ONESOFT CORP, S-1/A, 2000-02-25

ONESOFT CORP
S-1/A, 2000-02-25
PREPACKAGED SOFTWARE

Previous: AGL SEPARATE ACCOUNT VL R, NSAR-U, 2000-02-25

Next: EMPIRE STATE MUNICIPAL EXEMPT TRUST GUARANTEED SERIES 144, NSAR-U, 2000-02-25

<PAGE>

As filed with the Securities and Exchange Commission on February 25, 2000

Registration No. 333-94233
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

AMENDMENT NO. 2
TO
FORM S-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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

ONESOFT CORPORATION
(Exact name of registrant as specified in its charter)

Delaware 2389 54-1771616
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification No.)
incorporation or Classification Code
organization) Number)

1505 Farm Credit Drive, Suite 100
McLean, Virginia 22102
(703) 821-9190
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

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

James W. MacIntyre, IV
Chief Executive Officer
OneSoft Corporation
1505 Farm Credit Drive, Suite 100
McLean, Virginia 22102
(703) 821-9190
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

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

With copies to:

Jonathan L. Kravetz, Esq. Stephen A. Riddick, Esq.
Mintz, Levin, Cohn, Ferris, Brobeck, Phleger & Harrison LLP
Glovsky and Popeo, P.C. 701 Pennsylvania Ave., N.W.
One Financial Center Suite 220
Boston, MA 02111 Washington, D.C.
(617) 542-6000 (202) 220-5214

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

Approximate date of commencement of proposed sale to public: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are being offered or
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
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, 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 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 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>
Proposed
Amount Proposed Maximum
Title of Securities to to be Maximum Price Aggregate Amount of
be Registered Registered(1) Per Share(2) Offering Price(2) Registration Fee(3)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par
value................. $4,830,000 $13.00 $62,790,000 $16,577
</TABLE>

(1) Includes 630,000 shares subject to the underwriters' over-allotment option.

(2) Estimated solely for the purpose of calculating the amount of the
registration fee in accordance with Rule 457(a) under the Securities Act.

(3) Previously paid.

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

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, as amended, or until the Registration Statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to Section 8(a), may determine.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+Information contained herein is subject to completion or amendment. A +
+registration statement relating to these securities has been filed with the +
+Securities and Exchange Commission. These securities may not be sold nor may +
+offers to buy be accepted prior to the time the registration statement +
+becomes effective. This prospectus shall not constitute an offer to sell or +
+the solicitation of an offer to buy nor shall there be any sale of these +
+securities in any State in which such offer, solicitation or sale would be +
+unlawful prior to registration or qualification under the securities laws of +
+any such State. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Subject to Completion. Dated March , 2000

[LOGO OF ONESOFT]

- --------------------------------------------------------------------------------
Shares
Common Stock

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

This is the initial public offering of OneSoft Corporation and we are
offering 4,200,000 shares of our common stock. We anticipate that the initial
public offering price will be between $11.00 and $13.00 per share. We have
applied to have the shares we are offering approved for quotation on the
Nasdaq National Market under the symbol "ONSF."

Investing in our common stock involves risks. See "Risk Factors" beginning on
page 3.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary
is a criminal offense.

<TABLE>
<CAPTION>
Assumed Underwriting
Price to Discounts and Proceeds to
Public Commissions OneSoft
<S> <C> <C> <C>
Per Share $12.00 $0.84 $11.16
Total $50,400,000 $3,528,000 $46,872,000
</TABLE>

We and the selling stockholders listed on page 65 of the prospectus have
granted the underwriters a 30-day option to purchase up to additional 630,000
shares of common stock to cover any over-allotments. We will not receive any
proceeds from the sale of shares of common stock by selling stockholders.

Deutsche Banc Alex. Brown

SG Cowen

Friedman Billings Ramsey

Wit SoundView

The date of this Prospectus is , 2000.
<PAGE>

PROSPECTUS SUMMARY

This summary highlights selected information contained elsewhere in this
prospectus. This summary may not contain all of the information that you should
consider before investing in our common stock.

Our Business

We develop and provide Internet commerce application software and services
that enable our clients to rapidly build, grow, and extend their online
businesses. The core of our solution is OneCommerce, our application software
built on the eXtensible Markup Language standard, or XML. We designed
OneCommerce for scalable operation on the Microsoft operating platform.
OneCommerce enables enterprises to intelligently and dynamically interact with
their customers and trading partners over the Internet to exchange information,
provide services, and complete business-to-business and business-to-consumer
transactions. We primarily deliver OneCommerce on an outsourced basis, which
shortens our clients' time-to-market and minimizes their need to make
substantial investments to develop and maintain their own Internet commerce, or
e-commerce, Web sites.

In order to succeed in the Internet commerce marketplace, both traditional
companies and Internet-only businesses are investing heavily in Internet
commerce solutions. We believe that our market opportunity derives from the
need for a solution that:

. provides comprehensive functionality across key business processes;
. supports XML, an emerging standard for Internet commerce;
. rapidly adapts to changing business and technology requirements; and
. is designed for delivery on an outsourced basis.

We believe that our solution, comprised of OneCommerce and a broad array of
services, responds to these needs. OneCommerce manages Web site content,
provides personalized visitor experiences, processes orders, delivers customer
support, and integrates with internal and external business applications. We
believe we have developed the only XML-based Internet commerce application
software. We have designed our solution to be offered by us and our partners on
an outsourced basis. Widely-respected companies involved with Internet commerce
such as Microsoft and USWeb/CKS have endorsed OneCommerce as one of the
industry's top few solutions for large-scale Internet commerce. Our clients
include Alloy Online, ePhones, Espanol.com, Maytag, Phillips Publishing,
SmartCruiser.com, The Mark Group, and WeightWatchers.com.

Our objective is to provide the application software that supports a leading
share of commerce conducted over the Internet. We intend to do this by
expanding our range of application services to include additional software
functionality and value-added services. We also intend to contribute to and
leverage the emerging technology standards upon which we have built
OneCommerce. Further, we plan to expand our distribution channels to include a
broad range of application service providers, systems integrators, and other
professional services companies.

1
<PAGE>

The Offering

<TABLE>
<CAPTION>
Common stock offered by OneSoft...................... 4,200,000 shares
<C> <S>
Common stock to be outstanding after this offering.. 20,514,490 shares
Use of proceeds..................................... General corporate
purposes, including
working capital. See
"Use of Proceeds."
Proposed Nasdaq National Market symbol.............. ONSF
</TABLE>

The number of shares of our common stock that will be outstanding after this
offering is based on the number of shares outstanding on December 31, 1999, and
assumes no exercise of the underwriters' over-allotment option, and the
conversion into common stock of all of our preferred stock outstanding on that
date. It also assumes the filing of our amended and restated certificates of
incorporation immediately following the closing of this offering. It excludes
3,685,483 shares issuable upon exercise of subject options at a weighted-
average exercise price of $3.26 per share and 60,651 warrants at a weighted-
average exercise price of $6.59 per share and additional shares available for
issuance under our stock plans as of December 31, 1999.

Summary Consolidated Financial Data
(in thousands, except per share data)
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------
1995 1996 1997 1998 1999
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Consolidated Statement of
Operations Data:
Revenues:
Application services........ $ -- $ 240 $ 171 $ 561 $ 2,023
Professional services....... -- 1,834 1,834 995 6,928
-------- -------- -------- -------- --------
Total revenues............ -- 2,074 2,005 1,556 8,951
Gross profit................. -- 616 605 495 1,554
(Loss) income from
operations.................. (8) 48 (614) (3,764) (26,708)
Net (loss) income............ (8) 49 (601) (3,590) (26,370)
Net (loss) income
attributable to common
shareholders................ -- -- -- -- (29,431)
Basic and diluted net loss
per share................... $ (0.00) $ 0.02 $ (0.10) $ (0.60) $ (4.85)
Weighted average common
shares-basic and diluted.... 3,000 3,000 5,832 5,969 6,066
Pro forma basic and diluted
net loss per share.......... $ (1.87)
Pro forma weighted average
common shares-basic and
diluted..................... 14,123
</TABLE>

<TABLE>
<CAPTION>
December 31, 1999
------------------------------
Pro Forma
Actual Pro Forma As Adjusted
------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Consolidated
Balance Sheet
Data:
Cash, cash
equivalents
and short-term
investments .. $16,361 $16,361 61,933
Working
capital....... 11,542 11,542 57,144
Total assets... 28,811 28,811 74,383
Long term debt
and capital
lease
obligations... 63 63 63
Redeemable
preferred
stock......... 48,747 -- --
Stockholders'
(deficit)
equity ....... (30,323) 18,423 63,995
</TABLE>

The unaudited pro forma balance sheet data above reflects the conversion of
all classes of preferred stock into common stock as of December 31, 1999. See
Note 11 of Notes to Consolidated Financial Statements. The unaudited pro forma
as adjusted balance sheet data above reflects the receipt of the net proceeds
from the sale of the 4,200,000 shares of common stock in this offering at an
assumed initial public offering price of $12.00 per share, after deducting
estimated underwriting discounts and commissions and estimated offering
expenses.

2
<PAGE>

In this prospectus, "OneSoft", "we", "us", and "our" refer to OneSoft
Corporation. Our executive offices are located at 1505 Farm Credit Drive,
McLean, Virginia 22102. Our telephone number is (703) 821-9190. Our Web site is
located at http://www.onesoft.com. Information contained on our Web site is not
a part of this prospectus.

"OneSoft," "OneCommerce," our logo and other trademarks and service marks of
OneSoft Corporation mentioned in this prospectus are the property of OneSoft
Corporation. All other trademarks or trade names referred to in this prospectus
are the property of their respective owners.

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

Unless otherwise indicated, all information in this prospectus assumes:

. that the underwriters have not exercised their option to purchase
additional shares;

. conversion of all shares of preferred stock into shares of common stock
upon completion of this offering; and

. the filing of an amended and restated certificate of incorporation upon
completion of this offering.

3
<PAGE>

RISK FACTORS

Any investment in our common stock involves a high degree of risk. You
should consider carefully the following information about these risks, together
with the other information contained in this prospectus, before you decide
whether to buy our common stock. If any of the following risks actually occur,
our business, results of operations, and financial condition could suffer
significantly. In any such case, the market price of our common stock could
decline, and you may lose all or part of the money you paid to buy our common
stock.

Risks Related to Our Business

We have had recent losses and will incur substantial future losses that may
depress our stock price

We have incurred significant losses since 1997, including losses of
approximately $601,000, $3.6 million and $26.4 million for the years ended
December 31, 1997, 1998 and 1999, respectively. Our losses have resulted in an
accumulated deficit of approximately $33.8 million as of December 31, 1999. We
expect to substantially increase our sales and marketing, research and
development, and general and administrative expenses. We anticipate incurring
substantial losses for the next several years. As a result, we will need to
generate significant additional revenues to achieve and maintain profitability
in the future. Any significant shortfall of revenues in relation to our
expectations or any material delay in client licenses would have an immediate
adverse effect on our business. We are not certain when we will become
profitable. Even if we do achieve profitability, we may not sustain or increase
profitability on a quarterly or annual basis. Failure to achieve or maintain
profitability will materially and adversely affect the market price of our
common stock.

We expect our quarterly revenues and operating results to fluctuate and the
price of our common stock could fall if quarterly results are lower than
expectations

Our revenues and operating results are likely to vary significantly from
quarter to quarter. The factors that will affect our quarterly operating
results include:

. fluctuations in demand for our products and services;

. the timing of our application software and services sales;

. the timing of our application software implementations;

. increased expenditures for sales and marketing, research and development
and administration;

. the timing and introduction of new software by us or our competitors;
and

. the mix of services provided, and whether we or our channel partners
provide these services.

If revenue falls below our expectations in a quarter and we are not able to
quickly reduce our spending in response, our operating results for that quarter
could be harmed. It is likely that in some future quarter our operating results
may be below the expectations of public market analysts and investors and, as a
result, the price of our common stock may fall.

We have over 40 clients but currently only 14 clients have licensed our
application software, and our Internet commerce solution may never achieve
broad market acceptance, reducing potential for revenue growth

We first introduced the XML-based version of OneCommerce in April 1999 and
delivered a second major release in November 1999. Of our 40 clients, only 14
clients have licensed OneCommerce and of those, only three are operational on
the most recent version. Therefore, we have not demonstrated

4
<PAGE>

broad market acceptance of OneCommerce. If OneCommerce does not gain broad
market acceptance, or if OneCommerce fails to meet customer expectations, our
business would be harmed.

A large portion of our revenues are currently derived from five clients and a
loss of one or more of these clients could cause our results of operations to
suffer

Five of our clients accounted for 71% of our revenues for the year ended
December 31, 1998. Four clients accounted for 19.0%, 18.0%, 12.0%, and 12.0%
each, respectively. Five of our clients accounted for an aggregate of 57% of
our revenues for the year ended December 31, 1999. Three of those clients
accounted for 17.1%, 12.7%, and 11.6% each, respectively. Although we believe
that our client concentration will decrease as we continue to build our client
base, we expect that a small number of clients will continue to account for a
substantial portion of revenues in the near term. As a result, our inability to
secure additional significant clients during a given period or the loss of any
one major client could adversely affect our business. In addition, many of our
clients are Internet start-up companies with limited resources. Accordingly,
the non-payment of amounts due to us from a significant client could cause us
to incur a bad debt expense which could cause our financial condition to
suffer. For the year ended December 31, 1999, our bad debt expense was
approximately $1.1 million. We may experience higher levels of bad debt expense
in the future.

All of our revenues are directly related to a single family of relatively new
applications with few clients to date, and our revenue growth will be limited
if these offerings are not commercially successful

Our OneCommerce family of application services and related professional
services account for substantially all of our revenues to date, and we expect
these application services and professional services to continue to account for
most of our revenues for the foreseeable future. We have over 40 clients, for
both application services and professional services. If our current limited
offerings are not commercially successful,our revenues will not increase as
anticipated. We may not successfully develop or market any enhanced or new
application services in the future, which would limit our ability to increase
revenues.

In the emerging marketplace of Internet commerce, our application services
and professional services involve a new approach to the conduct of online
business. As a result, intensive marketing and sales efforts may be necessary
to educate prospective clients regarding the uses and benefits of our
application services and our professional services, thereby generating demand.
Companies that have already invested substantial resources in other methods of
conducting business may be reluctant to adopt a new approach that may replace,
limit or compete with their existing systems. Accordingly, a viable market for
our application services and professional services may not emerge or be
sustainable.

We anticipate the need to raise additional capital in the future, and if we
cannot meet future capital requirements, we may not be able to conduct our
business as planned

We currently anticipate that the net proceeds from this offering, together
with our existing working capital will be sufficient to meet our anticipated
working capital and capital expenditure requirements through 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 which are described herein. We may need to
raise additional funds in the future through public or private debt or equity
financings in order to:

. continue rapid expansion of our business;

. acquire complementary businesses or technologies;

. develop new products or services; or

. respond to competitive pressures.

5
<PAGE>

Additional financing 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 will not be able to take advantage of opportunities, develop new
products or services, or otherwise respond to unanticipated competitive
pressures. In such case, our business could be harmed.

Growth in our operation has strained and will continue to strain our resources;
our failure to manage growth effectively could negatively impact our revenue
growth

From January 1, 1999 to December 31, 1999, we grew from 72 to 261 employees,
our revenues increased dramatically, and we intend to continue to grow. If we
are successful, this growth will place a significant strain on the ability of
our management team to execute our business plan. In addition, significant
investments in personnel, management systems, and resources will be required.
There will also be significant additional administrative burdens placed on our
management team as a result of our status as a public company. We are upgrading
our financial accounting and planning systems, our project management systems,
our sales force automation systems, and installing a new customer relationship
management system. The installation and incorporation of these systems into our
management processes will place a significant burden on our management team and
our information technology staff, and these systems may not be effective once
implemented. If we do not manage this growth effectively, our business will
suffer.

We depend on our key personnel and we may not be able to fill other key
management positions, which could disrupt our operations and result in reduced
revenues

Our performance is substantially dependent on the continued services and on
the performance of our executive officers and other key employees, particularly
James W. MacIntyre, IV, our chief executive officer, Frederick C. Hawkins, III,
our chief financial officer, and Thomas E. Young, our senior vice president of
marketing and sales. The loss of the services of any of our key employees, or
an inability to hire other key members of management could materially and
adversely affect our business.

Our average sales cycle is four months, which makes our quarterly results
difficult to forecast accurately

Our application services and professional services are complex and often
involve significant investment decisions by prospective clients. As a result,
our average sales process frequently takes four months for reasons which
include the following:

. prospective clients often evaluate several possible alternative
solutions from other software vendors, systems integrators, and internal
development efforts;

. we typically must extensively educate the potential client about our
Internet commerce solution; and

. our clients frequently must seek multiple internal approvals to reach a
purchase decision due to the key role Internet commerce solutions may
play in their business.

Our sales cycle may be subject to a number of significant delays over which
we have little or no control. Our long sales cycle makes it difficult for us to
predict the quarter in which we will complete a particular sale. Because of
sales delays, our revenues and operating results may vary from period to
period. As a result, period-to-period comparisons of our results of operations
may not be meaningful, and you should not rely on them as an indication of
future performance.

6
<PAGE>

The Internet commerce market for our application software and services is new
and rapidly developing and may fail to mature into a sustainable market, which
would limit our ability to grow

The Internet commerce market is new and rapidly evolving. It is not clear
whether the developing infrastructure will be adequate to support increased
Internet commerce, or whether our customers will be successful in using our
application software and services to conduct their commercial operations
online. Consequently, the demand for our application services and professional
services in the Internet commerce market is uncertain. Our business will suffer
if our application services and professional services are not widely accepted
in the Internet commerce software market.

If broad market acceptance of eXtensible Markup Language does not develop, our
revenue growth could be negatively affected

OneCommerce is currently based in large part on eXtensible Markup Language,
or XML, an emerging technology standard for sharing data. It is possible that a
competing standard perceived to be superior could replace XML. If that happens,
the market may not accept an XML-based application and our future results would
suffer. If a new standard were perceived to be superior, our application
software might not be compatible with the new standard or we might not be able
to develop a product using a new standard in a timely manner. Consequently, a
failure of XML to achieve broad market acceptance or the introduction of a
competing standard perceived to be superior in the market could harm our
business.

Market acceptance of OneCommerce is dependent on the acceptance and use of
Microsoft operating systems and Internet technologies

We designed OneCommerce to run only on Microsoft operating systems and
Internet technologies. However, to date a majority of large-scale Internet
commerce sites have used other operating systems such as UNIX or Linux. We
cannot be certain that Microsoft operating systems and Internet technologies
will achieve wide market acceptance as an easily scalable operating platform
for large-scale Internet commerce solutions. If a significant number of
potential clients do not want to use Microsoft operating systems and Internet
technologies, we will be forced to develop products that run on other operating
systems or Internet servers. Development of a new product line would require
significant expenditures of time and money. Moreover, any change to Microsoft
operating systems or Internet technologies could require us to modify our
application services and could cause us to delay upgrades and releases. Any
decline in the market acceptance of Microsoft operating systems and Internet
technologies for any reason, including as a result of errors or delayed
introduction of enhancement or upgrades, could harm our business.

If we are forced to develop new application services in response to these
risks, we will be required to commit a substantial investment of resources, and
we may not be able to successfully develop or introduce new applications on a
timely or cost-effective basis, or at all, which could lead potential customers
to choose alternatives to our solution.

We are dependent on marketing, technology, and distribution relationships, and
if these relationships are not successful, our growth may be limited

We rely on marketing, technology, and distribution relationships with a
variety of companies, which, in part, generate leads for the sale of our
Internet commerce application services. These relationships include:

. vendors of key technology platforms;

. systems integrators and consulting firms;

7
<PAGE>

. vendors of complementary Internet commerce software; and

. application service providers.

Not all of our channel partner and alliance partner relationships are
documented in writing, and some are governed by agreements that can be
terminated by either party with little or no prior notice. We may not be able
to maintain these relationships and enter into additional relationships that
will provide timely and cost-effective distribution of OneCommerce.

Moreover, these relationships are not exclusive. If the partners with whom
we have relationships are not successful in selling and implementing systems
that include our application services, or if they more vigorously promote
competing solutions or technologies, our growth could be adversely affected.

We may fail to establish and maintain beneficial strategic relationships, which
would limit our revenue growth

We intend to establish additional strategic relationships with key
participants in the Internet commerce industry to increase our application
software and services sales. There is intense competition for these
relationships, and we may not be able to enter into these relationships on
commercially reasonable terms or at all. In the event of a dispute among
potential partners, it is possible that we could be drawn into litigation aimed
at preventing us from continuing our relationship with either party. Even if we
enter into relationships with other Internet commerce vendors, they themselves
may not attract significant numbers of customers. Accordingly, we may not
realize additional sales from these relationships. Moreover, we may have to
expend significant resources to establish these relationships. Our inability to
enter into new strategic relationships and expand our existing ones could harm
our business and limit our growth.

We face intense competition, which could adversely affect our sales and
profitability

The Internet commerce application software and professional services market
is intensely competitive, highly fragmented, characterized by rapid
technological change and significantly affected by new product and service
introductions. Recent acquisitions of several of our competitors by large
software companies and other market activities of industry participants have
increased the competition in our market. We may not be able to compete
successfully against current or future competitors. We compete with other
Internet commerce software vendors including Art Technology Group, BroadVision,
OpenMarket, Vignette, InterWorld, and others. We also compete with application
server products and their vendors including IBM and its Websphere products, the
Sun-Netscape Alliance and its products, Allaire Corporation and its products,
among others. A number of these competitors have significantly greater
financial, technical, marketing and other resources than we have and have been
in business longer than we have. Many competitors also have greater brand
recognition and more customers than we do. Competitors may therefore have the
capability to support marketing endeavors that are more extensive than ours or
to adopt pricing and terms that are more aggressive than ours.

Many of our key personnel are new to our company and may not work together
successfully causing internal distractions from the development of our business

A number of people on our management team and sales force have joined
OneSoft in the last 12 months. Our management team has limited experience
working together. Our future performance will depend, in part, on our ability
to integrate successfully our newly hired executive officers into our
management team, and our ability to develop an effective working relationship
among management. Our executive officers, who have worked together for only a
short time, may not be successful in working together or managing our company.
Any disaffection or disaccord among executive officers, or between our officers
and our board of directors, could affect our ability to make strategic
decisions. In addition, we are rapidly hiring sales personnel with limited
experience marketing our services and

8
<PAGE>

working with our sales force. If our key personnel are unable to market our
services and work together successfully, it could have a negative effect on our
ability to grow.

Competition for employees in our industry, and in our geographic region, is
intense, and we may not be able to hire or retain employees

We believe we will need to attract, retain and motivate talented management
and other highly skilled employees to be successful. Competition for skilled
personnel in our industry and in our geographic region is intense. If we are
unable to retain our key employees or attract, assimilate or retain other
highly qualified employees in the future, the growth of our business will not
meet future expectations.

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

The market for Internet commerce application software and related services
is subject to rapid technological change, changing customer needs, frequent new
product introductions and evolving industry standards that may render existing
applications and services obsolete. Our growth and future operating results
will depend in part upon our ability to enhance existing applications and
develop and introduce new application software or components that:

. exploit technological advances in the marketplace;

. meet changing customer requirements;

. achieve market acceptance;

. integrate successfully with third party software; and

. respond to competitive products.

Our research and development efforts have required, and are expected to
continue to require, substantial investment. We may not possess sufficient
resources to continue to make the necessary investments in technology. In
addition, we may not successfully identify new software opportunities and
develop and bring new software to market in a timely and efficient manner. If
we are unable, for technological or other reasons, to develop and introduce new
and enhanced software in a timely manner, we may lose existing customers and
fail to attract new customers, which could result in a decline in revenues.

Our application software may contain defects, which can result in reduced
sales, increased service and warranty costs, and liability to our clients and
claims against us

Our application software may contain errors that become apparent when they
are introduced or when the volume of usage increases. Errors in our software,
implementation errors, including those caused by third parties, or other
performance difficulties could result in decreased sales of our software,
increased service and warranty costs, and liability to our clients, which could
have an adverse effect on our business. Although we carry errors and omissions
insurance, such insurance may not cover all liability claims made against us.
Our risk of liability to clients is particularly pronounced because of our
belief that our application software will be critical to their operations.

Intellectual property claims against us can be costly and result in the loss of
significant rights if we are not successful in defending those claims

Other parties may assert infringement or unfair competition claims against
us. Any claim, with or without merit, could result in significant litigation
costs and distraction of management. Some of our competitors have been issued
U.S. patents on certain aspects of their electronic commerce software

9
<PAGE>

products. Although we do not believe that we are infringing on any such patent
rights, those companies may claim that we are doing so. If any such claim was
made against us, our business could be harmed, particularly if we are
unsuccessful in defending such claim. If we are forced to defend any such
claim, whether it is with or without merit or is determined in our favor, then
we may face costly litigation, diversion of technical and management personnel,
or delays in future application software releases. We may also be required to
enter into costly and burdensome royalty and licensing agreements. Such royalty
or licensing agreements, if required, may not be available on terms acceptable
to us, or at all.

We rely on our intellectual property rights and if we are unable to protect
these rights, we may face increased competition

We rely on a combination of patent, copyright, trademark, and trade secret
laws and restrictions on disclosure to protect our intellectual property
rights. We have applied to register 95 trademarks in the United States,
including "OneSoft", "OneCommerce", "PrimeCommerce", and "Internet Commerce
Opportunity Assessment", among others. We also have filed a patent application
claiming proprietary inventions used in our software architecture. We cannot be
certain that trademark registrations or patents will issue from these
applications. Moreover, even if they do, unauthorized persons may attempt to
copy or otherwise obtain and use our intellectual property. Monitoring
unauthorized use of our intellectual property is difficult, and we cannot be
certain that the steps we have taken will be effective to prevent unauthorized
use. In addition, our business activities may infringe on the proprietary
rights of others, and, from time to time, we have received and may continue to
receive, claims of infringement against us.

Litigation may be necessary to enforce our intellectual property rights, to
protect our trade secrets, or to determine the validity and scope of the
proprietary rights of others. Litigation could subject us to significant
liability for damages and invalidation of our proprietary rights. These
lawsuits, regardless of their success, would likely be time consuming and
expensive to resolve, and would divert management's time and attention away
from our business.

We generally enter into confidentiality or license agreements with our
employees and consultants, and control access to and distribution of our
intellectual property, documentation, and other proprietary information.
Despite our efforts to protect our proprietary rights from unauthorized use or
disclosure, unauthorized parties may attempt to disclose, obtain, or use our
solutions or intellectual property. We cannot assure you that the steps we have
taken will prevent misappropriation of our solutions or intellectual property,
particularly in foreign countries where laws or law enforcement practices may
not protect our proprietary rights as fully as in the United States.

Acquisitions may disrupt or otherwise have a negative impact on our business

We may acquire or make investments in complementary businesses, products,
services or technologies on an opportunistic basis when they will assist us in
carrying out our business strategy. Growth through acquisitions has been a
successful strategy used by other technology companies. We do not have any
present understanding, nor are we conducting any negotiations, relating to any
such acquisition or investment. If we acquire a company, then we could have
difficulty in assimilating that company's personnel and operations. In
addition, the key personnel of the acquired company may decide not to work for
us. If we acquire products, services or technologies, we could have difficulty
in

10
<PAGE>

assimilating them into our operations. These difficulties could disrupt our
ongoing business, distract our management and employees and increase our
expenses. Furthermore, we may have to incur debt or issue equity securities to
pay for any future acquisitions, the issuance of which could be dilutive to our
existing stockholders. In addition, these securities may have rights,
preferences or privileges senior to those of our existing stockholders.

We intend to expand our international sales efforts but do not have substantial
experience in international markets, therefore, we may not be successful and
such failures could have an adverse effect on our revenues

We intend to expand our international sales efforts in the future. We have
limited experience in marketing, selling, and supporting our application
software and services abroad. 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 could suffer. 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 and protections;

. differing labor regulations;

. political and economic uncertainty or instability in some regions;

. greater difficulty in staffing and managing foreign operations; and

. fluctuating currency exchange rates.

Risks Related to Our Industry

We depend on the growth in the use of the Internet for business, which is not
certain

Our future success depends heavily on the increased use of the Internet for
business. Although the Internet is experiencing rapid growth in the number of
users and traffic, this growth is a recent phenomenon and may not continue. The
failure of the Internet to continue to grow and develop as a commercial or
business medium could harm our business. The acceptance and use of the Internet
for commerce could be limited by a number of factors such as the growth and use
of the Internet in general, the relative ease of conducting transactions on the
Internet, concerns about transaction security, and taxation of transactions on
the Internet.

We depend on the speed and reliability of the Internet to enable the growth of
Internet commerce, which may not develop

The recent growth in Internet traffic has caused frequent periods of
decreased performance. If Internet usage continues to grow rapidly, its
infrastructure may not be able to support these demands and its performance and
reliability may decline. If outages or delays on the Internet occur frequently
or increase in frequency, Internet commerce could grow more slowly or decline,
which may reduce the demand for our Internet software application services. The
ability of OneCommerce and our professional services to satisfy our clients'
needs is ultimately limited by and depends upon the speed and reliability of
the Internet. Consequently, the emergence and growth of the market for our
application services and related professional services depends upon
improvements being made to the entire Internet infrastructure to alleviate
overloading and congestion. If these improvements are not made, the ability of
our clients to utilize our solutions will be hindered, and our business may
suffer.

11
<PAGE>

Breaches of security on the Internet may slow the growth of Internet commerce,
limit our growth, and expose us to liability

A significant barrier to market acceptance of Internet commerce and
communication is the concern regarding the secure exchange of valuable and
confidential information over public networks. Anyone who is able to circumvent
security measures could misappropriate proprietary, confidential customer
information or cause interruptions in our clients' operations. Our clients may
be required to incur significant costs to protect against security breaches or
to alleviate problems caused by breaches, reducing their demand for our
application services. A well-publicized breach of security could deter
consumers and businesses from using the Internet to conduct transactions that
involve transmitting confidential information. The failure of the security
features of our application software to prevent security breaches, or well-
publicized security breaches affecting the Web in general, could significantly
harm our business.

Unplanned system interruptions and capacity constraints could reduce our
ability to provide hosting services and could harm our business and our
reputation

Our clients have in the past experienced some interruptions with our hosted
network. We believe that these interruptions will continue to occur from time
to time. These interruptions could be due to hardware and operating system
failures. We expect a substantial portion of our revenues to be derived from
customers who use our hosted network. As a result, our business will suffer if
we experience frequent or long system interruptions that result in the
unavailability or reduced performance of our hosted network or reduce our
ability to provide remote management services. We expect to experience
occasional temporary capacity constraints due to sharply increased traffic,
which may cause unanticipated system disruptions, slower response times,
impaired quality and degradation in levels of customer service. If this were to
continue to happen, our business and reputation could be seriously harmed.

Our success largely depends on the efficient and uninterrupted operation of
our computer and communications hardware and network systems. Substantially all
of our computer communications systems are located in Northern Virginia. Our
systems and operations are vulnerable to damage or interruption from fire,
earthquake, power loss, telecommunications failure and similar events.

We have entered into service agreements with some of our clients that
require minimum performance standards, including standards regarding the
availability and response time of our remote management services. If we fail to
meet these standards, our clients could terminate their relationships with us
and we could be subject to contractual monetary penalties. Any unplanned
interruption of services may harm our ability to attract and retain clients.

We rely on relationships with, and the system integrity of, our hosting
partners

Some of our hosted network consists of data centers hosted by our partners.
Accordingly, we rely on the speed and reliability of the systems and networks
of these hosting partners. If our hosting partners experience system
interruptions or delays or other problems, or if we do not maintain or develop
relationships with hosting partners, our business could suffer.

Increasing governmental regulation and legal uncertainties surrounding the
Internet and Internet commerce could limit the market for our products

A number of legislative and regulatory proposals under consideration by
federal, state, local, and foreign governmental organizations may lead to laws
or regulations concerning various aspects of the Internet such as taxation of
goods and services provided over the Internet, pricing, content and quality of
goods and services. Legislation and anticipated legislation could dampen the
growth in Internet usage and decrease or limit its acceptance as a
communications and commercial medium. If enacted, these laws and regulations
could limit the market for our products and services. In addition, existing
laws

12
<PAGE>

could be applied to the Internet. Legislation or application of existing laws
could expose companies involved in Internet commerce to increased liability,
which could limit the growth of Internet commerce generally, and limit demand
for our application software and services, in particular.

Government regulation of the collection and use of personal data could reduce
demand for our products and services by impairing the ability of businesses to
obtain information about customers using the features of OneCommerce.

Our Internet application software connects to and analyzes data from various
applications, including Internet applications, which enable businesses to
capture and use information about their customers. Government regulation that
limits our clients' use of this information could reduce the demand for our
products. A number of jurisdictions have adopted, or are considering adopting,
laws that restrict the use of customer information from Internet applications.
The European Union has required that its member states adopt legislation that
imposes restrictions on the collection and use of personal data on the
Internet. They also must adopt legislation limiting the transfer of personally-
identifiable data to countries that do not impose equivalent restrictions. The
United States Department of Commerce and the European Union are negotiating
safe-harbor regulations for U.S.-based Internet commerce companies, but have
not yet reached agreement. In the United States, the Children's Online Privacy
Protection Act was enacted in October 1998. The Federal Trade Commission has
enacted rules implementing this legislation imposing disclosure obligations on
Internet sites collecting personally-identifiable data from children under the
age of 13. These rules become effective in April. In addition, the Federal
Trade Commission is investigating privacy practices of businesses that collect
information on the Internet. These and other privacy-related initiatives could
reduce demand for some of the Internet applications with which OneCommerce
operates, and could restrict the use of some of the features of OneCommerce in
some Internet commerce applications. Either scenario could potentially result
in reduced demand for our application software and services.

Risks Related to This Offering

Internet-related stock prices are especially volatile and this volatility may
depress our stock price and negatively impact your investment

The stock market, and specifically the stock prices of Internet-related
companies, has been very volatile. This volatility is often not related to the
operating performance of the companies. This broad market volatility and
industry volatility may reduce the price of our common stock, without regard to
our operating performance. Investors may not be able to resell their shares of
our common stock following periods of volatility because of the market's
adverse reaction to such volatility.

Securities class action litigation has often been brought against companies
experiencing volatility in the market price of their securities. Litigation
brought against us could result in substantial costs to us in defending against
a lawsuit and management's attention could be diverted from our business.

Because a group of existing stockholders owns a large percentage of our voting
stock, other stockholders' voting power may be limited

Following consummation of this offering, it is anticipated that our
officers, directors, and their affiliates will beneficially own or control
approximately 65.0% of our common stock. In combination with entities owning 5%
or more of our outstanding shares of common stock, this group will control
13,744,015 shares of common stock, or 65.0% of the outstanding shares of our
stock. As a result, if such persons act together, they will have the ability to
control all matters submitted to our stockholders for approval, including
election and removal of directors and the approval of any merger,
consolidation, or sale of all or substantially all of

13
<PAGE>

our assets. These stockholders may make decisions that are adverse to your
interests. See our discussion under the heading "Principal and Selling
Stockholders" for more information about ownership of our outstanding shares.

Management may apply the proceeds of this offering to uses that do not increase
our profits or market value

Our management has broad discretion as to how to spend the proceeds from
this offering and may spend these proceeds in ways with which our stockholders
may not agree. Our management has not determined how a substantial portion of
the offering proceeds will be allocated among the various uses. Accordingly,
the net proceeds may be used for corporate purposes that do not increase our
profitability or our market value. Until the proceeds are needed, we plan to
invest them in investment-grade, interest-bearing securities. The failure of
management to apply these proceeds effectively could harm our business. See
"Use of Proceeds" for more information about how we plan to use our proceeds
from this offering.

Future sales of shares of our common stock could cause the price of our shares
to decline

If our shareholders sell substantial amounts of our common stock, including
shares issued upon the exercise of outstanding options and warrants, in the
public market following the offering, then the market price of our common stock
could fall. Restrictions under the securities laws and certain lock-up
agreements limit the number of shares of common stock available for sale in the
public market. The holders of shares of common stock and warrants and
options for an aggregate of shares of common stock have agreed not to sell
any such securities for 180 days after the offering without the prior written
consent of Deutsche Bank Securities Inc. However, Deutsche Bank Securities Inc.
may, in its sole discretion, release all or any portion of the securities
subject to such lock-up agreements.

We may file a registration statement to register all shares of common stock
under our stock option plans shortly after completion of this offering. After
such registration statement is effective, shares issued upon exercise of stock
options will be eligible for resale in the public market without restriction.

Anti-takeover provisions and our right to issue preferred stock could make a
third-party acquisition of us difficult

We are a Delaware corporation. Anti-takeover provisions of Delaware law
could make it more difficult for a third party to acquire control of us, even
if such change in control would be beneficial to shareholders. Our restated
certificate of incorporation provides that our board of directors may issue
preferred stock without shareholder approval. In addition, our restated bylaws
provide for a classified board, with each board member serving a staggered
three-year term. The issuance of preferred stock, the existence of a classified
board, and other provisions in the charter and under Delaware law could make it
more difficult for a third party to acquire us.

You will incur immediate and substantial dilution in the book value of your
investment

The initial public offering price is substantially higher than the pro forma
net book value per share of our outstanding common stock. If you purchase
shares of our common stock, you will incur immediate and substantial dilution
in the amount of $8.88 per share. If the holders of outstanding options or
warrants exercise those options or warrants, you will experience further
dilution.

14
<PAGE>

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
AND INDUSTRY DATA

We make many statements in this prospectus under the captions "Prospectus
Summary," "Risk Factors," "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Business," and elsewhere that are
forward-looking and are not based on historical facts. These statements relate
to our future plans, objectives, expectations, and intentions. We may identify
these statements by the use of words such as "believe," "expect," "anticipate,"
"intend," and "plan," and similar expressions. These forward-looking statements
involve a number of risks and uncertainties. Our actual results could differ
materially from those anticipated in these forward-looking statements as a
result of various factors, including those we discuss in "Risk Factors" and
elsewhere in this prospectus. These forward-looking statements speak only as of
the date of this prospectus, and we caution you not to rely on these statements
without also considering the risks and uncertainties associated with these
statements and our business that are addressed in this prospectus.

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. Moreover, neither we nor any other
person assumes responsibility for the accuracy and completeness of the forward-
looking statements. You should rely only on the information contained in this
prospectus. We have not authorized anyone to provide you with information
different from that contained in this prospectus.

This prospectus contains estimates of market growth related to the Internet
and e-commerce. These estimates have been included in studies published by
nationally-known market research firms. These estimates assume that certain
events, trends and activities will occur. These estimates have been produced by
industry analysts based on trends to date, their knowledge of technologies and
markets, and customer research, but these are forecasts only and are subject to
inherent uncertainty. There can be no assurance that, even if these assumptions
are correct, we will experience similar growth or market acceptance.

15
<PAGE>

USE OF PROCEEDS

Our net proceeds from the sale of the 4,200,000 shares of common stock we
are offering, at an assumed initial offering price of $12.00 per share, are
estimated to be approximately $45.6 million after deducting underwriting
discounts and commissions and estimated offering expenses payable by us. If the
over-allotment option is exercised in full, we estimate that the net proceeds
will be approximately $62,800,000.

We intend to use the net proceeds we receive from this offering for working
capital and general corporate purposes, including:

. approximately $30 million to expand our sales and marketing
activities;

. approximately $17 million to expand our research and development; and

. the remainder for other general corporate purposes, including
capital expenditures.

The amounts and timing of our actual expenditures will depend on numerous
factors, including market acceptance of our application services and
professional services, the amount of proceeds actually raised in this offering,
the amount of cash generated by our operations, and competition. We may also
use a portion of the net proceeds from this offering 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
any potential acquisitions or investments. Pending application of the net
proceeds, we intend to invest them in short-term, interest-bearing, investment-
grade securities.

