724 SOLUTIONS INC, F-1/A, 1999-12-15

724 SOLUTIONS INC
F-1/A, 1999-12-15
BUSINESS SERVICES, NEC

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<PAGE>
FILE NO. 333-90143

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 15, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
--------------------------

AMENDMENT NO. 1
TO

FORM F-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------

724 SOLUTIONS INC.

(Exact name of Registrant as specified in its charter)

<TABLE>
<S> <C> <C>
ONTARIO 7372 INAPPLICABLE
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>

4101 YONGE STREET, SUITE 702
TORONTO, ONTARIO M2P IN6
(416) 226-2900
(Address and telephone number of Registrant's principal executive offices)

CT CORPORATION SYSTEM
111 8TH AVENUE
NEW YORK, NEW YORK 10011
(212) 247-2882

(Name, address and telephone number of agent for service)
--------------------------

COPIES TO:

<TABLE>
<S> <C> <C> <C>
ROBERT S. TOWNSEND, ESQ. BRIAN LUDMER, ESQ. MARC M. ROSSELL, ESQ. DEBORAH ALEXANDER, ESQ.
MARK L. MANDEL, ESQ. Goodman Phillips & Shearman & Sterling Osler, Hoskin &
Morrison & Foerster LLP Vineberg 599 Lexington Avenue Harcourt LLP
1290 Avenue of the 250 Yonge Street New York, New York 10022 1 First Canadian Place
Americas Suite 2400 (212) 848-4000 P.O. Box 50
New York, New York Toronto, Ontario M5B 2M6 Toronto, Ontario M5X 1B8
10104-0012 (416) 979-2211 (416) 362-2111
(212) 468-8000
</TABLE>

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

APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
--------------------------

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

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

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

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

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

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED MAXIMUM
TITLE OF CLASS OF AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C>
Common Shares.............................................. $89,700,000 $23,680.00(2)
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933, as amended.

(2) A registration fee in the amount of $27,800 was paid on or about
November 2, 1999.
--------------------------

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

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE

This Registration Statement includes two forms of prospectuses, one which
will be used for offers in the U.S., and one that will be used for offers in
Canada. The alternative pages for the Canadian prospectus are set forth prior to
Part II of this Registration Statement.
<PAGE>
SUBJECT TO COMPLETION, DATED DECEMBER 15, 1999
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
<PAGE>
6,000,000 Shares

[724 SOLUTIONS LOGO]

Common Shares

---------

We are offering - common shares in the United States through a syndicate
of U.S. underwriters and - common shares in Canada through a syndicate of
Canadian underwriters. The underwriters have an option to purchase a maximum of
900,000 additional common shares to cover over-allotments of common shares.

Prior to this offering, there has been no public market for our common
shares. The initial public offering price is expected to be between $11.00 and
$13.00 per common share. We have applied to list our common shares on The Nasdaq
Stock Market's National Market under the symbol "SVNX" and on The Toronto Stock
Exchange under the symbol "SVN".

Investing in our common shares involves risks. See "Risk Factors" starting
on page 6.

<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public Commissions 724 Solutions
--------------- --------------- ---------------
<S> <C> <C> <C>
Per Share..................................... $ - $ - $ -
Total......................................... $ - $ - $ -
</TABLE>

Delivery of the common shares will be made on or about - .

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

Credit Suisse First Boston

Robertson Stephens

Thomas Weisel Partners LLC

The date of this prospectus is - .
<PAGE>
TABLE OF CONTENTS

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PAGE
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<S> <C>
PROSPECTUS SUMMARY.................... 3
RISK FACTORS.......................... 6
FORWARD-LOOKING STATEMENTS............ 17
USE OF PROCEEDS....................... 18
DIVIDEND POLICY....................... 18
EXCHANGE RATES........................ 18
CAPITALIZATION........................ 19
DILUTION.............................. 20
SELECTED CONSOLIDATED FINANCIAL
DATA................................ 21
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS....................... 22
BUSINESS.............................. 31
</TABLE>

<TABLE>
<CAPTION>
PAGE
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<S> <C>
MANAGEMENT............................ 44
CERTAIN TRANSACTIONS.................. 51
PRINCIPAL SHAREHOLDERS................ 53
DESCRIPTION OF SHARE CAPITAL.......... 54
SHARES ELIGIBLE FOR FUTURE SALE....... 55
INCOME TAX CONSEQUENCES............... 57
UNDERWRITING.......................... 61
LEGAL MATTERS......................... 64
EXPERTS............................... 64
WHERE YOU CAN FIND MORE INFORMATION... 64
INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS.......................... F-1
</TABLE>

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY ONLY BE USED WHERE IT IS LEGAL
TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY ONLY BE ACCURATE
ON THE DATE OF THIS DOCUMENT.

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

DEALER PROSPECTUS DELIVERY OBLIGATION

UNTIL , 2000 (25 DAYS AFTER THE COMMENCEMENT OF THIS OFFERING),
ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS
IN ADDITION TO THE DEALER'S OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS AN
UNDERWRITER AND WITH RESPECT TO UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

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

2
<PAGE>
PROSPECTUS SUMMARY

THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS.
THIS SUMMARY DOES NOT CONTAIN ALL OF THE INFORMATION THAT YOU SHOULD CONSIDER
BEFORE INVESTING IN THE COMMON SHARES. YOU SHOULD READ THE ENTIRE PROSPECTUS
CAREFULLY, INCLUDING THE CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES.

724 SOLUTIONS INC.

We provide an Internet infrastructure solution to financial institutions
that enables them to offer personalized and secure on-line banking, brokerage
and e-commerce services across a wide range of Internet-enabled wireless and
consumer electronic devices. Our solution enables consumers to access these
services through network service providers using digital mobile phones, personal
digital assistants, two-way pagers and personal computers. With critical
security features built in, our solution can be quickly implemented and
integrated with existing systems, and scaled or expanded to accommodate future
growth. Using our platform, financial institutions may build on their consumers'
trust and provide new levels of service in an easy to use, personalized way.

The emergence of the Internet is having a significant effect on the delivery
of financial services to consumers. As a group, on-line consumers represent an
affluent and important market segment. These consumers are increasingly using
new methods, including wireless technologies, to access the Internet. The
convergence of the Internet and digital wireless technologies presents new
opportunities for financial institutions. Using our platform, financial
institutions can differentiate their services to retain and strengthen their
existing customer relationships and attract new customers.

Our objective is to become the leading provider of Internet infrastructure
solutions for the secure delivery of transaction and information services to
consumers. To differentiate us from our competitors, our strategy is to:

- FOCUS INITIALLY ON LEADING FINANCIAL INSTITUTIONS: Our target market
includes the largest financial institutions worldwide. Currently, Bank of
America, Citigroup and Bank of Montreal, three of our major shareholders,
are in various stages of implementing our solution on a non-exclusive
basis. These institutions have a worldwide customer base with
approximately 137 million customer relationships.

- ACCELERATE ADOPTION OF OUR SOLUTION BY CONSUMERS WORLDWIDE: Dataquest
projects that there will be 828 million digital wireless subscribers
worldwide by the end of 2003. To enable our customers to offer their
services to these subscribers, we are currently working with network
service providers including Bell Mobility and Sprint to provide broad
geographic coverage. We are also working with device manufacturers
including Ericsson, Motorola, Neopoint, Nokia, Palm Computing, Qualcomm
and Research In Motion to support a wide range of Internet-enabled
devices. We intend to deliver a consistent and compelling consumer
experience worldwide across a broad range of networks and devices.

- ACCELERATE ADOPTION OF OUR SOLUTION BY FINANCIAL INSTITUTIONS: In order to
enable rapid implementation of our platform, we are working with system
integrators, including Deloitte & Touche. In the future, we intend to
provide an application hosting service that will enable financial
institutions to operate the software and other components of our solution
on equipment maintained by us or by one or more third parties. We are
currently building the capacity to provide this service.

- EXPAND THE FUNCTIONALITY OF OUR PLATFORM: We work with technology
providers such as Certicom and our partner Sonera to provide robust
security, and with Sun Microsystems to provide highly scalable and
manageable features for our platform. We intend to continue to introduce
new services, applications and support for additional Internet-enabled
devices, including set-top boxes that permit television sets to display
electronic data, and game consoles.

3
<PAGE>
- PURSUE ACQUISITIONS OF COMPANIES AND TECHNOLOGIES: We intend to pursue
acquisitions of technologies and service capabilities that will enable us
to accelerate the introduction of new and innovative products and
services.

- ADAPT OUR PLATFORM FOR OTHER INDUSTRY SECTORS: Key elements of our
platform and strategy are transferable to other industries, such as
insurance, sales force management and logistics. We intend to address
these opportunities after establishing our position as the leading
provider of an Internet infrastructure solution for the on-line financial
services sector.

We believe that our solution benefits our customers and the companies with
which we have strategic relationships by enabling the delivery of differentiated
on-line financial services. These services increase consumer loyalty and drive
wireless airtime usage, consumer electronic device sales and the purchase of
other products and services.

Our revenue was approximately $2.1 million during the nine months ended
September 30, 1999 and we incurred net losses during this period of
approximately $6.2 million.

We are incorporated under the laws of Ontario, Canada. Our principal
executive offices are located at 4101 Yonge Street, Suite 702, Toronto, Ontario,
M2P 1N6, and our telephone number is (416) 226-2900.

THE OFFERING

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<S> <C> <C>
Common shares offered

U.S. offering...................................... - shares

Canadian offering.................................. - shares
-----------------
Total:............................................... 6,000,000 shares
=================
</TABLE>

<TABLE>
<S> <C>
Common shares to be outstanding after
this offering...................................... 35,402,426 shares

Use of proceeds...................................... For general corporate purposes, including the
development of our application hosting
service, and potential acquisitions

Proposed Nasdaq National Market symbol............... SVNX
Proposed Toronto Stock Exchange symbol............... SVN
</TABLE>

The table above is based on common shares outstanding as of October 29, 1999
and excludes the following:

- outstanding options as of September 30, 1999 to purchase 2,211,594 common
shares under our stock option plans at a weighted average exercise price
of $0.88 per share;

- 666,668 common shares issuable upon the exercise of a warrant having an
exercise price of $7.50 per share; and

- approximately 67,200 common shares issuable to one of our shareholders at
a purchase price of $7.50 per share upon exercise of a preemptive right if
the warrant described above is exercised.

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

Unless we state otherwise, the information in this prospectus assumes no
exercise of the underwriters' over-allotment option and gives effect to the
two-for-one split of our common shares that is expected to occur prior to the
completion of this offering.

All references to "$" or dollars in this prospectus refer to U.S. dollars
and all references to "Cdn.$" refer to Canadian dollars.

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

We have applied for registration of the trademarks "724 Solutions", "724
Solutions & Design" and "E-Anywhere" in Canada and "724 Solutions" and "724
Solutions & Design" in the U.S. All other trademarks or service marks appearing
in this prospectus are the trademarks or service marks of the companies that use
them.

4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION

Our consolidated financial statements are prepared in accordance with
Canadian generally accepted accounting principles. These principles conform in
all material respects with U.S. generally accepted accounting principles except
as disclosed in note 11 of our consolidated financial statements. You should
read the following selected consolidated financial data with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
our consolidated financial statements and notes appearing elsewhere in this
prospectus. The consolidated statements of operations data for the period from
July 28, 1997 (inception) to December 31, 1997, for the year ended December 31,
1998 and for the nine months ended September 30, 1998 and 1999, and the
consolidated balance sheet data as of September 30, 1999, are derived from our
consolidated financial statements that have been audited by KPMG LLP,
Independent Auditors, which are included elsewhere in this prospectus.

Cost of revenue............................. -- 61 61 819
------ ------- ------ -------
Gross profit................................ -- 1,825 1,196 1,283
Total operating expenses.................... 165 3,055 1,444 7,818
------ ------- ------ -------
Income (loss) from operations............... (165) (1,230) (248) (6,535)
Interest income............................. 10 107 69 341
------ ------- ------ -------
Net income (loss)........................... $ (155) $(1,123) $ (179) $(6,194)
====== ======= ====== =======
Basic and diluted net income (loss) per
share..................................... $(0.06) $ (0.19) $(0.04) $ (0.47)
====== ======= ====== =======
Shares used in computing basic and diluted
net income (loss) per share (in
thousands)................................ 2,752 5,784 4,564 13,301
====== ======= ====== =======
</TABLE>

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1999
----------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(IN THOUSANDS OF U.S. DOLLARS)
<S> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents................................... $28,044 $69,134 $134,430
Working capital............................................. 25,097 66,187 131,483
Total assets................................................ 32,444 73,534 138,830
Total shareholders' equity.................................. 26,734 67,824 133,120
</TABLE>

The pro forma numbers in the table above are adjusted to give effect to the
issuance of 10,082,066 common shares for aggregate proceeds of $41.1 million in
October 1999.

The pro forma as adjusted numbers in the table above are adjusted to give
effect to receipt of the net proceeds from the sale of 6,000,000 common shares
offered by us at the estimated initial public offering price of $12.00 per share
after deducting the underwriting discounts and commissions and estimated
offering expenses payable by us. See also "Use of Proceeds," "Capitalization"
and "Underwriting."

5
<PAGE>
RISK FACTORS

THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER
THE RISKS DESCRIBED BELOW AND THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS
BEFORE PURCHASING OUR COMMON SHARES. OUR MOST SIGNIFICANT RISKS AND
UNCERTAINTIES ARE DESCRIBED BELOW.

IF ANY OF THE FOLLOWING RISKS OCCUR, OUR BUSINESS, OPERATING RESULTS AND
FINANCIAL CONDITION COULD BE MATERIALLY ADVERSELY AFFECTED, THE TRADING PRICE OF
OUR COMMON SHARES COULD DECLINE AND YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT.

RISK FACTORS RELATED TO OUR BUSINESS

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

We have not been profitable since our inception. We incurred losses of
$155,000 for the period between July 28, 1997 and December 31, 1997,
$1.1 million for the year ended December 31, 1998 and $6.2 million for the nine
months ended September 30, 1999. As of September 30, 1999, we had an accumulated
deficit of $7.5 million. We expect to continue to incur losses in the near
future and possibly longer. We anticipate that our expenses will increase
substantially in the foreseeable future as we establish our application hosting
service and continue to increase our research and development, sales and
marketing and general and administrative expenses. These efforts may prove more
expensive than we currently anticipate. We cannot predict if we will ever
achieve profitability and if we do, we may not be able to sustain or increase
our profitability.

BECAUSE WE HAVE A LIMITED OPERATING HISTORY, IT MAY BE DIFFICULT FOR YOU TO
EVALUATE OUR BUSINESS AND ITS FUTURE PROSPECTS.

Your evaluation of our business will be more difficult because of our
limited operating history. We were founded in July 1997 and services based on
our platform were first launched on a trial basis in May 1999 with our initial
licensee, Bank of Montreal. Because we are in an early stage of development, our
prospects are difficult to predict and may change rapidly. When making your
investment decision, you should consider the risks, expenses and difficulties
that we may encounter or incur as a young company in a new and rapidly evolving
market, including our substantial dependence on a single product with only
limited market acceptance to date and our need to manage expanding operations.
Our business strategy may not be successful, and we may not successfully address
these risks.

OUR RAPID GROWTH MAY STRAIN OUR RESOURCES AND HINDER OUR ABILITY TO IMPLEMENT
OUR BUSINESS STRATEGY.

Our historical growth has placed, and any further growth is likely to
continue to place, a significant strain on our resources. Our ability to achieve
and maintain profitability will depend on our ability to manage our growth
effectively, to implement and expand operational and customer support systems
and to hire personnel worldwide. We may not be able to augment or improve
existing systems and controls or implement new systems and controls to respond
to any future growth. In addition, future growth may result in increased
responsibilities for our management personnel, which may limit their ability to
effectively manage our business.

WE ARE BUILDING THE CAPABILITY TO PROVIDE AN APPLICATION HOSTING SERVICE, AND IF
WE DO NOT SUCCESSFULLY IMPLEMENT THIS SERVICE WE MAY NOT ATTRACT OR RETAIN
CUSTOMERS.

Some of our existing customers require us, and some of our potential
customers will require us, to host and manage the server infrastructure and
software platform as part of the implementation of our solution. We may acquire
or partner with third parties to provide this service. We may also provide this
service by establishing application hosting facilities of our own, or through a
combination of these strategies. Regardless of the implementation strategy we
pursue, providing the service will require

6
<PAGE>
significant capital expenditures and other resources, and we cannot assure you
that we will be able to implement these services on an effective, cost-efficient
or timely basis. Because our experience is primarily in the areas of developing
and implementing our software solution, we do not know what other difficulties
we may encounter or risks we may be exposed to in the establishment and
operation of these facilities. If we cannot effectively implement these
services, we may lose our existing customers and may not attract new customers.

TO DATE, ALL OF OUR CUSTOMERS HAVE ACQUIRED AN EQUITY INTEREST IN OUR COMPANY
AND IF WE DISCONTINUE THIS PRACTICE WE MAY NOT ATTRACT NEW CUSTOMERS.

To date, all of our revenue has been attributable to the sale of our
solution to customers who have also purchased an equity interest in our company.
The opportunity to invest in our company provided these customers with an
additional incentive to purchase our solution. We do not expect to offer this
opportunity to prospective customers, which may hurt our ability to sell our
product.

BECAUSE ALL OF OUR CURRENT CUSTOMERS ARE SHAREHOLDERS IN OUR COMPANY, IF A
CUSTOMER CEASES TO LICENSE OUR TECHNOLOGY AND ALSO SELLS ITS SHARES IN OUR
COMPANY, THE MARKET PRICE OF OUR SHARES MAY DECLINE.

All of our current customers, or their affiliates, are shareholders in our
company. If any customer ceases to license our technology, our credibility in
the market may suffer which may impede our ability to attract new customers. In
addition, if a customer that switches to a competing technology also sells its
shares in our company, our credibility may further suffer and the market price
of our shares will likely decline.

WE HAVE A LENGTHY AND COMPLEX SALES CYCLE, WHICH COULD CAUSE THE DELAY OR LOSS
OF REVENUE AND INCREASE OUR EXPENSES.

Our sales efforts target large financial institutions worldwide, which
requires us to expend significant resources educating prospective customers
about the uses and benefits of our product. Because the purchase of our solution
is a significant decision for these institutions, our prospective customers
generally take a long time to evaluate our product. Our sales cycle typically
ranges from four to six months, although these cycles can be longer due to
significant delays over which we have little or no control. Our lengthy sales
cycle is due to many factors, including customer concerns about the introduction
or announcement of new products and technologies, requests for product
enhancements and an extensive evaluation process that may involve many
individuals or departments. As a result of our long sales cycle, it may take us
a substantial amount of time to generate revenue from our sales efforts. In
addition, any delay in selling our platform could lead our prospective customers
to find alternatives to our solution from a competitor or to develop an in-house
solution.

IF FINANCIAL INSTITUTIONS DO NOT CONSIDER THE INTERNET TO BE A VIABLE COMMERCIAL
MEDIUM, OUR CUSTOMER BASE MAY NOT GROW.

Our success depends on financial institutions' acceptance of the Internet as
a viable means to deliver their services. The adoption of the Internet for
commerce and communication, particularly by those financial institutions that
have historically relied upon traditional means, generally requires these
institutions to understand and accept a new way of conducting business and
exchanging information. Financial institutions may be reluctant or slow to adopt
a new, Internet-based strategy because of increased pressure on costs and the
complexity and risk involved in developing a solution based on emerging
technologies. Reluctance by financial institutions to use the Internet to
deliver financial services may prevent us from growing.

7
<PAGE>
OUR PRODUCT HAS ACHIEVED LIMITED MARKET ACCEPTANCE TO DATE, AND IF IT FAILS TO
ACHIEVE MARKET ACCEPTANCE OUR BUSINESS WILL NOT GROW.

Our solution is one of a number of competing solutions that is available in
a new and rapidly evolving market. Financial institutions may not prefer our
solution to competing technologies. If financial institutions do not accept our
product as the preferred solution, we may not attract new customers and our
business will not grow.

OUR FUTURE REVENUE DEPENDS ON CONSUMERS USING THE SERVICES THAT ARE BASED ON OUR
SOLUTION, AND IF OUR CUSTOMERS DO NOT SUCCESSFULLY MARKET THESE SERVICES, OUR
REVENUE WILL NOT GROW.

We expect that revenue under most of our license agreements will depend on
the number of monthly subscribers to these services. To stimulate consumer
adoption of these services, our customers must implement our solution quickly.
However, our customers may delay implementation because of factors that are not
within our control, including budgetary constraints, limited resources committed
to the implementation process and limited internal technical support.

Consumer adoption of these services also requires our customers to market
these services. However, our customers currently have no obligation to launch a
marketing campaign of any kind, may choose not to do so, or may not do so
effectively. To date, these services have only been provided on a test basis to
a limited number of consumers. As a result, we cannot assure you that a large
number of consumers will use these services in the future.

WE CURRENTLY DEPEND ON THE SALE OF A SINGLE PRODUCT TO GENERATE MOST OF OUR
REVENUE AND IF WE ARE UNABLE TO SELL THIS PRODUCT WE MAY NEVER BECOME
PROFITABLE.

We expect sales of our product to constitute most of our revenue for the
foreseeable future. If customers do not purchase this product, we do not
currently offer any other products or services that would enable us to become
profitable.

WE CURRENTLY RELY ON SALES TO A LIMITED NUMBER OF FINANCIAL INSTITUTIONS, AND IF
WE FAIL TO RETAIN THESE CUSTOMERS OR TO ADD NEW CUSTOMERS OUR REVENUE MAY BE
SUBSTANTIALLY REDUCED AND OUR SOLUTION MAY NOT ACHIEVE MARKET ACCEPTANCE.

We derive a significant portion of our revenue from the sale of our solution
to a limited number of financial institutions. Since our inception, sales to one
financial institution have accounted for more than 81% of our total revenue. We
expect that a small number of customers will continue to account for a
significant portion of our revenue for the foreseeable future. If any of our
customers discontinue their relationship with us for any reason, do not renew
their agreements with us, or seek to reduce or renegotiate their purchase and
payment obligations to us, our revenue may be substantially reduced. In
addition, there are a limited number of large financial institutions in our
target market, and we believe this number may decline in the future as a result
of consolidation in the financial services industry worldwide. If our sales
efforts to these potential customers are not successful, our solution may not
achieve market acceptance and our revenue will not grow.

OUR LICENSE AGREEMENTS WITH OUR CURRENT CUSTOMERS DO NOT HAVE LONG TERMS, AND
THE FAILURE OF ANY CUSTOMER TO RENEW ITS AGREEMENT COULD SIGNIFICANTLY DECREASE
OUR REVENUE.

A significant portion of our revenue is derived from the licensing of our
technology to our customers. Our license agreements with our current customers
generally terminate after two years. Unless renewed, the license agreement with
our first customer, Bank of Montreal, will expire in February 2000. Each of our
customers has the option, but is not obligated, to renew its license agreement
for additional terms. If a customer chooses not to extend its license, it may
continue to license additional technology that is made generally available to
our customers upon payment of a fee.

8
<PAGE>
There is no guarantee that any of our customers will renew their license
agreement. If our customers do not renew these agreements or otherwise license
our technology, our revenue will decrease substantially. See "Customers" and
"Certain Transactions."

IF THE DIGITAL WIRELESS AND OTHER NETWORK SERVICE PROVIDERS THAT ENABLE OUR
CUSTOMERS TO DELIVER SERVICES BASED ON OUR PRODUCT TO CONSUMERS FAIL TO SUPPORT
OUR SERVICE, OUR REVENUE FROM EXISTING CUSTOMERS WILL DECLINE AND WE MAY NOT
ATTRACT NEW CUSTOMERS.

We rely on wireless and other network service providers to introduce and
support services using our product in a timely and effective manner. We have no
control over the pace at which they will do so. If these providers are slow to
support the services that use our solution, our existing customers may not be
able to effectively offer these services, and potential customers may be
reluctant to purchase our platform. In addition, wireless and other network
service providers face implementation and support challenges in introducing
services delivered to Internet-enabled devices, which may slow their rate of
adoption or implementation of our solution. Moreover, the continued expansion of
digital wireless services, especially in North America, is critical to our
success.

IF WE DO NOT RESPOND ADEQUATELY TO EVOLVING TECHNOLOGY STANDARDS, SALES OF OUR
SOLUTION MAY DECLINE.

Our future success will depend on our ability to address the increasingly
sophisticated needs of our customers by supporting existing and emerging
technologies, including technologies related to communications and the Internet
generally and the financial services industry in particular. Wireless Internet
access is a rapidly evolving market and is characterized by an increasing number
of market entrants that have introduced or developed, or are in the process of
introducing or developing, products that facilitate the delivery of
Internet-based services through wireless devices. In addition, our competitors
may develop alternative technologies that gain broader market acceptance than
our solution. As a result, the life cycle of our solution is difficult to
estimate. We may need to develop and introduce new products and enhancements to
our existing solution on a timely basis to keep pace with technological
developments, evolving industry standards, changing customer requirements and
competitive technologies that may render our solution obsolete. These research
and development efforts may require us to expend significant capital and other
resources. In addition, as a result of the complexities inherent in our
solution, major enhancements or improvements will require long development and
testing periods. If we fail to develop products and services in a timely
fashion, or if we do not enhance our product to meet evolving customer needs and
industry standards, including security technology, we may not remain competitive
or sell our solution.

ANY DISRUPTION OF THE SERVICES SUPPORTED BY OUR PRODUCT DUE TO ACCIDENTAL OR
INTENTIONAL SECURITY BREACHES MAY DAMAGE OUR REPUTATION, EXPOSE US TO COSTLY
LITIGATION AND REQUIRE CAPITAL INVESTMENTS IN ALTERNATIVE SECURITY TECHNOLOGY.

Despite our efforts to maintain Internet security, we may not be able to
stop unauthorized attempts to gain access to or disrupt transactions between our
customers and the consumers of their services. Specifically, computer viruses,
break-ins and other disruptions could lead to interruptions, delays, loss of
data or the inability to accept and confirm the receipt of information. Any of
these events could substantially damage our reputation. We rely on encryption
and authentication technology licensed from third parties to provide the
security and authentication necessary to achieve secure transmission of
confidential information. We cannot assure you that this technology or future
advances in this technology or other developments will be able to prevent
security breaches. We may need to expend further capital and other resources to
protect against the threat of security breaches or to alleviate problems caused
by these breaches.

Because our activities involve the storage and transmission of proprietary
information such as credit card numbers and bank account numbers, if a
third-party were able to steal a user's proprietary

9
<PAGE>
information, we could be subject to claims, litigation or other potential
liabilities that could cause our expenses to increase substantially. In addition
to purposeful security breaches, the inadvertent transmission of computer
viruses could expose us to litigation or a significant loss of revenue. Although
our customer agreements contain provisions which limit our liability relating to
security, our customers or their consumers may seek to hold us liable for any
losses suffered as a result of unauthorized access to their communications. We
may not have adequate insurance or resources to cover these losses.

WE MAY ACQUIRE TECHNOLOGIES OR COMPANIES IN THE FUTURE AND THESE ACQUISITIONS
COULD DISRUPT OUR BUSINESS AND DILUTE YOUR HOLDINGS IN OUR COMPANY.

We may acquire technologies or companies in the future, especially to
establish our application hosting service. Entering into an acquisition entails
many risks, any of which could materially harm our business, including:

- diversion of management's attention from other business concerns;

- failure to effectively assimilate the acquired technology or company into
our business;

- the loss of key employees from either our current business or the acquired
business; and

- assumption of significant liabilities of the acquired company.

In addition, your holdings in our company will be diluted if we issue equity
securities in connection with any acquisition.

WE FACE COMPETITION FROM EXISTING AND NEW COMPETITORS AND FROM NEW PRODUCTS
WHICH COULD CAUSE US TO LOSE MARKET SHARE AND CAUSE OUR REVENUE TO DECLINE.

The widespread adoption of open industry standards, such as Wireless
Application Protocol (WAP) specifications, may make it easier for new market
entrants and existing competitors to introduce products that compete with our
product. In addition, our competitors may market their products and services
more effectively than we do, which could decrease demand for our product and
cause our revenue to decline. Currently, our competitors include:

- financial institutions that develop their own in-house solutions;

- software vendors focused on financial institutions;

- wireless and other network service providers that provide their customers
with wireless financial services; and

- software and services vendors and portals that provide the infrastructure
to link devices to carriers and the Internet and to enable other wireless
applications.

