TRINTECH GROUP PLC, 6-K, 2000-12-15

TRINTECH GROUP PLC
6-K, 2000-12-15
PREPACKAGED SOFTWARE

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________

FORM 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934

For the nine month period ended October 31, 2000
Commission File Number: 0-30320

TRINTECH GROUP PLC
(Exact name of registrant as specified in its charter)

Ireland
(Jurisdiction of incorporation or organization)

Trintech Group PLC
Trintech Building
South County Business Park
Leopardstown
Dublin 18, Ireland

(Address of principal executive offices)

Indicate by check whether the registrant files or will file annual reports under
Form 20-F or Form 40-F.

Form 20-F X Form 40-F
------- -------

Indicate by check whether the registrant by furnishing the information contained
in this Form is also thereby furnishing the information to the Commission
pursuant to Rule 12g3-2(b) under the Securities and Exchange Act of 1934.

Yes No X
------- -------

If "Yes" is marked, indicate below the file number assigned to the registrant in
conne ction Rule 12g3-2(b):

82- N/A
---------
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Trintech Group PLC
Form 6-K
Table of Contents
<TABLE>
<CAPTION>

Financial Information:
Page
----
<S> <C>
Condensed Financial Statements (unaudited)
Condensed Consolidated Statements of Income for the Three Months and Nine Months Ended October 31, 2000 and 1999.. 3
Condensed Consolidated Balance Sheets as of October 31, 2000 and January 31, 2000................................. 4
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended October 31, 2000 and 1999............... 5
Notes to Condensed Consolidated Financial Statements................................................................... 6
Management's Discussion and Analysis of Financial Condition and Results of Operations.................................. 10
Risk Factors........................................................................................................... 24
Signatures............................................................................................................. 35

</TABLE>

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TRINTECH GROUP PLC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(U.S. dollars in thousands, except share and per share data)
<TABLE>
<CAPTION>
Three months Nine months
ended October 31, ended October 31,
--------------------------- ---------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenue:
Product.................................... $ 6,052 $ 4,890 $ 15,528 $ 13,426
License.................................... 5,932 2,357 14,386 5,693
Service.................................... 2,040 783 3,583 2,077
---------- ---------- ---------- ----------
Total Revenue...................... 14,024 8,030 33,497 21,196
---------- ---------- ---------- ----------
Cost of revenue:
Product.................................... 4,046 3,045 10,351 8,737
License.................................... 1,294 574 3,805 1,946
Service.................................... 1,701 689 3,031 1,751
---------- ---------- ---------- ----------
Total Cost of Revenue............... 7,041 4,308 17,187 12,434
---------- ---------- ---------- ----------
Gross margin.................................. 6,983 3,722 16,310 8,762

Operating expenses:
Research & development..................... 4,781 2,387 13,147 5,975
Sales & marketing.......................... 4,643 2,184 11,964 6,102
General & administrative................... 2,871 1,764 7,851 5,006
Amortization............................... 1,436 - 1,436 -
Stock compensation......................... 1,157 - 4,086 -
---------- ---------- ---------- ----------
Total operating expenses............ 14,888 6,335 38,484 17,083
---------- ---------- ---------- ----------
Income (loss) from operations................. (7,905) (2,613) (22,174) (8,321)
Interest income (expense), net............. 2,224 252 5,198 391
Exchange gain (loss), net.................. 97 222 (103) 484
---------- ---------- ---------- ----------
Income (loss) before
provision for income taxes.................... (5,584) (2,139) (17,079) (7,446)

Provision for income taxes................. (324) - (326) (1)
---------- ---------- ---------- ----------
Net income (loss)............................. $ (5,908) $ (2,139) $ (17,405) $ (7,447)
========== ========== ========== ==========
Basic and diluted net income (loss)
per Ordinary Share............................ $ (0.21) $ (0.11) $ (0.64) $ (0.43)
========== ========== ========== ==========
Shares used in computing basic and diluted net
income (loss) per Ordinary Share.............. 28,367,673 19,630,635 27,095,176 17,380,894
========== ========== ========== ==========
Basic and diluted net income (loss)
per equivalent American Depositary Share...... $ (0.10) $ (0.05) $ (0.32) $ (0.21)
========== ========== ========== ==========
</TABLE>

3
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TRINTECH GROUP PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands, except share data)

<TABLE>
<CAPTION>
October 31, 2000 January 31, 2000
---------------- ----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....................................... $ 8,368 $ 10,862
Marketable securities........................................... 116,325 48,830
Accounts receivable, net of allowance for doubtful accounts of
$1,268 and $330 respectively................................... 17,174 7,799
Inventories..................................................... 1,631 840
Value added taxes............................................... 185 192
Prepaid expenses and other assets............................... 4,804 1,332
---------------- ----------------
Total current assets.................................. 148,487 69,855
Property and equipment, net..................................... 4,754 3,190
Goodwill and purchased intangible assets........................ 37,426 -
Other assets - software development costs....................... 313 1,250
---------------- ----------------
Total assets.......................................... $ 190,980 $ 74,295
================ ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................ $ 2,229 $ 4,082
Accrued payroll and related expenses............................ 2,152 871
Other accrued liabilities....................................... 6,886 2,677
Value added taxes............................................... 1,167 460
Warranty reserve................................................ 472 556
Deferred revenue................................................ 2,964 3,406
---------------- ----------------
Total current liabilities............................. 15,870 12,052
---------------- ----------------
Capital lease due after more than one year...................... 779 409
Government grants repayable and related loans................... 332 718

Series B preference shares, $0.0027 par value
10,000,000 authorized;
None issued and outstanding.................................... - -
Shareholders' equity:
Ordinary Shares, $0.0027 par value: 100,000,000 shares
authorized; 28,561,826 and 25,140,722 shares issued and
outstanding at October 31, 2000 and January 31, 2000
respectively................................................... 79 71

Additional paid-in capital...................................... 213,937 84,286
Accumulated deficit............................................. (38,990) (21,585)
Accumulated other comprehensive income.......................... (1,027) (1,656)
---------------- ----------------
Total shareholders' equity............................ 173,999 61,116
---------------- ----------------
Total liabilities and shareholders' equity............ $ 190,980 $ 74,295
================ ================
</TABLE>

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TRINTECH GROUP PLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollars in thousands)

<TABLE>
<CAPTION>
Three months Nine months
ended October 31, ended October 31,
--------------------------- ---------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)................................... $ (5,908) $ (2,139) $ (17,405) $ (7,447)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities:
Depreciation and amortization................... 2,215 580 3,572 1,671
Stock compensation.............................. 1,157 20 4,086 60
(Profit) on marketable securities............... (2,035) (141) (4,667) (145)
Purchase of marketable securities............... (348,517) (160,642) (957,165) (165,648)
Sale of marketable securities................... 363,646 107,038 894,336 117,895
Effect of changes in foreign currency exchange
rates.......................................... (302) (207) 1,029 (582)
Changes in operating assets and liabilities:
Inventories....................... 111 (28) (733) (213)
Accounts receivable............... (4,921) (3,613) (9,153) (5,448)
Prepaid expenses and other assets. (1,931) 890 (3,591) (170)
Value added tax receivable........ 59 (63) (24) 284
Accounts payable.................. (2,094) (226) (2,125) 1,005
Accrued payroll and related
expenses......................... (42) (2) 1,227 189
Deferred revenues................. 385 1,035 (857) 1,597
Value added tax payable........... 594 (2) 679 5
Warranty reserve.................. (3) (157) (7) (167)
Government grants repayable
and related loans................ - - (319) 247
Other acrued liabilities.......... 2,228 1,318 3,726 1,610
---------- ---------- ---------- ----------
Net cash provided by (used in) operating activities. 4,642 (56,339) (87,391) (55,257)
---------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (717) (644) (1,898) (1,132)
Payment to acquire Checkline (10,154) - (10,154) -
Net cash used in investing activities (10,871) (644) (12,052) (1,132)
---------- ---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on capital leases................ (88) (29) (153) (87)
Issuance of ordinary shares......................... 646 63,150 98,286 63,185
Expense of share issue.............................. - (3,256) (1,713) (3,256)
Repayments under bank overdraft..................... - - - (388)
---------- ---------- ---------- ----------
Net cash provided by (used in) financing activities. 558 59,865 96,420 59,454
---------- ---------- ---------- ----------
Net (decrease) increase in cash and cash equivalents (5,671) 2,882 (3,023) 3,065
Effect of exchange rate changes on cash and cash
equivalents........................................ 242 8 529 8
Cash and cash equivalents at beginning of period.... 13,797 1,874 10,862 1,691
---------- ---------- ---------- ----------
Cash and cash equivalents at end of period $ 8,368 $ 4,764 $ 8,368 $ 4,764
========== ========== ========== ==========
Supplemental disclosure of cash flow information
Interest paid................................... $ 16 $ 1 $ 22 $ 3
========== ========== ========== ==========
Taxes paid...................................... $ 57 $ - $ 59 $ 1
========== ========== ========== ==========
Supplemental disclosure of non-cash flow information
Acquisition of property and equipment under
capital leases................................. $ 683 $ 40 $ 799 $ 62
========== ========== ========== ==========
</TABLE>

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TRINTECH GROUP PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Interim Condensed Consolidated Financial Statements.