DIVIDEND POLICY

We have never declared or paid any cash dividends on shares of our capital
stock. We intend to retain any future earnings to finance future growth and do
not anticipate paying any cash dividends in the future. Payment of future
dividends, if any, will be at the discretion of our board of directors after
taking into account various factors, including our financial condition,
operating results, current and anticipated cash needs, and plans for expansion.

16
<PAGE>

CAPITALIZATION

The following table shows:

. our actual capitalization as of December 31, 1999;

. our capitalization as of that date on a pro forma basis to give effect
to the conversion of all preferred stock outstanding as of December 31,
1999 into common stock upon the closing of this offering; and

. our pro forma capitalization as adjusted to reflect our receipt of the
net proceeds from the sale of 4,200,000 shares of common stock offered
by us at the assumed initial public offering price of $12.00 per share
and after deducting underwriting discounts and commissions and estimated
offering expenses.

<TABLE>
<CAPTION>
December 31, 1999
--------------------------------
Pro Forma
Actual Pro Forma As Adjusted
-------- --------- -----------
(in thousands)
<S> <C> <C> <C>
Lease obligations, long-term portion........... $ 63 $ 63 63
Redeemable convertible preferred stock (non-
cumulative), par value $0.01 per share;
10,107,640 shares authorized; 10,107,640
shares issued and outstanding, actual; no
shares issued and outstanding, pro forma and
pro forma as adjusted......................... 48,747 -- --
Stockholders' equity:
Common stock, par value $0.001 per share;
20,242,969 shares authorized; 6,206,850
shares issued and outstanding, actual;
16,314,490 shares issued and outstanding pro
forma and 20,514,490 shares issued and
outstanding pro forma as adjusted............ 6 16 21
Additional paid-in capital..................... 5,451 54,188 99,754
Unearned stock compensation.................... (2,020) (2,020) (2,020)
Accumulated deficit............................ (33,760) (33,760) (33,760)
-------- -------- -------
Total stockholders' (deficit) equity......... (30,323) 18,424 63,995
-------- -------- -------
Total capitalization....................... $ 18,487 $ 18,487 $64,058
======== ======== =======
</TABLE>

The outstanding share information shown in the table excludes the following
shares:

. 3,685,483 shares of common stock issuable upon the exercise of
outstanding stock options granted as of December 31, 1999 with a
weighted average exercise price of $3.26 per share;

. 1,082,767 additional shares of common stock available for future grant
under our Second Amended and Restated 1997 Employee, Director and
Consultant Stock Option Plan, as of December 31, 1999; and

. 60,651 additional shares of common stock issuable upon the exercise of
warrants outstanding as of December 31, 1999, at an exercise price of
$6.59 per share.

17
<PAGE>

DILUTION

Our pro forma net tangible book value as of December 31, 1999, was $18.5
million, or $1.13 per share of common stock. Pro forma net tangible book value
per share represents the amount of our total tangible assets, less total
liabilities, divided by the number of shares of common stock outstanding as of
December 31, 1999, after giving effect to the conversion of all outstanding
shares of preferred stock and warrants into shares of common stock upon
completion of this offering. After giving effect to the receipt of the net
proceeds from the sale of shares of our common stock offered in this offering
at an assumed initial public offering price of $12.00 per share, and after
deducting underwriting discounts and commissions, and the estimated offering
expenses, our pro forma as adjusted net tangible book value as of December 31,
1999 would have been $64.0 million, or $3.12 per share of common stock. This
represents an immediate increase in pro forma net tangible book value of $1.99
per share to our existing stockholders and an immediate dilution of $8.88 per
share to new investors at the assumed initial public offering price. The
following table illustrates the per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share......... $ 12.00
Pro forma net tangible book value per share as of
December 31, 1999..................................... 1.13
Increase per share attributable to new investors....... 1.99
---------
Pro forma net tangible book value per share after the
offering 3.12
---------
Pro forma net tangible book value dilution per share to
new investors.......................................... $ 8.88
=========
</TABLE>

The following table summarizes, as of December 31, 1999, on the pro forma
basis described above, the number of shares of common stock purchased from us,
the total consideration paid to us, and the average price per share paid by
existing stockholders and by new investors purchasing shares of common stock in
this offering, before deducting underwriting discounts and commissions and the
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.......... 16,314,490 80% $47,589,826 49% $ 2.92
New public investors........... 4,200,000 20 50,400,000 51 12.00
---------- --- ----------- --- ------
Total........................ 20,514,490 100% $97,989,826 100% $ 4.78
========== === =========== === ======
</TABLE>

The foregoing discussion and tables assumes no exercise of any outstanding
stock options or warrants as of December 31, 1999. As of December 31, 1999,
there were options and warrants outstanding to purchase a total of 3,746,134
shares of our common stock with a weighted-average exercise price of $3.31 per
share. If any of these options and warrants are exercised, there will be
further dilution to new public investors. Please see Note 6 to the financial
statements for more information about these options and warrants.

If the underwriters exercise their over-allotment in full, the following
will occur:

. the number of shares of common stock held by existing stockholders will
be reduced to approximately 77.1% of the total number of shares of
common stock to be outstanding after this offering; and

. the number of shares of common stock held by the new investors will
increase to 4,830,000 shares, or 22.8% of the total number of shares of
common stock to be outstanding immediately after this offering. See
"Principal and Selling Stockholders."

18
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data should be read in
conjunction with the consolidated financial statements and related notes and
Management's Discussion and Analysis of Financial Condition and Results of
Operations, which are included elsewhere in this prospectus. The consolidated
statement of operations data for each of the three years in the period ended
December 31, 1999 and our consolidated balance sheet data as of December 31,
1998 and 1999 are derived from our consolidated financial statements that have
been audited by Ernst & Young LLP, independent auditors, and are included
elsewhere in this prospectus. The consolidated balance sheet data as of
December 31, 1995 and 1996 and the consolidated statement of operations data
for the year ended December 31, 1995 are derived from the unaudited
consolidated financial statements not included in this prospectus and include,
in the opinion of management, all adjustments, consisting only of normal
recurring adjustments, that are necessary. Historical results are not
necessarily indicative of future results. The pro forma consolidated balance
sheet data as of December 31, 1999 is unaudited and reflects the assumed
conversion of all outstanding shares of preferred stock into common stock upon
the completion of this offering. The unaudited pro forma as adjusted balance
sheet data above reflects the receipt of the net proceeds from the sale of the
shares of common stock offered by OneSoft at an assumed initial public offering
price of $12.00 per share after deducting the estimated underwriting discounts
and commissions and offering expenses.

19
<PAGE>

<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------------------------------------
1995 1996 1997 1998 1999
---------- ---------- ---------- ---------- ----------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Consolidated Statement
of Operations Data:
Revenues:
Application services... $ -- $ 240 $ 171 $ 561 $ 2,023
Professional services.. -- 1,834 1,834 995 6,928
---------- ---------- ---------- ---------- ----------
Total revenues........ -- 2,074 2,005 1,556 8,951
Cost of revenues........ -- 1,458 1,400 1,061 7,397
---------- ---------- ---------- ---------- ----------
Gross profit............ -- 616 605 495 1,554
Operating expenses:
Sales and marketing
expenses.............. -- -- -- 1,190 12,184
Research and
development costs..... -- -- 254 1,044 4,490
General and
administrative
expenses.............. 8 568 955 2,012 8,433
Non-cash stock based on
compensation expense.. -- -- 10 12 3,155
---------- ---------- ---------- ---------- ----------
Total operating
expenses............. 8 568 1,219 4,258 28,262
Income (loss) from
operations............. (8) 48 (614) (3,763) (26,708)
Interest income........ -- -- 17 169 613
Interest expense....... -- -- (18) (14) (48)
Minority interest...... -- 1 14 18 (227)
---------- ---------- ---------- ---------- ----------
Net income (loss)....... (8) 49 (601) (3,590) (26,370)
========== ========== ========== ========== ==========
Accretion of preferred
stock.................. -- -- -- 18 3,061
---------- ---------- ---------- ---------- ----------
Net income (loss)
attributable to
shareholders........... $ (8) $ 49 $ (601) $ (3,608) $ (29,431)
========== ========== ========== ========== ==========
Basic and diluted net
income (loss) per share
attributable to
shareholders........... $ (0.00) $ 0.02 $ (0.10) $ (0.60) $ (4.85)
========== ========== ========== ========== ==========
Weighted average shares
used in computing basic
and diluted net income
(loss) per share....... 3,000,000 3,000,000 5,832,278 5,968,736 6,066,009
Pro forma basic and
diluted net loss per
share attributable to
shareholders........... $ (1.87)
==========
Weighted average shares
used in computing pro
forma basic and diluted
net loss per share..... 14,122,682
</TABLE>

<TABLE>
<CAPTION>
December 31, December 31, 1999
------------------------ ------------------------------
Pro Forma
1995 1996 1997 1998 Actual Pro Forma As Adjusted
---- ---- ----- ------ ------- --------- -----------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Balance
Sheet Data:
Cash and cash
equivalents............ $13 $ 9 $ 733 $2,556 $16,361 $16,361 $61,933
Working capital......... (7) 1 494 2,506 11,542 11,542 57,144
Total assets............ 13 358 1,391 4,094 28,811 28,811 74,383
Long-term debt and
capital lease
obligations............ -- -- 31 33 63 63 63
Redeemable convertible
preferred stock........ -- -- 1,750 7,604 48,747 -- --
Stockholders' (deficit)
equity................. (7) 44 (766) (4,360) (30,323) 18,423 63,995
</TABLE>

20
<PAGE>

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

The following discussion and analysis of our financial condition and results
of operations should be read in conjunction with "Selected Consolidated
Financial Data" and our consolidated financial statements and related notes
appearing elsewhere in this prospectus. Please refer to "Special Note Regarding
Forward-Looking Statements and Industry Data" for additional information.

Overview

We were founded in Northern Virginia in 1995, and were reincorporated in the
state of Delaware in March 1997. Initial revenues were primarily generated from
professional services and software customization provided to governmental and
non-profit organizations. Beginning in 1997, we devoted our efforts primarily
to the research, development and distribution of OneCommerce, our application
software, and related enabling services, and shifted the focus of our business
to serving commercial clients. We released version 1.0 of OneCommerce in the
third quarter of 1998. We introduced OneCommerce version 2.0, the first XML-
based implementation of our application software, in April 1999. OneCommerce
version 3.0 was released in November 1999. Throughout these periods, we
expanded our organization in key areas, particularly research and development,
marketing and sales, and deployment services. We grew from 18 employees as of
December 31, 1997, to 261 full-time employees as of December 31, 1999, and
expect that our growth in personnel will continue throughout 2000.

We derive revenues from two primary sources: (1) application services and
(2) professional services. Application services revenues consist principally of
license fees for our OneCommerce application software and revenues from the
following services, packaged with the licensed application software: software
maintenance, managed services including application outsourcing, technical
support and transaction services. Our professional services, delivered by our
Internet Solution Center, include strategy, deployment and solutions management
services that enable clients to plan, design, implement and monitor their
Internet commerce businesses based on OneCommerce. Professional services also
include educational services to train our distribution partners to effectively
sell, install and support our OneCommerce solution, and train our clients to
use the administrative features of our software.

Application services are priced based primarily on the expected number of
server processors, or central processing units, required to support the
anticipated level of activity on our client's Internet commerce site. These
application services are typically rendered pursuant to a software license and
associated service agreement, generally with 24 to 36 month terms. The service
agreement is priced primarily on the selection and level of services provided.
A typical new Internet commerce Web site requires a license for OneCommerce
software for a minimum level of four processor license units, and managed
services for which the client will pay a flat monthly fee and initial service-
term commitment and configuration fee. We charge additional application service
fees as our clients add processor capacity.

While the majority of our software licenses are perpetual, we currently
license and plan to continue licensing our OneCommerce software on a term
basis. We sell most software licenses packaged with managed services and
recognize license revenues ratably over the term of the managed services
agreement. We recognize software maintenance revenues and managed services
revenues on a monthly basis consistent with those agreements.

21
<PAGE>

We generally bill our professional services on a time and materials basis.
Revenues from professional services agreements that are billed on a time and
materials basis are recognized as services are provided. Revenues generated
pursuant to fixed-fee professional services contracts are recognized as
services are rendered using the percentage-of-completion method of accounting,
and cash received from customers in excess of revenues is recognized as
deferred revenues. Although currently the majority of our professional services
revenues are derived from time and materials contracts, we plan to increasingly
offer service on a fixed-fee basis.

Cost of revenues include the direct costs of application services and
professional services, which consist primarily of the salaries and benefits of
our services personnel, costs of education and training of service partners and
clients, and costs related to hosting, network and systems infrastructure, and
facilities. We anticipate a transitory decline in our gross margins from the
provision of professional services, as we incur increasing costs related to the
development of packaged service offerings, and to the training of our indirect
channel partners to use these packaged service offerings to deploy and support
our OneCommerce solution.

Sales and marketing expenses consist primarily of salaries and commissions
for our direct and indirect sales force, promotional expenses including
expenses for advertising and trade shows, and the facilities costs for our
various sales offices. We market and sell our application and professional
services through our sales force, and application services through indirect
sales and distribution channels. Sales through indirect distribution channels
began in August 1999, and did not comprise a significant portion of our costs
in 1999. While not material in 1999, we intend to increase our use of indirect
channel partners as a means to broaden the distribution of our Internet
commerce solution and related services. Our sales and marketing team of 56
persons focuses on the North American market, and we intend to establish an
international sales presence in 2000. All sales to date have been domestic.

Research and development expenses consist primarily of salaries for
development personnel, and the related costs associated with the research,
development and enhancement of our software and service offerings, as well as
quality assurance and testing. Our current policy is to recognize these
expenses in the period incurred. We expect the absolute dollar amount of these
expenses to grow substantially as we continue to invest a significant
percentage of our revenues in these activities.

General and administrative expenses consist principally of salaries and
benefits for executive and managerial personnel, as well as expenses for
facilities, recruiting, legal services, financial services, and other
professional services. We expect these expenses to continue to increase as we
expand our operations. In addition, we anticipate that we will incur greater
general and administrative costs associated with our reporting obligations as a
public company.

Non-cash stock based compensation expenses consist of the non-cash
compensation recorded in connection with the granting of options to employees
and non-employees. We recorded expenses of $9,622, $12,047 and $397,238 during
the years ended December 31, 1997, 1998, and 1999, respectively, as a result of
the issuance of stock options to employees with exercise prices less than the
fair market value of our common stock at the date of issuance.

For the year ended December 31, 1999, we recorded $2.8 million of expense
related to the fair value of the options issued to non-employees. Approximately
$145,000 of this amount related to services performed during 1999 by non-
employees. The remaining $2.6 million resulted from the issuance of an option
to a consultant for the purchase of 250,000 shares of common stock with an
exercise price of $0.552 per share. These 250,000 options vest upon

22
<PAGE>

this individual meeting certain sales goals prior to December 2000 as discussed
in the option agreement. We have accounted for these 250,000 options under SOP
96-18 and accordingly recorded an expense using variable accounting for the
options through December 31, 1999.

We have experienced substantial net losses since our inception due to the
significant costs incurred to develop our software and related intellectual
property, to recruit and train personnel for our growing operations, as well as
other expenses related to the development of our business and brand. We
experienced bad debt expense of approximately $1.1 million in 1999. Many of our
clients are Internet startup companies with limited resources. We may
experience higher levels of bad debt expense in the future. As of December 31,
1999, we had an accumulated deficit of approximately $33.8 million. We
anticipate that our operating expenses will increase substantially in future
quarters as we increase sales and marketing operations, develop new
distribution channels, fund greater levels of research and development, and
support and improve operational and financial systems. Accordingly, we expect
to continue to incur additional losses for the foreseeable future.

Results of Operations

The following table sets forth the percentage of total revenues represented
by various items of revenues and expenses during the periods indicated:

<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------
1997 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
Percentage of Total Revenues:
Revenues:
Application services................... 8.5 % 36.1 % 22.6 %
Professional services.................. 91.5 63.9 77.4
--------- --------- ---------
Total revenues..................... 100.0 100.0 100.0
Cost of revenues....................... 69.8 68.2 82.6
--------- --------- ---------
Gross profit........................... 30.2 31.8 17.4
Operating expenses:
Sales and marketing................... 0.0 76.5 136.1
Research and development.............. 12.6 67.1 50.1
General and administrative............ 47.6 129.3 94.2
Non-cash stock based compensation..... 0.4 0.7 35.2
--------- --------- ---------
Total operating expense............... 60.6 273.6 315.6
Loss from operations................... (30.6) (241.4) (298.3)
Interest income, net................... 0.0 10.0 3.7
Net loss............................... (29.9)% (230.7)% (294.6)%
</TABLE>

Year Ended December 31, 1998 Compared to 1999

Application services revenues. Application services revenues increased
256.5% from $561,000 in the year ended December 31, 1998 to $2.0 million in the
year ended December 31, 1999. The increase reflects the continued development
of our direct and indirect distribution channels, as well as our ongoing
investment in research and development to enhance our application services
offerings. For the year ended December 31, 1998, application service revenues
comprised 36.1% of our total revenues, while application service revenues
comprised 22.6% of total revenues for the comparable period in 1999. For the
year ended December 31, 1998, substantially all of our sales were initial sales
to new customers, compared with 65.0% of application services revenues from
sales to new clients and 35.0% of our application services revenues derived
from ongoing sales or upgrades to existing clients for the comparable period.

23
<PAGE>

Professional services revenues. Professional services revenues increased
593.4% from $995,000 in the year ended December 31, 1998 to $6.9 million in the
comparable period of 1999. This expansion reflects the increased number of
deployments of our OneCommerce software and application services.

Cost of revenues. Cost of revenues increased 572.7% from $1.1 million during
the year ended December 31, 1998 to $7.4 million in the year ended December 31,
1999. This increase reflects an increase of $5.6 million in salary and benefits
associated with the addition of new employees to staff our Internet Solution
Center and network operations center, as well as an increase of $770,000 in
investments in infrastructure to support the greater demand for our
applications services and professional services. We plan to continue expanding
our services capacity through both hiring and infrastructure investments and,
accordingly, expect the cost of revenue to increase in absolute dollars and the
Company to experience minimal or negative margins during the next several
quarters.

Sales and marketing expenses. Sales and marketing expenses increased 916.6%
from $1.2 million during the year ended December 31, 1998 to $12.2 million
during the year ended December 31, 1999. The increase in sales and marketing
expenses resulted primarily from higher labor, recruiting, benefits, travel and
promotional costs associated with the hiring of additional sales and marketing
personnel and the expansion of our sales organization. Full time sales and
marketing personnel grew from nine employees as of December 31, 1998, to
54 employees as of December 31, 1999. We plan to continue expanding our sales
and marketing organization, and therefore expect our sales and marketing
expenses to increase during the next fiscal year.

Research and development expenses. Research and development expenses
increased 350.0% from $1.0 million during the year ended December 31, 1998 to
$4.5 million during the year ended December 31, 1999. The increase in research
and development expenses was due mainly to $12.4 million related to the hiring
of additional personnel and to $1.0 million related to other expenses
associated with the development of new products and services, specifically for
the development and release of version 3.0 of our OneCommerce software
application. Full-time research and development personnel grew from 11
employees as of December 31, 1998 to 38 employees as of December 31, 1999. We
plan to continue expanding our research and development organization and expect
to increase the dollar amount of expenses in this area.

General and administrative expenses. General and administrative expenses
increased 320.0% from $2.0 million in the year ended December 31, 1998 to $8.4
million in the year ended December 31, 1999. The increases in general and
administrative expenses were primarily due to infrastructure investments in
systems and personnel required to support our expanded operations and larger
number of customer related transactions. Our full-time general and
administrative personnel grew from 11 employees as of December 31, 1998 to
57 employees as of December 31, 1999. We expect general and administrative
expenses to increase in absolute dollar amounts in 2000 as we continue to add
personnel to support expanding operations related to the growth of our business
and assume the reporting requirements of a public company.

Non-cash stock based compensation expenses. We recorded stock option related
compensation expenses of $12,000 and $3.2 million in the year ended December
31, 1998 and 1999, respectively. These amounts result from (1) the exercise
prices of options granted to employees being less than the fair value of our
common stock underlying those options on the respective grant dates, and (2)
the fair value of stock options granted to non-employees. The increase was
primarily the result of our issuance of options to non-employees resulting in

24
<PAGE>

$2.8 million of expense during the year ended December 31, 1999 whereas there
were no significant issuance of options to non-employees during the year ended
December 31, 1998.

Other income. Other income increased from $156,000 in the year ended
December 31, 1998 to $338,000 in the comparable period in 1999. This change
reflects increased interest income due to the greater cash balances held by us
during 1999 which were partially offset by a $227,000 loss on the disposition
of the Sports Warehouse subsidiary.

Year Ended December 31, 1997 Compared to 1998

Application services revenues. Application services revenues increased 228%
from $171,000 in 1997 to $561,000 in 1998. The increase reflects the results of
increased sales and marketing activities, as well as continued development of
our application service offerings. For the 1997 fiscal year, application
service revenues comprised 8.5% of our total revenues, while application
service revenues comprised 36.1% of total revenues during 1998. Substantially
all of our sales in 1997 and 1998 were initial sales to new clients.

Professional services revenues. Professional services revenues decreased
44.7% from $1.8 million in 1997 to $995,000 in 1998. This decrease reflected
the ongoing shift in business focus from being a provider of services primarily
to government sector clients in our first year of operation to focusing on
providing Internet commerce solutions to clients in the commercial sector.
Professional services revenues decreased during this period of transition
because revenues from new Internet commerce clients had not yet offset the
decrease in revenues from government-related clients as we shifted our sales
and marketing efforts away from the non-profit sector.

Cost of revenues. Cost of revenues decreased 21.4% from $1.4 million during
1997 to $1.1 million in 1998. As we continued to shift our focus from serving
clients in the non-profit sector towards clients in the commercial-sector, we
shifted service-related personnel to the research and development group in
order to develop our version 1.0 of our OneCommerce product.

Sales and marketing expenses. We had no sales and marketing expenses in 1997
and $1.2 million of sales and marketing expenses in 1998. The increase in sales
and marketing expenses resulted from our initial efforts to develop a sales and
marketing organization, as we began the transition from a consulting oriented
professional services business to a company focused on developing, marketing
and selling Internet commerce infrastructure solutions.

Research and development expenses. Research and development expenses
increased 293.7% from $254,000 in 1997 to $1.0 million in 1998. The increase in
research and development expenses was due to the hiring of additional personnel
and to other expenses associated with the development of new products and
services, particularly our development efforts associated with version 2.0 of
our OneCommerce software application which began during the second half of
1998.

General and administrative expenses. General and administrative expenses
increased 109.4% from $955,000 in 1997 to $2.0 million in 1998. The increase in
general and administrative expenses was primarily due to increased staffing
required to support our expanded operations and customer related transactions
and increased professional services costs.

Non-cash stock based compensation expenses. We recorded stock option related
compensation of $9,622 in 1997 and $12,047 in 1998. These amounts resulted from
the exercise price of options granted to employees being less than the fair
value of the common stock underlying those options.

Interest income. Interest income increased from a net expense of $1,000 in
1997 to net other income of $156,000 in 1998 due to greater cash balances held
by us during 1998.

25
<PAGE>

Year Ended December 31, 1996 Compared to 1997

Application services revenues. Application services revenues decreased 28.7%
from $240,000 in 1996 to $171,000 in 1997. This decrease primarily reflects
fewer sales of our software applications to government and non-profit related
entities. For the 1996 fiscal year, application service revenues comprised 12%
of our total revenues, while application services revenues comprised 9% of
total revenues during 1997. Substantially all of our sales in 1996 and 1997
were initial sales to new clients.

Professional services revenues. Professional services revenues were
virtually unchanged between 1996 and 1997, totaling approximately $1.8 million
in each year. This is reflective of the company's early focus on developing its
distribution capabilities into the commercial sector while reducing new sales
to government related customers.

Cost of revenues. Cost of revenues decreased 6.7% from $1.5 million in 1996
to $1.4 million in 1997. This decrease in cost of revenues reflects a
corresponding decrease in revenues for the respective periods.

Sales and marketing expenses. We incurred no sales and marketing expenses in
either 1996 or 1997. During 1996, our first year of operations, we were focused
entirely on rendering application services and professional services to a
limited number of clients. In 1997, we focused on development of our
OneCommerce software application, which led to the commencement of sales and
marketing activities the following year.

Research and development expenses. We had no research and development
expenses during 1996 and $254,000 of research and development expenses in 1997.
The increase in research and development expenses was due to the hiring of
personnel and to other expenses associated with the development of new products
and services, particularly our development efforts associated with version 1.0
of our OneCommerce software application.

General and administrative expenses. General and administrative expenses
increased 68.1% from $568,000 in 1996 to $955,000 in 1997. The increase in
general and administrative expenses was primarily due to increased staffing
required to support our expanded operations and increased professional services
costs.

Non-cash stock based compensation expenses. We recorded no stock option
compensation in 1996 and approximately $10,000 of stock option compensation in
1997 due to the issuance of options to employees with exercise prices less than
the fair value of the common stock underlying the options.

26
<PAGE>

Quarterly Results of Operations

The following table sets forth consolidated statement of operations data for
each of the eight quarters beginning with the quarter ended March 31, 1998
through the quarter ended December 31, 1999. This quarterly information is
unaudited but has been prepared on the same basis as the annual consolidated
financial statements. In the opinion of our management, it reflects all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair representation of the information for the periods presented. This
statement of operations data should be read in conjunction with our
consolidated financial statements and related notes included elsewhere in this
prospectus. Operating results for any quarter are not necessarily indicative of
results for any future period.

<TABLE>
<CAPTION>
Three Months Ended
-----------------------------------------------------------------------------
March 31, June 30, Sept. 30, Dec. 31, March 31, June 30, Sept. 30, Dec. 31,
1998 1998 1998 1998 1999 1999 1999 1999
--------- -------- --------- -------- --------- -------- --------- --------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Application services... $ 158 $ 222 $ 82 $ 99 $ 116 $ 353 $ 602 $ 952
Professional services.. 220 172 436 167 917 1,025 1,634 3,352
----- ----- ------ ------- ------- ------- ------- --------
Total revenues......... 378 394 518 266 1,033 1,378 2,236 4,304
Cost of revenues........ 124 178 324 435 512 819 1,783 4,283
----- ----- ------ ------- ------- ------- ------- --------
Gross profit............ 254 216 194 (169) 521 559 453 21
Operating expenses:
Sales and marketing.... 76 69 289 756 1,256 1,937 4,356 4,635
Research and
development........... 163 191 310 380 412 898 1,504 1,676
General and
administrative........ 291 567 507 647 1,000 1,316 2,428 3,689
Non-cash stock based
compensation.......... 3 3 3 3 1,195 460 891 609
----- ----- ------ ------- ------- ------- ------- --------
Total operating
expenses.............. 533 830 1,109 1,786 3,863 4,611 9,179 10,609
Loss from operations.... (279) (614) (915) (1,955) (3,342) (4,052) (8,726) (10,588)
Interest income........ 25 19 69 56 50 57 183 323
Interest expense....... -- (7) (2) (5) -- -- -- (48)
Other.................. -- 8 1 9 1 1 1 (230)
----- ----- ------ ------- ------- ------- ------- --------
Net loss................ $(254) $(594) $ (847) $(1,895) $(3,291) $(3,994) $(8,542) $(10,543)
===== ===== ====== ======= ======= ======= ======= ========
</TABLE>

The increase in application services revenues from the year ended December
31, 1998 through the year ended December 31, 1999 was primarily due to the
growing market acceptance of our OneCommerce application software. The
declining gross margin during the period from the three months ended March 31,
1999 through the three months ended December 31, 1999 was primarily due to the
expansion of our services organization and the support and training provided to
channel partners that deploy our software, we anticipate this trend to continue
for the next several quarters. The increase in sales and marketing expenses
from the three months ended June 30, 1998 through the three months ended
December 31, 1999 was primarily due to increases in the hiring of sales
personnel and increasing sales resulting in increased commissions and
promotional activities. Specifically, during the year ended December 31, 1999,
sales and marketing expenses also increased over the June 30, 1999 quarter
primarily due to the launch of a significant marketing campaign.

Liquidity and Capital Resources

Historically, we have funded our operations primarily through the private
sale of equity securities. From inception through December 31, 1999, we raised
$47.6 million from the private sale of common and preferred stock.

27
<PAGE>

We used $18.1 million of cash in operating activities during the year ended
December 31, 1999. Cash operating losses during the year resulted primarily
from discretionary expenditures, including $12.2 million related to sales and
marketing expenses, and $4.5 million related to research and development
expenses. Changes in working capital items consisted primarily of cash provided
by accounts payable, accrued expenses, and other current liabilities offset by
increases in accounts receivable, and other current assets. We anticipate that
these discretionary expenses will increase in absolute dollar terms, and that
the mix of discretionary expenses will remain consistant through the period.

Our investing activities used cash of $6.1 million in 1999. Net cash used in
investing activities in this period was primarily the result of capital
expenditures for computer and communications equipment, purchased software,
office equipment, furniture, fixtures and leasehold improvements.

Our cash and cash equivalents totaled $16.4 million at December 31, 1999. In
October 1999, we conducted a final closing of our private placement of Series C
convertible preferred stock, raising an additional $2.8 million. Based on our
current business plan, we believe that existing cash and cash equivalents, the
proceeds from the October private placement and the proceeds from this initial
public offering will be sufficient to meet our working capital and capital
expenditure requirements at least through the 12 months following the
completion of this offering. During that period, we anticipate continued cash
operating losses; and we may need to raise additional funds during this period,
and we cannot be certain that we will be able to obtain additional financing on
acceptable terms, if at all. If we cannot raise required funds on acceptable
terms, we may not be able to develop or enhance our products, take advantage of
future opportunities or respond to competitive pressures or unanticipated
requirements.

Quantitative and Qualitative Disclosure about Market Risk

We do not have operations subject to risks of foreign currency fluctuations
or changes in interest rates, nor do we use derivative financial instruments in
our operations or investment portfolio. Our long-term debt consists primarily
of capital leases which have fixed interest rates ranging from 6.4% to 25.0%.
We invest our cash and cash equivalents in investment grade, highly liquid
investments, consisting of money market instruments and bank certificates of
deposit. We anticipate investing our net proceeds from this offering in similar
investment grade and highly liquid investments pending their use as described
in this prospectus.

Impact of Year 2000

Many currently installed computer and communications systems and software
products are unable to distinguish between 20th century dates and 21st century
dates. This situation could result in system failures or miscalculations
causing disruptions in the operations of any business. As a result, many
companies' software and computer and communications systems may need to be
upgraded or replaced to comply with such year 2000 requirements.

Our Year 2000 Testing and Licensing. We have tested all of our products for
Year 2000 compliance. The testing method employed was derived from our review
and analysis of the Year 2000 testing practices of other software vendors,
relevant industry Year 2000 compliance standards and the specific functionality
and operating environment of our Internet software solution. The tests were run
on all supported platforms as each version was released, and include testing
for date calculation and internal storage of date information with test numbers
starting in 1999 and going over into the Year 2000. Based on these tests, we
believe our

28
<PAGE>

Internet commerce software application to be Year 2000 compliant with respect
to date calculations and internal storage of date information.

In certain cases, we have warranted that the use or occurrence of dates on
or after January 1, 2000 will not adversely affect the performance of our
products with respect to four digit date-dependent data or the ability to
create, store, process and output information related to such data. If any of
our licensees experience Year 2000 problems as a result of their use of our
OneCommerce products, those licensees could assert claims for damages. Our
standard licensing agreement provides that if our products do not perform to
their specifications, we will correct such problems or issue replacement
software. If these corrective measures fail, we must refund the license fee
associated with the non-performing products. Our standard software license
agreement limits our liability to the amount of the license fee paid. To date,
we have not received any Year 2000 related claims on our products.

Our Internal Systems. Although we do not have a formal contingency plan to
address year 2000 issues, we worked internally and with third party vendors to
assure that we are prepared for the year 2000. We inventoried our internal
software and hardware systems, as well as products and services provided by
vendors. These systems include those related to product delivery, customer
service, internal and external communications, accounting and payroll.
Nevertheless, we cannot adequately test the Year 2000 readiness of such third
parties. The failure of any of these third parties to be Year 2000 ready could
result in a deterioration in the performance of our network or other systems,
or a complete system failure, which would have a material adverse effect on our
business, financial condition, results of operations and the price of our
common stock. Additionally, data service providers who rely on the Internet
could face serious disruptions arising from the Year 2000 issue. We are also
subject to external forces that might generally affect industry and commerce,
such as utility Year 2000 compliance failures and related service
interruptions. All of these factors could have a material adverse effect on our
business, financial condition, results of operations and the price of our
common stock.

Clients. The ability of our clients to receive our services depends on the
readiness of their computer equipment and the equipment and services of
communications and other third party vendors. We do not currently have any
information concerning the Year 2000 readiness status of our clients. Any Year
2000 compliance problem experienced by our clients could decrease demand for
our products that could seriously harm our business and operating results. If
our current or future clients fail to achieve Year 2000 readiness, it could
have a material adverse effect on our business, financial condition, results of
operations and the price of our common stock.

Costs/Contingency Plans. We do not anticipate our expenses for our Year 2000
compliance to be material. However, the cost of developing and implementing a
comprehensive contingency plan, if necessary, could be material. We have not
developed a contingency plan to address situations that may result if either we
or third parties upon whom we rely, are unable to achieve Year 2000 readiness.

Recent Accounting Pronouncements

In March 1998, the Accounting Standards Executive Committee issued Statement
of Position, or SOP, 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use". SOP 98-1 requires companies to
capitalize certain qualifying computer software costs which are incurred during
the application development stage and amortize them over the software's
estimated useful life. We were required to adopt SOP 98-1 effective January 1,
1999. Management believes that the adoption of SOP 98-1 will not have a
material impact on our consolidated financial position or results of
operations.

29
<PAGE>

BUSINESS

Overview

We develop and provide Internet commerce application software and services
that enable our clients to rapidly build, grow, and extend their online
businesses. The core of our solution is OneCommerce, our application software
using eXtensible Markup Language, or XML, an emerging technology standard that
was unavailable when early e-commerce software products were developed. We
designed OneCommerce for scalable operation on the Microsoft operating
platform. OneCommerce enables enterprises to intelligently and dynamically
interact with their customers and trading partners over the Internet to
exchange information, provide services, and complete business-to-business and
business-to-consumer transactions. OneCommerce supports the core business
processes required to conduct Internet commerce, including Internet marketing
and sales, order processing, and customer relationship and content management.
Our innovative use of XML also allows OneCommerce sites to be easily integrated
to a wide variety of Internet-connected business applications, online services,
and content sources.

We primarily deliver OneCommerce as an outsourced application service, which
shortens our clients' time-to-market and minimizes their need to make
substantial investments in the hardware, software, and technical personnel
required to support their own Internet commerce Web sites. Clients purchase
additional application software licenses and services from us as their site
traffic and transaction volumes grow. This business model allows us to benefit
from our clients' success. Our clients include mid-sized and large traditional
businesses that are deploying e-commerce Web sites to augment their existing
sales channels as well as new enterprises that are building Internet-only sales
channels. We currently serve over 40 clients from the retail and distribution,
media and entertainment, manufacturing, and business services industries.

Industry Background

The Internet is dramatically changing the way that business is conducted.
Companies, their customers, suppliers, partners, and distributors now have the
means to more fully automate and extend the reach of their businesses. As a
result, Internet commerce is growing exponentially. Forrester Research
estimates that revenue from Internet commerce will increase from $43 billion in
1998 to $1.3 trillion in 2003. This anticipated growth will have a profound
effect on virtually every industry throughout the industrialized world. Not
only have industry giants embraced Internet commerce by allocating large
budgets to developing Internet commerce sales channels, but also thousands of
pure Internet-based businesses have emerged in just a few years. Internet
commerce is progressively eliminating traditional barriers to entry, eroding
geographic boundaries and increasing customer choice and power. Entirely new
business models now pose competitive threats to traditional market leaders.
These competitive pressures force businesses to continuously advance their
Internet commerce capabilities. As a result, businesses require infrastructure
solutions to build, grow, and extend their Internet commerce businesses.

Challenges in Implementing Internet Commerce

Companies seeking to build or enhance their Internet commerce capabilities
face numerous challenges. These include:

. Need for speed and agility. In the crowded and rapidly changing
environment of Internet commerce, companies that can quickly deploy
their Internet commerce sites and adapt those sites to changes in
business and technology have a distinct competitive advantage.

30
<PAGE>

. Integrating multiple sales and supply channels. To be effective,
traditional businesses migrating to Internet commerce must plan,
implement and adapt their Internet sites while maintaining their
traditional business base. For example, manufacturers may decide to sell
directly to consumers via the Internet. At the same time, they must
retain their relationships with and provide incentives to their
traditional retailers, who may also develop their own competing Internet
commerce strategies. These business-to-consumer and business-to-business
interaction models must often be implemented within the same Internet
commerce site. In addition, the site must be integrated with multiple
systems, suppliers, and partners.

. Lack of expertise and facilities. Most companies lack the necessary
skilled technical personnel to effectively develop and operate their
Internet commerce businesses. Additionally, most companies entering the
Internet commerce arena do not have the facilities to operate their
Internet commerce site at their own locations.

. Selecting and integrating multiple technologies. Companies must select
from a wide variety of software applications to build and maintain a
competitive Internet commerce site. These applications are often stand-
alone programs produced by different vendors. As a result, they do not
integrate and communicate easily with each other, lack a common method
for integrating with existing information systems, and are costly to
maintain.

. Risk of obsolescence. Companies need a scalable Internet commerce
infrastructure to accommodate greater traffic and adapt to evolving
market and technology requirements. Without these capabilities, often
referred to as scalability and extensibility, companies face costly and
time-consuming rebuilding of their Internet commerce sites, which can
result in a loss of market opportunities. According to a joint study
conducted by The Boston Consulting Group and Shop.org, the average
retail Internet commerce site undergoes a major reconstruction
approximately every 20 weeks, and annual site development and
maintenance costs average 15% of annual revenue.

. Justifying Internet commerce investment based on financial
return. Deploying and maintaining an Internet commerce site is
expensive. GartnerGroup reports that the average cost to develop and
launch an Internet commerce site was $1.0 million in 1999. Businesses
often incur higher costs of ownership over time due to application
upgrades and new technology developments. In order to quantify the
investment in Internet commerce and maximize the return on that
investment, companies need tools to model and measure the financial
performance of their Web site and to assess the likely outcomes of
contemplated new sites, changes, and upgrades.

The Industry's Response

We believe that two key industry trends are acting to alleviate some of the
challenges faced by companies implementing Internet commerce strategies:

Broad acceptance of standards-based technologies

A relatively recent standard for Internet commerce has emerged in eXtensible
Markup Language, or XML, that defines a universal method for structuring and
communicating data via the Internet and between software applications. We
believe that XML will be a key enabler for conducting Internet commerce and
will ease the burden of systems integration between companies. XML was formally
recommended by the World Wide Web Consortium as a standard in February 1998.
Since then, a number of industry leaders, including IBM, Microsoft, Oracle, and
Sun Microsystems have announced support for XML.

31
<PAGE>

Unlike HyperText Markup Language, which is the standard currently used in
most Internet applications, XML permits data to be coded for content rather
than solely for presentation. Descriptive tags are attached to each piece of
data so applications can understand the meaning of the data and process it
accordingly. This coding difference allows applications to examine and
manipulate data contained in a document. This feature eliminates the need for
re-keying data and the need for customized programs that translate and format
information sent and received across the Internet.

