IRONSIDE TECHNOLOGIES INC, S-1, 2000-10-18

IRONSIDE TECHNOLOGIES INC
S-1, 2000-10-18

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<PAGE>

As filed with the Securities and Exchange Commission on October 18, 2000
Registration No. 333-

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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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IRONSIDE TECHNOLOGIES INC.
(Name of issuer in its charter)

<TABLE>
<S> <C> <C>
Yukon Territory 7372 98-0172098
(State or Other
Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or
Organization) Classification Code Number) Identification Number)
</TABLE>
7077 Koll Center Parkway
Pleasanton, California 94566
(925) 600-8822
(Address and telephone number of principal executive offices and principal
place of business)

William B. Lipsin
President and Chief Executive Officer
7077 Koll Center Parkway
Pleasanton, California 94566
(925) 600-8822
(Name, address and telephone number of agent for service)
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Copies of all communications to be sent to:

<TABLE>
<S> <C>
Henry H. Hewitt, Esq. Jeffrey D. Saper, Esq.
Reed W. Topham, Esq. Caine T. Moss, Esq.
Stoel Rives LLP Wilson Sonsini Goodrich & Rosati, P.C.
900 SW Fifth Avenue, Suite 2300 650 Page Mill Road
Portland, Oregon 97204 Palo Alto, California 94304
(503) 224-3380 (650) 493-9300
</TABLE>
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Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.

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

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

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

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

If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]

CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Proposed Maximum
Title of Each Class of Aggregate Offering Amount of Registration
Securities to be Registered Price(1) Fee
--------------------------------------------------------------------------------
<S> <C> <C>
Common Shares, no par value.......... $75,000,000 $19,800
</TABLE>
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(1) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457(o) under the Securities Act.
Includes proceeds from the sale of shares which the Underwriters have the
option to purchase to cover over-allotments, if any.

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

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<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 an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion
Preliminary Prospectus dated October 18, 2000

PROSPECTUS

[LOGO OF IRONSIDE TECHNOLOGIES INC.]

Common Shares

-----------

This is Ironside Technologies Inc.'s initial public offering. Ironside is
selling shares in the U.S. and Canada.

We expect the public offering price to be between $ and $ per share.
Currently, no public market exists for the shares. After pricing of the
offering, we expect that the shares will be quoted on the Nasdaq National
Market under the symbol "IRON."

Investing in the common shares involves risks that are described in the
"Risk Factors" section beginning on page 6 of this prospectus.

-----------

<TABLE>
<CAPTION>
Per Share Total
--------- -----
<S> <C> <C>
Public offering price............................. $ $
Underwriting discount............................. $ $
Proceeds, before expenses, to Ironside............ $ $
</TABLE>

The underwriters may also purchase up to an additional shares from
Ironside at the public offering price, less the underwriting discount, within
30 days from the date of this prospectus to cover over-allotments.

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.

The shares will be ready for delivery on or about , 2000.

-----------

Merrill Lynch & Co.

CIBC World Markets Thomas Weisel Partners LLC

-----------

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

DESCRIPTION OF GRAPHICS FOR FRONT COVER

To the far left of the page is an oval. At the top left of the oval is a
drawing of a factory. Below the factory and to the right is a drawing of a
truck. At the far left and at the bottom of the oval is the word
"Manufacturer." Below the word "Manufacturer" and centered in the middle of
the oval appears "& Distributor." To the immediate right of the oval is a
bidirectional arrow. The arrow to the right is pointing to a smaller oval.
Located in the smaller oval is a drawing of a rectangular shape. Directly
below the smaller oval appears "IRONSIDE Server," below which appears
"Applications." Below "Applications" appears "& Infrastructure." To the
immediate right of the cloud shape is a bidirectional arrow. A second
bidirectional arrow is also located below the cloud shape. The arrow to the
immediate right is pointing to an oval approximately the same size as the
oval to the far left of the page. On the oval are located five drawings. On
the far left and in the center of the oval is a drawing of a palm pilot. Above
the palm pilot is a rectangular shape. Below the rectangular shape and to
the right of the palm pilot is a drawing of a computer monitor with a keyboard
located directly below it. To the right and above the monitor are drawings of
two office buildings located next to each other. Centered at the bottom of the
oval is "Buyer." The arrow pointing down from the cloud shape points to an
oval. In the middle of the arrow and printed horizontally is "iXML." This oval
is smaller than the oval labeled "Buyer." On the oval is a rectangular shape.
Below the oval appears "IRONSIDE Exchange," directly below which appears
"Services Network." Another bidirectional arrow is located under "Services
Network." In the middle of the arrow and printed horizontally is "XML, xCBL,
cXML." The arrow is pointing to a bracket positioned horizontally on the page.
Below the bracket are three ovals in a horizontal line. On the oval located
farthest to the right and appearing approximately in the middle of the page
are two arrows pointing to each other. Below the arrows and in the middle of
the oval is "eMarketplaces." Directly below the oval appears "Simplexis,"
directly below which is "MRO.com." On the oval in the middle is a drawing of a
small rectangle at the top center of the oval, directly below which and in the
middle of the oval is "eProcurement." Directly below "eProcurement" and at the
bottom center of the oval is "System." Below the oval is "SAP"," below which and
centered underneath it is "JD Edwards." Below "JD Edwards" and centered beneath
it is "Ariba." On the oval to the far right and centered in the middle of the
oval is "Private Networks," with "Networks" located directly beneath "Private."
Centered beneath the oval is "Covisint" with "Transora" appearing directly below
it.

<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary....................................................... 1
Risk Factors............................................................. 6
Special Note Regarding Forward-Looking Statements........................ 19
Use of Proceeds.......................................................... 20
Dividend Policy.......................................................... 20
Capitalization........................................................... 21
Dilution................................................................. 22
Selected Consolidated Financial Data..................................... 23
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 25
Business................................................................. 39
Management............................................................... 57
Principal Shareholders................................................... 67
Related Party Transactions............................................... 69
Description of Share Capital............................................. 71
Shares Eligible for Future Sale.......................................... 73
Income Tax Considerations................................................ 75
Underwriting............................................................. 79
Legal Matters............................................................ 83
Experts.................................................................. 83
Where You Can Find Additional Information................................ 83
Index to Consolidated Financial Statements............................... F-1
</TABLE>

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You should rely only on the information contained or incorporated by
reference in this prospectus. We have not, and the underwriters have not,
authorized any other person to provide you with different information. If
anyone provides you with different or inconsistent information, you should not
rely on it. We are not, and the underwriters are not, making an offer to sell
these securities in any jurisdiction where the offer or sale is not permitted.
You should assume that the information appearing in this prospectus is accurate
only as of the date on the front cover of this prospectus. Our business,
financial condition, results of operations and prospects may have changed since
that date.
<PAGE>

PROSPECTUS SUMMARY

The following summary highlights information that we present more fully
elsewhere in this prospectus, especially "Risk Factors" and the financial
statements and notes thereto.

Ironside Technologies Inc.

We are a leading provider of Internet-based software applications and
related services for manufacturers and distributors, or sellers, designed to
facilitate and enhance business-to-business e-commerce. Our software
applications and services help businesses market and sell their products and
services over the Internet. Our solutions enable sellers to quickly and
efficiently leverage their existing enterprise business systems and the
Internet to connect with multiple buyers and online trading exchanges, while
maintaining the traditional sales channels around which their enterprise
infrastructure was built.

With our products and services, sellers can interact more closely and
efficiently with their customers, suppliers and other business partners through
the exchange of real-time product and process information. For example, a
chemical products distributor can use our products to enable engineers to
compare and configure products, obtain current inventory availability
information, place orders and obtain the status of orders--either from their
desk, using an Internet browser, an online trading exchange or the company's
procurement system, or using a wireless device while in the field. The market
for business-to-business e-commerce is projected by Forrester Research to be a
$2.7 trillion market by 2004.

Our solution is comprised of two key components: the Ironworks product
suite and the Ironside Network. The Ironworks product suite consists of our
web-based software products that enable sellers to integrate their existing
enterprise business systems into a unified e-commerce environment. It includes
a set of applications that provide a convenient interface for buyers to
communicate with a seller's enterprise business systems, as well as tools for
creating applications with custom features. Our Ironworks software can be
rapidly integrated into a broad range of operating systems and computing
environments. Our recently launched Ironside Network is an access service that
provides sellers with a single point of entry into multiple online trading
exchanges and the flexibility to quickly and efficiently enter and exit these
exchanges as they prove to be viable or non-viable channels to market products
and services. Both Ironworks users and non-Ironworks users can participate in
the Ironside Network.

Sellers can use our comprehensive solution to:

. reduce sales costs by automating transactions and enabling the
electronic distribution of product information;

. tap new revenue and market opportunities by reaching new and existing
customers through a variety of channels, such as Internet browsers,
automated procurement systems, wireless devices and online trading
exchanges;

. increase return on investment from existing enterprise business
systems by taking advantage of our rapid implementation to quickly
extend the benefits of those applications to buyers and other business
partners;

. improve supply chain efficiencies by reducing cycle times, lowering
inventories and reducing error rates through the real-time exchange of
information; and

. strengthen relationships with buyers by providing them with continuous
access to critical, secure, real-time information.

1
<PAGE>

We market our products to a wide range of industries. We also target
certain industries in which we have gained a strong customer base and acquired
significant expertise, including the chemicals and allied products,
electronics, food and beverage, and office/school supplies industries. We
currently have over 165 customers, including companies such as Brake Bros.,
General Semiconductor, Goodyear, J.L. Hammett, McKesson HBOC and Sandvik Steel.
We have also established strategic relationships with operating systems and
application software providers such as Clarify, IBM, Microsoft, Oracle, SAP and
Sun Microsystems, system integrators such as marchFIRST and BrightStar
Information Technology Group, and online trading exchanges and firms involved
in the business-to-business integration of buyers and exchanges.

Our objective is to be the leading global provider of comprehensive
Internet-based software applications for sellers designed to facilitate and
enhance business-to-business e-commerce. We plan to achieve this objective by:

. leveraging our first-mover advantage to build our customer base and
expand globally;

. leveraging our expertise in manufacturing and distribution;

. continuing to broaden strategic relationships;

. further developing our model for predictable, recurring revenues; and

. extending our technology and product leadership.

We were incorporated under the laws of the Province of Ontario, Canada in
February 1996 and continued under the laws of the Yukon Territory, Canada in
October 1998. Our principal executive offices are located at 7077 Koll Center
Parkway, Pleasanton, California 94566. Our telephone number is (925) 600-8822.
Our World Wide Web address is www.ironside.com. Information on our website does
not constitute a part of this prospectus.

Ironside(R) and Ironside Powered(R) are our registered trademarks.
Additionally, Ironworks(TM), IronX(TM), iXML(TM), B2BChat(TM) and Supply Chain
Relationship Management(TM) are our trademarks. This prospectus contains other
product names, trade names and trademarks of Ironside and of other
organizations.

2
<PAGE>

The Offering

<TABLE>
<S> <C>
Common shares offered by us..... shares

Common shares to be outstanding
after this offering............ shares

Use of proceeds................. For general corporate purposes and working
capital, including expansion of our sales and
marketing activities. See "Use of Proceeds."

Risk factors.................... See "Risk Factors" and other information
included in this prospectus for a discussion
of factors you should carefully consider
before deciding to invest in our common
shares.

Proposed Nasdaq National Market
symbol......................... IRON
</TABLE>

The number of shares that will be outstanding after the offering is based
on 86,670,790 shares outstanding as of June 30, 2000 and excludes:

. 15,436,184 shares issuable upon the exercise of outstanding stock
options at a weighted average exercise price of $0.80;

. 332,364 shares available for future issuance under our stock option
plan; and

. 1,403,387 common shares issuable through the exercise of convertible
preferred share warrants outstanding on June 30, 2000 at a weighted
average price of $1.43 per share.

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

Except as otherwise indicated, all of the information in this prospectus:

. reflects the automatic conversion of all outstanding preferred shares
into common shares upon the closing of this offering;

. reflects a -for-1 reverse stock split of our outstanding common
shares that was effected on , 2000;

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

. is expressed in United States dollars, except that references to
"Cdn.$" are to Canadian dollars and references to "(Pounds)" are to
British pounds.

3
<PAGE>

SUMMARY CONSOLIDATED FINANCIAL DATA
(in thousands, except per share data)

The following table sets forth a summary of our consolidated statements
of operations data for the periods presented. You should read this data in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and our Consolidated Financial Statements and the
accompanying Notes, included elsewhere in this prospectus. The pro forma
information in the following table gives effect to the automatic conversion of
all of our outstanding convertible preferred shares into common shares
immediately prior to the closing of this offering.

<TABLE>
<CAPTION>
Period from Three Months
February 22, 1996 Year Ended March 31, Ended June 30,
(date of inception) ----------------------------------- ----------------
to March 31, 1996 1997 1998 1999 2000 1999 2000
------------------- ------- ------- ------- -------- ------- -------
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Statements
of Operations Data:
Total revenues.......... $ -- $ -- $ 1,366 $ 3,327 $ 6,181 $ 577 $ 4,269
Gross profit............ -- -- 1,130 2,423 1,439 172 1,851
Operating expenses...... 33 1,014 5,536 7,402 18,197 2,544 10,684
Loss from operations.... (33) (1,014) (4,406) (4,979) (16,758) (2,372) (8,833)
Net loss attributable to
common shareholders.... $ (33) $(1,014) $(5,300) $(5,971) (21,986) (2,710) (9,973)
====== ======= ======= ======= ======== ======= =======
Net loss per share:
Basic and diluted..... $(0.01) $ (0.25) $ (1.31) $ (1.48) $ (5.44) $ (0.67) $ (2.47)
====== ======= ======= ======= ======== ======= =======
Weighted average
shares used in
computing basic and
diluted net loss per
share................ 3,871 4,040 4,040 4,040 4,040 4,040 4,040
====== ======= ======= ======= ======== ======= =======
Pro forma net loss per
share:
Basic and diluted
(unaudited).......... $ (0.37) $ (0.12)
======== =======
Weighted average
shares used in
computing basic and
diluted pro forma net
loss per share
(unaudited).......... 59,363 85,698
======== =======
</TABLE>

4
<PAGE>

The following table summarizes:

. actual consolidated balance sheet data;

. pro forma consolidated balance sheet data giving effect to the
conversion of all of our outstanding convertible preferred shares into
common shares immediately prior to the closing of this offering; and

. pro forma as adjusted consolidated balance sheet data, adjusted to
give effect to the conversion of our convertible preferred shares and
our sale of common shares in this offering at an assumed initial
public offering price of $ per share and after deducting estimated
underwriting discounts and estimated offering expenses.

<TABLE>
<CAPTION>
As of June 30, 2000
-----------------------------------
Pro Forma
Actual Pro Forma As Adjusted
----------- ----------- -----------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C>
Consolidated Balance Sheet Data:
Cash and cash equivalents.................. $ 34,746 $34,746 $
Working capital............................ 31,587 31,587
Total assets............................... 43,782 43,782
Capital lease obligations, long term, and
mandatorily redeemable convertible
preferred shares.......................... 71,240 268
Total shareholders' equity (deficit)....... (36,117) 34,855
</TABLE>

5
<PAGE>

RISK FACTORS

This offering and an investment in our common shares involve a high
degree of risk. You should carefully consider the following risk factors and
the other information in this prospectus, including our Consolidated Financial
Statements and the accompanying Notes, before investing in our common shares.
Our business could be seriously harmed by any of the following risks or
uncertainties. The trading price of our common shares could decline due to any
of these risks or uncertainties, and you may lose all or part of your
investment.

Risks Relating To Our Business

We are an early stage company, so we have only a limited operating history with
which you can evaluate our business and prospects.

We were incorporated in 1996. We began shipping Ironworks in 1997, and we
launched the Ironside Network in April 2000. Accordingly, we have only a
limited operating history with which you can evaluate our business and our
prospects. In addition, our prospects must be considered in light of the risks
encountered by companies in the early stages of development in new and rapidly
evolving markets, especially the market for Internet-based business-to-business
software. Some of the risks we face include our potential inability to:

. attract and retain a broad base of customers that can serve as
reference accounts for our ongoing sales efforts;

. manage competition;

. hire and retain qualified personnel;

. develop new technology;

. negotiate and maintain favorable strategic relationships; and

. plan and manage effectively the growth we expect in our business.

If we fail to address these risks successfully our business will likely
suffer.

We have a history of losses and, because for the foreseeable future we expect
to increase our investment in our business faster than we anticipate growth in
our revenues, we expect that we will continue to incur significant operating
losses and negative cash flow and may never be profitable.

We have spent significant funds to date to develop and refine our current
software applications, to develop our sales and marketing resources and to
build a professional services organization. We have incurred significant
operating and net losses and negative cash flow and have never been profitable.
We incurred a net loss of $19.2 million for the fiscal year ended March 31,
2000, and a net loss of $8.3 million for the quarter ended June 30, 2000. As of
June 30, 2000, we had an accumulated deficit of $38.6 million.

We expect to continue to invest significantly in our direct and indirect
sales and distribution efforts, both domestically and internationally, in order
to increase market awareness and sales of our software solution and the related
services we offer. We also plan to continue to grow our professional services
organization and our research and development effort to enhance our current
software products and to expand our software applications suite. We expect to
continue to hire additional personnel in all other areas of our company in
order to support our growing business. In addition, we expect to continue to
incur significant fixed and other costs associated with customer acquisitions
and with the implementation of software applications for our customers.

In order to achieve operating profitability, we will need to increase our
customer base, decrease our customer acquisition costs and increase our number
of licensed users and our revenues per customer. We cannot assure you that we
will be able to increase our revenues or increase our operating efficiencies in
this

6
<PAGE>

manner. Moreover, because we expect to continue to increase our investment in
our business faster than we anticipate growth in our revenues, we expect that
we will continue to incur significant operating losses and negative cash flow
for the foreseeable future and we may never be profitable.

Our quarterly financial results fluctuate due to a number of factors and are
difficult to predict, and if our future results are below the expectations of
the public market analysts and investors, the price of our common shares may
decline.

Our quarterly revenues and results of operations are difficult to
predict. We have experienced, and expect to continue to experience,
fluctuations in revenues and operating results from quarter to quarter due to a
number of factors, many of which are beyond our control. As a result, we
believe that quarter-to-quarter comparisons of our revenues and operating
results may not be accurate indicators of future performance. The reasons for
these fluctuations include, but are not limited to:

. market acceptance of our products;

. budgetary constraints of our customers;

. the amount and timing of software license orders;

. the amount and timing of operating costs relating to expansion of our
business, operations and infrastructure;

. the number and timing of new hires;

. our utilization rate for our service professionals;

. changes in our pricing policies or our competitors' pricing policies;

. entry of new competition into our market;

. variability in the mix of our license, service and maintenance
revenues; and

. costs related to potential acquisitions of technology or other
businesses.

We plan to increase our operating expenses significantly in order to
expand our sales and marketing operations and fund greater levels of research
and development. Our operating expenses, which include sales and marketing,
research and development and general and administrative expenses, are based on
our expectations of future revenues and are relatively fixed in the short term.
If revenues fall below our expectations in a quarter and we are not able to
quickly reduce our spending in response, our operating results for that quarter
could be harmed. It is likely that in some future quarter our operating results
may be below the expectations of public market analysts and investors, and, as
a result, the price of our common shares may fall.

We currently depend on Ironworks for all of our revenues. If Ironworks does not
achieve broad market acceptance, our business will be seriously harmed.

We currently derive all of our revenues from licensing our Ironworks
software and providing related professional services. We expect that we will
continue to depend on revenues from Ironworks licenses and related services for
the foreseeable future. As of September 30, 2000, over 165 customers had
licensed our Ironworks software. If Ironworks does not achieve broad market
acceptance, our business will be seriously harmed. We cannot predict whether
Ironworks will be broadly accepted.

Our Ironside Network may not be commercially successful because it is at an
early stage of development and because our pricing and revenue model for our
Ironside Network is unproven.

We launched our Ironside Network in April 2000, and we began processing
test transactions through the Ironside Network in September 2000. As of
September 30, 2000, six sellers and eleven online trading

7
<PAGE>

exchanges had agreed to participate in the Ironside Network. These sellers and
exchanges are in the process of integrating and testing their systems with the
Ironside Network. Broad and timely acceptance of our Ironside Network by both
sellers of products and online trading exchanges, which is important to our
future success, is subject to a number of significant risks. We cannot predict
whether the Ironside Network will be broadly accepted for the following
reasons:

. online trading exchanges are relatively new and unproven, and our
customers may not choose to participate in the Ironside Network or
consider it a valuable feature of our solution;

. the ability of our Ironside Network to attract and support large
numbers of sellers and exchanges is unproven;

. we need to enhance the features and services provided through our
Ironside Network to achieve widespread commercial acceptance of our
network, and we may be unable to do so;

. we may be unable to significantly expand our internal resources to
support the growth we expect in our Ironside Network; and

. alternative services introduced by our competitors may gain
widespread acceptance more rapidly and impede market acceptance of
our Ironside Network.

We expect to generate revenues from the Ironside Network primarily
through initial implementation fees, monthly subscription licenses, per
transaction fees and monthly fees for value-added services. Although we expect
to derive a substantial portion of our long-term future revenues from our
Ironside Network, our pricing and revenue model for the services associated
with our Ironside Network is unproven. If our pricing and revenue model is not
acceptable to our customers, our Ironside Network may not be commercially
successful.

We derive a significant portion of our revenues from a few customers and expect
to continue to do so in the future. If we lose any of these customers, or if we
are unable to attract new customers, our revenues may decline.

Revenues from one or a few customers have accounted for a significant
portion of our revenues. For the fiscal year ended March 31, 1998, revenues
from two customers accounted for 15% and 14% of total revenues; for the fiscal
year ended March 31, 1999, revenues from one customer accounted for 11% of
total revenues; and for the fiscal year ended March 31, 2000, revenues from two
customers accounted for 19% and 16% of total revenues. We expect to continue to
derive a significant portion of our revenues from one or a few customers in the
future. To become profitable, we will need to expand significantly our base of
customers as well as disaggregate our revenues across a larger number of
customers. If we lose any of our key customers, or if we are unable to attract
new customers once our work for our present key customers is completed, our
revenues may decline, and we will likely be unable to achieve profitability.

Approximately 16% of our revenues for the fiscal year ended March 31,
2000 related to custom design and implementation services that we provided to
The Goldman Sachs Group Inc. in connection with its deployment of a custom web-
based system. We expect that this project will also account for a significant
portion of our revenues in fiscal 2001 and fiscal 2002. We expect this project
to be substantially completed by the middle of fiscal 2002. Although we may
provide these types of special services from time to time, we do not expect to
receive a significant portion of our revenues from these types of services
after the Goldman Sachs project has been completed.

For our last fiscal year, we derived a significant portion of our revenues from
customers in certain industries, and if these industries suffer adverse
economic conditions, our revenues and demand for our products may decline.

Approximately 49% of our revenues for the fiscal year ended March 31,
2000, were derived from customers in the chemicals and allied products,
electronics, food and beverage and office/school supply

8
<PAGE>

industries. Excluding revenues that we received for services in connection with
a special project during fiscal 2000, these industries accounted for
approximately 58% of our total revenues. Our reliance on customers in these
industries subjects us to the economic conditions affecting these industries.
If we continue to rely on these industries as major sources of revenues, and
these industries suffer adverse economic conditions, there may be a significant
decrease in the demand for our products, and our revenues may decline.

If we are unable to develop new software products or enhancements to our
existing products on a timely and cost-effective basis, or if our new products
or enhancements do not achieve market acceptance, our business would be
seriously harmed.

The life cycles of our products are difficult to predict because the
market for our products is new and emerging and is characterized by rapid
technological change, changing customer needs and evolving industry standards.
The introduction of products employing new technologies and emerging industry
standards could render our existing products and services obsolete and
unmarketable. For example, our software products are based almost entirely on
Java and XML technologies. If new technologies are adopted as the standard in
our industry or are considered more robust than Java or XML, we may need to
rewrite our software products using these technologies in order to remain
competitive.

To be successful, our products and services must keep pace with
technological developments and emerging industry standards, address the rapidly
evolving and increasingly sophisticated needs of our customers and achieve
broad market acceptance. Consequently, our future financial performance will
depend, in significant part, upon the successful development, introduction and
customer acceptance of enhanced versions of our sell-side business-to-business
software applications and any new products or services that we may develop or
acquire. We cannot assure you that we will be successful in enhancing,
upgrading or continuing to effectively market our software applications, or
that any new products or services that we may develop or acquire will achieve
broad market acceptance.

In developing new products and services, we may:

. fail to develop and market products or product enhancements that
respond to technological changes or evolving industry standards in a
timely or cost-effective manner;

. encounter products, capabilities or technologies developed by others
that render our products and services obsolete or noncompetitive or
that shorten the life cycles of our existing products and services;

. experience difficulties that could delay or prevent the successful
development, introduction and marketing of these new products and
services; or

. fail to develop new products and services that adequately meet the
evolving requirements of businesses that engage in e-commerce.

If our existing strategic relationships terminate, or if we fail to develop new
strategic relationships, our business may suffer.

We have established strategic relationships with operating system and
application software providers, system integrators and online trading
exchanges. These relationships expose our software to potential customers to
which we may not otherwise have access and provide us with third-party service
providers that our customers can use for implementation assistance. In
addition, by virtue of these relationships, we gain access to the technology
underlying the products and services of our strategic relationship partners,
enabling us to design solutions that integrate our partners' technologies. If
our relationships with any of our strategic relationship partners are
terminated, or if we fail to develop new strategic relationships, we might lose
sales and marketing or product development opportunities, and our business may
suffer.

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If we do not expand our professional services organization, or if we are unable
to establish and maintain relationships with implementation and channel
partners, our customers may become dissatisfied and our business may be harmed.

Our customers typically engage us to assist them with implementation,
education and training, and maintenance and support. We believe that our
success depends on our ability to provide our customers with these services and
to attract and educate implementation and channel partners to provide similar
services to our customers. However, we cannot be certain that we can attract or
retain a sufficient number of service professionals and partners. Competition
for qualified personnel is intense. In addition, new personnel will require
training and education and will take time to reach full productivity. If we are
unable to attract and maintain these service professionals and partners, we
would likely be unable to meet customer demands for our implementation
services, which could hinder our ability to grow our business.

Our failure or the failure of our implementation providers to meet customer
expectations regarding deployment of our products could result in negative
publicity and reduced sales.

Deploying our products is a complex process involving integration with
our customers' enterprise business systems. In some cases, we deploy our
products ourselves, and in other cases, our implementation providers deploy our
products for us. We currently have entered into agreements with companies
including marchFIRST, BrightStar and IBM to implement our products. We or our
implementation providers may fail to meet customer expectations regarding the
timing or manner of deployment of our products, which could result in a loss of
customers, negative publicity and an inability to attract new customers. In
addition, complex deployments that we undertake ourselves may also increase the
amount of professional services allocated to each customer, thereby increasing
our costs and adversely affecting our business and operating results.

Our lengthy sales cycle could impact the timing of our revenues.

Generally, we are required to provide a significant level of education
regarding the use and benefits of our products, and potential customers tend to
engage in extensive internal reviews before making purchase decisions. In
addition, the purchase of our products typically involves a significant
commitment by our customers of capital and other resources and is therefore
subject to delays that are beyond our control. These delays often relate to
testing and acceptance of new technologies that affect key operations and
internal budgetary procedures. As a result, our sales cycle can be lengthy,
typically ranging from 90 to 180 days, which may have an impact on the timing
of our revenues.

The business-to-business e-commerce industry is highly competitive, and we may
not be able to compete effectively.

The market for business-to-business e-commerce solutions is rapidly
changing and highly competitive. We expect competition to intensify as the
number of entrants and new technologies increases. We may not be able to
compete successfully against current or future competitors. The competitive
pressures facing us may result in reduced margins, loss of sales or decreased
market share, which in turn could harm our business, operating results and
financial condition.

Our current and potential competitors include, among others:

. other business-to-business application providers such as BroadVision,
Click Commerce and Spaceworks;

. large software vendors, companies and trading networks that develop
their own business-to-business e-commerce solutions such as IBM,
Microsoft, Oracle and SAP;

. electronic data interchange, or EDI, vendors such as Harbinger,
Sterling Commerce and GE Exchange Services;

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. vendors of proprietary enterprise application integration solutions
such as webMethods, TIBCO and Vitria; and

. application server vendors who have added XML capabilities to their
products such as BEA and IBM.

Some of the competitive pressures we face are the following:

. many of our competitors and potential competitors have more
experience developing Internet-based software, larger technical
staffs, larger customer bases, more established distribution
channels, greater brand recognition 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.

. negotiating and maintaining favorable customer and strategic
relationships is critical to our business, and our competitors may be
able to negotiate strategic relationships on more favorable terms
than we are able to negotiate.

