SIGNALSOFT CORP
S-1/A, 2000-07-14
PREPACKAGED SOFTWARE
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<PAGE>   1


     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 14, 2000.

                                                      REGISTRATION NO. 333-34670
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

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


                                AMENDMENT NO. 2

                                       TO

                                    FORM S-1
            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
                             ---------------------
                             SIGNALSOFT CORPORATION
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                  <C>                                  <C>
              DELAWARE                               7372                              84-1268226
    (State or other jurisdiction         (Primary Standard Industrial               (I.R.S. Employer
 of incorporation or organization)       Classification Code Number)              Identification No.)
</TABLE>

                             1495 CANYON BOULEVARD
                            BOULDER, COLORADO 80302
                                 (303) 381-3000
  (Address, including zip code, and telephone number, including area code, of
                   registrant's principal executive offices)
                             ---------------------
                                ANDREW M. MURRAY
                        SENIOR VICE PRESIDENT OF FINANCE
                             SIGNALSOFT CORPORATION
                             1495 CANYON BOULEVARD
                            BOULDER, COLORADO 80302
                                 (303) 381-3000
                              FAX: (303) 381-3001
 (Name, address, including zip code, and telephone number, including area code,
                             of agent for service)

                                   Copies to:

<TABLE>
<S>                                                   <C>
              FRANCIS R. WHEELER, ESQ.                              PHILIP J. BOECKMAN, ESQ.
              J. GREGORY HOLLOWAY, ESQ.                              CRAVATH, SWAINE & MOORE
              HOLME ROBERTS & OWEN LLP                                   WORLDWIDE PLAZA
              1700 LINCOLN, SUITE 4100                                  825 EIGHTH AVENUE
               DENVER, COLORADO 80203                               NEW YORK, NEW YORK 10019
                   (303) 861-7000                                        (212) 474-1000
                 FAX (303) 866-0200                                    FAX (212) 474-3700
</TABLE>

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

    If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.  [ ]

    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, other than securities offered only in connection with dividend or interest
reinvestment plans, 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,
please check the following box.  [ ]
                             ---------------------
                        CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
                                                                    PROPOSED MAXIMUM     PROPOSED MAXIMUM
           TITLE OF EACH CLASS OF                AMOUNT TO BE      OFFERING PRICE PER   AGGREGATE OFFERING       AMOUNT OF
        SECURITIES TO BE REGISTERED               REGISTERED            SHARE(1)             PRICE(1)       REGISTRATION FEE(2)
--------------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>                  <C>                  <C>                  <C>
Common stock, $0.001 par value per share....   5,060,000 shares          $17.00            $86,020,000            $22,710
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Includes shares that the Underwriters have the option to purchase to cover
    over-allotments, if any. Estimated solely for the purpose of computing the
    amount of the registration fee pursuant to Rule 457 under the Securities Act
    of 1933, as amended.


(2) Previously paid.

     THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>   2

       THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
       MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH
       THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS
       NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER
       TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
       PERMITTED.


                   SUBJECT TO COMPLETION, DATED JULY 14, 2000


PROSPECTUS
                                4,400,000 SHARES

                               [SIGNALSOFT LOGO]

                             SIGNALSOFT CORPORATION
                                  COMMON STOCK
                              $         PER SHARE
                               ------------------
     We are selling 4,400,000 shares of our common stock. The underwriters named
in this prospectus may purchase up to 660,000 additional shares of common stock
from us to cover over-allotments.

     This is an initial public offering of our common stock. We currently expect
the initial public offering price to be between $15.00 and $17.00 per share. We
have applied to have our common stock included for quotation on the Nasdaq
National Market under the symbol "SGSF."

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

     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 these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

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

<TABLE>
<CAPTION>
                                                               PER SHARE      TOTAL
                                                              -----------   ----------
<S>                                                           <C>           <C>
Public Offering Price                                         $             $
Underwriting Discount                                         $             $
Proceeds to SignalSoft (before expenses)                      $             $
</TABLE>

     The underwriters are offering the shares subject to various conditions. The
underwriters expect to deliver the shares to purchasers on or about
  , 2000.

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

SALOMON SMITH BARNEY
                          DONALDSON, LUFKIN & JENRETTE
                                                                 LEHMAN BROTHERS

              , 2000
<PAGE>   3
DESCRIPTION OF ARTWORK FOR GATEFOLD.


The title of the graphic is Wireless Location Services: Key Enabler of
Future Mobile Commerce



There are four stylized concentric circles in the main body of the graphic. Each
circle has a label, specifically Wireless Network, Location Technologies,
Internet and Mobile Commerce. The Wireless Network circle is in the center, the
Location Technologies circle is next, the Internet circle is third, and the
largest circle is Mobile Commerce. Through the middle of the Wireless Network
circle is a cylinder with the label, Wireless Location Services(R). Below the
four concentric circles is another cylinder with icons and labels of each of
SignalSoft's products, specifically local.info(TM), Location Sensitive Billing,
Wireless 911/112, Tracking, Location Manager, and MAPS. Below the product icons
is the label, SignalSoft's Product Suite.



Around the edge of the Mobile Commerce circle are four pictures of people, each
using a Mobile Commerce service. Each picture has a line leading to a small
circle, which is overlaid on a picture of the New York City skyline. This small
circle represents the location of the service that each person is looking for.
Each picture also has a short description of a person using one of our services.




DESCRIPTION OF ARTWORK FOR INSIDE FRONT COVER

At the top of the page is SignalSoft's logo with the phrase, Wireless Location
Services(R), directly beneath. At the bottom of the page is a picture of
concentric circles formed in water with the overlaid phrase, "Now, it's not just
who you are, but where you are."

DESCRIPTION OF ARTWORK FOR INSIDE BACK COVER


At the top of the page is the title "SignalSoft Partners." In the middle of the
page is a stylized star. At each corner of the star are the categories of our
various industry partners: Equipment, Location Technology, Distributors and
Content.

<PAGE>   4

     YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS.
SIGNALSOFT CORPORATION HAS NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT
INFORMATION. SIGNALSOFT IS NOT MAKING AN OFFER OF THESE SECURITIES IN ANY STATE
WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION
PROVIDED IN THIS PROSPECTUS IS ACCURATE AS OF ANY OTHER DATE THAN THE DATE ON
THE FRONT OF THIS PROSPECTUS.

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

                               TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Prospectus Summary..........................................    1
Risk Factors................................................    5
Forward-Looking Statements..................................   17
Use of Proceeds.............................................   18
Dividend Policy.............................................   18
Capitalization..............................................   19
Dilution....................................................   20
Selected Financial Data.....................................   21
Management's Discussion and Analysis of Financial Condition
  and Results of Operations.................................   23
Business....................................................   33
Management..................................................   50
Principal Stockholders......................................   57
Certain Transactions........................................   59
Description of Capital Stock................................   61
Shares Eligible for Future Sale.............................   64
Material Tax Considerations for Non-United States Holders...   66
Underwriting................................................   68
Legal Matters...............................................   70
Experts.....................................................   70
Available Information.......................................   70
Index to Financial Statements...............................  F-1
</TABLE>


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

     Until           , 2000, all dealers that buy, sell or trade the common
stock, whether or not participating in this offering, may be required to deliver
a prospectus. This is in addition to the dealers' obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.

                                        i
<PAGE>   5

                               PROSPECTUS SUMMARY

     The following summarizes information in other sections of our prospectus,
including our consolidated financial statements and the notes to those
statements. This summary does not contain all of the information you should
consider before investing in our common stock. You should read the entire
prospectus carefully, especially the risks of investing in the shares discussed
under "Risk Factors."

                             SIGNALSOFT CORPORATION

     SignalSoft provides a suite of software products that enable the delivery
of location-based voice and data services, or mobile location services, to
wireless network operators. Our core software, which is designed to facilitate a
range of applications and which we call our operating platform, and our software
applications allow wireless network operators worldwide to unlock the value of a
central element of mobile telephone networks -- the location of their users. The
location of the wireless user will be fundamental to the delivery of many new
services by wireless operators. We believe that mobile location services will be
the key enabler of mobile commerce, or m-Commerce, which is the extension of
Internet-based transaction activity commonly known as electronic commerce, or
e-Commerce, to mobile phones and other mobile devices.

     We use the geographic location data generated by various third parties to
offer information, billing, safety and tracking applications based on the
location of the mobile user. With our products as an integral part of the
wireless network, network operators can transform wireless location data into a
strategic means to offer differentiated services, build customer loyalty and
generate incremental revenue.

     Our operating platform enables wireless operators to use their network to
provide mobile location services. We also offer wireless operators software
applications in four categories of mobile location services: information,
billing, safety and tracking. With our local.info(TM) product, a wireless user
can personalize on-demand Internet content such as traffic updates, weather
reports and restaurant reviews, in each case tailored to the user's current
location. Our Location Sensitive Billing product allows wireless operators to
customize billing plans and to charge differentiated rates based on the
geographic location of the subscriber. Our Wireless 911 application ensures that
the call of a wireless caller in distress is routed to the appropriate emergency
services provider. Our BFound.com(TM) wireless tracking service tracks and
manages trucks, freight and other portable assets using a standard wireless
device and an Internet browser such as Microsoft Internet Explorer or Netscape
Navigator.


     In order to reach wireless carriers worldwide, we market and sell our suite
of products, which we call Wireless Location Services(R), to network operators
through our direct sales force and to distributors, including wireless network
equipment providers and other resellers, which then sublicense our products to
network operators. Currently, most wireless operators that have licensed our
products have done so by sublicensing our products from our distributors. We
have entered into a variety of license-based and co-marketing relationships,
which we call industry partnerships, with leading wireless equipment providers
and other distributors in the wireless industry. We have also entered into
industry partnerships with over 40 Internet content providers in connection with
our local.info(TM) application, as well as with a number of companies that
provide the geographic location data of wireless users.


                                        1
<PAGE>   6


     As of June 30, 2000, the network operators named below have commercially
deployed or licensed our products.



<TABLE>
<S>                       <C>
--------------------------------------------------
                     DEPLOYED
--------------------------------------------------
   NETWORK OPERATOR          PRODUCT(S)
--------------------------------------------------
 Ameritech                Wireless 911
--------------------------------------------------
 AT&T Wireless            Wireless 911
--------------------------------------------------
 diAx (Switzerland)       local.info(TM)
                          Location Manager
--------------------------------------------------
 Houston Cellular         Wireless 911
--------------------------------------------------
 Southwestern Bell        Wireless 911
 Mobile
--------------------------------------------------
 Sprint PCS               Wireless 911
--------------------------------------------------
 US West Wireless         Wireless 911
--------------------------------------------------
--------------------------------------------------
                     LICENSED
--------------------------------------------------
   NETWORK OPERATOR          PRODUCT(S)
--------------------------------------------------
 AAPT (Australia)         local.info(TM)
                          Location Sensitive
                          Billing
                          Wireless 911
                          Location Manager
                          MAPS
--------------------------------------------------
 BellSouth                Wireless 911
--------------------------------------------------
 Triton PCS               Wireless 911
--------------------------------------------------
 US Unwired               Wireless 911
--------------------------------------------------
</TABLE>



     As noted above, network operators that license our products through our
distributors are not our direct customers. As a result, while we believe the
above list encompasses all of the network operators who have commercially
deployed or licensed our products, our distributors may have licensed our
products to other operators without yet giving us notice.



     Among network operators, AT&T Wireless Services accounted for approximately
50% of our revenue in 1997 and 19% in 1998, Ameritech accounted for
approximately 12% of our revenue in 1998, and diAx accounted for approximately
65% of our revenue in the three months ended March 31, 2000. The other network
operators listed above represented less than 1% of our revenue in the aggregate
in each of 1997, 1998 and the three months ended March 31, 2000. Our network
operator customers accounted for approximately 15% of our revenue in the
aggregate in 1999. Maintenance fees from our distributors, sales of our products
to our distributors and professional services to our potential distributor and
network operator customers accounted for the remainder of our revenue in those
periods.


                                  OUR STRATEGY

     Our goal is to be the leading provider of software solutions that
facilitate the delivery of mobile location services. The key elements of our
strategy are to:

     - innovate and enhance our products and services;
     - create market demand for mobile location services and brand awareness for
       our Wireless Location Services(R) products;
     - establish a global presence;
     - strengthen and expand our industry partnerships; and
     - pursue selective acquisitions.

                             CORPORATE INFORMATION

     Our corporate headquarters are located at 1495 Canyon Boulevard, Boulder,
Colorado 80302, and our telephone number is (303) 381-3000.

     Wireless Location Services(R), local.info(TM) and BFound.com(TM) are our
trademarks. This prospectus also contains brand names, trademarks or service
marks of other companies, and these brand names, trademarks or service marks are
the property of those other holders.

                                        2
<PAGE>   7

                                  THE OFFERING

Common stock offered................     4,400,000 shares


Common stock to be outstanding
  after this offering...............     22,820,751 shares



Use of proceeds.....................     We plan to use the net proceeds from
                                         this offering for research and
                                         development, capital expenditures and
                                         other general corporate purposes.


Proposed Nasdaq National Market
symbol..............................     SGSF


     Unless otherwise indicated, all information in this prospectus, including
the outstanding share information above, is based on the number of shares
outstanding as of June 30, 2000, except for the financial information which is
based on the number of shares outstanding as of March 31, 2000, and:


     - gives effect to the conversion of all outstanding shares of preferred
       stock into 10,981,172 shares of common stock upon the completion of this
       offering;


     - includes 9,976 shares of common stock and 548,347 shares of common stock
       issuable upon conversion of shares of our Nova Scotia subsidiary, in both
       cases issued to acquire 100% of the common stock of BFound.com Services,
       Inc. in April and May 2000;



     - excludes 1,530,781 shares of common stock issuable upon exercise of
       outstanding options as of June 30, 2000 at a weighted average exercise
       price of $1.97 per share;



     - excludes 25,336 shares of common stock issuable upon exercise of
       outstanding warrants as of June 30, 2000 at a weighted average exercise
       price of $1.25 per share;



     - excludes 474,628 shares of common stock reserved for future grants under
       our 1995 nonqualified stock option plan as of June 30, 2000;


     - excludes 3,400,000 shares of common stock reserved for future grants
       under our 2000 equity incentive plan; and

     - assumes there is no exercise of the underwriters' over-allotment option.

                                        3
<PAGE>   8

                             SUMMARY FINANCIAL DATA

     You should read this summary data together with the audited consolidated
financial statements, related notes and independent auditors' reports and
"Management's Discussion and Analysis of Results of Operations and Financial
Condition" included elsewhere in this prospectus. The following data for the
years ending December 31, 1997, 1998 and 1999 and as of December 31, 1999 have
been derived from the audited financial statements included elsewhere in this
prospectus. The data for the three months ended March 31, 1999 and 2000 have
been derived from the unaudited financial statements included elsewhere in this
prospectus. Historical results are not necessarily indicative of the results to
be expected in the future. Operating results for the three months ended March
31, 1999 and 2000 are not necessarily indicative of the results that may be
obtained for the full year.

     Pro forma basic and diluted loss per share gives effect to the acquisition
of BFound.com Services, Inc. and the automatic conversion of all outstanding
shares of preferred stock to common stock to occur upon the completion of the
offering as though it had occurred on January 1, 1999 or the issuance of the
preferred stock, if later.

     The pro forma balance sheet data give effect to the acquisition of
BFound.com in April and May 2000 and the conversion of all outstanding shares of
preferred stock upon the completion of this offering.

     The pro forma as adjusted data give effect to the acquisition of
BFound.com, the conversion of all outstanding shares of preferred stock upon
completion of this offering, and our receipt of the estimated net proceeds from
the sale of 4.4 million shares of common stock in this offering at an assumed
initial public offering price of $16.00 per share, after deducting the estimated
underwriting discount and estimated offering expenses payable by us.


<TABLE>
<CAPTION>
                                                                                     THREE MONTHS
                                                      YEAR ENDED DECEMBER 31,       ENDED MARCH 31,
                                                    ---------------------------   -------------------
                                                     1997      1998      1999      1999       2000
                                                    -------   -------   -------   -------   ---------
                                                          (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                 <C>       <C>       <C>       <C>       <C>
STATEMENT OF OPERATIONS DATA:
Total revenue.....................................  $ 1,352   $ 1,080   $ 1,956   $   223    $ 1,625
Gross profit (loss)...............................      963       (47)      179      (176)     1,013
Loss from operations..............................   (1,498)   (4,788)   (7,605)   (2,031)    (3,040)
Net loss..........................................   (1,435)   (4,451)   (7,595)   (1,979)    (2,675)
Net loss attributable to common stockholders......  $(1,601)  $(5,272)  $(8,616)  $(2,217)   $(3,586)
                                                    =======   =======   =======   =======    =======
Basic and diluted loss attributable to common
  stockholders per share..........................  $ (0.25)  $ (0.83)  $ (1.35)  $ (0.35)   $ (0.56)
                                                    =======   =======   =======   =======    =======
Shares used to compute basic and diluted loss
  attributable to common stockholders per share...    6,334     6,385     6,387     6,387      6,439
                                                    =======   =======   =======   =======    =======
Pro forma basic and diluted loss per share........                      $ (0.58)             $ (0.20)
                                                                        =======              =======
Shares used to compute pro forma basic and diluted
  loss per share..................................                       15,723               17,978
                                                                        =======              =======
</TABLE>



<TABLE>
<CAPTION>
                                                                        MARCH 31, 2000
                                                              ----------------------------------
                                                                                      PRO FORMA
                                                               ACTUAL    PRO FORMA   AS ADJUSTED
                                                              --------   ---------   -----------
                                                                        (IN THOUSANDS)
<S>                                                           <C>        <C>         <C>
BALANCE SHEET DATA:
Cash and cash equivalents...................................  $ 24,713   $ 23,461      $87,998
Working capital.............................................    24,986     23,512       88,049
Total assets................................................    28,485     31,583       96,120
Long-term capital lease obligations.........................        15         15           15
Mandatorily redeemable convertible preferred stock..........    45,239         --           --
Total stockholders' equity (deficit)........................   (18,676)    29,539       94,076
</TABLE>


                                        4
<PAGE>   9

                                  RISK FACTORS

     An investment in our common stock involves a high degree of risk. You
should consider carefully the following risks, as well as all of the other
information in this prospectus, before deciding to buy our common stock. If any
of the following risks occur, the market price of our stock could decline and
you could lose all or a part of your investment.

BECAUSE WE HAVE A LIMITED OPERATING HISTORY DATING BACK ONLY TO FEBRUARY 1995,
IT MAY BE DIFFICULT FOR YOU TO EVALUATE OUR BUSINESS AND PROSPECTS.

     We commenced business operations in February 1995 and released our first
product in 1997, and investors have only a very limited operating history on
which to evaluate our business prospects. We may not continue to grow and may
never achieve profitability. We are an early stage company in a new and
developing sector of the wireless telecommunications industry, and it is
uncertain whether we will be able to create, stimulate and maintain demand for
our products and services. We cannot assure you that our current or future
products will achieve or maintain commercial success. We cannot predict if we
will ever achieve profitability, and if we do, we may not be able to sustain or
increase profitability.

WE HAVE A HISTORY OF SIGNIFICANT LOSSES AND NEGATIVE CASH FLOWS AND EXPECT TO
INCUR SIGNIFICANT LOSSES AND HAVE CONTINUED NEGATIVE CASH FLOWS FOR THE NEXT
SEVERAL YEARS.


     We have not been profitable since we began our business. We incurred net
losses attributable to common stockholders of $0.1 million for the year ended
December 31, 1995, $0.7 million for the year ended December 31, 1996, $1.6
million for the year ended December 31, 1997, $5.3 million for the year ended
December 31, 1998, $8.6 million for the year ended December 31, 1999 and $3.6
million for the three months ended March 31, 2000. Our pro forma net losses
attributable to common stockholders, after giving effect to the acquisition of
BFound.com Services, Inc., were $2.2 million for the three months ended March
31, 1999 and $4.4 million for the three months ended March 31, 2000. As of March
31, 2000, we had an accumulated deficit of $19.8 million. We expect to continue
to incur losses, which may be substantial, and generate negative cash flows from
operations for the next several years. We expect that for at least the next 12
months, our losses will continue to increase on a quarterly basis. We also
anticipate that our expenses will continue to increase substantially in the
foreseeable future as we expand our sales and marketing, research and
development and general and administrative operations. These efforts may prove
even more expensive than we currently anticipate. Our revenue must grow
substantially if we are to offset these higher expenses and become profitable.
Since our inception through March 31, 2000, we have generated only $6.8 million
in revenue. We cannot predict if we will ever achieve profitability, and if we
do, we may not be able to sustain or increase profitability. Future net losses
could cause our stock price to decline.


BECAUSE THERE IS NO ESTABLISHED MARKET FOR MOBILE LOCATION PRODUCTS, AND THE
PRODUCTS WE EXPECT TO GENERATE SIGNIFICANT PORTIONS OF OUR REVENUE HAVE ACHIEVED
LITTLE OR NO MARKET ACCEPTANCE, OUR FUTURE SUCCESS IS UNCERTAIN.

     The market for mobile location products and services is new and its
potential is uncertain. In order to be successful, we need wireless network
operators to launch and maintain mobile location services utilizing our Wireless
Location Services(R) products, but we cannot be sure that wireless carriers will
accept our products or that a sufficient number of wireless users will purchase
mobile location services from their wireless carriers. To date, a number of
wireless carriers have implemented our Wireless 911 product, but their roll-outs
have been limited and we have recognized little subscriber revenue. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Overview." We anticipate that our local.info(TM) and Location
Sensitive Billing products and our planned Wireless Tracking product will
account for the majority of our revenue in the future. All of these products are
currently at an early stage, and their full potential is unknown. Currently, we
have one commercial deployment of local.info(TM) and no commercial deployments
for Location Sensitive Billing, and we are in the process of integrating our
BFound.com(TM) tracking service with our operating platform. See
"Business -- SignalSoft's Products and Services -- Software Applications." We

                                        5
<PAGE>   10

cannot be sure that the market will accept local.info(TM), Location Sensitive
Billing or Wireless Tracking or that these products will generate any material
revenue. If significant sales of local.info(TM), Location Sensitive Billing or
Wireless Tracking do not develop, our financial condition and results of
operations may suffer.

WE RELY TO A SUBSTANTIAL DEGREE ON A FEW KEY CUSTOMERS, AND OUR REVENUE MAY
DECLINE IF WE FAIL TO RETAIN THESE CUSTOMERS OR ADD NEW CUSTOMERS.


     We have derived in the past, and believe that we will continue to derive in
the future, a significant portion of our revenue from a limited number of
customers. After a customer licenses a product, we do not receive any more
revenue from that customer, except for any consulting and maintenance fees,
until and unless they purchase a new version of the product, add more
subscribers or, in the case of non-perpetual licenses, renew the license for
another period. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Overview -- Revenue." Our sales volume to specific
customers is likely to vary from year to year and quarter to quarter. Our
largest customer in the three months ended March 31, 2000, accounted for
approximately 65% of our revenue and two other customers each accounted for
approximately 12% of our revenue. Our two largest customers in 1999 accounted
for approximately 46% and 16% of our revenue, and our two largest customers in
1998 accounted for approximately 45% and 19% of our revenue. In 1999, one of our
industry partners purchased a pre-paid license, which accounted for
approximately 85% of our 1999 license fees. A different customer was our largest
customer in each of 1998, 1999 and the first three months of 2000. In addition,
receivables from six of our customers represented approximately 59% of our total
trade accounts receivable at December 31, 1998, 59% at December 31, 1999 and 95%
at March 31, 2000. Because we are likely to be receiving payments from a small
number of customers, a failure by any single customer to pay us on time or at
all could materially adversely affect our revenue. In addition, because there
are relatively few network operators worldwide, any substantial loss of business
from an existing or potential customer to a competitor could result in a
shortfall in revenue that could not readily be offset by other revenue sources.


OUR SALES CYCLE IS LONG AND OUR REVENUE IS UNPREDICTABLE, AND OUR STOCK PRICE
COULD DECLINE IF SALES ARE DELAYED OR CANCELED OR IF REVENUE FALLS SHORT OF
EXPECTATIONS.


     Licensing our software is a long and complex process. In the past, our
sales cycle has generally ranged from three to 18 months. Because our software
represents a substantial investment, wireless carriers may take several months
to evaluate our products, determine the size of the subscriber base to be
covered and obtain the necessary expenditure authorizations and financings. This
process may be extended if our industry partners are marketing our products as
part of a larger project or system. Any delay in sales of our products could
cause our operating results to vary significantly from projected results, which
could cause our stock price to decline. In addition, the up-front payment
structure of many of our licenses also makes our revenue irregular and could
cause our operating results to vary significantly. Also, we may not accurately
predict the sales of our products by our industry partners, since our industry
partners do not always keep us informed about the status of possible sales and
other revenue opportunities to their customers. Sales of our products by our
industry partners also depend on the timing of the roll-out of their own
products and systems. We have no control over the timing of our industry
partners' roll-outs, and we may not be informed of when these roll-outs will
occur, if at all.


     Because of these factors and our limited revenue history, it is especially
difficult to forecast our revenue and operating results. Our inability to
accurately predict the timing and magnitude of our sales could cause a number of
problems, including that:

     - we may have difficulty meeting our customers' delivery requirements in
       the event many large orders are received in a short period of time;

     - we may expend significant management efforts and incur substantial sales
       and marketing expenses in a particular period that do not translate into
       orders during that period or at all; and

     - we may have difficulty meeting our cash flow requirements and obtaining
       credit because of delays in receiving orders or delays in receiving
       payment for our products and services.
                                        6
<PAGE>   11

     The problems resulting from our lengthy and variable sales cycle could
impede our growth, harm our stock price, and restrict our ability to take
advantage of new opportunities.

OUR QUARTERLY OPERATING RESULTS VARY SIGNIFICANTLY, AND OUR STOCK PRICE COULD
FALL IF WE FAIL TO MEET THE EXPECTATIONS OF INVESTORS AND ANALYSTS.

     Our revenue and earnings may fluctuate from quarter to quarter based on
such factors as:

     - the number, size and rate of customer deployments;

     - the terms of licenses and other customer contracts, including the
       up-front payment structure of many of our licenses;

     - the length and complexity of our sales cycle;

     - the timing of costs related to product launches;

     - delays in or lack of market acceptance of our products;

     - the adequacy of provisions for losses;

     - the accuracy of estimates of resources required to complete customer
       deployments;

     - pricing and other competitive pressures; and

     - general economic conditions.

     Our industry also may experience some seasonality in sales. For example,
sales in the United States may be higher in the fourth quarter, and consequently
lower in the first quarter, due to our customers' desire to spend their full
budget by year end. In addition, sales in Europe may be lower in the third
quarter of the year due to summer vacations. A high percentage of our operating
expenses, especially personnel and rent, are relatively fixed in amount. As a
result, unanticipated declines in revenue in a quarter will likely result in
greater losses for that quarter.


WE ARE DEPENDENT ON THIRD-PARTY LOCATION SERVICES COMPANIES TO MANUFACTURE AND
INSTALL FCC-COMPLIANT LOCATION EQUIPMENT, AND WITHOUT SIGNIFICANTLY INCREASED
USAGE OF THIS EQUIPMENT, SUFFICIENT DEMAND FOR OUR PRODUCTS MAY NEVER
MATERIALIZE.



     We rely on third-party providers to manufacture and deploy devices that
determine the geographic location of wireless users for wireless network service
providers. Currently, we estimate that less than 1% of the wireless network in
the United States and in Europe is equipped with location devices that meet the
improved technology standards that the Federal Communications Commission, or
FCC, currently requires and the European Union is now considering. See
"Business -- Mobile Location Services: The FCC's 911 Mandate." The rest of the
wireless network is equipped with cell sector technology, which provides a broad
location estimate, based on the location of the tower and the set of antennas
with which the mobile phone is communicating, by identifying the approximate
middle point of the antenna's range. This technology can identify which cell
sector a wireless user is in, but cannot precisely locate the user within that
cell sector. Network operators and wireless users may never exhibit sufficient
demand for our mobile location services unless more precise location technology
is installed over much more of the wireless network. Technical failures, time
delays or the significant costs associated with developing or installing
improved location technology devices could slow down or stop the deployment of
our mobile location products. If deployment of improved location technology is
delayed or stopped, market acceptance of our products may be adversely affected,
since our products would have less functionality for carriers and users.


     Phase I of the FCC's 911 mandate required operators to be able to locate
911 callers by April 1, 1998, but we estimate that less than 5% of all wireless
network operations in the United States currently comply with Phase I. Phase II
of the FCC's mandate requires operators to be able to locate callers even more
precisely by October 1, 2001. We do not expect that most of the location
technology that network operators may use on the deadline date will be accurate
enough to meet the FCC's Phase II requirement. Because we
                                        7
<PAGE>   12

rely on third-party location technology instead of developing the technology
ourselves, we have little or no influence over its improvement. If the
technology never becomes precise enough to satisfy wireless users' needs or the
FCC's requirements, we may not be able to increase or sustain demand for our
products and services.

IF WIRELESS DEVICES ARE NOT WIDELY ADOPTED FOR INTERNET-BASED SERVICES, OUR
BUSINESS COULD SUFFER.

     Individuals currently use many competing products, such as portable
computers and personal data assistants, to remotely access the Internet and
email. Unlike wireless telephones, these products generally are designed for the
visual presentation and input of data. If mobile users do not accept wireless
telephones as a method of accessing Internet-based services, that lack of
acceptance could have a material adverse effect on our financial condition and
results of operations. There are many technological and market barriers that
must be overcome before the possibilities of mobile commerce, or m-Commerce,
become reality, including:

     - limited display capability and difficulty of data input in wireless
       telephones;

     - substantially slower connection speeds of wireless telephones compared to
       competing products;

     - lack of mobile applications and content customized for use on wireless
       telephones;

     - variety of competing wireless communication technologies, which may
       prevent standardization and confuse wireless users;

     - general unavailability of wireless devices that incorporate m-Commerce
       capable technology; and

     - challenge of developing handsets that reconcile wireless users' desires
       for high speed and power, ease of use, long battery life, small size and
       light weight.

     Mass market acceptance of m-Commerce is unlikely unless and until
manufacturers and content providers successfully address these obstacles.
Because we do not manufacture equipment or create content ourselves, we rely on
third parties to make these advances and can do little to achieve the necessary
improvements on our own. We cannot assure you that these hurdles can be overcome
or, even if they are, that wireless users will embrace m-Commerce.

IF MOBILE EQUIPMENT MANUFACTURERS DO NOT OVERCOME CAPACITY, TECHNOLOGY AND
EQUIPMENT LIMITATIONS, M-COMMERCE MAY NOT GROW AND WE MAY NOT BE ABLE TO SELL
OUR PRODUCTS.

     The wireless technology currently in use by most wireless carriers has
limited bandwidth, which restricts network capacity to deliver
bandwidth-intensive applications like data services to a large number of users.
Because of capacity limitations, wireless users may not be able to connect to
their network when they wish to, and the connection is likely to be slow,
especially when receiving data transmissions. Data services also may be more
expensive than users are willing to accept due to difficulties in transmitting
data over wireless networks. The possibility of someday offering streaming video
features on a wireless handset is also unlikely if network capacity is not
increased. These problems will intensify to the extent that the number of
wireless users increases and m-Commerce becomes more common. To overcome these
obstacles, wireless equipment manufacturers will need to develop new technology,
standards, equipment and devices that are capable of providing higher bandwidth
services at lower cost. We cannot be sure that manufacturers will be able to
develop technology and equipment that reliably delivers large quantities of data
at a reasonable price. If more capacity is not added, a sufficient market for
mobile location services is not likely to develop or be sustained, which would
adversely affect the sales of our products.

CONCERNS ABOUT PERSONAL PRIVACY AND COMMERCIAL SOLICITATION MAY LIMIT THE GROWTH
OF MOBILE LOCATION SERVICES AND REDUCE DEMAND FOR OUR PRODUCTS.

     In order for mobile location products and services to function properly,
wireless carriers must locate their subscribers and store information on each
subscriber's location. Although data regarding the location of the wireless user
resides only on the wireless carrier's systems, users may not feel comfortable
with the idea that the wireless carrier knows and can track their location.
Carriers will need to obtain subscribers'
                                        8
<PAGE>   13

permission to gather and use the subscribers' personal information, or they may
not be able to provide customized mobile location services which those
subscribers might otherwise desire. If subscribers view mobile location services
as an annoyance or a threat to their privacy, that could reduce demand for our
products and cause our sales to decline.

     Internet content providers may also create profiles of wireless users,
which may include personal information about the user and his or her habits and
preferences. Wireless users may object to the existence of a detailed personal
profile or the use of this profile to deliver customized services, and may
decline to provide personal information to their wireless carrier or refuse
permission for content providers to use their information. For example, Internet
content providers have considered matching online users' anonymous Internet
activity with their personal information, such as name, address and credit card
number. Public outcry from individuals and consumer groups has thus far
prevented the adoption of this plan. Also, federal and state laws currently
limit access to and use of consumer information, and these laws may be expanded
or be interpreted to cover the wireless market.


WE DEPEND HEAVILY ON EQUIPMENT PROVIDERS AND DISTRIBUTORS, AND OUR REVENUE MAY
DECLINE IF WE ARE UNABLE TO ESTABLISH OR MAINTAIN RELATIONSHIPS WITH THEM.



     We rely on equipment providers and other distributors of wireless equipment
to market our products as part of their own product and service offerings to
their customers. In 1999, one distributor purchased a pre-paid license, which
accounted for 85% of our license fees. Although we have entered into contracts
or relationships with some of these companies, we cannot be sure that we will be
able to develop or to maintain satisfactory relationships on acceptable
commercial terms with our current industry partners or with any other company.
Generally, our agreements allow our industry partners to terminate the
relationship on relatively short notice. In addition, our industry partners have
limited or no obligation to exert any particular effort in, or spend any money
in, marketing or sublicensing our products and services. We currently compete
against some of our industry partners, and may have to compete against more of
our industry partners in the future if they decide to develop their own mobile
location products. Any industry partner that becomes our competitor will likely
terminate their relationship with us, and our business may suffer if we cannot
find a new industry partner to replace that relationship. We cannot assure you
that we will be able to find a replacement on a timely basis or on acceptable
terms. Even if an industry partner that competes with us chooses not to
terminate our relationship, that industry partner will likely not promote our
products and services as vigorously as it promotes its own competing products
and services. Failure to create or sustain the relationships we need may delay
or stop the growth of our business.


WE MUST CONTINUE TO FORM RELATIONSHIPS WITH CONTENT PROVIDERS AND ENCOURAGE THE
DEVELOPMENT OF ACCURATE, USEFUL CONTENT AND APPLICATIONS FOR WIRELESS DEVICES,
OR OUR LOCAL.INFO(TM) PRODUCT MAY NOT BE ATTRACTIVE TO WIRELESS OPERATORS AND
USERS AND OUR BUSINESS MAY SUFFER.

     In order to encourage subscriber demand for mobile location services and
m-Commerce, we need to form additional relationships with content providers and
promote the development of Internet-based applications and content for the
wireless telephone market. Although we have entered into contracts or
arrangements with some content providers, we cannot be sure that we will be able
to develop or to maintain satisfactory relationships with these parties on
acceptable commercial terms. We also will need to enter into relationships with
a significant number of additional content providers. If content providers do
not create enough desirable applications and content for Internet-based services
over wireless telephones, our business could suffer. If the content we deliver
through our relationships with providers is inaccurate or not useful to users,
or if sufficient user demand for the available content does not develop, that
also could delay or stop the growth of our business.

IF WE ARE UNABLE TO INTEGRATE OUR PRODUCTS WITH THIRD-PARTY TECHNOLOGY, OUR
BUSINESS MAY SUFFER.

     Our products may not operate properly when integrated with the equipment
and systems of our customers, or when used to deliver services to a large number
of wireless subscribers. In particular, our products must be compatible with
mobile telephone switches, which direct calls to various parts of the
                                        9
<PAGE>   14

network. These switches can be manufactured according to many different
standards and may have different variations within each standard. Combining our
products with each type of switch requires a specialized interface and extensive
testing. Because we have not yet tested our products for compatibility with all
types of switches, we may encounter obstacles when we attempt to integrate our
products with a particular switch. If our software is not compatible with a
third-party provider's technology, we may not be able to sell our products and
services to that provider, or they may require us to make changes to our
products. These problems may also delay our sales or increase our expenses. We
may not be able to redesign our products to be compatible with our customers'
systems at all, or within the time period our customers are willing to accept.
We have a limited number of Location Manager, MAPS, Wireless 911 and
BFound.com(TM) installations, one deployment of local.info(TM)and no commercial
installations of our Location Sensitive Billing product. Based on the limited
market acceptance of our products to date, it is difficult to predict how many
or what kinds of compatibility problems we may have.


WE HAVE LIMITED ABILITY TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS AND MAY BE
SUBJECT TO CLAIMS ALLEGING INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF
OTHERS.