These interim condensed consolidated financial statements have been
prepared by Trintech Group PLC ("Trintech") pursuant to the rules and
regulations of the Securities and Exchange Commission and in accordance
with U.S. generally accepted accounting principles for interim financial
information. Accordingly, certain information and footnote disclosures
normally included in annual financial statements have been omitted or
condensed. In the opinion of management, all necessary adjustments
(consisting of normal recurring accruals) have been made for a fair
presentation of financial positions, results of operations and cash flows
at the date and for the periods presented. The operating results for the
quarter ended October 31, 2000 are not necessarily indicative of the
results that may be expected for the year ending January 31, 2001. See
"Factors Affecting Future Results." For further information refer to the
consolidated financial statements and footnotes for the year ended January
31, 2000 included in Trintech's Annual Report on Form 20-F and the German
Verkaufsprospekt/Untermechmensbericht dated May 8, 2000.

The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and the accompanying footnotes. Actual results could differ from those
estimates.

2. Irish Companies Acts, 1963 to 1999

The condensed consolidated financial information in this document does not
comprise full accounts as referred to in Section 19 of the Companies
(Amendment) Act, 1986, copies of which are required by that Act to be
annexed to Trintech's annual return and the information as of and for the
periods ended October 31, 2000 and October 31, 1999 is unaudited. A copy
of the full accounts for the year ended January 31, 2000, prepared in
accordance with Irish generally accepted accounting principles, is annexed
to the relevant annual return, and was filed in August 2000. The auditors
have reported without qualification under Section 193 of the Companies Act,
1990 in respect of such accounts.

The accompanying condensed consolidated financial statements are prepared
in accordance with generally accepted accounting principles in the United
States and include the Company and its wholly-owned subsidiaries in
Ireland, the United Kingdom, the Cayman Islands, Germany and the United
States after eliminating all material inter-company accounts and
transactions.

6
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3. Marketable Securities

Marketable securities are considered to be trading securities per SFAS 115
and are carried on the balance sheet at their market value.

4. Inventories
<TABLE>
<CAPTION>
October 31 January 31
2000 2000
(in thousands) (in thousands)
---------------- -----------------
<S> <C> <C>
Raw materials........................................... $ 143 $ 78
Finished goods.......................................... 1,488 762
Total................................................... $ 1,631 $ 840
</TABLE>

5. Comprehensive Income (Loss)

The following table sets forth the calculation of comprehensive income
(loss) for the three month and nine month periods ended October 31, 2000
and October 31, 1999:

<TABLE>
<CAPTION>
Three months ended Nine months ended
October 31, October 31,
2000 1999 2000 1999
-------- -------- -------- --------
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
Net loss............................... $ (5,908) $ (2,139) $(17,405) $ (7,447)
Other comprehensive income (loss)...... (818) (301) 629 (697)
-------- -------- -------- --------
Comprehensive loss..................... $ (6,726) $ (2,440) $(16,776) $ (8,144)
======== ======== ======== ========
</TABLE>

6. Computation of Net Loss Per Ordinary Share

<TABLE>
<CAPTION>
Three months ended Nine months ended
October 31, October 31,
2000 1999 2000 1999
---------- ---------- ---------- -----------
(In thousands, except share and per share data)
<S> <C> <C> <C> <C>
Numerator:
Numerator for basic and diluted
net loss per ordinary share
Net loss................................. $ (5,908) $ (2,139) $ (17,405) $ (7,447)
---------- ---------- ---------- -----------
</TABLE>

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<TABLE>
<CAPTION>
Denominator:
Denominator for basic and diluted
net loss per ordinary share
<S> <C> <C> <C> <C>
Weighted average ordinary shares......... 28,367,673 19,630,635 27,095,176 17,380,894
---------- ---------- ---------- -----------

Basic and diluted net loss per
ordinary share........................... $ (0.21) $ (0.11) $ (0.64) $ (0.43)
---------- ---------- ---------- -----------
</TABLE>
7. Acquisition

On August 25, 2000 the Company acquired Checkline, a privately held company in
the United Kingdom, for a total consideration of approximately $44 million. The
consideration comprises the issuance of ordinary shares equivalent to 1.2
million American depositary shares, $10 million in cash and a two-year
performance earn-out of approximately $5 million. Checkline is a transaction
processing and electronic card payment company. It combines expertise in
software, communications and systems integration to provide a comprehensive
range of secure payment solutions for transaction processing, integrated
merchant transaction management and eCommerce. Checkline has been accounted for
under the purchase accounting method. To date we have recorded goodwill of
approximately $39 million as a result of the acquisition of Checkline. Goodwill,
in respect of Checkline is being amortized on a straight-line basis over 5
years.

8. Subsequent Events

On November 15, 2000 the Company acquired Sursoft, a privately held Latin
American card and merchant management software company for total consideration
of approximately $10.7 million. The consideration is being effected through the
issuance of ordinary shares with a value of $3.5 million, $5.0 million in cash
and a five-year performance earn-out of at least $2.2 million. Sursoft
specializes in payment card and merchant management software for credit, debit
or smart cards and has over 10 years of secure payment software experience.
Sursoft has been accounted for under the purchase accounting method. As a result
there will be significant goodwill and other intangible assets amortized to the
income statement over their useful lives.

On November 19, 2000, the Company executed an agreement to acquire the primary
assets of Globeset for approximately $31 million, including intellectual
property rights to all of its software products. The consideration is being
effected through the issuance of ordinary shares with a value of $10 million and
the remainder in cash and the assumption of liabilities. Globeset products
include an enterprise wallet platform, a secure payment processing platform, and
a back office business to business platform. This acquisition is subject to the
completion of certain closing conditions, including obtaining all necessary
regulatory approvals.

8
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year earn out of $10 million, which if earned will be paid through the issuance
of American Depository Shares. The issuance price of these American Depository
Shares will be the higher of the price at date of issuance or $14. Exceptis
Technologies Limited is a leading provider of Internet enabled payment
infrastructure solutions for fraud prevention, automated payment card dispute
resolution and risk management for card issuers, financial transaction
processors and acquirers.

9
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

The following discussion should be read in conjunction with the Condensed
Consolidated Financial Statements and the Notes thereto appearing elsewhere in
this report. The following discussion contains "forward looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Any "forward
looking statements" are subject to certain risks and uncertainties that could
cause actual results to differ materially from those stated. "Forward looking
statements" may include, among others, statements regarding Trintech's expected
revenues, earnings, gross margins and overall financial performance in future
quarters, customer adoption of Trintech's mCommerce payment technology,
continued investment in Trintech's research and development and sales and
marketing programs, development of Trintech's eCommerce payment infrastructure
solutions on multi-platforms and Trintech's acquisition strategy and ability to
integrate recent and future acquisitions with and into Trintech. Factors that
could cause or contribute to such differences include Trintech's ability to
develop, market and sell its eCommerce and mobile commerce (m-commerce)
software, the market acceptance of the SSL or SET standards for eCommerce
payment transactions, its ability to effectively respond to future changes in
the e-payment software market, the continued market demand for its electronic
point-of-sale systems, the performance of third parties, including MasterCard,
Visa, Discover and Motorola under technology, marketing or other strategic
alliances, potential synergies of Trintech's recent acquisitions and their
effects on actual revenues, earnings, gross margins and overall financial
performance and the availability of financial resources to continue investment
in research and development and sales and marketing programs. Actual performance
may also be affected by other factors more fully discussed in the section
entitled "Factors That May Affect Future Results" appearing elsewhere in this
report and in Trintech's Form 20-F for the fiscal year ended January 31, 2000,
and Form 6-K for the fiscal quarter ended July 31, 2000, filed with the U.S.
Securities and Exchange Commission.

"Fiscal 1999" refers to the fiscal year ended January 31, 1999, "fiscal 2000"
refers to the fiscal year ended January 31, 2000 and "fiscal 2001" refers to the
fiscal year ending January 31, 2001.

Overview

From our organization through 1995, we developed and marketed electronic
PoS systems and e-payment software for payment card transactions in the physical
world. In early fiscal 1997, we launched our first products for Internet e-
payment transactions. Today, our revenue is primarily derived from three
sources:

Product Revenue. Product revenue, which continues to represent a
significant proportion of our total revenue, is derived from sales of our
electronic PoS system products, primarily the Compact 9000 and 9000i PoS devices
and the Compact 950-PP pin pad. Revenue for these products is recognized at the
time the products are shipped.

