TOP TIER SOFTWARE INC
S-1/A, 2000-09-11
PREPACKAGED SOFTWARE
Previous: BELLACASA PRODUCTIONS INC, SB-2/A, EX-27.3, 2000-09-11
Next: TOP TIER SOFTWARE INC, S-1/A, EX-23.1, 2000-09-11



<PAGE>


  As filed with the Securities and Exchange Commission on September 11, 2000

                                                     Registration No. 333-34038
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

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

                             AMENDMENT NO. 2
                                      TO
                                   FORM S-1
                            REGISTRATION STATEMENT
                                     UNDER
                          THE SECURITIES ACT OF 1933

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

                            TOP TIER SOFTWARE, INC.
            (Exact name of registrant as specified in its charter)

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

<TABLE>
 <S>                               <C>                             <C>
            Delaware                            7372                         77-0461287
 (State or other jurisdiction of    (Primary Standard Industrial          (I.R.S. Employer
 incorporation or organization)      Classification Code Number)       Identification Number)
</TABLE>

            6203 San Ignacio Avenue, Suite 101, San Jose, CA 95119
                                (408) 360-1700
  (Address, including zip code, and telephone number, including area code, of
                   Registrant's principal executive office)

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

                               Gregory S. Ayers
                            Chief Financial Officer
                            Top Tier Software, Inc.
            6203 San Ignacio Avenue, Suite 101, San Jose, CA 95119
                                (408) 360-1700
(Name, address, including zip code, and telephone number, including area code,
                             of agent for service)

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

                                  Copies to:
           Mark A. Bertelsen                     William D. Sherman
          Herbert P. Fockler                      Justin L. Bastian
            Burke F. Norton                         Corey Levens
             Jon C. Avina                        Stephanie A. Gonye
   Wilson Sonsini Goodrich & Rosati           Morrison & Foerster, LLP
       Professional Corporation                  755 Page Mill Road
          650 Page Mill Road                     Palo Alto, CA 94304
          Palo Alto, CA 94304                      (650) 813-5600
            (650) 493-9300

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

   Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.

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

   If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 145 under the Securities Act of
1933, as amended (the "Securities Act"), check the following box. [_]
   If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please 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 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. [_]

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

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

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

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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 offers to buy these   +
+securities in any state where the offer or sale is not permitted.             +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

              SUBJECT TO COMPLETION, DATED September 11, 2000

                                       Shares

                          [LOGO OF TOP TIER SOFTWARE]

                                  Common Stock

                                   --------

  Prior to this offering, there has been no public market for our common stock.
The initial public offering price of our common stock is expected to be between
$10.00 and $12.00 per share. We have made application to list our common stock
on The Nasdaq Stock Market's National Market under the symbol "TOPT."

  The underwriters have an option to purchase a maximum of 600,000 additional
shares to cover over-allotments of shares.

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

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

  Delivery of the shares of common stock will be made on or about           ,
2000.

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

Credit Suisse First Boston

               Dain Rauscher Wessels

                                                      U.S. Bancorp Piper Jaffray

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

Inside Front Cover Graphics
---------------------------

     In the upper left corner of the page is the phrase:  "Access, manipulate
and navigate unified enterprise information, creating collaborative business
networks."    Directly to the right is the TopTier Software logo.

     On the left side of the page is a large three dimensional diagram in the
shape of a four-tier cake.  The first tier, starting from the bottom, is labeled
"Data Sources" and is divided into three sections:  "Knowledge Management," "Web
Based Datasources" and "Internal Applications".  The Knowledge Management
section is further divided into two sections labeled with the following text:
"Document Mgmt. Systems - Groupware, Imaging,  Documents, Search Engines, etc.
and Office Applications - Word Processing, Spreadsheets, Presentations, etc."
and The Web Based Datasources section is further divided into three sections
labeled with the following text:  "Websites - News, Financials, Brokers,
Consumer Portals, etc.,"  "Information Wires - Business Wires, Credit
Information, Syndicated Data etc." and "Marketplaces - eCommerce, Suppliers,
Shippers, Services, etc."  The Internal Applications section is further divided
into three sections:  "Enterprise Applications - SAP, Baan, CRM, HR, etc.,"
"Databases/Data Warehouses - RDBMS, Flat Files, OLAP, OLTP, etc. and "Legacy
Apps."  The second tier is labeled "Application Server" and is divided
horizontally into two sections:  the top horizontal section is labeled "Portal
Personalization Engine" and the bottom horizontal section is labeled
"HyperRelational Navigation Technology (TM)."  The third tier is labeled
"Business Content Templates" and is divided into five sections:  "Web ,"
"Reports,"  "Visual Indicators,"  "Key Performance Indicators" and "Alerts."
The fourth tier is labeled "TopTier eBusiness Integration Portal."  A partial
screen shot is set on top of the fourth tier and is slightly angled so that it
appears to be inside the fourth tier.

     To the left of the left cake, three lines link the second tier (Application
Server) to three ellipses labeled with the following text: "Build," "Deploy,"
and "Administrate."  The three ellipses are partially stacked on top of each
other and enclosed in a rectangular box.  The rectangular box is labeled
"TopTier Deployment Environment."

     On the right is a three dimensional diagram in the shape of a three-tier
cake.  The first tier, starting from the bottom, is labeled "External Data
Sources" and is divided into three sections:  "Extranet,"  "Business Partners"
and "Websites."  The second tier is labeled "Application Server" and is divided
horizontally into two sections:  the top horizontal section is labeled "Portal
Personalization Engine" and the bottom horizontal section is labeled
"HyperRelational Navigation Technology (TM)."  A space separates the second and
third tiers. The third tier is labeled "TopTier eBusiness Integration Portal."
A partial screen shot is set on top of the fourth tier and is slightly angled so
that it appears to be inside the fourth tier.

     Dashes in the shape of a rectangle separate the left cake from the right
cake and is labeled "Firewall."  An arrow links the third tier of the right cake
("TopTier eBusiness Integration Portal") to the third tier of the left wedding
cake ("Business Content Templates").  Another arrow labeled "Correlation" links
the second tier of the right cake ("Application Server") to the second tier of
the left wedding cake ("Application Server").
<PAGE>

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

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                          Page
                                                                          ----
<S>                                                                       <C>
Prospectus Summary.......................................................   3

Risk Factors.............................................................   6

Special Note Regarding Forward-Looking Statements........................  14

Use of Proceeds..........................................................  14

Dividend Policy..........................................................  14

Capitalization...........................................................  15

Dilution.................................................................  16

Selected Consolidated Financial Data.....................................  17

Management's Discussion and Analysis of Financial Condition and Results
 of Operations...........................................................  19

Business.................................................................  29
</TABLE>

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
Management.................................................................  44

Related Party Transactions.................................................  54

Principal Stockholders.....................................................  57

Description of Capital Stock...............................................  59

Shares Eligible for Future Sale............................................  62

Underwriting...............................................................  64

Notice to Canadian Residents...............................................  67

Legal Matters..............................................................  68

Experts....................................................................  68

Where You Can Find More Information........................................  68

Index to Financial Statements.............................................. F-1
</TABLE>

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

   You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is different. This document may be used only where it is
legal to sell these securities. The information in this document may be
accurate only on the date of this document.



                     Dealer Prospectus Delivery Obligation

   Until       , 2000 (25 days after the commencement of this offering), all
dealers that engage in transactions in these securities, whether or not
participating in this offering, may be required to deliver a prospectus. This
is in addition to the dealer's obligation to deliver a prospectus when acting
as an underwriter and when selling unsold allotments or subscriptions.
<PAGE>


                               PROSPECTUS SUMMARY

   This summary highlights information contained elsewhere in this prospectus.
You should read the entire prospectus carefully.

                            Top Tier Software, Inc.

   We are a leading provider of a software platform that integrates corporate
data residing in a company's and its business partners' enterprise
applications, databases, text documents, Web sites and other data sources. Our
platform allows end users to directly access, navigate and manipulate this
integrated data through a corporate portal, which serves as a common user
interface for the company. We have licensed our software directly or through
resellers to over 150 companies, including Equilon (a joint venture of Royal
Dutch Shell and Texaco), Herman Miller, Hewlett-Packard, KPN (Dutch Telecom),
Nortel Networks, Phillips Group, Ricoh Canada and Rolls Royce Marine. Our
technology is also embedded in and ships with the mySAP.com Workplace eBusiness
application sold by SAP. To date, SAP has sold over one million end-user
licenses of mySAP.com Workplace. Our Baan Data Navigator product, sold by Baan
Company, has now been implemented by over 200 companies worldwide.

   Our eBusiness Integration Portal, or eBIP, software platform incorporates
our patented "HyperRelational" technology. This technology de-constructs
enterprise applications into individual "components" that represent individual
business processes or elements with which end users are familiar such as
"Customer," "Purchase Order" or "Supplier Inventory." These components are
presented as icons on our portal. This technology then enables an end user to
select a relevant piece of data, drag it from its location in one application,
and drop the data onto another icon, thereby "relating" it to any other
component or data. This action immediately presents correlated information from
both integrated and unintegrated applications and information sources. Our
experience indicates that the ability to enable all members of an extended
enterprise to directly and easily access and interact with data allows
companies to compete more effectively by reacting more swiftly to changing
market conditions and business events, to retain customers by being more
responsive to their demands, and to generate additional revenues while
increasing operational efficiency and reducing transaction costs.

   Our software is designed to extend the functionality provided by new and
existing enterprise applications, making the information they contain easily
accessible over the Internet by a network of collaborating businesses.
Companies can enable their existing information technology infrastructure to
operate over the Internet by deploying our products on top of their existing
applications or by using software solutions sold by independent software
vendors that embed our technology. We believe that this Internet-based
functionality significantly increases the value and return on our customers'
technology infrastructure investments. In addition, this functionality
addresses the limitations of traditional enterprise information portals, which
generally present only a subset of the underlying application data that is
typically extracted and aggregated.

   Our objectives are to establish our patented HyperRelational technology as
an industry standard protocol and increase awareness of the benefits of our
products by leveraging our strong sales channel relationships with strategic
software vendors such as SAP and Baan Company and extending our relationships
with systems integrators. Together, SAP and Baan Company have an installed base
of more than 20,000 enterprise application customers, representing over 10
million end users. Our relationships with these software vendors provide us
with an important endorsement of our software and create an opportunity for us,
as well as for these software vendors and systems integrators, to sell to this
installed base unrestricted versions of our HyperRelational technology that
extends its use to other enterprise applications and data sources. In addition,
to date, we have trained over 500 external professional consultants on our
products, tools and methodologies, and we anticipate that over 2,000 will have
been trained within the next 18 months.

                                       3
<PAGE>


   We have a limited operating history and have incurred net losses since
inception. We have spent significant funds in developing our technology and
building our sales and marketing operations and, as of June 30, 2000, we had a
pro forma accumulated deficit of $33.6 million, net of $44.1 million which was
attributable to non-cash charges resulting from Vanenburg Group BV's
acquisition of us in October 1998. We intend to continue to invest in extending
our technology and product leadership by enhancing our software solutions to
support an increasing number of data sources and enterprise applications and
developing industry specific applications that are built using our eBusiness
Integration Portal software products.

   We began operations in 1992 as Quicksoft Development (1992) Ltd., an
Israeli-based research and development company, which became our subsidiary
when we were incorporated in Delaware in August 1996 under the name DataSurf
Inc. We changed the name of our subsidiary to Top Tier Israel Ltd. and, in
1997, changed our name to Top Tier Software, Inc. Our principal executive
office is located at 6203 San Ignacio Avenue, Suite 101, San Jose, California
95119, and our telephone number is (408) 360-1700.

   "TopTier" and "HyperRelational" are our registered trademarks, and the
TopTier logo is a trademark of TopTier. This prospectus also includes
trademarks owned by others.

                                  The Offering

<TABLE>
 <C>                                                  <S>
 Common stock offered by us.......................... 4,000,000 shares
 Common stock to be outstanding after this offering.. 30,754,864 shares
 Use of proceeds..................................... General corporate
                                                      purposes, including
                                                      expansion of sales and
                                                      marketing capabilities,
                                                      product development and
                                                      other working capital
                                                      requirements.
 Proposed Nasdaq National Market symbol.............. "TOPT"
</TABLE>

   The number of outstanding shares above is based on shares outstanding as of
June 30, 2000. This number also includes 3,272,173 shares of common stock
issuable upon conversion of 2,155,298 shares of Series E preferred stock,
including 239,477 shares issued in July 2000. This conversion rate assumes an
initial public offering price of $11.00 per share and will vary if the initial
public offering price is different. See "Description of Capital Stock" and Note
14 of Notes to Consolidated Financial Statements. The number of outstanding
shares above excludes the following:

  . 3,112,865 shares issuable upon exercise of options outstanding as of June
    30, 2000 at a weighted average exercise price of $1.892; and

  . 5,345,818 shares reserved for future issuances under our stock plans.

   See "Management--Stock Plans" and Note 8 of Notes to Consolidated Financial
Statements.


                                       4
<PAGE>

                      Summary Consolidated Financial Data
                    (in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                        Nine Months  Three Months              Six Months Ended
                           Year Ended      Ended        Ended      Year Ended      June 30,
                          December 31, September 30, December 31, December 31, ------------------
                              1997         1998          1998         1999       1999      2000
                          ------------ ------------- ------------ ------------ --------  --------
                                                                                  (unaudited)
<S>                       <C>          <C>           <C>          <C>          <C>       <C>
Consolidated Statements
 of Operations Data:
Total revenues..........    $    95       $ 2,635      $    317    $    9,645  $  3,590  $  9,127
Cost of revenues........         80           192            91         1,698       344       969
Gross profit............         15         2,443           226         7,947     3,246     8,158
Operating expenses:
  Sales and marketing...        665         4,241         1,472         9,234     4,760     9,686
  Research and
   development, net.....      1,054         2,644         1,152         6,481     3,029     3,292
  General and
   administrative.......      1,823         1,913           783         2,654       930     2,223
  Purchased in-process
   research and
   development..........         --            --         3,557            --        --        --
  Amortization of
   deferred stock
   compensation(*)......         --            --            --         7,214       512     6,237
  Amortization of
   goodwill and
   intangibles..........         --            --         5,787        23,148    11,574    11,574
Loss from operations....     (3,526)       (6,355)      (12,524)      (40,784)  (17,559)  (24,854)
Basic net loss per
 share..................    $ (0.48)      $ (0.80)     $     --    $(1,779.25) $     --  $ (16.01)
Shares used in computing
 basic net loss per
 share..................      7,190         7,375            --            23        --     1,535
Pro forma basic net loss
 per share (unaudited)..                                           $    (2.24) $  (1.00) $  (1.88)
Shares used in computing
 pro forma basic net
 loss per share.........                                               18,158    17,581    21,516
</TABLE>

<TABLE>
<CAPTION>
                                                                 June 30, 2000
                                                                ----------------
                                                                           As
                                                                Actual  Adjusted
                                                                ------- --------
                                                                  (unaudited)
<S>                                                             <C>     <C>
Consolidated Balance Sheet Data:
Cash and cash equivalents...................................... $17,523 $59,443
Working capital................................................  12,926  54,846
Goodwill, net..................................................  26,809  26,809
Total assets...................................................  55,499  97,419
Total stockholders' equity.....................................  44,095  86,015
</TABLE>

   See Note 2 of Notes to Consolidated Financial Statements for a description
of the method that we used to compute our basic net loss per share and pro
forma basic net loss per share applicable to common stockholders.

   The as adjusted column in the consolidated balance sheet data table above
reflects our sale of 4,000,000 shares of common stock in this offering at an
assumed initial public offering price of $11.00 per share, after deducting
estimated underwriting discounts and commissions and estimated offering
expenses, and also reflects the sale of 239,477 shares of Series E preferred
stock in July 2000.

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

   Except as otherwise indicated, information in this prospectus:

  .  reflects the automatic conversion of all outstanding preferred stock
     into common stock upon completion of this offering, including the
     conversion of Series E preferred stock into common stock at a rate that
     may vary depending upon the actual initial public offering price; and

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


                                       5
<PAGE>

                                  RISK FACTORS

   You should carefully consider the risks described below before purchasing
our shares. Additional risks and uncertainties not presently known to us or
that we currently see as immaterial may also impair our business operations. If
any of the following risks actually occur, our business could be harmed, the
trading price of our common stock could decline, and you may lose all or part
of your investment.

                            Risks Related to TopTier

We have a limited operating history, which makes it difficult to evaluate our
prospects.

   We began operations in 1992 and were incorporated in Delaware in August
1996. Until August 1996, we were engaged primarily in software development for
third parties on a contract basis and, to a lesser extent, in developing our
initial eBusiness integration portal technologies and products. Since August
1996, we have focused our efforts exclusively on developing these technologies
and products. We commercially released the first version of our eBusiness
Integration Portal software in late June 1998. The revenue and income potential
of our market is unproven, and we have limited insight into trends that may
emerge in our market and affect our business. As a result of our limited
operating history, we have limited financial data that you can use to evaluate
our business.

   Our prospects must also be considered in light of the risks encountered by
companies in the early stages of development in new and rapidly evolving
markets, especially the eBusiness infrastructure integration software market.
Some of the risks that we face relate to our ability to:

  . attract and retain a broad customer base;

  . negotiate and maintain favorable strategic relationships;

  . expand our direct sales force and indirect sales channels;

  . attract, integrate, retain and motivate qualified professional personnel;

  . continually enhance our products to meet market demand and customer
    needs; and

  . plan and manage our growth effectively.

If we fail to manage these risks successfully, our business will suffer.

We have a history of net losses and expect to continue to incur net losses.

   We have experienced operating losses in each quarterly period since our
inception. We expect to incur net losses and negative operating cash flows for
the foreseeable future. The size of these net losses will depend, in part, on
the rate of growth of our revenues from license and service fees. Despite our
history of losses, we believe that it is critical to our future success that we
significantly increase our research and development, and our sales and
marketing expenditures. In addition, we have incurred and expect to continue to
incur significant non-cash operating expenses related to amortization of
goodwill resulting from Vanenburg's acquisition of us in October 1998 and
amortization of deferred stock compensation expense.

   We incurred net losses of approximately $599,000 from inception through
December 31, 1996, $3.4 million for the year ended December 31, 1997, $18.4
million for the combined periods comprising the year ended December 31, 1998,
$40.7 million for the year ended December 31, 1999 and $24.6 million for the
six months ended June 30, 2000. As of June 30, 2000, we had an accumulated
deficit of approximately $77.7 million. We expect to incur significant losses
in the future. It is possible that we may never achieve profitability, and even
if we do achieve profitability, we may not sustain or increase profitability on
a quarterly or annual basis in the future. If we do not achieve, sustain or
increase profitability in the future, then we may not be able to continue our
operations as currently planned. We cannot predict when we will operate
profitably, if at all.

                                       6
<PAGE>

We expect our quarterly operating results to fluctuate significantly, and an
unanticipated decline in revenues may disappoint securities analysts or
investors and result in a decline in our stock price.

   We expect to experience significant fluctuations in our future quarterly
operating results due to the factors listed in these "Risk Factors" and in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." Many of these factors are not within our control. Our revenues and
operating results depend upon the volume and timing of customer orders and
payments and the date of product delivery. Historically, a substantial portion
of revenues in a given quarter has been recorded in the third month of that
quarter. We expect this trend to continue, and, therefore, any failure or delay
in the closing of orders would have a material adverse affect on our quarterly
operating results. As a result, we believe that quarterly comparisons of our
operating results are not necessarily meaningful and that you should not rely
on the results of any quarter as an indication of our future performance.

   Our operating expenses are based on anticipated revenues and a high
percentage of these expenses are relatively fixed. As a result, a shortfall in
revenue, whether or not caused by a delay in the recognition of revenue, could
cause significant variations in operating results from quarter to quarter and
cause unexpected results. We record as deferred revenues payments that do not
meet our revenue recognition policy requirements. Since a portion of our
revenues each quarter is recognized from deferred revenues, our quarterly
results will depend primarily upon entering into new contracts to generate
revenues for that quarter as well as contracts entered into in prior quarters.
New contracts may not result in revenue in the quarter in which the contract
was signed, and we may not be able to predict accurately when revenues from
these contracts will be recognized. In addition, we may provide stock-based
incentive to various industry participants, and these incentives may have an
adverse effect on our quarterly operating results.

Our revenues will likely decline if we do not develop and maintain successful
strategic relationships.

   We have established strategic relationships with independent software
vendors such as SAP AG and Baan Company and systems integrators such as
Andersen Consulting and Deloitte Consulting. We rely on these strategic
partners for insights into new technology and for exposure to, and influence
with, many potential customers to which we may not otherwise have access. In
October 1999, we granted SAP a non-exclusive and perpetual license to include a
restricted version of our HyperRelational technology in its software. We rely
on SAP for an important endorsement of our software, significant license
revenue and exposure of certain of our technologies and products to the SAP
customer base. In addition, we rely on the implementation services and joint
marketing and sales efforts of systems integrators. If these relationships
fail, we will have to devote substantially more resources to the sales and
marketing, and implementation and support of our product than we would
otherwise, and our efforts may not be as effective as those of the systems
integrators. Systems integrators with which we have relationships also train
their personnel to sell and implement our products. The failure of systems
integrators to train their personnel would significantly harm our ability to
successfully license and implement our software products. We are currently
investing, and plan to continue to invest, significant resources to develop
relationships with enterprise application software providers and systems
integrators. Our operating results could be adversely affected if these efforts
do not generate sufficient license and service revenues.

Because a small number of our customers have historically accounted for a high
percentage of our revenues, the loss of a customer, in particular SAP, could
result in lower than expected revenues.

   In 1999, our two largest customers accounted for 87% of our total revenues,
with Baan Company accounting for 71% and SAP accounting for 16% of our total
revenues. For the six months ended June 30, 2000, these customers accounted for
19% and 33% of our total revenues, respectively. Because we have entered into
new agreements with Baan Company with different payment terms, we currently
anticipate that revenue that we recognize under our agreement with Baan Company
will decrease significantly during 2000. In addition, we anticipate that the
proportion of our revenues attributable to our relationship with SAP will
account for an increasing proportion, and our relationship with Baan Company
will account for a decreasing proportion, of our total revenues in the
foreseeable future. We may also receive additional revenues from the licensing
of our TopTier Extension for mySAP.com Workplace to SAP customers. If SAP
chooses not to renew

                                       7
<PAGE>

the license and resell agreement, or chooses to cease promoting our software to
its customers, our revenues may decline and our business could be adversely
affected. To offset this risk, we need to attract and retain new customers. Our
ability to attract and retain new customers will depend on a variety of
factors, including the performance, quality, breadth and depth of our current
and future products. Our failure to add new customers would limit our ability
to increase our revenues.

Our market is highly competitive, and if we do not compete effectively, we may
suffer price reductions, reduced gross margins and loss of market share.

   The market for our products is intensely competitive, evolving and subject
to rapid technological change. The intensity of competition is expected to
increase in the future. Increased competition is likely to result in price
reductions, reduced gross margins and loss of market share, any one of which
could significantly affect our operating results. Our current competitors
include information technology groups within organizations, traditional vendors
of enterprise application software, systems integrators developing their own
products and vendors of other enterprise application integration solutions. In
addition, our customers and companies with whom we currently have strategic
relationships, such as SAP and Baan Company, may become competitors in the
future. Some of our competitors and potential competitors have larger technical
staffs, larger customer bases, more established distribution channels, greater
brand recognition, more experienced senior management and greater financial,
marketing and other resources than we do.

   Our competitors may be able to develop products and services that are
superior to our software and services, that achieve greater customer acceptance
or that have significantly improved functionality as compared to our existing
software and future products and services. In addition, negotiating and
maintaining favorable customer and strategic relationships are critical to our
business. Our competitors may be able to negotiate strategic relationships on
more favorable terms than we are able to negotiate. Many of our competitors may
also have well-established relationships with our existing and prospective
customers. We may not be able to maintain our competitive position against
current and potential competitors, especially those with significantly greater
resources.

Our sales cycle is often long and unpredictable, and as a result, our operating
results could be harmed in any given quarter.

   Our products and technology are often purchased as part of large projects
undertaken by our customers. These projects are often complex, time consuming
and expensive. Customers generally consider a wide range of factors before
committing to purchase our products or products that incorporate our
technology, including product benefits, cost, timeliness of solution,
reliability and ability to solve a customer's specific need and inter-operate
with existing and future enterprise systems. As a result, we or other parties,
including systems integrators, must educate potential customers with respect to
these factors. In addition, the purchase of our product generally involves a
significant commitment of capital and other resources by a customer. This
commitment often requires significant technical review, assessment of
competitive products, and approval at a number of management levels within the
customer's organization. Because of these issues, our sales cycle has ranged
from three to six months and is difficult to predict for any particular license
transaction. This variable sales cycle makes it difficult to predict the
quarter in which expected orders will occur. During such sales cycles, events
beyond our control may affect the scope and timing of our sales contracts with
prospective customers. Delays in the execution of orders shift some or all of
the licensing fee revenue from that order from the expected quarter to a
subsequent quarter or quarters. Failure by customers to successfully deploy our
product, or the failure by us or systems integrators to meet customers' needs,
could damage our reputation with existing and future customers and reduce
future revenues.

We derive most of our revenues from sales of our eBusiness Integration Portal
software products and HyperRelational technology, and our business could be
materially harmed by factors that adversely affect the pricing and demand this
software and technology.

   We currently derive most of our revenues from licensing our eBusiness
Integration Portal software products and our HyperRelational technology. We
expect that we will continue to depend on our eBusiness

                                       8
<PAGE>

Integration Portal software and HyperRelational technology for most of our
revenues in the foreseeable future. Consequently, our future operating results
will depend on the demand for these products and technology, including new and
enhanced releases. A decline in the price of, or demand for, our eBusiness
Integration Portal software products or our HyperRelational technology, or
their failure to achieve broad market acceptance, could seriously harm our
business and results of operations.

If we fail to adequately respond to rapid technological changes, our existing
products will become obsolete or unmarketable.

   Advances in technology could render our current products obsolete and
unmarketable. We believe that to succeed we must enhance our eBusiness
Integration Portal software products and underlying HyperRelational technology,
develop new products and technologies on a timely basis, and satisfy the
increasingly sophisticated requirements of our customers. We may not
successfully respond to technological change, evolving industry standards or
customer requirements. If we are unable to adequately respond to these changes,
our revenues could decline. In connection with the introduction of new products
and enhancements, we have experienced development delays and related cost
overruns, which are not unusual in the software industry. To date, these delays
have not had a material impact on our revenues. If new releases or products are
delayed or do not achieve broad market acceptance, we could experience a delay
or loss of revenues and customer dissatisfaction.

If our software contains defects, we could lose customers and revenues.

   Software as complex as ours often contains unknown and undetected errors or
performance problems. Many defects are frequently found during the period
immediately following the introduction of new software or enhancements to
existing software. Although we attempt to resolve all errors that we believe
would be considered serious by our customers, our software may not be error-
free. Undetected errors or performance problems may be discovered in the future
and errors considered minor by us may be considered serious by our customers
who typically use our software for strategically important eBusiness
initiatives. This could result in lost revenues or delays in customer
acceptance and would be detrimental to our reputation, which could harm our
business.

Managing the growth of our operations will continue to strain our managerial,
operational and financial resources.

   We have rapidly and significantly expanded our operations. This expansion is
placing a significant strain on our managerial, operational and financial
resources, infrastructure and personnel. We anticipate that further significant
expansion will be required to grow our customer base. We may not be able to
implement management information and control systems in an efficient and timely
manner, and our current or planned personnel, systems, procedures and controls
may not be adequate to support our future operations. During 1999, we increased
the number of employees from 119 to 150, and from January 1, 2000 to June 30,
2000, we added 60 additional employees. Some of our existing senior management
personnel, including Gregory S. Ayers, our Chief Financial Officer, and Greg
Turner, our Senior Vice President of Worldwide Sales, joined us within the last
year. To manage the expected growth, we must improve existing, and implement
new, operational, financial and management controls and reporting systems and
procedures. In addition, we will also need to install new management
information and financial management systems.

We have important facilities and resources located in Israel, which has
historically experienced severe economic instability and military and political
unrest.

   Although we are incorporated in Delaware and headquartered in San Jose,
California, all of our research and development efforts are conducted through
our subsidiary, Top Tier Israel Ltd., which is incorporated under the laws of
the State of Israel. As a result, we are directly influenced by the political,
economic and military conditions affecting Israel. Any major hostilities
involving Israel could significantly harm our business. Israel's economy has
been subject to numerous destabilizing factors, including a period of rampant
inflation in

                                       9
<PAGE>

the early to mid-1980s, low foreign exchange reserves, fluctuations in world
commodity prices, military conflicts and civil unrest. Since the establishment
of the State of Israel in 1948, a state of hostility has existed, varying in
degree and intensity, between Israel and the Arab countries. In addition,
Israel and companies doing business with Israel have been the subject of an
economic boycott by the Arab countries since Israel's establishment. Although
Israel has entered into various agreements with certain Arab countries and the
Palestinian Authority, and various declarations have been signed in connection
with efforts to resolve some of the economic and political problems in the
Middle East, we cannot predict whether or in what manner these problems will be
resolved. In addition, our Senior Vice President of Research and Development,
Udi Ziv, and some of our employees are currently obligated to serve annual
reserve duty in the Israel Defense Forces and are subject to being called for
active military duty at any time. TopTier Israel, Ltd. has operated effectively
under these circumstances since its inception. We cannot predict the effect of
these obligations on TopTier Israel, Ltd. or TopTier in the future.

Our international operations involve risks that may adversely affect our
operating results.

   We have committed significant resources to international sales and marketing
of our products, and have offices in the United Kingdom, The Netherlands and
Germany. Our international expansion strategy may not generate sufficient
revenues to offset the expenditures required to establish and maintain our
international sales and marketing operations. Moreover, we may not successfully
localize, market and deliver our products in foreign markets, which may limit
our ability to sell our products in those markets. Risks that may affect our
international operations include:

  . greater difficulties in collecting accounts receivable and longer
    collection periods than for domestic customers;

  . difficulties in staffing and managing foreign operations;

  . changing and conflicting regulatory requirements;

  . potentially adverse tax consequences;

  . tariffs and general export restrictions, including export controls
    relating to encryption technology;

  . political instability;

  . fluctuations in currency exchange rates;

  . seasonal reductions in business activity during the summer months in
    Europe and certain other parts of the world; and

  . the impact of local economic conditions and practices.

   In addition, as we expand our international operations, we may allow payment
in foreign currencies and exposure to losses in foreign currency transactions
may increase. Any steps we may take to limit this exposure may not be
successful in avoiding exchange related losses, which could be material to our
operating results.

It would require significant time and effort to replace our key personnel.

   We depend on the continued service of our key technical, sales and senior
management personnel. The loss of any of our senior management or other key
research, development, sales and marketing personnel could have a material
adverse effect on our future operating results. In particular, Shai Agassi, our
Chief Executive Officer and Chairman of the Board of Directors, and Udi Ziv,
our Senior Vice President of Research and Development, would be difficult to
replace. We maintain "key person" life insurance for Mr. Agassi in the amount
of $1.0 million.

                                       10
<PAGE>

We may not be able to recruit or retain personnel because competition for
qualified personnel is intense in our industry and in our geographic regions.

   Our success depends on our ability to attract and retain qualified
management, engineering, sales and marketing and professional services
personnel. Competition for these types of personnel is intense, especially in
the Silicon Valley and Israel. If we are unable to attract, train and retain
additional qualified personnel, our growth may be limited due to our lack of
capacity to develop and market our products.

                         Risks Related to Our Industry

If the use of the Internet for business-to-business commerce does not grow as
anticipated, our future revenues could be lower than currently expected.

   We depend on the increased acceptance and use of the Internet as a medium
for conducting business between companies. Acceptance and use may not continue
to develop at historical rates, and a sufficiently broad base of business
customers may not adopt or continue to use the Internet as a medium of
commerce. In addition, issues of performance or government regulation of the
Internet may adversely affect companies' willingness to continue using, or to
adopt, eBusiness solutions that use the Internet, such as our own. If the use
of the Internet for business-to-business commerce does not grow, whether or not
due to any of these reasons, our operating results may suffer.

Failure to adequately protect our intellectual property rights will harm our
ability to compete.

   Our success depends on our ability to adequately protect our intellectual
property rights. Despite our efforts to protect our proprietary rights, these
efforts may not be sufficient to protect our proprietary rights against
unauthorized third-party copying or use, and existing laws afford only limited
protection. Attempts may be made to copy or reverse engineer aspects of our
products or to obtain and use information that we regard as proprietary. In
addition, existing laws may change in a manner that adversely affects our
proprietary rights. Furthermore, policing the unauthorized use of our product
is difficult, and expensive litigation may be necessary in the future to
enforce our intellectual property rights.

Our products could infringe the intellectual property rights of others,
resulting in costly litigation and the loss of significant rights.

   We may be subject to legal proceedings and claims for alleged infringement
of proprietary rights of others, particularly as the number of products and
competitors in our industry grow and functionalities of products overlap. This
risk is higher in a new market in which a large number of patent applications
have been filed but are not yet publicly disclosed. We have limited ability to
determine which patents our products may infringe and take measures to avoid
infringement. Any litigation could result in substantial costs and diversion of
management's attention and resources. Further, parties making infringement
claims against us may be able to obtain injunctive or other equitable relief,
which could prevent us from selling our products or require us to enter into
royalty or license agreements which are not advantageous to us.

                         Risks Related to This Offering

The substantial number of shares that will be eligible for sale in the near
future may cause the market price for our common stock to decline.

   Sales of a substantial number of shares of our common stock in the public
market following this offering could cause the market price of our common stock
to decline. The number of shares available for sale in the public market is
limited by restrictions under federal securities law and under agreements that
some of our stockholders have entered into with the underwriters and with us.
These lockup agreements restrict our

                                       11
<PAGE>

stockholders from selling, pledging or otherwise disposing of their shares for
a period of 180 days after the date of this prospectus without the prior
written consent of Credit Suisse First Boston Corporation. Credit Suisse First
Boston Corporation informed us that it has no current intention to release any
common stock from the restrictions of the lockup agreement but may, however, in
its sole discretion, release all or any portion of the common stock from the
restrictions of the lockup agreements. In considering whether to release common
stock from lockup, Credit Suisse First Boston Corporation has no objective
criteria but considers, among other factors, the particular circumstances
surrounding the request including, but not limited to, the number of shares
requested to be released, the possible impact on the market for our common
stock, the reasons for the request, and whether the holder of the shares
subject to the lockup is an officer, director or other affiliate of ours.

   The following table indicates approximately when the 26,754,864 shares of
our common stock that were outstanding as of June 30, 2000, on an as-converted
basis, or issuable upon conversion of the Series E preferred stock sold in July
2000, will be eligible for sale into the public market:

<TABLE>
<CAPTION>
                                                              Eligibility of
                                                             Restricted Shares
                                                                for Sale in
                                                               Public Market
                                                             -----------------
<S>                                                          <C>
On the date of this prospectus..............................             0
90 days after the date of this prospectus...................       205,113
180 days after the date of this prospectus..................    23,277,577
At various times more than 180 days after the date of this
 prospectus.................................................     3,272,173
</TABLE>

   Additionally, there were options outstanding to purchase 3,112,865 shares as
of June 30, 2000 and 5,345,818 shares reserved for future grant. For a further
description of the eligibility of shares for sale into the public market
following the offering, see "Shares Eligible for Future Sale."