     We rely on a combination of trade secrets, non-disclosure and other
contractual arrangements, and patent, copyright and trademark laws to protect
our proprietary rights. Because we operate in a new and developing sector of the
telecommunications industry that requires advanced technology and software, our
future success may be dependent, in part, upon our proprietary methodologies,
tools and other intellectual property rights. Although we have several pending
U.S. and international patent applications, we cannot assure you that patents
will issue, or that any issued patents will provide a meaningful barrier to
competition. We have rights under one issued patent based on a joint submission
with Motorola. Motorola holds actual title to the patent. Motorola may assign
rights under the patent to others without our consent or may choose to use the
patent and compete directly against us. The steps we take may not always be
adequate to deter misappropriation of our proprietary information, and we may
not always be able to detect unauthorized use of and take appropriate steps to
enforce our intellectual property rights. Our intellectual property may not
prevent others from developing or offering similar products and services. We
cannot be sure that a third party will not assert an infringement claim against
SignalSoft in the future, or if asserted, that we will be able to successfully
defend against any such claim.


WE FACE STRONG COMPETITION, AND OUR REVENUE COULD DECLINE IF WE ARE NOT ABLE TO
COMPETE SUCCESSFULLY WITH OTHER MOBILE LOCATION SERVICES PROVIDERS.

     The mobile location services market is evolving rapidly. We may not be
successful in competing against our current and future competitors. There are
competitors for each of our product offerings. In particular, several companies
have developed solutions to comply with the FCC mandate for emergency 911
specifications. See "Business -- Mobile Location Services: The FCC's 911
Mandate." We also compete against our current industry partners to the extent
they also offer mobile location services, and this may result in the termination
of our relationships with these industry partners. We expect competition in our
industry to be even more intense in the future as new competitors, such as
additional wireless equipment providers, enter the market. Many of our current
and potential competitors have longer operating histories, possess greater
industry and name recognition and have significantly greater financial,
technical and marketing resources than we have. Increased competition or our
failure to compete successfully is likely to result in price reductions, fewer
customer orders, reduced gross margins, increased marketing costs, loss of
market share, or any combination of these problems.

IF WE CANNOT ANTICIPATE OR RESPOND EFFECTIVELY TO CHANGES IN THE EVOLVING MOBILE
LOCATION SERVICES MARKET, OUR PRODUCTS MAY NEVER ACHIEVE MARKET ACCEPTANCE.

     The mobile location services industry is a new and emerging industry, and
its evolution will depend on user needs and demand. We cannot predict the rate
of adoption of mobile location services by wireless network operators or
wireless subscribers, or the price they will be willing to pay for these
services. Many wireless users rarely leave their home service area, which may
limit the market for some of our products and

                                       10
<PAGE>   15

services. As a result, it is extremely difficult to predict the pricing of these
services and the future size and growth of this market. Our future success will
depend, in large part, on our ability to charge accurately for our products and
services, control expenses and maintain customer contract quality. We may never
achieve market acceptance of our products and services.

IF WE DO NOT EXPAND INTO NEW CLASSES OF PRODUCTS, OUR BUSINESS MAY NOT GROW OR
MAY DECLINE.

     To increase revenues, we will need to expand our operations over time by
improving our existing products and introducing new products. Many of the most
innovative and potentially appealing features of mobile location
services -- such as e-coupons, targeted advertising and comparison shopping
services -- are not yet available. Expansion may strain our management,
financial and operational resources. Gross margins attributable to new classes
of products may be lower than those for our initial products. The life cycle of
our current products is difficult to predict, and we may not have new products
or services commercially available on a timely basis. Our expansions into new
product categories may not be timely and may not generate enough revenue to
offset the related costs. In addition, any new product that is not favorably
received by consumers could damage our reputation. In this prospectus, we
predict when we expect to introduce some new products. Given the nature of new
product development and commercialization, we may miss those target dates and
could altogether fail to develop and launch those products.

WE ARE VULNERABLE TO THE RAPID EVOLUTION OF TECHNOLOGY, AND OBSOLESCENCE IN THE
TECHNOLOGY WE USE COULD HARM OUR BUSINESS PROSPECTS.

     Our success will depend in part on our ability to develop solutions that
keep pace with continuing changes in location-based services technology,
evolving industry standards and regulations and changing customer objectives and
preferences. In particular, new technologies for switches, platforms and land
line and wireless telephones are constantly emerging, and it takes time for the
market to agree upon new standards from among the competing technologies. We
cannot be sure that we will adequately address these developments on a timely
basis or, even if we do address these developments, that we will be successful
in the marketplace. In addition, others may develop products or technologies
that render our current services non-competitive or obsolete.

OUR GROWTH MAY BE DIFFICULT TO MANAGE AND MAY BE SLOWED IF WE CANNOT OBTAIN THE
MANAGERIAL AND OPERATIONAL RESOURCES WE NEED.


     Our growth has placed and is likely to continue to place significant
demands on our management, administrative and operational resources. Since we
commenced business operations in February 1995 through June 30, 2000,
SignalSoft's full-time employees increased from three to 132. A large part of
that increase, from 63 to 132, has occurred since December 31, 1999. Managing
growth effectively will require us to continue developing and improving our
operational, financial and other internal systems, as well as our business
development capabilities, and to attract, train, retain, motivate and manage
employees. We expect that we will need to hire a significant number of new
employees.


WE RELY UPON KEY MANAGEMENT AND TECHNICAL PERSONNEL, AND OUR REVENUE MAY DECLINE
IF WE CANNOT ATTRACT OR RETAIN QUALIFIED EMPLOYEES.

     Our success for the foreseeable future will depend largely on the continued
services of our senior management team and our ability to attract, train and
retain highly skilled employees, especially customer deployment and other senior
technical personnel. Currently, none of our employees, including the members of
our senior management, is a party to an employment agreement with us. We expect
to need to hire a significant number of additional employees. We encounter
significant competition for employees with the technical skills required to
perform the services we offer. Our ability to attract and retain qualified
personnel in the future will have a critical impact on our ability to:

     - adequately manage and complete our existing customer contracts and to bid
       for or obtain new customer contracts;

                                       11
<PAGE>   16

     - deploy our products and integrate them with wireless networks;

     - conduct research and development;

     - bring together sufficient local resources to expand our international
       operations; and

     - appropriately staff projects with a limited life span and reassign those
       employees to other tasks when the project is finished.

     To the extent we hire a significant number of new employees, our
compensation costs will also increase. Competition for new employees will
increase the compensation we must pay to these new employees, and thus our
per-employee compensation costs will increase as well.

WE MAY NOT BE ABLE TO SUCCESSFULLY INTEGRATE BFOUND.COM OR ANY FUTURE
ACQUISITIONS WE MAY MAKE, AND THE COSTS AND MANAGEMENT EFFORTS OF COMBINING
ACQUIRED COMPANIES AND TECHNOLOGY WITH OUR BUSINESS MAY BE SIGNIFICANT.

     In April and May 2000, we acquired 100% of the common stock of BFound.com,
a British Columbia company that provides a mobile location service that allows
its customers to track the location of their trucks, freight and other portable
assets over the Internet. Because BFound.com invests heavily in research and
development, and because we expect to continue this level of investment, the
acquisition will increase our operating losses during the next several years.
BFound.com has a history of operating losses since its founding in November 1995
and may never become profitable. In 1999, BFound.com incurred a loss of $0.3
million, and in the six months ended April 30, 2000, it incurred a loss of $0.5
million. We cannot be sure that BFound.com's business will grow or remain
stable. We plan to incorporate BFound.com's technology into our products, and
this process may take longer or cost more than we currently estimate, or we may
not be successful at all.

     Although BFound.com is our only acquisition to date, we may acquire other
companies or technology in the future to grow our business or expand the
products and services we offer. Entering into acquisitions such as the
BFound.com acquisition involves many risks which could materially harm our
business, including the:

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

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

     - loss of key employees from either SignalSoft or the acquired business;

     - assumption of significant known and unknown liabilities of the acquired
       company;

     - amortization of goodwill of the acquired company and the incurrence of
       other charges that adversely affect our operating results;

     - incurrence of substantial debt to fund the acquisition;

     - overpaying for the acquired company as a result of competition with other
       potential buyers; and

     - significant transaction costs, including fees paid to advisors to
       negotiate the transaction.

     Future acquisitions by us also may dilute your holdings in SignalSoft if we
issue equity securities in any acquisition transaction. In addition, we may not
be able to complete desirable acquisitions in a timely manner or on terms we
find acceptable.

INTERNATIONAL EXPANSION IS AN IMPORTANT PART OF OUR STRATEGY, AND FOREIGN
OPERATIONS INVOLVE ADDITIONAL BUSINESS, ECONOMIC AND POLITICAL RISKS, WHICH
COULD LIMIT OUR ABILITY TO SUCCESSFULLY CARRY OUT OUR STRATEGY.

     We currently have offices in the United Kingdom and Victoria, British
Columbia. We have begun staffing sales and operations positions in the
Asia-Pacific region. Expansion of our customer base internationally is an
important part of our growth strategy. During the three months ended March 31,
2000, approximately 65% of
                                       12
<PAGE>   17

our revenue resulted from sales in Europe. A number of risks may adversely
affect our plans to expand internationally, including the following risks:

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

     - challenges in recruiting and managing qualified employees who are located
       near our foreign operations or are willing to move there;

     - difficulties in establishing and maintaining relationships with foreign
       industry partners, who are an important part of our marketing strategy;

     - a variety of foreign laws and regulations, including laws and regulations
       specifically relating to the telecommunications industry, which may
       differ from U.S. laws and regulations and from each other;

     - legal uncertainties, delays and expenses associated with tariffs, export
       licenses and other trade barriers;

     - inadequate protection of intellectual property in foreign countries;

     - political and economic instability;

     - adverse tax consequences; and

     - longer payment cycles.

     We have little direct experience in dealing with these issues, as we have
had only one international deployment to date. If any of these risks related to
international expansion occur, that might delay or stop our foreign expansion
plans or reduce our international revenue.

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

     As we expand our operations outside the United States, we will conduct more
of our business in currencies other than the U.S. dollar. Fluctuations in the
value of foreign currencies relative to the U.S. dollar could cause us to incur
currency exchange losses. We currently have one major contract in a foreign
currency and have experienced some fluctuations in the value of payments made to
us under that contract. This risk will increase to the extent our international
revenue increases. We cannot predict the effect of exchange rate fluctuations on
our future operating results. We have no experience in entering into currency
hedging contracts, and if we use hedging to try to manage any future foreign
currency exposure, we may incur hedging-related losses.

WE MAY NEED ADDITIONAL CAPITAL, POSSIBLY WITHIN THE NEXT 12 MONTHS, AND
ADDITIONAL FUNDING COULD DILUTE OUR STOCKHOLDERS, IMPOSE BURDENSOME FINANCIAL
RESTRICTIONS ON OUR BUSINESS OR BE UNAVAILABLE.


     We anticipate that our available cash resources combined with the net
proceeds from this offering will be sufficient to fund our operating losses for
approximately the next 12 months. Unlike many of our competitors and potential
competitors, our only current source of borrowing for working capital and
general corporate purposes is a revolving bank line of credit for up to $0.4
million. This line of credit matures in April 2001. If our plans or assumptions
change or are inaccurate, or we make any acquisitions, we may need to seek
capital sooner than anticipated. We may seek to raise any funds we need through
public or private debt or equity offerings. If we raise funds through the
issuance of equity securities, the percentage ownership of our then-current
stockholders may be reduced and the holders of new equity securities may have
rights, preferences or privileges senior to our common stock. If we obtain
additional funds through a bank credit facility or through issuance of debt
securities or preferred stock, this indebtedness or preferred stock would have
rights senior to the rights of our common stock, and their terms could impose
significant restrictions on our operations. If we need to raise additional
funds, we may not be able to do so on favorable terms, or at all. If we cannot
obtain adequate funds on acceptable terms, we may not be able to carry out our
business strategy.


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<PAGE>   18

OUR SOFTWARE PRODUCTS MAY CONTAIN DEFECTS OR ERRORS THAT COULD DAMAGE OUR
REPUTATION, RESULT IN INCREASED COSTS AND SUBJECT US TO PRODUCT LIABILITY
CLAIMS.


     The software products we develop are complex and must meet the stringent
technical requirements of our customers. We must develop our products quickly to
keep pace with the rapidly changing industry in which we operate. Products that
are as complex as ours may contain undetected errors or defects, especially when
first introduced or when new versions are released. These errors or defects may
include incorrect routing of or failure to route a call, delivery of incorrect
information or no information at all to a subscriber, or failure to charge the
appropriate rate for a call based on the subscriber's location. Our products may
not be free from errors or defects even after they have been tested, which could
result in the rejection of our products by our customers and damage to our
reputation, as well as lost revenue, diverted development resources and
increased support costs.


     We may also be subject to claims for damages related to any errors in our
products. A major product liability claim could materially adversely affect our
business by diverting the time and attention of our employees away from our
business, by damaging our reputation and by requiring us to pay damages.
Defending against a product liability lawsuit is often very expensive and could
limit our ability to invest in sales, marketing and research and development.
Any diversion of funds away from our business and product development efforts
could harm our future prospects.

WE COULD LOSE THE ABILITY TO USE NET OPERATING LOSSES, WHICH MAY ADVERSELY
AFFECT OUR FINANCIAL RESULTS.

     As of March 31, 2000, we had total net operating loss carryforwards, or
NOLs, of approximately $15.4 million for income tax purposes. These NOLs, if not
utilized to offset taxable income in future periods, will expire in various
amounts through 2019. Applicable U.S. federal income tax law imposes limitations
on the ability of corporations to use NOLs if the corporation experiences a more
than 50% change in ownership during any three-year period. We cannot assure you
that we will not take actions, such as the issuance of additional stock, that
would cause an ownership change to occur. In addition, the NOLs are subject to
examination by the Internal Revenue Service, or IRS, and are thus subject to
adjustment or disallowance resulting from any such IRS examination. Accordingly,
you should not assume the unrestricted availability of our currently existing or
future NOLs, if any, in making your investment decisions. If we are unable to
use our NOLs to offset our taxable income, our future tax payments will be
higher and our financial results may suffer.

CHANGES IN GOVERNMENT REGULATION COULD INCREASE OUR EXPENSES OR DECREASE THE
DEMAND FOR OUR PRODUCTS.

     We are not currently subject to direct regulation by the Federal
Communications Commission, or FCC, or any other governmental agency, except for
regulations applicable to businesses in general. However, in the future, we may
become subject to regulation by the FCC or another regulatory agency. For
example, concerns about personal privacy could result in regulations limiting
the use of mobile location services. A European Union, or EU, directive
prohibits the transmission of personally identifiable data to third countries --
including the United States -- that are deemed to provide inadequate privacy
protection for that information. The United States and the EU recently signed a
data privacy agreement, which includes standards that U.S. companies will be
able to use to comply with the EU directive. Wireless network operators are
currently regulated by the FCC and any regulations that affect them could also
increase our costs, limit our access to their networks and subscribers or reduce
our ability to continue selling and supporting our products and services.

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<PAGE>   19


A NUMBER OF INVESTORS MAY CLAIM THAT SOME PRESS RELEASES FORMERLY PROVIDED ON
OUR WEB SITE GIVE THEM RIGHTS TO RESCISSION OR DAMAGES IN CONNECTION WITH THIS
OFFERING. IF THE NUMBER OF VISITORS TO OUR WEB SITE WHO SAW THE PRESS RELEASES
IS SUBSTANTIAL, THE RELEVANT INVESTORS PURCHASE A SUBSTANTIAL NUMBER OF SHARES
OR OUR STOCK PRICE DROPS SIGNIFICANTLY, THE POTENTIAL DAMAGES COULD BE
SIGNIFICANT AND OUR BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL CONDITION
COULD SUFFER.



     From early March 2000, when we entered into discussions with the
underwriters regarding this offering, until May 25, 2000, our web site contained
a section that allowed access to press releases that were prepared by us and
some of our industry partners prior to March 2000. One of these press releases,
which was dated January 31, 2000, discussed the closing of our Series C
preferred stock offering. It is possible that anyone who viewed these press
releases on our web site after we began the registration process and who also
purchased shares directly from the underwriters in this offering could claim
that the press releases constituted a prospectus that did not meet the
requirements of the Securities Act and thus represented an offer from us to that
investor to purchase shares in this offering in violation of Section 5 of the
Securities Act. If the posting of the press releases on our web site did
constitute a violation of the Securities Act, that group of investors could have
the right, for a period of one year from the date of their purchase of common
stock in this offering, to obtain recovery of the consideration paid in
connection with the purchase of their common stock or, if they had already sold
the stock, sue us for damages resulting from their purchase of the stock. If the
number of visitors to our web site who saw the press releases is substantial,
the relevant investors purchase a substantial number of shares or our stock
price drops significantly, the potential damages could be significant and our
business, results of operations and financial condition could suffer.



     The press releases are no longer available on our web site. We advise
anyone who has viewed the press releases on our web site not to rely on the
information contained in these press releases in making a decision whether to
purchase shares of common stock in this offering. All potential purchasers of
our shares in this offering should rely only on the information set forth in
this prospectus and should make an investment decision only after carefully
reviewing and evaluating all of the information in this prospectus, including
the risks described in this section.



OUR MANAGEMENT HAS NOT YET IDENTIFIED SPECIFIC USES FOR UP TO $40 MILLION, OR
62%, OF THE NET PROCEEDS OF THIS OFFERING, WHICH MAY INCREASE THE RISK THAT THE
PROCEEDS WILL NOT BE APPLIED EFFECTIVELY.



     Our management will have broad discretion in determining how to use the
proceeds of the offering. Currently, our management has not identified specific
uses for approximately $25 million to $40 million, or 39% to 62%, of the net
proceeds of this offering, assuming no exercise of the over-allotment option.
Accordingly, we can spend the proceeds from the offering in ways which turn out
to be ineffective or with which our stockholders may not agree.


YOU WILL INCUR IMMEDIATE AND SUBSTANTIAL DILUTION.

     The initial public offering price is substantially higher than the net
tangible book value per share of our common stock immediately after this
offering. You will incur additional dilution if holders of stock options and
warrants, whether currently outstanding or subsequently granted, exercise their
options or warrants. Accordingly, if you purchase common stock in this offering,
you will incur immediate and substantial dilution of approximately $12.08 in the
net tangible book value per share of the common stock you purchase in this
offering. See "Dilution."

THE OWNERSHIP OF OUR COMPANY IS CONCENTRATED AMONG A LIMITED NUMBER OF
STOCKHOLDERS, AND THIS COULD DEPRESS OUR STOCK PRICE OR PREVENT A CHANGE OF
CONTROL THAT COULD OTHERWISE BE BENEFICIAL TO OUR STOCKHOLDERS.

     Immediately after this offering, our five largest stockholders, including
our founders and entities affiliated with one of our directors, will own more
than 50% of our outstanding common shares. These stockholders may, if they act
together, exercise significant influence over all matters requiring stockholder
approval after this offering, including the election of directors and the
determination of significant corporate actions. This

                                       15
<PAGE>   20

concentration of ownership could depress our stock price or delay or prevent a
change in control that could be otherwise beneficial to our stockholders.

OUR CERTIFICATE OF INCORPORATION AND BYLAWS AND DELAWARE LAW CONTAIN PROVISIONS
THAT COULD DISCOURAGE A TAKEOVER.

     Provisions of our restated certificate of incorporation and bylaws and
Delaware law may discourage, delay or prevent a merger or acquisition that a
stockholder may consider favorable. These provisions include the following:

     - authorizing the board to issue preferred stock;

     - prohibiting cumulative voting in the election of directors; and

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


     We have also approved an amendment to our certificate of incorporation to
establish a classified board in which only a third of the total board members
will be elected at each annual stockholders' meeting. The amendment will become
effective on the closing of this offering.


                                       16
<PAGE>   21

                           FORWARD-LOOKING STATEMENTS

     Some of the statements under "Prospectus Summary," "Risk Factors," "Use of
Proceeds," "Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Business," and elsewhere in this prospectus are
forward-looking statements. We generally identify forward-looking statements in
this prospectus using words like "believe," "intend," "expect," "estimate,"
"may," "should," "plan," "project," "contemplate," "anticipate," "predict" or
similar expressions. These statements involve known and unknown risks,
uncertainties, and other factors that may cause our or our industry's actual
results, level of activity, performance, or achievements to be materially
different from any future results, levels of activity, performance, or
achievements expressed or implied by these forward-looking statements. These
factors are described in "Risk Factors," "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and other sections of this
prospectus. Except as required by applicable law, including the securities laws
of the United States, and the rules and regulations of the Securities and
Exchange Commission, we do not plan to publicly update or revise any
forward-looking statements after we distribute this prospectus, whether as a
result of any new information, future events or otherwise.

     We use market data and industry forecasts and projections throughout this
prospectus, which we have obtained from internal surveys, market research,
publicly available information and industry publications. Industry publications
generally state that the information they provide has been obtained from sources
believed to be reliable, but that the accuracy and completeness of such
information is not guaranteed. The forecasts and projections are based on
industry surveys and the preparers' experience in the industry and there is no
assurance that any of the projected amounts will be achieved. Similarly, we
believe that the surveys and market research we or others have performed are
reliable, but we have not independently verified this information.

                                       17
<PAGE>   22

                                USE OF PROCEEDS


     We estimate that we will receive approximately $64.5 million in net
proceeds from this offering, based upon the sale of 4.4 million shares of common
stock at an assumed initial public offering price of $16.00 per share, the
mid-point of the offering range on the cover of this prospectus, and after
deducting the underwriting discount and estimated offering expenses payable by
us. If the underwriters exercise their over-allotment option in full, our net
proceeds will be approximately $74.4 million.



     We intend to spend approximately $20 million to $30 million on research and
development expenditures and approximately $4 million to $8 million on capital
expenditures from the beginning of 2000 through the end of 2001. We intend to
spend the remainder of the net proceeds for general corporate purposes, although
we have not identified amounts to be spent for any specific purpose.



     The actual amount of net proceeds we spend on a particular use will depend
on many factors, including our future revenue growth; additional financing
sources, if any; availability and desirability of acquisition candidates; the
amount of expenditures required for other uses; and the amount of cash generated
or used by our operations. Many of these factors are beyond our control.
Therefore, our management will have broad discretion in the use of the net
proceeds.


     Until we use the net proceeds of this offering as described above, we
intend to invest the net proceeds in short-term investment-grade marketable
securities.


     Although we have a need for only a portion of the proceeds of this offering
in order to fund our operations, we are conducting an initial public offering at
this time primarily in order to position ourselves more strongly in our market,
to create a public market for our common stock and to facilitate our future
access to the public capital markets.


                                DIVIDEND POLICY

     For the foreseeable future we plan to retain our earnings, if any, to
reinvest in our business. We have never declared or paid any dividends. Our
future decisions concerning the payment of dividends on the common stock will
depend upon our results of operations, financial condition and capital
expenditure plans, as well as such other factors as the board of directors, in
its sole discretion, may consider relevant.

                                       18
<PAGE>   23

                                 CAPITALIZATION

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

     - on an actual basis;

     - pro forma for our acquisition of 100% of the common stock of BFound.com
       in April and May 2000 and for the conversion of all of our outstanding
       preferred stock into 10,981,172 shares of common stock upon completion of
       this offering; and

     - pro forma as adjusted to give further effect to the sale in this offering
       of 4.4 million shares of common stock, assuming an initial public
       offering price of $16.00 per share, after deducting the estimated
       underwriting discount and estimated offering expenses payable by us.

     Please read this table in conjunction with the financial statements and
related notes and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included elsewhere in this prospectus.


<TABLE>
<CAPTION>
                                                                         MARCH 31, 2000
                                                              -------------------------------------
                                                                                        PRO FORMA
                                                               ACTUAL     PRO FORMA    AS ADJUSTED
                                                              ---------   ----------   ------------
                                                              (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                           <C>         <C>          <C>
Cash and cash equivalents...................................  $ 24,713     $ 23,461      $ 87,998
                                                              ========     ========      ========
Long-term capital lease obligations.........................  $     15     $     15      $     15
                                                              --------     --------      --------
Mandatorily redeemable convertible preferred stock..........    45,239           --            --
Stockholders' equity (deficit):
  Common stock, par value $.001; 20,600,000 shares
     authorized; 6,845,318 shares issued and outstanding
     actual (18,384,813 shares pro forma and 22,784,813
     shares pro forma as adjusted)..........................         7           18            23
  Additional paid in capital................................     3,906       52,110       116,642
  Deferred stock option compensation........................    (2,641)      (2,641)       (2,641)
  Notes receivable from stockholders........................      (109)        (109)         (109)
  Accumulated deficit.......................................   (19,839)     (19,839)      (19,839)
                                                              --------     --------      --------
     Total stockholders' equity (deficit)...................   (18,676)      29,539        94,076
                                                              --------     --------      --------
     Total capitalization...................................  $ 26,578     $ 29,554      $ 94,091
                                                              ========     ========      ========
</TABLE>


     The number of common shares to be outstanding after this offering is based
on the number of shares outstanding as of March 31, 2000 and does not include:


     - 1,530,781 shares that could be issued upon the exercise of options
       outstanding as of June 30, 2000 at a weighted average exercise price of
       $1.97 per share.



     - 25,336 shares that may be issued upon the exercise of warrants
       outstanding as of June 30, 2000 at a weighted average exercise price of
       $1.25 per share.



     - 474,628 shares of common stock reserved for future grants under our 1995
       nonqualified stock option plan.


     - 3,400,000 shares of common stock reserved for future grants under our
       2000 equity incentive plan.

                                       19
<PAGE>   24

                                    DILUTION

     Our pro forma net tangible book value as of March 31, 2000, assuming
conversion of all outstanding preferred stock into common stock, was $24.9
million or $1.35 per share. Pro forma net tangible book value per share is the
amount of pro forma total tangible assets minus total liabilities, divided by
our pro forma common shares outstanding, after giving effect on a pro forma
basis to:

     - our acquisition of 100% of the common stock of BFound.com in April and
       May 2000; and

     - the conversion of all outstanding shares of preferred stock into
       10,981,172 shares of common stock upon the completion of this offering.

     After giving effect to our sale of 4.4 million shares of common stock in
this offering, at an estimated initial public offering price of $16.00 per
share, the mid-point of the offering range and after deducting the estimated
underwriting discounts and commissions and offering expenses, our pro forma net
tangible book value as of March 31, 2000, would have been $89.4 million or $3.92
per share. This represents an immediate dilution in net tangible book value of
$12.08 per share to new stockholders purchasing our common stock in this
offering, and an immediate increase in net tangible book value of $2.57 per
share to existing common stockholders and preferred stockholders who
automatically convert to common stockholders concurrently with the sale of
common stock to new stockholders. Dilution per share represents the difference
between the price per share paid by new stockholders for the shares issued in
this offering and the pro forma net tangible book value per share immediately
after the completion of the offering. The following table illustrates this net
tangible book value per share dilution:

<TABLE>
<S>                                                           <C>     <C>
Assumed initial public offering price per share.............          $16.00
                                                                      ------
  Pro forma net tangible book value per share before the
     offering...............................................  $1.35
                                                              -----
  Increase in net tangible book value per share attributable
     to the offering........................................   2.57
                                                              -----
Pro forma net tangible book value per share of common stock             3.92
  after this offering and after giving effect to the
  conversion of all outstanding shares of preferred stock...
                                                                      ------
Dilution per share of common stock to new investors.........          $12.08
                                                                      ======
</TABLE>

     The following table summarizes the difference between the existing
stockholders and new investors with respect to the total number of shares of
common stock purchased and the total cash and non-cash consideration paid. Share
information for existing stockholders assumes the conversion of all outstanding
shares of preferred stock into an equal number of shares of common stock.

<TABLE>
<CAPTION>
                                      PURCHASED SHARES      TOTAL CONSIDERATION
                                    --------------------   ----------------------   AVERAGE PRICE PAID
                                      NUMBER     PERCENT      AMOUNT      PERCENT       PER SHARE
                                    ----------   -------   ------------   -------   ------------------
<S>                                 <C>          <C>       <C>            <C>       <C>
Existing stockholders.............  18,384,813     80.7%   $ 48,348,030     40.7%         $ 2.63
New investors.....................   4,400,000     19.3      70,400,000     59.3           16.00
                                    ----------    -----    ------------    -----
          Total...................  22,784,813    100.0%   $118,748,030    100.0%
                                    ==========    =====    ============    =====
</TABLE>


     These tables assume that none of the stock options outstanding upon the
closing of this offering will be exercised and that there is no exercise of the
underwriters' over-allotment option. As of March 31, 2000, 1,438,881 shares of
common stock were issuable upon exercise of outstanding stock options at a
weighted average exercise price of $1.34 per share and 25,336 shares of common
stock were issuable upon exercise of warrants outstanding at a weighted average
exercise price of $1.25 per share. If these outstanding options and warrants
were exercised, the shares issued would represent approximately 6.0% of the
common stock outstanding. If all of the outstanding stock options are exercised,
you will experience additional dilution.


                                       20
<PAGE>   25

                            SELECTED FINANCIAL DATA

     The following selected financial data should be read in conjunction with
the financial statements and the notes to such statements and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this prospectus. The statement of operations data for the
years ended December 31, 1997, 1998 and 1999, and the balance sheet data at
December 31, 1998 and 1999 are derived from our financial statements which have
been audited by KPMG LLP, independent auditors, and are included elsewhere in
this prospectus. The balance sheet data at December 31, 1997 is derived from our
audited financial statements, which are not included in this prospectus.
Statement of operations data for the years ended December 31, 1995 and 1996 and
the balance sheet data at December 31, 1995 and 1996 are derived from our
unaudited financial statements, which are not included in this prospectus. The
statement of operations data for the three months ended March 31, 1999 and 2000
and the March 31, 2000 balance sheet data have been derived from the unaudited
financial statements included elsewhere in this prospectus. Historical results
are not necessarily indicative of the results to be expected in the future.
Operating results for the three months ending March 31, 1999 and 2000 are not
necessarily indicative of the results that may be expected for the full year.

     Pro forma basic and diluted loss per share is computed using the weighted
average number of common shares outstanding, including the pro forma effects of
the acquisition of BFound.com Services, Inc. and the automatic conversion of all
outstanding shares of preferred stock into common stock upon completion of this
offering, as if the conversion occurred on January 1, 1999, or at the date the
preferred stock was actually issued, if later.


<TABLE>
<CAPTION>
                                                                                                  THREE MONTHS
                                                                                                     ENDED
                                                        YEAR ENDED DECEMBER 31,                    MARCH 31,
                                            -----------------------------------------------   --------------------
                                             1995     1996      1997      1998       1999       1999        2000
                                            ------   -------   -------   -------   --------   ---------   --------
                                                            (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                         <C>      <C>       <C>       <C>       <C>        <C>         <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
  License fees............................  $  143   $   591   $   680   $   353   $    883   $     51    $    746
  Maintenance fees........................      --        --        84       586        287        138          68
  Professional services and other.........      --        42       588       141        786         34         811
                                            ------   -------   -------   -------   --------   --------    --------
    Total revenue.........................     143       633     1,352     1,080      1,956        223       1,625
Cost of revenue...........................      41       127       389     1,127      1,777        399         611
                                            ------   -------   -------   -------   --------   --------    --------
    Gross profit (loss)...................     102       506       963       (47)       179       (176)      1,014
Operating expenses:
  Selling, general and administrative.....     132       492     1,196     2,020      3,935        945       2,024
  Research and development................      70       644     1,153     2,486      3,399        807       1,843
  Depreciation and amortization...........      --         3        16       134        192         46          70
  Stock option compensation expense.......      --        46        96       101        258         56         117
                                            ------   -------   -------   -------   --------   --------    --------
    Total operating expenses..............     202     1,185     2,461     4,741      7,784      1,854       4,054
    Loss from operations..................    (100)     (679)   (1,498)   (4,788)    (7,605)    (2,030)     (3,040)
Other income (expense):...................
  Interest income.........................       1        17       100       344        205         60         372
  Interest expense........................      --        (1)      (39)      (77)      (199)       (10)         (7)
  Other, net..............................      (1)       --         2        70          4          1          --
                                            ------   -------   -------   -------   --------   --------    --------
    Total other income, net...............      --        16        63       337         10         51         365
                                            ------   -------   -------   -------   --------   --------    --------
    Net loss..............................    (100)     (663)   (1,435)   (4,451)    (7,595)    (1,979)     (2,675)
Preferred stock dividend requirements and
  accretion of mandatorily redeemable
  convertible preferred stock to
  redemption value........................      --       (69)     (166)     (821)    (1,021)      (238)       (911)
                                            ------   -------   -------   -------   --------   --------    --------
  Net loss attributable to common
    stockholders..........................  $ (100)  $  (732)  $(1,601)  $(5,272)  $ (8,616)  $ (2,217)   $ (3,586)
                                            ======   =======   =======   =======   ========   ========    ========
Basic and diluted loss attributable to
  common stockholders per share...........  $(0.02)  $ (0.12)  $ (0.25)  $ (0.83)  $  (1.35)  $  (0.35)   $  (0.56)
                                            ======   =======   =======   =======   ========   ========    ========
Shares used to compute basic and diluted
  loss attributable to common stockholders
  per share...............................   6,020     6,287     6,334     6,385      6,387      6,387       6,439
                                            ======   =======   =======   =======   ========   ========    ========
Pro forma basic and diluted loss per
  share...................................                                         $  (0.58)              $  (0.20)
                                                                                   ========               ========
Shares used to compute pro forma basic and
  diluted loss per share..................                                           15,723                 17,978
                                                                                   ========               ========
</TABLE>


                                       21
<PAGE>   26


<TABLE>
<CAPTION>
                                                             DECEMBER 31,
                                            -----------------------------------------------   MARCH 31,
                                             1995     1996      1997      1998       1999       2000
                                            ------   -------   -------   -------   --------   ---------
                                                                  (IN THOUSANDS)
<S>                                         <C>      <C>       <C>       <C>       <C>        <C>         <C>
BALANCE SHEET DATA:
Cash and cash equivalents.................  $    4   $ 1,818   $   428   $ 5,120   $ 18,051   $ 24,713
Working capital (deficit).................     (98)    1,504       192     4,967     16,286     24,986
Total assets..............................      20     1,842     1,023     6,436     19,438     28,485
Long-term capital lease obligations.......      --        --        --        73         26         15
Mandatorily redeemable, convertible
  preferred stock.........................      --     2,028     2,197    12,590     32,205     45,239
Total stockholders' equity (deficit)......     (98)     (515)   (1,908)   (7,061)   (15,292)   (18,676)
</TABLE>


                                       22
<PAGE>   27

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

     The following discussion should be read in conjunction with the "Selected
Financial Data" and the other financial data included elsewhere in this
prospectus.

OVERVIEW

     Since 1995, we have been developing and marketing mobile location services
products to the wireless industry. We have focused our efforts on designing a
software platform and building related applications that help carriers generate
new revenue from one of their key assets -- the location of their subscribers.
Our software products enable the delivery of location-based voice and data
services to wireless operators and help operators to capitalize on the growing
trend toward mobile use of the Internet.


     We were incorporated in Colorado in 1994 and reincorporated in Delaware in
1998. We have a limited operating history. From our inception until 1997, our
efforts were primarily devoted to research and development, raising capital,
recruiting personnel and establishing key industry partnerships. We generated
total revenue of approximately $1.4 million in 1997, $1.1 million in 1998, $2.0
million in 1999 and $1.6 million for the three months ended March 31, 2000. We
incurred net losses of approximately $1.4 million in 1997, $4.5 million in 1998,
$7.6 million in 1999 and $2.7 million for the three months ended March 31, 2000.
We expect that net losses will continue to increase on a quarterly basis for at
least the next 12 months. As of March 31, 2000, we had an accumulated deficit of
$19.8 million.


     In 1996, the Federal Communications Commission mandated that all wireless
carriers offer a 911 service with features equivalent in many respects to those
of wireline 911 service. We used this mandate as an opportunity to develop a
mobile location services product called Wireless 911 that met the requirements
of the telecommunications industry. Although we realized that the revenue
potential for Wireless 911 was somewhat limited, we believed that our
development and rollout of Wireless 911 was an opportunity to capture market
share in mobile location services and to develop valuable partnerships in the
wireless industry.