License Revenue. Software license revenue is derived from license fees from
our e-

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payment software products for payment card transactions in the physical world
and over the Internet, and the provision of related support and maintenance
services to customers. We recognize software license revenue under SOP 97-2.
Under the terms of SOP 97-2, where an arrangement to deliver software does not
require significant production, modification or customization, we recognize
software license revenue when all of the following criteria are met:

. persuasive evidence of an arrangement exists;
. delivery has occurred;
. our fee is fixed or determinable; and
. collectibility is probable.

We also license our software on a recurring rental basis, and, under SOP
97-2, we recognize revenue from these arrangements ratably over the life of the
agreement. Customer support and maintenance fees are established as a percentage
of the software license price, typically 18% per year, and are generally paid
quarterly. We recognize revenue related to customer support and maintenance fees
ratably over the life of the agreement.

Service Revenue. We derive service revenue from consulting services,
educational and training services and customization and implementation services.
Services are provided primarily on a time and materials basis for which revenue
is recognized in the period that the services are provided.

With the launch of our first Internet product in the year ended January 31,
1997, or fiscal 1997, we shifted our growth strategy to emphasize e-payment
software products for Internet applications. We have historically sold our
products primarily through a direct sales force in Europe and North and South
America. We have established strategic relationships with VISA, RSA Data
Security, SAP America, Sun Microsystems, Unisys, MasterCard, VeriSign, Motorola,
Logica, ValiCert, Planet Payment, Baltimore, Oracle and Philips which provide
joint marketing opportunities as well as lead-generation for our direct sales
force. To facilitate worldwide market penetration, we have begun to establish
indirect sales channels, such as resellers and systems integrators. Revenue from
products sold through indirect sales channels is recognized net of commissions
and discounts.

<TABLE>
<CAPTION>
Three months ended Nine months ended
October 31, October 31,
2000 1999 2000 1999
------ ------ ------- -------
(in thousands of U.S. dollars) (in thousands of U.S. dollars)
<S> <C> <C> <C> <C>
Germany 10,861 9,347 28,772 27,141
Europe (excluding Germany) 4,716 2,042 13,148 5,895
Rest of the world 2,834 1,333 10,964 3,619
Eliminations (4,387) (4,692) (19,387) (15,459)
------ ------ ------- -------
Total 14,024 8,030 33,497 21,196
====== ====== ======= =======
</TABLE>

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<PAGE>

Cost of product revenue includes outsourced manufacturing costs, packaging,
documentation, labor and other costs associated with packaging and shipping our
electronic PoS system products. Cost of license revenue includes shipping,
software documentation, labor, third-party license fees and other costs
associated with the delivery of software products from which license revenue is
derived, the cost of providing after-sale support and maintenance services to
customers and the amortization of capitalized software development costs. Cost
of service revenue includes labor, travel and other non-recoverable costs
associated with the delivery of services to customers.

Research and development expenses consist primarily of labor and associated
costs connected with the development of our software products and electronic PoS
system products. Sales and marketing expenses consist of labor costs, including
commissions, travel and other costs associated with sales activity, and
advertising, trade show participation, public relations and other marketing
costs. General and administrative expenses consist primarily of labor and
recruitment costs, facilities costs, telephone and other office costs and
depreciation.

Due to our decision to emphasize e-payment software products for Internet
applications, in fiscal 1999 and in fiscal 2000, we substantially increased our
operating expenditures to build our presence in this business. This has included
significant increases in our research and development expenses related to the
development of e-commerce capable products, and substantial increases in our
sales and marketing personnel as we have expanded our global sales capabilities.
More recently, we have increased our research and development expenditure to
develop software applications for the mobile commerce payment market. We intend
to continue to grow our operating expenditures and, consequently, we expect to
continue to report losses from operations through at least fiscal 2002.

We operate as a holding company with operating subsidiaries in Ireland,
Germany, the United Kingdom and the United States and a financing subsidiary in
the Cayman Islands. Each subsidiary is taxed based on the laws of the
jurisdiction in which it is incorporated. Because taxes are incurred at the
subsidiary level, and one subsidiary's tax losses cannot be used to offset the
taxable income of subsidiaries in other tax jurisdictions, our consolidated
effective tax rate may increase to the extent that we report tax losses in some
subsidiaries and taxable income in others. In addition, our tax rate may also be
affected by costs that are not deductible for tax purposes, such as amortization
of goodwill.

We have significant operations and generate substantially all of our
taxable income in the United Kingdom and the Republic of Ireland, and some of
our Irish operating subsidiaries are taxed at rates substantially lower than
U.S. tax rates. One Irish subsidiary currently qualifies for a 10% tax rate
which, under current legislation, will remain in force until December 31, 2010,
and another Irish subsidiary qualifies for an exemption from income tax as our
revenue source is license fees from qualifying patents within the meaning of
Section 234 of the Irish Taxes Consolidation Act, 1997. We currently anticipate
that we will continue to benefit from this tax

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<PAGE>

treatment, although the extent of the benefit could vary from period to period,
and our tax situation may change. In addition, if these subsidiaries were no
longer to qualify for these tax rates or if the tax laws were rescinded or
changed, our operating results could be materially adversely affected.

A significant portion of our revenue, costs, assets and liabilities are
denominated in currencies other than the U.S. dollar, and we and all of our
subsidiaries, other than our U.S. and Cayman Islands subsidiaries, have
functional currencies other than the U.S. dollar. These currencies fluctuate
significantly against the U.S. dollar. As a result of the currency fluctuations
resulting primarily from fluctuations in the U.S. dollar and the Irish pound and
the conversion to U.S. dollars for financial reporting purposes, we experience
fluctuations in our operating results on an annual and, in particular, on a
quarterly basis. From time to time we have in the past and may in the future
hedge against the fluctuations in exchange rates. Future hedging transactions
may not successfully mitigate losses caused by currency fluctuations. We expect
to continue to experience exchange rate fluctuations on an annual and quarterly
basis, and currency fluctuations could have a material adverse impact on our
results of operations.

The conversion to the euro has not had a material effect on the pricing of,
or the market for, our products, licenses and services, and we do not expect the
conversion will have a material effect in the future.

Our quarterly revenue and operating results have historically been subject
to significant fluctuations due to a variety of factors described below, and we
anticipate that this volatility will continue. As a result, period-to-period
comparisons of our results of operations are not necessarily meaningful and
these comparisons should not be relied upon as indications of our future
performance. It is likely that in some future quarters our results of
operations will be below the expectations of public market analysts and
investors, which could have a severe adverse effect on the trading price of our
American depository shares.

We have experienced significant fluctuations in our quarterly product
revenue. In particular, electronic PoS systems revenue has generally been
higher in the quarter ended January 31 of each year as customers on a calendar-
based fiscal year complete their capital spending plans in December and have
capital budgets available in January.

License revenue can fluctuate significantly from quarter to quarter for a
number of reasons. A significant portion of our software revenue is typically
derived from a limited number of customers. As a result, small changes in the
number of customers in a particular quarter can significantly affect software
license revenue for that quarter. Additionally, because the price of our
software products varies significantly based on the product and the
functionality, the product mix in a particular quarter can also significantly
affect license revenue in that quarter.

Service revenue has varied significantly from quarter to quarter. Service
revenue has been significantly impacted by the number of customers requesting
services and the scope of the service engagements undertaken in a particular
quarter. The demand for customization services

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can vary as a result of the mix of products that are licensed to our customers
as well as the requirements of the customers for customization of our products
to suit their needs. As the functionality of our product line has broadened, the
portion of service revenue attributable to customization has declined. This is
being replaced by increased demand for consultancy, integration, educational and
training services.

Cost of revenue and gross margin has varied substantially from quarter to
quarter, both in line with revenue fluctuations and due to factors such as
headcount costs, currency fluctuations and facilities cost increases. Cost of
license revenue may be further impacted by license fees payable to third parties
from whom we license technology, which can vary depending upon product mix.
Because a substantial percentage of our costs are fixed, quarterly fluctuations
in total revenue result in significant fluctuations in our costs as a percentage
of revenue.

The level of research and development expenditures can vary from quarter to
quarter due to changing labor costs and other costs associated with growth in
headcount. In connection with our strategy emphasizing e-payment software
products for Internet applications, we have generally increased our research and
development expenditures over the past few years, including the development of
new products for mobile commerce in the current fiscal year.

Sales and marketing expenditure can vary significantly from quarter to
quarter depending on the timing of our advertising and promotion campaigns, the
hiring of sales personnel and the establishment of sales offices. We are
continuing to build our sales and marketing organization, and these expenditures
generally have increased from quarter to quarter.