Investors in this offering will experience immediate and substantial dilution.

   The initial public offering price per share is substantially higher than the
book value per share of our common stock. As a result, investors purchasing
common stock in this offering will incur immediate dilution of $9.21 in net
tangible book value per share, based on an assumed public offering price of
$11.00 per share. In addition, the number of shares available for issuance
under our stock option and employee stock purchase plans will automatically
increase without stockholder approval. Investors will incur additional dilution
upon the exercise of outstanding stock options and exercise of the
underwriters' overallotment option, if any.

Our charter documents and Delaware law will make it more difficult to acquire
us and may discourage take-over attempts and thus depress the market price of
our stock.

   Provisions of our certificate of incorporation and bylaws could make it more
difficult for a third party to acquire us, even if doing so would be beneficial
to our stockholders. For example, we have implemented the following provisions:

  . a staggered board of directors;

  . stockholder meetings may be called only by our board of directors, the
    chairman of the board or the president;

  . advance notice is required prior to stockholder proposals; and

  . stockholders may not act by written consent.

   Further, we have authorized preferred stock that is undesignated, making it
possible for our board of directors to issue preferred stock with voting or
other rights or preferences that could impede the success of any attempt to
change our control. Provisions of Delaware law also could make it more
difficult for a third party to acquire us. Specifically, Section 203 of the
Delaware General Corporation Law may have a discouraging effect on attempts to
acquire us that are not approved in advance by our board of directors,
including a premium over the market price for the shares of common stock held
by our stockholders.

                                       12
<PAGE>

Control by our principal stockholders may limit your ability to influence the
outcome of director elections and other matters requiring stockholder approval.

   Upon completion of this offering, our executive officers, directors and
persons holding at least 5% of our stock, and their affiliates, will
beneficially own 23,249,402 shares, or approximately 75.0% of the outstanding
shares of our common stock (73.5% if the underwriters' over-allotment option is
exercised in full). These stockholders, acting together, would be able to
control all matters requiring approval by our stockholders, including the
election of directors and the approval of mergers or other business combination
transactions. This concentration of ownership could have the effect of delaying
or preventing a change in our control or otherwise discouraging a potential
acquirer from attempting to obtain control of us. This could have a negative
effect on the market price of our common stock or prevent our stockholders from
realizing a premium over the market prices for their shares of common stock.
For information about the ownership of common stock by our executive officers,
directors and persons holding at least 5% of our stock, see "Principal
Stockholders."

Our stock price may be volatile, which could result in substantial losses for
investors purchasing shares in this offering.

   Prior to this offering, you could not buy or sell our common stock publicly.
An active public market for our common stock may not develop or be sustained
after this offering. We will negotiate and determine the initial public
offering price with the representatives of the underwriters. The market price
of our common stock after this offering will likely vary from the initial
public offering price. You may be unable to sell your shares of our common
stock at or above the offering price. The market price of the common stock may
fluctuate significantly in response to the following factors, some of which are
beyond our control:

  . variations in our quarterly operating results;

  . changes in securities analysts' estimates of our financial performance or
    in their buy/sell recommendations;

  . changes in market valuations of similar companies;

  . announcements by us or our competitors of significant contracts,
    acquisitions, strategic partnerships, joint ventures or capital
    commitments;

  . loss of an important strategic relationship with an enterprise
    application software provider such as SAP;

  . loss of an important business relationship with a systems integrator;

  . additions or departures of key personnel; and

  . fluctuations in our stock market price and volume, which are particularly
    common among highly volatile securities of software and eBusiness
    companies.

We are at risk of securities class action litigation due to our expected stock
price volatility.

   In the past, securities class action litigation has often been brought
against companies following periods of volatility in the market price of their
securities. This risk is especially acute for us, because technology companies
like ours have experienced greater than average stock price volatility in
recent years and, as a result, have been subject to, on average, a greater
number of securities class action claims than companies in other industries.
Due to the potential volatility of our stock price, we may in the future be the
target of similar litigation. Securities litigation could result in substantial
costs and divert management's attention and resources.

                                       13
<PAGE>

               SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

   This prospectus contains forward-looking statements. These statements relate
to future events or our future financial performance. In some cases, you can
identify forward-looking statements by terminology including "anticipates,"
"believes," "continue," "could," "estimates," "expects," "intends," "may,"
"plans," "potential," "predicts," "should," or "will," or the negative of these
terms or other comparable terminology. These statements are only predictions
and involve known and unknown risks, uncertainties and other factors, including
the risks outlined under "Risk Factors," that may cause our or our industry's
actual results, levels of activity, performance or achievements to be
materially different from any future results, levels or activity, performance
or achievements expressed or implied by these forward-looking statements.

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

                                USE OF PROCEEDS

   We estimate that our net proceeds from the sale of the 4,000,000 shares of
common stock in this offering will be approximately $39,920,000 at an assumed
initial public offering price of $11.00 per share, after deducting estimated
underwriting discounts and estimated offering expenses. If the underwriters
fully exercise their over-allotment option, we estimate that the net proceeds
will be approximately $46,058,000.

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

   We expect to use between $17.5 million and $24 million of the net proceeds
of the offering to fund increased sales and marketing activities. We also
intend to use approximately $7 million of the net proceeds of the offering for
research and development activities. We expect to use any remaining net
proceeds of the offering for general corporate purposes. The amounts we
actually expend for these purposes may vary significantly and will depend on a
number of factors, including the amount of our future revenues and the other
factors described under "Risk Factors." Accordingly, we will have broad
discretion in the allocation of the proceeds of this offering. We may also use
a portion of the proceeds to acquire or invest in complementary businesses,
technologies, product lines or products, although we have no current plans or
commitments for any of these acquisitions or investments. Pending such uses,
the net proceeds of this offering will be invested in short-term, interest-
bearing, investment-grade securities.

                                DIVIDEND POLICY

   We have never declared or paid cash dividends on our capital stock. We
currently intend to retain our future earnings to finance the growth and
development of our operations. We do not anticipate declaring or paying cash
dividends on our common stock for the foreseeable future. Any future
determination to declare or pay dividends will be at the discretion of our
board of directors and will be dependent upon our financial condition, results
of operations, capital requirements and other factors that our board of
directors considers relevant.

                                       14
<PAGE>

                                 CAPITALIZATION

   The following table sets forth as of June 30, 2000:

  . our actual capitalization;

  . our pro forma capitalization, which gives effect to the automatic
    conversion of all outstanding preferred stock into common stock upon
    completion of this offering, assuming an initial public offering price of
    $11.00 per share, and also reflects the sale of 239,477 shares of Series
    E preferred stock in July 2000; and

  . our pro forma as adjusted capitalization, which gives effect to the sale
    of 4,000,000 shares of common stock in this offering at an assumed
    initial public offering price of $11.00 per share, after deducting
    estimated underwriting discounts and commissions and estimated offering
    expenses and also reflects the sale of 239,477 shares of Series E
    preferred stock in July 2000.

   This information should be read in conjunction with our Consolidated
Financial Statements and related Notes included elsewhere in this prospectus.

<TABLE>
<CAPTION>
                                                        June 30, 2000
                                                  ----------------------------
                                                                        Pro
                                                              Pro     Forma As
                                                   Actual    Forma    Adjusted
                                                  --------  --------  --------
                                                    (in thousands, except
                                                          share and
                                                       per share data)
<S>                                               <C>       <C>       <C>
Cash and cash equivalents........................ $ 17,523  $ 19,523  $ 59,443
                                                  ========  ========  ========
Line of credit...................................      716       716       716
Credit facility from Vanenburg...................    2,000     2,000     2,000
Stockholders' equity:
  Convertible preferred stock, $0.001 par value:
   22,735,032 shares authorized; 21,896,857
   shares outstanding, actual; no shares
   outstanding, pro forma; 5,000,000 shares
   authorized, no shares outstanding, pro forma
   as adjusted...................................       22        --        --
  Common stock, $0.001 par value: 40,125,000
   shares authorized, 3,501,655 shares
   outstanding, actual; 200,000,000 shares
   authorized, 26,754,864 shares outstanding, pro
   forma; 200,000,000 shares authorized,
   30,754,864 shares outstanding, pro forma as
   adjusted......................................        4        27        31
Additional paid-in capital.......................  143,990   145,989   185,905
Deferred stock compensation......................  (15,641)  (15,641)  (15,641)
Notes receivable.................................   (6,577)   (6,577)   (6,577)
Accumulated deficit..............................  (77,703)  (77,703)  (77,703)
                                                  --------  --------  --------
  Total stockholders' equity.....................   44,095    46,095    86,015
                                                  --------  --------  --------
    Total capitalization......................... $ 46,811  $ 48,811  $ 88,731
                                                  ========  ========  ========
</TABLE>

   Outstanding shares exclude the following shares:

  . 3,112,865 shares of common stock issuable upon exercise of outstanding
    options at June 30, 2000 at a weighted average price of $1.892; and

  . 5,345,818 shares of common stock reserved for future issuances under our
    stock plans.

                                       15
<PAGE>

                                    DILUTION

   Our pro forma net tangible book value at June 30, 2000 was approximately
$15.2 million or $0.57 per share. Pro forma net tangible book value per share
is equal to the amount of our total tangible assets less our total liabilities,
divided by the number of outstanding shares of our common stock assuming the
conversion of all outstanding preferred stock into common stock. Pro forma
amounts also reflect the sale of 239,477 shares of Series E preferred stock in
July 2000.

   New investors who purchase shares in this offering will be diluted to the
extent of the difference between the initial public offering price and the pro
forma net tangible book value per share of common stock immediately after
completion of this offering. After giving effect to the sale of 4,000,000
shares of common stock in this offering at an assumed initial public offering
price of $11.00 per share, after deducting estimated underwriting discounts and
commissions and estimated offering expenses, our pro forma net tangible book
value at June 30, 2000 would have been $55.1 million or $1.79 per share. This
represents an immediate increase in pro forma net tangible book value of $1.22
per share to existing stockholders and an immediate dilution in pro forma net
tangible book value of $9.21 per share to new investors. The following table
illustrates this per share dilution:

<TABLE>
<S>                                                                <C>   <C>
Assumed initial public offering price per share...................       $11.00
  Pro forma net tangible book value per share as of June 30,
   2000........................................................... $0.57
  Increase in pro forma net tangible book value per share
   attributable to new investors..................................  1.22
                                                                   -----
Pro forma net tangible book value per share upon completion of
 this offering....................................................         1.79
                                                                         ------
Dilution per share to new investors...............................       $ 9.21
                                                                         ======
</TABLE>

   The following table sets forth at June 30, 2000 the differences between the
existing stockholders and new investors who purchase shares of common stock in
this offering in the number of shares purchased from us, the total
consideration paid, and the average price paid per share.

<TABLE>
<CAPTION>
                            Shares Purchased  Total Consideration
                           ------------------ -------------------- Average Price
                             Number   Percent    Amount    Percent   Per Share
                           ---------- ------- ------------ ------- -------------
<S>                        <C>        <C>     <C>          <C>     <C>
Existing stockholders..... 26,754,864   87.0% $119,998,265   73.2%    $ 4.49
New investors.............  4,000,000   13.0    44,000,000   26.8      11.00
                           ----------  -----  ------------  -----
  Total................... 30,754,864  100.0% $163,998,265  100.0%
                           ==========  =====  ============  =====
</TABLE>

   This table excludes the following shares:

  . 3,112,865 shares of common stock issuable upon exercise of outstanding
    options on June 30, 2000 at a weighted average price of 1.892; and

  . 5,345,818 shares of common stock reserved for future issuances under our
    stock plans.

   This table includes consideration attributable to existing stockholders of
$75,882,114 pushed down at the time of Vanenburg's acquisition of us in October
1998. To the extent outstanding options are exercised after June 30, 2000 or
the underwriters exercise their over-allotment option, there will be further
dilution to new investors.

                                       16
<PAGE>

                      SELECTED CONSOLIDATED FINANCIAL DATA

   The following selected consolidated financial data should be read in
conjunction with our Consolidated Financial Statements and related Notes and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." The statement of operations data for the years ended December 31,
1995 and 1996 and the balance sheet data as of December 31, 1995 and 1996 are
derived from unaudited consolidated financial statements not included in this
prospectus. The balance sheet data as of December 31, 1997 is derived from
audited financial statements not included in this prospectus. The statements of
operations data for the year ended December 31, 1997, nine months ended
September 30, 1998, three months ended December 31, 1998 and the year ended
December 31, 1999 and the balance sheet data as of December 31, 1998 and 1999,
are derived from our audited Consolidated Financial Statements included
elsewhere in this prospectus. The selected financial data as of June 30, 2000
and for the six months ended June 30, 1999 and 2000 have been derived from our
unaudited financial statements which, in the opinion of management, include all
adjustments, consisting of only normal recurring adjustments necessary for a
fair presentation of the results of operations for such periods. The weighted
average shares used in computing basic net loss per share below reflect the
acquisition by Vanenburg of all of our outstanding stock by October 1998, and
the resulting decrease in shares outstanding for the year ended December 31,
1999. The selected financial data for the years ended December 31, 1995, 1996
and 1997 and the period from January 1, 1998 through September 30, 1998 reflect
the results of operations and balance sheet data prior to the acquisition by
Vanenburg. See Note 3 of the Notes to the Consolidated Financial Statements.
The selected consolidated financial data for the period from October 1, 1998
through December 31, 1999 reflect the results of operations and balance sheet
data subsequent to the acquisition.

<TABLE>
<CAPTION>
                                                     Nine Months  Three Months
                           Year Ended December          Ended        Ended      Year Ended  Six Months Ended
                                   31,              September 30, December 31, December 31,     June 30,
                          ------------------------  ------------- ------------ ------------ ------------------
                           1995     1996    1997        1998          1998         1999       1999      2000
                          -------  ------  -------  ------------- ------------ ------------ --------  --------
                           (unaudited)                                                         (unaudited)
                                           (in thousands, except per share data)
<S>                       <C>      <C>     <C>      <C>           <C>          <C>          <C>       <C>
Consolidated Statements
 of Operations Data:
Revenues:
 License revenues.......  $    --  $   --  $    30     $ 2,484      $    244    $    7,260  $  3,327  $  5,911
 Service revenues.......    1,150   1,238       65         152            73         2,385       263     3,216
                          -------  ------  -------     -------      --------    ----------  --------  --------
   Total revenues.......    1,150   1,238       95       2,636           317         9,645     3,590     9,127
                          -------  ------  -------     -------      --------    ----------  --------  --------
Cost of revenues:
 Cost of license
  revenues..............       --      --       --           1            --            30        18        34
 Cost of service
  revenues..............      380     654       80         191            91         1,668       326       935
                          -------  ------  -------     -------      --------    ----------  --------  --------
   Total cost of
    revenues............      380     654       80         192            91         1,698       344       969
                          -------  ------  -------     -------      --------    ----------  --------  --------
Gross profit............      770     584       15       2,444           226         7,947     3,246     8,158
                          -------  ------  -------     -------      --------    ----------  --------  --------
Operating expenses:
 Sales and marketing....       --      --      665       4,241         1,472         9,234     4,760     9,686
 Research and
  development, net......      477     605    1,054       2,644         1,152         6,481     3,029     3,292
 General and
  administrative........      368     575    1,823       1,913           783         2,654       930     2,223
 Purchased in-process
  research and
  development...........       --      --       --          --         3,557            --        --        --
 Amortization of
  deferred stock
  compensation(*).......       --      --       --          --            --         7,214       512     6,237
 Amortization of
  goodwill and
  intangibles...........       --      --       --          --         5,787        23,148    11,574    11,574
                          -------  ------  -------     -------      --------    ----------  --------  --------
   Total operating
    expenses............      845   1,180    3,542       8,798        12,751        48,731    20,805    33,012
                          -------  ------  -------     -------      --------    ----------  --------  --------
Operating loss..........      (75)   (596)  (3,527)     (6,354)      (12,525)      (40,784)  (17,559)  (24,854)
Other income (expense),
 net....................      (10)     (3)      92         426            62           114        33       284
                          -------  ------  -------     -------      --------    ----------  --------  --------
Net loss................  $   (85) $ (599) $(3,435)    $(5,928)     $(12,463)   $  (40,670) $(17,526) $(24,570)
                          =======  ======  =======     =======      ========    ==========  ========  ========
Basic net loss per
 share..................  $(85.00) $(0.20) $ (0.48)    $ (0.80)     $     --    $(1,779.25) $     --  $  16.01
                          =======  ======  =======     =======      ========    ==========  ========  ========
Weighted average shares
 used in computing basic
 net loss per share.....        1   2,942    7,190       7,375            --            23        --     1,535
                          =======  ======  =======     =======      ========    ==========  ========  ========
Pro forma basic net loss
 per share
 (unaudited)(**)........       --      --       --          --            --    $    (2.24) $  (1.00) $  (1.88)
Shares used in computing
 pro forma basic net
 loss per share
 (unaudited)............       --      --       --          --            --        18,158    17,581    21,516
</TABLE>
-------
*  Amortization of deferred stock compensation has been excluded from the
   following expenses in the amounts indicated:
<TABLE>
<S>                                                   <C>       <C>     <C>
  Cost of service revenues..........................  $     433 $    31 $    261
  Sales and marketing...............................        927      66      709
  Research and development, net.....................      3,353     238    1,948
  General and administrative........................      2,501     177    3,319
</TABLE>

**  See Note 2 to Consolidated Financial Statements.

                                       17
<PAGE>

<TABLE>
<CAPTION>
                                       December 31,
                         ---------------------------------------------   June 30,
                          1995     1996     1997      1998      1999       2000
                         -------  -------  -------  --------  --------  -----------
                                      (in thousands)                    (unaudited)
<S>                      <C>      <C>      <C>      <C>       <C>       <C>
Consolidated Balance
 Sheet Data:
Cash and cash
 equivalents............ $    11  $   589  $ 3,115  $  3,914  $  2,540   $ 17,523
Working capital.........     (22)     240   10,222     4,714     5,923     12,926
Goodwill, net...........      --       --       --    58,981    37,533     26,809
Total assets............     275    1,000   13,073   113,131    50,944     55,499
Accumulated deficit.....     (86)    (599)  (4,034)  (12,463)  (53,133)   (77,703)
Total stockholders'
 equity.................     (75)     211   10,753    69,617    47,777     44,095
</TABLE>

                                       18
<PAGE>

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

Overview

   We are a leading provider of a software platform that integrates corporate
data residing in a company's and its business partners' enterprise
applications, databases, text documents, Web sites and other data sources, and
allows end users to directly access, navigate and manipulate this data through
a corporate portal, which serves as a common user interface for the company.

   We began operations in 1992 as Quicksoft Development (1992) Ltd., an
Israeli-based research and development company, which became our subsidiary
when we were incorporated in Delaware in August 1996. Until August 1996, we
were engaged primarily in software development for third parties on a contract
basis and, to a lesser extent, in developing our initial eBusiness integration
portal technologies and products. Since August 1996, we have focused our
efforts exclusively on developing these technologies and products. We
commercially released the first version of our eBusiness Integration Portal
software in late June 1998. With this release, we accelerated the development
of our sales and marketing organizations. During 1999, we increased the number
of total employees from 119 to 150, and from January 1, 2000 through June 30,
2000, we added 60 additional employees. We opened sales and marketing offices
in the United Kingdom in July 1998 and offices in Germany and The Netherlands
in October 1998. We have incurred significant losses since inception, and as of
June 30, 2000, we had an accumulated deficit of $77.7 million, of which $44.1
million was attributable to non-cash charges resulting from Vanenburg Group
BV's acquisition of us in October 1998.

Sources of Revenues

   We generate revenues from non-exclusive, perpetual product and technology
licenses and professional services. Since the release of our initial eBusiness
Intergration Portal software product, we have primarily generated revenues from
licenses of our technology and products. We license our technology and products
to large, independent software vendors and directly to corporations. We provide
engineering and maintenance services to these software vendors, training
services to systems integrators and implementation and maintenance support
services to corporations. Historically, we have derived a larger proportion of
our total revenues from license agreements with software vendors than from
agreements with corporations. To date, a majority of our total revenues has
been derived from customers located outside of the United States. We believe
that domestic revenues will represent a more significant component of our total
revenues as our operations grow, although the implementation of our products
will likely include foreign subsidiaries of U.S.-based customers.

   License Revenues. We generate revenues from the grant to independent
software vendors of licenses to embed our technology into their products. We
also receive revenues for licenses to corporations for a limited number of
copies of our software products. We recognize these revenues when a license
agreement has been executed or a definitive purchase order has been received
and the product has been delivered, no significant obligations with regard to
implementation remain, the fee is fixed and determinable and collection is
probable. License fees for contracts with extended payment terms (generally
greater than 12 months) are recognized as payments become due. We consider our
products to have been delivered when an access code has been provided to the
customer. In addition, we generate revenues from software vendors that resell
our stand-alone products to their customers. We recognize these revenues when
the distributor has met all provisions of SOP 97-2 and when such revenues are
reported to us by the software vendors. Payments received from software vendors
or corporations in advance of revenue recognition are recorded as deferred
revenues.

   Service Revenues. Independent software vendors may choose to separately
enter into service contracts for the provision of engineering assistance to
embed our technology into their products and for technology maintenance
services. We also generate revenues from implementation services to integrate
our technology within a corporation's enterprise information system. These
consulting services are generally billed at an hourly rate on a time and
materials basis and are recognized as the services are performed. Corporations
who license our products generally also purchase maintenance services from us.
We recognize revenues from these

                                       19
<PAGE>

contracts over the period during which these maintenance services are provided.
We also offer training services, which are billed on a per student basis.
Revenues from training services are recognized as classes are attended. Prior
to June 1998, we entered into consulting agreements with third parties and
received service revenues, which revenues we recognized ratably over the term
of those consulting agreements.

Concentration of Revenues

   A relatively small number of customers account for a significant portion of
our total revenues. As a result, the loss or delay of individual orders can
have a significant impact on our revenues. In 1998, sales to our largest
customer, Computer Curriculum Corporation, accounted for approximately 77% of
total revenues. In 1999, sales to our two largest customers accounted for
approximately 87% of total revenues, with Baan Company accounting for 71% and
SAP AG accounting for 16%. For the six months ended June 30, 2000, sales to
these customers accounted for approximately 52% of total revenues, with Baan
accounting for 19% and SAP AG accounting for 33%. We expect that revenues from
a limited number of customers will continue to account for a large percentage
of our total revenues.

Acquisition by Vanenburg

   From June 1997 to October 1998, Vanenburg Group BV acquired all of our
outstanding equity through a series of purchase transactions. Pursuant to SEC
accounting rules, the difference between the purchase price of those shares and
the book value of our net assets at September 30, 1998 is reflected on, or
"pushed down" to, our financial statements and a new basis of accounting was
established for our assets and liabilities. We have not acquired any entity in
a purchase transaction since inception that resulted in any goodwill being
reflected on our financial statements. As of June 30, 2000 and after reflecting
sale of 239,477 shares of Series E preferred stock in July 2000, Vanenburg
owned approximately 60.9% of our outstanding shares on a fully-diluted basis.

   As a result of the Vanenburg acquisition, we recorded $65.3 million of
goodwill in October 1998. In addition, we recorded intangible assets of $5.1
million, reflecting the estimated fair market value of our assembled workforce,
trade name and core technology at the time. We also expensed $3.6 million of
purchased in-process research and development. The goodwill and intangible
assets are being amortized over a period of 36 months beginning October 1998.
The quarterly amortization of goodwill is $5.4 million and the quarterly
amortization of intangibles is approximately $425,000. As of June 30, 2000,
$37.5 million of the goodwill and $3.0 million of the intangibles had been
amortized.

Income Taxes

   Our deferred tax assets primarily consist of net operating loss
carryforwards. We have recorded a valuation allowance for the full amount of
our net deferred tax assets, as the future realization of the tax benefit is
not currently likely. As of December 31, 1999, we had net cumulative operating
loss carryforwards for federal tax purposes of $35.9 million and for state tax
purposes of $20.5 million. These federal and state tax loss carryforwards are
available to reduce future taxable income and expire at various dates through
2019 and 2005. Under the provisions of the Internal Revenue Code, substantial
changes in our ownership may limit the amount of net operating loss
carryforwards that could be utilized annually in the future to offset taxable
income. Our subsidiaries in Israel and the United Kingdom had carryforward
losses of $4.0 million and $3.2 million that have no expiration date.

   Our Israeli subsidiary's initial investment plan of $80,000 and additional
investment plans of $644,000 have been granted "Approved Enterprise" status
under the Israeli Law for Encouragement of Capital Investments. In accordance
with this law, the income from the approved enterprises will be subject to tax
benefits for a seven year period, commencing with the first year in which
taxable income is generated but limited to twelve years from commencement of
production or fourteen years from the date of approval, whichever is earlier.
We have chosen to receive our subsidiary's benefits in respect of its plans
through the Alternative Benefits program. These benefits include a tax
exemption on income derived from the "Approved

                                       20
<PAGE>

Enterprise" for a period of two years and a reduced income tax rate of 25%
(instead of the regular rate of 36%) for the additional five years of the
benefit period. A company in which foreign investment exceeds 25% is entitled
to a benefit period of ten years. If the proportion of foreign investment is
between 25% and 49%, a company will be taxed at a rate of 25%; if between 49%
and 74%, at a rate of 20%; if between 74% and 90%, at a rate of 15%; and if in
excess of 90%, at a rate of 10%. The proportion of holdings of foreign
shareholders is measured annually based on the lowest level of foreign
investment during the year.

Historical Results of Operations

Comparison of Six Months Ended June 30, 1999 and 2000

   The selected financial data for the six months ended June 30, 1999 and 2000
has been derived from our unaudited financial statements which, in the opinion
of management, include all adjustments, consisting of only normal recurring
adjustments, necessary for a fair presentation of the results of operations for
these periods.

  Revenues

   License Revenues. License revenues increased 79% from $3.3 million in the
six months ended June 30, 1999 to $5.9 million in the six months ended June 30,
2000. This increase was due to revenue recognized under a new significant
software vendor license agreement entered into in late 1999, and growth in the
number of licenses to new customers. In addition, our average license revenue
per transaction increased in this period due to larger deployments by our
customers.

   Service Revenues. Service revenues increased from approximately $263,000 in
the six months ended June 30, 1999 to $3.2 million in the six months ended June
30, 2000. A significant portion of this increase relates to nonrecurring
engineering services performed in 2000 for one software vendor and various
support services provided worldwide to the same software vendor. An increased
number of new deployments of our product also resulted in an increase in
worldwide consulting services and an increased volume of training sessions
provided to our software vendors and customers. We expect service revenues to
continue to increase in absolute dollars as we support an increasing number of
new deployments of our product.

  Cost of Revenues

   Cost of License Revenues. Cost of license revenues consists of packaging and
shipping materials used in fulfillment of our products. Cost of license
revenues was approximately $18,000 for the six months ended June 30, 1999 and
approximately $34,000 for the six months ended June 30, 2000.

   Cost of Service Revenues. Cost of service revenues consists of salaries,
payments to third-party consultants incurred in providing customer support,
training and implementation services as well as reimbursable out-of-pocket
expenses. Cost of service revenues was approximately $326,000 for the six
months ended June 30, 1999 and approximately $936,000 for the six months ended
June 30, 2000. A majority of this increase was due to increased costs related
to services provided in connection with new deployments of our product as well
as nonrecurring engineering and support services provided to a new software
vendor. The number of employees providing services increased from 16 in
December 1998 to 55 on June 30, 2000. We expect that cost of service revenues
will continue to increase in absolute dollars as we continue to expand our
customer support organization to meet anticipated customer demand. We expect
cost of service revenues as a percentage of service revenues to decrease as we
discontinue discounts on services that we offered during our early stages of
development and through the first half of 1999.

  Operating Expenses

   Sales and Marketing. Sales and marketing expenses consist of salaries,
commissions, field office expenses, travel and entertainment, advertising,
trade show and conference expenses. Sales and marketing

                                       21
<PAGE>


expenses increased from $4.8 million for the six months ended June 30, 1999 to
$9.7 million for the six months ended June 30, 2000. These increases were due
to expansion of our direct sales force and field office facilities, and the
hiring of additional professional services personnel. Our marketing and
promotional activities have significantly increased in conjunction with
participation in numerous trade shows during 2000 along with launching a
significant advertising campaign worldwide. We expect that sales and marketing
expenses will continue to increase in absolute dollars as we continue to expand
our sales and marketing efforts, establish additional U.S. and international
sales offices and increase promotional activities.

   Research and Development, Net. Research and development expenses consist of
costs associated with the development of new products, enhancements to existing
products and quality assurance activities. These costs consist primarily of
employee salaries and benefits, as well as costs associated with consulting
resources that supplement the internal development team. We have not
capitalized any software development costs and have expensed all of these costs
as incurred. Research and development expenses increased from $3.0 million in
the six months ended June 30, 1999 to $3.3 million in the six months ended June
30, 2000. The increase was due to costs associated with the hiring of an
additional 20 personnel as well as increased office space in our research and
development office in Israel. Our research and development expenses are net of
Israeli government grant reimbursements of approximately $308,000 for the six
months ended June 30, 1999 and approximately $311,000 for six months ended June
30, 2000. We anticipate that we will continue to devote substantial resources
to research and development and that these expenses will continue to increase
in absolute dollars.

   General and Administrative. General and administrative expenses consist of
salaries for administrative, executive and finance personnel, recruiting costs,
information systems costs, professional service fees and allowances for
doubtful accounts. These expenses increased from approximately $930,000 for the
six months ended June 30, 1999 to $2.2 million for the six months ended June
30, 2000. These increases were due to costs associated with the hiring of
additional personnel and facility costs. We believe that our general and
administrative expenses will continue to increase in absolute dollars as a
result of our anticipated growth and the expenses associated with operating as
a public company.

   Amortization of Deferred Stock Compensation. Amortization of deferred stock
compensation includes the amortization of unearned employee stock-based
compensation. Employee stock-based compensation expense is amortized over a
four-year vesting period in a manner consistent with FASB Interpretation No.
28. In connection with the grant of employee stock options, we recorded
additional aggregate unearned stock-based compensation of $9.4 million through
the six months ended June 30, 2000. We recorded employee stock-based
compensation expense of approximately $512,000 for the six months ended June
30, 1999 and $6.2 million for the six months ended June 30, 2000. We anticipate
these expenses to decrease in future periods. Unearned compensation expense
will be reduced for future periods to the extent that options are terminated
prior to full vesting.

   Amortization of Goodwill and Intangibles. As a result of Vanenburg's
acquisition of us, we recorded $64.3 million of goodwill in October 1998. In
addition, we recorded intangible assets of $5.1 million, reflecting the
estimated fair market value of our assembled workforce, trade name and core
technology at the time of the acquisition. The goodwill and intangible assets
are being amortized over a period of 36 months. As a result, amortization of
goodwill and intangibles was $11.6 million for both the six months ended June
30, 1999 and 2000.

   Other Income, Net. Other income, net increased from approximately $33,000
for the six months ended June 30, 1999 to approximately $284,000 for the six
months ended June 30, 2000. The increase was due primarily to interest income
on notes issued from stockholders in connection with their purchase of common
stock for sale of our common stock.

   Net Loss. Net loss increased from $17.5 million for the six months ended
June 30, 1999 to $24.6 million for the six months ended June 30, 2000.

                                       22
<PAGE>

Historical Results of Operations

Comparison of Years Ended December 31, 1997, December 31, 1998 and December 31,
1999

  Revenues

   License Revenues. License revenues increased from approximately $30,000 in
1997 to $2.7 million in 1998. Substantially all of this increase was due to
revenues recognized under a license agreement entered into in 1997 with one
software vendor. License revenues increased 170% from $2.7 million in 1998 to
$7.3 million in 1999. This increase was due to revenues recognized under one
significant software vendor license agreement entered into in 1998, and growth
in the number of licenses to new customers. In addition, our average license
revenues per transaction has increased year to year due to larger deployments
by our customers.

   Service Revenues. Service revenues increased from approximately $65,000 in
1997, to approximately $225,000 in 1998, to $2.4 million in 1999. Substantially
all of the increase from 1997 to 1998 was due to service revenues recognized
under a license agreement entered into in 1997 with one software vendor. A
majority of the increase from 1998 to 1999 was due to service revenues
recognized under a license agreement entered into in 1998 with a different
software vendor. We expect service revenues to continue to increase in absolute
dollars as we support an increasing number of new deployments of our product.

  Cost of Revenues

   Cost of License Revenues. Cost of license revenues was negligible for 1997
and was approximately $1,000 in 1998 and approximately $30,000 in 1999.

   Cost of Service Revenues. Cost of service revenues was approximately $80,000
in 1997, approximately $282,000 in 1998 and $1.7 million in 1999. A majority of
the increase from 1998 to 1999 was due to increased costs related to services
provided under a license agreement entered into with one software vendor. The
number of employees providing services increased from 16 in December 1998 to 30
in December 1999. We expect that cost of service revenues will continue to
increase in absolute dollars as we continue to expand our customer support
organization to meet anticipated customer demand. We expect cost of service
revenues as a percentage of service revenues to decrease as we discontinue
discounts on services that we offered during our early stages of development
and through the first half of 1999.

  Operating Expenses

   Sales and Marketing. Sales and marketing expenses increased from
approximately $665,000 in 1997, to $5.7 million in 1998, to $9.2 million in
1999. These increases were due to expansion of our direct sales force,
increased spending on marketing and promotional activities, and the hiring of
additional professional services personnel. We expect that sales and marketing
expenses will continue to increase in absolute dollars as we continue to expand
our sales and marketing efforts, establish additional U.S. and international
sales offices and increase promotional activities.

   Research and Development, Net. Research and development expenses increased
from $1.1 million in 1997, to $3.7 million in 1998, to $6.5 million in 1999.
The increase from 1997 to 1998 was due to costs associated with the hiring of
additional personnel. The increase from 1998 to 1999 was due to costs
associated with the hiring of additional personnel, fees paid to third-party
consultants and travel related expenditures. Our research and development
expenses are net of Israeli government grant reimbursements of approximately
$362,000 in 1997, $419,000 in 1998 and $617,000 in 1999. We anticipate that we
will continue to devote substantial resources to research and development and
that these expenses will continue to increase in absolute dollars.

   General and Administrative. These expenses increased from $1.8 million in
1997 to $2.7 million in 1998, and increased to $2.7 million in 1999. These
increases were due to costs associated with the hiring of additional personnel
and facility costs. We believe that our general and administrative expenses
will continue to

                                       23
<PAGE>

increase in absolute dollars as a result of our anticipated growth and the
expenses associated with operating as a public company.

   Amortization of Deferred Stock Compensation. In connection with the grant of
some employee stock options, we recorded aggregate unearned stock-based
compensation of $19.7 million through December 31, 1999. We amortized employee
stock-based compensation expense of $7.2 million in 1999. We expect to record
employee stock-based compensation expenses of approximately $1.9 million for
the first quarter of 2000, $1.9 million for the second quarter of 2000,
$1.8 million for the third quarter of 2000, and $1.2 million for the fourth
quarter of 2000. We anticipate these expenses will to decrease consistently in
future periods. Unearned compensation expense will be reduced for future
periods to the extent that options are terminated prior to full vesting.

   Amortization of Goodwill and Intangibles. Amortization of goodwill and
intangibles was $5.8 million in 1998 and $23.1 million in 1999.