. many of our competitors may have well-established relationships with
our existing and prospective customers.

. some of our competitors may be able to provide customers with
software similar or preferable to ours at lower overall costs or to
reduce their license fees aggressively in an effort to increase
market share, and we may be unable to match these costs or fee
reductions by our competitors.

Some of our add-on modules incorporate licensed technology from third parties,
and our inability to maintain licenses for this technology, or defects in this
licensed technology, could harm our business.

We license and will continue to license from third parties certain
technology integral to some of our add-on modules. For example, our
eNotification and eApprovals modules incorporate technology licensed from
Delano Technology Corporation and our B2BChat module incorporates technology
licensed from LivePerson, Inc. Our inability to maintain any third-party
product licenses could result in delays in product development until equivalent
products can be identified, licensed and integrated. We also expect to require
new licenses in the future as our business grows and technology evolves. We
cannot assure you that we will be able to integrate the related third-party
products into our products or that these licenses will be available to us on
commercially reasonable terms, if at all. Furthermore, the operation of our
modules that incorporate licensed technology could be impaired if errors occur
in this licensed technology. It also may be more difficult to correct these
errors because this licensed technology is not within our control.

We rely on our internal systems, and may rely on the internal systems of third
parties, to operate and maintain our Ironside Network.

We currently operate and maintain our Ironside Network. In the future,
however, we may contract with third parties to operate and maintain our
Ironside Network. If our internal systems, or the internal systems of these
third parties, fail, or if they cannot be expanded or enhanced to accommodate
increased use of our Ironside Network, we could lose customers and revenues,
which could significantly harm our business.

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If we are unable to retain our executive officers and key personnel, or to
integrate new members of our senior management that are critical to our
business, we may not be able to successfully manage our business or achieve our
objectives.

Our future success depends upon the continued service of our executive
officers and key technical personnel. If we lose the services of one or more of
our executive officers or key technical personnel, or if one or more of them
decide to join a competitor or otherwise compete directly or indirectly with
us, our business, operating results and financial condition could be harmed.
William B. Lipsin, our President and Chief Executive Officer, would be
particularly difficult to replace.

Several of our executive officers and key personnel have recently joined
us, including our Chief Financial Officer and our Senior Vice President and
General Manager, Americas, who joined us in March and April 2000, respectively.
Our future performance will depend, in part, on our ability to successfully
integrate our newly-hired executive officers and key personnel into our
management team, and our ability to develop an effective working relationship
among management.

We may not be able to increase sales of our products and services if we are not
able to hire and retain qualified sales and marketing personnel.

Our solutions require a sophisticated sales and marketing effort targeted
at multiple departments within an organization. Competition for qualified sales
and marketing personnel is intense, and we might not be able to hire and retain
adequate numbers of such personnel to maintain our growth. New hires will
require training and take time to achieve full productivity. Also, our
competitors may attempt to hire our employees away from us. If we are unable to
hire or retain qualified sales personnel, or if newly hired personnel fail to
develop the necessary skills or reach productivity when anticipated, we may not
be able to expand our sales organization and increase sales of our products and
services.

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

Software as complex as ours often contains both known and undetected
errors or performance problems. Many serious defects are frequently found
during the period immediately following 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 is
not error-free. Undetected errors or performance problems may be discovered in
the future and known errors considered minor by us may be considered serious by
our customers. This could result in lost revenues or delays in customer
acceptance and would be detrimental to our reputation, which could harm our
business, operating results and financial condition.

Delivery of inaccurate data could harm our business and expose us to legal
liability.

The accuracy of product information and prices is critical to our
customers' businesses. Our products extract and process data from sellers'
enterprise business systems and facilitate the delivery of this data to buyers.
The failure of our products to accurately extract, translate, process or
deliver data could deter businesses from using our products, damage our
business reputation, harm our ability to attract new customers and expose us to
legal liability. In addition, from time to time the systems of our customers
may contain inaccurate pricing or other product information. Even though such
inaccuracies are not caused by our product and are not within our control,
similar consequences could occur. We currently do not carry insurance that
would adequately cover losses that may be incurred as a result of the delivery
of inaccurate data.

We intend to expand our international sales efforts but do not have substantial
experience in international markets.

We currently have operations in Europe, and we intend to continue to
expand our international sales efforts. We have limited experience in
marketing, selling and supporting our products and services abroad.

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Expansion of our international operations will require a significant amount of
attention from our management and substantial financial resources. If we are
unable to grow our international operations successfully and in a timely
manner, our business and operating results could be harmed. In addition, doing
business internationally involves additional risks, particularly:

. unexpected changes in regulatory requirements, taxes, trade laws,
export controls and tariffs;

. longer accounts receivable collection cycles;

. expenses associated with localizing products for foreign markets;

. restrictions on repatriation of earnings;

. differing intellectual property rights;

. differing labor regulations;

. changes in a specific country's or region's political or economic
conditions;

. burdens of complying with foreign laws;

. greater difficulty in staffing and managing foreign operations; and

. fluctuating currency exchange rates.

We have not been able to fund our operations from cash generated by our
business, and we may not be able to do so in the future. If we cannot meet our
future capital requirements, our business may suffer.

We have principally financed our operations to date through the private
placement of preferred shares. We currently anticipate that the net proceeds
from this offering, together with our existing cash immediately prior to this
offering, will be sufficient to meet our anticipated working capital and
capital expenditure requirements through at least the next 12 months. However,
the time period for which we believe our capital is sufficient is an estimate;
the actual time period may differ materially as a result of a number of
factors, risks and uncertainties. If we cannot generate sufficient cash
resources from our business to fund our operations in the future, we may need
to raise additional funds through public or private equity or debt financings
in order to:

. take advantage of opportunities to grow our business, including
through accelerating our current international expansion plans or
through acquisitions of complementary businesses or technologies;

. develop new and enhance existing products or services; or

. respond to competition.

If we raise additional funds through the issuance of equity or
convertible debt securities, it will reduce the percentage ownership of our
existing shareholders. In addition, the equity may be issued at lower prices
per share than that of this offering and these newly-issued securities may have
rights, preferences or privileges senior to those of existing shareholders,
including those acquiring shares in this offering. We cannot assure you that
additional financing will be available on terms favorable to us, or at all. If
we raise additional funds through the issuance of debt securities, these new
securities would have rights, preferences and privileges senior to those of our
common shares. The terms of these securities could also impose restrictions on
our operations. If adequate funds are not available or are not available on
acceptable terms, our ability to fund our operations, take advantage of
unanticipated opportunities, develop or enhance our products and services or
otherwise respond to competitive pressures would be significantly limited.

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

In order to remain competitive, we may find it necessary to acquire
additional businesses, products or technologies. If we identify an appropriate
acquisition candidate, we may not be able to negotiate the terms of

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the acquisition successfully, finance the acquisition, or integrate the
acquired business, products or technologies into our existing business and
operations. Further, completing a potential acquisition and integrating an
acquired business will likely cause significant diversions of management time
and resources. In addition, the key personnel of the acquired entity may
decide not to work for us. If we consummate one or more significant
acquisitions in which the consideration consists of stock or other securities,
your equity could be significantly diluted. If we were to proceed with one or
more significant acquisitions in which the consideration included cash, we
could be required to use a substantial portion of our available cash,
including proceeds of this offering. In addition, we may be required to
amortize significant amounts of goodwill and other intangible assets in
connection with future acquisitions, which could significantly reduce our
income.

If the protection of our intellectual property is inadequate, our competitors
may gain access to our technology, and our business may suffer.

We depend on our ability to develop and maintain the proprietary aspects
of our technology. To protect our proprietary technology, we rely primarily on
a combination of licenses and other contractual provisions, confidentiality
procedures, trade secrets, and patent, copyright and trademark laws. We
currently have one pending patent application. Protection of our intellectual
property is subject to the following risks:

. trade secret and copyright laws afford only limited protection;

. we may not be issued any patents;

. any patents issued to us may be challenged or otherwise fail to
provide us with any competitive advantages;

. we may not develop proprietary products or technologies that are
capable of being patented;

. our existing or any future trademarks may be canceled or otherwise
fail to provide meaningful protection; and

. the validity, enforceability and type of protection of proprietary
rights in Internet-related industries are uncertain and still
evolving.

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

Third-party claims that we infringe upon their intellectual property rights
could be costly to defend or settle.

Litigation regarding intellectual property rights is common in the
Internet and software industries. We expect that Internet technologies and
software products and services may be increasingly subject to third-party
infringement claims as the number of competitors in our industry segment grows
and the functionality of products in different industry segments overlaps. We
may from time to time encounter disputes over rights and obligations
concerning intellectual property. Third parties may bring claims of
infringement against us, which may be with or without merit.

We could be required, as a result of an intellectual property dispute, to
do one or more of the following:

. cease selling, incorporating or using products or services that rely
upon the disputed intellectual property;

. obtain from the holder of the intellectual property right a license to
sell or use the disputed intellectual property, which license may not
be available on reasonable terms;

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. redesign products or services that incorporate disputed intellectual
property; or

. pay money damages to the holder of the intellectual property right.

The occurrence of any of these events could result in substantial costs and
diversion of resources, which could seriously harm our business, operating
results and financial condition.

In addition, we have agreed, and may agree in the future, to indemnify
certain of our customers against claims that our software infringes upon the
intellectual property rights of others. We could incur substantial costs in
defending ourselves and our customers against infringement claims. In the event
of a claim of infringement, we and our customers may be required to obtain one
or more licenses from third parties. We, or our customers, may be unable to
obtain necessary licenses from third parties at a reasonable cost, or at all.
Defense of any lawsuit or failure to obtain any such required licenses could
harm our business, operating results and financial condition.

Fluctuations in exchange rates may affect our operating results.

A substantial portion of our revenues are realized in U.S. dollars. A
substantial portion of our operating expenses, however, are paid in Canadian
dollars. Further, we receive revenues and incur expenses in currencies other
than U.S. dollars and Canadian dollars. Fluctuations in the exchange rates
between the U.S. dollar and other currencies may have a material effect on our
results of operations. In particular, we may be adversely affected by a
significant strengthening of the Canadian dollar against the U.S. dollar. We do
not currently engage in currency hedging activities. Although we have not
experienced significant foreign exchange rate losses to date, we may in the
future, especially to the extent that we do not engage in hedging.

We have experienced significant growth in our business in recent periods, and
we may not be able to manage our future growth successfully.

Our ability to offer software and services and implement our business
plan successfully in a rapidly evolving market requires an effective planning
and management process. We have increased, and plan to continue to increase,
the scope of our operations at a rapid rate. The number of people we employ has
grown and will continue to grow substantially. As of March 31, 1999, we had a
total of 64 employees. As of March 31, 2000, we had a total of 170 employees.
As of September 30, 2000, we had a total of 218 employees. Future expansion
efforts could be expensive and may strain our managerial and other resources.
To manage future growth effectively, we must maintain and enhance our
management, financial and accounting systems and controls, hire and integrate
new personnel and manage expanded operations. If we do not manage growth
properly, it could harm our business, operating results and financial
condition.

If we become subject to product liability claims, they could be time consuming
and costly to defend.

Errors, defects or other performance problems in our software could
result in financial or other damages to our customers. They could seek damages
for losses from us, which, if successful, could harm our business
significantly. Although our license agreements typically contain provisions
designed to limit our exposure to product liability claims, existing or future
laws or unfavorable judicial decisions could negate these limitations of
liability provisions. We have not experienced any product liability claims to
date. However, a product liability claim brought against us, even if not
successful, could be time consuming and costly to defend and could harm our
reputation.

Your tax liability may increase if we are treated as a passive foreign
investment company.

If at any time we are classified as a passive foreign investment company
under U.S. tax laws, you may be subject to adverse tax consequences. We could
be a passive foreign investment company if 75% or more of our gross income in
any year is considered passive income for U.S. tax purposes. For this purpose,
passive income generally includes interest, dividends, some types of rents and
royalties, and gains from the sale of assets that produce these types of
income. In addition, we could be classified as a passive foreign investment

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company if the average percentage of our assets during any year that produced
passive income, or that were held to produce passive income, is at least 50%.
If we are classified as a passive foreign investment company, and if you sell
any of our common shares or receive some types of distributions from us, you
may have to pay taxes that are higher than if we were not considered a passive
foreign investment company. It is impossible to predict how much your taxes
would increase, if at all.

Although we do not anticipate classification as a passive foreign
investment company, the tests for such classification are complex and fact-
dependent and we cannot determine whether these tests will be met for the year
2000 or for future years. We urge you to consult your own tax advisor to
discuss the potential consequences to you if at any time we qualify as a
passive foreign investment company.

Because we are a Canadian company, it may be difficult for you to enforce civil
liabilities claims against us.

Some of our directors and officers and some of the experts named in this
prospectus are located in Canada. Therefore, it may be difficult for you to
effect service of process on these individuals. In addition, all or a
substantial portion of our assets and the assets of these individuals may be
located in Canada. Therefore, it may be difficult for you to satisfy a judgment
against us or any of these individuals in the United States.

In addition, a Canadian court may not permit you to bring an original
action in Canada or to enforce in Canada a U.S. court judgment based upon civil
liability provisions of U.S. federal securities laws. No treaty exists between
the United States and Canada for the reciprocal enforcement of foreign court
judgments.

Risks Relating To Our Industry

Continued adoption of the Internet as a method of conducting business is
necessary for our future growth.

The market for Internet-based, business-to-business integration software
is relatively new and is evolving rapidly. Our future revenues and any future
profits depend upon the widespread acceptance and use of the Internet as an
effective medium for business-to-business commerce. The failure of the Internet
to continue to develop as a commercial or business medium could harm our
business, operating results and financial condition. The acceptance and use of
the Internet for business-to-business commerce could be limited by a number of
factors, such as the growth and use of the Internet in general, the relative
ease of conducting business on the Internet, the efficiencies and improvements
that conducting commerce on the Internet provides, concerns about transaction
security and taxation of transactions on the Internet.

Increased security risks of online commerce may deter future use of our
software and services.

A fundamental requirement to conduct Internet-based, business-to-business
e-commerce is the secure transmission of confidential information over public
networks. Advances in computer capabilities, new discoveries in the field of
cryptography, the development of new computer viruses or other developments may
result in a compromise or breach of the security features contained in our
software or the algorithms used by our customers and their business partners to
protect content and transactions on online trading exchanges or proprietary
information in our customers' and their business partners' databases. Anyone
who is able to circumvent security measures could misappropriate proprietary,
confidential customer information or cause interruptions in our customers' and
their business partners' operations. Our customers and their business partners
may be required to incur significant costs to protect against security
breaches, including computer viruses, or to alleviate problems caused by
security breaches, reducing their demand for our software. Further, a well-
publicized compromise of security could deter businesses from using the
Internet to conduct transactions that involve transmitting confidential
information. The failure of the security features of our software to prevent

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security breaches, or well publicized security breaches affecting the Internet
in general, could significantly harm our business, operating results and
financial condition.

We depend on the speed and reliability of the Internet and our customers'
internal networks.

The recent growth in Internet traffic has caused frequent periods of
decreased performance. If Internet usage continues to grow rapidly, its
infrastructure may not be able to support these demands and its performance and
reliability may decline. If outages or delays on the Internet occur frequently
or increase in frequency, business-to-business e-commerce could grow more
slowly or decline, which may reduce the demand for our solutions. The ability
of our solutions to satisfy our customers' needs is ultimately limited by and
depends upon the speed and reliability of both the Internet and our customers'
internal networks. Consequently, the emergence and growth of the market for our
software depends upon improvements being made to the entire Internet as well as
to our individual customers' networking infrastructures to alleviate
overloading and congestion. If these improvements are not made, the ability of
our customers to utilize our solution will be hindered, and our business,
operating results and financial condition may suffer.

Increasing government regulation, including the imposition of sales taxes on e-
commerce transactions, could limit the market for our products and services.

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

Current regulations do not require us to collect sales or other similar
taxes in respect of the exchange of goods and services through our Ironside
Network. However, one or more states may seek to impose sales tax collection
obligations on out-of-state companies like us that engage in or facilitate
electronic commerce. A number of proposals have been made at the state and
local level that would impose additional taxes on the sale of goods and
services over the Internet. These proposals, if adopted, could substantially
impair the growth of electronic commerce and could adversely affect our
opportunity to derive financial benefit from such activities. Moreover, a
successful assertion by one or more states or any foreign country that we
should collect sales or other taxes on the exchange of goods and services
through our Ironside Network could seriously harm our business.

Legislation limiting the ability of the states to impose taxes on
Internet-based transactions has been proposed in the U.S. Congress. This
legislation could ultimately be enacted into law or this legislation could
contain a limited time period in which this tax moratorium will apply. In the
event that the tax moratorium is imposed for a limited time period, legislation
could be renewed at the end of this period. Failure to enact or renew this
legislation could allow various states to impose taxes on electronic commerce,
and the imposition of these taxes could seriously harm our business.

Risks Relating To This Offering

Internet and technology company stock prices are especially volatile, and this
volatility may depress our stock price or lead to class action litigation.

The market for technology companies generally, and specifically the stock
prices of Internet-related software companies, has been very volatile. The
market price of our common shares may fluctuate significantly in response to a
number of factors, some of which are beyond our control, such as changes in
accounting rules and regulations, market trends and company performance. In the
event of broad fluctuations in the market price of our common shares, you may
be unable to resell your shares at or above the offering price.

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Securities class action litigation has often been brought against
companies that experience volatility in the market price of their securities.
Litigation brought against us could result in substantial costs to us in
defending against a lawsuit and management's attention could be diverted from
our business.

Our securities have no prior market, and our stock price may decline after the
offering.

Before this offering, there has not been a public market for our common
shares, and an active public market for our common shares may not develop or be
sustained after this offering. The initial public offering price has been
determined by negotiations between representatives of the underwriters and us.
After this offering, the market price of our common shares may fall below the
initial public offering price.

Future sales of our common shares may depress our stock price.

12,712,747 of our common shares can be sold in the public market 180 days
after this offering. If substantial amounts of our common shares were to be
sold in the public market following this offering, the market price of our
common shares could fall. In addition, such sales could create the perception
to the public of difficulties or problems with our software and services. As a
result, these sales also might make it more difficult for us to sell equity or
equity-related securities in the future at a time and price that we deem
appropriate. For more information about shares eligible for sale after this
offering, see "Shares Eligible for Future Sale."

We have broad discretion to use the offering proceeds, and the investment of
these proceeds may not yield a favorable return.

The net proceeds of this offering are not allocated for specific
purposes. Thus, our management has broad discretion over how these proceeds are
used and could spend most of these proceeds in ways with which our shareholders
may not agree. The proceeds may be invested in ways that do not yield favorable
returns. See "Use of Proceeds" for more information about how we plan to use
our proceeds from this offering.

As a new investor, you will experience immediate and substantial dilution in
the value of the common shares.

If you purchase common shares in this offering, you will incur immediate
and substantial dilution in pro forma net tangible book value. The net tangible
book value of a common share purchased at an assumed initial public offering
price of $ is only $ . If the holders of outstanding options and warrants
exercise those options and warrants, you will incur further dilution.

Because certain existing shareholders own a large percentage of our voting
shares, other shareholders' voting power may be limited.

Following consummation of this offering, it is anticipated that our
executive officers, directors and their affiliates will beneficially own or
control approximately % of our common shares. In combination with entities
owning 5% or more of our outstanding common shares, this group controls
common shares, or approximately % of our outstanding common
shares. As a result, if such persons act together, they will have the ability
to control all matters submitted to our shareholders for approval, including
the election and removal of directors and the approval of any merger,
consolidation or sale of all or substantially all of our assets. These
shareholders may make decisions that are adverse to your interests.

Our charter, and contracts we have entered into with several members of our
senior management, contain anti-takeover and other provisions that could delay
or prevent an acquisition of us, even if an acquisition would be beneficial to
our shareholders.

Our restated articles of continuance provide for the issuance of an
unlimited number of preferred shares in certain designated classes. Immediately
following this offering, there will be no preferred shares

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outstanding. However, our board of directors may issue new preferred shares
without shareholder approval with rights and preferences superior to the rights
and preferences of our common shares. In addition to delaying or preventing a
change in control of us, the issuance of a substantial number of preferred
shares may adversely affect the price of our common shares.

Furthermore, pursuant to option agreements with our executive officers,
some of our key personnel and one of our directors, the options granted to
these individuals become immediately exercisable in full upon the occurrence of
any of the following events:

. a consolidation, merger or plan of exchange in which we are not the
surviving entity;

. a sale, lease or exchange of all or substantially all of our assets;

. a tender or exchange offer in which the offeror becomes the
beneficial owner of at least 20% of our common shares; or

. individuals constituting a majority of our board of directors cease
to constitute a majority during any 12 month period, unless the new
directors are approved by a least two-thirds of the directors still
in office.

These provisions may effectively delay or prevent an acquisition of us, even if
an acquisition would be beneficial to our shareholders.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements under "Prospectus Summary," "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business" and elsewhere in this prospectus constitute forward-
looking statements. These statements involve known and unknown risks,
uncertainties, and other 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 of activity, performance, or
achievements expressed or implied by such forward-looking statements. Such
factors include, among other things, those listed under "Risk Factors" and
elsewhere in this prospectus. In some cases, you can identify forward-looking
statements by terminology such as "may," "will," "should," "could," "expects,"
"plans," "intends," "anticipates," "believes," "estimates," "predicts,"
"potential," or "continue" or the negative of such terms or other comparable
terminology. These statements are only predictions. Actual events or results
may differ materially from those anticipated in any of these forward-looking
statements. In evaluating these statements, you should specifically consider
various factors, including the risks and uncertainties outlined under "Risk
Factors."

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

19
<PAGE>

USE OF PROCEEDS

We expect to receive approximately $ million in net proceeds from the
sale of the common shares in this offering, or $ if the underwriters
exercise their over-allotment option in full, based upon an assumed initial
public offering price of $ per share and after deducting estimated
underwriting discounts and commissions and estimated offering expenses paid and
payable by us.

Based on our current business model, we expect to use the net proceeds
from this offering for general corporate purposes and working capital,
including:

. $ to $ to fund increased sales and marketing activities;

. $ to $ to fund increased expenses related to hiring additional
research and development personnel; and

. $ to $ to fund increased general and administrative expenses
related to the enhancement of our infrastructure to support our
growth.

These figures are subject to change, however, depending upon our rate of
revenue growth, our overall financial performance and our evolving business
needs. Additionally, these expectations may prove to be inaccurate, as our
financial performance may differ from our current expectations or our business
needs may change as the market for our solutions evolves. As a result, the
proceeds we receive from this offering may be used in a manner significantly
different from our current allocation plans. Accordingly, we will have broad
discretion in the way we use the net proceeds.

We may also use a portion of the net proceeds to acquire additional
businesses, products and technologies or to establish joint ventures that we
believe will complement our current or future business. However, we have no
specific plans, agreements or commitments to do so, and are not currently
engaged in any negotiations for any such acquisition or joint venture. Pending
the uses described above, we intend to invest the net proceeds of this offering
in short-term investment grade, interest-bearing investments or accounts. Our
management will have significant flexibility in applying the net proceeds of
the offering. Our use of the net proceeds may change depending on market
conditions and other factors beyond our control.

DIVIDEND POLICY

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

20
<PAGE>

CAPITALIZATION

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

. Actual consolidated balance sheet data;

. Pro forma consolidated balance sheet data giving effect to the
conversion of all of our outstanding convertible preferred shares
into common shares immediately prior to the closing of this offering;
and

. Pro forma as adjusted consolidated balance sheet data, adjusted to
give effect to the conversion of our convertible preferred shares and
our sale of common shares in this offering at an assumed initial
public offering price of $ per share and after deducting
estimated underwriting discounts and estimated offering expenses.

You should read this table in conjunction with our Consolidated Financial
Statements and the accompanying Notes, "Selected Consolidated Financial Data,"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations," included elsewhere in this prospectus.

<TABLE>
<CAPTION>
June 30, 2000
-----------------------------------
Pro Forma
Actual Pro Forma As Adjusted
----------- ----------- -----------
(unaudited) (unaudited) (unaudited)
(in thousands except per share
data)
<S> <C> <C> <C>
Cash and cash equivalents.................. $ 34,746 $ 34,746
======== ======== ===
Capital lease obligations, long-term....... $ 268 $ 268
Mandatorily redeemable convertible
preferred shares: no par value, unlimited
authorized shares at June 30, 2000
(unaudited); 77,756 shares issued and
outstanding at June 30, 2000 (unaudited),
and none pro forma (unaudited) and pro
forma as adjusted (unaudited)............. 70,972
Shareholders' equity (deficit):
Common shares: no par value; unlimited
authorized shares at June 30, 2000
(unaudited); 4,040 shares issued and
outstanding at June 30, 2000
(unaudited), and 86,671 pro forma
(unaudited) and pro forma as
adjusted (unaudited).................... -- 70,972
Additional paid-in capital............... 17,687 17,687
Deferred stock-based compensation........ (15,207) (15,207)
Accumulated other comprehensive income
(loss).................................. (15) (15)
Accumulated deficit...................... (38,582) (38,582)
-------- -------- ---
Total shareholders' equity (deficit)... (36,117) 34,855
======== ======== ===
Total capitalization................... $ 35,123 $ 35,123
======== ========
</TABLE>

The number of common shares outstanding at June 30, 2000 excludes:

. 15,436,184 shares issuable upon the exercise of outstanding stock
options at a weighted average exercise price of $0.80;

. 332,364 shares available for future issuance under our stock option
plan; and

. 1,403,387 common shares issuable through the exercise of convertible
preferred share warrants outstanding on June 30, 2000 at a weighted
average price of $1.43 per share.

21
<PAGE>

DILUTION

If you invest in our common shares, your interest will be diluted to the
extent of the difference between the initial public offering price of our
common shares and the pro forma as adjusted net tangible book value per common
share after this offering. Our pro forma net tangible book value as of June 30,
2000 was approximately $34.9 million, or approximately $0.40 per common share.
Pro forma net tangible book value per share represents the amount of tangible
assets less total liabilities, divided by 86,670,790 common shares outstanding
after giving effect to the conversion of all of our outstanding preferred
shares into common shares upon completion of this offering.

After giving effect to our sale of common shares in this offering
at an assumed initial public offering price of $ per share and after
deduction of the estimated underwriting discounts and commissions and offering
expenses, our pro forma as adjusted net tangible book value as of June 30, 2000
would have been approximately $ million, or $ per share. This
represents an immediate increase in pro forma net tangible book value of $
per share to existing shareholders and an immediate dilution of $ per
share to purchasers of common shares in this offering.

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.................... $
Pro forma net tangible book value per share at June 30, 2000..... $0.40
Increase per share attributable to new investors.................
-----
Pro forma, as adjusted net tangible book value per share after
offering..........................................................
----
Dilution per share to new investors................................ $
====
</TABLE>

The following table sets forth, on a pro forma basis as of June 30, 2000,
the total consideration paid and the average price per share paid by the
existing shareholders and by new investors, before deducting estimated
underwriting discounts and commissions and offering expenses payable by us at a
public offering price of $ per share.

<TABLE>
<CAPTION>
Shares Purchased Total Consideration Average
------------------ ------------------- Price
Number Percent Amount Percent Per Share
---------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing shareholders.......... 86,670,790 % $69,830,000 % $0.81
New investors..................
---------- --- ----------- --- -----
Total........................ 100% 100%
========== === =========== === =====
</TABLE>

The foregoing computations exclude 15,436,184 shares issuable upon the
exercise of outstanding stock options, 332,364 shares available for future
issuance under our stock option plan and 1,403,387 common shares issuable
through the exercise of convertible preferred share warrants as of June 30,
2000. To the extent the option holders exercise these outstanding options or
warrants, or any options or warrants we grant in the future, there will be
further dilution to new investors.

22
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected financial data should be read in conjunction with
our Consolidated Financial Statements and the accompanying Notes and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," included elsewhere in this prospectus. The consolidated statements
of operations data for the years ended March 31, 1998, 1999 and 2000 and the
consolidated balance sheet data as of March 31, 1999 and 2000 are derived from
our audited financial statements included in this prospectus. The consolidated
statements of operations data for the period from February 22, 1996 (date of
inception) to March 31, 1996 and the year ended March 31, 1997 and the
consolidated balance sheet data as of March 31, 1996, 1997 and 1998 are derived
from our audited financial statements which are not included in this
prospectus. The selected consolidated financial data for the three months ended
June 30, 1999 and 2000 have been derived from our unaudited financial
statements, and, in the opinion of management, include all adjustments
(consisting of normal recurring accruals) necessary for a fair presentation of
our financial position and results of operations. Historical results are not
necessarily indicative of future results. The pro forma net loss per share
information in the following table gives effect to the automatic conversion of
all of our outstanding convertible preferred shares into common shares
immediately prior to the closing of this offering.