At the same time, data from independent sources indicates an increasing
number of businesses run their business applications on the Microsoft operating
platform.

Outsourcing the operation of Internet commerce sites

As enterprises conduct more of their business over the Internet, the
investment in systems and technical support necessary to provide the
functionality and reliability required in today's market environment increases.
More businesses are turning toward a new breed of service provider for Internet
application outsourcing services. For a monthly fee, these providers, commonly
referred to as application service providers, provide clients the functionality
they require, together with agreed-upon levels of reliability and scalability
through an established, sophisticated technical infrastructure and staff.
Application service providers run software applications for their clients on
closely monitored, centralized facilities equipped with software to manage site
capacity and backup communications lines and power. By using an outsourced
service such as an application service provider, a company can improve its
time-to-market without making the substantial initial and ongoing investment in
technology and support staff necessary to support a technology-enabled business
process. International Data Corporation estimates that the worldwide market for
application outsourcing will grow from $23 million in 1998 to over $2 billion
in 2003, a 144% compound annual growth rate.

The market opportunity for managed Internet commerce application software

In recent years, software vendors have introduced a range of applications
for Internet commerce sites for one or more functions. These functions include
tasks such as personalizing the content of a site to the profile of the
visitor, processing orders, providing online customer service, monitoring the
traffic through a site and providing reports about the performance of the site.
These applications have met some of the challenges of Internet commerce
businesses because they offer functionality that is specifically relevant to
Internet commerce. International Data Corporation projects that the Internet
commerce application market will grow from $444 million in 1998 to $13 billion
in 2003, a 96% compound annual growth rate.

Despite the growth of the Internet commerce applications market, we believe
the majority of applications do not address all the critical needs of Internet
commerce businesses. Few of these applications are designed to take full
advantage of the emerging XML standard or the efficiencies of Microsoft
Internet technologies. In addition, most existing applications were not
designed to be offered to customers on an outsourced basis by application
service providers. We believe that businesses requiring Internet commerce
solutions have recognized these trends in the market. We expect that they will
seek to purchase applications that offer an integrated solution for their
Internet commerce software requirements, both now and as their Internet
commerce businesses evolve. Further, we believe that many Internet commerce
businesses will choose to purchase their Internet commerce solutions on an
outsourced basis to reduce the initial expenditure and to take advantage of the
expertise and facilities of application service providers. Lastly, we believe
that many purchasers of the early generation products on the market today will
seek to replace these products to improve the financial performance of their
Internet commerce sites.

32
<PAGE>

The OneSoft Solution

OneSoft provides Internet commerce application software and managed
services, collectively called application services, to businesses seeking to
conduct business-to-business and business-to-consumer transactions via the
Internet. Our solution provides businesses the infrastructure to rapidly build,
grow, and extend their Internet commerce businesses, which assists them to
generate revenue, reduce costs, and optimize the value of their Internet
commerce sites. We believe that our solution provides the following advantages
to our clients:

. Comprehensive integrated Internet commerce application suite. The core
of our solution is our software application, OneCommerce. It provides
integrated functionality in the critical business processes of Internet
commerce: personalized marketing and selling, order processing, customer
care, decision support, and integration with partners and suppliers.
This comprehensive solution eliminates the time and expense of
integrating and maintaining multiple technologies from different
vendors. The integration of these functions within one software solution
also facilitates the capture of extremely detailed information about Web
site visitor behavior. With that knowledge, businesses can improve
customer acquisition and retention rates, resulting in increased sales.
Businesses can also use this information to model and assess likely
outcomes and financial results of potential site changes and upgrades.

. Internet application architecture designed for delivery on an outsourced
basis. We designed our software architecture to support outsourced
delivery by our channel partners, such as application service providers
and other Internet hosting companies, and by our Internet Solution
Center. Our architecture enables our channel partners to implement a
scalable and extensible managed service offering for their clients. This
outsourcing model reduces the expense and risk for clients to launch and
manage a fully operative Internet commerce site. This approach also
allows clients to leverage the expertise and facilities of our channel
partners and OneSoft rather than investing in additional personnel and
technical resources.

. XML-based architecture. OneCommerce is the first Internet commerce
software application based entirely on XML for both internal sharing of
data between system components, and external system-to-system
communications. This use of XML provides the capability to easily
integrate new functions and technologies, as well as to extend existing
ones, without expensive site reconstruction or system modifications. We
achieve this extensibility as a result of our component-based
application software design and use of XML. Each of the components can
be independently modified while still properly interacting with all
other components in the system.

. Software optimized to leverage widely-used Microsoft Internet
technologies. OneCommerce is specifically designed to work with
Microsoft operating systems and related Microsoft Internet software.
This aspect of our design allows our clients to build on their existing
technology investments. Our clients also benefit from Microsoft's multi-
billion dollar investments in software research and development, while
capturing the price-to-performance advantage of Microsoft's Internet
software platform.

. Managed services for Internet commerce. As additional support for
Internet commerce businesses, we provide a broad array of services
necessary to manage a Web site, through our channel partners and through
our Internet Solution Center. We offer software applications management
and provide technical support. In addition, we can provide hosting
services and Internet connectivity. We also enable Internet commerce
transaction services such as payment processing and order fulfillment.

33
<PAGE>

The OneSoft Strategy

We are a pioneer in bringing new Internet commerce solutions to market and
in developing new services to deliver those solutions. Our objective is to
provide the software infrastructure that supports a leading share of commerce
conducted over the Internet. We believe we can become a leading provider of
Internet commerce software and services through the following strategies:

Leverage new modes of application delivery via the Internet. We have
designed OneCommerce to be delivered either as a licensed software application
to clients for on-site use or as an application service offered by us or a wide
range of our partners. We believe that an application service will address the
key challenges faced by Internet commerce businesses: time-to-market and
startup costs. Accordingly, we believe that most Internet commerce software
applications will be offered as a service in the future. On December 9, 1999,
we announced a major strategic alliance with the world's leading Internet
professional services company, USWeb/CKS, to provide our Internet commerce
applications as an outsourced service. We believe we can leverage the
outsourcing capabilities of our software architecture, and alliances such as
our relationship with USWeb/CKS, to generate additional sales of our
application services.

Expand sales presence and market coverage through direct sales and strategic
alliances. We intend to expand our direct sales presence and support services
across the United States and in major international markets. In addition, we
plan to strengthen our distribution efforts by forming additional alliances
with leading providers of complementary software and services. These include
application service providers, systems integrators, Web design firms, and
Internet strategy consulting firms. We expect to cultivate these relationships
and others like them to:

. leverage our sales and marketing efforts for increased lead generation
and revenues from a larger base of clients;

. increase the number of trained professionals who can perform
implementation and application management services for clients, thereby
increasing the potential distribution volume of our software;

. gain business expertise in targeted industries to assist clients with
site implementations and to provide input for solutions development; and

. obtain technical expertise for developing new software functionality and
capabilities.

Broaden our range of application functionality and services. We currently
offer functionality for the critical processes of Internet commerce. We intend
to add new functionality such as support for Web sites that act as marketplaces
for interest-specific products and content, and offer additional value-added
services such as automated outbound targeted marketing campaigns. We expect to
implement our expansion through internal development, partnerships and
strategic acquisitions.

Focus on delivering economic success to our clients. We believe that we have
identified several key indicators, or metrics, of financial performance for
Internet commerce sites. We incorporate in our Internet application software
the ability to track, analyze, and customize these performance metrics. We plan
to continue to focus on performance metrics as Internet commerce evolves. Based
on these metrics, we will continue to develop tools and techniques to evaluate
Internet commerce business opportunities and performance. We plan to extend our
existing analytical software capabilities to provide interactive decision-
making models that forecast potential return based on different Web site
configurations and features. In addition, we expect to continue to prioritize
our software development efforts based on areas we

34
<PAGE>

identify as providing the most significant contributions to the financial
success of Internet commerce businesses in order to promote our clients' and
our own competitive advantage.

Products and Services

We offer our clients a broad array of application software and services that
enable them to rapidly build, grow and extend their Internet commerce
businesses. We provide these application services directly through our Internet
Solution Center, as well as through a growing number of partners supported by
our Internet Solution Center. We also focus on combining application software
and services into packaged solutions for delivery by our distribution partners.
We typically charge for application services based on the amount of computing
capacity, that is, number of processors, required to support a specific volume
of concurrent site visitors and transactions.

Our application software and services are described below.

OneCommerce

OneCommerce is our application software that gives companies the power to
deploy, manage and grow all aspects of their Internet commerce business. In
December 1999, the world's leading Internet professional services company,
USWeb/CKS, selected OneCommerce to provide an end-to-end hosted Internet
commerce service to its customers. Microsoft Corporation, one of the foremost
innovators in the development of Internet technologies, recommends OneCommerce
as an outstanding choice for companies deploying large-scale Internet commerce
businesses. In addition, service firms that implement Internet commerce
solutions voted OneCommerce "Best New Product" at the 1999 Breakaway Xchange
Conference, sponsored by CMP Media, Inc., a leading high technology publishing
firm.

35
<PAGE>

We have designed OneCommerce to provide our clients the advantages of
flexibility, extensibility and scalability as their Internet commerce
businesses grow and evolve. OneCommerce achieves these attributes by separating
critical application functions into independent components that can be easily
arranged and modified, while remaining fully integrated, through our innovative
use of XML. This enables OneCommerce to be quickly adapted to many business-to-
business, as well as business-to-consumer, models. The OneCommerce software
framework and product features are described below:

[CHART APPEARS HERE]

The graphic below illustrates the OneCommerce software framework. The graphic
diagrams how the four major areas of OneCommerce interact with each other. The
four major areas- Intelligent Customer Interactions, Internet Business
Optimization and Control, Business Systems Integration, and OS.XML-are depicted
as layered bars demonstrated the interaction between the areas. Detailed
functional capabilities are displayed for the Intelligent Customer Interaction
and the Business Optimization and Control areas. These elements are shown as a
series of rectangular boxes stacked in two parallel columns around a tall
rectangle called e-business Intelligence. On either side of the large box are
icons that represent online customers and partners, and business management.

The core technology of OneCommerce is comprised of four major areas: (1)
Intelligent Customer Interactions; (2) Internet Business Optimization and
Control; (3) Business Systems Integration; and (4) OneSoft Internet commerce
vocabulary called OS.XML. These areas are described in detail in the following
sections.

Intelligent Customer Interactions. OneCommerce intelligently manages
interactive sessions conducted with Web site visitors and with information
systems on the Internet. Our application software tailors the navigational
choices available to site visitors based on their preferences and recent site
activity, as well as the financial objectives of the Internet commerce site.
The ability to conduct personalized interactions with site visitors, which we
refer to as an interaction model, creates a customized site experience for the
site visitor. Using a variety of techniques, these models dynamically route
visitors towards revenue-generating activities on the site. Each interaction
model can dynamically combine any of the functionality provided by the
OneCommerce application. OneCommerce-powered sites can simultaneously

36
<PAGE>

support multiple types of site visitors from the same Web site. For example, a
single Web site using OneCommerce can simultaneously support large numbers of
unique interactions with different types of retail consumers, wholesalers, and
other business partners. Current functional capabilities include:

<TABLE>
<CAPTION>
OneCommerce Functionality Summary of Business Capabilities
<S> <C>
. Present any type of customer with any type of
merchandising content. This includes product descriptions,
articles, banner advertisements, links to related sites
and community features such as chat rooms.
Content Management . Organize, store, and manage any type of Web content that
can be defined using XML and stored in a database.
. Structure and arrange the Web site with unlimited
variations based on affinity profiles.
. Develop and test content changes prior to moving those
changes to the active Web site.

- --------------------------------------------------------------------------------
. Gather and store customer information provided by the
customer.
. Create and continually update profiles based on site
activity using proprietary algorithms, called affinity
profiles.
Targeted Marketing and . Present up-sell and cross-sell promotions to customers
Site Personalization once they have selected products to review.
. Target and personalize the presentation of products and
content to site visitors based on their individual
affinity profiles.

- --------------------------------------------------------------------------------
. Allow site visitor to exchange information and communicate
directly by participating in online bulletin boards, chat
sessions and group discussions, conferences, and events.
Community . Collaborate with site users in the creation and
publication
of site content.

- --------------------------------------------------------------------------------
. Create an order of multiple products and services from the
same Web site for visitors.
. Determine availability of products for sale by accessing
inventory records in real time.
. Input and process customer payment information in real-
Sales and time to complete a sales order.
Order Processing . Create, save, process, and track multiple orders for each
customer.
. Simultaneously support business-to-business and business-
to-consumer sales interactions within the same Web site.

- --------------------------------------------------------------------------------
. Enables client personnel to engage in online interactions
with site visitors.
. Manage personal account profiles, submit online inquiries,
and register comments and complaints at any point during
the buying process.
Customer Account and . Deliver self-service order tracking and customer account
Relationship Management and profile maintenance.
. Maintain detailed records of a customer's interactions
over
multiple visits to the site.

- --------------------------------------------------------------------------------
. Define and create custom application functionality for an
Internet commerce site.
Application Customizations . Carry forward modifications when clients upgrade to new
releases.
</TABLE>

37
<PAGE>

Internet Business Optimization and Control. OneCommerce provides the ability
to monitor and report business performance metrics such as total number of
visitors and visitor-to-order conversion rates. This capability enables non-
technical business managers to make frequent and rapid site adjustments to
improve business performance. These changes are made through easy-to-use, Web-
based workstations, called Role-Centric Workstations. Most application software
alternatives limit business managers to making minor modifications such as
creating a new sales promotion. OneCommerce allows managers to make substantive
changes in their Internet business model without redesigning or reprogramming
the Web site application code, thereby saving significant time and cost.
Descriptions of the standard Role-Centric Workstations provided with
OneCommerce are listed below:

<TABLE>
<CAPTION>
Role-Centric Workstation Summary of Site Management Capabilities
<C> <S>
. Provide a personalized location where sit managers tailor
their use of Role-Centric Workstations.
. Maintain the account structure and profile of management
users.
OneWorkstation . Modify capabilities from one or more of the Workstations
to suit a particular business role.
. Tailor Workstations to support customized application
functionality.

- --------------------------------------------------------------------------------------
. Define, create, edit, and delete site content.
. Provide "drag and drop" capability to create bundles of
products or content, and define product features.
ContentStation . Manage product inventory, administer shipping and handling
charges, and implement taxation rules on products and
services.

- --------------------------------------------------------------------------------------
. Provide real-time access to site performance and financial
metrics.
CommandStation . Present site performance and financial information to
business managers through comprehensive and flexible
reports.

- --------------------------------------------------------------------------------------
. View customer and market segment profiles.
MarketStation . Create up-sell, cross-sell, and targeted merchandising
programs.
. Create and target promotions and discounts based on both
product categories and customer profiles.

- --------------------------------------------------------------------------------------
. Process customer inquiries and quickly resolve order
issues.
SalesStation . Provide real-time searching and updating of specific
customer orders, including payment authorization, shipping
information, order and item level details, and returns
processing.
. Tracking, updating, and processing of customer online
inquiries.

- --------------------------------------------------------------------------------------
. Create and maintain structure for customer account
profiles and access privileges.
AccountStation . Provide real-time updating and modification of accounts in
response to customer inquiries.

- --------------------------------------------------------------------------------------
. Create and maintain Workstation user profiles.
AdminStation . Control permissions and authority to make changes to
various parts of the site.
. Tailor Workstations to support combinations of roles and
responsibilities in individual Internet commerce
businesses.
</TABLE>

38
<PAGE>

Business Systems Integration. OneCommerce incorporates a flexible framework
of XML-based application programming interfaces. This framework represents an
XML vocabulary for Internet commerce, which we call OS.XML. Our framework
supports the integration of software applications, content and data sources,
and value-added services. Benefits include ease of information formatting,
presentation, and communication between systems. OneCommerce provides
prepackaged connectors to integrate with leading business application systems
and services. These can include:

. business applications like enterprise resource planning;

. content sources, such as corporate databases, streaming audio and video,
or streaming news feeds;

. Internet-based services such as the OrderTrust network for order and
payment processing, and SkyAlland Marketing for outsourced customer
service; and

. other Internet commerce sites including retail sites, online malls,
corporate purchasing sites, and business-to-business trading exchanges.

OS.XML: The Vocabulary of Internet Commerce. OS.XML is a flexible data
representation of content types, rules, and transactions required for Internet
commerce. OneCommerce was designed to easily support integration to external
systems, services, and data sources through its unique use of XML. OneCommerce
software components, called Connector Components, are used to translate
formatted data into OS.XML files when received from or sent to sources outside
OneCommerce. OneCommerce can combine site graphics, navigation, and
functionality with any form of data using OS.XML. OS.XML information can be
manipulated by any of the components within OneCommerce without additional
formatting. As a result, OneCommerce can support and interact with any number
of XML vocabularies developed for specific business processes or industries.
Examples of these are Ariba's cXML, CommerceOne's Commerce Business Library,
Microsoft's BizTalk, the Universal Commerce Language and Protocol, known as
UCLP, as well as OneSoft's own OS.XML.

Our Internet Solution Center

Our Internet Solution Center supports distribution, deployment, and
operation of our software. The Internet Solution Center combines managed
application and transaction services, "best practices," and software
applications into packaged service offerings that lower a business' cost of
entry into Internet commerce and accelerates their time-to-market. The Internet
Solution Center plays a critical role in the expansion of our distribution
programs by delivering deployment, sales training, and technical support to
partners, allowing them to quickly and effectively market and implement our
solutions. By supporting a completely outsourced solution, the Internet
Solution Center offers our clients, both directly and through our partners, a
cost-effective approach to building and operating their Internet commerce
business. The services provided by the Internet Solution Center are broken into
three categories: application software outsourcing services, transaction
services, and professional services.

Application Software Outsourcing Services. For monthly fees and service-term
commitments, mid-to-large sized businesses and our distribution partners can
obtain comprehensive outsourced Internet commerce services and infrastructure
through our 24 x 7 x 365 network operations center, as well as application
management services. Our application software outsourcing services include the
following:

. Network Operations Services provide partners and clients with outsourced
system services, including secure facilities, hardware, configuration
and maintenance, high speed Internet connectivity, and network
infrastructure.

39
<PAGE>

. Application Management Services provide partners and clients with the
installation, ongoing monitoring, and proactive maintenance of the
OneCommerce software application, Microsoft Internet technologies, and
complementary software applications. We provide these application
management services to partners and clients from our network operations
center or through our application service provider partners.

. Support Services provide partners and clients with technical support,
and routine software maintenance services. Our staff manages issue
resolution through a carefully prescribed support process that serves
both clients and partners. We also distribute electronic software
updates that keep partners and clients current with the latest version
of OneCommerce.

Transaction Services. Our transaction processing capabilities provide
reliable, secure, and efficient options for processing a variety of Internet
commerce transactions. Through our partners, we currently offer two categories
of transaction services:

. Payment Processing Services support our Internet commerce partners and
clients with the ability to accept and process most major payment card
transactions, electronic fund transfers, or other types of financial
transactions.

. Order Processing and Other Transaction Services enable our partners and
clients to accept and process order transactions, including monitoring
and reporting status, supplier relationships and fulfillment and
distribution.

Professional Services. Our Internet Solution Center provides Internet
commerce strategy and deployment services to our partners and clients. Partners
and clients benefit from professional services expertise at every stage of the
systems lifecycle and training in each discipline as well.

. Strategy Services provides partners and clients with the tools and
knowledge, called an Internet Commerce Opportunity Assessment to assess
and plan their Internet commerce initiatives from a financial,
competitive market analysis, and business process perspective.

. Deployment Services provides partners and clients with experienced
solution development, creative design, and application integration to
deploy OneCommerce software using our Rapid Solutions Deployment
methodology, which facilitates the successful and consistent deployment
of our comprehensive Internet commerce solutions.

. Solutions Management provides partners and clients with project
management, quality assessment, and best practices to ensure initial and
ongoing success of a business' Internet commerce initiative. Partners
and clients benefit from the best practices of this group and the
service it provides to augment their post-deployment, in-house
capability as an outsourced full-service technology partner.

. Educational Services provides training to our partners to effectively
sell, deploy and support our OneCommerce solution. We also educate our
Internet commerce clients to implement their own OneCommerce solutions.
Each of our training courses offers evaluation and certification
testing. We incorporate best practices into our curriculum from product
development, professional services, sales and marketing and managed
services groups to provide a quality experience that provides
concentrated product learning and actual sales and deployment scenarios.
As of December 31, 1999, 73 partner associates have completed initial
training.

40
<PAGE>

Sales and Marketing

Sales Strategy

We market and sell our application services through both direct and indirect
sales channels. As of December 31, 1999, our sales organization was comprised
of 32 individuals all of whom were based in North America, including 13
business development directors and six inside sales personnel, all of whom
carry quotas. Our main sales office is located at our headquarters in McLean,
Virginia. We also recently opened sales offices in Los Angeles and New York
City. Our sales cycle takes an average of four months to complete. Our sales
team collaborates with prospective clients to determine their requirements for
a proposed Internet commerce solution, which can then be incorporated into one
or more detailed technical product reviews.

A key element of our strategy is to leverage our channel and alliance
partners for the distribution of our application services. We target mid-to-
large sized companies and new businesses planning to use the Internet as a
significant business channel. We primarily target companies in the retail and
distribution, media and entertainment, manufacturing, and business services
industries.

An additional element of our strategy is expansion of our international
activities. We currently market and sell our products primarily in North
America. We intend to broaden our presence in international markets by
developing an international sales force, leveraging current strategic partners
with global presence, and by entering into additional distribution agreements.
We expect to open sales offices in London and Miami within the next 12 months.

Marketing Strategy

As of December 31, 1999, we had 13 employees engaged in a variety of
marketing activities, including strategy development, corporate and product
marketing, market research, and market launch. We use a broad mix of programs
and target our efforts in areas including:

. brand-building and marketplace awareness;

. generating and developing client leads;

. educating the market on the advantages of OneSoft's application
services;

. utilizing our strategic partnerships and major clients to endorse our
solution for target markets; and

. building and enhancing relationships with press, media, and industry
analysts.

We produce a variety of materials, including brochures, white papers,
presentations, and demonstrations, as well as managing several corporate Web
sites. We leverage our strategic partners in our efforts through joint
marketing activities.

Channel and Alliance Partners

A key element of our strategy is to establish strategic alliances to assist
us in marketing, selling, and developing client Internet commerce systems.
These relationships help to increase market penetration of our application
service offerings. We develop and maintain significant working relationships
with vendors that we believe will contribute to our ongoing success. These
relationships fall into four categories: strategic alliances, application
service providers, systems integrators, and complementary solution vendors.

We work closely with these partners and intend to continue to develop
relationships of this nature. Our strategic alliances are managed by a team of
partner managers. As of December 31, 1999 there were six individuals
recruiting, qualifying, and supporting the OneSoft alliance partners.

41
<PAGE>

Strategic Alliances

In April 1999, we formed a partnership with Microsoft Corporation creating
the OneSoft Commerce Partner program for Microsoft Certified Solution
Providers. We created this program to enable a limited number of the over
15,000 Microsoft Certified Solution Providers worldwide to distribute our
application services. As part of this partnership, we co-market with Microsoft
the combined solution of OneSoft and Microsoft products. We are currently
training and certifying OneSoft Commerce Partners on the sale and deployment of
our OneCommerce Internet commerce software application and enabling services.

In December 1999, we announced the formation of an alliance with USWeb/CKS,
the world's leading Internet professional services firm. Our alliance enables
USWeb/CKS to deliver a packaged Internet commerce infrastructure solution in a
hosted environment that will also include enterprise resource planning services
for Internet commerce businesses, customer relationship management and
knowledge management. This strategic alliance enables us to reach a wider group
of customer opportunities based on USWeb/CKS brand recognition and market share
in the industry.

OneCommerce is optimized to operate on the Compaq Distributed Internet
Server Array architecture and we belong to the Compaq NonStop e-Business
Alliance. Through this program, our development team continually works jointly
with Compaq to increase the performance and scalability of our Internet
commerce architecture. This program provides access to partners and
distribution channels to some of the largest companies in the world that are
using Compaq as their preferred hardware vendor.

Application Service Providers

We partner with application service providers and Internet hosting providers
such as USWeb/CKS and Exodus Communications to support the industry trend
toward delivering software as a service. Our Internet Solution Center provides
partners with training, deployment tools and support. These application service
providers also provide businesses with direct client support, end-user support,
and maintenance services from a central point of contact. This eliminates the
need for businesses to develop or acquire software and hardware or employ
technical personnel to support this system.

Systems Integrators

We partner with a broad range of systems integrators to deliver services to
our clients. They are required to maintain a level of proficiency in our
products. Through our OneSoft Commerce Partner program, systems integrators
receive deployment training, sales and deployment tools, packaged solution
templates, and other support necessary to become proficient implementers of our
application software.

Set forth below is a list of systems integrators with which we have
relationships:

AppNet, Inc.
Compaq Computer Corporation
Compass Technology Management
Digital Boardwalk
International Software Solutions, Inc.
M1 Software
Sierra Systems
SoftNet Systems Corporation
Surebridge

42
<PAGE>

Complementary Solution Vendors

We partner with vendors that have complementary Internet commerce product
and service offerings in order to support the delivery of comprehensive
solutions to our clients. We support these partnerships through a combination
of joint marketing, training, and development. These vendors have developed
software or services that address elements of Internet commerce infrastructure
needed by a particular industry or for a particular business process.

Set forth below is a partial list of organizations with which we have
relationships:

<TABLE>
<C> <S>
AB&C Group Direct response, physical fulfillment, and warehousing
service provider
OrderTrust Network-based order and payment processing provider
Smith-Gardner Direct marketing and catalog marketing enterprise
resource planning customer management software
application provider
SkyAlland Marketing Customer loyalty management outsourced service provider
</TABLE>

Clients

Our clients include both traditional "bricks-and-mortar" companies and
Internet-only companies in the retail and distribution, media and
entertainment, manufacturing, and business services industries. The following
table is a representative list of clients as of February 15, 2000 who have
licensed OneCommerce or its predecessor products, and who have contracted for
services in an amount totaling at least $50,000.

<TABLE>
<CAPTION>
Retail & Manufacturing &
Distribution Media & Entertainment Services Business Services
- ------------------ --------------------- --------------- -----------------
<S> <C> <C> <C>
Alloy Online Eruptor Entertainment Maytag Ehomes
Allpets.com Phillips Publishing ETRAV
ePhones.com SmartCruiser
Espanol.com
Mark Group
SpaConcepts
WeightWatchers.com
</TABLE>

Case Studies

The following case studies illustrate the challenges faced by representative
clients in deploying their Internet commerce applications, and the benefits
derived from using OneCommerce. In each case, the client licensed our
application software, contracted for outsourced application services, and used
the services of our Internet Solution Center to launch their Web site and
integrate their site with their internal business systems.

Alloy Online, Inc. Alloy Online, www.alloy.com, provides online communities,
content and commerce to Generation Y, the 56 million Americans between the ages
of 10 and 24 who account for more than $250 billion of annual disposable
income. Alloy markets its products to this influential generation through the
Internet and mail-order catalogues.

As Alloy's business became more complex, Alloy was forced to look for a
replacement for its original Internet commerce solution. Its legacy Internet
infrastructure software had neither the scalablility nor flexibility to meet
its changing business needs. Alloy also wanted to reduce the time its
executives spent addressing technical issues, allowing the company to execute
on its business model.

43
<PAGE>

OneSoft replaced Alloy's system with a comprehensive software solution
provided on an outsourced basis. OneCommerce's extensible architecture provided
the direct marketing, customer support and business content management
capabilities required to support Alloy's growing community and commerce
demands. This comprehensive solution provided the Internet commerce
infrastructure that Alloy used as it became a leader in its industry by
creating a Generation Y portal with 1.6 million registered users.

ePhones. ePhones, www.ePhones.com, is an online provider of wireless
products and services. ePhones was formerly known as Totally Wireless, a
"bricks-and-mortar" seller of wireless phones and products that wanted to move
its business online.

ePhones sought an Internet commerce solution that would allow it to provide
customers with products from over 43 carriers and rate plans with over 100,000
different phone/rate combinations. The solution it desired needed to support
dynamic pricing, an enhanced, geographically calibrated search feature, a help
feature that would allow customers to search for the best prices available, a
personalization feature that would support up-sell and cross-sell
opportunities, and multiple customer interaction capabilities.

OneSoft provided comprehensive software supporting direct marketing, selling
and customer support. ePhones, then branded as Totally Wireless, went online
using our OneCommerce solution in May 1999. OneSoft's solution provided the
flexibility to manage content and the complexity of the product offerings. The
cross-selling ability of OneCommerce was particularly important because of the
multitude of features that accompany each product. In the first three months
online, sales increased by 36% and site traffic jumped 82%.

In addition, the extensibility inherent in OneCommerce enabled ePhones to
completely re-brand its business without tearing down and rebuilding the
existing Totally Wireless site.

SmartCruiser. SmartCruiser.com, www.smartcruiser.com, is the first online
cruise site with a booking engine that offers consumers the lowest price on a
wide variety of cruise vacations from fourteen leading cruise lines.

SmartCruiser.com required a solution that provided its customers the
convenience and efficiency of researching a wide variety of cruise vacations by
date, destination, and cruise line, as well as the ease of purchasing their
cruise vacation online.

SmartCruiser.com contracted with us for our OneCommerce application software
and managed services. Our Internet Solution Center delivered the site in less
than 90 days, and manages site operations on an outsourced basis. Using
OneCommerce, SmartCruiser.com created a catalog of cruise offerings,
established an Internet-based target marketing and sales program, and
streamlined the reservations process. The site also integrates to multiple
systems from various airline, hotel and cruise companies and enables
SmartCruiser.com to use Role-Centric Workstations to update site content.

SmartCruiser.com has quickly grown its online business by using OneCommerce.
The number of site hits increased 295% and the number of unique users increased
127% in the first five weeks. In addition, the number of return users increased
100% in the first six weeks.

44
<PAGE>

Competition

Our competitors vary in size, in the scope and breadth of their products and
services, and in their technical, financial and human resources. We have three
primary sources of competition:

. in-house development efforts by potential clients and systems
integration firms that build very customized solutions using development
platform application server products;

. Internet application software vendors such as Art Technology Group,
BroadVision, InterWorld, OpenMarket and Vignette; and

. vendors of platform application server products, such as IBM and the
Sun-Netscape Alliance.

In addition, we face potential competition from vendors of other Internet
commerce software applications as they expand the functionality of their
product offerings. These vendors may include Allaire Corporation and other
vendors of software designed to enable Internet commerce or management of
customer relationships.

Our principal competitive advantages include:

. an innovative use of XML;

. software designed for delivery on an outsourced basis;

. software designed to leverage Microsoft Internet technologies; and

. a comprehensive sell-side e-commerce solution.

Many of our competitors have substantially greater capital resources,
research and development programs, sales and marketing forces and customer
bases to whom they can sell their products and services. We may not be able to
maintain our competitive position against current and potential competitors.

Technology

We designed OneCommerce specifically for Internet commerce using a
component-based architecture that operates on Microsoft Internet technologies
and Compaq's Distributed Internet Server Array hardware configuration.

OneCommerce components communicate using our own version of eXtensible
Markup Language, or XML, which we call OS.XML. This unique application of XML
simplifies integration to external systems, preserves information during
transaction processing, and protects technological investment by allowing the
system to be cost effectively modified over time.

The OneCommerce architecture enables sites to cost-effectively scale to meet
increasing site user traffic and transaction activity. It also provides a
reliable foundation for delivering outsourced Internet commerce application
software.

45
<PAGE>

The Fundamental Elements of Internet Commerce -- a Component Based Architecture

The OneCommerce architecture has been designed to support any Internet
commerce interaction between an online customer or partner and an Internet
commerce business. This architecture is based on five essential elements:

The OneCommerce Component-Based Architecture

[GRAPH APPEARS HERE]

The graphic below illustrates the OneCommerce Component-Based Architecture.
The components called Presentation, Interaction, Transaction, Integration and
Information are displayed in a column of separate boxes. Arrows between the
boxes illustrate how they interact with each other and external systems and
databases. The external systems are displayed on the right side of the
graphic. The Integration Component is displayed as the Connector Component
boxes in the graphic.

In order to effectively conduct Internet commerce, an Internet commerce
solution must address all five of the above elements. In typical Internet
commerce solutions, however, these elements are not separated as discrete
components that can be individually modified or combined. This limits the
ability to support the varying and emerging business process requirements of
Internet commerce.

We believe we have overcome this problem by designing a software
architecture that both separates these five essential elements and provides
Internet commerce businesses with a

46
<PAGE>

framework within which the elements and components can be modified and combined
in any way. We describe below the five elements, how they work, and their
benefits.

1. Presentation. Presentation Models control how information and interactive
site options are displayed to Web site visitors. Presentation Models capture
the information to be processed and return results to the visitor based on his
or her affinity profile. Presentation Models are written in the eXtensible
Stylesheet Language, and can reference existing files written in any number of
other program languages. The eXtensible Stylesheet Language translates OS.XML
data for presentation and interprets site input data into OS.XML for
processing. Unlike most alternative Internet commerce solutions, OneCommerce
can format and deliver the same information for separate and proper display on
PC screens, wireless devices, cellular phones or printers.

2. Interaction. Interaction Models allow Internet commerce businesses to
define and control interactions with online users and remote systems based on a
combination of the visitor or system's affinity profile and the business
objectives of the client. Most existing Internet commerce solutions are limited
by preprogrammed online customer interactions, but OneCommerce allows
businesses to differentiate and evolve their sites based on online customer
experiences. Interaction Models are written in industry-standard scripting
languages, including Java Script or VisualBasic Script.

3. Transaction. Transaction Components provide application functionality in
our transactional format. The functionality supported includes searching,
controlling access, processing payments, profiling, and targeting product and
content offers. These components process data stored in either OneCommerce or
external data sources to complete actions requested by online visitors or
remote systems. Transaction Components do not perform data access themselves,
but rather process OS.XML data provided by Information or Connection
Components. This means that new functionality can be easily added as new
Transaction Components without requiring modifications to the data sources or
any of the other OneCommerce components as long as the new component can
receive and send formatted OS.XML. In contrast, most existing solutions make it
difficult to expand the site's functionality without costly modifications to
the site or its underlying databases.

4. Integration. Connector Components make the data and functionality of
external systems available to OneCommerce and vice versa. These components
interact with all external services, systems, and data repositories through the
communication of data and instructions in OS.XML format. By receiving and
transforming data from external business systems to OS.XML, the Connector
Components make the data immediately accessible to all components within the
OneCommerce application, eliminating the time and cost of complex application
integration.

5. Information. Information Components store and manage all data and data
definitions utilized within the OneCommerce system. These components support a
standard set of functionality accessed via the Transaction Components and are
responsible for data and data definition management and storage. Information
Components essentially transform into OS.XML data extracted from and inserted
into standard Open DataBase Connectivity, or ODBC, compliant databases and data
sources. By using Information Components to perform this transformation,
storage, searching and retrieval of information can be optimized for
performance on individual databases while still leveraging OS.XML within
OneCommerce. Information Components are optimized for Microsoft's SQL Server
7.0, however they can operate on any database compliant with the Open DataBase
Connectivity standard, again simplifying the process if integration with
alternative external databases is required.

47
<PAGE>

Technology Foundation for Outsourced Applications

Transactional Internet Application Architecture

OneCommerce is a transactional system. This means that rather than locking
an online customer to the same server for the duration of his or her session,
OneCommerce can treat every request or "click' as a distinct transaction.
OneCommerce can process these transactions across multiple servers while
recognizing that they collectively comprise a single site visitor session. The
transaction record is stored safely in a secure database, and if the customer
interacts with a different server for the next 'click', the customer's session
information is immediately accessible on the new server. This has a number of
advantages for operating an Internet commerce site in an outsourced
environment.

. Any customer interaction can occur on any server and customers can be
directed to the server with the least load for every individual
transaction or "click';

. User requests are evenly distributed across all available servers
utilizing hardware more efficiently;

. Customer session data is stored in a secure database and is
instantaneously restored in the event of transaction or hardware
failure; and

. Detailed activity logs are created which improve the accuracy and value
of financial reporting and analysis.

Industry Standard Platforms

OneCommerce is designed and optimized for Microsoft Internet technologies
and the Compaq Distributed Internet Server Array hardware configuration.
Microsoft Internet technologies provide an integrated platform consisting of
operating system, Internet connectivity, secure transaction monitoring, and
database software that would typically require several products from different
vendors to duplicate. OneCommerce operates on top of these capabilities,
eliminating the need to integrate or manage upgrades for multiple products.

Compaq's Distributed Internet Server Array architecture is a method for
arranging multiple Internet application servers in such a way that they support
high volume transaction processing. This method of setting up servers allows
adding new servers for additional capacity without stopping site operations.
This system also limits the risk of losing data or service if any one server
has technical problems and enables Internet commerce businesses to quickly and
easily scale for increasing customer demand by adding servers. For example, a
small system using Compaq's hardware architecture may start with two
application servers, then scale up to 20, 30, or more servers, as site traffic
and transaction volumes increase, without interrupting site operations.

Research and Development

We have invested substantial resources in research and development
activities. The majority of our activity consists of adding new competitive
product features, integrating complementary solutions, and delivering new
product releases as we expand into supporting new vertical markets and business
models.

We license and integrate certain third-party technologies and products into
OneCommerce through licensing agreements. We continually evaluate additional
third-party technologies for integration into our product line. We believe that
our future success depends in large part on our ability to enhance existing
products, develop new products, and maintain technological leadership. We
expect to continue to devote substantial resources to our research and
development activities.

48
<PAGE>

As of December 31, 1999, there were 38 employees and 19 contractors in our
product development organization. Our development team is located at our
headquarters in McLean, Virginia.

We had $254,000 of research and development expenses in the year ended
December 31, 1997, $1.0 million in the year ended December 31, 1998, and $4.5
million in the year ended December 31, 1999. Our policy is to expense research
and development expenses as incurred.

Intellectual Property and Proprietary Rights

Our success and ability to compete depend upon on our ability to develop and
protect the proprietary aspects of our technology and to operate without
infringing on the proprietary rights of others. We rely on a combination of
patent, trademark, trade secret, and copyright law and contractual restrictions
to protect our proprietary technology. These legal protections afford only
limited protection for our technology. We seek to protect our source code for
our software, documentation, and other written materials under trade secret and
copyright laws. We license our software pursuant to signed license agreements
and "clickthrough" or "shrink wrap" agreements, which impose restrictions on
the licensee's ability to use the software such as prohibiting reverse
engineering and limiting the use of copies. We also seek to avoid disclosure of
our intellectual property by requiring employees and consultants with access to
our proprietary information to execute confidentiality agreements.

We have filed a patent application with the United States Patent and
Trademark Office covering inventions relating to software for electronic
commerce within OneCommerce. We have applied for trademark and service mark
registration for over 95 marks, including "OneSoft" and "OneCommerce". We also
have rights to 362 domain names.

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 software exists, software piracy can be expected to be a persistent
problem. Litigation may be necessary in the future to enforce our intellectual
property rights, to protect our trade secrets, to determine the validity and
scope of our patents or the proprietary rights of others, or to defend against
claims of infringement or invalidity. Any such resulting litigation could
result in substantial costs and diversion of resources and could have a
material adverse effect on our business. Our means of protecting our
proprietary rights may not be adequate or our competitors may independently
develop similar technology. See "Risk Factors--We rely on our intellectual
property rights and if we are unable to protect those rights, we may face
increased competition."