   Other Income, Net. Other income, net increased to approximately $488,000 in
1998 from approximately $92,000 in 1997. The increase was due to increased
interest income on higher average interest-earning investment balances obtained
from equity financings. Other income, net decreased to approximately $114,000
in 1999 on lower average interest-earning investment balances, as cash was
consumed in operations.

   Net Loss. Net loss increased from $3.4 million in 1997, to $18.4 million in
1998, to $40.7 million in 1999.

                                       24
<PAGE>

Quarterly Results Of Operations

   The following tables set forth statement of operations data for each of the
seven most recent quarters, beginning with the quarter ended December 31, 1998,
the quarter in which the Vanenburg acquisition occurred, and ending with the
quarter ended June 30, 2000, as well as the percentage of our total revenues
represented by each item. This information has been derived from our unaudited
consolidated financial statements. The unaudited consolidated financial
statements have been prepared on the same basis as the audited Consolidated
Financial Statements contained in this prospectus and include all adjustments,
consisting only of normal recurring adjustments, that we consider necessary for
a fair presentation of this information. You should read this information in
conjunction with our audited Consolidated Financial Statements and related
Notes. Our quarterly operating results are expected to vary significantly from
quarter to quarter, and you should not draw any conclusions about our future
results from the results of operations for any quarter. We believe that period-
to-period comparisons of our results of operations are not necessarily
meaningful and should not be relied upon as indications of future performance.

<TABLE>
<CAPTION>
                                                Three Months Ended
                          --------------------------------------------------------------------------
                          Dec. 31,   Mar. 31,   Jun. 30,   Sept. 30,  Dec. 31,   Mar. 31,   Jun. 30,
                            1998       1999       1999       1999       1999       2000       2000
                          --------   --------   --------   ---------  --------   --------   --------
                                                                                    (unaudited)
                                                  (in thousands)
<S>                       <C>        <C>        <C>        <C>        <C>        <C>        <C>
Consolidated Statements of Operations Data:
Revenues:
 License revenues.......  $    244   $ 1,285    $ 2,042     $ 1,521   $  2,412   $  2,377   $  3,533
 Service revenues.......        73        96        167         879      1,243      1,653      1,563
                          --------   -------    -------     -------   --------   --------   --------
 Total revenues.........       317     1,381      2,209       2,400      3,655      4,030      5,096
                          --------   -------    -------     -------   --------   --------   --------
Cost of revenues:
 Cost of license
  revenues..............        --         8          9          --         13         22         12
 Cost of service
  revenues..............        91       119        207         510        832        423        513
                          --------   -------    -------     -------   --------   --------   --------
 Total cost of
  revenues..............        91       127        216         510        845        445        525
                          --------   -------    -------     -------   --------   --------   --------
Gross profit............       226     1,254      1,993       1,890      2,810      3,585      4,571
                          --------   -------    -------     -------   --------   --------   --------
Operating expenses:
 Sales and marketing....     1,472     2,442      2,318       2,176      2,298      3,962      5,724
 Research and
  development, net......     1,152     1,463      1,566       1,878      1,574      1,412      1,880
 General and
  administrative........       783       414        515         634      1,090      1,116      1,107
 Purchased in-process
  research and
  development...........     3,557        --         --          --         --         --         --
 Amortization of
  deferred stock
  compensation..........        --        --        512         171      6,531      2,867      3,369
 Amortization of
  goodwill and
  intangibles...........     5,787     5,787      5,787       5,787      5,787      5,787      5,787
                          --------   -------    -------     -------   --------   --------   --------
 Total operating
  expenses..............    12,751    10,106     10,698      10,648     17,278     15,144     17,867
                          --------   -------    -------     -------   --------   --------   --------
Operating loss..........   (12,525)   (8,852)    (8,706)     (8,758)   (14,467)   (11,559)   (13,296)
Other income, net.......        62        27          7          17         63        116        168
                          --------   -------    -------     -------   --------   --------   --------
Net loss................  $(12,463)  $(8,825)   $(8,699)    $(8,741)  $(14,404)  $(11,443)  $(13,128)
                          ========   =======    =======     =======   ========   ========   ========
As a Percentage of Total
 Revenues:
Revenues:
 License revenues.......        77 %      93 %       92 %        63 %       66 %       59 %       69 %
 Service revenues.......        23         7          8          37         34         41         31
                          --------   -------    -------     -------   --------   --------   --------
 Total revenues.........       100       100        100         100        100        100        100
                          --------   -------    -------     -------   --------   --------   --------
Cost of revenues:
 Cost of license
  revenues..............        --         1         --          --         --          1         --
 Cost of service
  revenues..............        29         9         10          21         23         10         10
                          --------   -------    -------     -------   --------   --------   --------
 Total cost of
  revenues..............        29         9         10          21         23         11         10
                          --------   -------    -------     -------   --------   --------   --------
Gross margin............        71        91         90          79         77         89         90
                          --------   -------    -------     -------   --------   --------   --------
Operating expenses:
 Sales and marketing....       484       177        105          91         63         98        112
 Research and
  development, net......       363       106         71          78         43         35         37
 General and
  administrative........       247        30         23          26         30         28         22
 Purchased in-process
  research and
  development...........     1,122        --         --          --         --         --         --
 Amortization of
  deferred stock
  compensation..........        --        --         23           7        179         71         66
 Amortization of
  goodwill and
  intangibles...........     1,826       419        262         241        158        144        114
                          --------   -------    -------     -------   --------   --------   --------
 Total operating
  expenses..............      4022       732        484         444        473        376        351
                          --------   -------    -------     -------   --------   --------   --------
Operating loss..........    (3,951)     (641)      (394)       (365)      (395)      (287)      (261)
Other income, net.......        20         2         --           1          2          2          3
                          --------   -------    -------     -------   --------   --------   --------
Net loss................    (3,932)%    (639)%     (394)%      (364)%     (394)%     (284)%     (258)%
                          ========   =======    =======     =======   ========   ========   ========
</TABLE>

                                       25
<PAGE>

   The trends discussed in the comparisons of operating results for the years
ended December 31, 1997, 1998 and 1999 and six months ended June 30, 1999 and
2000 also generally apply to our results of operations for our seven most
recent quarters ended June 30, 2000, with the additional factors noted below.
Our total revenues increased 336% from the fourth quarter of 1998 to the first
quarter of 1999, 60% from the first to the second quarters of 1999, 9% from the
second to the third quarters of 1999, 52% from the third to the fourth quarters
of 1999, 10% from the fourth quarter of 1999 to the first quarter of 2000 and
26% from the first to the second quarters of 2000.

   License revenues decreased from $2.0 million in the second quarter of 1999
to $1.5 million in the third quarter of 1999 due to significant license fees
paid in the second quarter. Service revenues increased 426% from approximately
$167,000 in the second quarter of 1999 to approximately $879,000 in the third
quarter of 1999 as separate service contracts were performed in these
subsequent quarters.

   Gross margin decreased from 90% in the second quarter of 1999 to 79% in the
third quarter of 1999. This decrease was due to a decline in higher margin
license revenue from the second quarter of 1999 to the third quarter of 1999,
resulting in a greater proportion of our total revenues being derived from
services in the third quarter. Gross margin increased from 77% in the fourth
quarter of 1999 to 89% in the first quarter of 2000 as a result of providing
our consulting and implementation services at a non-discounted rate to the
customers.

   Sales and marketing expenses increased from $1.5 million in the fourth
quarter of 1998 to $2.4 million in the first quarter of 1999 and to $2.3
million in the second quarter of 1999. The increased expenses in the first two
quarters of 1999 were due to our increased participation in various trade shows
and conferences. Sales and marketing expenses increased from $2.3 million in
the fourth quarter of 1999 to $4.0 million in the first quarter of 2000 to $5.7
million in the second quarter of 2000. These increases are a result of
launching a significant advertising campaign during 2000 in addition to our
increased participation in numerous trade shows during the year. We expect
sales and marketing expenses to fluctuate from quarter to quarter due to the
timing of, and our participation in, trade shows, conferences and other
marketing events.

   General and administrative expenses increased approximately $119,000 from
the second quarter to the third quarter of 1999 and approximately $456,000 from
the third quarter to the fourth quarter of 1999. These increases were due to
increased salaries and benefits, recruitment, travel, and legal costs and
information systems expenses.

   Amortization of goodwill and intangibles remained constant throughout the
five most recent quarters. We are amortizing goodwill and intangibles that we
recorded as a result of Vanenburg's acquisition of us over a period of 36
months.

Liquidity and Capital Resources

   Prior to this offering, we financed our operations through private sales of
common and preferred stock, with aggregate net proceeds of $43.2 million. As of
June 30, 2000, we had $17.5 million in cash and cash equivalents and $12.9
million in working capital with no outstanding long-term debt.

   In October 1998, Vanenburg acquired our outstanding equity and vested stock
options. At closing, the vested stock option holders were paid in full. The
selling stockholders received one-third of the purchase price in cash and were
issued notes for the balance consideration. The issuance of the notes was
recorded as a "pass through" transaction in our financial statements.
Accordingly, we issued notes due to selling stockholders totaling $41.0
million, and recorded a receivable due from Vanenburg for $41.0 million. In
1999, the total amount of the notes due to selling stockholders, including
accrued interest, was paid in full and an equal amount was received from
Vanenburg.

   Vanenburg has committed to provide financial support to us through June
2001, if necessary.

                                       26
<PAGE>

   Net cash used in operating activities was $1.5 million in 1997, $8.0 million
in 1998, $9.0 million in 1999 and $3.4 million in the six months ended June 30,
2000. Net cash used to fund operating activities in each of these periods
reflects net losses, offset in part by deferred revenues. Our significant
license transactions with software vendors have payment terms that exceed 12
months. Payment terms that exceed one year are not considered fixed and
determinable and revenue is recognized as payments become due.

   Net cash used in investing activities was $9.6 million in 1997 and $2.9
million in 1999. Net cash provided by investing activities was $8.0 million in
1998 and $3.5 million in the six months ended June 30, 2000. Investing
activities consist primarily of purchases and sales of investments, computer
hardware and software, office furniture and equipment and leasehold
improvements. Cash provided by investing activities for the six months ended
June 30, 2000 includes $2.7 million received from short-term lending
activities.

   Net cash generated from financing activities was $14.0 million in 1997,
approximately $831,000 in 1998, $10.6 million in 1999 and $14.9 million in the
six months ended June 30, 2000. Net cash generated from financing activities
consists of net proceeds from the issuance of convertible preferred and common
stock.

   We expect to experience a significant growth in our operating expenses for
the forseeable future in order to execute our business plan. As a result, we
anticipate that operating expenses and capital expenditures will constitute a
material use of our cash resources. In addition, we may utilize cash resources
to fund acquisitions or investments in other businesses, technologies or
product lines. We believe that available cash and cash equivalents including
the net proceeds from the initial public offering will be sufficient to meet
our working capital and operating expense requirements for at least the next
twelve months. Thereafter, we may require additional funds to support our
working capital and operating expense requirements or for other purposes and
may seek to raise these additional funds through public or private debt or
equity financings. There can be no assurance that this additional financing
will be available on reasonable terms, if at all, or that any financing will
not be dilutive to our stockholders.

Recent Accounting Pronouncements

   In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133
establishes accounting and reporting standards requiring that every derivative
instrument be recorded in the balance sheet at its fair value. SFAS No. 133
requires that changes in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. Special accounting
for qualifying hedges allows a derivative's gains and losses to offset related
results on the hedged item in the income statement. SFAS No. 133 is effective
for us in January 2001. We believe that the adoption of SFAS No. 133 will not
have a material effect on our financial statements.

   In December 1998, the AICPA issued Statement of Position (SOP) 98-9
"Modification of SOP 97-2, Software Revenue Recognition, with Respect to
Certain Transaction." SOP 98-9 amends SOP 97-2 and SOP 98-4 by extending the
deferral of the application of certain provisions of SOP 97-2 amended by SOP
98-4 through fiscal years beginning on or before March 15, 1999. All other
provisions of SOP 98-9 are effective for transactions entered into in fiscal
years beginning after March 15, 1999. We do not anticipate that this statement
will have a material impact on our statements of operations.

Seasonality

   We have experienced, and may continue to experience, a seasonal reduction in
our total revenues during the third quarter of each year, primarily due to
European vacation schedules which typically result in reduced economic activity
in Europe during this quarter. As a result, these sales may close in the fourth
quarter, which would increase revenues for that quarter relative to both the
preceding and subsequent quarters. While we anticipate that this trend will
continue, we expect that the impact on our total revenues will diminish if
revenues from European countries decline as a percentage of our total revenues.


                                       27
<PAGE>

Qualitative And Quantitative Disclosures About Market Risk

   We develop products in Israel and market our products in North America and
Europe. As a result, our financial results could be affected by factors such as
changes in foreign currency exchange rates or weak economic conditions in
foreign markets. Because substantially all of our sales are currently made in
U.S. dollars, a strengthening of the dollar could make our products less
competitive in foreign markets. In addition, as we expand our international
operations, we may allow payment in foreign currencies and exposure to losses
in foreign currency transactions may increase. Any steps we may take to limit
this exposure may not be successful in avoiding exchange related losses, which
could be material to our operating results. Our interest income is sensitive to
changes in the general level of U.S. interest rates, particularly since the
majority of our investments are in short-term instruments. Due to the short-
term nature of our investments, we believe that there is no material risk
exposure. Therefore, no quantitative tabular disclosures are presented.

Year 2000 Issues

   The year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any computer
programs or hardware that have date-sensitive software or embedded chips may
recognize a date using "00" as the year 1900 rather than the year 2000. This
could result in system failures or miscalculations causing disruptions of
operations for any company using such computer programs or hardware, including,
among other things, a temporary inability to process research data, send
invoices or engage in normal business activities. We completed an assessment of
our information technology systems for year 2000 problems in September 1999. We
did not replace any of our systems based on the results of our assessment. We
experienced no problems with our systems since the beginning of 2000. To date,
we have incurred expenses related to the year 2000 issue of less than $100,000,
which were included in operating expenses. We plan to continue to monitor our
system throughout the year to assess whether any problems develop. If any
errors or defects become evident, we may incur costs to resolve them, however,
we do not expect to make any material expenditures related to year 2000
compliance issues in the future.

                                       28
<PAGE>

                                    BUSINESS

Overview

   We are a leading provider of a software platform that integrates corporate
data residing in a company's and its business partners' enterprise
applications, databases, text documents, Web sites and other data sources, and
allows end users to directly access, navigate and manipulate this data through
a corporate portal, which serves as a common user interface for the company.
Our eBusiness Integration Portal, or eBIP, software platform utilizes a
patented technology, which we refer to as "HyperRelational." This technology
combines the benefits of hypertext and relational data models. We have licensed
our software directly or through resellers to over 150 companies, including
Equilon (a joint venture of Royal Dutch Shell and Texaco), Herman Miller,
Hewlett-Packard, KPN (Dutch Telecom), Nortel Networks, Phillips Group, Ricoh
Canada and Rolls Royce Marine. Our technology is also embedded in and ships
with the mySAP.com Workplace eBusiness application. To date, SAP has sold over
one million end-user licenses of mySAP.com Workplace. Our Baan Data Navigator
product, sold by Baan Company, has now been implemented by over 200 companies
worldwide.

Industry Background

   Conducting business over the Internet, often referred to as eBusiness, is
fundamentally changing the methods by which, and the speed at which, businesses
and individuals communicate and conduct commerce. International Data
Corporation estimates that the inter-company trade of goods and services over
the Internet, or business-to-business e-commerce, will grow from $97 billion in
1998 to $1.4 trillion in 2003. To compete in this dynamic eBusiness
environment, many companies are seeking to automate and accelerate business
processes by promoting tight business integration both within the enterprise
and among an extended enterprise of customers, suppliers and business partners.
By doing so, companies seek to increase revenues, streamline complex business
processes, lower costs and improve productivity. Companies want to rapidly and
seamlessly effect these changes, without interrupting the normal course of
business. In order to participate in this new economy, companies must deploy an
eBusiness platform based upon the Internet. Companies that can improve access
to their corporate information for their network of extended enterprise
partners are able to establish and maintain closer business relationships, gain
new efficiencies and create significant strategic advantages.

Existing Technology Infrastructure is Not Suitable for the New Market

   Over the past two decades, companies have implemented a wide range of
software applications to automate or optimize many aspects of their business.
Companies have invested heavily in enterprise resource planning and knowledge
management applications, as well as electronic data interchange technologies.
Based on data from International Data Corporation, in 1999 alone, approximately
$153 billion was invested worldwide on tools, applications and systems
infrastructure software. For example, software products from SAP and Baan
Company, two leading independent software vendors, are being used by more than
20,000 businesses worldwide, representing more than 10 million end users.
Nonetheless, most traditional enterprise applications cannot easily be adapted
to exploit the capabilities of the Internet, which prevents them from creating
a fully integrated network of business partners and customers. In addition,
these applications can be complex, difficult to implement and use and do not
provide easy access to relevant data. Further, companies generally have only a
limited number of personnel trained to access and manipulate this data
effectively. Moreover, because companies frequently use applications provided
by multiple vendors, integration of these applications is frequently difficult.
These limitations dramatically reduce the value companies derive from their
investments in information technology.

   As a result of the limitations of traditional enterprise applications,
companies have been required to make significant investments in enterprise
application integration, or EAI, software to integrate a broad range of
packaged and custom applications. These integration applications increase the
efficiency of enterprise applications by enabling disparate enterprise
applications to share data. Similarly, companies have begun to integrate their
extended business-to-business enterprise networks to facilitate links between
applications that

                                       29
<PAGE>

exist in multiple companies. These applications, however, facilitate only back-
end inter-application communication. They fail to provide the end user with an
integrated view, or understanding, of the extended enterprise's network of
information. Traditional EAI solutions also fail to fully capitalize on the
benefits of the Internet and are often inflexible because they are pre-
configured. As a result, they typically do not deliver the competitive
advantage, speed of implementation and time-to-market benefits required in
today's business environment.

   Internet-based enterprise information portals, commonly referred to as EIPs,
which provide personalized access to limited types of information, have
recently been introduced. However, much of the critical data that a Company's
extended enterprise needs to access is "structured" data, meaning that it
resides in packaged enterprise applications and databases, and is not easily
accessible through EIPs. Because information access provided by EIPs is
passive, end-user interaction with the information presented is limited
primarily to clicking on predefined Web-based links, reducing the value of the
portal and the information it presents. As a result, EIPs provide a limited
solution to information access and fail to fully integrate enterprise
applications across the extended enterprise.

Market Opportunity

   In order to exploit business opportunities that are provided by the
Internet, companies must deploy an eBusiness platform that provides an up-to-
date, integrated view into all information resources throughout the extended
enterprise and enables a broad range of end users to directly access, navigate
and manipulate this information. This platform must directly connect all
existing data sources within and outside a company, significantly improve the
accessibility to that information, and allow end users to act upon that
information in real time. In addition, this platform must be easy to deploy
throughout the extended enterprise and inherently flexible to adapt to
continuing changes as new partnerships are formed, business combinations occur
and existing relationships evolve. By integrating all data sources, companies
leverage and extend the useful life of their existing information technology
assets. Making the information easily available to all members of the extended
enterprise through an intuitive and effective interface significantly increases
the value of that information and the operational efficiency of the extended
enterprise.

The TopTier Solution

   We are a leading provider of a software platform that integrates corporate
data residing in a company's and its business partners' enterprise
applications, databases, text documents, Web sites and other data sources. Our
platform allows end users to directly access, navigate and manipulate this
integrated data through a corporate portal, which serves as a common user
interface for the company. Our TopTier eBusiness Integration Portal, or eBIP,
software platform is designed to enable a company's extended enterprise of
employees, customers, suppliers and business partners to directly interact with
this integrated information through our portal. Our software is also integral
to the operation of mySAP.com Workplace, sold by SAP AG, and Baan Data
Navigator, sold by Baan Company.

   Our eBIP incorporates our patented "HyperRelational" technology. This
technology de-constructs enterprise applications into individual "components"
that represent individual business processes or elements with which end users
are familiar such as "Customer," "Purchase Order" or "Supplier Inventory."
These components are presented as icons on our portal. This technology then
enables an end user to select a relevant piece of data, drag it from its
location in one application, and drop the data onto another icon, thereby
"relating" it to any other component or data. This action immediately presents
correlated information from both integrated and unintegrated applications and
information sources. We refer to this operation as "drag and relate." For
example, an employee in a company's purchasing department could determine the
status of an order by dragging the purchase request from the company's order-
entry software and relating it to the company's shipping software or the
website of a delivery vendor. The employee could then drag the confirmation of
shipment to a supplier's ordering system and determine the availability of
replenishment

                                       30
<PAGE>

supplies. Our eBIP enables end users to drag and relate across these separate
systems within a company's extended enterprise of customers, suppliers and
business partners as if they were one seamless business network. As the number
of data elements, data sources and participants within this network increases,
so does the value of the network to all participants.

   We design our products with the following objectives:

   Integration. Our software integrates data that resides in enterprise
applications, databases, text documents, Web sites and other data sources. We
present this information on our portal, while the underlying data continues to
reside in its original application. This allows the end user to access and
interact directly with the actual data, not merely an extracted and aggregated
subset of the data.

   Navigation. Our technology enables end users to navigate data using drag and
relate hyperlinks to relevant information selected by the end user. This
greatly increases the value of the information presented to end users.

   Ease-of-Use. Our solution is designed to dramatically expand the number of
end users that can access and interact with corporate data by making that
access and interaction easy and intuitive. We effectively mask the complexity
of underlying enterprise applications in much the same way as a graphical user
interface of a personal computer masks the complexity of its underlying
operating system commands.

   Our solution is designed to provide the following benefits to customers:

   Increased Competitiveness and Responsiveness. Our software provides real-
time access to critical business information from internal applications,
databases, text documents and Web sites, promoting an end user's ability to
promptly respond to new information. Rather than merely having access to static
information, every end user can be notified of relevant events that originate
in any application or data source, and can immediately act upon this
information. We believe that this allows companies to compete more effectively
by allowing them to react more swiftly to changing market conditions and
business events, retain customers by being more responsive to their demands,
and generate additional revenues while increasing operational efficiency and
reducing transaction costs.

   Ability to Rapidly Create Collaborative Business Networks. Using our eBIP, a
business' extended enterprise can rapidly become a large network that shares
information. Shared access to information throughout the extended enterprise
enables companies to achieve a high degree of collaboration. For example, a
regional manager who receives an alert that a customer shipment is delayed due
to a shortage of parts from one supplier can drag the name of the part onto a
"Suppliers" icon on our portal and instantly access information about
alternative suppliers and their inventory, coming directly from those
suppliers' information systems.

   Promotion of Wide Scale Deployment. Due to the value created when members of
a network interact, we believe that the overall value of the business network
created by our platform increases with the addition of each new member, which,
in turn, attracts additional members and promotes further deployment. In
addition, we believe that a business benefits most when the largest number of
employees participates in its eBusiness operations. Our software is designed to
be easy to use and features an interface that is appropriate for end users with
a broad range of technical competencies. Our portal allows full and
customizable access to a company's internal and external data sources by its
employees, customers, suppliers and business partners. This wide scale
deployment is further facilitated because our software scales to accommodate
the growth of our customers' extended enterprises and because only a browser is
required on the desktop to operate our software.

   Increased Value of Existing Enterprise Applications. Our solution leverages
the existing investments made in enterprise applications and increases their
value by increasing accessibility to their data, integrating disparate
applications and providing full view and update capability from an easy to use
interface. In addition, because our HyperRelational technology allows data
stored in disparate sources to be correlated, the value of

                                       31
<PAGE>

the underlying data to an end user is increased. Our solution significantly
increases the return on existing and new enterprise technology investments by
extending the functionality provided by these applications and making them
easily accessible by collaborative business networks. Our software can be
implemented over existing information technology infrastructure or sold as an
embedded solution by independent software vendors. Our software is currently
embedded and ships within eBusiness applications such as mySAP.com Workplace,
sold by SAP AG, and Baan Data Navigator, sold by Baan Company.

   Rapid and Flexible Implementation. Our solution is designed to be rapidly
implemented to integrate an enterprise's existing applications. Our software
can be implemented in as little as a week, depending on the number of
applications to be integrated and components to be created, allowing our
customers to realize benefits quickly. In addition, our customers can implement
our solution in stages by integrating or enabling one application at a time.

   Customers that have successfully adopted our solution include:

  . SAP AG: mySAP.com Workplace

   SAP AG, the leading enterprise software developer in the world, sought to
   create a complete enterprise information portal that would integrate
   SAP's software applications and other existing software, as well as Web
   sites. SAP licensed our HyperRelational technology and our eBusiness
   Integration Portal software products, and built its product mySAP.com
   Workplace using our HyperRelational technology. As a result, customers
   who buy mySAP.com Workplace will deploy a HyperRelational system that is
   compatible with other HyperRelational systems within the extended
   enterprise. We believe that SAP selected our technology to gain an
   advantage in becoming the preferred desktop for every employee in a
   corporation and to provide an open integration framework under mySAP.com
   Workplace. We believe that the functionality provided by our technology
   allows SAP to sell more products to its existing customers, and to
   enhance their presence to more desktops within those customers.

  . The Baan Company: Simplified Web-Based Integration and Information
    Analysis

   The Baan Company sought to differentiate itself by reducing the
   complexity associated with its suite of enterprise applications. The Baan
   Company licensed several of our products and our HyperRelational
   technology to extend and enhance their existing product offerings. We
   believe that our products were chosen by the Baan Company because of the
   unique capabilities of our products to simplify, integrate and navigate
   the various disconnected applications that the Baan Company markets.
   These products are sold primarily by us and Baan Company to their
   existing customers, which creates incremental sales opportunities for
   Baan Company. The Baan Data Navigator and the Baan OLAP Navigator are
   Baan-labeled products that are based on our products and technology. The
   Baan Workshop combines Baan's Dynamic Enterprise Modeler with our
   HyperRelation Navigation technology in one product.

  . Herman Miller: Real-Time Supply Chain Management Over The Internet

   Herman Miller, a premier office furniture manufacturer, sought to
   differentiate itself from its competitors by enabling its suppliers to
   perform self-service look-ups of information directly from its enterprise
   resource planning, or ERP, application via the Internet. Herman Miller's
   Baan ERP application had been significantly modified and had a
   proprietary interface to the data stored within the application. We
   believe that our solution was selected because of our ability to meet
   their needs due to our Internet integration and the tight integration
   with Baan ERP, and the proven scalability, security and ease of use of
   our products. Once deployed, it allowed Herman Miller's suppliers to
   track material requirements, receipt, quality and payment information and
   plan future shipments. Our solution provides Herman Miller's suppliers
   with a unified location for product procurement and inventory information
   from Herman Miller's various data sources, enabling its suppliers to
   proactively ship high volume, low stock items. This leads to reduction in
   Herman Miller's costs and improved predictability on its ability to
   timely deliver products to customers.


                                       32
<PAGE>

The TopTier Strategy

   Our objective is to become the leading provider of eBusiness integration and
portal software products. Key elements of our strategy to achieve this
objective include:

   Establish our HyperRelational Technology as an Industry Standard. We intend
to establish our patented HyperRelational technology as the standard protocol
for accessing and interacting with business and Internet-based structured and
unstructured information. We intend to do this by accelerating the adoption of
this technology through strategic relationships with leading systems
integrators and by entering into technology licensing agreements with
independent software vendors such as SAP and Baan Company. These relationships
also provide us with credibility and access to a large number of referenceable
customers. A cornerstone of this effort will be our commitment to de-
constructing widely used packaged applications, e-marketplaces and Internet
portals into components representing common business processes or elements.
Once componentized, the underlying data in these sources can be directly
accessed by any company that deploys our eBIP. In addition, we believe that a
strong network effect will increase the value of that network and attract
additional businesses, accelerating adoption of our products.

   Leverage Strategic Relationships with Independent Software Vendors.  We
intend to expand our direct sales force to support independent software vendors
in geographic regions in which they have a strong presence. Independent
software vendors, such as SAP and Baan Company, embed our technology in their
eBusiness applications, mySAP.com and Baan Business Intelligence Suite.
Together these companies have sold their products to more than
20,000 customers, representing well over 10 million end users. SAP and Baan
Company offer restricted versions of our software that is embedded in their
enterprise integration portal products that integrate only the data in their
respective applications. We believe that when end users use these restricted
versions, they will become familiar with our products. As a result, we believe
this will increase awareness of the benefits of our products and accelerate
adoption of our technology. We intend to leverage this channel to sell to the
end users of these limited versions additional product functionality that will
extend the HyperRelational capabilities to integrate other enterprise
applications, databases, text documents and Web sites.

   Extend Strategic Relationships with Systems Integrators. We intend to extend
our strong relationships with systems integrators by assisting them in the
creation of a large, highly trained consulting workforce. To date, we have
trained over 500 external professional consultants on our products, tools and
methodologies and we anticipate that over 2000 external professional
consultants will have been trained within the next 18 months. We believe that
the relationships that systems integrators have with our prospects' senior
management facilitate our access to strategic projects and can significantly
reduce the length of our sales cycles. In addition, we believe the software
deployment expertise and industry knowledge of systems integrators shortens the
implementation time of our product. Systems integrators also help us to secure
additional business and enable us to penetrate and leverage success within
vertical markets. We intend to expand our direct sales force to match our
systems integrators' presence in vertical markets and geographic locations, to
assist them in identifying, creating and closing sales opportunities.

   Develop Market-Focused Solutions. We intend to develop packaged eBusiness
solutions that are built on our eBusiness Integration Portal software products.
These solutions will package pre-selected business components that are used
widely in specific industries such as banking, telecommunications and
manufacturing. For example, in the oil and gas industry, we have developed
components that allow users to identify the best spot oil prices across
multiple marketplaces on the Internet. We intend to leverage the vertical
industry knowledge of our systems integration partners and combine it with our
flexible eBusiness Integration Portal software products to rapidly build these
industry-focused solutions. We believe that our customers and partners will
derive significant time-to-market benefits by deploying these pre-packaged
business solutions which they can use as a basis for their own implementations.
This provides us with the ability to leverage successes in an industry segment
to penetrate other customer accounts in that segment, while generating
additional revenue opportunities.

                                       33
<PAGE>

   Extend Technology and Product Leadership. We intend to enhance our
comprehensive software solutions that support an increasing number of data
sources and enterprise applications. We also intend to drive adoption of our
HyperRelational technology by ensuring that our products incorporate other
emerging technologies and industry standards. We have been a pioneer in the
creation of eBusiness integration and portal technologies and products and
believe that we have created the most compelling methods to represent and
interact with structured data on the Internet. We have done so by adopting
technologies and emerging standards for information presentation and
integration including XML, DOM, XSL, COM, OLE-DB and integrating with leading
applications such as mySAP.com Workplace, Baan ERP, Microsoft Back Office and
Lotus Notes, among others. We will continue to invest in research and
development to increase the performance, functionality and ease of use of our
software. We will also continue to analyze new technologies and integrate them
into our products where appropriate.

Products

   Our TopTier eBusiness Integration Portal software products are designed to
enable businesses to integrate enterprise applications throughout the extended
enterprise and allow end users to access, navigate and manipulate this
integrated information. Our products have been developed around our patented
HyperRelational technology platform.

   TopTier eBusiness Integration Portal Client. Our eBIP Client is a
personalized browser-based work environment. It presents end users with
individually customized and integrated information elements, called iViews.
Each iView contains one information element, which can come from any number of
applications underlying the portal. End users can select multiple iViews,
position them on the portal page and have that information presented and
automatically updated. Deploying these portals across an extended enterprise
presents a personalized and integrated view of the business to any end user.

   TopTier Web Navigator Client. Our TopTier Web Navigator Client enables the
end user to pick any of the HyperRelational information presented in the
iViews, and drag and drop it on any other component made available to the end
user. Our Web Navigator Client performs this drag and relate operation by
sending a request to the eBIP Server, which responds with the appropriate
related data, and by presenting the results on the end user's browser. An end
user may drag and relate this information or any other related information
repeatedly until reaching a resolution.

   TopTier eBusiness Integration Portal Server. Our TopTier eBIP Server
generates personalized portal pages for each end user throughout the extended
enterprise. In addition, it enables navigation across multiple components
representing different sources of information within and outside the
enterprise. The eBIP Server runs alongside our HyperRelational server and
processes all navigational requests across one or many applications. Our
HyperRelational server is an "Integration Server" that correlates all the
underlying enterprise data sources into a unified object model. These
navigational requests are primarily received from the Web Navigator Client in
response to end users' drag and relate operations.

   Unlike most other enterprise portals, our TopTier eBIP Server includes and
leverages a robust set of repositories, storing object models, presentation
components and end-user personalization requirements. The repositories enable
our product to represent data and related meta-data combined as a
HyperRelational link, and not merely as a hypertext link. As a result,
information is presented in context and end users may seamlessly navigate from
information presented on any portal page to any related information within the
unified object model representing the business.

   TopTier eBusiness Integration Portal Deployment Environment. Our TopTier
eBIP Deployment Environment is a development, testing and management
environment used by software developers, systems integrators and system
administrators. This environment is used to define object models, create
related components, correlate and integrate models, create roles for end users
and manage security and ongoing administration of the portal. The deployment
environment uses familiar tools and works within the framework

                                       34
<PAGE>

of Microsoft Visual Studio, leveraging developers' familiarity with these
tools. Our tools, which are highly intuitive, create open source components
which can be edited with a variety of third-party tools. Most of the management
tools are also integrated into Microsoft's Management Console and can be
operated from within a Web browser, enabling remote system management.

   TopTier Portal Packs. Our TopTier Portal Packs provide functionality
specific to a particular enterprise application, such as Baan ERP or SAP R/3.
This permits each application's unique application programming interface, or
API, to be accessed securely and reliably by our TopTier eBIP Server. The
Portal Packs allow us to leverage knowledge of the application's internal meta-
data structure to automate the object modeling and presentation layers. Our
Portal Packs typically include update capabilities to the underlying data and
are linked to high-level transaction and presentation information in contrast
to the limited, read-only access to partial information offered by most other
portals.

   TopTier Business Intelligence Client. Our TopTier Business Intelligence
Client is a fully functional, HyperRelational analysis client that is used to
access aggregated data served by a multi-dimensional Online Analytical
Processing, or OLAP, server. Our Business Intelligence, or BI, Client enables
the end user to analyze information and identify points of interest within the
multi-dimensional data. Once those points are identified the end user has the
ability to use this information in many ways, and may drag and relate the data
element into any other component within the web navigator. This ability creates
a unique OLAP to transactional closed-loop navigation within which end users
can seamlessly navigate these two different information storage models using
our eBusiness Integration Portal software.

Technology

HyperRelational Technology

   We have invented and patented aspects of an end-user directed navigation
technology that integrates information systems through a browser, which we call
HyperRelational technology. We believe that our HyperRelational technology is a
novel evolution and conceptual integration of two of the strongest information
representation models in enterprise computing: hypertext and relational. Our
software products are built around our HyperRelational technology and use the
protocol that represents it over the Internet, HyperRelational Navigation
Protocol, or HRNP.