     We introduced Wireless 911 in 1997. Four of the five largest wireless
operators in the United States, based on the number of subscribers at the end of
1999, have licensed our Wireless 911 product. Although actual deployment of the
product has been slow, which we believe is due primarily to contractual and
liability issues among carriers, local safety agencies and local exchange
carriers, Wireless 911 accounted for all of our revenue in 1997, approximately
86% of our revenue in 1998 and approximately 14% of our revenue in 1999.
Following our launch of Wireless 911, we focused on our core strategy of
developing mobile location services products that help wireless carriers
differentiate their service offerings, build subscriber loyalty and generate
additional revenue. We launched two products in 1998 -- local.info(TM) and
Location Sensitive Billing. In addition, we opened our first international
office in the United Kingdom, and began actively marketing our services to
network operators in Europe. In 1999, we continued our strategy of establishing
partnerships throughout the industry, expanding our selling and marketing
efforts in Europe and the United States and adding features to our products. We
also gained our first customer for a product other than Wireless 911, by
licensing local.info(TM) to diAx, a Swiss wireless network joint venture between
SBC Communications Inc. and diAx Holding AG. As of June 30, 2000, eleven network
operators had deployed or licensed our products, including six wireless
operators which have deployed Wireless 911, and one operator which has deployed
local.info(TM) and Location Manager.


     Our very limited operating history makes it difficult to forecast future
operating results. Since our inception, we have continued to invest
substantially in research and development, marketing, domestic and international
sales channels, professional services and our operational and administrative
infrastructure, resulting in losses and negative cash flow since our inception.
These activities have significantly increased our operating expenses,
contributing to net losses in each year since our inception. We expect to incur
substantial losses for the next several years. Although our revenue has grown in
recent quarters, our revenue may not increase at a rate sufficient to achieve
and maintain profitability, if at all. Also, if our customers continue to
purchase our products with perpetual licenses, then our revenue will continue to
vary significantly from quarter to quarter. We anticipate that our operating
expenses will increase substantially for the foreseeable
                                       23
<PAGE>   28

future as we expand our product development, sales and marketing, professional
services and operational and administrative staff.

  REVENUE

     We earn revenue primarily from license fees, maintenance fees and
professional services. Our revenue is recognized in accordance with the American
Institute of Certified Public Accountants SOP 97-2 (Statement of Position No.
97-2), Software Revenue Recognition, as amended.


     Our license fees are based on either subscribers or transactions. For
subscriber-based licenses, network operators can purchase a perpetual license
for a specific number of users, or pay recurring annual, quarterly or monthly
fees per subscriber. Upon delivery of our licensed products, no additional
products are required to be delivered under the terms of our license agreements.
For perpetual licenses, additional license fees are due when the total number of
subscribers using our products increases beyond the specified number for which a
license was purchased. With our local.info(TM) product, we also offer
capacity-based pricing. For capacity-based pricing, customers pre-pay for a
maximum number of subscriber transactions per month. If more capacity is needed,
more licenses must be purchased. Some distributors also offer our local.info(TM)
product on a per-transaction basis, whereby each transaction costs a fixed
amount. We expect that, going forward, license fees will represent the bulk of
our revenue.


     The revenue generated from the purchase of perpetual license fees is
recognized as individual products are delivered and accepted by the customer.
Annual, quarterly and monthly license revenue is ratably recognized over the
applicable period. Capacity-based license revenue is recognized upon software
installation and acceptance or on licensing of additional capacity.
Per-transaction license revenue is recognized as the transactional usage is
reported by the applicable distributor. License fees represented approximately
33% of our total revenue in 1998, 45% in 1999 and 46% in the three months ended
March 31, 2000.

     Maintenance fees arise from customer support, scheduled product upgrades
and other software support services. Maintenance fees vary depending on the
category of customer support provided by us. We charge our highest amounts when
we take the call directly from the wireless carrier, which we call first level
support. We offer discounts when our distributor partners provide first level
support to a wireless carrier. We may realize additional revenue if our
customers request unscheduled product enhancements. Maintenance agreements have
one-year terms and are renewable at the customer's option. Pricing varies,
depending upon whether the contract is sold by us or by our distributor
partners.

     Maintenance fee revenue is recognized ratably over the service period.
Maintenance fee revenue represented approximately 54% of total revenue in 1998,
15% in 1999 and 4% in the three months ended March 31, 2000.

     Professional services revenue results from consulting services primarily
focused in four areas. The first area of service is providing marketing support,
including designing specific business cases and performing market focus
activities. The second area is providing pre-product launch service design,
including the selection of content, the creation of the service offering and an
assessment of how our products would be integrated into the customer's
environment. The next area is the service launch process, including software and
product installation and content and application testing. The last area is
ongoing service in which we offer support as requested by the customer.

     Professional services revenue is recognized as services are provided.

     Other revenue consists primarily of resale of third-party software.
Depending on the customer's need, our MAPS product may include a restricted
license for Oracle(R) software, software for map information and some minor
additional software depending on configuration. Professional services revenue
and other revenue represented approximately 13% of total revenue in 1998, 40% in
1999 and 50% in the three months ended March 31, 2000.

     We market and sell our mobile location products, which we call Wireless
Location Services(R), to network operators both through our direct sales force
and through a variety of license-based and co-marketing

                                       24
<PAGE>   29

relationships that we call industry partnerships. We believe that most of our
future sales will be made through distributors who are our industry partners.


     Some of our distributor relationships with network equipment providers
require that we integrate our products with their own proprietary telephony
platforms, which consist of special hardware and software. We have typically
entered into porting and reseller agreements that require the distributor to
pre-purchase, on a non-refundable basis, a pre-determined number of licenses. In
exchange for these pre-paid licenses, we adapt, or port, our software to the
distributor's hardware/software platform and jointly develop a marketing plan
for the distributor's introduction of our Wireless Location Services(R). Since
the license fees are non-refundable and the modifications required are not
significant, license revenue related to porting and reseller agreements is
recognized on acceptance of the licensed product by our distributor. Following
acceptance, no additional services are required from us. After we receive the
initial up-front license fees, we receive no additional license fee revenue from
the distributor until additional licenses are purchased. We anticipate that
these pre-paid licenses will be a declining percentage of our revenue in the
future.


     Deferred revenue results from the following situations:

     - a customer purchases up-front licenses and pays for those licenses prior
       to deployment;

     - a distributor purchases licenses related to a porting and reselling
       activity, as described above, and pays for all or a portion of those
       licenses prior to delivery and acceptance of the software;

     - maintenance is paid in advance of a service delivery time period; and


     - professional services are invoiced at the customer's request and payment
       has been received, but the services have not yet been performed.


  COST OF REVENUE

     Cost of revenue consists of cost of operations, which includes compensation
and pro-rated overhead costs per employee for operations personnel; cost of
third-party software; and direct costs incurred when providing service.
Operations employees are personnel engaged in providing installation, training,
maintenance, support and consulting services for our Wireless Location
Services(R) software.

  RESEARCH AND DEVELOPMENT

     Research and development expenses include compensation and pro-rated
overhead costs per employee for personnel associated with the research, design,
experimentation, development, testing and quality control of our products.
Research and development activities are expensed as incurred until technological
feasibility of software is attained. Since technological feasibility has
generally coincided with commercialization of our products, no research and
development expenses have been capitalized. We currently expect our research and
development expenditures from the beginning of 2000 through the end of 2001 to
total approximately $20 million to $30 million. The amount of expenses for this
category in the future depends to a large degree upon how quickly our business
develops and how we respond to any future growth.

  SELLING, GENERAL AND ADMINISTRATIVE

     Selling, general and administrative expenses consist of compensation and
pro-rated overhead costs per employee for personnel in sales, marketing, and
administrative functions; sales commissions for sales employees; royalties to
our industry partners; and expenses associated with promotional activities,
travel, telecommunications and training. Our plans for continued expansion are
expected to significantly increase our costs in this category. The amount of
expenses for this category in the future depends to a large degree upon how
quickly our business develops and how we respond to any future growth.

  DEPRECIATION AND AMORTIZATION

     Depreciation and amortization consists of depreciation and amortization
expenses related to goodwill, hardware, desktop software and upgrades, patents
and other intellectual property, and property, plant and equipment.
                                       25
<PAGE>   30


     In March 2000 we contracted to acquire BFound.com Services, Inc., a British
Columbia corporation. On April 5, 2000 we purchased 76% of the common stock of
BFound.com for 9,976 shares of SignalSoft common stock and 413,175 shares of
Class B common stock of our Nova Scotia subsidiary with fair value of
approximately $2.3 million and $1.1 million in cash. On May 16, 2000, we
acquired the remaining 24% of BFound.com's common stock for 135,172 shares of
Class B common stock of our Nova Scotia subsidiary with fair value of
approximately $0.7 million and $0.4 million in cash. We recorded approximately
$4.7 million of goodwill related to the transaction and will amortize it on a
straight-line basis over the next five years, beginning in the second quarter of
this year. This transaction will be accounted for using the purchase method of
accounting. The shares of our Nova Scotia subsidiary are convertible on a
one-to-one basis into shares of SignalSoft common stock at any time within five
years of the acquisition at the option of the holder. On the five-year
anniversary of the acquisition, the shares will convert at our option.


  STOCK OPTION COMPENSATION EXPENSE

     Since 1995, we have used stock option grants to help compensate directors,
officers, employees and some consultants in connection with our equity growth.
When the exercise prices under these option grants are less than the fair value
of the underlying shares on the date of grant, we incur stock option
compensation expense. We amortize the difference between the fair value of the
underlying shares and the exercise price for the shares over the option vesting
period.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999

  REVENUE


     Total revenue increased $1.4 million, from $0.2 million for the three
months ended March 31, 1999 to $1.6 million for the three months ended March 31,
2000. The increase in revenue during the three months ended March 31, 2000
resulted primarily from an increase in license and professional fees associated
with our local.info(TM) product. During the three months ended March 31, 2000,
approximately 65% of our revenue resulted from sales to diAx, a Swiss wireless
operator.


     License fees. License fee revenue increased $0.7 million, from
approximately $50,000 in the three months ended March 31, 1999 to $0.7 million
for the three months ended March 31, 2000. The increase in license fee revenue
during the three months ended March 31, 2000 resulted primarily from the
local.info(TM) product line. This product was introduced in late 1998 with
revenue generation starting in mid-1999. The license fees for the three months
ended March 31, 1999 were derived primarily from our Wireless 911 product.

     Maintenance fees. Maintenance fee revenue decreased approximately $70,000,
from approximately $138,000 during the three months ended March 31, 1999 to
approximately $68,000 during the three months ended March 31, 2000. The decrease
in maintenance fee revenue is attributable primarily to the change by one of our
industry partners from a fixed quarterly maintenance fee based on estimated
customers to a fee based on actual customers in mid-1999.

     Professional services and other. Professional services and other revenue
increased $0.8 million, from approximately $34,000 in the three months ended
March 31, 1999 to $0.8 million in the three months ended March 31, 2000. The
increase resulted from the installation, training, and consultation services
provided in connection with introductory trials, demonstrations and deployment
of our local.info(TM) product.

  COST OF REVENUE


     Cost of revenue increased $0.2 million, or 53%, from $0.4 million in the
three months ended March 31, 1999 to $0.6 million in the three months ended
March 31, 2000. The dollar increase in cost of revenue was due primarily to the
growth in operations personnel from nine at March 31, 1999 to 15 at March 31,
2000, which accounted for approximately $0.1 million of the increase, and
related recruiting costs, which accounted for approximately $0.1 million of the
increase. As a percentage of total revenue, cost of revenue decreased to 38% in
the three months ended March 31, 2000 from 152% in the three months ended March
31, 1999. This decrease resulted from additional revenue in excess of the
incremental costs of revenue.

                                       26
<PAGE>   31

  SELLING, GENERAL AND ADMINISTRATIVE


     Selling, general and administrative costs increased $1.1 million, from $0.9
million in the three months ended March 31, 1999 to $2.0 million in the three
months ended March 31, 2000. The increase was due primarily to a growth in
selling, general and administrative personnel from 19 as of March 31, 1999 to 35
as of March 31, 2000, which accounted for approximately $0.5 million of the
increase, increased travel expenses, which accounted for approximately $0.1
million of the increase, the acceleration of sales and marketing activities,
which accounted for approximately $0.1 million of the increase and increased
recruiting costs, which accounted for approximately $0.1 million of the
increase.


  RESEARCH AND DEVELOPMENT


     Research and development expenses increased $1.0 million, from $0.8 million
for the three months ended March 31, 1999 to $1.8 million for the three months
ended March 31, 2000. The change in research and development costs was due
primarily to increased consulting costs resulting from the use of project
specific contract consultants to accelerate development efforts, which accounted
for approximately $0.4 million of the increase, an increase in research and
development personnel from 26 as of March 31, 1999 to 37 as of March 31, 2000,
which accounted for approximately $0.3 million of the increase and an increase
in recruiting costs, which accounted for approximately $0.1 million of the
increase.


  DEPRECIATION AND AMORTIZATION

     Depreciation and amortization increased approximately $23,000, from
approximately $47,000 in the three months ended March 31, 1999 to approximately
$70,000 in the three months ended March 31, 2000. The increase was due primarily
to an increase in equipment and leasehold improvements from $0.6 million at
March 31, 1999 to $1.2 million at March 31, 2000.

  STOCK OPTION COMPENSATION EXPENSE


     Stock option compensation expense increased approximately $61,000, from
approximately $56,000 in the three months ended March 31, 1999 to approximately
$117,000 in the three months ended March 31, 2000. These costs relate to options
granted in 1997, 1998 and 1999 under our nonqualified stock option plan with
exercise prices at less than fair value of common stock at the date of grant.
During the three months ended March 31, 2000, additional options were granted
with exercise prices at less than fair value resulting in $2.3 million in
deferred compensation which will be recognized ratably over the vesting period
of the options. Unrecognized compensation expense as of March 31, 2000 totaled
approximately $2.6 million.


  INTEREST INCOME

     Interest income increased $0.3 million, from approximately $60,000 in the
three months ended March 31, 1999 to $0.4 million in the three months ended
March 31, 2000. The increase in interest income was attributable to higher cash
and cash equivalents balances resulting from the proceeds provided by the
closing of our private placement offering in January 2000.

  INTEREST EXPENSE

     Interest expense decreased by approximately $3,000, from approximately
$10,000 in the three months ended March 31, 1999 to approximately $7,000 in the
three months ended March 31, 2000.

1999 COMPARED TO 1998

  REVENUE

     Total revenue increased $0.9 million, or 81%, from $1.1 million in 1998 to
$2.0 million during 1999. The increase in revenue during 1999 resulted primarily
from an increase in revenue from license fees and professional services
associated with our local.info(TM) and Location Sensitive Billing products.

                                       27
<PAGE>   32

     License fees. License fee revenue increased $0.5 million, from $0.4 million
in 1998 to $0.9 million in 1999. During both 1998 and 1999, the deployment by
our customers of our Wireless 911 product was slow. In 1998, we expanded our
product base in the mobile location services market with the introduction of
Location Sensitive Billing and local.info(TM). In late 1998 one of our industry
partners, Lucent Technologies, purchased licenses under a porting and reseller
agreement. The revenue from this purchase was deferred in 1998 and recognized in
1999 upon Lucent's acceptance. This contract represented 85% of the license fees
recognized as revenue in 1999.

     Maintenance fees. Maintenance fee revenue decreased $0.3 million, from $0.6
million in 1998 to $0.3 million in 1999. The decrease in maintenance fee revenue
was due primarily to the slowness of deployments by customers of our products
and to the change by one of our industry partners from a fixed quarterly
maintenance fee based on estimated customers to a fee based on actual customers.

     Professional services and other. Professional services revenue and other
revenue increased $0.7 million, from $0.1 million in 1998 to $0.8 million in
1999. The increase resulted from installation, training and consultation
services provided in connection with introductory trials, demonstrations and
deployment of our new Wireless Location Services(R) products in 1999.

  COST OF REVENUE

     Cost of revenue increased $0.7 million, or 58%, from $1.1 million in 1998
to $1.8 million in 1999. The dollar increase in cost of revenue in 1999 was due
primarily to an increase in operations personnel from nine in 1998 to 14 in
1999, including personnel in Europe. As a percentage of total revenue, cost of
revenue decreased to 91% in 1999 from 104% in 1998. This decrease resulted from
additional revenue in excess of the incremental costs of revenue.

  SELLING, GENERAL AND ADMINISTRATIVE

     Selling, general and administrative costs increased $1.9 million, from $2.0
million in 1998 to $3.9 million in 1999. The increase was due primarily to an
increase of personnel from 18 in 1998 to 22 in 1999, facility expansion both in
the United States and in Europe and accelerated sales and marketing activities.

  RESEARCH AND DEVELOPMENT

     Research and development expenses increased $0.9 million, from $2.5 million
in 1998 to $3.4 million in 1999. The increase in research and development costs
was due primarily to an increase in research and development personnel from 22
in 1998 to 27 in 1999.

  DEPRECIATION AND AMORTIZATION

     Depreciation and amortization expenses increased by $0.1 million, from $0.1
million in 1998 to $0.2 million in 1999.

  STOCK OPTION COMPENSATION EXPENSE

     Stock option compensation expense increased $0.2 million, from $0.1 million
in 1998 to $0.3 million in 1999. These expenses relate to options granted in
1997, 1998 and 1999 under our nonqualified stock option plan with exercise
prices at less than fair value of common stock at the date of grant.
Unrecognized compensation costs as of December 31, 1999 totaled $0.5 million.

  INTEREST INCOME

     In 1999 interest income decreased $0.1 million, from $0.3 million in 1998
to $0.2 million in 1999. Interest income realized in 1998 and 1999 resulted
primarily from the investment of the proceeds of our Series B and Series C
preferred stock financings in 1998 and 1999.

                                       28
<PAGE>   33

  INTEREST EXPENSE

     Interest expense increased $0.1 million, from $0.1 million in 1998 to $0.2
million in 1999. The increase resulted primarily from interest incurred under
90-day bridge loans issued to us in September 1999, as well as the fair value of
the cost of stock warrants issued in connection with the bridge loans.

1998 COMPARED TO 1997

  REVENUE


     Total revenue decreased $0.3 million, or 20%, from $1.4 million in 1997 to
$1.1 million in 1998. This decrease was a result of the decision by wireless
carriers to delay the purchase of emergency 911 services and instead contract
for service deployment through service bureaus, which license Wireless 911 from
us on a monthly basis and then provide Wireless 911 services to wireless
carriers. This decision has resulted in lower initial revenue for us, because
the carriers have neither prepaid for their licenses nor purchased licenses
covering all of their markets. Professional services revenue also decreased
relative to the reduced license activity.


     License fees. License fee revenue decreased $0.3 million, from $0.7 million
in 1997 to $0.4 million in 1998. License fees for 1997 were higher because of a
customer purchase in 1997 of a nationwide Wireless 911 license and the decision
in 1998 by carriers to deploy our Wireless 911 product through service bureaus,
rather than through up-front purchases of our Wireless 911 product.

     Maintenance fees. Maintenance fee revenue increased $0.5 million, from $0.1
million in 1997 to $0.6 million in 1998. This increase was primarily the result
of the addition of a new distributor who contracted for maintenance.

     Professional services and other. Professional services and other revenue
decreased $0.5 million, from $0.6 million in 1997 to $0.1 million in 1998. As
with license fees, the decrease resulted from a decrease in 1998 in the
deployment of our Wireless 911 product and the usage of service bureau licensing
instead. The absence of approximately $0.1 million in fees related to a research
and development arrangement completed in 1997 also contributed to the decrease.

  COST OF REVENUE

     Cost of revenue increased $0.7 million, or 190%, from $0.4 million in 1997
to $1.1 million in 1998. The dollar increase in cost of revenue in 1998 was due
primarily to an increase in operational personnel, from five in 1997 to nine in
1998, without a corresponding increase in revenue. As a percentage of total
revenue, cost of revenue increased to 104% in 1998 from 29% in 1997, due
primarily to the decrease in revenue from 1997 to 1998 resulting from timing of
revenue recognition.

  SELLING, GENERAL AND ADMINISTRATIVE

     Selling, general and administrative expenses increased $0.8 million, from
$1.2 million in 1997 to $2.0 million in 1998. The increase was due primarily to
an expansion in sales and marketing efforts, including the growth in
infrastructure and an increase in personnel from seven in 1997 to 18 in 1998.

  RESEARCH AND DEVELOPMENT

     Research and development expenses increased $1.3 million, from $1.2 million
in 1997 to $2.5 million in 1998. This increase was due primarily to the
increased efforts in research and development associated with product launches
and enhancements, and related to work on adapting our products to additional
equipment platforms. Expenses were also related to the increase in product
development and testing personnel, from 13 in 1997 to 22 in 1998.

  DEPRECIATION AND AMORTIZATION

     Depreciation and amortization expenses increased approximately $118,000,
from approximately $16,000 in 1997 to approximately $134,000 in 1998. This
increase was related to the increase in our asset base.

                                       29
<PAGE>   34

  INTEREST INCOME

     In 1998 interest income increased $0.2 million, from $0.1 million in 1997
to $0.3 million in 1998. Interest income realized in 1998 resulted primarily
from the investment of the proceeds of our Series B preferred stock financing.

  INTEREST EXPENSE

     Interest expense increased approximately $38,000, from approximately
$39,000 in 1997 to approximately $77,000 in 1998.

QUARTERLY RESULTS OF OPERATIONS FOR 1999 AND 2000

     The following table presents our operating results for the quarters ended
March 31, 1999, June 30, 1999, September 30, 1999, December 31, 1999 and March
31, 2000. The information for each of these quarters is unaudited and has been
prepared on the same basis as the audited financial statements appearing
elsewhere in this prospectus. In the opinion of management, all necessary
adjustments consisting only of normal recurring adjustments have been included
to present fairly the unaudited quarterly results when read in conjunction with
our audited financial statements and the related notes appearing elsewhere in
the prospectus. These operating results are not necessarily indicative of any
trend in performance or of the results of any future period.

                   CONSOLIDATED STATEMENT OF OPERATIONS DATA


<TABLE>
<CAPTION>
                                                      FOR THE QUARTERS ENDED (UNAUDITED)
                                        ---------------------------------------------------------------
                                        MARCH 31,   JUNE 30,   SEPTEMBER 30,   DECEMBER 31,   MARCH 31,
                                          1999        1999         1999            1999         2000
                                        ---------   --------   -------------   ------------   ---------
                                                                (IN THOUSANDS)
<S>                                     <C>         <C>        <C>             <C>            <C>
Revenue:
  License fees........................   $    51    $     1       $   753        $    78       $   746
  Maintenance fees....................       138         72            38             39            68
  Professional services and other.....        34        107            93            552           811
                                         -------    -------       -------        -------       -------
     Total revenue....................       223        180           884            669         1,625
Cost of revenue.......................       399        407           407            564           611
                                         -------    -------       -------        -------       -------
     Gross profit (loss)..............      (176)      (227)          477            105         1,014
Operating expenses:
  Selling, general and
     administrative...................       945        949           929          1,112         2,024
  Research and development............       807        791           838            963         1,843
  Depreciation and amortization.......        46         47            48             51            70
  Stock option compensation expense...        56         66            67             69           117
                                         -------    -------       -------        -------       -------
     Total operating expenses.........     1,854      1,852         1,882          2,195         4,054
                                         -------    -------       -------        -------       -------
     Loss from operations.............    (2,030)    (2,080)       (1,405)        (2,090)       (3,040)
Other income (expense):
  Interest income.....................        60         40            26             79           372
  Interest expense....................       (10)        (6)          (22)          (161)           (7)
  Other, net..........................         1          1             1              1            --
                                         -------    -------       -------        -------       -------
     Total other income (expense),
       net............................        51         35             5            (81)          365
                                         -------    -------       -------        -------       -------
     Net loss.........................   $(1,979)   $(2,045)      $(1,400)       $(2,171)      $(2,675)
                                         =======    =======       =======        =======       =======
</TABLE>


     Our revenue and operating results may vary significantly from quarter to
quarter due to a number of factors, many of which are outside our control and
many of which may cause our stock price to fluctuate. Among the factors that may
affect our quarterly results include our ability to develop, introduce and sell
products and product enhancements that meet customer requirements in a timely
manner, the timing of recognizing revenue and deferred revenue, the size of the
subscriber base of our customers and the extent of use by their subscribers of
our services.

                                       30
<PAGE>   35

     We plan to significantly increase our operating expenses to fund greater
levels of research and development, expand our sales and marketing operations,
broaden our customer support capabilities and develop new distribution channels.
We also plan to expand our general and administrative capabilities to address
the increased reporting and other administrative demands which will result from
increasing the size of our business. Our operating expenses are largely based on
anticipated growth in revenue. A high percentage of our expenses are, and will
continue to be, fixed. As a result, a delay in generating or recognizing revenue
for the reasons set forth above, or for any other reason, could cause a
significant variation in our operating results from quarter to quarter and
likely will result in substantial operating losses.

     Due to the foregoing factors, we believe that quarter-to-quarter
comparisons of our operating results are not a good indication of our future
performance. You should not rely on our results for any one quarter as
indication of our future performance. It is likely that in some future quarters,
our operating results will be below the expectations of public market analysts
and investors. In this event, the trading price for our shares will probably
decline.

LIQUIDITY AND CAPITAL RESOURCES


     Since our inception, we have financed our operations primarily through the
private offering of mandatorily redeemable convertible preferred stock. The
aggregate proceeds of such offerings through June 30, 2000, were approximately
$42.3 million, net of issuance costs. In addition, we have financed our
operations through an equipment loan, capitalized leases and an aggregate of
$3.0 million of short-term bridge loans. As of March 31, 2000, the principal
amounts outstanding under these obligations totaled $95,000.


     During 1999, cash and cash equivalents increased $12.9 million, from $5.1
million as of December 31, 1998 to $18.1 million as of December 31, 1999. This
increase resulted from cash provided by financing activities of $18.2 million
offset by cash used by operating activities of $5.1 million and cash used by
investing activities of $0.2 million. Cash provided by financing activities
resulted primarily from net proceeds of $16.2 million received from the issuance
of convertible preferred stock in December 1999 and proceeds of $3.0 million
received from the issuance of bridge loans in September 1999, offset by a
reduction in our debt obligations of $1.0 million. Cash used in operating
activities resulted primarily from a continuing investment in our growth,
including expansion of domestic and international leased office space and an
increase in sales and marketing efforts. Cash used by investing activities was
for purchases of general office equipment and upgrades to office computer
equipment.

     During the three months ended March 31, 2000, cash and cash equivalents
increased $6.7 million, from $18.1 million as of December 31, 1999 to $24.7
million as of March 31, 2000. This increase resulted from cash provided by
financing activities of $12.2 million offset by cash used in operating
activities of $4.9 million and cash used in investing activities of $0.6
million. Cash provided by financing activities resulted primarily from net
proceeds of $12.1 million received from the issuance of convertible preferred
stock in January 2000. Cash used in operating activities resulted primarily from
a continuing investment in our growth, including the addition of personnel and
related recruiting costs as well as the acceleration of sales and marketing
activities. Cash used in investing activities was for purchases of general
office equipment and computer equipment.


     As of March 31, 2000, our principal commitments consisted of obligations
outstanding under operating leases, an equipment loan and capitalized lease
obligations. In addition, we have a revolving line of credit agreement providing
for borrowings up to $0.4 million through April 2001. No borrowings were
outstanding under this line of credit as of March 31, 2000. We currently have a
$0.4 million commitment for a capital expenditure of computer equipment. We
currently expect our total capital expenditures for 2000 to be approximately
$2.5 million. We anticipate an increase in capital expenditures and lease
commitments consistent with our future growth and expansion and currently expect
to spend approximately $5 million to $10 million from the beginning of 2000
through the end of 2001.


     We anticipate that the net proceeds of this offering will be $64.5 million,
based on an assumed offering price of $16.00 per share and after deducting the
underwriting discount and estimated offering expenses
                                       31
<PAGE>   36


payable by us. We currently plan to spend approximately $20 million to $30
million on research and development and approximately $5 million to $10 million
on capital expenditures from the beginning of 2000 through the end of 2001. We
expect to use the remainder of the net proceeds for other general corporate
purposes.


     We believe that the net proceeds from this offering combined with our
current cash resources and cash expected to be provided by operations will be
sufficient to meet our anticipated cash needs for at least the next twelve
months. Our only current source of borrowing for working capital and general
corporate purposes is a revolving bank line of credit for up to $0.4 million.
The line of credit matures in April 2001. If our plans or assumptions change or
are inaccurate or we make any acquisitions, we may need to seek capital sooner
than anticipated. We may seek to raise any funds we need through public or
private debt or equity offerings. If we raise funds through the issuance of
equity securities, the percentage ownership of our then-current stockholders may
be reduced and the holders of new equity securities may have rights, preferences
or privileges senior to our common stock. If we obtain additional funds through
a bank credit facility or through issuance of debt securities or preferred
stock, this indebtedness or preferred stock would have rights senior to the
rights of our common stock, and their terms could impose significant
restrictions on our operations. If we are unable to obtain additional financing,
we may be required to reduce the scope of our planned expansion, product
development and marketing efforts. This failure could have an adverse impact on
our business, financial condition and operating results.

     Due to our very limited operating experience, we do not yet know if we
should expect seasonality in our sales. It is possible that our sales in the
United States may be higher in the fourth quarter, and consequently lower in the
first quarter due to our customers' desires to spend their full budget by year
end. In addition, sales in Europe may be lower in the third quarter due to
summer vacations.

     We do not expect that inflation will have a material effect on our results
of operations.

MARKET RISK

     We expect that as a result of our partner sales channel strategy that we
will be paid in United States dollars for the majority of our international
sales. Some of our customers, including our current largest customer, may pay us
in currency other than United States dollars. During the three months ended
March 31, 2000, approximately 65% of our revenue resulted from sales in Europe.
Fluctuations in the value of foreign currencies relative to the United States
dollar could cause us to incur currency exchange losses. To the extent our
international revenue increases and we are paid in currency other than United
States dollars, we will be exposed to greater foreign currency exchange risk. We
have experienced some fluctuation in the value of payments made to us in
currencies other than United States dollars. Although these fluctuations have
not materially affected our financial results, these types of fluctuations
subject us to potential foreign currency gains and losses that may have a
material effect on our financial results in the future. We do not engage in
commodity futures trading activities and do not enter into derivative financial
instrument transactions for trading or other speculative purposes. We have no
experience with any such activities or transactions, and if we enter into them
in the future, we could incur substantial losses.

                                       32
<PAGE>   37

                                    BUSINESS

OVERVIEW

     SignalSoft provides a suite of software products that enable the delivery
of location-based voice and data services to wireless network operators. Our
operating platform and software applications allow wireless network operators
worldwide to unlock the value of a central element of mobile telephone
networks -- the location of their users. The location of the wireless user will
be fundamental to the delivery of many new services by wireless operators. We
believe that mobile location services will be the key enabler of mobile
commerce, or m-Commerce, which is the extension of Internet-based transaction
activity, or e-Commerce, to mobile phones.

     We are an innovator in the emerging mobile location services industry. We
have created core software, which we call our operating platform, for wireless
carriers to offer a broad range of location-based services. To help drive demand
for these services, we have designed applications in four categories of mobile
location services: information, billing, safety and tracking. We continue to
educate the market through trade shows and white papers on the critical role
that we believe mobile location services plays in wireless networks and wireless
services in general, and we help define mobile location services standards
through our active participation in a number of key industry standards
organizations. We believe that we are now poised to benefit from the anticipated
worldwide demand for mobile location services.

     In order to reach wireless carriers worldwide, we market and sell our suite
of products, which we call Wireless Location Services(R), to network operators
both through our direct sales force and through a variety of license-based and
co-marketing relationships that we call industry partnerships.

     Our institutional and corporate investors include American Express
Financial Corporation, America Online, Broadview Partners Group, Comverse
Network Systems, Hikari Tsushin, Intel Capital, Lazard Technology Partners,
MediaTel Capital, New Ground Capital Limited, Olympic Venture Partners, Salomon
Smith Barney, Siemens Mustang Ventures, Tredegar Investments and Wessels,
Arnold, Henderson (Dain Rauscher Wessels).

INDUSTRY OVERVIEW

  GROWTH OF WIRELESS COMMUNICATIONS

     The use of wireless communications services has grown rapidly due to many
factors, including declining prices of wireless handsets and services, expanding
network coverage, the availability of extended service features such as voice
and text messaging and the proliferation of wireless devices with enhanced
capabilities. International Data Corporation, or IDC, predicts that the number
of global wireless subscribers is expected to increase from approximately 303
million subscribers in 1998 to 1.1 billion subscribers in 2003. Ovum predicts
that worldwide wireless revenue will increase from approximately $300 billion in
1999 to $601 billion in 2003. By 2002, Ovum forecasts that global revenue to
network operators from wireless usage will overtake revenue from wireline usage.

  GROWTH OF THE INTERNET AND E-COMMERCE

     The Internet has emerged as a global communications medium enabling
millions of people to share information and conduct business electronically.
Data Monitor estimates that there were approximately 95 million Internet users
worldwide at the end of 1999 and predicts that the number of users will grow to
545 million by the end of 2003. With the emergence of the Internet as a globally
accessible, interactive medium, many individuals and companies that have
traditionally conducted business in person, through the mail or over the
telephone now increasingly conduct business over the Internet through what is
known as e-Commerce. Forrester predicts that by the end of 2003, business and
consumer revenue from e-Commerce will range from $1.8 trillion to $3.2 trillion
worldwide.

                                       33
<PAGE>   38

  M-COMMERCE: CONVERGENCE OF WIRELESS COMMUNICATIONS, THE INTERNET AND
  E-COMMERCE

     m-Commerce is broadly defined as the use of mobile hand-held devices to
communicate, inform, transact and entertain using voice, text and other data
over wireless networks. The convergence of the rapid growth of the Internet, the
expansion and continuing refinement of mobile communications and the improvement
of digital technologies is creating market opportunities for m-Commerce. Due to
increased worldwide penetration of wireless handsets and the introduction of
wireless Internet protocols, we believe that the wireless industry is poised to
monetize the rich content of the Internet through m-Commerce. According to IDC,
approximately one-half of all devices accessing the Internet worldwide in 2002
will be mobile devices.

     We believe that the following five attributes characterize m-Commerce:

     - the localization of services and content tailored to the geographic
       position of the user;

     - the personalization of information based on the user's profile;

     - the accessibility of information beyond the confines of the home or
       office;

     - the timeliness of information and access to transactions; and

     - the combination of wireless communications and Internet access to make
       business and consumer transactions more convenient.

     The Yankee Group estimates that mobile data application and information
service revenue to wireless operators will grow from approximately $2 billion in
1998 to $39 billion in 2003. Ovum predicts that end-user spending on m-Commerce
goods and services will be $3.5 billion in 2000 and could rise to more than $200
billion in 2005.

     m-Commerce is in use today. For example, if a traveler is delayed at an
airport overnight, he could use traditional methods of directory assistance or a
telephone book to locate nearby hotels and then he could call each hotel to
determine availability and eventually book a room. Alternatively, in some
markets today he could utilize the m-Commerce features available through his
mobile phone to canvass, over the Internet, all hotels in his geographic area
and find the hotel with room availability that matches his price range and his
personal preferences, book the room using his mobile number as a credit
reference and then receive a confirmed booking, all with one mobile phone call.

  COMPETITIVE ENVIRONMENT OF WIRELESS NETWORK OPERATORS

     Due to intense competition, we believe that wireless network operators are
searching for ways to increase their revenue and profit margins and reduce
customer turnover. Among the pressures created by the competitive environment
and faced by operators today are:

     - the need to provide differentiated service offerings;

     - the need to retain existing customers;

     - continued downward pricing pressures; and

     - pressure for higher margins.

     For these reasons, we believe that wireless operators are interested in
unlocking the revenue and margin potential that may exist in the emerging
m-Commerce arena through mobile location services.

MOBILE LOCATION SERVICES: KEY ENABLER OF M-COMMERCE

     The location of the wireless user will be fundamental to the delivery of
many new services, but especially those relating to m-Commerce. Location of a
customer is a valuable asset to wireless network operators because it will
enable them to provide targeted and personalized value-added services.
Information

                                       34
<PAGE>   39

about a subscriber's geographic position facilitates the offering of services
such as location-based advertising, shopping, reservations and information
services. For example:

     - a businessman needing to send an important package late in the evening
       could use his mobile phone to search for the closest FedEx(R) drop box;

     - a commercial real estate agent could use her wireless device to help
       locate available office space within a specified geographic area, price
       range and build-out suitability;

     - a building contractor could search for a vendor with the appropriate
       material and best price within a given radius around a job site; and

     - shoppers may someday be able to find out which of their friends in their
       user group are also shopping at the mall.

     The dynamic geographic location of the mobile user presents opportunities
for merchants and content providers to direct highly targeted information to the
user. For example, one such service could allow an English-speaking traveler,
upon arrival at an airport in a foreign country, to be greeted in English with a
list of local restaurants and cultural attractions when she turns on her phone.
We believe other services will be available in the near future. A business could
use mobile location services to identify customers who are likely, based on
their individual profiles and their proximity to the business, to be interested
in its products or services. Movie theaters could offer local users the
opportunity to buy half-price tickets for movies that are unlikely to be at
capacity, or simply advertise the release of the newest films. Mall vendors
could alert mall patrons of sales or special releases. The offering of these
services will likely create new demand by wireless users for extended or related
services from their carriers.

