million and
$3.3 million in 1997, 1998 and 1999, respectively, and $13.2 million for the
three months ended March 31, 2000. Cash provided by financing activities
consisted primarily of proceeds from private sales of preferred stock and
borrowings under various notes payable.

We expect to experience significant growth in our operating expenses,
particularly sales and marketing and research and development expenses, for the
foreseeable future in order to execute our business plan. As a result, we
anticipate that these operating expenses, as well as planned capital
expenditures, will constitute a material use of our cash resources. In addition,
we may utilize cash resources to fund acquisitions or investments in
complementary businesses, technologies or product lines. We believe that our
existing cash and cash equivalents and cash from operations, together with the
net proceeds of this offering, will be sufficient to meet our anticipated needs
for working capital and capital expenditures for at least the next 12 months.
Thereafter, we may find it necessary to obtain additional equity or debt
financing. In the event additional financing is required, we may not be able to
raise it on acceptable terms or at all.

30
<PAGE>
NET OPERATING LOSS CARRYFORWARDS

As of December 31, 1999, we had net operating loss carryforwards of
$17.2 million and research and development tax credit carryforwards of
$0.2 million. The net operating loss and tax credit carryforwards will begin to
expire at various dates through 2019, if not utilized. The Tax Reform Act of
1986 imposes substantial restrictions on the utilization of net operating loss
and tax credit carryforwards in the event of an ownership change of a
corporation. Our ability to utilize net operating losses and tax credit
carryforwards on an annual basis could be limited as a result of an ownership
change as defined by Section 382 of the Internal Revenue Code. We have completed
several financings and believe that we have incurred ownership changes, which we
do not believe will have a material impact on our ability to utilize our net
operating loss and tax credit carryforwards.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board, or the FASB, issued
Statement of Financial Accounting Standards No. 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES. This statement established accounting and
reporting standards for derivative instruments and hedging activities.
SFAS 133, as amended by SFAS 137, will be effective for our financial reporting
beginning in the first quarter of 2001. SFAS 133 will require that we recognize
all derivatives as either assets or liabilities in the balance sheet and measure
those instruments at fair value. The accounting for gains and losses from
changes in the fair value of a particular derivative will depend on the intended
use of that derivative. We believe the adoption of this statement will not have
a significant impact on our financial position, results of operations or cash
flows.

In December 1999, the SEC issued Staff Accounting Bulletin No. 101, REVENUE
RECOGNITION. This bulletin establishes guidelines for revenue recognition and is
in effect for periods beginning March 31, 2000. We do not expect that the
adoption of this methodology will have a material impact on our financial
condition or results of operations.

QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

We have international offices in Canada, England, Norway and Sweden. As of
March 31, 2000, 4.7% of our total assets were located outside of the United
States and 64.8% and 47.4% of our revenues and 49.2% and 37.7% of our expenses
in 1999 and for the three months ended March 31, 2000, respectively, were from
our international operations. These subsidiaries transact business in local
currency or the Euro. Therefore, we are exposed to foreign currency exchange
risks. Historically, fluctuations in foreign currency exchange rates have not
had a material effect on our business. We have not conducted any hedging
transaction to reduce the risk related to currency fluctuations, though we may
do so as our international revenues increase.

Our interest income is sensitive to changes in the general level of United
States interest rates, particularly since the majority of our investments are in
short-term instruments. We deposit our cash in highly rated financial
institutions in North America and Europe and invest in diversified U.S. money
market investments with remaining maturities of less than 90 days. Due to the
short-term nature of our investments, we believe that we have minimal market
risk.

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BUSINESS

OVERVIEW

INDUSTRY BACKGROUND

GROWTH OF THE INTERNET AND E-BUSINESS

The internet has emerged as a global platform for communications and
commerce and is fundamentally changing the way enterprises interact with their
employees, customers, suppliers and business partners. Enterprises are
increasingly using the internet to share business information and create new
business opportunities. Forrester Research estimates that worldwide
internet-based commerce will grow from $657 billion in 2000 to $6.8 trillion in
2004. In order to capitalize on e-business opportunities, enterprises must
extend their business applications to the internet and seamlessly integrate
their business processes with those of their customers, suppliers and business
partners.

GROWTH OF WIRELESS ACCESS TO INFORMATION

Today, users typically access business information and applications from
their personal computers. Increasingly, however, advances in wireless
communications, including the development of web-enabled wireless devices and
the adoption of standards for the transfer of wireless data, such as wireless
application protocol or WAP, are enabling new ways to deliver and retrieve
business information. Worldwide use of wireless communications has grown rapidly
as web-enabled cellular phones and other wireless devices have become widely
available and affordable. ARC Group estimates that by 2005 1.0 billion people
worldwide will access the internet using wireless devices compared to
650 million people using personal computers. Having grown accustomed to and
dependent on the information and applications available on their personal
computers, business users will increasingly demand wireless access to this
information to conduct business anytime, anywhere. According to Ovum, the market
for mobile electronic commerce is expected to grow to over $200 billion by 2005.

PROLIFERATION OF BUSINESS INFORMATION AND APPLICATIONS

In today's e-business environment, access to the right business information
at the right time is a significant competitive advantage. While the internet and
wireless devices are making information more readily available, business
applications and other sources of information are proliferating and the rate and
frequency of business interactions are accelerating. In addition, many
enterprises have invested significant resources to implement enterprise-wide
information systems, including enterprise resource planning or ERP systems,
corporate intranets and other private internet-based networks. The proliferation
of information combined with these disparate information systems make it
difficult to aggregate and disseminate relevant information. As a result,
enterprises have not fully realized the

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expected benefits associated with their significant investments, and business
users must spend considerable time and resources gathering, organizing and
analyzing the information they require in order to effectively conduct business.

MARKET OPPORTUNITY FOR ACCESS FRAMEWORK SOFTWARE

Enterprises face many challenges in effectively managing and providing their
employees, customers, suppliers and business partners access to the right
information at the right time. These challenges include:

- delivering timely and relevant business information and applications;

- integrating many types and sources of information, including legacy
information systems, e-mail systems and new e-business applications;

- providing easy access to information and applications through any
web-enabled device, including wireless devices;

- scaling with the increasing volume of information and number of users,
including mobile users; and

- administering and managing secure access to information and applications.

We believe that current solutions, such as information portal software and
application or content integration technologies, are partial solutions that do
not adequately address all of these challenges and that there is a substantial
market opportunity for access framework software that provides a comprehensive
solution.

THE CORECHANGE SOLUTION

We believe Coreport provides the following benefits:

- PROVIDES RELEVANT, PERSONALIZED BUSINESS INFORMATION AND APPLICATIONS.
Using our software, enterprises can quickly deliver relevant business
information and applications to employees, suppliers, customers and
business partners. Coreport's role-based administration allows enterprises
to define categories of users and provides these users with access to
business information and applications for their specific needs and roles.
As a result, enterprises can rapidly add new users by assigning them to a
role rather than having to define access privileges for each user. In
addition, enterprises can easily modify roles to meet evolving business
needs and combine multiple roles per user.

- FACILITATES MOBILE E-BUSINESS. Coreport's wireless capabilities empower
users with the ability to conduct business anytime, anywhere. Coreport
provides users with wireless access to critical business information and
applications that were historically only available through personal
computers, allowing users ready access to this information in order to
conduct e-business.

- ENABLES MORE TIMELY AND INFORMED BUSINESS DECISIONS. Coreport provides a
single framework to access business information and applications, thereby
reducing the time and expense spent aggregating and analyzing this
information. In addition, by providing users with information that is
specific to their business needs and roles, Coreport enables users to make
more informed and better business decisions.

- PROMOTES RAPID IMPLEMENTATION OF E-BUSINESS STRATEGY. Coreport provides
extensive functionality and can integrate out-of-the-box with a broad
range of business applications and information

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systems including legacy and ERP systems. This allows enterprises to
quickly and cost-effectively implement e-business solutions around
existing enterprise information systems.

- ENHANCES BUSINESS RELATIONSHIPS. Using Coreport, enterprises can provide
their customers, suppliers and business partners with easy access to
business applications. By rapidly and efficiently sharing information,
enterprises can strengthen their business relationships, increase business
connectivity and create new business opportunities.

STRATEGY

Our objective is to be the leading provider of access framework software
that enables enterprises to manage access to business information and
applications. Key elements of our strategy include:

- ESTABLISHING COREPORT AS THE LEADING FRAMEWORK SOFTWARE. We believe that
our technology will position Coreport to become the standard for access
framework software. We plan to extend the functionality and enhance the
capabilities of Coreport through internal development, strategic
relationships and potential acquisitions.

- CAPITALIZING ON WIRELESS OPPORTUNITIES. The increased use of web-enabled
wireless devices and the growing demand for wireless access to business
information and applications represent a significant market opportunity
for our software. We believe that our ability to provide wireless access
to business information and applications provides us with a competitive
advantage in obtaining new customers.

- EXPANDING OUR DISTRIBUTION CHANNELS. We intend to significantly expand our
distribution channels by increasing the size of our sales force in North
America and Europe as well as establishing additional distribution
relationships. In addition, we intend to expand upon our initial success
in the financial services and healthcare industries and target other
vertical markets.

- DEVELOPING AND EXPANDING STRATEGIC RELATIONSHIPS. We intend to continue to
establish strategic relationships with leading companies that develop
business applications or provide consulting and implementation services.
We believe these relationships further validate our technology and
increase our recognition in the marketplace. We have established strategic
relationships with technology leaders such as IBM to provide
out-of-the-box integration with their products. In addition, we have
formed strategic marketing and implementation relationships with
Microsoft, Bullsoft, a division of Groupe Bull, and Cap Gemini Ernst &
Young.

- TARGETING GLOBAL 2000 COMPANIES. We plan to continue targeting Global 2000
companies as they rapidly transition their businesses online and take
advantage of wireless technologies. We believe that Global 2000 companies
represent a significant market opportunity for our software. They
typically have made significant investments in disparate information
systems and applications that they need to make available to a large
number of users. In addition, we believe that these companies face
competitive pressure to implement e-business strategies and have the
resources to support enterprise-wide implementations.

- EXPANDING OUR INTERNATIONAL PRESENCE. Historically, we have derived a
significant percentage of our revenues from Europe. We currently have
European offices in London, Oslo and Stockholm. Our international presence
allows us to better serve Global 2000 companies and capitalize on global
wireless opportunities. We plan to expand our international presence and
open new offices in Europe.

- LEVERAGING OUR CUSTOMER BASE. Many of our customers first license our
product on an initial rollout basis or implement our product within a
specific department or for an identified business application. We believe
that the value of our software to an enterprise increases as it is more
widely used. We intend to seek to increase the use of our software by our
customers.

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OUR PRODUCT AND TECHNOLOGY

Our product, Coreport, is comprised of five modules described below which
are licensed as a single, integrated product. The following graphic summarizes
how Coreport works:

[The graphic shows how the five modules of Coreport operate, examples of data
and applications being integrated by the Coreport Context Engine and the
categories of users (employees, suppliers, customers and business partners) who
gain access to information with an illustration of the personal computers or
wireless devices such users can use to access information]

COREPORT CONTEXT ENGINE maintains the relationships among users, their roles
and the data and applications they need, and provides this information to the
Coreport web server, Coreserv, which generates personalized browser interfaces
for all users. The Coreport Context Engine maintains security information for
each user and for each information system, providing users with access to all
these systems with a single username and password. In addition, the Coreport
Context Engine classifies the types of information sources to be made available
on any web-enabled personal computer or wireless device.

COREPORT ADMINISTRATOR enables enterprises to easily and securely administer
the needs of large numbers of users from one or many locations. Coreport
Administrator allows non-technical administrators to assign and manage access
rights to specified business information and applications for selected
individuals or groups based upon their roles.

CORESERV provides users with a personalized browser interface to access the
business information and applications they require. A single Coreport
installation can have multiple Coreserv servers, enabling large number of users
with varying levels of access rights and providing redundancy in the event of a
server failure.

COREALIGN enables enterprises to send targeted messages and content to
users, based on any set of parameters provided by the Coreport Context Engine.
Important messages, such as enterprise announcements, can be delivered to the
user interface and can be configured to require a response or confirmation.

COREPORT INTEGRATED SEARCH provides users with intelligent, natural language
searching capabilities across over 250 industry standard data formats using
technology licensed from Autonomy and integrated into our product. Coreport
Integrated Search allows enterprises to build and update an information index,
enabling users to rapidly identify relevant business information from a diverse
range of internal and external sources. Pre-configured searches or agents can be
built by users and stored as part of their Coreport profile.

COREPORT FEATURES

We believe that Coreport is a highly differentiated business product due to
several important features:

- ROLE-BASED ADMINISTRATION OF USERS AND THEIR INFORMATION NEEDS. Unlike
software solutions that require enterprises to maintain a profile for
every user and grant access rights on a per-user basis, Coreport enables
enterprises to define business roles and to then associate users with one
or more roles. This means that instead of managing 10,000 profiles for
10,000 users, an organization will only have to manage as many roles as it
needs to define.

- OUT-OF-THE-BOX FUNCTIONALITY. Our product is designed to be rapidly
installed for a large number of users. Coreport includes pre-configured
links to a broad range of business applications and information systems,
significantly reducing implementation time.

- SECURE, SINGLE SIGN-ON. Coreport provides users with access to all of
their business information and applications using a single username and
password. Coreport securely maintains and manages all of the passwords
required for each individual application.

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- OPEN FRAMEWORK DESIGNED FOR INTEGRATION. Coreport integrates with
web-based and legacy applications and databases, permitting users to
access all relevant business information. Coreport also includes a tool
set to facilitate integration with third-party applications and
information sources.

- DESIGNED FOR SCALABILITY AND ROBUSTNESS. Coreport provides a scalable
approach to integrate a broad range of business information and
application interfaces. Instead of copying business information onto a
separate server for redistribution to users, Coreport maintains address
links to the original data so that it can be accessed directly at its
source. In addition, each module of Coreport can be replicated and placed
on separate servers to enable large-scale implementations and to ensure
redundancy in the event of a hardware or network failure.

- PERSONALIZED USER INTERFACE. Coreport users can personalize the interface
on their personal computer or wireless device, which we believe increases
loyalty, familiarity and productivity.

- DIRECT APPLICATION LAUNCH. Coreport allows users to launch applications
directly by clicking within the Coreport browser interface. This
dashboard-like feature reduces the time required for users to find the
appropriate underlying applications.

- INFORMATION MANAGEMENT. Coreport's ability to develop a dynamic profile of
a user's business information needs and to suggest relevant information
sources makes it easier for users to find information.

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INTEGRATION AND INDUSTRY STANDARDS

Coreport is built using industry standard tools and techniques on the
Microsoft platform. Coreport supports industry standards, including Lightweight
Directory Access Protocol for synchronization of user information with other
applications; WAP for distribution of content to web-enabled wireless devices;
and eXtensible Markup Language for sharing data between applications and
organizations. In addition, Coreport includes adapters for integration with
leading products from IBM, Microsoft, Informix, Oracle, Sybase and many other
vendors. It is our intention to develop a version of Coreport for the Unix
platform in the near future. Industry-standard application programming
interfaces are also provided to allow system customization and integration with
other applications.

CUSTOMERS AND CASE STUDIES

CUSTOMERS

To date we have licensed our Coreport software to 30 customers. The
following list of customers includes customers who have entered into initial
rollout agreements with us as well as customers who have entered into license
agreements for wider-scale implementations:

FINANCIAL SERVICES:

ABN AMRO
Bank One
Credit Suisse First Boston
Fidelity Investments
Lloyds TSB Bank
Marsh McLennan Companies
Merrill Lynch Asset Management
The Advest Group

GOVERNMENT:

City of Stockholm
United Kingdom Ministry of Defense

HEALTHCARE:

Children's Hospital of Philadelphia
Gateway Health Systems
Rowan Regional Medical Center
Spartanburg Health Systems
St. Joseph's Medical Center

INDUSTRIAL:

ABB
AIMCOR
Philips Electronics
TotalFina Elf
Volvo
Wiremold

SERVICES:

AMB Property Corporation
Ashurst Morris Crisp
Braathens Airways
Contento Stockholm
Kjessler & Mannerstrale
SHL Group
SYSteam

OTHER:

Ericsson
Unilever

CUSTOMER CASE STUDIES

The following examples illustrate representative uses of Coreport by certain
of our customers:

CREDIT SUISSE FIRST BOSTON

DESCRIPTION. Credit Suisse First Boston is a global investment banking firm
with over 15,000 employees worldwide.

BUSINESS CHALLENGE. Credit Suisse First Boston, or CSFB, was seeking to
integrate access to a variety of internal information systems and sources of
financial and corporate information for employees within its finance department.
In addition, due to extensive travel by these employees, CSFB wanted to provide
wireless access to these employees. CSFB also wanted a secure solution that was
easy to manage to ensure that corporate compliance and other important policy
documents were only provided to appropriate recipients.

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SOLUTION. CSFB selected Coreport because of its ability to provide users
with wireless access to information from various sources. In addition,
Coreport's role-based administration facilitates delivery of targeted and often
sensitive information to CSFB employees based on their role within the
organization. CSFB expects that Coreport will provide users with rapid access to
information anytime, anywhere, resulting in enhanced decision-making
capabilities. CSFB is deploying Coreport to a select group of finance department
employees in Europe, North America and Southeast Asia.

Frank J. Fanzilli, Jr., one of our directors, is a managing director and the
co-chief information officer of information technology at CSFB.

ABN AMRO BANK

DESCRIPTION. ABN AMRO Bank is a global bank with 110,000 employees
worldwide.

BUSINESS CHALLENGE. ABN AMRO was looking for a solution to efficiently
deliver business information and applications to its North American employees
across its many business units and regional locations. ABN AMRO wanted a
solution that was easy to administer, allowed for single sign-on and would
integrate a broad range of internal and external sources of information.

SOLUTION. ABN AMRO selected Coreport software and is in the process of
deploying it to approximately 17,000 employees in North America. ABN AMRO
expects to increase employee efficiency and productivity by providing a single
web-based framework for employees to access internal reports, personalized news
feeds, e-mail, calendaring and scheduling applications, procurement systems and
employee human resource applications as well as legacy applications. In
addition, ABN AMRO also intends to use Coreport to provide video training on
demand and online discussion groups. As a result, ABN AMRO expects to
significantly decrease the administrative burden and costs of managing and
disseminating this information to its employees. ABN AMRO anticipates that
Coreport's role-based administration will allow it to more easily manage the
delivery of business information and applications to its many organizational
levels.

Daniel J. Foreman, one of our directors, is a managing director of ABN AMRO
Private Equity, an affiliate of ABN AMRO Bank. ABN AMRO Capital (USA), Inc., an
affiliate of ABN AMRO Private Equity, will own % of our common stock following
this offering.

A REAL ESTATE INVESTMENT TRUST

DESCRIPTION. This company is a large owner and operator of commercial and
industrial real estate in the United States.

BUSINESS CHALLENGE. The company was seeking an integrated solution to
provide its employees and independent commercial real estate partners throughout
the United States with access to a wide range of internal enterprise
information. In particular, the company wanted to allow the approximately 20
firms that handle the on-site management of its properties to access its systems
over the internet. The company also needed a solution that could be rapidly
deployed, as time to market was critical.

SOLUTION. The company chose Coreport for its out-of-the-box functionality
and integration with existing information systems and its ability to access many
types and sources of information, as well as for its secure user administration.
Coreport was installed, configured, customized and deployed to over 300 internal
and external users within three days, allowing the company to rapidly implement
its e-business strategy. Coreport has provided the company with the ability to
establish a common interface for use by its employees and the 20 firms that
manage the company's properties in 50 locations. Using our software, these firms
can directly access and update the company's core property management
applications. The company is currently upgrading to the latest release of
Coreport in order to take advantage of enhanced user management, functionality,
security, personalization capabilities and support for wireless devices. The
company also intends to provide access to its system to additional business
partners in the future, including leasing and commercial brokers.

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PROFESSIONAL SERVICES

We support our customers and partners with a range of services, including:

- IMPLEMENTATION CONSULTING SERVICES. We primarily provide implementation
services for the initial rollout of our product and rely on our
implementation partners for subsequent larger implementations. From time
to time, we also may provide additional technical services to our
customers and partners to assist them, if necessary, during product
implementation.

- TRAINING SERVICES. For our new customers and partners, we provide
training sessions and related materials on product functionality and
system administration.

- CUSTOMER SUPPORT. We believe that our success depends on providing
quality ongoing customer support. We provide customer support seven days a
week, twenty four hours a day. We have a worldwide support organization to
provide global coverage for our customers.

Through our services organization we attempt to make our customers and
partners technically self-sufficient. We intend to expand our services
organization as our license sales increase and as we enter into additional
strategic alliances.

SALES AND MARKETING

We currently market our software and services primarily through a direct
sales organization, complemented by indirect sales channels. As of May 25, 2000,
we had 25 direct and three indirect sales personnel located in offices in
Boston, Toronto, London, Stockholm and Oslo. We intend to increase our direct
sales force and open additional offices.

In addition to our direct sales organization, we have established indirect
sales, joint marketing and implementation relationships with, among others, Cap
Gemini Ernst & Young and Intellinet, an application and internet service
provider. We also have relationships with Asyst Consulting Group, Atlantic Data
Services, Averstar, Enator, KM ProNet, Kraftnatet, Logica, Microsoft, OS
Integration, Peapod Distribution, Salmon Ltd. and Sentillion.

We use a wide variety of marketing programs to attract potential customers
and to promote Coreport and its brand name. We use a mix of analyst updates,
seminars, market research, trade shows, speaking engagements, public relations,
web site marketing, direct mail and print advertising in order to achieve these
goals. Our marketing department also produces collateral material for
distribution to potential customers including presentation materials, Coreport
demonstrations, white papers, brochures and fact sheets. We provide support to
our partners with a variety of programs and training and product marketing
support materials.

STRATEGIC RELATIONSHIPS

As part of our strategy to establish Coreport as the leading provider of
access framework software, we have formed relationships with leading companies
that develop business applications and provide integrated solutions. We work
closely with many software and services providers to maintain a high level of
integration with information systems and emerging technologies.

We have established relationships with IBM and Bullsoft, a division of
Groupe Bull, to integrate with their information systems. In addition, we are
also establishing relationships with wireless industry leaders such as Avantgo
and i3Mobile in order to integrate and jointly market our products.

RESEARCH AND DEVELOPMENT

We have invested significantly in research and development to enhance our
current solution and develop new solutions. Our research and development
organization is responsible for development, quality and assurance testing,
documentation, release and maintenance, and overall execution of our development
strategy. Our research and development organization is based primarily in Boston
with a small group in Stockholm focused on Coreport's wireless functionality. We
intend to continue to invest

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significantly in research and development activities in order to expand and
enhance the capabilities of Coreport.

COMPETITION

The emerging market for our software is rapidly changing, intensely
competitive and is likely to become more competitive as the number of entrants
and new technologies increases and the demand for wireless access to business
information grows. While we are not aware that any of our competitors or
potential competitors currently offers a solution that is substantially similar
to ours, our product may be subject to current or potential competition from
products that provide one or more of the functions our product provides,
including:

- enterprise information portal vendors, such as Epicentric and Plumtree;

- wireless information service providers, such as Phone.com;

- e-business software providers, such as Ariba and SAP; and

- application integration software providers, such as Tibco.

We believe that the principal factors affecting a customer's decision to
select a solution include:

- ability to provide users access to a broad range of business information
and applications;

- ability to deliver business information and applications when and where it
is needed to a number of web-enabled devices including wireless devices;

- ability to scale to and manage large numbers of users;

- speed of implementation and ease of use; and

- product quality, customer service and price.

Some large potential competitors have longer operating histories, larger
customer bases, greater brand recognition, and significantly greater financial,
marketing and other resources than we do and may enter strategic or commercial
relationships with larger, more established and well-financed companies. Some of
our competitors may be able to secure alliances with customers and affiliates on
more favorable terms, devote greater resources to marketing and promotional
campaigns and devote substantially more resources to systems development than we
do. In addition, new technologies and the expansion of existing technologies may
increase competitive pressures on us. We may not be able to compete successfully
against current and future competitors, and competitive pressures faced by us
could harm our business, operating results and financial condition.

INTELLECTUAL PROPERTY

Our success depends in part upon our proprietary technology. We rely on a
combination of trademark and trade secret protection and confidentiality and
nondisclosure agreements to establish and protect our intellectual property
rights. In addition, we seek to avoid disclosure of our trade secrets through a
number of means, including requiring those persons with access to our
proprietary information to execute nondisclosure agreements with us and
restricting access to our source code. We seek to protect our software,
documentation and other written materials under trade secret and copyright laws,
which afford only limited protection. We currently have no patents.

Our means of protecting our proprietary rights may not be adequate. Our
competitors may independently develop similar technology, duplicate our products
or design around our proprietary intellectual property. Despite our efforts to
protect our proprietary rights, unauthorized parties may attempt to copy aspects
of our products or to obtain and use information that we regard as proprietary.
Policing unauthorized use of our products is difficult, and while we are unable
to determine the extent to which piracy of our solution exists, piracy can be
expected to be a persistent problem. In addition, the laws of some foreign
countries do not protect our proprietary rights to as great an extent as do the
laws of the United States.

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There has been a substantial amount of litigation in the software industry
and the internet industry regarding intellectual property rights. It is possible
that in the future, third parties may claim that we or our current or potential
future products infringe upon their intellectual property. We expect that
software product developers and providers of Internet-based software
applications will increasingly be subject to infringement claims as the number
of products and competitors in our industry segment grows and the functionality
of products in different industry segments overlaps. Any claims, with or without
merit, could be time consuming, result in costly litigation, cause product
shipment delays or require us to enter into royalty or licensing agreements.
Royalty or licensing agreements, if required, may not be available on terms
acceptable to us or at all, which could seriously harm our business.

EMPLOYEES

As of May 25, 2000, we employed 80 people, including 33 in sales and
marketing, 25 in product development, 17 in services and 5 in administration,
operations and finance. None of our employees is represented by a labor union,
and we believe that our relations with our employees are good.

FACILITIES

Our executive offices and principal operations are located in Boston,
Massachusetts and consist of approximately 7,832 square feet of office space
held under a lease that expires in February 2002 with respect to 5,879 square
feet and March 2005 with respect to 1,953 square feet. We also lease offices in
Toronto, London, Oslo and Stockholm. We believe that our existing facilities are
adequate to meet our current requirements, or that suitable additional space
will be available on commercially reasonable terms.

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MANAGEMENT

DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES

The following table sets forth information regarding our directors,
executive officers and key employees as of May 25, 2000:

<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Ulf Arnetz................................ 40 Chief Executive Officer, President and
Director
Charles F. Kane........................... 42 Chief Operating Officer and Chief
Financial Officer
Lars G. Ivarsson.......................... 48 Executive Vice President, Sales and
Marketing
Felimy Greene............................. 33 Executive Vice President, Product
Development
N. Hakan Wohlin........................... 34 Executive Vice President, Business
Development
Joachim Zetterlund........................ 37 Executive Vice President, Europe
Daniel Matlow............................. 37 Vice President, North American Sales
David G. Broms............................ 44 Vice President, Indirect Sales
Brian Flynn............................... 46 Vice President, Product Integration
Ingemar Bjorklund......................... 34 Vice President, Product Development
Angiras Koorapaty......................... 36 Vice President, Finance and Administration
Martin T. Hart(1)......................... 64 Chairman of the Board of Directors
Frank J. Fanzilli, Jr.(1)................. 43 Director
Daniel J. Foreman(1)...................... 41 Director
Richard Lindh............................. 36 Director
Ofer Nemirovsky(2)........................ 42 Director
Robert Pirie(2)........................... 66 Director
Gustav Vik(2)............................. 41 Director
</TABLE>

------------------------
(1) Member of Audit Committee.
(2) Member of Compensation Committee.

ULF ARNETZ is the founder of Corechange and has served as our President,
Chief Executive Officer and a director since our inception. From February 1994
to December 1995, he served as President of Cambridge Technology Partners
Scandinavia, a software services company. From 1988 to 1994, Mr. Arnetz served
as founder and President of IOS AB, a professional services company in Sweden
focused on enterprise information needs. Mr. Arnetz holds an M.S. from the Royal
Institute of Technology in Stockholm, Sweden.

CHARLES F. KANE has served as our Chief Operating Officer and Chief
Financial Officer since May 2000. From March 2000 to May 2000, Mr. Kane served
as the Chief Financial Officer of Informix, Inc., a software company. From
December 1995 to March 2000, he served as a Vice President and the Chief
Financial Officer of Ardent Software, Inc., a software company. From 1989 to
November 1995, Mr. Kane served in several financial and accounting positions
with Stratus Computer, Inc., a manufacturer of fault-tolerant computers, most
recently as international controller and finance director, mergers and
acquisitions. Mr. Kane is a certified public accountant and holds an M.B.A. from
Babson College and a B.B.A. in accountancy from the University of Notre Dame.

LARS G. IVARSSON has served as our Executive Vice President, Sales and
Marketing since January 1996. From 1993 to December 1995, Mr. Ivarsson served as
Business Development Director of Cambridge Technology Partners Scandinavia, a
software services company, and during that time he established Cambridge
Technology Partners Norway.

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<PAGE>
FELIMY GREENE has served as our Executive Vice President, Product
Development since March 2000. From August 1999 to March 2000, he served as our
Senior Vice President, Product Development. From August 1998 to July 1999,
Mr. Greene served as a managing director of VICO Solutions Ltd., a consulting
firm, and provided consulting services to Corechange UK Ltd. From October 1990
to August 1998, he served in a number of positions at Citibank N.A., most
recently as Vice President of Technology for their private banking division in
Europe, the Middle East and Africa. Mr. Greene holds a B.S. in computer science
from University College Dublin, Ireland.

N. HAKAN WOHLIN has served as our Executive Vice President, Business
Development since May 2000. From September 1999 to May 2000, Mr. Wohlin served
as a financial consultant to Corechange and as our acting Chief Financial
Officer. From November 1998 to September 1999, he served as Vice President,
Investment Banking for Prudential Securities Incorporated. From 1992 to
August 1998, he served in various capital markets positions with Bear, Stearns &
Co., Inc., most recently as an Associate Director, Capital Markets. Mr. Wohlin
holds an M.B.A. from Stockholm University, Sweden.

JOACHIM ZETTERLUND has served as our Executive Vice President, Europe since
April 2000. From October 1999 to April 2000, he served as the Managing Director
of Corechange U.K. From August 1998 to September 1999, Mr. Zetterlund was
Managing Director, Preferred Accounts Division for the United Kingdom, for Dell
Computer Corporation. From October 1997 to May 1998, Mr. Zetterlund was Vice
President, Europe for James Martin and Company, an information technology and
management consulting firm. From February 1994 to August 1997, Mr. Zetterlund
served in a number of positions at CTP, most recently as Vice President and
Territory Manager, Northern Europe. From August 1990 to February 1994,
Mr. Zetterlund held various positions with Digital Equipment Corporation, a
computer company, most recently sales director for consumer, process and
transportation industries.

DANIEL MATLOW has served as our Vice President, North American Sales since
August 1999 and as our Vice President, Healthcare Business Unit from September
1996 to July 1999. From September 1991 to July 1996, he served as the Chief
Executive Officer and President of SDLC Technologies Inc., a software and
education services company. From 1989 to August 1991, Mr. Matlow served as the
Vice President of Canadian operations for Online Software International, Inc., a
software company. He holds a B.A. from York University in Toronto, Canada.

DAVID G. BROMS has served as our Vice President, Indirect Sales since
May 2000. From November 1999 to May 2000, Mr. Broms served as a Director of
Alliances for Inforay, Incorporated, an information services company. From
June 1998 to November 1999, he was an industrial sales representative for Oracle
Corporation, an information management software company. From September 1996 to
June 1998, Mr. Broms served as Director of Alliances for Computervision
Corporation, a software company. From April 1994 to September 1996, he was the
New York/Midwest regional manager for Neuron Data Corporation, a software
company. Mr. Broms holds a B.S. in economics from the University of New
Hampshire.

BRIAN FLYNN has served as our Vice President, Product Integration since May
2000. From April 1999 to November 1999, he served as a systems analyst for BT
CellNet, a communications company. From November 1998 to March 1999, Mr. Flynn
served as an information technology consultant with ABB Business Services Ltd.,
an information technology consulting company. He was an information technology
consultant with Comforce, a consulting company, from January 1998 to November
1998, and with Allsoft Ltd., a consulting company, from November 1988 to January
1998, Mr. Flynn holds a B.S. in computer science and Avionics from Locking
College in the United Kingdom.

INGEMAR BJORKLUND has served as our Vice President, Product Development
since May 1999 and as our Director, Product Development, from May 1996 to April
1999. From February 1993 to May 1996, he was Director of Cambridge Technology
Partners Scandinavia. From September 1992 to

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February 1993, Mr. Bjorklund served as Chief Architect of Product Development at
IOS AB. He holds a B.S. in computer science from Uppsala University, Sweden.

ANGIRAS KOORAPATY has served as our Vice President, Finance and
Administration since April 1998. From October 1997 to March 1998, Mr. Koorapaty
served as an independent financial consultant. From February 1990 to September
1997, Mr. Koorapaty served as Finance Division Manager of Allstate Corporation,
an insurance company. From July 1983 until June 1987, he served as an auditor
for Sundaram and Srinivasan, Chartered Accountants. Mr. Koorapaty is a qualified
chartered accountant. He holds an M.B.A. from the George Washington University
and a B.A. from Loyola College.

MARTIN T. HART has served as the Chairman of our board of directors since
January 1998. Mr. Hart has been a business advisor and private investor since
1969. He currently serves as a director of P.J. America, Inc., a food service
company, MassMutual Corporate Investors, an investment company, MassMutual
Participation Investors, Inc., an investment company, Schuler Homes, Inc., a
homebuilder, Vail Banks, Inc., a bank holding company, T-Netix, Inc., a
communications company, and ValueClick, Inc., an internet advertising company.

FRANK J. FANZILLI, JR. has served as a director since February 2000. He is
currently a Managing Director and the Co-Chief Information Officer of
Information Technology at Credit Suisse First Boston Corp., a global investment
bank. Since joining Credit Suisse First Boston in 1985, Mr. Fanzilli has held
various positions within Information Technology, including Head of European
Information Services.

DANIEL J. FOREMAN has served as a director since February 2000. He is
currently a Managing Director of ABN AMRO Private Equity, an investment firm.
Mr. Foreman joined ABN AMRO in October 1997. From October 1987 to October 1997,
he served in various positions at Ameritech Development Corporation, most
recently as Vice President of Investments and Acquisitions. Prior to joining
Ameritech in 1987, Mr. Foreman was a consultant with Booz, Allen and Hamilton, a
management consulting firm. Mr. Foreman is also a director of Daleen
Technologies, Inc., a billing and customer care software provider, Integrated
Information Systems, Inc., an integrated internet solutions provider, Tavve
Software, Inc., a network management system software company, and Synacom
Technology, Inc., a wireless infrastructure software provider.

RICHARD LINDH has served as a director since April 1999. He has served as
the Marketing Director for Microsoft Europe, Middle East and Africa since June
1998 and prior to that as Director, Partner Strategy and Business Development
for Microsoft Europe from January 1994 to June 1998. Mr. Lindh served in a
variety of positions for Microsoft Sweden from August 1990 to January 1994. From
February 1988 until May 1990, he served as European Marketing Manager of
Synectics Medical AB, a Swedish medical technology company.

OFER NEMIROVSKY has served as a director since January 1998. He has served
as a Managing Director of HarbourVest Partners, a venture capital investment
firm, since 1986. Mr. Nemirovsky currently serves as a director for Daleen
Technologies, Inc., a telecommunications billing and customer care software
provider, Primix Solutions, Inc., an internet software and services company,
Ultimate Software Group, Inc., a software company, and several private
companies. Mr. Nemirovsky currently serves on the advisory board of DS Polaris
Fund II (Israel).

ROBERT PIRIE has served as a director since January 1998. He has served as
Vice-Chairman, Investment Banking of SG Cowen Securities Corporation since
October 1996. From 1993 to 1996, Mr. Pirie served as a senior managing director
of Bear, Stearns & Co. Inc. From 1982 to 1993, he served as President, Chief
Executive Officer and Co-Chairman at Rothschild, Inc., an investment banking
firm, and Rothschild North America, Inc. From 1973 to 1982, Mr. Pirie was a
partner at Skadden, Arps, Slate, Meagher & Flom, a law firm. Mr. Pirie currently
serves as Chairman of Thrucom, Inc., a fixed wireless data company.

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<PAGE>
GUSTAV VIK has served as a director since February 2000. He has served as
Executive Vice President, treasurer, secretary and a director of Xcelera.com, an
internet holding company, since March 1989. Mr. Vik has also served as the Chief
Executive Officer and Manager of OneSure.com, LLC, an internet company, since
January 2000, and of atinsurance.com LLC, an internet company, since May 1997.
Since March 1999, he has served as a director and secretary of Mirror-Image
Internet, Inc., an internet services company. Since 1988, Mr. Vik has been a
director and treasurer of VBI Corporation, a holding company. From
September 1986 to April 1997, Mr. Vik was the President and a director of Vik
Brothers Insurance, Inc.

BOARD COMPOSITION

We currently have eight directors. Each of our current directors was elected
to our board of directors pursuant to the terms of a stockholders' agreement
that we entered into with certain of our stockholders in connection with the
sale of shares of our Series B convertible preferred stock. This agreement will
terminate by its terms upon the completion of this offering. Upon the closing of
this offering the terms of office of the board of directors will be divided into
three classes. As a result, a portion of our board of directors will be elected
each year. The division of the three classes, the initial directors and their
respective election dates are as follows:

- the class 1 directors will be Messrs. Fanzilli, Lindh and Vik and their
term will expire at the annual meeting of stockholders to be held in 2001;

- The class 2 directors will be Messrs. Foreman, Nemirovsky and Pirie and
their term will expire at the annual meeting of stockholders to be held in
2002; and

- the class 3 directors will be Messrs. Arnetz and Hart and their term will
expire at the annual meeting of stockholders to be held in 2003.

At each annual meeting of stockholders after the initial classification, the
successors to directors whose terms are to expire will be elected to serve from
the time of election and qualification until the third annual meeting following
election. The authorized number of directors may be changed only by resolution
of the board of directors. Any additional directorships resulting from an
increase in the number of directors will be distributed among the three classes
so that, as nearly as possible, each class will consist of one-third of the
directors. This classification of the board of directors may have the effect of
delaying or preventing changes in control or management of our company.

COMMITTEES OF THE BOARD OF DIRECTORS

Our board of directors has established an audit committee and a compensation
committee. The audit committee reviews our internal accounting procedures and
consults with, and reviews the services provided by, our independent public
accountants. The current members of our audit committee are Messrs. Fanzilli,
Foreman and Hart. The compensation committee reviews and recommends to the board
of the compensation and benefits of all of our officers and reviews general
policy relating to compensation and benefits of our employees. The compensation
committee also administers the issuance of stock options and other awards under
our stock plans. The current members of the compensation committee are Messrs.
Nemirovsky, Pirie and Vik.

DIRECTOR COMPENSATION

Our directors do not currently receive any cash compensation from us for
their service as members of the board of directors, although they are reimbursed
for out-of-pocket expenses in connection with attendance at board and committee
meetings. We do not provide additional compensation for special assignments of
the board of directors. In June 1999, we granted stock options outside of any
stock plan to Messrs. Hart, Lindh, Nemirovsky and Pirie to purchase 40,000,
20,000, 40,000 and 40,000 shares,

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respectively, at an exercise price of $0.45 per share. In February 2000, we
granted stock options outside of any stock plan to Mr. Fanzilli to purchase
20,000 shares at an exercise price of $0.45 per share. The options granted to
Messrs. Hart, Pirie and Nemirovsky vest with respect to 20,000 shares
immediately upon grant, with respect to 6,667 shares on the first anniversary of
the date of grant and with respect to the balance of the shares in 24 monthly
installments commencing 13 months after the date of grant. The options granted
to Messrs. Lindh and Fanzilli vest with respect to 6,667 shares on the first
anniversary of the date of grant and with respect to the balance of the shares
in 24 monthly installments commencing 13 months after the date of grant.

In addition, our 2000 director stock option plan will become effective upon
the completion of this offering. The director plan provides for the grant of
stock options to purchase a maximum of 250,000 shares of our common stock. See
"--Stock Plans--2000 Director Stock Option Plan."

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The compensation committee of the board of directors consists of Messrs.
Nemirovsky, Pirie and Vik. No executive officer has served as a director or
member of the compensation committee, or other committee serving an equivalent
function, of any entity whose executive officers served as a member of the
compensation committee of our board of directors.

EXECUTIVE COMPENSATION

The following table presents summary information for the year ended
December 31, 1999, regarding the compensation of our Chief Executive Officer and
our other executive officers whose compensation exceeded $100,000 in such year,
collectively referred to as the named executive officers.

SUMMARY COMPENSATION TABLE (1)

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
------------------------------- UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS
<S> <C> <C> <C> <C>
Ulf Arnetz............................................ 1999 $180,000 -- --
President and Chief Executive Officer

Lars G. Ivarsson...................................... 1999 180,000 32,728 100,000
Executive Vice President, Sales and Marketing

Neil Gelfand.......................................... 1999 140,996 -- --
Former Chief Financial Officer
</TABLE>

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

(1) Messrs. Kane, Wohlin and Zetterlund would be named executive officers listed
in the table above if they had served in their present positions with us
during 1999. For a description of the compensation for Messrs. Kane and
Zetterlund, see "--Employment and Change of Control Agreements."

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<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth certain information regarding options granted
to our named executive officers during the year ended December 31, 1999. We have
not granted any stock appreciation rights.

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------
PERCENTAGE POTENTIAL REALIZABLE
OF TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF STOCK
SECURITIES GRANTED TO PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM
OPTIONS IN PRICE EXPIRATION -----------------------
NAME GRANTED FISCAL YEAR PER SHARE DATE 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Ulf Arnetz...................... -- -- -- -- -- --
Lars G. Ivarsson................ 100,000 16.7% $0.45 6/9/09
Neil Gelfand.................... -- -- -- -- -- --
</TABLE>

The percentage shown under "Percentage of Total Options Granted in Fiscal
Year" is based on an aggregate of 598,954 options granted to our employees in
1999 under our 1997 Stock Incentive Plan.

The exercise price of each option was equal to the fair market value of our
common stock as determined by the board of directors on the date of grant.

The exercise price for each option may be paid in cash, promissory notes, in
shares of our common stock valued at fair market value on the exercise date or
through a cashless exercise procedure involving a same-day sale of the purchased
shares.

The potential realizable value of these options at 5% and 10% appreciation
is calculated by assuming an initial public offering price of $ per share
that appreciates at the indicated rate for the ten-year term of the option at
the time of grant. Stock price appreciation of 5% and 10% is assumed pursuant to
rules promulgated by the Securities and Exchange Commission and does not
represent our prediction of our stock price performance.

AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES

The following table sets forth information regarding the number and value of
securities underlying unexercised options that are held by each of our named
executive officers as of December 31, 1999. No shares were acquired on the
exercise of stock options by these individuals during the year ended
December 31, 1999.

Amounts shown under the column "Value of Unexercised In-the-Money Options at
December 31, 1999" are based on the assumed initial public offering price of
$ per share, without taking into account any taxes that may be payable in
connection with the transaction, multiplied by the number of shares underlying
the option, less the exercise price payable for these shares.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-
UNEXERCISED OPTIONS AT MONEY OPTIONS AT
DECEMBER 31, 1999 DECEMBER 31, 1999
------------------------------- -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
Ulf Arnetz............................... -- -- -- --
Lars G. Ivarsson......................... -- 100,000
Neil Gelfand............................. -- -- -- --
</TABLE>

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<PAGE>
EMPLOYMENT AND CHANGE OF CONTROL AGREEMENTS

We have entered into an employment agreement with Mr. Kane, our Chief
Operating Officer and Chief Financial Officer, for the one-year period ending
May 24, 2001, subject to automatic extension for additional one-year periods
unless either party provides written notice to the contrary to the other party
at least 30 days prior to the expiration of the employment period. Under this
agreement, Mr. Kane receives an annual base salary of $200,000 and is eligible
for an annual bonus of up to $100,000. Mr. Kane also received an option to
purchase 187,500 shares of common stock with an exercise price of $5.837 per
share which will vest with respect to one-third of the shares on the first
anniversary of the commencement of his employment with us and with respect to
the balance of the shares in 24 monthly installments commencing on the date 13
months after the commencement of his employment with us. In the event
Mr. Kane's employment is terminated by us (1) due to our nonrenewal of the
employment agreement or (2) without cause, he will receive a pro rata portion of
his annual base salary during the three month period after the date of
termination.

We have entered into an employment agreement with Mr. Zetterlund, our
Executive Vice President, Europe. Under this agreement, Mr. Zetterlund receives
an annual base salary of $190,000. He received an initial guaranteed bonus of
$15,000 for the first three months of his employment. Mr. Zetterlund's
employment agreement is terminable upon six months written notice. In addition,
Mr. Zetterlund was granted an option to purchase 25,000 shares of common stock
at an exercise price of $0.45 per share, which he has exercised in full. Of the
25,000 shares purchased by Mr. Zetterlund, 10,000 shares have vested, 5,000
shares will vest one year after the date of grant and the remaining 10,000
shares will vest in 24 monthly installments commencing on the date 13 months
after the date of grant.

Each option agreement evidencing an option granted under, and each
restricted stock agreement evidencing an award granted under, our 1997 Stock
Incentive Plan provides that upon a change in control of Corechange, the option
or the restricted stock, as applicable, will become fully vested.

STOCK PLANS

1997 STOCK INCENTIVE PLAN

A total of 3,500,000 shares of our common stock are reserved for issuance
under our 1997 Stock Incentive Plan. As of May 25, 2000, options to purchase an
aggregate of 1,315,425 shares were outstanding and 1,910,083 shares of common
stock were available for future grant. The maximum number of shares of common
stock with respect to which awards may be granted to any individual under the
1997 stock plan shall not exceed 400,000 shares of common stock during any
calendar year.

The 1997 stock plan provides for the grant of incentive stock options within
the meaning of Section 422 of the Internal Revenue Code, nonqualified stock
options, shares of restricted stock and other stock-based awards, each known as
an award, to our employees, officers, directors, consultants and advisors.
Incentive stock options may be granted only to our employees. The 1997 stock
plan is administered by our board of directors or a committee appointed by the
board of directors. Subject to the provisions of the 1997 stock plan, the board
of directors has the authority to determine:

- to whom awards will be granted;

- the number of shares to be covered by an award;

- when an award becomes exercisable;

- the exercise or purchase price of an award (which price, in the case of
incentive stock options, shall not be less than the fair market value of
the common stock on the date of grant, or in the case of incentive stock
options granted to employees who own, directly or indirectly, more than

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<PAGE>
10% of the total combined voting power of all classes of our stock, 110%
of the fair market value of the common stock on the date of grant); and

- any restrictions on sale and repurchase rights which shall be placed on
shares purchased upon exercise of an award.

The maximum term of awards granted under the 1997 stock plan is ten years.
The 1997 stock plan will terminate in July 2007 unless we terminate it earlier.

2000 DIRECTOR STOCK OPTION PLAN

Our 2000 director stock option plan was adopted by our board of directors in
May 2000, subject to stockholder approval. Under the terms of the director stock
option plan, directors who are not our employees or employees of our
subsidiaries are eligible to receive nonqualified options to purchase shares of
our common stock. A total of 250,000 shares of our common stock may be issued
upon exercise of options granted under the director stock option plan.

The board of directors has the authority to adopt, amend and repeal the
administrative rules, guidelines and practices relating to the director stock
option plan. Under the terms of the director stock option plan, each
non-employee director continuing as a director following this offering will
receive an option to purchase 5,000 shares of our common stock on the effective
date of this offering at a price per share equal to the public offering price.
In addition, each non-employee director will receive an option to purchase 3,000
shares of our common stock on the date of each annual meeting of stockholders
commencing with the 2001 annual meeting of stockholders. Further, individuals
who become directors after this offering and are not our employees will receive
an option to purchase 5,000 shares of our common stock on the date of his or her
initial election to the board of directors. Additionally, the chairmen of our
audit committee and compensation committee will each receive options to purchase
an additional 1,000 shares of common stock on the effective date of this
offering at a price per share equal to the public offering price. In addition,
each chairman will receive an option to purchase 500 shares of our common stock
on the date of each annual meeting of stockholders. Further, individuals who
become the chairman of our audit committee or compensation committee after this
offering will receive an option to purchase 1,000 shares of our common stock on
the date of his or her appointment as chairman. The exercise price per share of
all options granted under the plan other than the options granted on the
effective date of this offering will be the closing price per share of our
common stock on the date of grant. All options granted under the director stock
option plan will be fully vested upon grant.

2000 EMPLOYEE STOCK PURCHASE PLAN

Our 2000 employee stock purchase plan provides for the issuance of up to
250,000 shares of our common stock to participating employees.

The employee stock purchase plan, which is intended to qualify under
Section 423 of the Internal Revenue Code, provides for consecutive, overlapping
24 month offering periods. Each offering period includes four six-month purchase
periods. The offering periods generally start on the first trading day on or
after September 1 and March 1 of each year. However, the first such offering
period will commence shortly after the effective date of this offering.

All of our employees, including directors who are employees, and all
employees of any participating subsidiaries whose customary employment is for
more than five months in a calendar year and who have been employed by us for at
least seven calendar days prior to enrolling are eligible to participate in the
employee stock purchase plan. Employees who would immediately after the grant
own five percent or more of the total combined voting power or value of our
stock or any subsidiary are not eligible to participate.

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<PAGE>
To participate in the employee stock purchase plan, an employee must
authorize us to deduct from one to ten percent of his or her base pay during the
offering period. Amounts deducted and accumulated by the participant are used to
purchase shares of common stock at the end of each purchase period. The price of
stock purchased under the employee stock purchase plan is 85% of the lower of
the fair market value of the common stock (1) at the beginning of the offering
period, or (2) at the end of the purchase period. However, under some
circumstances, the purchase price may be adjusted to a price not less than 85%
of the lower of the fair market value on the common stock on (a) the date our
stockholders approve an increase in shares reserved for issuance under the
employee stock purchase plan or (b) at the end of the purchase period. In the
event the fair market value at the end of a purchase period is less than the
fair market value at the beginning of the offering period, the participants will
be withdrawn from the current offering period following exercise and
automatically re-enrolled in a new offering period. The new offering period will
use the lower fair market value as of the first date of the new offering period
to determine the purchase price for future purchase periods. Participants may
end their participation at any time during an offering period, and they will be
paid their payroll deductions to date. Participation ends automatically upon
termination of employment.

401(K) PLAN

We have adopted an employee savings and retirement plan qualified under
Section 401 of the Internal Revenue Code that covers all full-time employees.
Employees may elect to reduce their current compensation by up to 20%, subject
to the statutorily prescribed annual limit, and have the amount of the reduction
contributed to the 401(k) plan. Although not required, we have made matching or
additional contributions to the 401(k) plan in amounts determined annually by
our board of directors. Amounts contributed by us in an employee's 401(k)
account vest 25% after one year of service and an additional 25% each year
thereafter until fully vested.

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<PAGE>
CERTAIN TRANSACTIONS

We have engaged in the following transactions with our directors, officers
and holders of more than five percent of our voting securities and affiliates of
our directors, officers and five percent stockholders.

ULF ARNETZ

Ulf Arnetz, our President and Chief Executive Officer, founded Corechange as
a limited liability company in March 1996. In April 1996, Mr. Arnetz contributed
$1.2 million to our capital and, together with his wife, Mona Arnetz, received
1,200,000 of our units. Concurrently with such contribution, Mr. Arnetz loaned
us $1.4 million pursuant to a demand promissory note bearing interest at a rate
of 8% per annum. In January 1997, Mr. Arnetz loaned us an additional $80,000.
This loan bore interest at a rate of 8% per annum.

In February 1997, in connection with our $4.5 million acquisition of
technologies from CTP, Mr. Arnetz loaned us $2.0 million, such loan bearing
interest at a rate of 8% per annum, and personally guaranteed a note in the
original principal amount of $2.5 million which we issued to CTP in payment of
the purchase price. Mr. Arnetz also pledged and granted a security interest in a
cash amount of $2.0 million held in escrow and options held by Mr. Arnetz to
purchase 345,000 shares of CTP stock as collateral for the note.

In April 1997, in connection with the issuance of 11% convertible promissory
notes in the aggregate principal amount of $1.0 million to two individuals, Mr.
Arnetz agreed to lend to us up to $1.0 million at such time as we required
additional financing for our operations. This obligation to lend terminated in
June 1997 upon the conversion of the notes into shares of our Series I junior
convertible preferred stock, at which time Mr. Arnetz granted tag-along rights
to the two individuals entitling them to participate in any sale by Mr. Arnetz
of his shares.

In May 1997, in connection with the change in our form of organization,
Mr. Arnetz and his wife exchanged the 1,200,000 units held by them for 2,400,000
shares of our common stock. In addition, $2.5 million of our indebtedness to
Mr. Arnetz was forgiven.

In June, September and December 1997, Mr. Arnetz loaned us $200,000,
$600,000 and $600,000, respectively. These loans bore interest at a rate of 8%
per annum. The June, September and December 1997 loans were repaid in full in
July and November 1997 and January 1998, respectively.

In February 1998, we repaid the remaining principal amount outstanding of
$1.0 million to Mr. Arnetz. We paid the interest on the indebtedness to Mr.
Arnetz outstanding from time to time in July 1997 in the amount of $89,800, in
January 1998 in the amount of $55,652 and in February 1998 in the amount of
$9,590.

ISSUANCE OF SERIES I JUNIOR CONVERTIBLE PREFERRED STOCK

In June 1997, we issued 413,965 shares of our Series I junior convertible
preferred stock at a price per share of $6.38 for a total purchase price of
$2.6 million. Of the 413,965 shares sold, 15,673 shares were sold to Bengt
Arnetz, a brother of Ulf Arnetz, for a purchase price of $100,000.

ISSUANCE OF SERIES II JUNIOR CONVERTIBLE PREFERRED STOCK

In June 1997, we issued 336,021 shares of our Series II junior convertible
preferred stock at a price per share of $7.44 for a total purchase price of
$2.5 million. Of the 336,021 shares sold, 20,161 shares were sold to Martin Hart
for a purchase price of $149,998.

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<PAGE>
ISSUANCE OF SERIES III JUNIOR CONVERTIBLE PREFERRED STOCK

In October 1997, we issued 200,032 shares of our Series III junior
convertible preferred stock at a price per share of $7.49 for a total purchase
price of $1.5 million. Of the 200,032 shares sold, 13,400 shares were sold to
Bengt Arnetz for a purchase price of $100,366.

ISSUANCE OF SERIES A CONVERTIBLE PREFERRED STOCK

In January 1998, we issued 2,403,832 shares of our Series A convertible
preferred stock at a price per share of $4.16 for a total purchase price of
$10.0 million. These shares were all sold to HarbourVest Partners V-Direct Fund
L.P. In connection with such purchase, HarbourVest received an option to
purchase an additional 480,766 shares of Series A convertible preferred stock at
a purchase price of $4.16. In June 1998, HarbourVest exercised this option and
purchased all 480,766 shares for a purchase price of $2,000,000.

8% CONVERTIBLE NOTES

In November 1999, December 1999 and January 2000, we issued 8% convertible
notes in the aggregate principal amount of $3.4 million. The notes bear interest
at a rate of 8% per year. All of these notes were converted into shares of
Series B convertible preferred stock in connection with the sale of our
Series B convertible preferred stock in February 2000. Convertible notes in the
aggregate original principal amount of $750,000 were issued to the following
directors, officers and five percent stockholders and their affiliates as
follows:

<TABLE>
<CAPTION>
PRINCIPAL
NAME AMOUNT
---- ---------
<S> <C>
Ulf Arnetz................................................ $250,000
HarbourVest Partners V-Direct Fund L.P.................... 500,000
</TABLE>

ISSUANCE OF SERIES B CONVERTIBLE PREFERRED STOCK

In February 2000, we issued 3,046,773 shares of our Series B convertible
preferred stock at a price per share of $5.837 for a total purchase price of
$17.7 million, including 588,891 shares issued upon conversion of the
convertible notes. Of the 3,046,773 shares sold, 2,530,052 shares were sold to
the following directors, officers and five percent stockholders and their
affiliates as follows:

<TABLE>
<CAPTION>
SERIES B
CONVERTIBLE
NAME PREFERRED STOCK PURCHASE PRICE
---- --------------- --------------
<S> <C> <C>
ABN AMRO Capital (USA), Inc.............................. 685,284 $4,000,000
Ulf Arnetz............................................... 43,853 250,000
HarbourVest Partners V-Direct Fund L.P................... 344,688 2,000,000
Xcelera.com, Inc......................................... 1,456,227 8,500,000
</TABLE>

COREPORT LICENSES

CREDIT SUISSE FIRST BOSTON

In March 2000, we entered into an initial rollout license agreement and a
license agreement for Coreport with Credit Suisse First Boston (Europe) Limited.
Under the initial rollout agreement, we licensed Coreport for 40 authorized
users, and under the license agreement, we licensed Coreport for 50 authorized
users. We also agreed to license Coreport for additional users at specified
rates and provide certain installation services, configuration support services
and maintenance services. As of May 25, 2000 we have received $45,252 from CSFB.

52
<PAGE>
ABN AMRO

In May 2000, we entered into an initial rollout license agreement and a
license agreement for Coreport with ABN AMRO Information Technology Services Co.
Under the initial rollout agreement, we licensed Coreport for 50 authorized
users. We then entered into the license agreement and licensed Coreport for
17,000 authorized users. Under the license agreement, we agreed to provide
support services for a one-year period. In connection with the license
agreement, we also entered into a professional services agreement with ABN AMRO.
Under this agreement, we agreed to provide services in connection with the
installation of Coreport for ABN AMRO. As of May 25, 2000, we have not received
any payments from ABN AMRO under these agreements.

REGISTRATION AGREEMENT

We have entered into a registration agreement with the purchasers of our
Series A and Series B convertible preferred stock, including those executive
officers and holders of five percent or more of our voting securities listed
above, pursuant to which such purchasers have registration rights with respect
to their shares following this offering. Please read "Description of Capital
Stock--Registration Rights" for a further description of the terms of that
agreement.

53
<PAGE>
PRINCIPAL STOCKHOLDERS

The following table presents information regarding the beneficial ownership
of our common stock as of May 25, 2000, and as adjusted to reflect the sale of
our common stock offered by this prospectus, by:

- each person, or group of affiliated persons, who is known by us to
beneficially own 5.0% or more of our common stock;

- each of our named executive officers;

- each of our directors; and

- all current directors and executive officers as a group.

Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Shares of common stock subject to options that
are currently exercisable or exercisable within 60 days of May 25, 2000 are
deemed outstanding for purposes of computing the percentage ownership of any
person. These shares, however, are not considered outstanding when computing the
percentage ownership of each other person. Except as indicated in the footnotes
to this table and pursuant to state community property laws, each stockholder
named in the table has sole voting and investment power for the shares shown as
beneficially owned by them. Percentage of ownership before this offering is
based on 11,278,237 shares of common stock outstanding on May 25, 2000 and
assumes the conversion of all outstanding shares of our convertible preferred
stock into shares of common stock. Percentage of ownership after this offering
is based on shares of common stock to be outstanding after
completion of this offering and assumes no exercise of the underwriters'
over-allotment option. Unless otherwise indicated in the footnotes, the address
of each of the individuals named below is c/o Corechange, Inc., 260 Franklin
Street, Suite 1890, Boston, Massachusetts 02110.

<TABLE>
<CAPTION>
PERCENTAGE OF
OPTIONS OWNERSHIP
NUMBER OF SHARES INCLUDED IN ----------------------
BENEFICIALLY BENEFICIAL BEFORE THE AFTER THE
OWNED OWNERSHIP OFFERING OFFERING
<S> <C> <C> <C> <C>
5% STOCKHOLDERS:
HarbourVest Partners V-Direct Fund L.P...... 3,229,286(1) -- 28.6% %
One Financial Center, 44th Floor
Boston, MA 02111

Xcelera.com, Inc............................ 1,627,547 -- 14.4
Ugland House, South Church Street
Grand Cayman, Cayman Islands,
British West Indies

ABN AMRO Capital (USA), Inc................. 685,284(2) -- 6.1
208 South LaSalle Street, 10th Floor
Chicago, IL 60604
</TABLE>

54
<PAGE>

<TABLE>
<CAPTION>
PERCENTAGE OF
OPTIONS OWNERSHIP
NUMBER OF SHARES INCLUDED IN ----------------------
BENEFICIALLY BENEFICIAL BEFORE THE AFTER THE
OWNED OWNERSHIP OFFERING OFFERING
<S> <C> <C> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS:
Ulf Arnetz.................................. 2,373,520(3) -- 21.0%
Lars G. Ivarsson............................ 366,016(4) 36,105 3.2
Neil Gelfand................................ 71,526 -- *
Martin T. Hart.............................. 94,411 27,221 *
Frank J. Fanzilli, Jr....................... -- -- --
Daniel J. Foreman........................... 685,284(5) -- 6.1
Richard Lindh............................... 7,221 7,221 *
Ofer Nemirovsky............................. 3,256,507(6) 27,221 28.8
Robert Pirie................................ 27,221 27,221 *
Gustav Vik.................................. 1,627,547(7) -- 14.4
All directors and executive officers as a 8,558,994 180,928 74.7% %
group (13 persons)........................
</TABLE>

------------------------
* Less than 1%.

(1) HarbourVest Partners, LLC is the managing member of HVP V-Direct Associates
L.L.C., the general partner of HarbourVest Partners V-Direct Fund L.P.
Edward W. Kane and D. Brooks Zug, who comprise the investment committee of
HarbourVest Partners, LLC, hold the power to vote and dispose of the shares
held by HarbourVest Partners V-Direct Fund L.P.

(2) The power to vote and dispose of the shares held by ABN AMRO Capital (USA),
Inc. is shared by Daniel J. Foreman, a managing director of ABN AMRO Private
Equity, which is an affiliate of ABN AMRO Capital (USA), Inc., and three
other partners of ABN AMRO Private Equity.

(3) Includes 150,000 shares held by Mr. Arnetz's minor children and 666 shares
held by Mr. Arnetz's wife.

(4) Includes 50,000 shares held by Mr. Ivarsson's wife and 68,675 shares held by
Pinnacle Trustees, Ltd., in trust for Mr. Ivarsson's children.

(5) Consists of 685,284 shares held by ABN AMRO Capital (USA), Inc., an
affiliate of ABN AMRO Private Equity, of which Mr. Foreman is a managing
director. Mr. Foreman disclaims beneficial ownership of these shares. See
footnote 2 for a description of the entities holding shared power to vote
and dispose of the shares held by ABN AMRO Capital (USA), Inc.

(6) Includes 3,229,286 shares held by HarbourVest Partners V-Direct Fund L.P.,
an affiliate of HarbourVest Partners, LLC, of which Mr. Nemirovsky is a
managing director. Mr. Nemirovsky disclaims beneficial ownership of these
shares. See footnote 1 for a description of the entities holding shared
power to vote and dispose of the shares held by HarbourVest Partners
V-Direct Fund L.P.

(7) Consists of 1,627,547 shares held by Xcelera.com, Inc., of which Mr. Vik is
executive vice president, treasurer, secretary and a director. Mr. Vik
disclaims beneficial ownership of these shares.

55
<PAGE>
DESCRIPTION OF CAPITAL STOCK

Upon the filing of our amended and restated certificate of incorporation
upon the closing of this offering, our authorized capital stock will consist of
45,000,000 shares of common stock, $0.01 par value per share, and 5,000,000
shares of preferred stock, $0.01 par value per share.

The following description of our capital stock and some of the provisions of
our amended and restated certificate of incorporation and other agreements to
which we and our stockholders are parties is only a summary and is qualified by
the provisions of the amended and restated certificate of incorporation and such
other agreements, and the provisions of applicable law.

COMMON STOCK

As of May 25, 2000 there were 4,396,848 shares of common stock outstanding.
After giving effect to the conversion of all outstanding shares of convertible
preferred stock into 6,881,389 shares of common stock upon the closing of this
offering, there will be 11,278,237 shares of common stock outstanding held by
267 stockholders of record.

Holders of our common stock are entitled to one vote for each share held on
all matters submitted to a vote of the stockholders and do not have any
cumulative voting rights. Accordingly, holders of a majority of the shares of
common stock entitled to vote in any election of directors may elect all of the
directors standing for election. Holders of our common stock are entitled to
receive proportionally any dividends declared by our board of directors, subject
to any preferential dividend rights of outstanding preferred stock.

In the event of our liquidation, dissolution or winding up, holders of our
common stock are entitled to share ratably in all assets remaining after payment
of all debts and other liabilities, subject to the prior rights of any
outstanding preferred stock. Holders of our common stock have no preemptive,
subscription, redemption or conversion rights. The outstanding shares of our
common stock are, and the shares to be issued by us in this offering will be,
when issued and paid for, validly issued, fully paid and nonassessable. The
rights, preferences and privileges of holders of our common stock are subject
to, and may be adversely affected by, the rights of holders of shares of any
series of preferred stock that we may issue.

PREFERRED STOCK

Under the terms of our amended and restated certificate of incorporation to
be filed upon the closing of this offering, our board of directors will be
authorized to issue shares of preferred stock in one or more series without
further stockholder approval. The board has discretion to determine the rights,
preferences, privileges and restrictions, including voting rights, dividend
rights, conversion rights, redemption privileges and liquidation preferences, of
each series of preferred stock.

The purpose of authorizing our board of directors to issue preferred stock
and determine its rights and preferences is to eliminate delays associated with
a stockholder vote on specific issuances. The issuance of preferred stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could make it more difficult for a third party to
acquire, or could discourage a third party from acquiring, a majority of our
outstanding voting stock.

WARRANTS

As of May 25, 2000, we had an outstanding common stock purchase warrant
entitling its holder to purchase 120,191 shares of common stock at an exercise
price of $4.99 per share.

56
<PAGE>
REGISTRATION RIGHTS

Pursuant to the terms of the registration agreement dated February 18, 2000
by and among us and the holders of our Series A convertible preferred stock and
Series B convertible preferred stock, the holders of our Series A convertible
preferred stock and Series B convertible preferred stock have registration
rights with respect to certain shares of common stock held by them or issuable
to them upon conversion of shares of preferred stock held by them as set forth
below.

PIGGYBACK REGISTRATION RIGHTS. The holders of registrable shares have the
right to request that any registrable shares be included in any registration
initiated by us. In any public offering, the underwriters may, for marketing
reasons, exclude all or part of the shares requested to be registered on behalf
of these holders. Notwithstanding the foregoing, we have the right to terminate
any such registration initiated by us prior to its effectiveness regardless of
any request for inclusion by a holder of registrable securities. All holders of
registrable securities have waived their registration rights with respect to
this offering.

DEMAND REGISTRATION. At any time after February 18, 2002, holders of
registrable securities may request that we register shares of common stock
having an aggregate offering price to the public of at least $250,000. Holders
of our Series A convertible preferred stock may request that we effect up to two
registrations under the demand registration provisions and the holders of our
Series B convertible preferred stock may also request up to two such
registrations. If at the time of any request for registration, we are engaged or
have fixed plans to engage, within 30 days of the time of the request, in a
registered public offering or are engaged in any activity which, in the good
faith determination of our board of directors, would be adversely affected by
the requested registration to our material detriment, then we may delay such
request for a period not in excess of six months from the effective date of such
offering or the date of the commencement of such material activity.

In addition, we have agreed that, pursuant to the terms of the Members'
Agreement dated February 7, 1997 by and among us, Ulf Arnetz, Mona Arnetz and
CTP, the members have the right to request that any registrable securities be
included in any registration initiated by us. In any public offering, the
underwriters may, for marketing reasons, exclude all or part of the shares
requested to be registered on behalf of these holders. The members have the
right to request a registration of their securities on a Form S-3 at such time
as we are eligible. The members have waived their registration rights with
respect to this offering.

ANTI-TAKEOVER PROVISIONS OF DELAWARE LAW AND CHARTER AND BYLAW PROVISIONS

DELAWARE LAW

We are subject to the provisions of Section 203 of the Delaware General
Corporate Law. In general, the statute prohibits a publicly held Delaware
corporation from engaging in any business combination with any interested
stockholder for a period of three years following the date that the stockholder
became an interested stockholder unless:

- prior to the date, the board of directors of the corporation approved
either the business combination or the transaction that resulted in the
stockholder becoming an interested stockholder;

- upon consummation of the transaction that resulted in the stockholder's
becoming an interested stockholder, the interested stockholder owned at
least 85% of the voting stock of the corporation outstanding at the time
the transaction commenced, excluding those shares owned by persons who are
directors and also officers, and by employee stock plans in which employee
participants do not have the right to determine confidentially whether
shares held under the plan will be tendered in a tender or exchange offer;
or

57
<PAGE>
- on or subsequent to the date, the business combination is approved by the
board of directors and authorized at an annual or special meeting of
stockholders, and not by written consent, by the affirmative vote of at
least two-thirds of the outstanding voting stock that is not owned by the
interested stockholder.

Section 203 defines "business combination" to include:

- any merger or consolidation involving the corporation and the interested
stockholder;

- any sale, transfer, pledge or other disposition involving the interested
stockholder of 10% or more of the assets of the corporation;

- in general, any transaction that results in the issuance or transfer by
the corporation of any stock of the corporation to the interested
stockholder; or

- the receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits provided by or
through the corporation.

In general, Section 203 defines an interested stockholder as an entity or person
beneficially owning 15% or more of the outstanding voting stock of the
corporation and any entity or person affiliated with or controlling or
controlled by such entity or person.

CHARTER AND BYLAW PROVISIONS

The amended and restated certificate of incorporation and amended and
restated bylaws that will be effective upon the closing of this offering provide
for the division of our board of directors into three classes as nearly equal in
size as possible with staggered three-year terms. See "Management." Under the
certificate of incorporation and the bylaws, any vacancy on the board of
directors, including a vacancy resulting from an enlargement of the board of
directors, may only be filled by vote of a majority of the directors then in
office. The classification of the board of directors and the limitation on and
filling of vacancies could make it more difficult for a third party to acquire,
or discourage a third party from acquiring, control of our company.

The certificate of incorporation and bylaws will also provide that any
action required or permitted to be taken by our stockholders at an annual
meeting or special meeting of stockholders may only be taken if it is properly
brought before such meeting and may not be taken by written action in lieu of a
meeting. The certificate of incorporation and bylaws will further provide that
special meetings of the stockholders may only be called by our chairman of the
board, the president or our board of directors. In order for any matter to be
considered "properly brought" before a meeting, a stockholder must comply with
certain requirements regarding advance notice and provide us with certain
information. These provisions could have the effect of delaying a vote on
stockholder actions which are favored by the holders of a majority of our
outstanding voting securities until the next stockholders meeting.

The General Corporation Law of Delaware provides generally that the
affirmative vote of a majority of the shares entitled to vote on any manner is
required to amend a corporation's certificate of incorporation or bylaws, unless
a corporation's certificate of incorporation or bylaws, as the case may be,
requires a greater percentage. Our certificate of incorporation will require the
affirmative vote of holders of at least 75% of the votes which all the
stockholders would be entitled to cast in any annual election of directors to
amend or repeal any of the provisions contained in the certificate of
incorporation described in the prior two paragraphs and this paragraph, or our
bylaws.

The certificate of incorporation will contain certain provisions permitted
under the General Corporation Law of Delaware relating to the liability of
directors. The provisions eliminate a director's liability for monetary damages
for a breach of fiduciary duty, except in certain circumstances involving
wrongful acts, such as the breach of a director's duty of loyalty or acts or
omissions which involve intentional misconduct or a knowing violation of law.
Further, our certificate of incorporation will

58
<PAGE>
contain provisions to indemnify our directors and officers to the fullest extent
permitted by the General Corporation Law of Delaware. We believe that these
provisions will assist us in attracting and retaining qualified individuals to
serve as directors.

TRANSFER AGENT AND REGISTRAR

ChaseMellon Shareholder Services, LLC has been appointed as the transfer
agent and registrar for our common stock.

59
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for our common
stock. Future sales of substantial amounts of our common stock in the public
market could adversely affect prevailing market prices. Upon completion of this
offering, we will have outstanding an aggregate of shares of common stock.
Of these shares, all of the shares sold in this offering will be freely tradable
without restriction or further registration under the Securities Act, unless
these shares are purchased by "affiliates", as that term is defined in Rule 144
under the Securities Act. The remaining 11,278,237 shares of common stock held
by existing stockholders are restricted securities. Restricted securities may be
sold in the public market only if registered or if they qualify for an exemption
from registration under the Securities Act.

Our executive officers, directors and substantially all of our stockholders
have agreed pursuant to "lock-up" agreements that for a period of 180 days from
the date of this prospectus, they will not sell any shares of common stock
without the prior written consent of Donaldson, Lufkin & Jenrette Securities
Corporation.

However, under these "lock-up" agreements, holders of shares who have not
been employees since the date of this prospectus may offer, sell or otherwise
dispose of:

- 25% of the shares they own on the date of this prospectus if at the end of
the 90-day period after the date of this prospectus or the second trading
day following the first public release of our quarterly results after the
date of this prospectus, whichever is later, the reported last sale price
of the common stock on the Nasdaq National Market has been at least twice
the price per share in this offering for 20 of the 30 trading days ending
on the last trading day of such applicable period; and

- an additional 25% of those shares if at the end of the 135-day period
after the date of this prospectus the reported last sale price of the
common stock on the Nasdaq National Market is at least twice the price per
share in this offering for 20 of the 30 trading days ending on the last
trading day of this 135-day period.

Assuming a full lock-up of 180 days and under the rules under the Securities
Act, the restricted shares will be available for sale in the public market,
subject, to certain volume and other restrictions, as follows:

<TABLE>
<CAPTION>
DAYS AFTER THE NUMBER OF SHARES
EFFECTIVE DATE ELIGIBLE FOR SALE COMMENT
<S> <C> <C>

180 days Lock-up released; shares eligible for sale under Rules 144
and 701
</TABLE>

Additionally, of the 1,497,818 shares that may be issued upon the exercise
of options outstanding as of May 25, 2000, approximately shares are
subject to options which will be vested and exercisable 180 days after the date
of this prospectus.

STOCK OPTIONS

Following this offering, we intend to file a registration statement under
the Securities Act covering approximately 2,410,083 shares of common stock
reserved for issuance under our stock incentive plans. We expect the
registration statement to be filed and become effective as soon as practicable
after the closing of this offering. Accordingly, shares registered under such
registration statement will be available for sale in the open market after the
effectiveness of the registration statement.

60
<PAGE>
UNDERWRITING

Subject to the terms and conditions contained in an underwriting agreement,
dated , 2000, the underwriters named below, who are represented by
Donaldson, Lufkin & Jenrette Securities Corporation, SG Cowen Securities
Corporation, Prudential Securities Incorporated and DLJDIRECT Inc., have
severally agreed to purchase from us the number of shares of common stock shown
opposite their names below:

<TABLE>
<CAPTION>
NUMBER OF
SHARES
<S> <C>
UNDERWRITERS:
Donaldson, Lufkin & Jenrette Securities Corporation.........
SG Cowen Securities Corporation.............................
Prudential Securities Incorporated..........................
DLJDIRECT Inc...............................................

---------
Total...................................................
=========
</TABLE>

The underwriting agreement provides that the obligations of the several
underwriters to purchase and accept delivery of the shares offered by this
prospectus are subject to the approval of their counsel of legal matters and
other conditions. The underwriters must purchase and accept delivery of all of
the shares of common stock offered by this prospectus, other than those covered
by the over-allotment option described below, if any are purchased.

The underwriters propose initially to offer some of the shares directly to
the public at the public offering price on the cover page of this prospectus and
some of these shares of common stock to dealers, including the underwriters, at
the public offering price less a concession not in excess of $ per share.
The underwriters may allow, and these dealers may re-allow, a concession not in
excess of $ per share on sales to other dealers. After the initial offering
of the common stock to the public, the representatives of the underwriters may
change the public offering price and other selling terms.

We have granted to the underwriters an option, exercisable within 30 days
after the date of this prospectus, to purchase, up to additional
shares of common stock at the initial public offering price less underwriting
discounts and commissions. The underwriters may exercise this option solely to
cover over-allotments, if any, made in connection with this offering. To the
extent that the underwriters exercise this option, each underwriter will become
obligated, under conditions specified in the underwriting agreement, to purchase
its pro rata portion of the additional shares based on that underwriter's
underwriting commitment as indicated in the preceding table.

The following table shows the underwriting fees to be paid by us in this
offering. These amounts are shown assuming both no exercise and full exercise of
the underwriters' option to purchase additional shares of common stock.

<TABLE>
<CAPTION>
NO EXERCISE FULL EXERCISE
<S> <C> <C>
Per share............................................ $ $
Total................................................
</TABLE>

We will pay the offering expenses, estimated to be $ .

Upon the consummation of this offering, Robert Pirie, one of our directors,
will receive options to purchase 5,000 shares of our common stock at an exercise
price equal to the initial public offering

61
<PAGE>
price, pursuant to our 2000 director stock option plan. Mr. Pirie is Vice
Chairman, Investment Banking of SG Cowen Securities Corporation.

Pursuant to an engagement letter between Corechange and Prudential
Securities Incorporated, Prudential Securities Incorporated has a right of first
refusal to participate as a managing underwriter in an initial public offering
of our common stock if such initial public offering occurs prior to June 30,
2001.

We, our officers and directors, and substantially all of our stockholders
have agreed, for a period of 180 days after the date of this prospectus, without
the prior written consent of Donaldson, Lufkin & Jenrette Securities
Corporation, not to:

- offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right
or warrant to purchase or otherwise transfer or dispose of, directly or
indirectly, any shares of common stock or any securities convertible into
or exercisable or exchangeable for common stock; or

- enter into any swap or other arrangement that transfers all or a portion
of the economic consequences associated with the ownership of the common
stock, regardless of whether any such transaction described above is to be
settled by delivery of common stock or other securities, in cash or
otherwise.

However, holders of shares who have not been employees since the date of
this prospectus may offer, sell or otherwise dispose of:

The underwriting agreement contains limited exceptions to these lock-up
agreements.

In addition, during this 180-day period, we have also agreed not to file any
registration statement for, and each of our executive officers, directors and
substantially all of our stockholders have agreed not to make any demand for, or
exercise any right for, the registration of any shares of common stock or any
securities convertible into or exercisable or exchangeable for common stock
without the prior written consent of Donaldson, Lufkin & Jenrette Securities
Corporation.

An electronic prospectus will be available on the web sites maintained by
DLJDIRECT Inc., one of the underwriters and an affiliate of Donaldson, Lufkin &
Jenrette Securities Corporation, and PrudentialSecurities.com, a division of
Prudential Securities Incorporated.

We have agreed to indemnify the underwriters against specified civil
liabilities, including liabilities under the Securities Act, or to contribute to
payments that the underwriters may be required to make because of these
liabilities.

62
<PAGE>
Prior to the offering, there has been no established trading market for the
common stock. We and the underwriters will negotiate the initial public offering
price for the shares of common stock offered by this prospectus. The factors
considered in determining the initial public offering price include:

- our history of and the prospects for the industry in which we compete;

- our past and present operations;

- our historical results of operations;

- our prospects for future earnings;

- the recent market prices of securities of generally comparable companies;
and

- the general conditions of the securities market at the time of the
offering.

We have applied for quotation on the Nasdaq National Market under the symbol
"CRCH".

In connection with this offering, the underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
common stock. Specifically, the underwriters may over-allot the offering,
creating a syndicate short position. The underwriters may bid for and purchase
shares of common stock in the open market to cover a syndicate short position or
to stabilize the price of the common stock. In addition, the underwriting
syndicate may reclaim selling concessions from syndicate members if the
syndicate repurchases previously distributed common stock in syndicate covering
transactions, in stabilization transactions or in some other way or if
Donaldson, Lufkin & Jenrette Securities Corporation receives a report that
indicates clients of such syndicate members have "flipped" the common stock.
These activities may stabilize or maintain the market price of the common stock
above independent market levels. The underwriters are not required to engage in
these activities, and may end any of these activities at any time.

Donaldson, Lufkin & Jenrette Securities Corporation has reserved for sale at
the initial public offering price up to shares of common stock offered by
this prospectus for sale to our employees, directors and other persons
designated by us. The number of shares available for sale to the general public
will be reduced to the extent that any reserved shares are purchased. Any
reserved shares not so purchased will be offered by the underwriters on the same
basis as the other shares offered through this prospectus.

Other than in the United States, no action has been taken by us or the
underwriters that would permit a public offering of the shares of common stock
offered by this prospectus in any jurisdiction where action for that purpose is
required. The shares of common stock offered by this prospectus may not be
offered or sold, directly or indirectly, nor may this prospectus or any other
offering material or advertisements associated with the offer and sale of any of
the shares of common stock offered through this prospectus be distributed or
published in any jurisdiction, except under circumstances that will result in
compliance with the applicable rules and regulations of that jurisdiction. You
should inform yourself and observe any restrictions relating to the offering of
the common stock and the distribution of this prospectus. This prospectus does
not constitute an offer to sell or a solicitation of an offer to buy any shares
of common stock offered in this prospectus in any jurisdiction in which an offer
or a solicitation is unlawful.

LEGAL MATTERS

Certain legal matters with respect to the validity of the shares offered
hereby will be passed upon for us by Hale and Dorr LLP, Boston, Massachusetts.
Certain legal matters in connection with this offering will be passed upon for
the underwriters by Gibson, Dunn & Crutcher LLP, New York, New York.

63
<PAGE>
EXPERTS

Our consolidated balance sheet as of December 31, 1999 and the related
consolidated statements of operations, stockholders' equity (deficit) and cash
flows for the year then ended included in this prospectus have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said report.

Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements at December 31, 1998, and for each of the two years ended
December 31, 1998, as set forth in their report. We have included these
financial statements in this prospectus and elsewhere in the registration
statement of which this prospectus is a part in reliance on Ernst & Young LLP's
report given on their authority as experts in accounting and auditing.

CHANGE IN ACCOUNTANTS

On March 8, 2000, after discussions with us, Ernst & Young LLP resigned as
our independent auditors when we informed them of our intention to enter into a
strategic alliance with the consulting division of Ernst & Young LLP. At that
time, Ernst & Young LLP advised us that the existence of such a relationship
would impair their independence in their role as independent auditors. We
subsequently appointed Arthur Andersen LLP as our independent accountants. There
were no disagreements with Ernst & Young during the years ended December 31,
1997 and 1998 or during any subsequent interim period preceding their
replacement on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which disagreements, if not
resolved to Ernst & Young's satisfaction, would have caused them to make
reference to the subject matter of the disagreement in connection with their
report. Ernst & Young issued an unqualified report on the financial statements
as of and for the years ended December 31, 1997 and 1998. We did not consult
Arthur Andersen LLP on any accounting or financial reporting matters in the
periods prior to their appointment. The change in accountants was approved by
our board of directors.

ADDITIONAL INFORMATION

We have has filed with the Commission a registration statement on Form S-1
under the Securities Act with respect to the offer and sale of common stock
pursuant to the prospectus. This prospectus, filed as part of that registration
statement, does not contain all the information set forth in the registration
statement or the exhibits thereto in accordance with the rules and regulations
of the Commission, and reference is hereby made to such omitted information.
Statements made in this prospectus concerning the contents of any contract,
agreement or other document filed as an exhibit to the registration statement
are summaries of the terms of such contracts, agreements or documents and are
not necessarily complete. Reference is made to each such exhibit for a more
complete description of the matters involved, and such statements shall be
deemed qualified by such reference. The registration statement and the exhibits
thereto filed with the Commission may be inspected, without charge, and copies
may be obtained at prescribed rates, at the public reference facility maintained
by the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549 and at the regional offices of the Commission located at 7 World Trade
Center, 13th Floor, New York, 10048 and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Please call the Commission at
1-800-SEC-0330 for further information on the operation of the public reference
facility. The registration statement and other information filed by us with the
Commission also are available at the Web site maintained by the Commission on
the internet at HTTP//:WWW.SEC.GOV. For further information pertaining to us and
our common stock offered by this prospectus, reference is hereby made to the
registration statement.

64
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Report of Independent Public Accountants.................... F-1

Report of Independent Auditors.............................. F-2

Consolidated Balance Sheets as of December 31, 1998 and 1999
and March 31, 2000 (unaudited)............................ F-3

Consolidated Statements of Operations for the Years Ended
December 31, 1997, 1998, and 1999 and for the Three Months
Ended March 31, 1999 and 2000 (unaudited)................. F-4

Consolidated Statements of Stockholders' Equity (Deficit)
for the Years Ended December 31, 1997, 1998 and 1999 and
for the Three Months Ended March 31, 2000 (unaudited)..... F-5

Consolidated Statements of Cash Flows for the Years Ended
December 31, 1997, 1998 and 1999 and for the Three Months
Ended March 31, 1999 and 2000 (unaudited)................. F-6

Notes to Consolidated Financial Statements.................. F-7
</TABLE>
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Corechange, Inc.:

We have audited the accompanying consolidated balance sheet of
Corechange, Inc. (a Delaware corporation) and subsidiaries as of December 31,
1999 and the related consolidated statements of operations, stockholders' equity
(deficit) and cash flows for the year then ended. 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 audit in accordance with auditing standards generally
accepted in the United States. 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 audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Corechange, Inc. and
subsidiaries as of December 31, 1999 and the results of their operations and
their cash flows for the year then ended in conformity with accounting
principles generally accepted in the United States.

/s/ ARTHUR ANDERSEN LLP

Boston, Massachusetts
April 11, 2000

F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS

To Corechange, Inc.:

We have audited the accompanying consolidated balance sheet of
Corechange, Inc. and subsidiaries (the Company) as of December 31, 1998 and the
related consolidated statements of operations, stockholders' deficit, and cash
flows for the years ended December 31, 1997 and 1998. 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 audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Corechange, Inc. as of December 31, 1998 and the consolidated results of its
operations and its cash flows for the years ended December 31, 1997 and 1998 in
conformity with generally accepted accounting principles.

/s/ Ernst & Young LLP

Boston, Massachusetts
February 26, 1999

F-2
<PAGE>
CORECHANGE, INC.

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
MARCH 31, 2000
DECEMBER 31, ----------------------
------------------- PRO FORMA
1998 1999 ACTUAL (NOTE 2(C))
<S> <C> <C> <C> <C>
(UNAUDITED)
ASSETS

CURRENT ASSETS:
Cash and cash equivalents................................. $ 2,890 $ 2,102 $ 13,144 $ 13,144
Accounts receivable--less allowance for doubtful accounts
of approximately $40 in 1998 and 1999 and $70 in 2000... 917 715 945 945
Other current assets...................................... 235 311 396 396
-------- -------- -------- --------

Total current assets................................ 4,042 3,128 14,485 14,485

Property and Equipment, net................................. 717 516 555 555

Other Assets................................................ 107 -- -- --
-------- -------- -------- --------

Total assets........................................ $ 4,866 $ 3,644 $ 15,040 $ 15,040
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
Convertible promissory notes.............................. $ -- $ 3,267 $ -- $ --
Notes payable............................................. 254 212 72 72
Accounts payable and accrued expenses..................... 1,100 1,127 1,145 1,145
Deferred revenue.......................................... 340 422 380 380
-------- -------- -------- --------

Total current liabilities........................... 1,694 5,028 1,597 1,597

Commitments and Contingencies (Note 10)

Redeemable Convertible Preferred Stock (Note 8)............. 11,573 11,634 32,659 --

STOCKHOLDERS' EQUITY (DEFICIT):
Series I convertible preferred stock--413,965 shares
authorized, issued and outstanding; no shares
authorized, issued or outstanding pro forma (liquidation
preference of $2,639)................................... 2,641 2,641 2,641 --
Series II convertible preferred stock--336,021 shares
authorized, issued and outstanding; no shares
authorized, issued or outstanding pro forma (liquidation
preference of $2,500)................................... 2,484 2,484 2,484 --
Series III convertible preferred stock--215,000 shares
authorized; 200,032 shares issued and outstanding; no
shares authorized, issued or outstanding pro forma
(liquidation preference of $1,500)...................... 1,417 1,417 1,417 --
Preferred stock, $0.01 par value; 5,000,000 shares
authorized, pro forma; no shares issued or outstanding,
pro forma............................................... -- -- -- --
Common stock--$0.01 par value; 15,000,000 shares
authorized; 4,144,365, 4,117,621 and 4,173,819 shares
issued and outstanding at December 31, 1998 and 1999 and
March 31, 2000, respectively; 11,055,208 shares issued
and outstanding pro forma............................... 41 41 42 111
Additional paid-in capital................................ 3,630 4,369 1,027 40,159
Deferred stock-based compensation......................... -- (547) (1,075) (1,075)
Accumulated deficit....................................... (18,597) (23,379) (25,706) (25,706)
Cumulative translation adjustment......................... (17) (44) (46) (46)
-------- -------- -------- --------

Total stockholders' equity (deficit)................ (8,401) (13,018) (19,216) 13,443
-------- -------- -------- --------

Total liabilities and stockholders' equity
(deficit)......................................... $ 4,866 $ 3,644 $ 15,040 $ 15,040
======== ======== ======== ========
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.

F-3
<PAGE>
CORECHANGE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------ -------------------
1997 1998 1999 1999 2000
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES:
Software licenses............................. $ 1,054 $ 1,004 $ 926 $ 204 $ 601
Services...................................... 1,864 4,657 4,340 1,079 546
------- ------- ------- ------- -------
Total revenues............................ 2,918 5,661 5,266 1,283 1,147
COST OF REVENUES(1)............................. 1,606 3,746 3,125 793 473
------- ------- ------- ------- -------
Gross profit.............................. 1,312 1,915 2,141 490 674
OPERATING EXPENSES:
Sales and marketing(1)........................ 2,437 3,914 2,845 607 1,276
Research and development(1)................... 1,240 1,768 1,344 260 500
General and administrative(1)................. 1,915 3,489 2,531 620 1,117
Acquired in-process technologies.............. 4,500 -- -- -- --
Stock-based compensation(1)................... -- -- 208 -- 151
Restructuring costs........................... -- 403 -- -- --
------- ------- ------- ------- -------
Total operating expenses.................. 10,092 9,574 6,928 1,487 3,044
------- ------- ------- ------- -------
Operating loss............................ (8,780) (7,659) (4,787) (997) (2,370)
Interest Expense................................ (219) (16) (43) (11) (45)
Interest Income................................. 24 246 48 23 88
------- ------- ------- ------- -------
Net loss.................................. (8,975) (7,429) (4,782) (985) (2,327)
Accretion and dividends on preferred stock...... -- (61) (61) (15) (4,460)
------- ------- ------- ------- -------
Net loss attributable to common
stockholders............................ $(8,975) $(7,490) $(4,843) $(1,000) $(6,787)
======= ======= ======= ======= =======
Net Loss per Share (Note 2(g))--Basic and
diluted....................................... $ (3.36) $ (2.04) $ (1.29) $ (0.26) $ (1.65)
======= ======= ======= ======= =======
Weighted average common shares
outstanding--Basic and diluted................ 2,669 3,664 3,754 3,775 4,102
======= ======= ======= ======= =======
Pro Forma Net Loss per Share (Note 2(g))--Basic
and diluted................................... $ (0.63) $ (0.69)
======= =======
Pro forma weighted average common shares
outstanding--Basic and diluted.............. 7,589 9,358
======= =======
</TABLE>

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

(1) The following summarizes the departmental allocation of stock-based
compensation:

<TABLE>
<S> <C> <C> <C> <C> <C>
Cost of Revenues................................ $ -- $ -- $ 42 $ -- $ 30
Operating Expenses:
Sales and marketing........................... -- -- 41 -- 30
Research and development...................... -- -- 63 -- 46
General and administrative.................... -- -- 62 -- 45
------- ------- ------- ------- -------
Total stock-based compensation............ $ -- $ -- $ 208 $ -- $ 151
======= ======= ======= ======= =======
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.

F-4
<PAGE>
CORECHANGE, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
MEMBERSHIP UNITS CONVERTIBLE PREFERRED STOCK
----------------------------------- -------------------------------------------------------
CLASS A CLASS B SERIES I SERIES II SERIES III
--------------- ------------------ ----------------- ----------------- -----------------
UNITS AMOUNT UNITS AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1996........................ 33,333 $ 33 1,166,667 $1,167 -- $ -- -- $ -- -- $ --
Comprehensive loss:
Net loss.................... -- -- -- -- -- -- -- -- -- --
Cumulative translation
adjustment................ -- -- -- -- -- -- -- -- -- --
Total comprehensive
loss.................. -- -- -- -- -- -- -- -- -- --
Issuance of membership
units..................... 2,667 3 -- -- -- -- -- -- -- --
Change in form of
organization from LLC to
corporation on May 12,
1997...................... (36,000) (36) (1,166,667) (1,167) -- -- -- -- -- --
Contribution of note payable
by shareholder to equity on
May 12, 1997................ -- -- -- -- -- -- -- -- -- --
Issuance of common stock...... -- -- -- -- -- -- -- -- -- --
Sale of convertible preferred
stock in April 1997 at $6.38
per share................... -- -- -- -- 254,347 1,623 -- -- -- --
Conversion of note payable by
shareholders to preferred
stock, including $18 of
accrued interest, at $6.38
per share................... -- -- -- -- 159,618 1,018 -- -- -- --
Sale of convertible preferred
stock in July 1997 at $7.44
per share, net of $16
issuance costs.............. -- -- -- -- -- -- 336,021 2,484 -- --
Sale of convertible preferred
stock in November 1997 at
$7.49 per share, net of $81
issuance costs.............. -- -- -- -- -- -- -- -- 200,032 1,417
------- ---- ---------- ------ -------- ------- -------- ------- -------- -------
Balance at December 31,
1997........................ -- -- -- -- 413,965 2,641 336,021 2,484 200,032 1,417
Comprehensive loss:
Net loss.................... -- -- -- -- -- -- -- -- -- --
Cumulative translation
adjustment................ -- -- -- -- -- -- -- -- -- --
Total comprehensive
loss.................. -- -- -- -- -- -- -- -- -- --
Issuance of common stock.... -- -- -- -- -- -- -- -- -- --
Repurchase and retirement of
common stock.............. -- -- -- -- -- -- -- -- -- --
Accretion of redeemable
convertible preferred
stock..................... -- -- -- -- -- -- -- -- -- --
------- ---- ---------- ------ -------- ------- -------- ------- -------- -------
Balance at December 31,
1998........................ -- -- -- -- 413,965 2,641 336,021 2,484 200,032 1,417
Comprehensive loss:
Net loss.................... -- -- -- -- -- -- -- -- -- --
Cumulative translation
adjustment................ -- -- -- -- -- -- -- -- -- --
Total comprehensive
loss.................. -- -- -- -- -- -- -- -- -- --
Issuance of common stock.... -- -- -- -- -- -- -- -- -- --
Deferred stock-based
compensation.............. -- -- -- -- -- -- -- -- -- --
Stock-based compensation
expense................... -- -- -- -- -- -- -- -- -- --
Repurchase and retirement of
common stock.............. -- -- -- -- -- -- -- -- -- --
Accretion of redeemable
convertible preferred
stock..................... -- -- -- -- -- -- -- -- -- --
------- ---- ---------- ------ -------- ------- -------- ------- -------- -------
Balance at December 31,
1999........................ -- -- -- -- 413,965 2,641 336,021 2,484 200,032 1,417
Comprehensive loss:
Net loss.................... -- -- -- -- -- -- -- -- -- --
Cumulative translation
adjustment................ -- -- -- -- -- -- -- -- -- --
Total comprehensive
loss.................. -- -- -- -- -- -- -- -- -- --
Issuance of common stock.... -- -- -- -- -- -- -- -- -- --
Deferred stock-based
compensation.............. -- -- -- -- -- -- -- -- -- --
Stock-based compensation
expense................... -- -- -- -- -- -- -- -- -- --
Compensation expense related
to consultant options..... -- -- -- -- -- -- -- -- -- --
Accretion and dividends on
redeemable convertible
preferred stock........... -- -- -- -- -- -- -- -- -- --
------- ---- ---------- ------ -------- ------- -------- ------- -------- -------
Balance at March 31, 2000
(unaudited)................. -- -- -- -- 413,965 2,641 336,021 2,484 200,032 1,417
Pro forma conversion of
preferred stock into common
stock....................... -- -- -- -- (413,965) (2,641) (336,021) (2,484) (200,032) (1,417)
------- ---- ---------- ------ -------- ------- -------- ------- -------- -------
Pro Forma Balance at March 31,
2000 (unaudited)............ -- $ -- -- $ -- -- $ -- -- $ -- -- $ --
======= ==== ========== ====== ======== ======= ======== ======= ======== =======

COMMON STOCK ADDITIONAL DEFERRED CUMULATIVE STOCKHOLDERS'
--------------------- PAID-IN STOCK-BASED ACCUMULATED TRANSLATION EQUITY
SHARES PAR VALUE CAPITAL COMPENSATION DEFICIT ADJUSTMENT (DEFICIT)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1996........................ -- $ -- $ 20 $ -- $ (2,193) $ -- $ (973)
Comprehensive loss:
Net loss.................... -- -- -- -- (8,975) -- (8,975)
Cumulative translation
adjustment................ -- -- -- -- -- (8) (8)
--------
Total comprehensive
loss.................. -- -- -- -- -- -- (8,983)
Issuance of membership
units..................... -- -- -- -- -- -- 3
Change in form of
organization from LLC to
corporation on May 12,
1997...................... 2,405,332 24 1,179 -- -- -- --
Contribution of note payable
by shareholder to equity on
May 12, 1997................ -- -- 2,479 -- -- -- 2,479
Issuance of common stock...... 1,856,892 18 2 -- -- -- 20
Sale of convertible preferred
stock in April 1997 at $6.38
per share................... -- -- -- -- -- -- 1,623
Conversion of note payable by
shareholders to preferred
stock, including $18 of
accrued interest, at $6.38
per share................... -- -- -- -- -- -- 1,018
Sale of convertible preferred
stock in July 1997 at $7.44
per share, net of $16
issuance costs.............. -- -- -- -- -- -- 2,484
Sale of convertible preferred
stock in November 1997 at
$7.49 per share, net of $81
issuance costs.............. -- -- -- -- -- -- 1,417
---------- ---- ------- ------- -------- ---- --------
Balance at December 31,
1997........................ 4,262,224 42 3,680 -- (11,168) (8) (912)
Comprehensive loss:
Net loss.................... -- -- -- -- (7,429) -- (7,429)
Cumulative translation
adjustment................ -- -- -- -- -- (9) (9)
--------
Total comprehensive
loss.................. -- -- -- -- -- (7,438)
Issuance of common stock.... 53,036 1 11 -- -- -- 12
Repurchase and retirement of
common stock.............. (170,895) (2) -- -- -- -- (2)
Accretion of redeemable
convertible preferred
stock..................... -- -- (61) -- -- -- (61)
---------- ---- ------- ------- -------- ---- --------
Balance at December 31,
1998........................ 4,144,365 41 3,630 -- (18,597) (17) (8,401)
Comprehensive loss:
Net loss.................... -- -- -- -- (4,782) -- (4,782)
Cumulative translation
adjustment................ -- -- -- -- -- (27) (27)
--------
Total comprehensive
loss.................. -- -- -- -- -- -- (4,809)
Issuance of common stock.... 225,084 2 48 -- -- -- 50
Deferred stock-based
compensation.............. -- -- 755 (755) -- -- --
Stock-based compensation
expense................... -- -- -- 208 -- -- 208
Repurchase and retirement of
common stock.............. (251,828) (2) (3) -- -- -- (5)
Accretion of redeemable
convertible preferred
stock..................... -- -- (61) -- -- -- (61)
---------- ---- ------- ------- -------- ---- --------
Balance at December 31,
1999........................ 4,117,621 41 4,369 (547) (23,379) (44) (13,018)
Comprehensive loss:
Net loss.................... -- -- -- -- (2,327) -- (2,327)
Cumulative translation
adjustment................ -- -- -- -- -- (2) (2)
--------
Total comprehensive
loss.................. -- -- -- -- -- -- (2,329)
Issuance of common stock.... 56,198 1 24 -- -- -- 25
Deferred stock-based
compensation.............. -- -- 679 (679) -- -- --
Stock-based compensation
expense................... -- -- -- 151 -- -- 151
Compensation expense related
to consultant options..... -- -- 415 -- -- -- 415
Accretion and dividends on
redeemable convertible
preferred stock........... -- -- (4,460) -- -- -- (4,460)
---------- ---- ------- ------- -------- ---- --------
Balance at March 31, 2000
(unaudited)................. 4,173,819 42 1,027 (1,075) (25,706) (46) (19,216)
Pro forma conversion of
preferred stock into common
stock....................... 6,881,389 69 39,132 -- -- -- 32,659
---------- ---- ------- ------- -------- ---- --------
Pro Forma Balance at March 31,
2000 (unaudited)............ 11,055,208 $111 $40,159 $(1,075) $(25,706) $(46) $ 13,443
========== ==== ======= ======= ======== ==== ========
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.

F-5
<PAGE>
CORECHANGE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------ -------------------
1997 1998 1999 1999 2000
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net loss.................................................. $(8,975) $(7,429) $(4,782) $ (985) $(2,327)
Adjustments to reconcile net loss to net cash used in
operating activities--
Acquired research and development....................... 4,500 -- -- -- --
Noncash interest expense................................ 18 -- -- -- --
Stock-based compensation expense........................ -- 8 208 -- 511
Depreciation and amortization........................... 187 313 435 171 75
Changes in operating assets and liabilities--
Accounts receivable................................... (596) 804 202 294 (230)
Other current assets.................................. (154) (1) (76) 91 (85)
Accounts payable and accrued expenses................. 481 (99) 29 (307) 68
Deferred revenue...................................... 234 (303) 81 (60) (42)
------- ------- ------- ------ -------

Net cash used in operating activities............... (4,305) (6,707) (3,903) (796) (2,030)
------- ------- ------- ------ -------
Cash Flows from Investing Activities:
Increase in other assets.................................. (8) -- -- -- --
Purchases of property and equipment....................... (582) (417) (127) -- (114)
Purchase of in-process research and development........... (4,500) -- -- -- --
------- ------- ------- ------ -------

Net cash used in investing activities............... (5,090) (417) (127) -- (114)
------- ------- ------- ------ -------
Cash Flows from Financing Activities:
Net proceeds from issuance of preferred stock............. 5,523 11,512 -- -- 13,186
Proceeds from issuance of notes payable to stockholders... 3,877 -- 3,267 -- 116
Proceeds from issuance of note payable to CTP............. 2,500 -- -- -- --
Proceeds of note payable.................................. 192 -- -- 40 --
Payments of notes payable................................. (2,032) (406) (42) -- (139)
Proceeds from issuance of common stock.................... 21 4 50 -- 25
Proceeds from issuance of membership units................ 3 -- -- -- --
Repurchase and retirement of common stock................. -- (3) (5) (3) --
Payments of notes payable to stockholders................. -- (1,832) -- -- --
------- ------- ------- ------ -------

Net cash provided by financing activities........... 10,084 9,275 3,270 37 13,188

Effect of Exchange Rates on Cash............................ (8) (9) (28) (21) (2)
------- ------- ------- ------ -------

Net Increase (Decrease) in Cash and Cash Equivalents........ 681 2,142 (788) (780) 11,042

Cash and Cash Equivalents at Beginning of Period............ 67 748 2,890 2,890 2,102
------- ------- ------- ------ -------

Cash and Cash Equivalents at End of Period.................. $ 748 $ 2,890 $ 2,102 $2,110 $13,144
======= ======= ======= ====== =======
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest.................................... $ 180 $ 57 $ -- $ -- $ --
======= ======= ======= ====== =======

Noncash Financing Activities:
Contribution of note payable by stockholders to equity
upon incorporation...................................... $ 2,479 $ -- $ -- $ -- $ --
======= ======= ======= ====== =======
Conversion of note payable by lenders to Series I
convertible preferred stock, including $18 of accrued
interest................................................ $ 1,018 $ -- $ -- $ -- $ --
======= ======= ======= ====== =======
Conversion of note payable to Series B redeemable
convertible preferred stock, including $50 of accrued
interest................................................ $ -- $ -- $ -- $ -- $ 3,433
======= ======= ======= ====== =======
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.

F-6
<PAGE>
CORECHANGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

1. OPERATIONS

Corechange, Inc. (Corechange or the Company) was organized in Delaware in
March 1996 under the name SPI Company, LLC. SPI Company, LLC was spun off from
Cambridge Technology Partners, Inc. (CTP). In August 1996, the company name was
changed to Corechange, LLC. On May 12, 1997, Corechange changed its form of
organization from a limited liability company to a corporation.

Corechange develops, markets and supports software that provides enterprises
with a framework to manage access to business information and applications using
the internet and wireless internet technology. Corechange's access framework
software, Coreport, enables enterprises to provide their employees, customers,
suppliers and business partners with an internet-based interface to easily
access and manipulate the information they require to conduct e-business.

2. SIGNIFICANT ACCOUNTING POLICIES

The accompanying consolidated financial statements reflect the application
of certain accounting policies as described below and elsewhere in these notes
to consolidated financial statements.

(A) PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements include the results of
operations of Corechange and its wholly owned subsidiaries. All significant
intercompany transactions and balances have been eliminated in consolidation.

(B) UNAUDITED INTERIM FINANCIAL STATEMENTS

The accompanying consolidated financial statements as of March 31, 2000 and
for the three months ended March 31, 1999 and 2000 are unaudited. These
unaudited financial statements have been prepared on the same basis as the
audited financial statements and include, in the opinion of management, all
normal recurring adjustments necessary for a fair presentation of the financial
position, results of operations, and cash flows for the interim periods
presented. Results for the three months ended March 31, 2000 are not necessarily
indicative of the results that may be expected for the entire fiscal year or
future periods.

The unaudited pro forma consolidated balance sheet as of March 31, 2000 and
the pro forma net loss per share for the year ended December 31, 1999 and the
three months ended March 31, 2000 reflect the automatic conversion of all
outstanding shares of Series A and Series B redeemable convertible preferred
stock and Series I, II, and III convertible preferred stock into 6,881,389
shares of common stock, which will occur upon the closing of Corechange's
proposed initial public offering.

F-7
<PAGE>
CORECHANGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(D) USE OF ESTIMATES

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

(E) REVENUE RECOGNITION

Corechange generates revenues from licensing its software and providing
professional services and training, maintenance, and customer support services.
Corechange executes separate contracts that govern the terms and conditions of
each software license and maintenance arrangement and each professional services
arrangement. These contracts may be elements in a multiple element arrangement.
Revenues under multiple element arrangements, which may include several
different software products or services sold together, are allocated to each
element based on the residual method in accordance with American Institute of
Certified Public Accountants (AICPA) Statement of Position 98-9, SOFTWARE
REVENUE RECOGNITION WITH RESPECT TO CERTAIN ARRANGEMENTS.

Corechange uses the residual method when vendor-specific objective evidence
of fair value does not exist for one of the delivered elements in an
arrangement. Under the residual method, the fair value of the undelivered
elements is deferred and subsequently recognized. Corechange has established
sufficient vendor specific objective evidence for professional services,
training, and maintenance and support services based on the price charged when
these elements are sold separately. Accordingly, software license revenues are
recognized under the residual method in arrangements in which software is
licensed with professional services, training, and maintenance and support
services.

Corechange recognizes software license revenues upon execution of a signed
license agreement, delivery of the software to a customer, and determination
that collection of a fixed license fee is probable.

Services revenues include professional services and training, maintenance,
and customer support fees. Professional services are not essential to the
functionality of the other elements in an arrangement and are accounted for
separately. Professional services revenues are recognized as the services are
performed for time and material contracts or on a percentage-of-completion basis
for fixed price contracts. The percentage of completion basis is used by
measuring the percentage of costs (primarily labor) incurred to date as compared
to the estimated total costs (primarily labor) for each contract. When a loss is
anticipated on a contract, the full amount thereof is provided currently. If
conditions for acceptance are required, professional services revenues are
recognized upon customer acceptance. Training revenues are recognized as the
services are provided. Maintenance and customer support fees include the right
to unspecified upgrades on a when-and-if-available basis and ongoing technical
support. Maintenance and customer support fees are recognized ratably over the
term of the maintenance contract on a straight-line basis.

F-8
<PAGE>
CORECHANGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(F) COST OF REVENUES

Cost of revenues consists primarily of personnel costs and third-party
consulting fees associated with implementation, training, maintenance, and other
support and professional services. Cost of revenues also includes software
license costs consisting of the costs of the media in which it is delivered;
these costs are not significant.

(G) LOSS PER SHARE

Basic and diluted net loss per share is computed by dividing the net loss
attributable to common stockholders for the period by the weighted average
number of unrestricted common shares outstanding during the period. Basic and
diluted net loss per share are the same, as the effect of the inclusion of
shares of common stock issuable upon the conversion of convertible preferred
stock and redeemable convertible preferred stock, as well as stock options,
restricted stock, and a stock warrant, would be antidilutive. In accordance with
Securities and Exchange Commission (SEC) Staff Accounting Bulletin (SAB)
No. 98, the Company has determined that there were no nominal issuances of
common stock or potential common stock in the period prior to the Company's
planned initial public offering. The following weighted average total of
potentially issuable shares were excluded from the calculation of dilutive
weighted average shares outstanding, as their effect would be antidilutive (in
thousands):

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------ -------------------
1997 1998 1999 1999 2000
<S> <C> <C> <C> <C> <C>
Convertible preferred stock.............. 475 3,478 3,835 3,835 5,256
Common stock options..................... -- 441 590 392 885
Restricted common stock.................. 749 547 221 221 88
Common stock warrant..................... -- 120 120 120 120
----- ----- ----- ----- -----
Total................................ 1,224 4,586 4,766 4,568 6,349
===== ===== ===== ===== =====
</TABLE>

F-9
<PAGE>
CORECHANGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The calculation of pro forma basic and diluted shares outstanding is as
follows:

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1999 MARCH 31, 2000
<S> <C> <C>
Weighted average shares used in computing basic and diluted
net loss per share........................................ 3,754 4,102
Weighted average adjustment to reflect the effect of the
conversion of preferred stock............................. 3,835 5,256
------- --------
Shares used in computing pro forma basic and diluted net
loss per share............................................ 7,589 9,358
======= ========
Net loss attributable to common stockholders used in
computing basic and diluted net loss per share............ $(4,843) $ (6,787)
Adjustments to reflect the effect of the conversion of
preferred stock:
Reversal of accrued dividends........................... -- 171
Reversal of accretion to redemption value............... 92 154
------- --------
Net loss available to common stockholders used in computing
pro forma basic and diluted net loss per share............ $(4,751) $ (6,462)
======= ========
</TABLE>

(H) CASH AND CASH EQUIVALENTS

Corechange considers all highly liquid investments with original maturities
of 90 days or less to be cash equivalents.

(I) PROPERTY AND EQUIPMENT

Property and equipment is recorded at cost and depreciated using the
straight-line method over the estimated useful life. Leasehold improvements are
amortized over the estimated useful life or the lease term, whichever is
shorter. Corechange reviews its property and equipment whenever events or
changes in circumstances indicate that the carrying amount of certain assets
might not be recoverable and recognizes an impairment loss when it is probable
that the estimated cash flows are less than the carrying value of the asset.

(J) RESEARCH AND DEVELOPMENT AND SOFTWARE DEVELOPMENT COSTS

Research and development costs are charged to operations as incurred.
Software development costs are included in research and development and are
charged to operations as incurred. After technological feasibility is
established, material software development costs are capitalized. The
capitalized cost is then amortized on a straight-line basis over the estimated
product life or in the ratio of current revenues to total projected product
revenues, whichever is greater. To date, the period between achieving
technological feasibility, which the Company has defined as when beta testing
commences, and the general availability of such software have been minimal, and
software development costs qualifying for capitalization have been
insignificant. Accordingly, the Company has not capitalized any software
development costs for the periods presented.

F-10
<PAGE>
CORECHANGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(K) INCOME TAXES

Corechange accounts for income taxes using the liability method under which
deferred tax assets and liabilities are determined based on differences between
financial reporting and tax bases of assets and liabilities and are measured
using enacted tax rates and laws.

(L) FOREIGN CURRENCY TRANSLATION

The balance sheet accounts of Corechange's foreign subsidiaries are
translated into U.S. dollars at current exchange rates; revenue and expense
accounts are translated at average exchange rates during the period. Translation
gains and losses are included as a separate component of stockholders' equity.
Transaction gains and losses, which are insignificant, are included in
operations.

(M) FINANCIAL INSTRUMENTS

The carrying value of financial instruments such as cash equivalents,
accounts receivable and accounts payable approximates their fair value based on
the short-term maturities of these instruments. The carrying value of the
convertible promissory notes and notes payable approximates the fair value based
on the current interest rate.

(N) CONCENTRATION OF CREDIT RISK AND OFF-BALANCE-SHEET RISK

Corechange has no significant off-balance-sheet risk such as foreign
exchange contracts, option contracts, or other foreign hedging arrangements.
Financial instruments that potentially subject Corechange to credit risk consist
of cash equivalents and accounts receivable. The concentration of credit risk
with respect to cash equivalents is minimized by Corechange's policies in which
investments are only placed with highly rated issuers with relatively short
maturities. The concentration of credit risk with respect to accounts receivable
is minimized by the creditworthiness of Corechange's customers and the variety
of industries in which the customers operate. Corechange generally does not
require collateral. Corechange maintains an allowance for doubtful accounts but
historically has not experienced any significant losses related to individual
customers or groups of customers in any particular industry or area. Three
customers accounted for approximately 17%, 53%, and 51% of revenues for the
years ended December 31, 1997, 1998 and 1999 and 46% and 43% of revenues for the
three months ended March 31, 1999 and 2000, respectively. These three customers
accounted for approximately 54% and 21% of accounts receivable at December 31,
1998 and 1999, respectively, and 41% of accounts receivable at March 31, 2000.

(O) STOCK-BASED COMPENSATION

Corechange accounts for its stock-based employee compensation plan utilizing
the provisions of Accounting Principles Board (APB) Opinion No. 25, ACCOUNTING
FOR STOCK ISSUED TO EMPLOYEES. Corechange has adopted the disclosure-only
provisions of Statement of Financial Accounting Standards (SFAS) No. 123,
ACCOUNTING FOR STOCK-BASED COMPENSATION. Corechange accounts for its stock-based
compensation for nonemployee consultants utilizing the provisions of SFAS
No. 123.

F-11
<PAGE>
CORECHANGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(P) RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS
No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. SFAS
No. 133 establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, (collectively, the derivatives) and for hedging activities. SFAS
No. 133, as amended by SFAS No. 137, is effective for all fiscal quarters of
fiscal years beginning after June 15, 2000. This new standard is not anticipated
to have a significant impact on Corechange's consolidated financial statements
based on the current structure and operations.

In December 1999, the SEC issued Staff Accounting Bulletin No. 101 REVENUE
RECOGNITION. This bulletin establishes guidelines for revenue recognition and is
in effect for periods beginning March 31, 2000. Corechange does not expect that
the adoption of this methodology will have a material impact on their financial
condition or results of operations.

3. RESTRUCTURING

During 1998, Corechange undertook certain actions to restructure its
business. The restructuring resulted from lower than expected demand for its
then-current products. The restructuring plan resulted in a restructuring charge
to operations totaling approximately $403,000. The principal actions in the
restructuring plan included the reduction of workforce, the reduction of
facilities and the decrease in efforts to market Corechange's then-current
products. Substantially all of the costs related to the restructuring charge
were paid in 1998. The restructuring charge is detailed as follows (in
thousands):

<TABLE>
<S> <C>
Employee severance, benefits, and related costs............. $ 324
Reduction in facilities..................................... 79
--------
$ 403
========
</TABLE>

EMPLOYEE SEVERANCE, BENEFITS, AND RELATED COSTS

The number of employees terminated, by department, resulting in the employee
severance costs detailed above is as follows:

<TABLE>
<S> <C>
Service..................................................... 4
Sales and marketing......................................... 8
Research and development.................................... 6
---
18
===
</TABLE>

REDUCTION IN FACILITIES

Approximately $79,500 of the restructuring charge relates to the termination
of a facilities lease and other lease-related costs. The facility lease had a
remaining term of six months. The amount charged to operations reflects
Corechange's actual costs incurred to buy out the lease. Included in this

F-12
<PAGE>
CORECHANGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

3. RESTRUCTURING (CONTINUED)
amount is the write-off of certain assets, primarily leasehold improvements,
that relate to the termination of this lease.

4. ACQUIRED TECHNOLOGY

In connection with its spin-off from CTP, Corechange entered into a
seven-year software license agreement with CTP granting Corechange licensee
rights, including internal use of software in exchange for payment of a royalty
of 15% of license fee revenues. On February 7, 1997, Corechange paid $4,500,000
to CTP in exchange for software and methodology and the proprietary rights to
the software that were previously owned by CTP and licensed to Corechange, thus
canceling the license agreement. A stockholder of Corechange and a third party
advanced Corechange $2,000,000, resulting in notes payable bearing interest at
8% per annum. Corechange used the advances to pay $2,000,000 of the purchase
price to CTP in March 1997; the remaining $2,500,000 was due in monthly
principal installments of $200,000 and interest (6% per annum) through
March 1998. The costs of the software rights were charged to expense as acquired
in-process technologies costs as the related technology was not at the point of
technological feasibility and had no alternative future use at the date of
purchase.

5. PROPERTY AND EQUIPMENT

Property and equipment consist of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
------------------- MARCH 31,
ESTIMATED USEFUL LIFE 1998 1999 2000
<S> <C> <C> <C> <C>
Computer equipment........................... 4 years $ 800 $ 827 $ 896
Furniture and fixtures....................... 4 years 273 310 337
Lesser of estimated
useful life or lease term 54 40 40
----- ----- -----
Leasehold improvements....................... 1,127 1,177 1,273
Less--Accumulated depreciation and
amortization............................... 410 661 718
----- ----- -----
Property and equipment, net.............. $ 717 $ 516 $ 555
===== ===== =====
</TABLE>

6. INCOME TAXES

Through May 12, 1997, Corechange was taxed as an LLC under the Internal
Revenue Code. In lieu of corporation income taxes, the members were taxed on
their share of the entity's taxable income. Upon termination of the LLC,
deferred income taxes were recorded for the tax effect of cumulative temporary
differences between the financial reporting and tax bases of certain assets and
liabilities, primarily net operating losses (NOL carryforwards), depreciation,
and amortization.

Corechange has incurred net operating losses since inception. At
December 31, 1999, Corechange has net operating loss carryforwards available to
reduce future federal and state taxable income of approximately $17,200,000 and
net operating loss carryforwards available to reduce foreign taxable income of
approximately $1,265,000. Also at December 31, 1999, Corechange has research and
development credits that can be used for federal and state tax reporting
purposes aggregating $154,000. These carryforwards and credits expire at various
times through 2019. Under the provisions of the Internal Revenue Code, certain
substantial changes in Corechange's ownership may significantly limit

F-13
<PAGE>
CORECHANGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

6. INCOME TAXES (CONTINUED)
the amount of net operating loss carryforwards that could be utilized annually
to offset future taxable income. Subsequent significant ownership changes could
further affect the limitation in future years.

Due to the uncertainty surrounding Corechange's ability to utilize its net
operating loss carryforwards and other deferred tax assets, Corechange has
provided a full valuation allowance against its otherwise recognizable deferred
tax asset at December 31, 1998 and 1999.

Deferred tax assets consist of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1998 1999
<S> <C> <C>
Net operating loss carryforwards............................ $2,900 $6,881
Research and development credit carryforwards............... 100 154
Other....................................................... 37 21
------ ------
Deferred tax assets..................................... 3,037 7,056
Valuation allowance......................................... (3,037) (7,056)
------ ------
$ -- $ --
====== ======
</TABLE>

7. DEBT

(A) CONVERTIBLE PROMISSORY NOTES

In November and December 1999 and in January 2000, Corechange entered into
unsecured subordinated convertible promissory notes with investors totaling
$3,383,000 (the Notes). The Notes accumulated interest at a rate of 8% per
annum, and had a maturity date of the earlier of October 1, 2000 or upon the
closing date of a qualified financing, as defined. Upon closing of the Series B
redeemable convertible preferred stock (Series B preferred stock) financing on
February 18, 2000 (see Note 8), all principal and accrued interest on the Notes
automatically converted into 588,191 shares of Series B preferred stock at a
conversion price equal to $5.837 per share.

(B) NOTES PAYABLE

Corechange maintains an unsecured line of credit with a Swedish bank for up
to approximately $236,000. Any borrowings are due upon demand and accrue
interest at a rate of 12.2% per annum. As of December 31, 1998 and 1999 and
March 31, 2000, Corechange had outstanding borrowings of $190,939, $211,674, and
$72,202, respectively.

8. REDEEMABLE CONVERTIBLE PREFERRED STOCK

During 1998, Corechange sold 2,884,598 shares of Series A redeemable
convertible preferred stock (Series A preferred stock) at $4.16 per share,
resulting in net proceeds of $11,511,796.

In February 2000, Corechange sold 2,458,582 shares of Series B preferred
stock at $5.837 per share, resulting in net proceeds of approximately
$13,132,000. In addition, holders of the Notes described in Note 7(a) converted
$3,433,274 of such Notes and accrued interest thereon, into 588,191 shares of
Series B preferred stock. The rights, preferences, and privileges of the
Series A and Series B preferred stock are as follows:

F-14
<PAGE>
CORECHANGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

8. REDEEMABLE CONVERTIBLE PREFERRED STOCK (CONTINUED)

VOTING

The holders of Series A and Series B preferred stock are entitled to the
number of votes equal to the number of whole shares of common stock into which
the preferred shares are convertible. The holders vote together with the holders
of common stock as a single class.

DIVIDENDS

The holders of Series A and Series B preferred stock are entitled to receive
dividends when, as, and if declared by the Board of Directors. The holders of
Series B preferred stock shall also accrue dividends on a daily basis at the
rate of 8% per annum on the liquidation value of each Series B share from the
issuance of the shares to the first of either (i) the liquidation date or
(ii) the conversion date. Dividends shall be cumulative and payable in
preference to any dividends payable on all other classes of stock. As of
March 31, 2000, Corechange had accrued $170,729 of cumulative dividends by
charges to additional paid in capital.

LIQUIDATION PREFERENCE

In the event of a voluntary or involuntary liquidation, dissolution, or
winding-up of Corechange, the holders of Series B preferred stock shall be
entitled to receive, in preference to the holders of all other classes and
series of stock, an amount equal to $5.837 per share plus all accrued and unpaid
dividends. After the distribution to Series B preferred stockholders, the
holders of Series A preferred stock shall be entitled to receive, in preference
to the holders of all other classes and series of stock, an amount equal to
$4.16 per share plus all accrued and unpaid dividends. If the assets of
Corechange are insufficient to pay the full preferential amounts to the
shareholders, the assets legally available for distribution shall be distributed
first to the holders as described above in proportion to the preferential amount
each holder is entitled to, and then ratably among the holders of other classes
of preferred stock.

CONVERSION

The Series A and Series B preferred stock are each convertible, at the
option of the holder, into one share of common stock, adjustable for certain
dilutive events. All shares of Series A and Series B preferred stock shall
automatically convert into common stock upon the closing of an underwritten
initial public offering of Corechange's common stock at a per-share offering
price of at least $8.32 and $14.59, respectively, and yielding aggregate gross
proceeds to Corechange of at least $20,000,000 and $30,000,000, respectively.
Mandatory conversion of Series B preferred stock shall also take place upon the
consent of at least 75% of the holders of the then-outstanding shares of
Series B preferred stock.

Upon the closing of Corechange's proposed initial public offering of its
common stock, all outstanding shares of Series B preferred stock will
automatically convert into 3,046,773 shares of common stock, resulting in an
effective purchase price of $5.837 per common share. The difference between the
effective purchase price per common share and the deemed fair value of the
common stock on the date of issuance of the Series B preferred stock for
accounting purposes resulted in a beneficial conversion feature of
$4.2 million, which is reflected as a dividend in the three months ended
March 31, 2000.

F-15
<PAGE>
CORECHANGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

8. REDEEMABLE CONVERTIBLE PREFERRED STOCK (CONTINUED)
REDEMPTION

In the event of a change in ownership and upon receipt of written request
for redemption from holders of at least a majority of the shares then
outstanding, Corechange will redeem all of the outstanding shares of Series B
preferred stock. The price per share to be paid to redeem the shares shall be an
amount equal to $5.837 plus all accrued and unpaid dividends, provided that, if
the aggregate consideration paid as a result of the change in ownership equals
at least $30,000,000, then accrued and unpaid 8% dividends shall not be included
in the redemption price. After the payment of all amounts to the holders of
Series B preferred stock, Corechange will redeem all of the outstanding shares
of Series A preferred stock upon written request from the holders of at least a
majority of the Series A preferred stock then outstanding. The price per share
to be paid to redeem the Series A preferred stock shall be equal to $4.16 plus
all accrued and unpaid dividends.

At any time on or after February 18, 2005, upon receipt of written request
for redemption from holders of at least a majority of the shares then
outstanding, Corechange will redeem all of the outstanding shares of Series A
and Series B preferred stock. The price per share to be paid to redeem the
shareholders of Series A preferred stock shall be equal to the sum of $4.16 plus
all accrued and unpaid dividends. The price per share to be paid to redeem the
shareholders of Series B preferred stock shall be an amount equal to the greater
of the sum of $5.837 plus all accrued and unpaid dividends or the fair market
value per share as determined by an independent appraiser.

The following table summarizes the activity of the Series A and B preferred
stock (in thousands, except share data):

<TABLE>
<CAPTION>
SERIES A SERIES B
PREFERRED STOCK PREFERRED STOCK
-------------------- --------------------
NUMBER OF NUMBER OF TOTAL
SHARES VALUE SHARES VALUE VALUE
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1997.................. -- $ -- -- $ -- $ --
Issuance of Series A preferred stock.... 2,884,598 11,512 -- -- 11,512
Accretion to redemption value........... -- 61 -- -- 61
--------- ------- --------- ------- -------
Balance, December 31, 1998.................. 2,884,598 11,573 -- -- 11,573
Accretion to redemption value........... -- 61 -- -- 61
--------- ------- --------- ------- -------
Balance, December 31, 1999.................. 2,884,598 11,634 -- -- 11,634
Issuance of Series B preferred stock.... -- -- 3,046,773 16,565 16,565
Accretion to redemption value........... -- 15 -- 47 47
Dividend related to beneficial
conversion of Series B preferred
stock................................. -- -- -- 4,227 4,227
Accrued dividends on Series B preferred
stock................................. -- -- -- 171 171
--------- ------- --------- ------- -------
Balance, March 31, 2000..................... 2,884,598 $11,649 3,046,773 $21,010 $32,659
========= ======= ========= ======= =======
</TABLE>

F-16
<PAGE>
CORECHANGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

9. STOCKHOLDERS' EQUITY

As of December 31, 1999 and March 31, 2000, the authorized capital stock of
Corechange was 9,000,000 and 15,000,000 shares of common stock, $0.01 par value
per share, respectively, and 7,849,584 shares of preferred stock, $0.01 par
value per share, of which 2,884,598 shares are designated Series A Preferred
Stock (Note 8), 4,000,000 shares are designated Series B Preferred Stock
(Note 8), 413,965 shares are designated Series I junior convertible preferred
stock, 336,021 shares are designated Series II junior convertible preferred
stock, and 215,000 shares are designated Series III junior convertible preferred
stock.

(A) JUNIOR CONVERTIBLE PREFERRED STOCK

Each series of junior convertible preferred stock converts into common stock
at the option of the holder or automatically upon the completion of a qualified
public offering, as defined. Each series of convertible preferred stock converts
into common shares at a per-share conversion price of $6.38, $7.44, and $7.49
for Series I, Series II, and Series III shares, respectively, subject to
adjustment for stock dividends, stock splits, or other similar
recapitalizations. Convertible preferred Series I, II, and III shares have
liquidation preference over the common stockholders in the amount of $6.38,
$7.44, and $7.49 per share, respectively. Each series is entitled to the number
of votes equal to the number of whole shares of common stock into which the
shares of that series are convertible. Each series ranks equally in liquidation.

(B) COMMON STOCK

The Board awarded 933,770, 14,350, and 20,000 shares of restricted stock
with purchase prices ranging from $0.01 to $0.45, which were determined to be
the fair value at the date of grant during 1997, 1998, and 1999, respectively.
The restricted stock generally vests over three years and, as of December 31,
1999 and March 31, 2000, approximately 97,000 and 79,000 shares remain unvested.
Through March 31, 2000, Corechange has repurchased and retired 422,723 shares of
restricted stock.

In January 1998, Corechange issued a warrant to one of its advisors for the
purchase of 120,191 shares of common stock at an exercise price of $4.99 per
share. The warrant is immediately exercisable and expires on January 21, 2001.
At the time of issuance, Corechange determined that the value of the warrant was
not material.

(D) STOCK PLANS

The 1997 Stock Incentive Plan (the 1997 Plan) provides for the issuance of
options, restricted stock or other stock-based awards to the employees,
officers, directors, consultants, and advisors of Corechange. Corechange is
authorized to issue up to 1,113,451 and 1,289,451 shares of common stock under
the 1997 Plan at December 31, 1999 and March 31, 2000, respectively. At
December 31, 1999 and March 31, 2000, there were 182,674 and 27,334 shares,
respectively, available for grant under the 1997 Plan. Incentive stock options
may be granted at an exercise price determined by the Board of Directors at the
date of grant and for a term not to exceed 10 years. The Board may grant awards
entitling recipients to acquire shares of common stock, subject to the right of
Corechange to repurchase all or part of such shares at their issue price or
another stated price from the recipient in the event

F-17
<PAGE>
CORECHANGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

9. STOCKHOLDERS' EQUITY (CONTINUED)
that conditions specified by the Board in the applicable award are not satisfied
prior to the end of the applicable restriction period (Restricted Stock). The
Board may at any time provide that any options become immediately exercisable in
full or in part, that any Restricted Stock awards be free of all restrictions,
or that any other stock-based awards may become exercisable in full or in part,
or free of some or all restrictions or conditions.

2000 DIRECTOR STOCK OPTION PLAN

In May 2000, the 2000 Director Stock Option Plan (the Director Plan) was
adopted by the board of directors, subject to stockholder approval. Under the
terms of the Director Plan, directors who are not employees are eligible to
receive nonqualified options to purchase shares of common stock. A total of
250,000 shares of common stock may be issued upon exercise of options granted
under the Director Plan.

Under the terms of the Director Plan, each non-employee director as of the
effective date of the proposed initial public offering will receive an option to
purchase 5,000 shares of common stock on the effective date of the proposed
offering. In addition, each such non-employee director will annually receive an
option to purchase 3,000 shares of common stock. Individuals who become
directors after the proposed offering and are not employees will receive an
option to purchase 5,000 shares of common stock on the date of his or her
initial election to the board of directors. Additionally, the chairman of the
audit and compensation committees will each receive an option to purchase 1,000
shares of common stock upon either the date of the proposed offering or the date
of his or her election as chairman and an annual option to purchase 500 shares
of common stock. The exercise price per share of all such options will be the
closing price per share of Corechange's common stock on the date of grant except
for the options issued on the effective date of the proposed offering. Such
options will be exercisable at the public offering price. All options granted
under the Director Plan will be fully vested upon grant. Corechange will account
for the Director Plan in accordance with APB No. 25 and, accordingly, no
compensation cost will be recognized under the Director Plan. Corechange will
elect the disclosure only alternative under SFAS 123.

2000 EMPLOYEE STOCK PURCHASE PLAN

In May 2000, the 2000 Employee Stock Purchase Plan (ESPP) was approved by
the board of directors, subject to stockholder approval and provides for the
issuance of up to 250,000 shares of common stock to participating employees. The
ESPP will be effective, but will not commence, upon the successful closing of
Corechange's proposed initial public offering. The ESPP is intended to provide a
means whereby eligible employees may purchase on a semi-annual basis, common
stock of Corechange through payroll deductions. The purchase price of shares of
common stock under the ESPP is the lower of 85% of the fair market value of the
common stock (1) at the beginning of the offering period, or (2) at the end of
the purchase period. Corechange will account for the ESPP in accordance with APB
No. 25 and, accordingly, no compensation cost will be recognized under the ESPP.
Corechange will elect the disclosure only alternative under SFAS 123.

F-18
<PAGE>
CORECHANGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

9. STOCKHOLDERS' EQUITY (CONTINUED)
The following table presents the stock option activity of the 1997 Plan for
the years ended December 31, 1998 and 1999 and the three months ended March 31,
2000. There were no stock options granted, exercised, canceled, or terminated
during 1997.

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
EXERCISE
SHARES PRICE
<S> <C> <C>
Outstanding at December 31, 1997......................... -- $ --
Granted.............................................. 441,304 0.237
-------- -------
Outstanding at December 31, 1998......................... 441,304 0.237
Granted.............................................. 791,725 0.45
Exercised............................................ (396) 0.45
Canceled............................................. (379,558) 0.45
-------- -------
Outstanding at December 31, 1999......................... 853,075 0.45
Granted.............................................. 210,668 5.22
Exercised............................................ (56,198) 0.45
Canceled............................................. (31,952) 0.45
-------- -------
Outstanding at March 31, 2000............................ 975,593 $ 1.52
======== =======
Exercisable at March 31, 2000............................ 323,274 $ 1.12
======== =======
Exercisable at December 31, 1999......................... 275,711 $ 0.45
======== =======
Exercisable at December 31, 1998......................... -- $ --
======== =======
</TABLE>

The following table summarizes information relating to currently outstanding
and exercisable options as of March 31, 2000:

<TABLE>
<CAPTION>
OUTSTANDING
----------------------------
WEIGHTED AVERAGE
REMAINING EXERCISABLE
NUMBER OF CONTRACTUAL LIFE NUMBER OF
EXERCISE PRICES SHARES IN YEARS SHARES
<S> <C> <C> <C>
0.09...$....... 8,000 7.89 4,275
0.45.......... 780,925 9.12 278,790
5.84.......... 186,668 9.91 40,209
------- -------
975,593 9.27 323,274
======= =======
</TABLE>

In connection with certain stock option and restricted stock grants during
the year ended December 31, 1999 and the three months ended March 31, 2000,
Corechange recorded deferred compensation of $755,566 and $678,662,
respectively. The deferred compensation represents the aggregate difference
between the option exercise price and the deemed fair value of the common stock
for accounting purposes. All stock options granted and stock sold prior to 1999
were at fair market value, and, therefore, did not result in deferred
compensation. The deferred compensation will be recognized as an expense over
the vesting period of the underlying stock options. Corechange recorded
compensation expense of $208,399 and $151,108 in the year ended December 31,
1999 and the three

F-19
<PAGE>
CORECHANGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

9. STOCKHOLDERS' EQUITY (CONTINUED)
months ended March 31, 2000, respectively, related to these options. Corechange
expects to record the following compensation expense related to these grants in
the years ended December 31 (in thousands):

Subsequent to March 31, 2000, Corechange granted 493,200 common stock
options to employees at exercise prices ranging from $5.837 to $8.00. Corechange
expects to record deferred compensation of approximately $1,494,000 related to
such grants.

During 1999 and 2000, Corechange issued to consultants 23,613 and 20,000
options to purchase common stock at $0.45 and $5.84 per share, respectively. As
of March 31, 2000, all options are fully vested. Corechange charged to expense
$360,000, the estimated fair value of the options, in the three months ended
March 31, 2000. In addition, in March 2000, Corechange issued to one of its
financial advisors options to purchase 6,168 shares of common stock at $5.84 per
share, related to the Series B preferred stock financing. At the time of grant,
all options were fully vested. Corechange recorded additional issuance costs of
approximately $55,000, the estimated fair value of the options at the time of
grant.

For purposes of the pro forma disclosures required by SFAS No. 123, the fair
value of each option grant was estimated on the date of grant using the
Black-Scholes option pricing model. The assumptions used and the weighted
average information for the years ended December 31, 1998 and 1999 and the three
months ended March 31, 1999 and 2000 are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
--------------------- ---------------------
1998 1999 1999 2000
<S> <C> <C> <C> <C>
Risk-free interest rates.......................... 5.5% 4.6%-6.0% 4.6% 6.5%
Expected lives.................................... 10 years 3-4 years 3-4 years 3-4 years
Expected dividend yield........................... -- -- -- --
Expected volatility............................... 70% 70% 70% 80%
Weighted average fair value of options granted.... $0.237 $ 0.592 $ 0.814 $ 5.029
</TABLE>

F-20
<PAGE>
CORECHANGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

9. STOCKHOLDERS' EQUITY (CONTINUED)
Had compensation cost for Corechange's 1997 Plan been determined consistent
with SFAS No. 123, Corechange's net loss would have been as follows (in
thousands, except per share data):

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
------------------- -------------------
1998 1999 1999 2000
<S> <C> <C> <C> <C>
Net loss attributable to common
stockholders--
As reported.......................... $(7,490) $(4,843) $(1,000) $(6,787)
======= ======= ======= =======
Pro forma............................ $(7,496) $(4,926) $(1,021) $(6,856)
======= ======= ======= =======
Basic and diluted net loss per share--
As reported.......................... $ (2.04) $ (1.29) $ (0.26) $ (1.65)
======= ======= ======= =======
Pro forma............................ $ (2.05) $ (1.31) $ (0.27) $ (1.67)
======= ======= ======= =======
</TABLE>

10. COMMITMENTS AND CONTINGENCIES

(A) OPERATING LEASES

Corechange leases office space and other equipment under various agreements
classified as operating leases. During the years ended December 31, 1997, 1998,
and 1999 and the three months ended March 31, 1999 and 2000, rent expense
totalled approximately $336,000, $572,000, $479,000, $112,000, and $116,000,
respectively.

Future minimum payments due under non-cancelable leases with terms of one
year or more are as follows (in thousands):

<TABLE>
<S> <C>
Year ending December 31,
2000........................................................ $ 582
2001........................................................ 609
2002........................................................ 615
2003........................................................ 613
2004........................................................ 613
Thereafter.................................................. 423
------
Total................................................... $3,455
======
</TABLE>

(B) LICENSE AND DISTRIBUTION AGREEMENT

In 1999, Corechange entered into a three-year OEM license and distribution
agreement with a third party. During the term of the agreement, Corechange is
required to make royalty payments of 7.5% to 50% to the third party based on
product and level of actual sales in addition to a $10,000 annual maintenance
fee. As of December 31, 1999 and March 31, 2000, Corechange has prepaid $100,000
in royalties and no amounts have been charged to expense.

F-21
<PAGE>
CORECHANGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

11. DEFINED CONTRIBUTION PLAN

Corechange has implemented a defined contribution plan, under the provisions
of Section 401(k) of the Internal Revenue Code, covering substantially all of
its employees. Participants may contribute up to 20% of their gross pay subject
to certain limitations. Corechange may make discretionary matching
contributions. Corechange contributions vest ratably over a four-year period.

Matching contributions were approximately $21,000, $36,000, $14,000, $4,000,
and $5,000 for the years ended December 31, 1997, 1998, and 1999 and the three
months ended March 31, 1999 and 2000, respectively.

12. BALANCE SHEET DATA

(A) ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following (in
thousands):

<TABLE>
<CAPTION>
DECEMBER 31
------------------- MARCH 31,
1998 1999 2000
<S> <C> <C> <C>
Accounts payable.................................. $ 470 $ 356 $ 511
Payroll and benefits.............................. 337 345 352
Other............................................. 293 426 282
------ ------ ------
$1,100 $1,127 $1,145
====== ====== ======
</TABLE>

(B) ALLOWANCE FOR DOUBTFUL ACCOUNTS

The following is a rollforward of Corechange's allowance for doubtful
accounts (in thousands):

<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
BEGINNING OF END OF
PERIOD ADDITIONS DEDUCTIONS PERIOD
<S> <C> <C> <C> <C>
Year ended December 31, 1997....................... $40 $45 $ -- $85
Year ended December 31, 1998....................... 85 -- (45) 40
Year ended December 31, 1999....................... 40 -- -- 40
Three months ended March 31, 2000.................. 40 30 -- 70
</TABLE>

13. SEGMENT AND GEOGRAPHIC INFORMATION

SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED
INFORMATION, established standards for reporting information about operating
segments in annual financial statements and requires selected information about
operating segments in interim financial reports issued to stockholders. It also
established standards for disclosures about products and services and geographic
areas. Operating segments are defined as components of an enterprise about which
separate financial information is available that is evaluated regularly by the
chief operating decision maker, or decision making group, in deciding how to
allocate resources and in assessing performance. Corechange's chief operating
decision maker is the Chief Executive Officer.

F-22
<PAGE>
CORECHANGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

13. SEGMENT AND GEOGRAPHIC INFORMATION (CONTINUED)
Corechange is organized geographically and by line of business. Corechange
has two major lines of business operating segments: software licenses, and
services. The software license line of business is engaged in the development
and licensing of software. The services line of business offers implementation,
training, and other consulting services. Revenues for these segments are
reported on the accompanying consolidated statements of operations. Corechange
does not allocate any expenses or any other source of income to its business
line segments. Similarly, property and equipment are not allocated to the
segments for management or segment reporting purposes.

GEOGRAPHIC INFORMATION

Domestic and export sales as a percentage of total revenues are as follows:

<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
------------------------------ -------------------
1997 1998 1999 1999 2000
<S> <C> <C> <C> <C> <C>
United States............................... 49% 22% 35% 43% 53%
United Kingdom.............................. -- 29 39 18 17
Norway...................................... 15 14 15 22 10
Sweden...................................... 36 35 11 17 20
--- --- --- --- ---
100% 100% 100% 100% 100%
=== === === === ===
</TABLE>

Revenues and identifiable assets for Corechange's North American and
European operations are as follows (in thousands). Corechange has intercompany
distribution arrangements with its subsidiaries. The basis for these
arrangements, disclosed below as transfers between geographic locations, is cost
plus a specified percentage for services and a commission rate for sales
generated in the geographic region.

<TABLE>
<CAPTION>
UNITED UNITED
STATES KINGDOM NORWAY SWEDEN OTHER ELIMINATIONS CONSOLIDATED
<S> <C> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1997--
Revenues.......................... $ 1,416 $ -- $445 $1,057 $ -- $ -- $ 2,918
Identifiable assets............... 3,050 58 299 429 161 (574) 3,423
Year ended December 31, 1998--
Revenues.......................... 1,345 1,645 948 2,084 698 (1,059) 5,661
Identifiable assets............... 5,356 383 309 384 117 (1,683) 4,866
Year ended December 31, 1999--
Revenues.......................... 2,295 2,105 902 807 981 (1,824) 5,266
Identifiable assets............... 5,078 335 165 993 74 (3,001) 3,644
Three months ended March 31, 1999--
Revenues.......................... 678 241 353 265 231 (485) 1,283
Identifiable assets............... 4,555 314 322 287 37 (1,982) 3,533
Three months ended March 31, 2000--
Revenues.......................... 662 251 151 307 273 (497) 1,147
Identifiable assets............... 17,083 339 176 811 146 (3,515) 15,040
</TABLE>

F-23
<PAGE>
CORECHANGE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

14. SUBSEQUENT EVENT

In June 1997, Corechange was advised by CTP that CTP believed that its
holdings of 5% of the Class A Units of Corechange, LLC prior to the
reorganization into a corporation should have resulted in CTP holding 5% of the
common stock of Corechange following the reorganization that occurred on
May 12, 1997. On April 7, 2000, Corechange and CTP agreed upon a resolution
whereby Corechange has issued 196,774 shares of common stock to CTP, which
provides CTP a 5% holding of Corechange's common stock at the time of the
reorganization. CTP holds 0.13% of Corechange's common stock at December 31,
1999. Corechange has accounted for the transaction as an adjustment of shares in
connection with the re-organization and thus will record the common shares
issued at par value in the three months ended June 30, 2000.

F-24
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

, 2000

corechange

SHARES OF COMMON STOCK

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

PROSPECTUS
--------------------------

DONALDSON, LUFKIN & JENRETTE
SG COWEN
PRUDENTIAL VOLPE TECHNOLOGY

A UNIT OF PRUDENTIAL SECURITIES

DLJDIRECT INC.

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

We have not authorized any dealer, sales person or other person to give you
written information other than this prospectus or to make representations as to
matters not stated in this prospectus. You must not rely on unauthorized
information. This prospectus is not an offer to sell these securities or our
solicitation of your offer to buy the securities in any jurisdiction where that
would not be permitted or legal. Neither the delivery of this prospectus nor any
sales made hereunder after the date of this prospectus shall create an
implication that the information contained herein or the affairs of Corechange
have not changed since the date hereof.

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

Until , 2000 (25 days after the date of this prospectus), all dealers that
effect transactions in these shares of common stock may be required to deliver a
prospectus. This is in addition to the dealer's obligation to deliver a
prospectus when acting as an underwriter and with respect to its unsold
allotments or subscriptions.

--------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses, other than the
underwriting discounts and commissions, payable by the Registrant in connection
with the sale of common stock being registered. All amounts are estimated except
the SEC registration fee, the NASD filing fee and the Nasdaq National Marketing
listing fee.

<TABLE>
<CAPTION>
AMOUNT TO
BE PAID
----------
<S> <C>
SEC registration fee........................................ 13,200
NASD filing fee............................................. 5,500
Nasdaq National Market listing fee.......................... *
Printing and engraving costs................................ *
Legal fees and expenses..................................... *
Accounting fees and expenses................................ *
Blue sky fees and expenses (including legal fees)........... *
Transfer agent fees......................................... *
Miscellaneous............................................... *
----------
Total....................................................... $
==========
</TABLE>

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

* To be included by amendment

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Registrant's Certificate of Incorporation (the "Certificate") provides
that, except to the extent prohibited by the Delaware General Corporation Law
(the "DGCL"), the Registrant's directors shall not be personally liable to the
Registrant or its stockholders for monetary damages for any breach of fiduciary
duty as directors of the Registrant. Under the DGCL, the directors have a
fiduciary duty to the Registrant which is not eliminated by this provision of
the Certificate and, in appropriate circumstances, equitable remedies such as
injunctive or other forms of nonmonetary relief will remain available. In
addition, each director will continue to be subject to liability under the DGCL
(i) for any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) arising under
Section 174 of the DGCL, or (iv) for any transaction from which the director
derived an improper personal benefit. This provision also does not affect the
directors' responsibilities under any other laws, such as the Federal securities
laws or state or Federal environmental laws.

Section 145 of the DGCL empowers a corporation to indemnify its directors
and officers and to purchase insurance with respect to liability arising out of
their capacity or status as directors and officers. The DGCL provides further
that the indemnification permitted thereunder shall not be deemed exclusive of
any other rights to which the directors and officers may be entitled under the
corporation's bylaws, any agreement, a vote of stockholders or otherwise. The
Certificate provides that the Registrant shall fully indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding (whether civil, criminal, administrative
or investigative) by reason of the fact that such person is or was a director or
officer of the Registrant, or is or was serving at the request of the Registrant
as a director or officer of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, against expenses (including
attorney's fees), judgments, fines and amounts paid in settlement actually and

II-1
<PAGE>
reasonably incurred by such person in connection with such action, suit or
proceeding. The Registrant has obtained liability insurance for its officers and
directors.

At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent as to which indemnification will be
required or permitted under the Certificate of Incorporation. The Registrant is
not aware of any threatened litigation or proceeding that may result in a claim
for such indemnification.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Set forth below in chronological order is a description of the Registrant's
sales of unregistered securities since May 25, 1997. The sales made to investors
were made in accordance with Section 4(2), Regulation S or Regulation D of the
Securities Act. Sales to all our employees, directors and officers were deemed
to be exempt from registration under the Securities Act in reliance on Rule 701
promulgated under Section 3(b) of the Securities Act as transactions under
compensatory benefit plans and contracts relating to compensation provided under
Rule 701.

In June 1997, we issued 413,965 shares of our Series I Junior Convertible
Preferred Stock to individual foreign investors and accredited investors in the
United States at a price per share of $6.38 for an aggregate purchase price of
$2,641,097. We also issued 336,021 shares of our Series II Junior Convertible
Preferred Stock to individual foreign investors and accredited investors in the
United States at a price per share of $7.44 for a total purchase price of
$249,996. Both issuances were made in reliance on Regulation S and
Regulation D.

In October 1997, we issued 200,032 shares of our Series III Junior
Convertible Preferred Stock to individual foreign investors and accredited
investors in the United States at a price per share of $7.49 for a total
purchase price of $1,498,240 in reliance on Regulation S and Regulation D.

In January 1998, we issued 2,403,832 shares of our Series A Convertible
Preferred Stock to individual foreign investors and accredited investors in the
United States at a price per share of $4.1600244 for a total purchase price of
$10.0 million in reliance on Regulation S and Regulation D. These shares were
all sold to HarbourVest Partners V-Direct Fund L.P. HarbourVest had an option to
purchase an additional 480,766 shares at $4.1600244, which it exercised in June
1998 for the purchase price of $2,000,000.

In November 1999, December 1999 and January 2000, we issued 8% convertible
notes to individual foreign investors and accredited investors in the United
States in the aggregate original principal amount of $3,383,000 in reliance on
Regulation S and Regulation D. These notes were converted into Series B
Convertible Preferred Stock in February 2000.

In February 2000, we issued 3,046,773 shares of our Series B Convertible
Preferred Stock at a price per share of $5.837 for a total purchase price of
$17,784,014 in reliance on Regulation S and Regulation D.

As of May 25, 2000, we had issued to directors, officers, employees,
consultants and contractors, upon the exercise of stock options or otherwise,
3,942,912 shares of common stock at a price of $.01 per share, 178,772 shares of
common stock at a price of $.02 per share, 149,886 shares of common stock at a
price of $.09 per share and 125,407 shares at a price of $.45 per share. In
addition, options to purchase 1,315,425 shares of common stock were outstanding
under our 1997 Stock Incentive Plan with exercise prices ranging from $.01 to
$8.00.

II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <C> <S>
1.1* -- Form of Underwriting Agreement
3.1 -- Certificate of Incorporation, as amended to date
3.2 -- Form of Certificate of Amendment to Certificate of
Incorporation, to be filed prior to the effectiveness of
this registration statement
3.3 -- Form of Amended and Restated Certificate of Incorporation,
to be filed upon the closing of this offering
3.4 -- Amended and Restated Bylaws of the registrant, as amended to
date
4.1* -- Specimen Certificate representing the Common Stock
5.1* -- Opinion of Hale and Dorr LLP
10.1 -- 1997 Stock Incentive Plan, as amended
10.2 -- 2000 Director Option Plan
10.3 -- 2000 Employee Stock Purchase Plan
10.4 -- Series B Convertible Preferred Stock Purchase Agreement
dated February 18, 2000, by and among the registrant and the
persons listed on the schedule of purchasers thereto
10.5 -- Registration Agreement dated February 18, 2000, by and among
the registrant, each of the Persons listed on the Schedule
of Investors attached hereto, HarbourVest
Partners V--Direct Fund L.P., and each of the other holders
of registrable securities who may from time to time become a
party thereto by executing a counterpart to the agreement
10.6 -- Members' Agreement dated as of February 7, 1997, by and
among the registrant, Ulf Arnetz, Mona Arnetz and Cambridge
Technology Partners (Massachusetts) Inc.
10.7 -- Employment Agreement dated May 24, 2000, between the
registrant and Charles F. Kane
10.8 -- Employment Agreement dated July 29, 1999, between the
registrant and Joachim Zetterlund
10.9 -- Employment Agreement dated March 1, 2000, between the
registrant and Felimy Greene
10.10 -- Office Lease dated December 27, 1996, by and between the
registrant and 260 Franklin Street Associates Trust, as
amended
+10.11* -- Coreport License and Services Agreement dated May 9, 2000,
between the registrant and ABN AMRO Information Technology
Services Co.
+10.12* -- Coreport License Agreement dated May 11, 2000, between the
registrant and ABN AMRO Information Technology Services Co.
+10.13* -- Professional Services Agreement dated May , 2000 between
the registrant and ABN AMRO Information Technology Services
Co.
+10.14* -- Letter Agreement dated March 28, 2000, between the
registrant and Credit Suisse First Boston (Europe) Limited
+10.15* -- Letter Agreement dated March 30, 2000, between the
registrant and Credit Suisse First Boston (Europe) Limited
+10.16* -- OEM License and Distribution Agreement dated as of
August 31, 1999 by and between the registrant and Autonomy,
Inc.
16.1 -- Letter dated May 30, 2000 from Ernst & Young LLP
21.1 -- Subsidiaries of the registrant
23.1 -- Consent of Arthur Andersen LLP, Independent Public
Accountants
23.2 -- Consent of Ernst & Young LLP, Independent Auditors
23.3* -- Consent of Hale and Dorr LLP (included in Exhibit 5.1)
24.1 -- Powers of Attorney (see Signature Page)
27.1 -- Financial Data Schedule
</TABLE>

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

* To be filed by amendment.

+ Confidential treatment to be requested for portions of these exhibits.

(b) Financial Statement Schedules.

None.

II-3
<PAGE>
ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes to provide to the Underwriter
at the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriter to
permit prompt delivery to each purchaser.

Insofar as indemnification to liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the Delaware General Corporation Law, the Certificate of
Incorporation of the Registrant, the Underwriting Agreement, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered hereunder, the Registrant will,
unless in the opinion of counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) For the purpose of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act shall be deemed part of this
Registration Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein and the offering of such securities at that
time shall be deemed to be the initial BONA FIDE offering thereof.

II-4
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Boston, Commonwealth of
Massachusetts, on this 30th day of May 2000.

<TABLE>
<S> <C> <C>
CORECHANGE, INC.

By: /s/ ULF ARNETZ
-----------------------------------------
Ulf Arnetz
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>

POWER OF ATTORNEY

We, the undersigned directors and/or officers of Corechange, Inc. (the
"Company"), hereby severally constitute and appoint Ulf Arnetz, President and
Chief Executive Officer, Charles Kane, Chief Operating Officer and Chief
Financial Officer and Angiras Koorapaty, Vice President, Finance and
Administration, and each of them individually, with full powers of substitution
and resubstitution, our true and lawful attorneys, with full powers to them and
each of them to sign for us, in our names and in the capacities indicated below,
the Registration Statement on Form S-1 filed with the Securities and Exchange
Commission, and any and all amendments to said Registration Statement (including
post-effective amendments), and any registration statement filed pursuant to
Rule 462(b) under the Securities Act of 1933, as amended, in connection with the
registration under the Securities Act of 1933, as amended, of equity securities
of the Company, and to file or cause to be filed the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as each of them might or could do in person, and hereby ratifying and
confirming all that said attorneys, and each of them, or their substitute or
substitutes, shall do or cause to be done by virtue of this Power of Attorney.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ ULF ARNETZ President, Chief Executive
------------------------------------------- Officer and Director May 30, 2000
Ulf Arnetz (Principal Executive Officer)

/s/ CHARLES KANE Chief Operating Officer and
------------------------------------------- Chief Financial Officer May 25, 2000
Charles Kane (Principal Financial Officer)

/s/ ANGIRAS KOORAPATY Vice President, Finance and
------------------------------------------- Administration (Principal May 24, 2000
Angiras Koorapaty Accounting Officer)
</TABLE>

II-5
<PAGE>

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ MARTIN HART Chairman of the Board of
------------------------------------------- Directors May 30, 2000
Martin Hart

/s/ FRANK FANZILLI, JR. Director
------------------------------------------- May 30, 2000
Frank Fanzilli, Jr.

/s/ DANIEL FOREMAN Director
------------------------------------------- May 30, 2000
Daniel Foreman

/s/ RICHARD LINDH Director
------------------------------------------- May 27, 2000
Richard Lindh

/s/ OFER NEMIROVSKY Director
------------------------------------------- May 30, 2000
Ofer Nemirovsky

/s/ ROBERT PIRIE Director
------------------------------------------- May 30, 2000
Robert Pirie

/s/ GUSTAV VIK Director
------------------------------------------- May 30, 2000
Gustav Vik
</TABLE>

II-6
<PAGE>
EXHIBIT INDEX

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

* To be filed by amendment.

+ Confidential treatment to be requested for portions of these exhibits.