   At the core of HyperRelational technology and its related Internet protocol,
is the concept of presenting context (meta-data) rich objects at the end user
interface, or presentation layer, for the purpose of enabling end users to
integrate and navigate information. This process of enriching presentation data
using meta-data is similar to the way eXtensible Markup Language, or XML,
enriches back-end data used for application and business to business
integration. Unlike basic hypertext, our HyperRelational-enriched products
present to the end user hyperlinks that point to descriptive meta-data instead
of pointing to a predetermined linked page. The end user is then allowed to
combine this meta-data with other relevant meta-data through a simple drag and
relate operation. As a result, the end user controls the navigation within and
across applications, unhindered by boundaries and predetermined paths through
the information designed by the author of each application. Our technology
bridges the gap between the text-centric Internet and the highly structured
environment of enterprise applications. This gap has hindered the attempts by
some other companies to integrate these sources of data.

   Implementations of this patented technology leverage the Internet's latest
technologies and standards, from transport layer to presentation layer. Our
software products make extensive use of XML, a relatively recent standard that
defines a universal method for structuring data, and other technologies to
bring the concept of meta-data rich objects to the end user. We intend to
leverage our strategic relationships to accelerate market adoption of our
HyperRelational technology and to create a de-facto industry standard.

   In addition, we have five U.S. patents and several foreign patents pending
for a number of algorithms and technologies relating to the use, extension and
derivatives of HyperRelational technology. Some of these

                                       35
<PAGE>

technologies are currently used in our products, and we intend to use the
others in future releases of our products. We believe that these technologies
provide us with a strong differentiation in this competitive market.

HyperRelational Compatibility Level

   We offer multiple HyperRelational compatibility levels to our strategic
independent software vendors. Existing applications do not require extensive
changes to become HyperRelational compatible. Our HyperRelational compatibility
levels allow these vendors to enjoy increased value and functionality as
developers increase the HyperRelational compatibility of their software. These
vendors may advance to higher levels of compatibility depending on their needs,
or as they make additional improvements to their software.

   Software vendors may choose from the following HyperRelational compatibility
levels:

<TABLE>
<CAPTION>
 Compatibility Level                         Description
 -------------------  ---------------------------------------------------------
 <C>                  <S>
 iView Enabled        Creates an iView that represents information from the
                      enterprise application, presented in its original format,
                      which can be included within the end user's portal page.

 Native iView         Adds HyperRelational capabilities to the base iView
                      through the use of XML and presents information according
                      to the end user's preferred look and feel.

 Component Enabled    Enables basic component integration, allowing end users
                      to represent and activate various parts of their
                      applications as components.

 Drag Out Enabled     Adds a representation of various data elements within
                      components as HyperRelational (meta-data-based) links,
                      enabling the end user to navigate from the component by a
                      drag and relate operation.

 Drag In Enabled      Adds the ability to drag into components by adding
                      functionality that modifies the request presented to the
                      component, based on the input element dropped on it.

 Automatic Generation Provides the highest level of compatibility by leveraging
                      all meta-data information about a certain data source to
                      automatically read and interpret an application metadata
                      repository and generate the appropriate HyperRelational
                      components, all without developer intervention.
</TABLE>


Reusable Portal Components Architecture

   Our eBusiness Integration Portal software is built around a componentized
model, in which large enterprise applications are de-constructed into reusable
portal components. The components represent diverse business processes and
elements with which end users are familiar such as "Customer," "Purchase
Order," "Top Selling Items," "Sales Report" or "Supplier Inventory." The
reusable nature of these components allows end users to combine their
components to create personalized environments matching their shifting
information needs. As such, components from various applications can be mixed
seamlessly to create homogenous end user experience across these disparate
systems whether running in one company or multiple enterprises. Our TopTier
eBIP Deployment Environment includes graphical development tools that permit
components to be reused and combined across multiple applications throughout
the extended enterprise.

Security

   Our eBusiness Integration Portal software contains a comprehensive set of
security features that is designed to allow enterprises distribute information
using the Internet within the company and outside the enterprise firewalls with
confidence. These features can provide security above and beyond current Web
security capabilities, by leveraging the knowledge residing in our eBusiness
Integration Portal repositories, regarding end users' role and object
relevance. Our software supports multiple security standards which can be
generic, such as LDAP3, SSL encryption, or application specific, such as SAP's
end user authentication. The

                                       36
<PAGE>

security mechanism can authenticate end users, limit access to certain
components, limit the information fields presented in those components and
limit the instances presented to the end user only to relevant items. For
example, when our portal identifies that an end user is a customer, it may only
provide access to sales orders relevant to this customer. In addition, because
all communications sent through our software can be sent using both HTTP and
secured HTTP protocols, which pass through corporate firewalls, our customers'
business partners are not required to modify their applications' security
infrastructure.

Support for Large Numbers of End Users

   Our eBusiness Integration Portal software products include features that
allow companies to readily manage deployments across a large number of end
users throughout the extended enterprise. For example, role-based desktop setup
enables the administrator to set a small number of end user personalized
starter portals and automatically distribute those portals throughout the
extended enterprise to thousands of end users. Similarly, distribution
mechanisms allow administrators to propagate components and other updates using
the Internet, eliminating lengthy implementation processes associated with
upgrades. The same capabilities allow software vendors and systems integrators
to package business components from past implementations and resell them to
other companies, leveraging the investment made in those components to generate
additional revenue.

   Our eBusiness Integration Portal software is designed to handle thousands of
simultaneous requests and service a high volume of transactions in large
enterprise implementations. Using a replicated and load-balanced multi-server
and multi-threaded architecture, our highly scalable software is optimized for
multi-processor systems and supports high-volume processing of requests. Our
architecture allows enterprises to scale their environments by adding more
computing resources as usage increases.

Strategic Relationships

   To increase our market leadership, we have formed strategic alliances with
leading independent software vendors, who embed and integrate our software into
their products and services, and resell our products. We believe that these
relationships provide strong endorsement of our technology and introduce our
products to their customer base. Our strategic relationships include the
following:

   SAP AG. In September 1999, we entered into a license and distribution
agreement with SAP AG. SAP uses our software as part of a solution that they
market to their customers under the name mySAP.com Workplace. As the largest
enterprise application vendor worldwide, with over 12,000 customers
representing more than 10 million end users, SAP provides a very important
endorsement of our software. mySAP.com Workplace includes a restricted version
of our HyperRelational technology, under which SAP can use our HyperRelational
technology to integrate with SAP and Web data sources only. This creates an
opportunity for us, as well as for SAP and systems integrators, to sell to the
SAP customer base the unrestricted TopTier Extension for mySAP.com, extending
the use of our HyperRelational technology to other enterprise applications and
data sources. We believe that, within the SAP customer base, the SAP
application set is the cornerstone for any information platform, providing us
with a clear advantage over other portals not embedded into SAP applications.
SAP has sold over one million end-user licenses of mySap.com Workplace, which
includes our HyperRelational technology.

   Under the license and distribution agreement, we granted to SAP a non-
exclusive and perpetual right to embed our HyperRelational technology into
SAP's software products. In addition, we granted to SAP a non-exclusive and
perpetual right to distribute our HyperRelational technology as embedded in
their software products and to resell licenses to our TopTier Extension for
mySAP.com products. We are obligated to provide various development, support
and maintenance services under the agreement and SAP is obligated to pay us
license, maintenance and royalty fees. Upon expiration of the initial term of
the agreement in December 2002, the agreement will automatically renew for one
year periods unless terminated by us or SAP.

   Baan Company. Baan Company uses our software products and HyperRelational
technology to extend and enhance their existing product offerings. The Baan
Data Navigator and the Baan OLAP Navigator are

                                       37
<PAGE>

Baan-labeled products that are based on our products and technology. The Baan
Worktop combines Baan's Dynamic Enterprise Modeler with our HyperRelational
navigation technology in one product. Our software products and technology have
been shipping inside Baan Business Intelligence Suite for over 21 months.
Further, our Baan Data Navigator product, sold by Baan Company, has now been
implemented by over 200 companies worldwide, representing thousands of end
users. Our relationship with Baan Company provides us with an endorsement of
our software by a major independent software vendor and provides us with an
opportunity to sell additional products to Baan Company's existing customer
base.

   Prior to March 2000, we entered into various agreements with Baan Company
under which Baan Company licensed and distributed our technology. In March
2000, we entered into a perpetual, original equipment manufacturer, or OEM,
agreement and a reseller agreement with Baan Development B.V., an affiliate of
Baan Company. These agreements supersede our prior agreements with Baan
Company. Under the OEM agreement, we granted to Baan Development a non-
exclusive, perpetual and worldwide right to embed our HyperRelational
technology into Baan's software products. In addition, we granted to Baan
Development a non-exclusive, perpetual and worldwide right to distribute our
HyperRelational technology as embedded in their software products. We are
obligated to provide various development, support and maintenance services
under the agreement, and Baan Development is obligated to pay us license,
maintenance and royalty fees. Under the reseller agreement, we granted to Baan
Development a non-exclusive license to distribute Baan Data Navigator, Baan
OLAP Navigator, Baan Data Navigator Development Environment, TopTier Web
Navigator, TopTier Portal Pack, TopTier Development Environment and TopTier
Business Integration Portal to end users. We are also obligated to provide
various maintenance and support services. Under the agreement, each of us and
Baan Development is obligated to pay royalties to the other depending on which
party licenses the software to end users. Baan Development is also obligated to
pay to us a portion of any maintenance and support fees that is collects. Upon
expiration of the initial term of the agreement in March 2004, the reseller
agreement will automatically renew for one year periods unless terminated by us
or Baan Development.

Key Business Relationships

   We have established business relationships with a number of leading systems
integrators, including Andersen Consulting, Deloitte Consulting,
PricewaterhouseCoopers, Ernst & Young, KPMG, IBM Global Services and Computer
Sciences Corporation. Many of these systems integrators have established
relationships across a broad range of enterprise customers, and our
relationships with these systems integrators often enable us to reach key
decision-makers within these enterprises more quickly, reducing sales cycles.
Working with systems integrators enables us to leverage our service
organization and reduce implementation times. In addition, by leveraging these
systems integrators' domain expertise, we can more effectively and rapidly
build complete portal solutions that contain business content representing best
business practices and recommended processes targeted at vertical markets.

                                       38
<PAGE>

Customers

   To date, we have licensed our software directly or through resellers to over
150 companies. In 1999, revenues from Baan Company, SAP and Computer Curriculum
Corporation accounted for 71%, 16% and 5% of our total revenues. For the six
months ended June 30, 2000, revenues from Baan Company and SAP. accounted for
19% and 33% of our total revenues. Our customers are predominantly Global 2000
companies and represent a broad spectrum of enterprises within diverse industry
sectors, including independent software developers, technology and
manufacturing. The following is a list of customers who have purchased at least
$100,000 of licenses or related services:

<TABLE>
     <S>                                          <C>
     Altera                                       Hewlett-Packard
     American Can Company                         Huber & Sunher
     Baan Company                                 KPN Dutch Telecom
     Basic American Food                          Nortel Networks
     BICC                                         Overtoom
     Computer Curriculum Corporation              Philips Group
     EMS                                          Pretoria Cement Company
     Equilon (joint venture of Royal Dutch Shell  Ricoh, Canada
      and Texaco)                                 Rolls-Royce Marine
     ERCOT                                        SAP AG
     Flowserve                                    Valmet
     Griffiths Labs                               V&S Vin & Spirit
     Herman Miller
</TABLE>

Sales & Marketing

   We sell our products through our direct sales force, which we augment by
relationships with systems integrators. A large percentage of our sales are the
direct result of leads generated by these relationships with systems
integrators. In addition, we have established product resell agreements with
independent software vendors that license our technology. The sales cycle for
our software typically ranges from three to six months. As of June 30, 2000,
our sales and marketing group consisted of 45 professionals located in our
headquarters in San Jose, California, and our offices in New York, New York;
Chicago, Illinois; Houston, Texas; Toronto, Canada; Utrecht, The Netherlands;
Munich, Germany; Malmo, Sweden; and London, United Kingdom. We plan to expand
our sales and marketing group through the recruitment of qualified individuals.

   Our sales strategy involves targeting entities that have large existing
enterprise application deployments and have a critical need for an eBusiness
portal, which are generally Global 2000 companies. Because we believe that our
products can increase a company's return on assets, we direct our marketing
efforts to officers and executives with responsibility for overall business
profitability such as chief executive officers, chief financial officers and
chief operating officers, as well as chief information officers. In addition,
we frequently participate in trade shows, seminars and conferences. We intend
to leverage the collaborative business network of our corporate customers who
are exposed to our software through their daily interaction with our customers'
portals. In addition, we conduct joint marketing and selling efforts such as
conferences and joint sales calls with independent software vendors and system
integrators to identify, create and close joint sales opportunities. In the
past, we have conducted such joint efforts with SAP, Baan Company, and Deloitte
Consulting.

   Our sales process requires that we work closely with prospective and
existing customers to identify short-term technical needs and long-term goals.
Our sales team, which includes both sales and technical professionals, then
works with these entities to develop proposals to address these needs. In many
cases, we collaborate with their senior executive team to develop mission-
critical solutions. The level of customer analysis and financial commitment
required for many of our product implementations has caused our sales cycle to
range from three to six months.

                                       39
<PAGE>

   We focus our marketing efforts on educating systems integrators, software
developers and prospective customers, generating new sales opportunities and
creating awareness of our products and their value proposition. We conduct a
variety of market education programs including market research, product and
strategy updates with industry analysts, public relations activities, direct
mail and relationship marketing programs, seminars, trade shows, speaking
engagements, advertising and Web site marketing. In addition to marketing our
products directly to prospective customers, we focus a directed effort on
customers that have received HyperRelational-enabled products from SAP and Baan
Company and that may require extensions to those products.

Services

   We offer comprehensive professional services that complement our products,
including strategic planning, project management and systems integration, as
well as consulting services and training relating to our software products. As
of June 30, 2000, our professional services and customer care group consisted
of 55 employees.

   A majority of our customers make use of our systems integrators professional
services or our own professional services and customer support to help them
design and develop a successful business solution. Our experienced consultants
support our certified systems integrators or work directly with customers to
design a solution based on our customers' existing applications and required
functionality, to facilitate the successful implementation and ongoing
maintenance of our solution. Our consultants have a diverse set of skills and
experiences, combining both business and technical expertise to effectively
meet our customers' requirements. To expand our professional services
capabilities, we have established business relationships with several systems
integrators, including Andersen Consulting, Computer Sciences Corporation,
Deloitte Consulting, Ernst & Young, IBM Global Services, KPMG,
PricewaterhouseCoopers, s e-technologies and Origin. To date, we have trained
over 750 external consultants on our products, tools and methodologies, and we
anticipate that over 2,000 will have been trained within the next 18 months.
Services provided by either our professional services group or third-party
systems integrators trained on our products, tools and methodologies include
the following:

  . architecture and application design services;

  . application development;

  . installation services;

  . class-based or computer-based training, including "train the trainer"
    programs;

  . testing and implementation services and maintenance services; and

  . on-site and remote support and coaching.

   We charge for professional and customer care services on a time and
materials basis and provide them through our professional services groups based
in San Jose, California; Houston, Texas; London, United Kingdom; Munich,
Germany; and Ra'anana, Israel. We plan to increase the number of our
professional services consultants and add additional service locations
throughout the United States and Europe.

   We offer our customers a choice of several levels of customer support that
are designed to quickly and effectively resolve customer technical inquiries.
Our most comprehensive option offers support 24 hours a day, seven days a week.
In addition, our customers can access a portal that we maintain that provides
information to our customers about the experiences of other companies using our
software.

   Through our training department, we provide our customers with education and
training. We regularly offer training courses for the software professionals
responsible for implementing our software. These training courses provide
practical instruction on a wide variety of topics. Standard courses are offered
at our headquarters, and we also provide customized classes at our customers'
locations. We also offer computer-based training equivalent to some of our
courses which can be taken over the Internet.

                                       40
<PAGE>

Research and Development

   Since inception, we have made substantial investments in research and
development. While we evaluate, license and incorporate externally developed
technologies, substantially all of our investment in research and development
has been made to develop new products internally. We expect to continue to
develop substantially all of our technologies internally. We believe that we
have demonstrated significant innovations in our new technology and products in
the fields of portals and eBusiness integration, leveraging technologies such
as XML, Dynamic Hypertext Markup Language (DHTML) and Microsoft COM+. The
majority of our research and development activity consists of developing new
versions of, and enhancements to, our products and HyperRelational technology
to better serve the needs of our customers. We commercially released the
initial version of our eBusiness Integration Portal software in late June 1998.
We have added a number of enhancements in subsequent releases.

   As of June 30, 2000, we had 93 employees dedicated to research and
development. Our development groups are divided around horizontal technologies
initiatives and strategic partners' product development support. We have a
large quality assurance group that manages a process designed to identify and
prevent software defects throughout the development cycle. Our research and
development expenditures in 1998 and 1999 were approximately $3.8 million and
$6.5 million. Expenditures for the six months ended June 30, 2000 were
approximately $3.3 million.

   In addition, we have a dedicated advanced technology group, which works
independently from our product development teams to research, develop and
patent advanced architectures and new concepts in our field. This group also
closely monitors emerging development and industry standards related to
eBusiness, Internet, knowledge management, visualization technology and
enterprise applications.

   In addition to our proprietary research, we actively participate in a number
of major industry consortia sponsored by the Israeli Chief Scientist. These
consortia provide us with government grants toward improving generic research
in areas of knowledge management and Internet applications. As part of our
participation in these consortia we build strong relationships with other
vendors who are part of the consortia, and try to leverage their technologies
to create better complete offerings with faster time-to-market metrics. In 1998
and 1999, we received approximately $419,000 and $617,000 in grants due to our
participation in those projects. We also received approximately $311,000 in
grants during the six months ended June 30, 2000. We have an approved grant
budget for 2000 of over $1.0 million, which we intend to fully use.

Competition

   Although we believe that our HyperRelational technology is a highly
differentiated solution to integration and access of information within the end
user layer, our eBusiness Integration Portal software products face competition
from independent software vendors, systems integrators that produce their own
solutions, enterprise application vendors that will attempt to enhance their
solutions, and vendors of proprietary Web application server products who have
announced portal capabilities within their future products. In addition, our
customers and other companies with whom we have strategic relationships may
become competitors in the future.

   We believe that the principal competitive factors affecting our market
require superior technology for:

  .  componentized information access;

  .  end user integration of various data types;

  .  tight integration with leading enterprise applications; and

  .  highly flexible personalized portal framework.

   We believe that our ability to address all four of these requirements is an
important differentiating factor. Most competitive products focus on either
information integration or information access. Customers and competitors may
attempt to enhance their products to provide truly integrated information
access. We believe

                                       41
<PAGE>

though that our fundamental technology differentiation, embodied in our
HyperRelational patents, provides us with a significant advantage over these
companies. We believe that our tight integration with more applications will
provide another layer of differentiation that will be difficult for competitors
to imitate.

   We believe that other principal competitive factors in our market include:

  . the breadth and depth of solutions;

  . product quality and performance;

  . ability of products to operate with multiple software applications;

  . ability to implement solutions;

  . customer service;

  . relationship with systems integrators;

  . establishment of a significant base of reference customers;

  . strength of core technology;

  . product price; and

  . patentable, differentiated technology.

   Although we believe that our solutions compete favorably with respect to
these factors, our market is relatively new and is evolving rapidly. We may not
be able to maintain our competitive position against current and potential
competitors, especially those with significantly greater resources.

Intellectual Property and Other Proprietary Rights

   Our success is dependent upon our ability to develop and protect our
proprietary technology and intellectual property rights. We rely primarily on a
combination of contractual provisions, confidentiality procedures, and trade
secret, patent, copyright and trademark laws to accomplish these goals.

   We license eBusiness Integration Portal software products and
HyperRelational technology pursuant to non-exclusive license agreements, which
impose restrictions on customers' ability to utilize the software. In addition,
we seek to avoid disclosure of our trade secrets, including but not limited to,
requiring employees, customers and others with access to our proprietary
information to execute confidentiality agreements with us. We severely restrict
access to our source code, and seek to protect our software, documentation and
other written materials under trade secret and copyright laws.

   As of June 30, 2000, we had one issued United States patent related to data
navigation with a drag and relate interface over the Internet. We also had five
United States patent applications pending, as well as foreign counterparts with
respect to some of these applications. In addition, we currently hold trademark
registrations in the United States for the trade names TopTier and
HyperRelational. We also have pending applications for the registration of the
TopTier name in the European Union, Japan and Australia. It is possible that
the patents that we have applied for, if issued, or our potential future
patents may be successfully challenged or that no patents will be issued from
our patent applications. It is also possible that we may not develop
proprietary products or technologies that may be patented, that any patent
issued to us may not provide us with any competitive advantages, or that the
patents of others will seriously harm our ability to do business. It is also
possible that our copyrights or trademarks could be challenged and invalidated.
In addition, existing patent, copyright and trademark laws afford only limited
protection. Effective protection of intellectual property rights may be
unavailable or limited in certain countries, because the laws of some foreign
countries do not protect our proprietary rights to the same extent as do the
laws of the United States. Monitoring unauthorized use of our patents and
trademarks is difficult and expensive, particularly given the global nature and
reach of the Internet. Furthermore, it is possible that our competitors will
adopt product or service names similar to ours,

                                       42
<PAGE>

impeding our ability to protect our intellectual property and possibly leading
to customer confusion. While we are not aware that our products, patents,
trademarks, copyrights or other proprietary rights infringe the proprietary
rights of third parties, any infringement claims, with or without merit,
brought by such third parties could be time-consuming and expensive to defend.

   Despite our efforts to protect our proprietary rights, existing laws afford
only limited protection. Attempts may be made to copy or reverse engineer
aspects of our product or to obtain and use information that we regard as
proprietary. Accordingly, there can be no assurance that we will be able to
protect our proprietary rights against unauthorized third-party copying or use.
Use by others of our proprietary rights could materially harm our business.
Furthermore, policing the unauthorized use of our product is difficult and
expensive litigation may be necessary in the future to enforce our intellectual
property rights.

   It is also possible that third parties will claim that we have infringed
their intellectual property rights. We expect that eBusiness developers will
increasingly be subject to infringement claims as the number of products in
different industry segments overlap. Any claims, with or without merit, could
be time-consuming, result in costly litigation, prevent product shipment, cause
delays, or require us to enter into royalty or licensing agreements, any of
which could harm our business. Patent litigation in particular has complex
technical issues and inherent uncertainties. In the event an infringement claim
against us was successful and we could not obtain a license on acceptable terms
or license a substitute technology or redesign to avoid infringement, our
business would be harmed.

Employees

   As of June 30, 2000, we employed 210 full-time employees. These included 45
in sales and marketing, 55 in professional services and customer care, 93 in
research and development and 17 in administration and finance. Our future
success will depend in part on our ability to attract, retain and motivate
highly qualified technical and management personnel, for whom competition is
intense. From time to time, we have employed, and will continue to employ,
independent contractors and consultants to support research and development,
marketing and sales, and business development. Our employees are not
represented by a collective bargaining agreement and we have never experienced
a strike or similar work stoppage. We consider our relations with our employees
to be good.

Facilities

   Our principal administrative and sales and marketing facility is located in
San Jose, California and currently consists of approximately 15,000 square feet
of office space held under a lease that expires in February 2002. On April 12,
2000 we entered into a five year lease relating to approximately 25,500 square
feet in San Jose, California, to which we intend to relocate our principal
administrative and sales and marketing facility by September 15, 2000. Our
research and development facility is located in Ra'anana, Israel, and consists
of 16,000 square feet of office space held under a five-year lease expiring in
March 2003. We also maintain offices for sales and support personnel in New
York, New York; Chicago, Illinois; Toronto, Canada; Houston, Texas; Utrecht,
The Netherlands; Munich, Germany; Malmo, Sweden; and London, United Kingdom.

Legal Proceedings

   We are not a party to any material legal proceedings.

                                       43
<PAGE>

                                   MANAGEMENT

Executive Officers and Directors

   Our executive officers and directors, and their ages and positions as of
June 30, 2000, are set forth below. The board of directors has appointed
Messrs. Kwatinetz and Leff to the board of directors, and Messrs. Kwatinetz and
Leff have agreed to join, effective as of the first meeting of the board of
directors following completion of the offering.

<TABLE>
<CAPTION>
Name                     Age Position
----                     --- --------
<S>                      <C> <C>
Shai Agassi.............  32 Chairman of the Board, Chief Executive Officer and President

David Blumstein.........  55 Vice Chairman of the Board

Gregory S. Ayers........  39 Chief Financial Officer and Corporate Secretary

Greg Turner.............  48 Senior Vice President, Worldwide Sales

Gil Perez...............  32 Senior Vice President, Professional Services

Joseph Zarb.............  34 Senior Vice President, Marketing

Udi Ziv.................  33 Senior Vice President, Research and Development

Jan Baan................  54 Director

Andries Bottema.........  38 Director

Martin Lechner..........  30 Director

Michael Kwatinetz.......  54 Director designee

Robert S. Leff..........  52 Director designee
</TABLE>

   Shai Agassi, a co-founder of TopTier, has been our Chairman of the Board
since September 1996 and our Chief Executive Officer and President since
October 1999. From September 1996 to October 1999, Mr. Agassi was our Chief
Technical Officer. From 1994 to 1996, Mr. Agassi was Vice President, Business
Development of TopTier Israel, which later became our subsidiary upon our
incorporation in August 1996. Mr. Agassi received his B.A. in Computer Science
from Israel Institute of Technology.

   David Blumstein has been our Vice Chairman of the Board since October 1999.
From 1996 to October 1999, Mr. Blumstein was our President and Chief Executive
Officer. Prior to joining TopTier, Mr. Blumstein was President and Chief
Executive Officer of Softbank OnHand, Inc. (U.S.), from 1994 to 1996 and
President and Chief Executive Officer of Alexander & Lord, Inc. from 1990 to
1994. He was President and Chief Operating Officer of Peter Norton Computing,
from 1989 to 1990, and President and Chief Executive Officer of Ingram
Distribution from 1987 to 1989. Prior to Ingram Distribution, Mr. Blumstein was
a principal in Softsel Computer Products, a software distributor, where he
spent seven years as Executive Vice President of Sales and Marketing. Mr.
Blumstein received his B.A. from Brooklyn College, NY.

   Gregory S. Ayers has been our Chief Financial Officer since January 2000 and
Corporate Secretary since March 2000. Mr. Ayers was Chief Financial Officer of
Xanthon, Inc. from February 1999 to December 1999. From October 1997 to January
1999, he was Vice President, New Business Development of Occulogix Corporation.
From April 1994 to August 1997, Mr. Ayers was Vice President, Chief Financial
Officer and Treasurer of UroQuest Medical Corporation. Mr. Ayers also held
various positions with KPMG Peat Marwick, including manager, from 1983 to 1991.
Mr. Ayers received his B.S. in Accounting from Stetson University, and he is a
certified public account.

   Greg Turner has been our Senior Vice President, Worldwide Sales since
January 2000. From July 1990 to October 1998, he served in a variety of
management positions with QAD Inc., most recently Vice President--Sales for
QAD's Consumer Products and Pharmaceutical sectors. Mr. Turner received his
B.Eng. (Honors) from the Sydney University of Technology.

                                       44
<PAGE>

   Gil Perez has been our Senior Vice President, Professional Services since
October 1999. From July 1996 to September 1999, Mr. Perez was Vice President
Presales and Account Management. From April 1994 to July 1996, he was Software
Developer and Project Manager of TopTier Israel. Mr. Perez received his B.S. in
Computer Science from Tel Aviv University and served as a Captain in the Israel
Defense Force from 1989 to 1993.

   Joseph J. Zarb has been our Senior Vice President, Marketing since August
1999. From August 1998 to August 1999, Mr. Zarb was Vice President, Corporate
Marketing. From August 1997 to May 1998, he was Vice President, Major Accounts,
and from May 1998 to August 1998, Mr. Zarb was Vice President, Business
Development. From September 1989 to August 1997, he worked in a product
marketing management position with IBM. Mr. Zarb received his B.S. in Computer
Science from Marist College.

   Udi Ziv has been our Senior Vice President, Research and Development since
November 1999. From May 1995 to November 1999, Mr. Ziv was Vice President,
Research and Development. From July 1991 to May 1995, he was the Development
Manager of TopTier Israel. Mr. Ziv received his B.S. in Computer Engineering
from Israel Institute of Technology.

   Jan Baan has been a director since June 1997. From 1978 to 1998, Mr. Baan
served as Chief Executive Officer and Chairman of the Board of Baan Company
N.V., which he founded in 1978. Since June 1999, Mr. Baan has served as a
member of the supervisory board of Vanenburg Group B.V., and has been Chairman
and Chief Executive Officer since December 1999.

   Andries Bottema has been a director since December 1999. He is currently a
partner in Vanenburg Group B.V. where he is responsible for strategy and
positioning. From 1997 to 1998, Mr. Bottema was President of Vanenburg
Institute and Research. From 1987 to 1997, he held several positions at senior
and executive management level for consulting, product marketing and business
development in Baan Company.

   Michael Kwatinetz is a founding managing partner of Azure Capital Partners
VC Advisors, L.P., which he co-founded in April 2000. From July 1998 to April
2000, Mr. Kwatinetz served as the Global Head of Credit Suisse First Boston
Equity Technology Research Group and the senior software and hardware analyst.
He has worked as an enterprise software design consultant, and, from 1979 to
1990, he was President of Woodbury Computer Associates. Mr. Kwatinetz is a
member of the Financial Accounting Standards Board (FASB) advisory committee.
He received his M.A. and Ph.D degrees in Mathematical Modeling from the
University of California Berkeley and his M.B.A. in Accounting from New York
University.

   Martin Lechner has been a director since October 1999. He is a director of
IQ Capital AG. From April 1998 to December 1999, Mr. Lechner served as Chief
Executive Officer of IQ Capital AG, which he co-founded in April 1998. From
November 1996 to March 1998, Mr. Lechner served as a Proprietary Trader for
Dresdner Kleinwort Benson. Mr. Lechner received his Dipl. Kaufmann from
University of Passau (Germany).

   Robert S. Leff is a founder and Chief Executive Officer of hiho.com, an
application service provider, where he has served since March 1999. From
October 1980 to March 1985, Mr. Leff was a founder and President of Merisel
(formerly Softsel Computer Products), a distributor of computer hardware,
networking equipment and software products. Mr. Leff served as Co-Chairman of
Softsel from March 1985 to December 1994. Mr. Leff received his B.S. degree in
Business Administration and his M.S. in Computer Science from the University of
Albany.

   The board of directors elects executive officers on an annual basis.
Executive officers serve until their successors have been duly elected and
qualified. There are no family relationships among any of our directors or
executive officers.

                                       45
<PAGE>

Board Composition

   Following the offering, our board of directors will consist of seven
directors divided into three classes with each class serving for a term of
three years as follows:

  . Class I directors will include Messrs. Kwatinetz, Lechner and Leff, and
    their terms will expire at the first annual meeting of stockholders
    following this offering;

  . Class II directors will include Messrs. Agassi and Blumstein, and their
    terms will expire at the second annual meeting of stockholders following
    this offering; and

  . Class III directors will include Messrs. Baan and Bottema, and their
    terms will expire at the third annual meeting of stockholders following
    this offering.

   Any additional directorships resulting from an increase in the number of
directors will be distributed among the three classes so that, as nearly as
possible, each class will consist of an equal number of directors.

Board Committees

   Our board of directors currently has two standing committees, an audit
committee and a compensation committee.

   Audit Committee. The board established an audit committee in March 2000,
which, upon completion of this offering, will consist of Messrs. Bottema,
Kwatinetz and Lechner. The audit committee has the following responsibilities:

  . to make such examinations as are necessary to monitor our corporate
    financial reporting and the internal and external audits;

  . to provide to the board the results of its examinations and
    recommendations;

  . to outline to the board improvements made, or to be made, in internal
    accounting controls;

  . to nominate independent auditors; and

  . to provide such additional information and materials as it may deem
    necessary to make the board aware of significant financial matters.

   Compensation Committee. The board established a compensation committee in
March 2000, which currently consists of Messrs. Baan and Lechner. The
compensation committee has the following responsibilities:

  . to review our executive compensation policy;

  . to administer our stock purchase and stock option plans; and

  . to make recommendations to the board regarding such matters.

Director Compensation

   Our directors currently do not receive any cash compensation for their
services as members of the board of directors or any committees, but directors
are reimbursed for reasonable expenses incurred in connection with attendance
of board or committee meetings. In addition, our non-employee directors are
eligible to participate in our 1996 Stock Option Plan and 2000 Stock Plan, and,
on the date of the offering and each year thereafter, will automatically be
granted an option to purchase shares of common stock. For details of directors'
participation in these plans, see "Stock Plans."

Compensation Committee Interlocks and Insider Participation

   Prior to March 2000, all compensation decisions were made by the board of
directors. In March 2000, the board established the compensation committee
consisting of Messrs. Baan and Lechner. No interlocking

                                       46
<PAGE>

relationship exists between our board of directors or compensation committee
and the board of directors or compensation committee of any other company, nor
has any such interlocking relationship existed in the past. For a discussion of
transactions that the compensation committee members or their affiliates have
entered into with us, please see "Related Party Transactions."

Executive Compensation

   The following table presents compensation information received by each
person serving as our chief executive officer and our other most highly
compensated executive officers in 1999.

                           Summary Compensation Table

<TABLE>
<CAPTION>
                                                       Long-Term
                                            Annual    Compensation
                                         Compensation    Awards
                                         ------------ ------------
                                                       Securities
                                                       Underlying   All Other
Name and Principal Position                 Salary      Options    Compensation
---------------------------              ------------ ------------ ------------
<S>                                      <C>          <C>          <C>
Shai Agassi.............................   $144,000     666,666            --
 President, Chief Executive Officer and
 Chairman of the Board

David Blumstein.........................   $144,000     350,000            --
 Vice Chairman of the Board and Former
 Chief Executive Officer

Gil Perez...............................   $129,385     150,000      $149,096
 Senior Vice President, Professional
  Services

Joseph Zarb.............................   $125,539      50,000      $ 47,479
 Senior Vice President, Marketing

Udi Ziv.................................   $120,000     250,000      $329,000
 Senior Vice President, Research and
  Development
</TABLE>

   The amounts listed under "All Other Compensation" represent distributions
that were made in connection with Vanenburg's acquisition of us, which closed
in October 1998. The distributions were conditioned upon the continued
employment of each individual 12 months after the closing of the acquisition.

Options Granted in 1999

   The following table sets forth information concerning stock options granted
in 1999 to the executive officers included in the summary compensation table.

<TABLE>
<CAPTION>
                                      Individual Grants
                         --------------------------------------------
                                                                       Potential Realized Value at
                         Number of   Percent of                          Assumed Annual Rates of
                         Securities Total Options Exercise            Stock Price Appreciation for
                         Underlying  Granted to    Price                      Options Term
                          Options   Employees in    Per    Expiration -----------------------------
Name                      Granted    Fiscal Year   Share      Date          5%            10%
----                     ---------- ------------- -------- ---------- -------------- --------------
<S>                      <C>        <C>           <C>      <C>        <C>            <C>
Shai Agassi.............  666,666       17.76%     $0.95    10/04/09  $   11,311,883 $   18,387,427
David Blumstein.........  350,000        9.33       0.95    10/04/09       5,938,745      9,653,409
Gil Perez...............  150,000        4.00       0.95    10/04/09       2,545,177      4,137,176
Joseph Zarb.............   50,000        1.33       0.95    10/04/09         848,393      1,379,059
Udi Ziv.................  250,000        6.66       0.95    10/04/09       4,241,961      6,895,292
</TABLE>

   The options in this table are incentive stock options, to the extent
permissable, and non-statutory options granted under our 1996 Stock Option Plan
and have exercise prices equal to the fair market value of our

                                       47
<PAGE>

common stock on the date of grant as determined by our board of directors at
that time. These options have ten-year terms and vest over a period of four
years as follows:

  . 25% of the shares subject to the option vested on October 5, 1999; and

  .  1/48th of the shares subject to the option vest each month thereafter.