We may also face competition in the future from established companies who
have not previously entered the market for wireless data services and
Internet-related services. Barriers to entry in the software market are
relatively low, and it is possible that new competitors or alliances among
competitors may emerge and rapidly acquire significant market share. In
addition, many of our competitors have greater resources which may enable them
to penetrate the market more quickly.

ANY FAILURE TO EXPAND AND MANAGE OUR INTERNATIONAL OPERATIONS COULD LIMIT OUR
POTENTIAL REVENUE GROWTH.

We are expanding our activities outside the U.S. and Canada. Our plans to
expand internationally may be adversely affected by a number of risks,
including:

- difficulties in localizing our product and services for foreign markets;

10
<PAGE>
- challenges in staffing and managing foreign operations;

- difficulties in establishing relationships with local partners;

- restrictions on the export of encryption and other technologies;

- recessionary environments in foreign economies, particularly in the
financial services sector; and

- longer payment cycles.

FLUCTUATIONS IN THE VALUE OF FOREIGN CURRENCIES COULD RESULT IN CURRENCY
EXCHANGE LOSSES.

Our expanding operations outside the U.S. and Canada are in some instances
conducted in currencies other than the U.S. dollar and fluctuations in the value
of foreign currencies relative to the U.S. dollar could cause us to incur
currency exchange losses. We cannot predict the effect of exchange rate
fluctuations upon future operating results.

WE WILL NEED TO RECRUIT, TRAIN AND RETAIN KEY MANAGEMENT AND OTHER QUALIFIED
PERSONNEL TO SUCCESSFULLY GROW OUR BUSINESS.

Our future success will depend in large part on our ability to recruit and
retain experienced research and development, sales and marketing, customer
service and management personnel. In particular, our future success depends in
part on the continued services of our current executive officers. If we do not
attract and retain such personnel, we may not be able to grow our business.
Competition for qualified personnel is intense in our industry. In the past we
have experienced difficulty in recruiting qualified personnel, especially
technical and sales personnel. We are in a new market and there are a limited
number of people with the appropriate combination of skills needed to provide
the services that our customers demand. We expect competition for qualified
personnel to remain intense, and we may not succeed in attracting or retaining
sufficient personnel. In addition, new employees generally require substantial
training, which requires significant resources and management attention. Even if
we invest significant resources to recruit, train and retain qualified
personnel, we may not be successful in our efforts.

OUR SOFTWARE MAY CONTAIN DEFECTS OR ERRORS THAT COULD DAMAGE OUR REPUTATION.

The software we develop is complex and must meet the stringent technical
requirements of our customers. We must develop our product quickly to keep pace
with the rapidly changing industry in which we operate. Software products that
are as complex as ours are likely to contain undetected errors or defects,
especially when first introduced or when new versions are released. In addition,
our software may not properly operate when integrated with the systems of our
customers, or when used to deliver services to a large number of a customer's
subscribers.

While we continually test our product for errors and work with customers
through our customer support services to identify and correct bugs, errors in
our product may be found in the future. Testing for errors is complicated in
part because it is difficult to simulate or anticipate the computing
environments in which our customers use our product. Our software may not be
free from errors or defects even after it has been tested, which could result in
the rejection of our product and damage to our reputation, as well as lost
revenue, diverted development resources, and increased support costs.

WE MAY BE SUBJECT TO PRODUCT LIABILITY CLAIMS THAT COULD RESULT IN SIGNIFICANT
COSTS TO US.

We may be subject to claims for damages related to any errors in our
product. A major product liability claim could materially adversely affect our
business because of the costs of defending against these types of lawsuits,
diversion of key employees' time and attention from the business and potential
damage to our reputation. Our license agreements with our customers contain
provisions designed to

11
<PAGE>
limit exposure to potential product liability claims. Limitation of liability
provisions contained in our license agreements may not be effective under the
laws of some jurisdictions if local laws treat them as unenforceable. As a
result, we could be required to pay substantial amounts of damages in settlement
or upon the determination of any of these types of claims.

WE HAVE NOT YET INTEGRATED PUBLIC KEY INFRASTRUCTURE INTO OUR SOLUTION, AND IF
WE FAIL TO DO SO, WE MAY BE COMPETITIVELY DISADVANTAGED AND OUR BUSINESS MAY NOT
GROW.

We expect that the use of public key infrastructure (PKI), an emerging
technology which facilitates user identity authentication and non-repudiation of
transactions, will be used by financial institutions' customers and by our
competitors. If we do not succeed in integrating public key infrastructure into
our solution, our product may not be attractive to potential customers because
of their security concerns. If PKI becomes a widely used standard and our
product does not use that standard, we may be at a competitive disadvantage.

OUR PRODUCT CONTAINS ENCRYPTION TECHNOLOGY WHOSE EXPORT IS RESTRICTED BY LAW,
WHICH MAY SLOW OUR GROWTH OR RESULT IN SIGNIFICANT COSTS.

The U.S. and Canadian governments generally limit the export of encryption
technology, which our product incorporates. A variety of cryptographic products
generally require export approvals from certain U.S. government agencies in the
case of exports from the U.S., and from Canadian government agencies in the case
of exports from Canada, although there are currently no restrictions on exports
of these products from Canada into the U.S. If any export approval that we
receive is revoked or modified, if our software is unlawfully exported or if the
U.S. or the Canadian government adopts new legislation or regulations
restricting export of software and encryption technology, we may not be able to
distribute our solution to potential customers, which will cause a decline in
our sales. We may need to incur significant costs and divert resources to
develop replacement technologies or need to adopt inferior substitute
technologies to satisfy these export restrictions. These substitute technologies
may not be the preferred security technologies of our customers, in which case,
our business may not grow. In addition, we may suffer similar consequences if
the laws of any other country limit the ability of third parties to sell
encryption technologies to us.

WE RELY ON THIRD PARTY SOFTWARE, TECHNOLOGY AND CONTENT, THE LOSS OF WHICH COULD
FORCE US TO USE INFERIOR SUBSTITUTE TECHNOLOGY OR TO CEASE OFFERING OUR PRODUCT.

We must now, and may in the future, license or otherwise obtain access to
the intellectual property of third parties. For example, we have entered into a
license agreement with Certicom and Consensus for use of their encryption
technology. We have also entered into license agreements with third party
content providers. In addition, we use certain third party software that may not
be available to us in the future on commercially reasonable terms or at all. Our
loss of, or inability to maintain or obtain any required intellectual property
could require us to use substitute technology, which could be more expensive or
of lower quality or performance, or force us to cease offering our product.
Moreover, some of our license agreements are non-exclusive and, therefore, our
competitors may have access to the same technology that we license.

IF OUR INTELLECTUAL PROPERTY IS NOT ADEQUATELY PROTECTED, WE MAY LOSE OUR
COMPETITIVE ADVANTAGE.

We depend on our ability to develop and maintain the proprietary aspects of
our technology. We seek to protect our software, documentation and other written
materials under trade secret and copyright laws, as well as confidentiality
provisions in our contracts with our customers, all of which afford limited
protection. We also seek to protect our proprietary technology under patent
laws. We have applied for patents, although none have been issued to date. We
have also applied for several trademark registrations for our trademarks,
including "724 Solutions", "724 Solutions & Design" and

12
<PAGE>
"E-Anywhere" in Canada and "724 Solutions" and "724 Solutions & Design" in the
U.S., although none of these trademarks has been registered to date.

Despite the measures we have taken to protect our intellectual property, we
cannot assure you that these steps will be adequate, that we will be able to
secure patent or trademark registrations for all of our patent applications or
trademarks, respectively, in Canada, the U.S. or other countries, or that third
parties will not breach the confidentiality provisions in our contracts or
infringe or misappropriate our copyrights, pending patents, trademarks and other
proprietary rights. In the event that a third party breaches the confidentiality
provisions in our contracts or misappropriates or infringes on our intellectual
property, we may not have adequate remedies. In addition, third parties may
independently discover or invent competing technologies or reverse engineer our
trade secrets, software or other technology. Moreover, the laws of some foreign
countries may not protect our proprietary rights to the same extent as do the
laws of the U.S. and Canada. Therefore, the measures we are taking to protect
our proprietary rights may not be adequate.

THIRD PARTIES MAY CLAIM THAT OUR PRODUCT INFRINGES ON THEIR INTELLECTUAL
PROPERTY, WHICH COULD RESULT IN SIGNIFICANT EXPENSES FOR LITIGATION OR FOR
DEVELOPING OR LICENSING NEW TECHNOLOGY.

Although we are not currently aware of any claims asserted by third parties
that we infringe on their intellectual property, in the future, they may assert
a claim that our current or future products infringe on their intellectual
property. We cannot predict whether third parties will assert these types of
claims against us or against the licensors of technology licensed to us, or
whether those claims will harm our business. If we are forced to defend against
these types of claims, whether they are with or without any merit or whether
they are resolved in favor of or against us or our licensors, we may face costly
litigation and diversion of management's attention and resources. As a result of
these disputes, we may have to develop costly non-infringing technology, or
enter into licensing agreements. These agreements, if necessary, may not be
available on terms acceptable to us, or at all, which could increase our
expenses or make our product less attractive to our customers.

OUR YEAR 2000 COMPLIANCE EFFORTS MAY INVOLVE SIGNIFICANT TIME AND EXPENSE, AND
UNCORRECTED PROBLEMS COULD DAMAGE OUR REPUTATION AND FORCE US TO DIVERT
RESOURCES FROM SELLING AND DEVELOPING OUR PRODUCT.

The risks posed by year 2000 issues, which arise because computer systems
and software products may be unable to distinguish between twentieth century
dates and twenty-first century dates, could harm our business in a number of
significant ways. Both before and after January 1, 2000, computer systems and
software used by many companies in a wide variety of industries, including
technology, finance and communications will produce erroneous results or fail
unless they have been modified or upgraded to process date information
correctly. If we experience disruptions as a result of the year 2000 problem,
our revenue could decline and we may incur significant costs to correct any
problems. Although we believe that our software product, internally developed
systems and technology are year 2000 compliant, our systems and technology
nevertheless could be substantially impaired or cease to operate due to year
2000 problems. We may face claims based on year 2000 issues arising from the
integration of multiple products, including ours, within an overall system. Our
customers may also cease or delay the purchase and installation of new complex
systems, such as our software product, as a result of, and during, their own
internal year 2000 testing.

Our solution is integrated with the systems of financial institutions, which
use our software to deliver information and services over the networks of
wireless and other network service providers to Internet-enabled devices. If
their software processes information erroneously, or fails to deliver
information or to otherwise operate, as a result of their failure to process
information relating to year 2000 issues, the services enabled by our solution
will not be properly delivered. If this occurs, our solution may become less
attractive to financial institutions as consumer demand for the services enabled
by our solution decreases. In addition, because we expect to receive revenue
under some of

13
<PAGE>
our contracts based on per user fees, our revenue will be reduced if additional
users are discouraged from purchasing the services supported by our solution as
a result of perceived or actual difficulties in delivering these services in
light of year 2000 issues.

IF WE DO NOT HAVE SUFFICIENT CAPITAL TO FUND OUR OPERATIONS, WE MAY BE FORCED TO
DISCONTINUE PRODUCT DEVELOPMENT, REDUCE OUR SALES AND MARKETING EFFORTS OR
FOREGO ATTRACTIVE BUSINESS OPPORTUNITIES.

We may not have sufficient capital to fund our operations and additional
capital may not be available on acceptable terms if at all. Any of these
outcomes could adversely impact our ability to respond to competitive pressures
or prevent us from conducting all or a portion of our planned operations. We
expect that the net proceeds from this offering and cash on hand will be
sufficient to meet our working capital and capital expenditure needs for at
least the next 12 months. After that, we may need to raise additional funds, and
additional financing which may not be available on acceptable terms, if at all.
We may also require additional capital to acquire or invest in complementary
businesses or products or obtain the right to use complementary technologies. If
we issue additional equity securities to raise funds, your ownership percentage
of our company will be reduced.

OUR ABILITY TO ISSUE PREFERRED SHARES COULD MAKE IT MORE DIFFICULT FOR A THIRD
PARTY TO ACQUIRE US TO THE DETRIMENT OF HOLDERS OF COMMON SHARES.

Provisions in our articles of incorporation may make it difficult for a
third party to acquire control of us, even if a change in control would be
beneficial to our shareholders. Prior to this offering, we expect to amend our
articles to authorize our board to issue, at its discretion, an unlimited number
of preferred shares. Without shareholder approval, our board will have the
authority to attach special rights, including voting or dividend rights, to the
preferred shares. Preferred shareholders who possess these rights could make it
more difficult for a third party to acquire our company.

RISK FACTORS RELATED TO OUR INDUSTRY

OUR BUSINESS WILL NOT GROW IF USE OF THE INTERNET DOES NOT CONTINUE TO GROW.

Our future success is substantially dependent on continued growth in the use
of the Internet. Our business may be adversely impacted if the number of users
on the Internet does not increase or if commerce over the Internet does not
become more accepted and widespread. The use and acceptance of the Internet may
not increase for a number of reasons, including the cost and availability of
Internet access.

Published reports have also indicated that capacity constraints caused by
growth in the use of the Internet may impede further development of the Internet
to the extent that users experience delays, transmission errors and other
difficulties. If the necessary infrastructure, products, services or facilities
are not developed, or if the Internet does not become a viable and widespread
commercial medium, we will not be able to grow our business.

OUR BUSINESS WILL NOT GROW IF THE USE OF WIRELESS DATA SERVICES DOES NOT
CONTINUE TO GROW.

The markets for wireless data services and related products are still
emerging, and continued growth in demand for and acceptance of these services
remains uncertain. Our solution depends on the acceptance of wireless data
services and Internet-enabled devices in the commercial and financial markets.
Current barriers to market acceptance of these services include cost,
reliability, platform and distribution channel constraints, safety,
functionality and ease of use. We cannot be certain that these barriers will be
overcome. Since the market for our solution is new and evolving, it is difficult
to predict the size of this market or its future growth rate, if any. Our future
financial performance will depend in large part upon the continued demand for
on-line financial services through wireless application devices. We cannot
assure you that a sufficient volume of subscribers will demand financial

14
<PAGE>
services or will seek financial services provided through the Internet on
wireless application devices. If the market for wireless on-line financial
services grows more slowly than we currently anticipate, our revenue may not
grow.

LACK OF CONSUMER CONFIDENCE IN THE SECURITY OF ON-LINE FINANCIAL TRANSACTIONS
COULD LIMIT ADOPTION OF OUR SOLUTION, WHICH COULD PREVENT US FROM BECOMING
PROFITABLE.

Consumers will not adopt on-line financial services if they are not
confident that financial transactions over the Internet can be undertaken
securely and confidentially. Although there is security technology currently
available for on-line transactions, many Internet users do not use the Internet
for commercial transactions because of continued security concerns. These
concerns may be heightened by well-publicized security breaches of any
Internet-related service, which could deter consumers from adopting the services
provided by our solution. If consumers do not gain confidence in the security
for on-line financial transactions that the current technologies provide, our
revenue will not increase.

CHANGES IN GOVERNMENT REGULATIONS MAY RESULT IN INCREASED EXPENSES, TAXES OR
LICENSING FEES WHICH COULD DECREASE THE DEMAND FOR OUR PRODUCT AND NEGATIVELY
IMPACT OUR RESULTS.

We are not currently subject to direct regulation by any governmental
agency, other than regulations applicable to businesses generally and laws and
regulations directly applicable to access to, or commerce on, the Internet.
However, a number of legislative and regulatory proposals under consideration by
federal, state, provincial, local and foreign governmental organizations may
lead to laws or regulations concerning various aspects of the Internet,
including but not limited to, on-line content, user privacy, taxation, access
charges and liability for third-party activities. Additionally, it is uncertain
how existing laws governing issues such as property ownership, copyright, trade
secrets, libel and personal privacy will be applied to the Internet. The
adoption of new laws or the broader application of existing laws may expose us
to significant liabilities and additional operational requirements and may
decrease the growth in the use of the Internet, which could in turn decrease the
demand for our product and increase our cost of doing business.

RISK FACTORS RELATED TO THIS OFFERING

A LIMITED NUMBER OF SHAREHOLDERS WILL COLLECTIVELY CONTINUE TO OWN A MAJORITY OF
OUR COMMON SHARES AFTER THIS OFFERING AND MAY ACT, OR PREVENT CERTAIN TYPES OF
CORPORATE ACTIONS, TO THE DETRIMENT OF OTHER SHAREHOLDERS.

Immediately after this offering, our five principal shareholders, including
entities affiliated with members of our management team, will own approximately
77.5% of our outstanding common shares. Accordingly, these shareholders may, if
they act together, exercise significant influence over all matters requiring
shareholder approval, including the election of a majority of the directors and
the determination of significant corporate actions after this offering. This
concentration could also have the effect of delaying or preventing a change in
control that could be otherwise beneficial to our shareholders.

THE MARKET PRICE OF OUR COMMON SHARES IS LIKELY TO BE VOLATILE, WHICH MAY RESULT
IN LITIGATION THAT COULD BE COSTLY AND DIVERT OUR RESOURCES.

Stock markets have recently experienced extreme price and volume
fluctuations, particularly for the shares of technology companies. These
fluctuations are often unrelated to the operating performance of particular
companies. The broad market fluctuations may adversely affect the market price
of our common shares. When the market price of a company's stock drops
significantly, shareholders often institute securities class action lawsuits
against that company. A lawsuit against us

15
<PAGE>
could cause us to incur substantial costs and could divert the time and
attention of our management and other resources.

FUTURE SALES OF COMMON SHARES BY OUR EXISTING SHAREHOLDERS COULD CAUSE OUR SHARE
PRICE TO FALL.

If our shareholders sell substantial amounts of our common shares in the
public market, the market price of our common shares could fall. The perception
among investors that these sales will occur could also produce this effect.
After this offering, we will have 35,402,426 common shares outstanding. All of
the common shares we will issue in this offering will generally be available for
resale in the public markets. In accordance with applicable securities laws and
after giving effect to lock-up agreements executed by our directors, executive
officers and existing shareholders with the underwriters, the common shares
outstanding after this offering will be available for sale in the public market
as follows:

<TABLE>
<CAPTION>
CANADIAN RESIDENTS U.S. RESIDENTS OTHER
------------------ -------------- --------
<S> <C> <C> <C>
On the date of this prospectus........................ - - -
90 days after the date of this prospectus............. - - -
180 days after the date of this prospectus............ - - -
After 180 days after the date of this prospectus...... - - -
</TABLE>

See also "Shares Eligible For Future Sale."

OUR SECURITIES HAVE NO PRIOR PUBLIC MARKET AND OUR SHARE PRICE MAY DECLINE AFTER
THE OFFERING.

Before this offering, there has been no public market for our common shares,
and an active public market for our common shares may not develop or be
sustained after this offering. If an active public market for our common shares
does not develop, the liquidity of your investment may be limited, and our share
price may decline below its initial public offering price. The initial public
offering price will be determined by negotiations between us and the
representative of the underwriters and may bear no relationship to the price
that will prevail in the public market.

WE WILL HAVE BROAD DISCRETION IN HOW WE USE THE PROCEEDS OF THIS OFFERING, AND
OUR USE OF THOSE PROCEEDS MAY NOT YIELD A FAVORABLE RETURN.

We intend to use the proceeds from this offering for general corporate
purposes, including the development of our application hosting service, and
potential acquisitions. Accordingly, we will have broad discretion in using
these proceeds. You will not have the opportunity to evaluate the economic,
financial or other information that we may use to determine how we use these
proceeds.

YOU WILL SUFFER IMMEDIATE AND SUBSTANTIAL DILUTION.

The initial public offering price of our common shares will significantly
exceed the net tangible book value per share of our common shares. Accordingly,
if you purchase common shares in this offering, you will incur immediate and
substantial dilution of your investment. If the outstanding options to purchase
our common shares are exercised, you will incur additional dilution.

16
<PAGE>
FORWARD-LOOKING STATEMENTS

Statements under "Prospectus Summary", "Risk Factors", "Management's
Discussion and Analysis of Financial Condition and Results of Operations",
"Business" and elsewhere in this prospectus about our future results, levels of
activity, performance, goals or achievements or other future events constitute
forward-looking statements. These statements involve known and unknown risks,
uncertainties and other factors that may cause actual results or events to
differ materially from those anticipated in our forward-looking statements.
These factors include, among others, those listed under "Risk Factors" or
described elsewhere in this prospectus.

In some cases, you can identify forward-looking statements by our use of
words such as "may", "will", "should", "could", "expects", "plans", "intends",
"anticipates", "believes", "estimates", "predicts", "potential" or "continue" or
the negative or other variations of these words, or other comparable words or
phrases.

Although we believe that the expectations reflected in our forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements or other future events. Moreover, neither
we nor anyone else assumes responsibility for the accuracy and completeness of
forward-looking statements. We are under no duty to update any of our forward-
looking statements after the date of this prospectus, other than as required by
law. You should not place undue reliance on forward-looking statements.

17
<PAGE>
USE OF PROCEEDS

We expect to receive about $65.3 million in net proceeds from the sale of
6,000,000 common shares in this offering, based on the estimated initial public
offering price of $12.00 per common share. We estimate that the net proceeds
will be about $75.3 million if the underwriters' over-allotment option is
exercised in full. The principal purposes of this offering are to obtain
additional capital, to create a public market for our common shares and to
facilitate our future access to the public capital markets.

We intend to use the net proceeds of this offering primarily for general
corporate purposes. We currently expect to use approximately $20 to $40 million
from the proceeds of this offering towards the development of our application
hosting service. In addition, we may use a portion of the net proceeds to fund
acquisitions of, or investments in, businesses, products or technologies that
expand, complement or are otherwise related to our current business. However, we
have no present agreements or commitments with respect to any acquisition or
investment. We have broad discretion in allocating the net proceeds of this
offering, and our plans with respect to the use of these proceeds may change
after the date of this prospectus. Pending these uses, we expect to invest the
net proceeds in short-term, interest-bearing investment grade securities.

DIVIDEND POLICY

We have never declared or paid any cash dividends on our common shares. We
currently intend to retain any future earnings to fund the development and
growth of our business and we do not anticipate paying any cash dividends in the
foreseeable future.

EXCHANGE RATES

As of December 10, 1999, the noon buying rate in New York City for cable
transfers in Canadian dollars was Cdn.$1.00 equals $0.6763. The following table
sets forth, for each period presented, the high and low exchange rates, the
average of the exchange rates on the last day of each month during the period
indicated, and the exchange rates at the end of the period indicated for one
Canadian dollar expressed in U.S. dollars, based on the noon buying rate for
cable transfers payable in Canadian dollars as certified for customs purposes by
the Federal Reserve Bank of New York.

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED
---------------------------------------------------- SEPTEMBER 30,
1994 1995 1996 1997 1998 1999
-------- -------- -------- -------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
End of period...................... $0.7143 $0.7323 $0.7301 $0.6999 $0.6504 $0.6805
Average for period................. $0.7194 $0.7299 $0.7353 $0.7246 $0.6757 $0.6711
High for period.................... $0.7634 $0.7519 $0.7519 $0.7463 $0.7092 $0.6897
Low for period..................... $0.7092 $0.7042 $0.7246 $0.6944 $0.6329 $0.6536
</TABLE>

18
<PAGE>
CAPITALIZATION

The table below describes our capitalization as of September 30, 1999:

- on an actual basis;

- on a pro forma basis to give effect to the issuance of 10,082,066 common
shares for aggregate proceeds of $41.1 million in October 1999; and

- on a pro forma basis as adjusted to give effect to the issuance of
10,082,066 common shares in October 1999 and to reflect the estimated net
proceeds from the sale of 6,000,000 common shares to be sold in this
offering based on the estimated initial public offering price of $12.00
per share.

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1999
-----------------------------------
PRO FORMA AS
ACTUAL PRO FORMA ADJUSTED
-------- --------- ------------
(IN THOUSANDS OF U.S. DOLLARS)
<S> <C> <C> <C>
Cash and cash equivalents................................... $28,044 $69,134 $134,430
======= ======= ========
Shareholders' equity:
Unlimited number of common shares authorized;
19,320,360 shares issued and outstanding (actual),
29,402,426 common shares issued and outstanding (pro
forma) and 35,402,426 common shares issued and
outstanding (pro forma as adjusted)(1).................. 34,165 75,255 140,551
8,216,210 common share purchase options (actual), 108,000
common share purchase options (pro forma and pro forma
as adjusted)(2)......................................... 41 41 41
Accumulated deficit......................................... (7,472) (7,472) (7,472)
------- ------- --------
Total capitalization........................................ $26,734 $67,824 $133,120
======= ======= ========
</TABLE>

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

(1) The number of shares outstanding as of September 30, 1999, after giving
effect to the issuance of 10,082,066 common shares in October 1999, in the
table above excludes the following:

- outstanding options as of September 30, 1999 to purchase 2,211,594 common
shares under our stock option plans at a weighted average exercise price
of $0.88 per share;

- 666,668 common shares issuable upon the exercise of a warrant having an
exercise price of $7.50 per share; and

- approximately 67,200 common shares issuable to one of our shareholders at
a purchase price of $7.50 per share upon exercise of a preemptive right if
the warrant described above is exercised.

(2) In October 1999, options to purchase 8,108,210 common shares were exercised.
These common shares are included in the 10,082,066 common shares that are
reflected in the pro forma and pro forma as adjusted columns.

19
<PAGE>
DILUTION

Our pro forma net tangible book value as of September 30, 1999, was $67.8
million or $2.31 per share. Pro forma net tangible book value per share
represents the amount of our total assets less total liabilities as of
September 30, 1999, divided by the number of common shares outstanding and
adjusted to give effect to the issuance of 10,082,066 common shares for net
proceeds of $41.1 million in October 1999. After giving effect to the sale of
the 6,000,000 common shares offered at the estimated initial public offering
price of $12.00 per share and after deducting the estimated underwriting
discounts and commissions and estimated offering expenses payable by us, our pro
forma net tangible book value as of September 30, 1999, would have been
$133.1 million, or $3.76 per share. This represents an immediate increase in pro
forma net tangible book value of $1.45 per share to existing shareholders and an
immediate dilution in net tangible book value of $8.24 per share to new
investors of common shares in this offering. The following table illustrates
this dilution on a per share basis:

<S> <C>
Estimated initial public offering price per share........... $12.00
Pro forma net tangible book value per share as of
September 30, 1999..................................... 2.31
Increase attributable to new investors.................. 1.45
------
Pro forma net tangible book value per share after this
offering.................................................. 3.76
------
Dilution per share to new investors......................... $ 8.24
======
</TABLE>

The following table sets forth, as of December 14, 1999, the difference
between the number of common shares purchased, the total consideration paid and
the average price per share paid by the existing holders of our common shares
and by the new investors, before deducting underwriting discounts and
commissions and estimated offering expenses payable by us at the assumed initial
public offering price of $12.00 per share.

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
----------------------- --------------------- PRICE PER
NUMBER PERCENTAGE AMOUNT PERCENTAGE SHARE
---------- ---------- -------- ---------- ---------
(IN THOUSANDS OF U.S. DOLLARS EXCEPT SHARE AMOUNT)
<S> <C> <C> <C> <C> <C>
Existing shareholders..................... 29,402,426 83.1% $ 75,255 51.1% $2.56
New investors............................. 6,000,000 16.9 72,000 48.9% 12.00
---------- ------ -------- ------
Total..................................... 35,402,426 100.0% $147,255 100.0%
========== ====== ======== ======
</TABLE>

To the extent that any shares are issued upon the exercise of options or
warrants that were outstanding as of September 30, 1999 or granted after that
date, or reserved for future issuance under our stock option plans, there will
be further dilution to new investors. For a more detailed discussion of our
stock option plans and outstanding options to purchase common shares see
"Management--Stock Option Plans", "Description of Share Capital" and notes 4
and 12 to the consolidated financial statements.

20
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA

Our consolidated financial statements are prepared in accordance with
Canadian generally accepted accounting principles. These principles conform in
all material respects with U.S. generally accepted accounting principles except
as disclosed in note 11 to our consolidated financial statements. You should
read the following selected consolidated financial data with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
our consolidated financial statements and notes appearing elsewhere in this
prospectus. The consolidated statements of operations data for the period from
July 28, 1997 (inception) to December 31, 1997, for the year ended December 31,
1998 and the nine months ended September 30, 1998 and 1999, and the consolidated
balance sheets data as of December 31, 1997 and 1998 and as of September 30,
1999, are derived from our consolidated financial statements that have been
audited by KPMG LLP, Independent Auditors, which are included elsewhere in this
prospectus.

<TABLE>
<CAPTION>
NINE MONTHS
PERIOD FROM ENDED
JULY 28, 1997 SEPTEMBER 30,
(INCEPTION) TO YEAR ENDED -------------------
DECEMBER 31, 1997 DECEMBER 31, 1998 1998 1999
------------------ ------------------ -------- --------
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
Revenue:
Product................................... $ -- $ 1,678 $1,049 $ 1,314
Services.................................. -- 208 208 788
------ ------- ------ -------
Total revenue........................... -- 1,886 1,257 2,102
Cost of revenue............................. -- 61 61 819
------ ------- ------ -------
Gross profit................................ -- 1,825 1,196 1,283
Operating expenses:
Research and development.................. 44 2,096 980 4,468
Sales and marketing....................... 39 412 209 1,134
General and administrative................ 82 547 255 2,216
------ ------- ------ -------
Total operating expenses................ 165 3,055 1,444 7,818
------ ------- ------ -------
Income (loss) from operations........... (165) (1,230) (248) (6,535)
Interest income............................. 10 107 69 341
------ ------- ------ -------
Income (loss) before income taxes....... (155) (1,123) (179) (6,194)
Income taxes................................ -- -- -- --
------ ------- ------ -------
Net income (loss)....................... $ (155) $(1,123) $ (179) $(6,194)
====== ======= ====== =======
Basic and diluted net income (loss) per
share..................................... $(0.06) $ (0.19) $(0.04) $ (0.47)
====== ======= ====== =======
Shares used in computing basic and diluted
net income (loss) per share (in
thousands)................................ 2,752 5,784 4,564 13,301
====== ======= ====== =======
</TABLE>

<TABLE>
<CAPTION>
AS OF
DECEMBER 31, AS OF
------------------- SEPTEMBER 30,
1997 1998 1999
-------- -------- --------------
(IN THOUSANDS OF U.S. DOLLARS)
<S> <C> <C> <C>
CONSOLIDATED BALANCE SHEETS DATA:
Cash and cash equivalents................................... $1,299 $2,976 $28,044
Working capital............................................. 1,267 1,913 25,097
Total assets................................................ 1,321 3,892 32,444
Total shareholders' equity.................................. 1,288 2,773 26,734
</TABLE>

21
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

YOU SHOULD READ THE FOLLOWING DISCUSSION IN CONJUNCTION WITH OUR
CONSOLIDATED FINANCIAL STATEMENTS AND THE ACCOMPANYING NOTES APPEARING ELSEWHERE
IN THIS PROSPECTUS.

OVERVIEW

Our company was established in July 1997 to conceive, design and deliver an
Internet infrastructure solution that enables financial institutions to deliver
financial information and services using a broad range of Internet-enabled
devices. We are adapting our technology for use by other types of on-line
merchants and for other applications.

For the period from July 1997 to May 1999 we were in a development phase,
conducting research and developing our product. In May 1999, we launched our
product on a trial basis. During this trial, a limited number of Bank of
Montreal's customers were able to access banking and brokerage services and
lifestyle content, including news, stock quotes, weather, lottery results and
horoscopes, through Internet-enabled devices, specifically PalmPilot connected
organizers and mobile phones. This trial was completed in September 1999. During
the period May through September 1999, we filled key management positions in our
sales and marketing departments, attracted Bank of America, Citigroup and Sonera
Corporation as additional investors and continued to develop our product.

SOURCES OF REVENUE

Our product revenue consists of license fees. Historically, our services
revenue has consisted primarily of implementation and customer service fees. In
the future, we believe that our services revenue will also include amounts
derived from maintenance fees, the operation of our application hosting service,
revenue sharing arrangements and commissions on e-commerce transactions.

CURRENT SOURCES OF REVENUE

LICENSE FEES

Through September 30, 1999, our product revenue consisted of the licensing
of our software. Until June 1999, substantially all of our revenue was derived
from our contract with Bank of Montreal.

Our two initial license agreements were with Bank of Montreal and Bank of
America and used a fixed fee license model. Under this model, our customer pays
us a fixed annual license fee upon execution of the license agreement and on
each anniversary date thereafter during the term of the agreement. The use of
this model helped provide us with the initial cash flow that was necessary to
fund our development and start-up costs.

After raising additional capital in August 1999 through the issuance of
common shares, we had the financial resources to forego this fixed fee license
model in favor of a variable fee license model. The variable fee license model
is based on a per user fee. The transition of our revenue model from fixed fee
to variable fee will have two significant consequences: first, we will no longer
receive large initial payments under our license agreements; and second, we
expect our revenue stream to vary with the number of our customers' users. We
expect that these variable fees will be subject to a minimum quarterly payment
and we expect to provide incentive discounts to our customers based on the
number of their users.

22
<PAGE>
Under the fixed fee license model, we recognize revenue when we have
executed an agreement with a customer, delivery and acceptance have occurred,
and the collection of the related receivable is deemed probable. Under the
variable fee license model, we commence the recognition of revenue when those
same conditions have been satisfied. Under the variable fee license model,
revenue from the minimum payments is recognized on a monthly basis. Revenue
associated with user fees in excess of any minimum payments is recognized on a
quarterly basis when the amount is determined.

IMPLEMENTATION AND CUSTOMER SERVICE FEES

Revenue from implementation and customer services includes fees for
implementation, consulting and training services. We currently rely and expect
to continue to rely on a combination of our own resources and third-party
consulting organizations to deliver these services to our customers. Customers
are charged a fee based on time and expenses. Revenue from implementation and
customer service fees is recognized on a monthly basis as the services are
performed.

FUTURE SOURCES OF REVENUE

MAINTENANCE FEES

We expect to receive revenue from maintaining and servicing our product for
our customers. The maintenance fee will typically be equal to a percentage of
the customer's license fee. If associated with the fixed fee license model, the
maintenance amounts received will be deferred and recognized on a straight-line
basis over the contract period. When associated with the variable fee license
model, any minimum payments will be recognized on a monthly basis. Maintenance
revenue in excess of any minimum payments will be recognized on a quarterly
basis when the amount is determined.

APPLICATION HOSTING SERVICE FEES

Some of our existing customers require us, and some of our potential
customers may require us, to host and manage the server infrastructure and
software platform as part of the implementation of our solution. We do not
currently have the capabilities or the facilities to provide this service. Once
implemented, we plan to provide this service for a monthly fee based upon the
number of our customers' users.

NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1999

REVENUE

Our revenue increased from $1.3 million for the nine months ended
September 30, 1998 to $2.1 million for the nine months ended September 30, 1999.
Our product revenue increased from $1.0 million for the nine months ended
September 30, 1998 to $1.3 million for the nine months ended September 30, 1999,
due primarily to four additional months of revenue realized in 1999 from our
contract with Bank of Montreal. Our service revenue increased from $208,000 for
the nine months ended September 30, 1998 to $788,000 for the nine months ended
September 30, 1999 due to additional contracts for consulting and software
design services.

COST OF REVENUE

Our cost of revenue consists of salaries and related expenses for our
consulting services, customer support, implementation and training services,
costs of third parties contracted to provide consulting services to customers
and an allocation of our facilities, administration and depreciation expenses.
In the future, our cost of revenue will also include software licensing expenses
and royalties paid to third parties for integration of their software into our
platform.

23
<PAGE>
Our cost of revenue increased from $61,000 for the nine months ended
September 30, 1998 to $819,000 for the nine months ended September 30, 1999 due
to payments to third party consultants and the addition of implementation and
customer service personnel.

OPERATING EXPENSES

RESEARCH AND DEVELOPMENT. Research and development expenses consist
primarily of compensation and related costs for research and development
personnel, including independent contractors and consultants, software licensing
expenses and royalties and allocated operating expenses.

Research and development expenses increased from $980,000 for the nine
months ended September 30, 1998 to $4.5 million for the nine months ended
September 30, 1999. This increase largely reflects the addition of personnel to
our research and development department which grew from 23 employees as of
September 30, 1998 to 69 employees as of September 30, 1999, primarily to
support the second release of our software.

SALES AND MARKETING. Sales and marketing expenses include compensation,
public relations and advertising, trade shows, marketing materials and allocated
operating expenses.

Sales and marketing expenses increased from $209,000 for the nine months
ended September 30, 1998 to $1.1 million for the nine months ended
September 30, 1999. This increase is primarily attributable to the hiring of
additional sales and marketing personnel, together with increased travel and
related expenses. Our sales and marketing department grew from one employee as
of September 30, 1998 to 14 employees as of September 30, 1999, including one
employee based in Europe. We expect that our sales and marketing expenses will
continue to increase as we expand internationally. This increase reflects the
opening of a sales office in San Francisco in 1999 and an increase in our
representation in Europe and Asia.

GENERAL AND ADMINISTRATIVE. General and administrative expenses include
salaries and benefits for corporate personnel and other general and
administrative expenses such as professional fees, facilities and travel, net of
any allocation to our research and development and sales and marketing
departments. Our corporate staff includes several of our executive officers and
our business development, financial planning and control, legal, human resources
and corporate administration staff.

Our general and administrative expenses increased from $255,000 for the nine
months ended September 30, 1998 to $2.2 million for the nine months ended
September 30, 1999. The corporate staff increased from five employees as of
September 30, 1998 to 23 employees as of September 30, 1999.

INTEREST INCOME

Interest income, which increased from $69,000 for the nine months ended
September 30, 1998 to $341,000 for the nine months ended September 30, 1999, was
derived from cash and cash equivalent balances, representing primarily the
unused portion of the proceeds from our issuances of common shares.

PERIOD FROM JULY 28, 1997 (INCEPTION) TO DECEMBER 31, 1997 COMPARED TO THE YEAR
ENDED DECEMBER 31, 1998

We were established in July 1997 and therefore have a limited operating
history for the period ended December 31, 1997. During this period, we commenced
a market research study to develop strategies for financial institutions with
respect to the use of the Internet and wireless services.

24
<PAGE>
REVENUE

We did not have any revenue for the period ended December 31, 1997. We
recognized $1.9 million of revenue for the year ended December 31, 1998, which
included $1.7 million of product revenue and $208,000 of services revenue. Our
product revenue consisted of license fees under our agreement with Bank of
Montreal, while our services revenue consisted of payments from Bank of Montreal
for our consulting work.

COST OF REVENUE

Cost of revenue was $61,000 for the year ended December 31, 1998 and
consisted of salaries and related expenses for our consulting work.

OPERATING EXPENSES

RESEARCH AND DEVELOPMENT. Research and development expenses increased from
$44,000 for the period ended December 31, 1997 to $2.1 million for the year
ended December 31, 1998, as we hired 33 employees in connection with the initial
release of our software.

SALES AND MARKETING. Sales and marketing expenses increased from $39,000
for the period ended December 31, 1997 to $412,000 for the year ended
December 31, 1998, reflecting the establishment of our sales and marketing
department.

GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
from $82,000 for the period ended December 31, 1997 to $547,000 for the year
ended December 31, 1998, primarily as a result of the increase in the size of
our corporate infrastructure.

INTEREST INCOME

Interest income, which increased from $10,000 for the period ended
December 31, 1997 to $107,000 for the year ended December 31, 1998, was derived
from cash and cash equivalent balances, representing primarily the unused
portion of the proceeds from our issuances of common shares.

25
<PAGE>
QUARTERLY RESULTS OF OPERATIONS

The following table sets forth certain unaudited consolidated statements of
operations data for each of the seven most recent quarters ended September 30,
1999. The information has been derived from our unaudited consolidated financial
statements that, in management's opinion, have been prepared on a basis
consistent with the audited consolidated financial statements contained
elsewhere in this prospectus and includes all adjustments consisting of only
normal recurring adjustments necessary for fair presentation of information when
read in conjunction with our audited consolidated financial statements and
related notes. These operating results are not necessarily indicative of results
for any future period. You should not rely on them to predict our future
performance.

<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------------------------------------------------------------------
MAR. 31, JUN. 30, SEPT. 30, DEC. 31, MAR. 31, JUN. 30, SEPT. 30,
1998 1998 1998 1998 1999 1999 1999
--------- --------- ---------- --------- --------- --------- ----------
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Revenue:
Product............................. $ -- $ 419 $ 630 $ 629 $ 548 $ 383 $ 383
Services............................ 208 -- -- -- 34 -- 754
------ ------ ------ ------- ------- ------- -------
Total revenue..................... 208 419 630 629 582 383 1,137
Cost of revenue....................... 61 -- -- -- -- 20 799
------ ------ ------ ------- ------- ------- -------
Gross profit...................... 147 419 630 629 582 363 338
------ ------ ------ ------- ------- ------- -------
Operating expenses:
Research and development............ 52 357 571 1,116 1,144 1,375 1,949
Sales and marketing................. 27 81 101 203 207 303 624
General and administrative.......... 41 104 110 292 332 629 1,255
------ ------ ------ ------- ------- ------- -------
Total operating expenses.......... 120 542 782 1,611 1,683 2,307 3,828
------ ------ ------ ------- ------- ------- -------
Income (loss) from operations......... 27 (123) (152) (982) (1,101) (1,944) (3,490)
Interest income....................... 18 20 31 38 61 28 252
------ ------ ------ ------- ------- ------- -------
Net income (loss)................. $ 45 $ (103) $ (121) $ (944) $(1,040) $(1,916) $(3,238)
====== ====== ====== ======= ======= ======= =======
Basic and diluted net income (loss)
per share........................... $ 0.01 $(0.02) $(0.02) $ (0.10) $ (0.09) $ (0.17) $ (0.19)
====== ====== ====== ======= ======= ======= =======
Shares used in computing basic and
diluted net income (loss) per share
(in thousands)...................... 4,000 4,667 5,000 9,286 11,429 11,609 16,870
====== ====== ====== ======= ======= ======= =======
</TABLE>

26
<PAGE>

<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------------------------------------------------------------------
MAR. 31, JUN. 30, SEPT. 30, DEC. 31, MAR. 31, JUN. 30, SEPT. 30,
1998 1998 1998 1998 1999 1999 1999
--------- --------- ---------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
AS A PERCENTAGE OF TOTAL REVENUE:
Revenue:
Product............................. 0.0% 100.0% 100.0% 100.0% 94.2% 100.0% 33.7%
Services............................ 100.0 0.0 0.0 0.0 5.8 0.0 66.3
------ ------ ------ ------- ------- ------- -------
Total revenue..................... 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Cost of revenue....................... 29.3 0.0 0.0 0.0 0.0 5.2 70.3
------ ------ ------ ------- ------- ------- -------
Gross profit...................... 70.7 100.0 100.0 100.0 100.0 94.8 29.7
------ ------ ------ ------- ------- ------- -------
Operating expenses:
Research and development............ 25.0 85.2 90.6 177.4 196.6 359.0 171.4
Sales and marketing................. 13.0 19.3 16.0 32.3 35.6 79.1 54.9
General and administrative.......... 19.7 24.8 17.5 46.4 57.0 164.2 110.4
------ ------ ------ ------- ------- ------- -------
Total operating expenses.......... 57.7 129.3 124.1 256.1 289.2 602.3 336.7
------ ------ ------ ------- ------- ------- -------
Income (loss) from operations......... 13.0 (29.4) (24.1) (156.1) (189.2) (507.6) (307.0)
Interest income....................... 8.7 4.8 4.9 6.0 10.5 7.3 22.2
------ ------ ------ ------- ------- ------- -------
Net income (loss)................. 21.6% (24.6)% (19.2)% (150.1)% (178.7)% (500.3)% (284.8)%
====== ====== ====== ======= ======= ======= =======
</TABLE>

REVENUE

Our quarterly product revenue for the seven quarters ended September 30,
1999 is derived from our license agreement with Bank of Montreal. We recognized
revenue of approximately $210,000 per month over the ten month period from
April 30, 1998 to February 28, 1999. Beginning April 1, 1999 we deferred a
portion of the revenue received under this agreement in connection with Bank of
Montreal's waiver of its exclusive rights to our technology in Canada. We expect
to recognize these amounts in 2000 upon the expiration of these rights. See
"Certain Transactions".

Our services revenue for the quarter ended March 31, 1998 relates to a
market research study that we conducted to develop strategies for financial
institutions with respect to the use of the Internet and wireless services. Our
services revenue in the quarter ended September 30, 1999 related to a customer
contract for consulting and software design services.

COST OF REVENUE

The cost of revenue for the seven quarters ended September 30, 1999 relates
to costs associated with delivering our services. The significant increase in
the cost of revenue for the quarter ended September 30, 1999 is due to a new
customer contract. To date, all of our costs related to our product revenue have
been research and development expenses.

OPERATING EXPENSES

Our quarterly operating expenses have increased primarily due to the growth
of our operations, in particular the increase in our staff and management.

LIQUIDITY AND CAPITAL RESOURCES

Since inception, we have financed our operations through issuances of common
shares together with revenue from operations. Through September 30, 1999, we
received aggregate proceeds of $34.2 million from the issuance of our common
shares. As of September 30, 1999, we had working capital of $25.1 million, which
included $28.0 million in cash and cash equivalents. In October 1999, we
received aggregate proceeds of $41.1 million from additional issuances of our
common shares.

27
<PAGE>
Net cash used in operating activities was $123,000 for the period from
July 28, 1997 to December 31, 1997, $4,000 for the year ended December 31, 1998,
and $3.9 million for the nine months ended September 30, 1999. Net cash used in
operating activities for the nine months ended September 30, 1999 reflects the
operating loss of $6.2 million offset by depreciation of $445,000 and net
changes in working capital of $1.9 million, primarily related to the deferred
revenue from fixed fee licenses.

Cash provided from financing activities was $1.4 million for the period from
July 28, 1997 to December 31, 1997, $2.6 million for the year ended
December 31, 1998 and $30.2 million for the nine months ended September 30,
1999. These cash flows reflect the proceeds received from issuances of our
common shares.

Cash used in investing activities was $21,000 for the period from July 28,
1997 to December 31, 1997, $927,000 for the year ended December 31, 1998 and
$1.2 million for the nine months ended September 30, 1999. Cash used in
investing activities reflects purchases of property and equipment in each
period. These expenditures consisted of purchases of computer hardware and
software, office furniture and equipment and leasehold improvements. We expect
that our capital expenditures will continue to increase in the future.

We expect our operating expenses to grow significantly, particularly
research and development expenses and sales and marketing expenses. In addition,
we expect to incur substantial operating expenses of $60 million to $80 million
in 2000 as we open our planned application hosting facilities and additional
sales offices. These expenses may vary depending upon the pace at which we open
these facilities and sales offices.

Our future liquidity and capital requirements will principally depend on our
rate of growth and the means by which we achieve our growth. For example, we may
utilize cash resources to fund acquisitions or investments in complementary
businesses or technologies. We believe that the net proceeds from the sale of
the common shares in this offering, together with cash on hand and revenue from
our operations, will be sufficient to meet our cash requirements for at least
the next 12 months.

IMPACT OF FOREIGN EXCHANGE RATE EXPOSURE

Substantially all of our revenue is expected to be earned in U.S. dollars. A
significant portion of our expenses is incurred in Canadian dollars. Changes in
the value of the Canadian dollar relative to the U.S. dollar may result in
currency translation gains and losses and could adversely affect our operating
results. To date, foreign currency exposure has been minimal. However, in the
future we intend to hedge all or a significant portion of our annual estimated
Canadian dollar expenses to minimize our Canadian dollar exposure. We are in the
process of implementing our currency strategy with respect to other foreign
currencies.

YEAR 2000 COMPLIANCE

Many currently installed computer systems and software products were coded
to accept only two-digit entries in date code fields. Both before and after the
year 2000, these date code fields will need to accept four-digit entries to
enable the computer systems and software products to distinguish
twenty-first century dates from twentieth century dates. Any of our computer
programs or hardware that have date-sensitive software or embedded computer
chips which have not been upgraded to be compliant with the requirements of the
year 2000 changeover may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in a system failure or miscalculations
causing disruptions of operations, including among other things, a temporary
inability to properly process transactions internally or in conjunction with
external computer systems on which we depend to provide our customers with our
product and services.

28
<PAGE>
OUR GENERAL READINESS

The year 2000 requirements affect the computers, software and other
equipment that we use, operate or maintain for our operations. Substantially all
of our software was developed after awareness of these issues became widespread
in the software industry, such that our software was designed with reference to
preventing year 2000 related difficulties from arising. Nonetheless, we have
adopted an internal policy to ensure that our product remains year 2000
compliant. We have conducted interface testing with all other products with
which our product interacts to determine if there are areas where the interfaces
themselves are not year 2000 compliant. We have taken proactive measures,
implementing a program of year 2000 awareness procedures for our employees,
customers and licensors to verify that all necessary procedures have been
undertaken and to ensure that our document management processes are constantly
reviewed to ensure year 2000 compliance. To the best of our knowledge, none of
our internal systems or equipment which are necessary for the conduct of our
business has any defects, errors or deficiencies which are not capable of being
remedied by us prior to December 31, 1999, and all expenses associated with this
remedial work have been fully provided for in our business plans.

We have also taken steps to ensure that our non-information technology
systems are year 2000 compliant. In particular, we have established plans to
ensure that our critical systems, including our electrical power, communications
and payroll systems, will not be impaired as a result of issues relating to the
year 2000. We have also devised an internal communications plan and a
contingency plan which designates certain individuals to respond to particular
year 2000 related problems if one occurs.

INDEPENDENT VERIFICATION AND VALIDATION

We engaged an independent consulting firm to conduct a verification of all
of our computer software source code. The review assessed our computer software
code, and a preliminary report has been issued. This report identified one
problem in the source code that related to year 2000 problems. We have made the
appropriate change to our source code and are awaiting final approval of this
change.

THIRD PARTY TECHNOLOGY SYSTEMS

If the software used by other entities with which our software interacts,
particularly the software used by the financial institutions with which our
software is integrated, fails to properly distinguish the year 2000 from the
year 1900, the services provided by these financial institutions to their
customers using our software will be substantially disrupted, will provide
erroneous information or will fail to properly process transactions. In addition
to computers and related systems, the operation of our office and facilities
equipment, such as fax machines, telephone switches, security systems and other
common devices, may be affected by the year 2000 problem.

COST OF OUR YEAR 2000 EFFORTS

We have incurred aggregate expenses of approximately $85,000 since our
inception in connection with this process, and do not expect to incur any
significant additional expenditures in this regard.

MOST LIKELY CONSEQUENCES OF YEAR 2000 PROBLEMS

We intend to identify and resolve all of our internal year 2000 problems
that could materially adversely affect our business operations before
December 31, 1999. However, we believe that it is not possible to determine with
complete certainty that all year 2000 related problems affecting us have been
identified or corrected. The number of devices and systems that could be
affected and the interactions among these devices and systems are numerous. We
believe that there exists the potential

29
<PAGE>
for a significant number of operational inconveniences and inefficiencies, and
possible disputes and claims related to products or services used or provided by
us.

CONTINGENCY PLANS

We have taken measures to ensure that our internal systems and equipment are
year 2000 compliant for both hardware and software. All of our operating systems
on all critical servers have been upgraded, and all individual computers and
tools have been verified as year 2000 compliant. We perform a daily back-up of
all critical information. In the event of a failure we estimate that the
information technology infrastructure necessary to run our internal business
operations could be restored.

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BUSINESS

OVERVIEW

Our objective is to become the leading provider of Internet infrastructure
solutions for the secure delivery of transaction and information services to
consumers. Our target market includes the largest financial institutions
worldwide. Bank of America, Citigroup and Bank of Montreal are in various stages
of implementing our solution. These institutions have a worldwide customer base
with approximately 137 million customer relationships.

INDUSTRY OVERVIEW

GROWTH OF THE INTERNET

The Internet has emerged as a global communications medium to deliver and
share information and conduct business electronically. International Data
Corporation (IDC) estimates that the number of worldwide Internet users will
grow from approximately 142 million users in 1998 to 502 million users by the
end of 2003. The dramatic growth in the number of Internet users has led to a
proliferation of information and services on the Internet, including financial
services, e-mail, e-commerce, news and lifestyle content. We believe that
consumers are increasingly seeking personalized and practical Internet
applications that they can use in their daily activities.

GROWTH OF DIGITAL WIRELESS COMMUNICATIONS

Digital wireless communications have grown rapidly due to declining consumer
costs, expanding network coverage, the availability of extended service features
such as voice and text messaging and the proliferation of wireless devices.
These wireless devices include personal digital assistants such as PalmPilot
connected organizers, and mobile phones such as the Neopoint 1000 and
Qualcomm PDQ, as well as two-way pagers such as those developed by Research In
Motion. Dataquest estimates that there were approximately 217 million digital
wireless subscribers worldwide at the end of 1998 and projects that this number
of subscribers will grow to approximately 828 million by the end of 2003. Recent
developments in wireless technology and deployment of digital data networks have
enabled the introduction of wireless data applications such as financial
services, news and lifestyle content.

CONVERGENCE OF WIRELESS COMMUNICATIONS AND THE INTERNET

The convergence of wireless communications and the Internet has created new
opportunities for the delivery of wireless data services. Dataquest estimates
that the number of wireless data subscribers worldwide will grow from
approximately 16 million at the end of 1998 to approximately 111 million at

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the end of 2003. We expect that the convergence of wireless communications and
the Internet will enable the delivery of wireless multimedia applications,
including voice, data, image and video. International wireless technology
groups, such as the Wireless Application Protocol Forum and the Symbian
Alliance, have created global standards for the transmission of wireless
applications, which we believe will lead to mass penetration of the market for
wireless devices and services.

GROWTH OF E-COMMERCE

With the emergence of the Internet as a globally accessible, fully
interactive medium, many individuals and companies that have traditionally
conducted business in person, through the mail or over the telephone now
increasingly conduct business electronically. We expect that consumer use of
e-commerce will accelerate as more individuals gain access to the Internet, as
the cost of Internet access decreases and as security concerns are alleviated.
In some parts of the world, particularly in a number of European and Asian
countries, e-commerce opportunities have been limited because credit cards,
which are currently the only secure form of on-line payment, are not widely
used. We expect these consumers to embrace e-commerce once a direct payment
system is available. According to IDC, Internet users worldwide are expected to
purchase more than $100 billion in goods and services in 1999, increasing to
$1.3 trillion in 2003.

GROWTH OF ON-LINE FINANCIAL SERVICES

THE OPPORTUNITY. Financial services are well suited for Internet
e-commerce. Consumers are increasingly conducting on-line transactions with
banks and securities brokers. These transactions can be faster, less expensive
and more convenient than transactions conducted through a broker, teller
or ATM. IDC expects that the number of users banking on-line in the U.S. will
increase from eight million in 1998 to approximately 40 million by the end
of 2003. In addition, IDC expects the number of on-line brokerage accounts to
continue to grow rapidly from six million in 1998 to 24 million in 2002. The
growth of electronic financial services has intensified price-based competition
among providers of financial services and has increased consumer expectations
for value-added services. Traditional financial institutions are at risk of
having their consumer base eroded by emerging on-line competitors, who are
driving the shift in the delivery of financial products and services from the
traditional physical infrastructure to electronic channels. This potential loss
of consumers creates a sense of urgency for traditional financial institutions
to respond with strategies that build on their unique trust relationship with
consumers and the strengths of their traditional channels and services.
Traditional financial institutions are well positioned to overcome consumer
concerns about security and to drive adoption of on-line services by their large
and attractive customer base. We believe that the increasing popularity of new
Internet-enabled devices will generate greater demand for on-line financial
services and provide an opportunity for financial institutions to deliver secure
personalized service to their consumers.

THE CHALLENGE. Large financial institutions have made significant
investments in computer systems that were not designed to facilitate e-commerce.
As consumers increasingly demand services through the Internet and other
electronic channels, financial institutions require a solution that enables
their existing systems to exchange information with their consumers across a
variety of Internet-enabled devices. This exchange requires a complex bridging
architecture that can interface with a variety of access devices, communication
protocols, operating systems, and network and security technologies. The
solution must also be secure, to protect the integrity and confidentiality of
information, and scalable, to process an increasing number of transactions. The
ideal solution must also enable rapid deployment and the flexibility to add
additional functions and services.

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THE 724 SOLUTION

We provide an Internet infrastructure solution that enables the delivery of
secure and personalized electronic information services, transactions and
payments using a broad range of mass-market wired and wireless Internet-enabled
devices, including digital mobile phones, personal computers and personal
digital assistants.

We are initially focused on providing our solution to large financial
institutions worldwide. Financial institutions are in a position to use their
large consumer base and unique trust relationship with consumers to accelerate
the adoption of on-line financial services. Our solution provides a robust and
scalable platform that enables financial institutions to deliver branded
financial services to their consumers on Internet-enabled devices in a
personalized, secure and cost efficient manner.

Our platform uses an open architecture and industry standards. The
architecture has been specifically designed to be extendable, allowing for the
addition of new devices, content and services.

724 SOLUTIONS FINANCIAL SERVICES PLATFORM

[Diagram]
[The diagram illustrates that different types of consumer devices connect to
network access providers. These network access providers connect to 724's
network and device gateway. 724's network and device gateway connects to 724's
services infrastructure, which connects to 724's transaction and content
gateway. The transaction and content gateway connects to financial institutions,
merchants and content providers. The administrative function supports the
overall architecture and provides a feed to a data warehouse. Security is
provided between each of these points in the system.]

Our architecture has four major components:

- THE NETWORK AND DEVICE GATEWAY provides access to a variety of
Internet-enabled devices and networks to ensure a consistent consumer
experience. Our platform automatically determines the appropriate
presentation of information for the device being used.

- THE SERVICES INFRASTRUCTURE enables: consumer applications, such as
banking, brokerage and e-commerce; personalization of the user experience;
notification services based on the consumer's interests and priorities;
and targeted marketing services. The services infrastructure also enables
session management, which ensures the continuity of a transaction over the
network. The architecture is supported by an overall administrative
function designed for easy and efficient management.

- THE TRANSACTION AND CONTENT GATEWAY connects to a financial institution's
existing infrastructure through a server using Open Financial Exchange
(OFX) or Extensible Markup Language (XML), two communication standards
that permit the electronic exchange of data, and to merchants and content
providers through the use of XML.

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- THE SECURITY LAYER provides security throughout the communication and
payment process from the consumer through to the network service provider.
Our solution is compatible with existing security technology used by
financial institutions and wireless and other network service providers.

We believe our solution will enable financial institutions to maintain and
deepen consumer relationships and accelerate the adoption of Internet-based
financial services. Our solution can be rapidly implemented, integrates easily
with existing systems, addresses security issues, is scalable and provides a
robust platform for future growth. Key benefits of our solution include:

- SPEED TO MARKET: Launched in May 1999, our solution can be rapidly
installed, branded and offered to consumers.

- EASE OF INTEGRATION WITH EXISTING SYSTEMS: Our platform links to a
financial institution's existing systems, enabling financial institutions
to preserve their existing investment, and to extend the productivity and
functionality of their existing infrastructure to new electronic channels.

- SECURITY: The security framework of our platform addresses financial
institutions' stringent security standards, creating an environment of
trust for consumers and allowing merchants to offer e-commerce services
with reduced fraud related concerns.

- SCALABILITY AND MANAGEABILITY: Our solution is designed to add users
efficiently and effectively. We believe that it can support significant
growth in users with little increase in infrastructure. It has a built in
set of tools to easily manage recovery, redundancy and deployment.

- ABILITY TO EXPAND FUNCTIONALITY: Our platform is designed to facilitate
the addition of new devices, content and services. It provides a robust
platform for the growth of electronic financial services and e-commerce.

- MAINTAIN AND DEEPEN CONSUMER RELATIONSHIPS: Our solution allows financial
institutions to connect directly with consumers wherever they can obtain
wired or wireless Internet access. Our solution also allows consumers to
set up their own personal preferences and alerts for an easy to use
experience. The information contained in the personalization and
notification databases provides our customers with a competitive advantage
in building consumer loyalty through the delivery of value-added services.

OUR STRATEGY

Our objective is to become the leading provider of an Internet
infrastructure for the secure delivery of services using a broad range of
Internet-enabled devices. Our strategy is to:

FOCUS ON LARGE FINANCIAL INSTITUTIONS: We are initially focusing on
providing our solution to large financial institutions worldwide, particularly
banks and brokerage firms. We believe that large financial institutions have
both the scale and global consumer base to maximize the adoption of services
based on our product. Financial institutions that have an aggregate of
approximately 137 million consumer relationships worldwide are in various stages
of implementing our solution. We believe that the trust relationship these
institutions have with consumers, combined with our secure payment
infrastructure, will accelerate consumer adoption of on-line financial services
and e-commerce transactions.

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ACCELERATE WORLDWIDE ADOPTION OF OUR SOLUTION: In an effort to encourage
rapid deployment of our solution by financial institutions, we are:

- Establishing relationships and alliances worldwide with wireless and other
network service providers, device manufacturers and content and technology
providers;

- Providing a compelling consumer experience through a consistent
user-friendly interface on a variety of Internet-enabled devices;

- Building a worldwide application hosting service; and

- Reducing our customers' initial cost of using our solution by charging a
variable license fee based on the number of users per month.

EXPAND OUR PLATFORM: Our architecture is designed to be extendable,
enabling our customers to continue to offer additional on-line services across a
variety of protocols, operating systems, networks and devices to maximize
consumer reach. We expect to further expand our reach by supporting additional
devices and broadening our functionality by introducing new applications,
content and services. For example, through our strategic relationship with
Sonera SmartTrust we plan to integrate into our solution public key
infrastructure (PKI), technology which facilitates the management of the tools
necessary to ensure authentication of user identity and the non-repudiation of
transactions. We believe this security feature is essential for the widespread
adoption of e-commerce transactions. Additionally, we have established our
Advanced Technology Center (ATC) to, among other things, gain early access to
device, wireless and network technologies.

PURSUE SELECTIVE ACQUISITIONS TO EXPAND OUR CAPABILITIES: We intend to
pursue acquisitions of companies and technologies that we believe will allow us
to quickly increase the scale and scope of our operations, such as expanding our
research and development team, expanding into new geographical markets or
industry sectors and providing new services.

DEVELOP APPLICATIONS FOR OTHER SECTORS: Once we have established a
significant presence in the financial services sector, we expect to use many of
the components of our architecture in other industries such as insurance, sales
force management and logistics.

OUR PLATFORM AND RELATED SERVICES

Our platform enables the delivery of secure and personalized electronic
information, services, transactions and payments using a broad range of
mass-market wired and wireless Internet-enabled devices. Our platform is
extendable across a wide array of protocols, operating systems and networks,
enabling financial institutions to deliver personalized transactions, services
and information to their customers over a wide range of communications networks.

Our platform architecture is illustrated below:

[Diagram]
[The diagram illustrates that 724's network and device gateway connects with
724's services infrastructure. The services infrastructure consists of consumer
applications, (including banking, brokerage and e-commerce services),
personalization, notification and alerts, targeted marketing services, session
management. The services infrastructure connects to 724's transaction and
content gateway. The administration function supports the overall architecture
and provides a feed to a data warehouse. Security is provided between each of
these points in the system.]

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NETWORK AND DEVICE GATEWAY

The network gateway transforms data from our platform into formats suitable
for use in a wide variety of wired and wireless networks including Code Division
Multiple Access (CDMA), Global System for Mobile Communication (GSM), Time
Division Multiple Access (TDMA), Cellular Digital Packet Data (CDPD), Mobitex
and Internet Protocol. Almost all digital mobile systems worldwide use one of
these major types of wireless access formats for voice and data communications.
This gateway enables our customers to quickly deploy their services through
multiple network service providers and allows for new protocols to be supported
without changes to our architecture.

The device gateway supports the presentation of our applications on multiple
devices. It recognizes the type of device a consumer is using and optimizes the
format of the information for the characteristics of that particular device
type. Our software automatically formats information delivered to a device using
style sheets programmed in Extensible Markup Language (XML) or Extensible Style
Language (XSL), a widely used language in Internet communications. This approach
enables our customers to deliver services over many types of access devices, and
allows new devices to be supported without changes to our architecture. The
network and device gateway ensures consumers receive a consistent and
user-friendly experience regardless of the device used.

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SERVICES INFRASTRUCTURE

CONSUMER APPLICATIONS. Our platform provides applications that include the
following:

BANKING

- account information and statements

- credit card statements

- intra-bank transfers

- bill payment

- bill presentment*

SECURITY ANALYSIS

- trading data and charting

- detailed stock quotes

- watchlists

- alerts

E-COMMERCE*

- direct purchase and payment

- travel services

BROKERAGE

- investment statements

- holdings and activities

- balances and open orders

- order placement and confirmation*

INFORMATIONAL

- news

- weather

- horoscopes

- lottery results

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

* To be included in future releases expected in the year 2000.

These applications are designed to be easy to use by consumers and provide
functions that can be quickly delivered to market.

PERSONALIZATION. Our solution enables consumers to customize their services
through a single set-up procedure. Once completed, a consumer's preferences are
stored in a unique profile on the network rather than on a specific device.
Thereafter, a consumer may use any Internet-enabled device to access his or her
account to retrieve information and conduct transactions without repeating the
set-up procedure. Changes in preferences made by a consumer on one device will
automatically be reflected on all other devices used by that consumer.

NOTIFICATION AND ALERTS. Our platform allows consumers to be notified
immediately of specific events such as stock price movements or releases of
relevant research. In the future, we expect that our platform will allow
notification of changes in a bank account balance above or below a previously
specified amount. The notification service supports a variety of alert
mechanisms such as text messages using e-mail and standard mobile network short
messaging service (SMS), which facilitates the transmission of messages between
subscribers and external systems such as e-mail, paging and voicemail.

TARGETED MARKETING SERVICES. Using data generated from personalized
profiles, financial institutions have the ability to gain a better understanding
of their consumers' needs and interests. Our targeted marketing service allows
the distribution of information directly to their consumers with personalized
messages or services based on their preferences.

SESSION MANAGEMENT. Our platform's session management system ensures
continuity of a transaction over the network. For example, if a user is
disconnected during a transaction but is able to reconnect within a prescribed
period of time, the user can complete the transaction without repeating the log
in process or previous entries.

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ADMINISTRATION

The administration functions allow our platform to be managed within a
customer's existing computer infrastructure. Through these services, platform
administrators can start and stop individual servers, add or remove resources
such as hardware from the platform without disrupting service, monitor
performance and perform system back-up procedures. These administration services
can be integrated with popular systems management tools allowing our platform to
be monitored as part of a financial institution's overall computing environment.
We provide a feed into a data warehouse of all transactions recorded by the
system.

TRANSACTION AND CONTENT GATEWAY

Our platform interfaces with the existing systems of financial institutions
through the transaction and content gateway. This connection is made using Open
Financial Exchange (OFX), an industry standard specification for the exchange of
financial data between financial institutions and consumers through the
Internet, or using Extensible Markup Language (XML). Merchants and content
providers connect to our system through an XML interface. This gateway allows
customers to quickly and easily connect to our platform and to extend the value
of their existing systems.

SECURITY

Our security framework is based on a strict methodology of threat
evaluation, risk analysis and policy creation, designed to address
authentication, authorization, privacy, integrity and non-repudiation. A
conventional user id/password mechanism provides user identification and
authentication. Our software incorporates standard cryptography protocols that
ensure the confidentiality of communications between servers, including Secure
Socket Layer (SSL) and Transport Layer Security (TLS), enhanced with Elliptical
Curve Cryptography (ECC) cypher-suites from Certicom, to ensure the privacy of
transactions and communications. These security technologies require minimal
computing power for encrypting and decrypting messages, making them well suited
for secure communications to wireless handheld devices. We are currently working
with Sonera SmartTrust, a division of Sonera Corporation, to incorporate Public
Key Infrastructure (PKI) technology into our applications to provide additional
support for user authentication and non-repudiation. Use of PKI technology,
which supports digital signatures, is expected to grow as a means of creating a
secure e-commerce environment over the Internet or virtual private networks.
This security framework addresses financial institutions' rigorous security
requirements, creating an environment of trust for consumers and allowing
merchants to offer e-commerce services with reduced fraud related concerns.

IMPLEMENTATION AND CUSTOMER SERVICE

We offer our customers consulting services regarding the installation and
deployment of our platform as well as ongoing product support. Services offered
during installation include training, configuration and connectivity to existing
systems. We believe that our customer support and consulting services result in
improved customer satisfaction and loyalty, a shorter sales process, faster
implementation and an increase in the sales of our product.

Customers have the option of implementing our solution using their in-house
personnel or using personnel provided by one of our designated third party
service providers. We bring together and coordinate the technology and resources
needed to deliver a single solution to customers who do not wish to use their
in-house resources to implement our solution.

APPLICATION HOSTING SERVICE

We are establishing an application hosting service to host and manage the
server infrastructure and software platform for our customers. These application
hosting facilities will support the scalability of

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our platform. We expect to provide these services worldwide, with facilities
based in Europe, Asia and North America. We may acquire or partner with third
parties to provide this service. We may also provide this service by
establishing application hosting facilities of our own or through a combination
of these strategies. We expect to incur significant expenses in the year 2000 in
order to establish application hosting facilities requested by our customers or
potential customers.

TECHNOLOGY

Our open-architecture platform communicates with our customers' systems via
an industry standard called Open Financial Exchange (OFX) gateway. Our platform
supports connectivity with Windows NT, the Internet, and database servers
compliant with Open Database Connectivity (ODBC), a standard protocol for
accessing database servers. We are enhancing our platform to support Sun
Microsystems' Solaris operating system and other standards including Financial
Information Exchange (FIX), a messaging standard that permits real-time
electronic securities transactions. Our open architecture allows us to
continually integrate best-in-class technology, ensuring that our customers'
needs are met on a timely basis.

Our architecture complies with Common Object Request Broker Architecture
(CORBA), a standard for applications software design used widely in the software
industry. We also use other widely accepted standards in developing our product,
including the following:

- encryption technologies such as Certicom's Elliptical Curve Cryptography
(ECC) and Secure Socket Layer (SSL), and RC4, a technology that permits
the encryption of large amounts of data;

- Hypertext Transfer Protocol (HTTP), the fundamental transport protocol for
Internet access on a client and server system; and

- Simple Mail Transport Protocol (SMTP), a standard protocol for e-mail
transmissions among different types of systems.

We are a full member of the Wireless Application Protocol Forum, an industry
association that has developed a leading standard for wireless information and
telephony services on digital mobile phones and other digital wireless devices.
Members of this organization include network service providers, device
manufacturers, leading infrastructure providers and software developers.

Our programs are written in C++ and Java, widely accepted standard
programming languages for developing object-oriented applications. We also make
extensive use in our software applications of Extensible Markup Language (XML),
which was completed by the World Wide Web Consortium in 1998.

RESEARCH AND DEVELOPMENT

As of December 6, 1999, our research and development department consisted of
98 people in four business units: program management, product definition,
architecture and product development. These units are responsible for assessing
new technologies, new release schedules, product architecture, security,
performance engineering, product requirements, quality assurance and product
support.

Our research and development expenditures were $44,000 in the period from
July 28, 1997 (inception) to December 31, 1997, $2.1 million for the year ended
December 31, 1998 and $4.5 million for the nine months ended
September 30, 1999.

In August 1999, we established our Advanced Technology Center (ATC) as part
of our architecture group. The ATC is primarily a research center focused on
rapidly developing innovative technologies from the concept stage to the
prototype stage. The ATC's main objectives are to gain early access to emerging
technologies, improve our products and services, expedite deployment to our
customers and

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create mutually beneficial relationships with customers, network service
providers and device manufacturers. As of December 6, 1999, the ATC employed
11 individuals with expertise in specialized areas such as carrier, database and
encryption technologies. To reflect the importance of the ATC in our research
and development process, we plan to increase the size of this group.

In July 1999, we established the Performance Engineering Group (PEG), a
group within our architecture group. The objective of PEG is to establish
benchmarks for our technology, to recommend and validate reference architectures
and to provide feedback to the architecture and product groups. We invest
heavily in performance engineering to ensure that our solution will be scalable
for large numbers of users and transaction volumes.

CUSTOMERS

We currently market our product and services to large financial institutions
such as banks and brokerages. Bank of Montreal, Bank of America and Citigroup
are in various stages of implementing our solution.

BANK OF MONTREAL

Bank of Montreal is a leading Canadian bank, which as of October 1999,
including its U.S. subsidiaries, had approximately Cdn.$231 billion in total
assets and approximately seven million retail customers. Bank of Montreal is a
fully integrated financial institution offering brokerage services through its
broker subsidiaries.

In May 1999, our platform enabled Bank of Montreal to become the first
financial institution in North America to launch an integrated wireless banking
and brokerage application in a market trial with approximately 350 users. This
service, named Veev, supports the delivery of banking, brokerage and lifestyle
applications through wireless phones and PalmPilot connected organizers. Bank of
Montreal has announced the success of its market trial and is currently in the
process of rolling out the Veev service throughout Canada.

In December 1999, Harris Bank, a U.S. subsidiary of Bank of Montreal,
announced its plans to commence a market trial of an online service based upon
our solution to customers in the Chicago, Illinois area.

BANK OF AMERICA

Bank of America, with $621 billion in assets as of September 30, 1999, is
the parent company of Bank of America, N.A., the largest bank in the U.S. The
bank serves more than 30 million households and 2 million businesses across the
country. Bank of America is a leading on-line banking provider in the U.S., with
more than 1.6 million on-line customers.

In July 1999, Bank of America announced that it intends to begin piloting
wireless on-line banking services using our solution in 2000.

CITIGROUP

Citigroup is a leading global financial institution which as of June 30,
1999 had approximately $690 billion in total assets and 100 million customer
relationships with consumer operations in more than 50 countries.

In August 1999, Citigroup announced its intention to implement our solution
worldwide under the leadership of its e-Citi division. We expect to enter into
one or more agreements with Citigroup and a number of its subsidiaries,
including Citibank and Salomon Smith Barney Inc., to deliver our solution to
their customers worldwide.

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ADDITIONAL CUSTOMER

In addition to these customers, we have entered into an agreement with an
additional U.S. bank to implement our solution. We expect that this bank will
announce its intention before the end of the first quarter of 2000 to launch
on-line services using our solution.

STRATEGIC RELATIONSHIPS

We are establishing worldwide relationships with wireless and other network
service providers, device manufacturers, technology companies and content
providers to facilitate the adoption of our customers' on-line products and
services. Through strategic relationships, we are able to gain technological
leadership, worldwide access and positioning and an early awareness of emerging
Internet technologies. Our participation in the development of these
technologies at an early stage gives us a competitive advantage to bring new
products and services to our customers. Currently, we are working with network
service providers such as Bell Mobility and Sprint; device manufacturers such as
3Com, Ericsson, Motorola, Neopoint, Nokia, Qualcomm and Research In Motion;
software and technology companies such as Certicom, Sonera and Sun Microsystems;
and system integrators such as Deloitte & Touche. We believe that our solution
benefits each of these types of companies as greater demand for digital wireless
financial services increases consumer loyalty and drives wireless airtime usage,
consumer electronic device sales and the consumption of other products and
services.

SALES AND MARKETING

As of December 6, 1999, we employed 19 people in sales. We intend to hire
additional people as we expand our Toronto sales team and establish sales teams
in New York, San Francisco, the U.K., continental Europe and the Asia Pacific
region. Our sales employees receive incentive compensation based on individual
sales volume. Deloitte & Touche assists us in selling and in implementing our
solution directly to large financial institutions worldwide.

As of December 6, 1999, we employed eight people in our marketing
department. Our marketing strategy consists of the following elements:

- DEFINE AND SELL OUR CATEGORY: We are driving a new category of consumer
services through a branding campaign for the personal financial
marketplace. We believe this will raise consumer expectations and create
demand for new services, while enabling financial institutions to meet
these expectations and demands.

- BUILD OUR IMAGE: We are seeking a corporate image that reflects
leadership, an understanding of our customers' business, technological
innovation and credibility. To achieve this, we intend to establish joint
marketing campaigns to showcase the success of our customers and the
network service providers and device manufacturers with whom we work.

- SEEK MARKET LEADERSHIP: By selling and deploying our solution to leading
financial institutions, we seek to gain early market share in the
provision of on-line solutions for financial institutions. Where possible,
we will take advantage of opportunities to conduct marketing activities
with our customers and the network operators and device manufacturers with
whom we work to create marketing programs.

COMPETITION

The market for our product and services is becoming increasingly
competitive. The widespread adoption of open standards may make it easier for
new market entrants and existing competitors to introduce products that compete
against ours. We believe that we will compete primarily on the basis of the
quality, functionality, ease of integration of our product and price of our
services. As a provider of a comprehensive Internet solution to financial
institutions, we assess potential competitors based

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primarily on their management, functionality and range of services, the security
and scalability of their architecture, and their client base, geographic focus
and capitalization.

Our current and potential competitors include:

- FINANCIAL INSTITUTIONS WITH IN-HOUSE SOLUTIONS: Financial institutions
that develop their own in-house solution with internal expertise and
outsourced service providers and products are a primary source of
competition. These include Celestial Securities Limited's wireless trading
service in Hong Kong; the wireless trading capability developed by
Fidelity using Research In Motion's two-way pagers and the wireless
trading service offered by DLJ Direct in the U.S.; the wireless brokerage
service provided by the on-line broker Fimatex in France; and a wireless
banking service offered by Barclays in the U.K.

- SOFTWARE VENDORS FOCUSED ON FINANCIAL INSTITUTIONS: Competitors include
Aether Systems and w-Trade. In addition, various companies active in the
Internet banking and brokerage businesses with a primary focus on back-end
processing, middleware or front-end personal computer platforms for retail
Internet banking are potential competitors. These include companies such
as S1 Corporation, CosmosBay, Brokat, TIBCO Software and Sanchez Computer
Associates.

- NETWORK SERVICE PROVIDERS: Sprint and BellSouth in the U.S. and NTT
DoCoMo in Japan are leaders in wireless data services. NTT DoCoMo provides
consumers with wireless banking services from over 50 banks as part of its
recently launched i-Mode service. Other network service providers with
advanced wireless data service initiatives include US West, Bell Atlantic,
AT&T Wireless Data Services, Nextel, Airtouch and Omnipoint in the U.S.,
Vodafone, British Telecom, Cellnet, Orange and One 2 One in the U.K.,
Deutsche Telecom and Starhub in continental Europe, and DDI and IDO in
Japan.

- DEVICE MANUFACTURERS: Ericsson, Motorola, Nokia and Matsushita are
pursuing wireless data service opportunities. Nokia recently announced
that it is working with Deutsche Bank's direct banking unit on a wireless
banking application, and that it plans to work with TD Waterhouse in North
America to develop a wireless trading service.

- SOFTWARE VENDORS, SERVICES VENDORS AND PORTALS: Companies that provide
browsers for digital mobile phones and the infrastructure to link devices
to network service providers and the Internet, such as Phone.com and
Microsoft MSN, are positioning themselves for the dramatic growth of
wireless data services. Companies offering wireless data services such as
e-mail, calendar access, aggregation of content, and a mobile e-commerce
platform include Saraide, mobilefinance.com, Wireless Knowledge (a joint
venture between Qualcomm and Microsoft), Research In Motion, Go America,
EmailPager, Logica and portals, such as America Online, Yahoo! and
Excite@Home. Software companies primarily focused on commercial wireless
applications are potential competitors in the future, including Qualcomm
Wireless Business Systems, Nettech Systems, Dynamic Mobile Data and
Mobimagic Co., a newly formed joint venture between Microsoft and NTT
Mobile.

INTELLECTUAL PROPERTY RIGHTS

We protect our proprietary technology through a combination of contractual
confidentiality provisions, trade secrets, and patent, copyright and trademark
laws. We have applied for patents and to have several of our trademarks
registered, including "724 Solutions", "724 Solutions & Design" and "E-Anywhere"
in Canada and "724 Solutions" and "724 Solutions & Design" in the U.S. To date,
none of these patents has been issued and none of these trademarks has been
registered. Despite the measures we have taken to protect our intellectual
property, we cannot assure you that third parties will not breach the
confidentiality provisions in our contracts or infringe or misappropriate our
copyrights, pending patents, trademarks and other proprietary rights. We may not
be able to secure

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patent or trademark registrations for all of our patent applications or
trademarks. We cannot assure you that third parties will not independently
discover or invent competing technologies or reverse engineer our trade secrets,
software or other technology. Moreover, the laws of some foreign countries may
not protect our proprietary rights to the same extent as do the laws of the U.S.
and Canada. Therefore, the measures we are taking to protect our proprietary
rights may not be adequate.

We also rely on technology and other intellectual property licensed to us by
third parties. For example, we have entered into a license agreement with
Certicom and Consensus for use of their encryption technology. We have also
entered into license agreements with third party content providers. In addition,
we use certain third party software that may not be available to us on
commercially reasonable terms or prices or at all in the future. Moreover, some
of our license agreements are non-exclusive, and therefore, our competitors may
have access to the very same technology licensed to us.

To date, we have not been notified that our product infringes on the
proprietary rights of third parties, but third parties could claim infringement
by us with respect to our existing or future products. Any claim of this kind,
whether or not it has merit, could result in costly litigation, divert
management's attention, cause delays in product installation, or cause us to
enter into royalty or licensing agreements on terms that may not be acceptable
to us.

EMPLOYEES

As of December 6, 1999, we had a total of 173 employees. None of our
employees is covered by any collective bargaining agreements. We believe that
our relations with our employees are good.

LEGAL PROCEEDINGS

We are not currently subject to any material legal proceedings; however, we
may from time to time become a party to various legal proceedings arising in the
ordinary course of our business.

FACILITIES

Our registered and head office is located in Toronto, Ontario in a
75,014 square foot facility under a lease which expires in 2005.

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<PAGE>
MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth information with respect to our executive
officers and directors as of the date of this prospectus:

<TABLE>
<CAPTION>
NAME AGE TITLE
- ---- -------- -----
<S> <C> <C>
Gregory Wolfond.......................... 38 Chairman and Chief Executive Officer
Christopher Erickson..................... 34 President, General Counsel, Secretary and
Director
Andre Boysen............................. 35 Chief Technology Officer and Director
Kerry McLellan........................... 38 Chief Operating Officer and Director
Karen Basian............................. 37 Chief Financial Officer
Mina Wallace............................. 44 Executive Vice President of Field
Operations
Alistair Rennie.......................... 34 Senior Vice President of Marketing
Lloyd F. Darlington...................... 54 Director
Martin A. Stein.......................... 59 Director
James D. Dixon........................... 56 Director
Harri Vatanen............................ 37 Director
Alan Young............................... 33 Director
</TABLE>

GREGORY WOLFOND. Mr. Wolfond co-founded our company in July 1997 and has
served as Chief Executive Officer since September 1997 and Chairman since April
1998. In 1987, Mr. Wolfond founded Footprint Software Inc., a financial services
software company specializing in object-oriented agent and sales technologies
with an emphasis on branch automation. At Footprint, Mr. Wolfond helped to
develop systems designed for ease of use across large financial institutions.
IBM purchased Footprint in May 1995, and Mr. Wolfond continued to serve as Chief
Executive Officer of Footprint until July 1997. While at IBM, Mr. Wolfond helped
develop IBM's network computing technology for the financial services industry.
Mr. Wolfond has a BA in Computer Science from the University of Western Ontario.
Mr. Wolfond resides in Toronto, Ontario.

CHRISTOPHER ERICKSON. Mr. Erickson co-founded our company with
Mr. Wolfond. He has served as President and General Counsel since our inception
and as a director since July 1998. In 1989, he founded Cygnus Computer
Associates Ltd., a software engineering firm that specialized in developing
client-server applications. While continuing to act as President of Cygnus he
joined Fasken Campbell Godfrey, a Canadian law firm, as a corporate/commercial
technology lawyer in 1994. In July 1997 he sold his interest in Cygnus and left
Fasken Campbell Godfrey to start our company. He is a director of the
Washington, D.C. based Computer Law Association and Chairman of the E-Commerce
Subcommittee of the Investment Funds Institute of Canada. He has also served as
a director of the Foundation for Responsible Computing and as a director and
general counsel to the Interactive Multimedia Arts and Technologies Association.
Mr. Erickson is a graduate of the computer engineering program (B.Sc.) at the
University of Waterloo and of the University of Toronto Law School (LLB). He is
a licensed professional engineer (P.Eng.) and a lawyer qualified to practice in
Ontario. Mr. Erickson resides in Toronto, Ontario.

ANDRE BOYSEN. Mr. Boysen has served as our Chief Technology Officer since
March 1998 and as a director since July 1998. He has extensive experience in the
financial software and telecommmunications industry. Mr. Boysen acted as Chief
Technology Officer for Footprint between March 1996 and March 1998. As CEO of
Footprint's Asia Pacific operations between 1994 and 1996, he established its
operations in Australia, New Zealand, Hong Kong, Singapore and Thailand. Between

44
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1990 and 1994, he served as CEO of Open Systems Limited, which developed turnkey
client-survey systems for several large companies. He sold his interest in Open
Systems when he joined Footprint. Mr. Boysen has a B.Sc. in Computer Engineering
from the University of Ottawa and an MBA from the Richard Ivey School of
Business at the University of Western Ontario. Mr. Boysen resides in Toronto,
Ontario.

KERRY MCLELLAN. Dr. McLellan joined our company in August 1998 as Executive
Vice-President, Strategy. He was appointed a director in March 1999 and Chief
Operating Officer in April 1999. He has previously managed several service
companies including Applied Business Research Limited and Melansons Waste
Management. He has acted as a consultant for Canadian and U.S. banks, technology
and telecommunications companies. He also was involved in the establishment of
Symcor, a Canadian multi-bank consortium for cheque and payment processing. He
holds a PhD in Business Strategy, specializing in technology and banking from
the Richard Ivey School of Business at the University of Western Ontario.
Dr. McLellan resides in Westfield, New Brunswick.

KAREN BASIAN. Ms. Basian joined our company as Chief Financial Officer in
February 1999. In September 1994, she joined Frito-Lay as Finance Director, and
became Director of Strategic Planning in July 1995. She served as Chief
Financial Officer and Vice-President, Finance at Hostess Frito-Lay from
September 1996 to February 1999. She has also held positions with Bain & Company
(from March 1989 to August 1994) where she served as a consultant and with
Deloitte & Touche (from September 1984 to December 1987) where she specialized
in international tax. Ms. Basian serves on the Board of the Alumni Association
for the University of Western Ontario. Ms. Basian has an Honors degree in
Business Administration from the University of Western Ontario, an MBA from IMD,
Lausanne, Switzerland and is a Chartered Accountant. Ms. Basian resides in
Toronto, Ontario.

MINA WALLACE. Ms. Wallace joined our company in April 1999 as Executive
Vice President of Field Operations. In 1991, she joined PeopleSoft Canada Co. as
Vice President of Sales, and became General Manager of Sales in 1996. Between
1986 and 1991, she held an executive sales position at Dun & Bradstreet
Software. Ms. Wallace has a Bachelor of Education and an MBA from the University
of Manitoba. Ms. Wallace resides in Toronto, Ontario.

ALISTAIR RENNIE. Mr. Rennie joined our company in April 1999 as Senior Vice
President of Marketing. In 1989, Mr. Rennie joined IBM as a business analyst and
held various product management and marketing positions with IBM until April
1999, becoming Program Director, Applications Server Marketing, in 1997.
Mr. Rennie has a BA in Economics and an Honors degree in Business Administration
from the University of Western Ontario. Mr. Rennie resides in Toronto, Ontario.

LLOYD F. DARLINGTON. Mr. Darlington has served as a director since
July 1998. Mr. Darlington was originally appointed to our board as a nominee of
Bank of Montreal under a shareholder agreement with our strategic investors.
Since May 1996, he has acted as Chief Technology Officer and General Manager of
Bank of Montreal. He is a director of Cebra Inc., Bank of Montreal's
wholly-owned electronic commerce subsidiary, and of Symcor Inc., a payment
processing corporation owned and operated by three of Canada's major financial
institutions. He began his career with Bank of Montreal in 1967 and, since 1980,
has held a variety of executive positions. Most recently, he served as Executive
Vice President, Operations from 1989 to 1996. Mr. Darlington received a BA in
English and Psychology from McGill University and an MBA from Concordia
University. Mr. Darlington resides in Toronto, Ontario.

MARTIN A. STEIN. Mr. Stein has served as a director since September 1998.
He is the President of Sonoma Mountain Ventures, a company he founded in
October 1998. Prior to founding Sonoma Mountain Ventures, Mr. Stein served as
Vice-Chairman of Technology and Operations of Bank America Corporation, was a
member of the bank's Office of the Chairman and served as

45
<PAGE>
Vice-Chairman of the capital budget committee. Mr. Stein joined Bank America in
June 1990 as Executive Vice-President. Before joining Bank America, Mr. Stein
served as Executive Vice President and Chief Information Officer of Paine Webber
in New York. Mr. Stein is a member of the board of several companies in the
financial services and technology industries, including Bank of Hawaii, Sequent
Computer Systems, LYNX Photonic Networks, Payment Net, FICS (a Belgian software
company), Evergreen Canada-Israel Investment and Wall Street Access. Mr. Stein
received a BA from Saint John's University, attended New York University's
Graduate School of Business, and received an Honorary Doctorate in Commercial
Science from Saint John's University. Mr. Stein resides in San Francisco,
California.

JAMES D. DIXON. Mr. Dixon has served as a director since June 1999.
Mr. Dixon was originally appointed to our board as a nominee of Bank of America
under a shareholder agreement with our strategic investors. He has served as
Group Executive of Bank of America Technology and Operations, a subsidiary of
Bank of America Corporation, since September 1998. From 1991 until the merger of
NationsBank Corporation and Bank America Corporation, Mr. Dixon served as
President of NationsBank Services, Inc. Prior to that, he served as Chief
Financial Officer of C&S/Sovran Corporation, a predecessor to NationsBank.
Mr. Dixon resides in Atlanta, Georgia.

HARRI VATANEN. Mr. Vatanen has served as a director since August 1999.
Mr. Vatanen was originally appointed to our board as a nominee of Sonera under a
shareholder agreement with our strategic investors. He is the founder and
President of Sonera SmartTrust and Senior Vice President of Sonera Corporation,
formerly Telecom Finland Ltd. Mr. Vatanen has worked in the telecommunications
industry for more than 15 years. Prior to joining Sonera, Mr. Vatanen worked at
a communications services management consulting company. Prior to working as a
consultant, he worked for Nokia Datacommunications in the product development
and international sales and marketing departments as a development manager of
future projects. Mr. Vatanen has a Master of Science in telecommunications,
information technology, and economics from Helsinki University of Technology.
Mr. Vatanen resides in London, U.K.

ALAN YOUNG. Mr. Young has served as a director since August 1999.
Mr. Young was originally appointed to our board as a nominee of Citigroup under
a shareholder agreement with our strategic investors. Since March 1998, he has
served as Vice-President, Access Devices and Distribution Technologies for
e-Citi, a division of Citigroup. From March 1995 to March 1998, Mr. Young served
as Vice President of Engineering of Viacom Inc., where he had responsibility for
implementing Viacom's worldwide satellite distribution strategy. From
September 1991 to March 1995, he served as a Technical Manager for MTV Europe
where he had responsibility for developing MTV Europe's satellite distribution
strategy. Mr. Young graduated from the University of York with a Masters degree
in Engineering. From August 1988 to September 1991, Mr. Young worked for British
Telecom, developing service specifications for television satellite uplink
facilities. Mr. Young resides in New Canaan, Connecticut.

COMMITTEES OF THE BOARD OF DIRECTORS

Our board has a stock option committee and a compensation committee.

STOCK OPTION COMMITTEE. The Stock Option Committee administers our stock
option plans, determining which individuals will receive grants of awards under
these plans, and the terms of these grants. The members of the Stock Option
Committee are Christopher Erickson and Andre Boysen.

COMPENSATION COMMITTEE. The Compensation Committee reviews and makes
recommendations to our board concerning the terms of the compensation packages
provided to our senior executive officers, including salary, bonus and awards
under our stock option plans and any other compensation plans that

46
<PAGE>
we may adopt in the future. The members of our Compensation Committee are
Gregory Wolfond, Martin A. Stein and Alan Young.

In addition to the above committees, we plan to establish an audit committee
to oversee the retention, performance and compensation of our independent
auditors, and the establishment and oversight of our systems of internal
accounting and auditing control. We plan to nominate Kerry McLellan, Lloyd F.
Darlington and James D. Dixon as members of our audit committee.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION

For the year ended December 31, 1998, our aggregate cash compensation
payments to our executive officers and directors was $424,800.

The following table sets forth all compensation we paid to our Chief
Executive Officer and each of our executive officers whose total salary and
bonus exceeded Cdn.$100,000 (approximately $65,000) in the years indicated.
Other than Christopher Erickson, we did not compensate any of these individuals
in 1997.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
----------------------------- UNDERLYING
OTHER ANNUAL OPTIONS
NAME AND PRINCIPAL POSITION YEAR SALARY ($) COMPENSATION ($) GRANTED (#)
- --------------------------- -------- ---------- ---------------- ------------
<S> <C> <C> <C> <C>
Gregory Wolfond
Chairman and Chief Executive Officer...... 1998 $179,400 $ -- --

Christopher Erickson 1998 97,500 -- 400,000
President and General Counsel............. 1997 26,700 -- --

Andre Boysen(1)
Chief Technology Officer.................. 1998 81,250 -- 400,000

Kerry McLellan(2)
Chief Operating Officer................... 1998 65,650 13,000 400,000
</TABLE>

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

(1) Mr. Boysen joined our company in March 1998.

(2) Dr. McLellan joined our company in August 1998. In addition, the amount
under "Other Annual Compensation" includes a monthly travel allowance of
$2,600 in 1998.

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<PAGE>
OPTION GRANTS DURING FISCAL 1998

We granted options under our Canadian stock option plan to the officers
named in the summary compensation table during the year ended December 31, 1998
as follows:

<TABLE>
<CAPTION>
MARKET VALUE OF
COMMON SHARES % OF TOTAL OPTIONS COMMON SHARES
UNDER OPTIONS GRANTED UNDER EXERCISE PRICE UNDERLYING OPTIONS ON
NAME GRANTED (#) PLANS IN 1998 (%) ($/SHARE) DATE OF GRANT(1)($) EXPIRATION DATE
- ---- ------------- ------------------ -------------- --------------------- ---------------
<S> <C> <C> <C> <C> <C>
Andre Boysen......... 400,000 21.4 $0.32 $0.32 March 2008
Kerry McLellan....... 400,000 21.4 0.32 0.32 August 2008
</TABLE>

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

(1) There was no public market for our common shares as of December 31, 1998.
Therefore, the amounts set forth in this column represent the fair market
value of each of our common shares as of that date, as determined by our
Board.

OPTIONS EXERCISED IN LAST FISCAL YEAR

The officers named in the summary compensation table did not exercise any
options during the year ended December 31, 1998. The following table sets forth
the estimated value as of December 31, 1998 of the exercisable and unexercisable
options held by these officers.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT YEAR END (#) YEAR END ($)(1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
(IN THOUSANDS OF
U.S. DOLLARS)
Christopher Erickson........................... 266,666 133,334 $347 $173
Andre Boysen................................... 200,000 200,000 260 260
Kerry McLellan................................. 150,000 250,000 195 325
</TABLE>

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

(1) The value of an "in-the-money" option represents the difference between the
aggregate estimated fair market value of the common shares issuable upon
exercise of the option and the aggregate exercise price of the option. There
was no public market for our common shares as of December 31, 1998.
Therefore, the amounts set forth in this column represent the fair market
value of our common shares as of December 31, 1998, of $1.63 per share, as
determined by our board.

DIRECTOR, EMPLOYEE AND CONSULTANT STOCK OPTIONS

As of September 30, 1999, our directors, employees and consultants held
options to purchase an aggregate of 2,211,594 of our common shares. Our
executive officers held options to acquire 1,370,000 of these common shares,
exercisable at prices ranging from $0.34 to $1.71, expiring at dates ranging
from September 22, 2007 to February 22, 2009. Those of our board members who are
not executive officers held options to acquire 108,000 common shares,
exercisable at prices ranging from $1.71 to $3.75, expiring at dates ranging
from September 14, 2008 to August 16, 2009. Our employees, excluding our
executive officers, held options to acquire 673,594 common shares, exercisable
at prices ranging from $0.34 to $3.75, expiring at dates ranging from
February 2, 2008 to September 27, 2009. Our consultants held options to acquire
60,000 common shares exercisable at a price of $3.75, expiring August 2, 2004.

COMPENSATION OF DIRECTORS

We do not presently pay any cash compensation to directors for serving on
our board, but we do reimburse directors for out-of-pocket expenses for
attending board and committee meetings. Of our

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<PAGE>
non-executive officers, only Martin A. Stein received stock options for his
participation on our board. In September 1998, Sonoma Mountain Ventures, a
consulting company controlled by Mr. Stein, received options under our Canadian
stock option plan to purchase 60,000 common shares at $1.71 per share.

EMPLOYMENT CONTRACTS

Each of our executive officers listed under "Management" has an employment
agreement with us. Each employment agreement provides each executive officer
with a compensation package which includes salary and benefits competitive with
industry standards and options to purchase common shares pursuant to our current
stock option plans. We retain all proprietary and intellectual property rights
in everything created, developed or conceived of by any of our employees while
employed with us. So long as any employee, including executive officers, is
employed by us, they are bound by non-competition and non-solicitation covenants
during their term of employment and for one year thereafter.

We have purchased a key-man employee insurance policy with respect to
Gregory Wolfond, our Chairman and Chief Executive Officer, providing coverage of
approximately $1.3 million.

STOCK OPTION PLANS

We currently have a Canadian stock option plan and a U.S. stock option plan,
both of which are intended to attract, retain and motivate key employees,
officers, directors and consultants. The Stock Option Committee of our board of
directors administers the option plans. The Stock Option Committee determines,
among other things, the eligibility of individuals to participate in the plans
and the term, vesting periods and the price of options granted under the plans.
The board has reserved an aggregate of 2,500,000 common shares for issuance
under the plans. As of September 30, 1999, options to purchase 2,211,594 shares
at a weighted average exercise price of $0.88 per share have been granted under
the Canadian stock option plan and no options have been granted under the U.S.
stock option plan.

CANADIAN STOCK OPTION PLAN. This plan was adopted in September 1997 and
provides for the grant of options to employees, officers, directors and advisors
of our company and our affiliates. All options granted under the plan have a
maximum term of 10 years and will have an exercise price per share of no less
than the fair market value of our common shares on the date of the option grant.
If an optionee's employment is terminated without cause, the vested portion of
any grant will remain exercisable until their expiration date. In the event of
termination for cause, the vested portion of any grant will remain exercisable
for a period of 30 days after the date of termination. Unvested options will
expire on termination unless the options would have vested within six months or
the required statutory notice period following a termination without cause,
whichever is earlier, or within one year if termination is due to death or
disability. If a change of control of our company occurs, all options become
immediately vested and exercisable.

U.S. STOCK OPTION PLAN. This plan was adopted in October 1999 and provides
for the grant of options and restricted shares to employees, officers, directors
and consultants of our company and our affiliates. The plan provides for the
grant of both incentive stock options and non-qualified stock options.

Incentive stock options granted under the plan have a maximum term of
10 years, or five years in the case of incentive stock options granted to an
employee who owns common shares having more than 10% of the voting power of our
company. The exercise price of incentive stock options will be no less than the
fair market value of our common shares on the date of the grant, or 110% of the
fair market value in the case of an incentive stock option granted to an
employee who owns common shares having more than 10% of the voting power of our
company. Non-qualified stock options granted under the

49
<PAGE>
plan have a maximum term of 10 years and an exercise price of no less than 85%
of the fair market value of our common shares on the date of the grant, or 110%
of the fair market value for those employees who own common shares representing
more than 10% of the voting power. Restricted shares granted under the plan have
a maximum term of 10 years and an exercise price of no less than 85% of the fair
market value of our common shares on the date of the grant, or 100% of the fair
market value in the case of restricted shares granted to an employee who owns
common shares having more than 10% of the voting power. We have a right to
repurchase shares from optionees within 90 days after termination.

NEW OPTION PLAN. We expect to adopt a new stock option plan prior to
completion of this offering. Options granted under the existing plans will be
unaffected by the adoption of the new plan. Upon our adoption of this plan, we
do not expect to grant any options under our existing plans. Our Stock Option
Committee will administer the new plan. The Stock Option Committee will
determine, among other things, the eligibility of individuals to participate in
the plan and the term, vesting periods and price of options granted under the
plan. The new plan will provide for the grant of options to all employees,
officers, directors and consultants of our company and our affiliates worldwide.
Both incentive stock options and non-qualified stock options will be available
to U.S. residents. Options held by any person under the new plan together with
any other options granted to that person may not at any time exceed 5% of the
aggregate number of common shares outstanding from time to time. The options
granted under the new plan will have a maximum term of 10 years and an exercise
price no less than the fair market value of our common shares on the date of the
grant, or 110% of fair market value in the case of an incentive stock option
granted to an employee who owns common shares having more than 10% of the voting
power. If a change of control of our company occurs, all options granted under
this plan will become fully vested and exercisable.

DIRECTORS' AND OFFICERS' INDEMNIFICATION

Under the Ontario Business Corporations Act, we are permitted to indemnify
our directors and officers and former directors and officers against costs and
expenses, including amounts paid to settle an action or satisfy a judgment in a
civil, criminal or administrative action or proceeding to which they are made
parties because of their position as directors or officers, including an action
against us. In order to be entitled to indemnification under this Act, the
director or officer must act honestly and in good faith with a view to our best
interests, and in the case of a criminal or administrative action or proceeding
that is enforced by a monetary penalty, the director or officer must have
reasonable grounds for believing that his or her conduct was lawful.

Under our by-laws, we may indemnify our subsidiaries' current and former
directors and our and our subsidiaries' current and former officers, employees
and agents. Our by-laws also provide that, to the fullest extent permitted by
the Act, we are authorized to purchase and maintain insurance on behalf of our
and our subsidiaries' current and past directors, officers, employees and agents
against any liability incurred by them in their duties. Our shareholder
agreement with our strategic investors listed under "Principal Shareholders"
also requires us to indemnify our directors under specified circumstances. We
believe that the provisions of our by-laws and the shareholders' agreement are
necessary to attract and retain qualified persons as directors and officers.

Currently, there is no pending litigation or proceeding where a current or
past director, officer or employee is seeking indemnification, nor are we aware
of any threatened litigation that may result in claims for indemnification. We
intend to increase the coverage provided under our current directors and
officers liability insurance policy.

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<PAGE>
CERTAIN TRANSACTIONS

BANK OF MONTREAL

In April 1998, we entered into a license agreement with Bank of Montreal,
which currently holds 1,714,285 of our common shares. Under this agreement, we
have also agreed to provide to Bank of Montreal related support and maintenance
services. Bank of Montreal has agreed, through February 29, 2000, to license all
of our technology that is now, or that during the term of the agreement will be,
available to our customers. The license fee for the first two years of the
agreement is Cdn. $3.0 million annually. The license is extendable annually at
the option of Bank of Montreal. With each extension, Bank of Montreal's license
will include any upgrades developed and provided to or intended to be provided
to our customers during that extension period. Bank of Montreal will retain the
right to use all of the technology previously licensed under the agreement
whether or not the license is extended.

If Bank of Montreal does not extend the general license, it may specifically
license additional technology from us that is made generally available to our
customers. The fee for this additional technology will be equal to the lowest
price at which this technology is made available to our other customers that
process similar volumes of business with our solution.

Initially, Bank of Montreal had the right to be the exclusive Canadian
financial institution to which we would license our technology. In
November 1998, Bank of Montreal agreed to waive this right in return for a
refund of a portion of its annual license fee based on fees paid by each other
Canadian financial institution in each year in which its license is in effect.
Bank of Montreal will not be entitled to receive this refund if it does not
annually extend its general license.

BANK OF AMERICA

In June 1999, we entered into a license agreement with Bank of America,
National Trust & Savings Association, an affiliate of Bank of America and a
predecessor of Bank of America, N.A. Bank of America currently holds 3,200,000
of our common shares. Bank of America has agreed, through February 1, 2001, to
license all of our technology that is now, or that during the term of the
agreement will be, available to our customers. The license is extendable
annually at the option of Bank of America. With each extension, Bank of
America's license will include any upgrades developed and provided to or
intended to be provided to our customers during that extension period. Bank of
America will retain the right to use all of the technology previously licensed
under the agreement whether or not the license is extended.

If Bank of America does not subscribe for an extension of its general
license in February 2001 or annually thereafter, it will have the right,
exercisable for four years after it ceases to subscribe to the general license,
to specifically license additional technology from us that is made generally
available to our customers. For two years after it ceases to subscribe to the
general license, Bank of America will retain the right to reinstate the license
by repaying the aggregate amount of fees that would otherwise have been paid had
the license been renewed each year.

In June 1999, we also entered into a software maintenance and support
agreement with Bank of America under which Bank of America pays an annual
maintenance fee. We charge Bank of America on a time and materials basis in
connection with installation, implementation and modification of customized code
and enhancements. This agreement has an initial term of two years and is
renewable annually at the option of the parties.

CITIGROUP

Citigroup has announced its intention to implement our solution worldwide
under the leadership of its e-Citi division. We are working with Citigroup and a
number of its subsidiaries, including

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<PAGE>
Citibank and Salomon Smith Barney Inc., to deliver our solution to their banking
and brokerage customers. We expect to enter into one or more agreements with
them to license our product. Citicorp Strategic Technology Corporation, a
subsidiary of Citigroup, currently holds 6,400,000 of our common shares.

SONOMA MOUNTAIN VENTURES

Since August 1999, we have received consulting services from Sonoma Mountain
Ventures, an entity controlled by Martin A. Stein, one of our directors. Sonoma
provides, upon our request, strategic planning advice in connection with our
customer services. The consulting arrangement is for a two year term ending in
August 2001. Sonoma will receive a monthly fee of approximately $28,000,
together with options to purchase an aggregate of 48,000 of our common shares.

MCLELLAN PATENT APPLICATION

In July 1999, we entered into an agreement with Dr. Kerry McLellan, our
Chief Operating Officer, in which we purchased his rights under patent
applications filed in the U.S. and Canada relating to a security system for
electronic transactions. We paid Dr. McLellan a nominal purchase price for these
rights and agreed to reimburse him for the expenses that he incurred in filing
these applications. The applications cover a security system that we do not
expect to incorporate into our product in the near future. Under our agreement,
we have agreed to pay Dr. McLellan a portion of any licensing fees that we
receive from any license of the rights covered by these patent applications and
a portion of the proceeds of any sale of these rights. Dr. McLellan also has the
right to repurchase the rights covered by the patent applications from us until
a U.S. patent covering the technology is issued or May 2002, whichever is
earlier. We have the right to terminate Dr. McLellan's royalty rights, rights to
receive a portion of any sale proceeds and right to buy back these rights until
July 2003.

BLUE SKY CAPITAL CORPORATION AND 1319079 ONTARIO INC.

In September 1997, we issued 3,999,800 common shares, together with an
option to purchase an additional 4,000,000 common shares, to Blue Sky Capital
Corporation, an entity controlled by our Chairman and Chief Executive Officer,
for an aggregate purchase price of approximately Cdn. $2.0 million. The option
was transferred to a second entity under his control, 1319079 Ontario Inc., and
was exercised in October 1998 at an exercise price of Cdn. $0.50 per share.

REGISTRATION RIGHTS

We are a party to a shareholder agreement with all of our existing
shareholders. This agreement provides that, subject to specified limitations, if
we propose to register or qualify for public distribution of any of our common
shares under the securities laws of the U.S. or Canada, all of our existing
shareholders, other than those owning less than 5% of the issued and outstanding
common shares, have the right to include their common shares in the public
distribution. Furthermore, holders of 21,402,426 of our common shares acting as
a group, may require us to qualify a prospectus for, or effect the registration
of, all or part of the common shares in the public distribution. These demand
rights apply during the period commencing nine months after the date of this
offering and ending on the fourth anniversary of this offering. The number of
shares to be included in a public distribution can be limited by the
underwriters of that offering.

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<PAGE>
PRINCIPAL SHAREHOLDERS

The following table provides information regarding the beneficial ownership
of our common shares as of December 14, 1999, and as adjusted to reflect the
sale of 6,000,000 common shares in this offering as to:

- each person or entity who beneficially owns more than 5% of our
outstanding common shares;

- each of our directors;

- each of the executive officers listed in the summary compensation table;
and

- all of our directors and executive officers as a group.

Except as otherwise indicated, the persons named in the table have sole
voting and investment power with respect to all common shares held by them.
Percentage ownership is based on 29,402,426 shares of common shares outstanding
as of December 14, 1999, and 6,000,000 additional common shares to be issued in
this offering.

<TABLE>
<CAPTION>
PERCENTAGE OF SHARES BENEFICIALLY OWNED
NUMBER OF SHARES ----------------------------------------
BENEFICIAL OWNER BENEFICIALLY OWNED BEFORE THE OFFERING AFTER THE OFFERING
- ---------------- ------------------ ------------------- ------------------
<S> <C> <C> <C>
Gregory Wolfond(1).......................... 8,000,000 27.2% 22.6%
c/o 724 Solutions Inc.
4101 Yonge Street, Suite 702
Toronto, ON M2P 1N6 Canada
Sonera Corporation.......................... 6,400,000 21.8% 18.1%
P.O. Box 106, Fin-00051
Teollisuuskatu 15
Helsinki, Finland
Citigroup Inc.(2)........................... 6,400,000 21.8% 18.1%
153 East 53rd Street
New York, NY 10043
Bank of Montreal............................ 3,428,570 11.7% 9.7%
55 Bloor Street East
Third Floor
Toronto, ON
Canada M4W 3N5
Bank of America Corporation................. 3,200,000 10.9% 9.0%
Bank of America Corporate Center
100 North Tryon Street
Charlotte, NC 28255
Christopher Erickson(3)..................... 333,332 * *
Andre Boysen(3)............................. 266,666 * *
Kerry McLellan(3)........................... 233,332 * *
Martin A. Stein(4).......................... 32,000 * *
All directors and executive officers as a
group (12 persons)(5)..................... 8,865,330 29.3% 24.4%
</TABLE>

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

* Less than 1% of the outstanding common shares.

(1) These shares are held of record by privately-held entities of which
Mr. Wolfond is the majority shareholder or has the sole power to vote and to
direct the disposition of their shares.

(2) These shares are held of record by Citicorp Strategic Technology
Corporation, a subsidiary of Citigroup Inc.

(3) These common shares are issuable upon the exercise of options that are
presently vested or that vest prior to January 31, 2000.

(4) Includes 20,000 common shares issuable upon the exercise of options that are
presently vested or that vest prior to January 31, 2000. Also includes
12,000 shares issuable upon the exercise of options that are presently
vested or that vest prior to January 31, 2000 that have been granted to
Sonoma Mountain Ventures, an entity controlled by Mr. Stein. See "Certain
Transactions."

(5) Includes 865,330 common shares that are issuable upon the exercise of
options that are presently vested or that vest prior to January 31, 2000.

53
<PAGE>
DESCRIPTION OF SHARE CAPITAL

AUTHORIZED AND ISSUED SHARE CAPITAL

COMMON SHARES

Our authorized share capital consists of an unlimited number of common
shares, of which 29,402,426 were issued and outstanding as of December 14, 1999.
Holders of common shares are entitled to one vote per share on all matters to be
voted on at all meetings of shareholders and to receive dividends as and when
declared by our board of directors. Upon the voluntary or involuntary
liquidation, dissolution or winding up of our company, the holders of common
shares are entitled to share ratably in our remaining assets available for
distribution, after payment of liabilities. A holder of common shares will have
no preemptive, redemption or conversion rights upon completion of this offering.

PREFERRED SHARES

We expect that our articles will be amended prior to the closing of this
offering to provide that our board of directors will have the authority, without
further action by the shareholders, to issue an unlimited number of preferred
shares in one or more series. These preferred shares may be entitled to dividend
and liquidation preferences over the common shares. The board will be able to
fix the designations, powers, preferences, privileges and relative,
participating, optional or special rights of any preferred shares issued,
including any qualifications, limitations or restrictions. Special rights which
may be granted to a series of preferred shares may include dividend rights,
conversion rights, voting rights, terms of redemption and liquidation
preferences, any of which may be superior to the rights of the common shares.
Preferred share issuances could decrease the market price of the common shares
and may adversely affect the voting and other rights of the holders of common
shares. The issuance of preferred shares could also have the effect of delaying
or preventing a change in control of our company.

SHARE SPLIT

Prior to the completion of this offering, we plan to file articles of
amendment to split all of our outstanding and reserved common shares on a
two-for-one basis. Unless otherwise specified, disclosure in the prospectus is
based on post-split numbers.

PRIOR SALES

The following are the only transactions involving the sale of common shares
for the 12 months prior to December 14, 1999.

1. In June 1999, we issued 541,790 common shares for an aggregate
subscription price of $2.0 million.

2. In July 1999, we issued 950,000 common shares for an aggregate
subscription price of $3.6 million.

3. In August 1999, we issued 6,400,000 common shares for an aggregate
subscription price of $24.5 million.

4. In October 1999, we issued 5,450,000 common shares for an aggregate
subscription price of $20.8 million, 2,658,210 common shares for an
aggregate subscription price of $10.2 million, and 1,973,856 common
shares for an aggregate subscription price of $10.0 million.

REGISTRAR AND TRANSFER AGENT

The registrar and transfer agent for our common shares is Montreal Trust
Company of Canada, 8th Floor, 151 Front Street West, Toronto, Ontario M5J 2N1.

54
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the offering, a total of 35,402,426 common shares will be
outstanding (36,302,426 common shares if the underwriters exercise their
over-allotment option in full). All of the common shares sold in the offering in
the U.S. and Canada will be freely tradable without restriction under either the
Securities Act of 1933, except for any such shares which may be acquired by an
affiliate of ours, as that term is defined in Rule 144 promulgated under the
Securities Act of 1933 or applicable Canadian securities laws (except by
"control persons", as defined under these laws).

U.S. RESALE RESTRICTIONS

All of our common shares issued prior to this offering are "restricted
securities" as this term is defined under Rule 144, in that such shares were
issued in private transactions not involving a public offering and may not be
sold in the U.S. in the absence of registration other than in accordance with
Rule 144 under the Securities Act of 1933 or another exemption from
registration. In general, under Rule 144 as currently in effect, any of our
affiliates or any person (or persons whose shares are aggregated in accordance
with Rule 144) who has beneficially owned our common shares which are treated as
restricted securities for at least one year would be entitled to sell within any
three-month period a number of shares that does not exceed the greater of 1% of
our outstanding common shares (approximately 354,024 shares based upon the
number of common shares expected to be outstanding after the offering) or the
reported average weekly trading volume in our common shares during the four
weeks preceding the date on which notice of such sale was filed under Rule 144.
Sales under Rule 144 are also subject to manner of sale restrictions and notice
requirements and to the availability of current public information concerning
our company. In addition, affiliates of our company must comply with the
restrictions and requirements of Rule 144 (other than the one-year holding
period requirements) in order to sell common shares that are not restricted
securities (such as common shares acquired by affiliates in market
transactions). Furthermore, if a period of at least two years has elapsed from
the date restricted securities were acquired from us or from one of our
affiliates, a holder of these restricted securities who is not an affiliate at
the time of the sale and who has not been an affiliate for at least three months
prior to such sale would be entitled to sell the shares immediately without
regard to the volume, manner of sale, notice and public information requirements
of Rule 144.

Upon closing of this offering, we intend to file a registration statement
for the resale of the common shares that are authorized for issuance under our
existing and new stock option plans. We expect this registration statement to
become effective immediately upon filing. Shares issued pursuant to our stock
option plans to U.S. residents after the effective date of that registration
statement (other than shares issued to our affiliates) generally will be freely
tradable without restriction or further registration under the Securities Act of
1933. As of September 30, 1999, options to purchase 2,211,594 common shares have
been granted under our stock option plan, of which none have been exercised.

We, along with our directors, executive officers and a majority of our
current shareholders have agreed, for a period of 180 days after the date of
this prospectus, not to offer or sell any of our common shares, subject to
limited exceptions, without the prior written consent of Credit Suisse First
Boston. See "Underwriting."

CANADIAN RESALE RESTRICTIONS

Excluding any common shares purchased in this offering, Canadian residents
hold 11,428,570 common shares and options or warrants to purchase
2,096,594 common shares. Under applicable Canadian securities laws, all such
common shares or common shares issuable upon exercise of such options may not be
sold or otherwise disposed of for value, except pursuant to a prospectus, a
discretionary exemption or a statutory exemption available only in specific
limited circumstances, until

55
<PAGE>
we have been a reporting issuer for at least 12 months in the province in which
such shareholder or optionee resides. We will become a reporting issuer when we
file this prospectus with the securities regulatory authorities of those
provinces and when those authorities issue receipts for the prospectus. We
expect that the receipts will be issued on or about the date of this prospectus.
We have applied to these regulatory authorities for a discretionary exemption
that would permit sales of our common shares by residents of these provinces who
are our employees and acquired such shares upon the exercise of stock options
after we have been a reporting issuer for 180 days, provided that a particular
employee has held the common shares or stock options for a combined period of at
least one year.

If the discretionary exemption is granted or other steps taken to allow the
sale of such common shares are successful, 1,564,938 common shares issuable upon
the exercise of outstanding and vested options will be eligible for resale
180 days after the completion of this offering.

ESCROWED SECURITIES

We are seeking discretionary relief from securities regulators in each of
the provinces of Canada to be exempt from applicable escrow rules, in accordance
with the policies of The Toronto Stock Exchange concerning the disposition of
shares held by certain persons related to a company engaging in an initial
public offering. In the event such relief is not obtained, several holders of
common shares will have to enter into an escrow agreement with us and a trustee.
Pursuant to this agreement, - common shares (representing - % of our
common shares outstanding after giving effect to the offering) will be placed in
escrow with the trustee by the shareholders. Of the escrowed shares deposited
with the trustee, one third will be released on each of the first, second and
third anniversaries of the date on which receipt for this prospectus is issued,
or earlier with the consent of The Toronto Stock Exchange.

REGISTRATION RIGHTS

For a description of the registration rights held by the holders of our
outstanding common shares, see "Certain Transactions."

56
<PAGE>
INCOME TAX CONSEQUENCES

In this section we summarize certain of the U.S. and Canadian federal income
tax considerations that may be relevant to purchasers of common shares in this
offering who:

- are U.S. persons within the meaning of the U.S. Internal Revenue Code of
1986, as amended (the "Internal Revenue Code"), including a purchaser who,
or that, is a citizen or resident of the U.S., a corporation or
partnership created or organized under the laws of the U.S. or any
political subdivision thereof or therein, an estate, the income of which
is subject to U.S. federal income tax regardless of the source, or a trust
if a court within the U.S. is able to exercise primary supervision over
the administration of the trust and one or more U.S. persons have the
authority to control all substantial decisions of the trust;

- for purposes of the Income Tax Act (Canada) (the "Income Tax Act") and the
Canada-U.S. Income Tax Convention (1980) (the "Convention"), are resident
in the U.S. and are not nor are deemed to be resident in Canada;

- hold shares as capital assets for purposes of the Internal Revenue Code
and capital property for purposes of the Income Tax Act; and

- deal at arm's length with us for purposes of the Income Tax Act and the
Internal Revenue Code.

We will refer to beneficial owners of common shares who satisfy the above
conditions as "Unconnected U.S. Shareholders." Such persons do not include, and
this summary does not apply to, persons who are "financial institutions" as
defined in Section 142.2 of the Income Tax Act and non-resident insurers which
carry on business in Canada and elsewhere.

We will assume, for purposes of this discussion, that you are an Unconnected
U.S. Shareholder. The tax consequences of a purchase of common shares by persons
who are not Unconnected U.S. Shareholders may differ substantially from the tax
consequences discussed in this section. This discussion does not purport to deal
with all aspects of U.S. or Canadian federal income taxation that may be
relevant to particular Unconnected U.S. Shareholders or to certain classes of
Unconnected U.S. Shareholders who are subject to special treatment under the
U.S. or Canadian federal income tax laws, including, but not limited to,
Unconnected U.S. Shareholders who own, actually or constructively, 10% or more
of the total combined voting power of all classes of our shares, financial
institutions, dealers in securities, banks, insurance companies, tax-exempt
organizations, broker-dealers, individual retirement and other tax-deferred
accounts, U.S. persons whose functional currency (as defined in Section 985 of
the Internal Revenue Code) is not the U.S. dollar, or Unconnected U.S.
Shareholders holding common shares as part of a "straddle," "hedge" or
"conversion transaction." This discussion does not deal with persons who are not
Unconnected U.S. Shareholders.

The discussion is based upon the current provisions of:

- the Income Tax Act and regulations under the Income Tax Act;

- the Internal Revenue Code and existing and proposed regulations under the
Internal Revenue Code;

- the Convention;

- the current administrative policies and practices published by Revenue
Canada;

- all specific proposals to amend the Income Tax Act and the regulations
under the Income Tax Act that have been publicly announced by the Minister
of Finance (Canada) prior to the date of this prospectus;

- the administrative rulings, practice and policies of the U.S. Internal
Revenue Service; and

- judicial decisions,

57
<PAGE>
all as of the date hereof and all of which are subject to change (possibly on a
retroactive basis) and differing interpretation. We do not discuss the potential
effects of any recently proposed legislation in the U.S. and do not take into
account the tax laws of the various provinces or territories of Canada or the
tax laws of the various state and local jurisdictions of the U.S. or foreign
jurisdictions.

WE INTEND THIS DISCUSSION TO BE A GENERAL DESCRIPTION OF THE U.S. FEDERAL
AND CANADIAN FEDERAL INCOME TAX CONSIDERATIONS MATERIAL TO A PURCHASE OF COMMON
SHARES AND IT IS NOT INTENDED TO BE, NOR SHOULD IT BE CONSTRUED AS, LEGAL OR TAX
ADVICE TO ANY PERSON PURCHASING COMMON SHARES. THIS DISCUSSION DOES NOT DEAL
WITH ALL POSSIBLE TAX CONSEQUENCES RELATING TO AN INVESTMENT IN OUR COMMON
SHARES. WE HAVE NOT TAKEN INTO ACCOUNT YOUR PARTICULAR CIRCUMSTANCES AND DO NOT
ADDRESS CONSEQUENCES PECULIAR TO YOU UNDER PROVISIONS OF U.S. OR CANADIAN INCOME
TAX LAW. THEREFORE, YOU SHOULD CONSULT YOUR OWN TAX ADVISOR REGARDING YOUR
INDIVIDUAL TAX CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF COMMON
SHARES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN
TAX LAWS, AND ANY CHANGES IN APPLICABLE LAWS.

U.S. FEDERAL INCOME TAX CONSIDERATIONS

You generally will be required to include the U.S. dollar value of any
dividend distribution which you receive on the common shares in ordinary income
to the extent of our current or accumulated earnings and profits, as determined
under U.S. federal income tax principles. The U.S. dollar value of any
distribution received in Canadian dollars will be determined based on the spot
exchange rate for the date of receipt. The amount of the distribution will be
determined without reduction for the Canadian withholding tax. To the extent any
dividend distribution paid by us exceeds our current or accumulated earnings and
profits, your pro rata share of such distribution will be treated first as a
return of capital up to your adjusted tax basis in our common shares (with a
corresponding reduction in basis), and then as a gain from the sale or exchange
of the shares. Unconnected U.S. Shareholders should consult their tax advisors
regarding the tax treatment of foreign currency gain or loss, if any, on
Canadian dollars received. Dividends paid by us on the shares will not generally
be eligible for the "dividends received" deduction.

In general, an Unconnected U.S. Shareholder subject to withholding tax in
Canada may be entitled to claim a credit or deduction for U.S. Federal income
tax purposes in the amount of the taxes withheld, subject to certain conditions
and limitations. The amount of allowable foreign tax credits in any year
generally cannot exceed regular U.S. tax liability for the year attributable to
certain foreign source income. However, limitations on the use of foreign tax
credits generally will not apply to an electing individual Unconnected U.S.
Shareholder whose creditable foreign taxes during a tax year do not exceed $300
($600 for joint filers) if such individual's gross income for the tax year from
non-U.S. sources consists solely of certain items of "passive income" reported
on a "payee statement" furnished to the Unconnected U.S. Shareholder. In
addition, an Unconnected U.S. Shareholder will be denied a foreign tax credit
with respect to taxes withheld from dividends received to the extent such
Unconnected U.S. Shareholder has not held the common shares for a minimum period
or to the extent such Unconnected U.S. Shareholder is under an obligation to
make certain related payments with respect to substantially similar or related
property.

You generally will recognize gain or loss on the sale, exchange or other
disposition of common shares in an amount equal to the difference, if any,
between the amount realized on the sale and your adjusted tax basis in the
common shares. Any gain or loss you recognize upon the sale of common shares
held as capital assets will be long-term or short-term capital gain or loss,
depending on whether the shares have been held by you for more than one year.
Gain or loss resulting from a sale of the common shares generally will be
U.S. source for U.S. foreign tax credit purposes unless attributable to an
office or other fixed place of business outside the U.S.

Dividend payments with respect to the common shares and proceeds from the
sale, exchange or redemption of common shares may be subject to information
reporting to the Internal Revenue Service

58
<PAGE>
and possible U.S. backup withholding tax at a rate of 31%. Backup withholding
will not apply, however, to an Unconnected U.S. Shareholder who furnishes a
correct taxpayer identification number and makes any other required
certification or who is otherwise exempt from backup withholding. Generally, an
Unconnected U.S. Shareholder will provide such certification on IRS Form W-9.
Amounts withheld under the backup withholding rules may be credited against a
holder's tax liability, and a holder may obtain a refund of any excess amounts
withheld under the backup withholding rules by filing the appropriate form for
refund with the IRS. Unconnected U.S. Shareholders should consult with their own
tax advisors concerning the application of the backup withholding rules.

PASSIVE FOREIGN INVESTMENT COMPANIES

The rules governing "passive foreign investment companies" can have
significant tax effects on Unconnected U.S. Shareholders. We could be classified
as a passive foreign investment company if, for any taxable year, either:

- 75% or more of our gross income is "passive income," which includes
interest, dividends and some types of rents and royalties; or

- the average percentage, by fair market value, or, in some cases, by
adjusted tax basis, of our assets that produce or are held for the
production of "passive income" is 50% or more.

Distributions which constitute "excess distributions," as defined in
Section 1291 of the Internal Revenue Code, from a passive foreign investment
company and dispositions of shares of a passive foreign investment company are
subject to special rules, pursuant to which the Unconnected U.S. Shareholder
generally must allocate the gain or excess distribution ratably to each day in
such holder's holding period for the common shares. The portion of the gain or
excess distribution allocated to the taxable year in which the gain was
recognized or the excess distribution was received and any taxable years during
which we were not a passive foreign investment company would be taxed as
ordinary income. The portion of the gain or excess distribution allocated to
each of the other taxable years would be subject to tax at the maximum ordinary
income rate in effect for such taxable year and an interest charge would be
imposed on the deferred tax. The tax and interest charge on the amounts
allocated to the tax years during which we are a passive foreign investment
company (other than the current tax year) would be includible in the holder's
U.S. federal income tax liability for the taxable year in which the gain was
recognized or excess distribution was received. This tax liability could not be
offset by net operating losses, and gains (but not losses) realized on the sale
of the common shares could not be treated as capital in nature, notwithstanding
that the common shares were held as capital assets. However, if an Unconnected
U.S. Shareholder makes a timely election to treat us as a qualified electing
fund under section 1295, the above described rules generally will not apply.
Instead, the Unconnected U.S. Shareholder would include annually in his gross
income his pro rata share of our ordinary earnings and net capital gain,
regardless of whether such income or gain was actually distributed. Tax on the
income resulting from the qualified electing fund election, however, may be
deferred.

In addition, subject to specific limitations, Unconnected U.S. Shareholders
owning actually or constructively marketable shares in a passive foreign
investment company may in certain circumstances, make an election under
section 1296 of the Internal Revenue Code to mark that stock to market annually,
rather than being subject to the above-described rules. Amounts included in or
deducted from income under this mark to market election and actual gains and
losses realized upon disposition, subject to specific limitations, will be
treated as ordinary gains or losses.

An Unconnected U.S. Shareholder who beneficially owns shares of a passive
foreign investment company must file an annual return with the U.S. Internal
Revenue Service.

We believe that we will not be a passive foreign investment company for the
current fiscal year. However, we cannot assure you that we will not be a passive
foreign investment company in future

59
<PAGE>
years. Moreover, we can give no assurance that we will have timely knowledge of
our status as a passive foreign investment company. You should be aware that if
we are or become a passive foreign investment company we may not be able to
satisfy record-keeping requirements that would permit you to make a qualified
electing fund election. You should consult your tax advisor with respect to how
the passive foreign investment company rules affect your tax situation,
including the advisability of making an election to treat us as a qualified
electing fund or making a mark to market election and whether such elections
will be available.

CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

In this section, we summarize the material anticipated Canadian federal
income tax considerations relevant to your purchase of common shares. This
section will only apply if you do not use or hold and are not deemed to use or
hold the common shares in, or in the course of, carrying on a business in Canada
for the purposes of the Income Tax Act.

Under the Income Tax Act, as an Unconnected U.S. Shareholder, you will
generally be exempt from Canadian tax on a capital gain realized on an actual or
deemed disposition of the common shares unless you, persons with whom you did
not deal at arm's length for the purposes of the Income Tax Act, or you and such
persons owned or had interests in or rights to acquire 25% or more of our issued
common shares of any class of the capital stock of our company at any time
during the five year period immediately preceding the disposition or deemed
disposition. Where a capital gain realized on a disposition or deemed
disposition of our common shares is subject to tax under the Income Tax Act, the
Convention will exempt the capital gain from Canadian tax if, on the disposition
of our shares, the value of our common shares is not derived principally from
real property situated in Canada. This relief under the Convention may not be
available if you had a permanent establishment or fixed base available in Canada
during the 12 months immediately preceding the disposition of the shares.

Dividends paid, credited or deemed to have been paid or credited on the
shares to Unconnected U.S. Shareholders will generally be subject to a Canadian
withholding tax at a rate of 25% under the Income Tax Act. Under the Convention,
the rate of withholding tax generally applicable to Unconnected U.S.
Shareholders who beneficially own the dividends is reduced to 15%. In the case
of Unconnected U.S. Shareholders that are companies that beneficially own at
least 10% of our voting shares, the rate of withholding tax on dividends is
reduced to 5%.

Canada does not currently impose any estate taxes or succession duties,
however, if you die, there is generally a deemed disposition of the common
shares held at that time for proceeds of disposition equal to the fair market
value of the shares immediately before your death. Capital gains realized on the
deemed disposition, if any, will generally have the income tax consequences
described above.

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<PAGE>
UNDERWRITING

Credit Suisse First Boston Corporation is acting as representative for the
underwriters named below. Each of the U.S. and Canadian underwriters has agreed
to purchase the number of common shares set forth below opposite its name. Their
obligations are contained in a U.S. underwriting agreement and a Canadian
underwriting agreement dated - , 2000.

<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITERS SHARES
- ----------------- ---------
<S> <C>
Credit Suisse First Boston Corporation...................... -
FleetBoston Robertson Stephens Inc.......................... -
Thomas Weisel Partners LLC.................................. -
---------
Subtotal................................................ -
---------
</TABLE>

<TABLE>
<CAPTION>
NUMBER OF
CANADIAN UNDERWRITERS SHARES
- --------------------- ---------
<S> <C>
Nesbitt Burns Inc........................................... -
RBC Dominion Securities Inc................................. -
Credit Suisse First Boston Securities Canada Inc............ -
---------
Subtotal................................................ -
---------
Total................................................. 6,000,000
=========
</TABLE>

Each of the U.S. offering and the Canadian offering is conditional upon the
closing of the other.

The underwriting agreements provide that the underwriters are obligated to
purchase all of the common shares in the offering if any are purchased, other
than those shares covered by the over-allotment option described below. The
underwriting agreements also provide that if an underwriter defaults, the
purchase commitments of non-defaulting underwriters may be increased or the
offerings of common shares may be terminated. The obligations of the
underwriters under each underwriting agreement may be terminated at their
discretion on the basis of their assessment of the state of the financial
markets and also upon the occurrence of certain stated events.

We have granted to the underwriters a 30-day option exercisable by the
representative to purchase on a pro rata basis up to 900,000 additional common
shares from us at the initial public offering price less the underwriting
discounts and commissions. The option may be exercised only to cover any
over-allotments of common shares.

The U.S. underwriters and the Canadian underwriters are entering into an
inter-syndicate agreement providing for, among other things, the coordination of
their activities. Pursuant to the inter-syndicate agreement, sales may be made
between the U.S. underwriters and the Canadian underwriters at a price per
common share equal to the initial public offering price less an amount not
greater than the per common share amount of the selling concession or
commissions to dealers applicable to such shares. Pursuant to the
inter-syndicate agreement, each U.S. underwriter will agree to not offer or
sell, directly or indirectly, any common shares or distribute any prospectus
relating to the offering within Canada, and each Canadian underwriter will agree
to offer or sell, directly or indirectly, common shares or distribute any
prospectus relating to the offering, only in Canada.

The underwriters will offer our common shares initially at the public
offering price on the cover page of this prospectus, and to selling group
members at that price less a concession of $ - per common share. The
underwriters and selling group members may allow a discount of $ - per
common share on sales to other broker/dealers. After the initial public
offering, the public offering price, concession and discount may only be changed
by the representative.

61
<PAGE>
The following table summarizes the compensation and estimated expenses we
will pay.

<TABLE>
<CAPTION>
TOTAL
-------------------------------
WITHOUT WITH
PER SHARE OVER-ALLOTMENT OVER-ALLOTMENT
--------- -------------- --------------
<S> <C> <C> <C>
Underwriting discounts and commissions payable by us.... $ - $ - $ -
Expenses payable by us.................................. - - -
</TABLE>

At our request, the underwriters have reserved for sale, at the initial
public offering price, up to - common shares for our employees, directors
and certain other persons associated with us who have expressed an interest in
purchasing common shares in the offering. The number of shares available for
sale to the general public in the offering will be reduced to the extent that
these persons purchase the reserved shares. Any reserved shares which are not
purchased will be offered by the underwriters to the general public on the same
terms as the other shares.

The underwriters have informed us that they do not expect discretionary
sales to exceed 10% of the common shares being offered.

We and our executive officers and directors and a majority of our current
shareholders have agreed that we will not, except under limited circumstances,
offer, sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, or file with the Securities and Exchange Commission or the
securities commission of any province of Canada, a registration statement or
prospectus relating to any of our common shares or securities convertible into
or exchangeable or exercisable for any of our common shares, or publicly
disclose the intention to make any such offer, sale, pledge, disposition or
filing, without the prior written consent of Credit Suisse First Boston
Corporation, for a period of 180 days after the date of this prospectus.
However, following the closing of this offering, we will be permitted to file a
registration statement relating to the shares authorized for issuance under our
stock option plans.

We have agreed to indemnify the underwriters against liabilities under the
Securities Act and the securities legislation of each Canadian province, or
contribute to payments which the underwriters may be required to make in respect
of those liabilities.

We have applied for our common shares to be approved for quotation on the
Nasdaq National Market and for listing on The Toronto Stock Exchange under the
symbol "SVNX" and "SVN", respectively. This quotation or listing is subject to
our meeting the relevant quotation or listing standards.

Before this offering, there has been no public market for our common shares.
The initial public offering price is to be determined through negotiations
between us and the representative of the underwriters. The principal factors
considered in determining the initial public offering price, in addition to
prevailing market conditions, include:

- the recent market prices of, and the demand for, publicly traded common
stock of generally comparable companies;

- our current financial condition;

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

- the ability of our management;

- our past and present operations;

- the prospects for, and anticipated timing of, our future revenue;

- the present state of our development;

62
<PAGE>
- the percentage interest being sold by us as compared to our valuation; and

- the above factors in relation to market values and various valuation
measures of other companies engaged in activities similar to ours.

The representative, on behalf of the underwriters, may engage in
over-allotment, stabilizing transactions, syndicate covering transactions,
penalty bids and "passive" market making, in accordance with Regulation M under
the Securities Exchange Act of 1934.

- Over-allotment involves syndicate sales in excess of the offering size,
which creates a syndicate short position.

- Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum.

- Syndicate covering transactions involve purchases of the common shares in
the open market after the distribution has been completed in order to
cover syndicate short positions.

- Penalty bids permit the representative to reclaim a selling concession
from a syndicate member when the common shares originally sold by such
syndicate member are purchased in a stabilizing transaction or a syndicate
covering transaction to cover syndicate short positions.

- In "passive" market making, market makers in the common shares who are
underwriters or prospective underwriters may, subject to certain
limitations, make bids for or purchases of the common shares until the
time, if any, at which a stabilizing bid is made.

In accordance with a policy statement of the Ontario Securities Commission,
the underwriters may not, throughout the period of distribution, bid for or
purchase common shares. Exceptions, however, exist where the bid or purchase is
not made to create the appearance of active trading in, or raising prices of,
the common shares. These exceptions include a bid or purchase permitted under
the by-laws and rules of The Toronto Stock Exchange relating to market
stabilization and passive market making activities and a bid or purchase made
for and on behalf of a customer where the order was not solicited during the
period of distribution. We have been advised that in connection with the
offering and pursuant to the first exception mentioned above, the underwriters
may over-allot or effect transactions which stabilize or maintain the market
price of the common shares at levels other than those which might otherwise
prevail on the open market.

These stabilizing transactions, syndicate covering transactions and penalty
bids may cause the price of the common shares to be higher than it would
otherwise be in the absence of these transactions. The transactions may be
effected on The Nasdaq National Market and The Toronto Stock Exchange or
otherwise and, if commenced, may be discontinued at any time.

Thomas Weisel Partners LLC, one of the U.S. underwriters, was organized and
registered as a broker/dealer under the U.S. securities laws in December 1998.
Since December 1998, Thomas Weisel Partners LLC has been named as a lead or
co-manager on 93 filed public offerings of equity securities, of which 74 have
been completed, and has acted as a syndicate member in an additional 51 public
offerings of equity securities. Thomas Weisel Partners LLC does not have any
material relationship with us or any of our officers, directors or other
controlling persons, except with respect to its contractual relationship with us
pursuant to the U.S. underwriting agreement entered into in connection with this
offering.

The common shares are being offered by the several underwriters, subject to
prior sale, when, as and if issued to and accepted by them, subject to approval
of legal matters by counsel for the underwriters and other conditions. The
underwriters reserve the right to withdraw, cancel or modify these offers and to
reject orders in whole or in part.

The common shares will be ready for delivery in Toronto, Ontario on or about
- , 2000.

63
<PAGE>
LEGAL MATTERS

Goodman Phillips & Vineberg, Toronto, will pass upon the legality of the
common shares offered by this prospectus. Morrison & Foerster LLP, New York,
New York, is acting as our U.S. legal counsel with respect to the offering.
Shearman & Sterling and Osler, Hoskin & Harcourt LLP are acting as U.S. and
Canadian counsel, respectively, to the underwriters.

EXPERTS

Our consolidated balance sheets as of December 31, 1997 and 1998 and
September 30, 1999 and our consolidated statements of operations, shareholders'
equity and cash flows for the period from July 28, 1997 (date of inception) to
December 31, 1997, the year ended December 31, 1998 and the nine months ended
September 30, 1998 and 1999 included in this prospectus have been audited by
KPMG LLP, Independent Auditors, and have been so included in reliance upon the
reports of that firm given upon their authority as experts in accounting and
auditing. KPMG LLP's address is 4120 Yonge Street, Suite 500, Toronto, Ontario
M2P 2B8.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Securities and Exchange Commission a registration
statement on Form F-1 covering the common shares being sold in this offering. We
have not included in this prospectus all of the information contained in the
registration statement, and you should refer to the registration statement and
its exhibits for further information.

Any statement regarding any of the contracts or other documents referred to
in this prospectus is not necessarily complete. If the contract or document is
filed as an exhibit to the registration statement, the contract or document is
deemed to modify the description contained in this prospectus. You must review
the exhibits themselves for a complete description of the contract or document.

You may review a copy of the registration statement, including exhibits and
schedules filed with it, at the Commission's public reference facilities in
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C., 20549, and
at the regional offices of the Commission located at 7 World Trade Center,
13th Floor, New York, New York 10048 and at the Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. You may also
obtain copies of such materials from the Public Reference Section of the
Commission, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C., 20549, at prescribed rates. You may call the Commission at
1-800-SEC-0330 for further information on the public reference rooms. These
Commission filings are also available to the public from commercial document
retrieval services.

Prior to this offering, we have not been required to file reports with the
Commission. Following consummation of the offering, we will be required to file
reports and other information with the Commission under the U.S. Securities
Exchange Act of 1934 and with the securities regulators in each of the provinces
of Canada under the applicable provincial securities legislation. You are
invited to read and copy any reports, statements or other information, other
than confidential filings, that we file with the Commission at its public
reference room. These materials can also be inspected on the Securities and
Exchange Commission's Website at http://www.sec.gov, and the Canadian System for
Electronic Document Analysis and Retrieval (SEDAR) (http://www.sedar.com).

We intend to file with the Commission annual reports on Form 20-F. In
addition, in order to comply with the rules of The Nasdaq Stock Market's
National Market, we intend to furnish to our shareholders an annual report and a
proxy statement prior to each of our annual meetings of shareholders. Our annual
reports will include consolidated financial statements prepared in accordance
with accounting principles generally accepted in Canada which, except as will be
disclosed therein, will conform in all material respects with accounting
principles generally accepted in the U.S. These annual financial statements will
be examined by our independent auditors. We also intend to make available
quarterly reports containing condensed unaudited financial information for each
of the first three quarters of each fiscal year, prepared in accordance with
accounting principles generally accepted in Canada.

64
<PAGE>
724 SOLUTIONS INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Report of KPMG LLP, Independent Auditors.................... F-2

Consolidated Balance Sheets................................. F-3

Consolidated Statements of Operations....................... F-4

Consolidated Statements of Shareholders' Equity............. F-5

Consolidated Statements of Cash Flows....................... F-6

Notes to Consolidated Financial Statements.................. F-7
</TABLE>

F-1
<PAGE>
AUDITORS' REPORT

To the Board of Directors of 724 Solutions Inc.

When the transaction referred to in note 12 to the notes to the Consolidated
Financial Statements has been consummated, we will be in a position to render
the following report.

(Signed) KPMG LLP

We have audited the consolidated balance sheets of 724 Solutions Inc. as at
December 31, 1997 and 1998 and September 30, 1999 and the consolidated
statements of operations, shareholders' equity and cash flows for the period
from July 28, 1997 (date of inception) to December 31, 1997, the year ended
December 31, 1998 and the nine months ended September 30, 1998 and 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of the Company as at December 31,
1997 and 1998 and September 30, 1999 and the results of its operations and its
cash flows for the period from July 28, 1997 (date of inception) to
December 31, 1997, the year ended December 31, 1998 and the nine months ended
September 30, 1998 and 1999 in accordance with generally accepted accounting
principles in Canada.

Generally accepted accounting principles in Canada differ in some respects
from those applicable in the United States (note 11).

<TABLE>
<S> <C>
Toronto, Canada -
October 29, 1999, except as to Note 12 Chartered Accountants
which is as of December , 1999
</TABLE>

F-2
<PAGE>
724 SOLUTIONS INC.

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF U.S. DOLLARS)

<TABLE>
<CAPTION>
DECEMBER 31,
------------------- SEPTEMBER 30,
1997 1998 1999
-------- -------- --------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $1,299 $ 2,976 $28,044
Accounts receivable, net of allowance for doubtful
accounts of $0.......................................... 1 35 2,265
Prepaid expenses.......................................... -- 21 498
------ ------- -------
Total current assets.................................... 1,300 3,032 30,807

Property and equipment (note 3)............................. 21 860 1,637
------ ------- -------
Total assets................................................ $1,321 $ 3,892 $32,444
====== ======= =======

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 23 $ 236 $ 398
Accrued liabilities....................................... 10 463 1,457
Deferred revenue.......................................... -- 420 3,855
------ ------- -------
Total current liabilities............................... 33 1,119 5,710

Shareholders' equity (note 4):
Unlimited number of common shares authorized;
4,000,000 common shares issued and outstanding at
December 31, 1997; 11,428,570 common shares at
December 31, 1998 and 19,320,360 common shares issued
and outstanding at September 30, 1999................... 1,443 4,051 34,165
Common share purchase options;
4,000,000 options at December 31, 1997, zero options at
December 31, 1998 and 8,216,210 options at
September 30, 1999...................................... -- -- 41
Accumulated deficit....................................... (155) (1,278) (7,472)
------ ------- -------
Total shareholders' equity................................ 1,288 2,773 26,734
------ ------- -------
Total liabilities and shareholders' equity.................. $1,321 $ 3,892 $32,444
====== ======= =======
</TABLE>

See accompanying notes to the consolidated financial statements.

F-3
<PAGE>
724 SOLUTIONS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
PERIOD FROM
JULY 28, 1997 NINE MONTHS ENDED
(INCEPTION) TO YEAR ENDED SEPTEMBER 30,
DECEMBER 31, DECEMBER 31, -------------------
1997 1998 1998 1999
-------------- ------------- -------- --------
<S> <C> <C> <C> <C>
Revenue:
Product.......................................... $ -- $ 1,678 $1,049 $ 1,314
Services......................................... -- 208 208 788
------ ------- ------ -------
Total revenue.................................. -- 1,886 1,257 2,102

Cost of revenue.................................... -- 61 61 819
------ ------- ------ -------
Gross profit....................................... -- 1,825 1,196 1,283
Operating expenses:
Research and development......................... 44 2,096 980 4,468
Sales and marketing.............................. 39 412 209 1,134
General and administrative....................... 82 547 255 2,216
------ ------- ------ -------
Total operating expenses....................... 165 3,055 1,444 7,818
------ ------- ------ -------
Income (loss) from operations.................. (165) (1,230) (248) (6,535)
Interest income.................................... 10 107 69 341
------ ------- ------ -------
Income (loss) before income taxes.............. (155) (1,123) (179) (6,194)
Income taxes (note 5).............................. -- -- -- --
------ ------- ------ -------
Net income (loss).............................. $ (155) $(1,123) $ (179) $(6,194)
====== ======= ====== =======
Basic and diluted net income (loss) per share...... $(0.06) $ (0.19) $(0.04) $ (0.47)
====== ======= ====== =======
Shares used in computing basic and diluted net
income (loss) per share (in thousands)........... 2,752 5,784 4,564 13,301
====== ======= ====== =======
</TABLE>

See accompanying notes to the consolidated financial statements.

F-4
<PAGE>
724 SOLUTIONS INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS OF U.S. DOLLARS)

<TABLE>
<CAPTION>
COMMON SHARE
COMMON SHARES PURCHASE OPTIONS TOTAL
--------------------- --------------------- ACCUMULATED SHAREHOLDERS'
NUMBER AMOUNT NUMBER AMOUNT DEFICIT EQUITY
---------- -------- ---------- -------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balances, at July 28, 1997
(inception)................ 200 $ 1 -- $ -- $ -- $ 1
Net income (loss)............ -- -- -- -- (155) (155)
Issuance of common share
purchase options........... -- -- 4,000,000 -- -- --
Issuance of common shares.... 3,999,800 1,442 -- -- -- 1,442
---------- ------- ---------- ---- ------- -------
Balances, December 31,
1997....................... 4,000,000 1,443 4,000,000 -- (155) 1,288
Net income (loss)............ -- -- -- -- (1,123) (1,123)
Issuance of common share
purchase options........... -- -- 2,428,570 291 -- 291
Exercise of common share
purchase options........... 6,428,570 2,200 (6,428,570) (291) -- 1,909
Issuance of common shares.... 1,000,000 408 -- -- -- 408
---------- ------- ---------- ---- ------- -------
Balances, December 31,
1998....................... 11,428,570 4,051 -- -- (1,278) 2,773
Net income (loss)............ -- -- -- -- (6,194) (6,194)
Issuance of common share
purchase options........... -- -- 8,216,210 41 -- 41
Issuance of common shares.... 7,891,790 30,114 -- -- -- 30,114
---------- ------- ---------- ---- ------- -------
Balances, September 30, 1999
(note 12).................. 19,320,360 $34,165 8,216,210 $ 41 $(7,472) $26,734
========== ======= ========== ==== ======= =======
</TABLE>

See accompanying notes to the consolidated financial statements.

F-5
<PAGE>
724 SOLUTIONS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF U.S. DOLLARS)

<TABLE>
<CAPTION>
PERIOD FROM
JULY 28, 1997 NINE MONTHS ENDED
(INCEPTION) TO YEAR ENDED SEPTEMBER 30,
DECEMBER 31, DECEMBER 31, -------------------
1997 1998 1998 1999
-------------- ------------- -------- --------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss).............................. $ (155) $(1,123) $ (179) $(6,194)
Depreciation................................... -- 88 34 445
Change in operating assets and liabilities:
Accounts receivable.......................... (1) (34) -- (2,230)
Prepaid expenses............................. -- (21) (41) (477)
Accounts payable............................. 23 213 112 162
Accrued liabilities.......................... 10 453 200 994
Deferred revenue............................. -- 420 827 3,435
------ ------- ------ -------
Net cash from (used in) operating activities....... (123) (4) 953 (3,865)
------ ------- ------ -------

Cash flows from investing activities:
Purchases of property and equipment............ (21) (927) (361) (1,222)
------ ------- ------ -------

Cash used in investing activities.................. (21) (927) (361) (1,222)
------ ------- ------ -------

Cash flows from financing activities:
Issuance of common shares and common share
purchase options............................. 1,443 2,608 698 30,155
------ ------- ------ -------
Cash provided by financing activities.............. 1,443 2,608 698 30,155
------ ------- ------ -------

Net increase in cash and cash equivalents.......... 1,299 1,677 1,290 25,068
Cash and cash equivalents at beginning of period... -- 1,299 1,299 2,976
------ ------- ------ -------
Cash and cash equivalents at end of period......... $1,299 $ 2,976 $2,589 $28,044
====== ======= ====== =======
</TABLE>

See accompanying notes to the consolidated financial statements.

F-6
<PAGE>
724 SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PERIOD FROM JULY 28, 1997 (INCEPTION) TO DECEMBER 31, 1997,
YEAR ENDED DECEMBER 31, 1998 AND THE NINE MONTHS ENDED SEPTEMBER 30, 1999

1. ORGANIZATION OF THE COMPANY

The Company was established in July 1997 to conceive, design and deliver an
Internet infrastructure solution that enables financial institutions to deliver
financial information and services using a broad range of Internet-enabled
devices. The Company is adapting its technology for use by other types of
on-line merchants and for other applications.

2. SIGNIFICANT ACCOUNTING POLICIES

These financial statements are stated in U.S. dollars, except as otherwise
noted. They have been prepared in accordance with accounting principles
generally accepted in Canada which, except as disclosed in note 11, conform, in
all material respects, with accounting principles generally accepted in the U.S.

CONSOLIDATION

These consolidated financial statements include the accounts of the Company
and its wholly owned inactive U.S. subsidiary, 724 Solutions Corp., which was
incorporated on September 15, 1999.

CASH AND CASH EQUIVALENTS

Cash consists of deposits with major financial institutions. Cash
equivalents consists of high grade commercial paper with an original maturity of
three months or less at the date of acquisition. As at September 30, 1999, cash
equivalents accounted for approximately 89% of the cash and cash equivalents
balance and consisted of investments in thirty day commercial paper.

FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK

Financial instruments consist of cash and cash equivalents, accounts
receivable, accounts payable and accrued liabilities. The Company determines the
fair value of its financial instruments based on quoted market values or
discounted cash flow analyses. Unless otherwise indicated, the fair values of
financial assets and financial liabilities approximate their recorded amounts.

Financial instruments that potentially expose the Company to concentrations
of credit risk consist primarily of cash and cash equivalents and accounts
receivable. Cash and cash equivalents consist primarily of deposits with major
commercial banks and high-grade commercial paper, the maturities of which are
three months or less from the date of purchase. The Company performs periodic
credit evaluations of the financial condition of its customers. Allowances are
maintained for potential credit losses consistent with the credit risk of
specific customers.

REVENUE RECOGNITION

The Company's revenue is derived from (i) the licensing of a product and
(ii) the provision of related services, including installation, integration,
training and maintenance and support. Product revenue is recognized when a
contract with a customer has been executed, delivery and acceptance have
occurred and the collection of the related receivables is deemed probable by
management. Services revenue is recognized as the services are performed.
Maintenance and support revenue paid in advance, is non-refundable and is
recognized ratably over the term of the agreements, which are typically twelve
months. Product and services revenue that have been prepaid but do not yet
qualify for recognition as revenue under the Company's revenue recognition
policy is reflected as deferred revenue on the Company's balance sheet.

F-7
<PAGE>
724 SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

RESEARCH AND DEVELOPMENT EXPENSES

Costs related to research, design and development of software products are
charged to research and development expenses as incurred. Software development
costs are capitalized beginning when a product's technological feasibility has
been established, which generally occurs upon completion of a working model, and
ending when a product is available for general release to customers. To date,
completing a working model of the Company's product and the general release of
the product have substantially coincided. As a result, the Company has not
capitalized any software development costs since such costs have not been
significant.

INVESTMENT TAX CREDITS

The Company is entitled to Canadian federal and provincial investment tax
credits which are earned as a percentage of eligible research and development
expenditures incurred in each taxation year.

Investment tax credits are accounted for as a reduction of the related
expenditure for items of a current nature and a reduction of the related asset
cost for items of a long-term nature, provided that the Company has reasonable
assurance that the tax credits will be realized.

STOCK-BASED COMPENSATION

The Company uses the intrinsic value method to account for its stock-based
employee compensation plan. As such, compensation expense is recorded if on the
date of grant the current fair value of each underlying common share exceeds the
exercise price per share. To date, the exercise price at the date of the grant
has been equal to the fair value of the underlying common share.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost, net of accumulated depreciation
and amortization, and are amortized over their estimated useful lives. Leasehold
improvements are recorded at cost and amortized over the lesser of their useful
lives or the term of the related lease. Expenditures for maintenance and repairs
have been charged to the statement of operations as incurred. Depreciation and
amortization are computed using the straight-line method as follows:

<S> <C>
Computer equipment.......................................... 3 years
Computer software........................................... 1 year
Office furniture and equipment.............................. 5 years
Leasehold improvements...................................... 5 years
</TABLE>

The Company regularly reviews the carrying values of its property and
equipment by comparing the carrying amount of the asset to the expected future
cash flows to be generated by the asset. If the carrying value exceeds the
amount recoverable, a writedown is charged to the statements of operations.

CURRENCY TRANSLATION

Effective July 31, 1999, the U.S. dollar became the functional currency of
the Company. This change resulted from the increased significance of U.S. dollar
denominated revenue and expenditures in relation to the Company's Canadian
dollar denominated transactions. In addition, the Company's recent issuances of
common shares have been primarily denominated in U.S. dollars. Exchange gains

F-8
<PAGE>
724 SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

and losses resulting from transactions denominated in currencies other than U.S.
dollars are included in the results of operations for the period.

Prior to July 31, 1999, the functional currency of the Company was the
Canadian dollar. Accordingly, monetary assets and liabilities of the Company
that were denominated in foreign currencies were translated into Canadian
dollars at the exchange rate prevailing at the balance sheet date. Transactions
included in operations were translated at the average rate for the period.
Exchange gains and losses resulting from the translation of these amounts were
reflected in the statement of operations in the period in which they occurred.

INCOME TAXES

The Company provides for income taxes under the liability method. Under the
liability method, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying value of existing assets and liabilities and their respective
tax basis and operating loss and tax credit carryforwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingencies at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.

3. PROPERTY AND EQUIPMENT

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

<TABLE>
<CAPTION>
DECEMBER 31,
------------------- SEPTEMBER 30,
1997 1998 1999
-------- -------- --------------
<S> <C> <C> <C>
Computer equipment...................................... $11 $356 $ 966
Computer software....................................... -- 200 400
Office furniture and equipment.......................... 10 172 223
Leasehold improvements.................................. -- 220 581
------ ------ ------
21 948 2,170

Less accumulated depreciation........................... -- 88 533
------ ------ ------
$21 $860 $1,637
====== ====== ======
</TABLE>

F-9
<PAGE>
724 SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. SHAREHOLDERS' EQUITY

(a) Common share issuances

In September 1997, the Company issued 3,999,800 common shares and granted an
option to acquire an additional 4,000,000 common shares to the founder of the
Company for gross proceeds of Cdn.$1,999,900. The option was exercisable at the
holder's option at a price of $0.50 per common share. The option was exercised
in October 1998.

In April 1998, the Company issued to Bank of Montreal 1,000,000 common
shares for gross proceeds of Cdn.$1,000,000 and provided Bank of Montreal, under
certain circumstances, with an option to subscribe for 2,428,570 additional
common shares for Cdn.$1,000,000. The Company assigned a value of Cdn. $416,666
to the option. The option was exercised in October 1998.

In June 1999, the Company issued 541,790 common shares to Bank of America at
a price of $3.69 per share for gross proceeds of $2,000,000 and provided Bank of
America, under certain circumstances, with an option to subscribe for
541,790 additional common shares for $2,000,000. The option was exercised in
October 1999 (note 12).

In July 1999, the Company issued to Citicorp Strategic Technology
Corporation 950,000 common shares at a price of $3.83 per share for gross
proceeds of $3,633,750 and provided Citicorp Strategic Technology Corporation
with an option to subscribe for 5,450,000 additional common shares at a price of
$3.83 upon the satisfaction of certain conditions. The option was exercised in
October 1999 (note 12).

In August 1999, the Company granted Bank of America an option to subscribe
for 2,116,420 common shares at a price of $3.90 per share. The option was
exercised in October 1999 (note 12).

In August 1999, the Company issued 6,400,000 common shares to Sonera Ltd.
for a price of $3.83 per share for gross proceeds of $24,480,000.

(b) Stock option plan

The Company's stock option plan (the "Plan") provides for the granting of
options to employees, officers, directors, advisors and consultants of the
Company and its affiliates. The maximum number of common shares which may be set
aside for issuance under the Plan is 2,500,000 shares, provided that the Board
of Directors of the Company has the right, from time to time, to increase such
number subject to the approval of the stockholders of the Company when required
by law or regulatory authority. Generally, options issued under the Plan vest
annually over a three year period. The common shares issuable upon exercise of
any option that is cancelled or terminated prior to its exercise will become
available again for grant under the Plan. In accordance with the Plan, the
exercise price of options is determined based on the fair market value per share
on the grant date.

Options granted under the Plan may be exercised during a period not
exceeding ten years from the date of grant, subject to earlier termination if
the optionee ceases to be an employee, officer or director of the Company or any
of its subsidiaries, as applicable. Options issued under the Plan are
non-transferable.

In October 1999, the Company adopted a U.S. stock option plan (the "U.S.
Plan") that provides for the grant of options and restricted shares to
employees, officers, directors and consultants of the

F-10
<PAGE>
724 SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. SHAREHOLDERS' EQUITY -- (CONTINUED)

Company and its subsidiaries. As this plan was adopted subsequent to September
30, 1999, no options under the U.S. Plan were outstanding as of September 30,
1999.

A summary of the status of the Company's options under the Plan as at
September 30, 1999, is as follows:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
REMAINING NUMBER OF
NUMBER OF CONTRACTUAL OPTIONS
EXERCISE PRICES OPTIONS LIFE (YEARS) EXERCISABLE
- --------------- --------- ------------ -----------
<S> <C> <C> <C>
$0.68................................................ 1,577,334 8.5 995,996
$3.41................................................ 473,800 9.3 39,500
$7.50................................................ 160,460 9.9 62,000
--------- ---------
2,211,594 1,097,496
========= =========
</TABLE>

The following table summarizes the continuity of options issued under the
Plan:

<TABLE>
<CAPTION>
1997 1998 1999
WEIGHTED WEIGHTED WEIGHTED
NUMBER AVERAGE NUMBER AVERAGE NUMBER AVERAGE
OF OPTIONS EXERCISE PRICE OF OPTIONS EXERCISE PRICE OF OPTIONS EXERCISE PRICE
---------- -------------- ---------- -------------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning of
period.................. -- $ -- 400,000 $0.35 1,865,000 $0.49
Granted................... 400,000 0.35 1,465,000 $0.54 404,460 2.52
Cancelled................. -- -- -- -- [57,986] 0.51
------- --------- ---------
Outstanding, end of
period.................. 400,000 $0.35 1,865,000 $0.49 2,211,594 $0.88
======= ===== ========= ===== ========= =====
Options exercisable, end
of period............... 200,000 $0.35 625,166 $0.34 1,097,496 $0.58
======= ===== ========= ===== ========= =====
</TABLE>

The Company has issued 108,000 stock options under the stock option plan, to
advisors for services rendered. These options have an exercise price of $3.75
per common share. The Company has recorded a professional fee expense of $40,500
in the nine month period ended September 30, 1999 in connection with these
options. Included in the 108,000 options are 48,000 options granted to a
director of the Company in his capacity as a consultant.

F-11
<PAGE>
724 SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. INCOME TAXES

The provision for income taxes differs from the amount computed by applying
the statutory income tax rate to income (loss) before income taxes. The sources
and tax effects of the differences are as follows (in thousands):

<TABLE>
<CAPTION>
PERIOD FROM NINE MONTHS ENDED
JULY 28, 1997 SEPTEMBER 30,
(INCEPTION) TO YEAR ENDED -------------------
DECEMBER 31, 1997 DECEMBER 31, 1998 1998 1999
------------------- ------------------- -------- --------
<S> <C> <C> <C> <C>
Basic rate applied to income (loss)
before provision for income
taxes............................ $(69) $(501) $ (80) $(2,763)

Adjustments resulting from:

Scientific research expenses not
deducted for tax............... -- 333 87 770

Other............................ 45 168 (7) 110
---- ----- ------- -------
(24) -- -- (1,883)
Unrecognized benefit of net
operating losses carried
forward.......................... 24 -- -- 1,883
---- ----- ------- -------
Income taxes....................... $ -- $ -- $ -- $ --
==== ===== ======= =======
</TABLE>

Significant components of the Company's deferred tax assets are as follows
(in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
------------------- SEPTEMBER 30,
1997 1998 1999
-------- -------- --------------
<S> <C> <C> <C>
Research and development expenses deferred for income
tax purposes........................................ $ -- $ 244 $ 1,138
Net operating losses carried forward.................. 24 24 1,907
Other................................................. -- -- 90
------- ------- -------
Deferred tax asset.................................... 24 268 3,135
Less valuation allowance.............................. (24) (268) (3,135)
------- ------- -------
$ -- $ -- $ --
======= ======= =======
</TABLE>

In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers
projected future taxable income, uncertainties related to the industry in which
the Company operates, and tax planning strategies in making this assessment. In
order to fully realize the deferred tax assets the Company will need to generate
future taxable income of approximately $7 million prior to the expiration of the
net operating losses carried forward in the years 2003 to 2005. Due to the
uncertainties related to the industry in which the Company operates, the tax
benefit of the above carried forward amounts have been completely offset by a
valuation allowance.

F-12
<PAGE>
724 SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. LEASE COMMITMENTS

Future minimum lease payments under non-cancellable operating leases for
premises and equipment are as follows (in thousands):

<TABLE>
<CAPTION>
SEPTEMBER 30,
1999
--------------
<S> <C>
2000........................................................ $ 609
2001........................................................ 1,051
2002........................................................ 1,045
2003........................................................ 1,029
2004........................................................ 949
2005 and thereafter......................................... 587
</TABLE>

Rent expense for the period from July 28, 1997 (inception) to December 31,
1997, the year ended December 31, 1998 and the nine months ended September 30,
1998 and 1999 was $6,000, $107,000, $17,000 and $307,000, respectively. The
Company is also responsible for certain common area costs at its leased
premises.

7. SEGMENTED INFORMATION

The Company operates in a single reportable operating segment, that is, the
design and delivery of an Internet infrastructure platform that enables
financial institutions to deliver financial information and services to a range
of Internet-enabled devices. The single reportable operating segment derives its
revenue from the sale of software and related services. As at September 30, 1999
all assets related to the Company's operations were located in Canada. Revenue
is attributable to geographic location based on the location of the customer, as
follows (in thousands):

<TABLE>
<CAPTION>
NINE MONTHS
PERIOD FROM ENDED
JULY 28, 1997 YEAR ENDED SEPTEMBER 30,
(INCEPTION) TO DECEMBER 31, -------------------
DECEMBER 31, 1997 1998 1998 1999
------------------- ------------- -------- --------
<S> <C> <C> <C> <C>
Revenue by geographic locations:
U.S................................... $ -- $ -- $ -- $ 754
Canada................................ -- 1,866 1,257 1,348
------ ------ ------ ------
$ -- $1,866 $1,257 $2,102
====== ====== ====== ======
</TABLE>

For the year ended December 31, 1998, one customer accounted for 100% of
revenue. For the period from January 1, 1999 to September 30, 1999, two
customers have accounted for 100% of revenue. At September 30, 1999, two
customers accounted for 100% of the accounts receivable balance.

8. RELATED PARTY TRANSACTIONS

The Company has entered into technology licensing agreements with two of its
shareholders. The technology license agreements provide for, among other things,
an annual licensing fee for the use of the Company's technology. In addition,
the agreements set out terms for future maintenance and

F-13
<PAGE>
724 SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. RELATED PARTY TRANSACTIONS -- (CONTINUED)

service fees to be paid by the licensees. The following tables set out the
balances and transactions with the shareholders relating to these agreements (in
thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------- SEPTEMBER 30,
1997 1998 1999
-------------- -------------- --------------
<S> <C> <C> <C>
RELATED PARTY BALANCES:
Accounts receivable................. $ -- $ 34 $ 750
Deferred revenue.................... -- 420 2,855
</TABLE>

<TABLE>
<CAPTION>
NINE MONTHS
PERIOD FROM ENDED
JULY 28, 1997 SEPTEMBER 30,
(INCEPTION) TO YEAR ENDED -------------------
DECEMBER 31, 1997 DECEMBER 31, 1998 1998 1999
------------------- ------------------- -------- --------
<S> <C> <C> <C> <C>
RELATED PARTY TRANSACTIONS:
Revenue.............................. $ -- $1,886 $1,257 $1,348
</TABLE>

In August 1999, the Company entered into a two year consulting agreement
with a director of the Company providing for a monthly consulting fee of
$28,000, together with options, granted under the option plan, to purchase
48,000 common shares of the Company at an exercise price of $3.75, vesting at a
rate of 2,000 shares per month.

9. EARNINGS PER SHARE

Due to the net loss for all periods presented, all potential common shares
outstanding are considered anti-dilutive and are excluded from the calculation
of diluted loss per share. Common shares that could potentially dilute basic
loss per share in the future that were not included in the computation of
diluted loss per share because to do so would have been anti-dilutive for the
periods presented amounted to 10,319,804.

10. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE

The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date. The effects of the Year 2000 Issue may be experienced before, on, or after
January 1, 2000, and, if not addressed, the impact on operations and financial
reporting may range from minor errors to significant systems failure which could
affect an entity's ability to conduct normal business operations. It is not
possible to be certain that all aspects of the Year 2000 Issue affecting the
Company, including those related to the efforts of customers, suppliers, or
other third parties, will be fully resolved.

11. CANADIAN AND U.S. ACCOUNTING POLICY DIFFERENCES

The financial statements of the Company have been prepared in accordance
with generally accepted accounting principles ("GAAP") as applied in Canada
which conform in all material respects with generally accepted accounting
principles in the U.S.

F-14
<PAGE>
724 SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. CANADIAN AND U.S. ACCOUNTING POLICY DIFFERENCES -- (CONTINUED)

Supplemental disclosures required under U.S. GAAP include the following:

(a) Recent Accounting Pronouncements:

In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income", (SFAS No. 130) which establishes standards for
reporting and presentation of comprehensive income. This standard defines
comprehensive income as the changes in equity of an enterprise except those
resulting from stockholder transactions. Comprehensive net income (loss) for the
period from July 28, 1997 (inception) to December 31, 1997, the year ended
December 31, 1998 and the nine months ended September 30, 1998 and 1999,
equalled the net income (loss) for the period.

In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures About Segments of an Enterprise and Related Information" (SFAS
No. 131). SFAS No. 131 was adopted by the Company in 1997. SFAS No. 131
establishes standards for disclosures about operating segments, product and
services, geographic areas and major customers. The Company operates in a single
reportable operating segment, that is, the design and delivery of an Internet
infrastructure platform that enables financial institutions to deliver financial
information and services to a range of Internet-enabled devices.

In March 1998, the American Institute of Certified Public Accountants issued
SOP No. 98-1, "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use," (SOP No. 98-1). SOP No. 98-1 requires entities to
capitalize certain costs related to internal-use software once certain criteria
have been met. For U.S. GAAP purposes, SOP 98-1 was adopted by the Company in
1998. The adoption of SOP No. 98-1 did not have a material impact on the
Company's financial position or results of operations.

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (SFAS No. 133). SFAS No. 133 establishes accounting and
reporting standards requiring that every derivative instrument be recorded in
the balance sheet as either an asset or liability measured at its fair value.
SFAS No. 133, as recently amended, is effective for fiscal years beginning after
June 15, 2000. Management believes the adoption of SFAS No. 133 will not have a
material effect on the Company's financial position or results of operations.

(b) SFAS 123 Pro Forma Information:

SFAS No. 123, "Employee Stock Compensation," encourages, but does not
require, the recording of compensation costs related to stock options valued at
fair value. For companies choosing not to adopt the fair value measurement for
stock based compensation, the pronouncement requires the disclosure of pro forma
net income and net income (loss) per share information as if the Company had
accounted for its stock options issued in 1997 through 1999 under the fair value
method. The Company has elected not to adopt the recording of compensation cost
for stock options at fair value and,

F-15
<PAGE>
724 SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. CANADIAN AND U.S. ACCOUNTING POLICY DIFFERENCES -- (CONTINUED)

accordingly, a summary of the pro forma impact on the statement of operations is
presented in the table below (in thousands, except per share amounts):

<TABLE>
<CAPTION>
PERIOD FROM
JULY 28, 1997
(INCEPTION) TO YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1997 DECEMBER 31, 1998 SEPTEMBER 30, 1999
------------------- ------------------- -------------------
<S> <C> <C> <C>
Net income (loss)........................... $ (155) $(1,123) $(6,194)
Compensation expense related to the fair
value of stock options.................... (4) (23) (48)
------- ------- -------
Pro forma net income (loss)................. $ (159) $(1,146) $(6,242)
======= ======= =======
Pro forma net income (loss) per share....... $ (0.06) $ (0.20) $ (0.47)
======= ======= =======
</TABLE>

The fair value of each option granted has been estimated at the date of
grant using the minimal value method and by applying the following assumption:
weighted average risk free interest rate of 4.75% for the period from July 28,
1997 (inception) to December 31, 1997; 5.1% for the year ended December 31,
1998; and 4.9% for the nine months ended September 30, 1999.

The Company has assumed no forfeiture rate as adjustments for actual
forfeitures are made in the year they occur. The weighted-average grant-date
fair value of options issued was $0.07 and $0.13 for the period from July 28,
1997 (inception) to December 31, 1997 and for the year ended December 31, 1998,
respectively. The weighted-average grant-date fair value of options issued in
the nine months period ended September 30, 1999 was $0.38.

12. SUBSEQUENT EVENTS

The Company's Board of Directors has authorized the initial filing of a
prospectus with regulatory authorities in Canada and the United States that
would permit the Company to sell shares of the Company's common stock in
connection with a proposed initial public offering ("IPO").

The Company intends to file articles of amendment to split all of the
outstanding and reserved common shares on a basis of two for one prior to the
filing of the IPO. This share split has been reflected in these financial
statements as if it had occurred from inception.

In October 1999, in connection with the exercise of common share purchase
options, the Company issued: (i) 5,450,000 common shares to Citicorp Strategic
Technology Corporation for cash proceeds of $20,846,250; and
(ii) 2,658,210 common shares to Bank of America for cash proceeds of
$10,243,456.

In October 1999, the Company completed three private placements for a total
issuance of 1,973,856 common shares at prices of $3.83 and $7.50 per share and
666,668 common shares issuable upon the exercise of a warrant exercisable at a
price of $7.50 per share for total proceeds of $10,000,000. The private
placements will trigger a preemptive right to issue approximately 67,200 common
shares at a purchase price of $7.50 per share if the warrant is exercised.

F-16
<PAGE>
[LOGO]
<PAGE>
[ALTERNATIVE COVER PAGE FOR CANADIAN PROSPECTUS]

This is a preliminary prospectus relating to these securities, a copy of which
has been filed with the securities commissions or other regulatory authority in
each of the provinces of Canada but which has not yet become final for the
purpose of a distribution or a distribution to the public. Information contained
herein is subject to completion or amendment. These securities may not be sold
to, nor may offers to buy be accepted from residents of such jurisdictions prior
to the time a receipt for the final prospectus is obtained from the appropriate
securities commission or other regulatory authority.
<PAGE>
AMENDED PRELIMINARY PROSPECTUS DATED DECEMBER 15, 1999

THIS AMENDED PRELIMINARY PROSPECTUS CONSTITUTES A PUBLIC OFFERING OF THESE
SECURITIES ONLY IN THOSE JURISDICTIONS WHERE THEY MAY BE LAWFULLY OFFERED FOR
SALE AND THEREIN ONLY BY PERSONS PERMITTED TO SELL SUCH SECURITIES. NO
SECURITIES COMMISSION OR SIMILAR AUTHORITY IN CANADA OR THE UNITED STATES HAS IN
ANY WAY PASSED UPON THE MERITS OF THE SECURITIES OFFERED HEREUNDER AND ANY
REPRESENTATION TO THE CONTRARY IS AN OFFENCE.

THIS AMENDED PRELIMINARY PROSPECTUS HAS BEEN FILED UNDER PROCEDURES IN EACH OF
THE PROVINCES OF CANADA WHICH PERMIT CERTAIN INFORMATION WITH RESPECT TO THESE
SECURITIES TO BE DETERMINED AFTER THE PROSPECTUS HAS BECOME FINAL AND PERMIT THE
OMISSION FROM THIS AMENDED AND RESTATED PRELIMINARY PROSPECTUS OF SUCH
INFORMATION. SUCH PROCEDURES REQUIRE THE DELIVERY TO PURCHASERS OF A PROSPECTUS
OR A PROSPECTUS SUPPLEMENT CONTAINING THIS OMITTED INFORMATION WITHIN A
SPECIFIED PERIOD OF TIME AFTER AGREEING TO PURCHASE ANY OF THESE SECURITIES.

INITIAL PUBLIC OFFERING

[LOGO]

CDN. $ -

6,000,000 COMMON SHARES

This offering is an initial public offering (the "Offering") of 6,000,000 common
shares of 724 Solutions Inc. (the "Company"). The Company is offering
- common shares in the United States through a syndicate of
U.S. underwriters and - common shares in Canada through a syndicate of
Canadian underwriters. The common shares are being offered in Canada by Nesbitt
Burns Inc., RBC Dominion Securities Inc. and Credit Suisse First Boston
Securities Canada Inc. (the "Canadian Underwriters") and in the United States by
Credit Suisse First Boston Corporation, BancBoston Robertson Stephens Inc. and
Thomas Weisel Partners LLC (the "U.S. Underwriters" and, collectively with the
Canadian Underwriters, the "Underwriters"). This prospectus incorporates the
prospectus included in a Registration Statement on Form F-1 filed with the U.S.
Securities and Exchange Commission. The offering price of the common shares has
been determined by negotiation between the Company and the Underwriters.

THERE IS CURRENTLY NO MARKET THROUGH WHICH THE COMMON SHARES MAY BE SOLD. An
application has been made to list the common shares for trading on The Toronto
Stock Exchange under the symbol "SVN", subject to the Company meeting the
exchange's listing requirements. An application has been made for the quotation
of the common shares on the Nasdaq National Market under the symbol "SVNX",
subject to the Company meeting Nasdaq's quotation requirements.

After giving effect the Offering, the offering price of each common share would
exceed the net tangible book value per common share as of September 30, 1999 by
Cdn.$ - , representing a dilution factor of - % ( - % if the
Underwriters' over-allotment option is exercised in full). See "Dilution" and
"Risk Factors".

AN INVESTMENT IN THE COMMON SHARES IS SUBJECT TO A NUMBER OF RISK FACTORS WHICH
SHOULD BE CAREFULLY REVIEWED BY PROSPECTIVE PURCHASERS. SEE "RISK FACTORS".

PRICE: CDN. $ - PER COMMON SHARE
-----------------------------------------
-----------------------------------------

<TABLE>
<CAPTION>
PRICE TO UNDERWRITING NET PROCEEDS
PUBLIC COMMISSION TO THE COMPANY(1)
--------------- -------------- -----------------
<S> <C> <C> <C>
Per common share(2)...................................... Cdn. $ - Cdn. $ - Cdn. $ -
Total(3)................................................. Cdn. $ - Cdn. $ - Cdn. $ -
</TABLE>

(1) Before deducting expenses of the Offering payable by the Company estimated
at $ - .

(2) The common shares are being offered in Canada in Canadian dollars at the
approximate equivalent of the U.S. dollar offering price converted at an
exchange rate of Cdn. $ - equals U.S.$1.00 as of - , 2000. See
"Exchange Rates".

(3) The Company has granted an over-allotment option to the Underwriters
exercisable within 30 days from the completion of the Offering to purchase a
maximum of - additional common shares on the same terms as set forth
above to cover over-allotments, if any. If the over-allotment option is
exercised in full, the Price to Public, Underwriting Commission and Net
Proceeds to the Company will be Cdn.$ - , Cdn.$ - and Cdn.$ - ,
respectively.

The Canadian Underwriters, as principals, conditionally offer the common
shares, subject to prior sale, if, as and when issued and sold by the Company
and delivered to the Canadian Underwriters and accepted by them in accordance
with the conditions of the Canadian Underwriting Agreement described under
"Underwriting" and subject to the approval of certain legal matters on behalf of
the Company by Goodman Phillips & Vineberg, Toronto and Morrison & Foerster LLP,
and on behalf of the Underwriters by Osler, Hoskin & Harcourt LLP and
Shearman & Sterling.

Subscriptions shall be received subject to rejection or allotment in whole
or in part, and the right is reserved to close the subscription books at any
time without notice. It is expected that the closing of the Offering will take
place on - , 2000 or such other date which may be agreed upon, but not later
than - , 2000. Certificates evidencing the common shares will be available
for delivery at closing.
<PAGE>
[ALTERNATIVE TABLE OF CONTENTS FOR CANADIAN PROSPECTUS]

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
PRINCIPAL SHAREHOLDERS................ 53
DESCRIPTION OF SHARE CAPITAL.......... 54
SHARES ELIGIBLE FOR FUTURE SALE....... 55
INCOME TAX CONSEQUENCES............... 57
UNDERWRITING.......................... 61
LEGAL MATTERS......................... 64
EXPERTS............................... 64
WHERE YOU CAN FIND MORE INFORMATION... 64
ELIGIBILITY FOR INVESTMENT............ 65
MATERIAL CONTRACTS.................... 65
PURCHASERS' STATUTORY RIGHTS.......... 66
INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS.......................... F-1
CERTIFICATE OF THE COMPANY............ C-1
CERTIFICATE OF THE UNDERWRITERS....... C-2
</TABLE>

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

DEALER PROSPECTUS DELIVERY OBLIGATION

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

2
<PAGE>
[ALTERNATIVE PAGE F-2 FOR CANADIAN PROSPECTUS]

AUDITORS' REPORT

To the Board of Directors of 724 Solutions Inc.

Generally accepted accounting principles in Canada differ in some respects
from those applicable in the United States (note 11).

<TABLE>
<S> <C>
Toronto, Canada
October 29, 1999, except as to Note 12 Chartered Accountants
which is as of December , 1999
</TABLE>

F-2
<PAGE>
[ALTERNATIVE PAGE F-3 FOR CANADIAN PROSPECTUS]

724 SOLUTIONS INC.

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF U.S. DOLLARS)

Shareholders' equity (note 4):
Unlimited number of common shares authorized;
4,000,000 common shares issued and outstanding at
December 31,
1997; 11,428,570 common shares at December 31, 1998 and
19,320,360 common shares issued and outstanding at
September 30,
1999.................................................... 1,443 4,051 34,165
Common share purchase options;
4,000,000 options at December 31, 1997, zero options at
December 31, 1998, and 8,216,210 options at
September 30, 1999...................................... -- -- 41
Accumulated deficit....................................... (155) (1,278) (7,472)
------ ------- -------
Total shareholders' equity................................ 1,288 2,773 26,734
------ ------- -------
Total liabilities and shareholders' equity.................. $1,321 $ 3,892 $32,444
====== ======= =======
</TABLE>

<TABLE>
<S> <C>
(Signed) GREGORY WOLFOND (Signed) CHRISTOPHER ERICKSON
Director Director
</TABLE>

See accompanying notes to the consolidated financial statements.

F-3
<PAGE>
[ADDITIONAL PAGE 40 FOR CANADIAN PROSPECTUS]

engineer our trade secrets, software or other technology. Moreover, the laws of
some foreign countries may not protect our proprietary rights to the same extent
as do the laws of the U.S. and Canada. Therefore, the measures we are taking to
protect our proprietary rights may not be adequate.

EMPLOYEES

As of December 6, 1999, we had a total of 173 employees. None of our
employees is covered by any collective bargaining agreements. We believe that
our relations with our employees are good.

LEGAL PROCEEDINGS

We are not currently subject to any material legal proceedings; however, we
may from time to time become a party to various legal proceedings arising in the
ordinary course of our business.

FACILITIES

Our registered and head office is located in Toronto, Ontario in a
75,014 square foot facility under a lease which expires in 2005.

CORPORATE HISTORY

The Company was incorporated under the BUSINESS CORPORATIONS ACT (Ontario)
on July 28, 1997. Pursuant to Articles of Amalgamation dated July 7, 1999, the
Company amalgamated with 1344495 Ontario Limited, a wholly owned subsidiary, and
continued under the name 724 Solutions Inc. Pursuant to Articles of Amendment,
dated December - , 1999, the Company effected a two-for-one split of its
common shares.

43
<PAGE>
[ADDITIONAL PAGE FOR CANADIAN PROSPECTUS]

ELIGIBILITY FOR INVESTMENT

In the opinion of Goodman Phillips & Vineberg, Toronto, counsel to the
Company, and of Osler, Hoskin & Harcourt LLP, counsel to the Underwriters,
subject to compliance with the prudent investment standards and general
investment provisions and restrictions of the statutes referred to below (and,
where applicable the regulations thereunder) and, in certain cases, subject to
the satisfaction of additional requirements relating to investment policies,
standards, procedures and goals, the purchase of the common shares offered
hereby will not, at the date of issue, be precluded under the following
statutes:

INSURANCE COMPANIES ACT (Canada)

PENSION BENEFITS STANDARDS ACT, 1985 (Canada)

TRUST AND LOAN COMPANIES ACT (Canada)

FINANCIAL INSTITUTIONS ACT
(British Columbia)

LOAN AND TRUST CORPORATIONS ACT (Alberta)

THE INSURANCE ACT (Manitoba)

THE TRUSTEE ACT (Manitoba)

PENSION BENEFITS ACT (Ontario)

LOAN AND TRUST CORPORATIONS ACT (Ontario)

AN ACT RESPECTING INSURANCE (Quebec) (for
insurers other than mutual associates and insurance funds)

AN ACT RESPECTING TRUST COMPANIES AND SAVING COMPANIES (Quebec) (for
saving companies investing their own funds, and by trust companies
investing their own funds and deposits received by them)

SUPPLEMENTAL PENSION PLANS ACT (Quebec)

In the opinion of such counsel, the common shares, if, as and when listed on
a prescribed stock exchange (which presently includes The Toronto Stock
Exchange), will be qualified investments for a trust governed by a Registered
Retirement Savings Plan, a Registered Retirement Income Fund or a Deferred
Profit Sharing Plan under the Income Tax Act and the regulations thereunder, and
under certain proposed amendments to the Income Tax Act, for a trust governed by
a Registered Education Savings Plan. Also in the opinion of such counsel, at the
date of their issue, the common shares will not be "foreign property" for the
purposes of Part XI of the Income Tax Act. The foregoing opinions assume that
there will be no changes in the applicable legislation currently in effect prior
to the date of issue of the common shares.

MATERIAL CONTRACTS

The only material contracts entered into by the Company during the past two
year period or to which it has become a party, other than in the ordinary course
of business, are as follows:

1. the Amended and Restated Unanimous Shareholder Agreement dated
October 26, 1999 among the Company and its existing shareholders;

2. the U.S. underwriting agreement dated - , 2000 referred to under
"Underwriting"; and

3. the Canadian underwriting agreement dated - , 2000 referred to under
"Underwriting".

Copies of these agreements, or the relevant provisions thereof, will be
available for inspection at the head office of the Company during normal
business hours during the course of distribution and for a period of 30 days
thereafter.

65
<PAGE>
[ADDITIONAL PAGE FOR CANADIAN PROSPECTUS]

PURCHASERS' STATUTORY RIGHTS

Securities legislation in several of the Canadian provinces provides the
purchasers with the right to withdraw from an agreement to purchase securities
within two business days after receipt or deemed receipt of a prospectus and any
amendment. In several of the provinces, securities legislation further provides
the purchaser with remedies for rescission or, in some jurisdictions, damages
where the prospectus and any amendment contains a misrepresentation or is not
delivered to the purchaser, provided that such remedies for rescission or
damages are exercised by the purchaser within the time limit prescribed by the
securities legislation of his province. The purchaser should refer to any
applicable provisions of the securities legislation of his province for the
particulars of these rights or consult with a legal adviser.

66
<PAGE>
[ADDITIONAL PAGE FOR CANADIAN PROSPECTUS]

CERTIFICATE OF THE COMPANY

Dated: December - , 1999

The foregoing, as of the date of the supplemented prospectus providing the
information permitted to be omitted from this prospectus, will constitute full,
true and plain disclosure of all material facts relating to the securities
offered by this prospectus as required by the securities laws of all the
provinces of Canada and, for the purpose of the SECURITIES ACT (Quebec), will
not contain any misrepresentation likely to affect the value or the market price
of the securities to be distributed.

<TABLE>
<S> <C>
(Signed) GREGORY WOLFOND (Signed) KAREN BASIAN
Chairman and Chief Executive Officer Chief Financial Officer

On behalf of the Board of Directors

(Signed) CHRISTOPHER ERICKSON (Signed) ANDRE BOYSEN
Director Director
</TABLE>

C-1
<PAGE>
[ADDITIONAL PAGE FOR CANADIAN PROSPECTUS]

CERTIFICATE OF THE UNDERWRITERS

Dated: December - , 1999

To the best of our knowledge, information and belief, the foregoing, as of
the date of the supplemented prospectus providing the information permitted to
be omitted from this prospectus, will constitue full, true and plain disclosure
of all material facts relating to the securities offered by this prospectus as
required by the securities laws of all the provinces of Canada and, for the
purpose of the SECURITIES ACT (Quebec), to our knowledge, this prospectus will
not contain any misrepresentation likely to affect the value or the market price
of the securities to be distributed.

<TABLE>
<S> <C> <C>
NESBITT BURNS INC. RBC DOMINION SECURITIES INC. CREDIT SUISSE FIRST BOSTON
SECURITIES CANADA INC.

By: (Signed) W. J. BLAIR AGNEW By: (Signed) DANIEL R. COHOLAN By: (Signed) CHRISTOPHER LEGG
</TABLE>

The following are the names of every person or company having an interest,
either directly or indirectly, to the extent of not less than 5% in the capital
of:

NESBITT BURNS INC.: The Nesbitt Burns Corporation Limited, a majority-owned
subsidiary of a Canadian chartered bank;

RBC DOMINION SECURITIES INC.: an indirect wholly-owned subsidiary of a Canadian
chartered bank; and

CREDIT SUISSE FIRST BOSTON SECURITIES CANADA INC.: an indirect subsidiary of
Credit Suisse First Boston, a Swiss bank.

C-2
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The table below lists the fees and expenses, other than underwriting
discounts and commissions, which the registrant will pay in connection with the
offering described in this registration statement. All the expenses are
estimates, except for the Securities and Exchange Commission registration fee,
the Canadian Securities Regulators Filing Fees, the Nasdaq National Market
listing fee, the NASD filing fee and the TSE listing fee.

<TABLE>
<CAPTION>
AMOUNT
--------
<S> <C>
Securities and Exchange Commission Registration Fee......... $23,680
NASD Filing Fee............................................. 10,500
Canadian Securities Regulators Filing Fees.................. 8,792
Nasdaq National Market listing fee.......................... -
TSE listing fee............................................. -
Legal fees and expenses..................................... -
Accounting fees and expenses................................ -
Printing and engraving expenses............................. -
Transfer agent and registrar fees........................... -
Miscellaneous expenses...................................... -
-------
TOTAL....................................................... $ -
=======
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

DIRECTORS' AND OFFICERS' INDEMNIFICATION

Under the Business Corporations Act (Ontario), we are permitted to indemnify
our directors and officers and former directors and officers against costs and
expenses, including amounts paid to settle an action or satisfy a judgment in a
civil, criminal or administrative action or proceeding to which they are made
parties because of their position as directors or officers, including an action
against us. In order to be entitled to indemnification under this Act, the
director or officer must act honestly and in good faith with a view to our best
interests, and in the case of a criminal or administrative action or proceeding
that is enforced by a monetary penalty, the director or officer must have
reasonable grounds for believing that his or her conduct was lawful.

Under our by-laws, we are permitted to indemnify our subsidiaries' current
and former directors and our and our subsidiaries' current and former officers,
employees and agents. Our by-laws also provide that, to the fullest extent
permitted by the Act, we are authorized to purchase and maintain insurance on
behalf of our and our subsidiaries' current and past directors, officers,
employees and agents against any liability incurred by them in their duties. Our
shareholder agreement with our strategic investors listed under "Principal
Shareholders" also requires us to indemnify our directors under specified
circumstances. We believe that the provisions of our by-laws and the
shareholders' agreement are necessary to attract and retain qualified persons as
directors and officers.

II-1
<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

In September 1997, we issued 3,999,800 common shares, together with an
option to purchase an additional 4,000,000 of our common shares, to an entity
controlled by our Chairman and Chief Executive Officer, for an aggregate
purchase price of approximately Cdn.$2.0 million. The option was transferred to
a second entity under his control, and was exercised in October 1998 at an
exercise price of Cdn.$0.50 per share.

In April 1998, we issued 1,000,000 common shares to Bank of Montreal for a
purchase price of Cdn.$1.00 per share, together with an option to purchase an
additional 2,428,570 shares for an aggregate purchase price of
Cdn.$1.0 million. This option was exercised in October 1998.

In June 1999, Bank of America Corporation purchased 541,790 of our common
shares for $2.0 million, together with an option to purchase an additional
541,790 common shares at a price of $3.69 per share. In August 1999, the Company
issued to Bank of America an option to purchase 2,116,420 common shares at a
price of $3.90 per common share. The option was exercised in October 1999. The
weighted average price per share of the common shares issued to Bank of America
was $3.83 per share.

In July 1999, Citicorp Strategic Technology Corporation purchased 950,000 of
our common shares for $3.83 per share, and agreed to purchase an additional
5,450,000 common shares at a price of $3.83 per share upon the satisfaction of
certain conditions. The option was exercised in October 1999.

In August 1999, Sonera Corporation subscribed for 6,400,000 shares for $3.83
per share.

Through September 30, 1999, we issued options to our officers, directors,
employees and advisors to purchase an aggregate of 2,211,594 of our common
shares.

In October 1999, we issued 6,757,190 common shares for an aggregate
subscription price of $25.8 million, 2,116,420 common shares at a price per
share of $3.90 and for an aggregate subscription price of $8.2 million,
541,790 common shares at a price per share of $3.69 and for an aggregate
subscription price of $2.0 million, and 666,666 common shares and
666,668 common shares issuable upon the exercise of a warrant at an exercise
price per share of $7.50 for an aggregate subscription price of $5,000,010.

Each of these sales was exempt from the registration requirements of the
Securities Act of 1933 under Section 4(2) thereof or Regulation S thereunder.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER NAME OF DOCUMENT
- --------------------- ----------------
<S> <C>
1.1(1) Form of U.S. Underwriting Agreement.

1.2(1) Form of Canadian Underwriting Agreement.

3.1(1) Articles of Amalgamation of the Registrant.

3.2(1) By-laws of Registrant.

5.1(1) Opinion of Goodman Phillips & Vineberg, Toronto with respect
to the validity of the shares.

10.1(2) Subscription Agreement between Bank of Montreal, the
Registrant and Blue Sky Capital Corporation, dated
April 30, 1998.

10.2(1) Amended and Restated Unanimous Shareholders' Agreement among
the Registrant and its Shareholders.
</TABLE>

II-2
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER NAME OF DOCUMENT
- --------------------- ----------------
<S> <C>
10.3(2)(3) Technology License Agreement, dated April 30, 1998, between
the Registrant and Bank of Montreal.

10.4(2) Mutual Indemnity Agreement, dated April 30, 1998, between
the Registrant and Bank of Montreal.

10.5(2) Letter Agreement, dated November 27, 1998, between Bank of
Montreal and the Registrant.

10.6(2) Letter Agreement, dated November 27, 1998, between Bank of
Montreal and the Registrant.

10.7(2) Letter Agreement, dated July 26, 1999, between Bank of
Montreal and the Registrant.

10.8(2)(3) Technology License Agreement, dated June 1, 1999, between
the Registrant and Bank of America, N.A. (as successor to
Bank of America National Trust & Savings Association).

10.9(2)(3) Software Maintenance and Support Agreement, dated June 1,
1999, between the Registrant and Bank of America, N.A. (as
successor to Bank of America National Trust & Savings
Association).

10.10(2) Letter Agreement, dated July 31, 1998, between Dr. Kerry
McLellan and the Registrant.

10.11(1) Lease, dated April 23, 1998, between Truscan Property
Corporation and the Registrant, as amended.

11.1(2) List of Subsidiaries.

23.1(1) Consent of Goodman Phillips & Vineberg, Toronto (contained
in Exhibit 5.1).

23.2(1) Consent of Morrison & Foerster LLP.

23.3 Consent of KPMG LLP.

24.1(2) Powers of Attorney (included on the signature pages).

27.1 Financial Data Schedule.
</TABLE>

(b) FINANCIAL STATEMENT SCHEDULES

None.

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

(1) To be filed by amendment.

(2) Previously filed.

(3) Confidential treatment has been requested with respect to certain portions
of the Exhibit. Omitted portions will be filed separately with the
Securities and Exchange Commission.

ITEM 17. UNDERTAKINGS.

(1) The undersigned registrant hereby undertakes to provide to the underwriter
at the closing specified in the underwriting agreement, certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.

(2) Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or
controlling person

II-3
<PAGE>
of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication of such
issue.

(3) The undersigned registrant hereby undertakes that:

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

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

II-4
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing of this Amendment to Form F-1 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the city of Toronto, Ontario on
December 15, 1999.

<TABLE>
<S> <C> <C>
724 SOLUTIONS INC.

Per: /s/ GREGORY WOLFOND
-----------------------------------------
Gregory Wolfond
CHAIRMAN AND CEO
</TABLE>

Pursuant to the requirements of the Securities Act of 1933, as amended, this
amended registration statement has been signed by the following persons in the
capacities on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
Chairman and Chief
* Executive Officer
------------------------------------------- (principal executive December 15, 1999
Gregory Wolfond officer)

* President, General
------------------------------------------- Counsel, Secretary and December 15, 1999
Chris Erickson Director

*
------------------------------------------- Chief Technology Officer December 15, 1999
Andre Boysen and Director

*
------------------------------------------- Chief Operating Officer December 15, 1999
Kerry McLellan and Director

* Chief Financial Officer
------------------------------------------- (principal financial and December 15, 1999
Karen Basian accounting officer)

*
------------------------------------------- Director December 15, 1999
Lloyd F. Darlington

*
------------------------------------------- Director December 15, 1999
Martin A. Stein
</TABLE>

II-5
<PAGE>

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
*
------------------------------------------- Director December 15, 1999
James D. Dixon

*
------------------------------------------- Director December 15, 1999
Harri Vatanen

*
------------------------------------------- Director December 15, 1999
Alan Young
</TABLE>

<TABLE>
<S> <C> <C> <C>
* /s/ GREGORY WOLFOND
- -------------------------------------------
By: Gregory Wolfond, as
ATTORNEY-IN-FACT
</TABLE>

II-6
<PAGE>
AUTHORIZED REPRESENTATIVE

Pursuant to the requirements of Section 6(a) of the Securities Act of 1933,
as amended, the undersigned has signed this amended Registration Statement
solely in the capacity of the duly authorized representative of
724 Solutions Inc. in the U.S., on December 15, 1999.

<TABLE>
<S> <C> <C>
724 SOLUTIONS CORP.

Per: /s/ KAREN BASIAN
-----------------------------------------
Name: Karen Basian
Title: Treasurer
</TABLE>

II-7
<PAGE>
724 SOLUTIONS INC.
INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT NO. NAME OF DOCUMENT
- --------------------- ------------------------------------------------------------
<S> <C>
1.1(1) Form of U.S. Underwriting Agreement.

1.2(1) Form of Canadian Underwriting Agreement.

3.1(1) Articles of Amalgamation of the Registrant.

3.2(1) By-laws of Registrant.

5.1(1) Opinion of Goodman Phillips & Vineberg, Toronto with respect
to the validity of the shares.

10.1(2) Subscription Agreement between Bank of Montreal, the
Registrant and Blue Sky Capital Corporation, dated
April 30, 1998.

10.2(1) Amended and Restated Unanimous Shareholders' Agreement among
the Registrant and its Shareholders.

10.3(2)(3) Technology License Agreement, dated April 30, 1998, between
the Registrant and Bank of Montreal.