23
<PAGE>

<TABLE>
<CAPTION>
Period from
February 22, 1996 Three Months
(date of Year Ended March 31, Ended June 30,
inception) to ----------------------------------- ----------------
March 31, 1996 1997 1998 1999 2000 1999 2000
----------------- ------- ------- ------- -------- ------- -------
(in thousands, except per share data) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Statements
of Operations Data:
Revenues:
License................ $ -- $ -- $ 1,258 $ 2,714 $ 2,805 $ 238 $ 1,751
Services and
maintenance........... -- -- 108 613 3,376 339 2,518
------ ------- ------- ------- -------- ------- -------
Total revenues....... -- -- 1,366 3,327 6,181 577 4,269
Cost of revenues:
License................ -- -- 5 207 268 70 219
Services and
maintenance
(excluding stock-
based compensation of
$0, $5, $81, $6 and
$75, respectively).... -- -- 231 697 4,474 335 2,199
------ ------- ------- ------- -------- ------- -------
Total cost of
revenues............ -- -- 236 904 4,742 405 2,418
------ ------- ------- ------- -------- ------- -------
Gross profit............ -- -- 1,130 2,423 1,439 172 1,851
------ ------- ------- ------- -------- ------- -------
Operating expenses:
Research and
development
(excluding stock-
based compensation of
$0, $19, $142, $17
and $150,
respectively)......... 16 418 1,022 1,273 3,226 553 1,424
Sales and marketing
(excluding stock-
based compensation of
$0, $38, $379, $32
and $1,501,
respectively)......... 10 389 3,276 4,689 11,568 1,494 5,856
General and
administrative
(excluding stock-
based compensation of
$0, $66, $398, $31
and $610,
respectively)......... 7 207 1,238 1,312 2,403 411 1,068
Stock-based
compensation.......... -- -- -- 128 1,000 86 2,336
------ ------- ------- ------- -------- ------- -------
Total operating
expenses............ 33 1,014 5,536 7,402 18,197 2,544 10,684
------ ------- ------- ------- -------- ------- -------
Loss from operations.... (33) (1,014) (4,406) (4,979) (16,758) (2,372) (8,833)
Interest income......... -- -- 76 98 544 27 548
Interest expense........ -- -- (24) (16) (2,971) (10) (6)
------ ------- ------- ------- -------- ------- -------
Net loss................ (33) (1,014) (4,354) (4,897) (19,185) (2,355) (8,291)
Accretion of mandatorily
redeemable convertible
preferred shares to
redemption value....... -- -- (946) (1,074) (2,801) (355) (1,682)
------ ------- ------- ------- -------- ------- -------
Net loss attributable to
common shareholders.... $ (33) $(1,014) $(5,300) $(5,971) $(21,986) $(2,710) $(9,973)
------ ------- ------- ------- -------- ------- -------
Net loss per share:
Basic and diluted...... $(0.01) $ (0.25) $ (1.31) $ (1.48) $ (5.44) $ (0.67) $ (2.47)
====== ======= ======= ======= ======== ======= =======
Weighted average
shares used in
computing basic and
diluted net loss per
share................. 3,871 4,040 4,040 4,040 4,040 4,040 4,040
====== ======= ======= ======= ======== ======= =======
Pro forma net loss per
share:
Basic and diluted
(unaudited)........... $ (0.37) $ (0.12)
======== =======
Weighted average
shares used in
computing basic and
diluted pro forma net
loss per share
(unaudited)........... 59,363 85,698
======== =======
</TABLE>

<TABLE>
<CAPTION>
As of March 31,
---------------------------------------- June 30,
1996 1997 1998 1999 2000 2000
---- ----- ------- -------- -------- -----------
(in thousands) (unaudited)
<S> <C> <C> <C> <C> <C> <C>
Consolidated Balance
Sheet Data:
Cash and cash
equivalents............. $ -- $ 3 $ 1,269 $ 3,014 $ 15,880 $ 34,746
Working capital
(deficit)............... (38) (415) 1,141 3,557 13,269 31,587
Total assets............. 8 217 2,290 5,542 23,575 43,782
Capital lease
obligations, long-term,
and mandatorily
redeemable convertible
preferred shares........ -- 3 7,855 15,310 45,032 71,240
Total shareholders'
deficit................. (33) (313) (6,346) (11,227) (28,935) (36,117)
</TABLE>

24
<PAGE>

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

The following discussion should be read in conjunction with our
Consolidated Financial Statements and the accompanying Notes, included
elsewhere in this prospectus. This discussion contains forward-looking
statements that involve risks and uncertainties. Our actual results could
differ materially from those anticipated in these forward-looking statements as
a result of various factors including those set forth under "Risk Factors" and
elsewhere in this prospectus. See "Special Note Regarding Forward Looking
Statements."

Overview

We were founded in February 1996, and from that date through April 1997
we were primarily engaged in conducting research and developing our initial
products. In April 1997, we began selling our Ironworks software products and
related services. Following the release of Ironworks, we accelerated the
recruitment of personnel, purchased additional operating assets, commenced
marketing of our products and services and substantially invested in building a
direct sales force.

We currently sell our products and services primarily in North America
and Europe, through our direct sales force. Prior to fiscal 2000, almost all of
our sales were in North America. Total sales outside of North America accounted
for 13% of our total revenues for fiscal 2000 and 18% for the quarter ended
June 30, 2000. Substantially all of our sales outside of North America were in
Europe. We expect that sales outside of North America will increase as a
percentage of our total revenues as a result of our increased efforts to market
our products in Europe and the Asia-Pacific region.

Sources of Revenues

Currently, our revenues are principally derived from sales of software
licenses and services. Our license revenues are derived from our Ironworks
software products and include both server licenses and end-user licenses. Our
Ironworks software typically consists of a single server license and a certain
number of end-user licenses. A server license allows a customer to run the
Ironworks software on a single server. Our customers typically purchase a
single server license in connection with an Ironworks installation, but some
large customers may purchase multiple server licenses. End-user license fees
are based on the number of individual end-users that access our customer's
enterprise business systems through the Ironworks software. License revenues
accounted for 45% of our total revenues in fiscal 2000 and 41% for the quarter
ended June 30, 2000.

We receive services revenues from maintenance and support contracts and
the delivery of implementation consulting and training services. Customers who
license our Ironworks products generally purchase one-year maintenance
contracts, which provide software upgrades and technical support. These
maintenance contracts are renewable at the customer's option for a fee. To
date, all customers who have licensed our software products have purchased
initial maintenance contracts for technical support. We also provide
implementation and various other consulting services to customers who purchase
our Ironworks products, and we offer fee-based training services to our
customers. Although we intend to continue to provide implementation and
training services, we also expect to increasingly rely on third-party
consulting organizations to deliver these services directly to purchasers of
our Ironworks products. Services and maintenance revenues accounted for 55% of
our total revenues in fiscal 2000 and 59% for the quarter ended June 30, 2000.

We also intend to generate revenues from our Ironside Network, which we
launched in April 2000. We have not yet generated revenues from products and
services related to the Ironside Network. We expect to generate revenues from
the Ironside Network primarily through initial implementation fees, monthly
subscription licenses, per transaction fees and monthly fees for value-added
services. We intend to classify revenues received from monthly subscription
licenses and monthly fees for value-added services as license revenues, and
revenues received from implementation fees and per transaction fees as services
revenues. The

25
<PAGE>

monthly subscription license fee we charge will be a fixed amount based on the
number of exchanges with which the seller desires to transact business through
the Ironside Network. We also intend to charge a fixed fee to sellers for
transactions facilitated by the Ironside Network. In addition, we intend to
enter into revenue sharing arrangements with third parties that provide value-
added services in connection with transactions facilitated by the Ironside
Network, such as business intelligence, content management, hosting, shipping
and logistics, insurance and financial services.

Approximately 16% of our revenues for the fiscal year ended March 31,
2000 related to custom design and implementation services that we provided to
The Goldman Sachs Group in connection with its deployment of a custom web-based
system. We expect that this project will also account for a significant portion
of our revenues in fiscal 2001 and fiscal 2002. We expect this project to be
substantially completed by the middle of fiscal 2002. The services we are
providing in connection with this project are not directly related to our
software products or the Ironside Network. Although we may provide these types
of special services from time to time, we do not expect to receive a
significant portion of our revenues from these types of services after the
Goldman Sachs project has been completed.

Revenues from two customers accounted for 15% and 14% of total revenues
for the year ended March 31, 1998. One customer accounted for 11% of total
revenues for the year ended March 31, 1999. Two customers accounted for 19% and
16% of total revenues for the year ended March 31, 2000. Two customers
accounted for 27% and 13% of total revenues for the quarter ended June 30,
2000.

Revenue Recognition

We enter into software arrangements that consist of multiple elements,
such as licenses, maintenance contracts and services. We generally recognize
revenue under the residual method as prescribed by Statement of Position No.
97-2 "Software Revenue Recognition" and Statement of Position No. 98-9
"Modification of SOP 97-2 with Respect to Certain Transactions" whereby revenue
is allocated to each undelivered element when sold separately and the residual
amount is then allocated to the delivered element. The license revenues are
recognized when there is persuasive evidence of an arrangement with a fixed and
determinable fee that is probable of collection and when delivery has occurred.

For contracts involving significant implementation or customization
essential to the functionality of our products, we recognize license and
service revenues under the percentage-of-completion method using labor hours
incurred as the measure of progress towards completion. We classify revenues
from these arrangements as license and services and maintenance revenues,
respectively, based upon the estimated fair value of each element. Provisions
for estimated contract losses are recognized in the period in which the loss
becomes probable and can be reasonably estimated.

License revenues from reseller arrangements are recognized upon receipt
of payment from the reseller relating to sales to third parties. Our agreements
with our customers and resellers do not contain product return rights.

Services and maintenance revenues consist of professional services and
maintenance fees. Professional services primarily consist of software
implementation and training. Professional services revenue is recognized as
such services are performed. Services revenues from maintenance agreements,
which include services such as technical product support and an unspecified
number of product upgrades, is recognized ratably over the term of the
agreement, which is generally one year.

The revenues that we expect to generate from the Ironside Network will
primarily consist of implementation fees, monthly subscription license fees,
per transaction fees and monthly fees for value-added services. Implementation
fees and subscription license fees will be recognized on a ratable basis over
the term of the agreement. Revenues from transaction fees will be recognized as
these services are performed. Revenues from monthly fees for value-added
services will be recognized as these services are rendered.

26
<PAGE>

Cost of Revenues

Our cost of license revenues includes royalties payable to third parties
for technology integrated into our products, the cost of manuals and product
documentation, production media used to deliver our products and shipping
costs, including the costs associated with the electronic transmission of
software to new customers. We recently introduced additional product modules
that incorporate technology of third parties. Our cost of revenues for products
that incorporate third-party software is generally higher than the cost of
revenues for products that do not incorporate third-party software. Our cost of
license revenues could increase as a percentage of revenues in future periods
if sales of these product modules incorporating third-party software increase.
We also expect our cost of license revenues to include hosting and other
expenses related to the Ironside Network.

Our cost of services and maintenance revenues includes salaries and
related expenses for our customer support, implementation and training services
organizations, costs of third parties contracted to provide consulting services
to customers, and expenses related to our facilities, communications and
depreciation of our assets. Any costs related to warranty provisions in our
software license agreements is expensed as cost of services and maintenance
revenues. Our cost of service revenues can fluctuate depending on the amount of
professional services provided by us compared to third-party service providers
acting as our subcontractors, which generally results in higher cost of
revenues for us.

Operating Expenses

Our operating expenses are classified into four categories: research and
development, sales and marketing, general and administrative, and stock-based
compensation. We classify charges to these operating expense categories based
on the nature of the expenditures. Although each category includes expenses
that are unique to such category, there are commonly recurring expenditures
included in these categories, such as salaries, employee benefits, bonuses,
travel and entertainment, third-party professional fees and communication
costs. We allocate the costs for facilities, office equipment including
computers, and related charges to the operating expense categories based on
employee headcount and square footage utilized.

Research and Development. Research and development expenses consist
primarily of activities related to the research, development and enhancement of
our software and service offerings, as well as quality assurance and testing.
All costs incurred in the research and development of software products and
enhancements to existing products have been expensed as incurred. We have
expensed all software development costs because the period between the
achievement of technological feasibility, which we define as the establishment
of a working model, and the general availability of such software to customers
has historically been short, and software development costs qualifying for
capitalization have historically been insignificant. We expect to incur greater
research and development expenses as we further enhance our existing products
and develop new products that address the evolving needs of our customers.

Sales and Marketing. Sales and marketing expenses consist primarily of
activities related to our direct and indirect sales force, lead generation, and
promotional expenses such as public relations, seminars, trade shows, marketing
programs and marketing collateral materials. We intend to increase our use of
indirect channel partners to broaden the distribution of our products.

General and Administrative. General and administrative expenses primarily
relate to executive, financial, and human resources personnel, as well as
expenses for legal services, financial services, and other professional
services. We expect to incur greater general and administrative expenses
associated with our reporting obligations as a public company and for investor
relations.

Stock-based Compensation. Stock-based compensation expenses consist of
the non-cash compensation recorded in connection with the granting of options
to employees and non-employees as a result of the issuance of these options
with exercise prices deemed to be less than the fair market value of our common
shares at the date of issuance.

27
<PAGE>

Results of Operations

The following table sets forth our financial data for the fiscal years
ended March 31, 1998, 1999 and 2000 and the three months ended June 30, 1999
and 2000. Our historical operating results are not necessarily indicative of
the results for any future period.

<TABLE>
<CAPTION>
Three Months
Ended
Year Ended March 31, June 30,
-------------------------- ----------------
1998 1999 2000 1999 2000
------- ------- -------- ------- -------
(in thousands) (unaudited)
<S> <C> <C> <C> <C> <C>
Consolidated Statements of
Operations Data
Revenues:
License.................... $ 1,258 $ 2,714 $ 2,805 $238 $1,751
Services and maintenance... 108 613 3,376 339 2,518
------- ------- -------- ------- -------
Total revenues........... 1,366 3,327 6,181 577 4,269
Cost of revenues:
License.................... 5 207 268 70 219
Services and maintenance
(excluding stock-based
compensation of $0, $5,
$81, $6 and $75,
respectively)............. 231 697 4,474 335 2,199
------- ------- -------- ------- -------
Total cost of revenues... 236 904 4,742 405 2,418
------- ------- -------- ------- -------
Gross profit................. 1,130 2,423 1,439 172 1,851
------- ------- -------- ------- -------
Operating expenses:
Research and development
(excluding stock-based
compensation of $0, $19,
$142, $17 and $150,
respectively)............. 1,022 1,273 3,226 553 1,424
Sales and marketing
(excluding stock-based
compensation of $0, $38,
$379, $32 and $1,501,
respectively)............. 3,276 4,689 11,568 1,494 5,856
General and administrative
(excluding stock-based
compensation of $0, $66,
$398, $31 and $610,
respectively)............. 1,238 1,312 2,403 411 1,068
Stock-based compensation... -- 128 1,000 86 2,336
------- ------- -------- ------- -------
Total operating
expenses................ 5,536 7,402 18,197 2,544 10,684
------- ------- -------- ------- -------
Loss from operations......... (4,406) (4,979) (16,758) (2,372) (8,833)
Interest income (expense),
net......................... 52 82 (2,427) 17 542
------- ------- -------- ------- -------
Net loss..................... $(4,354) $(4,897) $(19,185) $(2,355) $(8,291)
======= ======= ======== ======= =======
</TABLE>

28
<PAGE>

The following table sets forth our financial data as a percentage of
total revenues for the fiscal years ended March 31, 1998, 1999 and 2000 and the
three months ended June 30, 1999 and 2000. These historical percentages are not
necessarily indicative of the percentages for any future period.

<TABLE>
<CAPTION>
Three Months
Ended June
Year Ended March 31, 30,
------------------------ ---------------
1998 1999 2000 1999 2000
------ ------ ------ ------ ------
(unaudited)
<S> <C> <C> <C> <C> <C>
Consolidated Statements of
Operations Data
Revenues:
License.................... 92.1 % 81.6 % 45.4 % 41.2 % 41.0 %
Services and maintenance... 7.9 18.4 54.6 58.8 59.0
------ ------ ------ ------ ------
Total revenues........... 100.0 100.0 100.0 100.0 100.0
Cost of revenues:
License.................... 0.4 6.2 4.3 12.1 5.1
Services and maintenance... 16.9 21.0 72.4 58.1 51.5
------ ------ ------ ------ ------
Total cost of revenues... 17.3 27.2 76.7 70.2 56.6
------ ------ ------ ------ ------
Gross profit................. 82.7 72.8 23.3 29.8 43.4
------ ------ ------ ------ ------
Operating expenses:
Research and development... 74.8 38.3 52.2 95.8 33.4
Sales and marketing........ 239.8 140.9 187.1 258.9 137.2
General and
administrative............ 90.6 39.4 38.9 71.2 25.0
Stock-based compensation... -- 3.8 16.2 15.0 54.7
------ ------ ------ ------ ------
Total operating
expenses................ 405.2 222.4 294.4 440.9 250.3
------ ------ ------ ------ ------
Loss from operations......... (322.5) (149.6) (271.1) (411.1) (206.9)
Interest income (expense),
net......................... 3.8 2.5 (39.3) 3.0 12.7
------ ------ ------ ------ ------
Net loss..................... (318.7)% (147.1)% (310.4)% (408.1)% (194.2)%
====== ====== ====== ====== ======
</TABLE>

Three Months Ended June 30, 1999 and 2000

Revenues

License revenues increased from $238,000 for the three months ended June
30, 1999 to $1.8 million for the same period in 2000, an increase of $1.5
million, or 636%. This increase was primarily due to the increased market
acceptance of our Ironworks product suite in North America and to sales
generated by our European sales office, which opened in September 1999. During
this period, we increased our total sales and marketing personnel from 27 to
72. License revenues during this period also increased due to additional sales
of our prepackaged integrated solutions for commonly-used ERP systems and of
enhanced versions of our Ironworks software.

Services and maintenance revenues increased from $339,000 for the three
months ended June 30, 1999 to $2.5 million for the same period in 2000, an
increase of $2.2 million, or 643%. This increase was primarily due to an
increase in service revenues during this period in connection with increased
licensing activity. This increase also reflects service revenues attributable
to the design and implementation services we provided to Goldman Sachs. Our
total number of implementation, service and training personnel grew from 20 on
June 30, 1999 to 52 on June 30, 2000. Our maintenance revenues also increased
during this period as our customer base grew.

Cost of Revenues

Cost of license revenues increased from $70,000 for the three months
ended June 30, 1999 to $219,000 for the same period in 2000, an increase of
$149,000, or 213%. This increase was primarily

29
<PAGE>

attributable to increased licensing activities, composed primarily of royalties
payable to third parties for technology incorporated into some of our add-on
product modules. As a percentage of revenues, cost of license revenues
decreased from 12% for the three months ended June 30, 1999 to 5% for the same
period in 2000.

Cost of services and maintenance revenues increased from $335,000 for the
three months ended June 30, 1999 to $2.2 million for the same period in 2000,
an increase of $1.9 million, or 556%. This increase was primarily attributable
to the hiring of additional implementation, service and training personnel and
the use of third-party implementation providers that we subcontracted during
this period to support expanding our customer base. As a percentage of
revenues, cost of services and maintenance revenues decreased from 58% for the
three months ended June 30, 1999 to 52% for the same period in 2000.

Operating Expenses

Research and Development. Research and development expenses increased
from $553,000 for the three months ended June 30, 1999 to $1.4 million for the
same period in 2000, an increase of $0.9 million, or 158%. Our total number of
product development personnel grew from 26 on June 30, 1999 to 53 on June 30,
2000. As a result of the increased headcount and the use of contract
programmers, personnel costs related to product development increased from
$440,000 for the three months ended June 30, 1999 to $1.1 million for the same
period in 2000. As a percentage of revenues, research and development expenses
decreased from 96% for the three months ended June 30, 1999 to 33% for the same
period in 2000, due primarily to the fact that our revenues grew faster than
our research and development expenses.

Sales and Marketing. Sales and marketing expenses increased from $1.5
million for the three months ended June 30, 1999 to $5.9 million for the same
period in 2000, an increase of $4.4 million, or 292%. This increase resulted
primarily from the expansion of our direct sales force and our investment in
sales and marketing infrastructure, including costs related to the opening of
our sales office in the United Kingdom in September 1999. We also significantly
increased spending for marketing activities, such as trade shows, advertising
and other promotional expenses to grow our customer base. As a percentage of
revenues, sales and marketing expenses decreased from 259% for the three months
ended June 30, 1999 to 137% for the same period in 2000, due primarily to the
fact that our revenues grew faster than our sales and marketing expenses.

General and Administrative. General and administrative expenses increased
from $411,000 for the three months ended June 30, 1999 to $1.1 million for the
same period in 2000, an increase of $0.7 million, or 160%. This increase is
primarily due to the hiring of executive, finance and administrative personnel
needed to support the growth of our business. As a percentage of revenues,
general and administrative expenses decreased from 71% for the three months
ended June 30, 1999 to 25% for the same period in 2000, due primarily to the
fact that our revenues grew faster than general and administrative expenses.
Personnel costs associated with general and administrative functions increased
from $241,000 in the three months ended June 30, 1999 to $574,000 for the same
period in fiscal 2000.

Fiscal Years Ended March 31, 1998, 1999 and 2000

Revenues

License revenues increased from $1.3 million in fiscal 1998, to $2.7
million in fiscal 1999, to $2.8 million in fiscal 2000. This increase in each
year is primarily attributable to increased market acceptance of our Ironworks
product suite in North America and increased sales generated by our operations
in Europe. Sales growth was enhanced during this period by our expanded sales
and marketing efforts, expansion into new vertical market segments, the
introduction of new products and the upgrading of existing products. Sales to
new customers accounted for license revenues of $1.3 million in fiscal 1998,
$2.3 million in fiscal 1999 and $2.1 million in fiscal 2000. License revenues
of $404,000 in fiscal 1999 and $749,000 in fiscal 2000 related to sales to
existing customers during those periods. Sales to existing customers consisted
primarily of additional server and end-user licenses.

30
<PAGE>

Services and maintenance revenues increased from $108,000 in fiscal 1998,
to $613,000 in fiscal 1999, to $3.4 million in fiscal 2000. The increase from
fiscal 1998 to fiscal 1999 reflects increased implementation service revenues
in connection with increased licensing activity, as well as the performance of
a larger proportion of implementation services by our personnel as opposed to
third parties. The increase from fiscal 1999 to fiscal 2000 reflects a
significant increase in the amount of service revenues attributable to the
design and implementation services we provided to Goldman Sachs during that
period. Our total number of implementation, service and training personnel grew
from seven on March 31, 1998 to 12 on March 31, 1999, to 47 on March 31, 2000.
This increased capacity, combined with our use of third-party implementation
service providers, allowed us to provide more implementation services. Our
maintenance revenues also increased during this period as our customer base
grew.

Cost of Revenues

Cost of license revenues increased from $5,000 in fiscal 1998, to
$207,000 in fiscal 1999, to $268,000 in fiscal 2000. The increase in each year
was primarily attributable to increased licensing activities, and consisted
primarily of royalties payable to third parties for technology incorporated
into our products. As a percentage of revenues, cost of license revenues
increased from 0.4% in fiscal 1998 to 6.2% in fiscal 1999, and decreased as a
percentage of revenues to 4.3% in fiscal 2000. Royalties that we pay to third
parties vary depending on the types of software products sold and the extent to
which those products incorporate technology of third parties. We pay royalties
in connection with some of our add-on product modules, and, historically, we
paid royalties in connection with sales of some of our prepackaged integrated
solutions. Cost of revenues as a percentage of revenues was higher in fiscal
1999 due to higher sales of these types of prepackaged integrated solutions. We
no longer pay royalties to third parties in connection with sales of our
prepackaged integrated solutions.

Cost of services and maintenance revenues increased from $231,000 in
fiscal 1998, to $697,000 in fiscal 1999, to $4.5 million in fiscal 2000. The
increase in each year is primarily attributable to the hiring of additional
implementation, service and training personnel. Beginning in the third quarter
of fiscal 1998, we began to hire implementation and technical support
personnel. In the fourth quarter of fiscal 1998, we began to hire training
personnel to provide training services to customers and implementation
providers. Our total implementation, service and training personnel grew from
seven on March 31, 1998, to 12 on March 31, 1999, to 47 on March 31, 2000. In
addition, we contracted with a number of independent contractors during fiscal
2000 to provide services in connection with the Goldman Sachs project. As a
result of the increased headcount and the use of independent contractors,
personnel costs related to services and maintenance functions increased from
$145,000 in fiscal 1998, to $378,000 in fiscal 1999, to $2.5 million in fiscal
2000. Cost of services and maintenance revenues for fiscal 2000 also reflect a
$1.1 million charge for expected future costs relating to the installation of a
new product release to replace third-party software we installed for some of
our customers. We expect to complete these replacements during fiscal 2001. In
addition, cost of services and maintenance revenues for fiscal 2000 include a
$383,000 charge for the loss we expect to incur on implementations of the new
product release.

We expect our cost of services and maintenance revenues to increase as a
result of our continued expansion of our services and maintenance staff.
Because services and maintenance revenues have substantially lower margins than
license revenues, this expansion will reduce our gross margins if our license
revenues do not increase significantly. We expect cost of services and
maintenance revenues to vary from period to period depending on the mix of
services we provide and the overall utilization rates of our services staff.

Operating Expenses

Research and Development. Research and development expenses increased
from $1.0 million in fiscal 1998, to $1.3 million in fiscal 1999, to $3.2
million in fiscal 2000. The increase in research and development expenses in
each year was related primarily to an increase in the number of software
engineers and other technical staff supporting the development, testing and
quality assurance of new releases of our software products. Our research and
development staff increased from 13 on March 31, 1998, to 18 on March 31, 1999,
to 42 on March 31, 2000. As a percentage of revenue, research and development
expenses

31
<PAGE>

decreased from 75% in fiscal 1998, to 38% in fiscal 1999, due primarily to the
fact that our revenues grew faster than research and development expenses.
Research and development increased as a percentage of revenues to 52% in fiscal
2000, due primarily to expenses associated with the development of new product
modules, the development of Ironworks 5.0 and the development of additional
prepackaged integrated solutions for commonly used ERP systems. We believe that
continued investment in research and development is critical to our strategic
objectives, and, accordingly, we expect that the dollar amounts of research and
development expenses will increase in future periods, but may fluctuate as a
percentage of our revenues from period to period.

Sales and Marketing. Sales and marketing expenses increased from $3.3
million in fiscal 1998, to $4.7 million in fiscal 1999, to $11.6 million in
fiscal 2000. The increase in sales and marketing expenses in each year resulted
primarily from building a direct sales force and investing in sales and
marketing infrastructure. As a percentage of revenues, sales and marketing
expenses decreased from 240% in fiscal 1998, to 141% in fiscal 1999, primarily
due to the fact that our revenues grew faster than our sales and marketing
expenses. Sales and marketing expenses increased as a percentage of revenues to
187% in fiscal 2000, due primarily to increased staffing of sales and marketing
personnel as we established new North American sales offices and opened our
first European sales office in the United Kingdom. Personnel costs associated
with sales and marketing functions increased from $1.8 million in fiscal 1998,
to $2.7 million in fiscal 1999, to $7.2 million in fiscal 2000. We also
significantly increased spending for marketing activities, such as trade shows,
advertising and other promotional expenses. Costs associated with these
marketing activities increased from $704,000 in fiscal 1998, to $1.0 million in
fiscal 1999, to $2.2 million in fiscal 2000. We anticipate that our sales and
marketing expenses will continue to increase in absolute dollar amounts in
future periods as we continue to expand our sales and marketing efforts, but
may fluctuate as a percentage of total revenues from period to period.

General and Administrative. General and administrative expenses increased
from $1.2 million in fiscal 1998, to $1.3 million in fiscal 1999, to $2.4
million in fiscal 2000. The year-to-year increase in general and administrative
expenses resulted primarily from the addition of executive, finance and
administrative personnel to support the growth of our business during these
periods. As a percentage of revenues, general and administrative expenses
decreased from 91% in fiscal 1998, to 39% in fiscal 1999 due primarily to the
fact that our revenues grew faster than our general and administrative
expenses. General and administrative expenses remained at 39% in fiscal 2000.
Personnel costs associated with general and administrative functions increased
from $1.0 million in fiscal 1998, to $1.2 million in fiscal 1999, to $1.8
million in fiscal 2000. We expect general and administrative expenses to
continue to increase as we add personnel to support expanding operations, incur
additional costs related to the growth of our business and assume the reporting
requirements of a public company. These expenses, however, may fluctuate as a
percentage of revenues from period to period.