   In February 2000, we granted Mr. Shai Agassi an option to purchase 1,368,334
shares of our common stock with an exercise price of $3.50, the fair market
value of our common stock on the date of grant as determined by our board. This
option vests over a 32-month period, with approximately 42,761 options vesting
each month.

   Under the rules of the SEC, the amounts in the last two columns represent
the hypothetical gain or option spread that would exist for the options in this
table if the assumed initial public offering price of our common stock
appreciates at assumed annual rates of 5% or 10% over the ten-year terms of
such options. Annual compounding results in total appreciation of 63%, assuming
5% appreciation per year, and 159%, assuming 10% appreciation per year. If the
price of our common stock were to increase at such rates from the assumed
initial public offering price of $11 per share over the next 10 years, the
resulting stock price at 5% would be $18 per share and at 10% would be $29 per
share. The 5% and 10% assumed annual rates of appreciation are specified in SEC
rules and do not represent our estimate or projection of future stock price
growth. We do not necessarily agree that this method can properly determine the
value of an option.

1999 Year-End Option Values

   The following table sets forth information, as to the executive officers
included in the summary compensation table, concerning the number of shares
subject to both exercisable and unexercisable stock options as of December 31,
1999. Also reported is the aggregate dollar value realized upon exercise of
these options based on the assumed initial public offering price of $11 per
share and values for in-the-money options that represent the positive spread
between the respective exercise prices of these options and the assumed initial
public offering price of $11 per share.

<TABLE>
<CAPTION>
                                                    Number of Securities               Value of Unexercised
                                                   Underlying Unexercised             In-the-Money Options at
                           Shares               Options at December 31, 1999             December 31, 1999
                          Acquired     Value    ----------------------------------   -------------------------
Name                     on Exercise  Realized   Exercisable        Unexercisable    Exercisable Unexercisable
----                     ----------- ----------  -----------        -------------    ----------- -------------
<S>                      <C>         <C>        <C>                <C>               <C>         <C>
Shai Agassi.............       --    $      --             666,666               --  $6,699,994      $ --
David Blumstein.........   350,000    3,517,500                --                --         --         --
Gil Perez...............       --            --            173,750               --   1,767,484        --
Joseph Zarb.............   119,061    1,247,909                --                --         --         --
Udi Ziv.................       --           --             250,000               --   2,512,500        --
</TABLE>

   Under our early exercise program our employees have the ability to purchase
shares of common stock underlying their unvested options, subject to our
repurchase right.

Employment and Severance Agreements

   Messrs. Agassi, Blumstein and Ziv each entered into a one-year employment
agreement with us in October 1998, which was subsequently extended for an
additional one-year period in October 1999. Each of these agreements provides
for annual salary and participation in our benefit plans. The agreements also
provide that if the party to the agreement is terminated without cause or
voluntarily terminates his employment with us for good reason, then he is
entitled to continue to receive his salary for the longer of six months or the
remainder of the agreement's term. In addition, our right to repurchase any
unvested shares of common stock purchased by the executive officer lapses in
the event we are acquired or there is a change in control.

                                       48
<PAGE>

Stock Plans

2000 Stock Plan

   Our board of directors adopted the 2000 Stock Plan in March 2000, and the
plan will be submitted to our stockholders for their approval prior to the
completion of this offering. The purpose of the 2000 Plan is to provide us with
the means to retain and attract employees, directors and consultants who are
essential to our future growth and success by providing these individuals with
an opportunity to acquire shares of our common stock. Our 2000 Plan provides
for the grant of nonstatutory stock options to our employees, directors and
consultants, and to the employees, directors and consultants of our subsidiary
corporations, and for the grant of incentive stock options, within the meaning
of Section 422 of the Internal Revenue Code, to our employees and employees of
our subsidiaries.

   Number of Shares of Common Stock Available under the 2000 Plan. A total of
2,500,000 shares of common stock have initially been authorized for issuance
under the 2000 Plan. In addition, the following shares will again be available
for grant and issuance under the 2000 Plan:

  .  shares that are subject to issuance upon exercise of an option granted
     under the 2000 Plan that cease to be subject to that option for any
     reason other than exercise of the option;

  .  shares that have been issued in connection with the exercise of an
     option granted under the 2000 Plan that are subsequently forfeited or
     repurchased by us at the original purchase price; and

  .  shares that are subject to an award granted under a restricted stock
     purchase agreement under the 2000 Plan that are subsequently forfeited
     or repurchased by us at the original issue price.

   Moreover, on the first day of each fiscal year during the term of the 2000
Plan, beginning with our fiscal year 2001, the number of shares available for
issuance under our 2000 Plan will increase by an amount of shares equal to the
lesser of 5% of the outstanding shares of our common stock on the last day of
our immediately preceding fiscal year, 2,500,000 shares, or a lesser amount as
our board may determine.

   Administration of the Incentive Plan. Our board of directors or a committee
of our board administers the 2000 Plan. In the case of options intended to
qualify as "performance-based compensation" within the meaning of Section
162(m) of the Internal Revenue Code, the committee must consist of two or more
"outside directors." The administrator has the power to determine the terms of
the options granted, including the exercise price, the number of shares subject
to each option, the exercisability of the options and the form of consideration
payable upon exercise.

   Options. The administrator determines the exercise price of options granted
under the 2000 Plan, but with respect to nonstatutory stock options intended to
qualify as "performance-based compensation" within the meaning of Section
162(m) of the Internal Revenue Code and all incentive stock options, the
exercise price must at least be equal to the fair market value of our common
stock on the date of grant. The term of an incentive stock option may not
exceed 10 years, except that with respect to any participant who owns 10% of
the voting power of all classes of our outstanding capital stock, the term must
not exceed five years and the exercise price must equal at least 110% of the
fair market value on the grant date. The administrator is free to determine the
term of all other options.

   No person may be granted an option to purchase more than 1,000,000 shares in
any fiscal year; provided that, in connection with his or her initial service,
an optionee may be granted options to purchase up to an additional 750,000
shares.

   After termination of one of our employees, directors or consultants, he or
she may exercise his or her option for the period of time stated in his or her
option agreement to the extent the option is vested on the date of termination.
Generally, if termination is due to death or disability, the option will remain
exercisable for 12 months. In all other cases, the option will generally remain
exercisable for three months. However, an option may never be exercised later
than the expiration of its term.

                                       49
<PAGE>


   Automatic Grants to Nonemployee Directors. The 2000 Plan provides for the
periodic automatic grant of options to our non-employee directors who do not
beneficially own 5% or more of our outstanding voting securities. Each option
granted under this automatic grant provision will have an exercise price per
share equal to 100% of the fair market value per share of our common stock on
the date of grant, and will have a term of 10 years, unless terminated earlier
upon the optionee's termination of service as a director. The following two
types of options will automatically be granted to non-employee directors under
the 2000 Plan:

  . Initial Grant. An eligible non-employee director who does not
    beneficially own 5% or more of our outstanding voting securities will
    automatically be granted an option to purchase 40,000 shares of common
    stock on the later of the date of this offering and the date the
    individual first becomes a non-employee director, whether by appointment
    by our board or election by our stockholders. An employee director who
    ceases to be an employee will not be eligible to receive this initial
    grant. Each initial grant will become vested and exercisable in four
    successive equal annual installments, measured from the option grant
    date.

  . Annual Grants. Each eligible non-employee director who does not
    beneficially own 5% or more of our outstanding voting securities will
    automatically be granted an option to purchase 10,000 shares of our
    common stock on each anniversary of the date the director first became an
    eligible non-employee director. Each annual grant will become vested and
    exercisable on the first anniversary of the option grant date.

The other terms and conditions of the options automatically granted to non-
employee directors are generally the same as those for other options granted
under the 2000 Plan.

   Transferability of Options. The 2000 Plan generally does not allow for the
transfer of options, and only the optionee may exercise an option during his or
her lifetime. The administrator may, however, allow options to be transferable.

   Adjustments upon Merger or Asset Sale. The 2000 Plan provides that in the
event of our merger with or into another corporation or a sale of substantially
all of our assets, the successor corporation will assume or substitute each
option. If the outstanding options are not assumed or substituted, the
administrator will provide notice to each optionee that he or she has the right
to exercise the option as to all of the shares subject to the option, including
shares which would not otherwise be exercisable, for a period of 15 days from
the date of the notice. The option will then terminate upon the expiration of
this 15-day period.

   Amendment and Termination of the 2000 Plan. The 2000 Plan will automatically
terminate in 2010, unless we terminate it sooner. In addition, our board of
directors has the authority to amend, suspend or terminate the 2000 Plan,
provided that such change may not adversely affect any option previously
granted under the 2000 Plan.

2000 Employee Stock Purchase Plan

   Our board of directors adopted the 2000 Employee Stock Purchase Plan in
March 2000, and the plan will be submitted to our stockholders for their
approval prior to completion of this offering. Our Purchase Plan provides
eligible employees the opportunity to purchase shares of our common stock at a
discount through payroll deductions.

   Number of Shares of Common Stock Available under the Purchase Plan. A total
of 500,000 shares of common stock have initially been authorized for issuance
under the Purchase Plan. In addition, the number of shares authorized for
issuance under the Purchase Plan will increase automatically on the first day
of each fiscal year, beginning with our fiscal year 2001, equal to the lesser
of 1% of the outstanding shares of our common stock on the last day of the
immediately preceding fiscal year, 500,000 shares, or a lesser amount as our
board of directors may determine.

                                       50
<PAGE>

   Administration of the Purchase Plan. Our board of directors or a committee
of our board administers the Purchase Plan. The administrator has full and
exclusive authority to interpret the terms of the Purchase Plan and determine
eligibility.

   Eligibility to Participate. Our employees are eligible to participate in the
Purchase Plan if they are customarily employed by us or a participating
subsidiary for at least 20 hours per week and more than five months in any
calendar year. Nonetheless, an employee may not participate in the Purchase
Plan if:

  . he or she owns stock possessing 5% or more of the total voting power or
    value of all classes of our capital stock; or

  . his or her rights to purchase stock under all employee stock purchase
    plans accrue at a rate that exceeds $25,000 worth of stock in any
    calendar year.

   Offering Periods and Contributions. The Purchase Plan is intended to qualify
under Section 423 of the Internal Revenue Code and contains consecutive,
overlapping 24-month offering periods. Each offering period includes four 6-
month purchase periods. The offering periods generally start on the first
trading day on or after February 1 and August 1 of each year or on such other
date as our board of directors shall determine. However, the first such
offering period will commence on the first trading day on or after the date of
this offering and will end on the last trading day on or after August 1, 2002.

   Our Purchase Plan permits participants to purchase common stock through
payroll deductions of up to 15% of their eligible compensation, which includes
a participant's base straight time gross earnings, commissions and bonuses. A
participant may purchase a maximum of 2,000 shares during any six month
purchase period.

   Purchase of Shares. Amounts deducted from a participant's eligible
compensation and accumulated during a six month offering period are used to
purchase shares of our common stock at the end of the six month offering
period. The price is 85% of the lower of the fair market value of our common
stock at the beginning or end of the offering period. Participants may end
their participation at any time during an offering period and will be refunded
their payroll deductions to date. Participation ends automatically upon
termination of employment with us.

   Transferability of Rights. A participant may not transfer rights granted
under the Purchase Plan other than by will, by the laws of descent and
distribution or as otherwise provided under the Purchase Plan.

   Adjustments upon Merger or Asset Sale. In the event of our merger with or
into another corporation or a sale of all or substantially all of our assets, a
successor corporation may assume or substitute for all outstanding
participation rights under the Purchase Plan. If the successor corporation
refuses to assume or substitute for these rights, the offering period then in
progress will be shortened, and a new exercise date will be set.

   Amendment and Termination of the Purchase Plan. The Purchase Plan will
terminate in 2010. Nonetheless, our board of directors has the authority to
amend or terminate the Purchase Plan, except that, subject to certain
exceptions described in the Purchase Plan, no such action may adversely affect
any outstanding rights to purchase stock under the Purchase Plan.

 1996 Stock Option Plan

   Our board of directors and stockholders adopted our 1996 Stock Option Plan
in October 1996. A total of 10,372,936 shares of common stock have been
authorized for issuance under the 1996 Plan. As of June 30, 2000, options to
acquire a total of 3,112,865 shares of our common stock were issued and
outstanding, and a total of 3,817,030 shares of our common stock had been
issued upon the exercise of options granted under the 1996 Plan. In addition,
1,097,223 shares were purchased and cancelled by Vanenburg in October 1998 upon
its acquisition of us. Our board of directors has decided not to grant any
additional options under the 1996 Plan as

                                       51
<PAGE>

of the effective date of this offering. However, the 1996 Plan will continue to
govern the terms and conditions of outstanding options already granted under
the 1996 Plan.

   Our board of directors or a committee of our board administers the 1996
Plan. The administrator of the 1996 Plan has the authority to determine the
terms and conditions of the options granted under the 1996 Plan.

   Our 1996 Plan provides for the grant of nonstatutory stock options to our
employees, directors and consultants or employees, directors and consultants of
our parent or subsidiary corporations, and for the grant to our employees or
employees of our parent or subsidiary corporations of incentive stock options,
within the meaning of Section 422 of the Internal Revenue Code. The exercise
price of options granted under our 1996 Plan may not be less than 85% of the
fair market value of our common stock on the date of grant and the term of an
option may not exceed 10 years. An outstanding option may terminate prior to
the end of its 10 year term if the optionee ceases to be a service provider.

   Our 1996 Plan provides that in the event of our merger with or into another
corporation or a sale of substantially all of our assets, the successor
corporation will assume or substitute each option. If the outstanding options
are not assumed or substituted, the options will terminate. However, the
administrator of the 1996 Plan has the discretionary authority to provide that
each option that is not assumed or substituted in a merger or asset sale will
accelerate and become fully exercisable prior to termination.

Limitations of Liability and Indemnification Matters

   As permitted by Delaware law, our certificate of incorporation eliminates
the personal liability of our directors for monetary damages for breach of
their fiduciary duties as directors, except for liability for any of the
following:

  . any breach of a director's duty of loyalty to us or our stockholders;

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

  . unlawful payments of dividends or unlawful stock repurchases or
    redemptions; or

  . any transaction from which a director derives an improper personal
    benefit.

Our certificate of incorporation also provides that if Delaware law is in the
future amended to authorize corporate action further limiting or eliminating
the personal liability of directors, then the liability of our directors will
be limited or eliminated to the fullest extent permitted by the amended
Delaware law.

   As permitted by Delaware law, our bylaws provide for the following:

  . we must indemnify our directors and executive officers to the fullest
    extent permitted by Delaware law;

  . we may indemnify our other officers, employees and agents to the fullest
    extent permitted by Delaware law; and

  . we must advance all expenses, as incurred, of our directors and executive
    officers in connection with a legal proceeding to the fullest extent
    permitted by Delaware law, subject to limited exceptions.

We believe that indemnification under our bylaws covers at least negligence and
gross negligence on the part of an indemnified party.

   We have entered into separate indemnification agreements with each of our
directors and executive officers. These agreements provide for the following:

  . we must indemnify the director or officer against expenses (including
    attorney's 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 (other than
    liabilities arising from willful misconduct or conduct that is knowingly
    fraudulent or deliberately dishonest); and

                                       52
<PAGE>

  . we must 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, the above bylaw provisions
and the indemnification agreements are necessary to attract and retain
qualified persons as directors and officers. Following completion of this
offering, we will also maintain directors' and officers' liability insurance.

   These limitation of liability and indemnification provisions may discourage
stockholders from bringing a lawsuit against the directors for breach of their
fiduciary duty. They may also have the effect of reducing the likelihood of
derivative litigation against directors and officers, even though such an
action, if successful, might otherwise benefit us and our stockholders.
Furthermore, a stockholder's investment may be adversely affected to the extent
we pay the costs of settlement and damage awards against directors and officers
as a result of these indemnification provisions.

   We are not aware of any pending litigation or proceeding involving any of
our directors, officers, employees or agents where indemnification will be
sought, required or permitted. Furthermore, we are not aware of any threatened
litigation or proceeding that might result in a claim for indemnification.

                                       53
<PAGE>

                           RELATED PARTY TRANSACTIONS

Acquisition of Quicksoft Development (1992) Ltd.

   In September 1996, we exchanged all of the outstanding shares of Quicksoft
Development (1992) Ltd., an Israel-based research and development company owned
primarily by Shai Agassi, our Chief Executive Officer, and Mr. Agassi's family,
for 6,375,000 shares of our common stock. Of the shares that were issued in
this transaction, Mr. Agassi and Quicksoft Limited (a holding company
affiliated with Mr. Agassi) each received 3,187,500 shares of common stock.
After the acquisition, Quicksoft Development (1992) Ltd. changed its name to
Top Tier Israel, Ltd.

   Of the 1,000 common shares of Top Tier Israel now outstanding, we own 999
shares and Mr. Agassi owns one share in order to satisfy Israel corporate law
requirements that a company have at least two shareholders.

Sale of Common Stock

   In September 1996, we sold 689,874 shares of our common stock to David
Blumstein, Vice Chairman of the Board, at a price of $0.0067 per share.

Preferred Stock Financings and Acquisition by Vanenburg

   From September 1996 through November 1996, we sold an aggregate of 1,491,376
shares of our Series A preferred stock at a price of $0.53 per share. David
Blumstein purchased 366,376 shares for an aggregate purchase price of $195,401.
From June through November 1997, we sold an aggregate of 6,709,264 shares of
our Series B preferred stock to Vanenburg Capital Management I at a price of
$2.09 per share.

   On October 6, 1998, we entered into an Agreement and Plan of Reorganization
with Vanenburg, whereby Vanenburg acquired substantially all of our outstanding
capital stock. Two of our directors, Jan Baan and Andries Bottema, are
affiliates of Vanenburg. Under the terms of that agreement, (1) we merged with
a wholly-owned subsidiary of Vanenburg, with Top Tier Software, Inc. as the
surviving corporation; (2) each outstanding share of our common stock and
Series A preferred stock and each vested option to purchase common stock was
converted into the right to receive cash and promissory notes in the aggregate
amount of approximately $6.28 per share; (3) each unvested option to purchase
common stock was converted into a similar option to purchase the common stock
of the surviving corporation with the same rights and vesting period as the
original option; (4) each outstanding share of Series B preferred stock was
converted into one share of Series B preferred stock of the surviving
corporation; and (5) we issued to Vanenburg 10,500,000 shares of Series C
preferred stock. The promissory notes, which were guaranteed by Vanenburg,
included promissory notes that we issued to the following executive officers in
the following amounts:

<TABLE>
<CAPTION>
     Executive Officer                                 Aggregate Amount of Notes
     -----------------                                 -------------------------
     <S>                                               <C>
     Shai Agassi......................................        $13,340,441
     David Blumstein..................................        $ 5,676,229
     Gil Perez........................................        $   392,366
</TABLE>

We repaid all of these promissory notes in full in April and October 1999.

   Of the aggregate amount that Vanenburg paid in cash and promissory notes,
Vanenburg withheld an aggregate amount of approximately $2.9 million, and
placed this amount in an employee pool. We distributed the entire pool to those
individuals, other than Shai Agassi and David Blumstein, who were still
employed by us on the first anniversary date of the Vanenburg transaction.

   In addition, on October 6, 1998, we sold 763,740 shares of Series A
preferred stock at a price of $4.143 per share to Shai Agassi, David Blumstein
and Quicksoft Limited. The Series A preferred stock was issued in three equal
installments of 254,580 shares on or about the following dates: October 6,
1998, April 6, 1999 and October 6, 1999.

                                       54
<PAGE>

   On October 27, 1999, we sold an aggregate of 2,008,032 shares of our Series
D preferred stock at a price of $4.98 per share.

   On June 29, 2000 and July 11, 2000, we sold an aggregate of 2,155,298 shares
of our Series E preferred stock at a price of $8.3515 per share.

   The following table summarizes the shares of capital stock purchased by
executive officers, directors and 5% or more stockholders and their affiliates
in these transactions:

<TABLE>
<CAPTION>
                             Series A        Series B        Series C        Series D        Series E
Stockholder               Preferred Stock Preferred Stock Preferred Stock Preferred Stock Preferred Stock
-----------               --------------- --------------- --------------- --------------- ---------------
<S>                       <C>             <C>             <C>             <C>             <C>
Vanenburg Capital
 Management I...........          --         6,709,264      10,500,000             --             --
Entities affiliated with
 Ferman AG..............          --               --              --        1,708,032            --
Azure Capital Partners..          --               --              --              --         957,911
Shai Agassi.............      318,747              --              --              --             --
Quicksoft Limited.......      318,747              --              --              --             --
David Blumstein.........      126,246              --              --              --             --
</TABLE>

   Jan Baan and Andries Bottema, two of our directors, are affiliated with the
Vanenburg Capital Management I. Martin Lechner, one of our directors, is
affiliated with Ferman AG. Michael Kwatinetz, one of our director designees, is
affiliated with Azure Capital Partners. Shai Agassi is affiliated with
Quicksoft Limited.

Agreements with Baan

   In August 1998, we entered into a memorandum of understanding with Baan
Company. Under this memorandum of understanding, we agreed to license to Baan
Company various products that incorporate our HyperRelational navigation
technology, which products Baan Company distributes to its customers. Baan
Company is obligated to pay us various fees in connection with the sale,
development and maintenance of the distributed products. Both parties agree to
split all maintenance and upgrade fees from the customers who purchase these
products. This agreement has since been superseded.

   In March 2000, we entered into a perpetual, original equipment manufacturer,
or OEM, agreement and a reseller agreement with Baan Development B.V., an
affiliate of Baan Company. These agreements supersede our prior agreements with
Baan Company. Under the OEM agreement, we granted to Baan Development a non-
exclusive, perpetual and worldwide right to embed our HyperRelational
technology into Baan's software products. In addition, we granted to Baan
Development a non-exclusive, perpetual and worldwide right to distribute our
HyperRelational technology as embedded in their software products. We are
obligated to provide various development, support and maintenance services
under the agreement, and Baan Development is obligated to pay us license,
maintenance and royalty fees. This agreement is perpetual. Under the reseller
agreement, we granted to Baan Development a non-exclusive and worldwide license
to distribute Baan Data Navigator, Baan OLAP Navigator, Baan Data Navigator
Development Environment, TopTier Web Navigator, TopTier Portal Pack, TopTier
Development Environment and TopTier Business Integration Portal to end users.
Under the agreement, each of us and Baan Development is obligated to pay
royalties to the other depending on which party licenses the software to end
users. Baan Development is also obligated to pay to us a portion of any
maintenance and support fees that it collects. Upon expiration of the initial
term of the agreement in March 2004, the reseller agreement will automatically
renew for one year periods unless terminated by us or Baan Development B.V.

   Jan Baan, one of our directors, was an executive officer of Baan Company at
the time that we entered into the memorandum of understanding with Baan Company
in August 1998. In 1999, we received approximately 71% of our total revenues
from this memorandum of understanding. In addition, Jan Baan and Andries
Bottema, two of our directors, are affiliated with Vanenburg Capital Management
I, which beneficially owns over 10% of Baan Company's outstanding capital stock
and is our majority stockholder.

                                       55
<PAGE>

Loans to Executive Officers

   We permit holders of options under our 1996 Stock Option Plan to purchase
shares of common stock underlying unvested options, subject to our right to
repurchase these shares, which right lapses over time. In addition, we allow
employees to borrow from us the full exercise price of their options by signing
a promissory note. The following executive officers listed in the summary
compensation table have received such loans:

  .  In February 2000, we loaned Shai Agassi an aggregate of $5,422,502
     secured by two promissory notes and a stock pledge agreement, in
     connection with his purchase of 2,035,000 shares of our common stock.
     The notes are due and payable in February 2005.

  .  In December 1999, we loaned David Blumstein an aggregate of $332,500
     secured by a promissory note and a stock pledge agreement, in connection
     with his purchase of 350,000 shares of our common stock. The note is due
     and payable in December 2004.

  .  In January 2000, we loaned Gil Perez an aggregate of $143,766 secured by
     two promissory notes and a stock pledge agreement, in connection with
     his purchase of 173,750 shares of our common stock. The note is due and
     payable in January 2005.

  .  In December 1999, we loaned Joseph Zarb an aggregate of $61,773 secured
     by a promissory note and a stock pledge agreement, in connection with
     his purchase of 119,062 shares of our common stock. The note is due and
     payable in December 2004.

                                       56
<PAGE>

                             PRINCIPAL STOCKHOLDERS

   The following table sets forth information concerning the beneficial
ownership of our common stock as of July 31, 2000, and as adjusted to reflect
the sale of 4,000,000 shares of common stock in this offering, by the following
persons and entities:

  . each person or entity who owns beneficially 5% or more of our outstanding
    common stock;

  . each of the members and designees of our board of directors;

  . each of our executive officers included in the summary compensation
    table; and

  . all members of our board of directors and executive officers as a group.

   Under rules promulgated by the SEC, the number and percentage of shares
beneficially owned is determined in accordance with Rule 13d-3 of the Exchange
Act, and the information is not necessarily indicative of beneficial ownership
for any other purpose. Under such rule, beneficial ownership includes any
shares as to which the individual or entity has voting power or investment
power and any shares which the individual or entity has the right to acquire
within 60 days of July 31, 2000 through the exercise of any stock option,
warrant or other right. Unless otherwise indicated in the footnotes, each
person or entity has sole voting and investment power (or shares such powers
with his or her spouse) for the shares shown as beneficially owned. Except as
otherwise noted, the address of each person listed on the table is c/o Top Tier
Software, Inc., 6203 San Ignacio Avenue, Suite 101, San Jose, California 95119.

   The percentage of common stock outstanding as of July 31, 2000 is based on
26,769,864 shares of common stock outstanding on that date, assuming that all
outstanding preferred stock has been converted into common stock.

<TABLE>
<CAPTION>
                                                                   Percent
                                                                Beneficially
                                                                    Owned
                                                    Shares    -----------------
                                                 Beneficially  Before   After
Name of Beneficial Owner                            Owned     Offering Offering
------------------------                         ------------ -------- --------
<S>                                              <C>          <C>      <C>
Vanenburg Capital Management I(1)..............   17,209,264    64.3%    55.9%
Jan Baan(1)....................................   17,209,264    64.3     55.9
Andries Bottema(1).............................   17,209,264    64.3     55.9
Shai Agassi(2).................................    2,353,748     8.8      7.6
Azure Capital Partners(3)......................    1,454,300     5.4      4.7
Michael Kwatinetz(3)...........................    1,454,300     5.4      4.7
Entities affiliated with Ferman AG(4)..........    1,213,032     4.5      3.9
Martin Lechner(4)..............................    1,213,032     4.5      3.9
David Blumstein(5).............................      476,247     1.8      1.5
Udi Ziv(6).....................................      250,000       *        *
Gil Perez(7)...................................      173,750       *        *
Joseph Zarb(8).................................      119,061       *        *
Robert S. Leff.................................            0       *        *
All executive officers and directors as a group
 (10 persons)(9)...............................   23,249,402    86.0     75.0
</TABLE>
--------
 *   Less than 1% beneficially owned.

(1)  Includes shares held by Vanenburg Capital Management I. All of the shares
     of Vanenburg Capital Management I are held by Vanenburg Capital Management
     Holdings. All of the shares of Vanenburg Capital Management Holdings are
     held by Stichting Administratickantoor VCMH and Vanenburg Group B.V. Wim
     Heijting is the director of Stichting Administratickantoor VCMH. All of
     the shares of Vanenburg Group B.V. are held by the Stichting
     Administratickantoor Vanenburg Ventures and Stichting Oikonomos. Jan Baan
     and Paul Baan are directors of Stichting Administratickantoor Vanenburg
     Ventures and effectively retain voting control of Vanenburg Group B.V. Jan
     Baan and members of his immediate

                                       57
<PAGE>


    family are directors of Stichting Oikonomos. Jan Baan and Andries Bottema
    are directors of Vanenburg Group B.V. Jan Baan, Paul Baan, Andries Bottema
    and Wim Heijting disclaim beneficial ownership of the shares held by these
    entities, except to the extent of their proportionate interest therein. The
    address of these individuals and entities is Vanenburgerallee 13, P.O. Box
    231, 3880 AE Putten, The Netherlands.

(2) Includes 318,748 shares held by Quicksoft Ltd., an Israeli company
    affiliated with Mr. Agassi, and 2,035,000 shares, which were issued upon
    exercise of options granted in October 1999 and February 2000. A portion of
    these shares are subject to repurchase by us, which right lapses
    progressively over time.

(3) Includes shares held by Azure Capital Partners. Azure Capital Partners VC
    Administrators, LLC is the general partner of Azure Capital Partners. Paul
    Ferris, Michael Kwatinetz, Cameron Lester, Quint Slattery and Paul
    Weinstein are the managing members of Azure Capital Partners VC
    Administrators, LLC and share voting and investment power of the shares of
    TopTier held by Azure Capital Partners. The managing members of Azure
    Capital Partners VC Administrators, LLC disclaim beneficial ownership of
    the shares, except to the extent of their proportionate interest therein.
    The address for Mr. Kwatinetz and these entities is c/o Azure Capital
    Partners, 650 California Street, San Francisco, California 94108.

(4) Includes shares held by Ferman AG, and IQ Capital AG. Mr. Lechner is
    chairman of the supervisory board and Chief Executive Officer of Ferman AG.
    He is also a board member and stockholder of IQ Capital AG, one of our
    stockholders. Mr. Lechner may be deemed to beneficially own all shares of
    TopTier held by Ferman AG, and IQ Capital AG. Mr. Lechner disclaims
    beneficial ownership of such shares, except to the extent of his
    proportionate interest therein. The address for Mr. Lechner and these
    entities is c/o IQ Capital AG, Aktiengesellschaft, Borsenplatz 1, 60313,
    Frankfurt, Germany.

(5) Includes 350,000 shares, which were issued upon exercise of options granted
    in October 1999. A portion of these shares are subject to repurchase by us,
    which right lapses progressively over time.

(6) Includes 250,000 shares issuable upon exercise of outstanding options
    within 60 days of July 31, 2000. If exercised, a portion of these shares
    would be subject to repurchase by us, which right lapses progressively over
    time.

(7) Includes 173,750 shares, which were issued upon exercise of options granted
    in October 1999. A portion of these shares are subject to repurchase by us,
    which right lapses progressively over time.

(8) Includes 119,061 shares, which were issued upon exercise of options granted
    in October 1999. A portion of these shares are subject to repurchase by us,
    which right lapses progressively over time.

(9) Includes 250,000 shares issuable upon exercise of outstanding options
    within 60 days of July 31, 2000. If exercised, a portion of the shares
    issuable upon exercise of these options are subject to repurchase by us,
    which right lapses progressively over time.

                                       58
<PAGE>

                          DESCRIPTION OF CAPITAL STOCK

   Following completion of this offering, our authorized capital stock will
consist of 200,000,000 shares of common stock, $0.001 par value per share, and
5,000,000 shares of preferred stock, $0.001 par value per share.

Common Stock

   As of June 30, 2000, there were 26,754,864 shares of common stock
outstanding held of record by approximately 35 stockholders, after giving
effect to the conversion of all outstanding preferred stock into common stock
(including shares of Series E preferred stock issued in July 2000), assuming no
exercise of outstanding options after June 30, 2000 and assuming an initial
public offering price of $11.00 per share. Of the 22,136,334 shares of
preferred stock currently outstanding, 19,981,036 will convert to common stock
at a one-to-one ratio, and 2,155,298 shares will convert to common stock at a
ratio that may vary depending upon the actual public offering price per share.
If the initial public offering price per share is less than $16.70, 2,155,298
shares of preferred stock will convert to common stock at a ratio approximately
equal to 16.70 divided by the actual public offering per share. Assuming an
initial public offering price of $11.00 per share, the 2,155,298 shares of
Series E preferred Stock currently outstanding will convert into 3,272,173
shares of common stock. As a result, there will be 30,754,864 shares of common
stock outstanding (assuming no exercise of the underwriters' over-allotment
option and no exercise of outstanding options after June 30, 2000) after giving
effect to the sale of 4,000,000 shares of common stock in this offering.

   The holders of common stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Subject to any preferences that
may be applicable to any outstanding preferred stock, the holders of common
stock are entitled to receive ratably any dividends that may be declared from
time to time by the board of directors out of funds legally available for that
purpose. In the event of a liquidation, dissolution or winding up of TopTier,
the holders of common stock are entitled to share ratably in all assets
remaining after payment of liabilities, subject to any prior rights of any
preferred stock then outstanding. The common stock has no preemptive,
conversion or other subscription rights. There are no redemption or sinking
fund provisions applicable to the common stock. All outstanding shares of
common stock are fully paid and non-assessable.

Preferred Stock

   Effective upon completion of this offering, our board will be authorized to
issue 5,000,000 shares of undesignated preferred stock. The board will have the
authority to issue the undesignated preferred stock in one or more series and
to determine the powers, preferences and rights granted to, and the
qualifications, limitations or restrictions imposed upon, any wholly unissued
series of undesignated preferred stock, and to fix the number of shares
constituting any series and the designation of that series, without any further
vote or action by the stockholders. The issuance of preferred stock may have
the effect of delaying, deferring or preventing a change in control of TopTier
without further action by the stockholders and may adversely affect the voting
and other rights of the holders of common stock. At present, we have no plans
to issue any shares of preferred stock.

Registration Rights of Stockholders

   The holders of 23,013,732 shares of common stock or their transferees are
entitled to rights to have these shares, called "registrable securities,"
registered under the Securities Act. These rights are provided under the terms
of an agreement between us and these holders. Subject to limitations in this
agreement, the holders of the registrable securities may require us, on one
occasion at any time after six months of the date of this offering, to use our
best efforts to register registrable securities for public resale, provided
that the proposed aggregate offering price is in excess of $10,000,000. In
addition, the holders of the registrable securities may require, on three
occasions in any 12-month period, to register their shares for public resale on
Form S-3, once we are eligible to use Form S-3, provided that the aggregate
offering price is at least $1,000,000. In addition, if we register any of our
common stock, either for our own account or for the account of other security
holders, the

                                       59
<PAGE>

holders of registrable securities are entitled to include their shares in the
registration. A holder's right to include shares in an underwritten
registration is subject to conditions and limitations, including the right of
the underwriters to limit the number of shares included in that offering. All
fees, costs and expenses of these registrations must be borne by us, other than
selling expenses (including underwriting discounts, selling commissions and
stock transfer taxes, which must be borne by the holders of the securities
being registered).

Anti-Takeover Provisions of Delaware Law and Charter Provisions

   The provisions of Delaware law, and of our certificate of incorporation and
bylaws, described below may have the effect of delaying, deferring or
discouraging another person from acquiring control of our company.