Recent Developments

Acquisitions

On August 25, 2000 the Company acquired Checkline, a privately held company
in the United Kingdom, for a total consideration of approximately $44 million.
The consideration comprises the issuance of ordinary shares equivalent to 1.2
million American depositary shares, $10 million in cash and a two-year
performance earn-out of approximately $5 million. Checkline is a transaction
processing and electronic card payment company. It combines expertise in
software, communications and systems integration to provide a comprehensive
range of secure payment solutions for transaction processing, integrated
merchant transaction management and eCommerce. Checkline has been accounted for
under the purchase accounting method. We recorded goodwill of approximately $39
million as a result of the acquisition of Checkline. Goodwill, in respect of
Checkline is being amortized on a straight-line basis over 5 years.

14
<PAGE>

cards and has over 10 years of secure payment software experience. Sursoft has
been accounted for under the purchase accounting method. As a result there will
be significant goodwill and other intangible assets amortized to the income
statement over their useful lives.

On November 19, 2000, the Company executed an agreement to acquire the
primary assets of Globeset for approximately $31million, including intellectual
property rights to all of its software products. The consideration is being
effected through the issuance of ordinary shares with a value of $10 million and
the remainder in cash and the assumption of liabilities, subject to final
adjustment to the amount of assumed indebtedness. Globeset products include an
enterprise wallet platform, a secure payment processing platform, and a back
office business to business platform. This acquisition is subject to the
completion of certain closing conditions, including obtaining all necessary
regulatory approvals. As a result there will be significant goodwill and other
intangible assets amortized to the income statement over their useful lives.

On November 20, 2000 the Company acquired Exceptis Technologies Limited for
a total consideration of approximately $26 million, comprising approximately $16
million consideration at closing, effected through the issuance of 1.8 million
American Depository Shares, and a two year earn out of $10 million, which if
earned will be paid through the issuance of American Depository Shares. The
issuance price of these American Depository Shares will be the higher of the
price at date of issuance or $14. Exceptis Technologies is a leading provider of
Internet enabled payment infrastructure solutions for fraud prevention,
automated payment card dispute resolution and risk management for card issuers,
financial transaction processors and acquirers. As a result there will be
significant goodwill and other intangible assets amortized to the income
statement over their useful lives.

Revenue in the acquired companies can fluctuate significantly from quarter
to quarter for a number of reasons. A significant portion of their revenue is
typically derived from a limited number of customers. As a result, small
changes in the number of customers in a particular quarter can significantly
affect revenue for that quarter. Additionally, because the price of the
acquired companies products varies significantly based on the product and the
functionality and between the companies, the product mix in the acquired
companies in a particular quarter can also significantly affect revenue in that
quarter.

Cost of revenue and gross margin in the acquired companies has varied
substantially from quarter to quarter, both in line with revenue fluctuations
and due to factors such as headcount costs, currency fluctuations and facilities
cost increases. The level of research and development expenditures can vary from
quarter to quarter due to changing labor costs and other costs associated with
growth in headcount. In connection with their relevant business strategies they
have generally increased research and development expenditures over the past few
years.

Sales and marketing expenditure in the acquired companies can vary
significantly from quarter to quarter depending on the timing of advertising and
promotion campaigns and the hiring of sales personnel. They are continuing to
build their sales and marketing organizations, and these expenditures generally
have increased from quarter to quarter.

15
<PAGE>

Quarterly Results of Operations

The following table presents our results of operations expressed as a percentage
of total
revenue, after giving effect to rounding, for the periods indicated:

<TABLE>
<CAPTION>
Three months Nine months
ended October 31, ended October 31,
---------------------------------- ----------------------------------
2000 1999 2000 1999
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Revenue:
Product 43% 61% 46% 63%
License 42% 29% 43% 27%
Service 15% 10% 11% 10%
-------------- -------------- -------------- --------------
Total Revenue 100% 100% 100% 100%
-------------- -------------- -------------- --------------
Cost of revenue:
Product 29% 38% 31% 41%
License 9% 7% 11% 9%
Service 12% 9% 9% 8%
-------------- -------------- -------------- --------------
Total Cost of Revenue 50% 54% 51% 59%
-------------- -------------- -------------- --------------
Gross margin 50% 46% 49% 41%

Operating expenses:
Research & development 34% 30% 39% 28%
Sales & marketing 33% 27% 36% 29%
General & administrative 20% 22% 23% 24%
Amortization 10% - 4% -
Stock compensation 8% - 12% -
-------------- -------------- -------------- --------------
Total operating expenses 106% 79% 115% 81%
-------------- -------------- -------------- --------------
Income (loss) from operations (56%) (33%) (66%) (39%)

Interest income (expense), net 16% 3% 16% 2%
Exchange (loss) gain, net 1% 3% (0%) 2%
Income (loss) before
provision for income taxes (40%) (27%) (51%) (35%)

Provision for income taxes (2%) - (1%) -
-------------- -------------- -------------- --------------
Net income (loss) (42%) (27%) (52%) (35%)

-------------- -------------- -------------- --------------
</TABLE>

16
<PAGE>

Revenue

Total Revenue. Total revenue increased $6 million to $14.0 million in the
quarter ended October 31, 2000 from $8 million in the quarter ended October 31,
1999, an increase of 75%. In the nine months ended October 31, 2000, total
revenue increased $12.3 million to $33.5 million from $21.2 million in the nine
months ended October 31, 1999, an increase of 58%. The increase was attributable
to increased sales of software license fees, services, electronic PoS system
products and the inclusion of Checkline revenue which was not included in the
comparable quarter of last year.

We have historically derived a significant portion of our total revenue from a
small number of customers. In the quarter ended October 31, 2000, Tyco accounted
for 10% of our total revenue. In the quarter ended October 31, 1999, Tyco
accounted for 23% of our total revenue and Deutsche Verkehrs Bank Zentrale
accounted for 11% of our total revenue. In the nine months ended October 31,
2000, Tyco accounted for 14% of our total revenue. In the nine months ended
October 31, 1999, Tyco accounted for 27% of our total revenue and B&S accounted
for 10% of our total revenue.

Product. Product revenue increased $1.2 million to $6.1 million in the quarter
ended October 31, 2000 from $4.9 million in the quarter ended October 31, 1999,
an increase of 24%. In the nine months ended October 31, 2000 product revenue
increased $2.1 million to $15.5 million from $13.4 million in the nine months
ended October 31, 1999, an increase of 16%. Product sales represented 43% and
46% of total revenue in the quarter and nine months ended October 31, 2000,
respectively, compared to 61% and 63% of total revenue in the quarter and nine
months ended October 31, 1999, respectively. The increase in product sales was
due primarily to increased volume of sales and the inclusion of Checkline
revenue, which was not included in the comparable quarter of last year. This
increase, however, was partially offset by lower average selling prices for our
electronic PoS system products.

License. Software license revenue increased $3.5 million to $5.9 million in the
quarter ended October 31, 2000 from $2.4 million in the quarter ended October 31
1999, an increase of 152%. In the nine months ended October 31, 2000 software
license revenue increased $8.7 million to $14.4 million from $5.7 million in the
nine months ended October 31, 1999, an increase of 153%. Software license
revenue represented 42% and 43% of total revenue in the quarter and nine months
ended October 31, 2000, respectively, compared to 29% and 27% of total revenue
in the quarter and nine months ended October 31, 1999, respectively. The
increase in software license revenue was primarily due to increased sales of our
e-payment software infrastructure products to new customers, associated service
and maintenance fees and the inclusion of Checkline revenue, which was not
included in the comparable quarter of last year.

Service. Service revenue increased $1.3 million to $2 million in the quarter
ended October 31, 2000 from $783,000 in the quarter ended October 31, 1999, an
increase of 161%. In the nine months ended October 31, 2000 service revenue
increased $1.5 million to $3.6 million from $2.1 million in the nine months
ended October 31, 1999, an increase of 73%. The increase in service

17
<PAGE>

revenue primarily resulted from an increase in sales of software licenses, which
resulted in increased demand for training, project management and consulting
services and the inclusion of Checkline revenue, which was not included in the
comparable quarter of last year.

Cost of Revenue

Total Cost of Revenue. Total cost of revenue increased $2.7 million to $7
million in the quarter ended October 31, 2000 from $4.3 million in the quarter
ended October 31, 1999, an increase of 63%. In the nine months ended October 31,
2000 total cost of revenue increased $4.8 million to $17.2 million from $12.4
million in the nine months ended October 31, 1999, an increase of 38%. Total
gross margin increased to 50% and 49% for the quarter and nine months ended
October 31, 2000, respectively, from 46% and 41% for the quarter and nine months
ended October 31, 1999, respectively. Improvements in the gross margins are
attributable to the increase in high margin software license revenue as a
percentage of total revenue.