Stock-Based Compensation. We recorded aggregate deferred compensation of
$497,000 in fiscal 1999, $4.4 million in fiscal 2000 and $13.7 million in the
quarter ended June 30, 2000 related to stock option grants to employees. Of the
deferred compensation, $128,000 was amortized in fiscal 1999, $1.0 million was
amortized in fiscal 2000 and $2.3 million was amortized in the quarter ended
June 30, 2000. For the remainder of fiscal 2001 and in fiscal 2002, we expect
to amortize stock-based compensation of:

<TABLE>
<CAPTION>
Expected Amortization
of Stock-Based
Compensation
---------------------
(in thousands)
<S> <C>
Quarter Ending
--------------
September 30, 2000..................................... $2,264
December 31, 2000...................................... 2,244
March 31, 2001......................................... 2,172
June 30, 2001.......................................... 1,364
September 30, 2001..................................... 1,181
December 31, 2001...................................... 1,168
March 31, 2002......................................... 1,133
</TABLE>

32
<PAGE>

The remaining unamortized, unearned stock-based compensation will be
approximately $2.6 million for the fiscal year ended March 31, 2003, and $1.0
million for the fiscal year ended March 31, 2004, and $31,000 for the fiscal
year ended March 31, 2005.

Interest Income (Expense), Net. We had net interest income of $52,000 in
fiscal 1998 and $82,000 in fiscal 1999, compared to net interest expense of
$2.4 million in fiscal 2000. Net interest expense for fiscal 2000 included $3.0
million of interest expense related to the beneficial conversion feature of
convertible promissory notes issued in July and September 1999, which were
converted into preferred shares in October 1999. The $2.9 million of interest
expense represents the difference between the fair value at the respective
dates of issuance and the conversion price most beneficial to the holders of
the notes. We had $542,000 of net interest income for the three months ended
June 30, 2000 resulting primarily from interest on proceeds from the issuance
of preferred shares.

Provision for Income Taxes. As of March 31, 2000, we had available net
operating loss carryforwards for Canadian and United Kingdom purposes of
approximately $23.1 million and $1.3 million, respectively. The Canadian net
operating loss carryforwards begin to expire in 2003 and the United Kingdom net
operating losses do not expire. Approximately $11.4 million of the Canadian net
operating loss carryforwards relate to our U.S. operations. As such, they may
be utilized to reduce United States taxable income arising from operations in
the United States and begin to expire in 2013 for U.S. tax purposes. The
Canadian net operating losses are subject to certain Canadian and United States
net operating loss restrictions that may apply on any change of control of our
company, which could adversely effect the amounts of and benefits to be derived
therefrom in certain circumstances. We have provided a full valuation allowance
on the deferred tax asset because of the uncertainty regarding this
realization. Our accounting for deferred taxes under Statement of Financial
Accounting Standards No. 109 involves the evaluation of a number of factors
concerning the realizability of our deferred tax assets. In concluding that a
full valuation allowance was required, management primarily considered factors
such as our history of operating losses and expected future losses and the
nature of our deferred tax assets.

33
<PAGE>

Quarterly Results of Operations

The following table presents our unaudited quarterly results of
operations for each of the four quarters in the period ended March 31, 2000 and
the quarter ended June 30, 2000. You should read the following table in
conjunction with our Consolidated Financial Statements and the accompanying
Notes, included elsewhere in this prospectus. We have prepared this unaudited
information on the same basis as our audited consolidated financial statements.
This table includes all adjustments, consisting only of normal recurring
adjustments, that we consider necessary for a fair presentation of our
financial position and operating results for the quarters presented. You should
not draw any conclusions about our future results from the results of
operations for any quarter.

<TABLE>
<CAPTION>
Quarter Ended
----------------------------------------------------
June 30, Sept. 30, Dec. 31, Mar. 31, June 30,
1999 1999 1999 2000 2000
-------- --------- -------- -------- --------
(in thousands, except as a percentage of net
revenues)
<S> <C> <C> <C> <C> <C>
Consolidated Statement
of Operations Data:
Revenues:
License............... $ 238 $ 402 $ 950 $ 1,215 $ 1,751
Services and
maintenance.......... 339 224 1,043 1,770 2,518
------- ------- ------- ------- -------
Total revenues...... 577 626 1,993 2,985 4,269
Cost of revenues:
License............... 70 33 137 28 219
Services and
maintenance.......... 335 408 2,010 1,721 2,199
------- ------- ------- ------- -------
Total cost of
revenues........... 405 441 2,147 1,749 2,418
------- ------- ------- ------- -------
Gross profit............ 172 185 (154) 1,236 1,851
------- ------- ------- ------- -------
Operating expenses:
Research and
development.......... 553 633 909 1,131 1,424
Sales and marketing... 1,494 1,944 2,903 5,227 5,856
General and
administrative....... 411 418 547 1,027 1,068
Stock-based
compensation......... 86 244 282 388 2,336
------- ------- ------- ------- -------
Total operating
expenses........... 2,544 3,239 4,641 7,773 10,684
------- ------- ------- ------- -------
Loss from operations.... (2,372) (3,054) (4,795) (6,537) (8,833)
Interest income
(expense), net......... 17 (2,931) 234 253 542
------- ------- ------- ------- -------
Net loss................ $(2,355) $(5,985) $(4,561) $(6,284) $(8,291)
======= ======= ======= ======= =======
As a Percentage of Net
Revenues:
Revenues:
License............... 41.2% 64.2% 47.7% 40.7% 41.0%
Services and
maintenance.......... 58.8 35.8 52.3 59.3 59.0
------- ------- ------- ------- -------
Total revenues...... 100.0 100.0 100.0 100.0 100.0
Cost of revenues:
License............... 12.1 5.3 6.9 0.9 5.1
Services and
maintenance.......... 58.1 65.2 100.8 57.7 51.5
------- ------- ------- ------- -------
Total cost of
revenues........... 70.2 70.5 107.7 58.6 56.6
------- ------- ------- ------- -------
Gross profit............ 29.8 29.5 (7.7) 41.4 43.4
------- ------- ------- ------- -------
Operating expenses:
Research and
development.......... 95.8 101.1 45.6 37.9 33.4
Sales and marketing... 258.9 310.5 145.8 175.1 137.2
General and
administrative....... 71.2 66.8 27.4 34.4 25.0
Stock-based
compensation......... 15.0 39.0 14.1 13.0 54.7
------- ------- ------- ------- -------
Total operating
expenses........... 440.9 517.4 232.9 260.4 250.3
------- ------- ------- ------- -------
Loss from operations.... (411.1) (487.9) (240.6) (219.0) (206.9)
Interest income
(expense), net......... 3.0 (468.2) 11.7 8.5 12.7
------- ------- ------- ------- -------
Net loss................ (408.1)% (956.1)% (228.9)% (210.5)% (194.2)%
======= ======= ======= ======= =======
</TABLE>

34
<PAGE>

Fluctuations in Quarterly Results

Revenues

Our license revenues increased in each of the five quarters ended June
30, 2000 due primarily to increased market acceptance of our Ironworks product
suite and the expansion of our sales force. During this period we increased our
total sales and marketing headcount from 27 to 72. This contributed to an
increase in the number of customers from 83 to 152 and led to increases in
license revenues from the sale of our Ironworks products.

Our services and maintenance revenues also increased during the five
quarters ended June 30, 2000. Service revenues decreased slightly during the
quarter ended September 30, 1999, compared to the quarter ended June 30, 1999,
due to a decrease in the number of implementations performed during the quarter
ended September 30, 1999. Implementations are the primary components of our
services and maintenance revenues. The number of implementations we perform
during a particular quarter is related to the number of license orders we
generate in the preceding quarter. We performed more implementations during the
quarter ended June 30, 1999, compared to the quarter ended September 30, 1999,
as a result of a greater number of license orders in the quarter ended March
31, 1999. Service revenues for the quarter ended March 31, 2000 and June 30,
2000 reflect $546,000 and $1.2 million of service revenues relating to services
we performed for Goldman Sachs. These services were not related to software
licenses. Our maintenance revenues increased in each of the five quarters ended
June 30, 2000, as the revenues from the maintenance contracts that we sold to
our growing customer base are being recognized over the period of the
maintenance contracts.

Cost of Revenues

Our cost of license revenues fluctuated during the five quarters ended
June 30, 2000, due to the types of software licenses sold during these periods.
Royalties that we pay to third parties vary depending on the types of software
products sold and the extent to which those products incorporate technology of
third parties. In particular, we historically paid royalties in connection with
sales of some of our prepackaged integrated solutions. We no longer pay
royalties to third parties in connection with sales of our prepackaged
integrated solutions.

Our cost of services and maintenance revenues increased in the five
quarters ended June 30, 2000, due primarily to an increase in the number of
services and maintenance personnel to support our customer base. During the
five quarters ended June 30, 2000, our implementation, service and training
personnel grew from 12 to 52. The personnel costs associated with this
headcount increased from $246,000 during the quarter ended June 30, 1999 to
$830,000 during the quarter ended June 30, 2000. Cost of services and
maintenance revenues for the quarter ended December 31, 1999 reflects a $1.1
million charge for expected future costs relating to the installation of a new
product release to replace third-party software we installed for some of our
customers. In addition, cost of services and maintenance revenues for the
quarter ended March 31, 2000 include a charge of $383,000 for the loss we
expect to incur on implementations of the new product release. Our cost of
services and maintenance revenues represented 94% of our total cost of revenues
during fiscal 2000.

Operating Expenses

Our operating expenses have generally increased in absolute dollars each
quarter because of increased staffing in our sales and marketing, research and
development and general and administrative functions necessary to support our
growth. Our total number of employees increased from 64 on March 31, 1999, to
82 on June 30, 1999, to 103 on September 30, 1999, to 122 on December 31, 1999,
to 170 on March 31, 2000 to 208 on June 30, 2000. In addition, sales and
marketing expenses increased due to higher costs for marketing programs, sales
commissions and sales office expenses. In addition to costs related to
increased headcount,

35
<PAGE>

general and administrative expenses increased due to a larger amount of legal,
accounting and other professional fees.

Liquidity and Capital Resources

From inception to June 30, 2000, we financed our operations primarily
through private placements of preferred shares, with net proceeds of
approximately $66.2 million, loans from related parties of $725,000 and the use
of equipment leases of $563,000. As of June 30, 2000, we had $34.7 million in
cash and cash equivalents, and $31.6 million in working capital.

Net cash used in operating activities was $4.1 million in fiscal 1998,
$5.1 million in fiscal 1999, $11.7 million in fiscal 2000 and $5.1 million for
the three months ended June 30, 2000. Net cash flows used in operating
activities in each period reflect increasing net losses and, to a lesser
extent, accounts receivable, prepaid expenses and other current assets, offset
in part by increases in accounts payable and accrued liabilities and non-cash
charges.

Net cash used in investing activities was $358,000 in fiscal 1998,
$237,000 in fiscal 1999, $2.5 million in fiscal 2000 and $1.0 million for the
three months ended June 30, 2000. Net cash used in investing activities
reflects purchases of property and equipment in each period and $316,000 of
restricted cash in fiscal 2000. Restricted cash consists of cash that is
designated as collateral for capital lease obligations.

Net cash from financing activities was $5.7 million in fiscal 1998, $7.3
million in fiscal 1999, $27.0 million in fiscal 2000 and $25.0 million for the
three months ended June 30, 2000. These cash flows reflect primarily proceeds
from private sales of preferred shares and convertible promissory notes.

Capital expenditures, including capital leases, were $380,000 in fiscal
1998, $351,000 in fiscal 1999, $2.6 million in fiscal 2000 and $1.0 million for
the three months ended June 30, 2000. Capital expenditures increased
significantly in fiscal 2000 due to the expansion of our corporate headquarters
in Pleasanton, California, the opening of our sales offices in Alpharetta,
Georgia and Slough, United Kingdom and investments in computer equipment
related to increased headcount and the launch of the Ironside Network.

We expect to experience a significant increase in our operating expenses,
particularly research and development, sales and marketing expenses and general
and administrative expenses, for the foreseeable future in order to execute our
business plan. As a result, we anticipate that such operating expenses, as well
as planned capital expenditures, will constitute a material use of our cash
resources. In addition, we may utilize cash resources to fund acquisitions or
investments in complementary businesses, technologies or product lines. We
believe our existing cash balances, together with the net proceeds from the
sale of the common shares in this offering, will be sufficient to meet our
working capital and operating resource expenditure requirements for at least
the next 12 months. Thereafter, we may find it necessary to obtain additional
equity or debt financing. In the event additional financing is required, we may
not be able to raise it on acceptable terms or at all.

Recently Issued Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board, FASB, issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS
133 established accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. In July 1999, the FASB issued SFAS No. 137, "Accounting
with Derivative Instruments and Hedging Activities Deferral of the Effective
Date of FASB Statement No. 133. SFAS 137 deferred the effective date until the
first fiscal quarter of the first fiscal year beginning after June 15, 2000. We
will adopt SFAS 133 in the quarter ended June 30, 2001. We have not engaged in
hedging activities or invested in derivative instruments and accordingly, we do
not believe implementation of SFAS 133 will have a material effect on our
financial statements.

36
<PAGE>

In December 1999, the SEC issued Staff Accounting Bulletin ("SAB")
No.101, "Revenue Recognition in Financial Statements," which provides guidance
on the recognition, presentation and disclosure of revenue in financial
statements filed with the SEC. SAB No. 101 outlines the basic criteria that
must be met to recognize revenue and provides guidance for disclosures related
to revenue recognition policies. We have incorporated the impact of SAB No. 101
into our financial position and results of operations.

In March 2000, the FASB issued FIN No. 44, "Accounting for Certain
Transactions Involving Stock Compensation--an interpretation of APB Opinion No.
25". This Interpretation clarifies the definition of employee for purposes of
applying APB No. 25, "Accounting for Stock Issued to Employees," or APB 25, the
criteria for determining whether a plan qualifies as a noncompensatory plan,
the accounting consequence of various modifications to the terms of a
previously fixed stock option or award, and the accounting for an exchange of
stock compensation awards in a business combination. This Interpretation is
effective July 1, 2000, but certain conclusions in this Interpretation cover
specific events that occur after either December 15, 1998, or January 12, 2000.
We do not expect the adoption of FIN No. 44 to have a material effect on our
financial position or results of operations.

European Economic and Monetary Union (EMU) New European Currency

On January 1, 1999, member countries of the European Economic and
Monetary Union established fixed conversion rates between their existing
national currencies and one common currency--the Euro. The Euro trades on
currency exchanges and, during a three-year dual-currency transition period,
either the Euro or the national currencies may be used in business
transactions. Beginning in January 2002, new Euro-denominated bills and coins
will be issued, and the national currencies will be withdrawn from circulation.
Our European operating subsidiary is implementing plans to address the systems
and business issues raised by the Euro currency conversion. These issues
include, among others, (1) the need to adapt computer and other business
systems and equipment to accommodate Euro-denominated transactions; and (2) the
competitive impact of cross-border price transparency, which may make it more
difficult for businesses to charge different prices for the same products on a
country-by-country basis, particularly once the Euro currency is issued in
2002. While we anticipate that the Euro conversion will not have a material
adverse impact on our financial condition or results of operations, we cannot
assure you that our key vendors, customers and distributors will not be
affected by such Euro currency issues, which could have an adverse effect on
our business, operating results and financial condition. Further, there can be
no assurance that the currency market volatility will not increase, which could
have an adverse effect on our Euro exposures.

Qualitative and Quantitative Disclosures About Market Risk

Foreign Currency Risk

We develop our products in Canada and market our products in North
America, Europe and the Asia-Pacific region. 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. As our sales are currently
primarily made or denominated in U.S. dollars, a strengthening of the dollar
could make our products less competitive in foreign markets.

37
<PAGE>

The economic impact of currency exchange rate movements on our operating
results is complex because such changes are often linked to variability in real
growth, inflation, interest rates, governmental actions and other factors.
These changes, if material, may cause us to adjust our financing and operating
strategies. Consequently, isolating the effect of changes in currency does not
incorporate these other important economic factors.

Interest Rate Risk

Our interest income is sensitive to changes in the general level of U.S.
interest rates, particularly because our investments are in cash and cash
equivalents. Due to the short-term nature of our investments, we believe that
there is no material risk exposure.

38
<PAGE>

BUSINESS

Overview

We are a leading provider of Internet-based software applications and
related services for manufacturers and distributors, or sellers, designed to
facilitate and enhance business-to-business e-commerce. Our software
applications and services help businesses market and sell their products and
services over the Internet. Our solutions enable sellers to quickly and
efficiently leverage their existing enterprise business systems and the
Internet to connect with multiple buyers and online trading exchanges. With our
products and services, sellers can interact more closely and efficiently with
their customers, suppliers and other business partners through the exchange of
real-time product and process information.

Our solutions allow sellers to access the existing and emerging
opportunities for business-to-business e-commerce, while maintaining the
traditional sales channels around which their existing enterprise
infrastructure was built. This enables sellers to continue to process orders
and communicate with buyers through important traditional channels, such as
phone and fax, while also enabling them to communicate with buyers using new
channels, such as a web browser, a wireless device or an online trading
exchange. By complementing existing systems, our products and services allow
sellers to evolve their business strategy to reflect the appropriate blend of
traditional business and e-commerce practices.

Industry Background

Growth of the Internet and Business-to-Business E-Commerce

The widespread adoption of the Internet as a business communication
platform has created a foundation for business-to-business e-commerce that has
enabled organizations to tap new revenue streams, streamline cumbersome
processes, lower costs, improve productivity and increase customer
satisfaction. As a result, a growing number of companies are seeking to use the
Internet to buy and sell products and services. Forrester Research estimates
that the annual value of business-to-business e-commerce in the United States
will increase by 564% from an estimated $406 billion in 2000 to nearly
$2.7 trillion in 2004, accounting for more than 17% of the total dollar value
of business trade.

Forrester Research estimates that 47% of the combined value of business-
to-business e-commerce transactions in 2004 will be conducted through bilateral
trade via seller/extranet sites. Seller sites are Internet sites, maintained by
sellers, that allow buyers to purchase products or services. Seller sites range
from relatively simple catalog sites to sophisticated, fully functional e-
commerce sites. These sophisticated seller sites allow users to complete
complex business-to-business transactions that involve the sale of products and
services with multiple features and options, or custom pricing or service
options. These complex transactions require real-time communication between the
enterprise business systems of sellers and buyers.

The Internet has also led to the development of online trading exchanges,
which have emerged as important channels for business-to-business e-commerce.
Online trading exchanges are services that connect multiple sellers and buyers
through one marketplace over the Internet. Using an exchange, or marketplace,
sellers can communicate with multiple buyers, and buyers can similarly
communicate with multiple sellers, without the difficulties and expense that
would be required to establish direct connections between each seller and each
buyer. Forrester Research estimates that business-to-business e-commerce
transactions through marketplaces in the United States will increase from $55
billion in 2000 to over $1.4 trillion in 2004, representing an annual growth
rate of 126%.

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Current Approaches to Business-to-Business E-Commerce Integration are
Inadequate

Historically, sellers have relied on a combination of sales personnel,
telephones, fax machines and email to sell products to their customers. In
recent years, the business environment has grown increasingly competitive,
forcing companies to seek new ways to improve productivity and customer
satisfaction. Over the last decade, companies have also invested heavily in
enterprise resource planning, or ERP, systems supplied by vendors such as Baan,
JD Edwards, Oracle, PeopleSoft and SAP and supply chain management software
from companies such as i2 and Manugistics to automate and improve the
efficiency of their internal business processes. Historically, however, these
systems have not readily supported business processes beyond the borders of the
enterprise. As a result, companies have had difficulties achieving efficiencies
from integration of their business processes with those of their customers,
suppliers and other business partners. The variety of computing environments
and the inability to share information across these environments have been
major impediments to the growth of business-to-business e-commerce.

Online trading exchanges have their own challenges and limitations. These
exchanges use multiple transaction formats, resulting in the absence of a
common transaction standard or protocol. Due to the considerable time and
expense necessary to customize existing enterprise business systems to work
with a particular exchange, sellers are faced with difficult decisions as to
which protocols and standards to adopt and which exchanges will provide a long-
term return on investment. In order to be successful, an online trading
exchange must develop a long-term value proposition that will attract the
participation of multiple buyers and sellers. In addition, an exchange must
build the necessary and costly infrastructure to accommodate the integration of
both buyer and seller systems. Existing exchanges have been developed primarily
to provide business buyers with an efficient means of locating and purchasing
materials required for production and operations and have not addressed the
difficulties associated with integrating the enterprise business systems of
sellers with these exchanges.

Only a limited number of approaches have been developed to address the
impediments and difficulties associated with integrating sellers' enterprise
business systems into an e-commerce environment. For example, several
enterprise application vendors, which focus on integrating existing
applications and data sources within an enterprise, have connected single
sellers with a single buyer or single exchange. This type of integration
generally involves static data, which can become quickly out of date, rather
than software that is able to access valuable real-time information from a
seller's enterprise business systems. These types of systems generally do not
allow buyers to obtain real-time information about current inventories or
promised delivery dates and require extensive customized integration, which
takes significant time and resources. In addition, these approaches generally
provide limited functionality and limited ability to efficiently increase
capacity as required, or scalability.

Our Opportunity

We believe there is a significant market opportunity for a comprehensive
business-to-business e-commerce solution that enables sellers to integrate
their existing enterprise business solutions with independent buyers and online
trading exchanges. This type of solution must provide sellers with fast,
efficient and scalable integration with multiple independent buyers and
exchanges. It should also allow sellers to offer their business partners the
ability to exchange information and conduct transactions over the Internet in a
secure, reliable environment and on a real-time basis, regardless of installed
technology infrastructure. We believe a solution that is easy to use, can be
deployed quickly, and is based on Internet technology offers significant
advantages over traditional client-server architectures. These advantages
include the ability to be deployed over a broad range of browser-enabled
devices and ease of integration with other Internet-based software
applications.

As the use of online trading exchanges by business buyers grows, it is
becoming increasingly important for sellers to make their products available
for sale through these exchanges. Online trading

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exchanges represent a significant opportunity for sellers to reach both new and
existing customers more efficiently. We believe it will be crucial for sellers
to have the flexibility to sell their products through multiple exchanges in
order to remain competitive. Further, we believe it will be important for
sellers to quickly and efficiently enter and exit these exchanges as they prove
to be viable or non-viable channels to market their products and services.

The Ironside Solution

Our comprehensive solution provides sellers with fast and efficient
integration with both direct buyers and online trading exchanges. Our solution
consists of two key components: our Ironworks product suite and the Ironside
Network. The Ironworks product suite consists of our web-based software
products that enable sellers to integrate their existing enterprise systems
with multiple buyers and online trading exchanges. In addition, the Ironworks
product suite delivers a set of applications that provide a convenient
interface for buyers to communicate with a seller's enterprise systems using an
Internet browser, procurement system or wireless device, as well as tools for
creating applications with custom features. Our recently launched Ironside
Network is an access service that provides sellers with a single point of entry
into multiple online trading exchanges and the flexibility to enter and exit
these exchanges quickly and efficiently. In order to facilitate the efficient
integration of our products, our experienced professional services team,
together with our certified partners, provides implementation services,
training and maintenance and support. Our products are designed to provide
manufacturers and distributors with a real-time, interactive, business-to-
business e-commerce solution. By implementing our comprehensive solution,
sellers can achieve cost savings, take advantage of significant new market
opportunities and increase customer satisfaction.

We believe our solution offers the following key benefits to sellers:

Reduced Operating Costs

Our solutions enable sellers to reduce sales costs through automation,
improved access and improved customer service. By automating transactions,
sellers can reduce the costs associated with, and reduce the potential for
error inherent in, paper-based ordering and payment processes. Our solutions
also enable buyers to access a seller's systems to obtain product information,
thereby reducing the costs of providing this information to buyers. Our
solutions allow sellers to combine this product information with the customer-
specific business logic, such as pricing calculations and product
configurations, necessary to guide a buyer through a purchase decision, further
reducing call center and other sales and marketing costs.

New Revenue and Market Opportunities

The Ironworks product suite enables sellers to increase revenues by
reaching new and existing customers through a variety of channels, such as
Internet browsers, automated procurement systems or wireless devices. Buyers
are able to access valuable information and to complete transactions at all
times of the day, even after normal business hours. The Ironside Network
provides our customers with immediate access to the new revenue and market
opportunities that are quickly emerging through online trading exchanges. As
new exchanges emerge, our customers can quickly connect to these exchanges and
begin selling to new buyers that are being serviced by these exchanges. By
allowing our customers to quickly and efficiently enter and exit online trading
exchanges, our solutions also help minimize the risk of participating in new
exchanges that may not be successful.

Increased Return on Technology Investments and Rapid Implementation

Over the years, companies have invested significant amounts in ERP
systems and other enterprise business systems to increase the efficiency of
their internal operations. By effectively integrating our customers' enterprise
business systems to the e-commerce environment, our solutions help maximize the
returns on these

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investments by extending the benefits of those applications to a seller's
customers and other business partners. Implementation time for our solutions
ranges from less than one month to six months. We believe that our rapid
implementation results in a shorter payback period and a higher return on
investment for our customers.

Improved Supply Chain Efficiencies

In addition to increasing their return on investment in existing
enterprise business systems, our customers can use our software to achieve
significant cost savings and productivity enhancements in their supply chain by
reducing cycle times, lowering inventories and reducing error rates through the
real-time exchange of information. Closer integration with their suppliers and
buyers helps our customers improve their planning and forecasting capabilities
as order information is relayed in real-time to manufacturing and distribution
facilities.

Stronger Relationships with Buyers

Our solutions enable sellers to deliver valuable real-time information to
buyers, including product specific pricing and availability. In addition,
buyers are able to use multiple access methods, including browser, wireless
device, procurement system or online trading exchange to receive this
information directly from a seller's enterprise business systems. Further, our
web-based solutions make real-time information available to buyers outside of
normal business hours, thereby increasing convenience for buyers. As a result
of continuous access to this information, buyers develop stronger relationships
with sellers.

Strategy

Leverage First-Mover Advantage to Build Customer Base and Expand Globally

We believe we currently provide the most comprehensive business-to-
business e-commerce solution, as compared to our competitors. We have
established a strong presence in North America and Europe with a solid customer
base comprised of over 165 customers in a variety of industries. We intend to
capitalize on our market position and further build our customer base by
continuing to focus on sellers, complementing existing buyer-focused solutions,
and by aggressively marketing our solutions globally.

We intend to attract influential sellers in diverse industries to adopt
our solutions in order to expand our base of customers. We believe our recently
launched Ironside Network enhances the value of our solutions for our
customers. As new online trading exchanges are added to the Ironside Network,
our solutions become more valuable to sellers who desire to sell their products
through those exchanges. Similarly, the integration of an influential seller to
an exchange participating in the Ironside Network makes our solutions
attractive to other sellers who desire to sell their products through that
participating exchange.

Leverage Expertise in Manufacturing and Distribution

Manufacturers and distributors represent one of the largest market
opportunities for e-commerce software solution providers. Within this market,
we have targeted the chemicals and allied products, electronics, food and
beverage, and office/school supplies industries. We targeted these industries
in particular because they each have a large number of companies with
significant annual revenues, and these companies typically generate revenues
through sales of a relatively large number of products to a large number of
buyers. Forrester Research estimates that business-to-business e-commerce in
the computing and electronics, food and agriculture, petrochemicals, paper and
office products, and pharmaceutical and medical products industries will be
nearly $1.5 trillion in the aggregate in 2004, accounting for over 54% of the
total dollar value of business-to-business e-commerce. Our products are ideally
suited for the complex distribution systems, frequent customer interaction and
high transaction volumes associated with these industries. We have an

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established customer base and strong relationships in these industries, and we
have developed substantial in-house industry knowledge and expertise. We
believe this knowledge and expertise provides us with a significant competitive
advantage and enables us to develop tailored solutions that address problems
faced by participants in these industries. We intend to continue to build upon
our expertise and increase our customer penetration in our targeted industries.

Continue to Broaden Strategic Relationships

We plan to build upon our existing strategic technical and sales
relationships with industry leaders in the areas of e-commerce, systems
integration, and value-added services. We will continue to work with existing
and new partners to expand our customer base, accelerate our product roll-outs,
integrate best-of-class technology into our products, and provide additional
value-added services to our customers. These relationships allow us to focus on
our industry and technology expertise while taking advantage of the strengths
of complementary solutions and the influence of these industry leaders. We
believe that our strategic relationships will accelerate the widespread
deployment of our solutions.

Further Develop Model for Predictable, Recurring Revenues

Our current business model provides revenues from a number of sources,
including new license sales, maintenance fees and professional services fees.
We also intend to receive subscription fees and transaction fees from sellers
using our Ironside Network. We expect that our market leadership position and
our growing network of strategic relationships will provide a predictable
source of revenues over time.