Delaware Law

   We are subject to Section 203 of the Delaware General Corporation Law
regulating corporate takeovers. This section prevents certain Delaware
corporations from engaging, under limited circumstances, in a "business
combination," which includes a merger or sale of more than 10% of the
corporation's assets, with any "interested stockholder," or a stockholder who
owns 15% or more of the corporation's outstanding voting stock, as well as
affiliates and associates of stockholders, for three years following the date
that the stockholder became an interested stockholder, unless:

  . the transaction is approved by the board prior to the date the interested
    stockholder attained that status;

  . upon the closing of the transaction that resulted in the stockholder
    becoming an interested stockholder, the interested stockholder owned at
    least 85% of the voting stock of the corporation outstanding at the time
    the transaction commenced; or

  . on or subsequent to the date the stockholder became an interested
    stockholder, the business combination is approved by the board and
    authorized at an annual or special meeting of stockholders by at least
    two-thirds of the outstanding voting stock that is not owned by the
    interested stockholder.

   A Delaware corporation may opt out of Section 203 by including an express
provision in its original certificate of incorporation or amending its
certificate of incorporation or bylaws to include such an express provision,
which amendment is approved by at least a majority of the outstanding voting
shares. However, we have not opted out of this provision. Section 203 could
prohibit or delay mergers or other takeover or change-in-control attempts and,
accordingly, may discourage attempts to acquire us.

Charter and Bylaw Provisions

   Our certificate of incorporation provides that, following the completion of
this offering, our board of directors will be reorganized into a classified
board, divided into three classes. The directors in each class will serve for a
three-year term, with our stockholders electing one class each year. For more
information on the classification of our board, see "Management--Board
Composition." This system of electing and removing directors may tend to
discourage a third party from making a tender offer or otherwise attempting to
obtain control of us, because it generally makes it more difficult for
stockholders to replace a majority of the directors.

   Our bylaws provide that any action required or permitted to be taken by our
stockholders at an annual or special meeting may be taken only if it is
properly brought before the meeting, including having provided required notice.
Our stockholders may not take any action by written consent. Our bylaws also
provide that special meetings of the stockholders may only be called by our
board, the chairman of our board or our chief executive officer. Our
certificate of incorporation provides that our board of directors may issue
preferred stock with voting or other rights without stockholder action.

   As described below, our bylaws provide that we must indemnify officers and
directors against losses that they may incur in legal proceedings and
investigations resulting from their services to us, including actions in

                                       60
<PAGE>

connection with takeover defense measures. These provisions may have the effect
of preventing changes in our management.

Nasdaq National Market Listing

   We have applied to list our common stock on The Nasdaq Stock Market's
National Market under the trading symbol "TOPT."

Transfer Agent and Registrar

   The transfer agent and registrar for our common stock is ChaseMellon
Shareholder Services, L.L.C.

                                       61
<PAGE>

                        SHARES ELIGIBLE FOR FUTURE SALE

   Prior to this offering, there has been no market for our common stock.
Therefore, future sales of substantial amounts of our common stock could
negatively affect the market price of our common stock. Furthermore, since only
          shares will be available for sale after this offering because of the
contractual and legal restrictions on the resale of our outstanding shares
described below, sales of substantial amounts of our common stock after these
restrictions lapse could have a negative effect on the market price.

   Following this offering, we will have 29,637,989 shares of common stock
outstanding, assuming no exercise of outstanding options after June 30, 2000.
Of these shares, all of the 4,000,000 shares sold in this offering will be
freely tradable without restriction or further registration under the
Securities Act, unless these shares are purchased by our affiliates. The
remaining 25,637,989 shares of common stock held by existing stockholders are
restricted securities. Restricted securities may be sold in the public market
only if they are registered or they qualify for an exemption from registration
under Rules 144 or 701 under the Securities Act, as summarized below.

   As a result of the contractual and legal restrictions described below, the
25,637,989 shares of common stock that are restricted securities will be
available for sale in the public market as follows:

  .             shares on                , 2000, the date of this prospectus;

  .             shares on                , 2001, 180 days after the date of
    this prospectus;

  .             shares on                , 2001, one year after the date of
    this prospectus; and

  .             shares at various times thereafter.

Lock-Up Agreements

   All of our executive officers and directors and substantially all of our
stockholders and option holders have agreed not to (1) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of common
stock or any securities convertible into or exercisable or exchangeable for
common stock or (2) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
common stock, without the prior written consent of Credit Suisse First Boston
Corporation, for a period of 180 days after the date of this prospectus.

Rule 144

   Shares Held for Less Than Two Years. In general, under Rule 144 as currently
in effect, beginning 90 days after the date of this prospectus, a person who
has beneficially owned shares of our common stock for at least one year would
be entitled to sell within any three-month period a number of shares that is
not more than the greater of:

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

  . the average weekly trading volume of the common stock on the Nasdaq
    National Market during the four calendar weeks before a notice of the
    sale on Form 144 is filed.

   In order for stockholders to sell their shares under Rule 144, they must
also comply with manner of sale provisions and notice requirements, and there
must be current public information available about us.


                                       62
<PAGE>

   Shares Held for More Than Two Years. Under Rule 144(k), a person may sell
their shares without complying with the manner of sale, public information,
volume limitation or notice requirements of Rule 144, if they meet the
following two requirements:

  . they have beneficially owned the shares for at least two years; and

  . they have not been an affiliate of ours at any time during the 90 days
    before a sale.

Rule 701

   In general, under Rule 701 of the Securities Act as currently in effect, any
of our employees, consultants or advisors who purchased shares from us under a
stock option plan or other written agreement can resell those shares 90 days
after the effective date of this offering in reliance on Rule 144, but without
complying with some of the restrictions, including the holding period, of Rule
144.

Stock Options

   Following the completion of this offering, we intend to file registration
statements under the Securities Act covering approximately               shares
of common stock issued and outstanding subject to outstanding options or
reserved for issuance under our stock plans. See "Management--Stock Plans" for
a more detailed description of our stock plans. Shares registered under this
registration statement will, subject to vesting provisions and Rule 144 volume
limitations applicable to our affiliates, be available for sale in the open
market immediately after the 180 day lock-up agreements expire. Each year as
the number of shares reserved for issuance under our 2000 Stock Plan increases,
we will file new registration statements to register the additional shares.

                                       63
<PAGE>

                                  UNDERWRITING

   Under the terms and subject to the conditions contained in an underwriting
agreement dated              , 2000, we have agreed to sell to the underwriters
named below, for whom Credit Suisse First Boston Corporation, Dain Rauscher
Incorporated and U.S. Bancorp Piper Jaffray Inc. are acting as representatives,
the following respective numbers of shares of common stock:

<TABLE>
<CAPTION>
                                                                          Number
                                                                            of
   Underwriter                                                            Shares
   -----------                                                            ------
   <S>                                                                    <C>
   Credit Suisse First Boston Corporation................................
   Dain Rauscher Incorporated ...........................................
   U.S. Bancorp Piper Jaffray Inc. ......................................
                                                                           ----
     Total...............................................................
                                                                           ====
</TABLE>

   The underwriting agreement provides that the underwriters are obligated to
purchase all the shares of common stock in the offering if any are purchased,
other than those shares covered by the over-allotment option described below.
The underwriting agreement also provides that if an underwriter defaults the
purchase commitments of non-defaulting underwriters may be increased or the
offering of common stock may be terminated.

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

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

   The following table summarizes the compensation and estimated expenses we
will pay.

<TABLE>
<CAPTION>
                                       Per Share                       Total
                             ----------------------------- -----------------------------
                                Without          With         Without          With
                             Over-allotment Over-allotment Over-allotment Over-allotment
                             -------------- -------------- -------------- --------------
   <S>                       <C>            <C>            <C>            <C>
   Underwriting Discounts
    and Commissions paid by
    us ....................      $              $              $              $
   Expenses payable by us
    .......................      $              $              $              $
</TABLE>

   The underwriters have informed us that they do not expect discretionary
sales to exceed 5% of the shares of common stock being offered.

   We have agreed that we will not offer, sell, contract to sell, pledge or
otherwise dispose of, directly or indirectly, or file with the Securities and
Exchange Commission a registration statement under the Securities Act of 1933
(the "Securities Act") relating to, any shares of our common stock or
securities convertible into or exchangeable or exercisable for any shares of
our common stock, or publicly disclose the intention to make any such offer,
sale, pledge, disposition or filing, without the prior written consent of
Credit Suisse First Boston Corporation for a period of 180 days after the date
of this prospectus. We can, however, issue stock pursuant to the exercise of
currently outstanding options.

                                       64
<PAGE>

   Our officers and directors and substantially all of our stockholders have
agreed that they will not offer, sell, contract to sell, pledge or otherwise
dispose of, directly or indirectly, any shares of our common stock or
securities convertible into or exchangeable or exercisable for any shares of
our common stock, enter into a transaction which would have the same effect, or
enter into any swap, hedge or other arrangement that transfers, in whole or in
part, any of the economic consequences of ownership of our common stock,
whether any such aforementioned transaction is to be settled by delivery of our
common stock or such other securities, in cash or otherwise, or publicly
disclose the intention to make any such offer, sale, pledge or disposition, or
to enter into any such transaction, swap, hedge or other arrangement, without,
in each case, the prior written consent of Credit Suisse First Boston
Corporation for a period of 180 days after the date of this prospectus.

   We have agreed to indemnify the underwriters against liabilities under the
Securities Act, or contribute to payments which the underwriters may be
required to make in that respect.

   We have made application to list the shares of common stock on The Nasdaq
Stock Market's National Market, under the symbol "TOPT."

   Prior to this offering, there has been no public market for our common
stock. The initial public offering price will be determined by negotiation
between us and the underwriters. The principal factors to be considered in
determining the public offering price include:

  . the information in this prospectus and otherwise available to the
    underwriters;

  . the history and the prospects for the industry in which we will compete;

  . the ability of our management;

  . the prospects for our future earnings;

  . the present state of our development and our current financial condition;

  . the general condition of the securities markets at the time of this
    offering; and

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

   In connection with the offering the underwriters may engage in stabilizing
transactions, over-allotment transactions, syndicate covering transactions, and
penalty bids in accordance with Regulation M under the Securities Exchange Act
of 1934.

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

  . Over-allotment involves sales by the underwriters of shares in excess of
    the number of shares the underwriters are obligated to purchase, which
    creates a syndicate short position. The short position may be either a
    covered short position or a naked short position. In a covered short
    position, the number of shares over-alloted by the underwriters is not
    greater than the number of shares that they may purchase in the over-
    allotment option. In a naked short position, the number of shares
    involved is greater than the number of shares in the over-allotment
    option. The underwriters may close out any short position by either
    exercising their over-allotment option and/or purchasing shares in the
    open market.

  . 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. In determining the source of shares to
    close out the short position, the underwriters will consider, among other
    things, the price of shares available for purchase in the open market as
    compared to the price at which they may purchase shares through the over-
    allotment option. If the underwriters sell more shares than could be
    covered by the over-allotment option--a naked short position--that
    position can only be closed out by buying shares in the open market. A
    naked short position is more likely to be created if the underwriters are
    concerned that there may be downward pressure on the price of the shares
    in the open market after pricing that could adversely affect investors
    who purchase in the offering.

                                       65
<PAGE>

  . Penalty bids permit the representatives to reclaim a selling concession
    from a syndicate member when the common stock originally sold by the
    syndicate member is purchased in a stabilizing or syndicate covering
    transaction to cover syndicate short positions.

These stabilizing transactions, syndicate covering transactions and penalty
bids may have the effect of raising or maintaining the market price of the
common stock or preventing or retarding a decline in the market price of the
common stock. As a result the price of the common stock may be higher than the
price that might otherwise exist in the open market. These transactions may be
effected on The Nasdaq Stock Market's National Market or otherwise and, if
commenced, may be discontinued at any time.

   A prospectus in electronic format may be made available on the web sites
maintained by one or more of the underwriters participating in this offering.
The representatives may agree to allocate a number of shares to underwriters
for sale to their online brokerage account holders. Internet distributions will
be allocated by the underwriters that will make internet distributions on the
same basis as other allocations.

                                       66
<PAGE>

                          NOTICE TO CANADIAN RESIDENTS

Resale Restrictions

   The distribution of the common stock in Canada is being made only on a
private placement basis exempt from the requirement that we prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of common stock are effected. Accordingly, any resale of the common
stock in Canada must be made in accordance with applicable securities laws
which will vary depending on the relevant jurisdiction, and which may require
resales to be made in accordance with available statutory exemptions or
pursuant to a discretionary exemption granted by the applicable Canadian
securities regulatory authority. Purchasers are advised to seek legal advice
prior to any resale of the common stock.

Representations of Purchasers

   Each purchaser of common stock in Canada who receives a purchase
confirmation will be deemed to represent to us and the dealer from whom such
purchase confirmation is received that (i) such purchaser is entitled under
applicable provincial securities laws to purchase such common stock without the
benefit of a prospectus qualified under such securities laws, (ii) where
required by law, that such purchaser is purchasing as principal and not as
agent, and (iii) such purchaser has reviewed the text above under "Resale
Restrictions."

Rights of Action (Ontario Purchasers)

   The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Ontario securities law. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or rescission or rights of action under the civil liability provisions
of the U.S. federal securities laws.

Enforcement of Legal Rights

   All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be
possible for Canadian purchasers to effect service of process within Canada
upon the issuer or such persons. All or a substantial portion of the assets of
the issuer and such persons may be located outside of Canada and, as a result,
it may not be possible to satisfy a judgment against the issuer or such persons
in Canada or to enforce a judgment obtained in Canadian courts against such
issuer or persons outside of Canada.

Notice to British Columbia Residents

   A purchaser of common stock to whom the Securities Act (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
common stock acquired by such purchaser pursuant to this offering. Such report
must be in the form attached to British Columbia Securities Commission Blanket
Order BOR #95/17, a copy of which may be obtained from us. Only one such report
must be filed in respect of common stock acquired on the same date and under
the same prospectus exemption.

Taxation and Eligibility for Investment

   Canadian purchasers of common stock should consult their own legal and tax
advisors with respect to the tax consequences of an investment in the common
stock in their particular circumstances and with respect to the eligibility of
the common stock for investment by the purchaser under relevant Canadian
legislation.

                                       67
<PAGE>

                                 LEGAL MATTERS

   The validity of the issuance of the shares of common stock offered in this
offering will be passed upon by Wilson Sonsini Goodrich & Rosati, Professional
Corporation, Palo Alto, California. Legal matters in connection with this
offering will be passed upon for the underwriters by Morrison & Foerster, LLP,
Palo Alto, California.

                                    EXPERTS

    The audited consolidated financial statements and schedule included in this
prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports, and are included herein in reliance upon the authority of said firm as
experts in giving said reports.


                      WHERE YOU CAN FIND MORE INFORMATION

   We have filed with the SEC a registration statement on Form S-1 under the
Securities Act of 1933 with respect to the shares of common stock to be sold in
this offering. Although this prospectus is part of the registration statement,
it does not contain all of the information set forth in the registration
statement and the related exhibits and schedules thereto. For further
information with respect to us and the common stock to be sold in this
offering, we refer you to the registration statement and the exhibits and
schedules filed with the registration statement. Statements contained in this
prospectus as to the contents of any contract or any other document referred to
are not necessarily complete, and, in each instance, we refer you to the copy
of such contract or other document filed as an exhibit to the registration
statement. A copy of the registration statement, and the related exhibits and
schedules, may be inspected without charge at the public reference facilities
maintained by the SEC in the following locations:

  . Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549;

  . Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
    60661; and

  . Seven World Trade Center, 13th Floor, New York, New York 10048.

   Copies of all or any part of the registration statement may be obtained from
such offices upon the payment of the fees prescribed by the SEC. The public may
obtain information on the operations of the public reference facilities in
Washington, D.C. by calling the SEC at 1-800-SEC-0330. The SEC maintains a web
site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC. The
web site is located at www.sec.gov.

                                       68
<PAGE>

                            TOP TIER SOFTWARE, INC.

                         INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
Report of Independent Public Accountants................................... F-2

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

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

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

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

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

                                      F-1
<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of Top Tier Software, Inc.:

We have audited the accompanying consolidated balance sheets of Top Tier
Software, Inc. (a Delaware corporation) and subsidiaries as of December 31,
1999 and 1998 and the related consolidated statements of operations,
stockholders' equity and cash flows for the year ended December 31, 1997, the
nine months ended September 30, 1998, the three months ended December 31, 1998
and the year ended December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Top Tier Software, Inc. and
subsidiaries as of December 31, 1998 and 1999, and the results of their
operations and their cash flows for the year ended December 31, 1997, the nine
months ended September 30, 1998, the three months ended December 31, 1998 and
the year ended December 31, 1999 in conformity with accounting principles
generally accepted in the United States.

                                          /s/ Arthur Andersen llp

March 30, 2000
San Jose, California

                                      F-2
<PAGE>

                            TOP TIER SOFTWARE, INC.

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                    June 30, 2000
                               December 31,                           Pro forma
                         --------------------------    June 30,     Stockholders'
                             1998          1999          2000      Equity (Note 8)
                         ------------  ------------  ------------  ---------------
                                                             (Unaudited)
<S>                      <C>           <C>           <C>           <C>
        ASSETS
Current assets:
  Cash and cash
   equivalents.........  $  3,913,500  $  2,539,862  $ 17,523,349
  Restricted cash......       225,000     1,116,885     1,109,036
  Marketable
   securities..........            --     2,199,377            --
  Accounts receivable,
   net of allowance for
   doubtful accounts of
   $24,558, $114,874
   and $404,917,
   respectively........       271,230     2,494,037     4,057,339
  Deferred offering
   costs...............            --            --       546,739
  Deferred acquisition
   costs...............     2,169,155            --            --
  Prepaid expenses.....       109,566       189,446       272,614
  Other current
   assets..............       309,284       258,324       356,046
  Due from Vanenburg...    41,112,609       124,418       225,119
                         ------------  ------------  ------------
   Total current
    assets.............    48,110,344     8,922,349    24,090,242
Property and equipment,
 net...................     1,297,756     1,446,661     2,233,979
Goodwill, net..........    58,980,733    37,532,733    26,808,733
Intangible assets,
 net...................     4,669,100     2,969,100     2,119,100
Other assets...........        72,660        72,660       246,877
                         ------------  ------------  ------------
   Total assets........  $113,130,593  $ 50,943,503  $ 55,498,931
                         ============  ============  ============
    LIABILITIES AND
  STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable.....  $     91,398  $    400,025     2,993,413
  Accrued expenses.....     1,321,903     2,136,105     4,473,161
  Deferred revenue.....       994,450       158,712       500,547
  Line of credit.......            --            --       716,071
  Due to Vanenburg.....            --       304,750     2,480,994
  Notes due to selling
   stockholders........    40,988,191            --            --
                         ------------  ------------  ------------
   Total current
    liabilities........    43,395,942     2,999,592    11,164,186
Accrued severance
 payable...............       117,782       166,618       239,729
                         ------------  ------------  ------------
   Total liabilities...    43,513,724     3,166,210    11,403,915
                         ------------  ------------  ------------
Commitments (Note 6)
Stockholders' equity:
  Convertible preferred
   stock, $0.001 par
   value, aggregate
   liquidation
   preference of
   $94,739,445 and
   $110,739,424 as of
   December 31, 1999
   and June 30, 2000,
   respectively:
   Series A:
    763,740 shares
     authorized;
     254,582
     outstanding at
     1998 and 763,740
     shares outstanding
     at 1999 and June
     30, 2000; no
     shares outstanding
     pro forma.........           255           764           764             --
   Series B:
    9,105,430 and
     6,709,264 shares
     authorized as of
     December 31, 1999
     and June 30, 2000,
     respectively;
     6,709,264 shares
     outstanding; no
     shares outstanding
     pro forma.........         6,709         6,709         6,709             --
   Series C:
    10,500,000 shares
     authorized and
     outstanding; no
     shares outstanding
     pro forma.........        10,500        10,500        10,500             --
   Series D:
    3,100,000 and
     2,008,032 shares
     authorized as of
     December 31, 1999
     and June 30, 2000,
     respectively;
     2,008,032 shares
     outstanding at
     1999 and June 30,
     2000; no shares
     outstanding pro
     forma.............            --         2,008         2,008             --
   Series E
    (unaudited):
    2,753,996 shares
     authorized;
     1,915,821
     outstanding at
     June 30, 2000;
     no shares
     outstanding pro
     forma.............            --            --         1,916
  Common stock, $0.001
   par value:
   33,125,000 and
    40,125,000 shares
    authorized as of
    December 31, 1999
    and June 30, 2000,
    respectively;
    690,656 and
    3,501,655 shares
    outstanding at
    December 31, 1999
    and June 30, 2000,
    respectively;
    26,391,290 shares
    outstanding
    pro forma..........            --           691         3,502   $     26,391
Additional paid-in
 capital...............    82,062,273   113,876,852   143,990,574    143,989,582
Deferred stock
 compensation..........            --   (12,520,946)  (15,640,502)   (15,640,502)
Notes receivable.......            --      (466,251)   (6,577,136)    (6,577,136)
Accumulated deficit....   (12,462,868)  (53,133,034)  (77,703,319)   (77,703,319)
                         ------------  ------------  ------------   ------------
   Total stockholders'
    equity.............    69,616,869    47,777,293    44,095,016   $ 44,095,016
                         ------------  ------------  ------------   ------------
     Total liabilities
      and stockholders'
      equity...........  $113,130,593  $ 50,943,503  $ 55,498,931
                         ============  ============  ============
</TABLE>
  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                      F-3
<PAGE>

                            TOP TIER SOFTWARE, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                         Nine months  Three months
                           Year ended       ended        ended       Year ended   Six months ended June 30,
                          December 31,  September 30, December 31,  December 31,  --------------------------
                              1997          1998          1998          1999          1999          2000
                          ------------  ------------- ------------  ------------  ------------  ------------
<S>                       <C>           <C>           <C>           <C>           <C>           <C>
Revenues:
  License revenues......  $    29,925    $ 2,483,247  $    244,464  $  7,260,115  $  3,327,145  $  5,910,928
  Service revenues......       64,584        151,743        72,765     2,384,989       263,159     3,216,394
                          -----------    -----------  ------------  ------------  ------------  ------------
    Total revenues......       94,509      2,634,990       317,229     9,645,104     3,590,304     9,127,322
                          -----------    -----------  ------------  ------------  ------------  ------------
Cost of revenues:
  Cost of license
   revenues.............           --            825           174        30,169        17,690        33,676
  Cost of service
   revenues.............       80,084        191,361        90,785     1,668,327       326,318       935,645
                          -----------    -----------  ------------  ------------  ------------  ------------
    Total cost of
     revenues...........       80,084        192,186        90,959     1,698,496       344,008       969,321
                          -----------    -----------  ------------  ------------  ------------  ------------
  Gross profit..........       14,425      2,442,804       226,270     7,946,608     3,246,296     8,158,001
                          -----------    -----------  ------------  ------------  ------------  ------------
Operating expenses:
  Sales and marketing...      665,214      4,240,251     1,471,909     9,233,823     4,760,066     9,685,838
  Research and
   development, net.....    1,053,302      2,644,363     1,151,988     6,481,432     3,029,256     3,291,853
  General and
   administrative.......    1,822,255      1,913,122       783,102     2,653,841       929,517     2,223,496
  Purchased in-process
   research and
   development..........           --             --     3,556,700            --            --            --
  Amortization of
   deferred stock
   compensation(*)......           --             --            --     7,213,392       512,096     6,236,748
  Amortization of
   goodwill and
   intangibles..........           --             --     5,787,000    23,148,000    11,574,000    11,574,000
                          -----------    -----------  ------------  ------------  ------------  ------------
    Total operating
     expenses...........    3,540,771      8,797,736    12,750,699    48,730,488    20,804,935    33,011,935
                          -----------    -----------  ------------  ------------  ------------  ------------
    Operating loss......   (3,526,346)    (6,354,932)  (12,524,429)  (40,783,880)  (17,558,639)  (24,853,934)
Other income (expense):
  Interest income.......      189,510        382,381        60,664       119,587        39,368       318,274
  Other, net............      (98,173)        44,540           897        (5,873)       (5,872)      (34,625)
                          -----------    -----------  ------------  ------------  ------------  ------------
    Total other income,
     net................       91,337        426,921        61,561       113,714        33,496       283,649
    Net loss............  $(3,435,009)   $(5,928,011) $(12,462,868) $(40,670,166) $(17,525,143) $(24,570,285)
                          ===========    ===========  ============  ============  ============  ============
Basic net loss per
 share..................  $     (0.48)   $     (0.80) $         --  $  (1,779.25) $         --  $     (16.01)
                          ===========    ===========  ============  ============  ============  ============
Shares used in computing
 basic net loss per
 share..................    7,189,806      7,375,124            --        22,858            --     1,534,577
                          ===========    ===========  ============  ============  ============  ============
Pro forma net loss
 attributable to common
 stockholders (see
 Note 2)................                                            $(40,670,166) $(17,525,143) $(40,564,286)
Pro forma basic net loss
 per share (unaudited)..                                            $      (2.24) $      (1.00) $      (1.88)
                                                                    ============  ============  ============
Shares used in computing
 pro forma unaudited
 basic net loss per
 share..................                                              18,157,924    17,580,589    21,515,620
------------------------                                            ============  ============  ============
(*) Amortization of deferred stock based
    compensation excluded from the following
    expenses:
  Cost of service revenues......................................         432,745        30,632       261,137
  Sales and marketing...........................................         926,705        65,597       708,885
  Research and development, net.................................       3,353,028       238,840     1,948,339
  General and administrative....................................       2,500,914       177,027     3,318,387
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                      F-4
<PAGE>

                            TOP TIER SOFTWARE, INC.

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                    Convertible
                  Preferred Stock        Common Stock                      Deferred                                   Total
                 -------------------  -------------------    Paid-in        Stock         Notes     Accumulated   Stockholders'
                   Shares    Amount     Shares    Amount     Capital     Compensation  Receivable     Deficit        Equity
                 ----------  -------  ----------  -------  ------------  ------------  -----------  ------------  -------------
<S>              <C>         <C>      <C>         <C>      <C>           <C>           <C>          <C>           <C>
Balance,
 December 31,
 1996...........  1,491,377  $ 1,491   7,064,874  $ 7,065  $    801,202  $         --  $        --  $   (598,686) $    211,072
Issuance of
 common stock
 upon exercise
 of options.....         --       --     300,000      300        15,700            --           --            --        16,000
Issuance of
 Series B
 convertible
 preferred stock
 at $2.09 per
 share, net of
 issuance costs
 of $39,319.....  6,709,264    6,709          --       --    13,953,971            --           --            --    13,960,680
Net loss........         --       --          --       --            --            --           --    (3,435,009)   (3,435,009)
                 ----------  -------  ----------  -------  ------------  ------------  -----------  ------------  ------------
Balance,
 December 31,
 1997...........  8,200,641    8,200   7,364,874    7,365    14,770,873            --           --    (4,033,695)   10,752,743
Issuance of
 common stock
 upon exercise
 of options.....         --       --      15,375       15           805            --           --            --           820
Net loss........         --       --          --       --            --            --           --    (5,928,011)   (5,928,011)
                 ----------  -------  ----------  -------  ------------  ------------  -----------  ------------  ------------
Balance,
 September 30,
 1998...........  8,200,641    8,200   7,380,249    7,380    14,771,678            --           --    (9,961,706)    4,825,552
Issuance of
 Series C
 convertible
 preferred stock
 upon Vanenburg
 acquisition.... 10,500,000   10,500          --       --    66,736,486            --           --     9,961,706    76,708,692
Retirement of
 Series A
 convertible
 preferred stock
 and common
 stock upon
 Vanenburg
 acquisition.... (1,491,377)  (1,491) (7,380,249)  (7,380)     (817,707)           --           --            --      (826,578)
Issuance of
 Series A
 convertible
 preferred stock
 at $4.14 per
 share..........    254,580      255          --       --     1,054,833            --           --            --     1,055,088
Compensation
 expense on
 Series A
 convertible
 preferred
 stock..........         --       --          --       --       316,983            --           --            --       316,983
Net loss........         --       --          --       --            --            --           --   (12,462,868)  (12,462,868)
                 ----------  -------  ----------  -------  ------------  ------------  -----------  ------------  ------------
Balance,
 December 31,
 1998........... 17,463,844   17,464          --       --    82,062,273            --           --   (12,462,868)   69,616,869
Issuance of
 Series A
 convertible
 preferred stock
 at $4.14 per
 share..........    509,160      509          --       --     2,108,902            --           --            --     2,109,411
Compensation
 expense on
 Series A
 convertible
 preferred
 stock..........         --       --          --       --       170,730            --           --            --       170,730
Issuance of
 Series D
 convertible
 preferred stock
 at $4.98 per
 share, net of
 offering costs
 of $670,116....  2,008,032    2,008          --       --     9,327,876            --           --            --     9,329,884
Issuance of
 common stock
 upon exercise
 of options.....         --       --     690,656      691       472,733            --     (466,251)           --         7,173
Deferred stock
 compensation...         --       --          --       --    19,734,338   (19,734,338)          --            --            --
Amortization of
 deferred stock
 compensation...         --       --          --       --            --     7,213,392           --            --     7,213,392
Net loss........         --       --          --       --            --            --           --   (40,670,166)  (40,670,166)
                 ----------  -------  ----------  -------  ------------  ------------  -----------  ------------  ------------
Balance,
 December 31,
 1999........... 19,981,036   19,981     690,656      691   113,876,852   (12,520,946)    (466,251)  (53,133,034)   47,777,293
Issuance of
 common stock
 upon exercise
 of stock
 options........         --       --   2,810,999    2,811     5,944,355            --   (5,878,595)           --        68,571
Interest on
 shareholder
 notes..........         --       --          --       --            --            --     (232,290)           --      (232,290)
Issuance of
 Series E
 preferred stock
 at $8.35 per
 share, net of
 offering costs
 of $1,185,000..  1,915,821    1,916          --       --    14,813,063            --           --            --    14,814,979
Deferred stock
 compensation...         --       --          --       --     9,356,304    (9,356,304)          --            --            --
Amortization of
 deferred stock
 compensation...         --       --          --       --            --     6,236,748           --            --     6,236,748
Net loss........         --       --          --       --            --            --           --   (24,570,285)  (24,570,285)
                 ----------  -------  ----------  -------  ------------  ------------  -----------  ------------  ------------
Balance, June
 30, 2000....... 21,896,857  $21,897   3,501,655  $ 3,502  $143,990,574  $(15,640,502) $(6,577,136) $(77,703,319) $ 44,095,016
                 ==========  =======  ==========  =======  ============  ============  ===========  ============  ============
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                      F-5
<PAGE>

                            TOP TIER SOFTWARE, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                         Nine months  Three months
                           Year ended       ended        ended       Year ended   Six months ended June 30,
                          December 31,  September 30, December 31,  December 31,  --------------------------
                              1997          1998          1998          1999          1999          2000
                          ------------  ------------- ------------  ------------  ------------  ------------
                                                                                         (unaudited)
<S>                       <C>           <C>           <C>           <C>           <C>           <C>
Cash flows from
 operating activities:
 Net loss...............  $ (3,435,009)  $(5,928,011) $(12,462,868) $(40,670,166) $(17,525,143) $(24,570,285)
 Adjustments to
  reconcile net loss to
  net cash used in
  operating activities:
 Depreciation and
  amortization..........        85,967       181,440     5,905,030    30,953,443    12,089,108    18,258,160
 Purchased in-process
  research and
  development...........            --            --     3,556,700            --            --            --
 Gain on sale of
  property and
  equipment.............            --            --            --        (2,687)           --        (4,985)
 Interest income on
  notes receivable from
  stockholders..........            --            --            --            --            --      (232,290)
 Compensation expense...            --            --     1,040,035     2,339,885     1,616,833            --
 Changes in operating
  assets and
  liabilities:
 Accounts receivable,
  net...................       241,505      (767,019)      549,714    (2,222,807)   (1,100,004)   (1,563,302)
 Due from Vanenburg.....            --       (18,090)     (106,328)           --            --      (100,701)
 Prepaid expenses and
  other current assets..      (176,034)     (494,104)      349,857       (28,919)     (181,622)     (720,983)
 Other assets...........       (34,203)       (1,765)      (34,368)           --            --            --
 Accounts payable.......       335,420       161,188      (609,740)      308,627       286,731     2,593,388
 Accrued expenses.......       175,878     1,281,230      (564,343)      814,202      (426,738)    2,337,055
 Deferred revenue.......     1,260,090      (255,380)      (80,260)     (835,738)    1,127,308       341,835
 Due to Vanenburg and
  other liabilities.....            --       151,080       117,782       353,586            --       249,356
                          ------------   -----------  ------------  ------------  ------------  ------------
  Net cash used in
   operating
   activities...........    (1,546,386)   (5,689,431)   (2,338,789)   (8,990,574)   (4,113,527)   (3,412,752)
                          ------------   -----------  ------------  ------------  ------------  ------------
Cash flows from
 investing activities:
 Purchases of property
  and equipment.........      (470,779)     (798,118)     (305,207)     (750,507)      (76,490)   (1,236,391)
 Proceeds from sale of
  property and
  equipment.............            --            --            --        12,238            --            --
 Proceeds from sale of
  marketable
  securities............    13,102,459    24,053,769     2,051,963     1,384,760            --     2,199,377
 Purchase of marketable
  securities............   (22,201,790)  (16,574,279)     (432,122)   (3,584,138)       (6,637)           --
 Receipts from
  Vanenburg.............            --            --            --    42,126,123    21,695,860     2,000,000
 Payments to selling
  stockholders..........            --            --            --   (42,126,123)  (20,195,860)           --
 Purchase of other
  assets................            --            --            --            --       (21,706)     (174,217)
 Proceeds from line of
  credit ...............            --            --            --            --            --       716,071
                          ------------   -----------  ------------  ------------  ------------  ------------
  Net cash (used in)
   provided by investing
   activities...........    (9,570,110)    6,681,372     1,314,634    (2,937,647)    1,395,167     3,504,840
                          ------------   -----------  ------------  ------------  ------------  ------------
Cash flows from
 financing activities:
 Proceeds from issuance
  of:
 Common stock...........        16,000           820            --         7,173            --        68,571
 Preferred stock, net of
  offering costs........    13,960,680            --     1,055,088    11,439,295     1,054,833    14,814,979
(Increase) decrease in
 restricted cash........            --      (225,000)           --      (891,885)           --         7,849
                          ------------   -----------  ------------  ------------  ------------  ------------
  Net cash provided by
   (used in) financing
   activities...........    13,976,680      (224,180)    1,055,088    10,554,583     1,054,833    14,891,399
                          ------------   -----------  ------------  ------------  ------------  ------------
Net increase (decrease)
 in cash and cash
 equivalents............     2,860,184       767,761        30,933    (1,373,638)   (1,663,527)   14,983,487
Cash and cash
 equivalents at
 beginning of period....       254,622     3,114,806     3,882,567     3,913,500     3,913,500     2,539,862
                          ------------   -----------  ------------  ------------  ------------  ------------
Cash and cash
 equivalents at end of
 period.................  $  3,114,806   $ 3,882,567  $  3,913,500  $  2,539,862  $  2,249,973  $ 17,523,349
                          ============   ===========  ============  ============  ============  ============
Supplemental disclosure
 of noncash investing
 and financing
 activities:
 Resulting from the
  Vanenburg acquisition:
 Goodwill and intangible
  assets................  $         --   $        --  $ 69,436,833  $         --  $         --  $         --
 Deferred acquisition
  costs, net............  $         --   $        --  $  2,169,155  $         --  $         --  $         --
 Due from Vanenburg.....  $         --   $        --  $ 40,988,191  $         --  $         --  $         --
 Notes due to selling
  stockholders..........  $         --   $        --  $(40,988,191) $         --  $         --  $         --
Exercise of options for
 stockholder notes......  $         --   $        --  $         --  $         --  $         --  $  5,878,595
Sale of equipment for
 employee receivable....  $         --   $        --  $         --  $         --  $         --  $      6,646
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                      F-6
<PAGE>

                            TOP TIER SOFTWARE, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND BASIS OF PRESENTATION

   Top Tier Software, Inc. (the "Company") began operations in 1992 as an
Israeli-based research and development company, which became a subsidiary of
the Company when it incorporated in Delaware on August 22, 1996. The Company is
a provider of eBusiness portal technologies and products that integrate
information residing in a business' internal and external enterprise
applications, databases, text documents, Web sites and other data sources. The
Company's eBusiness Integration Portal software products are designed to enable
a business' extended enterprise of employees, customers, suppliers and partners
to directly access, navigate and manipulate this integrated information using
an intuitive and effective portal interface. The Company's software products
are developed around its patented HyperRelational technology, a protocol for
accessing and interacting with structured and unstructured data. Through a
combination of hypertext and relational models, the Company's HyperRelational
technology directs the end user to related meta-data in multiple data sources.
As a result, end users of the software are able to directly access, use and
manipulate information that is relevant to their query and are not merely
directed to one, predetermined data location.