We have received correspondence from attorneys representing our former chief
technology officer, asserting that he invented a portion of the technology
incorporated in our pending patent application and that our use of any of this
technology infringes on his ownership rights. We believe this assertion lacks
merit, and we intend to vigorously defend against any legal action that might
be brought with respect to this matter. We further believe that if the former
employee is found to be an inventor of some of the technology claimed in our
pending patent application, he will also be found to have invented that
technology while employed by us. As such, we do not believe that we would be
excluded from using this technology. Nevertheless, should litigation arise from
this matter, the results are unpredictable, and we cannot guarantee that we
will preserve the right to use the proprietary technology asserted to be owned
by the former employee. See "Risk Factors--Intellectual property claims against
us can be costly and result in the loss of significant rights if we are not
successful in defending those claims."

49
<PAGE>

Employees

As of December 31, 1999, we had a total of 261 employees. Of our employees,
38 were in research and development, 54 in sales and marketing, 112 in
services, and 57 in finance and administration. Our future success will depend
in part on our ability to attract, retain and motivate highly qualified
technical and management personnel, for whom competition is intense. From time
to time, we also employ independent contractors to support our research and
development efforts. Our employees are not represented by any collective
bargaining unit, and we have never experienced a work stoppage. We believe our
relations with our employees are good.

Properties

Our headquarters are located in a leased facility in McLean, Virginia,
consisting of approximately 90,000 square feet. The McLean facility is expected
to meet our needs through March 2000, at which time we intend to expand our
facilities by entering into one or more additional leases. We have also leased
space for our network operation center in Annandale, Virginia and space for
sales and support personnel in New York, New York and Santa Monica, California.

Legal Proceedings

There are no material legal proceedings pending against our company.

50
<PAGE>

MANAGEMENT

Directors, Executive Officers and Key Employees

The following table shows the name, age and position of each of our
executive officers and directors as of the date of this prospectus.

<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
James W. MacIntyre, IV 32 Chairman of the Board, President and Chief
....................... Executive Officer
Frederick C. Hawkins, 35 Chief Financial Officer and Senior Vice President
III.................... of Finance
Thomas E. Young......... 34 Senior Vice President of Marketing and Sales
Peter M. Jones.......... 42 Executive Vice President of Corporate Development
Jeffrey M. MacIntyre.... 30 Senior Vice President of Services and Director
Eric D. Waller.......... 34 Vice President of Product Development
Randall V. Pevin........ 36 Vice President of Operations
Henry D. Barratt, Jr. 48
(1) (2)................ Director
A. Douglas Peabody (1) 47
....................... Director
Justin Hall-Tipping (1) 43
(2).................... Director
Stephen P. Rader........ 44 Director
Thomas R. Hitchner (2).. 48 Director
Carlos E. Cisneros...... 34 Director
</TABLE>
- --------
(1)Member of the Audit Committee.
(2)Member of the Compensation Committee.

James W. MacIntyre, IV is the founder of OneSoft and has served as our
president and chief executive officer since our inception in 1995. Mr.
MacIntyre has served as our chairman of the board since January 1996. From
October 1994 to January 1995, Mr. MacIntyre served as president of Convergence,
Inc., a developer of Internet application systems. Mr. MacIntyre has over 12
years of management experience in product design, development, marketing and
sales of software and networking products. He also established the organization
and operations of TGF Technologies, Inc., which is now one of the largest
Internet service providers in northern New England, and which recently was
acquired by OneMain.com, Inc. Mr. MacIntyre holds a B.A. in philosophy and
economics from the University of Vermont. Jeffrey M. MacIntyre is the brother
of James W. MacIntyre, IV.

Frederick C. Hawkins, III has served as our chief financial officer and
senior vice president of finance since November 1997. From December 1996 to
November 1997, Mr. Hawkins worked as an independent business consultant,
providing strategic planning and financing advice to Silicon Valley companies.
From 1990 to December 1996, Mr. Hawkins served as President of Advanced Health
Products, Inc., a medical products company. Mr. Hawkins holds a B.S. from The
Wharton School of the University of Pennsylvania and an M.B.A. from the
Stanford Graduate School of Business.

Thomas E. Young has served as our senior vice president of marketing and
sales since October 1999. From May 1999 to October 1999, Mr. Young was our
senior vice president of marketing. From June 1998 to May 1999, Mr. Young was
the vice president of e-Chain Technologies, a business unit of Manugistics
Group, Inc., an enterprise application vendor. While at e-Chain Technologies,
Mr. Young created and ran the e-commerce division. From 1995 to 1998, Mr. Young
managed Manugistics' global product marketing, product management, and North
American business development. From July 1993 to 1995, Mr. Young was the
manager of business development at Manugistics. Prior to this, Mr. Young worked
at Andersen

51
<PAGE>

Consulting for over four years. Mr. Young holds a B.S. in mechanical
engineering from the University of Maryland and completed graduate work in high
tech marketing at Stanford University.

Peter M. Jones joined OneSoft in May 1999 and has served as our executive
vice president of corporate development since December 1999. From December 1994
to May 1999, Mr. Jones was an independent strategy consultant for several
companies in the United States and Europe. Mr. Jones holds a B.A. in
mathematics from Oxford University and an M.B.A. from Harvard Business School.

Jeffrey M. MacIntyre has served as our senior vice president of services and
a member of the board of directors of OneSoft since November 1997. Mr.
MacIntyre joined OneSoft in March 1997 in connection with the merger of
InterFlowww Enterprises Inc., a software development company he co-founded.
From April 1996 to March 1997, Mr. MacIntyre was a project management
consultant for Convergence, Inc., a developer of Internet applications. From
June 1996 to March 1997, Mr. MacIntyre was the president of InterFlowww, where
he was responsible for business formation and management. From August 1994 to
March 1996, Mr. MacIntyre was a business process design consultant for Andersen
Consulting. Mr. MacIntyre holds a B.A. in English, with a concentration in
management information systems, from the University of Vermont. James W.
MacIntyre, IV is the brother of Jeffrey M. MacIntyre.

Eric D. Waller has served as our vice president of product development since
June 1999. From March 1999 to June 1999, Mr. Waller served as our senior
manager of product engineering. From August 1997 to March 1999, Mr. Waller was
the director of commercial products of Reliable Software Technologies, a
software products and consulting company, where he was responsible for sales,
marketing, engineering and customer service. From August 1995 to August 1997,
Mr. Waller served as a product architect for Platinum Technology, Inc., an
enterprise application company, later acquired by Computer Associates
International, Inc. From April 1994 to August 1995, Mr. Waller was a senior
software engineer at Chalke, Inc., a financial software products company.

Randall V. Pevin has served as our vice president of operations since
November 1997. From October 1996 to November 1997, Mr. Pevin was a project
manager at OneSoft. From June 1994 to June 1996, Mr. Pevin served as a lead
consultant at Logical Network Services Technical Consulting, where he managed
software projects. Mr. Pevin holds a B.A. in business administration from
Central Connecticut University.

Henry D. Barratt, Jr. has served as a member of OneSoft's board of directors
since November 1997. Mr. Barratt is a managing director of Blue Water Capital,
L.L.C., a venture capital firm which he co-founded in 1996. From October 1994
to December 1995, Mr. Barratt was the president of The Drayton Company, an
investment banking firm.

A. Douglas Peabody has served as a member of OneSoft's board of directors
since August 1998. Currently, Mr. Peabody is the president and chief executive
officer of Weider Publications, Inc., a magazine publishing company. From
January 1993 to January 2000, Mr. Peabody served as president of Meigher,
Peabody & Company, Inc., a general partner of Meigher Communications, L.P., a
publishing company he co-founded. From 1982 to January 1995, Mr. Peabody worked
at Inco Venture Capital Management, where he served in various executive
capacities before he was appointed president and managing principal in April
1992. Mr. Peabody served as a director of America Online, Inc. from 1985 to
1993 and as its vice chairman from 1989 to 1993. Mr. Peabody holds an A.B. from
Dartmouth College, an M.B.A. from The Wharton School of the University of
Pennsylvania, and a J.D. from the University of Virginia School of Law.

Justin Hall-Tipping has served as a member of OneSoft's board of directors
since July 1998. Mr. Hall-Tipping has served as managing director of SG Capital
Partners, the U.S.

52
<PAGE>

merchant banking affiliate of Societe Generale Capital Corporation, since June
1997. From May 1995 to June 1997, Mr. Hall-Tipping was director of the Data
Intelligence Group of Reuters PLC. From 1991 to May 1995, Mr. Hall-Tipping was
chief executive officer of HeartBeat Corp. Mr. Hall-Tipping holds a B.S. in
international finance and banking from City University in London and an M.B.A
from Harvard Business School.

Stephen P. Rader has served as a member of OneSoft's board of directors
since April 1999. Mr. Rader has served as a managing member of Rader,
Reinfrank & Co., LLC, a private investment firm he co-founded, since January
1997. From October 1989 to December 1996, Mr. Rader served as managing
director of Chartwell Partners, a private investment firm. Mr. Rader holds a
B.S. and a J.D. from the University of Southern California.

Thomas R. Hitchner has served as a member of OneSoft's board of directors
since August 1999. Mr. Hitchner has been a general partner of QuestMark
Partners, L.P., since November 1998. From February 1984 to November 1998, Mr.
Hitchner was an employee of Alex. Brown & Sons, Incorporated, most recently as
a managing director and a member of its private equity group. Mr. Hitchner is
also a director of Zapme! Corporation. Mr. Hitchner holds a B.A. from Harvard
University.

Carlos E. Cisneros has served as a member of OneSoft's board of directors
since July 1999. Since 1996, Mr. Cisneros has been the chief executive officer
and the chairman of the board of the Cisneros Television Group. Since 1998,
Mr. Cisneros has been the vice chairman of Ibero American Media Partners.
Since 1991, Mr. Cisneros has been the executive vice president of Venevision
International, Inc. Mr. Cisneros is also a director of El Sitio Inc. Mr.
Cisneros holds a B.A. in political science from American University.

Board Composition

We currently have eight directors. Prior to the closing of this offering,
holders of our Series A preferred stock were entitled to nominate and elect
two directors while holders of our Series B preferred stock and our Series C
preferred stock were each entitled to nominate and elect one director. Messrs.
Barratt, Jr. and Hall-Tipping were nominated by the Series A preferred
stockholders, Mr. Rader was nominated by the Series B preferred stockholders,
and Mr. Hitchner was nominated by the Series C preferred stockholders. Each of
these persons serves on our board of directors pursuant to these preferred
stock nominating and election rights. The holders of our common stock, voting
as a separate class, were entitled to elect four members of our board of
directors, to be nominated by Mr. MacIntyre, IV. Messrs. MacIntyre, IV,
MacIntyre, and Cisneros serve on our board of directors pursuant to these
rights, with one vacancy. In addition, Mr. Peabody serves as a non-affiliated
director, nominated by the board of directors and elected by the stockholders.
Upon the closing of this offering, these board representation rights will
terminate and no stockholders will have any special rights with respect to
board representation.

Prior to the closing of this offering, directors are elected by the
stockholders at each annual meeting of stockholders and serve for one year or
until their successors are duly elected and qualified. Our restated
certificate of incorporation and restated bylaws, to be effective upon the
closing of this offering, provide that our board of directors will be divided
into three classes, as nearly equal in size as possible with staggered three-
year terms. The division of the three classes, the initial directors and their
respective expiration dates are as follows:

. the class I directors will be Messrs. Barratt, Jr., Hall-Tipping, and
MacIntyre, and their term will expire at the annual meeting of
stockholders to be held in 2001;

. the class II directors will be Messrs. Hitchner, Peabody, and Rader, and
their term will expire at the annual meeting of stockholders to be held
in 2002; and

53
<PAGE>

. the class III directors will be Messrs. Cisneros and MacIntyre, IV, and
their term will expire at the annual meeting of stockholders to be held
in 2003.

At each annual meeting of stockholders beginning with the annual meeting to
be held in 2001, the successors to directors whose terms expire will be elected
to serve from the time of election and qualification until the third annual
meeting following election, or until their successors have been duly elected
and qualified, or until their earlier resignation or removal. In addition, 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. The
classification of our board of directors may have the effect of discouraging or
making it more difficult for a third party to acquire control of OneSoft.

Board Committees

Our board of directors has an audit committee and a compensation committee.

Audit Committee. The current members of our audit committee are Messrs.
Barratt, Jr., Hall-Tipping and Peabody. Our audit committee reviews, acts on,
and reports to the board of directors with respect to various auditing and
accounting matters, including the selection of our independent auditors, the
scope of the annual audits, fees to be paid to the auditors, the performance of
our independent auditors and our accounting practices.

Compensation Committee. The current members of our compensation committee
are Messrs. Barratt, Jr., Hall-Tipping and Hitchner. Our compensation committee
determines the salaries and incentive compensation of our officers and provides
recommendations for the salaries and incentive compensation of our other
employees. The compensation committee also administers our Second Amended and
Restated 1997 Employee, Director and Consultant Stock Option Plan.

Compensation Committee Interlocks and Insider Participation

The voting members of our compensation committee of the board of directors
are Messrs. Barratt, Jr., Hall-Tipping and Hitchner, none of whom has, at any
time since our formation, been an officer or employee of OneSoft. No executive
officer of OneSoft currently serves, or in the past has served, as a member of
the board of directors or compensation committee of any entity that has one or
more executive officers serving as a member of our board of directors or
compensation committee. Prior to the formation of the compensation committee,
the board of directors as a whole made decisions relating to the compensation
of our executive officers.

Director Compensation

Our directors do not receive cash compensation for their services as
directors but are reimbursed for their reasonable and necessary expenses
incurred in attending board meetings.

In June 1998, we granted to Mr. Peabody, one of our directors, an option to
purchase 100,000 shares of common stock at an exercise price of $0.552 per
share. Mr. Peabody exercised this option in full in April 1999. These shares
are subject to restrictions that terminate upon completion of this offering.

In October 1998, we granted to Blue Water Strategic Fund I, L.L.C. a non-
qualified stock option to purchase 25,000 shares of common stock at an exercise
price of $0.552 per share. Mr. Henry D. Barratt, Jr., one of our directors, is
a managing director of Blue Water Capital,

54
<PAGE>

L.L.C., a venture capital firm which is the managing member of Blue Water
Strategic Fund I, L.L.C. The option to Blue Water Strategic Fund I L.L.C. was
immediately exercisable upon the grant, and terminates in October 2008.

Key Person Life Insurance

We have purchased and presently maintain a key person life insurance policy
in the amount of $2,000,000 on the life of James W. MacIntyre, IV, in favor of
OneSoft.

Executive Compensation

The following table shows all compensation awarded to, earned by, or paid to
our Chief Executive Officer and our other most highly compensated executive
officers or former executive officers who earned at least $100,000 for services
rendered to OneSoft in all capacities during the year ended December 31, 1999.

Summary Compensation Table

<TABLE>
<CAPTION>
Long Term
Compensation
Awards
------------
Annual
Compensation (1) Securities
----------------- Underlying
Name and Principal Position Salary Bonus Options
- --------------------------- -------- -------- ------------
<S> <C> <C> <C>
James W. MacIntyre, IV......................... $221,539 $ 54,044 --
President and Chief Executive Officer
Richard Borenstein............................. 125,769 118,325 100,000
Former Senior Vice President of World Wide
Sales (2)
Frederick C. Hawkins, III...................... 150,756 87,250 --
Senior Vice President of Finance and Chief
Financial Officer
Jeffrey M. MacIntyre........................... 117,692 48,551 --
Senior Vice President of Services
Randall V. Pevin............................... 93,077 25,833
Vice President of Operations
Thomas E. Young................................ 92,308 90,320 220,000
Senior Vice President of Marketing and Sales
</TABLE>
- --------
(1) The columns for "Other Annual Compensation" and "All Other Compensation"
have been omitted because there is no such compensation required to be
reported.
(2) Mr. Borenstein ceased to be an executive officer of OneSoft on or about
October 1,1999. His full-time employment with us terminated on December 31,
1999.

55
<PAGE>

Option Grants in 1999

The following table contains information concerning the stock option grants
made to each of the individuals listed in the Summary Compensation Table during
the fiscal year ended December 31, 1999. These options were granted pursuant to
our Second Amended and Restated 1997 Employee, Director and Consultant Stock
Option Plan and are incentive stock options.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates Of
Stock Price Appreciation
Individual Grants For Option Term (3)
------------------------------------------------------------- ------------------------
Number Of % Of Total
Shares Options
Underlying Granted To Exercise Fair Value
Options Employees In Price at Dates Expiration
Name Granted 1999(1) Per Share (2) of Grant Date 0% 5% 10%
---- ---------- ------------ ------------- ---------- ---------- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James W. MacIntyre, IV.. -- -- -- -- -- -- -- --
Richard Borenstein...... 250,000(4) 8.7% $0.552 $ 1.45 3/30/00 $224,500 $4,748,684 $7,643,227
Frederick C. Hawkins,
III.................... -- -- -- -- -- -- -- --
Randall V. Pevin........ -- -- -- -- -- -- -- --
Jeffrey M. MacIntyre.... -- -- -- -- -- -- -- --
Thomas E. Young......... 200,000(5) 6.9 0.552 $ 4.00 9/17/09 $689,600 $3,798,947 $6,114,582
20,000(6) 0.7 11.00 $11.00 12/30/09 -- $ 150,935 $ 382,498
</TABLE>

- --------

(1) The percentage shown under this column is based on options to purchase
shares of our common stock granted to employees, consultants and directors
of OneSoft under our Second Amended and Restated 1997 Employee, Director
and Consultant Stock Option Plan during 1999.

(2) The exercise price may be paid in cash valued at fair market value on the
exercise date.

(3) Assumes appreciation of the common stock at a rate of 5% and 10% per year
over the 10-year option period as mandated by the rules and regulations of
the Securities and Exchange Commission, and does not represent our estimate
or projection of the future value of the common stock. The potential
realizable values at 0%, 5%, and 10% appreciation are calculated by:
multiplying the number of shares of common stock underlying the option by
the assumed initial public offering price of $12.00 per share, assuming
that the aggregate stock value derived from that calculation compounds at
the annual 0%, 5% or 10% rate shown in the table until the expiration of
the option, and subtracting from that result the aggregate option exercise
price. The actual value realized may be greater or less than the potential
realizable values set forth in the table.
(4) This option has vested for the exercise of 100,000 shares.
(5) The options vest over a three-year period beginning on the first
anniversary of the date of employment, May 3, 1999, and expire on the tenth
anniversary of the date of grant.
(6) The options vest over a four-year period beginning on the first
anniversary of the date of grant, December 30, 1999.

Option Exercises

None of the individuals listed in the Summary Compensation Table exercised
any options to purchase securities of OneSoft during the year ended December
31, 1999.

Year-end Option Values

The following table sets forth information with respect to the aggregate
value of options held by each executive officer named in the Summary
Compensation Table as of December 31, 1999. The potential value of the
unexercised in-the-money options at fiscal year end is based on the value of
$12.00 per share, the assumed initial public offering price of our shares of
common stock, less the per share exercise price.

We have rights to repurchase the shares issued on exercise of these options
upon termination of the optionee's employment, death or disability. These
rights of repurchase will

56
<PAGE>

terminate upon the consummation of this offering. All options were granted at
an exercise price equal to the fair market value of our common stock on the
date of grant, as determined by our board of directors.

<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options In-the-Money Options at
at December 31, 1999 December 31, 1999
---------------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- --------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C>
James W. MacIntyre, IV.. 38,670 19,330 $ 443,724 221,290
Richard Borenstein...... 100,000 -- 1,144,800 --
Frederick C. Hawkins,
III.................... 200,000 100,000 2,289,600 1,144,800
Randall V. Pevin........ 98,750 66,250 1,130,490 730,830
Jeffrey M. MacIntyre.... 34,670 17,330 396,902 198,394
Thomas E. Young......... -- 220,000 -- 2,309,600
</TABLE>

The columns for number of shares acquired on exercise and value received
have been omitted because there were no option exercises by the individuals
listed in the Summary Compensation Table for the year ended December 31, 1999.

Employee Benefit Plans

Second Amended and Restated 1997 Employee, Director and Consultant Stock
Option Plan. The following description of OneSoft's Second Amended and Restated
1997 Employee, Director and Consultant Stock Option Plan is a summary of the
material terms of the plan.

The purpose of the plan is to enhance the profitability and value of OneSoft
for the benefit of its stockholders by enabling OneSoft to offer to employees,
directors and consultants stock based incentives. This is a means to both
increase the ownership of OneSoft held by those individuals in order to
attract, retain and reward them and strengthen the mutual interests between
those individuals and the stockholders of OneSoft. The plan authorizes the
grant of options to purchase shares of common stock to employees, directors and
consultants of OneSoft and its affiliates. Under the plan, OneSoft may grant
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986 and non-qualified stock options. Incentive stock options
may only be granted to employees of OneSoft. The maximum number of shares that
can be issued as incentive stock options shall be 6,000,000.

The plan was approved by OneSoft's board of directors and its stockholders
in March 1997 and subsequently amended by the board of directors and
stockholders in August 1999, and February 2000. A total of 6,000,000 shares are
reserved for issuance under the plan as of February 2000. As of December 31,
1999, 231,750 shares had been issued as the result of the exercise of options,
3,685,483 shares were subject to outstanding options, and 1,082,767 shares were
available for future grants. The plan is administered by the compensation
committee of the board of directors. Subject to the provisions of the plan, the
committee has authority to determine the employees, directors and consultants
of OneSoft who are to be awarded options and the terms of these awards,
including:

. the number of shares subject to an option;

. when the option becomes exercisable;

. the option exercise price per share; and

. the duration of the option.

Incentive stock options must have an exercise price equal to at least 100%,
110% if the grant is to a stockholder holding more than 10% of OneSoft's voting
stock, of the fair market value of a share on the date of the award and
generally have a duration of 10 years, five years

57
<PAGE>

if the grant is to a stockholder holding more than 5% of OneSoft's voting
stock. Terms and conditions of awards are in written agreements between OneSoft
and the holders of the options. Awards under the plan may not be made after the
tenth anniversary of the date of its adoption but awards granted before that
date may extend beyond that date.

If the employment with OneSoft of the holder of an incentive stock option is
terminated for any reason other than as a result of the holder's death or
disability or for "cause" as defined in the plan, the holder may exercise the
option, to the extent exercisable on the date of termination of employment,
until the earlier of the option's specified expiration date and 90 days after
the date of termination. If an option holder dies or becomes disabled, both
incentive and non-qualified stock options may generally be exercised, to the
extent exercisable on the date of death or disability, by the option holder or
the option holder's survivors until the earlier of the option's specified
termination date and one year after the date of death or disability. If an
option holder's employment with OneSoft is terminated for cause, all
outstanding and unexercised options are immediately forfeited.

2000 Employee Stock Purchase Plan. In February 2000 the board of directors
and the stockholders adopted the 2000 Employee Stock Purchase Plan. The 2000
Employee Stock Purchase Plan authorizes the issuance of a maximum of 200,000
shares of common stock, plus an annual increase beginning January 1, 2001,
equal to the lesser of (i) 1% of the outstanding common stock, on a fully
diluted basis, and (ii) such lesser number of shares as determined by the
board, to participating employees through the grant of nontransferable options.
The aggregate maximum number of shares available under the plan over the life
of the plan is 2,000,000 shares.

The 2000 Employee Stock Purchase Plan is administered by the board's
compensation committee. All employees working 20 hours or more per week, who
have been continuously employed by OneSoft for at least three months as of the
offering date are eligible to participate. Any employee who would own more than
5% of OneSoft's stock, immediately after the grant under the plan, may not
participate in the 2000 Employee Stock Purchase Plan. To participate in the
2000 Employee Stock Purchase Plan, an employee authorizes a deduction from his
or her pay, not to exceed $21,250 per year, beginning on the first day of a
designated six month offering period. On the first day of each offering period,
each outstanding option granted under the 2000 Employee Stock Purchase Plan is
automatically exercised using funds withheld from each employee's compensation
as of that date. A participating employee may withdraw from the 2000 Employee
Stock Purchase Plan at any time prior to the exercise date of the offering
period.

Employment Agreements

We have entered into employment agreements with James W. MacIntyre, IV,
Frederick C. Hawkins, III and Jeffrey M. MacIntyre which contain non-
disclosure, assignment of inventions, non-competition and non-solicitation
restrictions and covenants. These agreements provide for annual base salaries,
subject to increase by the board of directors, and allow for additional annual
bonus compensation upon the meeting of certain mutually agreed upon business
objectives. Current salaries are $240,000 for James W. MacIntyre, IV, $175,000
for Frederick C. Hawkins, III and $150,000 for Jeffrey M. MacIntyre. These
agreements automatically renew annually unless either we, or they, provide
written notice of intention not to renew an agreement. Pursuant to his
agreement, we granted Mr. Hawkins incentive stock options to purchase 300,000
shares of our common stock under our Second Amended and Restated 1997 Employee,
Director and Consultant Stock Option Plan at an exercise price of $0.552 per
share. These options vest quarterly over a period of three years.

58
<PAGE>

Additionally, we have entered into employment-at-will letter agreements with
Randall V. Pevin and Thomas E. Young, which also contain non-disclosure,
assignment of inventions, non-competition and non-solicitation restrictions and
covenants. These letter agreements provide for annual base salaries, subject to
increase by the board of directors. The agreement with Mr. Young allows for
annual bonus compensation upon the meeting of certain mutually agreed upon
business objectives. Pursuant to our agreement with Mr. Young, we granted him
incentive stock options to purchase 200,000 shares of our common stock at an
exercise price of $0.552 per share under our Second Amended and Restated 1997
Employee, Director and Consultant Stock Option Plan. These options vest
annually over a period of three years.

Our employment agreement with James W. MacIntyre, IV provides that if we
terminate his employment without "cause," as defined in the agreement, he
terminates his employment with "good reason," as defined in the agreement, or
we fail to renew his agreement, such that he is employed with us less than
three years, he will be entitled to severance pay equal to 100% of his annual
base salary, plus 100% of his annual bonus, paid in twelve monthly installments
from the date of termination, plus fringe benefits for twelve months from the
date of termination. If Mr. MacIntyre IV's employment is terminated after three
years or more of employment, by reason of any of the above conditions, we will
pay him one-half of his annual salary plus one-half of his bonus, paid in six
monthly installments from the date of termination, plus fringe benefits for six
months from the date of termination. Our employment agreements with Frederick
C. Hawkins, III and Jeffrey M. MacIntyre provide that if we terminate their
employment without "cause," as defined in the agreements, they terminate their
employment with "good reason," as defined in the agreements, or we fail to
renew their agreements, such that they are employed with us less than three
years, they will be entitled to severance pay equal to one-half of their annual
base salaries, plus one-half of his annual bonus in the case of Mr. Hawkins,
paid in six monthly installments from the date of termination, plus fringe
benefits for six months from the date of termination. If the terminations of
Messrs. MacIntyre, IV, Hawkins or MacIntyre are voluntary, other than for "good
reason," by OneSoft for cause or as a result of death or disability, we have no
obligation to pay severance beyond the individual's accrued and unpaid base
salary and bonus up to the date of termination. Our letter agreements with Mr.
Pevin and Mr. Young have no severance provisions.

Severance Agreement

We have entered into a severance agreement with Richard Borenstein pursuant
to which we agreed to pay Mr. Borenstein a lump sum of $42,000 upon termination
of his full-time employment with us on December 31, 1999. Additionally, we will
pay his fringe benefits until March 31, 2000. As Mr. Borenstein has a H-1B visa
to work for OneSoft, our severance agreement with him contains provisions
outlining assistance that OneSoft may provide to him in modifying his H-1B
visa. At the time of our termination of his full-time employment Mr. Borenstein
held a fully vested option to purchase 100,000 shares of our common stock at an
exercise price of $0.552 per share. This option expires on March 30, 2000.

Indemnification of Directors and Executive Officers and Limitation of Liability

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

. for any breach of the director's duty of loyalty to OneSoft or our
stockholders;

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

59
<PAGE>

. under Section 174 of the Delaware General Corporation Law regarding
unlawful dividends and stock purchases; or

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

As permitted by Delaware law, our restated bylaws provide that we must
indemnify our directors and executive officers to the fullest extent permitted
by Delaware law and advance expenses, as incurred, to our directors and
executive officers to defend any action for which rights of indemnification are
provided. In addition, our restated certificate of incorporation and restated
bylaws also permit us to grant such rights to indemnification to our employees
and agents. Our restated bylaws also provide that we may enter into
indemnification agreements with our directors and officers and purchase
insurance on behalf of any person whom we are required or permitted to
indemnify. We have obtained liability insurance for our officers and directors.

The limitation of liability and indemnification provisions in our restated
certificate of incorporation and restated bylaws may discourage stockholders
from bringing a lawsuit against directors for breach of their fiduciary duty.
They may also reduce the likelihood of derivative litigation against directors
and officers, even though an action, if successful, might benefit us and other
stockholders. Furthermore, a stockholder's investment may be adversely affected
to the extent we pay the costs of settlement and damage awards against
directors and officers as required by these indemnification provisions.

Presently, there is no pending litigation or proceeding involving any of our
directors, officers or employees for which indemnification is sought, nor are
we aware of any threatened litigation that may result in claims for
indemnification.

60
<PAGE>

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Transactions with Management and Others

On November 1, 1995, in connection with the formation and initial financing
of Global Exchange Inc., a Virginia corporation, our predecessor in interest,
James W. MacIntyre, IV, our chairman, president and chief executive officer,
purchased 250 shares of the common stock of Global Exchange Inc. for an
aggregate purchase price of $250. On March 18, 1997, InterFlowww Enterprises,
Inc., a Vermont corporation, merged with and into Global Exchange Inc. pursuant
to a plan of merger approved by Global Exchange Inc.'s and InterFlowww's
stockholders and boards of directors as of March 17, 1997. Pursuant to the plan
of merger, each share of InterFlowww common stock was converted into 11.2
shares of Global Exchange Inc.'s common stock. On March 31, 1997, upon our
reincorporation in Delaware, each share of common stock of Global Exchange Inc.
was converted into 300 shares of our common stock. James W. MacIntyre, IV, a
principal stockholder of InterFlowww, and Jeffrey M. MacIntyre, our senior vice
president of services and the president and a principal stockholder of
InterFlowww, received 2,250,000 shares and 420,000 shares, respectively, of our
common stock (on a post-reincorporation basis) upon consummation of the
InterFlowww merger. Jeffrey M. MacIntyre joined OneSoft and became a director
and our senior vice president of services following the merger.

In April 1996, Global Exchange Inc. employed William Langdon as chief
financial officer. In June 1997, we terminated Mr. Langdon's employment with
us, and we executed a settlement agreement with him. Under the settlement
agreement, we paid Mr. Langdon $80,000 and agreed to pay him an additional
$30,000 within 60 days of an initial public offering of our capital stock.

In August 1996, we formed Sports Warehouse, Inc., a Delaware corporation. On
August 9, 1996, Sports Warehouse, Inc. granted Bakersville Holdings Limited 48
shares of its common stock. Carlos E. Cisneros, a member of our board of
directors, is a beneficial owner of Bakersville Holdings. On April 17, 1997, we
entered into a shareholders agreement with Bakersville Holdings with regard to
Sports Warehouse, Inc. Pursuant to this agreement, Bakersville Holdings
invested an additional $50,000 in Sports Warehouse in exchange for, among other
things, the right to convert its $150,000 aggregate investment in Sports
Warehouse into shares of our common stock at the time of our initial public
offering at a conversion factor which would assume a compounded annual return
on the $150,000 investment calculated at 20% per year from the date of the
agreement. Following receipt of notice from us regarding our proposed initial
public offering, Bakersville Holdings converted its shares in Sports Warehouse
into 24,480 shares of our common stock on November 23, 1999. We dissolved
Sports Warehouse effective January 13, 2000.

Indebtedness of Management

In December 1997, we lent $412,333 to Frederick C. Hawkins, III, our chief
financial officer and senior vice president of finance, in connection with his
purchase of 750,000 shares of our common stock, at a price of $0.552 per share,
from William Robertson, a former majority stockholder. The loan is secured by a
pledge of the 100,000 shares of Mr. Hawkins' OneSoft common stock. The loan may
be prepaid in whole or in part, at any time, with recourse to Mr. Hawkins,
decreasing upon prepayment, dollar for dollar, accrues interest at the rate of
6.02% per annum and provides for personal recourse to Mr. Hawkins to 50% of the
aggregate outstanding balance as of February 24, 2000. The loan is payable on
or after the first to occur of December 1, 2002, the sale of substantially all
of our assets, or a sale of the collateral pledged as security for the loan.
The largest amount of Mr. Hawkins' loan that was outstanding during the year
ended December 31, 1999 was $467,860.

61
<PAGE>

In August 1999, we lent $500,000 to James W. MacIntyre, IV, our president
and chief executive officer, secured by a pledge of 100,000 shares of Mr.
MacIntyre's OneSoft common stock. The loan accrues interest at the rate of
5.43% per annum and is payable on or before August 13, 2002. The largest amount
of Mr. MacIntyre's loan that was outstanding during the year ended December 31,
1999 was $510,084.

Directors and Executive Officers

On April 12, 1998, our Board of Directors voted to appoint A. Douglas
Peabody as a Director of OneSoft. In June 1998, we granted Mr. Peabody an
immediately exercisable non-qualified stock option to purchase 100,000 shares
of our common stock at the price of $0.552 per share. On April 12, 1999, Mr.
Peabody exercised his option in full.

On November 7, 1997, we granted Frederick C. Hawkins, III, an incentive
stock option to purchase 300,000 shares of our common stock under our Second
Amended and Restated 1997 Employee, Director and Consultant Stock Option Plan
at a price of $0.552 per share. These options vest quarterly over a period of
three years.

On October 6, 1997, we granted James W. MacIntyre, IV, a non-qualified stock
option to purchase 58,000 shares of our common stock under our Second Amended
and Restated 1997 Employee, Director and Consultant Stock Option Plan at a
price of $0.552 per share. These options vest quarterly over a period of three
years.

On October 6, 1997, we granted Jeffrey M. MacIntyre, an incentive stock
option to purchase 52,000 shares of our common stock under our Second Amended
and Restated 1997 Employee, Director and Consultant Stock Option Plan at a
price of $0.552 per share. These options vest quarterly over a period of three
years.

On May 5, 1997, October 6, 1997 and October 16, 1998 we granted Randall V.
Pevin incentive stock options to purchase 35,000, 30,000, and 100,000 shares,
respectively. These options have exercise prices of $0.062 per share, $0.552
per share, $0.552 per share, respectively. The first two options vest quarterly
over a period of three years, and the third option vests bi-annually over a
period of two years.

On May 3, 1999 and December 30, 1999 we granted Thomas E. Young, incentive
stock options to purchase 200,000 and 20,000 shares, respectively. These
options have exercise prices of $0.552 per share and $11.00 per share,
respectively. The first option vests over a three year period. The second
option vests over a four year period.

On March 8, 1999, July 1, 1999, November 15, 1999 and December 15, 1999, we
granted Eric D. Waller, incentive stock options to purchase 5,000, 25,000,
10,000 and 35,000 shares, respectively. These options have exercise prices of
$0.552 per share, $6.00 per share, $10.00 per share, and $11.00 per share,
respectively. These options vest annually over a four year period.

On September 2, 1999 we granted Peter M. Jones, an incentive stock option to
purchase 300,000 shares of our common stock under our Second Amended and
Restated 1997 Employee, Director and Consultant Stock Option Plan, at a price
of $4.00 per share. These options vest annually over a three year period.

Series A Convertible Preferred Stock Offerings

In November 1997, March 1998 and June 1998, we raised gross proceeds of
approximately $7.6 million from the issue and sale of a total of 3,192,530
shares of Series A preferred stock in a private placement to two investors.
Blue Water Strategic Fund I, L.L.C. and SGC Partners II

62
<PAGE>

LLC, each a five percent beneficial holder of our common stock, purchased all
of the shares of Series A preferred stock. Blue Water Strategic Fund I
purchased shares of Series A preferred stock at the prices of $2.28 and $2.41
per share. SGC Partners II purchased shares of Series A preferred stock at a
price of $2.41 per share. Henry D. Barratt, Jr., one of our directors, is a
managing director of Blue Water Capital, L.L.C., the managing member of Blue
Water Strategic Fund I, and was elected to our board of directors pursuant to
an investor rights agreement, the provisions of which that relate to the
election of directors will terminate upon the closing of this offering. Justin
Hall-Tipping, one of our directors, is a managing director of SG Capital
Partners, the managing member of SGC Partners II LLC and was elected to our
board of directors pursuant to an investor rights agreement, the provisions of
which that relate to the election of directors will terminate upon the closing
of this offering.

Series B Convertible Preferred Stock Offering

In March 1999, we raised gross proceeds of approximately $7.5 million from
the issue and sale of a total of 2,023,857 shares of Series B convertible
preferred stock in a private placement to two investors at a price of $3.706
per share. Rader Reinfrank Holdings No. 2 and SGC Partners II LLC, each a five
percent beneficial holder of our common stock, purchased all of the shares of
Series B convertible preferred stock. Stephen P. Rader, one of our directors,
is a managing member of Rader Reinfrank & Co., LLC, the general partner of
Rader Reinfrank Investors, L.P., general partner of Rader Reinfrank Holdings
No. 2. Justin Hall-Tipping, a member of our board of directors, is the managing
director of SG Capital Partners, the managing member of SGC Partners II LLC.
Messrs. Rader and Hall-Tipping were elected to our board of directors pursuant
to an investor rights agreement, the provisions of which that relate to the
election of directors will terminate upon the closing of this offering.

Series C Convertible Preferred Stock Offering

In August 1999 and October 1999, we raised gross proceeds of approximately
$32.2 million from the issue and sale of a total of 4,891,253 shares of Series
C convertible preferred stock in a private placement to 20 investors at a price
of $6.58 per share. QuestMark Partners, L.P., a five percent beneficial
stockholder of OneSoft, purchased a total of 1,517,451 shares of Series C
convertible preferred stock. Thomas R. Hitchner, one of our directors, is a
general partner of QuestMark Partners, L.P., and was elected to our board of
directors pursuant to an investor rights agreement, the provisions of which
that relate to the election of directors will terminate upon the closing of
this offering.

63
<PAGE>

PRINCIPAL AND SELLING STOCKHOLDERS

The following table presents information regarding the beneficial ownership
of OneSoft's common stock as of December 31, 1999, and as adjusted to reflect
the sale of the common stock in this offering, by:

. each person, or group of affiliated persons, known to us to be the
beneficial owner of more than 5% of our common stock;

. each of our directors;

. each executive officer listed in the Summary Compensation Table above;
and

. all current directors and executive officers of OneSoft as a group.

<TABLE>
<CAPTION>
Percentage of
Outstanding
Shares
Beneficially
Number Owned (2)
of Shares -----------------
Beneficially Before After
Name of Beneficial Owner Owned (1) Offering Offering
- ------------------------ ------------ -------- --------
<S> <C> <C> <C>
Blue Water Strategic Fund I, L.L.C. (3)........ 1,896,130 11.6% 9.2%
8300 Greensboro Drive, Suite 1210
McLean, VA 22102

SGC Partners II LLC (4)........................ 3,125,382 19.2 15.2
1221 Avenue of the Americas
New York, NY 10020

Rader Reinfrank Holdings No. 2 (5)............. 1,815,096 11.1 8.8
9465 Wilshire Blvd., Suite 950
Beverly Hills, CA 90212

QuestMark Partners, L.P. (6)................... 1,517,451 9.3 7.4
One South Street, Suite 800
Baltimore, MD 21202

James W. MacIntyre, IV (7)..................... 3,304,406 20.2 16.1

Richard Borenstein (8)......................... 100,000 * *

Frederick C. Hawkins, III (9).................. 962,700 5.8 4.6

Thomas E. Young................................ -- * *

Randall V. Pevin(10)........................... 98,750 * *

Jeffrey M. MacIntyre (11)...................... 459,000 2.8 2.2

Henry D. Barratt, Jr. (3)...................... 1,896,130 11.6 9.2

A. Douglas Peabody............................. 100,000 * *

Justin Hall-Tipping (4)........................ 3,125,382 19.2 15.2

Stephen P. Rader (5)........................... 1,815,096 11.1 8.8

Thomas R. Hitchner (6)......................... 1,517,451 9.3 7.4

Carlos E. Cisneros (12)........................ 365,100 2.2 1.8
Bakersville Holdings Limited
1900 Avenue of the Stars, Suite 2100
Los Angeles, CA 90067

All directors and executive officers as a group
(12 persons) (13)............................. 13,744,015 81.6 65.0
</TABLE>
- --------
* Represents beneficial ownership of less than 1%.