Extend Technology and Product Leadership

We believe that, compared to our competitors, we currently provide the
most comprehensive seller-focused business-to-business e-commerce solution
supporting multiple protocols and data format standards. In July 2000, we
further expanded the functionality of the Ironworks product suite to include
new features, such as template order entry, order approval workflow and
intelligent promotion. The Ironside Network was also enhanced in July 2000 to
include content management and syndication features, as well as additional
foreign language support. We intend to continue investing in research and
development to ensure that our products incorporate the latest technologies and
standards. We also intend to increase the performance, functionality and ease
of use of our products by integrating new technologies into our software and
supporting a wider range of enterprise applications.

Products

Our products can be categorized as follows:

. Ironworks

. Ironside Powered Development Kit

. Ironside Network

Ironworks

Ironworks is a web-based software product that enables sellers to
integrate their existing enterprise business systems into a single, unified e-
commerce environment. The Ironworks software consists of server software and a
suite of business applications. The server software runs on a server connected
to a seller's computer network and provides seamless integration to a seller's
existing enterprise business systems. We refer to a server running our
Ironworks software as an "Ironside Powered Server." The business applications,
which

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are launched by the Ironside Powered Server over the Internet, provide a
convenient interface for buyers to access the seller's enterprise business
systems. We use our patent-pending Ultra Thin Client, or UTC, technology to
develop the Ironworks business applications. The UTC technology minimizes the
part of the application that must be sent from the seller's system to the buyer
over the Internet, resulting in reduced data transfer times.

[Graphic material omitted. The graphic contains two headings. The heading to
the left of the page is entitled "Buyer." The heading to the right of the page
is entitled "Seller." Under the "Buyer" heading is a drawing of a computer
monitor and keyboard. The words "End-user PC" appear above the monitor. The
words "Wireless Device" appear to the right of the monitor, underneath of which
is a drawing of a personal digital assistant. Appearing below the computer is a
drawing of a computer network server and to the right of the server the words
"Buyer Enterprise System" are written. A bracket appears to the right of all
three drawings. A cloud shape is to the right of the bracket with the word
"Internet" written inside. There are three lightening bolts surrounding the
cloud, one pointing down and two pointing to the right, to graphics located
under the "Seller" heading. Under the "Seller" heading is a drawing of a server
with the words "Ironworks Server" written inside. Appearing to the right of
this server is another bracket, which is bracketing a rectangle. Above the
rectangle the word "Enterprise" is written. Inside the rectangle are five
shaded boxes, arranged vertically. The following words or letter combinations
appear, one in each box, beginning at the top: "ERP," "SCN," "CRN,"
"Logistics," "Legacy."]

Our Ironworks software allows buyers to use an Internet browser,
procurement system or wireless device to securely execute specific business
processes and receive information. Through the Ironworks suite of business
applications, we currently deliver to sellers and their buyers the following
Internet-enabled business processes:

. Order / Quote Entry, enabling buyers to enter orders or obtain
quotes;

. Order Status, enabling buyers to obtain the status of orders;

. Product Inquiry, enabling buyers to determine product functionality
and availability;

. Product Configuration, enabling buyers to configure products with
multiple features;

. User Administration, enabling sellers to set restrictions for
specific users;

. Product Administration, enabling sellers to adjust product lists and
pricing; and

. External Advertising and Communication, enabling sellers to promote
their products or the products of others through the Ironworks
software.

To speed deployment, we have developed prepackaged integrated solutions
for many of the commonly used ERP systems. These prepackaged integrated
solutions include:

. Ironworks for SAP;

. Ironworks for Oracle;

. Ironworks for JD Edwards;

. Ironworks for eBPCS (SSA);

. Ironworks for JBA; and

. Ironworks for PRISM (Marcam).

Using these prepackaged integrated solutions, a team of our service
professionals or a team from one of our certified implementation partners can
rapidly integrate Ironworks with a seller's existing ERP system. The
implementation time for most of these deployments ranges from less than one
month to four months, although we have not yet implemented our Ironworks for
Oracle prepackaged integrated solution.

Customers using certain enterprise business systems are often better
served by a custom Ironworks solution rather than a prepackaged integrated
solution. These systems include those supplied by Baan, PeopleSoft and other
providers. We can easily adapt Ironworks to these systems because Ironworks is
based on an open architecture. In addition, Ironworks can be easily adapted to
supply chain management systems,

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logistics systems, distribution systems and other types of enterprise business
systems. We use templates and other tools to reduce the deployment time for
custom Ironworks solutions for systems such as Baan and PeopleSoft. Custom
Ironworks deployments generally can be performed in three to six months.

We also offer a variety of modules that can be purchased by our customers
to further enhance the functionality of Ironworks, including improved
collaboration capabilities, order approval functionality and access. These
modules include:

. eNotification, which adds email activities leveraging work-flow
processing to a seller's e-commerce environment in order to
facilitate more effective communication with buyers;

. eApprovals, a set of rules-based workflows that simplify, streamline
and automate a buyer's internal order-approval processes;

. B2BChat, which enables sellers to provide real-time interactive
responses to buyer questions, increasing customer satisfaction and
optimizing order sizes by dynamically matching buyers' needs with
available solutions;

. eWireless, which allows sellers to give their field sales force and
their buyers real-time access to information, such as order status,
directly from a wireless device; and

. Ironside Access, which allows sellers to give buyers the ability to
connect using certain other technologies, such as EDI, procurement
systems and HTML-based systems.

We developed the Ironside Access module internally. All of the other
modules we currently offer use technology developed by other companies, which
we adapted for use within Ironworks. We pay a license fee to the developers of
these technologies when we license the related modules to our Ironworks
customers. We intend to continue to provide additional modules that will
enhance the functionality of Ironworks. Currently, we are working to develop an
advanced search engine module, a vendor-managed inventory module and a payment
processing module.

Ironside Powered Development Kit

The core business applications that we offer as part of Ironworks
facilitate the most common business processes. For many of our customers, these
applications are sufficient to meet their immediate needs for an effective e-
commerce solution. Other customers, however, need the ability to customize the
applications or develop additional applications that meet their unique
requirements. For these customers, we offer the Ironside Powered Development
Kit.

The Ironside Powered Development Kit, or iDK, provides a framework for
customizing our Ironworks software. The iDK is a set of software tools for
creating e-commerce applications tailored to a seller's unique business needs.
Some applications that can be created with the iDK include:

. Accounts Receivable Status;

. Online Warranty Registration;

. Customer Cash Management;

. New Customer Registration;

. Returns Authorization;

. Customer Demand Forecasting; and

. Patient Care Registration.

In order to allow a customer to effectively use the iDK, we certify one
or more programmers within an Ironworks customer's organization through
Ironside iDK training.

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Ironside Network

We designed our Ironside Network to provide sellers with a single point
of entry into multiple online trading exchanges and the flexibility to quickly
enter and exit exchanges. The Ironside Network will facilitate transactions
across multiple exchanges providing sellers with immediate access to new
markets and revenue streams.

[Graphic material omitted. In the center of the graphic is on oval labeled
"Ironside.net Transaction Exchange." Above the central oval are three ovals
arranged in a row from left to right, each labeled "Trading Exchanges." Each of
the "Trading Exchanges" ovals is joined to the central oval with a
bidirectional arrow labeled "XML". Below the central oval is an oval labeled
"Sellers," which is joined to the central oval with a bidirectional arrow
labeled "iXML." To the left of the central oval are three smaller ovals
arranged diagonally from upper left to lower right, labeled "Shipping &
Logistics," "Payment" and "Insurance," respectively. Each of these smaller
ovals is joined to the central oval with a line. To the right of the central
oval are three smaller ovals arranged diagonally from upper right to lower
left, labeled "Business Intelligence," "Document Management" and "Hosting
Services," respectively. Each of these smaller ovals is joined to the central
oval with a line.]

We developed the Ironside Network to:

. enable sellers to participate in online trading exchanges, which have
emerged as important new market channels;

. protect sellers from volatility in the technology standards and other
dynamics associated with online trading exchanges;

. allow buyers within online trading exchanges to obtain access to as
many sellers as possible; and

. provide transaction-centric and business intelligence and other
value-added services for both buyers and sellers.

The Ironside Network consists of three major elements:

. IronsideX, which enables sellers to use the Ironside Network if they
do not already use our Ironworks software;

. Ironside.Net, which converts transaction formats and facilitates
communication between the systems of buyers and sellers; and

. IronsideXCHANGE, which allows online trading exchanges to participate
in the Ironside Network if they have not already adopted a common
industry transaction format.

IronsideX. IronsideX is a software application that facilitates
transactions with exchanges participating in the Ironside Network. IronsideX
provides the necessary bridge between the Ironside Network and the back office
systems of sellers. A seller that does not currently use Ironworks can use
IronsideX to participate in the Ironside Network. IronsideX does not include
the Ironworks suite of business applications that facilitate direct sales to
buyers without utilizing an exchange.

We install IronsideX and provide any necessary implementation and
training services for a one-time fee that is considerably lower than the
license and implementation fees for a full deployment of our Ironworks product
suite. This makes IronsideX a relatively inexpensive way for sellers to begin
using the Ironside Network. We intend to charge sellers monthly subscription
fees and transaction fees to participate in the Ironside Network. These fees
will be the same for both IronsideX and Ironworks users participating in the
Ironside Network.

Based on our installations of Ironworks and beta-test installations of
IronsideX, we believe that 90% of all IronsideX installations can be performed
in 20 business days or less. We believe the combination of low-cost entry and
fast installation makes IronsideX attractive to sellers who want a cost-
effective, low-risk alternative that allows them to participate in e-commerce
activities via online trading exchanges.

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Ironside.Net. Ironside.Net facilitates communication between the systems
of buyers by routing transactions and converting transactions formats. The
buyers in these transactions can be purchasing either directly from a seller or
through an online trading exchange. The sellers can be individual sellers, such
as manufacturers on distributors, or online trading exchanges.

Ironside.Net has been designed to convert different buyer transaction
formats to iXML. iXML is a transaction format that we developed to describe
business transactions and facilitate communication between the different
systems of buyers and sellers through the Ironside Network. iXML is based on
eXtensible Markup Language, or XML, a recent standard that defines a universal
method for structuring data. Because Ironside.Net can convert transaction
formats to iXML, sellers can participate in a variety of online trading
exchanges that use different, commonly-used transaction standards, such as:

. Ariba cXML;

. BizTalk;

. Clarus Fusion;

. Commerce One xCBL;

. EDI;

. OBI;

. RosettaNet;

. UDDI; and

. Proprietary email formats.

Once a buyer's transaction formats are converted to iXML through
Ironside.Net, they are communicated to the seller's enterprise business systems
for processing.

In addition to facilitating e-commerce transactions, we intend to provide
the following additional value-added services through Ironside.Net:

. Business intelligence, which will give sellers data regarding certain
online trading exchanges, such as transaction volume comparisons and
transaction content;

. Content management, which will facilitate delivery and updating of
sellers' content information, such as product catalog and stock
keeping unit, or SKU, information;

. Hosting, which will allow sellers to use our servers, rather than
their own servers, to run IronsideX;

. Shipping and logistics, which will enable sellers to determine the
best shipping and logistics mechanism to meet a buyer's needs;

. Insurance, which will provide insurance for the completion of
transactions and the delivery of products; and

. Financial, which will include credit analysis, lines of credit and
payment processing.

Services, such as content management, shipping and logistics, insurance
and financial services will be provided by third parties. We intend to enter
into revenue sharing or other fee arrangements with these service providers
with respect to the services they provide through the Ironside Network.

Hosting and content management services became available through the
Ironside Network in October 2000. We expect our remaining value-added services
currently in development to be implemented during the first half of 2001.

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In addition to the value-added services relating to online trading
exchanges, the Ironside Network has the capacity to host subscription-based
business applications that are not related to online trading exchanges. For
example, we have entered into a relationship with a wireless infrastructure
provider that enables us to provide subscription-based wireless services to our
customers. This wireless service uses the Ironside Network to facilitate
communication with a seller's enterprise business systems through wireless
devices.

IronsideXCHANGE. There are a number of online trading exchanges that
currently provide trading and auctioning functions. Many of these exchanges,
however, do not have real-time integration to the enterprise business systems
of participating sellers, and they have not adopted one of the common industry
transaction standards that would permit them to participate in the Ironside
Network. For these exchanges, we offer IronsideXCHANGE, which allows an
exchange to participate in the Ironside Network and provides the exchange with
real-time integration to the enterprise business systems of sellers
participating in the Ironside Network. We provide the IronsideXCHANGE software
to interested online trading exchanges at no charge. We believe it is in our
customers' best interests for Ironside to facilitate the participation of a
wide variety of online trading exchanges in the Ironside Network.

Professional Services

Our professional services organization helps our customers maximize the
value of their technology investments, reduce implementation times and minimize
the burden on internal information systems and resources by providing a range
of services that facilitate the integration of our solutions. By teaming with a
range of leading implementation partners and channel partners, we deliver
comprehensive systems integration services, implementation services, education
and training services and technical support services for our solutions. Our
professional services are grouped into three categories:

Implementation Services. Our team of over 50 experienced service
professionals provides customers and partners with project management,
application integration, configuration services and technical support to deploy
our solutions. Our streamlined implementation methodology enables the
successful deployment of some of our solutions in less than one month. Our team
tailors the scope of integration and configuration services to meet each
customer's individual needs.

Education and Training Services. We are committed to delivering the
knowledge and tools needed for the successful implementation and deployment of
our Ironside Powered solutions to our customers and to our channel partners. We
have created a comprehensive curriculum to meet these needs that includes
hands-on classes for customers as well as partners and certification upon
completion of the courses. The classes, which are typically five days in
duration, are conducted at one of our in-house training facilities located in
Pleasanton, California; Alpharetta, Georgia; Toronto, Canada; and Slough,
United Kingdom. When requested by customers or partners, we conduct training at
their locations. To date, over 350 individual customers and partners have
received Ironside certification.

Maintenance and Support Services. We provide maintenance and support
through our call centers located in Toronto, Canada and Slough, United Kingdom
to customers that purchase our products directly from us. Each of our
implementation partners has been certified and has integrated the support
requirements for Ironworks into their existing customer support organizations.
Our partners are responsible for installation, call support, training,
maintenance, upgrades, new release installations and day-to-day trouble
shooting for their base of customers. We are committed to supporting our
partners by creating new releases, software fixes and browser support. By
working together with our partners, we believe we can ensure the highest degree
of customer satisfaction.

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Customers

As of September 30, 2000, we had licensed our software to over 165
customers. In the fiscal year ended March 31, 2000, two customers, Goodyear
Tire and Rubber Co. and The Goldman Sachs Group, Inc. accounted for
approximately 19% and 16%, respectively, of our total revenues. Our customers
are primarily mid-tier manufacturers and distributors and represent a broad
spectrum of enterprises within diverse industries. A significant number of our
customers are manufacturers and distributors in the chemicals and allied
products, food and beverage, electronics and office/school supplies industries.
We specifically target these industries for two reasons. First, each of these
industries has a large number of sellers with significant annual revenues.
Second, companies in these industries typically generate revenues through sales
of a relatively large number of products to a large number of buyers. Our
products are ideally suited for the complex distribution systems and high
transaction volumes associated with these industries. The following is a list
of substantially all of our customers that have purchased at least $100,000 of
software licenses and related services since February 1996:

Food / Foodservice / Beverage Chemicals and Allied Products
Bacardi Busack & Shamban
The Boelter Companies Chemfab
Brake Bros. The D-M-E Company
Cacique Ellis & Everard
Mother Parker's Tea and Coffee Goodyear Tire & Rubber
Serca Foodservice Intertape Polymer
South Beach Beverages MacDermid
United Distillers and Vintners Performance Polymers
Sulzer Metco

Electronics Tyco Adhesives
Beamscope Canada

The DAC Group Office / School Supplies
European Telecom Central National-Gottesman
Express Computer Supply Fox River Paper Company
General Semiconductor J.L. Hammett
Marconi School Specialty
Paradyne W.B. Mason
ROCOM (UK)

Weidmuller Medical / Health Supplies

Bellco Health
Metals / Industrial / Commercial McKesson HBOC
Asahi America Safeskin (a subsidiary of Kimberly
Automotive Group Clark)
Gustafson Sauflon Pharmaceuticals
HRP Songbird Hearing

Huhtamaki Van Leer
Kawneer Company Other Customers
Plieger The Goldman Sachs Group
Production Tool Supply Malden Mills
PWS Distributors Mastercraft Fabrics
Sandvik Steel New Creative Enterprises
Velux America Plasti-Line
York Wallcovering Velcro

The Ironside Network was launched in April 2000, and only a small number
of test transactions have been processed to date through the Ironside Network.
We are targeting existing Ironworks users as well as new customers as potential
subscribers to the Ironside Network. As of September 30, 2000, six sellers and
eleven online trading exchanges had agreed to participate in the Ironside
Network. These sellers and exchanges are in the process of integrating and
testing their systems with the Ironside Network.

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Case Studies

The following case studies illustrate how some of our customers have used
our solutions to improve their business-to-business e-commerce capabilities.

J.L. Hammett Company

J.L. Hammett Company is one of the largest school-supply distributors in
the United States. The school supply distribution business is characterized by
low operating margins, which makes cost control a priority. J.L. Hammett wanted
to reduce customer service and order management costs by providing e-commerce
capabilities to its customers and considered developing its own e-commerce
applications before deciding to purchase Ironworks in December 1997. J.L.
Hammett chose Ironworks because of its functionality and its ability to be
rapidly deployed. We were able to integrate Ironworks with J.L. Hammett's
custom order management and inventory control systems in approximately 90 days.

J.L. Hammett initially perceived e-commerce as a way to reduce costs. Our
solution not only reduced costs, but also helped J.L. Hammett increase
inventory turns and strengthen customer satisfaction. Ironworks allowed J.L.
Hammett to achieve a virtually paperless warehouse and provide its customers
with real-time visibility into the actual inventories within J.L. Hammett's
warehouse facilities. The high level of integration with existing enterprise
systems provided by Ironworks enabled J.L. Hammett to greatly reduce order-
processing times. For some products, J.L. Hammett was able to reduce order-
processing times from approximately three-weeks to less than three hours. Our
solutions help J.L. Hammett manage its supply chain more effectively, resulting
in better inventory management and customers rarely encountering items that are
out-of-stock.

During 1999, the first full year that J.L. Hammett used Ironworks to
provide e-commerce capabilities to its customers, J.L. Hammett handled more
than 10 percent of its $160 million in revenues through its online storefront.
J.L. Hammett expects online sales to be significantly higher in 2000. In
addition, J.L. Hammett has increased its average order size by 200% due in part
to our solutions.

In March 2000, J.L. Hammett purchased an Ironside Access module from us.
The Ironside Access module, together with Ironworks, enabled certain J.L.
Hammett customers to connect to its systems using EDI technologies.

To further strengthen its online presence, J.L. Hammett has agreed to
become one of the first sellers to participate in the Ironside Network. J.L.
Hammett will initially utilize the Ironside Network to integrate into Simplexis
and Epylon.com, which are leading online trading exchanges for education and
government institutions.

Brake Bros. Plc

Brake Bros. is one of Europe's largest food distributors. Brake Bros.
operates within a highly competitive, margin-sensitive industry in which
operational efficiency is the key to profitability. To manage its sales and
distribution operations, Brake Bros. employs one of the world's largest
SAP R/3-based ERP systems. Brake Bros. needed to extend this ERP system to
provide e-commerce capabilities to its customers.

Brake Bros. expected that integrating an e-commerce solution with its ERP
system would be both costly and time-consuming. Our prepackaged Ironworks for
SAP solution allowed Brake Bros. to significantly reduce the amount of time and
expense necessary for deployment of an e-commerce solution. Brake Bros.
purchased its Ironworks for SAP license in December 1999. We were able to
implement this solution for Brake Bros. in approximately 90 days.

Brake Bros. has traditionally handled approximately 15,000 telephone and
fax orders per day. With its Ironworks for SAP solution fully deployed, Brake
Bros. expects to immediately shift more than five percent of

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its call center activity to the Internet, which is expected to reduce costs.
Brake Bros. expects that this percentage will continue to increase as Brake
Bros. markets its e-commerce capabilities to its 100,000 customers.

Strategic Relationships

In order to deliver a comprehensive solution to our customers, we have
established strategic relationships with organizations in three general
categories: operating systems and application software vendors, system
integrators, and online trading exchanges and e-commerce platform providers.

Operating Systems and Application Software Vendors

We have established relationships with operating systems platform
partners to help ensure the reliability, scalability and performance of our
products when operating on these platforms. To enhance the functionality and
benefits of our solutions, we also collaborate with application software
vendors.

SAP AG. We have entered into software license agreements with SAP America
and complementary software program certification agreements with SAP AG. SAP is
an international developer and supplier of integrated business application
software. Under these agreements, SAP has granted us non-exclusive, perpetual
licenses to use specified SAP R/3 General Function Blocks software to develop a
prepackaged integrated version of Ironworks for SAP R/3. Also under these
agreements, SAP will test and certify our Ironworks for SAP R/3 product and our
Ironside Network for functionality with SAP's mySAP.com marketplace. As of
September 30, 2000, we had installed our Ironworks for SAP solution for two
customers. After SAP has certified our products, we anticipate entering into a
complementary software program marketing agreement with SAP to provide
marketing services for our Ironworks for SAP product.

IBM. We have entered into a software vendor marketing program agreement
with IBM. IBM is a leading supplier of end-to-end e-commerce solutions. Through
this agreement, IBM has agreed to assist us in marketing our Ironworks products
in exchange for a percentage of the revenues from sales of Ironworks in which
IBM's sales force is directly involved. We are also an Advanced Business
Partner in the IBM Partnerworld for Developers. Through this relationship, IBM
provides support and services to select developers who build solutions using
IBM technologies and whom IBM views as important to its business from the
standpoint of revenue generation and technology. We have sold our software to
large customers such as Goodyear and Chemfab through our relationship with IBM.

Delano Technology Corporation. We have entered into a software license
and OEM agreement with Delano Technology Corporation to use its Delano E-
Business Interaction Suite Software to develop modules that enhance the
functionality of our Ironworks software for our customers. Delano provides e-
commerce solutions enabling businesses to interact electronically. To date, we
have introduced several modules, including eNotification which adds email
activities leveraging work-flow processing to a seller's e-commerce environment
in order to facilitate more effective communication with buyers, and eApprovals
which is a set of rules-based work-flows that simplify, streamline and automate
a buyer's internal order-approval processes.

Clarify, Inc. We are a software member of the Clarify Solutions Alliance
Program. Through this arrangement, Clarify has agreed to assist us in marketing
our Ironworks products, and we have agreed to assist Clarify in marketing its
products. Clarify, a Nortel Networks company, provides software applications
for managing customer interactions.

System Integrators

We have relationships with several system integrators who implement our
products and often assist us with sales and lead generation. We have certified
and trained over 180 consultants in these organizations for the implementation
and operation of our products.

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marchFIRST, Inc. We have entered into an alliance agreement with
marchFIRST whereby marchFIRST markets our products and is responsible for
installing, integrating, maintaining and supporting these products. marchFIRST,
Inc. is a leading Internet professional services firm with offices throughout
the world and considerable expertise and relationships in the manufacturing and
distribution communities. marchFIRST has over 30 Ironside-certified employees,
who are capable of managing the integration of Ironside solutions to a seller's
enterprise business systems.

BrightStar Information Technology Group, Inc. We have entered into an
alliance agreement with BrightStar Information Technology Group. BrightStar is
a leading e-commerce consulting and services company. Under this agreement,
BrightStar markets our products and is responsible for product implementation.

Online Trading Exchanges and E-Commerce Platform Providers

We have relationships with online trading exchanges and firms involved in
the business-to-business integration of buyers and exchanges. These
relationships assist us in ensuring that the Ironside Network is capable of
receiving and translating transaction information from buyers and online
trading exchanges. Also, by integrating these online exchanges into the
Ironside Network, we can increase the number of buyers that can conduct online
transactions with the sellers participating in the Ironside Network. We are
pursuing additional relationships with other exchanges and technology vendors
to further support the Ironside Network.

BuildPoint Corporation. We have entered into a marketing agreement with
BuildPoint Corporation. BuildPoint.com is the first live web-based online
trading exchange, or marketplace, that provides online project bidding and
materials procurement for the construction industry, which currently serves
over 30,000 construction professionals. Our agreement with BuildPoint.com
provides for joint development and implementation of a marketing plan for
BuildPoint.com and the Ironside Network directed toward sellers. Our
relationship with BuildPoint.com will permit sellers connected to the Ironside
Network to sell their products and services to BuildPoint.com's buyer
community.

Epylon.com, Inc. We have entered into a Marketing Agreement with
Epylon.com, Inc. Epylon.com is a leading online trading exchange for education
and government institutions. Our agreement with Epylon.com provides for joint
development and implementation of a marketing plan for Epylon.com and the
Ironside Network directed toward sellers. Our relationship with Epylon.com
developed out of our relationship with our customer J.L. Hammett, one of the
largest school-supply distributors in the United States. J.L. Hammett will be
the first supplier to use the Ironside Network to integrate into Epylon.com

Sales and Marketing

We market and sell our products and services primarily through our direct
sales force. As of September 30, 2000, our sales and marketing group consisted
of 75 persons, including 37 direct sales professionals and managers located
primarily at our headquarters in Pleasanton, California, and our offices in
Framingham, Massachusetts; Alpharetta, Georgia; Warrenville, Illinois; Laguna
Hills, California; Dallas, Texas; Elk Rapids, Michigan; Toronto, Canada;
Utrecht, The Netherlands; Karlsruhe, Germany and Slough, United Kingdom. We
expect to open additional sales offices in France, Japan, Singapore and
Australia over the next 18 months. All of our marketing tools are available to
our sales representatives through our secure intranet site.

We engage in a variety of marketing activities to generate sales leads
for our products. These activities include seminar programs, trade shows, guest
speaker invitations, public relations activities and events, customer events
and focused direct mailings. A number of our sales leads are also generated by
our strategic relationships. In addition, we receive inquiries through our web
site. We use telemarketing to qualify sales leads. In addition to meeting our
size and industry criteria, qualified leads relate to potential customers that
have established a budget and allocated responsibility for implementation of an
e-commerce project. Our telemarketing staff members send qualified leads to our
sales representatives. Our sales representatives continue to qualify leads as
opportunities advance through various stages in the sales process. Our sales
efforts are

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directed at multiple decision makers involved with Internet projects within an
organization, frequently including the president, vice president of sales,
chief financial officer and chief information officer. The sales cycle for our
products typically ranges from 90 to 180 days.

New sales representatives generally become productive within three to six
months. All of our sales representatives have annual sales quotas based on
software license revenues. Our sales representatives receive a base salary plus
sales commissions.

Technology

Product Architecture and the Ironside Powered Server

Our Ironworks software is based on an open architecture, which means that
our software can be easily adapted to work with different types of systems and
future technologies. In the center of this architecture is the Ironside Powered
Server, which refers to a server that is connected to a company's computer
network and that is running our Ironworks software. The Ironside Powered Server
represents the gateway for different Internet access mechanisms to gain access
to the back-office systems of sellers who use our products. The server also
represents the real-time integration technology for various back-office systems
such as ERP systems.

There are two primary access mechanisms that can be used to access the
Ironside Powered Server. The first access mechanism is represented by the core
Ironworks business applications, as well as custom business applications
created using our iDK. These business applications utilize our patent-pending
Ultra Thin Client, or UTC, technology, which makes it possible to create
efficient transaction-based applications that are highly interactive. This
access mechanism is highly configurable and extensible.

The second access mechanism is an open mechanism that allows for any XML
based system to gain access to the real-time integration offered by the
Ironside Powered Server, using iXML. The Ironside Network, for example, uses
this access mechanism to communicate with sellers running either our Ironworks
software or our IronsideX software. External translation programs can take
advantage of this open technology and provide specific integration to wireless
networks, procurement systems, direct HTML integration, and online trading
exchange integration. The real-time integration technology used by our
Ironworks software also relies on the iXML protocol. This protocol is used to
create a transaction adapter that allows an Ironside Powered Server to
communicate with various enterprise business systems. The iXML protocol
specification is freely available for all to use.

iXML

Our software makes extensive use of iXML, which is based on eXtensible
Markup Language, or XML, a recent standard that defines a universal method for
structuring data. Unlike HTML, the standard currently used in most web
applications, XML permits data to be coded for content rather than solely for
presentation. This coding difference allows applications to examine and
manipulate data contained in a document. Descriptive tags are attached to each
piece of data so that applications can understand the meaning of the data and
process it accordingly.

iXML provides a method to translate the various XML document types into
descriptions of specific business transactions. These transaction descriptions
are used by our Ironworks software and the Ironside Network to communicate with
the enterprise business systems of sellers.