   On October 6, 1998, the Vanenburg Group ("Vanenburg") completed the
acquisition of the Company. As a result of acquisition, a change in control
occurred, and a new reporting entity exists. For purposes of presentation, a
dark bar has been inserted in the accompanying financial statements to clearly
separate the results of operations and cash flows of the Company before and
after the change in control. The financial statements also reflect "push-down"
accounting in accordance with SEC Staff Accounting Bulletin No. 54, "SAB 54"
and accordingly, the carrying amounts of identifiable assets and liabilities
were adjusted at September 30, 1998 to reflect their fair values at the date of
acquisition of the Company by Vanenburg--(see also Note 3). Vanenburg is
committed to provide financial support to the Company through June 2001, if
necessary.

   The Company has incurred net operating losses since inception and, as of
December 31, 1999 and June 30, 2000, had an accumulated deficit of $53.3
million and $77.7 million (unaudited), respectively. The Company is subject to
various risks associated with companies in a comparable stage of development,
including, but not limited to, dependence on key individuals and customers,
competition from larger, more established entities, the risk that rapid
technological advances could render its products obsolete and unmarketable and
the need to obtain adequate financing to support its growth.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   Interim Financial Statements (Unaudited)

   The interim financial statements for the six months ended June 30, 1999 and
2000, are unaudited and have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of the
Company's management, the unaudited interim financial statements contain all
adjustments, consisting of normal recurring adjustments, considered necessary
for a fair presentation. The results of operations for the interim periods are
not necessary indicative of the results for the entire year.

 Principles of Consolidation and Functional Currency

   The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries in Israel and the United Kingdom after
elimination of intercompany transactions and balances. The functional currency
of the Company's foreign subsidiaries is the U.S. dollar; accordingly, all
gains and losses arising from currency transactions in currencies other than
the U.S. dollar are included in other income in the accompanying consolidated
statements of operations.

                                      F-7
<PAGE>

                            TOP TIER SOFTWARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


 Use of Estimates in Preparation of Financial Statements

   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 expenses during the reporting period.
Actual results could differ from those estimates.

 Cash Equivalents and Marketable Securities

   The Company considers all highly liquid investments with an original
maturity of three months or less from the date of purchase to be cash
equivalents. As of December 31, 1998 and 1999, the Company's cash was deposited
in checking and money market accounts, U.S. Government Treasury Bills, and
short-term certificates of deposit. The Company classifies its investments in
debt and equity securities as available-for-sale in accordance with Statement
of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." All marketable securities as of
December 31, 1999 were investments in U.S. Government treasury bills and were
classified as available-for-sale by the Company. The contractual maturities of
these securities come due within one year from December 31, 1999. Securities
classified as available-for-sale are reported at fair market value and the
related unrealized holding gains and losses have not been material to date.
Realized gains and losses are computed using the specific identification
method. No realized gains or losses occurred in the year ended December 31,
1999.

 Software Development Costs

   Software development costs incurred prior to the establishment of
technological feasibility are included in research and development expenses.
The Company defines establishment of technological feasibility as the
completion of a working model. Software development costs incurred subsequent
to the establishment of technological feasibility through the period of general
market availability of the products are capitalized, if material, after
consideration of various factors, including net realizable value. To date,
software development costs that are eligible for capitalization have not been
material and have been expensed.

 Property and Equipment

   Property and equipment are stated at cost. Depreciation is provided using
the straight-line method over the estimated useful lives of the assets (or over
the lease term if it is shorter for leasehold improvements), which range
primarily from three to five years.

   Property and equipment consisted of the following:

<TABLE>
<CAPTION>
                                              December 31,
                                          ----------------------   June 30,
                                             1998        1999        2000
                                          ----------  ----------  -----------
                                                                  (unaudited)
     <S>                                  <C>         <C>         <C>
     Computer software and equipment..... $1,042,666  $1,661,516  $ 2,667,430
     Furniture, fixtures, equipment and
      leasehold improvements.............    337,317     451,661      694,271
     Vehicles............................     35,803      37,993       19,217
                                          ----------  ----------  -----------
                                           1,415,786   2,151,170    3,380,918
     Less: Accumulated depreciation and
      amortization.......................   (118,030)   (704,509)  (1,146,939)
                                          ----------  ----------  -----------
                                          $1,297,756  $1,446,661  $ 2,233,979
                                          ==========  ==========  ===========
</TABLE>

                                      F-8
<PAGE>

                            TOP TIER SOFTWARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


 Goodwill and Intangible Assets

   Goodwill and certain intangible assets were recorded through the application
of "push-down" accounting in accordance with SAB 54 in connection with the
Vanenburg transaction described in Note 3. Goodwill and identifiable intangible
assets are amortized on a straight-line basis over three years, the estimated
period of benefit.

   The Company periodically evaluates the carrying value of its long-lived
assets. Impairment charges are recorded when indicators of impairment are
present and the undiscounted future cash flows estimated to be generated by the
underlying assets are less than the assets' carrying amounts. If such assets
are determined to be impaired, the impairment to be recognized is measured as
the amount by which the carrying amount of the assets exceeds the estimated
fair value of the assets. To date, no such impairment charges have been
required.

 Accrued Expenses

   Accrued expenses consisted of the following:

<TABLE>
<CAPTION>
                                                   December 31,
                                               ---------------------  June 30,
                                                  1998       1999       2000
                                               ---------- ---------- -----------
                                                                     (unaudited)
     <S>                                       <C>        <C>        <C>
     Accrued payroll and benefits............. $  446,626 $  711,154 $1,586,110
     Accrued offering costs...................         --    476,526  2,030,425
     Accrued consulting fees..................         --    346,873    346,873
     Accrued other............................    875,277    601,552    509,753
                                               ---------- ---------- ----------
                                               $1,321,903 $2,136,105 $4,473,161
                                               ========== ========== ==========
</TABLE>

 Revenue Recognition

   The Company currently generates license and service revenues from
transactions with three classes of customers: corporations, resellers and
independent software vendors.

   Corporations: Revenues for product licenses granted to corporations are
recognized under the residual method in accordance with the American Institute
of Certified Public Accountants Statement of Position 97-2 "Software Revenue
Recognition" ("SOP 97-2") as amended by Statement of Position 98-9. Under SOP
97-2 license revenues are recognized when a license agreement has been executed
or a definitive purchase order has been received and the product has been
delivered, no significant obligations with regard to implementation remain, the
fee is fixed and determinable and collectibility is probable. Fees from
licenses are generally recognized upon shipment provided that the above
criteria have been met, payment of the license fees is not dependent upon the
performance of the implementation services, if provided, and such
implementation services are not essential to the functionality of the software.
Maintenance revenues from ongoing customer support and product enhancements are
recognized ratably over the term of the maintenance period. Training revenues
are recognized as services are performed.

   Resellers: The Company enters into reseller arrangements that typically
provide for sublicense fees payable to the Company based on a percent of the
resellers net revenues. These license revenues are recognized when the
distributor has met all provisions of SOP 97-2 and when such revenues are
reported by the distributor or reseller. In the case of guaranteed minimum
license fees, revenues are recognized in the period such fees are guaranteed,
provided that all other provisions of SOP 97-2 have been met. The Company may
enter into reseller arrangements that include a financial commitment for joint
marketing efforts based on reseller sales volume. Any fees due the reseller
under these provisions are offset against the related revenues.

                                      F-9
<PAGE>

                            TOP TIER SOFTWARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   Independent Software Vendors: Revenues for technology licenses granted to
independent software vendors ("ISV") are recognized in accordance with SOP 97-
2. Payments for license fees under these arrangements typically are paid over a
multi-year period. As specified by SOP 97-2, the Company recognizes such
license fees as they become due, provided the technology has been delivered, no
significant obligations with regard to implementation remain, the fees are
fixed and determinable, collectibility is probable and acceptance has been
received, if applicable. The Company may also provide engineering services to
the independent software vendors. In instances where payment of the license
fees is dependent upon the performance of the engineering services rendered and
the engineering services are essential to the functionality of the software,
both the license and engineering services are recognized as a multi-element
arrangement under the percentage of completion method of contract accounting.
Under current ISV arrangements, engineering services are not essential to the
functionality of the software, nor are the license fee payments coincidental
with the provision of such services. Engineering services are billed and
recognized on a time and material basis. Maintenance revenues from ongoing
customer support and product are recognized over the term of the maintenance
period. Such maintenance is recognized based on vendor specific objective
evidence.

   If an element of a license agreement with any of our customers has not been
delivered, revenue for the undelivered element is deferred based on vendor-
specific objective evidence of fair value. If vendor-specific objective
evidence of fair value does not exist, all revenue is deferred until sufficient
objective evidence exists or all elements have been delivered.

 Fair Value of Financial Instrument

   Unless otherwise noted, the carrying amount of financial instruments
approximates fair value.

 Concentration of Credit Risk and Significant Customers

   Financial instruments which potentially subject the Company to a
concentration of credit risk principally consist of accounts receivable. The
Company generally does not require collateral on accounts receivable as the
majority of the Company's customers are large, well established companies.

   Amounts due from significant customers as a percentage of accounts
receivable were as follows:

<TABLE>
<CAPTION>
                                                     December 31,
                                                     --------------   June 30,
                                                      1998    1999      2000
                                                     ------  ------  -----------
                                                                     (unaudited)
     <S>                                             <C>     <C>     <C>
     Customer A.....................................    9.7%   18.7%     8.2%
     Customer B.....................................     --    52.0%    17.1%
     Customer C.....................................    9.6%     --      4.5%
     Customer D.....................................   40.4%    2.2%      --
     Customer H.....................................     --      --     39.0%
</TABLE>

                                      F-10
<PAGE>

                            TOP TIER SOFTWARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   Revenues from significant customers, representing approximately 10% or more
of total revenue for the respective periods, are summarized as follows:

<TABLE>
<CAPTION>
                                                                                   Six months
                                            Nine months  Three months                 ended
                               Year ended      ended        ended      Year ended   June 30,
                              December 31, September 30, December 31, December 31, ------------
                                  1997         1998          1998         1999     1999   2000
                              ------------ ------------- ------------ ------------ -----  -----
                                                                                   (unaudited)
     <S>                      <C>          <C>           <C>          <C>          <C>    <C>
     Customer A..............        *            *             *         71.0%     84.0%  18.9%
     Customer B..............        *            *             *         15.9%        *   33.0%
     Customer C..............        *         70.9%         63.8%           *         *      *
     Customer D..............        *            *          28.8%           *         *      *
     Customer E..............     41.2%           *             *            *         *      *
     Customer F..............     42.9%           *             *            *         *      *
     Customer G..............     10.6%           *             *            *         *      *
     Customer H..............        *            *             *            *         *   23.0%
</TABLE>
--------
(* = less than 10%)

 Comprehensive Income

   Effective January 1, 1998, the Company adopted SFAS No. 130 "Reporting
Comprehensive Income" which establishes standards for reporting and displaying
comprehensive income in a full set of financial statements. Comprehensive
income includes unrealized gains and losses on equity securities that have been
previously excluded from net income and reflected, instead, in equity. For all
periods presented, the Company has no material components of comprehensive
income (loss).

 Stock-Based Compensation

   The Company accounts for its stock-based compensation under Accounting
Principles Board Opinion ("APB") No. 25. Companies that elect to employ APB No.
25 are required to disclose the pro forma net income (loss) that would have
resulted from using the fair value method described in SFAS No. 123,
"Accounting for Stock-Based Compensation," to value stock-based compensation.
Note 8 to the financial statements contains a summary of the disclosure
provisions under SFAS No. 123.

 Basic Net Loss Per Share and Pro Forma Basic Net Loss Per Share

   Historical net loss per share has been calculated under SFAS No. 128,
"Earnings Per Share." Basic net loss per share on a historical basis is
computed using the weighted average number of shares of common stock
outstanding. No diluted loss per share information has been presented in the
accompanying consolidated statements of operations since potential common
shares from conversion of the convertible preferred stock and stock options are
antidilutive. The total number of shares excluded from diluted loss per share
relating to these securities was 9,409,642, 10,496,392, 18,539,874 and
24,003,883 for the year ended December 31, 1997, the nine months ended
September 30, 1998, the three months ended December 31, 1998 and the year ended
December 31, 1999, respectively. The total number of shares excluded from
diluted loss per share for the six months ended June 30, 1999 and 2000 was
18,794,451 (unaudited) and 27,553,090 (unaudited), respectively.

   Pro forma basic net loss per share has been calculated assuming the
conversion of convertible preferred stock into an equivalent number of common
shares, as if the shares had converted on the dates of their issuance.

                                      F-11
<PAGE>

                            TOP TIER SOFTWARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   The following table presents the calculation of basic and pro forma basic
net loss per share:

<TABLE>
<CAPTION>
                                         Nine months  Three months
                           Year ended       ended        ended       Year ended   Six months ended June 30,
                          December 31,  September 30, December 31,  December 31,  --------------------------
                              1997          1998          1998          1999          1999          2000
                          ------------  ------------- ------------  ------------  ------------  ------------
                                                                                         (unaudited)
<S>                       <C>           <C>           <C>           <C>           <C>           <C>
Net loss................  $(3,435,009)   $(5,928,011) $(12,462,868) $(40,670,166) $(17,525,143) $(24,570,285)
                          ===========    ===========  ============  ============  ============  ============
Basic:
 Weighted average shares
  of common stock
  outstanding...........    7,189,806      7,375,124            --        39,689            --     2,891,157
 Less: Weighted average
  shares of common stock
  subject to
  repurchase............           --             --            --       (16,831)           --    (1,356,580)
                          -----------    -----------  ------------  ------------  ------------  ------------
Weighted average shares
 used in computing basic
 net loss per share.....    7,189,806      7,375,124            --        22,858            --     1,534,577
                          ===========    ===========  ============  ============  ============  ============
Basic net loss per
 share..................  $     (0.48)   $     (0.80) $         --  $  (1,779.25) $         --  $     (16.01)
                          ===========    ===========  ============  ============  ============  ============
Pro forma:
 Net loss...............                                            $(40,670,166) $(17,525,143) $(24,570,285)
                                                                    ============  ============  ============
Beneficial conversion
 related to the Series E
 convertible preferred
 stock..................                                            $         --  $         --  $(15,944,000)
                                                                    ------------  ------------  ------------
Pro forma net loss
 attributable to common
 stockholders...........                                            $(40,670,166) $(17,525,143) $(40,514,285)
                                                                    ============  ============  ============
Shares used above                                                         22,858            --     1,534,577
 Pro forma adjustment to
  reflect weighted
  average effect of
  assumed conversion of
  convertible preferred
  stock and beneficial
  conversion related to
  the Series E
  convertible preferred
  stock (unaudited).....                                              18,135,066    17,580,589    19,981,043
                                                                    ------------  ------------  ------------
 Weighted average shares
  used in computing pro
  forma basic net loss
  per share
  (unaudited)...........                                              18,157,924    17,580,589    21,515,620
                                                                    ============  ============  ============
Pro forma basic net loss
 per share (unaudited)..                                            $      (2.24) $      (1.00) $      (1.88)
                                                                    ============  ============  ============
</TABLE>

 Recent Accounting Pronouncements

   In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133
establishes accounting and reporting standards requiring that every derivative
instrument be recorded in the balance sheet at its fair value. SFAS No. 133
requires that changes in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. Special accounting
for qualifying hedges allows a derivative's gains and losses to offset related
results on the hedged item in the income statement. SFAS No. 133 is effective
for the Company at the beginning of 2001. The Company believes that the
adoption of SFAS No. 133 will not have a material effect on its financial
statements.

   In December 1998, the AICPA issued Statement of Position ("SOP") 98-9,
"Modification of SOP 97-2, Software Revenue Recognition, with Respect to
Certain Transactions." SOP 98-9 amends SOP 97-2 and SOP 98-4 by extending the
deferral of the application of certain provisions of SOP 97-2 amended by SOP
98-4 through fiscal years beginning on or before March 15, 1999. All other
provisions of SOP 98-9 are effective for transactions entered into in fiscal
years beginning after March 15, 1999. The Company does not anticipate that this
statement will have a material impact on its statements of operations.

                                      F-12
<PAGE>


                          TOP TIER SOFTWARE, INC.

          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


3. PURCHASE OF THE COMPANY BY THE VANENBURG GROUP

   On October 6, 1998 (the "Closing Date"), Vanenburg completed the acquisition
of the Company, pursuant to an Agreement and Plan of Merger (the "Merger
Agreement"), whereby a wholly-owned subsidiary of Vanenburg merged with and
into the Company. As a result of this merger, the Company became a wholly-owned
subsidiary of Vanenburg as of the Closing Date. As consideration in the merger,
the holders of shares of the Company's common stock, Series A convertible
preferred stock (assuming conversion of all Series A convertible preferred
stock to common stock) and vested options to purchase the Company's common
stock received total consideration of $62,582,954 or approximately $6.28 per
share. Each holder of unvested options to purchase common stock outstanding as
of the closing date received a similar option to purchase the common stock of
the surviving company with the same rights and vesting period as the original
option. The value of these options, estimated using the Black-Scholes option-
pricing model, amounted to $7,470,846. All outstanding common stock, Series A
convertible preferred stock and vested options to purchase the Company's common
stock as of the date of the agreement were cancelled and Vanenburg was issued
10,500,000 shares of Series C convertible preferred stock. In addition to the
above consideration, the Merger Agreement stipulated that certain employees of
the Company shall receive cash bonuses to be paid by Vanenburg upon the first
anniversary of the Closing Date if that employee is still employed by the
Company. The aggregate amount of the bonuses paid was $2,892,207. Prior to
October 6, 1998, Vanenburg had purchased all of the then outstanding Series B
convertible preferred stock of the Company. As holders of Series B convertible
preferred stock as of the closing date, Vanenburg received an equivalent number
of shares of Series B convertible preferred stock of the surviving company. The
total consideration paid by Vanenburg for the purchase of the Series B
convertible preferred stock of the Company, taking into account equity in the
results of the Company and amortization of excess of cost over net assets
acquired for the period over which the investment was held prior to the closing
date, amounted to $7,601,990. The purchase price is as follows:

<TABLE>
   <S>                                                              <C>
   Consideration paid to:
     Common stock shareholders..................................... $46,332,131
     Series A preferred stock shareholders.........................   9,362,645
     Vested common stock option holders............................   6,888,178
   Purchase of Series B preferred, net of equity accounting........   7,601,990
   Assumption of unvested employee stock options...................   7,470,846
   Retention bonus.................................................   2,892,207
   Acquisition costs...............................................     125,000
                                                                    -----------
                                                                    $80,672,997
                                                                    ===========
</TABLE>

                                      F-13
<PAGE>

                            TOP TIER SOFTWARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

   The acquisition of the Company by Vanenburg was accounted for using the
purchase method of accounting. Accordingly, the carrying amount of identifiable
assets and liabilities on the Company's balance sheet as of September 30, 1998
were adjusted to reflect their fair values at the date of acquisition and the
stockholder's net investment was adjusted to reflect the full purchase amount
paid by Vanenburg. The Company's in-process research and development that had
not reached technological feasibility and had no probable future uses was
expensed during the three months ended December 31, 1998. The Company's
intangible assets are being amortized over three years. Allocation of the
purchase price is as follows:

<TABLE>
   <S>                                                              <C>
   Tangible assets acquired........................................ $ 8,445,728
   Liabilities assumed.............................................  (3,654,845)
   Deferred acquisition costs......................................   2,892,207
   Expensed in-process research and development....................   3,556,700
   Intangible assets:
     Core technology...............................................   3,513,091
     Acquired workforce............................................   1,030,556
     Tradename.....................................................     550,453
   Goodwill........................................................  64,339,107
                                                                    -----------
                                                                    $80,672,997
                                                                    ===========
</TABLE>

The excess of cost over net assets acquired (goodwill) in the accompanying
consolidated balance sheets is being amortized over three years.

   The following unaudited pro forma information shows consolidated operating
results for the years ended December 31, 1997 and 1998, as if the Vanenburg
acquisition had occurred at the beginning of 1997.

<TABLE>
<CAPTION>
                                                        1997          1998
                                                    ------------  ------------
   <S>                                              <C>           <C>
   Net revenues.................................... $     94,509  $  2,952,219
   Net loss........................................ $(26,215,409) $(34,344,244)
   Basic net loss per share........................ $      (0.00) $      (0.00)
</TABLE>

   Of the total consideration payable to the selling stockholders one third was
paid in cash as of the closing date. The remaining two thirds of the
consideration was evidenced by two promissory notes issued by the Company
payable to each individual selling shareholder. One note bore interest at an
annual interest rate of 5.35% and was paid in full, both principal and
interest, six months from the closing date. The other note bore interest at an
annual interest rate of 5.42% and was paid in full, both principal and
interest, twelve months from the closing date. The Company's obligations under
these notes were payable and guaranteed by Vanenburg who pledged 3,400,000
shares of Baan Company N.V. as collateral for this guarantee. As of December
31, 1998 an amount of $40,988,191, including accrued interest, was due to
stockholders and due from Vanenburg.

   In addition, on October 6, 1998, the Company entered into an agreement for
the sale and issuance of 763,740 shares of Series A convertible preferred stock
at $4.143 per share. The agreement was with two officers of the Company and a
related party requiring the purchase of the shares that were issued on three
dates: within ten days of signing, six months and a year thereafter, in equal
installments of 254,580 shares of Series A convertible preferred stock each.
The Company recognized compensation expense of $316,983 and $170,729 for the
months ended December 31, 1998 and year ended December 31, 1999, respectively,
in connection with the shares issued to the officers.

   Deferred acquisition costs represent retention bonuses paid to employees by
Vanenburg. These costs are included as consideration received in the
acquisition, but were expensed ratably over the twelve-month period the bonuses
were earned. All bonuses were paid by Vanenburg in October 1999.

                                      F-14
<PAGE>

                            TOP TIER SOFTWARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


4. ACCRUED SEVERANCE PAY

   Under Israeli law and labor agreements, the Company's subsidiary in Israel
is required to make severance payments to its dismissed employees and employees
leaving its employment in certain other circumstances. The calculation is based
on the employee's latest salary and the period employed. For certain employees,
including officers, the obligation for severance pay is discharged by payment
of premiums to insurance companies under approved plans and by the accruals
presented in the balance sheets. The amounts maintained with insurance
companies are not under the control of the Company and therefore are not
reflected in the financial statements.

5. LINES OF CREDIT

   The Company has entered into a $750,000 line of credit agreement with a bank
that expires in November 2000. Amounts withdrawn bear interest at one percent
over the bank's prime rate. As of December 31, 1999 no amounts had been
withdrawn on this line of credit. In addition, the Company has entered into
agreements with banks for credit card facilities amounting to $100,000 and
$250,000 that expire in July 2000 and October 2000, respectively. To secure
these lines of credit the Company has deposits of $225,000 and $1,116,885 as of
December 31, 1998 and 1999, respectively, which are presented as restricted
cash in the accompanying balance sheets.

6. COMMITMENTS

   The Company leases its facilities under operating lease agreements expiring
through February 2004 (excluding renewal options). Rent expense for all
operating leases totaled $148,697, $305,044, $126,163 and $757,394 for the year
ended December 31, 1997, the nine months ended September 30, 1998, the three
months ended December 31, 1998 and the year ended December 31, 1999,
respectively. Minimum future lease payments under all noncancellable operating
leases as of December 31, 1999 are as follows:

<TABLE>
       <S>                                                            <C>
       2000.......................................................... $  801,884
       2001..........................................................    824,334
       2002..........................................................    796,837
       2003..........................................................    374,583
       2004..........................................................     98,878
                                                                      ----------
                                                                      $2,896,516
                                                                      ==========
</TABLE>

   The Company's research and development efforts have been partially financed
through both royalty bearing and non-royalty bearing grants by the Office of
the Chief Scientist of the government of Israel ("OCS"). Such amounts are
deducted from research and development costs (see Note 9). The Company is
committed to repay royalty bearing grants to the OCS at the rate of 3% to 5% of
sales of the products, up to 100% of the amount of such grants received. As of
December 31, 1999, the Company has received cumulative royalty bearing grants
amounting to $217,542.

                                      F-15
<PAGE>

                            TOP TIER SOFTWARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


7. CONVERTIBLE PREFERRED STOCK

   The Company is authorized to issue up to 26,075,000 shares of convertible
preferred stock with a par value of $0.001 per share, of which it has
designated 736,740 shares as Series A preferred stock, and 9,150,430 shares as
Series B preferred stock, 10,500,000 as Series C preferred stock and 3,100,000
as Series D preferred stock. At a meeting of the Board of Directors in October
1999 a three for two split of preferred stock was authorized. All references to
per share amounts and number of shares in these financial statements have been
retroactively restated to reflect this stock split. The rights and preferences
of Series A, B, C and D preferred stock are as follows:

 Dividends

   The holders of preferred stock are entitled to receive dividends when and as
declared by the Board of Directors at a rate of $0.3314, $0.1669, $0.5152 and
$0.3984 per share of Series A, B, C, and D preferred stock, respectively.
Dividends may be declared and paid upon shares of common stock in any fiscal
year only if dividends have been declared or paid upon all the shares of
preferred stock at such annual rates. No dividends in excess of the annual
rates shall be paid to the holders of preferred stock unless equivalent
dividends are paid to the holders of common stock. The rights to dividends on
shares of preferred stock are not cumulative.

 Liquidation Preference

   In the event of any liquidation, dissolution or winding up of the Company,
holders of Series A, B, C and D preferred stock are entitled to receive, in
preference to holders of common stock, the amount of $4.143, $2.08, $6.44 and
$4.98 per share, respectively. Such amounts will be adjusted for any stock
split, combination, distribution or dividend. After payment of the above
amounts, the remaining assets of the Company will be distributed to the holders
of Series A, B, C and D preferred stock and the common stock pro rata based on
the number of shares of common stock held by each (assuming conversion of all
Series A, B, C and D preferred stock) until Series A, B, C and D preferred
stockholders have received an aggregate of $1.07, $4.16, $12.88 and $9.96,
respectively, including amounts paid pursuant to the preference discussed
above.

 Voting Rights

   The holders of the Series A, B, C and D preferred stock are entitled to the
number of votes equal to the number of shares of common stock into which such
preferred stock is convertible.

   Holders of Series A preferred stock, voting separately as a class, are
entitled to elect two members of the Board of Directors. Holders of Series B
and C preferred stock, voting separately as a class, are entitled to elect two
members of the Board of Directors. Holders of Series D preferred stock, voting
separately as a class, are entitled to elect one member of the Board of
Directors.

   Holders of Series A, B, C and D preferred stock, voting together as a single
class, are entitled to elect the remaining directors.

 Conversion

   Each share of Series A and B preferred stock is convertible into one share
of common stock, at the option of the holder thereof, at any time after the
date of issuance. The conversion rate is subject to adjustment for dilution,
including, but not limited to, stock splits, stock dividends and stock
combinations.

   In addition, each share of Series A, B, C and D preferred stock will
automatically convert into common stock at the then conversion rate upon the
written consent of holders of 66.67% of all outstanding Series A, B

                                      F-16
<PAGE>

                            TOP TIER SOFTWARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

and C preferred stock and 50% of all outstanding Series D preferred stock. Each
share of Series A, B, C and D preferred stock will also automatically convert
upon the closing of an underwritten public offering of the Company's common
stock with a public offering price per share not less than $14.94 and an
aggregate offering price of $20 million.

8. COMMON STOCK

   The Company is authorized to issue up to 33,125,000 shares of three for two
common stock with a par value of $0.001 per share. At a meeting of the Board of
Directors in October 1999 a stock split of common stock was authorized. All
references to per share amounts and number of shares in these financial
statements have been retroactively restated to reflect this stock split.

 Common Stock Reserved for Future Issuance

   Shares of common stock reserved for future issuance is as follows:

<TABLE>
<CAPTION>
                                                        December 31,  June 30,
                                                            1999        2000
                                                        ------------ -----------
                                                                     (unaudited)
<S>                                                     <C>          <C>
Conversion of Series A preferred stock.................     763,740     763,740
Conversion of Series B preferred stock.................   6,709,264   6,709,264
Conversion of Series C preferred stock.................  10,500,000  10,500,000
Conversion of Series D preferred stock.................   2,008,032   2,008,032
Conversion of Series E preferred stock.................          --   1,915,821
Stock Option Plan......................................   6,269,682   3,458,683
                                                         ----------  ----------
                                                         26,250,718  25,355,540
                                                         ==========  ==========
</TABLE>

 Pro forma Stockholders' Equity (Unaudited)

   In March 2000, the Board of Directors authorized the filing of a
registration statement with the Securities and Exchange Commission to register
shares of its common stock in connection with a proposed initial public
offering ("IPO"). If the IPO is consummated under the terms presently
anticipated, all of the currently outstanding convertible preferred stock will
be converted into 22,889,635 shares of common stock upon the closing of the
IPO. The effect of the conversions has been reflected as unaudited pro forma
stockholders' deficit in the accompanying balance sheet as of June 30, 2000.

 Stock Option Plan

   In October 1996, the Company established the 1996 Stock Option Plan (the
"1996 Plan") and has reserved 8,372,936 shares of common stock for issuance.
The board of directors or a committee of the board administers the 1996 Plan.
The administrator of the 1996 Plan has the authority to determine the terms and
conditions of the options granted under the 1996 Plan. Under the Plan, the
Board of Directors may grant incentive and nonqualified stock options to
employees, consultants and directors of the Company. The exercise price per
share for an incentive stock option cannot be less than the fair market value,
as determined by the Board of Directors, on the date of grant. The exercise
price per share for nonqualified stock options cannot be less than 85% of fair
market value, as determined by the Board of Directors, on the date of grant.
The term of an option may not exceed 10 years after the date of grant and the
options generally vest over a four-year period. Options may be exercised prior
to full vesting. Any unvested shares so purchased are subject to a repurchase
right in favor of the Company with the repurchase price to be equal to the
original purchase price of the stock.

                                      F-17
<PAGE>


                          TOP TIER SOFTWARE, INC.

          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   Option activity under the 1996 Plan was as follows:

<TABLE>
<CAPTION>
                                                                        Weighted
                                                                         Average
                                                                        Exercise
                                               Available     Options      Price
                                               For Grant   Outstanding  Per Share
                                               ----------  -----------  ---------
<S>                                            <C>         <C>          <C>
Balance at December 31, 1996..................    936,126     999,000    $0.053
  Authorized..................................  1,437,810          --        --
  Granted.....................................   (510,000)    510,000    $0.053
  Exercised...................................         --    (300,000)   $0.053
                                               ----------  ----------
Balance at December 31, 1997..................  1,863,936   1,209,000    $0.053
  Granted..................................... (1,182,750)  1,182,750    $0.207
  Exercised...................................         --     (15,375)   $0.053
  Cancelled...................................     80,625     (80,625)   $0.053
                                               ----------  ----------
Balance at September 30, 1998.................    761,811   2,295,750    $0.118
  Purchased and cancelled by Vanenburg........         --  (1,097,223)   $0.058
  Cancelled...................................    122,500    (122,500)   $0.053
                                               ----------  ----------
Balance at December 31, 1998..................    884,311   1,076,027    $0.187
  Authorized..................................  5,000,000          --        --
  Granted..................................... (3,752,756)  3,752,756    $0.950
  Exercised...................................         --    (690,656)   $0.766
  Cancelled...................................    115,287    (115,287)   $0.270
                                               ----------  ----------
Balance at December 31, 1999..................  2,246,842   4,022,840    $0.799
  Authorized (unaudited)......................         --         --
  Granted (unaudited)......................... (2,016,984)  2,016,984    $4.300
  Exercised (unaudited).......................         --  (2,810,999)   $2.108
  Cancelled (unaudited).......................    115,960    (115,960)   $0.611
                                               ----------  ----------
Balance at June 30, 2000 (unaudited)..........    345,818   3,112,865    $1.892
                                               ==========  ==========
</TABLE>

   At the closing date of the Vanenburg transaction (see Note 3), Vanenburg
purchased all the vested options of 1,097,223 under the 1996 Stock Option Plan
at a price of $6.28 per share. The options were subsequently cancelled. The
unvested options of 1,198,527 remained outstanding.

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

<TABLE>
<CAPTION>
                                         Options Outstanding and Exercisable
                                      -----------------------------------------
                                          Number     Weighted   Exercise Price
                                      Outstanding at  Average        and
                                       December 31,  Remaining Weighted Average
     Range of Exercise Price               1999        Years    Exercise Price
     -------------------------------  -------------- --------- ----------------
     <S>                              <C>            <C>       <C>
     $0.053.........................       68,397      6.84         $0.053
     $0.207.........................      735,287      8.50         $0.207
     $0.950.........................    3,219,156      9.74         $0.950
                                        ---------                   ------
                                        4,022,840                   $0.799
                                        =========                   ======
</TABLE>

                                      F-18
<PAGE>

                            TOP TIER SOFTWARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

   The following table summarizes information about stock options outstanding
at June 30, 2000:

<TABLE>
<CAPTION>
                                         Options Outstanding and Exercisable
                                                     (unaudited)
                                      -----------------------------------------
                                                     Weighted   Exercise Price
                                                      Average        and
                                          Number     Remaining Weighted Average
     Range of Exercise Price          Outstanding at   Years    Exercise Price
     -------------------------------- -------------- --------- ----------------
     <S>                              <C>            <C>       <C>
     $0.053..........................      54,897      6.34         $0.053
     $0.207..........................     389,053      8.01         $0.207
     $0.950..........................   2,023,265      9.24         $0.950
     $2.50-$3.50.....................     154,150      9.57         $2.989
     $5.00-$7.50.....................     491,500      9.88         $6.963
                                        ---------                   ------
                                        3,112,865                   $1.892
                                        =========                   ======
</TABLE>

 Fair Value Disclosures

   The Company accounts for these Plans under APB Opinion No. 25, "Accounting
for Stock Issued to Employees." Had compensation expense for the stock plans
been determined consistent with SFAS No. 123, "Accounting for Stock-Based
Compensation," the impact on the Company's net loss would be as follows:

<TABLE>
<CAPTION>
                                        Nine months  Three months
                          Year ended       ended        ended       Year ended
                         December 31,  September 30, December 31,  December 31,
                             1997          1998          1998          1999
                         ------------  ------------- ------------  ------------
<S>                      <C>           <C>           <C>           <C>
Net loss:
  As reported........... $(3,435,009)   $(5,928,011) $(12,462,868) $(40,670,166)
  Pro forma............. $(3,442,004)   $(5,939,971) $(12,474,828) $(41,083,253)
Basic net loss per
 share:
  As reported........... $     (0.48)   $     (0.80) $         --  $  (1,779.25)
  Pro forma............. $     (0.48)   $     (0.81) $         --  $  (1,797.32)
</TABLE>

   The weighted average fair value of options granted in the year ended
December 31, 1997, the nine months ended September 30, 1998, the three months
ended December 31, 1998 and the year ended December 31, 1999 was $3.81. The
fair value of each option grant is estimated on the date of the grant using the
Black-Scholes option pricing model with the following assumptions for grants in
all reported periods: (1) average expected life of the options is 5 years; (2)
dividend yield of 0%; (3) expected volatility of 0%; and (4) risk free interest
rate ranging from 5.34% to 6.07%.