(1) Beneficial ownership for purposes of the following table is determined in
accordance with the rules of the Securities and Exchange Commission and is
not necessarily indicative of beneficial ownership for any other purpose.
In computing the number of shares beneficially owned by a person and the
percentage ownership of that person,

64
<PAGE>

shares of common stock issuable upon the exercise of options that are
currently exercisable or exercisable within 60 days of December 31, 1999
are deemed to be outstanding. These shares, however, are not considered
outstanding for purposes of computing the percentage ownership of any other
person. Except as indicated in the footnotes, we believe that the persons
and entities named in the table have sole voting and sole investment power
with respect to all shares beneficially owned by them, subject to community
property laws where applicable. Percentage of ownership is based on
16,314,490 shares of common stock outstanding as of December 31, 1999,
assuming conversion of all outstanding preferred stock into common stock,
and 20,514,490 shares of common stock outstanding after completion of the
offering.

(2) Assumes no exercise of the underwriters' over-allotment option.

(3) Consists of 1,871,130 shares owned by Blue Water Strategic Fund I, L.L.C.
Mr. Barratt, a director of OneSoft, is a Managing Director of Blue Water
Capital, L.L.C., the managing member of Blue Water Strategic Fund I. This
number also includes 25,000 shares subject to currently exercisable
options. Blue Water Capital has sole voting and investment power with
respect to these shares. Mr. Barratt expressly disclaims beneficial
ownership of these shares, except to the extent of his pecuniary interest
therein.

(4) Consists of 3,125,382 shares owned by SGC Partners II LLC. Mr. Hall-
Tipping, a director of OneSoft, is a managing director of SG Capital
Partners, the managing member of SGC Partners II LLC. SG Capital Partners
has sole voting and investment power with respect to these shares. Mr.
Hall-Tipping expressly disclaims beneficial ownership of these shares,
except to the extent of his pecuniary interest therein.

(5) Consists of 1,815,096 shares owned by Rader Reinfrank Holdings No. 2. Mr.
Rader, a director of OneSoft, is a managing member of Rader Reinfrank &
Co., LLC, the General Partner of Rader Reinfrank Investors, L.P., General
Partner of Rader Reinfrank Holdings No. 2, a California general
partnership. Rader Reinfrank & Co., has sole voting and investment power
with respect to these shares. Mr. Rader expressly disclaims beneficial
ownership of these shares, except to the extent of his pecuniary interest
therein.

(6) Consists of 1,517,451 shares owned by QuestMark Partners, L.P. Mr.
Hitchner, a director of OneSoft, is a general partner of QuestMark
Partners. QuestMark Partners has sole voting and investment power with
respect to these shares. Mr. Hitchner expressly disclaims beneficial
ownership of these shares, except to the extent of his pecuniary interest
therein.

(7) Consists of shares held of record by Mr. MacIntyre. Includes 43,500 shares
subject to currently exercisable options. Does not include shares of
common stock over which Mr. MacIntyre has voting control pursuant to an
irrevocable proxy that terminates upon the completion of this offering.

(8) Consists of 100,000 shares subject to currently exercisable options. Mr.
Borenstein ceased being an executive officer of the Company on or about
October 1,1999. Mr. Borenstein's full time-employment with us terminated
on December 31, 1999.

(9) Includes 225,000 shares subject to currently exercisable options.

(10) Consists of 98,750 shares subject to currently exercisable options.

(11) Includes 39,000 shares subject to currently exercisable options.

(12) Consists of 365,100 shares owned by Bakersville Holdings Limited. Mr.
Cisneros, a director of OneSoft, is a beneficial owner of Bakersville
Holdings. Bakersville Holdings has sole voting and investment power with
respect to these shares.

(13) Includes 531,250 shares subject to currently exercisable options. See
footnotes (3) through (11) above.

65
<PAGE>

In the event that the underwriters' over-allotment option is exercised in
full, the beneficial ownership of the stockholders listed below will change as
follows:

<TABLE>
<CAPTION>
Shares
Beneficially
Number of Owned After the
Shares Offered Offering
in the Over- -----------------
allotment Number Percent
-------------- --------- -------
<S> <C> <C> <C>
James W. MacIntyre, IV (1)..................... 150,000 3,154,406 14.9%
Bakersville Holdings Limited (2)............... 50,000 315,100 1.5
Eugene Choi (3)................................ 20,000 360,523 1.7
Frederick C. Hawkins, III (4).................. 50,000 912,700 4.3
Jeffrey M. MacIntyre (5)....................... 100,000 359,000 1.7
South Street LLC (6)........................... 7,500 30,436 *
Andrew Wright (7).............................. 10,714 65,159 *
</TABLE>
- --------
* Less than 1%

(1) See footnote (7) above.

(2) See footnote (12) above.

(3) Prior to this offering, Eugene Choi, an employee of ours, owned 352,773
shares of our common stock. This number includes 27,750 shares subject to
currently exercisable options.

(4) See footnote (9) above.

(5) See footnote (11) above.
(6) Prior to this offering, South Street LLC, a holder of Series C preferred
stock, owned 37,936 shares of our common stock.
(7) Prior to this offering, Andrew Wright, a holder of Series C preferred
stock, owned 75,873 shares of our common stock.

66
<PAGE>

DESCRIPTION OF CAPITAL STOCK

Upon completion of this offering, we will be authorized to issue 50,000,000
shares of common stock, par value $.001 per share, and 5,000,000 shares of
preferred stock, par value $.001 per share, of which there will be shares of
common stock and no shares of preferred stock outstanding. As of December 31,
1999, and assuming the conversion of all outstanding shares of convertible
preferred stock into shares of common stock upon the closing of this offering,
there were outstanding 16,314,490 shares of common stock held of record by 57
stockholders. In addition, as of December 31, 1999 there were outstanding
options to purchase 3,685,483 shares of common stock, and outstanding warrants
to purchase 60,651 shares of common stock.

Common Stock

Holders of common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the stockholders and do not have
cumulative voting rights. Subject to preferences that may be applicable to any
outstanding shares of preferred stock, holders of common stock are entitled to
receive ratably such dividends, if any, as may be declared by our board of
directors out of funds legally available. All outstanding shares of common
stock are fully paid and nonassessable, and the holders of common stock have no
preferences or rights of conversion, exchange, preemption or redemption. In the
event of any liquidation, dissolution or winding-up of our affairs, holders of
common stock will be entitled to share ratably in our assets that are remaining
after payment or provision for payment of all of our debts and obligations, and
after liquidation payments to holders of outstanding shares of preferred stock,
if any.

Preferred Stock

Upon the closing of this offering, all of our outstanding shares of
preferred stock will convert into 10,107,640 shares of common stock. These
shares of preferred stock will no longer be authorized, issued or outstanding
after completion of this offering.

The board of directors has the authority to issue 5,000,000 shares of
preferred stock in one or more series and to fix the rights, preferences,
privileges and restrictions granted to or imposed upon the preferred stock,
including dividend rights, conversion rights, terms of redemption, liquidation
preference, sinking fund terms and the number of shares constituting any series
or the designation of a series, without any further vote or action by the
stockholders. The board of directors, without stockholder approval, can issue
preferred stock with voting and conversion rights which could adversely affect
the voting power of the holders of common stock. The issuance of preferred
stock could have the effect of delaying, deferring or preventing a change in
control of OneSoft. We have no present plan to issue any shares of preferred
stock. See "Anti-Takeover Effects of Various Provisions of Delaware Law and
OneSoft's Amended and Restated Certificate of Incorporation and Amended and
Restated Bylaws."

Warrants

As of the date of this prospectus, a warrant to purchase a total of 60,651
shares of our common stock is held by Deutsche Bank Securities Inc. The warrant
was issued to Deutsche Bank Securities Inc. as partial consideration for their
services as placement agent for the private placement of our Series C
convertible preferred stock in August and October 1999. This warrant is
currently exercisable at an exercise price of $6.59 per share and may be
exercised on a cashless basis. It expires on October 5, 2004. The number of
shares for which the warrant described above is exercisable is subject to
adjustment upon changes in our capital structure,

67
<PAGE>

including stock splits, combinations or dividends and reclassifications,
exchanges or substitutions. The warrant carries specified registration rights.
See "Registration Rights--Warrant Holder."

Registration Rights

Common Stockholders. On the date 180 days after the completion of this
offering, the holders of 13,426,546 shares of common stock or their transferees
will have rights to cause us to register these shares under the Securities Act
of 1933. We may be required to effect up to two demand registrations, at our
expense. We will not be required to effect a demand registration if the
anticipated gross proceeds of the shares to be registered are expected to be
less than $25 million. In addition, the holders of these shares will have the
right to cause us to register these shares, at our expense, on a Form S-3,
provided that we are eligible to use this form. We may be required to effect up
to four demand registrations, except that, if we have effected all four
registrations and the holders of registration rights have not yet requested a
demand registration, we may be required to effect five demand registrations. We
will not be required to effect a demand registration if the anticipated gross
proceeds of the shares to be registered are expected to be less than $5.0
million. If we propose to register any of our securities under the Securities
Act, either for our own account or for the account of other security holders,
other than in connection with an employee stock benefit plan or certain
business combinations involving us, the holders of 16,372,490 shares of common
stock, including 58,000 shares of common stock to be issued upon the exercise
of options and, in the case of an underwritten offering, 60,651 shares of
common stock to be issued upon the exercise of a warrant, will be entitled to
notice of the registration and will be entitled to include, at our expense,
their shares of common stock. All of these registration rights, except for
those in favor of the warrant holder, will terminate on the earlier of August
13, 2006 or when a holder is able to sell all of its shares pursuant to Rule
144 under the Securities Act in any 90-day period. These registration rights
are subject to customary conditions and limitations, including the right of the
underwriters of an offering to limit the number of shares included in any such
registration.

Warrant Holder. Pursuant to the terms of the warrant, the holder of the
warrant to purchase a total of 60,651 shares of common stock is entitled to
specified rights with respect to the registration of its shares of common stock
under the Securities Act. Subject to various and customary exceptions, if we
propose to register shares of the common stock under the Securities Act in an
underwritten public offering, the holder is entitled to notice of the
registration and is entitled to include its shares of common stock issuable
upon the exercise of the warrant in the registration at our expense. The
underwriters have the right to limit the number of warrant shares included in
any registration pursuant to the warrant.

Anti-Takeover Effects of Various Provisions of Delaware Law and OneSoft's
Amended and Restated Certificate of Incorporation and Amended and Restated
Bylaws

After the closing of this offering, we will be subject to the anti-takeover
provisions of Section 203 of the Delaware General Corporation Law. In general,
Section 203 prohibits a publicly-held Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person became an
interested stockholder, unless the interested stockholder attained that status
with the approval of the board of directors or unless the business combination
is approved in a prescribed manner. "Business combinations" include mergers,
asset sales and other transactions resulting in a financial benefit to the
interested stockholder. Generally, an "interested stockholder" is a person who,
together with his affiliates and associates, owns, or within the prior three
years did own, 15% or more of the corporation's voting stock. This

68
<PAGE>

statute could prohibit or delay the accomplishment of mergers or other takeover
or change of control attempts with respect to OneSoft and, accordingly, may
discourage attempts to acquire us.

In addition, our amended and restated certificate of incorporation and
amended and restated bylaws that will be in effect upon the closing of this
offering, the relevant provisions of which are summarized below, may delay,
defer or prevent a tender offer or takeover attempt that a stockholder might
consider in its best interest, including those attempts that might result in a
premium over the market price for the shares held by stockholders.

Classified Board of Directors. Following the completion of this offering,
our board of directors will be divided into three classes serving staggered
three-year terms. Consequently, approximately one-third of the board of
directors will be elected each year. These provisions are likely to increase
the time required for stockholders to change the composition of our board of
directors. For example, in general, at least two annual meetings will be
necessary for stockholders to effect a change in the majority of our board of
directors.

Advance Notice Requirements for Stockholder Proposals and Director
Nominees. Our amended and restated bylaws provide that, for nominations to the
board of directors or for other business to be properly brought by a
stockholder before a meeting of stockholders, the stockholder must first have
given timely notice of the proposal in writing to our Secretary. For an annual
meeting, a stockholder's notice generally must be delivered not less than 45
days nor more than 75 days prior to the anniversary of the preceding year's
mailing date. For a special meeting, the notice must generally be delivered not
later than the later of 90 days prior to the special meeting or 10 days
following the day on which public announcement of the meeting is first made.
Detailed requirements as to the form of the notice and information required in
the notice are specified in our amended and restated bylaws. If it is
determined that business was not properly brought before a meeting in
accordance with our bylaw provisions, such business will not be conducted at
the meeting.

Stockholder Action, Special Meeting of Stockholders. Our amended and
restated certificate of incorporation does not permit our stockholders to act
by written consent. As a result, any action to be effected by our stockholders
must be effected at a duly called annual or special meeting of the
stockholders. Special meetings of the stockholders may be called only by our
board of directors.

Transfer Agent and Registrar

The transfer agent and registrar for the common stock is American Stock
Transfer Company, New York, New York.

69
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Before this offering, there was no public market for our common stock. An
active public market for our common stock may not develop or be sustained after
this offering. Future sales of substantial amounts of common stock, including
shares issued upon exercise of outstanding options or warrants, in the public
market after this offering could adversely affect the prevailing market price
of our common stock and could impair our ability to raise equity capital in the
future. In addition, since a limited number of shares will be available for
sale immediately after this offering due to the contractual and legal
restrictions on resale described below, sales of substantial amounts of our
common stock in the public market after the restrictions lapse could adversely
affect the prevailing market price and our ability to raise equity capital in
the future.

Upon completion of this offering, we will have outstanding 20,514,490 shares
of common stock, based on shares outstanding at December 31, 1999, assuming no
exercise of the underwriters' over-allotment option and no exercise of
outstanding options or warrants. Of this number, all of the shares sold in this
offering will be freely tradable in the public market without restriction or
further registration under the Securities Act, unless those shares are
purchased by any of our affiliates. An affiliate of OneSoft is a person that
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, OneSoft. Our current affiliates
include the individuals and entities that hold more than 10% of our stock
listed under "Principal and Selling Stockholders" as well as our other
executive officers and directors.

The remaining 16,314,490 shares of common stock held by existing
stockholders are deemed "restricted securities" as defined under Rule 144
promulgated under the Securities Act. Restricted securities may not be sold
publicly unless they are registered under the Securities Act or are sold
pursuant to Rule 144 or another exemption from registration. Of these shares,
15,468,453 shares are subject to lock-up agreements with the underwriters or
directly with us, under which all of our directors and officers and
stockholders holding more than 1% of our common stock have agreed not to
transfer or dispose of, directly or indirectly, any shares of common stock or
any securities convertible into or exercisable or exchangeable for shares of
common stock, for a period of 180 days after the date of this prospectus.
Deutsche Bank Securities Inc., in some instances together with us, may release
the shares subject to the lock-up agreements in whole or in part at any time
with or without notice. Subject to these lock-up agreements, the shares of
common stock outstanding upon completion of this offering will be available for
sale in the public market as follows:

<TABLE>
<CAPTION>
Days After the Effective Shares Eligible
Date for Sale Comment
- ------------------------ --------------- ------------------------------------------------
<S> <C> <C>
On Effectiveness........ 4,344,121 Freely tradable shares sold in this offering and
shares saleable under Rule 144(k) that are not
subject to the 180 day lock-up

90 days................. 76,250 Additional shares saleable under Rules 144 and
701 that are not subject to the 180 day lock-up

180 days................ 15,468,453 The 180 day lock-up is released and these
additional shares are saleable under Rule 701,
Rule 144 (subject, in some cases, to volume
limitations), or Rule 144(k)

More than 180 days...... 643,666 Restricted shares that are held for less than
one year and are not yet saleable under Rule 144
</TABLE>

70
<PAGE>

Rule 144

In general, under Rule 144, beginning 90 days after the date of this
prospectus, stockholders of OneSoft that have beneficially owned their shares
for at least one year, but less than two years, and affiliates of OneSoft that
have beneficially owned their shares for any period of more than one year or
who have purchased OneSoft shares in the open market, would be entitled to sell
within any three-month period a number of shares that does not exceed the
greater of:

. 1% of the number of shares of common stock then outstanding, equal to
approximately 205,145 shares immediately after this offering; or

. the average weekly trading volume of the common stock on the Nasdaq
National Market during the four calendar weeks preceding the filing of a
notice of sale with the SEC.

Sales under Rule 144 are also subject to manner of sale provisions and
notice requirements and to the availability of current public information about
us.

Rule 144(k)

Under Rule 144(k), a person who is not deemed to have been one of our
affiliates at any time during the 90 days preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years,
including the holding period of any prior owner except one of our affiliates,
is entitled to sell those shares without complying with the volume limitation
or the manner of sale, public information or notice provisions of Rule 144.

Rule 701

In general, under Rule 701 of the Securities Act, any of our employees,
officers, directors, consultants or advisors who purchased shares from us in
connection with a compensatory stock or option plan or other written agreement
is eligible to resell those shares 90 days after the effective date of this
offering in reliance on Rule 144, but without compliance with certain
restrictions, including the holding period contained in Rule 144. However,
55,500 shares issued pursuant to Rule 701 are subject to lock-up agreements and
will only become eligible for sale at the earlier of the expiration of the 180-
day lock-up agreements or the obtaining of the prior written consent of
Deutsche Bank Securities Inc.

Registration Rights

At any time more than six months after the closing of this offering, the
holders of 16,314,490 shares of our common stock and 118,651 shares of our
common stock issuable upon the exercise of outstanding options and warrants, or
their transferees, will be entitled to rights to register their shares under
the Securities Act. See "Description of Capital Stock--Registration Rights."
Registration of these shares under the Securities Act would result in these
shares becoming freely tradable without restriction under the Securities Act
immediately upon the effectiveness of the registration, except for shares
purchased by affiliates.

Stock Options

Promptly following this offering, we will file a registration statement
under the Securities Act covering all shares of common stock subject to
outstanding options or options reserved for issuance under our Second Amended
and Restated 1997 Employee, Director and Consultant Stock Option Plan. Based on
the number of shares subject to options outstanding or reserved for issuance
under this plan at December 31, 1999, this registration statement

71
<PAGE>

would cover approximately 4,750,000 shares. The registration statement will
automatically become effective upon filing. Accordingly, subject to Rule 144
volume limitations applicable to our affiliates, approximately 950,009 shares
registered under the registration statement will be available for sale in the
open market immediately and approximately an additional 425,250 shares
registered under the registration statement will be available for sale in the
open market immediately after the 180-day lock-up agreements expire.

Warrants

As of December 31, 1999, we had outstanding a warrant to purchase 60,651
shares of common stock. When this warrant is exercised and the exercise price
is paid in cash, the shares must be held for one year before they can be sold
under Rule 144. This warrant also contains "net exercise provisions." These
provisions allow the holder to exercise the warrant for a lesser number of
shares of common stock in lieu of paying cash. The shares of common stock
issued in a "net exercise" could be publicly sold under Rule 144 immediately
after exercise, subject to the 180-day lock-up period.

72
<PAGE>

UNDERWRITING

Subject to the terms and conditions of the underwriting agreement, the
underwriters, named below through their representatives Deutsche Bank
Securities Inc., SG Cowen Securities Corporation, Friedman, Billings, Ramsey &
Co., Inc. and SoundView Technology Group, Inc. have severally agreed to
purchase from OneSoft the following respective number of shares of common stock
at the initial public offering price less the underwriting discounts and
commissions set forth on the cover page of this prospectus.

<TABLE>
<CAPTION>
Number of
Underwriter Shares
- ----------- ---------
<S> <C>
Deutsche Bank Securities Inc. .......................................
SG Cowen Securities Corporation......................................
Friedman, Billings, Ramsey & Co., Inc................................
SoundView Technology Group, Inc. ....................................
---
Total..............................................................
===
</TABLE>

The underwriting agreement provides that the obligations of the underwriters
are subject to certain conditions precedent and that the underwriters will
purchase all shares of the common stock to be sold in this offering, other than
those covered by the over-allotment option described below, if any of such
shares are purchased.

The underwriters propose to offer the shares of common stock to the public
at public offering price set forth on the cover page of this prospectus and to
dealers at a price that represents a concession not in excess of $ per share,
under the public offering price. The underwriters may allow, and these dealers
may re-allow, a concession of not more than $ per share to other dealers.
After the initial public offering, representatives of the underwriters may
change the offering price and other selling terms.

We, and the selling stockholders, have granted the underwriters an option,
to purchase up to additional shares of common stock, at the public offering
price less the underwriting discounts and commissions set forth on the cover
page of this prospectus. This option is exercisable not later than 30 days
after the date of this prospectus. The underwriters may exercise this option
only to cover over-allotments made in connection with the sale of the common
stock to be sold in this offering. To the extent the underwriters exercise this
option, each of the underwriters will become obligated, subject to conditions,
to purchase approximately the same percentage of additional shares of common
stock as the number of shares of common stock to be sold in this offering. We
and the selling stockholders will be obligated, pursuant to the option, to sell
these additional shares of common stock to the underwriters to the extent the
option is exercised. If any additional shares of common stock are purchased,
the underwriters will offer the additional shares on the same terms as those on
which the shares are being offered.

The underwriting fee is equal to the public offering price per share of
common stock less the amount paid by the underwriters to us per share of common
stock. The underwriting fee is % of the initial public offering price. We
have agreed to pay the underwriters the following fees, assuming either no
exercise or full exercise by the underwriters of the underwriters' over-
allotment option:

<TABLE>
<CAPTION>
Total Fees
-----------------------------------------
Without Exercise of With Full Exercise of
Fee Per Over-Allotment Over-Allotment
Share Option Option
------- ------------------- ---------------------
<S> <C> <C> <C>
Fees paid by OneSoft..........
</TABLE>

73
<PAGE>

In addition, we estimate that our share of the total expenses of this
offering, excluding underwriting discounts and commissions, will be
approximately $ .

We and the selling stockholders have agreed to indemnify the underwriters
against some specified types of liabilities, including liabilities under the
Securities Act and to contribute to payments the underwriters may be required
to make in respect of any of these liabilities.

Each of our officers and directors and certain of our stockholders and
holders of options and warrants to purchase our stock, have agreed not to
offer, sell, contract to sell or otherwise dispose of, or enter into any
transaction that is designed to, or could be expected to, result in the
disposition of any portion of our common stock held by these persons for a
period of 180 days after the effective date of the registration statement, of
which this prospectus is a part, without the prior written consent of Deutsche
Bank Securities Inc. This consent may be given at any time without public
notice. We have entered into a similar agreement with the representatives of
the underwriters. In the event that the underwriters' over-allotment option is
exercised in full, some of our officers and other shareholders will be selling
their common stock in the offering. See "Principal and Selling Shareholders"
for additional information.

Transfers or dispositions can be made during the lock-up periods in the case
of gifts for estate planning purposes where the donee signs a lock-up
agreement.

The representatives of the underwriters have advised us that the
underwriters do not intend to confirm sales to any account over which they
exercise discretionary authority.

To facilitate the offering of our common stock, the underwriters may engage
in transactions that stabilize, maintain or otherwise affect the market price
of our common stock. Specifically, the underwriters may over-allot shares of
our common stock in connection with this offering, thus creating a short
position in our common stock for their own account. A short position results
when an underwriter sells more shares of common stock than that underwriter is
committed to purchase. Additionally, to cover the over-allotments or to
stabilize the market price of our common stock, the underwriters may bid for,
and purchase, shares of our common stock in the open market. Finally, the
representatives, on behalf of the underwriters, may also reclaim selling
concessions allowed to an underwriter or dealer if the underwriting syndicate
repurchases shares distributed by that underwriter or dealer. Any of these
activities may maintain the market price of our common stock at a level above
that which might otherwise prevail in the open market. These transactions may
be effected on the Nasdaq National Market or otherwise. The underwriters are
not required to engage in these activities and, if commenced, may end any of
these activities at any time.

The number of shares of our common stock available for sale to the general
public will be reduced to the extent these reserved shares are purchased. Any
reserved shares that are not purchased by these persons will be offered by the
underwriters to the general public on the same basis as the other shares in
this offering.

The representatives of the underwriters have advised us that the
underwriters do not intend to confirm sales to any account over which they
exercise discretionary authority.

At our request, the underwriters have reserved for sale, at the initial
public offering price, up to 378,000 shares or 9%, of our common stock being
sold in this offering for our vendors, employees, family members of employees,
customers, and other third parties. The number of shares of our common stock
available for sale to the general public will be reduced to the extent these
reserved shares are purchased. Any reserved shares that are not purchased by
these persons will be offered by the underwriters to the general public on the
same basis as the other shares in this offering.

74
<PAGE>

SG Cowen Securities Corporation holds 2,071,400 shares of our Series A
preferred stock, 674,619 shares of our Series B preferred stock, and 379,363
shares of our Series C preferred stock through their affiliate Societe Generale
Capital Corporation. Deutsche Bank Securities Inc. served as placement agent in
connection with our Series C preferred stock financing and was paid a cash
placement agent fee. Deutsche Bank Securities Inc. received warrants for the
purchase of 60,651 shares of our common stock.

Pricing of this Offering

Prior to this offering, there has been no public market for our common
stock. Consequently, the initial public offering price for our common stock has
been determined by negotiation among us and the representatives of the
underwriters. Among the primary factors considered in determining the public
offering price were:

. prevailing market conditions;

. our results of operations in recent periods;

. the present stage of our development;

. the market capitalizations and stages of development of other companies
that we and the representatives of the underwriters believe to be
comparable to our business; and

. estimates of our business potential.

75
<PAGE>

LEGAL MATTERS

The validity of the common stock offered by this prospectus will be passed
upon for us by Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., Boston,
Massachusetts. Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. and some of
its members have options to purchase a total of 156,000 shares of our common
stock. Certain issues will be passed upon for the underwriters by Brobeck,
Phleger & Harrison LLP, Washington, D.C.

EXPERTS

Ernst & Young LLP, independent auditors, have audited our financial
statements at December 31, 1998 and 1999, and for each of the three years in
the period ended December 31, 1999, as set forth in their report. We have
included our financial statements in the prospectus and elsewhere in the
registration statement in reliance on Ernst & Young LLP's report, given on
their authority as experts in accounting and auditing.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the Securities and Exchange Commission a registration
statement on Form S-l under the Securities Act of 1933 regarding the common
stock offered by us. This prospectus does not contain all of the information
included in the registration statement and the exhibits filed as part of the
registration statement. Particular items are omitted in accordance with the
rules and regulations of the Securities and Exchange Commission. For further
information with respect to OneSoft and the common stock offered by this
prospectus, reference is made to the registration statement and its exhibits
and schedules. You may review a copy of the registration statement, including
exhibits, at the Securities and Exchange Commission located at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, Seven World Trade Center, 13th
Floor, New York, New York 10048 or Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of all or any part of the
registration statement may be obtained from that office after payment of fees
prescribed by the Securities and Exchange Commission. The Securities and
Exchange Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Securities and Exchange Commission at
http://www.sec.gov. Please call the Securities and Exchange Commission at 1-
800-SEC-0330 for further information on the operation of the public reference
rooms.

Upon receipt of a request by an investor or his or her representative prior
to , 2000 (25 days after the date of this prospectus), we shall transmit
or cause to be transmitted promptly, without charge, a paper copy of the
prospectus.

We intend to provide our stockholders with annual reports containing
financial statements audited by an independent public accounting firm and to
make available to our stockholders quarterly reports containing unaudited
financial data for the first three quarters of each year.

76
<PAGE>

ONESOFT CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Auditors............................................. F-2
Consolidated Balance Sheets................................................ F-3
Consolidated Statements of Operations...................................... F-4
Consolidated Statements of Stockholders' Equity............................ F-5
Consolidated Statements of Cash Flows...................................... F-6
Notes to Financial Statements.............................................. F-7
</TABLE>

F-1
<PAGE>

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

Board of Directors
OneSoft Corporation

We have audited the accompanying consolidated balance sheets of OneSoft
Corporation as of December 31, 1999 and 1998, and the related consolidated
statements of operations, stockholders' deficit and cash flows for each of the
three years ended December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits 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 audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of OneSoft Corporation at
December 31, 1999 and 1998 and the results of its operations and its cash flows
for each of the three years ended December 31, 1999, in conformity with
accounting principles generally accepted in the United States.

/s/ Ernst & Young LLP

February 4, 2000
McLean, VA

F-2
<PAGE>

ONESOFT CORPORATION

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
As of
December 31, Pro Forma
------------------------- December 31,
1998 1999 1999
----------- ------------ ------------
<S> <C> <C> <C>
Assets
Current assets:
Cash ................................ $ 2,555,843 $ 16,361,236 $ 16,361,236
Accounts receivable, net of
allowance........................... 392,193 3,707,506 3,707,506
Other receivables.................... 193,257 736,784 736,784
Other current assets................. 161,317 1,061,794 1,061,794
----------- ------------ ------------
Total current assets............... 3,302,610 21,867,320 21,867,320
Notes receivable--related party....... 441,036 977,944 977,944
Other non-current assets.............. -- 256,389 256,389
Restricted cash....................... -- 1,437,070 1,437,070
Property and equipment, net........... 350,826 4,272,580 4,272,580
----------- ------------ ------------
Total assets....................... $ 4,094,472 $ 28,811,303 $ 28,811,303
=========== ============ ============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable..................... $ 306,515 $ 4,438,130 $ 4,438,130
Accrued payroll...................... 415,527 1,952,203 1,952,203
Other current liabilities............ 34,033 2,467,457 2,467,457
Deferred revenue..................... -- 1,340,887 1,340,887
Capital lease obligations--current... 40,231 126,153 126,153
Notes payable--related party......... -- -- --
----------- ------------ ------------
Total current liabilities.......... 796,306 10,324,830 10,324,830
Capital lease obligations--
noncurrent........................... 33,489 63,163 63,163
Minority interest..................... 20,911 -- --
Redeemable convertible preferred
stock; $0.01 par value,
10,107,640 shares authorized,
3,192,530, 10,107,640 and 0 issued
and outstanding...................... 7,604,034 48,746,754 --
Stockholders' (deficit) equity:
Common stock; $0.001 par value,
20,242,969 shares authorized,
5,977,570, 6,206,850 and 16,314,490
shares issued and outstanding....... 5,978 6,207 16,315
Additional capital................... 1,644 5,451,190 54,187,836
Unearned stock option compensation... (38,567) (2,020,819) (2,020,819)
Accumulated deficit.................. (4,329,323) (33,760,022) (33,760,022)
----------- ------------ ------------
Total stockholders' (deficit)
equity............................ (4,360,268) (30,323,444) 18,423,310
----------- ------------ ------------
Total liabilities and stockholders'
(deficit) equity.................. $ 4,094,472 $ 28,811,303 $ 28,811,303
=========== ============ ============
</TABLE>

F-3
<PAGE>

ONESOFT CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------
1997 1998 1999
---------- ----------- -------------
<S> <C> <C> <C>
Revenues:
Application services.................... $ 170,891 $ 560,890 $ 2,022,504
Professional services................... 1,834,509 994,668 6,928,473
---------- ----------- -------------
Total revenues........................ 2,005,400 1,555,558 8,950,977
Cost of revenues (exclusive of non-cash
compensation expense shown below)....... 1,399,554 1,061,011 7,397,061
---------- ----------- -------------
Gross profit............................. 605,846 494,547 1,553,916
Operating expenses:
Sales and marketing expenses (exclusive
of non-cash compensation expense shown
below)................................. -- 1,190,009 12,184,461
Research and development costs
(exclusive of non-cash
compensation expense shown below)...... 254,456 1,044,358 4,490,407
General and administrative expense
(exclusive of non-cash
compensation expense shown below)...... 955,454 2,011,916 8,432,646
Non-cash stock based compensation
expense................................ 9,622 12,047 3,154,508
---------- ----------- -------------
Total operating expense............... 1,219,532 4,258,330 28,262,022
Loss from operations..................... (613,686) (3,763,783) (26,708,106)
Other income (expenses):
Interest income........................ 16,902 169,128 612,666
Interest expense....................... (17,615) (13,514) (47,938)
Disposal of Sports Warehouse........... -- -- (226,788)
---------- ----------- -------------
(713) 155,614 337,940
Net loss before taxes and minority
interest................................ (614,399) (3,608,169) (26,370,166)
Provision for income taxes............... -- -- --
Minority interest in consolidated
subsidiaries............................ 13,893 17,967 --
---------- ----------- -------------
Net loss................................. $ (600,506) $(3,590,202) $ (26,370,166)
========== =========== =============
Accretion of preferred stock............. -- 18,034 3,060,533
---------- ----------- -------------
Net loss attributable to shareholders.... $ (600,506) $(3,608,236) $ (29,430,699)
========== =========== =============
Net loss per share attributable to
shareholders, basic and diluted......... $ (0.10) $ (0.60) $ (4.85)
========== =========== =============
Weighted average shares used in
calculation
of basic and diluted loss per share..... 5,832,278 5,968,736 6,066,009
Pro forma loss per share attributable to
shareholders, basic and diluted......... $ (1.87)
=============
Weighted average shared used in
calculation
of pro forma loss per share............. 14,122,682
</TABLE>

F-4
<PAGE>

ONESOFT CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
Common Stock Unearned Total
----------------- Stock Additional Accumulated Stockholders'
Shares Amount Compensation Capital Deficit Equity (Deficit)
--------- ------ ------------ ---------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31,
1996................... 3,000,000 $3,000 $ -- $ -- $ 36,134 $ 39,134
Recapitalization....... 3,360,000 3,360 -- (3,360) -- --
Sale of common stock... 340,620 341 -- 199,659 -- 200,000
Issuance of stock
options............... -- -- (60,236) 60,236 -- --
Amortization of
unearned stock option
compensation.......... -- -- 9,622 -- -- 9,622
Repurchase of common
stock................. (750,000) (750) -- (256,535) (156,715) (414,000)
Net loss............... -- -- -- -- (600,506) (600,506)
--------- ------ ----------- ---------- ------------ ------------
Balance, December 31,
1997................... 5,950,620 5,951 (50,614) -- (721,087) (765,750)
Exercise of stock
options............... 26,950 27 -- 1,644 -- 1,671
Amortization of
unearned stock option
compensation.......... -- -- 12,047 -- -- 12,047
Accretion of preferred
stock................. -- -- -- -- (18,034) (18,034)
Net loss............... -- -- -- -- (3,590,202) (3,590,202)
--------- ------ ----------- ---------- ------------ ------------
Balance, December 31,
1998................... 5,977,570 5,978 (38,567) 1,644 (4,329,323) (4,360,268)
Exercise of stock
options............... 204,800 205 -- 68,010 -- 68,215
Issuance of stock
options............... -- -- (2,379,490) 5,136,760 -- 2,757,270
Amortization of
unearned stock
compensation.......... -- -- 397,238 -- -- 397,238
Disposal of Sports
Warehouse............. 24,480 24 -- 244,776 -- 244,800
Issuance of warrants
(Note 6).............. -- -- -- -- -- --
Accretion of preferred
stock................. -- -- -- -- (3,060,533) (3,060,533)
Net loss............... -- -- -- -- (26,370,166) (26,370,166)
--------- ------ ----------- ---------- ------------ ------------
Balance at December 31,
1999................... 6,206,850 $6,207 $(2,020,819) $5,451,190 $(33,760,022) $(30,323,444)
========= ====== =========== ========== ============ ============
</TABLE>

F-5
<PAGE>

ONESOFT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------
1997 1998 1999
---------- ----------- ------------
<S> <C> <C> <C>
Cash flows from operating activities
Net loss............................... $ (600,506) $(3,590,202) $(26,370,166)
Adjustments to reconcile net income
loss to net cash used in operating
activities:
Depreciation........................... 27,395 118,543 503,110
Non-cash compensation.................. 9,622 12,047 3,154,508
Minority interest...................... (13,893) (17,967) --
Disposal of Sports Warehouse........... -- -- 226,788
Changes in operating assets and
liabilities:
Accounts receivable................... 223,233 (309,704) (3,315,313)
Other receivables..................... -- (193,257) (543,527)
Other assets.......................... (11,463) (149,427) (1,156,866)
Accounts payable...................... (28,438) 146,096 4,131,615
Accrued payroll....................... 26,696 332,101 1,536,676
Other current liabilities............. 7,293 13,238 2,433,424
Deferred revenues..................... -- -- 1,340,887
---------- ----------- ------------
Net cash used in operating activities.. (360,061) (3,638,532) (18,058,864)
Cash flows from investing activities
Acquisition of property and equipment.. (48,474) (260,887) (4,126,385)
Minority interest contribution to
Sports Warehouse, Inc. ............... 50,000 -- --
Restricted cash........................ -- -- (1,437,070)
Notes receivable--related party........ (412,750) (46,286) (536,908)
---------- ----------- ------------
(411,224) (307,173) (6,100,363)
Cash flows from financing activities
Repurchase of common stock............. (414,000) -- --
Exercise of stock options.............. -- 1,671 68,215
Sale of common stock................... 200,000 -- --
Sale of redeemable preferred stock, net
of offering costs..................... 1,750,000 5,817,966 38,082,187
Payments of capital lease obligations.. (34,230) (27,455) (185,782)
Repayment of notes payable--related
party................................. (30,000) (24,000) --
Borrowings under notes payable--related
party................................. 24,000 -- --
---------- ----------- ------------
Net cash provided by financing
activities............................ 1,495,770 5,768,182 37,964,620
---------- ----------- ------------
Net increase in cash................... 724,485 1,822,477 13,805,393
Cash at beginning of year.............. 8,881 733,366 2,555,843
---------- ----------- ------------
Cash at end of year.................... $ 733,366 $ 2,555,843 $ 16,361,236
========== =========== ============
</TABLE>

F-6
<PAGE>

ONESOFT CORPORATION

NOTES TO FINANCIAL STATEMENTS

1. Organization and Significant Accounting Policies

Organization

OneSoft, Inc. ("The Company") is a leading provider of Internet commerce
software and services that enable businesses to use the Internet as a commerce
channel with their customers, partners and suppliers. The Company was
incorporated in Virginia in November 1995 and in June 1997 the Company merged
with a shell company resulting in the surviving company being incorporated in
Delaware. The shareholder ownership percentages of the Company were the same
both prior and subsequent to this transaction. From inception, the Company has
conducted development efforts resulting in the creation of "OneCommerce", our
Internet commerce software, and the services used to deploy the application for
our business customers. In 1997 the Company began licensing its software, which
has evolved into offering companies a comprehensive solution to efficiently
build, grow and extend their Internet commerce businesses rapidly and cost-
effectively, thus maximizing their revenue opportunities.

Recapitalization

During the first quarter of 1997, the Company acquired all of the
outstanding common stock of Interflowww, Inc. for 3,360,000 shares of the
Company's founders share. Interflowww, Inc. was majority owned by a shareholder
of the Company, and its limited operations since inception had been funded
entirely by OneSoft.

Principles of Consolidation

All significant intercompany accounts and transactions have been eliminated
in consolidation. The Company held a 70% equity interest in Sports Warehouse,
Inc. which it has consolidated for financial statement purposes. On November
23, the Company acquired the remaining 30% of Sports Warehouse and
subsequently, disposed of the subsidiary (see Note 6).

Revenue Recognition

The Company recognizes revenue in accordance with the American Institute of
Certified Public Accountants' Statement of Position 97-2, "Software Revenue
Recognition" ("SOP 97-2"), as amended by Statement of Position 98-4, "Deferral
of the Effective Date of a Provision of SOP 97-2" ("SOP 98-4"). The Company
derives revenue from application and professional services. Applications
services revenues consist primarily of license fees, software maintenance fees
and fees for managed services that include application outsourcing, technical
support and transaction services. The Company derives revenue from the
provision of professional services that assist clients in the planning, design
and implementation of their Internet commerce business.

Revenues from license fees is recognized when persuasive evidence of an
agreement exists, delivery of the product has occurred, no significant company
obligations with regard to installation or implementation of the software
remain, the fee is fixed or determinable and collection is probable. Revenues
on arrangements with customers that are not the ultimate end user (primarily
resellers) is recognized upon receipt of a reseller report of the sale and the
Company's shipment of the licensed software. Advanced payments are recorded as
deferred revenue until the product is shipped, services are delivered or
obligations are met.

F-7
<PAGE>

ONESOFT CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

1. Organization and Significant Accounting Policies (continued)

Revenue Recognition (continued)

The Company's products do not require significant customization. The Company
provides start up services, professional services and managed services, which
may be sold in conjunction with its software. These services are not essential
to the functioning of the Company's software.

Revenue related to maintenance is recognized on a straight line basis over
the period maintenance is provided.

Professional services revenue, which is substantially time and materials
related, is recognized as the services are provided. Set up services, consist
primarily of professional services to configure hardware and install the
Company's software, and are recognized as the services are provided. The
Company has established vender specific objective evidence ("VSOE") for its
professional fees, including set up services, as these services are regularly
sold on a time and materials basis in the absence of the Company's licenses.

Managed services, consist primarily of application outsourcing, technical
support and transaction services and are recognized ratably over the life of
the managed services agreement. The Company has not established VSOE on its
managed services. Accordingly, when licenses are sold in conjunction with
managed services the license revenue is recognized over the term of the managed
services. The deferred revenues at December 31, 1999 result primarily from
deferred software licenses revenue on contracts that contain managed services.

The Company provides non-specified upgrades of its product only on a when
and if available basis. Historically, the Company has not offered significant
discounts on its software or other services.

In December 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-9, "Modification of SOP 97-2, Software Revenue
Recognition, With Respect to Certain Transactions" ("SOP 98-9"). SOP 98-9
requires use of the "residual method" for recognition of revenues when vendor-
specific objective evidence exists for undelivered elements but does not exist
for delivered elements of a software arrangement. The Company will be required
to comply with the provisions of SOP 98-9 for transactions entered into
beginning January 1, 2000. The Company does not believe that the adoption of
SOP 98-9 will have a material effect on its financial position or results of
operations.

Stock Split

In 1998, the Company declared a 10 to 1 stock split of its common stock. On
March 1, 1999, the Company declared an additional 10 to 1 stock split of its
Series A preferred stock. Accordingly all prior period stock balances have been
restated to reflect the stock splits as if both splits had occurred at the
beginning of the earliest period presented.

Fair Value of Financial Instruments

The Company considers the recorded value of its financial assets and
liabilities, consisting primarily of cash, accounts receivable, notes
receivable, current liabilities and capital lease obligations to approximate
the fair value of the respective assets and liabilities at December 31, 1998
and 1999.

F-8
<PAGE>

ONESOFT CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

1. Organization and Significant Accounting Policies (continued)

Use of Estimates

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

Concentration of Credit Risk

Financial instruments which subject the Company to concentrations of credit
risk primarily consist of cash, cash equivalents and accounts receivable. The
Company maintains its cash and cash equivalents principally in domestic
financial institutions of high credit standing.

The Company's accounts receivable are derived primarily from the sale of
software products and related services. The Company performs ongoing credit
evaluations of its customers and generally does not require collateral.

At December 31, 1998 and 1999, five customers accounted for approximately
88% and 53%, respectively of the total accounts receivable balance. During the
years ended December 31, 1998 and 1999, five customers accounted for 71% and
57%, respectively, of the Company's revenues.

Income Taxes

The Company accounts for taxes under Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes (SFAS 109). Under SFAS 109,
deferred tax liabilities and assets are determined based on the differences
between the financial statement and tax basis of assets and liabilities using
enacted rates expected to be in effect during the year in which the
differences reverse.

Property and Equipment

Property and equipment are stated at cost and depreciated using the
straight-line method over the estimated useful life of the asset, ranging from
three to five years. Leasehold improvements are depreciated over the lesser of
the useful life of the addition or the lease term.

Product Development

The Company expenses research and development costs as they are incurred.
Product development costs for the years ended December 31, 1997, 1998 and 1999
$254,456, $1,044,358 and $4,490,407, respectively.

Reclassification

Certain prior year balances have been reclassified to conform with the 1999
presentation.

Restricted Cash

The Company utilizes CD's for security deposits on rental properties.

F-9
<PAGE>

ONESOFT CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

2. Accounts Receivable & Other Receivables

Accounts receivable consist of the following:

<TABLE>
<CAPTION>
December 31,
--------------------
1998 1999
-------- ----------
<S> <C> <C>
Billed receivables..................................... $369,447 $3,803,881
Unbilled receivables................................... 103,280 800,100
Allowance for possible losses.......................... (80,534) (896,475)
-------- ----------
Total.................................................. $392,193 $3,707,506
======== ==========
</TABLE>

Other receivables consist of amounts reimbursable to the Company primarily
as the result of equipment leases.

Valuation Accounts

A summary of the Company's allowance for bad debts is as follows:

<TABLE>
<S> <C>
Balance at December 31, 1997 $ 33,981
Additions charged to expense 53,250
Accounts receivable written-off (6,697)
----------
Balance at December 31, 1998 $ 80,534
Additions charged to expense 1,119,727
Accounts receivable written off (303,786)
----------
Balance at December 31, 1999 $ 896,475
==========
</TABLE>

3.Notes Receivable--Related Party

On December 1, 1997, the Company loaned an officer of the Company $412,333
to purchase 750,000 shares of the Company's common stock from a third party.
The note is due on December 1, 2002, accrues interest at 6.02% per annum, and
is secured by the 750,000 shares of OneSoft common stock and other assets. At
December 31, 1998, the outstanding loan is $441,036 consisting of principal of
$412,333 and accrued interest of $28,703. At December 31, 1999, the outstanding
loan is $467,860 consisting of principal of $412,333 and accrued interest of
$55,527.

On August 13, 1999 the Company loaned an officer of the Company $500,000.
The loan is due on August 13, 2002, accrues interest at 5.43% per annum, and is
secured by shares of the Company's common stock. At December 31, 1999 the
outstanding loan is $510,084 consisting of principal of $500,000 and accrued
interest of $10,084.

F-10
<PAGE>

ONESOFT CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

4.Property and Equipment

Property and equipment consist of the following:

<TABLE>
<CAPTION>
December 31,
--------------------
1998 1999
-------- ----------
<S> <C> <C>
Equipment............................................. $216,075 $1,888,541
Furniture............................................. 101,304 348,107
Leasehold improvements................................ 36,502 1,247,703
Software.............................................. 153,573 1,447,967
-------- ----------
507,454 4,932,318
Less accumulated depreciation and amortization........ (156,628) (659,738)
-------- ----------
Total................................................. 350,826 4,272,580
======== ==========
</TABLE>

5.Notes Payable

The Company paid interest of approximately $7,615, $13,500 and $47,983
related to all of its notes payable and capital leases for the years ended
December 31, 1997, 1998 and 1999, respectively.

6.Stockholders' Equity and Redeemable Convertible Preferred Stock

Common Stock

On April 13, 1997, the Company sold 340,620 shares of common stock for
$.587 per share.

On December 1, 1997, the Company purchased 750,000 shares of common stock
from a former officer of the Company for $414,000.

In conjunction with the announcement of the Company's initial public
offering the minority owner of Sports Warehouse exercised a right to exchange
their investment in Sports Warehouse for 24,480 shares of OneSoft common
stock. Subsequent to the transaction the Company disposed of Sports Warehouse
resulting in a loss of $226,788.

Redeemable Convertible Preferred Stock

On November 14, 1997, the Company sold 766,770 shares of Series A Mandatory
Redeemable Convertible Preferred Stock for proceeds of $1,750,000.

On March 13, 1998, the Company sold 147,220 shares of Series A Mandatory
Redeemable Convertible Preferred Stock for proceeds of $336,000.

In June 1998, the Company sold 2,278,540 shares of Series A Mandatory
Redeemable Convertible Preferred Stock for proceeds of $5,500,000.

On March 1, 1999 the Company sold 2,023,857 shares of Series B Mandatory
Redeemable Convertible Preferred Stock for proceeds of $7.5 million. In
conjunction with this sale, the Company declared a 10 to 1 stock split for
series A preferred stock. All prior period stock balances have been restated
to reflect the stock split as if it had occurred at the beginning of the
earliest period.

F-11
<PAGE>

ONESOFT CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

6.Stockholders Equity and Redeemable Convertible Preferred Stock (continued)

On August 13, 1999 the Company sold 4,464,771 shares of Series C Mandatory
Redeemable Convertible Preferred Stock for net proceeds of approximately $29.4
million.

On October 5, 1999, the Company sold 426,482 shares of Series C Redeemable
Convertible Preferred Stock for net proceeds of approximately $2.8 million. In
conjunction with this transaction the Company issued an investor a warrant to
purchase 60,651 shares of common stock with an exercise price of $6.59 for
assistance in selling the preferred stock.

All classes of the Company's Mandatory Redeemable Convertible Preferred
Stock (collectively referred to as the "Preferred Stock") convert into an
equivalent number of common shares at the holders discretion at any time after
issuance. The Preferred Stock is entitled to dividends, payable if and when
declared by the board of directors. The Preferred Stock has voting rights on an
as if converted basis. The Preferred Stock will convert into common stock if
the Company is sold or holds a public offering of equity securities, as defined
in the agreement. The Preferred Stock has certain anti-dilutive and future
registration provisions as defined in the agreement. The Preferred Shares have
liquidation preferences over common shares. Accretion of the preferred shares
for the years ended December 31, 1998 and 1999 was $18,034 and $3,060,533
respectively.

Stock Options

Statement of Financial Accounting Standard (SFAS) No. 123, "Accounting for
Stock-Based Compensation," requires a fair value based methodology of
accounting for all stock option plans. The Company has elected to follow APB 25
and related interpretations in accounting for its employee stock options and
has provided pro forma fair value disclosure under SFAS No. 123. Under APB 25,
if the exercise price of the Company's stock options equal or exceed the market
price of the underlying stock on the date of grant, no compensation expense is
recognized.

During 1997, the Company adopted the 1997 Stock Option Plan (the "Plan").
Under the Plan, 3,000,000 shares of common stock are reserved for issuance.
During 1999, the Company's Board of Directors increased the number of shares of
common stock that can be issued under the Plan to 5,000,000. Options under the
Plan may be of two types: non qualified stock options and incentive stock
options. All employee options expire after 3 months from the employee
termination date. Options vest over periods not to exceed 5 years and the
contractual term of the options is 10 years from the date of grant. At December
31, 1998 and 1999 the Company had 1,324,560 and 1,082,767 options available for
grant under the plan.

The Company recorded expense of $9,622, $12,047 and $397,238 during the
years ended December 31, 1997, 1998 and 1999 as a result of the issuance of
stock options to employees with exercise prices less than the fair market value
of the Company's common stock at the date of issuance.

During 1999 the Company recorded an additional $2,757,270 of expense related
to the fair value of the options issued to non-employees. Of this amount
$145,270 related to services performed during 1999 by non-employees and
$2,612,000 of the balance resulted from the issuance to a consultant of an
option for 250,000 shares of common stock with and exercise price of $0.552 per
share. These options vest upon this individual meeting certain sales goals,

F-12
<PAGE>

ONESOFT CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

6. Stockholders Equity and Redeemable Covertible Preferred Stock (continued)

prior to December of 2000, pursuant to the option agreement. The Company has
accounted for these options under SOP 96-18 and accordingly recorded the
variable accounting for the options through December 31, 1999.

Pro forma information regarding net income is required by SFAS No. 123, and
has been determined as if the Company had accounted for its stock options under
the fair value method of that statement. The fair value for these options was
estimated at the date of grant using the minimum valuation method and the
following assumptions: risk free interest rate 6%; a dividend yield of 0%; and
weighed average expected life of 4 years. For purposes of pro forma disclosure,
the estimated fair value of the options is amortized to expense over the
options' vesting period.

The weighted average fair values of the options granted in 1997 with a stock
price equal to the exercise price and with a stock option price greater than
the exercise price is $0.14 and $0.44 per share, respectively. The weighted
average fair values of the options granted in 1998 with a stock price equal to
the exercise price is $0.14 per share. The weighted average fair values of the
options granted in 1999 with a stock price equal to the exercise price and with
a stock price greater than the exercise price are $1.88 and $2.05 per share,
respectively.

<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------
1997 1998 1999
---------- ------------ -------------
<S> <C> <C> <C>
Pro forma net loss................... $(609,822) $(3,653,083) $(30,612,017)
Pro forma basic and diluted net loss
per share(1)........................ $(0.10) $(0.61) $(2.17)
</TABLE>

- --------

(1) The pro forma net loss reflects the pro forma weighted outstanding shares
for the year ended December 31, 1999. See note 11.

The Company's stock option activity and related information is as follows:

<TABLE>
<CAPTION>
Weighted-
Average
Number of Exercise
Options Price
--------- ---------
<S> <C> <C>
Outstanding at January 1, 1997......................... -- $ --
Granted............................................... 1,091,040 0.53
Exercised............................................. -- --
Forfeited............................................. -- --
--------- -----
Outstanding at December 31, 1997....................... 1,091,040 0.53
Granted............................................... 853,150 0.53
Exercised............................................. (26,950) 0.06
Canceled/Forfeited.................................... (268,750) 0.49
--------- -----
Outstanding at December 31, 1998....................... 1,648,490 0.55
Granted............................................... 2,869,710 4.15
Exercised............................................. (204,800) 0.33
Canceled/Forfeited.................................... (627,917) 1.18
--------- -----
Outstanding at December 31, 1999....................... 3,685,483 $3.26
========= =====
Exercisable at December 31, 1999...................... 944,548 $0.49
========= =====
</TABLE>

F-13
<PAGE>

ONESOFT CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

6. Stockholders Equity and Redeemable Covertible Preferred Stock (continued)

The following table summarizes information about stock options outstanding
at December 31, 1999:

<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
--------------------- ---------------------
Weighted- Weighted-
Average Average
Range of Number Exercise Number Exercise
Exercise Price Outstanding Price Exercisable Price
-------------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Less than $1.00.................. 2,254,983 $0.49 944,548 $0.49
$1.00 to $4.00................... 337,500 3.97 -- --
$4.01 to $8.00................... 411,000 5.59 -- --
$8.01 to $12.00.................. 682,000 10.39 -- --
--------- -------
3,685,483 944,548
========= =======
</TABLE>

The average remaining contractual lives for options outstanding at December
31, 1998 and December 31, 1999 was 9 years and 8 years respectively.

7. Income Taxes

At December 31, 1998, the Company had a net operating loss carryforwards for
tax purposes of approximately $24.7 million, which principally expires in 2018.
The timing and manner in which the operating loss carryforward may be utilized
in any year by the Company will be limited by the Company's ability to generate
future earnings and certain other provisions of the US tax code.

Net deferred tax assets at December 31, consist of:

<TABLE>
<CAPTION>
1998 1999
----------- -----------
<S> <C> <C>
Net operating loss carryforward.................... $ 1,507,510 $ 9,744,307
Allowance for bad debts............................ 32,214 354,108
Unbilled receivable................................ -- 529,650
Deferred revenue................................... -- 143,452
Other.............................................. 25,558 143,452
Valuation allowance................................ (1,565,282) (10,914,969)
----------- -----------
Net deferred tax asset............................. $ -- $ --
=========== ===========
</TABLE>

As the Company does not have a history of consistent earnings and no
assurance can be made of future earnings, a valuation allowance in the amount
of the deferred tax asset has been recorded.

F-14
<PAGE>

ONESOFT CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

7. Income Taxes (continued)

A summary of items which cause the recorded income taxes to differ from the
statutory Federal income tax rate is as follows:

<TABLE>
<CAPTION>
Year ended December 31,
-----------------------------------
1997 1998 1999
--------- ----------- -----------
<S> <C> <C> <C>
Tax expense (benefit) at statutory
Federal rate........................ $(208,896) $(1,226,777) $(8,968,916)
Effect of:
State income tax, net.............. (36,864) (216,490) (1,582,750)
Stock issuance costs............... -- 55,164 --
Stock based........................ -- -- 1,102,579
Other.............................. 18,827 49,755 492,587
Increase in valuation allowance.... 226,933 1,338,348 8,956,500
--------- ----------- -----------
Income tax expense (benefit)......... $ -- $ -- --
========= =========== ===========
</TABLE>

The Company paid no income taxes during the years ended December 31, 1997,
1998 and 1999, respectively.

8. Leases

The Company currently leases office space and equipment under non-cancelable
operating leases. The future minimum lease payments under non-cancelable
operating leases at December 31, 1999 are as follow:

<TABLE>
<CAPTION>
Fiscal Year
-----------
<S> <C>
2000............................................................. $ 1,789,640
2001............................................................. 1,988,588
2002............................................................. 2,032,990
2003............................................................. 2,077,812
2004............................................................. 2,125,153
Thereafter....................................................... 3,459,545
-----------
Total............................................................ $13,473,728
===========
</TABLE>

Rent expense for the years ended December 31, 1997, 1998 and 1999 was
approximately $67,000, $122,000 and $154,000, respectively.

F-15
<PAGE>

ONESOFT CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

8. Leases (continued)

The Company currently leases equipment and furniture under non-cancelable
capital leases. The future minimum lease payments under non-cancelable capital
leases at December 31, 1999 are as follow:

<TABLE>
<CAPTION>
Fiscal Year
-----------
<S> <C>
2000............................................................... $149,497
2001............................................................... 66,624
2002............................................................... --
2003............................................................... --
2004............................................................... --
Thereafter......................................................... --
--------
Total minimum lease payments....................................... 216,121
Less amount representing interest.................................. 26,805
--------
Present value of minimum lease payments............................ 189,316
Less current portion of capital lease obligation................... 126,153
--------
Non-current portion of capital lease obligation.................... $ 63,163
========
</TABLE>

For the years ended December 31, 1997, 1998, and 1999, the Company had
capital assets of $0, $69,500, and $341,411.

9. 401(k) Plan

The Company has a 401(k) Plan for the benefit of all employees who meet
certain eligibility requirements. The plan documents provide for the Company to
make defined contributions as well as matching and other discretionary
contributions, as determined by the Board of Directors. The Company contributed
$4,777, $0 and $0 to the plan for the years ended December 31, 1997, 1998,
1999, respectively.

10.Earnings Per Share

The following table sets forth the computation of historical basic and
diluted earnings per share:

<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------
1996 1997 1998
---------- ----------- ------------
<S> <C> <C> <C>
Numerator:
Net income (loss)..................... $ (600,506) $(3,590,202) $(26,370,166)
Accretion on preferred shares......... -- (18,034) (3,060,533)
---------- ----------- ------------
Net income available to shareholders.. $ (600,506) $(3,608,236) $(29,430,699)
========== =========== ============
Denominator:
Weighted average common shares........ 5,832,278 5,968,736 6,066,089
Effect of dilutive securities:
Warrants............................ -- -- --
Stock option........................ -- -- --
Preferred stock..................... -- -- --
---------- ----------- ------------
Weighted average common shares basic
and diluted.......................... 5,832,278 5,968,736 6,066,009
========== =========== ============
</TABLE>

The effect of the exercise of options or preferred stock would be dilutive
for years ended December 31, 1997, 1998 and 1999.

F-16
<PAGE>

ONESOFT CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

11.Pro Forma Balance Sheet and Earnings Per Share (unaudited)

The pro forma balance sheet reflects the conversion of all classes of
preferred stock as of December 31, 1999.

The pro forma earning per share reflects the conversion of the all classes
of preferred stock as of the beginning of the respective periods presented.

The following table sets forth the components of pro forma basic and diluted
earnings per share as of December 31, 1999:

<TABLE>
<S> <C>
Numerator:
Net income
(loss)... $(26,370,166)
Denominator:
Weighted
average
common
shares... 6,066,089
Conversion
of
preferred
shares... 8,056,593
------------
Pro forma
weighted
average
common
shares
basic and
diluted.. 14,122,682
============
</TABLE>

12. Commitments & Contingencies

The Company has entered into employment agreements with its Chief Executive
Officer ("CEO"), Chief Financial Officer ("CFO") and the Senior Vice President
of Services ("VP of Services") which contain non-disclosure, assignment of
inventions, non-competition and non-solicitation restrictions and covenants.
These agreements provide an initial annual base salaries of $240,000, $175,000
and $150,000 for the CEO, CFO and VP of Services respectively, subject to
increase by the board of directors, and allow for additional annual bonus
compensation based on the meeting of certain mutually agreed upon business
objectives and as defined in the agreements. The agreements automatically renew
annually unless either the Company or these executives, provide written notice
of intention not to renew an agreement. In addition these agreements provide
for certain severance benefits to these executives as defined in the
agreements.

The Company also is involved in other legal proceedings in the ordinary
course of its business. In the opinion of management, these proceedings involve
amounts that would not have a material effect on the financial position or
results of operations of the Company if such proceedings were disposed of
unfavorably.

The Company has entered into a marketing agreement with another entity. The
total amount the Company has committed to pay approximates $1,000,000 over the
next two years.

F-17
<PAGE>

You should rely only on the information contained in this prospectus. We have
not authorized anyone to provide information different from that contained in
this prospectus. We are offering to sell, and seeking offers to buy, shares of
common stock only in jurisdictions where offers and sales are permitted. The
information contained in this prospectus is accurate only as of the date of
this prospectus, regardless of the time of delivery of this prospectus or of
any sale of our common stock.

TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary....................................................... 1
Risk Factors............................................................. 4
Special Note Regarding Forward-Looking Statements and Industry Data...... 15
Use of Proceeds.......................................................... 16
Dividend Policy.......................................................... 16
Capitalization........................................................... 17
Dilution................................................................. 18
Selected Consolidated Financial Data..................................... 19
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 21
Business................................................................. 30
Management............................................................... 51
Certain Transactions..................................................... 61
Principal Stockholders................................................... 64
Description of Capital Stock............................................. 67
Shares Eligible for Future Sale.......................................... 70
Underwriting............................................................. 73
Legal Matters............................................................ 76
Experts.................................................................. 76
Where You Can Find Additional Information................................ 76
Index to Consolidated Financial Statements............................... F-1
</TABLE>

Until , 2000 (25 days after the date of this prospectus), all dealers that
buy, sell or trade in these securities, whether or not participating in this
offering, may be required to deliver a prospectus. Dealers are also obligated
to deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
- --------------------------------------------------------------------------------
[LOGO] OneSoft Corporation

Common Stock

Deutsche Banc Alex. Brown

SG Cowen

Friedman Billings Ramsey

Wit SoundView

Prospectus

, 2000
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

The following table sets forth an itemization of all estimated expenses, all
of which we will pay, in connection with the issuance and distribution of the
securities being registered:

<TABLE>
<CAPTION>
Underwriter Amount
----------- ----------
<S> <C>
SEC Registration Fee............................................. $ 18,480
Nasdaq National Market Listing Fee............................... 1,000
NASD Fee......................................................... 7,500
Printing and engraving expenses.................................. 400,000
Legal fees and expenses.......................................... 450,000
Accounting fees and expenses..................................... 350,000
Transfer agent and registrar fees................................ 4,600
Miscellaneous.................................................... 68,420
----------
$1,300,000
==========
</TABLE>

Item 14. Indemnification of Directors and Officers.

Our amended and restated certificate of incorporation (the "Charter")
provides that we shall indemnify and advance expenses to the fullest extent
permitted by Section 145 of the Delaware General Corporation Law, as amended
from time to time, to each person who is or was one of our directors or
officers and the heirs, executors and administrators of such a person. Any
expenses, including attorneys' fees, incurred by a person who is or was one of
our directors or officers, and the heirs, executors and administrators of such
a person in connection with defending any such proceeding in advance of its
final disposition shall be paid by us; provided, however, that if Delaware law
requires an advancement of expenses incurred by an indemnitee in his capacity
as a director or officer, and not in any other capacity in which service was or
is rendered by such indemnitee, including, without limitation, service to an
employee benefit plan, shall be made only upon delivery to us of an undertaking
by or on behalf of such indemnitee, to repay all amounts so advanced, if it
shall ultimately be determined that such indemnitee is not entitled to be
indemnified for such expenses. Notwithstanding the aforementioned
indemnification provisions, we may, at the discretion of our chief executive
officer, enter into indemnification agreements with directors or officers.

Section 145 of Delaware law provides that a corporation has the power to
indemnify any director or officer, or former director or officer, 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, other than an action by or in the right of the corporation,
by reason of the fact that such director or officer or former director or
officer is or was a director, officer, employee or agent of the corporation,
against expenses, including attorneys' fees, judgments, fines and amounts paid
in settlement actually and reasonably incurred by them in connection with such
action, suit or proceeding, if such person shall have acted in good faith and
in a manner reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or proceeding,
provided that such person had no reasonable cause to believe his or her conduct
was unlawful, except that, if such action shall be in the right of the
corporation, no such indemnification shall be provided as to any claim, issue
or matter as to which such person shall have been judged to have been liable to
the corporation unless and to the extent that the Court of Chancery of the
State of Delaware, or any court in which such suit or action was brought, shall
determine

II-1
<PAGE>

upon application that, in view of all of the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses as such
court shall deem proper.

The amended and restated certificate of incorporation contains a provision
to limit the personal liability of our directors to the fullest extent
permitted by Section 102(b)(7) of Delaware law, as amended. In addition, the
restated bylaws provide that we shall 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, other than an action by us or in our right, by reason of the
fact that he is or was one of our directors, officers, employees or agents, or
is or was serving at our request as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses, including attorneys' fees, judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to our best interests, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful.

As permitted by Delaware law, the amended and restated certificate of
incorporation, which will be filed prior to the completion of the offering,
provides that, subject to certain limited exceptions, none of our directors
shall be liable to us or our stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (1) for any breach of the
director's duty of loyalty to us or our stockholders, (2) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (3) for the unlawful payment of dividends on or redemption or
repurchase of our capital stock or (4) for any transaction from which the
director derived an improper personal benefit. The effect of this provision is
to limit our ability and our stockholders' ability through stockholder
derivative suits on our behalf to recover monetary damages against a director
for the breach of certain fiduciary duties as a director, including breaches
resulting from grossly negligent conduct. In addition, the amended and restated
certificate of incorporation and Restated bylaws provide that we shall, to the
fullest extent permitted by Delaware law, indemnify all of our directors and
officers and that we may, to the extent permitted by Delaware law, indemnify
our employees and agents.

We have agreed to indemnify the underwriters against certain liabilities,
including civil liabilities under the Securities Act.

Item 15. Recent Sales of Unregistered Securities.

Set forth in chronological order is information regarding shares of common
stock issued, and options and warrants granted, by the registrant within the
past three years. Also included is the consideration, if any, received by the
registrant for such shares and options and information relating to the section
of the Securities Act or rule of the Securities and Exchange Commission under
which exemption from registration was claimed.

Certain Grants and Exercises of Stock Options

The issuance of the securities described below were exempt from registration
under the Securities Act in reliance on Rule 701 promulgated under Section 3(b)
of the Securities Act, as transactions not involving a public offering or
transactions pursuant to compensatory benefit plans and contracts relating to
compensation as provided under Rule 701.

In March 1997, the registrant's Amended and Restated 1997 Employee, Director
and Consultant Stock Option Plan was approved and adopted by the board of
directors and stockholders of the registrant. In August 1999 and February 2000,
the board of directors and

II-2
<PAGE>

stockholders of the registrant approved and adopted amendments to the plan that
increased the total number of shares of common stock for which options may be
granted under the plan. Since March 1997, options to purchase a total of
4,813,900 shares of common stock have been granted, 896,667 shares of which
have been cancelled. As of December 31, 1999, 231,750 of these options had been
exercised.

In March 1997, we issued an incentive stock option to purchase 81,000 shares
of our common stock at an exercise price of $0.062 per share to one consultant
in exchange for services rendered to OneSoft.

In February 1999, we issued a non-qualified stock option to purchase 75,000
shares of our common stock at an exercise price of $0.552 per share to three
consultants in exchange for services rendered to OneSoft.

In April 1999, we issued 100,000 shares of our common stock to one board
member at $0.552 per share.

Issuances of Capital Stock

The sale and issuance of the securities described below were deemed to be
exempt from registration under the Securities Act pursuant to Section 4(2)
and/or Regulation D promulgated thereunder.

(1) In March 1997, we issued 840,000 shares of our common stock to three of
our employees, including one of our senior vice presidents, in connection with
the merger of InterFlowww Enterprises, Inc. into Global Exchange, Inc., our
predecessor in interest.

(2) In April 1997, we issued and sold 340,620 shares of our common stock in
a private placement to one investor for $200,000.

(3) In November 1997, March 1998, and June 1998 the registrant issued and
sold a total of 3,192,530 shares of Series A convertible preferred stock in a
private placement to two investors at a price per share of $2.283 and
$2.4138264 for gross consideration of approximately $7.6 million.

(4) In February 1999, the registrant issued and sold a total of 2,023,857
shares of Series B convertible preferred stock in a private placement to two
investors at a price per share of $3.705793 for gross consideration of
approximately $7.5 million.

(5) In August 1999 and October 1999 the registrant issued and sold a total
of 4,891,253 shares of Series C convertible preferred stock in a private
placement to twenty investors at a price per share of $6.59 for gross
consideration of approximately $32.2 million. We granted the exclusive agent
for this private placement, Deutsche Bank Securities Inc., a five-year, non-
cancelable and non-transferable warrant to purchase 60,651 shares of our common
stock at the equivalent of the offering price.

(6) In November 1999, we issued 24,480 shares of our common stock to one of
our investors upon conversion of its 30% interest in Sports Warehouse, Inc.

II-3
<PAGE>

Item 16. Exhibits and Financial Statement Schedules.

(a) Exhibits

<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<C> <S>
*1.1 Form of Underwriting Agreement

**3.1 Form of Amended and Restated Certificate of Incorporation of OneSoft
Corporation

**3.2 Form of Amended and Restated Bylaws of OneSoft Corporation

*4.1 Form of Common Stock Certificate of OneSoft Corporation

4.2 See Exhibits 3.1 and 3.2 for provisions of the Amended and Restated
Certificate of Incorporation and Amended and Restated Bylaws of the
Registrant defining the rights of holders of common stock of the
Registrant

**4.3 Warrant to Purchase 60,651 shares of common stock of OneSoft
Corporation issued to Deutsche Bank Securities Inc.

5.1 Form of Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
with respect to the legality of securities being registered

10.1 Second Amended and Restated 1997 Employee, Director and Consultant
Stock Option Plan

**10.2 Employment Agreement between James W. MacIntyre, IV and the Registrant

10.3 Amended and Restated Employment Agreement between Frederick C.
Hawkins, III and the Registrant

**10.4 Employment Agreement between Jeffrey M. MacIntyre and the Registrant

**10.5 Employment Letter Agreement from the Registrant to Randall Pevin

**10.6 Employment Letter Agreement from the Registrant to Thomas E. Young

**10.7 Third Amended and Restated Investor Rights Agreement dated as of
August 13, 1999 by and among the Registrant, the holders of Series A
Preferred Stock, the holders of Series B Preferred Stock, the holders
of Series C Preferred Stock and the holders of Common Stock.

**10.8 Form of Incentive Stock Option Agreement of the Registrant

**10.9 Form of Non-Qualified Stock Option Agreement of the Registrant

**10.10 Separation Agreement by and between the Registrant and Richard
Borenstein

**10.11 Settlement Agreement by and between the Registrant and William Langdon

**10.12 Agreement of Lease between Annandale Financial Center Joint Venture
and the Registrant for 4,595 square feet, Annadale, Virginia

**10.13 Agreement of Lease between Annandale Financial Center Joint Venture
and the Registrant for 1,860 square feet, Annadale, Virginia

**10.14 Agreement of Lease between Annandale Financial Center Joint Venture
and the Registrant for 3,720 square feet, Annadale, Virginia

**10.15 Agreement of Lease between Annandale Financial Center Joint Venture
and the Registrant for 1,476 square feet, Annadale, Virginia

**10.16 Sublease by and between Dover Corporation and the Registrant for a
portion of the 34th floor at 280 Park Avenue, New York, New York

**10.17 Sublease by and between the Registrant and NexTel Communications, Inc.
for 70,104 square feet in McLean, Virginia
</TABLE>

II-4
<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<C> <S>
**10.18 Regus Business Centre Service Agreement by and between the Registrant
and Regus Business Centre for one office in Santa Monica, California

**10.19 Loan and Pledge Agreement between the Registrant and James W.
MacIntyre, IV

10.20 Loan and Pledge Agreement between the Registrant and Frederick C.
Hawkins III

**+10.21 Managed Application and Services Agreement by and between the
Registrant and SmartCruiser, LLC

**+10.22 Non-Binding Letter of Intent by and between Microsoft Corporation and
the Registrant

**+10.23 Master Alliance and License Agreement by and between USWeb/CKS and
the Registrant

**+10.24 Managed Application and Services Agreement between The Mark Group,
Inc. and the Registrant

**+10.25 Letter of Engagement from the Registrant to Maytag Corporation

**+10.26 Services Agreement by and between Phillips Publishing, Inc. and the
Registrant

**+10.27 JumpStart Training Program Agreement by and between Compaq Computer
Corporation and the Registrant

**+10.28 Services Agreement by and between the Registrant and Alloy Designs,
Inc.

**+10.29 Managed Application and Services Agreement by and between Skyway
Communications and the Registrant

**+10.30 License Agreement by and between Espanol.com, Inc. and the Registrant

**+10.31 Letter of Engagement from the Registrant to The Invus Group

10.32 2000 Employee Stock Purchase Plan

23.1 Consent of Ernst & Young LLP, Independent Auditors

23.2 Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (see
Exhibit 5.1)

**24.1 Powers of Attorney (See Signature Page)

**27.1 Financial Data Schedule
</TABLE>
- --------
* To be filed by amendment.
** Previously filed with the SEC.
+ Confidential treatment requested from the SEC.

(b) Financial Statement Schedules

Financial Statements Schedules are omitted because the information is
included in the Financial Statements or notes thereto.

II-5
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has caused this Amendment No.2 to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
McLean, Commonwealth of Virginia, on the 25th day of February, 2000.

OneSoft Corporation

/s/ James W. MacIntyre, IV
By: _________________________________
James W. MacIntyre, IV
Chairman of the Board of
Directors,
President and Chief Executive
Officer

POWER OF ATTORNEY

We the undersigned officers and directors of OneSoft Corporation hereby
severally constitute and appoint James W. MacIntyre, IV and Frederick C.
Hawkins, III, and each of them singly (with full power to each of them to act
alone), our true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution in each of them for him and in his name, place
and stead, and in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement (or any
other Registration Statement for the same offering that is to be effective upon
filing pursuant to Rule 462(b) under the Securities Act of 1933), and to file
the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done in
and about the premises, as full to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorneys-in-
fact and agents or any of them or their or his substitute or substitutes may
lawfully do or cause to be done by virtue hereof.

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

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----

<S> <C> <C>
/s/ James W. MacIntyre, IV Chairman, Chief Executive January 7, 2000
______________________________________ Officer, President and
James W. MacIntyre, IV Treasurer (principal
executive officer)

/s/ Frederick C. Hawkins, III Chief Financial Officer January 7, 2000
______________________________________ (principal financial and
Frederick C. Hawkins, III accounting officer)

/s/ Jeffrey M. Macintyre Director January 7, 2000
______________________________________
Jeffrey M. MacIntyre
</TABLE>

II-6
<PAGE>

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----

<S> <C> <C>
/s/ Henry D. Barratt, Jr. Director January 7, 2000
______________________________________
Henry D. Barratt, Jr.

/s/ Justin Hall-Tipping Director January 7, 2000
______________________________________
Justin Hall-Tipping

/s/ A. Douglas Peabody Director January 7, 2000
______________________________________
A. Douglas Peabody

/s/ Stephen P. Rader Director January 7, 2000
______________________________________
Stephen P. Rader

/s/ Thomas R. Hitchner Director January 7, 2000
______________________________________
Thomas R. Hitchner

/s/ Carlos E. Cisneros Director January 7, 2000
______________________________________
Carlos E. Cisneros
</TABLE>

II-7

<PAGE>

[LETTERHEAD OF MINTZ, LEVIN, COHN, FERRIS, GLOVSKY AND POPEO, P.C.]

Exhibit 5.1

February 25, 2000

OneSoft Corporation
1105 Farm Credit Drive
McLean, Virginia

Ladies and Gentlemen:

We have acted as counsel to OneSoft Corporation, a Delaware corporation
(the "Company"), in connection with the preparation and filing with the
Securities and Exchange Commission (the "Commission") of a Registration
Statement on Form S-1, Registration No. 333-94233, as amended (the "Registration
Statement"), pursuant to which the Company is registering under the Securities
Act of 1933 (the "Securities Act"), as amended, an aggregate of $50,000,000
worth of shares (the "Shares") of its common stock, $.01 par value per share
(the "Common Stock"). The Shares are to be sold to a group of underwriters (the
"Underwriters") who are parties to an Underwriting Agreement with the Company,
the form of which Agreement will be filed as an exhibit to the Registration
Statement. All of shares being registered pursuant to the Registration Statement
are being registered for sale to the Underwriters. This opinion is being
rendered in connection with the filing of the Registration Statement. All
capitalized terms used herein and not otherwise defined shall have the
respective meanings given to them in the Registration Statement.

In connection with this opinion, we have examined the Company's Amended and
Restated Certificate of Incorporation and Amended and Restated Bylaws; the
minutes of all pertinent meetings of stockholders and directors of the Company
relating to the Registration Statement and the transactions contemplated
thereby; such other records of the corporate proceedings of the Company and
certificates of the Company's officers as we deemed relevant; and the
Registration Statement and the exhibits thereto filed with the Commission.

In our examination, we have assumed the genuineness of all signatures, the
legal capacity of natural persons, the authenticity of all documents submitted
to us as originals, the conformity to original documents of all documents
submitted to us as certified or photostatic copies and the authenticity of the
originals of such copies.

<PAGE>

MINTZ, LEVIN, COHN, FERRIS, GLOVSKY AND POPEO, P.C.

February 25, 2000
Page 2

OneSoft Corporation
February 25, 2000
Page 2

Based upon the foregoing, and subject to the limitations set forth below,
we are of the opinion that the Shares, when issued by the Company and delivered
by the Company and the against payment therefor as contemplated by the
Underwriting Agreement, will be duly and validly issued, fully paid and
non-assessable shares of the Common Stock.

Our opinion is limited to the General Corporation Law of the State of
Delaware, including the applicable provisions of the Constitution of the State
of Delaware and reported judicial decisions interpreting those laws, and we
express no opinion with respect to the laws of any other jurisdiction. No
opinion is expressed herein with respect to the qualification of the Shares
under the securities or blue sky laws of any state or any foreign jurisdiction.

We understand that you wish to file this opinion as an exhibit to the
Registration Statement, and we hereby consent thereto. We hereby further consent
to the reference to us under the caption "Legal Matters" in the prospectus
included in the Registration Statement and in any abbreviated registration
statement pursuant to Rule 462(b) under the Securities Act.

Very truly yours,

Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.

<PAGE>

Exhibit 10.1

ONESOFT CORPORATION

SECOND AMENDED AND RESTATED
1997 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK OPTION PLAN

1. DEFINITIONS.
-----------

Unless otherwise specified or unless the context otherwise requires, the
following terms, as used in this OneSoft Corporation Second Amended and
Restated 1997 Employee, Director and Consultant Stock Option Plan, have the
following meanings:

Administrator means the Board of Directors, unless it has delegated
-------------
power to act on its behalf to the Committee, in which case the
Administrator means the Committee.

Affiliate means a corporation which, for purposes of Section 424 of
---------
the Code, is a parent or subsidiary of the Company, direct or
indirect.

Annual Meeting means the annual meeting of the stockholders of the
--------------
Company.

Board of Directors means the Board of Directors of the Company.
------------------

Code means the United States Internal Revenue Code of 1986, as
----
amended.

Committee means the committee of the Board of Directors to which the
---------
Board of Directors has delegated power to act under or pursuant to
the provisions of the Plan.

Common Stock means shares of the Company's common stock, $.001 par
------------
value per share.

Company means OneSoft Corporation, a Delaware corporation.
-------

Disability or Disabled means permanent and total disability as
---------- --------
defined in Section 22(e)(3) of the Code.

Fair Market Value of a Share of Common Stock means:
-----------------

(1) If the Common Stock is listed on a national securities exchange
or traded in the over-the-counter market and sales prices are
regularly reported for the Common Stock, the closing or last price of
the Common Stock on the Composite Tape or other comparable reporting
system for the trading day immediately preceding the applicable date;
<PAGE>

(2) If the Common Stock is not traded on a national securities
exchange but is traded on the over-the-counter market, if sales
prices are not regularly reported for the Common Stock for the
trading day referred to in clause (1), and if bid and asked prices
for the Common Stock are regularly reported, the mean between the bid
and the asked price for the Common Stock at the close of trading in
the over-the-counter market for the trading day on which Common Stock
was traded immediately preceding the applicable date; and

(3) If the Common Stock is neither listed on a national securities
exchange nor traded in the over-the-counter market, such value as the
Administrator, in good faith, shall determine.

ISO means an option meant to qualify as an incentive stock option
---
under Section 422 of the Code.

Key Employee means an employee of the Company or of an Affiliate
------------
(including, without limitation, an employee who is also serving as an
officer or director of the Company or of an Affiliate), designated by
the Administrator to be eligible to be granted one or more Options
under the Plan.

Non-Qualified Option means an option which is not intended to qualify
--------------------
as an ISO.

Option means an ISO or Non-Qualified Option granted under the Plan.
------

Option Agreement means an agreement between the Company and a
----------------
Participant delivered pursuant to the Plan, in such form as the
Administrator shall approve.

Participant means a Key Employee, director or consultant to whom one
-----------
or more Options are granted under the Plan. As used herein,
"Participant" shall include "Participant's Survivors" where the
context requires.

Plan means this OneSoft Corporation Second Amended and Restated 1997
----
Employee, Director and Consultant Stock Option Plan.

Shares means shares of the Common Stock as to which Options have been
------
or may be granted under the Plan or any shares of capital stock into
which the Shares are changed or for which they are exchanged within
the provisions of Paragraph 3 of the Plan. The Shares issued upon
exercise of Options granted under the Plan may be authorized and
unissued shares or shares held by the Company in its treasury, or
both.

Survivors means a deceased Participant's legal representatives and/or
---------
any person or persons who acquired the Participant's rights to an
Option by will or by the laws of descent and distribution.

2
<PAGE>

2. PURPOSES OF THE PLAN.
--------------------

The Plan is intended to encourage ownership of Shares by Key Employees and
directors of and certain consultants to the Company in order to attract such
people, to induce them to work for the benefit of the Company or of an Affiliate
and to provide additional incentive for them to promote the success of the
Company or of an Affiliate. The Plan provides for the granting of ISOs and Non-
Qualified Options.

3. SHARES SUBJECT TO THE PLAN.
--------------------------

(a) The number of Shares which may be issued from time to time pursuant to
this Plan shall be 6,000,000 or the equivalent of such number of Shares after
the Administrator, in its sole discretion, has interpreted the effect of any
stock split, stock dividend, combination, recapitalization or similar
transaction in accordance with Paragraph 16 of the Plan.

(b) The maximum number of Shares that may be issued as ISOs pursuant to
this Plan shall be 6,000,000 Shares or the equivalent of such number of Shares
after the Administrator, in its sole discretion, has interpreted the effect of
any stock split, stock dividend, combination, recapitalization or similar
transaction in accordance with Paragraph 16 of the Plan.

(c) If an Option ceases to be "outstanding", in whole or in part, the
Shares which were subject to such Option shall be available for the granting of
other Options under the Plan. Any Option shall be treated as "outstanding" until
such Option is exercised in full, or terminates or expires under the provisions
of the Plan, or by agreement of the parties to the pertinent Option Agreement.

4. ADMINISTRATION OF THE PLAN.
--------------------------

The Administrator of the Plan will be the Board of Directors, except to the
extent the Board of Directors delegates its authority to the Committee, in which
case the Committee shall be the Administrator. Subject to the provisions of the
Plan, the Administrator is authorized to:

a. Interpret the provisions of the Plan or of any Option or Option
Agreement and to make all rules and determinations which it deems
necessary or advisable for the administration of the Plan;

b. Determine which employees of the Company or of an Affiliate shall be
designated as Key Employees and which of the Key Employees, directors
and consultants shall be granted Options;

c. Determine the number of Shares for which an Option or Options shall
be granted, provided, however, that in no event shall Options to
purchase more than 500,000 Shares be granted to any Participant in
any fiscal year; and

d. Specify the terms and conditions upon which an Option or Options may
be granted;

3
<PAGE>

provided, however, that all such interpretations, rules, determinations, terms
and conditions shall be made and prescribed in the context of preserving the tax
status under Section 422 of the Code of those Options which are designated as
ISOs. Subject to the foregoing, the interpretation and construction by the
Administrator of any provisions of the Plan or of any Option granted under it
shall be final, unless otherwise determined by the Board of Directors, if the
Administrator is the Committee.

5. ELIGIBILITY FOR PARTICIPATION.
-----------------------------

The Administrator will, in its sole discretion, name the Participants in
the Plan, provided, however, that each Participant must be a Key Employee,
director or consultant of the Company or of an Affiliate at the time an Option
is granted. Notwithstanding any of the foregoing provisions, the Administrator
may authorize the grant of an Option to a person not then an employee, director
or consultant of the Company or of an Affiliate provided however, that the
actual grant of such Option shall be conditioned upon such person becoming
eligible to become a Participant at or prior to the time of the delivery of the
Option Agreement evidencing such Option. ISOs may be granted only to Key
Employees. Non-Qualified Options may be granted to any Key Employee, director or
consultant of the Company or an Affiliate. The granting of any Option to any
individual shall neither entitle that individual to, nor disqualify him or her
from, participation in any other grant of Options.

6. TERMS AND CONDITIONS OF OPTIONS.
-------------------------------

Each Option shall be set forth in writing in an Option Agreement, duly
executed by the Company and, to the extent required by law or requested by the
Company, by the Participant. The Administrator may provide that Options be
granted subject to such terms and conditions consistent with the terms and
conditions specifically required under this Plan, as the Administrator may deem
appropriate including, without limitation, subsequent approval by the
shareholders of the Company of this Plan or any amendments thereto.

A. Non-Qualified Options: Each Option intended to be a Non-Qualified
---------------------
Option shall be subject to the terms and conditions which the
Administrator determines to be appropriate and in the best interest of
the Company, subject to the following minimum standards for any such
Non-Qualified Option:

a. Option Price: Each Option Agreement shall state the option price
(per share) of the Shares covered by each Option, which option
price shall be determined by the Administrator but shall not be
less than the par value per share of Common Stock.

b. Each Option Agreement shall state the number of Shares to which
it pertains;

c. Each Option Agreement shall state the date or dates on which it
first is exercisable and the date after which it may no longer be
exercised, and may provide that the Option rights accrue or
become exercisable in

4
<PAGE>

installments over a period of months or years, or upon the
occurrence of certain conditions or the attainment of stated
goals or events; and

d. Exercise of any Option may be conditioned upon the Participant's
execution of a Share purchase agreement in form satisfactory to
the Administrator providing for certain protections for the
Company and its other shareholders, including requirements that:

i. The Participant's or the Participant's Survivors' right to
sell or transfer the Shares may be restricted; and

ii. The Participant or the Participant's Survivors may be
required to execute letters of investment intent and must
also acknowledge that the Shares will bear legends noting
any applicable restrictions.

B. ISOs: Each Option intended to be an ISO shall be issued only to a Key
---- Employee and be subject to at least the following terms and
conditions, with such additional restrictions or changes as the
Administrator determines are appropriate but not in conflict
with Section 422 of the Code and relevant regulations and
rulings of the Internal Revenue Service:

a. Minimum standards: The ISO shall meet the minimum standards
required of Non-Qualified Options, as described in Paragraph
6(A) above, except clause (a) thereunder.

b. Option Price: Immediately before the Option is granted, if the
Participant owns, directly or by reason of the applicable
attribution rules in Section 424(d) of the Code:

i. Ten percent (10%) or less of the total combined voting
-------
power of all classes of share capital of the Company or an
Affiliate, the Option price per share of the Shares covered
by each Option shall not be less than one hundred percent
(100%) of the Fair Market Value per share of the Shares on
the date of the grant of the Option.

ii. More than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or an
Affiliate, the Option price per share of the Shares covered
by each Option shall not be less than one hundred ten
percent (110%) of the said Fair Market Value on the date of
grant.

c. Term of Option: For Participants who own

i. Ten percent (10%) or less of the total combined voting
-------
power of all classes of share capital of the Company or an
Affiliate, each Option shall terminate not more than ten
(10) years from the date

5
<PAGE>

of the grant or at such earlier time as the Option
Agreement may provide.

ii. More than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or an
Affiliate, each Option shall terminate not more than five
(5) years from the date of the grant or at such earlier
time as the Option Agreement may provide.

d. Limitation on Yearly Exercise: The Option Agreements shall
restrict the amount of Options which may be exercisable in any
calendar year (under this or any other ISO plan of the Company
or an Affiliate) so that the aggregate Fair Market Value
(determined at the time each ISO is granted) of the stock with
respect to which ISOs are exercisable for the first time by the
Participant in any calendar year does not exceed one hundred
thousand dollars ($100,000), provided that this subparagraph (d)
shall have no force or effect if its inclusion in the Plan is
not necessary for Options issued as ISOs to qualify as ISOs
pursuant to Section 422(d) of the Code.

7. EXERCISE OF OPTIONS AND ISSUE OF SHARES.
---------------------------------------

An Option (or any part or installment thereof) shall be exercised by giving
written notice to the Company at its principal executive office address,
together with provision for payment of the full purchase price in accordance
with this Paragraph for the Shares as to which the Option is being exercised,
and upon compliance with any other condition(s) set forth in the Option
Agreement. Such written notice shall be signed by the person exercising the
Option, shall state the number of Shares with respect to which the Option is
being exercised and shall contain any representation required by the Plan or the
Option Agreement. Payment of the purchase price for the Shares as to which such
Option is being exercised shall be made (a) in United States dollars in cash or
by check, or (b) at the discretion of the Administrator, through delivery of
shares of Common Stock having a Fair Market Value equal as of the date of the
exercise to the cash exercise price of the Option, or (c) at the discretion of
the Administrator, by delivery of the grantee's personal recourse note bearing
interest payable not less than annually at no less than 100% of the applicable
Federal rate, as defined in Section 1274(d) of the Code, or (d) at the
discretion of the Administrator, in accordance with a cashless exercise program
established with a securities brokerage firm, and approved by the Administrator,
or (e) at the discretion of the Administrator, by any combination of (a), (b),
(c) and (d) above. Notwithstanding the foregoing, the Administrator shall accept
only such payment on exercise of an ISO as is permitted by Section 422 of the
Code.

The Company shall then reasonably promptly deliver the Shares as to which
such Option was exercised to the Participant (or to the Participant's Survivors,
as the case may be). In determining what constitutes "reasonably promptly," it
is expressly understood that the delivery of the Shares may be delayed by the
Company in order to comply with any law or regulation (including, without
limitation, state securities or "blue sky" laws) which requires the Company to
take any action with respect to the Shares prior to their issuance. The Shares
shall, upon

6
<PAGE>

delivery, be evidenced by an appropriate certificate or certificates for fully
paid, non-assessable Shares.

The Administrator shall have the right to accelerate the date of exercise
of any installment of any Option; provided that the Administrator shall not
accelerate the exercise date of any installment of any Option granted to any Key
Employee as an ISO (and not previously converted into a Non-Qualified Option
pursuant to Paragraph 19) if such acceleration would violate the annual vesting
limitation contained in Section 422(d) of the Code, as described in Paragraph
6.B.d.

The Administrator may, in its discretion, amend any term or condition of an
outstanding Option provided (i) such term or condition as amended is permitted
by the Plan, (ii) any such amendment shall be made only with the consent of the
Participant to whom the Option was granted, or in the event of the death of the
Participant, the Participant's Survivors, if the amendment is adverse to the
Participant, and (iii) any such amendment of any ISO shall be made only after
the Administrator, after consulting the counsel for the Company, determines
whether such amendment would constitute a "modification" of any Option which is
an ISO (as that term is defined in Section 424(h) of the Code) or would cause
any adverse tax consequences for the holder of such ISO.

7
<PAGE>

8. RIGHTS AS A SHAREHOLDER.
-----------------------

No Participant to whom an Option has been granted shall have rights as a
shareholder with respect to any Shares covered by such Option, except after due
exercise of the Option and tender of the full purchase price for the Shares
being purchased pursuant to such exercise and registration of the Shares in the
Company's share register in the name of the Participant.

9. ASSIGNABILITY AND TRANSFERABILITY OF OPTIONS.
--------------------------------------------

By its terms, an Option granted to a Participant shall not be transferable
by the Participant other than (i) by will or by the laws of descent and
distribution, or (ii) as otherwise determined by the Administrator and set forth
in the applicable Option Agreement. The designation of a beneficiary of an
Option by a Participant shall not be deemed a transfer prohibited by this
Paragraph. Except as provided above, an Option shall be exercisable, during the
Participant's lifetime, only by such Participant (or by his or her legal
representative) and shall not be assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Any attempted transfer, assignment,
pledge, hypothecation or other disposition of any Option or of any rights
granted thereunder contrary to the provisions of this Plan, or the levy of any
attachment or similar process upon an Option, shall be null and void.

10. EFFECT OF TERMINATION OF SERVICE OTHER THAN "FOR CAUSE" OR DEATH OR
-------------------------------------------------------------------
DISABILITY.
----------

Except as otherwise provided in the pertinent Option Agreement, in the
event of a termination of service (whether as an employee, director or
consultant) with the Company or an Affiliate before the Participant has
exercised all Options, the following rules apply:

a. A Participant who ceases to be an employee, director or consultant of
the Company or of an Affiliate (for any reason other than termination
"for cause", Disability, or death for which events there are special
rules in Paragraphs 11, 12, and 13, respectively), may exercise any
Option granted to him or her to the extent that the Option is
exercisable on the date of such termination of service, but only
within such term as the Administrator has designated in the pertinent
Option Agreement.

b. Except as provided in Subparagraph (c) below, or Paragraph 12 or 13,
in no event may an Option Agreement provide, if the Option is
intended to be an ISO, that the time for exercise be later than three
(3) months after the Participant's termination of employment.

c. The provisions of this Paragraph, and not the provisions of Paragraph
12 or 13, shall apply to a Participant who subsequently becomes
Disabled or dies after the termination of employment, director status
or consultancy, provided, however, in the case of a Participant's
Disability or death within three (3) months after the

8
<PAGE>

termination of employment, director status or consultancy, the
Participant or the Participant's Survivors may exercise the Option
within one (1) year after the date of the Participant's termination
of employment, but in no event after the date of expiration of the
term of the Option.

d. Notwithstanding anything herein to the contrary, if subsequent to a
Participant's termination of employment, termination of director
status or termination of consultancy, but prior to the exercise of an
Option, the Board of Directors determines that, either prior or
subsequent to the Participant's termination, the Participant engaged
in conduct which would constitute "cause", then such Participant
shall forthwith cease to have any right to exercise any Option.

e. A Participant to whom an Option has been granted under the Plan who
is absent from work with the Company or with an Affiliate because of
temporary disability (any disability other than a permanent and total
Disability as defined in Paragraph 1 hereof), or who is on leave of
absence for any purpose, shall not, during the period of any such
absence, be deemed, by virtue of such absence alone, to have
terminated such Participant's employment, director status or
consultancy with the Company or with an Affiliate, except as the
Administrator may otherwise expressly provide.

f. Except as required by law or as set forth in the pertinent Option
Agreement, Options granted under the Plan shall not be affected by
any change of a Participant's status within or among the Company and
any Affiliates, so long as the Participant continues to be an
employee, director or consultant of the Company or any Affiliate.

11. EFFECT OF TERMINATION OF SERVICE "FOR CAUSE".
--------------------------------------------

Except as otherwise provided in the pertinent Option Agreement, the
following rules apply if the Participant's service (whether as an employee,
director or consultant) with the Company or an Affiliate is terminated "for
cause" prior to the time that all his or her outstanding Options have been
exercised:

a. All outstanding and unexercised Options as of the time the
Participant is notified his or her service is terminated "for cause"
will immediately be forfeited.

b. For purposes of this Plan, "cause" shall include (and is not limited
to) dishonesty with respect to the Company or any Affiliate,
insubordination, substantial malfeasance or non-feasance of duty,
unauthorized disclosure of confidential information, and conduct
substantially prejudicial to the business of the Company or any
Affiliate. The determination of the Administrator as to the existence
of "cause" will be conclusive on the Participant and the Company.

c. "Cause" is not limited to events which have occurred prior to a
Participant's termination of service, nor is it necessary that the
Administrator's finding of

9
<PAGE>

"cause" occur prior to termination. If the Administrator determines,
subsequent to a Participant's termination of service but prior to the
exercise of an Option, that either prior or subsequent to the
Participant's termination the Participant engaged in conduct which
would constitute "cause," then the right to exercise any Option is
forfeited.

d. Any definition in an agreement between the Participant and the
Company or an Affiliate, which contains a conflicting definition of
"cause" for termination and which is in effect at the time of such
termination, shall supersede the definition in this Plan with respect
to such Participant.

12. EFFECT OF TERMINATION OF SERVICE FOR DISABILITY.
-----------------------------------------------

Except as otherwise provided in the pertinent Option Agreement, a
Participant who ceases to be an employee, director or consultant of the Company
or of an Affiliate by reason of Disability may exercise any Option granted to
such Participant:

a. To the extent exercisable but not exercised on the date of
Disability; and

b. In the event rights to exercise the Option accrue periodically, to
the extent of a pro rata portion of any additional rights as would
have accrued had the Participant not become Disabled prior to the end
of the accrual period which next ends following the date of
Disability. The proration shall be based upon the number of days of
such accrual period prior to the date of Disability.

A Disabled Participant may exercise such rights only within the period
ending one (1) year after the date of the Participant's termination of
employment, directorship or consultancy, as the case may be, notwithstanding
that the Participant might have been able to exercise the Option as to some or
all of the Shares on a later date if the Participant had not become disabled and
had continued to be an employee, director or consultant or, if earlier, within
the originally prescribed term of the Option.

The Administrator shall make the determination both of whether Disability
has occurred and the date of its occurrence (unless a procedure for such
determination is set forth in another agreement between the Company and such
Participant, in which case such procedure shall be used for such determination).
If requested, the Participant shall be examined by a physician selected or
approved by the Administrator, the cost of which examination shall be paid for
by the Company.

13. EFFECT OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.
---------------------------------------------------------

Except as otherwise provided in the pertinent Option Agreement, in the
event of the death of a Participant while the Participant is an employee,
director or consultant of the Company or of an Affiliate, such Option may be
exercised by the Participant's Survivors:

a. To the extent exercisable but not exercised on the date of death; and

10
<PAGE>

b. In the event rights to exercise the Option accrue periodically, to the
extent of a pro rata portion of any additional rights which would have
accrued had the Participant not died prior to the end of the accrual
period which next ends following the date of death. The proration
shall be based upon the number of days of such accrual period prior to
the Participant's death.

If the Participant's Survivors wish to exercise the Option, they must take
all necessary steps to exercise the Option within one (1) year after the date of
death of such Participant, notwithstanding that the decedent might have been
able to exercise the Option as to some or all of the Shares on a later date if
he or she had not died and had continued to be an employee, director or
consultant or, if earlier, within the originally prescribed term of the Option.

14. PURCHASE FOR INVESTMENT.
-----------------------

Unless the offering and sale of the Shares to be issued upon the particular
exercise of an Option shall have been effectively registered under the
Securities Act of 1933, as now in force or hereafter amended (the "1933 Act"),
the Company shall be under no obligation to issue the Shares covered by such
exercise unless and until the following conditions have been fulfilled:

a. The person(s) who exercise(s) such Option shall warrant to the
Company, prior to the receipt of such Shares, that such person(s) are
acquiring such Shares for their own respective accounts, for
investment, and not with a view to, or for sale in connection with,
the distribution of any such Shares, in which event the person(s)
acquiring such Shares shall be bound by the provisions of the
following legend which shall be endorsed upon the certificate(s)
evidencing their Shares issued pursuant to such exercise or such
grant:

"The shares represented by this certificate have been taken for
investment and they may not be sold or otherwise transferred by
any person, including a pledgee, unless (1) either (a) a
Registration Statement with respect to such shares shall be
effective under the Securities Act of 1933, as amended, or (b)
the Company shall have received an opinion of counsel
satisfactory to it that an exemption from registration under such
Act is then available, and (2) there shall have been compliance
with all applicable state securities laws."

b. At the discretion of the Administrator, the Company shall have
received an opinion of its counsel that the Shares may be issued upon
such particular exercise in compliance with the 1933 Act without
registration thereunder.

15. DISSOLUTION OR LIQUIDATION OF THE COMPANY.
-----------------------------------------

Upon the dissolution or liquidation of the Company, all Options granted
under this Plan which as of such date shall not have been exercised will
terminate and become null and void; provided, however, that if the rights of a
Participant or a Participant's Survivors have not

11
<PAGE>

otherwise terminated and expired, the Participant or the Participant's Survivors
will have the right immediately prior to such dissolution or liquidation to
exercise any Option to the extent that the Option is exercisable as of the date
immediately prior to such dissolution or liquidation.

16. ADJUSTMENTS.
-----------

Upon the occurrence of any of the following events, a Participant's rights
with respect to any Option granted to him or her hereunder which has not
previously been exercised in full shall be adjusted as hereinafter provided,
unless otherwise specifically provided in the pertinent Option Agreement:

A. Stock Dividends and Stock Splits. If (i) the shares of Common Stock
--------------------------------
shall be subdivided or combined into a greater or smaller number of shares or if
the Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, or (ii) additional shares or new or different shares
or other securities of the Company or other non-cash assets are distributed with
respect to such shares of Common Stock, the number of shares of Common Stock
deliverable upon the exercise of such Option may be appropriately increased or
decreased proportionately, and appropriate adjustments may be made in the
purchase price per share to reflect such events.

The number of Shares subject to the limitation in Paragraphs 3(c) and 4(c)
shall also be adjusted proportionately upon the occurrence of such events.

B. Consolidations or Mergers. If the Company is to be consolidated with or
-------------------------
acquired by another entity in a merger, sale of all or substantially all of the
Company's assets or otherwise (an "Acquisition"), the Administrator or the board
of directors of any entity assuming the obligations of the Company hereunder
(the "Successor Board"), shall, as to outstanding Options, either (i) make
appropriate provision for the continuation of such Options by substituting on an
equitable basis for the Shares then subject to such Options either the
consideration payable with respect to the outstanding shares of Common Stock in
connection with the Acquisition or securities of any successor or acquiring
entity; or (ii) upon written notice to the Participants, provide that all
Options must be exercised (either to the extent then exercisable or, at the
discretion of the Administrator, all Options being made fully exercisable for
purposes of this Subparagraph), within a specified number of days of the date of
such notice, at the end of which period the Options shall terminate; or (iii)
terminate all Options in exchange for a cash payment equal to the excess of the
Fair Market Value of the shares subject to such Options (either to the extent
then exercisable or, at the discretion of the Administrator, all Options being
made fully exercisable for purposes of this Subparagraph) over the exercise
price thereof.

C. Recapitalization or Reorganization. In the event of a recapitalization
----------------------------------
or reorganization of the Company (other than a transaction described in
Subparagraph B above) pursuant to which securities of the Company or of another
corporation are issued with respect to the outstanding shares of Common Stock, a
Participant upon exercising an Option shall be entitled to receive for the
purchase price paid upon such exercise the securities which would have been
received if such Option had been exercised prior to such recapitalization or
reorganization.

12
<PAGE>

D. Modification of ISOs. Notwithstanding the foregoing, any adjustments
--------------------
made pursuant to Subparagraph A, B or C with respect to ISOs shall be made only
after the Administrator, after consulting with counsel for the Company,
determines whether such adjustments would constitute a "modification" of such
ISOs (as that term is defined in Section 424(h) of the Code) or would cause any
adverse tax consequences for the holders of such ISOs. If the Administrator
determines that such adjustments made with respect to ISOs would constitute a
modification of such ISOs, it may refrain from making such adjustments, unless
the holder of an ISO specifically requests in writing that such adjustment be
made and such writing indicates that the holder has full knowledge of the
consequences of such "modification" on his or her income tax treatment with
respect to the ISO.

17. ISSUANCES OF SECURITIES.
-----------------------

Except as expressly provided herein, no issuance by the Company of shares
of stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to Options. Except as
expressly provided herein, no adjustments shall be made for dividends paid in
cash or in property (including without limitation, securities) of the Company.

18. FRACTIONAL SHARES.
-----------------

No fractional shares shall be issued under the Plan and the person
exercising such right shall receive from the Company cash in lieu of such
fractional shares equal to the Fair Market Value thereof.

19. CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOs.
------------------------------------------------------------------

The Administrator, at the written request of any Participant, may in its
discretion take such actions as may be necessary to convert such Participant's
ISOs (or any portions thereof) that have not been exercised on the date of
conversion into Non-Qualified Options at any time prior to the expiration of
such ISOs, regardless of whether the Participant is an employee of the Company
or an Affiliate at the time of such conversion. Such actions may include, but
not be limited to, extending the exercise period or reducing the exercise price
of the appropriate installments of such Options. At the time of such conversion,
the Administrator (with the consent of the Participant) may impose such
conditions on the exercise of the resulting Non-Qualified Options as the
Administrator in its discretion may determine, provided that such conditions
shall not be inconsistent with this Plan. Nothing in the Plan shall be deemed to
give any Participant the right to have such Participant's ISOs converted into
Non-Qualified Options, and no such conversion shall occur until and unless the
Administrator takes appropriate action. The Administrator, with the consent of
the Participant, may also terminate any portion of any ISO that has not been
exercised at the time of such conversion.

13
<PAGE>

20. WITHHOLDING.
-----------

In the event that any federal, state, or local income taxes, employment
taxes, Federal Insurance Contributions Act ("F.I.C.A.") withholdings or other
amounts are required by applicable law or governmental regulation to be withheld
from the Participant's salary, wages or other remuneration in connection with
the exercise of an Option or a Disqualifying Disposition (as defined in
Paragraph 21), the Company may withhold from the Participant's compensation, if
any, or may require that the Participant advance in cash to the Company, or to
any Affiliate of the Company which employs or employed the Participant, the
amount of such withholdings unless a different withholding arrangement,
including the use of shares of the Company's Common Stock or a promissory note,
is authorized by the Administrator (and permitted by law). For purposes hereof,
the fair market value of the shares withheld for purposes of payroll withholding
shall be determined in the manner provided in Paragraph 1 above, as of the most
recent practicable date prior to the date of exercise. If the fair market value
of the shares withheld is less than the amount of payroll withholdings required,
the Participant may be required to advance the difference in cash to the Company
or the Affiliate employer. The Administrator in its discretion may condition the
exercise of an Option for less than the then Fair Market Value on the
Participant's payment of such additional withholding.

21. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.
----------------------------------------------

Each Key Employee who receives an ISO must agree to notify the Company in
writing immediately after the Key Employee makes a Disqualifying Disposition of
any shares acquired pursuant to the exercise of an ISO. A Disqualifying
Disposition is any disposition (including any sale) of such shares before the
later of (a) two years after the date the Key Employee was granted the ISO, or
(b) one year after the date the Key Employee acquired Shares by exercising the
ISO. If the Key Employee has died before such stock is sold, these holding
period requirements do not apply and no Disqualifying Disposition can occur
thereafter.

22. TERMINATION OF THE PLAN.
-----------------------

The Plan will terminate on March 17, 2007, the date which is ten (10) years
from the earlier of the date of its adoption and the date of its approval by the
shareholders of the Company. The Plan may be terminated at an earlier date by
vote of the shareholders of the Company; provided, however, that any such
earlier termination shall not affect any Option Agreements executed prior to the
effective date of such termination.

23. AMENDMENT OF THE PLAN AND AGREEMENTS.
------------------------------------

The Plan may be amended by the shareholders of the Company. The Plan may
also be amended by the Administrator, including, without limitation, to the
extent necessary to qualify any or all outstanding Options granted under the
Plan or Options to be granted under the Plan for favorable federal income tax
treatment (including deferral of taxation upon exercise) as may be afforded
incentive stock options under Section 422 of the Code, and to the extent
necessary to qualify the shares issuable upon exercise of any outstanding
Options granted, or Options to be granted, under the Plan for listing on any
national securities exchange or quotation in any national automated quotation
system of securities dealers. Any amendment approved by the Administrator which
the Administrator determines is of a scope that requires shareholder

14
<PAGE>

approval shall be subject to obtaining such shareholder approval. Any
modification or amendment of the Plan shall not, without the consent of a
Participant, adversely affect his or her rights under an Option previously
granted to him or her. With the consent of the Participant affected, the
Administrator may amend outstanding Option Agreements in a manner which may be
adverse to the Participant but which is not inconsistent with the Plan. In the
discretion of the Administrator, outstanding Option Agreements may be amended by
the Administrator in a manner which is not adverse to the Participant.

24. EMPLOYMENT OR OTHER RELATIONSHIP.
--------------------------------

Nothing in this Plan or any Option Agreement shall be deemed to prevent the
Company or an Affiliate from terminating the employment, consultancy or director
status of a Participant, nor to prevent a Participant from terminating his or
her own employment, consultancy or director status or to give any Participant a
right to be retained in employment or other service by the Company or any
Affiliate for any period of time.

25. GOVERNING LAW.
-------------

This Plan shall be construed and enforced in accordance with the law of the
State of Delaware

<PAGE>

Exhibit 10.3

AMENDED AND RESTATED EMPLOYMENT AGREEMENT
-----------------------------------------

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated as of this 24th day of
February, 2000 (the "Effective Date"), is by and between Fredrick C. Hawkins,
III, (the "Executive") and OneSoft Corporation, a Delaware corporation with its
principal offices at 1505 Farm Credit Drive, McLean, Virginia 22102 (the
"Company").

WHEREAS the Company desires to employ Executive as the Chief Financial Officer
of the Company for the period and upon the terms and conditions hereinafter set
forth; and

WHEREAS Executive desires to serve in such capacities upon the terms and
conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the Company and Executive hereby agree as follows:

1. Employment.
----------

a) The Company will employ the Executive and Executive agrees to be employed
by the Company, as the Company's Chief Financial Officer. Executive will have
the responsibilities, duties and authority commensurate with his position as the
Chief Financial Officer including, without limitation, responsibility for
directing the Company's Financial Affairs ("Responsibilities"). Executive will
also have such other responsibilities, duties and authority as may from time to
time be assigned to him by the President or the Board of Directors of the
Company.

b) The Executive will be required to devote (i) substantially his entire time
during Company business hours as defined in then current Company policies, plus
any other reasonable time required to complete the obligations of his
Responsibilities (reasonable sick leave, holidays, vacation time and other time
and efforts not defined in this section of the Employment Agreement exempt) and
(ii) his best efforts to faithfully and satisfactorily fulfill the obligations
of his Responsibilities to further the Company's best interests.

2. Concurrent Agreements.
---------------------

a) As used in this Agreement, the following terms shall have the following
respective meanings:

"Option Agreement" shall mean that certain stock option agreement dated
the 27th day of June, 1997 by and among William L. Robertson, OneSoft Corp.
and the Executive, including any amendments to the agreement or assignments of
rights granted thereof.
<PAGE>

"Optioned Shares" shall mean the Company's common stock subject to the
Option Agreement, in part or in whole.

"Incentive Stock Option Agreement" shall mean that written agreement by
and between the Company and Executive whereby the Executive will receive
qualified incentive stock options for 300,000 of the Company's common shares,
vesting quarterly in even increments over first three years following the
Commencement Date.

"Assignment of Inventions, Nondisclosure and Noncompetition Agreement"
shall mean that agreement in the form attached hereto as Exhibit A.

b) In addition to the terms of this Employment Agreement, the Company and
Executive agree to negotiate or affirm and to be bound by the terms of the
following agreements as defined herein; (i) the Option Agreement, (ii) the
Assignment of Inventions, Nondisclosure and Noncompetition Agreement, and (iii)
the Incentive Stock Option Agreement.

c) The Company and the Executive shall enter into the Assignment of
Inventions, Nondisclosure and Noncompetition Agreement in the form attached
hereto as Exhibit A.

3. Term of Employment. Executive's employment hereunder shall commence on
------------------
the date (the "Commencement Date") as agreed upon by the parties, and continue
until the first anniversary thereof, unless terminated earlier in accordance
with the terms hereof. The term of the Executive's employment hereunder shall
renew automatically for additional successive one-year periods, unless either
party hereto provides written notice of its intention not to renew the Agreement
at least ninety (90) days prior to the applicable expiration date.

4. Compensation. In consideration for Executive's services under this
------------
Agreement, Executive will be (i) paid salary at an annual rate of $140,000,
subject to increases by the Board (the "Annual Salary") and (ii) an annual
bonus, which as a percent of Annual Salary, is commensurate with annual bonuses
of other senior executives (with the execuption of the Chief Executive Officer)
of the Company. Executive's Annual Salary shall be paid in periodic installments
at such times as salaries are generally paid to other executives of the Company
and all compensation under this agreement shall be subject to required
withholdings and deductions.

5. Vacation, Benefits and Reimbursement of Expenses.
------------------------------------------------

(a) Vacation. Executive shall be entitled to vacation commensurate with other
senior executives of the Company.

(b) Employee Benefit Plans and Other Benefits. Executive shall also be
entitled to participate in any employee benefit plans which the Company provides
or may establish for the benefit of its executives including, without
limitation, life, medical, dental and other insurance, 401(k), stock option, and
similar plans.
<PAGE>

(c) Reimbursement of Expenses. Executive shall be entitled to reimbursement
for all ordinary and reasonable out-of-pocket business expenses which are
reasonably incurred by him in furtherance of the Company's business in
accordance with policies adopted from time to time by the Company.

6. Termination by the Executive. Executive's employment may be terminated by
----------------------------
him, by giving a written notice of at least ninety (90) days to the Company. In
the event of such a notice, the Company may elect to waive the ninety (90) day
period or any portion thereof, in which event Executive's employment shall end
as of such earlier date. For purposes of this Paragraph 6, the Termination Date
shall be such date as Executive's employment ends.

7. Termination by the Company. Executive's employment may be terminated at
--------------------------
any time by the Company (a) with Cause, by a written notice to Executive,
effective immediately unless otherwise stated in such notice, which date shall
be the Termination Date therefor, (b) without Cause at any time, by a written
notice to Executive, effective ninety (90) days after the date given, except as
Executive and the Company may otherwise agree in writing, which date of
effectiveness shall be the Termination Date therefor, or (c) for death or total
and permanent disability in accordance with Paragraph 7.

For purposes of this Agreement, the term "Cause" means (i) the willful and
continued failure by Executive to substantially perform his duties hereunder, or
(ii) the willful engaging by Executive in misconduct which is materially
injurious to the Company, monetarily or otherwise, or (iii) a felony conviction
by a court of competent jurisdiction or (iv) confirmed and continuing
intoxication by alcohol or other controlled substances.

8. Termination upon Death or Disability.
------------------------------------

(a) Executive's employment by the Company shall terminate upon his death, or
upon the Company's written notice if, by virtue of total and permanent
disability, Executive is unable to perform his duties hereunder.

(b) Executive shall be considered to be totally and permanently disabled
hereunder if for reasons involving mental or physical illness or physical injury
Executive is unable to or fails to perform his duties hereunder for a period of
ninety (90) consecutive calendar days or for any periods aggregating ninety (90)
days or more in any twelve (12) consecutive month period. The determination
that, by virtue of total and permanent disability, Executive is unable to
perform his duties hereunder shall be made by a physician chosen by the Company
and reasonably satisfactory to Executive (or his legal representative). The cost
of such examination shall be borne by the Company. In the event of total and
permanent disability, the Termination Date shall be the date of the Company's
written notice.

9. Payments of Compensation Upon Termination.
-----------------------------------------

(a) In the event Executive's employment hereunder shall be terminated by the
Executive other than for Good Reason (as herein after defined), by the Company
for Cause or as a result of death or total and permanent disability, Executive
shall be entitled as of the
<PAGE>

Termination Date to no compensation under this Agreement, except as provided in
Section 10.

(b) In the event Executive's employment is terminated by Executive for Good
Reason, by the Company without Cause or by reason of the Company's election of
non-renewal of the term under Section 3 such that Executive will not have been
employed hereunder for at least three years from the Commencement Date, then in
any of such events the Company shall pay to Executive an amount equal one-half
his then-current annualized salary plus one-half of his annual bonus as provided
for in Section 4, which salary-based amount shall be paid, commencing with the
first day of the month next following the month during which such termination
occurs, in six equal monthly installments at the times and in the manner in
which his salary had been paid during his employment and which bonus-based
amount shall be paid not later than the time of the last of such monthly salary-
based payments.

(c) During such six-month period after termination of his employment, as the
case may be, the Company shall continue to pay or provide all of the fringe
benefits which it had been making available to Executive prior to such
termination or, if the provision thereof is not possible, the economic
equivalent thereof.

(d) For purposes of this Agreement, the term "Good Reason" shall mean a
diminution in the authority, compensation level (annual salary or annual bonus),
working conditions or support which Executive had or was entitled to have as of
the Commencement Date, or the promotion date if the Executive accepts a
promotion, including but not limited to any curtailment by the Company's
President, or as appropriate the Board of Directors, of the power of the
Executive to act within his role as Chief Financial Officer or other role as
defined by any accepted promotion, any change in his title or position not
accepted by the Executive as a promotion such that he is no longer in name or in
fact the Chief Financial Officer of the Company, any hiring of another executive
subsequent to the Commencement Date to whom Executive is required to report or
who does not report to Executive, the Company President or to another executive
who directly or indirectly reports to Executive or Company President, or any
requirement that Executive serve as an executive of the Company or any
subsidiary or other affiliate of the Company in any location other than the
Washington, D.C. -Metroplex area or Greater New York City.

10. Accrued Compensation. In the event of any termination of Executive's
--------------------
employment for any reason, Executive (or his estate) shall be paid such portion
of Executive's Base Salary as has accrued by virtue of his employment during the
period prior to termination and has not yet been paid, together with any amounts
for expense reimbursement which have been properly incurred in accordance with
the provisions hereof prior to termination and have not yet been paid. Such
amounts shall be paid within fifteen (15) days of the Termination Date.