The Ironside Transaction Adapter Toolkit

The agility and extensibility of XML enables us to create transaction
adapters tailored to a variety of systems. These transaction adapters enable
our software to integrate with enterprise business systems. We create these
transaction adapters with our Ironside Transaction Adapter Toolkit, or iTDK,
which consists of software

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tools that simplify the process of creating transaction adapters. Once a
transaction adapter is created for a particular type of system, it can often be
reused. Our integrated Ironworks solutions, for example, use previously created
transaction adapters for commonly used ERP systems that require little
modification, thus reducing deployment time. Our service professionals and our
implementation partners use the iTDK to build transaction adapters for other
systems for which we currently do not provide a prepackaged integrated
solution. In addition, we make the iTDK available to our Ironworks customers if
they desire to build their own transaction adapters.

Cross-Platform Support and Compatibility

Our software has been developed almost exclusively in the Java
programming language, which means our products can be deployed on nearly all
computing hardware and operating systems. We currently support major server
platforms, including Windows NT/2000, IBM AS-400 and AIX servers, HP UNIX
servers running HP-UX and SUN servers running Solaris.

Scalability, Performance and Reliability

The Ironside Powered Server is designed to be scalable. We consider a
scalable solution to be a solution that can address rising system demands
without significant performance degradation. We achieve this through a server-
farm concept. If incremental demand exceeds existing server capacities, another
Ironside Powered Server can be added to offset the incremental demand, with a
fixed incremental cost per server. If a server experiences an outage, due to
hardware or software failure, requests are automatically routed to the next
available server.

The Ironside Powered Server utilizes the latest encryption techniques and
public key infrastructure. The server takes advantage of the public key
infrastructure used by Hypertext Transfer Protocol, or HTTP, servers to handle
requests and transmit responses. We use certificates and encryption schemes to
provide methods to encode information transmitted over the Internet to make it
unintelligible to all but intended recipients, and access control lists to
ensure authentication, authorization and data privacy. In addition to
encryption and server authentication, the Ironside Powered Server also performs
user authentication based on user identification and password challenges.
Application privileges can also be configured on a user by user basis.

Research and Development

We have made substantial investments in research and development. We
expect most enhancements to our software will continue to be developed
internally. However, we have successfully licensed third party technology for
several of our product modules, such as eNotification and eApprovals. We
anticipate that the majority of our research and development activity will
consist of developing new versions and enhancements to our Ironworks software,
including continued development of additional prepackaged integrated solutions
for rapid integration with commonly used enterprise business systems. We also
intend to continue to develop enhancements to the Ironside Network and related
software.

Our product development group consists of five primary development
groups: an infrastructure group, an application group, an integrated solutions
group, an access group and an Ironside Network group. Our infrastructure group
is focused primarily on integrating new techniques and tools into components
for use by the other development groups. Our application group is focused on
building and enhancing business applications. The integrated solutions group is
responsible for ensuring manageable real-time integration to different host
environments, including ERP systems, logistics and SCM systems. Our access
group develops mechanisms to translate different XML formats for use within the
Ironside Network. Finally, the Ironside Network group ensures proper
development, automation and maintenance of the Ironside Network, and is
responsible for the deployment of online trading exchange and seller
integrations for the Ironside Network.

As of September 30, 2000, we had 58 employees dedicated to research and
development. Our research and development expenditures for the fiscal years
1998, 1999 and 2000 were approximately $1.0 million,

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$1.3 million and $3.2 million, respectively. We expect to continue to incur
significant expenses related to research and development. All research and
development costs have been expensed as incurred.

Competition

The market for business-to-business e-commerce solutions is complex and
rapidly changing. The current market is intensely competitive and is likely to
become more competitive as the number of entrants and new technologies
increases. While none of our competitors or potential competitors currently
produces a solution that is identical to ours, we are subject to current or
potential competition from large software vendors, online trading exchanges
that develop their own business-to-business solutions, certain EDI vendors, and
vendors of proprietary EAI and application server products who have added XML
capabilities to their products. Our current competitors include BroadVision,
Click Commerce, Haht Software, IBM, Intershop, Microsoft, Open Market, SAP,
Seagull Software, Spaceworks and webMethods. In addition, our customers and
other companies with whom we have strategic relationships may also become
competitors in the future.

Many of our existing and potential customers evaluate on an on-going
basis whether to develop their own e-commerce software solution or purchase it
from outside suppliers. As a result, we must, on an on-going basis, educate
existing and potential customer on the advantages of our software over
internally developed software as well as our competitors products. We believe
that the principal competitive factors affecting our market include breadth and
depth of solution, speed and ease of deployment, interoperability with existing
applications, core technology, product quality and performance, product
features (including security), and customer service. We believe our solution
currently competes favorably with respect to these factors. However, our market
is relatively new and evolving rapidly. We may not be able to maintain our
competitive position against current and potential competitors, especially
those with significantly greater financial, marketing, service, support,
technical and other resources.

Some large potential competitors have longer operating histories, larger
customer bases, greater brand recognition, and significantly greater financial,
marketing and other resources than we do and may enter into strategic or
commercial relationships with larger, more established and well-financed
companies. Some of our competitors may be able to secure alliances with
customers and affiliates on more favorable terms, devote greater resources to
marketing and promotional campaigns and devote substantially more resources to
systems development than we can. In addition, new technologies and the
expansion of existing technologies may increase competitive pressures on us.
Competitive pressures faced by us could harm our business, operating results
and financial condition.

Intellectual Property and Other Proprietary Rights

We depend on proprietary rights and technology. We rely primarily on a
combination of copyright, trade secret, trademark and patent laws,
confidentiality procedures, contractual provisions and other similar measures
to protect our proprietary information and technology.

We license rather than sell our software, and we require our customers to
enter into license agreements that impose restrictions on their ability to
utilize our software. As part of our efforts to protect proprietary rights and
technology, we generally require our employees to sign agreements that require
them to assign to us any proprietary information, inventions or other
intellectual property they generate while employed by us. We implement other
procedures designed to avoid the disclosure of our trade secrets and
technology, such as restricting access to our source code and executing
confidentiality agreements with consultants, customers and other persons with
access to our proprietary information.

We presently have one patent application pending in the United States,
Canada, Europe and Japan. It is possible that no patent will be issued from our
patent application. In addition, the patent we have applied for, if issued, or
our potential future patents, may be successfully challenged. It is also
possible that we may not

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develop proprietary products or technologies that are patentable, 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.

Ironside and Ironside Powered are registered trademarks in the United
States and Canada. We have also filed applications to register the Ironside
trademark in a number of other countries. We have filed federal trademark
applications in the United States for Ironworks, IronX, iXML, B2BChat and
Supply Chain Relationship Management. In the case of Ironworks, we have also
filed trademark applications in a number of other countries. Our trademark
applications are subject to review by applicable governmental authorities, may
be opposed by private parties and may not be issued. If such trademarks are
issued, they may be canceled or otherwise fail to provide meaningful
protection. We have registered the Internet domain names "ironside.com" and
"ironside.net" with Network Solutions, Inc.

Despite our efforts to protect our proprietary rights, unauthorized
parties may attempt to copy aspects of our products or to obtain and use
information that we regard as proprietary, and third parties may develop
similar technology independently. It is difficult for us to police unauthorized
use of our products. In addition, effective protection of our proprietary
rights is unavailable or limited in some foreign countries. The protection of
our proprietary rights may be inadequate and our competitors may be able to
introduce competing products that are similar to ours, which would impair our
competitive position, and we may become involved in costly and time-consuming
litigation.

Employees

As of September 30, 2000, we had a total of 218 employees, including 75
in sales and marketing, 57 in client services and support, 58 in research and
development and 28 in general and administrative functions. Of these employees,
approximately 44 were located in the United States, 142 were located in
Toronto, Canada, and 32 were located in Europe. None of our employees is
represented by a collective bargaining agreement, nor have we experienced any
work stoppage. We consider our relations with our employees to be good.

Facilities

Our primary offices are located in approximately 16,550 square feet of
office space in Pleasanton, California under a lease expiring March 31, 2005.
We lease a total of approximately 25,000 square feet of office space in two
buildings located in Toronto, Canada for product development, professional
services and training. We expect to lease approximately 25,000 additional
square feet of office space in Toronto, Canada by the end of 2000. The leases
for the Toronto offices expire in December 2001 and February 2005. We also
lease sales offices in Alpharetta, Georgia; Utrecht, The Netherlands; and
Slough, United Kingdom and we maintain smaller sales offices in Dallas, Texas;
Elk Rapids, Michigan; Framingham, Massachusetts; Karlsruhe, Germany; Laguna
Hills, California; and Warrenville, Illinois.

Legal Proceedings

We are not currently a party to any material legal proceedings.

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MANAGEMENT

Executive Officers and Directors

The following table sets forth certain information regarding our
executive officers and directors as of September 30, 2000:

<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<C> <C> <S>
William B. Lipsin....... 47 President, Chief Executive Officer and Director
Derek J. Smyth.......... 35 Chief Operating Officer
Daniel W. Fairfax....... 45 Chief Financial Officer
Lori A. Allan........... 45 Senior Vice President and General Manager,
Americas
Philip J. Padfield...... 43 Senior Vice President and General Manager,
International
Dale A. deFreitas....... 34 Chief Administrative Officer
Graham D.S. Anderson.... 35 Director
Djenane Cameron......... 32 Director
Perry M. Monych......... 45 Director
A. Michael Spence....... 56 Director
Larry Wasser............ 44 Director
Peter A. Weinbach....... 35 Director
</TABLE>

William B. Lipsin joined Ironside in March 1997 as President and CEO.
Prior to joining Ironside, Mr. Lipsin was General Manager of Bay Networks
Canada, a provider of worldwide networking solutions, where he managed the
Canadian merger between Synoptics Communications and Wellfleet. From 1992 to
1994, Mr. Lipsin served as Senior Vice President, Marketing and Services, for
Crowntek, a Canadian systems integrator that was acquired by GE Capital. Prior
to joining Crowntek, he spent 16 years at IBM. Mr. Lipsin holds a Bachelor of
Commerce from the University of British Columbia. Mr. Lipsin is a resident of
Danville, California.

Derek J. Smyth joined Ironside in May 1997 as Vice President, Marketing
and Business Development and was named Chief Operating Officer in November
1999. As Ironside's COO, Mr. Smyth is responsible for overall direction of
strategic partnerships, business solutions and product development. Prior to
joining Ironside, Mr. Smyth held a number of executive positions with Bay
Networks Canada, a provider of worldwide networking solutions, including
overall management of strategic marketing and sales initiatives across Canada.
From September 1992 to December 1995, he held a number of positions, including
Director of North American Distribution and Channels at Radius, Inc. Mr. Smyth
holds a Bachelor, Commerce and Economics from the University of Toronto. Mr.
Smyth is a resident of Oakville, Ontario.

Daniel W. Fairfax joined Ironside in March 2000 as Chief Financial
Officer. Prior to joining Ironside, Mr. Fairfax was Chief Financial Officer of
Acta Technologies, a developer of data warehousing software. From June 1993 to
October 1998, Mr. Fairfax served as the Chief Financial Officer of NeoVista
Software (now Accrue Software), a provider of intelligent data-mining
solutions. From June 1982 to June 1993, Mr. Fairfax held general management and
senior financial positions with Siemens and Spectra-Physics. Mr. Fairfax is a
Certified Public Accountant and holds an AB in Economics from Whitman College
and an MBA from the University of Chicago. Mr. Fairfax is a resident of Los
Altos, California.

Lori A. Allan joined Ironside in April 2000 as Senior Vice President and
General Manager, Americas. Ms. Allan was most recently Vice President, Sales,
for the Americas for the Data Management division of IBM Corp. Before that, she
held the role of Vice President, Software for IBM Canada. In her 22-year career
with IBM, Ms. Allan has led teams in re-engineering, sales, marketing and
organizational management. Ms. Allan holds a Bachelor of Mathematics from the
University of Waterloo. Ms. Allan is a resident of Thornhill, Ontario.

Philip J. Padfield served as a consultant to Ironside from September to
December 1999. In December 1999, Mr. Padfield joined Ironside as Vice President
for Europe, Middle East and Asia. He was named Senior Vice President and
General Manager, International, in April 2000. Prior to joining Ironside, Mr.
Padfield was

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Vice President of International Operations for Inference Corporation, a
developer of software and services for customer relationship management and e-
commerce, where he was responsible for operations outside of North America. Mr.
Padfield joined Inference as UK Sales Director in June 1995 and became UK
Managing Director in May 1996. Prior to his tenure at Inference, he was a
Regional Manager for Northern European operations at Informix and has held
senior sales and sales management positions at Stratus Computer and Pyramid
Technology. Mr. Padfield attended London University and The Royal Military
Academy, Sandhurst. Mr. Padfield is a resident of Burnham, Buckinghamshire,
England.

Dale A. deFreitas joined Ironside in April 1997 as Vice President,
Operations and was named Chief Administrative Officer in April 2000. From
February 1996 to April 1997, Mr. deFreitas served as Controller of Bay Networks
Canada, a provider of worldwide networking solutions. At Bay Networks, he was
responsible for finance, administration, MIS, and the implementation of systems
and processes. Prior to his tenure at Bay Networks, Mr. deFreitas held a number
of senior management positions in planning, finance, administration, and MIS
for various technology manufacturers and resellers, including AST Computer
Canada and Crowntek Business Centres. Mr. deFreitas attended the University of
Western Ontario. Mr. deFreitas is a resident of Toronto, Ontario.

Graham D.S. Anderson has been a director of Ironside since October 1998.
Mr. Anderson has been a general partner of Euclid Partners, a venture capital
fund management firm, since 1996. From 1995 to 1996, he was with Salzinger &
Company, where he served as a management consultant to America Online's
Greenhouse Project, Image Technology Corporation (now network MCI Digital
Imaging), CI Impressions and The Walt Disney Company. Prior to joining
Salzinger & Company, Mr. Anderson practiced law at Susman Godfrey in Houston,
where he concentrated on securities, private equity and software law. Mr.
Anderson also serves as a director of Calypso Online and JuniorNet Corporation.
He holds a BA and a JD from Yale University and a Master of Philosophy from the
University of Glasgow. Mr. Anderson is a resident of Bedford, New York.

Djenane Cameron has been a director of Ironside since January 2000. Ms.
Cameron has been with Working Ventures Canadian Fund, Inc., a Canadian labor-
sponsored investment fund, since 1997, where she is an Investment Manager. Ms.
Cameron also serves as a director of Triple G Systems Group and Dipix
Technologies Inc. She holds an MBA from the University of Western Ontario and a
BA from McGill University. Ms. Cameron is a resident of Toronto, Ontario.

Perry M. Monych has been a director of Ironside since May 2000. Effective
as of November 8, 2000, Mr. Monych has resigned his position as President and
CEO of GE Access, which he has held since November 1997, to become President of
U.S. Operations at Tech Data Corporation pending INS approval of Tech Data's
visa petition on Mr. Monych's behalf. He previously held the position of
President and CEO of GE Capital IT Solutions, North America. Mr. Monych holds a
BS from the University of British Columbia and an MBA from Harvard University.
Mr. Monych is a resident of Boulder, Colorado.

A. Michael Spence has been a director of Ironside since October 2000. Dr.
Spence has been Professor of Management in the Graduate School of Business at
Stanford University since 1999. From 1990 to 1999, he was Phillip H. Knight
Professor and Dean of the Graduate School of Business at Stanford University.
Dr. Spence also serves as a director of Blue Martini Software Inc., General
Mills, Inc., ITI Education Corporation, Nike, Inc., Siebel Systems, Inc., and
Torstar Corporation. He holds a BA from Princeton University, an MA from Oxford
University and a PhD from Harvard University. Dr. Spence is a resident of
Stanford, California.

Larry Wasser has been a director of Ironside since April 1996. Mr. Wasser
was the founder of Beamscope Canada, a distributor of home office products,
home computer hardware and software, and video gaming and digital entertainment
products, and he has been Chairman and CEO of Beamscope since 1982. Mr. Wasser
also serves as a director of Unisel Holdings, S.A., Mt. Sinai Hospital and the
Canadian Film Center. He holds an Hons. BA from the University of Toronto. Mr.
Wasser is a resident of Toronto, Ontario.

58
<PAGE>

Peter A. Weinbach has been a director of Ironside since October 1999. Mr.
Weinbach has been with AIG Horizon Partners LLC since 1998, where he is
Managing Director. Prior to joining AIG Horizon Partners LLC, Mr. Weinbach was
a principal in the Information Services Group of ING Barings Furman Selz, an
investment banking firm. Before that, Mr. Weinbach was a Vice President in the
Mergers and Acquisition Group of Salomon Smith Barney. Prior to joining Salomon
Smith Barney, Mr. Weinbach was a Vice President at Patricof & Co., Ventures,
Inc., where he focused on private equity investments in a variety of
industries. He also serves as a director of Grassroots.com, Pensare, Personics
Software and Lionheart Newspapers. Mr. Weinbach holds a BS and an MBA from the
Wharton School of Business, and an MA from the Graduate School of Arts and
Sciences, at the University of Pennsylvania. Mr. Weinbach is a resident of
South Port, Connecticut.

Board of Directors

Each of our directors serves until our next annual meeting of
shareholders or until his or her successor is duly elected and qualified.

Committees

The board of directors has an audit committee, a compensation committee
and a strategic planning committee.

Audit Committee. The audit committee makes recommendations to the board
of directors regarding the selection of independent accountants, reviews the
results and scope of audit and other services provided by our independent
accountants and reviews and evaluates the audit and control functions. The
audit committee currently consists of Mr. Anderson, Ms. Cameron and Mr. Monych.

Compensation Committee. The compensation committee reviews and makes
recommendations regarding our stock plans and makes decisions concerning
salaries and incentive compensation for our executive officers. The
compensation committee currently consists of Mr. Lipsin, Mr. Wasser and
Mr. Weinbach.

Strategic Planning Committee. The strategic planning committee reviews
and assists with the company's strategic objectives, including identifying
candidates for mergers and acquisitions, strategic licensing deals and
corporate partnering opportunities. In order to be effective, all decisions of
the strategic planning committee must be made by a vote of a majority of its
members and must be approved by the board of directors. The strategic planning
committee currently consists of Mr. Anderson, Mr. Lipsin and Mr. Weinbach.

Compensation Committee Interlocks and Insider Participation

During the last fiscal year, Mr. Lipsin, our President and Chief
Executive Officer, Mr. Wasser and Mr. Weinbach served on our compensation
committee.

During the last fiscal year, none of our executive officers served as a
member of the compensation committee (or other board committee performing
equivalent functions or, in the absence of any such committee, the entire board
of directors) or as a director of another entity, one of whose executive
officers served as a member of our compensation committee or as a director of
our company.

Compensation

Our directors are reimbursed for expenses incurred in connection with
attending board and committee meetings but are not otherwise compensated for
their services as board members, except for Dr. Spence, who receives an annual
retainer of $10,000 and was granted an option to purchase 100,000 common shares
under our 2000 stock incentive plan upon his appointment to our board of
directors, subject to approval of the 2000 stock incentive plan by our
shareholders.

59
<PAGE>

Executive Officers

Each of our executive officers is appointed by our board of directors and
serves until his or her resignation or removal. There are no family
relationships among our directors and executive officers.

Executive Compensation

The following table sets forth certain information concerning
compensation for services rendered to us in all capacities during the fiscal
year ended March 31, 2000 by our chief executive officer and all of our other
executive officers whose total annual salary and bonus for fiscal 2000 exceeded
$100,000, whom we collectively refer to as the "Named Executive Officers." Mr.
Smyth and Mr. deFreitas are paid in Canadian dollars, and Mr. Padfield is paid
in British pounds. We have translated the amounts paid to these individuals
into U.S. dollars based on the weighted average exchange rate for the fiscal
year ended March 31, 2000, which was $1.00 : Cdn$1.4760 and $1.00 :
(Pounds)0.61831.

Summary Compensation Table

<TABLE>
<CAPTION>
Annual Compensation Securities
------------------------------------- Underlying All Other
Name and Principal Other Annual Options/SARs Compensation
Position(s) Salary ($) Bonus ($) Compensation ($) (#) ($)
------------------ ---------- --------- ---------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
William B. Lipsin.......
Chief Executive Officer 200,000 219,919 -- 345,000 24,900(3)

Derek J. Smyth..........
Chief Operating officer 114,916 104,941 -- 550,000 8,333(4)

Daniel W. Fairfax(1)....
Chief Financial
Officer............... 2,692 -- -- 900,000 --

Philip J. Padfield(2)...
Senior V.P. and General
Manager, International 44,419 93,502 -- 300,000 9,761(5)

Dale A. deFreitas.......
Chief Administrative
Officer 101,626 71,419 -- 295,000 1,626(6)
</TABLE>
--------
(1) Mr. Fairfax joined Ironside on March 28, 2000. The amount paid to Mr.
Fairfax for the fiscal year ended March 31, 2000 reflects his annual salary
of $175,000.
(2) The amounts in the table represent the amounts earned by Mr. Padfield as an
Ironside employee, beginning December 22, 1999. From September 13 to
December 21, 1999, Mr. Padfield was employed by Protege Virtual Management
Limited, a consulting firm engaged by Ironside to perform management
services in Europe. As a Protege employee, Mr. Padfield earned $37,598 in
salary, $16,173 in bonus and $5,308 in other compensation, consisting
solely of car allowance.
(3) Consists of $9,900 in car allowance and $15,000 in insurance premiums.
(4) Consists of $6,707 in car allowance and $1,626 in insurance premiums.
(5) Consists of $5,864 in car allowance, $1,743 in insurance premiums and
$2,154 in group personal pension plan contributions.
(6) Consists solely of insurance premiums.

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<PAGE>

Option Grants in Fiscal Year 2000

The following table sets forth each grant of stock options during fiscal
2000 to each of the Named Executive Officers. No stock appreciation rights were
granted during fiscal 2000. All options granted to the Named Executive Officers
were granted under our stock option plan. These options have a term of five
years and vest at the rate of 25% per year, beginning one year after the date
of grant, except that they become immediately exercisable in full upon the
occurrence of specified events. See "Employment Agreements and Change of
Control Arrangements" for a description of these events. The percentage numbers
are based on options to purchase an aggregate of 4,887,386 common shares
granted to eligible participants under our stock option plan during fiscal
2000.

The 5% and 10% assumed annual rates of compounded stock price
appreciation are mandated by rules of the Securities and Exchange Commission
and do not represent our estimate or projection of our future stock prices. The
potential realizable values are calculated by assuming that the initial public
offering price of $ per share was the fair market value of our common shares
at the time of grant, that the common shares appreciate at the indicated rate
for the entire term of the option and that the option is exercised at the
exercise price and sold on the last day of the option term at the appreciated
price.

Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential
Realizable
Value at
Assumed
Annual Rates
of Stock
Individual Grants Price
--------------------------------------------- Appreciation
Number of % of Total for Option
Securities Options/SARs Exercise Terms
Underlying Granted to or Base -------------
Options/SARs Employees in Price Expiration 10%
Name Granted (#) Fiscal Year ($/Sh) Date 5% ($) ($)
---- ------------ ------------ -------- ---------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
William B. Lipsin....... 345,000 7.1% $0.11 7/14/04
Chief Executive Officer

Derek J. Smyth.......... 550,000 11.3% $0.11 7/14/04
Chief Operating Officer

Daniel W. Fairfax....... 900,000 18.4% $0.83 3/28/05
Chief Financial Officer

Philip J. Padfield...... 50,000 1.0% $0.83 9/23/04
Senior V.P. and General 250,000 5.1% $0.83 12/23/04
Manager,
International

Dale A. deFreitas....... 295,000 6.0% $0.11 7/14/04
Chief Administrative
Officer
</TABLE>

61
<PAGE>

Aggregate Option Exercises in Fiscal Year 2000 and Fiscal Year-End Option
Values

None of our executive officers exercised any options in fiscal 2000. The
following table sets forth the number and value of securities underlying
unexercised options held by each of the Named Executive Officer as of March 31,
2000. The value of unexercised in-the-money options at 2000 fiscal year end has
been calculated on the basis of an assumed initial public offering price of
$ per share, less the applicable exercise price per share, multiplied by the
number of shares underlying the options.

Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values

<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options/SARs
Acquired On Options/SARs at FY-End (#) at FY End ($)
Exercise Value -------------------------- -------------------------
Name (#) Realized Exercisable/Unexercisable Exercisable/Unexercisable
---- ----------- -------- -------------------------- -------------------------
<S> <C> <C> <C> <C>
William B. Lipsin....... -- -- 0/2,118,299 0/
Chief Executive Officer

Derek J. Smyth.......... -- -- 0/1,140,000 0/
Chief Operating Officer

Daniel W. Fairfax....... -- -- 0/900,000 0/
Chief Financial Officer

Philip J. Padfield...... -- -- 0/300,000 0/
Senior V.P. and General
Manager, International

Dale A. deFreitas....... -- -- 0/590,000 0/
Chief Administrative
Officer
</TABLE>

Employee Benefit Plans

Amended and Restated Stock Option Plan

Our amended and restated stock option plan was adopted by our board of
directors and approved by our shareholders on September 18, 1998 (the "1998
Plan"). The 1998 Plan was further amended on June 30, 2000. Under the 1998
Plan, employees and directors are eligible to receive grants of stock options.
We currently have 14,800,000 common shares reserved for issuance under the 1998
Plan. As of September 30, 2000, we had options to purchase 14,615,886 common
shares outstanding under the 1998 Plan. We do not anticipate granting any
additional stock options under our 1998 Plan after the effective date of our
2000 Stock Option Plan.

The 1998 Plan provides that the exercise price of an option granted under
the 1998 Plan shall not be less than the fair market value of a common share at
the time the exercise price for such option is established by the board of
directors. Options outstanding under the 1998 Plan generally vest at the rate
of 25% upon the completion of one year of service from the date of grant and
6.25% upon the completion of each quarter year of service thereafter, and
expire on the later of (1) five years from the date of grant, or (2) six months
after an initial public offering of our common shares. The 1998 Plan provides
for earlier termination of options in the event of the death or retirement of
an optionee, or if we enter into certain business combination transactions.

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<PAGE>

2000 Stock Option Plan

Our 2000 Stock Option Plan (the "2000 Plan") was adopted by our board of
directors and approved by our shareholders in October 2000. The 2000 Plan will
become effective as of October 19, 2000. The 2000 Plan provides for the
granting of incentive stock options and nonqualified stock options to our
employees, directors and consultants. Initially, 2,250,000 common shares will
be reserved for issuance under the 2000 Plan.

The number of shares reserved for issuance under the 2000 Plan will
increase by the following:

. The number of shares that were reserved but unissued under our 1998
Plan on the effective date of the 2000 Plan; and

. any shares returned to the 1998 Plan as a result of termination of
options issued under the 1998 Plan.

The board of directors administers the 2000 Plan and determines the
terms of options granted, including the exercise price, the number of shares
subject to individual option awards and the vesting period of options. The
exercise price of incentive stock options cannot be less than 100% of the fair
market value of the common shares on the date of grant or, in the case of
incentive stock options granted to holders of more than 10% of our voting
power, less than 110% of the fair market value of the common shares on the
date of grant. The term of an incentive stock option cannot exceed 10 years,
and the term of an incentive stock option granted to a holder of more than 10%
of our voting power cannot exceed five years.

Our board of directors may not, without the adversely affected
optionee's prior written consent, amend, modify or terminate the 2000 Plan if
the amendment, modification or termination would impair the rights of option
holders. Our 2000 Plan will terminate in 2010 unless terminated earlier by the
board of directors.

Employee Stock Purchase Plan

Our Employee Stock Purchase Plan is expected to be adopted by our board
of directors and approved by our shareholders in November 2000. The Employee
Stock Purchase Plan will become effective upon completion of this offering.
Initially, a total of common shares will be available for issuance
under the plan.

The Employee Stock Purchase Plan will be administered by a committee
appointed by our board of directors. Employees are eligible to participate if
they are customarily employed by us for at least 20 hours per week and more
than five months in any fiscal year. The plan permits an eligible employee to
purchase our common shares at a discount through accumulated payroll
deductions of up to 15% of his or her base compensation.

The plan, which is intended to qualify under Section 423 of the Internal
Revenue Code, will be implemented by a series of overlapping offering periods
of 24 months' duration, with new offering periods, other than the first
offering period, commencing on or about May 15 and November 15 of each year.
Each offering period will consist of four consecutive purchase periods of
approximately six months' duration, at the end of which, an automatic purchase
will be made for participants. The initial offering period is expected to
commence on the date of this offering and end on November 15, 2002. The
initial purchase period is expected to begin on the date of this offering and
end on May 15, 2001. Participants may not accrue the right to purchase common
shares at a rate that exceeds $25,000 in value, measured at the beginning of
the offering period, for each calendar year of an offering period.