     We believe that m-Commerce, driven by mobile location services, will become
the preferred means to connect Internet-based information and services with
physical store locations near the user. For example, a wireless user searching
for a particular book could locate the nearest available bookstore with the book
in stock, and obtain directions to the store.

     A limited number of mobile location services applications are currently in
use in the United States, in Europe and in parts of the Asia-Pacific region for
information, billing, safety and tracking. We expect that the types and scope of
mobile location products that are available to businesses and consumers will
evolve as the technologies used by third parties to identify the geographic
location of a mobile user, which we call location determination technologies,
and on which these applications are based continue to improve. Capacity
increases, improved wireless devices and other technology advances also will be
critical to the continued development of the mobile location services industry.
As these services gather momentum, third party developers will be encouraged to
create new applications.

MOBILE LOCATION SERVICES: PART OF THE NETWORK INFRASTRUCTURE

     Because the location of the mobile device is a valuable asset for wireless
network operators, the operators have developed standards that place mobile
location services in an integral part of the network infrastructure. We believe
that the core software of mobile location services, which we call the operating
platform and which supports many mobile location services applications, will be
as important to a wireless network as other, existing network elements. Examples
of these existing network elements include the mobile switching center, which
directs calls to and from different parts of the network, the service control
point, which is a central database platform for providing enhanced services such
as authentication, and the home location register, which is a key software
component that contains a broad range of information for subscriber validation
and other critical network functions.

     The mobile location services operating platform interfaces with each of the
network components discussed above, as well as with other network components.
This interface enables the delivery of mobile location services over both voice
and data networks. The critical nature of these processes requires fault-
tolerant and often fail-safe systems that have a 99.999% reliability and the
capability to handle instructions in as little as 200 milliseconds.
                                       35
<PAGE>   40

     From a technical standpoint, the successful delivery of mobile location
services requires the coordination of the following four critical network
components: location determination technologies, a location gateway,
applications and location provisioning, each of which is discussed below.

[Chart shows mobile location services components, including location
determination technologies, location gateway, applications and location
provisioning.]

  LOCATION DETERMINATION TECHNOLOGIES


     There are currently a variety of technologies available in the worldwide
market that compute the latitude and longitude coordinates of a mobile device
with varying degrees of precision. These technologies are referred to as
location determination technologies and provide location data through a variety
of methods. Angle of arrival uses two cellular antennas to compare the angles at
which radio signals reach the cellular towers from the mobile phone, and then
uses mathematical calculations to estimate the location of the mobile phone.
Cellular tower and sector proximity provides a broad location estimate, based on
the location of the tower and the set of antennas with which the mobile phone is
communicating, by selecting the approximate middle point of the antenna's range.
The enhanced observed time difference technique relies on a modified mobile
phone's ability to synchronize radio signals it receives from both the cellular
tower with which it communicates and neighboring cellular towers to estimate the
phone's position. The global positioning system's location estimates are made
possible by a timing and distance measurement, called triangulation, between the
mobile phone and a minimum of three of 24 global positioning satellites in orbit
around the earth. Time difference of arrival and time of arrival both use
triangulation as well, but these methods measure the time it takes a signal to
reach three different cellular towers, rather than three satellites. Finally,
timing advance measures the time it takes a radio signal to reach one tower,
then estimates an arc within which the mobile phone is likely to be present.
Location technologies may be embedded in wireless networks, be contained in the
mobile handsets themselves or use a combination of both methods. We do not
expect any single method to emerge and win universal acceptance in the
foreseeable future. Today, cellular tower and sector proximity is by far the
most widely available and used location determination technology. With this
technology, the identified position is generally within 50 to 5,000 meters of
the caller's actual location, depending on the size of the cell sector. We do
not provide any location determination technologies, but we


                                       36
<PAGE>   41

have successfully tested our applications against each of the current
technologies and have entered into industry partnerships with several of the
providers.

  LOCATION GATEWAY

     There are a number of different location determination technologies, each
with its own complexities. The use of these technologies varies widely among
different wireless carriers and even among and within geographic markets served
by the same carrier. Due to these factors, the mobile communications standards
organizations have defined the concept of a location gateway. A location gateway
assimilates, interprets and stores for retrieval the location information
generated by the disparate location technologies. The gateway then provides an
interface with a multitude of applications from one or more vendors that use the
location information. If the location gateway is to work in numerous countries
across multiple standards, the gateway must be compatible with the wireless
standards, networks and equipment of a wide variety of wireless operators.

  APPLICATIONS

     Mobile location applications take basic location data, primarily latitude
and longitude, from the location gateway and use the location either to provide
basic network functions like call routing or billing, or to access information
from outside the wireless network. Like the location gateway, the applications
should be compatible with the wireless standards, networks and equipment of a
wide variety of network operators. Some applications are integrated with many
parts of the network, interfacing to the switches, billing systems, customer
care and other network elements such as those used for authentication, call
set-up and roaming. Other applications, such as an asset tracking application,
use location provided directly from the location gateway over the Internet.
Overall, the applications should be independent of one another to allow network
operators the option to use one or more, but not necessarily all, of the
applications.

  LOCATION PROVISIONING

     All wireless network elements require data to operate. The location-based
elements need map data such as streets, postal code boundaries and signal
strength information, as well as subscriber data such as office addresses, work
group numbers and content preferences. The telecommunications industry uses the
term provisioning to describe the process of importing this data from a variety
of sources and configuring the data to run on the location-based elements of the
network. An important characteristic of provisioning is the ability to load new
data, edit existing data or delete data without affecting the on-going
processing of calls. This feature is often called on-line transaction
processing.

MOBILE LOCATION SERVICES: THE FCC'S 911 MANDATE

     An early application of mobile location services has been wireless 911
services. In 1996, the Federal Communications Commission, or FCC, mandated that
all wireless service providers must report the callback number and originating
cell sector site of a 911 call by April 1, 1998, referred to as Phase I
compliance. Providers are required to pinpoint the location of all 911 callers
within 125 meters in 67% of all cases by October 1, 2001, referred to as Phase
II compliance. The European Union is currently investigating similar directives
for a European emergency 112 system. Although less than five percent of all
wireless network operations in the United States are currently in compliance
with the FCC Phase I mandate, this government-mandated mobile location services
application has served as an impetus and testing ground for location
determination technologies and commercial applications of mobile location
services by wireless network operators.

MARKET OPPORTUNITY

     Wireless network operators are searching for ways to differentiate their
product offerings, increase customer loyalty and consequently increase their
revenues and profit margins. Mobile location services can help to unlock the
revenue and margin potential that may exist in the emerging m-Commerce arena.
Carriers will require that the four network components -- location determination
technology, location gateway, applications and location
provisioning -- interface to their existing equipment, even if their equipment
is from
                                       37
<PAGE>   42

multiple vendors. We believe that a carrier or network equipment provider would
have difficulty designing mobile location products that work across such
standards and equipment systems, since carriers and providers are unlikely to
have experience with all of the standards or access to the systems of rival
companies. Carriers will further demand that these components meet
telecommunication requirements for reliability and scalability, i.e., the
ability to handle millions of subscribers. Finally, global carriers with
investments around the world will require that mobile location services
providers be able to serve the different wireless network standards for each
portion of the carriers' networks. We believe that a significant market
opportunity exists for a company with a mobile location services operating
platform and multiple software applications that address the needs of wireless
network operators.

SIGNALSOFT'S SOLUTION

     We provide an operating platform and a suite of related software
applications that allow wireless network operators to seamlessly package
location-based, value-added voice and data services to their users. The key
features of our solution are as follows:

  COMPATIBILITY


     We have designed our software to integrate with the wireless network and to
be compatible with the existing systems of wireless operators, wireless location
determination technology companies and Internet content providers. We already
have commercial deployments of our operating platform and software applications
in markets that use standards including Advanced Mobile Phone Service; Code
Division Multiple Access; Global System for Mobile Communication; and Time
Division Multiple Access. These deployments use equipment from Compaq, Ericsson,
Lucent, Nokia, Nortel and Sun Microsystems. Our location gateway, which we call
the Location Manager, is able to interface with each existing location
determination technology and combine with our location provisioning component,
which we call MAPS, to produce the geographic location of the user. Our platform
and applications are designed to integrate into the network operators' systems
and provide services to wireless subscribers in what we believe are the core
mobile location services applications categories: information, billing, safety
and tracking. Our platform and applications are designed to work in wireless
systems that use equipment from a variety of vendors. We are not dependent on
any one standard, equipment provider or location determination technology.


  MODULARITY, FLEXIBILITY AND COST-EFFECTIVENESS

     Our software may be adopted as a suite or as a single application,
depending on the needs of the network operator. Our operating platform may be
used independently of our applications and may be combined with applications of
other third party-providers, and our applications can be used with other
location gateways. We can provide our customer base with the ability to
customize our software. For example, our Location Sensitive Billing product can
be configured for service deployment such that two different carriers would
provide very different service offerings to their wireless customer base.
Similar customization through configuration is achievable with our
local.info(TM) application. This flexibility reduces both initial and
incremental capital requirements of network operators, and allows operators to
more rapidly and cost-effectively build initial capacity and introduce
additional services. Our software has the capability to accommodate either or
both voice and data transmissions, and as bandwidth in mobile telephony
increases, video streaming as well.

  SCALABILITY

     Our platform and applications are scalable, which means that they are
designed to grow from systems receiving thousands of calls and serving thousands
of users to systems receiving millions of calls and serving millions of users.
Our scalability is represented both in our software architecture and in our
licensing structure. For example, customers may deploy our software in a lab
environment for service creation and testing, in a low-end configuration for
small deployments, or in a geographically diverse, redundant, highly reliable
configuration for very large systems. When purchasing our products, network
operators may license a relatively small number of subscribers or transactions
to allow them to start with little capital risk. Only as

                                       38
<PAGE>   43

the number of subscribers in the network grows, or as penetration and usage of
our services increase, are they required to invest more capital into expanded
licenses. We believe that our platform and applications are capable of providing
mobile location services to operators both in the current environment and in an
environment in which such services are required on a much expanded basis.

  EXCLUSIVE FOCUS ON MOBILE LOCATION SERVICES

     Our exclusive focus is on providing a mobile location services operating
platform and applications for enhanced voice and data services. Our founders
started developing mobile location services software products in February 1995,
prior to the adoption of the FCC's 1996 emergency 911 mandate. In September
1996, we announced our first commercial product, Wireless 911. We launched a
location-sensitive billing system in June 1998 and a location-based information
application in September 1998. With our recent acquisition of BFound.com, and
the addition of its wireless tracking technology, we now offer a suite of
applications covering each of four core categories of mobile location
services -- information, billing, safety and tracking. We have consistently
demonstrated our experience and knowledge in the market by presenting at
industry conferences, sponsoring workshops and contributing to standards
organizations.

SIGNALSOFT'S PRODUCTS AND SERVICES

     Of the four critical network components required for mobile location
services, we provide every component other than the location determination
technologies. For this component, we have partnered with wireless location
determination technology vendors, and we provide an open platform for their
technologies to coexist in a customer's network. SignalSoft's product suite of
Wireless Location Services(R) consists of software that typically is integrated
into the network of the wireless operator. Our location gateway is called the
Location Manager, and we also offer a location provisioning component, which we
call MAPS. Together, the Location Manager and MAPS form what we call our
operating platform which supports applications, including our own
local.info(TM), Location Sensitive Billing, Wireless 911 and wireless tracking
applications.

                                       39
<PAGE>   44

  [Chart shows how our Wireless Location Services(R) provide three of the four
                     mobile location services components.]

  OPERATING PLATFORM

     Location Manager

     The Location Manager is a versatile software hub that allows multiple
wireless location determination technologies to interface with both our suite of
Wireless Location Services(R) applications and other third party applications as
well. The Location Manager is located on the wireless operator's network,
receives data from the location determination technologies residing on or
connected with that network and converts that data for use by multiple
applications. The Location Manager helps wireless service providers to separate
location determination technology decisions, which are based primarily on
technical requirements and cost, from location services decisions, which are
based primarily on market demand.

     MAPS


     Maps Application Provisioning Server, or MAPS, is an advanced Geographic
Information System which provides an integrated provisioning system for our
Wireless Location Services(R) products and other mobile location services
software. With MAPS, network operators can update databases, add new services
and execute numerous other provisioning tasks without affecting the performance
of other applications. This ability helps to ensure that the network operator
will be able to continue critical applications, such as billing, while
simultaneously updating its network. MAPS also includes a user-friendly
interface for statistical and reporting functions to support system
administration.


                                       40
<PAGE>   45

  SOFTWARE APPLICATIONS

     SignalSoft's suite of Wireless Location Services(R) applications is focused
within four functional categories: information, billing, safety and tracking.
Each of these products can be used individually or integrated with our other
products.

     local.info(TM)

     To enable m-Commerce, our local.info(TM) application delivers geographical
information and Internet content to wireless subscribers based on their
location. Although diAx, a Swiss wireless network joint venture between SBC
Communications Inc. and diAx Holding AG, is the only operator that has thus far
commercially deployed this application, we are testing our local.info(TM)
application with several operators in over a dozen cities worldwide with most
major equipment vendors.

     In 1999, diAx began using local.info(TM) at several ski resorts to provide
local users with information on restaurants, ski conditions, lift availability
and entertainment. diAx offered local businesses the opportunity to be featured
on its information-based network services. This m-Commerce application enhanced
diAx's ability to enter into a new geographic market and generate incremental
revenue from increased network usage. The service also has the potential to
produce advertising revenue for diAx.


     In order to help carriers provide content for their m-Commerce services, we
established and launched the local.info(TM) Content Alliance in January 1999. We
have entered into over 40 industry partnerships with content providers through
the local.info(TM) Content Alliance. These industry partnerships generally
involve a joint marketing agreement between the content providers and us that
allows both parties the right to use each other's names, on a non-exclusive
basis, in marketing activities. None of these agreements, individually or in the
aggregate, provides or is expected to provide us with a material amount of
revenue. By entering into a joint marketing agreement, each content partner
becomes part of the local.info(TM) Content Alliance. We intend to partner with
multiple companies providing the same types of content in order to source local
content for different geographic regions.


                                       41
<PAGE>   46


<TABLE>
<S>                       <C>                       <C>                       <C>
------------------------------------------------------------------------------------------------------
LOCAL.INFO(TM) CONTENT ALLIANCE
------------------------------------------------------------------------------------------------------
CATEGORY                  PROVIDERS                 CATEGORY                  PROVIDERS
------------------------------------------------------------------------------------------------------
 Advertising/Coupons      AiroMedia, DealTime.com,  City Guide                10Best.com, ahhaa,
                          Eversave.com, Mediaplex,                            CitiKey, EzyFind, Go2
                          SUMmedia, Targus,                                   Systems, Sonata.com,
                          TicketingSolutions,                                 Wcities.com, Wireless
                          Vicinity                                            Media
------------------------------------------------------------------------------------------------------
 Directories              AirFlash, EzyFind,        Entertainment             Airflash, Buzz Wireless,
                          InfoNow, InfoSpace.com,                             CitiKey, Enspot.com,
                          Kapitol, MapQuest.com,                              e-street.com, EzyFind,
                          myFON.com, Targus,                                  Go2 Systems, i3 Mobile,
                          Vicinity, WorldPages                                InfoNow, indiqu.com,
                                                                              Squeezenet.com,
                                                                              Syncromedia.com, The
                                                                              SportsNetwork.com,
                                                                              Ticketing Solutions,
                                                                              Wcities.com,
                                                                              Yourmovies.com.au
------------------------------------------------------------------------------------------------------
 Mapping                  CitiKey, InfoNow,         Restaurants               CitiKey, e-street.com,
                          MapQuest.com, Vicinity                              EzyFind,
                                                                              Globaldining.com, Go2
                                                                              Systems, InfoNow,
                                                                              Menus.com,
                                                                              Squeezenet.com,
                                                                              Wcities.com
------------------------------------------------------------------------------------------------------
 Roadside/Other Services  ahhaa, ATX, Cross         Shopping                  AirFlash, EzyFind, Go2
                          Country, Mobile News                                Systems, i3 Mobile,
                          Channel, myFON.com,                                 indiqu.com, InfoNow,
                          phORTAL.com                                         Kapitol, RealMalls,
                                                                              Ticketing Solutions,
                                                                              Wcities.com, WorldPages
------------------------------------------------------------------------------------------------------
 Travel & Traffic         AirFlash, e-street.com,   Weather                   Go2 Systems, i3 Mobile,
                          Go2 Systems, i3 Mobile,                             InfoNow, Strategy.com,
                          indiqu.com, InfoNow,                                Weather Window
                          MapQuest.com,
                          Strategy.com, Portugal
                          Hotels, SmartRoute,
                          Squeezenet.com
------------------------------------------------------------------------------------------------------
</TABLE>


     Location Sensitive Billing

     Location Sensitive Billing enables wireless network operators to define
multiple geographic zones for each subscriber. The network operator can
point-and-click on maps to define and modify up to ten calling zones for an
individual subscriber. Establishing these calling zones allows a wireless
carrier to charge different rates for various zones. For example, wireless
network operators could offer their subscribers the same rate as land line
phones when making calls from the home or office, but still charge higher rates
when subscribers are not in "pre-specified" zones. As a result, Location
Sensitive Billing can make it more economical for subscribers to freely
substitute their wireless phone for their land line phones, while network
operators are still able to charge higher prices for mobile minutes. Currently,
one operator has licensed Location Sensitive Billing and several others are
testing it.

                                       42
<PAGE>   47

     Wireless 911

     Wireless 911 is designed to automatically locate wireless callers in
distress, record their calling information and route their calls to the
appropriate public safety answering point. Wireless 911 meets both Phase I and
Phase II requirements of the FCC mandate. Additionally, Wireless 911 supports
major wireless switch/interface standards, is compatible with many combinations
of wireless equipment and handset-based location determination technologies, and
is capable of interfacing with land line Emergency 911 systems. Four of the five
largest network operators in the United States, based on number of subscribers
at the end of 1999, use our Wireless 911 application.

     Tracking


     Our current BFound.com(TM) service utilizes a third-party Internet browser
such as Microsoft Internet Explorer or Netscape Navigator and a Global
Positioning System unit to track and manage trucks, freight and other portable
assets. We use an application service provider model whereby we host this
application on one of our servers. We are currently testing in a carrier's
network the combination of the BFound.com(TM) service with our Location Manager.
This combination would allow us to offer the wireless industry a way to track
portable assets without the separate Global Positioning System unit. As part of
our ongoing enhancements, we plan to take BFound.com's technology and combine it
with our software architecture to offer Wireless Tracking as a software
application that we may license to wireless carriers or our industry partners.
We intend to make this application commercially available in 2001. We believe
that Wireless Tracking's chief advantage over other commercially available
tracking systems will be that it will not require the user to install special
equipment in trucks or other assets being tracked.


  PROFESSIONAL SERVICES AND MAINTENANCE

     Many carriers contract with us for our professional services because of our
experience in implementing mobile location services in wireless networks. We
currently offer consulting in four primary areas: strategy, implementation,
launch and maintenance. Our professional services help network operators get
started quickly and learn the basic operation of our operating platforms and
software applications. We can load content into the carrier infrastructure,
establish the relevant interfaces to the network equipment and perform testing
to help ensure that the launch of the carrier's mobile location services
offering is successful.

     We provide maintenance services to our customers for software support,
scheduled product upgrades and other support services. For example, through our
in-house customer service capabilities and through our partnerships with
equipment providers, we offer comprehensive customer support services 24 hours a
day, seven days a week.

SIGNALSOFT'S STRATEGY

     Our goal is to be the leading provider of software solutions that enable
the delivery of mobile location services. The key elements of our strategy
include the following:

  INNOVATE AND ENHANCE OUR PRODUCTS AND SERVICES

     We believe that the market for mobile location services will continue to
evolve rapidly. We intend to stay at the leading edge of this evolution by
creating new products and services. We plan to introduce a tool-box, which we
call our Software Development Kit, by the end of 2001, which will allow third
parties to design, develop and deploy their own mobile location services
software applications. We believe that these third-party applications will
create additional demand for our operating platform and for our own applications
as well. In addition, we have joined the Wireless Multimedia Forum, a new
industry organization, to promote the integration of location information with
multimedia and video services over wireless networks.


     Technology standards are constantly evolving. We intend to modify our
products or develop new products as needed to comply with next-generation
technology standards, such as Global Packet Radio System and Enhanced Data
Global system for mobile communications Environment, and third-generation or


                                       43
<PAGE>   48


3G standards such as cdma2000, which is an updated version of Code Division
Multiple Access, Universal Mobile Telecommunications System and Wideband Code
Division Multiple Access.



     We intend to continually refine and enhance our current product and
services, especially through extensive testing of our software on our industry
partners' systems. For example, we recently began to offer map displays on
Wireless Application Protocol enabled devices. Wireless Application Protocol is
a software protocol that is capable of filtering and displaying Internet
information on a mobile telephone screen. We are also an active member of the
Wireless Application Protocol Forum, an international industry organization. We
also plan to add additional content partners to the local.info(TM) Content
Alliance.


  CREATE MARKET DEMAND

     To create additional market demand for mobile location services and to
establish our Wireless Location Services(R) as the de facto industry standard,
we have focused on increasing visibility among wireless network operators and
equipment suppliers around the world. Such initiatives include:

     - maximizing promotional activities through industry conference
       co-sponsorships, one-on-one meetings with customers and potential
       customers, trade shows, media relations, and speaking engagements,

     - demonstrating our products with multiple industry partners at trade shows
       and promoting awareness of the integration of our software in our
       industry partners' service offerings, and

     - promoting our interests with industry standard-setting organizations.

     We also expect to increase Wireless Location Services(R) adoption by
continuing to maintain it as an open, flexible and interoperable platform that
is compatible with all major networks and standards.

  ESTABLISH A GLOBAL PRESENCE

     SignalSoft expects to capitalize on the rapid growth and increasing
penetration of wireless services in North America, Europe, Asia-Pacific and
South America to drive demand for Wireless Location Services(R) applications.
Our efforts are currently focused on North America and Europe, where we have
established multiple reference accounts and have introduced our suite of
products and services. We plan to expand aggressively in these regions through
our industry partnerships and direct marketing efforts. We are currently
beginning to staff sales and operations positions in Asia-Pacific and expect to
expand into South America by 2001.

  STRENGTHEN AND EXPAND KEY INDUSTRY PARTNERSHIPS

     We believe that our industry partnerships with equipment providers,
distributors, location determination technology vendors and content providers
are important to our business, and we plan to continue to strengthen these
partnerships and seek key new industry partnerships.

     Our relationships with equipment providers have given us several
advantages, including:

     - the opportunity to bundle our products with equipment manufacturers;

     - an additional distribution channel for improved access to major wireless
       network operators;

     - the opportunity to assess and test products before deployment; and

     - a valuable understanding of our customers' technology and operations,
       which helps us in product design, marketing and in identifying new sales
       opportunities.

     Our exclusive focus on mobile location services allows our industry
partners to focus on their core competencies. In addition, a content provider
can establish a relationship with one of our network operators and have its
content integrated into the operator's network. The network operator benefits by
having more content to deliver to its subscribers, thus enabling the operator to
further differentiate its product offerings,

                                       44
<PAGE>   49

build customer loyalty and gain additional revenues. Our operating platform and
software applications act as the focal point for this activity.

  PURSUE SELECTIVE ACQUISITIONS

     We intend to pursue acquisitions of companies and technologies that we
believe will allow us to provide new services, enhance our technology, add new
key personnel and extend our operations into new geographic markets. For
example, our recent acquisition of BFound.com Services, Inc. provided us with a
mobile location services tracking application that we believe complements our
existing applications. BFound.com also gives us additional qualified development
personnel that will help expand our industry reach.


NETWORK OPERATORS AND OTHER CUSTOMERS



     As of June 30, 2000, the following wireless network operators had deployed
or licensed our software:



<TABLE>
<S>                       <C>
--------------------------------------------------
                     DEPLOYED
--------------------------------------------------
   NETWORK OPERATOR          PRODUCT(S)
--------------------------------------------------
 Ameritech                Wireless 911
--------------------------------------------------
 AT&T Wireless            Wireless 911
--------------------------------------------------
 diAx (Switzerland)       local.info(TM)
                          Location Manager
--------------------------------------------------
 Houston Cellular         Wireless 911
--------------------------------------------------
 Southwestern Bell        Wireless 911
 Mobile
--------------------------------------------------
 Sprint PCS               Wireless 911
--------------------------------------------------
 US West Wireless         Wireless 911
--------------------------------------------------
--------------------------------------------------
                     LICENSED
--------------------------------------------------
   NETWORK OPERATOR          PRODUCT(S)
--------------------------------------------------
 AAPT (Australia)         local.info(TM)
                          Location Sensitive
                          Billing
                          Wireless 911
                          Location Manager
                          MAPS
--------------------------------------------------
 BellSouth                Wireless 911
--------------------------------------------------
 Triton PCS               Wireless 911
--------------------------------------------------
 US Unwired               Wireless 911
--------------------------------------------------
</TABLE>



We license our products directly to network operators and to our distributors,
which then sublicense our products to network operators. Our distributors are
listed in "-- Sales and Marketing -- Distributors" on page 46. The network
operators that sublicense our products from our distributors are not our direct
customers. In addition, several additional operators are testing our products
for use within their networks. Most of our deployments have been for Wireless
911. Our customers typically license our products through perpetual,
non-exclusive licenses. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Overview -- Revenue." None of the license
agreements producing this revenue, unless the scope of these agreements is
expanded, is expected to provide us with a material amount of future revenue.



     Among network operators, AT&T Wireless Services accounted for approximately
50% of our revenue in 1997 and 19% in 1998, Ameritech accounted for
approximately 12% of our revenue in 1998, and diAx accounted for approximately
65% of our revenue in the three months ended March 31, 2000. The other network
operators listed above represented less than 1% of our revenue in the aggregate
in each of 1997, 1998 and the three months ended March 31, 2000. All of our
network operator customers accounted for approximately 15% of our revenue in the
aggregate in 1999. Among distributors, Lucent accounted for approximately 46% of
our revenue in 1999, Compaq accounted for approximately 16% of our revenue in
1999, and Motorola and Telcordia each accounted for approximately 12% of our
revenue in the three months ended March 31, 2000. Our other distributor
customers accounted for approximately 15% of our revenue in the aggregate in
1999 and 4% of our revenue in the aggregate in the three months ended March 31,
2000. These revenue percentages do not add up to 100% for any given period
because they do not include revenue from performing professional services for
other potential network operator customers and potential distributors.
Professional services revenue accounted for less than 10% of our revenue in 1999
and the three months ended March 31, 2000.


                                       45
<PAGE>   50

SALES AND MARKETING

     We market and sell our operating platform and applications to wireless
network operators primarily through industry partnerships we have developed with
equipment providers, distributors, location determination technology vendors and
content providers. We also use our own direct sales force.


     We have entered into non-exclusive industry partnerships with the content
providers named in the chart on page 42 above, as well as with companies in the
following categories:



     Equipment Providers: These companies provide the core equipment for
wireless networks. As of June 30, 2000, our equipment partners were Ericsson,
Lucent, Motorola, Nokia, Nortel and Siemens. At present, five of our equipment
partners are assessing or are in the process of bundling our operating platform
and applications with their products to market and sell to network operators
worldwide.



     Distributors: We have also sought industry partnerships with companies who
provide combinations of hardware and software to wireless operators. Our
distributor partners bundle our products in these combinations and resell our
products to network operators. As of June 30, 2000, SignalSoft's distributor
partners were Compaq, GTE-TSI, Lucent, Motorola, SCC Communications, SigmaOne
and Telcordia.


     Our partnerships with our equipment and distributor partners are based on
non-exclusive distribution agreements with terms of between three to five years.


     Location Determination Technology Vendors: Since location determination
technology vendors develop, promote and deploy the geographic positioning
technologies used by our Wireless Location Services(R), we have established both
technical and marketing relationships with these companies. The location
determination technology vendors promote our compatibility with their location
finding systems, and we promote the location determination technology vendors as
companies with positioning technology. We regularly test with these vendors both
in lab environments and in live field tests to help ensure product success and
compatibility. As of June 30, 2000, SignalSoft's location determination
technology partners were Allen Telecom, Cambridge Positioning Systems, Cell-Loc,
Ericsson, Lucent, Motorola, SigmaOne, SiRF, SnapTrack (a division of Qualcomm),
TruePosition (a division of Liberty Media) and US Wireless.



     To help drive demand for mobile location services in general and our
Wireless Location Services(R) in particular, we also use direct sales channels,
which promote our Wireless Location Services(R) products and consulting services
directly to network operators and assist our industry partners in selling our
products and services. We maintain regular contact with customers through
one-on-one meetings, industry conferences and SignalSoft-sponsored educational
workshops. We also market our products via trade shows, media and analyst
relations and speaking engagements. As of June 30, 2000, we had 33 sales and
marketing personnel located in the United States, Canada, the United Kingdom,
the Netherlands, France and Australia. We are continuing to increase our sales
and marketing efforts by expanding our office in the United Kingdom and by
opening an office in the Asia-Pacific region.


TECHNOLOGY

     We believe that one of our principal strengths is our proprietary,
internally developed technology. Our operating platform and software
applications have been designed to provide a network- and device-independent
platform for the creation and delivery of mobile location services. Our software
components can be deployed on a variety of computer hardware and operating
systems to satisfy the requirements of our network operator customers and
partnerships. Each component of our product suite has been designed to achieve
these goals while satisfying the requirements of the telecommunications
industry. Our software architecture consists of a set of C++ and Java class
libraries that allow us to achieve the following benefits:

     - Independence from any specific location determination technology is
       achieved by building individual interfaces to differing location
       technologies in much the same way as printer drivers permit many
       different vendors' hardware to function with a single software operating
       system.

                                       46
<PAGE>   51

     - Provisioning and management of geographic data is made possible through
       the use of our proprietary MAPS client and server algorithms, which
       utilize Geographic Information System, or GIS, functions optimized for
       the demanding requirements of telecommunications networks.

     - Deployment of our software in different vendor networks is achieved by
       proprietary software programs that receive a message from the switch in
       its original proprietary format, extract the data required by our
       applications from the message and subsequently respond to the switch with
       the appropriate information required to complete the transaction.

     - Deployment of our software on multiple partner vendor platforms is
       achieved by additional proprietary software programs that individually
       deal with each partner's operating system, hardware and network
       management requirements.


     Based on our internal research and involvement in the wireless industry for
over five years, we believe that we are the only company with a full suite of
deployable software products across at least three of the major network
components -- location gateway, applications and location provisioning -- and
within the following four functional categories -- information, billing, safety
and tracking. Not only do we have functional software developed in these areas
of mobile location services, but we believe that we are also the only company to
have commercially deployed location-based software products in all of the
current major wireless transmission technologies -- Advanced Mobile Phone
Service, Code Division Multiple Access, Global System for Mobile Communication
and Time Division Multiple Access. Based on these factors, we believe we are the
leading international applications and software developer of mobile
location-based services.


RESEARCH AND DEVELOPMENT


     Our research and development group is a technical workforce experienced in
current software development technologies. Our testing team consists of software
engineers with experience in both software subsystem and system-level testing.
The members of our engineering team have an average of approximately eight
years' experience in the management of software development and approximately
ten years' experience in software development. Approximately 80% of our
engineers have BS, BA or equivalent engineering degrees. As of June 30, 2000, we
had 52 employees engaged in research and product development activities,
including product support. We continue to recruit additional skilled research
and product development personnel and intend to increase the size of this group.
Competition for employees with the skills and experience we need is intense.


     Our research and development expenditures were approximately $3.4 million
for 1999 and approximately $2.5 million for 1998.

INTELLECTUAL PROPERTY


     We rely on a combination of trade secrets, non-disclosure and other
contractual arrangements, as well as patent, copyright and trademark laws to
protect our proprietary rights. As part of our intellectual property strategy,
we have in the past submitted, and continue to submit, patent applications for
our Wireless Location Services(R) products in the United States and
internationally. We currently have rights under one issued United States patent
based on a joint submission between SignalSoft and Motorola. The patent relates
to the provisioning of calling zones by wireless subscribers and expires in
2016. Motorola holds actual title to the patent. Motorola may assign rights
under this patent to others without our consent or may choose to use the patent
and compete directly against us. If this happens, we will face increased
competition. In addition, we have filed seven U.S. and two international patent
applications. We have obtained or are in the process of obtaining common law
trademark rights and trademark registrations on our product names from the
United States Patent and Trademark Office. As part of our normal business
practices, we provide copyright notices on our confidential technical, sales and
marketing documents.


                                       47
<PAGE>   52

COMPETITION

     There are competitors for each of our product offerings. We expect to
encounter competition from wireless location determination technology vendors,
service bureaus, application service providers and equipment providers. In
particular, several companies have developed solutions to comply with the FCC
mandate for Emergency 911 specifications. Because we are part of an emerging
market, we cannot identify or predict which new competitors may enter the mobile
location services industry in the future. We may compete against our current
industry partners to the extent they also offer mobile location services, which
may result in the termination of our relationships with these industry partners.
We expect competition in our industry to be even more intense in the future as
new competitors, such as additional wireless equipment providers, enter the
market. Many of our current and potential competitors have longer operating
histories, greater industry and name recognition and greater financial,
technical and marketing resources than we do. Increased competition may result
in lower prices for our products, which may have a material adverse effect on
our revenues and operating results.

     We compete based on the following factors:

     - product features;

     - integration of products with wireless operators' networks;

     - available content;

     - timing of new product introductions;

     - price; and

     - customer support and services.

REGULATION

     We are not currently subject to direct regulation by the Federal
Communications Commission, or FCC, or any other governmental agency, except for
regulations applicable to businesses in general. However, in the future, we may
become subject to regulation by the FCC or another regulatory agency. Concerns
about personal privacy could result in regulations limiting the use of mobile
location services. For example, a European Union, or EU, directive prohibits the
transmission of personally identifiable data to third countries  -- including
the United States -- that are deemed to provide inadequate privacy protection
for that information. The United States and the EU recently signed a data
privacy agreement, which includes standards that U.S. companies will be able to
use to comply with the EU directive. The FCC may adopt additional regulations
related to this directive, including increased protections for personal data.
Also, existing laws governing access to and use of consumer information could be
interpreted or expanded to cover the wireless market.

     Wireless network operators are currently regulated by the FCC and any
regulations that affect them could also increase our costs, limit our access to
their networks and subscribers or reduce our ability to continue selling and
supporting our products and services. Currently, wireless carriers are subject
to the FCC's 911 mandate. Our Wireless 911 product complies with the
requirements of both phases of this mandate. However, we cannot anticipate what
regulations the FCC may adopt in the future and what impact those regulations
may have on our business, our industry partners or our customers.

LEGAL PROCEEDINGS

     We are not a party to any material legal proceedings, nor are we currently
aware of any threatened material legal proceedings. From time to time, we may
become involved in litigation relating to claims arising out of our operations
in the normal course of our business.

                                       48
<PAGE>   53

PROPERTY AND FACILITIES


     Our corporate headquarters are located at 1495 Canyon Boulevard, Boulder,
Colorado 80302. We currently lease approximately 18,000 square feet of office
space at our corporate headquarters and most of our equipment, including
computers, under non-cancelable capital and operating lease agreements which
expire on various dates through 2003. We also lease additional office space
elsewhere in Boulder and office space in the United Kingdom, in Victoria,
British Columbia and in Stockholm, Sweden.


EMPLOYEES


     As of June 30, 2000, we had 132 employees. None of our employees are
covered by collective bargaining agreements. We believe that our relations with
our employees are good.


INCORPORATION

     We were incorporated in 1994 in Colorado. We reincorporated in Delaware in
1998.

                                       49
<PAGE>   54

                                   MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

     The current executive officers and directors of SignalSoft, along with
their backgrounds, are:


<TABLE>
<CAPTION>
NAME                                    AGE   POSITION
----                                    ---   --------
<S>                                     <C>   <C>
David A. Hose.........................  37    Chief Executive Officer, President and
                                                Chairman of the Board of Directors
Mark H. Flolid........................  49    Executive Vice President of Corporate
                                                Development and Director
Donald J. Winters, Jr. ...............  48    Senior Vice President and Chief
                                              Operating Officer
Roy Kligfield.........................  49    Senior Vice President of Engineering
Andrew M. Murray......................  42    Senior Vice President of Finance,
                                              Chief Financial Officer and
                                                Secretary-Treasurer
Charles P. Waite, Jr..................  45    Director
B. Holt Thrasher......................  38    Director
Eric L. Doggett.......................  41    Director
Perry M. LaForge......................  42    Director
</TABLE>


     David A. Hose is a founding member of SignalSoft and has been our Chief
Executive Officer, President and Chairman of the Board of Directors since
February 1995. In this capacity, Mr. Hose is responsible for overseeing
SignalSoft's growth and strategic direction. Prior to joining SignalSoft, from
1993 to January 1995, Mr. Hose served as the Vice President of Engineering at
SCC Communications Corp., where he designed location-based applications for
public-safety command and control systems. Between 1982 and 1993, Mr. Hose was
employed in various management roles at SCC, GeoBased Systems, Criterion, Inc.
and J&D Software.

     Mark H. Flolid is a founding member of SignalSoft and served as our
Executive Vice President of Sales and Marketing from February 1995 until August
1999. In August 1999, Mr. Flolid assumed the role of Executive Vice President of
Corporate Development and is responsible for SignalSoft's new product
development and strategic partnerships. Prior to joining SignalSoft, from 1992
to January 1995, Mr. Flolid was Senior Vice President of Sales and Marketing at
SCC Communications Corp. Between 1981 and 1992, he held senior management
positions in sales, marketing and operations at Thomas Bros. Maps, GeoBased
Systems and Criterion, Inc. Mr. Flolid graduated from the University of Texas
where he earned both a BA in Political Science and an MA in Economics.

     Donald J. Winters, Jr. became our Senior Vice President and Chief Operating
Officer in December 1999. He joined SignalSoft in February 1997 as Vice
President of Operations and also served as Vice President of Sales from August
1999 to December 1999. Mr. Winters manages SignalSoft's sales, marketing and
customer operations. Prior to joining SignalSoft, from February 1996 to February
1997, he was Vice President of Business Development for Coral Systems, a
developer of fraud management and churn management software for use by wireless
carriers, where he was responsible for new product development and strategic
partnerships. Between 1978 and February 1996, Mr. Winters held a number of
management positions at AirTouch Communications and Pacific Telesis in
engineering, operations, technology development, and strategy.

     Roy Kligfield has been SignalSoft's Senior Vice President of Engineering
since March 2000. From January 1996 to March 2000, he served as our Vice
President of Development. At SignalSoft, he is responsible for the design,
development and testing of SignalSoft's products, platforms and interfaces to
all external technologies. Prior to joining SignalSoft, from 1992 to December
1995, Mr. Kligfield was General Manager of Geological Development Center at
CogniSeis Development, a creator of geophysical and geological processing
software for the oil and gas industry, where he developed geological software,
including multidimensional mapping applications. Between 1981 and 1992, Mr.
Kligfield was an Associate Professor of

                                       50
<PAGE>   55


Structural Geology at the University of Colorado where he taught structural
geology, mapping and Geographic Information System concepts. Mr. Kligfield has
an extensive background in mapping and software development management and has
authored over 130 publications on these subjects. Mr. Kligfield graduated from
Columbia University where he earned a Ph.D., a M.Phil., and a BA in Geology.


     Andrew M. Murray joined SignalSoft as Vice President of Finance and
Administration and Chief Financial Officer in August 1998. He became
Secretary-Treasurer in October 1998 and Senior Vice President of Finance in
March 2000. At SignalSoft, Mr. Murray oversees all financial functions, legal
relationships, human resources, information systems and office administration.
Prior to joining SignalSoft, from January 1989 to August 1998, he served as
Chief Financial Officer and Vice President of Finance and Administration for
Dynamic Information Systems Corp., a Boulder, Colorado-based software company.
His prior experiences also include finance-related management positions at
Murray Equipment Company, AT&T Communications and Mountain Bell. Mr. Murray also
serves on the board of directors of Bellco First Federal Credit Union and is a
Certified Management Accountant. Mr. Murray earned an MBA from the University of
Denver and a BS in Business Administration from the University of Northern
Colorado.

     Charles P. Waite, Jr. joined our board of directors in May 1997. He has
served as a General Partner with Seattle-based Olympic Venture Partners, a
technology-focused venture capital firm with a specific emphasis on firms in the
software, life sciences, Internet, communications and health care sectors, since
1987. Prior to joining Olympic, Mr. Waite was a General Partner at Hambrecht &
Quist, a venture capital operation based in San Francisco, for four years. From
1977 to 1981, he was a Cardiovascular Products Specialist for Denver-based Cobe
Laboratories, Inc. He currently serves on the boards of directors of Loudeye
Technologies, Rosetta Inpharmatics, Verity and WatchGuard. Mr. Waite earned an
MBA from Harvard University and a BA from Kenyon College.

     B. Holt Thrasher joined our board of directors in May 1997. He has served
as a Managing Director of Broadview International LLC, which provides merger and
acquisition banking services, since August 1995. Prior to joining Broadview,
from March 1995 to August 1995, Mr. Thrasher was a full-time consultant with
Omnipoint, a PCS service provider and developer of wireless communications
equipment. From March 1992 to March 1995, he served as Vice President of
Corporate Development at Tip Hook PLC. From August 1985 to September 1990, Mr.
Thrasher served as Vice President of Mergers and Acquisitions with Smith Barney
Harris & Upham and Company Inc. From June 1983 to August 1985, he was an
associate with Brown Brothers Harriman. Mr. Thrasher also serves on the boards
of directors of T-NETIX, Inc., a provider of call processing services, and The
Kairos Foundation, a non-profit organization. Mr. Thrasher earned an MBA from
the International Institute of Management Development in Lausanne, Switzerland
and a BA from Colby College.

     Eric L. Doggett joined our board in December 1997. He has served as the
President and Chief Executive Officer of Charlotte, North Carolina-based
Glenayre Technologies Inc., a developer of personal telecommunications equipment
and software, since June 1999. Prior to joining Glenayre, from July 1998 to June
1999, he served as a strategic, operational and financial consultant for
telecommunications ventures as a Venture Partner with Rein Capital, LLC. From
September 1996 to June 1998, Mr. Doggett was a Senior Vice President and General
Manager of the Communications Products Group at Compaq's Tandem Computers. From
June 1995 to September 1996, he served as Vice President of Technology at Nortel
Networks' Public Carriers. His prior experiences include over 11 years at Nortel
Networks' Public Carriers in other executive positions including Vice President
of Marketing, Vice President/General Manager of International and Assistant Vice
President/General Manager of the DMS-10 switching division. Mr. Doggett holds an
MBA from Duke University and a BS in physics from North Carolina State
University.


     Perry M. LaForge has served as a director since December 1998. He is a Vice
President and Partner with the international management-consulting firm of
Pittiglio Rabin Todd and McGrath. Prior to joining Pittiglio Rabin in 1984, Mr.
LaForge worked for Corning Technical Products and Sperry Univac, where he was
responsible for business development and new product releases. Mr. LaForge is
the founder, Executive Director and Chairman of the CDMA Development Group, a
trade association comprised of over 100 wireless operators and manufacturers. He
is also the founder, Chairman and President of Incode Telecom Group, a


                                       51
<PAGE>   56

telecommunications consulting company. Mr. LaForge earned his MBA from the Amos
Tuck School of Business at Dartmouth College and his BS from the University of
Santa Clara.

COMPOSITION OF THE BOARD OF DIRECTORS


     We have approved an amendment to our certificate of incorporation to
provide for a board of directors consisting of six members, who will be divided
into three classes of two directors each serving staggered three-year terms:


     - the term of our Class I directors will expire at our 2001 annual meeting;

     - the term of our Class II directors will expire at our 2002 annual
       meeting; and

     - the term of our Class III directors will expire at our 2003 annual
       meeting.


The amendment will become effective on the closing of this offering. Our Class I
directors will be Messrs. Flolid and LaForge. Our Class II directors will be
Messrs. Doggett and Thrasher. Our Class III directors will be Messrs. Hose and
Waite. When our classified board is in place, only two of our six board members
will be elected at each annual stockholders' meeting, with the other directors
continuing for the remainder of their class terms.


COMPENSATION OF DIRECTORS

     Our directors who are not also our employees are reimbursed for the
expenses they incur in attending meetings of our board or our board committees.
All directors who are not also our employees are eligible to participate in our
nonqualified stock option plan. In 1999, we granted Mr. LaForge an option to
purchase 20,000 shares of our common stock under this plan. In 1997, we granted
Mr. Doggett an option to purchase 20,000 shares of our common stock, Mr.
Thrasher an option to purchase 20,000 shares of our common stock, and Mr. Waite
an option to purchase 40,000 shares of our common stock under this plan. These
options vest over 50 months, with 24% vesting on the one-year anniversary of the
date of grant and 2% vesting each month thereafter. Mr. Waite's options have an
exercise price of $0.05 per share. Each of Messrs. Doggett, LaForge and
Thrasher's options have an exercise price of $0.65 per share.

COMMITTEES OF THE BOARD OF DIRECTORS

     We have both an Audit Committee and a Compensation Committee.

     Audit Committee. The Audit Committee consists of three directors. Currently
the members of our Audit Committee are Messrs. LaForge, Thrasher and Waite. The
Audit Committee is responsible for recommending annually to the board of
directors the independent auditors to be retained, reviewing with our
independent auditors the scope and results of the audit engagement, reviewing
our system of internal accounting controls and directing investigations into
matters within the scope of its functions.

     Compensation Committee. The Compensation Committee consists of three
directors. Currently the members of our Compensation Committee are Messrs.
Doggett, Thrasher and Waite. The Compensation Committee is responsible for
determining executive compensation policies and guidelines. It also administers
our stock option plans and establishes the terms and conditions of all stock
option grants.

                                       52
<PAGE>   57

EXECUTIVE COMPENSATION

     The following table sets forth information concerning the compensation
earned by our Chief Executive Officer and by each of our four most highly
compensated executive officers for the fiscal year ended December 31, 1999.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                              ANNUAL COMPENSATION
                                                              --------------------
NAME AND PRINCIPAL POSITION                                    SALARY      BONUS
---------------------------                                   ---------   --------
<S>                                                           <C>         <C>
David A. Hose...............................................  $150,000    $45,000
  Chief Executive Officer, President and Chairman of the
  Board of Directors
Mark H. Flolid..............................................   125,000     13,000
  Executive Vice President of Corporate Development
Donald J. Winters, Jr. .....................................   134,379     22,000
  Senior Vice President and Chief Operating Officer
Roy Kligfield...............................................   130,000     22,000
  Senior Vice President of Engineering
Andrew M. Murray............................................   120,840     22,000
  Senior Vice President of Finance, Chief Financial Officer
  and Secretary-Treasurer
</TABLE>

STOCK OPTION INFORMATION

     We did not grant any stock options during 1999 to our executive officers
that are named in the Summary Compensation Table. See "-- Stock Option Plans."

     The following table provides, for our executive officers listed in the
Summary Compensation Table, information on the number of shares represented by
unexercised options owned by them at December 31, 1999 and the value of those
options as of the same date. None of the named executive officers exercised any
options in 1999.

                    AGGREGATE FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
                                                NUMBER OF SECURITIES
                                               UNDERLYING UNEXERCISED           VALUE OF UNEXERCISED
                                             OPTIONS AT FISCAL YEAR END       IN-THE-MONEY OPTIONS (1)
                                             ---------------------------     ---------------------------
NAME                                         EXERCISABLE   UNEXERCISABLE     EXERCISABLE   UNEXERCISABLE
----                                         -----------   -------------     -----------   -------------
<S>                                          <C>           <C>               <C>           <C>
David A. Hose..............................         --            --                 --            --
Mark H. Flolid.............................         --            --                 --            --
Donald J. Winters, Jr. ....................    114,000        61,000         $1,780,500      $950,750
Roy Kligfield..............................    228,800        36,200            341,800       568,450
Andrew M. Murray...........................     24,000        51,000            368,400       782,850
</TABLE>

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

(1) The value of the unexercised in-the-money options represents the difference
    between the price of the common stock in this offering and the exercise
    price of the options, multiplied by the number of shares underlying the
    options.

STOCK OPTION PLANS

  1995 NONQUALIFIED STOCK OPTION PLAN

     The SignalSoft Corporation Nonqualified Stock Option Plan effective
November 17, 1995, as currently amended, permits the grant of nonqualified stock
options to our key employees, key consultants, key advisors and non-employee
directors, including those of our affiliated companies. We have reserved for
issuance 2,500,000 shares of common stock which may be subject to awards under
the plan. The number of shares is subject to adjustment on account of stock
splits, stock dividends and other dilutive changes in the number of

                                       53
<PAGE>   58


outstanding shares of our common stock. We can re-grant shares of common stock
covered by unexercised nonqualified stock options that expire, terminate or are
canceled, together with shares of common stock that are forfeited for any reason
or that are used to pay withholding taxes or the option exercise price. As of
June 30, 2000, there were outstanding stock options to purchase an aggregate of
1,530,781 shares of common stock.


     The plan may be administered either by our board of directors or by a
committee. The administrator has the sole discretion to determine the employees,
consultants and non-employee directors to whom awards will be granted and the
terms and conditions of such awards. There is no maximum aggregate fair market
value of stock that may become exercisable by any one employee under incentive
stock options during any calendar year. The administrator determines the
exercise price for each option.

     Upon the occurrence of a reorganization, merger or consolidation or our
dissolution or liquidation, the administer determines whether all outstanding
options will remain outstanding, become fully vested and immediately
exercisable, or be assumed by the surviving entity in the transaction. If the
options accelerate, all outstanding options that are not exercised before the
effective date of the transaction will automatically terminate.

  2000 EQUITY INCENTIVE PLAN


     Introduction. We have adopted the SignalSoft Corporation Equity Incentive
Plan, which will become effective on the closing of this offering. The equity
incentive plan is designed to provide a financial incentive that will help us
attract, retain and motivate the most qualified employees, consultants and
directors.


     The equity incentive plan will provide for the grant of non-qualified stock
options, incentive stock options, stock appreciation rights, restricted stock,
stock units and other stock grants to our employees, consultants and
non-employee directors. The maximum number of shares of common stock that may be
subject to awards under the equity incentive plan is 3,400,000. The number of
shares as to which options or other awards may be granted in any calendar year
will be limited to 1,000,000. Such numbers will increase by up to 800,000 shares
in each calendar year thereafter. The maximum number of shares that may be
subject to incentive stock options is 3,400,000. The number of shares subject to
such limitations is subject to adjustment on account of stock splits, stock
dividends and other dilutive changes in the common stock. Shares of common stock
covered by unexercised non-qualified or incentive stock options that expire or
terminate, together with shares of common stock that are forfeited under a
restricted stock grant or any other award (other than an option) under the
equity incentive plan or that are used to pay withholding taxes or the option
exercise price, will again be available for grants under the equity incentive
plan.

     Participation. The equity incentive plan provides that awards may be made
to employees, consultants and non-employee directors. It is expected that most,
if not all, of our employees will be eligible to receive grants under the equity
incentive plan.

     Administration. The equity incentive plan is administered by our
Compensation Committee. The Committee has discretion to determine the employees,
consultants and directors to whom awards may be granted under the equity
incentive plan and the manner in which such awards will vest. Options, stock
appreciation rights, restricted stock and stock units may be granted by the
Committee to employees, consultants and directors in such numbers and at such
times during the term of the equity incentive plan as the Committee shall
determine, except that:

     - the maximum number of shares subject to one or more options or stock
       appreciation rights that can be granted during any calendar year to any
       employee, consultant or director is 500,000 shares of common stock;

     - the maximum number of shares as to which options or other awards may be
       granted in any calendar year will be limited to 1,000,000; and

     - incentive options may be granted only to employees.

     The Committee may delegate to specified officers of SignalSoft the power
and authority to grant awards to specified groups of employees and consultants,
subject to any restrictions or conditions that the Committee

                                       54
<PAGE>   59

imposes. However, the Committee may not delegate the authority to grant awards
with respect to any employee or consultant who is subject to Section 16(b) of
the Securities Exchange Act.

     Exercise of Options. The Committee determines the exercise price for each
option; however, incentive stock options must have an exercise price that is at
least equal to the fair market value of the common stock on the date the
incentive stock option is granted (at least equal to 110% of fair market value
in the case of an incentive stock option granted to an employee who owns common
stock having more than 10% of the voting power). An option holder may exercise
an option by written notice and payment of the exercise price in:

     - cash or certified funds, or by wire transfer;

     - by the surrender of a number of shares of common stock already owned by
       the option holder for at least six months with a fair market value equal
       to the exercise price; or

     - through a broker's transaction by directing the broker to sell all or a
       portion of the common stock to pay the exercise price or make a loan to
       the option holder to permit the option holder to pay the exercise price.

Options, stock appreciation rights, stock units and restricted stock awards
granted under the equity incentive plan generally are not transferable other
than by will or by the laws of descent and distribution; however, the Committee
may provide at the time of the grant of a non-qualified option or thereafter
that the holder may transfer the non-qualified option to an immediate family
member or to a trust or partnership of which the only beneficiaries or partners
are immediate family members or trusts for the benefit of immediate family
members.

     Option Term. The Committee determines the term of each option, which may be
no longer than ten years (five years in the case of an incentive stock option
granted to an employee who owns common stock having more than 10% of the voting
power) and the period during which the option may be exercised following
termination of employment. Options granted under the equity incentive plan
generally must be exercised within 90 days after termination of the optionee's
status as our employee, our director or our consultant, or 12 months if the
termination is due to the disability or death of the optionee, but in no event
later than the expiration of the option's term.

     Restricted Stock. The Committee may grant a participant a number of shares
of restricted stock as determined by the Committee in its sole discretion.
Grants of restricted stock may be subject to such restrictions, including for
example, continuous employment with us for a stated period of time or the
attainment of performance goals and objectives, determined in the discretion of
the Committee. The restrictions may vary among awards and participants. If a
participant dies or becomes disabled or retires under our retirement policy, the
restricted stock will become fully vested as to a pro rata portion of each award
based on the ratio of the number of months of employment completed at
termination of employment from the date of the award to the total number of
months of employment required for each award to become fully vested. The
remaining portion of the restricted stock will be forfeited. If a participant
terminates employment for any other reason, all unvested shares of restricted
stock will be forfeited.

     Stock Units. The Committee may grant stock units to participants. The
Committee determines the number of stock units to be granted, the goals and
objectives to be satisfied, the time and manner of payment, and any other terms
and conditions applicable to the stock units.

     Stock Appreciation Rights. The Committee may grant stock appreciation
rights to participants, either separately or in tandem with the grant of
options. The Committee determines the period during which a stock appreciation
right may be exercised and the other terms and conditions applicable to the
stock appreciation rights. Upon exercise of a stock appreciation right, a
participant is entitled to a payment equal to the number of shares of common
stock as to which the stock appreciation right is exercised times the excess of
the fair market value of one share of common stock on the date the stock
appreciation right is exercised over the fair market value of one share of
common stock on the date the stock appreciation right was granted. The amount
may be paid in shares of common stock, in cash, or in a combination of cash and
common stock as determined in the discretion of the Committee. Upon termination
of employment, stock appreciation rights are
                                       55
<PAGE>   60

exercisable in the same manner as options. See "-- Option Term," above. If a
stock appreciation right is granted in tandem with an option, exercise of the
stock appreciation right or the option will result in an equal reduction in the
number of shares subject to the corresponding option or stock appreciation
right.

     Other Stock Grants. The Committee may award stock bonuses to such
participants, subject to such conditions and restrictions, as it determines in
its sole discretion. Stock bonuses may be outright grants or may be conditioned
on continued employment or attainment of performance goals as determined in the
discretion of the Committee. Our board may, in its sole discretion, establish
other incentive compensation arrangements under which participants may acquire
common stock or provide that other incentive compensation will be paid in common
stock under the equity incentive plan.

     Change in Control. All awards granted under the equity incentive plan shall
immediately vest upon any "change in control" of SignalSoft unless otherwise
provided by the Committee at the time of grant. A "change in control" occurs if:

     - 50% or more of our voting stock or outstanding stock is acquired by a
       person, entity or group (as defined in the Exchange Act), other than a
       trustee or other fiduciary that holds securities under a SignalSoft
       employee benefit plan;

     - or during any period of three years individuals who were members of our
       board at the beginning of such period (including new directors whose
       election or nomination was approved by a vote of at least two-thirds of
       the directors then in office who were directors at the beginning of the
       period or whose election of nomination was previously so approved) cease
       for any reason to be a majority of our board.

     Merger and Reorganization. Upon the occurrence of:

     - the reorganization (other than a bankruptcy reorganization), merger or
       consolidation of SignalSoft (other than a reorganization, merger or
       consolidation in which we are the continuing company and that does not
       result in any change in the outstanding shares of common stock);

     - the sale of all or substantially all of our assets of (other than a sale
       in which we continue as a holding company of an entity that conducts the
       business formerly conducted by us);

     - or the dissolution or liquidation of SignalSoft,

all outstanding options will terminate automatically when the event occurs if we
give the option holders 30 days prior written notice of the event. Notice is
also given to holders of other awards. Notice is not required if we, the
successor, or the purchaser makes adequate provision for the assumption of the
outstanding options or the substitution of new options or awards on terms
comparable to the outstanding options or awards. When the notice is given, all
outstanding options fully vest and can be exercised prior to the event and other
awards become exercisable and payable.

     Amendment and Termination. Our board may amend the equity incentive plan in
any respect at any time provided shareholder approval is obtained when necessary
or desirable, but no amendment can impair any option, stock appreciation right,
award or unit previously granted or deprive an option holder, without his or her
consent, of any common stock previously acquired. The equity incentive plan will
terminate 10 years from the date of the closing of this offering unless sooner
terminated by our board.

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS

     We have not entered into employment or severance agreements with any of the
members of our senior management group.

     All of our employees and consultants, including the members of our senior
management group, have signed confidentiality and non-disclosure agreements and
proprietary information and invention agreements. These agreements obligate our
employees and consultants not to disclose confidential information concerning
SignalSoft and to assign to us all rights in any work they create during their
employment with us.
                                       56
<PAGE>   61

                             PRINCIPAL STOCKHOLDERS


     The following table sets forth information with respect to the beneficial
ownership of our common stock as of June 30, 2000, assuming that our outstanding
preferred stock had been converted to common stock as of that date, by:


     - each person known to us to own beneficially more than 5% of our
       outstanding common stock;

     - our chief executive officer, other executive officers and directors; and

     - all directors and executive officers as a group.


     The amounts and percentage of common stock beneficially owned are reported
on the basis of regulations of the SEC governing the determination of beneficial
ownership of securities. Under the SEC's rules, a person is deemed to be a
"beneficial owner" of a security if that person has or shares "voting power,"
which includes the power to vote or to direct the voting of such security, or
"investment power," which includes the power to dispose of or to direct the
disposition of such security. A person is also deemed to be a beneficial owner
of any securities of which that person has a right to acquire beneficial
ownership within 60 days. Under these rules, more than one person may be deemed
a beneficial owner of the same securities and a person may be deemed to be a
beneficial owner of securities as to which such person has no economic interest.
The information set forth in the following table excludes any shares purchased
in the offering by the respective beneficial owner.



<TABLE>
<CAPTION>
                                                                             PERCENTAGE OWNED
                                                         NUMBER     ----------------------------------
BENEFICIAL OWNER(1)                                     OF SHARES   PRIOR TO OFFERING   AFTER OFFERING
-------------------                                     ---------   -----------------   --------------
<S>                                                     <C>         <C>                 <C>
Olympic Venture Partners (2)..........................  3,249,300         17.6%              14.2%
American Express Financial Corporation (3)............  2,533,783         13.8               11.1
James A. Fitch........................................  1,940,000         10.5                8.5
Lazard Freres & Co. LLC (4)...........................  1,291,630          7.0                5.7
TGI Fund II, LC (5)...................................    971,485          5.3                4.3
David A. Hose.........................................  1,940,000         10.5                8.5
Mark H. Flolid (6)....................................  1,940,000         10.5                8.5
Donald J. Winters, Jr. (7)............................    192,000          1.0              *
Roy Kligfield (8).....................................    380,133          2.0                1.6
Andrew M. Murray (9)..................................     43,572       *                   *
Charles P. Waite, Jr. (10)............................  3,249,300         17.6               14.2
B. Holt Thrasher (11).................................    181,119          1.0              *
Eric L. Doggett (12)..................................     22,800       *                   *
Perry M. LaForge (13).................................     49,830       *                   *
All directors and executive officers as a group (9
  persons)............................................  7,998,754         42.7               34.6
</TABLE>


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

 *  Less than one percent.

 (1) Unless otherwise indicated, the address of each person named in the table
     is SignalSoft Corporation, 1495 Canyon Boulevard, Boulder, Colorado 80302.

 (2) Represents shares of common stock owned by investors affiliated with
     Olympic Venture Partners, including:

     - 1,932,770 shares of common stock owned by Olympic Venture Partners III,
       L.P. and 2,111 shares of common stock issuable under a warrant held by
       Olympic Venture Partners III, L.P.

     - 98,456 shares of common stock owned by OVP III Entrepreneurs Fund, L.P.

     - 1,122,157 shares of common stock owned by Olympic Venture Partners IV,
       L.P. and 11,777 shares of common stock issuable under a warrant held by
       Olympic Venture Partners IV, L.P.

     - 56,108 shares of common stock owned by OVP IV Entrepreneurs Fund, L.P.
       and 321 shares of common stock issuable under a warrant held by OVP IV
       Entrepreneurs Fund, L.P.

                                       57
<PAGE>   62


     - 25,600 shares beneficially owned by Charles P. Waite, Jr., as to which
       Olympic Venture Partners disclaims beneficial ownership.


    The address for Olympic Venture Partners and its affiliates is 2420 Carillon
    Point, Kirkland, Washington 98033.

 (3) Represents shares of common stock owned by companies affiliated with
     American Express Financial Corporation, including:

     - 1,689,189 shares of common stock owned by Wrap One & Co.

     - 844,594 shares of common stock owned by Saka & Co.

    The address for American Express Financial Corporation and its affiliates is
    733 Marquette Avenue, Minneapolis, Minnesota 55402.

 (4) The address for Lazard Freres & Co. LLC is 5335 Wisconsin Avenue NW, Suite
     410, Washington, DC 20015.

 (5) Includes 8,411 shares of common stock issuable under a warrant. The address
     for TGI Fund II, LC is 701 Fifth Avenue, Suite 6501, Seattle, Washington
     98104.

 (6) Excludes 6,700 shares owned by Mr. Flolid's sister-in-law, as to which Mr.
     Flolid disclaims beneficial ownership.


 (7) Includes 10,500 shares of common stock issuable under options granted under
     the terms of our Nonqualified Stock Option Plan, which are exercisable on
     or before August 29, 2000.



 (8) Includes 246,800 shares of common stock issuable under options granted
     under the terms of our Nonqualified Stock Option Plan, which are
     exercisable on or before August 29, 2000.



 (9) Includes 9,000 shares of common stock issuable under options granted under
     the terms of our Nonqualified Stock Option Plan, which are exercisable on
     or before August 29, 2000.



(10) Includes 25,600 shares of common stock issuable under options granted under
     the terms of our Nonqualified Stock Option Plan, which are exercisable on
     or before August 29, 2000. Includes 3,209,491 shares owned by Olympic
     Venture Partners and its affiliates and 14,209 shares of common stock
     issuable under warrants held by Olympic Venture Partners and its
     affiliates, as to which Mr. Waite disclaims beneficial ownership.



(11) Includes 12,800 shares of common stock issuable under options granted under
     the terms of our Nonqualified Stock Option Plan, which are exercisable on
     or before August 29, 2000. Includes 127,993 shares of common stock
     beneficially owned by Peter J. Mooney as nominee for Broadview Partners
     Group and 326 shares of common stock issuable under a warrant held by
     Broadview Partners Group. Mr. Thrasher disclaims beneficial ownership of
     112,634 shares of this common stock and 289 shares of common stock issuable
     under this warrant.



(12) Includes 12,800 shares of common stock issuable under options granted under
     the terms of our Nonqualified Stock Option Plan, which are exercisable on
     or before August 29, 2000.



(13) Includes 7,600 shares of common stock issuable under options granted under
     the terms of our Nonqualified Stock Option Plan, which are exercisable on
     or before August 29, 2000.


                                       58
<PAGE>   63

                              CERTAIN TRANSACTIONS

     We have granted nonqualified stock options to some of our directors and
executive officers, as described in "Management -- Compensation of Directors"
and "-- Executive Compensation."

     Since our inception, we have issued shares of preferred stock in the
following private placement transactions:

     - an aggregate of 1,571,700 shares of Series A preferred stock at $1.27 per
       share in August 1996;

     - an aggregate of 3,835,148 shares of Series B preferred stock at $2.52 per
       share in January and February 1998; and

     - an aggregate of 5,574,324 shares of Series C preferred stock at $5.92 per
       share in December 1999 and January 2000.

The share and per share data set forth in this section assume the automatic
conversion of our outstanding preferred stock to common stock on the completion
of this offering. The following table summarizes the shares of preferred stock
purchased in these private placement transactions, to the extent occurring on or
after January 1, 1999, by our named executive officers, directors and 5%
stockholders and persons and entities associated with them. Shares held by
affiliated persons and entities have been aggregated. See "Principal
Stockholders."

<TABLE>
<CAPTION>
                                                              SHARES OF SERIES C
INVESTOR                                                       PREFERRED STOCK
--------                                                      ------------------
<S>                                                           <C>
Olympic Venture Partners....................................        177,255
American Express Financial Corporation......................      2,533,783
TGI Fund II, LC.............................................        168,225
Perry M. LaForge............................................         42,230
</TABLE>


     Olympic Venture Partners, of which one of our directors, Charles P. Waite,
Jr., is a General Partner, beneficially owns approximately 17.6% of our stock.
American Express Financial Corporation beneficially owns approximately 13.8% of
our stock. TGI Fund II, LC beneficially owns approximately 5.3% of our stock.
Perry M. LaForge is one of our directors.


     In 1997, we entered into a consulting agreement with Eddy Hose, the father
of David Hose, our President, Chief Executive Officer and Chairman of the Board
of Directors. Eddy Hose currently provides engineering consulting services
related to location determination technologies under the direction of Roy
Kligfield, our Senior Vice President of Engineering. Eddy Hose received a
master's degree in engineering from the University of California at Los Angeles
and has 45 years of telecommunications and aerospace industry experience. Eddy
Hose receives a monthly retainer of $8,000. David Hose has no direct interest in
this transaction.

     In December 1999, we issued warrants exercisable for 25,336 shares of our
common stock to seven of our stockholders, in connection with a $3.0 million
bridge loan to us from these stockholders. Some of our named executive officers,
directors and 5% stockholders and persons and entities associated with them
received warrants in this transaction, as set forth below:


     - we issued warrants exercisable for 14,209 shares of common stock to
       affiliates of Olympic Venture Partners, which beneficially owns
       approximately 17.6% of our stock and of which one of our directors,
       Charles P. Waite, Jr., is a General Partner;


     - we issued warrants for 8,411 shares of common stock to TGI Fund II, LC,
       which beneficially owns approximately 5.3% of our stock; and

     - we issued warrants for 326 shares of common stock to Broadview Partners
       Group, of which one of our directors, B. Holt Thrasher, is a Managing
       Director.

                                       59
<PAGE>   64

We repaid the loan amounts in shares of Series C preferred stock in December
1999. The weighted average exercise price of the warrants is $1.25 per share. If
not exercised, the warrants will terminate when we complete this offering.


     In March 2000, we entered into a loan agreement with Donald J. Winters,
Jr., our Chief Operating Officer. The principal amount of the loan was
$195,944.56, which Mr. Winters used for the purpose of exercising stock options
and paying associated taxes. The loan was secured by the shares of our common
stock that Mr. Winters received on exercise of his options. The loan bore
interest at a rate of 8.75%. Mr. Winters repaid the loan in June 2000.


     We have entered into an agreement with Broadview International LLC, of
which one of our directors, B. Holt Thrasher, is a Managing Director. Broadview
provides merger and acquisition banking services. Under this agreement,
Broadview will represent and advise us if a third party approaches us with an
offer to acquire us. If a third party expresses interest in acquiring us and we
agree to discuss a possible acquisition by that party, we will pay Broadview a
one-time commitment fee. If we are acquired, we will pay Broadview a success fee
and a percentage of the final consideration.

     We have entered into indemnification agreements with our officers and
directors. These agreements contain provisions requiring us to, among other
things, indemnify our officers and directors against liabilities that may arise
by reason of their status or service as officers or directors, except for
liabilities arising from willful misconduct. We have also agreed to advance
their expenses incurred as a result of any proceeding against them as to which
they could be indemnified.


     We have entered into an investors' rights agreement with most of our
stockholders, which contains registration rights provisions. See "Description of
Capital Stock -- Registration Rights."


     We believe that the terms of the transactions described in this section
were at least as favorable to us as the terms we could have obtained from
unrelated third parties through arms-length negotiation.

                                       60
<PAGE>   65

                          DESCRIPTION OF CAPITAL STOCK

     This section summarizes the material terms and provisions of our capital
stock as stated in our certificate of incorporation and bylaws.

GENERAL

     When we complete this offering, our authorized capital stock will consist
of 75 million shares, including 65 million shares of common stock, par value
$0.001 per share, and 10 million shares of preferred stock, par value $0.001 per
share.

     After this offering and the conversion of our preferred stock into common
stock, we will have outstanding:


     - 22,820,751 shares of common stock if the underwriters do not exercise
       their over-allotment option, or



     - 23,480,751 shares of common stock if the underwriters exercise their
       over-allotment option in full; and


     - no shares of preferred stock.

COMMON STOCK

     Each stockholder of record of common stock will be entitled to one vote for
each outstanding share of our common stock owned by that stockholder on every
matter properly submitted to the stockholders for their vote. After satisfaction
of the dividend rights of holders of preferred stock, holders of common stock
are entitled to any dividend declared by the board of directors out of funds
legally available for this purpose. After the payment of liquidation preferences
to holders of any outstanding preferred stock, holders of our common stock are
entitled to receive, on a pro rata basis, all our remaining assets available for
distribution to the stockholders in the event of our liquidation, dissolution,
or winding up. Holders of our common stock do not have any preemptive right to
become subscribers or purchasers of additional shares of any class of our
capital stock. The rights, preferences and privileges of holders of our common
stock are subject to, and may be adversely affected by, the rights of the
holders of shares of any series of preferred stock that we may designate and
issue in the future.

PREFERRED STOCK

     Our restated certificate of incorporation allows the board of directors to
issue, without stockholder approval, one or more series of preferred stock
having such rights, including rights, dividend rights, dividend rates,
redemption rights, conversion rights and such preferences, including liquidation
preferences, as the board of directors may determine.

     Currently, we have designated Series A, Series B and Series C preferred
stock. All of the outstanding shares of these series of preferred stock will
automatically convert into an equal number of shares of our common stock when we
complete this offering. We plan to amend our certificate of incorporation to
delete the existing series of preferred stock effective on the closing of this
offering.

     The issuance of preferred stock by the board of directors may have the
effect of delaying or preventing a change in control. Our issuance of preferred
stock could decrease the amount of earnings and assets available for
distribution to the holders of our common stock or could adversely affect the
rights and powers, including voting rights, of the holders of our common stock.
The issuance of preferred stock could have the effect of decreasing the market
price of our common stock.

REGISTRATION RIGHTS


     We have entered into an investors' rights agreement with most of our
stockholders. Under this agreement, as amended, holders of substantially all of
our common stock can require us to register the sale of their shares, or include
their shares in other registrations, subject to customary conditions under the
Securities Act. Subject to limitations and the lock-up agreements with the
underwriters, we must register the sale of these shares if at any time after
this offering, the holders of 30% or more of these shares request registration.
Subject to limitations, these holders may require us to file an unlimited number
of registration statements on Form S-3 when we are eligible to use Form S-3,
generally one year after this offering. If we decide to make

                                       61
<PAGE>   66

a public offering of our shares, these holders have the right to include their
shares in the offering, subject to limitations, except that offerings in
connection with stock option plans, convertible debt or mergers do not trigger
this right. These registration rights terminate two years after we complete this
offering. The investors' rights agreement also requires us to provide financial
statements and other information to our current stockholders.

LIMITATION OF LIABILITY; INDEMNIFICATION OF OUR OFFICERS AND DIRECTORS

     As permitted by the Delaware General Corporation Law, our certificate of
incorporation provides that our directors will not be personally liable to us or
our stockholders for monetary damages for breach of fiduciary duty as a
director, except in instances where Delaware law prohibits exemption from
liability. As a result of this provision, we and our stockholders may be unable
to obtain monetary damages from a director for breach of his or her duty of
care.

     Our certificate of incorporation and bylaws provide for the indemnification
of our directors and officers to the fullest extent authorized by the Delaware
General Corporation Law, except that we will indemnify a director or officer in
connection with an action initiated by that person only if our board of
directors authorized bringing the action.

     The indemnification provided under our certificate of incorporation and
bylaws include the right to be paid expenses in advance of any proceeding for
which indemnification may be had. However, payment of these expenses incurred by
a director or officer in advance of the final disposition of a proceeding may be
made only upon delivery to us of an undertaking by or on behalf of the director
or officer to repay all amounts so paid in advance if it is ultimately
determined that the director or officer is not entitled to be indemnified.

     We have entered into separate indemnification agreements with each of our
directors and officers. These agreements require us to, among other things,
indemnify the director or officer against expenses, including attorneys' fees,
judgments, fines and settlements paid by the individual in connection with any
action, suit or proceeding arising out of the individual's status or service as
a director or officer of SignalSoft, other than liabilities arising from willful
misconduct or conduct that is knowingly fraudulent or deliberately dishonest. We
have also agreed to advance expenses incurred by the individual in connection
with any proceeding against the individual with respect to which he or she may
be entitled to indemnification by us. We believe that our certificate of
incorporation and bylaw provisions and indemnification agreements are necessary
to attract and retain qualified persons as directors and officers.

POSSIBLE ANTI-TAKEOVER EFFECTS

     Our certificate of incorporation and bylaws and certain provisions of
Delaware law contain provisions that may have the effect of hindering or
delaying an attempted takeover of our company other than through negotiation
with our board of directors. These provisions could have the effect of
discouraging attempts to acquire us or remove incumbent management, even if some
or a majority of our stockholders believe this action to be in their best
interest, including attempts that might result in the stockholders' receiving a
premium over the market price for the shares of our common stock held by the
stockholders.


     Classified Board of Directors. We have approved an amendment to our
certificate of incorporation to establish a classified board of directors, which
will become effective on the closing of this offering. Our board will consist of
six members, who will be divided into three classes of two directors each
serving staggered three-year terms. Once the classified board is in place, only
two of our six board members will be elected at each annual stockholders'
meeting, with the other directors continuing for the remainder of their class
terms. This provision could delay or prevent an acquisition of control of
SignalSoft by a holder of a substantial block of our stock, or the removal of
our incumbent board of directors or management.


     Preferred Stock Issuances. Our certificate of incorporation allows our
board to issue, without stockholder approval, preferred stock with terms set by
the board. The preferred stock could be issued quickly with terms that delay or
prevent the change in control or make removal of our management more difficult.

                                       62
<PAGE>   67

Also, the issuance of preferred stock may cause the market price of our common
stock to decrease. See "Description of Capital Stock" for more information.

     Special Stockholders' Meetings. Our bylaws provide that special meetings of
stockholders, unless otherwise prescribed by statute, may be called only by the
chairman of the board, the president or a majority of the board of directors.
The bylaws require the president to call a special meeting of stockholders
owning at least 5% of our common stock request the meeting in writing.

     Section 203 of Delaware Law. In addition to these provisions of our bylaws,
we are subject to the provisions of Section 203 of the Delaware General
Corporation Law which generally prohibits publicly held Delaware corporations
from engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
became an interested stockholder, unless:

     - prior to the date that the person became an interested stockholder, the
       transaction or business combination that resulted in the person becoming
       an interested stockholder is approved by the board of directors;

     - upon consummation of the transaction that resulted in the stockholder
       becoming an interested stockholder, the interested stockholder owns at
       least 85% of our outstanding voting stock; or

     - on or after that date, the business combination is approved by our board
       of directors and by the affirmative vote of at least 66 2/3% of our
       outstanding voting stock that is not owned by the interested stockholder.

A "business combination" includes mergers, asset sales and other similar
transactions resulting in a financial benefit to the interested stockholder.
Generally, an "interested stockholder" is a person who, together with affiliates
and associates, owns, or within the last three years did own, 15% or more of a
corporation's voting stock.

     These provisions and the provisions of our certificate of incorporation and
bylaws described above could have the effect of delaying, deferring or
preventing a proxy contest or an acquisition of control of our company by a
holder of a substantial block of our stock, or the removal of the incumbent
board of directors. Such provisions could also have the effect of discouraging
an outsider from making a tender offer or otherwise attempting to obtain control
of SignalSoft, even though such an attempt might be beneficial to SignalSoft and
our stockholders. The existence of these provisions may reduce the price that
certain investors might be willing to pay in the future for shares of our common
stock.

WARRANTS


     As of June 30, 2000, there were outstanding warrants to purchase an
aggregate of 25,336 shares of common stock, which are all presently exercisable.
The warrants have a weighted-average exercise price of $1.25 per share. If not
exercised, these warrants will terminate on the closing of this offering.


LISTING

     We have applied to have our common stock included for quotation on the
Nasdaq National Market under the symbol "SGSF."

TRANSFER AGENT AND REGISTRAR


     American Securities Transfer & Trust, Inc. serves as the transfer agent and
registrar for our common stock.


                                       63
<PAGE>   68

                        SHARES ELIGIBLE FOR FUTURE SALE


     Upon completion of this offering, we will have 22,820,751 shares of common
stock issued and outstanding, or 23,480,751 shares if the underwriters exercise
their over-allotment option in full. We will have 1,530,781 shares of common
stock issuable on exercise of outstanding options. All of the shares we sell in
this offering will be freely tradeable without restriction or further
registration under the Securities Act, except that any shares purchased by our
"affiliates," as that term is defined in Rule 144, may generally only be sold in
compliance with the limitations of Rule 144 described below.



     Of the remaining shares of common stock outstanding after this offering,
4,811,729 shares also will be freely tradeable without restriction in the public
market, and 13,609,022 shares may be sold publicly only if registered under the
Securities Act or sold in accordance with an exemption from the Securities Act,
such as Rule 144.


     Prior to this offering, there has been no public market for our common
stock. We are unable to estimate the number of shares that may be sold in the
future by our existing stockholders or the effect, if any, that sales of shares
by such stockholders, or the availability of the shares for sale, will have on
the market price of the common stock prevailing from time to time. Sales of
substantial amounts of our common stock in the public market could adversely
affect prevailing market prices.

     For purposes of Rule 144, an "affiliate" of an issuer is a person that,
directly or indirectly through one or more intermediaries, controls, or is
controlled by or is under common control with, such issuer. In general, under
Rule 144, a stockholder including an "affiliate," who has beneficially owned
shares for at least one year is entitled to sell, within any three-month period,
a number of "restricted" shares that does not exceed the greater of:


     - one percent of the then outstanding shares of common stock, or
       approximately 228,207 shares expected to be outstanding immediately after
       this offering; or


     - the average weekly trading volume during the four calendar weeks
       preceding the sale.

     Sales under Rule 144 are subject to manner of sale limitations, notice
requirements and the availability of current public information about the
issuer. Rule 144(k) provides that a person who is not deemed an "affiliate" and
who has beneficially owned shares for at least two years is entitled to sell
such shares at any time under Rule 144 without regard to the limitations
described above. We estimate that 4,811,729 outstanding shares fall in this
category.

     Any employee, officer, director, advisor or consultant who purchased his or
her shares under a written compensatory plan or contract is entitled to rely on
the resale provisions of Rule 701, which permits non-affiliates to sell their
Rule 701 shares without having to comply with the public information, holding
period, volume limitation or notice provisions of Rule 144 and permits
affiliates to sell their Rule 701 shares without having to comply with Rule
144's holding period restrictions, in each case commencing 90 days after we
become subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934. However, our officers, directors and current
stockholders are subject to 180-day lock-up agreements.


     As of June 30, 2000, there were outstanding stock options to purchase an
aggregate of 1,530,781 shares of common stock, of which 652,868 are presently
exercisable or exercisable within 60 days. These outstanding stock options are
held by our executive officers or employees. Following the offering, we intend
to file a registration statement on Form S-8 covering the 2,000,000 shares of
common stock issuable under our 1995 nonqualified stock option plan and
3,400,000 shares of common stock issuable under our 2000 equity incentive plan,
including shares subject to outstanding options, thus permitting the resale of
such shares in the public market without restriction under the Securities Act,
other than restrictions applicable to affiliates.



     As of June 30, 2000, there were also outstanding warrants to purchase an
aggregate of 25,336 shares of common stock, which are all presently exercisable.
The warrants have a weighted-average exercise price of $1.25 per share. If not
exercised, these warrants will terminate on the closing of this offering.


                                       64
<PAGE>   69

     We have granted registration rights to substantially all of our
stockholders. As of the date of this prospectus, an aggregate of 10,981,172
shares of our common stock are entitled to these rights. See "Description of
Capital Stock -- Registration Rights."

     We and our executive officers, directors and all of our other stockholders
have agreed, under lock-up agreements relating to the transfer of shares of our
capital stock, that for a period of 180 days after the date of this prospectus
we will not directly or indirectly, offer, pledge, sell, or otherwise dispose of
any shares of capital stock, including but not limited to the filing, or
participation in the filing, of a registration statement with the Securities and
Exchange Commission in respect of, or establish or increase a put equivalent
position or liquidate or decrease a call equivalent position within the meaning
of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the Securities and Exchange Commission promulgated under that
Act with respect to, any shares of capital stock or any securities convertible
into, or exercisable or exchangeable for such capital stock, or publicly
announce an intention to effect any such a transaction, without the prior
written consent of Salomon Smith Barney Inc. Salomon Smith Barney Inc. has
informed us that it has no current intentions of releasing any shares subject to
the lock-up agreements. Any determination by Salomon Smith Barney Inc. to
release any shares subject to the lock-up agreements would be based on a number
of factors at the time of determination, including the market price and trading
volumes of the common stock, the liquidity of the trading market for the common
stock, general market conditions, the number of shares proposed to be sold, and
the timing, purpose and terms of the proposed sale. There are no exceptions to
the lock-up except that individuals subject to the lock-up may dispose of shares
as bona fide gifts to persons who also enter into lock-up agreements that
terminate 180 days after the date of the prospectus.

                                       65
<PAGE>   70

           MATERIAL TAX CONSIDERATIONS FOR NON-UNITED STATES HOLDERS

     The following summary sets forth the U.S. federal tax consequences that are
anticipated to be material in the acquisition, ownership, and disposition of our
common stock by a holder that, for U.S. federal income tax purposes, is not a
"United States person" (as defined below). This summary does not address every
aspect of U.S. federal income taxation that may be relevant to a particular
non-U.S. holder under special circumstances or who is subject to special
treatment under applicable law (e.g., certain financial institutions, insurance
companies, broker-dealers, and tax-exempt organizations), and does not address
any tax consequences arising under the laws of any state, local, or foreign
jurisdiction. This summary is based upon the U.S. federal tax law now in effect,
which is subject to change, perhaps with retroactive effect. Prospective
investors should consult their tax advisors regarding their particular tax
consequences of acquiring, owning, and disposing of our common stock.

     For purposes of this summary, a "United States person" means:

     - a citizen or resident of the United States;

     - a corporation, partnership, or other entity created or organized under
       the laws of the United States or any State or political subdivision of
       the United States;

     - an estate the income of which is includible in gross income for U.S.
       federal income tax purposes regardless of its source; or

     - a trust (A) the administration of which is subject to the primary
       supervision of a United States court and which has one or more United
       States persons who have the authority to control all substantial
       decisions of the trust, or (B) that was in existence on August 20, 1996,
       was treated as a United States person on that date, and elected to
       continue to be so treated.

DIVIDENDS

     Distributions made by us with respect to our common stock generally will be
taxable to you as ordinary income to the extent of our current or accumulated
earnings and profits (as determined for United States federal income tax
purposes). Currently, we have no earnings and profits. Distributions in excess
of our current or accumulated earnings and profits will be treated first as a
non-taxable return of capital reducing your tax basis in the common stock. Any
such distribution in excess of your tax basis in the common stock will be
treated as capital gain and will be either long-term or short-term capital gain
depending upon whether you have held the common stock for more than one year.
Dividends received by a non-U.S. holder with respect to our common stock will
generally be subject to withholding of U.S. federal income tax at the rate of
30%. If the distribution received by a non-U.S. holder with respect to our
common stock is effectively connected with the conduct of a trade or business in
the United States by the non-U.S. holder, the dividend will not be subject to
withholding but instead will be subject to U.S. federal income tax imposed on
net income on the same basis that applies to U.S. persons generally. In
addition, a corporate non-U.S. holder receiving effectively connected dividends
may be subject to a branch profits tax of 30% on the corporation's effectively
connected earnings and profits, subject to certain adjustments.

     Non-U.S. holders should consult any applicable income tax treaties that may
provide for a reduction of or exemption from U.S. withholding tax or, in the
case of a corporate non-U.S. holder, the branch profits tax. A non-U.S. holder
may be required to satisfy certain certification requirements in order to claim
such treaty benefits.

GAIN ON DISPOSITION

     A non-U.S. holder will generally not be subject to U.S. federal income or
withholding tax on gain recognized on a sale or other disposition of our common
stock, unless the gain is:

     - effectively connected with the conduct of a trade or business in the
       United States by the non-U.S. holder, or

                                       66
<PAGE>   71

     - in the case of non-U.S. holder who is a nonresident alien individual and
       holds our common stock as a capital asset, such holder is present in the
       United States for 183 or more days in the taxable year of the
       disposition, and certain other requirements are met.

     Gain that is effectively connected with the conduct of trade or business in
the United States by the non-U.S. holder will be subject to U.S. federal income
tax imposed on net income on the same basis that applies to U.S. persons
generally and, with respect to corporate holders and under certain
circumstances, the branch profits tax. Non-U.S. holders should consult any
applicable income tax treaties that may provide for different rules.

UNITED STATES FEDERAL ESTATE TAX

     An individual who is not a citizen or resident of the United States (as
specially defined for U.S. federal estate tax purposes) and is treated as the
owner of, or has made certain lifetime transfers of, an interest in our common
stock at the time of death will be required to include the value of that
interest in his gross estate for U.S. federal estate tax purposes, unless an
applicable estate tax treaty applies.

INFORMATION REPORTING AND BACKUP WITHHOLDING

     Generally, we must report annually to the United States Internal Revenue
Service and to each non-U.S. holder the amount of dividends paid to such holder,
and the tax withheld on such dividends, regardless of whether any tax has been
actually withheld. This information may also be made available to the tax
authorities of a country in which the non-U.S. holder resides. Under current
United States Treasury regulations, United States information reporting
requirements and backup withholding tax will generally not apply to dividends
paid on our common stock to a non-U.S. holder at an address outside the United
States. Payments by a United States office of a broker of the proceeds of a sale
of our common stock are subject to both backup withholding at a rate of 31% and
information reporting unless the holder certifies as to its non-U.S. holder
status under penalties of perjury or otherwise establishes an exemption.
Payments of the proceeds from the disposition of our common stock by foreign
offices of United States brokers, or foreign brokers with certain types of
relationships to the United States, will not be subject to backup withholding,
but will be subject to information reporting, unless the broker has documentary
evidence in its records that the holder is a non-U.S. holder and certain other
conditions are met, or the holder otherwise establishes an exemption.

     Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If backup withholding results in an overpayment of tax, a refund may
be obtained, provided that certain required information is furnished to the
Internal Revenue Service. The United States Treasury Department has promulgated
final regulations regarding the withholding and information reporting rules
discussed above. In general, such regulations do not significantly alter the
substantive withholding and information reporting requirements but unify current
certification procedures and forms and clarify reliance standards. The final
regulations are anticipated to become effective for payments made after December
31, 2000, subject to certain transition rules.

                                       67
<PAGE>   72

                                  UNDERWRITING

     Subject to the terms and conditions stated in the underwriting agreement
dated the date of this prospectus, each underwriter named below has severally
agreed to purchase, and we have agreed to sell to such underwriter, the number
of shares set forth opposite the name of such underwriter.

<TABLE>
<CAPTION>
                                                               NUMBER OF
NAME                                                            SHARES
----                                                           ---------
<S>                                                            <C>
Salomon Smith Barney Inc. ..................................
Donaldson, Lufkin & Jenrette Securities Corporation.........
Lehman Brothers Inc. .......................................
                                                               ---------
     Total..................................................   4,400,000
                                                               =========
</TABLE>

     The underwriting agreement provides that the obligations of the several
underwriters to purchase the shares included in this offering are subject to
approval of particular legal matters by counsel and to other conditions. The
underwriters are obligated to purchase all the shares, other than those covered
by the over-allotment option described below, if they purchase any of the
shares.

     The underwriters, for whom Salomon Smith Barney Inc., Donaldson, Lufkin &
Jenrette Securities Corporation and Lehman Brothers Inc. are acting as
representatives, propose to offer some of the shares directly to the public at
the public offering price set forth on the cover page of this prospectus and
some of the shares to dealers at the public offering price less a concession not
in excess of $     per share. The underwriters may allow, and such dealers may
reallow, a concession not in excess of $     per share on sales to other
dealers. If all of the shares are not sold at the initial offering price, the
representatives may change the public offering price and the other selling
terms. The representatives have advised us that the underwriters do not intend
to confirm any sales to any accounts over which they exercise discretionary
authority.

     We have granted to the underwriters an option exercisable for 30 days from
the date of this prospectus to purchase up to 660,000 additional shares of
common stock at the public offering price less the underwriting discount. The
underwriters may exercise such option solely for the purpose of covering over-
allotments, if any, in connection with this offering. To the extent such option
is exercised, each underwriter will be obligated, subject to certain conditions,
to purchase a number of additional shares approximately proportionate to such
underwriter's initial purchase commitment.

     At our request, the underwriters will reserve up to 10% of the shares to be
offered, or approximately 440,000 shares, as directed shares for sale at the
initial public offering price to our directors, officers and employees, as well
as to individuals associated with us or our employees, who have advised us of
their desire to purchase such shares. This directed share program will be
administered by Salomon Smith Barney Inc. The number of shares of our common
stock available for sale to the general public will be reduced to the extent
these individuals purchase directed shares. Any directed shares which are not so
purchased will be offered by the underwriters to the general public on the same
basis as the other shares offered by this prospectus. We have agreed to
indemnify the underwriters against certain liabilities and expenses, including
liabilities under the Securities Act of 1933, in connection with sales of
directed shares.

     We, our officers and directors and all of our other stockholders have
agreed that, for a period of 180 days from the date of this prospectus, we and
they will not, without the prior written consent of Salomon Smith Barney Inc.,
dispose of or hedge any shares of our common stock or any securities convertible
into or exchangeable for our common stock. Shares purchased by our directors,
officers and stockholders under the directed share program also will be covered
by this lock-up agreement. Salomon Smith Barney Inc. in its sole discretion may
release any of the securities subject to these lock-up agreements at any time
without notice. In addition, the sale of directed shares may be restricted for
up to three months if required by the National Association of Securities
Dealers, Inc.

     Prior to this offering, there has been no public market for the common
stock. Consequently, the initial public offering price for the shares was
determined by negotiations among the representatives and us. The
                                       68
<PAGE>   73

factors considered in determining the initial public offering price were our
record of operations, our current financial condition, our future prospects, our
markets, the economic conditions in and future prospects for the industry in
which we compete, our management, and currently prevailing general conditions in
the equity securities markets, including current market valuations of publicly
traded companies considered comparable to us. There can be no assurance,
however, that the prices at which the shares will sell in the public market
after this offering will not be lower than the price at which they are sold by
the underwriters or that an active trading market in the common stock will
develop and continue after this offering.

     We have applied to have the common stock included for quotation on the
Nasdaq National Market under the symbol "SGSF."

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

<TABLE>
<CAPTION>
                                                                  PAID BY SIGNALSOFT
                                                              ---------------------------
                                                              NO EXERCISE   FULL EXERCISE
                                                              -----------   -------------
<S>                                                           <C>           <C>
Per share...................................................   $              $
Total.......................................................   $              $
</TABLE>

     In connection with the offering, Salomon Smith Barney Inc., on behalf of
the underwriters, may purchase and sell shares of common stock in the open
market. These transactions may include over-allotment, syndicate covering
transactions and stabilizing transactions. Over-allotment involves syndicate
sales of common stock in excess of the number of shares to be purchased by the
underwriters in the offering, which created a syndicate short position.
Syndicate covering transactions involve purchases of the common stock in the
open market after the distribution has been completed in order to cover
syndicate short positions. Stabilizing transactions consist of bids or purchases
of common stock made for the purpose of preventing or retarding a decline in the
market price of the common stock while the offering is in progress.

     The underwriters also may impose a penalty bid. Penalty bids permit the
underwriters to reclaim a selling concession from a syndicate member when
Salomon Smith Barney Inc., in covering syndicate short positions or making
stabilizing purchases, repurchases shares originally sold by that syndicate
member.

     Any of these activities may cause the price of the common stock to be
higher than the price that otherwise would exist in the open market in the
absence of such transactions. These transactions may be effected on the Nasdaq
National Market or in the over-the-counter market, or otherwise and, if
commenced, may be discontinued at any time.

     We estimate that the total expenses of this offering will be $935,000.


     The representatives have performed certain investment banking and advisory
services for us from time to time for which they have received customary fees
and expenses. Salomon Smith Barney Inc. acted as placement agent in our most
recent private placement of Series C preferred stock in January 2000. Salomon
Smith Barney Inc. received customary compensation for acting as placement agent
and purchased 84,459 shares of Series C preferred stock in the private
placement. These shares will convert automatically into 84,459 shares of common
stock upon the closing of this offering. The representatives may, from time to
time, engage in transactions with and perform services for us in the ordinary
course of their business.


     We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, or to contribute to
payments the underwriters may be required to make in respect of any of those
liabilities.

                                       69
<PAGE>   74

                                 LEGAL MATTERS

     Holme Roberts & Owen LLP, Denver, Colorado, will pass upon the validity of
the shares of common stock on our behalf. Cravath, Swaine & Moore, New York, New
York, will pass upon legal matters for the underwriters.

                                    EXPERTS

     The financial statements of SignalSoft Corporation as of December 31, 1998
and 1999 and for each of the years in the three-year period ended December 31,
1999 have been included in this prospectus and in the registration statement in
reliance upon the report of KPMG LLP, independent certified public accountants,
appearing elsewhere in this prospectus, and upon the authority of that firm as
experts in accounting and auditing.

     The financial statements of BFound.com Services, Inc. as of October 31,
1999 and for the year then ended, have been included in this prospectus and in
the registration statement in reliance upon the report of KPMG LLP, chartered
accountants, appearing elsewhere in this prospectus, and upon the authority of
that firm as experts in accounting and auditing.

                             AVAILABLE INFORMATION

     We have filed with the SEC a registration statement on Form S-1 under the
Securities Act with respect to the shares of common stock offered by this
prospectus. This prospectus does not contain all the information set forth in
the registration statement, certain portions of which are omitted as permitted
by the rules and regulations of the SEC.

     For further information about us and the shares offered by this prospectus,
you should refer to the registration statement, including the exhibits and
schedules filed with the registration statement. You may obtain copies of the
registration statement, of which this prospectus is a part, together with such
exhibits and schedules, upon payment of the fee prescribed by the SEC, or you
may examine these documents without charge at the offices of the SEC.

     After the offering is completed, we will be subject to the informational
requirements of the Securities Exchange Act of 1934 and will be required to file
annual and quarterly reports, proxy statements and other information with the
SEC. You can inspect and copy reports and other information filed by us with the
SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington,
D.C. 20549. You may also obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0300. The SEC also maintains an
Internet site at http://www.sec.gov that contains reports, proxy and information
statements regarding issuers, including us, that file electronically with the
SEC.

     As a result of this offering, we will become subject to the information and
reporting requirements of the Securities Exchange Act of 1934 and will be
required to file periodic reports, proxy statements and other information with
the Securities and Exchange Commission. We will send an annual report to
stockholders and any additional reports or statements required by the Securities
and Exchange Commission. The annual report to shareholders will contain
financial information that has been examined and reported on, with an opinion
expressed by an independent public accountant.

                                       70
<PAGE>   75

                         INDEX TO FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
                                                              PAGE NO.
                                                              --------
<S>                                                           <C>
SIGNALSOFT CORPORATION
Independent Auditors' Report................................     F-2
Balance Sheets as of December 31, 1998 and 1999 and March
  31, 2000 (unaudited)......................................     F-3
Statements of Operations for the years ended December 31,
  1997, 1998 and 1999 and the three months ended March 31,
  1999 and 2000 (unaudited).................................     F-4
Statements of Stockholders' Deficit for the years ended
  December 31, 1997, 1998 and 1999 and the three months
  ended March 31, 2000 (unaudited)..........................     F-5
Statements of Cash Flows for the years ended December 31,
  1997, 1998 and 1999 and the three months ended March 31,
  1999 and 2000 (unaudited).................................     F-6
Notes to Financial Statements...............................     F-7

BFOUND.COM SERVICES, INC.
Independent Auditors' Report................................    F-15
Balance Sheets as of October 31, 1999 and April 30, 2000
  (unaudited)...............................................    F-16
Statements of Operations for the year ended October 31, 1999
  and for the six months ended April 30, 1999 and 2000
  (unaudited)...............................................    F-17
Statements of Shareholders' Equity for the year ended
  October 31, 1999 and for the six months ended April 30,
  2000 (unaudited)..........................................    F-18
Statements of Cash Flows for the year ended October 31, 1999
  and for the six months ended April 30, 1999 and 2000
  (unaudited)...............................................    F-19
Notes to Financial Statements...............................    F-20

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
Notes to Unaudited Pro Forma Condensed Combined Financial
  Statements................................................    F-27
Unaudited Pro Forma Condensed Combined Balance Sheet as of
  March 31, 2000............................................    F-28
Unaudited Pro Forma Condensed Combined Statement of
  Operations for the three months ended March 31, 2000......    F-29
Unaudited Pro Forma Condensed Combined Statement of
  Operations for the year ended December 31, 1999...........    F-30
</TABLE>


                                       F-1
<PAGE>   76

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
SignalSoft Corporation:

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

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

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

                                            KPMG LLP

Boulder, Colorado
February 17, 2000, except for note 11, which is
as of May 16, 2000

                                       F-2
<PAGE>   77

                             SIGNALSOFT CORPORATION

                                 BALANCE SHEETS


<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                        --------------------------    MARCH 31,
                                                           1998           1999           2000
                                                        -----------   ------------   ------------
                                                                                     (UNAUDITED)
<S>                                                     <C>           <C>            <C>
                                             ASSETS

Current assets:
  Cash and cash equivalents...........................  $ 5,119,918   $ 18,051,349   $ 24,713,329
  Trade accounts receivable...........................      169,767        425,993      1,363,621
  Prepaid expenses and other..........................      511,885        307,966        815,187
                                                        -----------   ------------   ------------
          Total current assets........................    5,801,570     18,785,308     26,892,137
Equipment and leasehold improvements, net.............      634,861        652,730      1,199,646
Prepaid acquisition costs.............................           --             --        301,865
Prepaid stock offering costs..........................           --             --         91,275
                                                        -----------   ------------   ------------
          Total assets................................  $ 6,436,431   $ 19,438,038   $ 28,484,923
                                                        ===========   ============   ============

                              LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
  Note payable........................................  $    91,667   $     41,667   $     29,167
  Current portion of capital lease obligations........       84,865         56,232         50,697
  Trade accounts payable..............................      143,042      1,752,903        410,601
  Accrued compensation payable........................      131,684        542,067        555,977
  Other accrued expenses..............................       17,884         55,353        847,282
  Advances under research and development
     arrangement......................................      231,442             --             --
  Deferred revenue....................................      134,164         50,833         12,333
                                                        -----------   ------------   ------------
          Total current liabilities...................      834,748      2,499,055      1,906,057
Capital lease obligations, less current portion.......       72,860         25,971         15,475
                                                        -----------   ------------   ------------
          Total liabilities...........................      907,608      2,525,026      1,921,532
                                                        -----------   ------------   ------------
Mandatorily redeemable, convertible preferred stock:
  Series A, par value $.001, 1,571,700 shares
     authorized, issued and outstanding; aggregate
     liquidation preference of $2,000,000 and
     redemption value of $2,546,667 and $2,586,667 at
     December 31, 1999 and March 31, 2000,
     respectively.....................................    2,359,519      2,525,442      2,566,923
  Series B, par value $.001, 3,835,148 shares
     authorized, issued and outstanding; aggregate
     liquidation preference of $9,650,000 and
     redemption value of $11,065,334 and $11,258,333
     at December 31, 1999 and March 31, 2000,
     respectively.....................................   10,230,277     11,015,837     11,212,226
  Series C, par value $.001, 5,574,324 shares
     authorized; 3,370,806 and 5,574,324 shares issued
     and outstanding in 1999 and 2000, respectively;
     aggregate liquidation preference of $19,955,172
     and $33,000,000 and redemption value of
     $20,017,254 and $33,661,201 at December 31, 1999
     and March 31, 2000, respectively.................           --     18,663,841     31,459,773
                                                        -----------   ------------   ------------
                                                         12,589,796     32,205,120     45,238,922
                                                        -----------   ------------   ------------
Stockholders' deficit:
  Common stock, par value $.01 in 1998, $.001 in 1999
     and 2000; 20,000,000, 20,000,000 and 20,600,000
     shares authorized in 1998, 1999 and 2000,
     respectively; 6,386,666, 6,393,636 and 6,845,318
     shares issued and outstanding in 1998, 1999 and
     2000, respectively...............................       63,867          6,394          6,846
  Additional paid-in capital..........................      689,483      1,420,846      3,906,488
  Deferred stock option compensation..................     (178,462)      (467,210)    (2,641,269)
  Notes receivable from stockholders..................           --             --       (109,104)
  Accumulated deficit.................................   (7,635,861)   (16,252,138)   (19,838,492)
                                                        -----------   ------------   ------------
          Total stockholders' deficit.................   (7,060,973)   (15,292,108)   (18,675,531)
                                                        -----------   ------------   ------------
Commitments and contingencies (notes 5, 6, 7 and 8)
          Total liabilities and stockholders'
            deficit...................................  $ 6,436,431   $ 19,428,038   $ 28,484,923
                                                        ===========   ============   ============
</TABLE>


                See accompanying notes to financial statements.
                                       F-3
<PAGE>   78

                             SIGNALSOFT CORPORATION

                            STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                                                           THREE MONTHS ENDED
                                                            YEARS ENDED                         MARCH 31,
                                              ---------------------------------------   -------------------------
                                                 1997          1998          1999          1999          2000
                                              -----------   -----------   -----------   -----------   -----------
                                                                                               (UNAUDITED)
<S>                                           <C>           <C>           <C>           <C>           <C>
Revenue:
  License fees..............................  $   680,000   $   353,102   $   882,557   $    50,458   $   745,905
  Maintenance fees..........................       83,333       586,503       287,301       138,470        68,200
  Professional services and other...........      588,178       140,903       785,915        34,498       810,903
                                              -----------   -----------   -----------   -----------   -----------
         Total revenue......................    1,351,511     1,080,508     1,955,773       223,426     1,625,008
Cost of revenue (exclusive of stock option
  compensation expense of $16,020, $16,392,
  $30,256, $6,955 and $22,342 for the
  periods ended December 31, 1997, 1998,
  1999 and March 31, 1999 and 2000,
  respectively).............................      389,055     1,127,200     1,777,142       399,002       611,559
                                              -----------   -----------   -----------   -----------   -----------
         Gross profit (loss)................      962,456       (46,692)      178,631      (175,576)    1,013,449
Operating expenses:
  Selling, general and administrative
    (exclusive of stock option compensation
    expense of $21,252, $24,864, $118,712,
    $26,167 and $56,043 for the periods
    ended December 31, 1997, 1998, 1999 and
    March 31, 1999 and 2000,
    respectively)...........................    1,196,478     2,019,808     3,934,617       945,010     2,023,740
  Research and development (exclusive of
    stock option compensation expense of
    $58,524, $59,748, $109,017, $23,019 and
    $38,461 for the periods ended December
    31, 1997, 1998, 1999 and March 31, 1999
    and 2000, respectively).................    1,152,669     2,486,002     3,399,410       807,297     1,842,848
  Depreciation and amortization.............       16,056       134,320       191,679        46,636        69,859
  Stock option compensation expense.........       95,796       101,004       257,985        56,141       116,846
                                              -----------   -----------   -----------   -----------   -----------
         Total operating expenses...........    2,460,999     4,741,134     7,783,691     1,855,084     4,053,293
                                              -----------   -----------   -----------   -----------   -----------
         Loss from operations...............   (1,498,543)   (4,787,826)   (7,605,060)   (2,030,660)   (3,039,844)
                                              -----------   -----------   -----------   -----------   -----------
Other income (expense):
  Interest income...........................      100,035       343,504       204,895        60,413       371,682
  Interest expense..........................      (38,593)      (76,787)     (199,436)      (10,324)       (6,685)
  Other, net................................        2,000        70,132         4,500         1,125            --
                                              -----------   -----------   -----------   -----------   -----------
         Total other income, net............       63,442       336,849         9,959        51,214       364,997
                                              -----------   -----------   -----------   -----------   -----------
         Net loss...........................   (1,435,101)   (4,450,977)   (7,595,101)   (1,979,446)   (2,674,847)
Preferred stock dividend requirements and
  accretion of mandatorily redeemable
  convertible preferred stock to redemption
  value.....................................     (165,923)     (820,745)   (1,021,176)     (237,871)     (911,507)
                                              -----------   -----------   -----------   -----------   -----------
         Net loss attributable to common
           stockholders.....................  $(1,601,024)  $(5,271,722)  $(8,616,277)  $(2,217,317)  $(3,586,354)
                                              ===========   ===========   ===========   ===========   ===========
Basic and diluted -- loss per share.........  $      (.25)  $      (.83)  $     (1.35)  $      (.35)  $      (.56)
                                              ===========   ===========   ===========   ===========   ===========
Weighted average number of common shares
  outstanding -- basic and diluted..........    6,333,981     6,385,269     6,387,220     6,386,666     6,438,804
                                              ===========   ===========   ===========   ===========   ===========
</TABLE>


                See accompanying notes to financial statements.

                                       F-4
<PAGE>   79

                             SIGNALSOFT CORPORATION

                      STATEMENTS OF STOCKHOLDERS' DEFICIT


<TABLE>
<CAPTION>
                                                                                                       NOTES
                                      COMMON STOCK       ADDITIONAL     DEFERRED                     RECEIVABLE        TOTAL
                                  --------------------    PAID-IN     STOCK OPTION   ACCUMULATED        FROM       STOCKHOLDERS'
                                   SHARES      AMOUNT     CAPITAL     COMPENSATION     DEFICIT      STOCKHOLDERS      DEFICIT
                                  ---------   --------   ----------   ------------   ------------   ------------   -------------
<S>                               <C>         <C>        <C>          <C>            <C>            <C>            <C>
Balances at January 1, 1997.....  6,286,666   $ 62,867   $  329,583   $  (144,362)   $   (763,115)          --     $   (515,027)
Issuance of common stock for
  cash..........................     90,000        900      111,600            --              --           --          112,500
Accretion of mandatorily
  redeemable convertible
  preferred stock to redemption
  value.........................         --         --           --            --        (165,923)          --         (165,923)
Issuance of common stock options
  at less than fair value.......         --         --      209,200      (209,200)             --           --               --
Amortization of deferred stock
  option compensation...........         --         --           --        95,796              --           --           95,796
Net loss........................         --         --           --            --      (1,435,101)          --       (1,435,101)
                                  ---------   --------   ----------   -----------    ------------    ---------     ------------
Balances at December 31, 1997...  6,376,666     63,767      650,383      (257,766)     (2,364,139)          --       (1,907,755)
Issuance of common stock for
  cash..........................     10,000        100       17,400            --              --           --           17,500
Accretion of mandatorily
  redeemable convertible
  preferred stock to redemption
  value.........................         --         --           --            --        (820,745)          --         (820,745)
Issuance of common stock options
  at less than fair value.......         --         --       21,700       (21,700)             --           --               --
Amortization of deferred stock
  option compensation...........         --         --           --       101,004              --           --          101,004
Net loss........................         --         --           --            --      (4,450,977)          --       (4,450,977)
                                  ---------   --------   ----------   -----------    ------------    ---------     ------------
Balances at December 31, 1998...  6,386,666     63,867      689,483      (178,462)     (7,635,861)          --       (7,060,973)
Change to $.001 per share par
  value for common stock........         --    (57,480)      57,480            --              --           --               --
Exercise of common stock
  options.......................      6,970          7        4,524            --              --           --            4,531
Accretion of mandatorily
  redeemable convertible
  preferred stock to redemption
  value.........................         --         --           --            --      (1,021,176)          --       (1,021,176)
Issuance of common stock options
  at less than fair value.......         --         --      546,733      (546,733)             --           --               --
Amortization of deferred stock
  option compensation...........         --         --           --       257,985              --           --          257,985
Common stock warrants issued in
  connection with debt..........         --         --      122,626            --              --           --          122,626
Net loss........................         --         --           --            --      (7,595,101)          --       (7,595,101)
                                  ---------   --------   ----------   -----------    ------------    ---------     ------------
Balances at December 31, 1999...  6,393,636      6,394    1,420,846      (467,210)    (16,252,138)          --      (15,292,108)
Exercise of common stock
  options.......................    451,682        452      194,737            --              --     (109,104)          86,085
Accretion of mandatorily
  redeemable convertible
  preferred stock to redemption
  value.........................         --         --           --            --        (911,507)          --         (911,507)
Issuance of common stock options
  at less than fair value.......         --         --    2,290,905    (2,290,905)             --           --               --
Amortization of deferred stock
  option compensation...........         --         --           --       116,846              --           --          116,846
Net loss........................         --         --           --            --      (2,674,847)          --       (2,674,847)
                                  ---------   --------   ----------   -----------    ------------    ---------     ------------
Balances at March 31, 2000
  (unaudited)...................  6,845,318   $  6,846   $3,906,488   $(2,641,269)   $(19,838,492)   $(109,104)    $(18,675,531)
                                  =========   ========   ==========   ===========    ============    =========     ============
</TABLE>


                See accompanying notes to financial statements.

                                       F-5
<PAGE>   80

                             SIGNALSOFT CORPORATION

                            STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                              YEARS ENDED                 THREE MONTHS ENDED MARCH 31,
                                                ---------------------------------------   -----------------------------
                                                   1997          1998          1999           1999            2000
                                                -----------   -----------   -----------   -------------   -------------
                                                                                                   (UNAUDITED)
<S>                                             <C>           <C>           <C>           <C>             <C>
Cash flows from operating activities:
  Net loss....................................  $(1,435,101)  $(4,450,977)  $(7,595,101)   $(1,979,446)    $(2,674,847)
  Adjustments to reconcile net loss to net
     cash used by operating activities:
     Depreciation and amortization............       17,551       149,054       214,318         53,255          79,107
     Amortization of discount on advances
       under research and development
       arrangement............................       35,649        22,072        13,212          4,209              --
     Compensation and interest expense related
       to issuance of common stock options and
       warrants...............................       95,796       101,004       380,611         56,168         116,846
     Gain (loss) on disposal of assets........      (14,283)       24,221            --             --              --
     Changes in operating assets and
       liabilities:
       Trade accounts receivable..............     (500,000)      330,233      (256,226)       568,095        (937,628)
       Prepaid expenses and other.............       12,652      (509,431)      203,842        158,358        (507,221)
       Trade accounts payable.................       (1,170)      134,975     1,609,861         20,518      (1,342,302)
       Accrued expenses.......................      138,872         5,696       447,852        125,069         805,839
       Deferred revenue.......................       41,667        92,497       (83,331        (88,501)        (38,500)
                                                -----------   -----------   -----------    -----------     -----------
          Net cash used by operating
            activities........................   (1,608,367)   (4,100,656)   (5,064,962)    (1,082,275)     (4,498,706)
                                                -----------   -----------   -----------    -----------     -----------
Cash flows from investing activities:
  Additions to equipment and leasehold
     improvements.............................      (86,415)     (470,331)     (222,320)       (33,898)       (626,023)
  Prepaid acquisition costs...................           --            --            --             --        (301,865)
                                                -----------   -----------   -----------    -----------     -----------
          Net cash used by investing
            activities........................      (86,415)     (470,331)     (222,320)       (33,898)       (927,888)
Cash flows from financing activities:
  Proceeds from issuance of common stock......      112,500        17,500         4,531             --          86,085
  Prepaid stock offering costs................           --            --            --             --         (91,275)
  Proceeds from issuance of mandatorily
     redeemable convertible preferred stock...           --     9,575,455    16,227,243             --      12,122,295
  Proceeds from issuance of debt..............           --       100,000     3,000,000             --              --
  Principal payments on debt and capital lease
     obligations..............................      (32,500)      (96,972)     (768,407)       (37,782)        (28,531)
  Advances received under research and
     development
     arrangement..............................      225,025            --            --             --              --
  Payments on advances under research and
     development arrangement..................           --      (333,892)     (244,654)            --              --
                                                -----------   -----------   -----------    -----------     -----------
          Net cash provided (used) by
            financing activities..............      305,025     9,262,091    18,218,713        (33,768)     12,088,574
                                                -----------   -----------   -----------    -----------     -----------
          Net increase (decrease) in cash and
            cash equivalents..................   (1,389,757)    4,691,104    12,931,431     (1,153,955)      6,661,980
Cash and cash equivalents at beginning of
  period......................................    1,818,571       428,814     5,119,918      5,119,918      18,051,349
                                                -----------   -----------   -----------    -----------     -----------
Cash and cash equivalents at end of period....  $   428,814   $ 5,119,918   $18,051,349    $ 3,965,963     $24,713,329
                                                ===========   ===========   ===========    ===========     ===========
Supplemental disclosures of cash flow
  information:
  Cash paid for interest......................  $     2,338   $    34,385   $    73,125    $    16,592     $     6,584
                                                ===========   ===========   ===========    ===========     ===========
  Assets acquired under capital leases........  $        --   $   246,364   $     9,790    $        --     $        --
                                                ===========   ===========   ===========    ===========     ===========
  Conversion of debt to mandatorily redeemable
     convertible preferred stock..............  $        --   $        --   $ 2,366,905    $        --     $        --
                                                ===========   ===========   ===========    ===========     ===========
  Loans issued to employees for stock option
     exercises................................  $        --   $        --   $        --    $        --     $   109,104
                                                ===========   ===========   ===========    ===========     ===========
</TABLE>


                See accompanying notes to financial statements.

                                       F-6
<PAGE>   81

                             SIGNALSOFT CORPORATION

                         NOTES TO FINANCIAL STATEMENTS

(1) BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

  (a) Business and Basis of Presentation

     SignalSoft Corporation (the Company) is a Boulder, Colorado based developer
of location-based software services for wireless intelligent networks. The
Company operates in one business segment.

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

     The accompanying unaudited financial information as of March 31, 2000 and
for the three months ended March 31, 1999 and 2000, has been prepared in
accordance with generally accepted accounting principles for interim financial
information. All significant adjustments, consisting of only normal and
recurring adjustments, that, in the opinion of management, are necessary for a
fair presentation of the results of operations and cash flows for the three
months ended March 31, 1999 and 2000 have been included. Operating results for
the three months ending March 31, 1999 and 2000 are not necessarily indicative
of the results that may be expected for the full year.

  (b) Cash and Cash Equivalents

     Cash and cash equivalents include highly liquid investments with original
maturities of three months or less at the date of purchase.

  (c) Equipment and Leasehold Improvements

     Equipment and leasehold improvements are recorded at cost. Costs of
maintenance and repairs are charged to operations as incurred. Depreciation is
calculated using the straight-line method over the estimated useful lives of the
assets, which range from 3 to 7 years. Amortization of leasehold improvements is
calculated over the lesser of the lease term or the estimated useful lives of
the improvements which is estimated at 10 years.

  (d) Income Taxes

     The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes (SFAS
No. 109). Under the asset and liability method of Statement No. 109, deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss and tax credit carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. Under SFAS No. 109, the effect on deferred tax assets and liabilities
of a change in tax rates is recognized in operations in the period that includes
the enactment date. A valuation allowance is recognized to the extent deferred
tax assets may not be realizable.

  (e) Revenue Recognition

     In accordance with the provisions of Statement of Position (SOP) 97-2,
Software Revenue Recognition (SOP 97-2), the Company recognizes software license
revenue when persuasive evidence of an arrangement exists, delivery has
occurred, the fee is fixed or determinable and collectibility is probable. In
addition, SOP 97-2 requires that revenue recognized from software arrangements
be allocated to each element of a

                                       F-7
<PAGE>   82
                             SIGNALSOFT CORPORATION

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

multiple element arrangement based on vendor specific objective evidence of each
element. The Company records revenue from licensing fees as individual products
are delivered and accepted by the customer. Revenue relating to separate
maintenance and service contracts is recognized ratably over the service period.
Professional services consulting fees are recognized as services are provided.
Effective January 1, 1999, the Company adopted the provisions of SOP 98-9,
Modification of SOP 97-2, Software Revenue Recognition with Respect to Certain
Transactions (SOP 98-9). SOP 98-9 clarifies certain provisions of SOP 97-2, and
effectively defers the required adoption of those provisions until the fiscal
year beginning January 1, 2000. The adoption of SOP 98-9 had no impact on the
Company's results of operations, financial position or cash flows.

  (f) Cost of Revenue

     Included in cost of revenue is salaries for employees who directly provide
services to customers and related overhead, including depreciation.

  (g) Impairment of Long-Lived Assets and Assets to be Disposed Of

     In accordance with SFAS No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, the Company
reviews long-lived assets and certain identifiable intangibles for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Recoverability of assets to be held and used is
generally measured by a comparison of the carrying amount of an asset to future
net cash flows expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognized is equal to the
amount by which the carrying amounts of the assets exceed the fair values of the
assets. Assets to be disposed of are reported at the lower of the carrying
amount or fair value, less costs to sell. No impairment was recognized in 1997,
1998, 1999, or 2000.

  (h) Stock-Based Compensation

     The Company accounts for its stock option plan in accordance with the
provisions of Accounting Principles Board (APB) Opinion No. 25, Accounting for
Stock Issued to Employees, and related interpretations, which requires
compensation cost to be recognized for the excess of the fair value of options
on the date of grant over the option exercise price. Under SFAS No. 123,
Accounting for Stock-Based Compensation, entities are permitted to recognize as
expense the fair value of all stock-based awards on the date of grant over the
vesting period. Alternatively, SFAS No. 123 also allows entities to continue to
apply the provisions of APB Opinion No. 25 and provide pro forma net income or
loss and earnings or loss per share disclosures as if the fair-value-based
method defined in SFAS No. 123 had been applied. The Company has elected to
continue to apply the provisions of APB Opinion No. 25 and provide the pro forma
disclosures required by SFAS No. 123. Options granted to non-employees for
services are accounted for in accordance with SFAS No. 123.

  (i) Software Development Costs and Research and Development Costs

     The Company may capitalize costs related to the development of certain
software products. In accordance with Statement of Financial Accounting
Standards No. 86, Accounting for the Costs of Computer Software to Be Sold,
Leased or Otherwise Marketed, capitalization of costs begins when technological
feasibility has been established and ceases when the product is available for
general release to customers, at which time amortization begins on a product by
product basis. Capitalized costs will be amortized over the estimated useful
life of the product. No software development costs were capitalized during 1997,
1998, 1999 or 2000, as costs incurred between attainment of technological
feasibility and general release were de minimis.

                                       F-8
<PAGE>   83
                             SIGNALSOFT CORPORATION

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

     Research and development costs are charged to operations as incurred.

  (j) Loss Per Share

     Loss per share is presented in accordance with the provisions of SFAS No.
128, Earnings Per Share. Under SFAS No. 128, basic earnings (loss) per share
(EPS) excludes dilution for potential common stock issuances and is computed by
dividing earnings or loss available to common stockholders by the weighted
average number of common shares outstanding for the period. Diluted EPS reflects
the potential dilution that would occur if securities or other contracts to
issue common stock were exercised or converted into common stock. Basic and
diluted EPS are the same for all periods, as all potential common stock
instruments, consisting of common stock options and warrants and convertible
preferred stock, are anti-dilutive.

  (k) Reclassifications

     Certain 1997 and 1998 amounts have been reclassified to conform with the
1999 financial statement presentation.

(2) EQUIPMENT AND LEASEHOLD IMPROVEMENTS

     Equipment and leasehold improvements consist of the following:

<TABLE>
<CAPTION>
                                                         DECEMBER 31,
                                                    ----------------------    MARCH 31,
                                                      1998         1999         2000
                                                    ---------   ----------   -----------
                                                                             (UNAUDITED)
<S>                                                 <C>         <C>          <C>
Office and computer equipment and software........  $ 526,500   $  739,779   $1,232,415
Leasehold improvements............................    253,410      253,410      298,486
Furniture and fixtures............................     20,578       39,409      127,720
                                                    ---------   ----------   ----------
                                                      800,488    1,032,598    1,658,621
Less accumulated depreciation and amortization....   (165,627)    (379,868)    (458,975)
                                                    ---------   ----------   ----------
                                                    $ 634,861   $  652,730   $1,199,646
                                                    =========   ==========   ==========
</TABLE>

(3) DEBT AND ADVANCES UNDER RESEARCH AND DEVELOPMENT ARRANGEMENT

     During 1998, the Company issued a note payable due in annual installments
through October 20, 2000 to a bank with interest at 8.75%, which is secured by
computer equipment. At December 31, 1999, the outstanding balance was $41,667
and at March 31, 2000 the balance was $29,167.

     The Company has entered into a revolving line-of-credit agreement which
provides for borrowings of up to $400,000 through April 20, 2000. Interest on
the line-of-credit accrues at the bank's prime rate (8.5% and 9.0% on December
31, 1999 and March 31, 2000, respectively) and is payable monthly. If borrowings
are made, $1,000,000 is required to be maintained on account with the bank as a
compensating balance. The Company had no borrowings under the line of credit at
December 31, 1999 or March 31, 2000.


     During 1995, the Company entered into a research and development
arrangement with a customer whereby the Company received periodic advances to
fund research and development activities related to the development of a
specific product for this customer. In November 1997, the arrangement was
formalized into a written contract and revenue was recognized in accordance with
the contract terms. The portion of the advances to be repaid was recorded as a
liability and interest was imputed based on the expected repayment date, as the
agreement did not specify repayment terms. The remainder of the advances was
recognized as revenue when the product was delivered in late 1997. At December
31, 1998, the balance to be repaid was $231,442, net of unamortized discount of
$35,284, which was based on an imputed interest rate of 8%. The remaining
balance was repaid in 1999.


                                       F-9
<PAGE>   84
                             SIGNALSOFT CORPORATION

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(4) INCOME TAXES

     Income tax benefit differs from the amounts that would result from applying
the federal statutory rate of 34% as follows:


<TABLE>
<CAPTION>
                                                                             THREE MONTHS
                                           YEARS ENDED DECEMBER 31,             ENDED
                                     -------------------------------------    MARCH 31,
                                       1997         1998          1999           2000
                                     ---------   -----------   -----------   ------------
                                                                             (UNAUDITED)
<S>                                  <C>         <C>           <C>           <C>
Expected tax benefit...............  $(487,934)  $(1,513,332)  $(2,582,334)   $(909,448)
Change in valuation allowance for
  deferred tax assets..............    542,543     1,356,870     2,497,876      937,193
Other, net.........................    (54,609)      156,462        84,458      (27,745)
                                     ---------   -----------   -----------    ---------
          Income tax benefit.......  $      --   $        --   $        --    $      --
                                     =========   ===========   ===========    =========
</TABLE>


     Temporary differences that give rise to significant components of deferred
tax assets are as follows:


<TABLE>
<CAPTION>
                                                       DECEMBER 31,
                                                 -------------------------    MARCH 31,
                                                    1998          1999          2000
                                                 -----------   -----------   -----------
                                                                             (UNAUDITED)
<S>                                              <C>           <C>           <C>
Net operating loss carryforwards...............  $ 2,045,235   $ 4,336,616   $ 5,165,803
Other, net.....................................       (3,681)      202,814       310,820
                                                 -----------   -----------   -----------
          Gross deferred tax assets............    2,041,554     4,539,430     5,476,623
Valuation allowance............................   (2,041,554)   (4,539,430)   (5,476,623)
                                                 -----------   -----------   -----------
          Net deferred tax assets..............  $        --   $        --   $        --
                                                 ===========   ===========   ===========
</TABLE>


     At December 31, 1999 and March 31, 2000, the Company has a cumulative net
operating loss carryforward for income tax purposes of approximately $12,900,000
and $15,400,000, respectively, which will expire in various amounts through the
year 2020, if not utilized.

     Due to the uncertainty regarding the utilization of net operating loss and
research and experimentation credit carryforwards, no tax benefit for losses has
been recorded by the Company in any period, and a valuation allowance has been
recorded for the entire amount of the deferred tax asset.

(5) MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK

     The Company has three classes of mandatorily redeemable convertible
preferred stock (Series A, Series B and Series C) outstanding. All mandatorily
redeemable convertible preferred shares are convertible at any time at the
option of the holder into common stock, initially on a one for one basis subject
to adjustment for anti-dilution provisions included in the respective preferred
stock agreements. All preferred stock has voting rights on an as converted basis
and has liquidation preferences equal to the face amount of the preferred shares
sold, plus all declared but unpaid dividends.

     Each share of preferred stock is automatically converted to common stock at
the time of an initial public offering provided certain offering parameters are
met. Each holder of preferred stock is entitled to cash dividends, when and if
declared by the Board of Directors. In the event dividends are paid on any
shares of common stock, an additional dividend shall be paid with respect to all
outstanding shares of preferred stock in an equal amount per share (on an
as-converted basis) to the amount paid or set aside for each share of common
stock.

                                      F-10
<PAGE>   85
                             SIGNALSOFT CORPORATION

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

     The Company is required to redeem all outstanding shares of preferred stock
at the option of the holder subsequent to August 1, 2003 for Series A and B, and
December 1, 2006 for Series C, at an amount equal to the liquidation value of
the preferred shares, plus an amount which together with any dividends paid to
date, would equal an annual non-compounded return of 8%.

(6) STOCK OPTIONS AND WARRANTS

  (a) Stock Options and Grants

     The Company has adopted a non-qualified stock option plan, pursuant to
which the Company's Board of Directors may issue common shares and grant
incentive stock options and non-statutory stock options to employees, directors
and consultants. The plan authorizes common stock issuances and grants of
options to purchase up to 2,000,000 shares of common stock. The options
generally vest over 50 months and expire upon the earlier of three months after
termination of employment or ten years from the date of grant. At December 31,
1999 and March 31, 2000, there were 384,301 and 102,467, respectively, shares
available for grant under the plan.


     The weighted average fair value of options on the date of grant in 1997,
1998, 1999 and 2000 was $.29, $1.80, $1.68 and $9.14, respectively, using the
Black-Scholes option-pricing model with the following assumptions: no expected
dividends or volatility, risk-free interest rate of approximately 6% for the
years ended 1997, 1998 and 1999, and 6.5% for the three months ended March 31,
2000 and an expected term of 5 years. The remaining weighted average contractual
life of options outstanding at March 31, 2000 was 7.95 years, with exercise
prices ranging from $.05 to $5.33.



     As discussed in note 1, the Company utilizes APB Opinion No. 25 to account
for its employee stock options. The Company has granted options with exercise
prices less than the fair value of common stock on the date of grant based on
recent stock transactions, and the related compensation expense is being
recognized over the vesting period of the options. Unrecognized compensation
expense at December 31, 1999 totaled approximately $467,000 and $2,641,000 at
March 31, 2000. If the Company determined compensation cost based on the fair
value of the options at the grant date under SFAS No. 123, the Company's net
loss would have been approximately $1,450,000, $4,476,000, $7,676,000,
$1,986,000 and $2,694,000, and net loss per share would have been $.26, $.83,
$1.36, $.35 and $.56, for the years ended December 31, 1997, 1998 and 1999, and
the three months ended March 31, 1999 and 2000, respectively.


                                      F-11
<PAGE>   86
                             SIGNALSOFT CORPORATION

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

     Option activity during the years ended 1997, 1998 and 1999, and the three
months ended March 31, 2000, consisted of the following:

<TABLE>
<CAPTION>
                                                                    WEIGHTED
                                                         NUMBER     AVERAGE
                                                           OF       EXERCISE     OPTIONS
                                                         OPTIONS     PRICE     EXERCISABLE
                                                        ---------   --------   -----------
<S>                                                     <C>         <C>        <C>
Balance at January 1, 1997............................    458,000    $ .24
Granted...............................................    712,000      .46
                                                        ---------
Balance at December 31, 1997..........................  1,170,000      .37       264,400
Granted...............................................    217,000      .65
Forfeited.............................................    (33,000)     .42
                                                        ---------
Balance at December 31, 1998..........................  1,354,000      .42       576,560
Granted...............................................    292,667      .82
Exercised.............................................     (6,970)     .65
Forfeited.............................................    (30,968)     .80
                                                        ---------
Balance at December 31, 1999..........................  1,608,729      .48       885,920
Granted...............................................    294,200     4.64
Exercised.............................................   (451,682)     .43
Forfeited.............................................    (12,366)    1.44
                                                        ---------    -----       -------
Balance at March 31, 2000 (unaudited).................  1,438,881    $1.34       551,032
                                                        =========    =====       =======
</TABLE>

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

<TABLE>
<CAPTION>
                                              WEIGHTED
                                               AVERAGE     WEIGHTED        NUMBER         WEIGHTED
                                              REMAINING    AVERAGE    EXERCISABLE AS OF   AVERAGE
RANGE OF                         NUMBER      CONTRACTUAL   EXERCISE     DECEMBER 31,      EXERCISE
EXERCISE PRICE                 OUTSTANDING      LIFE        PRICE           1999           PRICE
--------------                 -----------   -----------   --------   -----------------   --------
<S>                            <C>           <C>           <C>        <C>                 <C>
$ .05-.35....................     823,000       6.83        $ .27          657,940         $ .26
  .65........................     712,229       8.39          .65          227,980           .65
 1.25........................      73,500       9.72         1.25               --            --
                                ---------                                  -------
                                1,608,729       7.65        $ .48          885,920         $ .36
                                =========                                  =======
</TABLE>

  (b) Common Stock Purchase Warrants

     In September 1999, the Company issued warrants to purchase 25,336 shares of
common stock in connection with obtaining a $3,000,000 loan. The warrants are
exercisable at $1.25 per share and expire on the earlier of an initial public
offering or on various dates in September 2004. The fair value of the warrants
was determined using the Black-Scholes option-pricing model with the following
assumptions; no dividends or volatility, risk-free interest rate of 6% and an
expected term of 5 years, which resulted in debt issuance costs of $122,626.
Such issuance costs were amortized to interest expense, using the effective
interest method until the conversion of the debt into Series C Preferred Stock
in December 1999, at which time the remaining unamortized costs were charged to
interest expense.

(7) COMMITMENTS AND CONTINGENCIES

  Leases

     The Company leases office space and equipment under noncancellable capital
and operating lease agreements which expire through 2004. Approximately $260,000
is included in equipment and leasehold

                                      F-12
<PAGE>   87
                             SIGNALSOFT CORPORATION

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

improvements at December 31, 1999 and March 31, 2000, relating to equipment held
under capital leases. Future minimum lease payments as of December 31, 1999 are
as follows (unaudited):

<TABLE>
<CAPTION>
                                                              CAPITAL    OPERATING
                                                               LEASES      LEASES
                                                              --------   ----------
<S>                                                           <C>        <C>
2000........................................................  $ 61,900   $  765,000
2001........................................................    24,052      706,000
2002........................................................     3,371      435,000
2003........................................................        --      216,000
                                                              --------   ----------
          Total future minimum lease payments...............    89,323   $2,122,000
                                                                         ==========
Less amount representing interest...........................    (7,120)
                                                              --------
          Present value of future minimum lease payments....   (82,203)
Less current portion........................................   (56,232)
                                                              --------
          Long-term portion.................................  $(25,971)
                                                              ========
</TABLE>


     Rent expense for operating leases for the years ended December 31, 1997,
1998, 1999 and the three months ended March 31, 1999 and 2000 was $162,000,
$312,000, $622,000, $155,000 and $246,000, respectively. Included in prepaid
expense and other assets in 1998 is $427,000 due from a lessor relating to a
sale-leaseback wherein the Company had purchased the related assets, but had yet
to receive funding from the lessor under the master lease agreement. The lease
is classified as an operating lease, and no gain or loss was recognized on the
transaction.


(8) EMPLOYEE BENEFIT PLAN

     The Company has a 401(k) plan which covers substantially all employees and
allows employee contributions of up to 20% of compensation, up to the maximum
allowed by the Internal Revenue Code. The Company has not made a discretionary
matching contribution to the plan since inception.

(9) SIGNIFICANT CUSTOMERS AND CONCENTRATION OR CREDIT RISK

     Revenue earned from significant customers is as follows:


<TABLE>
<CAPTION>
                                                           YEAR ENDED       THREE MONTHS
                                                          DECEMBER 31,         ENDED
                                                       ------------------    MARCH 31,
                                                       1997   1998   1999       2000
                                                       ----   ----   ----   ------------
                                                                            (UNAUDITED)
<S>                                                    <C>    <C>    <C>    <C>
Customer A...........................................   --     --     46%        --
Customer B...........................................   50%    19%     4%         1%
Customer C...........................................   39%    45%    16%         1%
Customer D...........................................   11%    --     --         12%
Customer E...........................................   --     --      6%        65%
Customer F...........................................   --     --     --         12%
</TABLE>


     During the three months ended March 21, 2000, 65% of the Company's revenue
resulted from sales in Europe.


     At December 31, 1998 and 1999 and March 31, 2000, receivables from these
customers represented 59%, 59%, and 95%, respectively, of trade accounts
receivable.


     As of December 31, 1999 and March 31, 2000, the Company has approximately
$18,000,000 and $22,500,000, respectively on deposit with a single financial
institution.

                                      F-13
<PAGE>   88
                             SIGNALSOFT CORPORATION

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(10) RELATED PARTY TRANSACTIONS

     Certain marketing and administrative services were provided to the Company
by relatives of officers of the Company and members of the Board of Directors.
Payments related to these services approximated $74,000, $83,000 and $103,000 in
the years ended December 31, 1997, 1998, 1999, respectively, and $28,000 and
$26,000 during the three months ended March 31, 1999 and 2000, respectively.

(11) SUBSEQUENT EVENT

     In February 2000, the Company agreed to acquire all of the capital stock of
BFound.com Services, Inc. (BFound), a Canadian corporation, in exchange for
558,323 shares of the Company's common stock and $1,500,000 in cash. The
business combination was completed in May 2000 and will be accounted for using
the purchase method of accounting. Included in prepaid expenses at March 31,
2000 is approximately $172,000 of advances made to BFound for future consulting
services.

                                      F-14
<PAGE>   89

                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors
BFound.com Services, Inc.

     We have audited the accompanying balance sheet of BFound.com Services, Inc.
as at October 31, 1999 and the related statements of operations and
comprehensive loss, shareholders' equity and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.

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

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of BFound.com Services, Inc. as
at October 31, 1999, and the results of its operations and its cash flows in
conformity with accounting principles generally accepted in the United States of
America.

                                            KPMG LLP

Victoria, Canada
April 4, 2000, except for note 10, which is
as of May 16, 2000

                                      F-15
<PAGE>   90

                           BFOUND.COM SERVICES, INC.

                                 BALANCE SHEETS
                           (EXPRESSED IN US DOLLARS)
                      OCTOBER 31, 1999 AND APRIL 30, 2000

<TABLE>
<CAPTION>
                                                              OCTOBER 31,    APRIL 30,
                                                                 1999          2000
                                                              -----------   -----------
                                                                            (UNAUDITED)
<S>                                                           <C>           <C>
ASSETS

Current assets:
  Cash......................................................   $ 149,552     $ 248,185
  Short-term investments....................................     208,826            --
  Accounts receivable.......................................      45,033        14,786
  Prepaid expenses..........................................      13,011         1,006
  GST receivable............................................      12,031         7,815
                                                               ---------     ---------
          Total current assets..............................     428,453       271,792
Deferred income tax asset...................................       5,153         5,153
Fixed assets, net of accumulated depreciation (note 2)......      70,407        92,429
                                                               ---------     ---------
          Total assets......................................   $ 504,013     $ 369,374
                                                               =========     =========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Accounts payable..........................................   $  52,735     $  66,045
  Accrued payroll expenses..................................      19,645        49,095
  Current portion of obligations under capital lease (note
     3).....................................................       6,763         6,432
  Deferred revenue (note 10)................................          --       123,300
  Due to shareholder (note 4)...............................       3,385            --
                                                               ---------     ---------
     Total current liabilities..............................      82,528       244,872
Obligations under capital lease, less current portion (note
  3)........................................................       2,388            --
                                                               ---------     ---------
          Total liabilities.................................      84,916       244,872
Shareholders' equity:
  Share capital (notes 6 and 7):
     Authorized:
       1,000,000 first preferred voting shares with a par
        value of $0.07 per share, none issued and
        outstanding.........................................          --            --
       1,000,000 second preferred voting shares with a par
        value of $0.07 per share, none issued and
        outstanding.........................................          --            --
       100,000,000 class A common voting shares with no par
        value, 6,685,958 and 7,365,958 shares issued and
        outstanding, respectively...........................     673,229       929,760
  Accumulated deficit.......................................    (246,740)     (789,246)
  Accumulated other comprehensive loss......................      (7,392)      (16,012)
                                                               ---------     ---------
          Total shareholders' equity........................     419,097       124,502
Subsequent event (note 10)
Commitment and contingency (notes 11 and 12)
                                                               ---------     ---------
          Total liabilities and shareholders' equity........   $ 504,013     $ 369,374
                                                               =========     =========
</TABLE>

                See accompanying notes to financial statements.

                                      F-16
<PAGE>   91

                           BFOUND.COM SERVICES, INC.

                STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
                           (EXPRESSED IN US DOLLARS)

<TABLE>
<CAPTION>
                                                                                SIX MONTHS ENDED
                                                               YEAR ENDED    -----------------------
                                                               OCTOBER 31,   APRIL 30,    APRIL 30,
                                                                  1999          1999         2000
                                                               -----------   ----------   ----------
                                                                                   (UNAUDITED)
<S>                                                            <C>           <C>          <C>
Revenue:
  Hardware sales............................................    $  23,972     $  2,788    $  22,658
  Professional fees.........................................      142,997       83,512       84,981
                                                                ---------     --------    ---------
                                                                  166,969       86,300      107,639
Cost of goods and services sold.............................       18,964        4,878       21,138
                                                                ---------     --------    ---------
                                                                  148,005       81,422       86,501
Expenses:
  Administration............................................      141,520       40,599      317,152
  Marketing.................................................       80,159       22,912       97,303
  Research and development..................................      240,665       71,945      214,552
                                                                ---------     --------    ---------
                                                                  462,344      135,456      629,007
                                                                ---------     --------    ---------
Loss before income taxes....................................     (314,339)     (54,034)    (542,506)
Deferred income tax benefit.................................        5,005           --           --
                                                                ---------     --------    ---------
Net loss....................................................     (309,334)     (54,034)    (542,506)
                                                                ---------     --------    ---------
Other comprehensive loss --
  foreign currency translation adjustment...................       (5,343)         (84)      (8,620)
                                                                ---------     --------    ---------
Comprehensive loss..........................................    $(314,677)    $(54,118)   $(551,126)
                                                                =========     ========    =========
</TABLE>

                See accompanying notes to financial statements.

                                      F-17
<PAGE>   92

                           BFOUND.COM SERVICES, INC.

                       STATEMENTS OF SHAREHOLDERS' EQUITY
                           (EXPRESSED IN US DOLLARS)
      THE YEAR ENDED OCTOBER 31, 1999 AND SIX MONTHS ENDED APRIL 30, 2000

<TABLE>
<CAPTION>
                                                                         ACCUMULATED
                                                                            OTHER           TOTAL
                                                SHARE     ACCUMULATED   COMPREHENSIVE   SHAREHOLDERS'
                                               CAPITAL      DEFICIT        INCOME          EQUITY
                                               --------   -----------   -------------   -------------
<S>                                            <C>        <C>           <C>             <C>
Balances, November 1, 1998...................  $  1,570    $  62,594      $ (2,049)       $  62,115
Issuance of common shares for cash...........   671,659           --            --          671,659
Comprehensive income:
  Net loss...................................        --     (309,334)           --         (309,334)
  Foreign currency translation adjustment....        --           --        (5,343)          (5,343)
                                               --------    ---------      --------        ---------
Balances, October 31, 1999...................   673,229     (246,740)       (7,392)         419,097
Exercise of common share options
  (unaudited)................................   256,531           --            --          256,531
Comprehensive income (unaudited):
  Net loss...................................        --     (542,506)           --         (542,506)
  Foreign currency translation adjustment....        --           --        (8,620)          (8,620)
                                               --------    ---------      --------        ---------
Balances, April 30, 2000 (unaudited).........  $929,760    $(789,246)     $(16,012)       $ 124,502
                                               ========    =========      ========        =========
</TABLE>

                See accompanying notes to financial statements.

                                      F-18
<PAGE>   93

                           BFOUND.COM SERVICES, INC.

                            STATEMENTS OF CASH FLOWS
                           (EXPRESSED IN US DOLLARS)

<TABLE>
<CAPTION>
                                                                                SIX MONTHS ENDED
                                                              YEAR ENDED    -------------------------
                                                              OCTOBER 31,    APRIL 30,     APRIL 30,
                                                                 1999          1999          2000
                                                              -----------   -----------   -----------
                                                                            (UNAUDITED)
<S>                                                           <C>           <C>           <C>
Cash provided by (used in):
Operating activities:
  Net loss.................................................    $(309,334)    $(54,034)     $(542,506)
  Items not involving cash:
     Depreciation..........................................       28,887        5,011         14,279
     Write-off of investment tax credit....................           --        1,829             --
  Changes in non-cash operating working capital:
     Accounts receivable...................................      (15,808)      18,266         30,247
     Income taxes receivable...............................       16,092        1,109             --
     Prepaid expenses......................................      (12,457)         554         12,005
     GST receivable........................................      (12,773)      (2,517)         4,216
     Accounts payable......................................       48,970        6,738         13,310
     Accrued payroll expenses..............................       13,992        3,994         29,450
     Deferred revenue......................................           --           --        123,300
                                                               ---------     --------      ---------
          Net cash used in operating activities............     (242,431)     (19,050)      (315,699)
Investing activities:
  Purchase of short-term investments.......................     (485,927)          --             --
  Proceeds from maturity of short-term investments.........      277,101           --        208,826
  Purchase of fixed assets.................................      (67,501)      (2,618)       (36,301)
                                                               ---------     --------      ---------
          Net cash used in investing activities............     (276,327)      (2,618)       172,525
Financing activities:
  Increase in due to shareholder...........................        3,885           --             --
  Decrease in due to shareholder...........................       (2,638)        (695)        (3,385)
  Decrease in obligations under capital lease..............       (6,207)      (5,028)        (2,719)
  Issue of share capital...................................      671,659       20,036        256,531
                                                               ---------     --------      ---------
          Net cash provided by financing activities........      666,699       14,313        250,427
          Effect of exchange ratios on cash................       (5,343)         (84)        (8,620)
                                                               ---------     --------      ---------
Increase (decrease) in cash................................      142,598       (7,439)        98,633
Cash, beginning of period..................................        6,954        6,954        149,552
                                                               ---------     --------      ---------
Cash, end of period........................................    $ 149,552     $   (485)     $ 248,185
                                                               =========     ========      =========
Supplementary information:
  Interest paid............................................        3,465        1,131            873
  Assets acquired under capital leases.....................        2,214        2,214             --
</TABLE>

                 See accompanying notes to financial statements

                                      F-19
<PAGE>   94

                           BFOUND.COM SERVICES, INC.

                         NOTES TO FINANCIAL STATEMENTS
                           (EXPRESSED IN US DOLLARS)
  YEAR ENDED OCTOBER 31, 1999 AND SIX MONTHS ENDED APRIL 30, 2000 (UNAUDITED)

     The Company is incorporated under the Company Act (British Columbia) and
its principal business activity includes the development of Internet-based
location tracking system and sales of tracking applications.

1. SIGNIFICANT ACCOUNTING POLICIES:

     The financial statements of the Company have been prepared in accordance
with generally accepted accounting principles in the United States. The
following is a summary of the significant accounting policies used in the
preparation of the financial statements.

  (a) Short-term investments:

     The Company's investment portfolio of short term investments includes
government securities, commercial paper, bankers' acceptances and term deposit
certificates. Short-term investments are recorded at the lower of cost or market
value. The Company considers short-term investments to be held-to-maturity
securities. At April 30, 2000, amortized cost approximates market value.

  (b) Fixed assets:

     Fixed assets are stated at cost. Depreciation is provided using the
following annual rates:

<TABLE>
<CAPTION>
ASSET                                                               BASIS         RATE
-----                                                               -----         ----
<S>                                                           <C>                 <C>
Computer hardware...........................................  Declining balance    30%
Computer software...........................................  Declining balance    50%
Equipment...................................................  Declining balance    20%
</TABLE>

  (c) Income taxes:

     The Company has adopted Statement of Financial Accounting Standards No.
109 -- "Accounting for Income Taxes" (SFAS 109). This standard requires the use
of the asset and liability approach for accounting and reporting on income
taxes. Deferred tax assets and liabilities are recognized for the future
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

     Investment tax credits (ITCs) are accounted for as a reduction in the cost
of the expense when there is reasonable assurance that such credits will be
realized. These ITCs are used to reduce current and future federal taxes
payable. The Company expects that under current tax laws, it will continue to
generate additional tax credits directly related to the Company's ongoing
research and development activities.

  (d) Revenue recognition:

     The Company recognizes revenue from product sales at the time of shipment.
Revenue from professional fees is recognized as the services are rendered.

  (e) Research and development costs:

     Product development costs are expensed as incurred.

                                      F-20
<PAGE>   95
                           BFOUND.COM SERVICES, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

  (f) Software development costs:

     The Company accounts for the costs related to the development of certain
software products for internal use in accordance with Statement of Position
(SOP) No. 98-1, Accounting for the Costs of Computer Software Developed or
Obtained from Internal Use. No costs have been capitalized to date as the
application development period and related costs have been insignificant.

  (g) Foreign currency transactions:

     The functional currency of the operations of the Company is the Canadian
dollar. Assets and liabilities measured in Canadian dollars are translated into
United States dollars using exchange rates in effect at the balance sheet date
with revenue and expense transactions translated using average exchange rates
prevailing during the period. Exchange gains and losses arising on this
translation are excluded from the determination of income and are reported as
foreign currency translation adjustment (which is included in comprehensive
loss) in shareholders' equity.

  (h) Use of estimates:

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of assets and liabilities at the date of the financial statements,
and the reported amounts of revenue and expenses during the reporting period.
Significant areas requiring the use of management estimates relate to the
determination of net recoverable value of other assets, useful lives for
amortization purposes, provisions for doubtful accounts, obsolete inventory and
liability amounts. Actual results may ultimately differ significantly from these
estimates.

  (i) Stock-based compensation:

     The Company accounts for stock-based employee and director compensation
arrangements in accordance with provisions of Accounting Principles Board
("APB") Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations and complies with the disclosure provisions of SFAS No. 123,
Accounting for Stock-Based Compensation. Under APB No. 25, compensation expense
is based on the excess, if any, on the measurement date of the fair value of the
Company's stock and the exercise price of options to purchase that stock.
Stock-based compensation arrangements for others are recorded at their fair
value and charged against earnings over their vesting period.

  (j) Impairment of long-lived assets and long-lived assets to be disposed of:

     The Company accounts for long-lived assets in accordance with the
provisions of SFAS No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of. This statement requires that
long-lived assets and certain identifiable intangibles be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If such assets
are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceeds the fair value of
the assets. Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell. At April 30, 2000 the only long-lived
assets reported on the Company's balance sheets are fixed assets.

                                      F-21
<PAGE>   96
                           BFOUND.COM SERVICES, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

  (k) Comprehensive income (loss):

     Effective October 31, 1999, the Company adopted the provisions of SFAS No.
130, "Reporting Comprehensive Income," which establishes standards for reporting
comprehensive income (loss) and its components in financial statements. Other
comprehensive income, as defined, includes all changes in equity (net assets)
during a period from non-owner sources.

  (l) Unaudited interim financial information:

     The financial information as of April 30, 2000 and for the six month
periods ended April 30, 2000 and 1999 is unaudited; however, in the opinion of
management, such information reflects all adjustments, consisting solely of
normal recurring adjustments, necessary for a fair presentation of the results
for the periods presented. Operating results for the six months ended April 30,
2000 are not necessarily indicative of the results that may be expected for the
full year.

2. FIXED ASSETS:

<TABLE>
<CAPTION>
                                                                  ACCUMULATED    NET BOOK
OCTOBER 31, 1999                                         COST     DEPRECIATION    VALUE
----------------                                       --------   ------------   --------
<S>                                                    <C>        <C>            <C>
Computer equipment...................................  $ 74,656     $33,729      $40,927
Computer software....................................    14,691       8,254        6,437
Furniture and equipment..............................    30,395       7,352       23,043
                                                       --------     -------      -------
                                                       $119,742     $49,335      $70,407
                                                       ========     =======      =======
</TABLE>

     Included in fixed assets are leased computer equipment with a net book
value of $9,421 at October 31, 1999.

<TABLE>
<CAPTION>
                                                                  ACCUMULATED    NET BOOK
APRIL 30, 2000                                           COST     DEPRECIATION    VALUE
--------------                                         --------   ------------   --------
                                                                  (UNAUDITED)
<S>                                                    <C>        <C>            <C>
Computer equipment...................................  $ 92,327     $42,391      $49,936
Computer software....................................    20,047      11,175        8,872
Furniture and equipment..............................    43,669      10,048       33,621
                                                       --------     -------      -------
                                                       $156,043     $63,614      $92,429
                                                       ========     =======      =======
</TABLE>

     Included in fixed assets are leased computer equipment with a net book
value of $8,008 at April 30, 2000.

3. OBLIGATIONS UNDER CAPITAL LEASE:

     The Company leases computer equipment under leases which are classified as
capital leases. The future minimum annual lease payments as of October 31, 1999
are as follows:

<TABLE>
<S>                                                            <C>
2000........................................................   $ 8,005
2001........................................................     2,594
                                                               -------
                                                                10,599
Less amount representing interest...........................    (1,448)
                                                               -------
Present value of capital lease obligations..................     9,151
Less current portion........................................    (6,763)
                                                               -------
                                                               $ 2,388
                                                               =======
</TABLE>

                                      F-22
<PAGE>   97
                           BFOUND.COM SERVICES, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

     Interest incurred during the year ended October 31, 1999 and the six months
ended April 30, 1999 and 2000, with respect to the above included in
administration expenses amounted to $2,668, $1,130 and $873, respectively.

4. DUE TO SHAREHOLDER:

     The amounts due to shareholder are unsecured, non-interest bearing and are
due on demand.

5. RELATED PARTY TRANSACTIONS:

     During the year ended October 31, 1999, BFound.com Services, Inc. engaged
Discovery Capital Corporation, a related party, to prepare a business plan and
summary. The value of this contract was $12,114, of which $6,057 was paid during
the year ended October 31, 1999. The balance was paid as of April 30, 2000.

     During the year ended October 31, 1999, the Company engaged M G Management
Solutions, a related party, to provide consulting services at a rate of $673 per
day. At October 31, 1999 a total of 20 days of consulting services was provided
and a balance of $13,857 was recorded as accounts payable. At April 30, 2000 a
total of 50.5 days of consulting services was provided. The entire balance was
paid as of April 30, 2000.

     Both Discovery Capital Corporation and M G Management Solutions are
represented on the Company's board of directors.

     These transactions are in the normal course of operations and are recorded
at value agreed to between the Company and the related party.

6. SHARE CAPITAL:

     On May 31, 1999, the Board of Directors of the Company approved the
division of its common shares on an eighty-for-one basis (stock split). The
stock split was transacted by means of the cancellation of previously issued
share certificates and the issuance of new certificates. All references to
common shares and per share amounts in the financial statements have been
restated to reflect the stock split on a retroactive basis.

     During the year ended October 31, 1999, the Company raised net proceeds of
$671,659 by the issuance from treasury of 2,885,958 common shares through
private placements. The placements were at prices ranging from $0.101 to $0.367
per share. During the six months ended April 30, 2000, the Company issued
680,000 shares of common stock for proceeds of $256,531 to satisfy option
exercises.

7. COMMON STOCK OPTIONS

     On June 8, 1999, the Company adopted the 1999 Key Employee and Consultant
Stock Option Plan (the "Plan"). The Plan provides for the grant of up to 715,000
incentive or non-qualified stock options or shares of restricted stock to key
employees and consultants (an "Optionee") of the Company. Options granted under
the Plan generally vest ratably over a period of three years and expire ten
years from the date of grant. If an Optionee ceases employment with or service
to the Company (a "Termination"), the Optionee may exercise any vested option at
the time of Termination within such period of time specified in the option
agreement. Unvested options revert to the Plan at the date of the Termination.
If, after Termination, the Optionee does not exercise the options within the
time specified, the Option shall terminate and the shares revert to the Plan.

     During the year ended October 31, 1999, the Company granted 310,000
non-qualified stock options. A total of 220,000 options was granted with a
one-year vesting period and an exercise price of $0.367, an amount that
approximates or exceeds the fair value of the Company stock at the date of the
grant. A total of 90,000 options was granted with a two-year vesting period and
an exercise price of $0.370, an amount that
                                      F-23
<PAGE>   98
                           BFOUND.COM SERVICES, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

approximates or exceeds the fair value of the Company stock at the date of the
grant. An additional 370,000 options were granted during the six months ended
April 30, 2000 with an exercise price of $0.367.

     Accordingly, in 1999 and 2000 the Company recorded no non-cash compensation
expense relating to the issuance of stock options to purchase common shares to
employees of the Company as the exercise prices were equal to or greater than
fair value.

     Following is a summary of stock option activity:

<TABLE>
<CAPTION>
                                                                             WEIGHTED
                                                                             AVERAGE
                                                               OUTSTANDING   EXERCISE
                                                                 SHARES       PRICE
                                                               -----------   --------
<S>                                                            <C>           <C>
Outstanding as of October 31, 1998..........................          --      $   --
Granted.....................................................     310,000       0.368
Exercised...................................................          --          --
Canceled....................................................          --          --
                                                                 -------      ------
Outstanding as of October 31, 1999..........................     310,000       0.368
Granted (unaudited).........................................     370,000       0.370
Exercised (unaudited).......................................     680,000       0.369
Canceled (unaudited)........................................          --          --
                                                                 -------      ------
Outstanding as of April 30, 2000 (unaudited)................          --      $   --
                                                                 =======      ======
</TABLE>

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

<TABLE>
<CAPTION>
                                                    AVERAGE      WEIGHTED             WEIGHTED
RANGE OF                                           REMAINING     AVERAGE              AVERAGE
EXERCISE                              NUMBER      CONTRACTUAL    EXERCISE   NUMBER    EXERCISE
PRICES                              OUTSTANDING   LIFE (YEARS)    PRICE     VESTED     PRICE
--------                            -----------   ------------   --------   -------   --------
<S>                                 <C>           <C>            <C>        <C>       <C>
$0.367...........................     220,000           9         $0.367     75,000    $0.367
$0.370...........................     460,000           9          0.370     75,000     0.370
                                      -------          --         ------    -------    ------
                                      680,000           9         $0.369    150,000    $0.367
                                      =======          ==         ======    =======    ======
</TABLE>

     The Company has adopted the disclosure only requirements of SFAS No. 123,
Accounting for Stock Based Compensation, to account for grants to employees
under the Company's existing stock-based compensation plan. Had compensation
cost for the Company's stock option plan been determined based on the fair value
at the grant date for awards under those plans consistent with the measurement
provisions of SFAS No. 123, the Company's net loss would have been adjusted as
follows:

<TABLE>
<CAPTION>
                                                                             SIX MONTHS
                                                               YEAR ENDED       ENDED
                                                              OCTOBER 31,     APRIL 30,
                                                                  1999          2000
                                                              ------------   -----------
                                                                             (UNAUDITED)
<S>                                                           <C>            <C>
Loss for the period.........................................   $(309,334)     $(542,506)
Loss for the period -- pro-forma............................    (324,356)     $(575,457)
</TABLE>

                                      F-24
<PAGE>   99
                           BFOUND.COM SERVICES, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

     The weighted average grant date fair value was $0.24 for the year ended
October 31, 1999 and six months ended April 30, 2000, using the Black-Scholes
option-pricing model with the following assumptions:

<TABLE>
<CAPTION>
                                                            YEAR ENDED    SIX MONTHS ENDED
                                                            OCTOBER 31,      JANUARY 31,
                                                               1999             2000
                                                            -----------   -----------------
                                                                             (UNAUDITED)
<S>                                                         <C>           <C>
Expected dividend yield...................................       0.00%            0.00%
Expected stock price volatility...........................      75.00%           75.00%
Risk-free interest rate...................................       6.25%            6.25%
Expected life of options..................................    5 years          5 years
</TABLE>

     The Black-Scholes option valuation model was developed for use in
estimating the fair value of options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility. The
actual benefit of the options issued will only be determined over their life
based on the timing and extent of future market price changes, and such implied
benefit may differ from the amount calculated by the Black-Scholes model.

8. FINANCIAL INSTRUMENTS:

  (a) Fair value:

     For certain of the Company's financial instruments, including cash,
short-term investments, accounts receivable, and accounts payable and accrued
liabilities, the carrying amounts approximate fair value due to their immediate
or short-term maturity. The fair value of obligations under long-term debt,
calculated at the present value of future payments of principal interest,
discounted at the current market rates of interest available to the Company for
debt instruments with similar terms and maturity, approximate their carrying
values.

  (b) Credit risk:

     The Company's major contracts are denominated in U.S. dollars and, as such,
the Company is exposed to exchange rate fluctuations in this currency.

9. INCOME TAXES:

     Current income taxes are computed at statutory rates on pre-tax income.
Deferred taxes would be recorded based on differences in the carrying values of
assets and liabilities for financial statement and income tax purposes. At April
30, 2000, the Company has elected to carry forward net operating losses for
federal income tax purposes of approximately $760,000 that are available to
reduce future taxable income to 2007. As utilization of such operating losses
for tax purposes is not assured, the deferred tax asset has been partially
reserved through the recording of a valuation allowance. These operating losses
may be limited to the extent an "ownership change" occurs.

     The components of the deferred tax asset are as follows:

<TABLE>
<CAPTION>
                                                               OCTOBER 31,    APRIL 30,
                                                                  1999          2000
                                                               -----------   -----------
                                                                             (UNAUDITED)
<S>                                                            <C>           <C>
Deferred tax asset:
  Net operating loss carryforward...........................    $ 123,153     $ 344,640
  Less valuation allowance..................................     (118,000)     (339,487)
                                                                ---------     ---------
Net deferred tax asset......................................    $   5,153     $   5,153
                                                                =========     =========
</TABLE>

                                      F-25
<PAGE>   100
                           BFOUND.COM SERVICES, INC.

                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

10. SUBSEQUENT EVENT:

     Pursuant to a share purchase agreement dated April 4, 2000, all common
stock options issued to that date were exercised for cash and subsequently 100%
of the issued and outstanding share capital was purchased by SignalSoft Corp., a
company incorporated in the United States.

     In March 2000, the Company received approximately $172,000 in advances from
SignalSoft Corp. for future software development and consulting services. These
advances are being recognized as revenue as services are rendered. As of April
30, 2000 $49,200 has been recognized in software development and consulting
fees.

11. COMMITMENT:

     During May 1998, the Company entered into a contract with BC Tel Mobility
Cellular Inc. (BC Tel). The Company received $69,286 from BC Tel to fund
research and development of its Internet based vehicle location services. In
exchange, the Company agreed to pay a royalty to BC Tel equal to 5% of the
invoiced price of or fees for commercial products sold, leased or licensed by
the Company or any of its selling agents or representatives, not including any
sales, excise or other taxes, customs duties or charges. The maximum royalty
payable over the life of the contract is $207,857.

     During the year ended October 31, 1999 and the six month period ended April
30, 2000, BFound.com Services, Inc. invoiced hardware and services totaling
$7,968 and $17,271, respectively. As of October 31, 1999 and April 30, 2000 a
royalty payable to BC Tel of $410 and $555, respectively, had been recorded as
an accounts payable.

12. CONTINGENCY:

     The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date. Although the change in date has occurred, it is not possible to conclude
that all aspects of the Year 2000 Issue that may affect the Company, including
those related to customers, suppliers, or other third parties, have been fully
resolved.

                                      F-26
<PAGE>   101

      NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

     On April 4, 2000 we acquired 76% of the outstanding shares of common stock
of BFound.com Services, Inc. in exchange for $1.1 million in cash and 423,151
shares of SignalSoft common stock. We acquired the remainder of the common stock
of BFound.com Services, Inc. on May 16, 2000.

     The unaudited pro forma condensed combined balance sheet assumes that the
BFound.com acquisition occurred on March 31, 2000 and includes the March 31,
2000 historical balance sheet of SignalSoft and the April 30, 2000 balance sheet
of BFound.com adjusted for the pro forma effects of the acquisition. The
unaudited pro forma condensed combined statement of operations, assumes that the
acquisition occurred on January 1, 1999, and includes the historical statements
of operations of SignalSoft and BFound.com for the years ended December 31, 1999
and January 31, 2000, respectively, and for the three month periods ended March
31, 2000 and April 30, 2000, respectively, adjusted for the pro forma effects of
the acquisition.

     The unaudited pro forma condensed combined statement of operations is not
necessarily indicative of the results of operations that would actually have
occurred if the transaction had been consummated as of January 1, 1999, and is
not intended to indicate the expected results for any future period. These
statements should be read in conjunction with the historical financial
statements and related notes thereto of SignalSoft and BFound.com, included
elsewhere herein.

     The BFound.com acquisition will be accounted for using the purchase method
of accounting. The pro forma financial information has been prepared on the
basis of assumptions described in the following notes and includes assumptions
relating to the allocation of the consideration paid for the common stock of
BFound.com based on preliminary estimates of the fair values of the assets and
liabilities of BFound.com. The actual allocation of such consideration may
differ from that reflected in the pro forma financial statements. We do not
expect that the final allocation of the purchase price will differ materially
from the preliminary allocations.

     The pro forma financial information gives effect to the following pro forma
adjustments:

          (1) To reflect total consideration of $4,777,727, consisting of cash
     of $1,500,000 and 558,323 shares of SignalSoft common stock valued at $5.33
     per share, and acquisition costs of $301,865.

          (2) To record goodwill of $4,653,225, based on total consideration of
     $4,777,727, less fair value of net tangible assets acquired of $124,502.

          (3) To eliminate BFound.com shareholders' equity acquired.

          (4) To record additional amortization expense related to goodwill
     using an amortization period of five years on a straight-line basis.

          (5) To decrease interest income for the effect of cash paid at
     acquisition.

          (6) To eliminate advances, deferred revenue and revenue for
     transactions between SignalSoft and BFound.com.

                                      F-27
<PAGE>   102

  UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS -- BALANCE SHEET


<TABLE>
<CAPTION>
                                            MARCH 31, 2000   APRIL 30, 2000    PRO FORMA     PRO FORMA
                                              SIGNALSOFT       BFOUND.COM     ADJUSTMENTS    COMBINED
                                            --------------   --------------   -----------    ---------
                                                                  (IN THOUSANDS)
<S>                                         <C>              <C>              <C>            <C>
                                                ASSETS

Current assets:
  Cash and cash equivalents...............     $ 24,713           $248          $(1,500)(1)  $ 23,461
  Trade accounts receivable...............        1,364             23                          1,387
  Prepaid expenses and other..............          815              1             (123)(6)       693
                                               --------           ----          -------      --------
          Total current assets............       26,892            272           (1,623)       25,541
  Equipment and leasehold improvements,
     net..................................        1,200             92                          1,292
  Prepaid acquisition costs...............          302             --             (302)(1)        --
  Deferred stock offering costs...........           91             --                             91
  Other assets............................           --              5                              5
  Goodwill................................           --             --            4,654(2)      4,654
                                               --------           ----          -------      --------
          Total assets....................     $ 28,485           $369          $ 2,729      $ 31,583
                                               ========           ====          =======      ========

                            LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
  Notes payable...........................     $     29           $ --                       $     29
  Current portion of capital lease
     obligation...........................           51              7                             58
  Accounts payable and accrued
     liabilities..........................        1,258             66                          1,324
  Accrued compensation....................          556             49                            605
  Deferred revenue........................           13            123             (123)(6)        13
                                               --------           ----          -------      --------
          Total current liabilities.......        1,907            245             (123)        2,029
Long-term capital lease obligations less
  current portion.........................           15             --                             15
Mandatorily redeemable convertible
  preferred stock.........................       45,239             --                         45,239
Stockholders' equity (deficit)............      (18,676)           124            2,976(1)    (15,700)
                                                                                   (124)(3)
                                               --------           ----          -------      --------
          Total liabilities and
            stockholders' equity
            (deficit).....................     $ 28,485           $369          $ 2,729      $ 31,583
                                               ========           ====          =======      ========
</TABLE>


                                      F-28
<PAGE>   103


   UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS -- (CONTINUED)



                            STATEMENT OF OPERATIONS


                   FOR THE THREE MONTHS ENDED MARCH 31, 2000



<TABLE>
<CAPTION>
                                      THREE MONTHS       THREE MONTHS
                                          ENDED              ENDED
                                     MARCH 31, 2000     APRIL 30, 2000     PRO FORMA    PRO FORMA
                                       SIGNALSOFT         BFOUND.COM      ADJUSTMENTS   COMBINED
                                    -----------------   ---------------   -----------   ---------
                                                (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                 <C>                 <C>               <C>           <C>
Revenue:
  License fees....................       $   746             $  --           $           $   746
  Maintenance fees................            68                --                            68
  Professional services and
     other........................           811               107             (49)(6)       869
                                         -------             -----           -----       -------
          Total revenue...........         1,625               107             (49)        1,683
Cost of revenue...................           611                21                           632
                                         -------             -----           -----       -------
          Gross profit............         1,014                86             (49)        1,051
Operating expenses:
  Selling, general and
     administrative...............         2,024               317                         2,341
  Research and development........         1,843                97                         1,940
  Depreciation and amortization...            70               215             233(4)        518
  Stock option compensation
     expense......................           117                --                           117
                                         -------             -----           -----       -------
          Total operating
            expenses..............         4,054               629             233         4,916
                                         -------             -----           -----       -------
          Loss from operations....        (3,040)             (543)           (282)       (3,865)
Other income (expense):
  Interest income.................           372                --             (19)(5)       353
  Interest expense................            (7)               --                            (7)
  Other, net......................            --                --                            --
                                         -------             -----           -----       -------
          Total other income
            (expense).............           365                --             (19)          346
                                         -------             -----           -----       -------
Loss before income taxes..........        (2,675)             (543)           (301)       (3,519)
          Provision for income
            taxes.................            --                --                            --
                                         -------             -----           -----       -------
Net loss..........................        (2,675)             (543)           (301)       (3,519)
Preferred stock dividend
  requirement and accretion of
  mandatorily redeemable
  convertible preferred stock to
  liquidation value...............       $  (912)            $  --                       $  (912)
                                         -------             -----           -----       -------
          Net loss attributable to
            common stockholders...       $(3,587)            $(543)          $(301)      $(4,431)
                                         =======             =====           =====       =======
Basic and diluted loss per
  share...........................       $  (.56)                                        $  (.64)
                                         =======                                         =======
Shares used to compute basic and
  diluted loss per share..........         6,439                                           6,997
</TABLE>


                                      F-29
<PAGE>   104

   UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

                            STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 1999


<TABLE>
<CAPTION>
                                       YEAR ENDED       12 MONTHS ENDED
                                    DECEMBER 31, 1999   JANUARY 31, 2000    PRO FORMA    PRO FORMA
                                       SIGNALSOFT          BFOUND.COM      ADJUSTMENTS   COMBINED
                                    -----------------   ----------------   -----------   ---------
                                                (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                 <C>                 <C>                <C>           <C>
Revenue:
  License fees....................       $   883             $  --           $           $    883
  Maintenance fees................           287                --                            287
  Professional services and
     other........................           786               167                            953
                                         -------             -----                       --------
          Total revenue...........         1,956               167                          2,123
Cost of revenue...................         1,777                33                          1,810
                                         -------             -----                       --------
          Gross profit............           179               134                            313
Operating expenses:
  Selling, general and
     administrative...............         3,935               343                          4,278
  Research and development........         3,399               313                          3,712
  Depreciation and amortization...           192                32               931(4)     1,155
  Stock option compensation
     expense......................           258                --                            258
                                         -------             -----           -------     --------
          Total operating
            expenses..............         7,784               688               931        9,403
                                         -------             -----           -------     --------
          Loss from operations....        (7,605)             (554)             (931)      (9,090)
Other income (expense):
  Interest income.................           205                --               (75)(5)      130
  Interest expense................          (200)               --                           (200)
  Other, net......................             5                --                              5
                                         -------             -----           -------     --------
          Total other income
            (expense).............            10                --               (75)         (65)
                                         -------             -----           -------     --------
Loss before income taxes..........        (7,595)             (554)           (1,006)      (9,155)
          Provision for income
            taxes.................            --                 5                              5
                                         -------             -----           -------     --------
Net loss..........................        (7,595)             (549)           (1,006)      (9,150)
                                         -------             -----           -------     --------
Preferred stock dividend
  requirement and accretion of
  mandatorily redeemable
  convertible preferred stock to
  liquidation value...............       $(1,021)            $  --                       $ (1,021)
                                         -------             -----           -------     --------
          Net loss attributable to
            common stockholders...       $(8,616)            $(549)          $(1,006)    $(10,171)
                                         =======             =====           =======     ========
Basic and diluted loss per
  share...........................       $ (1.35)                                        $  (1.46)
                                         =======                                         ========
Shares used to compute basic and
  diluted loss per share..........         6,387                                            6,946
                                         =======                                         ========
</TABLE>


                                      F-30
<PAGE>   105

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

                                4,400,000 SHARES

                             SIGNALSOFT CORPORATION

                                  COMMON STOCK

                               [SIGNALSOFT LOGO]

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

                                   PROSPECTUS

                                           , 2000

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

                              SALOMON SMITH BARNEY
                          DONALDSON, LUFKIN & JENRETTE
                                LEHMAN BROTHERS

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>   106

                                    PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

     The following table sets forth the various expenses payable by the
Registrant in connection with the sale and distribution of the securities
offered hereby, other than underwriting discounts and commissions. All of the
amounts shown are estimated except the Securities and Exchange Commission
registration fee, the National Association of Securities Dealers, Inc. filing
fee and the Nasdaq National Market listing fee.

<TABLE>
<S>                                                            <C>
Securities and Exchange Commission registration fee.........   $ 22,710
National Association of Securities Dealers, Inc. filing
  fee.......................................................      9,102
Nasdaq National Market listing fee..........................     95,000
Transfer agent's and registrar's fees.......................      1,700
Printing expenses...........................................    350,000
Legal fees and expenses.....................................    200,000
Accounting fees and expenses................................    250,000
Blue Sky filing fees and expenses...........................      4,000
Miscellaneous expenses......................................      2,488
                                                               --------
          Total.............................................   $935,000
                                                               ========
</TABLE>

ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS

     Section 145 of the Delaware General Corporation Law ("Section 145") permits
indemnification of directors, officers, agents and controlling persons of a
corporation under certain conditions and subject to certain limitations. The
Registrant's Bylaws include provisions to require the Registrant to indemnify
its directors and officers to the fullest extent permitted by Section 145,
including circumstances in which indemnification is otherwise discretionary.
Section 145 also empowers the Registrant to purchase and maintain insurance that
protects its officers, directors, employees and agents against any liabilities
incurred in connection with their service in such positions.

     The Registrant has entered into separate indemnification agreements with
each of its directors and officers. These agreements require the Registrant to,
among other things, indemnify the director or officer against expenses,
including attorneys' fees, judgments, fines and settlements paid by the
individual in connection with any action, suit or proceeding arising out of the
individual's status or service as a director or officer of the Registrant, other
than liabilities arising from willful misconduct or conduct that is knowingly
fraudulent or deliberately dishonest. The Registrant has also agreed to advance
expenses incurred by the individual in connection with any proceeding against
the individual with respect to which he or she may be entitled to
indemnification by the Registrant.

     The form of Underwriting Agreement filed as Exhibit 1.1 to this
Registration Statement provides for indemnification by the Underwriters of the
Registrant and its directors and officers, and by the Registrant of the
Underwriters, for certain liabilities arising under the Securities Act.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

     The following information relates to securities issued or sold by the
Registrant within the last three years. During that time, the Registrant has
issued unregistered securities in the transactions described below. Securities
issued in such transaction were offered and sold in reliance upon the exemption
from registration under Section 4(2) of the Securities Act, relating to sales by
an issuer not involving any public offering, or under Rule 701 under the
Securities Act. The sales of securities were made without the use of an
underwriter and the certificates evidencing the shares bear a restrictive legend
permitting the transfer thereof only upon registration of the shares or an
exemption under the Act.

                                      II-1
<PAGE>   107


     (1) From January 1, 1997 to June 30, 2000, we have granted options to
purchase an aggregate of 1,695,367 shares of common stock at exercise prices
ranging from $0.20 to $10.00 per share to employees, directors and consultants
pursuant to the SignalSoft Corporation Nonqualified Stock Option Plan dated
November 17, 1995, as amended.


     (2) On January 22, 1998, the Registrant entered into a Preferred Stock
Purchase Agreement for the sale of an aggregate 3,835,148 shares of Series B
Convertible Preferred Stock to 10 investors at $2.52 per share for an aggregate
purchase price of $9,650,000.

     (3) On December 15, 1999, the Registrant entered into a Preferred Stock
Purchase Agreement for the sale of an aggregate 5,574,324 shares of Series C
Convertible Preferred Stock to 22 investors at $5.92 per share for an aggregate
purchase price of $33,000,000.

     (4) On December 22, 1999, the Registrant issued warrants exercisable for
25,336 shares of common stock to seven investors at a weighted average exercise
price of $1.25 per share. These warrants were issued in connection with a $3.0
million bridge loan to the Registrant from these investors, which was repaid in
December 1999.


     (5) On April 4, 2000, the Registrant issued 9,976 shares of common stock
and shares of subsidiary stock convertible into 413,175 shares of common stock
to 20 investors at $5.33 per share in connection with the acquisition of 76% of
the common stock of BFound.com Services, Inc.



     (6) On May 16, 2000, the Registrant issued shares of subsidiary stock
convertible into 135,172 shares of common stock to one investor at $5.33 per
share in connection with the acquisition of 24% of the common stock of
BFound.com Services, Inc.


     The issuances described in paragraphs (2) through (6) above were deemed to
be exempt from registration under the Securities Act in reliance on Section 4(2)
of the Securities Act as transactions by an issuer not involving a public
offering. The sales of securities described in paragraph (1) above were deemed
to be exempt from the registration requirements of the Securities Act in
reliance on Rule 701 promulgated under Section 3(b) of the Securities Act as
transactions by an issuer pursuant to compensatory benefit plans and contracts
relating to compensation as provided under Rule 701. The recipients of
securities in each such transaction represented their intention to acquire the
securities for investment only and not with a view to or for sale in connection
with any distribution thereof and appropriate legends were affixed to the share
certificates and other instruments issued in such transactions. All recipients
either received adequate information about the Registrant or had access, through
employment or other relationships, to information about the Registrant.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

     (a) Exhibits


<TABLE>
<CAPTION>
      EXHIBIT NO.                                DESCRIPTION
      -----------                                -----------
<C>                      <S>
         1.1             -- Form of Underwriting Agreement
         3.1++           -- Form of Amended and Restated Certificate of Incorporation
                            of SignalSoft Corporation
         3.2++           -- Form of Bylaws of SignalSoft Corporation
         4.1*            -- Specimen stock certificate for shares of common stock of
                            SignalSoft Corporation
         5.1++           -- Opinion of Holme Roberts & Owen LLP, regarding legality
                            of securities being registered
        10.1+            -- Series C Preferred Stock Purchase Agreement dated as of
                            December 15, 1999 by and among SignalSoft Corporation and
                            the Investors listed on Exhibit A thereto
        10.2+            -- Purchase Agreement dated as of March 22, 2000 by and
                            among SignalSoft Corporation, SignalSoft NS Co. and the
                            shareholders of BFound.com Services, Inc.
</TABLE>


                                      II-2
<PAGE>   108


<TABLE>
<CAPTION>
      EXHIBIT NO.                                DESCRIPTION
      -----------                                -----------
<C>                      <S>
        10.3+            -- Investors' Rights Agreement dated as of August 1, 1996 by
                            and among SignalSoft Corporation, the Investors listed on
                            Exhibit A thereto, David Hose, Mark Flolid and Jim Fitch
        10.4+            -- Amendment One to 8/1/96 Investors' Rights Agreement of
                            SignalSoft Corporation
        10.5+            -- Amendment Two to 8/1/96 Investors' Rights Agreement of
                            SignalSoft Corporation
        10.6++           -- Lease Agreement dated as of March 1998 by and between
                            Walnut Canyon Partners and SignalSoft Corporation
        10.7++           -- SignalSoft Corporation Nonqualified Stock Option Plan
                            effective November 17, 1995, as amended
        10.8++           -- Form of Stock Option Grant Agreement
        10.9             -- SignalSoft Corporation Equity Incentive Plan
        10.10            -- Form of Indemnification Agreement
        21.1+            -- Subsidiaries of SignalSoft Corporation
        23.1             -- Consent of KPMG LLP (SignalSoft Corporation)
        23.2             -- Consent of KPMG LLP (BFound.com Services, Inc.)
        23.3++           -- Consent of Holme Roberts & Owen LLP (included as part of
                            Exhibit 5.1)
        24.1+            -- Powers of Attorney
        27               -- Financial Data Schedule
</TABLE>


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

 *  To be filed by amendment.

 +  Previously filed with the Form S-1 Registration Statement on April 13, 2000
    (File No. 333-34670) and incorporated by reference.


 ++ Previously filed with Amendment No. 1 to the Form S-1 Registration Statement
    on June 8, 2000 (File No. 333-34670) and incorporated by reference.


     (b) Financial Statement Schedules:

     Schedules have been omitted because the information required to be shown in
the schedules is not applicable or is included elsewhere in our financial
statements or the notes thereto.

ITEM 17. UNDERTAKINGS


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


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

                                      II-3
<PAGE>   109

     The undersigned Registrant hereby undertakes that:

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


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


                                      II-4
<PAGE>   110

                                   SIGNATURES


     Pursuant to the requirements of the Securities Act, the undersigned
Registrant has duly caused this Amendment No. 2 to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Boulder, Colorado, on the 14th day of July, 2000.


                                            SIGNALSOFT CORPORATION

                                            By:                 *
                                              ----------------------------------
                                                        David A. Hose
                                              Chief Executive Officer, President
                                                              and
                                              Chairman of the Board of Directors

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


<TABLE>
<CAPTION>
                        NAME                                        TITLE                     DATE
                        ----                                        -----                     ----
<C>                                                    <S>                                <C>

                          *                            Chief Executive Officer,           July 14, 2000
-----------------------------------------------------    President and Chairman of the
                    David A. Hose                        Board of Directors (Principal
                                                         Executive Officer)

                /s/ ANDREW M. MURRAY                   Senior Vice President of           July 14, 2000
-----------------------------------------------------    Finance, Chief Financial
                  Andrew M. Murray                       Officer and
                                                         Secretary-Treasurer (Principal
                                                         Financial Officer and
                                                         Principal Accounting Officer)

                          *                            Executive Vice President of        July 14, 2000
-----------------------------------------------------    Corporate Development and
                   Mark H. Flolid                        Director

                          *                            Director                           July 14, 2000
-----------------------------------------------------
                Charles P. Waite, Jr.

                          *                            Director                           July 14, 2000
-----------------------------------------------------
                  B. Holt Thrasher

                          *                            Director                           July 14, 2000
-----------------------------------------------------
                   Eric L. Doggett

                          *                            Director                           July 14, 2000
-----------------------------------------------------
                  Perry M. LaForge
</TABLE>


*By:      /s/ ANDREW M. MURRAY
     -------------------------------
            Andrew M. Murray
            attorney-in-fact

                                      II-5
<PAGE>   111

                                 EXHIBIT INDEX


<TABLE>
<CAPTION>
      EXHIBIT NO.                                DESCRIPTION
      -----------                                -----------
<C>                      <S>
          1.1            -- Form of Underwriting Agreement
          3.1++          -- Form of Amended and Restated Certificate of Incorporation
                            of SignalSoft Corporation
          3.2++          -- Form of Bylaws of SignalSoft Corporation
          4.1*           -- Specimen stock certificate for shares of common stock of
                            SignalSoft Corporation
          5.1++          -- Opinion of Holme Roberts & Owen LLP, regarding legality
                            of securities being registered
         10.1+           -- Series C Preferred Stock Purchase Agreement dated as of
                            December 15, 1999 by and among SignalSoft Corporation and
                            the Investors listed on Exhibit A thereto
         10.2+           -- Purchase Agreement dated as of March 22, 2000 by and
                            among SignalSoft Corporation, SignalSoft NS Co. and the
                            shareholders of BFound.com Services, Inc.
         10.3+           -- Investors' Rights Agreement dated as of August 1, 1996 by
                            and among SignalSoft Corporation, the Investors listed on
                            Exhibit A thereto, David Hose, Mark Flolid and Jim Fitch
         10.4+           -- Amendment One to 8/1/96 Investors' Rights Agreement of
                            SignalSoft Corporation
         10.5+           -- Amendment Two to 8/1/96 Investors' Rights Agreement of
                            SignalSoft Corporation
         10.6++          -- Lease Agreement dated as of March 1998 by and between
                            Walnut Canyon Partners and SignalSoft Corporation
         10.7++          -- SignalSoft Corporation Nonqualified Stock Option Plan
                            effective November 17, 1995, as amended
         10.8++          -- Form of Stock Option Grant Agreement
         10.9            -- SignalSoft Corporation Equity Incentive Plan
         10.10           -- Form of Indemnification Agreement
         21.1+           -- Subsidiaries of SignalSoft Corporation
         23.1            -- Consent of KPMG LLP (SignalSoft Corporation)
         23.2            -- Consent of KPMG LLP (BFound.com Services, Inc.)
         23.3++          -- Consent of Holme Roberts & Owen LLP (included as part of
                            Exhibit 5.1)
         24.1+           -- Powers of Attorney
         27              -- Financial Data Schedule
</TABLE>


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

 *  To be filed by amendment.

 +  Previously filed with the Form S-1 Registration Statement on April 13, 2000
    (File No. 333-34670) and incorporated by reference.


++  Previously filed with Amendment No. 1 to the Form S-1 Registration Statement
    on June 8, 2000 (File No. 333-34670) and incorporated by reference.



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