Product. Cost of product revenue increased $1 million to $4 million in the
quarter ended October 31, 2000 from $3 million in the quarter ended October 31,
1999, an increase of 33%. In the nine months ended October 31, 2000, cost of
product revenue increased $1.6 million to $10.3 million from $8.7 million in the
nine months ended October 31, 1999, an increase of 18%. The increase in the cost
of product revenue in absolute dollars primarily resulted from increased volume
of sales and the inclusion of Checkline cost, which was not included in the
comparable quarter of last year. Product revenue costs represented 67% of
product revenue for the quarter and nine months ended October 31, 2000, compared
to 62% and 65% of product revenue in the quarter and nine months ended October
31, 1999.

License. Cost of software license revenue increased $720,000 to $1.3 million in
the quarter ended October 31, 2000 from $574,000 in the quarter ended October
31, 1999, an increase of 125%. In the nine months ended October 31, 2000, cost
of software license revenue increased $1.9 million to $3.8 million from $1.9
million in the nine months ended October 31, 1999, an increase of 96%. The
increase primarily resulted from increased expenditures in both infrastructure
and labor costs associated with the expansion of our support and maintenance
facilities and the cost of third-party software products sold as part of our e-
payment software. Software license costs were 22% and 26% of license revenue in
the quarter and nine months ended October 31, 2000, respectively, compared to
24% and 34% in the quarter and nine months ended October 31, 1999, respectively.
The decrease as a percentage of license revenue reflects the substantial
increase in license revenue compared to the quarter and nine months ended
October 31, 1999. The increase in absolute dollars resulted from increased
expenditures in both infrastructure and labor costs associated with the
expansion of our support and maintenance facilities, the cost of third-party
software products sold as part of our e-payment software solution sales and the
inclusion of Checkline cost, which was not included in the comparable quarter of
last year.

Service. Cost of service revenue increased $1 million to $1.7 million for the
quarter ended October 31, 2000 from $689,000 for the quarter ended October 31,
1999 an increase of 147%. In the nine months ended October 31, 2000 cost of
service revenue increased $1.3 million to $3

18
<PAGE>

million from $1.7 million in the nine months ended October 31, 1999, an increase
of 73%. Service costs were 83% and 85% of service revenue in the quarter and
nine months ended October 31, 2000, respectively, compared to 88% and 84% of
service revenue in the quarter and nine months ended October 31, 1999,
respectively. The increase in the cost of service revenue primarily resulted
from increased headcount, investment in infrastructure and the inclusion of
Checkline cost, which was not included in the comparable quarter of last year.

Operating Expenses

Research and Development. Research and development expenses increased $2.4
million to $4.8 million in the quarter ended October 31, 2000 from $2.4 million
in the quarter ended October 31, 1999, an increase of 100%. In the nine months
ended October 31, 2000, research and development expenses increased $7.1 million
to $13.1 million from $6 million in the nine months ended October 31, 1999, an
increase of 120%. Research and development expenses were 34% and 39% of total
revenue in the quarter and nine months ended October 31, 2000, respectively
compared to 30% and 28% of total revenue in the quarter and nine months ended
October 31, 1999 respectively. The increase in absolute dollars and as a
percentage of total revenue was primarily due to an increase in number of
research and development employees required to accelerate research and
development activity and the inclusion of Checkline research and development
expenditure in the quarter and nine months ended October 31, 2000.

Sales and Marketing. Sales and marketing expenses increased $2.4 million to $4.6
million in the quarter ended October 31, 2000 from $2.2 million in the quarter
ended October 31, 1999, an increase of 113%. In the nine months ended October
31, 2000, sales and marketing expenses increased $5.9 million to $12 million
from $6.1 million in the nine months ended October 31, 1999, an increase of 96%.
Sales and marketing expenses were 33% and 36% of total revenue in the quarter
and nine months ended October 31, 2000, respectively, compared to 27% and 29% of
total revenue in the quarter and nine months ended October 31, 1999
respectively. The increase primarily resulted from the recruitment of additional
sales personnel, the expansion of our sales offices in the United States and
Europe, increases in direct marketing activities and travel costs and the
inclusion of Checkline sales and marketing expenditure in the quarter and nine
months ended October 31, 2000.

General and Administrative. General and administrative expenses increased $1.1
million to $2.9 million in the quarter ended October 31, 2000 from $1.8 million
in the quarter ended October 31, 1999, an increase of 63%. In the nine months
ended October 31, 2000 general and administrative expenses increased $2.8
million to $7.8 million from $5 million in the nine months ended October 31,
1999, a 57% increase. General and administrative expenses were 20% and 23% of
total revenue for the quarter and nine months ended October 31, 2000,
respectively, compared to 22% and 24% for the quarter and the nine months ended
October 31, 1999. The increase in absolute dollars primarily resulted from
increases in labor costs related to hiring additional management and
administrative personnel, telecommunications and management information systems
costs, provision for doubtful debts, an increase in depreciation costs and the
inclusion of Checkline general and administration expenditure in the quarter and
nine months ended October 31, 2000.

19
<PAGE>

Amortization: Amortization expense was $1.4 million in the quarter ended October
31, 2000. This was a result of goodwill and purchased intangible assets recorded
in connection with the acquisition of Checkline during the quarter.

Stock Compensation. We recorded, in the quarter ended October 31, 2000 and in
the nine months ended October 31, 2000, $1.2 million and $4.1 million
respectively of non-cash stock compensation associated with options to acquire
an aggregate of 230,000 ordinary shares (460,000 equivalent ADSs) granted to
members of our advisory board and MasterCard at fair market value on the date of
grant. The options were treated as variable options for accounting purposes
under Financial Accounting Standard 123 and Emerging Issues Task Force abstract
96-18 ("Accounting for Equity Instruments that are Issued to Other Than
Employees for Acquiring, or in Conjunction with Selling, Goods and Services"
(EITF 96-18)). As a result non-cash stock compensation was related to the
difference between the exercise price of these options and the fair market value
of our ADSs on the measurement date of the options, multiplied by the number of
options time-apportioned over their respective vesting periods, less the
aggregate amount of stock compensation charges previously recorded for these
option grants. In May 2000, we revised these option grants so that in future
periods the non-cash compensation charge is fixed on a quarterly basis as
follows:

<TABLE>
<S> <C>
Quarter Ending January 31, 2001........................... $1,157,300
Quarter Ending April 30, 2001............................. $ 469,175
Quarter Ending October 31, 2001........................... $ 97,231
</TABLE>

Interest Income (Expense), Net. Interest income (expense), net consists of
interest income and interest expense. Interest income, net was $2.2 million in
the quarter ended October 31, 2000 compared to $252,000 of interest income
(expense), net in the quarter ended October 31, 1999. In the nine months ended
October 31, 2000 interest income (expense), net increased $4.8 million to $5.2
million of interest income (expense), net compared to $391,000 of interest
income (expense), net in the nine months ended October 31, 1999. The increase
was due to higher cash balances arising from the completion of an initial public
offering in September 1999 and our secondary offering in May 2000.

Provision for Income Taxes. Provision for income taxes was $324,000 in the
quarter ended October 31, 2000 and $326,000 in the nine months ended October
31, 2000 compared to $0 for income taxes in the quarter ended October 31, 1999
and $1,000 for income taxes in the nine months ended October 31, 1999. The
increase is due to increased activities in the United Kingdom including
Checkline.

Liquidity and Capital Resources

On May 4, 2000, we completed a secondary public offering and received net
proceeds of $93.5 million from the sale of 2,225,000 ordinary shares. On
September 24, 1999, we completed our initial public offering and received net
proceeds of approximately $59.5 million from the sale of 5,887,598 ordinary
shares. In fiscal 1999, we raised an aggregate of $20.0 million in private

20
<PAGE>

placements of 482,765 ordinary shares and 3,000,000 redeemable convertible
preference shares. Prior to fiscal 1999, we had satisfied our cash requirements
principally through cash generated by operations, proceeds from the sale of
ordinary shares to a single outside investor and borrowings under our bank
credit facilities.

We have an approved credit facility from Bank of Ireland of IR(Pounds)650,000,
or approximately $690,000 of October 31, 2000. The credit facility bears
interest at the bank's overdraft rate which was 7.74% per year as of October 31,
2000. The facility does not have a stated expiration date, but all amounts drawn
under it are repayable on demand. As of October 31, 2000, there was $0
outstanding under the credit facility. As of October 31, 2000, we had working
capital of $132.6 million, including cash and cash equivalents totaling $8.3
million and marketable securities totaling $116.3 million.

Net cash used in operating activities was approximately $87.4 million in the
nine months ended October 31, 2000 compared to $55.3 million in the same period
in 1999. This is due to our allocation of cash to marketable securities and our
net loss of $17.4 million for the nine months ended October 31, 2000.

Net cash used in investing activities was approximately $12.1 million in the
nine months ended October 31, 2000 compared to $1.1 million for the nine months
ended October 31, 1999. The increase was due to a payment to acquire Checkline
and the purchase of property and equipment.