Individuals who are eligible employees as of the first business day of
each offering period may enter the plan as of that offering period. Once
enrolled in the plan, a participant will continue to participate in the plan
for future offering periods, until the participant ceases to be an eligible
employee, withdraws from the plan or discontinues his or her contributions.

63
<PAGE>

The purchase price per share will be 85% of the lower of (1) the fair
market value of our common shares on the purchase date and (2) the fair market
value of our common shares on the last trading day before the offering date,
or, in the case of the first offering period under the plan, the price at which
our common shares are offered to the public in our initial public offering.

The board of directors may at any time amend, modify or terminate the
plan.

401(k) Plan

Effective November 1, 1999, we established a 401(k) defined contribution
plan, in which all of our U.S. employees may participate. Plan participants
contribute up to 20% of their eligible compensation to the plan, subject to the
statutorily prescribed annual limit, which is $10,500 for 2000. We intend the
plan to qualify under Section 401(k) of the Internal Revenue Code so that
contributions by employees to the plan, and income earned, if any, on plan
contributions, are not taxable to employees until withdrawn from the plan.
Under the plan, we may make matching contributions on behalf of plan
participants. To date, we have not made any matching contributions, and we do
not currently anticipate making any matching contributions in the foreseeable
future.

Registered Retirement Savings Plan

Effective November 1, 1999, we established a group registered retirement
savings plan, which is a defined contribution plan in which all of our Canadian
employees may participate. Plan participants contribute up to 18% of their
eligible compensation, subject to the statutorily prescribed annual limit,
which is Cdn.$13,500 for 2000. We intend the plan to qualify under Canadian tax
law so that contributions by employees to the plan, and income earned, if any,
on plan contributions, are not taxable to employees until withdrawn from the
plan. To date, we have not made any matching contributions, and we do not
currently anticipate making any matching contributions in the foreseeable
future.

Group Personal Pension Plan

Effective February 1, 2000, we established a group personal pension plan,
which is a defined contribution plan in which all of our U.K. employees may
participate. Plan participants contribute from 17.5% to 40% of their eligible
compensation, depending on their age. In addition, we make matching
contributions on behalf of plan participants equal to five percent of each
participant's eligible compensation. We intend the plan to qualify under
British tax law so that contributions to the plan by employees and by us, and
the income earned, if any, on plan contributions, are not taxable to employees
until withdrawn, and so that our contributions will be deductible by us when
made.

Employment Agreements and Change of Control Arrangements

We have entered into employment agreements with each of our executive
officers. The terms of these agreements are described below. Amounts paid in
Canadian dollars and British pounds have been translated into U.S. dollars at
the weighted average exchange rate for the relevant fiscal year, which was
$1.00 : Cdn. $1.4026 for the fiscal year ended March 31, 1998, and $1.00 : Cdn.
$1.4760 : (Pounds)0.61831 for the fiscal year ended March 31, 2000. Amounts
relating to the current fiscal year were translated at the weighted average
exchange rate for the six month period ended September 30, 2000, which was
$1.00 : Cdn.$1.4769 : (Pounds)0.6535.

William B. Lipsin. We entered into an employment agreement with Mr.
Lipsin on April 1, 1997, for an indefinite term. This agreement provides for
annual salary of Cdn.$200,000 (approximately $142,592) and other compensation
and benefits. We may terminate this agreement without just cause, as defined in
the agreement, by giving Mr. Lipsin 18 months' written notice of termination or
compensation in lieu of such notice. This agreement also contains
confidentiality provisions. As a result of subsequent adjustments by our board
of directors, Mr. Lipsin's current annual salary is $250,000.

64
<PAGE>

Derek J. Smyth. We entered into an employment agreement with Mr. Smyth on
April 14, 1997, for an indefinite term. This agreement provides for annual
salary of Cdn.$150,000 (approximately $106,944) and other compensation and
benefits. We may terminate this agreement without just cause, as defined in the
agreement, by giving Mr. Smyth 18 months' written notice of termination or
compensation in lieu of such notice. This agreement also contains
confidentiality and non-solicitation provisions. As a result of subsequent
adjustments by our board of directors, Mr. Smyth's current annual salary is
Cdn.$215,000 (approximately $145,575).

Daniel W. Fairfax. We entered into an employment agreement with Mr.
Fairfax on March 2, 2000, for an indefinite term. This agreement provides for
annual salary of $175,000 and other compensation and benefits. We may terminate
this agreement without just cause, as defined in the agreement, by giving Mr.
Fairfax six months' written notice of termination or compensation in lieu of
such notice. This agreement also contains confidentiality and non-solicitation
provisions.

Lori A. Allan. We entered into an employment agreement with Ms. Allan on
March 28, 2000, for an indefinite term. This agreement provides for annual
salary of Cdn.$240,000 (approximately $162,503) and other compensation and
benefits. We may terminate this agreement without just cause, as defined in the
agreement, by giving Ms. Allan six months' written notice of termination or
compensation in lieu of such notice. This agreement also contains
confidentiality and non-solicitation provisions.

Philip J. Padfield. We entered into an employment agreement with Mr.
Padfield on December 22, 1999, for a definite term expiring on September 26,
2022. This agreement provides for annual salary of (Pounds)100,000
(approximately $161,731) and other compensation and benefits. We may terminate
this agreement without just cause, as defined in the agreement, by giving Mr.
Padfield six months' written notice of termination or compensation in lieu of
such notice. This agreement also contains confidentiality, non-solicitation and
non-competition provisions. As a result of subsequent adjustments by our board
of directors, Mr Padfield's current annual salary is (Pounds)115,000
(approximately $175,976).

Dale A. deFreitas. We entered into an employment agreement with Mr.
deFreitas on April 14, 1997, for an indefinite term. This agreement provides
for annual salary of Cdn.$150,000 (currently, approximately $101,564) and other
compensation and benefits. We may terminate this agreement without just cause,
as defined in the agreement, by giving Mr. deFreitas 18 months' written notice
of termination or compensation in lieu of such notice. This agreement also
contains confidentiality and non-solicitation provisions.

Pursuant to option agreements between us and our executive officers, some
of our key personnel and one of our directors, the options granted to these
individuals under our amended and restated stock option plan become immediately
exercisable in full upon the occurrence of any of the following events:

. A consolidation, merger or plan of exchange in which we are not the
surviving entity;

. A sale, lease or exchange of all or substantially all of our assets;

. A tender or exchange offer in which the offeror becomes the
beneficial owner of at least 20% of our common shares; or

. Individuals constituting a majority of our board of directors cease
to constitute a majority during any 12 month period, unless the new
directors are approved by at least two-thirds of the directors still
in office.

Director and Officer Indemnification and Liability

Under the Business Corporations Act (Yukon), we are permitted to
indemnify our directors and officers and former directors and officers against
all costs, charges and expenses reasonably incurred, including amounts paid to
settle an action or satisfy a judgment in a civil, criminal or administrative
action or proceeding to which they are made parties because of their position
as directors or officers, including an action against us,

65
<PAGE>

but excluding an action brought by us or on our behalf to procure a judgment in
our favor unless court approval is obtained for such indemnification. In order
to be entitled to indemnification under the Business Corporations Act (Yukon),
the director or officer must act honestly and in good faith with a view to our
best interests, and in the case of a criminal or administrative action or
proceeding that is enforced by a monetary penalty, the director or officer must
have reasonable grounds for believing that his or her conduct was lawful. Under
our bylaws, we may indemnify our and our directly held subsidiaries' current
and former directors and our and our directly held subsidiaries' current and
former officers, employees and agents. Our by-laws also provide that, to the
fullest extent permitted by the Business Corporations Act (Yukon), we are
authorized to purchase and maintain insurance on behalf of our and our
subsidiaries' current and past directors, officers, employees and agents
against any liability incurred by them in their duties. Our unanimous
shareholders' agreement, which will be terminated upon completion of this
offering, also requires us to indemnify our directors to the fullest extent
permitted by law.

We have also entered into agreements to indemnify our directors and
executive officers. These agreements, among other things, indemnify our
directors and executive officers for expenses, such as attorneys' fees,
judgments, fines and settlement amounts, incurred by any person in any action
or proceeding, including any action by us arising out of that person's services
as a director or executive officer of us or any of our subsidiaries or any
other company or enterprise to which the person provides services at our
request. We believe that these provisions and agreements are necessary to
attract and retain qualified persons as directors and executive officers.

Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, we have been informed that in the opinion
of the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act and is therefore
unenforceable.

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

66
<PAGE>

PRINCIPAL SHAREHOLDERS

The following table sets forth certain information regarding the
beneficial ownership of our common shares as of September 30, 2000, and as
adjusted to reflect the sale of the common shares offered hereby, by:

. each shareholder known by us to own beneficially more than 5% of our
outstanding common shares;

. each of our directors;

. each of our named executive officers; and

. all current executive officers and directors as a group.

Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. For purposes of calculating the number of
shares beneficially owned by a shareholder and the percentage ownership of that
shareholder, common shares subject to options that are currently exercisable or
exercisable within 60 days of September 30, 2000 by that shareholder are deemed
outstanding. These options are listed below under the heading "Number of Shares
Underlying Options" and are not treated as outstanding for the purpose of
computing the percentage ownership of any other shareholder. Percentage
ownership is based on 86,670,790 common shares outstanding on September 30,
2000 (after giving effect to the conversion of all of our outstanding preferred
shares into common shares) and shares outstanding upon completion of
this offering assuming no exercise of the underwriters' over-allotment option.

Unless otherwise noted below, the address for each shareholder below is:
c/o Ironside Technologies Inc., 7077 Koll Center Parkway, Pleasanton,
California 94566. Unless otherwise noted, we believe that each of the
shareholders has sole investment and voting power with respect to the common
shares indicated, except to the extent shared by spouses under applicable law.

67
<PAGE>

<TABLE>
<CAPTION>
Percentage of
Shares
Number of Outstanding
Shares -----------------
Number of Underlying Before After
Name and Address of Beneficial Owner Shares Options(1) Offering Offering
------------------------------------ ---------- ---------- -------- --------
<S> <C> <C> <C> <C>
Philip J. Padfield.................... -- 12,500 *
Dale A. deFreitas..................... -- 249,688 *
Graham D.S. Anderson(3)............... 8,310,138 -- 9.6
Djenane Cameron(4).................... 14,851,943 -- 17.1
Perry M. Monych(5).................... 13,346,530 -- 15.4
Larry Wasser(6)....................... 13,222,772 -- 15.3
Peter A. Weinbach(7).................. 7,215,605 -- 8.3
All executive officers and directors
as a group (11 persons)(8)........... 43,480,844 2,005,175 53.2
</TABLE>
--------
* Less than 1%
(1) Although these options have vested or will vest within 60 days of September
30, 2000, under the terms of our amended and restated stock option plan,
they will not be exercisable until 90 days after this offering, except for
528,299 options held by Mr. Lipsin, which are currently exercisable.
(2) At the time that it acquired our shares, EuclidSR Partners, L.P., was known
as Euclid Partners V, L.P.
(3) Includes 8,310,138 shares held by EuclidSR Partners, L.P. Mr. Anderson is a
general partner of EuclidSR Associates, L.P., which is the general partner
of EuclidSR Partners, L.P. As such, Mr. Anderson may be deemed to have
voting and investment power with respect to such shares. Mr. Anderson
disclaims beneficial ownership of shares held by EuclidSR Partners, L.P.
(4) Includes 14,851,943 shares held by Working Ventures Canadian Fund Inc., of
which Ms. Cameron is an Investment Manager. Ms. Cameron disclaims
beneficial ownership of the shares owned by Working Ventures Canadian Fund
Inc.
(5) Includes 13,346,530 shares held by G.E. Capital Equity Holdings B.V. Mr.
Monych is President and CEO of GE Access, which is an affiliate of G.E.
Capital Equity Holdings B.V. As such, Mr. Monych may be deemed to have
voting and investment power with respect to the shares held by G.E. Capital
Equity Holdings B.V. Mr. Monych disclaims beneficial ownership of shares
held by G.E. Capital Equity Holdings B.V.
(6) Includes 13,222,772 shares held by Beamscope Canada Inc., of which Mr.
Wasser is Chairman and CEO. Mr. Wasser disclaims beneficial ownership of
the shares owned by Beamscope Canada Inc.
(7) Includes 7,215,605 shares held by AIG Horizon Partners Fund, L.P. Mr.
Weinbach is Managing Director of AIG Horizon Partners LLC, which is an
affiliate of AIG Horizon Partners Fund, L.P. As such, Mr. Weinbach may be
deemed to have voting and investment power with respect to the shares held
by AIG Horizon Partners Fund, L.P. Mr. Weinbach disclaims beneficial
ownership of the shares held by AIG Horizon Partners Fund, L.P.
(8) See footnotes 3-7 above.

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<PAGE>

RELATED PARTY TRANSACTIONS

Equity Financings

On April 25, 1996, in connection with our initial organization, we sold
45 common shares to each of Peter W. Bennett, Douglas L. MacCallum and Andrew
R. Siks, and five common shares to Beamscope Canada Inc., for $1.00 per share.
On March 1, 1997, we sold 6.12242489 common shares to Jerry Lenders for an
aggregate purchase of $6.00. As of September 30, 2000, and as adjusted for
stock splits, each of Peter W. Bennett, Douglas L. MacCallum and Andrew R. Siks
held 1,244,114 common shares, Beamscope Canada Inc. Held 138,235 common shares
and Jerry Lenders held 169,267 common shares.

Between July 1997 and January 1998, we issued a total of 18,799,276 Class
A convertible preferred shares at a purchase price of $0.3548813 per share. In
September 1998, we issued a total of 16,630,212 Class B convertible preferred
shares at a purchase price of $0.4409645 per share. In October 1999, we issued
30,065,025 Class C-1 convertible preferred shares at a purchase price of
$0.8315312 per share. In October 1999, we issued 4,209,102 Class C-2
convertible preferred shares at a purchase price of $0.8315312 per share. In
April 2000, we issued 8,052,170 Class D convertible preferred shares at a
purchase price of $3.32 per share. The Class A, Class B, Class C-1, Class C-2
and Class D convertible preferred shares will automatically convert to common
shares upon completion of this offering at a conversion rate of 1:1,
1:1.208784, 1:1, 1:1.333333, and 1:1, respectively. The conversion rates are
subject to adjustment from time to time.

We have granted registration rights to the holders of the Class B, Class
C-1, Class C-2 and Class D preferred shares. Therefore, we may become obligated
to register the common shares issued upon conversion of these preferred shares.
See "Description of Share Capital--Registration Rights."

The following table sets forth those shareholders who beneficially own
five percent or more of our outstanding equity securities who have purchased
our preferred shares. The numbers in the following table are on an as converted
to common shares basis in accordance with the conversion ratios described
above.

<TABLE>
<CAPTION>
Aggregate
Class A Class B Class C-1 Class C-2 Class D Consideration
Shareholder Preferred Preferred Preferred Preferred Preferred Paid
----------- --------- --------- --------- --------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Working Ventures
Canadian Fund Inc...... 5,939,395 4,568,714 2,405,202 1,336,223 602,410 $9,039,360
Beamscope Canada Inc.... 8,617,456 1,827,485 1,803,902 534,489 301,205 6,410,030
G.E. Capital Equity
Holdings B.V........... 9,137,426 1,803,902 2,405,201 6,333,333
C.I. Covington Fund
Inc.................... 4,242,425 2,405,202 451,807 5,313,829
AIG Horizon Partners
Fund, L.P.............. 7,215,605 6,000,000
EuclidSR Partners,
L.P.................... 4,568,714 2,405,202 1,336,223 4,500,000
</TABLE>

Djenane Cameron, one of our directors, is an investment manager with
Working Ventures Canadian Fund Inc. Larry Wasser, one of our directors, is
Chairman and CEO of Beamscope Canada. Perry M. Monych, one of our directors, is
President and CEO of GE Access, an affiliate of G.E. Capital Equity Holdings
B.V. Peter A. Weinbach, one of our directors, is Managing Director of AIG
Horizon Partners LLC, an affiliate of AIG Horizon Partners Fund, L.P. At the
time that it acquired our shares, EuclidSR Partners, L.P., was known as Euclid
Partners V, L.P. Graham D.S. Anderson, one of our directors, is a general
partner of EuclidSR Associates, L.P., the general partner of EuclidSR Partners,
L.P.

69
<PAGE>

Loans to Officers

During the fiscal year ended March 31, 1999, we loaned $200,000 to
William B. Lipsin, our President and Chief Executive Officer, to assist him
with his relocation expenses in connection with the relocation of our
headquarters to Pleasanton, California. This loan was non-interest bearing, and
Mr. Lipsin was obligated to repay the amount of this loan only if he did not
remain employed by us through September 2000. Because Mr. Lipsin remained
employed by us through this date, his obligation to repay this loan has been
extinguished.

Other Transactions

During the fiscal year ended March 31, 1998, we sold software licenses
and related services of approximately $54,300 to Beamscope Canada Inc. During
the fiscal year ended March 31, 2000, we sold additional software licenses and
related services to Beamscope of approximately $290,000. Beamscope is the
beneficial owner of approximately 15.3% of our outstanding capital stock. In
addition, Larry Wasser, who is a member of our board of directors, is Chairman
and CEO of Beamscope. The sales to Beamscope were made on the same general
terms and condition as the majority of our other sales during the respective
years.

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<PAGE>

DESCRIPTION OF SHARE CAPITAL

The following description is not complete and may not contain all the
information you should consider before investing in our common shares. This
description is subject to and qualified in its entirety by our restated
articles of continuance and bylaws, which are included as exhibits to the
registration statement of which this prospectus is a part, and by applicable
provisions of Yukon Territory law.

Our restated articles of continuance authorize us to issue an unlimited
number of common shares, no par value, and an unlimited number of preferred
shares, no par value, in the following classes and series: Class A Special
Shares, Class B Special Shares, Class C-1 Special Shares, Class C-2 Special
Shares and Class D Special Shares.

Common Shares

As of September 30, 2000, assuming conversion of all outstanding
preferred shares, there were 86,670,790 common shares outstanding that were
held of record by 25 shareholders. After giving effect to the sale of common
shares offered in this offering, there will be common shares
outstanding, assuming no exercise of outstanding options and warrants. As of
September 30, 2000, there were outstanding options to purchase a total of
15,584,434 common shares and outstanding warrants to purchase 1,403,387 common
shares.

The holders of common shares are entitled to one vote per share on all
matters to be voted upon by the shareholders and do not have cumulative voting
rights. The holders of outstanding common shares are entitled to receive
dividends out of assets legally available at times and in amounts as the board
may determine from time to time. Upon our liquidation, dissolution or winding
up, the holders of our common shares are entitled to share ratably in all
assets remaining after payment of liabilities, subject to prior distribution
rights of preferred shares, if any, then outstanding. The common shares have no
preemptive or conversion rights and are not subject to redemption. All
outstanding common shares are fully paid and nonassessable, and the common
shares to be issued upon completion of this offering will be fully paid and
nonassessable.

Preferred Shares

Upon completion of this offering, provided that the price per share is
approved by our board of directors or a committee thereof consisting of not
less than four directors, all of our outstanding preferred shares will be
converted into common shares. After the completion of this offering, pursuant
to our restated articles of continuance, our board of directors will have the
authority, without further action by the shareholders, to issue an unlimited
number of preferred shares with the designations, rights and preferences
prescribed in our restated articles of continuance, some of which are superior
to those of our common shares. Therefore, preferred shares could be issued
quickly with terms that could delay or prevent a change in control of our
company or make removal of our management more difficult. Additionally, the
issuance of preferred shares may decrease the market price of the common shares
and may adversely affect the voting and other rights of the holders of common
shares. We have no present plans to issue any preferred shares.

If we do not complete this offering prior to 5:00 p.m. Eastern Standard
Time on December 31, 2000, the conversion price applicable to the Class D
Special Shares will be adjusted by dividing the current conversion price of
$3.32 per share by 1.1. This would result in the issuance of an additional
805,398 common shares upon conversion of the Class D Special Shares. After
giving effect to this potential adjustment to the conversion price of the Class
D Special Shares, and assuming the automatic conversion of all outstanding
preferred shares into common shares upon completion of this offering, the
number of shares outstanding as of June 30, 2000 would be 87,476,188.

71
<PAGE>

Registration Rights

After this offering, the holders of 63,831,670 common shares will be
entitled to rights with respect to the registration or qualification of those
shares under the Securities Act and applicable Canadian provincial securities
laws, respectively, pursuant to a registration rights agreement among those
holders and us dated April 11, 2000. Under the terms of this agreement, if we
propose to register any of our securities under the Securities Act or qualify
for distribution any of our securities under applicable Canadian provincial and
territorial securities laws, either for our own account or for the account of
other security holders exercising registration rights, the holders of these
shares are entitled to notice of the registration and to include their common
shares in the registration or filing at our expense. Additionally, the holders
of these shares are entitled to demand registration rights pursuant to which
they may require us to file a registration statement under the Securities Act
or a prospectus under applicable Canadian provincial and territorial securities
laws at our expense with respect to their common shares. All of these
registration and related rights are subject to the right of the underwriters of
an offering to limit the number of shares included in such registration.
Holders of these registration rights have entered into lock-up agreements and
waived their registration rights until 180 days following the closing of this
offering.

Transfer Agent and Registrar

The transfer agent and registrar for our common shares is
. The transfer agent's address is
, and its telephone number is
.

National Market Listing

We will apply to list our common shares on The Nasdaq Stock Market's
National Market under the symbol "IRON."

72
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, we will have common shares
outstanding, assuming no exercise of outstanding options. Of these shares, the
shares sold in this offering will be available for immediate sale in
the public market as of the date of this prospectus. The remaining
common shares are "restricted securities" under Rule 144 of the Securities Act.
Generally, restricted securities that have been owned for two years may be sold
immediately after the completion of this offering and restricted securities
that have been owned for at least one year may be sold 90 days after completion
of this offering subject to compliance with the volume and other limitations of
Rule 144. Following this offering, 12,712,747 common shares will be eligible
for sale in the public market beginning 180 days after the date of this
prospectus, or earlier with the consent of Merrill Lynch, Pierce, Fenner &
Smith Incorporated and 73,958,043 common shares will become eligible for sale
in the public market at various times following 180 days after the date of this
prospectus, subject in each case to the limitations of Rule 144. Common shares
previously issued by us may also be subject to hold periods under applicable
Canadian securities laws. The U.S. and Canadian resale restrictions are
summarized below.

Lock-Up Agreements

Pursuant to certain "lock-up" agreements, we and our executive officers,
directors and certain of our other shareholders, option holders and warrant
holders have agreed not to offer, sell, contract to sell, announce an intention
to sell, pledge or otherwise dispose of, directly or indirectly, or file with
the SEC a registration statement under the Securities Act relating to, any
common shares or securities convertible into or exchangeable or exercisable for
any common shares without the prior written consent of Merrill Lynch, Pierce,
Fenner & Smith Incorporated for a period of 180 days after the date of this
prospectus.

Rule 144

In general, under Rule 144 as currently in effect, beginning 90 days
after the date of this prospectus, a person who has beneficially owned
restricted shares for at least one year would be entitled to sell in any three-
month period up to the greater of:

. 1% of the then-outstanding common shares, or approximately
shares immediately after this offering; and

. the average weekly trading volume of the common shares during the
four calendar weeks preceding the filing of a Form 144 with respect
to such sale.

Sales under Rule 144 are also subject to certain manner of sale and
notice requirements and to the availability of current public information about
us.

Under Rule 144(k), a person who has not been one of our affiliates during
the preceding 90 days and who has beneficially owned the restricted shares for
at least two years is entitled to sell them without complying with the manner
of sale, public information, volume limitation or notice provisions of Rule
144.

Rule 701

Any of our employees, directors, officers, consultants or advisors who
purchased shares from us in connection with a written stock or option plan
before the effective date of this offering is entitled to rely on the resale
provisions of Rule 701, subject to the lock-up agreements described above. In
general, Rule 701 permits non-affiliates to sell their Rule 701 shares 90 days
after the effectiveness of a registration statement relating to a company's
initial public offering without having to comply with the public information,
holding period, volume limitation or notice provisions of Rule 144 and permits
affiliates to sell their Rule 701 shares without having to comply with the
holding period of Rule 144. As of September 30, 2000, the holders of options to
purchase approximately 2,227,796 common shares will be eligible to sell their
shares after exercise of their options in reliance upon Rule 701 upon the
expiration of the 180-day lock-up period.

73
<PAGE>

Registration Rights

After this offering, the holders of 63,831,670 common shares will be
entitled to rights with respect to the registration of these shares under the
Securities Act and Canadian securities laws. If these shares are registered
under these laws, they would become freely tradable immediately upon the
effectiveness of the registration, except for shares purchased by affiliates.
See "Description of Share Capital--Registration Rights."

Stock Options and Warrants

As of September 30, 2000, options to purchase a total of 14,615,886
common shares under our existing stock option plan were outstanding. Additional
options and warrants to purchase 2,371,935 common shares were also outstanding
as of September 30, 2000. An additional 2,137,745 common shares were available
for future option grants under our existing stock option plan. We intend to
file a registration statement on Form S-8 to register common shares issued or
reserved for issuance under our existing stock option plan, our proposed 2000
stock incentive plan and our proposed Employee Stock Purchase Plan within 180
days after the date of this prospectus, thus permitting the resale of such
shares by nonaffiliates in the public market without restriction under the
Securities Act.

Canadian Resale Restrictions

Excluding any common shares purchased in this offering, as of September
30, 2000, Canadian residents held 52,686,908 common shares and options or
warrants to purchase 8,892,722 common shares. Under applicable Canadian
securities laws, all such common shares or common shares issuable upon exercise
of such options may not be sold or otherwise disposed of for value, except
pursuant to a prospectus qualifying the sale of such shares, a discretionary
exemption or a statutory exemption from the requirement to file a prospectus,
until we have been a reporting issuer for at least 12 months in the province in
which such shareholder or optionee resides. We will become a reporting issuer
in the provinces of Ontario and British Columbia when we file this prospectus
with the securities regulatory authorities of those provinces and when those
authorities issue receipts for the prospectus. We expect that the receipts will
be issued on or about the date of this prospectus.

The Canadian prospectus will qualify the issuance of common shares on the
automatic conversion of the preferred shares and on the exercise of convertible
preferred share warrants and, accordingly, such common shares will only be
subject to resale restrictions pursuant to the lock-up agreements and under
U.S. securities laws.

74
<PAGE>

INCOME TAX CONSIDERATIONS

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

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

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

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

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

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

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

This discussion is based upon:

. the Income Tax Act and the Income Tax Regulations;

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

. the Convention;

. the current administrative policies and practices published by the
Canada Customs and Revenue Agency;

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

75
<PAGE>

. the administrative rulings, practice and policies of the U.S.
Internal Revenue Service (the "IRS"); and

. applicable U.S. and Canadian judicial decisions,

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

This discussion is merely a general description of the U.S. and Canadian
federal income tax considerations material to a purchase of common shares and
it is not intended to be, nor should it be construed as, legal or tax advice to
any person purchasing common shares. This discussion does not deal with all
possible tax consequences relating to an investment in our common shares. We
have not taken into account your particular circumstances and do not address
all consequences to you under provisions of U.S. or Canadian income tax law.

Therefore, you should consult your own tax advisor regarding the
particular tax consequences to you of purchasing, owning and disposing of
common shares, including the applicability and effect of any state, local or
foreign tax laws, and any changes in applicable laws.

U.S. Federal Income Tax Considerations

You generally will be required to include the U.S. dollar value of any
dividend distribution which you receive on the common shares in ordinary income
to the extent of our current and accumulated earnings and profits, as
determined under U.S. federal income tax principles. The amount of the
distribution required to be included in gross income will be determined without
reduction for Canadian withholding tax. Therefore, in the event that the
distribution is subject to Canadian withholding tax, you generally will be
required to report gross income in an amount greater than the cash received. To
the extent any dividend distribution paid by us exceeds our current and
accumulated earnings and profits, your pro rata share of the excess amount will
be treated first as a return of capital up to your adjusted tax basis in our
common shares (with a corresponding reduction in basis), and then as a gain
from the sale or exchange of the common shares. Unconnected U.S. Shareholders
should consult their tax advisors regarding the tax treatment of foreign
currency gain or loss, if any, on Canadian dollars received.

Dividends, if any, paid by us on our common shares generally will not be
eligible for the "dividends received" deduction. However, an Unconnected U.S.
Shareholder that is a corporation may, in certain circumstances, be entitled to
a 70% deduction in respect of the U.S. source portion of the dividends received
from us if such Unconnected U.S. Shareholders own shares representing at least
10% of our voting power and value.

Subject to certain conditions and limitations, you may be entitled to
claim a credit for U.S. federal income tax purposes in an amount equal to the
U.S. dollar value of Canadian taxes withheld on certain distributions that we
make to you. The rules relating to foreign tax credits are extremely complex
and the availability of a foreign tax credit depends on numerous factors. You
should consult your own tax advisor concerning the application of the U.S.
foreign tax credit rules to your particular situation.