 Deferred Stock Compensation

   Deferred stock compensation represents the aggregate difference, at the
grant date, between the respective exercise price of stock options and the fair
value of the underlying stock. Deferred stock compensation is amortized over
the vesting period of the applicable options in a manner consistent with FASB
Interpretation No. 28. The Company had recorded unearned stock-based
compensation of $19,734,338 for the year ended December 31, 1999 and amortized
deferred stock compensation of $7,213,392.

   The total unearned stock-based compensation recorded at December 31, 1999 of
$12,520,946 will be amortized as follows: $6,811,836, $3,565,021, $1,673,087,
and $471,002 during the year ended 2000, 2001, 2002 and 2003, respectively. The
amount of deferred stock compensation expense to be recorded in future periods
could decrease if options for which accrued but unvested compensation has been
recorded are forfeited.

                                      F-19
<PAGE>

                            TOP TIER SOFTWARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


 Stock Repurchase Agreements

   In connection with the exercise of options pursuant to the 1996 Plan,
employees entered into restricted stock purchase agreements with the Company.
Under the terms of these agreements, the Company has a right to repurchase any
unvested shares at the original exercise price of the shares upon termination
of the employee. The repurchase right lapses ratably over the vesting term of
the original grant. As of December 31, 1999, 383,957 shares were subject to
repurchase by the Company. As of June 30, 2000, 1,550,590 shares (unaudited)
were subject to repurchase by the Company.

9. RESEARCH AND DEVELOPMENT, NET

   Research and development expenses are comprised of the following:

<TABLE>
<CAPTION>
                                         Nine months  Three months
                            Year ended      ended        ended      Year ended
                           December 31, September 30, December 31, December 31,
                               1997         1998          1998         1999
                           ------------ ------------- ------------ ------------
<S>                        <C>          <C>           <C>          <C>
Research and development
 expenses................   $1,415,479   $2,958,294    $ 910,647    $6,060,522
Less--OCS participations:
  Royalty bearing
   participation.........      (24,815)          --           --            --
  Non-royalty bearing
   participation.........     (337,362)    (313,931)    (104,643)     (617,042)
                            ----------   ----------    ---------    ----------
Research and development
 expenses, net...........   $1,053,302   $2,644,363    $ 806,004    $5,443,480
                            ==========   ==========    =========    ==========
</TABLE>

10. INCOME TAXES

   The Company accounts for income taxes pursuant to SFAS No. 109, "Accounting
for Income Taxes". Deferred tax assets and liabilities are recognized for the
estimated future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates in effect for the year in which those temporary
differences are expected to be recorded 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.

   As a result of the Company's continued losses, there was no provision for
income taxes for each of the year ended December 31, 1997, the nine months
ended September 30, 1998, the three months ended December 31, 1998 and the year
ended December 31, 1999.

   The components of the net deferred income tax asset were as follows:

<TABLE>
<CAPTION>
                                                            December 31,
                                                      -------------------------
                                                         1998          1999
                                                      -----------  ------------
     <S>                                              <C>          <C>
     Net operating losses............................ $ 4,778,398  $ 16,778,785
     Other timing differences........................      82,327       142,876
                                                      -----------  ------------
                                                        4,860,725    16,921,661
     Less valuation allowance........................  (4,860,725)  (16,921,661)
                                                      -----------  ------------
     Net deferred tax asset.......................... $        --  $         --
                                                      ===========  ============
</TABLE>

   No deferred income taxes have been included in these financial statements in
respect of net operating losses of the Company's Israeli subsidiary as during
the period in which these tax losses are utilized the subsidiary's income would
be substantially tax exempt and accordingly there will be no tax benefit
available.

                                      F-20
<PAGE>

                            TOP TIER SOFTWARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   At December 31, 1999, the Company had net cumulative operating loss
carryforwards for federal and state income tax reporting purposes of
approximately $35.9 million and $20.5 million, respectively. The federal net
operating loss carryforwards expire on various dates through 2019. The state
net operating loss carryforwards expire on various dates through 2005. To the
extent that net operating losses, when realized, relate to stock option
deductions, the resulting benefits will be credited to stockholders' equity.
Under current tax law, net operating loss and credit carryforwards available in
any given year may be limited upon the occurrence of certain events, including
significant changes in ownership interests. The Company's subsidiaries in
Israel and the UK had carryforward tax losses of approximately $4.0 million and
$3.2 million, respectively, that have no expiration date.

   The Company's Israeli subsidiary's initial investment plan of $80,000 and
additional investment plans of $644,000 have been granted "Approved Enterprise"
status, under the Israeli Law for Encouragement of Capital Investments. In
accordance with this law, the income from the approved enterprises for a seven
year period, commencing with the first year in which taxable income is
generated but limited to twelve years from commencement of production or
fourteen years from the date of approval, whichever is earlier ("benefit
period"), will be subject to tax benefits. The Company has chosen to receive
its benefits in respect of its plans through the "Alternative Benefits"
program. These benefits include a tax exemption on income derived from the
"Approved Enterprise" for a period of two years and a reduced income tax rate
of 25% (instead of the regular rate of 36%) for the additional five years of
the benefit period. A company in which foreign investment exceeds 25% is
entitled to a benefit period of ten years. If the proportion of foreign
investment is between 25% and 49%, the Company will be taxed at a rate of 25%;
if between 49% and 74%, at a rate of 20%; if between 74% and 90%, at a rate of
15%; and if in excess of 90%, at a rate of 10%. The proportion of holdings of
foreign shareholders is measured annually based on the lowest level of foreign
investment during the year.

   A reconciliation of income tax expense and the amount computed by applying
the statutory Federal income tax rate to loss before income taxes are as
follows:

<TABLE>
<CAPTION>
                                        Nine months  Three months
                           Year ended      ended        ended      Year ended
                          December 31, September 30, December 31, December 31,
                              1997         1998          1998         1999
                          ------------ ------------- ------------ ------------
<S>                       <C>          <C>           <C>          <C>
Federal statutory rate...    (34.0)%       (34.0)%      (34.0)%      (34.0)%
State taxes, net of
 federal benefit.........     (5.3)%        (5.3)%       (5.3)%       (5.3)%
Change in valuation
 allowance...............     34.4 %        18.9 %       18.9 %       31.8 %
Difference of foreign
 statutory rates.........      4.9 %        20.4 %       20.4 %        7.5 %
                             -----         -----        -----        -----
                               0.0 %         0.0 %        0.0 %        0.0 %
                             =====         =====        =====        =====
</TABLE>

                                      F-21
<PAGE>

                            TOP TIER SOFTWARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


11. SEGMENT INFORMATION

   SFAS No. 131, "Disclosures About Segments of an Enterprise and Related
Information," establishes standards for disclosures about operating segments,
products and services, geographic areas and major customers. The Company is
organized and operates in one reportable segment which is the development,
manufacture and sales of database connectivity software and development tools.

   The Company's revenues by geographic area is as follows:

<TABLE>
<CAPTION>
                                          Nine months  Three months
                             Year ended      ended        ended      Year ended
                            December 31, September 30, December 31, December 31,
                                1997         1998          1998         1999
                            ------------ ------------- ------------ ------------
<S>                         <C>          <C>           <C>          <C>
Netherlands................   $    --     $       --     $ 15,000    $6,786,986
U.S........................    53,925      2,634,990      293,778     1,431,390
Germany....................        --             --           --       833,494
Other......................    40,584             --        8,451       593,234
                              -------     ----------     --------    ----------
Total......................   $94,509     $2,634,990     $317,229    $9,645,104
                              =======     ==========     ========    ==========
</TABLE>

   The Company's net fixed assets by geographic area are as follows:

<TABLE>
<CAPTION>
                                                               December 31,
                                                           ---------------------
                                                              1998       1999
                                                           ---------- ----------
     <S>                                                   <C>        <C>
     U.S. ................................................ $  692,897 $  778,635
     Israel...............................................    557,778    629,171
     Other................................................     47,081     38,855
                                                           ---------- ----------
                                                           $1,297,756 $1,446,661
                                                           ========== ==========
</TABLE>

12. RELATED PARTY TRANSACTIONS

   In December 1999, the Company sold 469,062 shares of its common stock to
officers of the Company in consideration for full recourse promissory notes in
the amount approximately $395,000. Should the officers terminate employment,
these shares are subject to a right of repurchase by the Company. The right of
repurchase lapses over a four year period and as of December 31, 1999, 323,956
shares were subject to repurchase. The notes bear interest at 8.5% and mature
at various dates through December 2004.

13. SUBSEQUENT EVENTS

 Amendment to the Articles of Incorporation

   In March 2000, the Company's Board of Directors increased its authorized
shares of common and undesignated preferred stock to 200,000,000 and 5,000,000
shares, respectively.

 2000 Stock Plan

   In March 2000, the Board of Directors approved the Company's 2000 Stock Plan
(the "2000 Plan"), subject to stockholder approval. The 2000 Plan will become
effective upon the Company's initial public offering and 2,500,000 shares have
been reserved for future issuance. Upon the closing of the initial public
offering and the stockholder approval of the 2000 Plan, the Company's 1996 Plan
will be terminated and no further options shall be granted under the 1996 Plan.

                                      F-22
<PAGE>

                            TOP TIER SOFTWARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


 2000 Employee Stock Purchase Plan

   In March 2000, the Board of Directors approved the adoption of the 2000
Employee Stock Purchase Plan (the "Purchase Plan"), subject to stockholder
approval. The Purchase Plan will become effective upon the Company's initial
public offering and 500,000 shares have been reserved for future issuance.

 Stockholders' Notes

   In January and February 2000, the Company sold 2,208,750 shares of its
common stock to officers of the Company in consideration for full recourse
promissory notes in the amount of approximately $5.6 million. Should the
officers employment terminate, these shares are subject to a right of
repurchase by the Company. The right of repurchase lapses over a four year
period. The notes bear interest at 8.5% and mature at various dates through
February 2005.

14. SUBSEQUENT EVENTS (unaudited)

 Amendment to the Articles of Incorporation

   In June 2000, the Company's Board of Directors increased its authorized
shares of common and preferred stock to 40,125,000 and 22,735,032 shares,
respectively. The preferred stock will consist of five series and are
designated as follows: 763,740 shares of Series A preferred, 6,709,264 shares
of Series B preferred, 10,500,000 shares of Series C preferred, 2,008,032
shares of Series D preferred and 2,753,996 shares of Series E preferred.

 Issuance of Series E Preferred Stock

   On June 29, 2000, the Company issued 1,915,821 shares of Series E preferred
stock for $8.3515 per share. On July 11, 2000, the Company issued an additional
239,477 shares of Series E preferred. The rights and preferences of Series A,
B, C and D preferred stock are as follows:

    Dividends

     The holders of Series E preferred stock are entitled to receive
  dividends when and as declared by the Board of Directors at a rate of
  $0.6681 per share. Dividends may be declared and paid upon shares of common
  stock in any fiscal year only if dividends have been declared or paid upon
  all the shares of preferred stock at such annual rates. No dividends in
  excess of the annual rates shall be paid to the holders of preferred stock
  unless equivalent dividends are paid to the holders of common stock. The
  rights to dividends on shares of preferred stock are not cumulative.

    Liquidation Preference

     In the event of any liquidation, dissolution or winding up of the
  Company, holders of Series E preferred stock are entitled to receive, in
  preference to holders of common stock, the amount of $8.3515. Such amounts
  will be adjusted for any stock split, combination, distribution or
  dividend. After payment of the initial liquidation amount to all preferred
  stockholders, the remaining assets of the Company will be distributed to
  the holders of preferred stock and the common stock pro rata based on the
  number of shares of common stock held by each (assuming conversion of all
  preferred stock) until Series E preferred stockholders have received an
  aggregate of $16.70, including amounts paid pursuant to the preference
  discussed above.

                                      F-23
<PAGE>

                            TOP TIER SOFTWARE, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   Voting Rights

     The holders of the Series E preferred stock are entitled to the number
  of votes equal to the number of shares of common stock into which such
  preferred stock is convertible. Holders of Series E preferred stock are not
  entitled to a seat on the Board of Directors, and will vote together as one
  class with the other holders of the preferred stock to elect the remaining
  directors.

   Conversion

     Each share of Series E preferred stock is convertible into one share of
  common stock, at the option of the holder thereof, at any time after the
  date of issuance. The conversion rate is subject to adjustment for
  dilution, including, but not limited to, stock splits, stock dividends and
  stock combinations.

     Automatic conversion of Series E preferred stock into common stock will
  occur upon at the then conversion rate upon the written consent of holders
  of the majority vote of all outstanding Series E preferred stock. Each
  share of Series E preferred stock will also automatically convert upon the
  closing of an underwritten public offering of the Company's common stock
  with an aggregate public offering price of $20 million. In the event the
  per share offering price is less than $16.70, as adjusted, the conversion
  price for Series E preferred shall be adjusted according to a defined
  calculation, but in no event can be less than $4.6397 per share.

     In accordance with EITF 98-5 the Company has measured the impact of such
  contingent beneficial conversion feature at the commitment date, but will
  not recognize the impact in earnings until the contingency is resolved.

 Stock Option Grants

   For the six months ended June 30, 2000, the Company granted stock options to
employees to purchase 2,016,984 shares of common stock at exercise prices
ranging between $2.50 and $7.50 per share. In connection with such option
grants, the Company recognized stock compensation totaling approximately
$9,356,000 which is being amortized over the vesting period of the related
options. In August 2000, the Board of Directors approved an increase of
2,000,000 shares in the shares available for future issuance.

 Lease Commitments

   In June 2000, the Company entered into two new lease agreements for new
office space. The term for each lease is 60 months and requires monthly rental
payments of $59,890 per month.

 Line of Credit

   As of June 30, 2000, the Company has withdrawn $716,071 under a line of
credit agreement with a bank. The principal bears interest at one percent over
the bank's prime rate (10.5% as of June 30, 2000). The required monthly
payments represent interest only, with the principal due upon expiration of the
agreement in November 2000.

                                      F-24
<PAGE>

                             Description of Artwork

Inside Back Cover Graphics
--------------------------

     In the upper left corner of the page is the phrase: "Companies compete more
effectively by acting more rapidly."  Directly to the right is the TopTier
Software logo.  The following phrase is beneath:  "End users are notified of
relevant events that originate in any application and can intelligently and
immediately respond."

     The remainder of the page contains three screen shots demonstrating the
drag and relate operation.  To the left of the first screen shot is the number
"1."  To the right of the first screen shot is the following text: "A `Low
Inventory' alert appears on the eBusiness Integration Portal of an employee.  He
personalized his portal to warn him when critical supplies run low.  A quick
Drag and Relate (TM) to an enterprise application shows him which product is low
in inventory, and at which warehouse." Directly below the first screen shot is
the second screen shot with a number "2" to the left.  To the right of the
second screen shot is the following text:  "It's Hydrochloric Acid at a key
warehouse.  And it's critical to keeping the line running.  The company needs
alternative sources.  To find other sources, he Drags and Relates (TM) from the
internal application to an external websource - in this case, that of a chemical
supplier."  Directly below the second screen shot is the third screen shot with
a number "3" to the left.  To the right of the third screen shot is the
following text:  "Quickly, he finds a list of other suppliers and can even check
their inventory levels.  He places the order online and resolves the problem -
in just 2 Drag and Relate (TM) actions."
<PAGE>




                          [LOGO OF TOP TIER SOFTWARE]
<PAGE>

                                    PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

   The following is an itemized statement of the costs and expenses, other than
underwriting discounts and commissions, incurred and to be incurred by the
Registrant in connection with the issuance and distribution of the securities
registered in this offering. All amounts are estimates except the Securities
and Exchange Commission ("SEC") registration fee and the National Association
of Securities Dealers, Inc. ("NASD") filing fee.

<TABLE>
     <S>                                                                <C>
     SEC registration fee.............................................. $27,628
     NASD filing fee...................................................  11,500
     Nasdaq National Market listing fee................................   1,000
     Printing fees and expenses........................................      *
     Legal fees and expenses...........................................      *
     Accounting fees and expenses......................................      *
     Director and officer liability insurance..........................      *
     Blue sky fees and expenses........................................      *
     Transfer agent and registrar fees.................................      *
     Miscellaneous.....................................................      *
                                                                        -------
       Total........................................................... $    *
                                                                        =======
</TABLE>
--------
* To be disclosed by amendment

Item 14. Indemnification of Directors and Officers

   Section 145 of the General Corporation Law of Delaware (the "DGCL") provides
that a Delaware corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of such corporation) by
reason of the fact that any such person is or was a director, officer, employee
or agent of such corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise. The indemnity may
include expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection
with such action, suit or proceeding, provided that such officer or director
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful. A Delaware corporation may indemnify officers and
directors against expenses (including attorneys' fees) in connection with the
defense or settlement of an action by or in the right of the corporation under
the same conditions, except that no indemnification is permitted without
judicial approval if the officer or director is adjudged to be liable to the
corporation. Where an officer or director is successful on the merits or
otherwise in the defense of any action referred to above, the corporation must
indemnify him or her against the expenses (including attorney's fees) which
such officer or director actually and reasonably incurred. The foregoing
description is qualified in its entirety by reference to the more detailed
provisions of Section 145 of the DGCL.

   Section 102 of the DGCL allows a Delaware corporation to eliminate or limit
the personal liability of a director to the corporation or to any of its
stockholders for monetary damage for a breach of fiduciary duty as a director,
except in the case where the director (i) breaches such person's duty of
loyalty to the corporation or its stockholders, (ii) fails to act in good
faith, engages in intentional misconduct or knowingly violates a law, (iii)
authorizes the payment of a dividend or approves a stock purchase or redemption
in violation of Section 174 of the DGCL or (iv) obtains an improper personal
benefit.

                                      II-1
<PAGE>

   In accordance with the DGCL, the Registrant's Certificate of Incorporation
contains a provision to limit the personal liability of its directors for
monetary damages for breach of their fiduciary duty to the fullest extent
permitted by the DGCL now or as it may hereafter be amended.

   In addition, as permitted by the DGCL, the Registrant's Bylaws provide that
(i) the Registrant is required to indemnify its directors and officers and
persons serving in such capacities in other business enterprises at the
Registrant's request, to the fullest extent permitted by Delaware law; (ii) the
Registrant may indemnify its employees and agents to the fullest extent
permitted by Delaware law; (iii) the Registrant is required to advance expenses
incurred by its directors and officers in connection with defending a
proceeding (except that a director or officer must undertake to repay any
advances if it should ultimately be determined that the director or officer is
not entitled to indemnification); (iv) the rights conferred in the Bylaws are
not exclusive; and (v) the Registrant may not retroactively amend the Bylaw
provisions in a way that adversely affects any director or officer.

   The Registrant maintains insurance covering its directors and officers
against certain liabilities incurred by them in their capacities as such,
including among other things, certain liabilities under the Securities Act of
1933, as amended (the "Securities Act"). The Registrant also intends to enter
into indemnification agreements with its directors and officers prior to the
closing of this offering that provide the maximum indemnity allowed to
directors and officers by the DGCL and the Registrant's Bylaws.

   The Underwriting Agreement provides for indemnification by the Underwriters
of the Registrant and its directors and officers who sign this Registration
Statement against certain liabilities, including liabilities under the
Securities Act.

   Reference is made to the following documents filed as exhibits to this
Registration Statement regarding relevant indemnification provisions described
above and elsewhere herein:

<TABLE>
<CAPTION>
                                                                       Exhibit
   Document                                                            Number
   --------                                                            -------
   <S>                                                                 <C>
   Form of Underwriting Agreement.....................................   1.1
   Certificate of Incorporation of Registrant.........................   3.1
   Bylaws of Registrant...............................................   3.2
   Form of Indemnification Agreement to be entered into by the
    Registrant with each of its directors and officers................  10.4
</TABLE>

Item 15. Recent Sales of Unregistered Securities

   Since the Registrant's incorporation inception in August 1996, it has issued
and sold the following unregistered securities.

   1. The Registrant granted options to purchase 6,444,506 shares of common
stock at exercise prices ranging from $0.05 to $0.95 per share to employees,
consultants, directors and other service providers under its 1996 Stock Option
Plan. 1,097,223 of these options were purchased and cancelled in October 1998
in connection with the acquisition by Vanenburg Capital Management I. Through
December 31, 1999, the Registrant issued and sold an aggregate of
1,006,031 shares of common stock to employees, consultants, directors and other
service providers at prices ranging from $0.05 to $0.95 per share pursuant to
exercises of the options referred to above.

   2. In September 1996, the Registrant issued and sold 6,375,000 shares of
common stock to Shai Agassi in exchange for all of the outstanding shares of
Quicksoft Development (1992) Ltd. The Registrant also issued and sold 689,874
shares of common stock to David Blumstein for an aggregate purchase price of
$4,622. All 7,380,249 shares of common stock outstanding in October 1998 were
subsequently repurchased by the Registrant in connection with the acquisition
by Vanenburg Capital Management I.

   3. In September and November 1996, the Registrant issued and sold 1,491,377
shares of Series A Preferred Stock to 17 private investors for an aggregate
purchase price of $795,401. All 1,491,377 shares of Series A Preferred Stock
were subsequently repurchased by the Registrant in October 1998 in connection
with the acquisition by Vanenburg Capital Management I.

                                      II-2
<PAGE>

   4. In June and November 1997, the Registrant issued and sold 6,709,264
shares of Series B Preferred Stock to Vanenburg Capital Management I for an
aggregate purchase price of $13,999,999.

   5. In October 1998, the Registrant issued and sold 10,500,000 shares of
Series C Preferred Stock to Vanenburg Capital Management I as part of a
restructuring of the Registrant capital stock structure in connection with the
acquisition by Vanenburg Capital Management I of substantially all outstanding
capital stock of the Registrant.

   6. In October 1998, the Registrant issued and sold 763,740 shares of our
Series A Preferred Stock to Shai Agassi, David Blumstein and Quicksoft Limited.

   7. In October 1999, the Registrant issued and sold 2,008,032 shares of
Series D Preferred Stock to 6 private investors, all located in Germany, for an
aggregate purchase price of $9,999,999.

   8. In June and July 2000, the Registrant issued and sold 2,155,298 shares of
Series E Preferred Stock to four private investors for an aggregate purchase
price of $17,999,971.

   For the foregoing issuances of unregistered securities, the Registrant
relied upon the exemptions from registration afforded by Section 4(2) of the
Securities Act and/or Rule 701 and Regulation S thereunder.

Item 16. Exhibits and Financial Statement Schedules

<TABLE>
<CAPTION>
 Exhibit
   No.                                 Description
 -------                               -----------
 <C>     <S>
  1.1*   Form of Underwriting Agreement.

  3.1**  Amended and Restated Certificate of Incorporation dated June 29, 2000.

  3.3*   Form of Amended and Restated Certificate of Incorporation to be filed
         after the closing of this offering.

  3.4**  Form of Amended and Restated Bylaws to become effective upon the
         closing of this offering.

  4.1**  Reference is made to Exhibits 3.1 through 3.4.

  4.2*   Specimen Stock Certificate.

  5.1*   Opinion of Wilson Sonsini Goodrich & Rosati, with respect to the
         securities being issued.

 10.1**  1996 Stock Option Plan and form of agreement thereunder.

 10.2**  2000 Stock Plan and form of agreement thereunder.

 10.3**  2000 Employee Stock Purchase Plan and form of agreement thereunder.

 10.4**  Form of Indemnification Agreement entered into between the Registrant
         and its directors and executive officers.

 10.5**  Office Lease between the Registrant and State Compensation Insurance
         Fund dated December 19, 1996.

 10.6**  Office Lease between Top Tier Israel Ltd. and Meir Hakharoshet
         Investments and Trade Ltd. dated December 5, 1997.

 10.7**+ OEM License Agreement between Baan Development B.V. and the Registrant
         dated as of March 25, 2000.

 10.8**+ Reseller Agreement between Baan Development B.V. and the Registrant
         dated as of March 25, 2000.

 10.9**+ Master Software License and Distribution Agreement for Embedded
         Products between SAP and the Registrant dated October 15, 1999.

 10.10** Amended and Restated Investor Rights Agreement dated July 11, 2000
         among the Registrant and certain investors.

 10.11** Amended and Restated Voting Agreement dated July 11, 2000 among the
         Registrant and certain investors.

 10.12** Form of Restricted Stock Purchase Agreement between the Registrant and
         certain executive officers.

 10.13** Worldwide Intercompany Management Services and Technical Support
         Agreement between the Registrant and Top Tier Israel, Ltd. dated
         August 22, 1996.

</TABLE>

                                      II-3
<PAGE>

<TABLE>
<CAPTION>
 Exhibit
   No.                                 Description
 -------                               -----------
 <C>     <S>
 10.14** International Distributor Agreement between the Registrant and TopTier
         Israel, Ltd. dated August 22, 1996.

 10.15** Promissory Note dated February 19, 2000 of Shai Agassi.

 10.16** Promissory Note dated February 19, 2000 of Shai Agassi.

 10.17** Promissory Note dated December 30, 1999 of David Blumstein.

 10.18** Promissory Note dated January 22, 2000 of Gil Perez.

 10.19** Promissory Note dated January 22, 2000 of Gil Perez.

 10.20** Promissory Note dated December 30, 1999 of Joseph Zarb.

 10.21** Employment Agreement between the Registrant and Shai Agassi dated
         October 6, 1998.

 10.22** Employment Agreement between the Registrant and David Blumstein dated
         October 6, 1998.

 10.23** Employment Agreement between the Registrant and Udi Ziv dated October
         6, 1998.

 10.24** Offer letter dated July 28, 1997 from the Registrant to Joseph Zarb.

 10.25** Business Line of Credit Agreement between the Registrant and Bank of
         America, National Association dated November 1, 1999.

 10.26** Office Lease between Registrant and EME Technologies, Inc. dated May
         16, 2000.

 10.27** Stockholders' Agreement dated October 6, 1998 between the Registrant
         and certain investors.

 10.28** Agreement and Plan of Reorganization dated October 6, 1998 between
         Vanenburg Ventures B.V., Tahoe Acquisition Corporation, the Registrant
         and certain investors.

 21.1**  List of Subsidiaries.

 23.1    Consent of Arthur Andersen, Independent Public Accountants.

 23.2*   Consent of Wilson Sonsini Goodrich & Rosati.

 23.3**  Consent of Michael Kwatinetz to be named as a person about to become a
         director.

 23.4**  Consent of Robert S. Leff to be named as a person about to become a
         director.

 23.5**  Consent of IDC dated August 3, 2000.

 24.1**  Power of Attorney (filed herewith on the signature page of this
         Registration Statement).

 27.1    Financial Data Schedule.

</TABLE>

--------
*   To be filed by amendment.
**  Previously filed.
+   Confidential treatment has been requested with respect to certain portions
    of this exhibit. Omitted portions have been filed separately with the SEC.

Item 17. Undertakings

   The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing, as 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 described under Item 14 above, or
otherwise, the Registrant has been advised that in the opinion of the SEC 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

                                      II-4
<PAGE>

proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered hereunder, 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.

   The undersigned Registrant hereby undertakes that:

     (1) For purposes of determining any liability under the Securities Act,
  the information omitted from the form of the 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-5
<PAGE>


                                SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, the 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 San
Jose, State of California, on the 11th day of September 2000.

                                          TOP TIER SOFTWARE, INC.

                                                   /s/ G. S. Ayers

                                          By: ____________________________

                                                   Gregory S. Ayers

                                          Name: __________________________

                                               Chief Financial Officer

                                          Title: _________________________

   Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed by the following persons on
September 11, 2000 in the capacities indicated:

<TABLE>
<CAPTION>
                  Signature                                 Title
                  ---------                                 -----
 <C>                                         <S>
                      *                      Chairman of the Board of
 ___________________________________________  Directors, President and Chief
                 Shai Agassi                  Executive Officer (principal
                                              executive officer)

              /s/ G. S. Ayers                Chief Financial Officer (principal
 ___________________________________________  financial officer and principal
              Gregory S. Ayers                accounting officer)
                      *                      Director
 ___________________________________________
                  Jan Baan

                      *                      Director
 ___________________________________________
               David Blumstein
                      *                      Director
 ___________________________________________
               Andries Bottema

                      *                      Director
 ___________________________________________
               Martin Lechner

             /s/ G.S. Ayers
 *By: ______________________________________
              Gregory S. Ayers
              Attorney-in-Fact
</TABLE>

                                      II-6
<PAGE>

              REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE

To the Board of Directors and Stockholders
of Top Tier Software, Inc.

   We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements of Top Tier Software, Inc. included in
this Registration Statement and have issued our report thereon dated March 30,
2000. Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying schedule is the
responsibility of the Company's management and is presented for the purpose of
complying with the Securities and Exchange Commission's rules and is not part
of the basic financial statements. This schedule has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
as a whole.

San Jose, California                      /s/ Arthur Andersen LLP
March 30, 2000

                                      S-1
<PAGE>

                            TOP TIER SOFTWARE, INC.

                 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
                                     Balance at Charged to             Balance
                                     beginning  costs and              at end
            Description              of period   expenses  Deductions of period
------------------------------------ ---------- ---------- ---------- ---------
<S>                                  <C>        <C>        <C>        <C>
Year ended December 31, 1997:
 Allowance for doubtful accounts....  $    --    $    --    $    --   $    --
Nine-month period ended September
 30, 1998:
 Allowance for doubtful accounts....  $    --    $    --    $    --   $    --
Three-month period ended December
 31, 1998:
 Allowance for doubtful accounts....  $    --    $ 24,558   $    --   $ 24,558
Year ended December 31, 1999:
 Allowance for doubtful accounts....  $ 24,558   $ 90,316   $    --   $114,874
Six-month period ended June 30,
 2000:
 Allowance for doubtful accounts
  (unaudited).......................  $114,874   $370,043   $(80,000) $404,917
</TABLE>
<PAGE>

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
 Exhibit
   No.                                 Description
 -------                               -----------
 <C>     <S>
  1.1*   Form of Underwriting Agreement.

  3.1**  Amended and Restated Certificate of Incorporation dated June 29, 2000.

  3.3*   Form of Amended and Restated Certificate of Incorporation to be filed
         after the closing of this offering.

  3.4**  Form of Amended and Restated Bylaws to become effective upon the
         closing of this offering.

  4.1**  Reference is made to Exhibits 3.1 through 3.4.

  4.2*   Specimen Stock Certificate.

  5.1*   Opinion of Wilson Sonsini Goodrich & Rosati, with respect to the
         securities being issued.

 10.1**  1996 Stock Option Plan and form of agreement thereunder.

 10.2**  2000 Stock Plan and form of agreement thereunder.

 10.3**  2000 Employee Stock Purchase Plan and form of agreement thereunder.

 10.4**  Form of Indemnification Agreement entered into between the Registrant
         and its directors and executive officers.

 10.5**  Office Lease between the Registrant and State Compensation Insurance
         Fund dated December 19, 1996.

 10.6**  Office Lease between Top Tier Israel Ltd. and Meir Hakharoshet
         Investments and Trade Ltd. dated December 5, 1997.

 10.7**+ OEM License Agreement between Baan Development B.V. and the Registrant
         dated as of March 25, 2000.

 10.8**+ Reseller Agreement between Baan Development B.V. and the Registrant
         dated as of March 25, 2000.

 10.9**+ Master Software License and Distribution Agreement for Embedded
         Products between SAP and the Registrant dated October 15, 1999.

 10.10** Amended and Restated Investor Rights Agreement dated July 11, 2000
         among the Registrant and certain investors.

 10.11** Amended and Restated Voting Agreement dated July 11, 2000 among the
         Registrant and certain investors.

 10.12** Form of Restricted Stock Purchase Agreement between the Registrant and
         certain executive officers.

 10.13** Worldwide Intercompany Management Services and Technical Support
         Agreement between the Registrant and Top Tier Israel, Ltd. dated
         August 22, 1996.

 10.14** International Distributor Agreement between the Registrant and TopTier
         Israel, Ltd. dated August 22, 1996.

 10.15** Promissory Note dated February 19, 2000 of Shai Agassi.

 10.16** Promissory Note dated February 19, 2000 of Shai Agassi.

 10.17** Promissory Note dated December 30, 1999 of David Blumstein.

 10.18** Promissory Note dated January 22, 2000 of Gil Perez.

 10.19** Promissory Note dated January 22, 2000 of Gil Perez.

 10.20** Promissory Note dated December 30, 1999 of Joseph Zarb.

 10.21** Employment Agreement between the Registrant and Shai Agassi dated
         October 6, 1998.

 10.22** Employment Agreement between the Registrant and David Blumstein dated
         October 6, 1998.

 10.23** Employment Agreement between the Registrant and Udi Ziv dated October
         6, 1998.

 10.24** Offer letter dated July 28, 1997 from the Registrant to Joseph Zarb.

</TABLE>
<PAGE>

<TABLE>
<CAPTION>
 Exhibit
   No.                                 Description
 -------                               -----------
 <C>     <S>
 10.25** Business Line of Credit Agreement between the Registrant and Bank of
         America, National Association dated November 1, 1999.

 10.26** Office Lease between Registrant and EME Technologies, Inc. dated May
         16, 2000.

 10.27** Stockholders' Agreement dated October 6, 1998 between the Registrant
         and certain investors.

 10.28** Agreement and Plan of Reorganization dated October 6, 1998 between
         Vanenburg Ventures B.V., Tahoe Acquisition Corporation, the Registrant
         and certain investors.

 21.1**  List of Subsidiaries.

 23.1    Consent of Arthur Andersen, Independent Public Accountants.

 23.2*   Consent of Wilson Sonsini Goodrich & Rosati.

 23.3**  Consent of Michael Kwatinetz to be named as a person about to become a
         director.

 23.4**  Consent of Robert S. Leff to be named as a person about to become a
         director.

 23.5**  Consent of IDC dated August 3, 2000.

 24.1**  Power of Attorney (filed herewith on the signature page of this
         Registration Statement).

 27.1    Financial Data Schedule.

</TABLE>

--------
*   To be filed by amendment.

**  Previously filed.

+   Confidential treatment has been requested with respect to certain portions
    of this exhibit. Omitted portions have been filed separately with the SEC.


© 2022 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission