EXCELERGY CORP, S-1, 2000-03-10

EXCELERGY CORP
S-1, 2000-03-10

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<PAGE>

As filed with the Securities and Exchange Commission on March 10, 2000

Registration No. 333-

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FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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

Delaware 7371 04-3429277
(State or other
jurisdiction of
incorporation or
organization)
(Primary Standard Industrial Classification Code Number)
(I.R.S. Employer
Identification Number)

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

Excelergy Corporation
3 Cambridge Center
Cambridge, Massachusetts 02142
(617) 452-1600
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)

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

Cary G. Bullock
President, Chief Executive Officer and Chairman
Excelergy Corporation
3 Cambridge Center
Cambridge, Massachusetts 02142
(617) 452-1600
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

Copies to:

Mark H. Burnett William C. Rogers
Testa, Hurwitz & Thibeault, LLP Choate, Hall & Stewart
125 High Street 53 State Street
Boston, Massachusetts 02110 Boston, Massachusetts 02109
(617) 248-7000 (617) 248-5000

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

Approximate date of commencement of 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. [X]

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CALCULATION OF REGISTRATION FEE

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Proposed maximum
Title of each class of aggregate Amount of
Securities to be registered offering price(1) registration fee
- -----------------------------------------------------------------------------------
<S> <C> <C>
Common Stock, $.01 par value.................... $86,250,000 $22,770
- -----------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(a) under the Securities Act of 1933.

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

The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.

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

The information in this prospectus is not complete and may be changed. These
securities may not be sold until the registration statement filed with the
Securities and Exchange Commission becomes effective. This preliminary
prospectus is not an offer to sell these securities nor does it seek offers to
buy these securities in any jurisdiction where the offer or sale is not
permitted.

Subject to Completion, Dated March 10, 2000

[LOGO OF EXCELERGY]

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

Shares
Common Stock

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

This is the initial public offering of Excelergy Corporation. We are offering
shares of common stock. We anticipate that the initial public offering
price will be between $ and $ per share.

We have applied for listing on the Nasdaq National Market under the symbol
"XCEL."

Investing in our common stock involves certain risks. See "Risk Factors"
beginning on page 5.

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.

<TABLE>
<CAPTION>
Underwriting Proceeds, before
Price to Discounts and expenses, to
Public Commissions Excelergy
-------- ------------- ----------------
<S> <C> <C> <C>
Per Share $ $ $
Total $ $ $
</TABLE>

We have granted the underwriters the right to purchase up to additional
shares of our common stock to cover over-allotments.

Deutsche Banc Alex. Brown Robertson Stephens

Dain Rauscher Wessels

The date of this prospectus is , 2000
<PAGE>

[Across the inside front cover there is a teal title bar that reads "Excelergy
is at the center of two forces of change." Underneath this bar are two
overlapping ovals, a blue oval on the left and a yellow oval on the right with
the intersecting section in green. Above the blue oval on the left is the word
"Internet." Over the yellow oval on the right are the words "Energy
Deregulation." Within the overlapping section of the two ovals is the world
"Excelergy." Beneath the two overlapping ovals reads "The widespread adoption of
the Internet as a platform for business-to-business e-commerce has created new
opportunities for business communications and collaboration. Deregulation in the
energy industry is creating a complex, competitive business environment with new
market participants, relationships and interactions. Excelergy offers an end-to-
end suite of Internet-enabled solutions and services that allow retail energy
companies to become networked e-businesses."

The inside front cover gatefold depicts a triangular image. The upper point of
the triangle is an image of a computer with the words "End-user" above it. The
computer is labeled "e-ChoiceNet." To the right of the computer image there is a
figure of a person. Connecting the computer image at the top point of the
triangle to the image at the lower right point of the triangle is a yellow
double-headed arrow with repeating numbers "101010." The lower right point of
the triangle is a blue cube with the words "Distribution Company" above it. The
cube is labeled "ABP/Legacy." To the right of the cube is a figure of two people
labeled "End user." To the left of the cube is a short yellow arrow pointing
left to a thin box which is labeled "eXACT." Coming out of this thin box is
another yellow double-headed arrow with repeating data numbers "101010" on it.
This arrow connects to the third, lower left point of the triangle which is
labeled "Energy Marketers." The yellow arrow touches another thin box labeled
"eXACT." To the left of the thin box labeled "eXACT" there is a short yellow
right-arrow coming from another blue cube that is labeled "ABP/Legacy." On the
bottom left side of the box are figures of two people labeled "End-user."
Another yellow double-headed arrow with the repeating data numbers "101010"
connects this point back to the computer image at the top of the triangle.

Along the outside of the triangle graphic are product highlights and text.
Starting from the upper right hand corner of the page going counter-clockwise is
the "Excelergy" logo. Beneath the logo reads the text "We offer leading
business-to-business transaction management, customer relationship management
and e-commerce solutions for the deregulating energy industry." In the upper
left hand corner of the page there is the word "e-ChoiceNet(SM)." Beneath the
label reads "Solutions that enable retail energy companies to establish
privately branded Internet portals that let end users conduct online auctions to
select their energy providers and access pricing and service information." To
the right of the label and text, there are two overlapping screen shots of the
product e-ChoiceNet. On the bottom left hand corner of the page there is the
word "Excelergy ABP(TM) 3000." Beneath the label, the text reads "A scalable,
flexible customer relationship management and billing system for retail energy
companies." To the right of the label are two overlapping screen shots of the
Excelergy ABP(TM) 3000. On the bottom right hand corner of the page there is the
word "Excelergy eXACT(TM)." Beneath the label reads "Business-to-business
transaction management solutions that enable our customers to manage and
exchange data electronically." To the left of the label is a screen shot of
eXACT.
<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 our common stock. You should read the entire prospectus
carefully.

Excelergy

The retail energy industry is well-positioned to benefit from new Internet-
based technology solutions. According to The Edison Electric Institute and the
American Gas Association, the electric power and natural gas energy industries
in the United States generated 1998 retail revenues of approximately $265
billion, making it one of the largest markets in the country. Deregulation of
the retail energy market is creating a complex, competitive business
environment with new participants, relationships and interactions. In this new
environment, complex information, including enrollment, historical usage and
monthly consumption, billing and payment information, which previously had been
processed within a single entity, must now be coordinated and communicated
among several companies, each with different types of information systems and
data exchange capabilities. These companies also need to provide end users,
particularly commercial and industrial end users, with a broad range of value-
added services, including consolidated invoices covering multiple products,
services and sites, real-time access to energy usage information and online
bill presentment.

Retail energy companies are seeking cost-effective information technology
solutions that enable them to better manage their complex business-to-business
interactions, while improving their ability to attract, service and retain end
users. By using Internet-enabled solutions tailored to address their specific
needs, these companies can enter a market more quickly, regardless of their
size, location, function or existing technology. Further, the Internet can
serve as a key component of their customer acquisition and retention strategies
because of its easy accessibility, wide reach and flexibility. The Internet
also facilitates consumer choice through the creation of centralized
marketplaces where retail energy end users can choose among competing suppliers
offering different products and services.

Our current product offerings consist of:

. Excelergy ABP 3000--a scalable, flexible customer relationship management
and billing system for retail energy companies;

. Excelergy eXACT--business-to-business transaction management solutions
that enable our customers to manage and exchange data electronically; and

. e-ChoiceNet--solutions that enable retail energy companies to establish
privately branded Internet portals that let end users conduct online
auctions to select their energy providers and access pricing and service
information.

In addition, we provide consulting and implementation services to configure our
software to meet a customer's particular business needs and information system
requirements. Further, we are creating a centralized, business-to-business web
site, or e-hub, where retail energy companies can exchange

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<PAGE>

information using our eXACT transaction management solutions. We are enhancing
our product offerings to integrate seamlessly with this e-hub, creating a
powerful technology platform for the deregulating retail energy industry.

Key benefits of our product offerings include:

. streamlined communication flow among retail energy market participants,
which lowers transaction costs and increases customer satisfaction;

. open architecture that uses eXtensible Mark-up Language, or XML, and
standard application programming interfaces, is easily configurable, and
integrates with legacy and other enterprise systems;

. business processes automation, which replaces a broad range of manual and
labor-intensive tasks, allowing companies to respond more quickly to
changing market conditions, while lowering their operating costs;

. a versatile and scalable customer relationship management system that
provides Internet enrollment, flexible billing and other value-added
capabilities, which enhances our customers' ability to acquire, service
and retain end users; and

. a foundation for establishing industry-wide standards for electronic
business transactions and communications among retail energy companies.