Net cash provided by financing activities was $96.4 million for the nine months
ended October 31, 2000 compared to net cash provided of $59.5 million for the
nine months ended October 31, 1999. Cash, cash equivalents and short-term
investments totaled $124.7 million at October 31, 2000 compared with $59.7
million at January 31, 2000. This increase is due to the completion of our
secondary offering.

Although we have no material commitments for capital expenditures or strategic
investments, other than those resulting from acquisitions as discussed above, we
anticipate an increase in the rate of capital expenditures consistent with our
anticipated growth in operations, infrastructure and personnel. Our future
liquidity and capital requirements will depend upon numerous factors including
the cost and timing of expansion of product development efforts and the success
of these development efforts, the cost and timing of expansion of sales and
marketing activities, the extent to which our existing and new products gain
market acceptance, market developments, the level and timing of license revenue
and available borrowings under line of credit arrangements.

We believe that the proceeds generated by the sale of our securities in our
initial public offering and our follow-on offering, together with funds
available under our credit facility, cash generated from operations and cash and
cash equivalents on hand, will be sufficient to meet our projected working
capital requirements for at least the next 12 months. However, the underlying
assumed levels of revenues and expenses may prove to be inaccurate. We may be
required to finance any additional requirements within the next twelve months or
beyond through additional equity, debt financings or credit

21
<PAGE>

facilities. We may not be able to obtain additional financings or credit
facilities, or if these funds are available, they may not be available on
satisfactory terms. If funding is insufficient at any time in the future, we may
be unable to develop or enhance our products or services, take advantage of
business opportunities or respond to competitive pressures. If we raise
additional funds by issuing equity securities, dilution to existing shareholders
will result.

Qualitative and Quantitative Disclosure About Market Risk

Interest income and expense are sensitive to changes in the general level of
Irish and U.S. interest rates, particularly since our investments are in short-
term instruments and our available line of credit requires interest payments at
variable rates. One of our foreign subsidiaries has in the past entered into
foreign exchange contracts as a hedge against accounts receivable in currencies
other than the Irish pound. However, as of October 31, 2000, neither we nor our
subsidiaries were parties to any foreign currency hedging or other derivative
financial instruments. Based on the nature and current levels of our investments
and debt, we have concluded that there is no material market risk exposure.

Our investment policy requires us to invest funds in excess of current operating
requirements in marketable securities such as commercial paper, corporate bonds
and U.S. government agency fixed income securities. As stated in our investment
policy, we are averse to principal loss and seek to ensure the safety and
preservation of invested funds by limiting default and market risks. We mitigate
default risk by investing only in investment-grade securities.

At October 31, 2000, our cash and cash equivalents consisted primarily of highly
liquid investments with maturity of three months or less. We have concluded that
this does not result in any material market risk exposure.

Year 2000

The year 2000 issue exists because many computer systems and applications use
two-digit rather than four-digit date fields to designate a year. As a result,
the systems and applications may not properly recognize the year 2000 or be able
to process data including it, which has the potential to cause data
miscalculations or inaccuracies, operational malfunctions or failures.

We have not experienced any problems with our computer systems relating to such
systems being unable to recognize appropriate dates related to the year 2000. We
are also not aware of any material problems with our clients or vendors.
Accordingly, we do not anticipate incurring material expenses or experiencing
any material operational disruptions as a result of year 2000 issues.

22
<PAGE>

Employees

We employed the following numbers of employees as of October 31, 2000 and 1999:
<TABLE>
<CAPTION>
As of
------------------------
October 31, October 31,
2000 1999
------------------------
<S> <C> <C>
Research and development........................... 201 141
Professional and support services.................. 68 40
Sales and marketing................................ 89 48
Administration..................................... 68 36
---- ----
Total.............................................. 426 265
---- ----
</TABLE>

Of our total number of employees as of October 31, 2000, 180 are located in
Ireland, 112 are located in Europe outside Ireland and 134 are located in North
America.

23
<PAGE>

FACTORS THAT MAY AFFECT FUTURE RESULTS

In addition to the other factors identified in this Report on Form 6-K, the
following risk factors could materially and adversely affect the Company's
future operating results, and could cause actual events to differ materially
from those predicted in the Company's forward looking statements relating to its
business.

We recently emphasized e-commerce software for Internet payment transactions, an
area in which we have limited experience.

We introduced our first e-commerce software product for Internet payment
transactions in 1996, and the majority of our e-commerce products and modules
that we currently market have been released in the last twelve months. As a
result, we have a very limited operating history in developing, marketing and
selling our e-commerce software, which makes the prediction of future operating
results for this portion of our business very difficult. A substantial majority
of our research and development expenses in the past two years has related to e-
commerce software for payment card transactions, and this effort will continue
to account for a significant percentage of our total research and development
expenses. Demand for our e-commerce software may not increase and these products
may not gain market acceptance. If we fail to increase sales of our e-commerce
software, our future revenue and net income, as well as the prospects for this
critical portion of our business, will be materially adversely affected.

The standards for e-commerce payment transactions that we support may not
achieve broad market acceptance or market acceptance may be slower than
anticipated.

A significant part of our business strategy is to continue to develop
software products that support both SSL and SET standards for payment card
transactions over the Internet. If neither achieves broad market acceptance, our
results of operations and prospects will be materially adversely affected. In
addition, if a new standard emerges that is more accepted by the marketplace, we
may not be successful in developing products that comply with that standard on a
timely basis, or at all.

The SSL standard was developed in 1996, but it has not achieved broad
acceptance outside of North America. In particular, SSL has not achieved broad
acceptance in Europe, which is currently our primary market for our e-payment
solutions for payment card transactions in the physical world. The SET standard
was first implemented in 1997 to address perceived security limitations of SSL.
However, the SET standard has been adopted at a slower rate than we originally
anticipated, and currently the SET standard has achieved limited market
acceptance, particularly in the United States. Because our product development
efforts have focused on these two standards, future sales of our e-payment
products for Internet transactions and the rate of revenue growth attributable
to these products, will be materially adversely affected if these standards do
not achieve broad market acceptance.

24
<PAGE>

Part of our strategy has been, and continues to be, to develop products
that support the SET standard. We pursue this strategy because we believe that
marketing SET-compliant products can differentiate us from competitors that do
not market SET-compliant products. We further believe that this differentiation
is important to our business because the level of competition relating to SSL
products is significantly greater than that relating to SET products. However,
the adoption of SET has been impeded by several factors, including:

. the ease of using SSL as compared to SET
. limited financial incentives for cardholders and merchants to use SET
. the installed base of SSL technology, including embedded functionality
in Netscape products

If SET technology is not broadly adopted, we will lose a potential
competitive advantage, and our prospects and results of operations could be
materially adversely affected.

To be successful, we will need to effectively respond to future changes in the
rapidly developing markets in which we sell our software products.

The markets for our e-payment software solutions for the physical world
and, in particular, for payment card transactions over the Internet, are at
early stages of development and are rapidly evolving. Our ability to design,
develop, introduce and support new e-payment software products and enhancements
to existing products on a timely basis that meet changing market needs and
respond to technological developments is critical to our future success. In
addition, these products will need to support industry standards and
interoperate with a variety of third parties' products, including those of our
competitors. We may be unable to develop interoperable products, and widespread
adoption of a proprietary or closed e-payment standard could preclude us from
effectively doing so. Also, the number of businesses and cardholders engaged in
e-commerce may not grow or could decrease, reducing the potential market for our
e-commerce products.

The market for e-payment solutions for mobile commerce may not develop and, if
it does develop, we may not be able to develop products that successfully
compete in this market, either of which would significantly impact our financial
results and prospects.

In February 2000, we announced the availability of our first e-payment
solution for making online purchases from mobile phones and other wireless
devices. We intend to invest a significant portion of our future research and
development expenses to enhance this first product and to develop one or more
additional products for the m-commerce payment market. However, we cannot
predict whether we will be successful in these development efforts or whether
our existing product or any future m-commerce products will gain market
acceptance. We do not currently expect to recognize significant revenue from m-
commerce products until at least late fiscal 2002. In addition, if this market
develops, we may face significant competition from major telecommunication
service providers and mobile phone handset and equipment providers, among
others. These companies have significantly more resources than us and may
develop new

25
<PAGE>

standards for payment card mobile phone based transactions which we do not
address and may not be able to support in the future. In addition, these
companies may provide similar products to ours at a lower cost or at no cost to
facilitate sales of their telecom equipment or mobile phones. If we fail to
generate significant sales of our m-commerce payment products, our future
revenue and net income, as well as the prospects for this portion of our
business, will be materially adversely affected.

We depend on sales of our electronic point-of-sale systems for payment card
transactions for a substantial majority of our total revenue.

A substantial majority of our total revenue historically has been derived
from the sale of our electronic payment card point-of-sale system products. We
expect that these products will continue to account for a significant percentage
of our total revenue through at least fiscal 2002. We have historically marketed
our electronic PoS system products solely in Europe, and particularly in
Germany. For fiscal 2000, our customers in Germany accounted for over 60% of our
electronic PoS system product revenues. We intend to continue to focus
substantially all of our marketing efforts for our electronic PoS system
products in Europe, and particularly in Germany. As a result, our future results
of operations will depend on continued market demand for, and acceptance of,
these products in Europe in general and Germany in particular. A reduction in
demand for our electronic PoS system products could have a material adverse
effect on our business, financial condition and results of operations.

Average selling prices for electronic PoS system products may continue to
decline, adversely affecting our results of operations, particularly our revenue
and operating and net income.

The market for electronic PoS system products is characterized by
increasing price competition, which historically has caused the average selling
prices of our electronic PoS systems to decrease over the life of each product.
We expect this trend to continue. To offset declines in the average selling
prices of our electronic PoS system products, we will need to reduce the cost of
these products by implementing cost reduction design changes, obtaining cost
reductions as and if volumes increase and successfully managing manufacturing
and subcontracting relationships. We do not operate our own manufacturing
facilities, and, as a result, we may not be able to reduce our costs as rapidly
as companies that operate their own manufacturing facilities. If we do not
design and introduce lower cost versions of our electronic PoS system products
in a timely manner or successfully manage our manufacturing relationships,
margins on our electronic PoS system products will decrease. A decrease in
margins or an accelerated decrease in average selling prices could have a
material adverse effect on our business, financial condition and results of
operations.

We have incurred losses and expect continued losses.

We incurred a net loss of $12.1 million for the year ended January 31,
2000, and we have incurred net losses in our last eleven quarters. As of October
31, 2000, we had an accumulated deficit of $39 million. In fiscal 2001 we
substantially increased our operating expenditures to

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build our presence in the e-commerce software business. This has included
significant increases in our research and development expenses related to the
development of e-commerce capable products, and substantial increases in our
sales and marketing personnel. We intend to continue to grow our operating
expenditures and, consequently, we expect to continue to report losses from
operations for at least one year.

Our business is subject to currency fluctuations that can adversely affect our
operating results.

Due to our multinational operations, our business is subject to
fluctuations based upon changes in the exchange rates between the currencies in
which we collect revenues or pay expenses and the Irish pound and the euro. In
particular the value of the U.S. dollar impacts our operating results. Our
expenses are not necessarily incurred in the currency in which revenue is
generated, and, as a result, we are required from time to time to convert
currencies to meet our obligations. These currency conversions are subject to
exchange rate fluctuations, and changes to the value of the Irish pound or the
euro relative to other currencies could adversely affect our business and
results of operations. For example, sales of our electronic PoS systems in
Germany are denominated in euro while a portion of the related manufacturing
costs are denominated in U.K. pounds sterling. As a result, in the year ended
January 31, 2000 and for the nine months ended October 31, 2000, margins on
electronic PoS systems were negatively impacted.

In addition, our consolidated financial statements are prepared in Irish
pounds and translated to U.S. dollars for reporting purposes. As a result, even
when foreign currency expenses substantially offset revenues in the same
currency, our net income may be diminished, or our net loss increased, when
reported in U.S. dollars in our financial statements.

Our quarterly operating results are difficult to predict because they can
fluctuate significantly. This limits your ability to evaluate our historical
financial results and increases the likelihood that our results will fall below
market analysts' expectations, which could cause the price of our ADSs to drop
rapidly and severely.

We have experienced significant quarterly fluctuations in operating results
and cash flows and we expect that these fluctuations will continue in future
periods. In addition, our revenue is difficult to predict for several reasons.
As a result, we believe that our quarterly revenue, expenses and operating
results are likely to vary significantly in the future. Thus, it is likely that
in some future quarters our results of operations will be below the expectations
of public market analysts and investors, which could have a severe adverse
effect on the trading price of our ADSs. We also believe that period-to-period
comparisons of our quarterly operating results are not necessarily meaningful
and that, as a result, these comparisons should not be relied upon as
indications of our future performance.

Quarterly fluctuations have been, and may in the future be, caused by
factors which

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include:

. the size and timing of orders
. currency fluctuations
. product mix
. the rate of acceptance of new products
. purchasing and payment patterns of our customers
. our pricing policies and those of our competitors

In addition, our revenue is difficult to predict for the following reasons:

. we have generally recognized a substantial portion of our revenue in
the last month of each quarter
. the market for our e-commerce products is new and rapidly changing
. the sales cycle for our products is typically 6 to 12 months and
varies substantially from customer to customer

Over the past few years, we have substantially increased our investment in
our infrastructure, and we expect to continue to do so. As a result, if revenue
in any quarter falls below expectations, expenditure levels could be
disproportionately high as a percentage of revenue, and our business and
operating results for that quarter would be adversely affected, perhaps
materially.

We may fail to integrate adequately acquired products, technologies or
businesses.

From time to time, we evaluate opportunities to acquire additional product
offerings, complementary technologies and businesses, up to November 20, 2000 we
have acquired Checkline, Sursoft, Exceptis Technologies and executed an
agreement to acquire the primary assets of Globeset subject to the completion of
certain closing conditions, including obtaining all necessary regulatory
approvals. There are significant inherent risks in these and any future
acquisitions including:

. assimilating acquired products, technologies and businesses,
. amortization of acquired intangible assets,
. diversion of our management's attention from normal daily operations of the
business,
. potential difficulties in completing projects associated with in-process
research and development,
. risks of entering markets in which we have no or limited direct prior
experience and where competitors in such markets have stronger market
positions
. initial dependence on unfamiliar supply chains or relatively small supply
partners
. insufficient revenues to offset increased expenses associated with
acquisitions; and
. the potential loss of key employees of the acquired company

Our management has limited experience in assimilating acquired organizations and
products into our operations and such assimilation is inherently risky. We may
not be able to integrate

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successfully any products or technologies or businesses that might be acquired
in the future, and the failure to do so could have a material adverse effect on
our business and results of operations.

We derive a significant amount of our revenues from a limited number of
customers.

A significant percentage of our revenue is derived from a limited number of
our customers. Approximately 40% of our total revenue for the year ended January
31, 2000 and 29% of our total revenue for the three months ended October 31,
2000 was attributable to our three largest customers in those periods. The loss
of any major customer, or any reduction or delay in orders by any major
customer, could have a material adverse effect on our business, financial
condition and results of operations.

We rely on strategic relationships that may not continue in the future.

We have developed strategic relationships with larger, public companies. We
rely in part on these relationships to co-market our products and generate leads
for our direct sales force. However, these relationships are not exclusive, and
the third party generally is not obligated to market our products or provide
leads. We will need to establish additional strategic relationships to be
successful.

Two of the companies with which we have developed a strategic relationship
are VISA International and MasterCard International. We believe that our
reputation has benefited from past transactions and joint press releases with
these companies, as well as from VISA's equity investment in us in 1998. Neither
customer is obligated to continue to conduct business or marketing activities
with us. VISA or MasterCard's endorsement of one or more of our competitors
could cause existing customers to switch to competitors and could materially
adversely affect our ability to add new customers.

Our success depends on our ability to expand our direct sales force.

We have sold our products almost exclusively through our direct sales
force. Our future revenue growth will depend in large part on our ability to
recruit, train and manage additional sales personnel worldwide. We have
experienced and continue to experience difficulty in recruiting qualified sales
personnel, and the market for these personnel is highly competitive. We may not
be able to successfully expand our direct sales force, and any expansion of the
sales force may not result in increased revenue. Our business and results of
operations will be materially adversely affected if we fail to successfully
expand our direct sales force.

Our growth may be limited if we fail to build an indirect sales channel.

Indirect sales channels accounted for approximately 4% of our total revenue
in fiscal 2000. We recently have established relationships with a limited number
of resellers and systems integrators and consultants. These are new, early-stage
relationships and, as such, are generally untested. Our existing indirect
channels will have to generate significant revenue and we will

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need to establish additional indirect channels to be successful.

Increased competition may result in decreased demand for our products and
services, which may result in reduced revenues and gross margins and loss of
market share.

The market for e-payment software and electronic PoS systems is intensely
competitive, and we expect competition to continue to increase. Our competitors
include Verifone, a subsidiary of Hewlett-Packard, and Giesecke & Devrient for
our electronic PoS system products, and IBM, Verifone and Brodia for our e-
payment software. Growing competition may result in reduced revenues and gross
margins and loss of market share, any one of which could have a material adverse
effect on our business, financial condition and results of operations. Some
competitors in our market have longer operating histories, significantly greater
financial, technical, marketing and other resources, greater brand recognition
and a larger installed customer base than we do. In addition, current and
potential competitors may make strategic acquisitions or establish cooperative
relationships to expand their product offerings and to offer more comprehensive
e-payment solutions. We also expect to face additional competition as other
established and emerging companies enter the market for e-payment solutions.

We depend on a few key personnel to manage and operate us.