11. General.
-------

(a) Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be addressed to the receiving party's
address set forth above or to such other address as a party may designate by
notice hereunder, and shall be either (i) delivered by hand, (ii) made by
telecopy, (iii) sent by overnight courier, or (iv) sent by registered or
certified
<PAGE>

mail, return receipt requested, postage prepaid. All notices, requests, consents
and other communications hereunder shall be deemed to have been given either (i)
if by hand, at the time of the delivery thereof to the receiving party at the
address of such party set forth above, (ii) if made by telecopy, at the time
that receipt thereof has been acknowledged by electronic confirmation or
otherwise, (iii) if sent by overnight courier, on the next business day
following the day such notice is delivered to the courier service, or (iv) if
sent by registered or certified mail, on the fifth business day following the
day such mailing is made.

(b) Entire Agreement. This Agreement, agreements to which this Agreement
refers and the Exhibits hereto embody the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof and
supersede all prior oral or written agreements and understandings relating to
the subject matter hereof. No statement, representation, warranty, covenant or
agreement of any kind not expressly set forth in this Agreement or the Exhibits
hereto shall affect, or be used to interpret, change or restrict, the express
terms and provisions of this Agreement.

(c) Modifications and Amendments. The terms and provisions of this Agreement
may be modified or amended only by written agreement executed by the parties
hereto.

(d) Waivers and Consents. The terms and provisions of this Agreement may be
waived, or consent for the departure therefrom granted, only by written document
executed by the party entitled to the benefits of such terms or provisions. No
such waiver or consent shall be deemed to be or shall constitute a waiver or
consent with respect to any other terms or provisions of this Agreement, whether
or not similar. Each such waiver or consent shall be effective only in the
specific instance and for the purpose for which it was given, and shall not
constitute a continuing waiver or consent.

(e) Parties. This Agreement is personal and shall in no way be subject to
assignment by Executive except as contemplated hereby. This Agreement shall be
binding upon and shall inure to the benefit of the Company and its successors
and assigns.

(f) Governing Law. This Agreement and the rights and obligations of the
parties hereunder shall be construed in accordance with and governed by the law
of The Commonwealth of Virginia, without giving effect to the conflict of law
principles thereof.

(g) Severability. The parties intend this Agreement to be enforced as written.
However, if any portion or provision of this Agreement shall to any extent be
declared illegal or unenforceable by a duly authorized court having
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.

(h) Headings and Captions. The headings and captions of the various
subdivisions of this Agreement are for convenience of reference only and shall
in no way modify, or affect the meaning or construction of any of the terms or
provisions hereof.
<PAGE>

(i) No Waiver of Rights, Powers and Remedies. No failure or delay by a party
hereto in exercising any right, power or remedy under this Agreement, and no
course of dealing between the parties hereto, shall operate as a waiver of any
such right, power or remedy of the party. No single or partial exercise of any
right, power or remedy under this Agreement by a party hereto, nor any
abandonment or discontinuance of steps to enforce any such right, power or
remedy, shall preclude such party from any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder. The election of any
remedy by a party hereto shall not constitute a waiver of the right of such
party to pursue other available remedies. No notice to or demand on a party not
expressly required under this Agreement shall entitle the party receiving such
notice or demand to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the party giving such
notice or demand to any other or further action in any circumstances without
such notice or demand.

(j) Counterparts. This Agreement may be executed in one or more counterparts,
and by different parties hereto on separate counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.

IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of
the day and year first above written.

OneSoft Corporation.

By: /s/ James W. MacIntyre, IV
------------------------------------------
James W. MacIntyre, IV,
Chairman & CEO

/s/ Frederick C. Hawkins, III
------------------------------------------
Fredrick C. Hawkins, III

<PAGE>

Exhibit 10.20

AMENDED AND RESTATED PROMISSORY NOTE
------------------------------------

$412,333.00 Annandale, Virginia
February 24, 2000

FOR VALUE RECEIVED, Frederick C. Hawkins, III (the "Maker"), hereby promises
to pay to OneSoft Corporation, a Delaware corporation (the "Lender"), the
principal sum of Four Hundred Twelve Thousand Three Hundred Thirty-three Dollars
($412,333.00), with interest, at the rate hereinafter set forth, from December
1, 1997 until payment in full of all principal and interest hereunder. All
payments of principal and interest shall be made in lawful currency of the
United States of America in immediately available funds at such address as the
Lender may from time to time designate.

1. Interest. Interest on all unpaid principal and due but unpaid interest
--------
shall accrue at the rate of 6.10 percent per annum on a self-amortizing basis.
Payment of accrued interest shall be made upon demand of the principal amount
hereunder.

2. Principal. All unpaid principal and accrued interest shall be payable on
---------
demand on or after the first to occur of (i) December 1, 2002; (ii) the sale of
substantially all of the assets of the Lender where cash proceeds to the Maker
are equal to or greater than the then-outstanding principal and accrued
interest; or (iii) a sale of all of the Collateral pledged as security for the
payment of this Note pursuant to and defined in a certain Stock Pledge Agreement
of even date herewith.

3. Prepayment. This Note may be prepaid in whole or in part by the Maker
----------
without penalty at any time. Unpaid principal and accrued interest shall be
payable, without demand, on a pro rata basis at any time the Maker sells a
portion of the Collateral pledged as security for the payment of this Note
pursuant to the Stock Pledge Agreement. At any time the Maker sells a portion of
the shares which he owns of the Lender's common stock, other than the
Collateral, after setting aside sufficient funds to pay all tax liabilities
resulting from each such sale (i) if the net, after tax proceeds from each such
sale are less than one-half of the outstanding principal plus accrued interest
to the date first above written (the "Current Outstanding Balance"), all such
proceeds shall be payable, without demand, to the Lender; (ii) if the net, after
tax proceeds from each such sale are equal to or greater than one-half of the
Current Outstanding Balance, one-half of the Current Outstanding Balance shall
be payable, without demand, to the Lender with the remaining proceeds going to
the Maker; and (iii) once the Maker has received any proceeds from any such
sale, thereafter all such net, after tax proceeds shall be payable, without
demand, to the Lender until the Note is prepaid in full. Any prepayments to the
Lender shall be applied first to accrued but unpaid interest and then to
principal. At the option of Maker, this Note may be prepaid in whole or in part
by Maker's assignment to the Lender of such portion of the Collateral equal to
the then-outstanding principal and accrued interest. Any prepayments by the
Maker shall be applied first against the 50% of the Current Outstanding Balance
to which the Payee has recourse against the Maker and then against the remainder
of the Note.

4. Default. Upon the occurrence of (a) any failure of the Maker to repay the
-------
obligations hereunder, or (b) the insolvency, dissolution, appointment of a
receiver for any part of the property of, assignment for the benefit of
creditors by, or the commencement of any proceedings under any bankruptcy or
insolvency laws by or against the Maker, Lender's recourse against Maker with
respect to any amount due hereunder shall be limited (i) to the Collateral for
this Promissory Note pursuant to and defined in that certain Stock Pledge
Agreement of even date herewith and (ii) personally to fifty percent (50%) of
the Current Outstanding Balance.

5. Waivers. The Maker hereby (i) waives notice of and consents to any and
-------
all advances, settlements, compromises and indulgences, including any extension
or postponement of the time for
<PAGE>

payment and any and all additions, substitutions and releases of any person
primarily or secondarily liable, (ii) waives presentment, demand, notice,
protest and all other demands, notices and suretyship defenses generally, in
connection with the delivery, acceptance, performance, default or enforcement of
or under this Note and (iii) agrees to pay all costs and expenses, including
reasonable attorneys' fees, incurred or paid by the Lender in enforcing this
Note on default.

6. Governing Law. This Note shall be governed by and construed in accordance
-------------
with the law of The Commonwealth of Virginia without giving effect to the
conflict of law principles thereof.

THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK

2
<PAGE>

IN WITNESS WHEREOF, the Maker has caused this Amended and Restated Note to be
executed as an instrument under seal as of the date first above written.

/s/ Frederick C. Hawkins, III
----------------------------------------
Frederick C. Hawkins, III

3
<PAGE>

AMENDED AND RESTATED STOCK PLEDGE AGREEMENT
-------------------------------------------

This Amended and Restated Stock Pledge Agreement (this "Agreement") dated as
of February 24, 2000 is made by and between Fredrick C. Hawkins, III (the
"Pledgor") and OneSoft Corporation, a Delaware corporation (the "Pledgee").

WHEREAS, the Pledgor acquired 750,000 of the issued and outstanding shares of
the common stock (the "Robertson Shares") of the Pledgee from William L.
Robertson pursuant to that certain Agreement and Assignment dated as of November
14, 1997 (the "Robertson Shares Agreement"); and

WHEREAS, the Pledgee agreed to accept payment for the Robertson Shares in the
form of a Note from the Pledgor in the original principal amount of $412,333.00
(the "Note") and the Pledgor agreed to grant a security interest to the Pledgee
in the Shares purchased by the Pledgor, along with certain other collateral; and

WHEREAS, the Pledgee has agreed to accept a substitute for the security
interest and to release and return to the Pledgor that portion of the Shares and
that certain other collateral which will no longer serve as a security interest,
and to enter into this Agreement.

NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

1. Grant of Security Interest. As collateral security for the prompt and
--------------------------
complete payment, performance and observance of all obligations of the Pledgor
under the Note (the "Obligations"), the Pledgor hereby delivers and pledges to
the Pledgee and grants to the Pledgee a first security interest in and lien on
the following property (the "Collateral"):

(a) 100,000 shares of the Common Stock of the Pledgee and the
certificates representing same as described in Schedule A attached hereto (the
"Pledged Securities"); and

(b) All dividends, interest, distributions, accessions, additions and
substitutions for, to or on the Pledged Securities, other than cash
dividends.

2. Delivery of Certificates and Instruments. The Pledgor shall deliver to the
----------------------------------------
Pledgee the original certificates representing the Pledged Securities and the
Pledgee shall release and return to the Pledgor the original certificates
representing the Shares along with that certain other collateral concurrently
with the execution and delivery of this Agreement. All stock certificates
representing the Collateral shall be accompanied by stock powers duly executed
in blank by the Pledgor. The Pledgee shall register the modification of the
pledge effected hereby on its stock register and corporate records.

3. Holding and Care of the Collateral. The Pledgee shall hold the stock
----------------------------------
certificates as security for the Obligations and shall not encumber, dispose of,
or release the Collateral except in accordance with the terms and provisions of
this Agreement. The Pledgee shall have no duty to the Pledgor with respect to
the Collateral other than the duty to use reasonable care in the safe custody
<PAGE>

of the Collateral in its possession. Without limiting the generality of the
foregoing, the Pledgee, although it may do so at its option, shall be under no
obligation to the Pledgor to take any steps necessary to preserve rights in the
Collateral against other parties.

4. Representations, Warranties and Covenants. The Pledgor hereby represents
-----------------------------------------
and warrants to the Pledgee that:

(a) The Pledged Securities hereafter delivered to the Pledgee will be
owned by the Pledgor free and clear of all claims, liens and encumbrances of
every nature whatsoever, except in favor of the Pledgee;

(b) For so long as the Pledgor shall be the record owner of the
Collateral, the Pledgor shall pay all taxes, assessments and other charges which
may be levied or assessed against the Collateral from time to time;

(d) The Pledgor shall provide to the Pledgee such assurances as may be
required by the Pledgee to establish, preserve, perfect and protect the
Pledgee's first and priority security interest in the Collateral, including
without limitation, the execution and delivery of Uniform Commercial Code
Financing Statements reflecting the pledge and security interest granted hereby;

(e) The Pledgor will not directly or indirectly assign, pledge or
otherwise encumber the Collateral or any interest therein; and

(f) The execution, delivery, performance validity and enforceability of
this Agreement requires no consent, license, permit, approval or authorization
of, exemption by, notice or report to, or registration, filing or declaration
with, any governmental instrumentality.

5. Voting Rights of the Pledgor and Certain Payments Absent Default.
----------------------------------------------------------------
Provided that no Event of Default (as defined in the Note) shall have occurred
and be continuing, for so long as the Pledgor shall be the record owner of the
Collateral, the Pledgor shall be entitled (a) to the extent permitted by
applicable law and the Articles of Organization and By-Laws of the Company, as
amended and restated, to exercise voting power with respect to the Collateral,
provided, however, that in no event shall the Pledgor exercise such voting power
in any manner contrary to or inconsistent with the terms hereof or with the
terms of the Note or the Amended and Restated Stockholders' and Voting Agreement
dated January 6, 1997 to which the Robertson Shares are subject, and (b) to
receive and retain for the Pledgor's own account any and all dividends (other
than stock or liquidating dividends) and interest from time to time declared or
paid upon any of the Collateral.

6. Distribution on Liquidation; Stock Dividends, Etc. Upon the dissolution,
--------------------------------------------------
winding up, liquidation or reorganization of the Company, whether in bankruptcy,
insolvency or receivership proceedings, or upon an assignment for the benefit of
creditors or otherwise, any sum to be paid or any property to be distributed
upon or with respect to the Collateral shall be paid over to the Pledgee to be
held by it as collateral security for the Obligations. In the event that any
stock

2
<PAGE>

dividend shall be declared on any of the Collateral, or any shares of stock or
fractions thereof shall be issued pursuant to any stock split involving any of
the Collateral, or any distribution of capital shall be made on any of the
Collateral, or any property of any kind shall be distributed upon or with
respect to any of the Collateral pursuant to any recapitalization,
reclassification, merger, consolidation, or reorganization of the capital of the
issuing corporation, the shares or other property so distributed shall be
delivered to the Pledgee, to be held by the Pledgee as part of the Collateral.

7. Dividends, Voting Rights, Etc. on Default. If an Event of Default shall
------------------------------------------
occur and be continuing, the Pledgee, for so long as said Event of Default shall
continue to exist, shall be entitled to receive and retain as collateral
security for the Obligations any and all dividends and other distributions from
time to time declared upon or paid with respect to any of the Collateral and to
exercise any and all voting rights and all rights of payment, conversion,
exchange, subscription or any other rights, privileges or options pertaining to
the Collateral as if the Pledgee were the absolute owner thereof, including,
without limitation, the right to exchange, at the discretion of the Pledgee any
and all of the Collateral upon any merger, consolidation, reorganization,
recapitalization or other readjustment of the issuing corporation, and, upon the
exercise of any such right, privilege or option pertaining to the Collateral, to
deposit and deliver any and all of the Collateral with any committee,
depositary, transfer agent, registrar or other designated agency upon such terms
and conditions as the Pledgee may determine, all without liability except to
account for property actually received by the Pledgee, provided, however, that
the Pledgee shall have no duty to the Pledgor to exercise any of the aforesaid
rights, privileges or options and shall not be responsible for any failure or
delay with respect to the exercise of any such rights, privileges or options.

8. Application of Cash Collateral. Any cash received and retained by the
------------------------------
Pledgee as additional Collateral pursuant to the foregoing provisions may at any
time and from time to time while an Event of Default shall have occurred and be
continuing be applied (in whole or in part) by the Pledgee, at the Pledgee's
option, to the payment of interest on and/or principal of the Note.

9. Remedies Upon Default. Upon the occurrence and during the continuation of
---------------------
any Event of Default, the Pledgee shall be entitled to all the rights and
remedies of a creditor contained in the Uniform Commercial Code of The
Commonwealth of Virginia (the "UCC").

10. Power of Attorney. Effective upon the occurrence and during the
-----------------
continuation of an Event of Default, the Pledgor hereby irrevocably appoints the
Pledgee as the Pledgor's attorney-in-fact for the purpose of carrying out this
Agreement and taking any action and executing any instrument which the Pledgee
may deem reasonably necessary or advisable to accomplish the purposes hereof.
Without limiting the generality of the foregoing, effective upon the occurrence
and during the continuation of an Event of Default, the Pledgee shall have the
right and power to (i) receive, endorse and collect all checks and other orders
for the payment of money made payable to the Pledgor representing any interest
or dividend or other distribution in respect of the Collateral or any part
thereof and to give full discharge for the same and (ii) to execute all
endorsements, assignments or other instruments or conveyance or transfer with
respect to all or any of the Collateral. The power of attorney granted
hereunder is coupled with an interest and is irrevocable until all the
Obligations shall have been finally and irrevocably satisfied and paid in full.

3
<PAGE>

11. Payment of Taxes, Charges, Etc. The Pledgee, at its option, may
------------------------------
discharge any taxes, charges, assessments, security interests, liens or other
encumbrances upon the Collateral. All such expenditures incurred by the Pledgee
shall become payable by the Pledgor to the Pledgee upon demand, shall bear
interest at a rate of eight percent (8%) per annum from the date incurred to the
date of payment, and shall become part of the Obligations secured by the
Collateral.

12. Waivers by Pledgor. The Pledgor hereby waives presentment, notice of
------------------
dishonor and protest of all instruments included in, or evidencing, any
obligations of the Pledgor to the Pledgee or the Collateral and all other
demands and notices of every kind in connection with this Agreement, the
Collateral or the Obligations.

13. Release of Collateral. Upon the irrevocable payment in full in cash
---------------------
of all of the Obligations, the Pledgor shall be entitled to the return of all
Collateral hereunder which has not been either previously returned or used or
applied to the payment of the Obligations.

14. Rights, Amendments and Waivers. No course of dealing between the Pledgor
------------------------------
and the Pledgee, nor any delay in exercising, on the part of the Pledgee, any
right, power or privilege hereunder, shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The Pledgee may exercise its rights with respect to
the Collateral without resorting or regard to other sources of reimbursement for
the Obligations. No amendment, modification, consent or waiver of any provision
of this Agreement or of any of the rights of the Pledgee hereunder or with
respect to the Obligations or the Collateral shall be effective unless in a
writing executed by the Pledgee, and then such amendment, modification, consent
or waiver shall be effective only in the specific instance and for the purpose
for which given.

15. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the law of The Commonwealth of Virginia without giving effect to
the conflict of laws principles thereof.

16. Severability. If any provision of this Agreement shall be held by any
------------
court of competent jurisdiction to be unenforceable, such holding shall not
affect or impair any other provision hereof.

17. Benefit of Agreement; Assignment. This Agreement shall inure to the
--------------------------------
benefit of the Pledgee and the Pledgee's successors, heirs, executors,
administrators and assigns and shall be binding upon the Pledgor and Pledgor's
heirs, executors, administrators, other legal representatives, successors and
permitted assigns. The parties hereto may not assign their rights and
obligations under this Agreement without the prior written consent of the other
parties hereto.

18. Headings and Captions. The headings and captions of the sections of this
---------------------
Agreement are for convenience only and shall in no way affect the meaning or
construction of any provision hereof.

19. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

4
<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as an
instrument under seal as of the date first above written

PLEDGOR PLEDGEE

/s/ Fredrick C. Hawkins, III
- ---------------------------------
Fredrick C. Hawkins, III ONESOFT CORPORATION

By: /s/ James W. MacIntyre, IV
------------------------------
Name: James W. MacIntyre, IV
Title: Chairman & CEO

5
<PAGE>

SCHEDULE A

PLEDGED SECURITIES

Owner Certificate Number Number of Shares of Common Stock
- ----- ------------------ --------------------------------

Fredrick C. Hawkins, III 100,000

<PAGE>

Exhibit 10.32

ONESOFT CORPORATION

2000 EMPLOYEE STOCK PURCHASE PLAN

The following constitute the provisions of the 2000 Employee Stock Purchase
Plan (the "Plan") of OneSoft Corporation (the "Company").

1. Purpose. The purpose of the Plan is to provide Employees of the Company
-------
and its Designated Subsidiaries with an opportunity to purchase Common Stock of
the Company. It is the intention of the Company to have the Plan qualify as an
"Employee Stock Purchase Plan" under Section 423 of the Internal Revenue Code of
1986, as amended. The provisions of the Plan shall, accordingly, be construed so
as to extend and limit participation in a manner consistent with the
requirements of that section of the Code.

2. Definitions.
-----------

(a) "Board" shall mean the Board of Directors of the Company, or a
-----
committee of the Board of Directors named by the Board to administer the Plan.

(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
----

(d) "Company" shall mean OneSoft Corporation, a Delaware corporation.
-------

(e) "Compensation" shall mean all compensation that is taxable income for
------------
federal income tax purposes, including, payments for overtime, shift premium,
incentive compensation, incentive payments, bonuses, commissions and other
compensation.

(f) "Continuous Status as an Employee" shall mean the absence of any
--------------------------------
interruption or termination of service as an Employee. Continuous Status as an
Employee shall not be considered interrupted in the case of a leave of absence
agreed to in writing by the Company, provided that such leave is for a period of
not more than 90 days or reemployment upon the expiration of such leave is
guaranteed by contract or statute.

(g) "Contributions" shall mean all amounts credited to the account of a
-------------
participant pursuant to the Plan.

(h) "Designated Subsidiaries" shall mean the Subsidiaries which have been
-----------------------
designated by the Board from time to time in its sole discretion as eligible to
participate in the Plan.

(i) "Employee" shall mean any person, including an officer, who is
--------
customarily employed for at least 20 hours per week and more than five months in
a calendar year by the Company or one of its Designated Subsidiaries.

(j) "Exercise Date" shall mean the last day of each Offering Period of the
-------------
Plan.

(k) "Offering Date" shall mean the first business day of each Offering
-------------
Period of the Plan, except that in the case of an individual who becomes an
eligible Employee after the first business day of an Offering Period but on or
prior to the first business day of the fourth calendar month within such
<PAGE>

Offering Period, the term "Offering Date" shall mean the first business day of
such fourth calendar month coinciding with or next succeeding the day on which
that individual becomes an eligible Employee.

Options granted after the first business day of an Offering Period will be
subject to the same terms as the options granted on the first business day of
such Offering Period except that they will have a different grant date (thus,
potentially, a different exercise price) and, because they expire at the same
time as the options granted on the first business day of such Offering Period, a
shorter term.

(l) "Offering Period" shall mean a period of six (6) months commencing on
---------------
November 1 and May 1 of each calendar year, other than the first Offering Period
as set forth in Section 4.

(m) "Plan" shall mean this OneSoft Corporation 2000 Employee Stock Purchase
----
Plan.

(n) "Subsidiary" shall mean a corporation, domestic or foreign, of which
----------
not less than 50% of the voting shares are held by the Company or a Subsidiary,
whether or not such corporation now exists or is hereafter organized or acquired
by the Company or a Subsidiary.

3. Eligibility.
-----------

(a) Any person who has been continuously employed as an Employee for three
(3) months as of the Offering Date of a given Offering Period shall be eligible
to participate in such Offering Period under the Plan, provided that such person
was not eligible to participate in such Offering Period as of any prior Offering
Date, and further, subject to the requirements of paragraph 5(a) and the
limitations imposed by Section 423(b) of the Code.

(b) Any provisions of the Plan to the contrary notwithstanding, no Employee
shall be granted an option under the Plan (i) if, immediately after the grant,
such Employee (or any other person whose stock would be attributed to such
Employee pursuant to Section 424(d) of the Code) would own stock and/or hold
outstanding options to purchase stock possessing five percent (5%) or more of
the total combined voting power or value of all classes of stock of the Company
or of any Subsidiary of the Company, (ii) which permits his or her rights to
purchase stock under all employee stock purchase plans (described in Section 423
of the Code) of the Company and its Subsidiaries to accrue at a rate which
exceeds $25,000 of fair market value of such stock (determined at the time such
option is granted) for each calendar year in which such option is outstanding at
any time, or (iii) to purchase more than 1000 shares of Common Stock in any one
Offering Period. Any option granted under the Plan shall be deemed to be
modified to the extent necessary to satisfy this paragraph (b).

4. Offering Periods. The Plan shall be implemented by a series of Offering
----------------
Periods, with a new Offering Period commencing on May 1 and November 1 of each
year (or at such other time or times as may be determined by the Board of
Directors). The initial Offering Period shall commence at a time to be
determined by the Board and continue until October 31, 2000. The Plan shall
continue until terminated in accordance with paragraph 19 hereof. The Board of
Directors of the Company shall have the power to change the duration and/or the
frequency of Offering Periods with respect to future offerings without
stockholder approval if such change is announced at least 15 days prior to the
scheduled beginning of the first Offering Period to be affected.

2
<PAGE>

5. Participation.
-------------

(a) An eligible Employee may become a participant in the Plan by completing
an Enrollment Form provided by the Company and filing it with the Company prior
to the applicable Offering Date, unless a later time for filing the Enrollment
Form is set by the Board for all eligible Employees with respect to a given
Offering Period. The Enrollment Form and their submission may be electronic, as
directed by the Company. The Enrollment Form shall set forth the percentage of
the participant's Compensation (subject to Section 6(a) below) to be paid as
Contributions pursuant to the Plan.

(b) Payroll deductions shall commence on the first payroll following the
Offering Date and shall end on the last payroll paid on or prior to the Exercise
Date of the Offering Periods to which the Enrollment Form is applicable, unless
sooner terminated by the participant as provided in paragraph 10.

6. Method of Payment of Contributions.
----------------------------------

(a) A participant shall elect to have payroll deductions made on each
payday during the Offering Period in an amount not less than 1% and not more
than 10% (or such greater percentage as the Board may establish from time to
time before an Offering Date) of such participant's Compensation on each such
payday. All payroll deductions made by a participant shall be credited to his or
her account under the Plan. A participant may not make any additional payments
into such account.

(b) A participant may discontinue his or her participation in the Plan as
provided in paragraph 10, or, on one occasion only during the Offering Period,
may decrease, but may not increase, the rate of his or her Contributions during
the Offering Period by completing and filing with the Company a new Enrollment
Form authorizing a change in the deduction rate. The change in rate shall be
effective as of the beginning of the next payroll period following the date of
the filing of the new Enrollment Form, if the Enrollment Form is completed at
least ten (10) business days prior to such date, and, if not, as of the
beginning of the next succeeding payroll period.

(c) Notwithstanding the foregoing, to the extent necessary to comply with
Section 423(b)(8) of the Code and paragraph 3(b) hereof, a participant's payroll
deductions may be decreased to 0% at such time and for so long as the aggregate
of all payroll deductions accumulated with respect to the current Offering
Period and any other Offering Period ending within the current calendar year
equals $21,250. Payroll deductions shall recommence at the rate provided in such
participant's Enrollment Form at the beginning of the first Offering Period
which is scheduled to end in the following calendar year, unless terminated by
the participant as provided in paragraph 10.

7. Grant of Option.
---------------

(a) On the Offering Date of each Offering Period, each eligible Employee
participating in such Offering Period shall be granted an option to purchase on
the Exercise Date of such Offering Period a number of shares of the Common Stock
determined by dividing such Employee's Contributions accumulated prior to such
Exercise Date and retained in the participant's account as of the Exercise Date
by the lower of (i) 85% of the fair market value of a share of Common Stock on
the Offering Date, or (ii) 85% of the fair market value of a share of the Common
Stock on the Exercise Date; provided however, that such purchase shall be
subject to the limitations set forth in Sections 3(b) and 12 hereof. The fair
market value of a share of the Common Stock shall be determined as provided in
Section 7(b) herein.

3
<PAGE>

(b) The option price per share of the shares offered in a given Offering
Period shall be the lower of (i) 85% of the fair market value of a share of the
Common Stock on the Offering Date, or (ii) 85% of the fair market value of a
share of the Common Stock on the Exercise Date. The fair market value of the
Common Stock on a given date shall be determined by the Board in its discretion
based on the closing sale price of the Common Stock for such date (or, in the
event that the Common Stock is not traded on such date, on the immediately
preceding trading date), as reported by the National Association of Securities
Dealers Automated Quotation (Nasdaq) National Market or, if such price is not
reported, the mean of the bid and asked prices per share of the Common Stock as
reported by Nasdaq or, in the event the Common Stock is listed on a stock
exchange, the fair market value per share shall be the closing sale price on
such exchange on such date (or, in the event that the Common Stock is not traded
on such date, on the immediately preceding trading date), as reported in The
Wall Street Journal.

8. Exercise of Option. Unless a participant withdraws from the Plan as
------------------
provided in paragraph 10, his or her option for the purchase of shares will be
exercised automatically on the Exercise Date of the Offering Period, and the
maximum number of full shares subject to option will be purchased for him or her
at the applicable option price with the accumulated Contributions in his or her
account. If a fractional number of shares results, then such number shall be
rounded down to the next whole number and any unapplied cash shall be carried
forward to the next Exercise Date, unless the participant requests a cash
payment. The shares purchased upon exercise of an option hereunder shall be
deemed to be transferred to the participant on the Exercise Date. During a
participant's lifetime, a participant's option to purchase shares hereunder is
exercisable only by him or her.

9. Delivery. Upon the written request of a participant, certificates
--------
representing the shares purchased upon exercise of an option will be issued as
promptly as practicable after the Exercise Date of each Offering Period to
participants who wish to hold their shares in certificate form. Any cash
remaining in a participant's account under the Plan after a purchase by him or
her of shares at the termination of each Offering Period shall be carried
forward to the next Exercise Date unless the participant requests a cash
payment.

10. Withdrawal; Termination of Employment.
-------------------------------------

(a) A participant may withdraw all but not less than all the Contributions
credited to his or her account under the Plan at any time prior to the Exercise
Date of the Offering Period by giving written notice to the Company. All of the
participant's Contributions credited to his or her account will be paid to him
or her promptly after receipt of his or her notice of withdrawal and his or her
option for the current period will be automatically terminated, and no further
Contributions for the purchase of shares will be made during the Offering
Period.

(b) Upon termination of the participant's Continuous Status as an Employee
prior to the Exercise Date of the Offering Period for any reason, including
retirement or death, the Contributions credited to his or her account will be
returned to him or her or, in the case of his or her death, to the person or
persons entitled thereto under paragraph 14 hereof, and his or her option will
be automatically terminated.

(c) In the event an Employee fails to remain in Continuous Status as an
Employee for at least 20 hours per week during the Offering Period in which the
Employee is a participant, he or she will be deemed to have elected to withdraw
from the Plan and the Contributions credited to his or her account will be
returned to him or her and his or her option terminated.

4
<PAGE>

(d) A participant's withdrawal from an Offering Period will not have any
effect upon his or her eligibility to participate in a succeeding offering or in
any similar plan which may hereafter be adopted by the Company.

11. Interest. No interest shall accrue on the Contributions of a
--------
participant in the Plan.

12. Stock.
-----

(a) The maximum number of shares of Common Stock which shall be made
available for sale under the Plan shall be 200,000 shares, plus an annual
increase beginning January 1, 2001 and ending on January 1, 2009, equal to the
lesser of (i) 1% of the Company's outstanding Common Stock, on a fully diluted,
as converted basis, or (ii) such lesser number of shares as determined by the
Board, with an aggregate maximum number of shares available under the Plan over
the life of the Plan of 2,000,000 shares, subject to adjustment upon changes in
capitalization of the Company as provided in paragraph 18. If the total number
of shares which would otherwise be subject to options granted pursuant to
Section 7(a) hereof on the Offering Date of an Offering Period exceeds the
number of shares then available under the Plan (after deduction of all shares
for which options have been exercised or are then outstanding), the Company
shall make a pro rata allocation of the shares remaining available for option
grants in as uniform a manner as shall be practicable and as it shall determine
to be equitable. Any amounts remaining in an Employee's account not applied to
the purchase of stock pursuant to this Section 12 shall be refunded on or
promptly after the Exercise Date. In such event, the Company shall give written
notice of such reduction of the number of shares subject to the option to each
Employee affected thereby and shall similarly reduce the rate of Contributions,
if necessary.

(b) The participant will have no interest or voting right in shares covered
by his or her option until such option has been exercised.

13. Administration. The Board shall supervise and administer the Plan and
--------------
shall have full power to adopt, amend and rescind any rules deemed desirable and
appropriate for the administration of the Plan and not inconsistent with the
Plan, to construe and interpret the Plan, and to make all other determinations
necessary or advisable for the administration of the Plan.

14. Designation of Beneficiary.
--------------------------

(a) A participant may file a written designation of a beneficiary who is to
receive any shares and cash, if any, from the participant's account under the
Plan in the event of such participant's death subsequent to the end of the
Offering Period but prior to delivery to him or her of such shares and cash. In
addition, a participant may file a written designation of a beneficiary who is
to receive any cash from the participant's account under the Plan in the event
of such participant's death prior to the Exercise Date of the Offering Period.
If a participant is married and the designated beneficiary is not the spouse,
spousal consent shall be required for such designation to be effective.

(b) Such designation of beneficiary may be changed by the participant (and
his or her spouse, if any) at any time by written notice. In the event of the
death of a participant and in the absence of a beneficiary validly designated
under the Plan who is living at the time of such participant's death, the
Company shall deliver such shares and/or cash to the executor or administrator
of the estate of the participant, or if no such executor or administrator has
been appointed (to the knowledge of the Company), the Company, in its
discretion, may deliver such shares and/or cash to the spouse or to any one or
more dependents or relatives of the participant, or if no spouse, dependent or
relative is known to the Company, then to such other person as the Company may
designate.

5
<PAGE>

15. Transferability. Neither Contributions credited to a participant's
---------------
account nor any rights with regard to the exercise of an option or to receive
shares under the Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will, the laws of descent and distribution
or as provided in paragraph 14 hereof) by the participant. Any such attempt at
assignment, transfer, pledge or other disposition shall be without effect,
except that the Company may treat such act as an election to withdraw funds in
accordance with paragraph 10 hereof.

16. Use of Funds. All Contributions received or held by the Company under
------------
the Plan may be used by the Company for any corporate purpose, and the Company
shall not be obligated to segregate such Contributions.

17. Reports. Individual accounts will be maintained for each participant in
-------
the Plan. Statements of account will be given to participating Employees
promptly following the Exercise Date, which statements will set forth the
amounts of Contributions, the per share purchase price, the number of shares
purchased and the remaining cash balance, if any.

18. Adjustments Upon Changes in Capitalization. Subject to any required
------------------------------------------
action by the stockholders of the Company, the number of shares of Common Stock
covered by unexercised options under the Plan and the number of shares of Common
Stock which have been authorized for issuance under the Plan but are not yet
subject to options (collectively, the "Reserves"), the maximum number of shares
of Common Stock that may be purchased by a participant in an Offering Period, as
well as the price per share of Common Stock covered by each unexercised option
under the Plan, shall be proportionately adjusted for any increase or decrease
in the number of issued shares of Common Stock resulting from a stock split,
reverse stock split, stock dividend, combination or reclassification of the
Common Stock, or any other increase or decrease in the number of shares of
Common Stock effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall not
be deemed to have been "effected without receipt of consideration." Such
adjustment shall be made by the Board, whose determination in that respect shall
be final, binding and conclusive. Except as expressly provided herein, no issue
by the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of Common Stock
subject to an option.

In the event of the proposed dissolution or liquidation of the Company, an
Offering Period then in progress will terminate immediately prior to the
consummation of such proposed action, unless otherwise provided by the Board. In
the event of a proposed sale of all or substantially all of the assets of the
Company, or the merger of the Company with or into another corporation, each
option outstanding under the Plan shall be assumed or an equivalent option shall
be substituted by such successor corporation or a parent or subsidiary of such
successor corporation, unless the Board determines, in the exercise of its sole
discretion and in lieu of such assumption or substitution, to shorten the
Offering Period then in progress by setting a new Exercise Date (the "New
Exercise Date"). If the Board shortens the Offering Period then in progress in
lieu of assumption or substitution in the event of a merger or sale of assets,
the Board shall notify each participant in writing, at least ten days prior to
the New Exercise Date, that the Exercise Date for his or her option has been
changed to the New Exercise Date and that his or her option will be exercised
automatically on the New Exercise Date, unless prior to such date he or she has
withdrawn from the Offering Period as provided in paragraph 10 hereof. For
purposes of this paragraph, an option granted under the Plan shall be deemed to
be assumed if, following the sale of assets or merger, the option confers the
right to purchase, for each share of Common Stock subject to the option
immediately prior to the sale of assets or merger, the consideration (whether
stock, cash or other securities or property) received in the sale of assets or
merger by holders of Common Stock for each share of Common Stock held on the
effective date of the transaction (and if such holders were offered a choice of
consideration, the type of

6
<PAGE>

consideration chosen by the holders of a majority of the outstanding shares of
Common Stock); provided, however, that if such consideration received in the
sale of assets or merger was not solely common stock of the successor
corporation or its parent (as defined in Section 424(e) of the Code), the Board
may, with the consent of the successor corporation, provide for the
consideration to be received upon exercise of the option to be solely common
stock of the successor corporation or its parent equal in fair market value to
the per share consideration received by holders of Common Stock in the sale of
assets or merger.

The Board may, if it so determines in the exercise of its sole discretion,
also make provision for adjusting the Reserves, as well as the price per share
of Common Stock covered by each outstanding option, in the event that the
Company effects one or more reorganizations, recapitalizations, rights offerings
or other increases or reductions of shares of its outstanding Common Stock, and
in the event of the Company being consolidated with or merged into any other
corporation.

19. Amendment or Termination. The Board may at any time terminate or amend
------------------------
the Plan. Except as provided in paragraph 18 hereof, no such termination may
affect options previously granted, nor may an amendment make any change in any
option theretofore granted which adversely affects the rights of any
participant. In addition, to the extent necessary to comply with Section 423 of
the Code (or any successor rule or provision or any applicable law or
regulation), the Company shall obtain stockholder approval in such a manner and
to such a degree as so required.

20. Notices. All notices or other communications by a participant to the
-------
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.

21. Conditions Upon Issuance of Shares. Shares shall not be issued with
----------------------------------
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.

As a condition to the exercise of an option, the Company may require the
person exercising such option to represent and warrant at the time of any such
exercise that the shares are being purchased only for investment and without any
present intention to sell or distribute such shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned applicable provisions of law.

22. Right to Terminate Employment. Nothing in the Plan or in any agreement
-----------------------------
entered into pursuant to the Plan shall confer upon any Employee or other
optionee the right to continue in the employment of the Company or any
Subsidiary, or affect any right which the Company or any Subsidiary may have to
terminate the employment of such Employee or other optionee.

23. Rights as a Stockholder. Neither the granting of an option nor
----------------------- a
deduction from payroll shall constitute an Employee the owner of shares covered
by an option. No optionee shall have any right as a stockholder unless and until
an option has been exercised, and the shares underlying the option have been
registered in the Company's share register.

24. Term of Plan. The Plan became effective upon its adoption by the Board
------------
of Directors in February, 2000 and shall continue in effect for a term of ten
(10) years unless sooner terminated under paragraph 19 hereof.

7
<PAGE>

25. Applicable Law. This Plan shall be governed in accordance with the laws
--------------
of the State of Delaware, applied without giving effect to any conflict-of-law
principles.

<PAGE>

Exhibit 23.1

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the reference to our firm under the captions "Selected
Consolidated Financial Data" and "Experts" and to the use of our report dated
February 4, 2000 to the Registration Statement (Form S-1 No. 333-94233) and
related Prospectus of OneSoft Corporation for the registration of _________
shares of its common stock.

/s/ Ernst & Young LLP

McLean, Virginia
February 25, 2000

<PAGE>

EXHIBIT 23.2

CONSENT OF THE BOSTON
CONSULTING GROUP AND SHOP.ORG

THE BOSTON CONSULTING GROUP AND SHOP.ORG HEREBY CONSENT TO THE USE OF OUR
NAMES AND THE DATA PRESENTED IN THE "BUSINESS" SECTION OF THE PROSPECTUS OF THE
ONE SOFT CORPORATION, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
(REGISTRATION NO. 333-94233).

/S/ ROBERT L. SMITH, JR.
EXECUTIVE DIRECTOR
DATE: FEBRUARY 18, 2000 SHOP.ORG

/S/ JULIE BREEN
E-COMMERCE RESEARCH
SPECIALIST

THE BOSTON CONSULTING GROUP