Our objective is to provide the leading business-to-business e-commerce
platform for the deregulating retail energy industry. We intend to achieve
market leadership by providing the most comprehensive suite of cost-effective,
end-to-end solutions that retail energy companies need to compete in the
emerging, competitive retail energy market. The key elements of our strategy
are to:

. expand our solutions into a comprehensive, business-to-business platform
that will integrate seamlessly with our retail energy market e-hub;

. create a network effect by attracting the largest retail energy companies
to our platform;

. utilize transaction-based pricing to accelerate market penetration and
develop recurring revenue streams;

. build strong product and integration alliances;

. continue efforts to establish energy industry standards; and

. expand our international presence.

We began marketing our products in 1998. Our customers include Allegheny
Power Services Corporation, BP Amoco, Boston Gas, Computer Sciences
Corporation, Constellation Energy Group, First Energy Services Corporation and
Niagara Mohawk.

We were originally organized in February 1998 as a Massachusetts limited
liability company under the name of Customer Care Solutions, LLC. In July 1998,
we merged into a newly formed Massachusetts corporation, which changed its name
to Customer Care Solutions, Inc. In April 1999, we changed our name to
Excelergy Corporation. We reincorporated in Delaware on December 30, 1999. Our
principal executive offices are located at 3 Cambridge Center, Cambridge,
Massachusetts 02142, and our telephone number is (617) 452-1600. Our corporate
web site is located at www.excelergy.com. The information contained in our web
site is not made a part of this prospectus.

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<PAGE>

The Offering

<TABLE>
<C> <S>
Common stock offered by Excelergy............ shares
Common stock to be outstanding after this
offering.................................... shares
Use of proceeds.............................. For general corporate purposes,
including working capital, as
well as potential acquisitions
of, or investments in,
complementary businesses or
technologies
Proposed Nasdaq National Market symbol....... XCEL
</TABLE>

The number of shares of common stock to be outstanding after this offering
is based on the shares outstanding as of March 1, 2000 and excludes:

. shares of common stock reserved for issuance under our 1998 stock
plan, of which shares were subject to outstanding options with a
weighted average exercise price of $ per share;

. shares of common stock reserved for issuance under our 2000 employee
stock purchase plan; and

. shares of common stock issuable upon exercise of an outstanding
warrant with an exercise price of $ per share.

3
<PAGE>

Summary Financial Data
(in thousands, except per share data)

You should read the following summary financial data together with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our financial statements and the related notes included
elsewhere in this prospectus. The pro forma balance sheet data gives effect to
the issuance of our Series C convertible preferred stock in February 2000 as if
it occurred on December 31, 1999. The pro forma as adjusted balance sheet also
gives effect to the conversion of all outstanding redeemable convertible
preferred stock into common stock upon the closing of this offering and the
sale of shares of common stock offered by us at an assumed initial public
offering price of $ (the midpoint of the range set forth on the cover page
of this prospectus), after deducting estimated underwriting discounts and
commissions and estimated offering expenses. See "Use of Proceeds" and
"Capitalization."

<TABLE>
<CAPTION>
For the period
from inception
(February 8, 1998) Year Ended
to December 31, December 31,
1998 1999
------------------ ------------
<S> <C> <C>
Statement of Operations Data:
Revenue:
License....................................... $ -- $ 1,113
Service....................................... 982 3,044
----- --------
Total revenue................................ 982 4,157
----- --------
Gross margin................................... 438 2,777
----- --------
Loss from operations........................... (855) (12,479)
----- --------
Net loss....................................... (862) (12,131)
----- --------
Net loss attributable to common stockholders... $(862) $(16,107)
===== ========
Basic and diluted net loss per share........... $(.20) $ (2.76)
===== ========
Weighted average shares of common stock
outstanding used in computing basic and
diluted net loss per share.................... 4,237 5,830
Pro forma as adjusted basic and diluted net
loss per share (unaudited) ................... $ (1.07)
Weighted average shares of common stock
outstanding used in computing pro forma as
adjusted basic and diluted net loss per share
(unaudited)................................... 11,342
</TABLE>

<TABLE>
<CAPTION>
December 31, 1999
------------------------------
Pro Forma
Actual Pro Forma As Adjusted
------- --------- -----------
<S> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents ........... $18,835 41,885
Working capital...................... 12,064 35,114
Total assets......................... 22,949 45,999
Long-term debt (including current
portion)............................ 1,427 1,427
Redeemable convertible preferred
stock............................... 28,547 51,597
Total stockholders' equity
(deficit)........................... (14,822) (14,822)
</TABLE>

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Unless otherwise indicated, all information in this prospectus assumes:

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

. all stock splits effected prior to the date of this prospectus;

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

. the effectiveness of our amended and restated certificate of
incorporation to be filed after completion of this offering.

Excelergy(TM), the Excelergy logo, Excelergy ABP(TM), Excelergy eXACT(TM),
e-ChoiceNet(TM) and Exceleration(TM) are trademarks of Excelergy. All other
trade names and trademarks referred to in this prospectus are the property of
their respective owners.

4
<PAGE>

RISK FACTORS

An investment in our common stock involves a high degree of risk. You should
consider carefully the following risks, together with all other information
included in this prospectus before you decide to buy our common stock. Please
keep these risks in mind when reading this prospectus, including any forward-
looking statements appearing in this prospectus. If any of the following risks
actually occurs, our business, prospects, financial condition or results of
operations would likely suffer materially. As a result, the trading price of
our common stock may decline, and you could lose all or part of the money you
paid to buy our common stock.

Risks Related to Our Business

Our extremely limited operating history makes it difficult to evaluate our
business and prospects.

We commenced operations in February 1998 and only recently began to market
and sell our products and services. We licensed our first software product in
March 1998. In addition, we have begun offering new software products and are
planning to introduce additional products. Accordingly, you have limited
information about us with which to evaluate our business, strategies,
performance and prospects, or an investment in our common stock. Before buying
our common stock, you should consider the risks, uncertainties and difficulties
frequently encountered by companies in their early stages of development,
particularly companies in new and rapidly evolving markets such as those whose
business depends on the Internet.

Our success is dependent on the pace, extent and manner of deregulation of the
retail energy industry.

We derive all of our revenue from licensing our software and providing
services to retail energy companies positioning for deregulation. The retail
energy market is undergoing deregulation on a state-by-state basis and we
cannot assure you that any other states will enact deregulation legislation. If
additional states do not deregulate the retail energy industry, or if the
states which have enacted deregulation legislation slow the implementation of
deregulation or repeal this legislation, our business, prospects and financial
condition would be seriously harmed. The pace, extent and manner of
deregulation, and the evolution of competitive retail energy markets, could be
impacted by a number of factors, including the following:

. changes to the political climate, which currently favors deregulation, as
a result of interruptions of service, significant, rapid price increases
and other factors which may be viewed as the result of deregulation or
the lack of regulatory control;

. implementation of regulations that do not encourage the development of
competitive energy markets;

. development of competitive wholesale markets, which is essential for
competitive retail energy markets to develop; and

. the speed with which energy marketers emerge in a region to compete in
the retail energy market.

Our success is dependent on the emergence and success of retail energy
companies.

The principal potential customers for our software products and services are
retail energy companies that compete in various deregulated or deregulating
retail energy markets. Energy marketers are new participants in the industry
created by deregulation. If energy marketers do not

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emerge to compete with distribution companies in these markets or are not
successful, the market for our products and services, and our business and
prospects, may be materially harmed. The roles these retail energy companies
play in the market are new and evolving. Demand for energy marketers' services
may not develop, and their businesses may not be viable or profitable enough to
survive. Further, actions by existing utilities may impede energy marketers
from establishing themselves in the market. The terms of deregulation may also
impose costs on the retail energy marketplace and its participants, such as the
recovery of historical costs, which may impede or prevent the development of a
competitive retail energy market. Similarly, the failure of a competitive
wholesale market for energy to develop in a region may impede or prevent the
development of a competitive retail energy market in that region. Any
consolidation, or other decrease in the number of retail energy companies could
also reduce the number of potential customers for our products and services or
increase pressure on the pricing of our products and services.

Our business model and strategy are unproven and may not be successful.

We do not know whether our business model and strategy will be successful.
We are developing and offering Internet-based software solutions tailored to
address the needs of the retail energy industry, which is undergoing
fundamental changes resulting from deregulation. The Internet is not currently
being widely used, and may not emerge or develop, as a platform for conducting
business in the retail energy industry. In addition, we are beginning to
license our products for prices based, at least in part, on the number of
meters serviced or transactions processed by our customers with our software.
Certain of our customers have licensed our products on this basis. We
previously only licensed our products for a one-time, perpetual license fee,
with maintenance and support available for additional fees. Our new
transaction-based pricing model may not be attractive to our current or
prospective customers. If the assumptions underlying our business model and
strategy are not valid, or if we are unable to implement our business plan to
achieve the predicted level of market penetration or to obtain the desired
level of pricing of our products and services for sustained periods, our
business, prospects, financial condition and results of operations could be
seriously harmed.

We have incurred losses and have experienced negative operating cash flow to
date and expect our losses and negative operating cash flow to continue.

As of December 31, 1999, we had an accumulated deficit of approximately
$13.0 million. In pursuing our current business, we have incurred significant
losses and experienced negative operating cash flow for each month since our
formation. If our revenue does not grow as we expect, or if our operating
expenses exceed our plans and cannot be adjusted in a timely manner, our
business, prospects, financial condition and results of operations will be
materially adversely affected. We cannot be certain if or when we will be
profitable or if or when we will generate positive operating cash flow. We
intend to continue to invest in research and development to enhance our current
products and develop future products. We also plan to continue to expand our
sales and marketing activities and to hire additional people throughout our
company to support our growing business. As a result, we will need to increase
our revenues significantly to achieve profitability. Because we expect to
continue to invest in our business ahead of anticipated future revenues, we
expect that we will continue to incur operating losses and negative operating
cash flows for the foreseeable future.

Our quarterly revenue and operating results are volatile and difficult to
predict. If we fail to meet the expectations of public market analysts or
investors, the market price of our common stock may decrease significantly.

Our quarterly revenue and operating results have varied significantly in the
past and will likely vary significantly in the future. We believe that period-
to-period comparisons of our results of

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<PAGE>

operations are not meaningful and should not be relied upon as indicators of
future performance. Our revenue and operating results may fall below the
expectations of securities analysts or investors in some future quarter or
quarters. Our failure to meet these expectations would likely adversely affect
the market price of our common stock.

Our quarterly revenue and operating results may vary depending on a number
of factors, including:

. demand for our software products and services, including the size and
timing of our license transactions;

. delays in the implementation of our software by customers, which may
impact the timing of our recognition of revenue;

. delays or reductions in spending for application software by our
customers and potential customers;

. fluctuations in the number of transactions processed using our software
by our customers who license our products for transaction-based fees;

. the mix of our revenue during any period from one-time license fees and
transaction-based license fees;

. deferrals of customer orders in anticipation of product enhancements or
new products;

. changes in our pricing policies or those of our competitors;

. our ability to control operating expenses;

. our ability to expand our product development and sales and marketing
operations, including hiring additional personnel;

. compensation policies that compensate sales personnel based on achieving
quarterly and annual quotas;

. actions taken by our competitors, including new product introductions and
enhancements;

. our success in developing new relationships and maintaining and enhancing
existing relationships with strategic partners, including systems
integrators and other implementation partners;

. technological changes affecting our markets; and

. general economic factors.

Our quarterly revenue may fluctuate because we currently depend on a small
number of large orders.

We currently derive a significant portion of our software license revenue in
each quarter from a small number of relatively large orders. Our operating
results for a particular fiscal period could be materially adversely affected
if we are unable to complete those orders, or satisfy our customers' acceptance
criteria, on schedule and at anticipated levels. In many cases, we recognize
revenue from software licenses on a percentage-of-completion basis.
Accordingly, our ability to recognize this revenue is subject to delays
associated with our customers' ability to complete the implementation of our
software in a timely manner.

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<PAGE>

We expect the transition to transaction-based license fees for our software to
add uncertainty to our quarterly license revenue.

In addition to offering our software products for a one-time, perpetual
license fee, we have begun to offer our software for transaction based-license
fees. We expect that this change will add uncertainty to our quarterly license
revenue until sufficient volumes of transactions are conducted using our
software which is licensed on this basis. Further, if a customer that has
licensed our software on this basis stops using our software, the license
revenue we derive from that customer would also stop.

Our sales cycles are relatively long and unpredictable, which makes it
difficult to forecast our revenue.

Prospective customers frequently view the purchase of our software as part
of a long-term strategic decision, which often results in customers taking an
extended period to assess alternative solutions or deferring their licensing or
purchasing decisions until the market evolves or broad industry standards are
adopted. We must continue to educate potential customers on the use and
benefits of our products and services, as well as the integration of our
products and services with other software utilized by them and their business
partners. The decision by a prospective customer to purchase our software
products frequently involves several functional departments within its
business. In addition, a prospective customer must consider the significant
costs that the license and implementation of our products typically involve,
including training and integration costs. Implementation of our software can
also include a substantial commitment of resources by our customers or their
consultants over an extended period of time. As a result, our sales cycle
generally ranges up to six months. Consequently, the relatively long and
unpredictable nature of our sales cycle makes it difficult to forecast our
revenue.

Our results of operations would be adversely affected if our operating expenses
do not correspond with the timing of our revenue.

Most of our operating expenses, such as employee compensation and rent for
properties, are either relatively fixed in the short-term or incurred in
advance of sales. Moreover, our spending levels are based in part on our
expectations regarding future revenue. As a result, if revenue for a particular
quarter is below expectations, we will most likely not be able to
proportionately reduce operating expenses for that quarter. A shortfall in
revenue, therefore, would have a disproportionate effect on our expected
operating results for that quarter and could cause the trading price of our
common stock to decline.

To date, our revenue has been derived from a small number of customers, and the
loss of a large customer could hurt our revenue or operating results.

First Energy Services Corporation represented 80% and 50% of our revenue in
1998 and 1999, respectively. In addition, during 1999, two other customers,
Computer Services Corporation and Allegheny Power Service Corporation, each
accounted for more than 10% of our revenue. We expect that we will continue to
derive a significant portion of our revenue from a relatively small number of
customers in the future. Accordingly, the loss of a large customer could
materially hurt our business, and the deferral or loss of anticipated orders
from a small number of prospective customers could materially hurt our revenue
and operating results in any period.

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<PAGE>

Substantially all of our license revenue has been derived from licensing of our
Excelergy ABP customer relationship management and billing software, and if
demand for this software does not increase or declines, our business would be
seriously harmed.

Licenses of our Excelergy ABP customer relationship management and billing
software have accounted for substantially all of our license revenue to date.
We anticipate that revenue from licenses of this software will continue to
constitute a substantial portion of our license revenue for the foreseeable
future. We have recently released a new version of our Excelergy ABP 3000
software. We have begun offering other products, but have not recognized
revenue from the license of such products. Consequently, our future financial
performance will depend, in significant part, upon the successful development,
introduction and customer acceptance of enhanced versions of our Excelergy ABP
software and other products.

We have begun offering a new family of software products and are dependent on
its market acceptance.

We are offering our eXACT transaction management solutions that provides
enhanced business-to-business solutions. Versions of our eXACT solutions that
can be licensed separately from our other products are currently expected to be
commercially available during the middle of 2000. Achievement of our overall
business goals depends upon the sustained market acceptance of these products
at desired pricing levels. If these products do not achieve and sustain market
acceptance, we may experience a material adverse effect on our business,
prospects, operating results and financial condition.

We may not be able to continue to develop new products or enhance existing
products on a timely basis.

To be competitive, we must continue to develop and introduce on a timely
basis new products and product enhancements. Our products and services must
keep pace with technological developments and emerging industry standards and
regulations, address the changing and increasingly sophisticated needs of our
customers and achieve sustained market acceptance. Our failure to develop and
introduce new products and enhancements successfully and on a timely basis, or
the failure of new or enhanced products to achieve and sustain market
acceptance, could have a material adverse effect on our business, prospects,
operating results and financial condition. The life cycles of our products are
difficult to predict because the market for our products is new and emerging,
and is characterized by rapid technological change, changing customer needs and
evolving industry standards and regulations. We have experienced delays in the
introduction of new releases of our products. The introduction of products
employing new technologies and emerging industry standards could render our
existing products or services obsolete and unmarketable.

Software defects could delay the market acceptance of our products and lead to
a loss of revenue.

Our software is complex and, accordingly, may contain undetected errors or
failures when first introduced or as new versions are released. This may result
in loss of, or delay in, market acceptance of our products. We have in the past
discovered software errors in new releases of our products and in our new
products after their introduction. If we experience significant software errors
in future releases, we could experience delays in those releases, customer
dissatisfaction and potentially lost revenue. We may in the future discover
errors or other defects, including those that limit the ability of our software
to handle large volumes of transactions, in new releases of our products or new
products after their general availability. Any of these errors or defects could
cause our business to be materially harmed.

9
<PAGE>

If we fail to recruit and retain a significant number of qualified technical
personnel, we may not be able to develop, enhance and introduce our products on
a timely basis and our business will be harmed.

We require the services of a substantial number of qualified technical
personnel. The market for skilled technical personnel is characterized by
intense competition and aggressive recruiting, as well as a high level of
employee mobility, which makes it particularly difficult to attract and retain
the qualified technical personnel we require. We have experienced, and we
expect to continue to experience, difficulty in hiring and retaining highly
skilled employees with appropriate technical qualifications. In the past, we
have retained independent contractors with appropriate technical qualifications
when we have needed additional technical expertise and assistance. If we are
unable to recruit and retain a sufficient number of qualified technical
employees and independent contractors, we may not be able to complete the
development of, or upgrade or enhance, our products in a timely manner.
Further, if we are required to retain a significant number of independent
contractors in lieu of hiring technical employees, we expect that our expenses
will be higher. As a result, our business may be harmed and our operating
results may suffer.

We may be unable to attract or retain the other highly skilled employees that
are necessary for the success of our business.

In addition to our dependence on our technical personnel, our ability to be
successful also depends on our continuing ability to attract and retain other
highly skilled employees. We depend on the continued services of our senior
management, particularly Cary G. Bullock, our President and Chief Executive
Officer, and Kevin Monagle, an Executive Vice President, and other personnel.
As we continue to grow, we will need to hire additional personnel in all
operational areas. Competition for personnel in high technology industries in
the areas where our operations are located is intense. We have in the past
experienced, and we expect to continue to experience in the future, difficulty
in hiring and retaining highly skilled employees with appropriate
qualifications. If we do not succeed in attracting or retaining the necessary
personnel, our business could be adversely affected.

We may need to make acquisitions in order to remain competitive in our market.
Our business could be adversely affected, and your equity could be
significantly diluted, as a result of any of these future acquisitions.

To remain competitive, we may find it necessary to acquire or invest in
additional businesses, products or technologies. From time to time, we may
engage in discussions and negotiations regarding our acquiring or investing in
businesses, products or technologies. If we identify an appropriate acquisition
or investment candidate, we may not be able to negotiate the terms of the
acquisition or investment, or finance the acquisition or investment, on
commercially acceptable terms or at all. If we acquire or invest in another
business, we could have difficulty assimilating that business' personnel,
operations, technology or products and service offerings. In addition, the key
personnel of the acquired business may decide not to work for us. These
difficulties could disrupt our ongoing business, distract our management and
employees, increase our expenses and adversely affect our results of
operations. If we consummate one or more significant acquisitions in which the
consideration consists of stock or other securities, your equity could be
significantly diluted. If we were to proceed with one or more significant
acquisitions in which the consideration included cash, we could be required to
use a substantial portion of our available cash, including proceeds from this
offering, to consummate any acquisition. Acquisition financing may not be
available on favorable terms, or at all. In addition, we may be required to
amortize significant amounts of goodwill and other intangible assets in
connection with future acquisitions, which would seriously harm our results of
operations. As of the date of this prospectus, we have no agreement to enter
into any material investment or acquisition transaction.

10
<PAGE>

We depend in some cases on strategic business alliances to sell and implement
our products, and any failure to develop or maintain these alliances could hurt
our business and prospects.

Consultants, systems integrators and service providers who recommend,
install and support our software with their customers are expected to be an
important source of our sales. To augment our implementation capabilities and
revenue, we intend to continue to develop and expand relationships with
consultants, systems integrators, service providers and other potential
industry partners, and generate new business opportunities through joint
marketing and sales efforts. We may encounter difficulties in forging and
maintaining long-term relationships with these firms for a variety of reasons.
These firms may discontinue their relationships with us, fail to devote
sufficient resources to market our products or develop relationships with our
competitors. In addition, if these firms fail to implement our products
successfully for their customers, we may not have the resources to implement
our products on the schedule required by their customers, which could have a
material adverse effect on our ability to generate revenue or our relationship
with those customers.

We have limited experience with large-scale implementations, which are
important to our future success.

We have limited experience in implementing our applications on a large
scale. If implementation of our software solutions takes substantially longer
or costs substantially more than our customers anticipate, they may become
dissatisfied and our business may be seriously harmed. Further, if our
customers cannot successfully deploy our applications on a large scale, or if
they determine for any reason that our products cannot accommodate large-scale
deployment, our business could also be seriously harmed.

Our reputation and success will depend upon our customers being satisfied with
our products and services.

We believe that, because of the high degree of interaction among the retail
energy companies, our ability to license our software to a large number of them
will depend on our ability to successfully implement our solutions for, and
satisfy, our early-adopter customers. If we are unable to substantially satisfy
these customers, other retail energy companies may be reluctant to license our
software.

If our software produces inaccurate information about the transactions it
processes, we may lose customers and revenue.

Software defects or inaccurate data may cause incorrect recording, reporting
or display of information about transactions to us, our customers and their
business partners. Inaccurate information, such as inaccurate usage or billing
information, could cause errors in our customers' bills to end users, financial
settlements with their business partners or license fee payments to us. Our
customers may also seek to hold us liable for any damages incurred by them or
their business partners or end users. Software defects or inaccurate data may
also lead to customer dissatisfaction. As a result, we could lose customers. In
addition, our ability to recognize revenue in some cases depends on our
customers and their business partners supplying us with data regarding
transactions processed using our software. They may provide us with erroneous
or incomplete data, which could result in lost transactional revenue for us.

We may need to raise additional capital to remain competitive, and capital may
not be available on acceptable terms, if at all.

We expect the net proceeds from this offering 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

11
<PAGE>

additional funds and we may not be able to obtain additional financing on
favorable terms, if at all. If we cannot raise funds on acceptable terms if and
when needed, we may not be able to develop or enhance our products and
services, take advantage of future opportunities, grow our business or respond
to competitive pressures or unanticipated requirements, which could seriously
harm our business. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources."

Our revenue might be harmed by a resistance to adopt our software by internal
information technology departments.

Some businesses may have already made a substantial investment in other
third-party or internally developed software designed to accomplish the same
functions as our software. These businesses may be reluctant to abandon their
investments in favor of our software. In addition, information technology
departments of potential customers may resist purchasing our software for a
variety of other reasons, particularly the potential displacement of their
historical role in creating and operating software and concerns that packaged
software products are not sufficiently customizable for their enterprises. If
the demand for our products does not grow for any of these reasons, our revenue
may be harmed.

We are growing rapidly, and our failure to manage this growth could harm our
business.

We have experienced and are currently experiencing a period of significant
growth. Our employees increased from 13 at January 1, 1999 to 123 at March 2,
2000. This growth has placed a significant strain on our resources. We expect
that any future growth would cause similar or increased strains on our
resources. As part of this growth, we will have to expand, train and manage our
employee base and maintain close coordination among our technical, accounting,
finance, marketing and sales staffs. Further, we may have to implement new
operational and financial systems and procedures and controls. If we are unable
to manage our growth effectively, our business, results of operations and
financial condition could be adversely affected. Several members of our senior
management team joined us in 1999 and 2000, including Robert E. Kinney, our
Chief Financial Officer and Vice President, Finance. Our management team may
not be able to continue to work together effectively or to manage our growth
successfully. We believe that the successful integration of our management team
is critical to our ability to manage our operations effectively and support our
anticipated future growth.

We face intense competition, which could affect our ability to increase
revenue, maintain our margins and increase our market share.

The market for our Internet-based applications is intensely competitive and
we expect competition to increase in the future. Competitors vary in size and
in the scope and breadth of the products and services they offer. Companies
offering one or more products directly competitive with our products include
IBM, SAP, Science and Computer Technology, Orcom Solutions and Peace Software
to the extent they enhance their existing product offerings with competitive
applications. As a result of the large market opportunity for applications to
service the billing and customer service needs of the energy industry, we also
expect competition from other established and emerging companies. For example,
as the emergence of the application service provider market enables hosted
solutions from our competitors to become broadly available, our future success
may also depend upon our ability to establish successful relationships with
leading application service providers.

Many of our current and potential competitors have longer operating
histories, significantly greater financial, technical, marketing and other
resources, significantly greater name recognition and

12
<PAGE>

a larger installed base of customers than us. In addition, many of our
competitors have well-established relationships with our current and potential
customers and have extensive knowledge of our industry. Current and potential
competitors have established or may establish cooperative relationships among
themselves or with third parties to increase the ability of their products to
address customer needs. Accordingly, it is possible that new competitors or
alliances among competitors may emerge and rapidly acquire significant market
share. We also expect that competition will increase as a result of industry
consolidation. Increased competition may result in price reductions, reduced
margins and loss of market share, any one of which could seriously harm our
business.

Our success depends in part upon our ability to protect our intellectual
property, but we may not be able to do so adequately.

Our success depends in large part upon our proprietary technology. We rely
on a combination of copyright, trademark and trade secret protection,
confidentiality and nondisclosure agreements and licensing arrangements to
establish and protect our intellectual property rights. We license rather than
sell our solutions and require our customers to enter into license agreements,
which impose restrictions on their ability to utilize the software. In
addition, we seek to avoid disclosure of our trade secrets through a number of
means, including requiring those persons with access to our proprietary
information to execute nondisclosure agreements with us and restricting access
to our source code. We seek to protect our software, documentation and other
written materials under trade secret and copyright laws, which afford only
limited protection.

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

We may face costly damages or litigation costs if a third party claims that we
infringe its intellectual property.

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

If we expand into international markets, our business will be susceptible to
numerous risks associated with international operations.

To be successful, we believe we must expand our operations and hire
additional personnel to address international markets where the retail energy
industry has been, or is being, deregulated. To achieve acceptance in
international markets, our products must be modified to handle a variety of

13
<PAGE>

factors specific to each international market, such as native languages and
customs, tax laws and local regulations. We will be subject to a number of
risks associated with international business activities. These risks generally
include:

. unexpected changes in regulatory requirements;

. burdens of complying with a wide variety of foreign laws;

. currency exchange rate fluctuations;

. seasonal fluctuations in purchasing patterns;

. tariffs, export controls and other trade barriers;

. longer accounts receivable payment cycles and difficulties in collecting
accounts receivable;

. difficulties in managing and staffing international operations;

. potentially adverse tax consequences, including restrictions on the
repatriation of earnings; and

. global economic turbulence and political instability.

Our business may face additional risks and uncertainties not presently known to
us which could cause our business to suffer.

In addition to the risks specifically identified in this "Risk Factors"
section or elsewhere in this prospectus, we may face additional risks and
uncertainties not presently known to us or that we currently deem immaterial
which ultimately may impair our business, results of operations and financial
condition.

Risks Related to the Internet Industry

If the use of the Internet and electronic commerce do not grow as anticipated,
our business will be seriously harmed.

Our software and services depend on the increased acceptance and use of the
Internet as a medium of commerce. Rapid growth in the use of the Internet is a
recent phenomenon. As a result, acceptance and use may not continue to develop
at historical rates, and energy industry participants may not adopt or continue
to use the Internet as a medium of commerce. Demand and market acceptance for
recently introduced services and products over the Internet are subject to a
high level of uncertainty, and there exist few proven services and products.

Our business would be seriously harmed if:

. Use of the Internet does not continue to increase or increases more
slowly than expected;

. The technology underlying the Internet does not effectively support any
expansion that may occur; or

. The Internet does not create a viable commercial marketplace, inhibiting
the development of electronic commerce and reducing the need for our
products and services.

14
<PAGE>

We depend on the widespread acceptance of the Internet as a commercial
marketplace, which may not occur on a timely basis.

The Internet may not be accepted as a viable long-term commercial
marketplace for a number of reasons, including:

. Potentially inadequate development of the necessary communication and
computer network technology, particularly if the rapid growth of the
Internet continues;

. Delayed development or implementation of enabling technologies and
performance improvements;

. Delayed development or adoption of new standards and protocols; and

. Increased governmental regulation.

Security risks and concerns may deter the use of the Internet for conducting
electronic commerce.

A significant barrier to electronic commerce and communications is the
secure transmission of confidential information over public networks. Advances
in computer capabilities, new discoveries in the field of cryptography or other
events or developments could result in compromises or breaches of security
systems designed to protect proprietary information. If any well-publicized
compromises of security were to occur, it could have the effect of
substantially reducing the use of the Internet for commerce and communications.
Anyone who circumvents security measures could misappropriate proprietary
information or cause interruptions in services or operations. The Internet is a
public network, and data is sent over the network from many sources. In the
past, computer viruses, software programs that disable or impair computers,
have been distributed and have rapidly spread over the Internet. Computer
viruses could be introduced into our systems or those of our customers or
suppliers. In addition, software programs designed to overwhelm selected web
sites with inquiries, thus denying legitimate users access to those sites have
become increasingly common. We or our customers may be required to expend
significant capital and other resources to protect against or to alleviate
problems caused by these threats. To the extent that our activities may involve
the storage and transmission of proprietary information, such as credit card
numbers, security breaches could expose us to a risk of loss or litigation and
possible liability. Our security measures may be inadequate to prevent security
breaches, and our business would be harmed if we do not prevent them.

Our web sites may experience performance problems or delays as a result of high
volumes of traffic.

If the volume of traffic on our web sites increases, they may in the future
experience slower response times or other problems. In addition, users will
depend on Internet service providers, telecommunications companies and the
efficient operation of their computer networks and other computer equipment for
access to these web sites. Each of our web sites could experience outages,
delays and other difficulties due to system failures unrelated to our systems.
Any delays in response time or performance problems could cause users to
perceive these web sites as not functioning properly and, therefore, cause them
to use other methods to conduct business.

We depend on the continued viability of the Internet infrastructure.

Our business depends upon the development and maintenance of a viable
Internet infrastructure. The current Internet infrastructure may be unable to
support an increased number of users. The timely development of products such
as high-speed modems and communications equipment will be necessary to continue
reliable Internet access. Furthermore, users of the Internet

15
<PAGE>

have experienced outages and delays as a result of damage to portions of the
Internet infrastructure and specific web sites. Any disruption in the Internet
access provided by third-party providers or any failure of third-party
providers to handle higher volumes of user traffic could seriously harm our
business, results of operations and financial condition. Finally, the
effectiveness of the Internet may decline due to delays in the development or
adoption of new standards and protocols designed to support increased levels of
activity. If new standards or protocols are developed, we may be required to
incur substantial expenditures to adapt our products.

Increasing government regulation of the Internet could limit the market for our
products and services.

As Internet commerce evolves, we expect that federal, state or foreign
agencies will adopt regulations covering issues such as user privacy, pricing,
taxation of goods and services provided over the Internet, and content and
quality of products and services. Legislation could expose companies involved
in electronic commerce to liability, which could limit the growth of electronic
commerce generally. Legislation could dampen the growth in Internet usage and
decrease its acceptance as a communications and commercial medium. If enacted,
these laws, rules or regulations could limit the market for our products and
services.

Risks Related to this Offering

The price of our common stock after this offering may be lower than the price
you pay.

Prior to this offering, there has been no public market for our common
stock. After this offering, an active trading market in our stock might not
develop or continue. If you purchase shares of our common stock in this
offering, you will pay a price that was not established in a competitive
market. Rather, you will pay a price that we negotiated with the
representatives of the underwriters. The price of our common stock that will
prevail in the market after this offering may be higher or lower than the price
you pay. See "Underwriting."

Our stock price could fluctuate widely in response to various factors, many of
which are beyond our control.

The trading price of our common stock may be highly volatile. Our stock
price could fluctuate widely in response to factors such as the following:

. actual or anticipated variations in our quarterly revenues or operating
results;

. announcements of new products or services by us or our competitors or new
competing technologies;

. our addition or loss of significant customers;

. changes in financial estimates or recommendations by securities analysts;

. conditions or trends in the retail energy industry, including
developments in the pace, scope and success of deregulation;

. conditions or trends in the Internet and on-line commerce industries;

. announcements by us of significant acquisitions or strategic
partnerships;

. additions or departures of our key personnel;

. future equity or debt offerings by us or our announcements of such
offerings; and

. general market and general economic conditions.

16
<PAGE>

In addition, in recent years the stock market in general, and the Nasdaq
National Market and the market for Internet and technology companies in
particular, have experienced large price and volume fluctuations. These
fluctuations have often been unrelated or disproportionate to the operating
performance of these companies. These market and industry factors may
materially and adversely affect our stock price, regardless of our operating
performance.

Our executive officers, directors and principal stockholders own a significant
percentage of our company and will be able to exercise significant influence
over our company, which could have a material and adverse effect on the market
price of our common stock.

After this offering, our executive officers, directors and principal
stockholders and their affiliates will together control approximately % of our
outstanding common stock. As a result, these stockholders, if they act
together, will be able to control all matters requiring stockholder approval,
including the election of directors and approval of significant corporate
transactions, and will continue to have significant influence over our affairs.
This concentration of ownership may have the effect of delaying, preventing or
deterring a change in control, could deprive our stockholders of an opportunity
to receive a premium for their common stock as part of a sale and might affect
the market price of our common stock.

Certain provisions of our charter, by-laws and Delaware law make a takeover
difficult.

Certain provisions of our corporate charter and by-laws, which will be in
effect after the closing of this offering, and Delaware law might discourage,
delay or prevent a change of control or a change in our management, even if
such changes would be beneficial to our stockholders. These provisions include
a staggered board of directors, limitations on persons authorized to call a
special meeting of stockholders and advance notice procedures required for
stockholders to make nominations of candidates for election as directors or to
bring matters before an annual meeting of stockholders. These provisions could
also discourage proxy contests and make it more difficult for you and other
stockholders to elect directors and take other corporate actions. The existence
of these provisions could limit the price that investors might be willing to
pay in the future for shares of our common stock and could deprive you of an
opportunity to receive a premium for your common stock as part of a sale.

The market price of our common stock may drop significantly when the
restrictions on resale by our existing securityholders lapse.

Following this offering, we will have approximately shares of common stock
outstanding. Approximately shares, or %, of our outstanding common stock
will be subject to restrictions on resale under U.S. securities laws. Holders
of shares have agreed not to sell these shares for at least 180 days
following the date of this prospectus, although Deutsche Bank Securities Inc.
can waive these restrictions at any time. As these restrictions on resale end
beginning in , 2000, the market price of our common stock could drop
significantly if holders of these shares sell them or are perceived by the
market as intending to sell them. These sales also may make it difficult for us
to sell equity securities in the future at a time and price that we deem
appropriate. See "Shares Eligible for Future Sale."

We will have discretion as to the use of the proceeds of this offering, which
we may not use effectively.

We have not committed the net proceeds of this offering to any particular
purpose. As a result, our management will have significant flexibility in
applying the net proceeds of this offering and could apply them to uses which
do not realize the benefits or yield we expect. If we do not apply

17
<PAGE>

the funds we receive effectively, our accumulated deficit will increase and we
may lose significant business opportunities. See "Use of Proceeds."

If our stock price is volatile, we may be subject to securities class action
litigation, which would distract our management and could result in substantial
costs or large judgments against us.

In the past, securities class action litigation has often been brought
against a company following periods of volatility in the market price of its
stock. We may in the future be the target of similar litigation. Securities
litigation could result in substantial costs and divert management's attention
and resources.

Investors will experience immediate and substantial dilution in the book value
of their investment.

If you purchase shares of our common stock in this offering, you will
experience immediate and substantial dilution because the price you pay will be
substantially greater than the net tangible book value per share of the shares
you acquire. This dilution is due, in large part, to the fact that our current
investors paid substantially less than the public offering price when they
purchased their shares of common stock. You will experience additional dilution
upon the exercise of outstanding stock options and the warrant to purchase
common stock.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

Some of the statements under "Prospectus Summary," "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business," and elsewhere in this prospectus constitute forward-
looking statements. These statements relate to future events or our future
financial performance, and are identified by terminology such as "may," "will,"
"could," "should," "expects," "plans," "intends," "seeks," "anticipates,"
"believes," "estimates," "potential," or "continue" or the negative of such
terms or other comparable terminology. These statements are only predictions.
You should not place undue reliance on these forward-looking statements. Actual
events or results may differ materially. In evaluating these statements, you
should specifically consider various factors, including the risks outlined
under "Risk Factors." These factors may cause our actual results to differ
materially from any forward-looking statement.

Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance, or achievements. Moreover, neither we nor any other
person assumes responsibility for the accuracy and completeness of these
statements. We are under no duty to update any of the forward-looking
statements after the date of this prospectus to conform these statements to
actual results.

This prospectus contains estimates of the size of the electric power and
natural gas markets, and market growth related to e-commerce. These estimates
have been included in studies published by market research and other firms,
including the American Gas Association, Edison Electric Institute and Gartner
Group. These estimates have been produced by industry analysts based on trends
to date, their knowledge of technologies and markets, and customer research,
but these are forecasts only and are subject to inherent uncertainty.

18
<PAGE>

USE OF PROCEEDS

We estimate that our net proceeds from the sale of shares of common stock
that we are offering hereby will be approximately $ million, at an assumed
initial public offering price of $ per share (the midpoint of the range set
forth on the cover page of this prospectus), after deducting estimated
underwriting discounts and commissions and estimated offering expenses. If the
underwriters' over-allotment option is exercised in full, we estimate that our
net proceeds will be approximately $ million.

The principal purposes of this offering are to obtain additional working
capital, create a public market for our common stock, increase our visibility
in the marketplace, facilitate future access to public capital markets and
provide liquidity to existing stockholders.

We intend to use our net proceeds from this offering for working capital and
other general corporate purposes. We may also use a portion of our net proceeds
to acquire or invest in complementary businesses or products or to obtain the
right to use complementary technologies. We have no specific understandings,
commitments or agreements with respect to any acquisition or investment.
Pending these proposed uses, we intend to invest our net proceeds from this
offering in short-term, interest-bearing, investment-grade securities,
certificates of deposit or direct or guaranteed obligations of the United
States.

DIVIDEND POLICY

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

19
<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of Excelergy as of
December 31, 1999:

. on an actual basis;

. on a pro forma basis giving effect to the issuance of our Series C
convertible preferred stock in February 2000, as if it occurred on
December 31, 1999; and

. on a pro forma as adjusted basis to reflect the conversion of all
outstanding shares of convertible preferred stock into shares of common
stock upon the closing of this offering and the sale by us of shares
of common stock offered hereby at an assumed initial public offering
price of $ per share (the midpoint of the range set forth on the cover
page of this prospectus), after deducting estimated underwriting
discounts and commissions and estimated offering expenses payable by us.

This information should be read in conjunction with our financial statements
and notes thereto, appearing elsewhere in this prospectus. This information
excludes:

. shares of common stock reserved for issuance under our 1998 stock
option plan, of which shares were subject to outstanding options with
a weighted average exercise price of $ per share;

. shares of common stock reserved for issuance under our 2000 employee
stock purchase plan; and

. shares of common stock issuable upon exercise of an outstanding
warrant with an exercise price of $ per share.

<TABLE>
<CAPTION>
December 31, 1999
-------------------------------
Pro Pro Forma
Actual Forma As Adjusted
-------- -------- -----------
(in thousands, except share
data)
<S> <C> <C> <C>
Long-term debt, net of current portion......... $ 1,058 $ 1,058 $
-------- --------
Redeemable convertible preferred stock:
Series A redeemable convertible preferred
stock, $.01 par value, 1,302,000 shares
authorized; 1,301,852 shares, issued and
outstanding actual and pro forma at December
31, 1999 and ( ) issued and outstanding for
pro forma as adjusted........................ 10,767 10,767
Series B redeemable convertible preferred
stock, $.01 par value, 3,729,336 authorized,
issued and outstanding for actual and pro
forma at December 31, 1999; ( ) issued and
outstanding for pro forma as adjusted........ 17,780 17,780
Series C redeemable convertible preferred
stock, $.01 par value, 2,750,634 shares
authorized, issued and outstanding actual
and pro forma at December 31, 1999; ( )
issued and outstanding for pro forma as
adjusted..................................... -- 23,050
-------- -------- ----
Total redeemable convertible preferred
stock...................................... 28,547 51,597
-------- -------- ----
Stockholders' equity (deficit):
Common Stock, $0.01 par value: 30,000,000
shares authorized, 7,121,928 shares issued
and 6,881,928 shares outstanding actual and
pro forma December 31, 1999 and [ ] shares
issued and outstanding for pro forma as
adjusted..................................... 71 71
Additional paid-in capital.................... 3,000 3,000
Stockholders' notes receivable................ (1,273) (1,273)
Deferred compensation......................... (3,027) (3,027)
Accumulated deficit........................... (12,993) (12,993)
Treasury stock (240,000 shares of common
stock in 1999 at cost)....................... (600) (600)
-------- -------- ----
Total stockholders' equity (deficit)........ (14,822) (14,822)
-------- -------- ----
Total capitalization....................... 14,783 37,833
======== ======== ====
</TABLE>

20
<PAGE>

DILUTION

If you invest in our common stock, your interest will be diluted to the
extent of the difference between the public offering price per share of our
common stock and the pro forma as adjusted net tangible book value per share of
our common stock after this offering. We calculate net tangible book value per
share by dividing the net tangible book value (total assets less intangible
assets and total liabilities) by the number of outstanding shares of common
stock.

Our pro forma net tangible book value at December 31, 1999 was approximately
$ million, or $ per share, after giving effect to the issuance of our
Series C redeemable convertible preferred stock in February 2000 and the
conversion of all outstanding shares of our preferred stock into common stock
upon the closing of this offering.

After giving effect to the sale of the shares of common stock by us at
an assumed initial public offering price of $ per share (the midpoint of the
range set forth on the cover of this prospectus), less the estimated
underwriting discounts and commissions and estimated offering expenses payable
by us, our pro forma as adjusted net tangible book value at December 31, 1999
would be $ million, or $ per share. This represents an immediate increase
in the pro forma as adjusted net tangible book value of $ per share to
existing stockholders and an immediate dilution of $ per share to new
investors, or approximately % of the assumed initial public offering price
of $ per share.

The following table illustrates this per share dilution:

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

If the underwriters exercise their option to purchase additional shares in
this offering, the pro forma net tangible book value per share after the
offering would be $ per share, the immediate increase in pro forma net
tangible book value per share to existing stockholders would be $ per share
and the dilution to persons who purchase shares in the offering would be $
per share.

The following table summarizes, on a pro forma basis as of December 31,
1999, the differences between the existing stockholders and new investors with
respect to the number of shares of common stock purchased from us, the total
consideration paid to us and the average price per share paid:

<TABLE>
<CAPTION>
Shares Total
Purchased Consideration
-------------- -------------- Average Price
Number Percent Amount Percent Per Share
------ ------- ------ ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders............... % $ % $
New investors.......................
--- ----- --- -----
Totals............................ 100.0% $ 100.0%
=== ===== === =====
</TABLE>

The information in the table is based upon an assumed initial public
offering price of $ per share (the midpoint of the range set forth on the
cover page of this prospectus), before deducting estimated underwriting
discounts and commissions and estimated offering expenses payable by us.

21
<PAGE>

The information concerning existing stockholders is based on the number of
shares of common stock outstanding on December 31, 1999 and gives effect to the
issuance of our Series C convertible preferred stock in February 2000 and the
conversion of all outstanding shares of preferred stock into common stock upon
completion of this offering. The information presented with respect to existing
stockholders excludes as of December 31, 1999:

. shares of common stock reserved for issuance under our 1998 stock
plan, of which shares were subject to outstanding options with a
weighted average exercise price of $ per share;

. shares of common stock reserved for issuance under our 2000 employee
stock purchase plan; and

. shares of common stock issuable upon exercise of an outstanding
warrant with an exercise price of $. per share.

The issuance of common stock in connection with the exercise of these
options and the warrant will result in further dilution to new investors. See
note 8 of our financial statements for more information regarding our equity
structure.

22
<PAGE>

SELECTED FINANCIAL DATA
(in thousands, except per share data)

The following selected financial data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our financial statements and related notes included elsewhere
in this prospectus. The statement of operations data for the period from
inception (February 8, 1998) to December 31, 1998 and for the year ended
December 31, 1999 and the balance sheet data as of December 31, 1998 and 1999
are derived from our financial statements audited by KPMG LLP, independent
certified public accountants.

<TABLE>
<CAPTION>
For the period
from inception
(February 8, 1998) For the year ended
to December 31, December 31,
1998 1999
------------------ ------------------
<S> <C> <C>
Revenue:
License............................... $ -- $ 1,113
Service............................... 981 3,044
------ --------
Total revenue....................... 981 4,157
Cost of revenue......................... 543 1,380
------ --------
Gross margin........................ 438 2,777
------ --------
Operating expenses:
Sales and marketing................... -- 4,199
Research and development.............. 653 7,252
General and administrative............ 342 2,862
Amortization of intangible assets..... 63 533
Stock-based compensation expense...... 235 410
------ --------
Total operating expenses............ 1,293 15,256
------ --------
Loss from operations.................... (855) (12,479)
Interest expense........................ (7) (27)
Interest income......................... -- 375
------ --------
Net loss............................ (862) (12,131)
Accretion to preferred stock redemption
value.................................. -- (3,975)
------ --------
Net loss attributable to common
stockholders........................... $ (862) $(16,107)
====== ========
Basic and diluted net loss per share.... $ (.20) $ (2.76)
====== ========
Weighted average shares of common stock
outstanding used in computing basic and
diluted net loss per share............. 4,237 5,830
====== ========
Pro forma as adjusted basic and diluted
net loss per share as adjusted
(unaudited)............................ $ (1.07)
========
Weighted average shares of common stock
outstanding used in computing pro forma
as adjusted basic and diluted net loss
per share as adjusted (unaudited)...... 11,342
========
</TABLE>

23
<PAGE>

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

The following discussion and analysis of the financial condition and results
of operations of Excelergy should be read in conjunction with "Selected
Financial Data" and Excelergy's financial statements and notes thereto
appearing elsewhere in this prospectus. This discussion and analysis contains
forward-looking statements that involve risks and uncertainties. You should not
place undue reliance on these forward-looking statements. Our actual results
may differ materially from those anticipated in these forward-looking
statements as a result of certain important factors, including, but not limited
to, those set forth under "Risk Factors" and elsewhere in this prospectus.

Overview

Excelergy offers leading business-to-business transaction management,
customer relationship management and e-commerce solutions for the deregulating
retail energy industry. We were originally organized in February 1998 under the
name Customer Care Solutions, LLC. In July 1998, we merged into a newly formed
Massachusetts corporation, which changed its name to Customer Care Solutions,
Inc. In December 1998, we acquired the assets of Hillside Investment Associates
for shares of our common stock. Hillside Investment Associates provided
technical consulting services for companies in the utilities industry.

We derive revenue from licensing our software products and providing
consulting and implementation services. Through December 31, 1999, we derived
substantially all of our revenue from licenses of our Excelergy ABP customer
relationship management and billing software, and from associated
implementation and maintenance fees. Until recently, we have licensed this
software on a perpetual license basis for a one-time fee and have recognized
all of the revenue over the implementation period, generally six months. Our
first license of this software occurred in 1998.

In addition, we offer Excelergy eXACT business-to-business transaction
management solutions and e-ChoiceNet solutions. We expect that in the future we
will derive an increasing percentage of our total revenue from licenses of
these products.

We have begun to license all of our products for fees based, at least in
part, on the number of meters serviced or transactions processed by our
customers using our software. Under this transaction-based model, our revenue
will be derived from charging a fee for each transaction processed by an
Excelergy product. Examples of these transactions include the provision of a
monthly bill, using ABP 3000, an exchange of data between business partners
using our eXACT transaction management solutions, and an enrollment of an end
user by an energy marketer using e-ChoiceNet. Several of our customers have
licensed our software on this basis. We expect an increasing proportion of our
license revenue will be derived from transaction-based fees. As a result of our
transitioning from one-time license fees to transaction-based license fees, we
expect our license revenue to fluctuate over the next several quarters.

For contracts involving significant implementation or configuration
essential to the functionality of our product, license and service revenue is
recognized using the percentage-of-completion method using labor hours incurred
as the measure of progress toward completion. We classify revenue from these
arrangements as license and service revenue, respectively, based upon the
estimated fair value of each element. We expect that for the foreseeable future
a significant portion of our license and service revenue will be recognized
using this percentage-of-completion methodology.

In the future, license revenue for contracts that do not involve significant
implementation or modification essential to the functionality of our product,
will be recognized when there is persuasive evidence of an arrangement for a
fixed and determinable fee that is probable of collection and when

24
<PAGE>

delivery has occurred. For arrangements with multiple elements, we recognize
revenue as prescribed by Statement of Position No. 98-9, Modification of SOP
No. 97-2 with Respect to Certain Transactions.

Customers who license our products also generally purchase maintenance
contracts under which we provide software upgrades and technical support over a
stated term, which is typically twelve months. Such contracts are generally
renewed annually. Maintenance revenue is recognized ratably over the term of
the maintenance contract.

We bill our consulting and implementation services on a time-and-materials
basis. Customers may purchase implementation services from us or from third
party systems integrators, or both. Time for implementation generally ranges up
to six months depending upon the product licensed, size and complexity of the
customer's information technology systems, and resources allocated by the
customer to the implementation project. Deferred revenue includes amounts
billed to customers for which revenue has not yet been recognized. Such
deferrals generally result from implementations that are not yet completed, and
may include deferred license and service revenue.

Since our inception, we have incurred significant losses. As of December 31,
1999, we had an accumulated deficit of approximately $13.0 million. We have not
achieved profitability on a quarterly or an annual basis, and anticipate that
we will continue to incur net losses. We expect to increase our expenditures
relating to research and development, professional services and sales and
marketing, areas in which we intend to hire a significant number of new
employees. As a result, we believe that we will continue to incur operating
losses and negative cash flows from operations for the foreseeable future and
that the rate at which these losses will be incurred are expected to increase
from current levels. Further, this expansion will place significant demands on
our systems, procedures and controls. We expect future expansion to continue to
challenge our ability to hire, train, manage and retain our employees.

Results of Operations

The following table sets forth our results of operations expressed as a
percentage of total revenues for the periods presented:

<TABLE>
<CAPTION>
Period from
Inception
(February 8, 1998) Year Ended
to December 31, December 31,
1998 1999
------------------ ------------
<S> <C> <C>
Revenue:
License....................................... -- % 26.8%
Service....................................... 100.0 73.2
----- ------
Total revenue............................... 100.0 100.0
Cost of revenue................................. 55.4 33.2
----- ------
Gross margin................................ 44.6 66.8
----- ------
Operating expenses:
Sales and marketing........................... -- 101.0
Research and development...................... 66.5 174.5
General and administrative.................... 34.8 68.8
Amortization of intangible assets............. 6.4 12.8
Stock-based compensation expense.............. 24.0 9.9
----- ------
Total operating expenses.................... 131.7 367.0
----- ------
Loss from operations............................ (87.1) (300.2)
Interest (expense) income, net.................. (0.7) 8.4
----- ------
Net loss.................................... (87.8)% (291.8)%
===== ======
</TABLE>

25
<PAGE>

Year ended December 31, 1999 and Period from Inception (February 8, 1998) to
December 31, 1998

Revenue

Total revenue increased to $4.2 million for the year ended December 31, 1999
from $982,000 for the period from inception (February 8, 1998) to December 31,
1998.

License Revenue. Our license revenue increased to $1.1 million for 1999 from
$0 for 1998. We began licensing our software in 1998. Due to the timing, size
and nature of our licenses, we began recognizing license revenue during the
second half of 1999.

Service Revenue. Our service revenue increased to $3.0 million for 1999 from
$982,000 for 1998, an increase of 210%. This increase was primarily
attributable to an increased level of professional services provided to
implement our software for customers and, to a lesser extent, an increase in
maintenance revenue.

Cost of Revenue. Cost of revenue consists of compensation and related
overhead costs for employees and contractors engaged in consulting,
implementation, training, maintenance and support services for our customers.
Total cost of revenue increased to $1.4 million for 1999 from $543,000 for
1998, an increase of 154%. The increase in cost of revenue was due primarily to
an increase in employees and contractors to support our expanding customer
base. As a percentage of total revenue, gross margin increased to 66.8% for
1999 from 44.6% for 1998.

Operating Expenses

Sales and Marketing. Sales and marketing expenses consist primarily of
compensation and related costs for sales and marketing personnel, including
commissions, bonuses and recruiting fees, as well as marketing program costs.
Sales and marketing expenses increased to $4.2 million for 1999 from $0 during
1998. Sales and marketing expenses as a percentage of total revenues were 101%
for 1999. This increase was due to the hiring of sales and marketing personnel,
and the introduction of various marketing programs in 1999.

Research and Development. Research and development expenses consist
primarily of compensation and related costs for employees and contractors.
Research and development expenses increased to $7.3 million for 1999 from
$653,000 for 1998, an increase of 1,010%. Research and development expenses as
a percentage of total revenue were 66.5% and 174.5% for 1998 and 1999,
respectively. This increase was attributable to the higher level of staffing in
1999 as we continued to enhance our existing software and develop new software.
We expect that the amount of research and development expenses will continue to
increase as we make additional investments in our technology and products.

General and Administrative. General and administrative expenses consist
primarily of compensation and related costs for our executive, finance and
administrative personnel, as well as third-party professional service fees.
General and administrative expenses increased to $2.9 million for 1999 from
$342,000 for 1998, an increase of 737%. The increase was primarily due to the
hiring of additional executive and financial personnel as well as increased
professional services fees associated with growth. General and administrative
expenses as a percentage of total revenue were 34.8% and 68.9% for 1998 and
1999, respectively. We expect that the amount of general and administrative
expenses will continue to increase as we expand our operations.

Stock-Based Compensation. We have granted certain stock options to our
officers and employees at prices subsequently determined to be below the per
share fair value of our common

26
<PAGE>

stock for financial reporting purposes at the date of grant. This stock-based
compensation is being amortized over the four-year vesting period of the
granted options. We recognized $235,000 and $410,000 of this expense for 1998
and 1999, respectively.

Amortization of Intangible Assets. This expense represents the amortization
of the intangible assets that resulted from the acquisition of Hillside
Investment Associates effective as of November 1, 1998 and the license of the
e-ChoiceNet.com web site in September 1999. Amortization expense increased to
$533,000 for 1999 from $63,000 for 1998, an increase of 752%. Amortization as a
percentage of total revenue was 6.4% and 12.8% for 1998 and 1999, respectively.
The increase was primarily attributable to including amortization expense on
Hillside Investment Associates for twelve months in 1999 versus two months in
the 1998, and the additional amortization expense related to the license of the
e-ChoiceNet.com web site in 1999.

Interest Income (Expense), Net

Net interest income was $348,000 for 1999 compared to net interest expense
of $7,300 for 1998. The interest income for 1999 resulted primarily from the
interest generated from funds raised in the January 1999 and October 1999
preferred stock financings and was partially offset by interest on our
equipment loans.

Income Taxes

Since inception, we have incurred net losses for federal and state tax
purposes and have not recognized any material tax provision or benefit. As of
December 31, 1999, we had net operating loss carryforwards of approximately
$5.7 million for federal income tax purposes which are available to offset
future federal taxable income, if any, through 2019. Our use of these net loss
carryforwards may be subject to limitations. We have placed a valuation
allowance against our net deferred tax assets due to the uncertainty of the
realization of these assets.

Quarterly Results of Operations

The following table sets forth the statement of operations data for the six
quarters ending December 31, 1999. This information has been derived from our
unaudited financial statements. The unaudited quarterly financial statements
have been prepared on the same basis as the audited financial statements
contained in this prospectus and include all adjustments, consisting only of
normal recurring adjustments, that we considered necessary for a fair
presentation of such information when read in conjunction with our audited
financial statement and related notes. Operating results for any quarter are
not necessarily indicative of results for any future period.

27
<PAGE>

<TABLE>
<CAPTION>
Quarter Ended
-------------------------------------------------------
Sep. 30, Dec. 31, Mar. 31, Jun. 30, Sep. 30, Dec. 31,
1998 1998 1999 1999 1999 1999
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
License................ $ -- $ -- $ -- $ -- $ 160 $ 953
Service................ 240 629 924 539 690 891
----- ----- ------ ------- ------- -------
Total revenue........ 240 629 924 539 850 1,844
Costs of revenue......... 163 354 203 267 433 477
----- ----- ------ ------- ------- -------
Gross margin......... 77 275 721 272 417 1,367
Operating expenses:
Sales and marketing.... -- -- 270 737 1,006 2,186
Research and
development........... 129 501 552 802 2,015 3,883
General and
administrative........ 174 44 254 642 636 1,330
Amortization of
intangible assets..... -- 63 94 94 132 213
Stock-based
compensation expense.. 220 14 19 45 149 197
----- ----- ------ ------- ------- -------
Total operating
expenses............ 523 622 1,189 2,320 3,938 7,809
----- ----- ------ ------- ------- -------
Operating loss........... (446) (347) (468) (2,048) (3,521) (6,442)
Interest income
(expense)............... (4) (3) 42 57 40 209
----- ----- ------ ------- ------- -------
Net loss................. $(450) $(350) $ (426) $(1,991) $(3,481) $(6,233)
===== ===== ====== ======= ======= =======
</TABLE>

Our quarterly revenue and operating results have varied significantly in the
past and will likely vary significantly in the future. We believe that period-
to-period comparisons of our results of operations are not meaningful and
should not be relied upon as indicators of future performance. Our revenue and
operating results may fall below the expectations of securities analysts or
investors in some future quarter or quarters. Our failure to meet these
expectations would likely adversely affect the market price of our common
stock.