Our success is largely dependent on the personal efforts and abilities of
our senior management, including in particular John McGuire, Cyril McGuire,
George Burne, Kevin Shea, Paul Byrne, Chris Meehan and John Harte. The loss of
one or more of members of our senior management could have a material adverse
effect on our business and prospects.

If we are unable to attract and retain highly skilled personnel with experience
in the e-payment and banking industries, we may be unable to grow our business.

The market for qualified personnel with experience in the e-payment and
banking industries in general, and software engineers with this experience in
particular, is highly competitive. Our strategic plan requires continued
investment in research and development and sales and marketing personnel.
Failure to successfully attract, hire, assimilate and retain qualified personnel
could limit the rate at which we develop new products and generate sales, which
could have a material adverse effect on our business, prospects and results of
operations.

Our reliance on third parties to manufacture our electronic PoS system products
involves risks, including, in particular, reduced control over the manufacturing
process and product quality.

Our electronic PoS system products are manufactured by Keltek and Fujitsu.
Our reliance on outsourced manufacturers involves significant risks, including:

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. reduced control over delivery schedules, quality assurance and cost
. the potential lack of adequate manufacturing capacity
. the potential misappropriation of our intellectual property

We must make binding forecasts as much as three months in advance of
expected delivery dates. If product sales do not meet these forecasts, our
cashflow would be adversely impacted, and the risk that our inventory could
become obsolete would increase. If Keltek or Fujitsu cease manufacturing our
electronic PoS system products or increase their prices, we may not be able to
rapidly obtain alternative capacity at a comparable price. Any delay in delivery
of products to our customers or any increase in manufacturing costs could have a
material adverse effect on our business and results of operations.

We have in the past received products that contained defects from our
manufacturers. Because we warrant the quality of our electronic PoS system
products to our customers, we have been required to repair or replace defective
products at our own expense. This expense has in the past exceeded the amounts
reimbursed to us by the manufacturers. This expense has not in the past had a
material adverse effect on our results of operations. However, any repetition of
these or similar problems could have a material adverse effect on our
reputation, business and results of operations.

We may not be able to timely respond to rapid technological changes that impact
our business.

The markets for our e-payment software and electronic PoS system solutions
are susceptible to rapid changes due to technology innovation, evolving industry
standards, changes in customer and cardholder needs and frequent new product
introductions. We will need to use leading technologies effectively, continue to
develop our technical expertise and enhance our existing products on a timely
basis to compete successfully in these markets. We may not be successful in
achieving these business requirements.

We may be unable to protect our proprietary rights. Unauthorized use of our
technology may result in development of products which compete with our
products.

Our success depends in part on our ability to protect our rights in our e-
payment and PoS system technology. We rely upon a combination of patents,
contractual rights, trade secrets, copyright laws and trademarks to establish
and protect these rights. We also enter into confidentiality agreements with our
employees, consultants and third parties to seek to limit and protect the
distribution of our proprietary information regarding this technology. However,
we have not signed protective agreements in every case. Unauthorized parties may
copy aspects of our products and obtain and use information that we regard as
proprietary. Other parties may breach confidentiality agreements and other
protective contracts we have executed. We may not become aware of, or have
adequate remedies in the event of, a breach.

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Some may claim that we infringe their intellectual property rights, which could
result in costly litigation or require us to reengineer or cease sales of our
products.

We believe that our products do not infringe upon the intellectual property
rights of others and that we have all rights necessary to use the intellectual
property employed in our business. However, we have not performed patent
searches for all of the technologies encompassed in our products. Third parties
may in the future claim that our current or future products infringe their
proprietary rights. Any infringement claim, with or without merit, could result
in costly litigation or require us to reengineer or cease sales of our products,
any of which could have a material adverse effect on our business, financial
condition, results of operations and prospects. Infringement claims could also
require us to enter into royalty or licensing agreements. Licensing agreements,
if required, may not be available on terms acceptable to us or at all.

Our industry and our customers' industry are subject to government regulations
that could limit our ability to market our products.

Our current and prospective customers include non-U.S. and state and
federally chartered banks and savings and loan associations. These customers, as
well as customers in other industries that we plan to target in the future,
operate in markets that are subject to extensive and complex regulation. While
we are not directly subject to this regulation, our products and services must
be designed to work within the extensive and evolving regulatory constraints
under which our customers operate. If our products fail to comply with
regulations applicable to our customers, or if we cannot timely and cost-
effectively respond to changes in the regulatory environments of each of our
customers, our product sales could be materially adversely affected, which could
have a material adverse effect on our business, prospects and results of
operations.

Exports of software products utilizing encryption technology are generally
restricted by the U.S., Irish, German and various other foreign governments. Our
inability to obtain and maintain required approvals under these regulations
could adversely affect our ability to sell our products. Also, U.S., Irish,
German or other foreign legislation or regulations may further limit levels of
encryption or authentication technology that may be sold or exported. Any export
restrictions of this sort, new legislation or regulations, or increased costs of
compliance could have a material adverse effect on our business, results of
operations and prospects.

Our electronic PoS system products must comply with standards established
by telecommunications authorities in various countries, as well as with
recommendations of quasi-regulatory authorities and standards-setting
committees. Failure to comply with these standards and recommendations could
limit our ability to sell these products.

Rapid growth could strain our personnel and systems.

We have recently experienced rapid expansion of our operations in multiple
countries,

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which has placed, and is expected to continue to place, significant demands on
our administrative, operational and financial personnel and systems. Because of
these demands, we hired a significant number of employees in fiscal 1999 and
fiscal 2000 and expect to continue hiring during fiscal 2001. Our inability to
train and integrate our new employees and promptly address and respond to rapid
growth if it occurs could have a material adverse effect on our business and
results of operations.

Trading in our shares could be subject to extreme price fluctuations and you
could have difficulty trading your shares.

The market for shares in newly public technology companies is subject to
extreme price and volume fluctuations, often unrelated to the operating
performance of these companies. Due to the potential volatility of our stock
price, we may in the future be the target of securities class action litigation.
Securities litigation could result in substantial costs and divert our
management's attention and resources. In addition, although the ADSs are quoted
on the Nasdaq National Market and the Neuer Markt, the daily trading volume has
been limited. An active trading market may not develop or be sustained. In
addition, the Neuer Markt is a new trading market. The Neuer Markt may
experience delays in settlement and clearance as trading volume increases. These
factors could adversely affect the market price of the ADSs.

The rights of shareholders in Irish corporations may be more limited than the
rights of shareholders in United States and German corporations.

The rights of holders of ordinary shares and, therefore, some of the rights
of ADS holders, are governed by Irish law and the laws of the European Union. As
a result, the rights of our shareholders differ from, and may be more limited
than, the rights of shareholders in typical United States or German
corporations. In particular, Irish law significantly limits the circumstances
under which shareholders of Irish corporations may bring derivative actions.

Our three largest shareholders have the ability to significantly influence
corporate actions, which limits your ability to influence or control corporate
actions. This concentration of ownership also can reduce the market price of the
ADSs.

Our three largest shareholders own approximately 44% of our equivalent
ADSs. If these shareholders act together, they will have the ability to
significantly influence the election of directors and the outcome of all
corporate actions requiring shareholder approval. This concentration of
ownership also may have the effect of delaying or preventing a change in control
of us, which in turn could reduce the market price of the ADSs.

Our corporate tax rate may increase, which could adversely impact our cash flow,
financial condition and results of operations.

We have operations and generate substantially all of our taxable income in
the United Kingdom and the Republic of Ireland. Currently, some of our Irish
subsidiaries are taxed at rates substantially lower than U.S. or German tax
rates. If our Irish subsidiaries were no longer to qualify for these lower tax
rates or if the applicable tax laws were rescinded or changed, our

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operating results could be materially adversely affected. In addition, if
German, U.S. or other foreign tax authorities were to change applicable tax laws
or successfully challenge the manner in which our subsidiaries' profits are
currently recognized, our taxes could increase, and our business, cash flow,
financial condition and results of operations could be materially adversely
affected.

The German takeover code, our articles of association and Irish law may make an
acquisition of us more difficult, which could affect the trading price of our
ADSs.

As required by the Neuer Markt, we have adopted the takeover code
recommended by the Stock Exchange Expert Commission at the German Federal
Ministry of Finance. Although this takeover code does not have the force of law,
it is generally required by the Frankfurt Stock Exchange that companies listed
on the Neuer Markt acknowledge these takeover provisions. The applicability of
the takeover code, as well as provisions of our articles of association and
Irish law, could delay, defer or prevent a change of control of us, which in
turn could reduce the market price of the ADSs. In addition, the rights of our
shareholders under the takeover code could differ from the rights of
shareholders under the United States federal and state laws governing tender
offers and takeovers.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.

TRINTECH GROUP PLC

By:/s/ John McGuire
---------------------
John McGuire
Chief Executive Officer

Dated: December 14, 2000