You generally will recognize gain or loss on the sale, exchange or other
disposition of your common shares in an amount equal to the difference, if any,
between the amount realized on the sale, exchange or disposition and your
adjusted tax basis in the common shares. Any gain or loss you recognize upon
the sale, exchange or disposition of common shares held as capital assets
generally will be long-term or short-term

76
<PAGE>

capital gain or loss, depending on whether the shares have been held by you for
more than one year. Gain or loss resulting from a sale, exchange or disposition
of the common shares generally will be U.S. source for U.S. foreign tax credit
purposes unless it is attributable to an office or other fixed place of
business outside the U.S. and other conditions are met.

Dividend payments, if any, with respect to the common shares and proceeds
from the sale, exchange or disposition of common shares may be subject to
information reporting to the IRS and possible U.S. backup withholding tax at a
rate of 31%. Backup withholding generally will not apply, however, to an
Unconnected U.S. Shareholder who furnishes a correct taxpayer identification
number and makes any other required certification or who is otherwise exempt
from backup withholding. Generally, an Unconnected U.S. Shareholder will
provide such certification on IRS Form W-9. Amounts withheld under the backup
withholding rules may be credited against a holder's tax liability, and a
holder may obtain a refund of any excess amounts withheld under the backup
withholding rules by timely filing the appropriate form for refund with the
IRS.

Passive Foreign Investment Companies

The rules governing "passive foreign investment companies" can have
significant tax effects on Unconnected U.S. Shareholders. We believe that we
will not be a passive foreign investment company as of the date the offering is
completed. If, however, we are classified as a passive foreign investment
company for any taxable year in which you own our common shares, the U.S.
federal income tax consequences to you of owning and disposing of your common
shares may differ from those described above. We generally will be classified
as a passive foreign investment company for any taxable year if either in that
taxable year or in any prior taxable year for which you have held our shares:

. 75% or more of our gross income is "passive income," which generally
includes interest, dividends, some types of rents and royalties and
gains from the sale or exchange of assets that produce passive
income; or

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

In the event that we are a passive foreign investment company,
distributions by us which constitute "excess distributions," as defined in
Section 1291 of the Internal Revenue Code, and gains from the disposition of
our common shares, are subject to special rules, pursuant to which an
Unconnected U.S. Shareholder generally must allocate the gain or excess
distribution ratably to each day in such holder's holding period for the common
shares. The portion of the gain or excess distribution allocated to the taxable
year in which the gain was recognized or the excess distribution was received
and any taxable year during which we were not a passive foreign investment
company would be taxed as ordinary income for the current year. The portion of
the gain or excess distribution allocated to each of the other taxable years
would be subject to tax at the maximum ordinary income rate in effect for such
taxable year and an interest charge would be imposed on the resulting tax
liability determined as if that liability had been due with respect to that
prior year (such amounts are subject to U.S. tax liability even though they are
not actually included in an Unconnected U.S. Shareholder's income). However, if
an Unconnected U.S. Shareholder makes a timely election to treat us as a
qualified electing fund under section 1295 of the Internal Revenue Code, and if
other requirements are satisfied, the above described rules generally will not
apply. Instead, the Unconnected U.S. Shareholder would include annually in his
gross income his pro rata share of our ordinary earnings and net capital gain,
regardless of whether such income or gain was actually distributed to such
Unconnected U.S. Shareholder.

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

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<PAGE>

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

To determine whether we are a passive foreign investment company, it is
necessary to examine each year our gross income and the value of our assets.
Although we do not anticipate classification as a passive foreign investment
company, the tests are complex and fact-dependent and we cannot determine
whether these tests will be met for the year 2000 or future years. Neither we
nor our advisors have the duty, or will undertake, to inform you of a
determination that we are or have become a passive foreign investment company,
and we do not currently intend to take actions necessary to permit you to make
a "qualified electing fund election" in the event we are classified as a
passive foreign investment company. You are urged to consult your own tax
advisor with respect to the potential consequences to you if at any time we
qualify as a passive foreign investment company, including the advisability of
making a mark to market election if such election is available or a qualified
electing fund election.

Canadian Federal Income Tax Considerations

In this section, we summarize the material anticipated Canadian federal
income tax considerations relevant to your purchase of common shares. This
section will only apply if you do not use or hold and are not deemed to use or
hold the common shares in, or in the course of, carrying on a business in
Canada and you never become resident in Canada for the purposes of the Income
Tax Act.

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

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

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

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<PAGE>

UNDERWRITING

Merrill Lynch, Pierce, Fenner & Smith Incorporated, CIBC World Markets
Corp. and Thomas Weisel Partners LLC are acting as representatives of each of
the underwriters named below. Subject to the terms and conditions described in
a purchase agreement among us, we have agreed to sell to the underwriters, and
each of the underwriters, severally and not jointly, has agreed to purchase the
number of shares listed opposite its name below:

<TABLE>
<CAPTION>
Number
Underwriter of Shares
----------- ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...............................................
CIBC World Markets Corp.........................................
Thomas Weisel Partners LLC......................................
---
Total.....................................................
===
</TABLE>

The underwriters have agreed to purchase all of the shares sold under the
purchase agreement if any of these shares are purchased. If an underwriter
defaults, the purchase agreement provides that the purchase commitments of the
nondefaulting underwriters may be increased or the purchase agreement may be
terminated. The closings for the sale of shares to be purchased by the
underwriters are conditioned on one another.

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

The underwriters are offering the shares, subject to prior sale, when, as
and if issued to and accepted by them, subject to approval of legal matters by
their counsel, including the validity of the shares, and other conditions
contained in the purchase agreements, such as the receipt by the underwriters
of officer's certificates and legal opinions. The underwriters reserve the
right to withdraw, cancel or modify offers to the public and to reject orders
in whole or in part.

Commissions and Discounts

The representatives have advised us that the underwriters propose
initially to offer the shares to the public at the initial public offering
price on the cover page of this prospectus and to dealers at that price less a
concession not in excess of $. per share. The underwriters may allow, and the
dealers may reallow, a discount not in excess of $. per share to other
dealers. After the initial public offering, the public offering price,
concession and discount may be changed.

The following table shows the public offering price, underwriting
discount and proceeds before expenses to us. The information assumes either no
exercise or full exercise by the underwriters of their over-allotment options.

<TABLE>
<CAPTION>
Per Share Without Option With Option
--------- --------------- -----------
<S> <C> <C> <C>
Public offering price.............. $ $ $
Underwriting discount.............. $ $ $
Proceeds, before expenses, to
Ironside.......................... $ $ $
</TABLE>

The expenses of the offering, not including the underwriting discount,
are estimated at $ and are payable by us.

79
<PAGE>

Over-allotment Option

We have granted options to the underwriters to purchase up to
additional shares at the public offering price less the underwriting discount.
The underwriters may exercise these options for 30 days from the date of the
prospectus solely to cover any over-allotments. If the underwriters exercise
those options, each will be obligated, subject to conditions contained in the
purchase agreement, to purchase a number of additional shares proportionate to
that underwriter's initial amount reflected in the above table.

Reserved Shares

At our request, the underwriters have reserved for sale, at the initial
public offering price, up to an aggregate of 5% of the shares offered by this
prospectus for sale to some of our directors, officers, employees,
distributors, dealers, business associates and related persons. If these
persons purchase reserved shares, this will reduce the number of shares
available for sale to the general public. Any reserved shares that are not
orally confirmed for purchase within one day of the pricing of this offering
will be offered by the underwriters to the general public on the same terms as
the other shares offered by this prospectus.

No Sales of Similar Securities

We and our executive officers and directors and all existing stockholders
have agreed, with exceptions, not to sell or transfer any common stock for 180
days after the date of this prospectus without first obtaining the written
consent of Merrill Lynch. Specifically, we and these other individuals have
agreed not to directly or indirectly

. offer, pledge, sell or contract to sell any common stock,

. sell any option or contract to purchase any common stock,

. purchase any option or contract to sell any common stock,

. grant any option, right or warrant for the sale of any common stock,

. lend or otherwise dispose of or transfer any common stock,

. request or demand that we file a registration statement related to
the common stock, or

. enter into any swap or other agreement that transfers, in whole or in
part, the economic consequences of ownership of any common stock
whether any such swap or transaction is to be settled by delivery of
shares or other securities, in cash or otherwise.

This lockup provision applies to common stock and to securities
convertible into or exchangeable or exercisable for or repayable with common
stock. It also applies to common stock owned now or acquired later by the
person executing the agreement or for which the person executing the agreement
later acquires the power of disposition.

Quotation on the Nasdaq National Market

We expect the shares to be approved for quotation on the Nasdaq National
Market, subject to notice of issuance, under the symbol "IRON."

Before this offering, there has been no public market for our common
stock. The initial public offering price will be determined through
negotiations among us and the representatives of the underwriters. In addition
to prevailing market conditions, the factors to be considered in determining
the initial public offering price are

. the valuation multiples of publicly traded companies that the
representatives of the underwriters believe to be comparable to us,

. our financial information,

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

80
<PAGE>

. an assessment of our management, its past and present operations, and
the prospects for, and timing of, our future revenues,

. the present state of our development, and

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

An active trading market for the shares may not develop. It is also
possible that after the offering the shares will not trade in the public market
at or above the initial public offering price.

The underwriters do not expect to sell more than 5% of the shares in the
aggregate to accounts over which they exercise discretionary authority.

Price Stabilization, Short Positions and Penalty Bids

Until the distribution of the shares is completed, SEC rules may limit
underwriters and selling group members from bidding for and purchasing our
common stock. However, the representatives may engage in transactions that
stabilize the price of the common stock, such as bids or purchases to peg, fix
or maintain that price.

If the underwriters create a short position in the common stock in
connection with the offering, i.e, if they sell more shares than are listed on
the cover of this prospectus, the representatives may reduce that short
position by purchasing shares in the open market. The representatives may also
elect to reduce any short position by exercising all or part of the over-
allotment option described above. Purchases of the common stock to stabilize
its price or to reduce a short position may cause the price of the common stock
to be higher than it might be in the absence of such purchases.

The representatives may also impose a penalty bid on underwriters and
selling group members. This means that if the representatives purchase shares
in the open market to reduce the underwriter's short position or to stabilize
the price of such shares, they may reclaim the amount of the selling concession
from the underwriters and selling group members who sold those shares. The
imposition of a penalty bid may also affect the price of the shares in that it
discourages resales of those shares.

Neither we nor any of the underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the common stock. In addition, neither
we nor any of the underwriters makes any representation that the
representatives will engage in these transactions or that these transactions,
once commenced, will not be discontinued without notice.

Other Relationships

An affiliate of CIBC World Markets Corp., a representative of the
underwriters engaged in, and may in the future engage in, investment banking
and other commercial dealings in the ordinary course of business with us. This
affiliate has received customary fees and commissions, including warrants to
purchase shares of our preferred stock, for these transactions. CIBC is an
indirect wholly-owned subsidiary of an entity that purchased shares of
preferred stock in connection with one of our preferred stock financing rounds.

Thomas Weisel Partners LLC, one of the representatives of the
underwriters, was organized and registered as a broker-dealer in December 1998.
Since December 1998, Thomas Weisel Partners has been named as a lead or co-
manager on numerous public offerings of equity securities. Thomas Weisel
Partners does not have any material relationship with us or any of our
officers, directors or other controlling persons, except with respect to its
contractual relationship with us pursuant to the underwriting agreement entered
into in connection with this offering.

81
<PAGE>

Internet Offering

Merrill Lynch will be facilitating Internet distribution for this
offering to certain of its Internet subscription customers. Merrill Lynch
intends to allocate a limited number of shares for sale to its online brokerage
customers. An electronic prospectus is available on the Internet Web site
maintained by Merrill Lynch. Other than the prospectus in electronic format,
the information on the Merrill Lynch website is not part of this prospectus.

82
<PAGE>

LEGAL MATTERS

Stikeman Elliott, Toronto, Canada and Anton, Campion, Macdonald & Oyler,
Yukon, Canada, will pass on the legality of the common shares offered by this
prospectus. Stoel Rives LLP, Portland, Oregon, is acting as our United States
counsel with respect to the offering. Certain legal matters will be passed upon
for the underwriters by Wilson Sonsini Goodrich & Rosati, Professional
Corporation, Palo Alto, California.

EXPERTS

The consolidated financial statements of Ironside Technologies Inc. at
March 31, 1999 and 2000, and for each of the three years in the period ended
March 31, 2000, included in this prospectus have been so included in reliance
on the report of PricewaterhouseCoopers LLP, independent accountants, given on
the authority of said firm as experts in auditing and accounting.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the SEC a registration statement on Form S-1. This
prospectus, which forms a part of the registration statement, does not contain
all the information included in the registration statement. Certain information
is omitted and you should refer to the registration statement and its exhibits.
With respect to references made in this prospectus to any of our contracts or
other documents, such references are not necessarily complete and you should
refer to the exhibits attached to the registration statement for copies of the
actual contract or document. You may read and copy the registration statement,
including exhibits and schedules filed with it, at the SEC's public reference
facilities in Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549. You may obtain information on the operation of the SEC's public
reference facilities by calling the SEC at 1-800-SEC-0330. The SEC maintains a
website (http://www.sec.gov) that contains reports, proxy and information
statements and other information regarding registrants, such as us, that file
electronically with the SEC.

Upon completion of this offering, we will become subject to the
information and periodic reporting requirements under the Exchange Act and, in
accordance with this law, will file periodic reports, proxy statements and
other information with the SEC. These periodic reports, proxy statements and
other information will be available for inspection and copying at the SEC's
public reference facilities and the website of the SEC referred to above.

83
<PAGE>

IRONSIDE TECHNOLOGIES INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Report of Independent Accountants........................................... F-2
Consolidated Balance Sheets................................................. F-3
Consolidated Statements of Operations....................................... F-4
Consolidated Statements of Shareholders' Equity (Deficit)................... F-5
Consolidated Statements of Cash Flows....................................... F-6
Notes to Consolidated Financial Statements.................................. F-7
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of
Ironside Technologies Inc.

In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, of shareholders' equity
(deficit) and of cash flows present fairly, in all material respects, the
financial position of Ironside Technologies Inc. (the "Company") at March 31,
1999 and 2000 and the results of its operations and its cash flows for each of
the three years in the period ended March 31, 2000, in conformity with
accounting principles generally accepted in the United States. These
consolidated financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these consolidated
financial statements based on our audits. We conducted our audits of these
consolidated financial statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and estimates made
by management and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.

/s/ PricewaterhouseCoopers LLP

Toronto, Canada
April 20, 2000, except for note 12, which is as of October 17, 2000

F-2
<PAGE>

IRONSIDE TECHNOLOGIES INC.

CONSOLIDATED BALANCE SHEETS
(in thousands)

<TABLE>
<CAPTION>
March 31, Pro Forma
------------------ June 30, June 30,
1999 2000 2000 2000
-------- -------- ----------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
ASSETS

Current assets:
Cash and cash equivalents............ $ 3,014 $ 15,880 $ 34,746
Accounts receivable, net............. 1,810 3,527 3,877
Prepaid expenses and other current
assets.............................. 192 1,340 1,623
-------- -------- --------
Total current assets............... 5,016 20,747 40,246
Restricted cash........................ -- 316 311
Property and equipment, net............ 526 2,512 3,225
-------- -------- --------
$ 5,542 $ 23,575 $ 43,782
======== ======== ========

LIABILITIES, MANDATORILY REDEEMABLE
CONVERTIBLE PREFERRED SHARES AND
SHAREHOLDERS' EQUITY (DEFICIT)

Current liabilities:
Accounts payable..................... $ 698 $ 2,355 $ 2,151
Accrued liabilities.................. 442 3,545 4,183
Deferred revenue..................... 288 1,447 2,194
Current portion of capital lease
obligations......................... 31 131 131
-------- -------- --------
Total current liabilities.......... 1,459 7,478 8,659
Capital lease obligations, long-term... 90 309 268
-------- -------- --------
1,549 7,787 8,927
-------- -------- --------

Commitments (Note 9)

Mandatorily redeemable convertible
preferred shares: no par value;
unlimited authorized shares at March
31, 1999 and 2000 and June 30, 2000
(unaudited); 35,429, 69,704, and
77,756 shares issued and outstanding
at March 31, 1999 and 2000 and June
30, 2000 (unaudited), respectively,
and none pro forma (unaudited);
aggregate liquidation preference of
$72,074 at June 30, 2000 (unaudited).. 15,220 44,723 70,972 $ --
-------- -------- --------
Shareholders' Equity (Deficit):
Common shares: no par value; unlimited
authorized shares at March 31, 1999
and 2000 and June 30, 2000
(unaudited); 4,040 shares issued and
outstanding at March 31, 1999 and 2000
and June 30, 2000 (unaudited),
respectively, and 86,671 pro forma
(unaudited)........................... -- -- -- 70,972
Additional paid-in capital............. 248 5,233 17,687 17,687
Deferred stock-based compensation...... (369) (3,879) (15,207) (15,207)
Accumulated other comprehensive income
(loss)................................ -- 2 (15) (15)
Accumulated deficit.................... (11,106) (30,291) (38,582) (38,582)
-------- -------- -------- --------
Total shareholders' equity
(deficit)......................... (11,227) (28,935) (36,117) $ 34,855
-------- -------- -------- ========
$ 5,542 $ 23,575 $ 43,782
======== ======== ========
</TABLE>

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

F-3
<PAGE>

IRONSIDE TECHNOLOGIES INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)

<TABLE>
<CAPTION>
Three Months
March 31, ended June 30,
-------------------------- -----------------
1998 1999 2000 1999 2000
------- ------- -------- -------- -------
(unaudited)
<S> <C> <C> <C> <C> <C>
Revenues:
License....................... $ 1,258 $ 2,714 $ 2,805 $ 238 $ 1,751
Services and maintenance...... 108 613 3,376 339 2,518
------- ------- -------- -------- -------
Total revenues.............. 1,366 3,327 6,181 577 4,269
------- ------- -------- -------- -------
Cost of revenues:
License....................... 5 207 268 70 219
Services and maintenance
(excluding stock-based
compensation of $0, $5, $81,
$6, and $75, respectively)... 231 697 4,474 335 2,199
------- ------- -------- -------- -------
Total cost of revenues...... 236 904 4,742 405 2,418
------- ------- -------- -------- -------
Gross profit.................... 1,130 2,423 1,439 172 1,851
------- ------- -------- -------- -------
Operating Expenses:
Research and development
(excluding stock-based
compensation of $0, $19,
$142, $17, and $150,
respectively)................ 1,022 1,273 3,226 553 1,424
Sales and marketing (excluding
stock-based compensation of
$0, $38, $379, $32, and
$1,501, respectively)........ 3,276 4,689 11,568 1,494 5,856
General and administrative
(excluding stock-based
compensation of $0, $66,
$398, $31, and $610,
respectively)................ 1,238 1,312 2,403 411 1,068
Stock-based compensation...... -- 128 1,000 86 2,336
------- ------- -------- -------- -------
5,536 7,402 18,197 2,544 10,684
------- ------- -------- -------- -------
Loss from operations............ (4,406) (4,979) (16,758) (2,372) (8,833)
Interest income................. 76 98 544 27 548
Interest expense................ (24) (16) (2,971) (10) (6)
------- ------- -------- -------- -------
Net loss........................ (4,354) (4,897) (19,185) (2,355) (8,291)
Accretion of mandatorily
redeemable convertible
preferred shares to redemption
value.......................... (946) (1,074) (2,801) (355) (1,682)
------- ------- -------- -------- -------
Net loss attributable to common
shareholders................... $(5,300) $(5,971) $(21,986) $ (2,710) $(9,973)
======= ======= ======== ======== =======
Net loss per share:
Basic and diluted............. $ (1.31) $ (1.48) $ (5.44) $ (0.67) $ (2.47)
======= ======= ======== ======== =======
Weighted average shares used
in computing basic and
diluted net loss per share... 4,040 4,040 4,040 4,040 4,040
======= ======= ======== ======== =======
Pro forma net loss per share:
Basic and diluted
(unaudited).................. $ (0.37) $ (0.12)
======== =======
Weighted average shares used
in computing basic and
diluted pro forma net loss
per share (unaudited)........ 59,363 85,698
======== =======
</TABLE>

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

F-4
<PAGE>

IRONSIDE TECHNOLOGIES INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
(in thousands)

<TABLE>
<CAPTION>
Convertible
preferred
shares Common shares Additional Deferred Accumulated Total
--------------- ------------- paid-in stock-based Accumulated comprehensive shareholders'
Shares Amount Shares Amount capital compensation deficit income (loss) equity (deficit)
------ ------- ------ ------ ---------- ------------ ----------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at March 31,
1997................. 4,424 $ 733 4,040 $ -- $ -- $ -- $ (1,046) $ -- $ (313)
Issuance of Class A
convertible
preferred shares on
conversion of notes
payable from
related party....... 800 726 -- -- -- -- -- -- 726
Conversion of Class
A convertible
preferred shares to
mandatorily
redeemable
convertible
preferred shares.... (5,224) (1,459) -- -- -- -- -- -- (1,459)
Issuance of
mandatorily
redeemable
convertible
preferred share
warrants............ -- -- -- -- 137 -- -- -- 137
Accretion of
mandatorily
redeemable
convertible
preferred shares to
redemption value.... -- -- -- -- (137) -- (809) -- (946)
Net loss............ -- -- -- -- -- -- (4,354) -- (4,354)
------ ------- ----- ---- ------- -------- -------- ---- --------
Balance at March 31,
1998................. -- -- 4,040 -- -- -- (6,209) -- (6,209)
Deferred stock-
based
compensation........ -- -- -- -- 497 (497) -- -- --
Stock-based
compensation........ -- -- -- -- -- 128 -- -- 128
Issuance of
mandatorily
redeemable
convertible
preferred share
option.............. -- -- -- -- 825 -- -- -- 825
Accretion of
mandatorily
redeemable
convertible
preferred shares to
redemption value.... -- -- -- (1,074) -- -- -- (1,074)
Net loss............ -- -- -- -- -- -- (4,897) -- (4,897)
------ ------- ----- ---- ------- -------- -------- ---- --------
Balance at March 31,
1999................. -- -- 4,040 -- 248 (369) (11,106) -- (11,227)
Beneficial
conversion feature
on issuance of
convertible
promissory notes.... -- -- -- -- 2,931 -- -- -- 2,931
Deferred stock-
based
compensation........ -- -- -- -- 4,447 (4,447) -- -- --
Stock-based
compensation........ -- -- -- -- 63 937 -- -- 1,000
Issuance of
mandatorily
redeemable
convertible
preferred share
warrants............ -- -- -- -- 345 -- -- -- 345
Accretion of
mandatorily
redeemable
convertible
preferred shares to
redemption value.... -- -- -- -- (2,801) -- -- -- (2,801)
Net loss............ -- -- -- -- -- -- (19,185) -- (19,185)
Other comprehensive
income (loss).......
Currency
translation
adjustment ....... -- -- -- -- -- -- -- 2 2
------ ------- ----- ---- ------- -------- -------- ---- --------
Comprehensive
loss................ -- -- -- -- -- -- (19,185) 2 (19,183)
------ ------- ----- ---- ------- -------- -------- ---- --------
Balance at March 31,
2000................. -- -- 4,040 -- 5,233 (3,879) (30,291) 2 (28,935)
Deferred stock-
based compensation
(unaudited)......... -- -- -- -- 13,770 (13,770) -- -- --
Stock-based
compensation
(unaudited)......... -- -- -- -- 31 2,365 -- -- 2,396
Stock option
cancellations
(unaudited)......... -- -- -- -- (137) 77 -- -- (60)
Issuance of
mandatorily
redeemable
convertible
preferred share
warrants
(unaudited)......... -- -- -- -- 472 -- -- -- 472
Accretion of
mandatorily
redeemable
convertible
preferred shares to
redemption value
(unaudited)......... -- -- -- -- (1,682) -- -- -- (1,682)
Net loss
(unaudited)......... -- -- -- -- -- -- (8,291) -- (8,291)
Other comprehensive
income (loss).......
Currency
translation
adjustment
(unaudited)....... -- -- -- -- -- -- -- (17) (17)
------ ------- ----- ---- ------- -------- -------- ---- --------
Comprehensive loss
(unaudited)......... -- -- -- -- -- -- (8,291) (17) (8,308)
------ ------- ----- ---- ------- -------- -------- ---- --------
Balance at June 30,
2000 (unaudited)..... -- $ -- 4,040 $ -- $17,687 $(15,207) $(38,582) $(15) $(36,117)
====== ======= ===== ==== ======= ======== ======== ==== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.

F-5
<PAGE>

IRONSIDE TECHNOLOGIES INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

<TABLE>
<CAPTION>
Three Months
ended
Year ended March 31, June 30,
-------------------------- ----------------
1998 1999 2000 1999 2000
------- ------- -------- ------- -------
(unaudited)
<S> <C> <C> <C> <C> <C>
Cash flows from operating
activities:
Net loss....................... $(4,354) $(4,897) $(19,185) $(2,355) $(8,291)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation and
amortization................ 116 193 573 92 314
Foreign exchange
(gain)/loss................. 1 (1) (9) -- (28)
Stock-based compensation..... -- 128 1,000 86 2,336
Non-cash compensation........ -- 64 105 -- 25
Beneficial conversion feature
on convertible promissory
notes....................... -- -- 2,931 -- --
Net changes in operating
assets and liabilities
Accounts receivable........ (485) (1,117) (1,725) 107 (330)
Prepaid expenses and other
current assets............ (58) (196) (1,253) (112) (308)
Accounts payable........... 410 351 1,648 4 (194)
Accrued liabilities........ 199 219 3,103 (25) 649
Deferred revenue........... 57 146 1,159 (33) 747
------- ------- -------- ------- -------
Net cash used in
operating activities.... (4,114) (5,110) (11,653) (2,236) (5,080)
------- ------- -------- ------- -------
Cash flows from investing
activities:
(Increase) decrease in
restricted cash............... -- -- (316) (316) 5
Additions to property and
equipment..................... (358) (237) (2,130) (152) (1,027)
------- ------- -------- ------- -------
Net cash used in
investing activities.... (358) (237) (2,446) (468) (1,022)
------- ------- -------- ------- -------
Cash flows from financing
activities:
Repayment of capital lease
obligations................... (1) (17) (96) (12) (41)
Advances from related party.... 308 -- -- -- --
Proceeds from issuance of Class
A preferred shares, net of
issuance costs................ 5,431 -- -- -- --
Proceeds from issuance of Class
B preferred shares, net of
issuance costs................ -- 7,272 -- -- --
Proceeds from issuance of Class
C-1 preferred shares, net of
issuance costs................ -- -- 23,725 -- --
Proceeds from issuance of
convertible promissory notes,
net of issuance costs......... -- -- 3,322 -- --
Proceeds from issuance of Class
D preferred shares, net of
issuance costs................ -- -- -- -- 25,039
------- ------- -------- ------- -------
Net cash provided by
financing activities.... 5,738 7,255 26,951 (12) 24,998
------- ------- -------- ------- -------
Effect of exchange rate changes
on cash......................... -- (163) 14 -- (30)
------- ------- -------- ------- -------
Increase in cash and cash
equivalents during the period... 1,266 1,745 12,866 (2,716) 18,866
Cash and cash equivalents at
beginning of period............. 3 1,269 3,014 3,014 15,880
------- ------- -------- ------- -------
Cash and cash equivalents at end
of period....................... $ 1,269 $ 3,014 $ 15,880 $ 298 $34,746
======= ======= ======== ======= =======
</TABLE>

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

F-6
<PAGE>

IRONSIDE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Information as of and/or for the three months ended June 30, 1999 and 2000 is
unaudited

1 The Company and summary of significant accounting policies

Ironside Technologies Inc. (the "Company") was incorporated on February
22, 1996 under the laws of the Province of Ontario, Canada. The Company
reincorporated in Yukon, Canada on October 16, 1998. The Company is a provider
of Internet-based software applications and related services for manufacturers
and distributors, or sellers, designed to facilitate and enhance business-to-
business e-commerce. The Company's solutions enable sellers to quickly and
efficiently leverage their existing enterprise business systems and the
Internet to connect with multiple buyers and online trading exchanges, while
maintaining the traditional sales channels around which their enterprise
infrastructure was built. With the Company's products and services, sellers can
interact more closely and efficiently with their customers, suppliers and other
business partners through the exchange of real-time product and process
information. The Company's primary markets are North America and Europe.

Basis of presentation

The Company's consolidated financial statements are prepared in
accordance with accounting principles generally accepted in the United States.
All financial and share numbers have been rounded to the nearest thousand
throughout the consolidated financial statements. The accompanying consolidated
financial statements include the accounts of the Company and its wholly owned
subsidiary, Ironside Technologies Europe Ltd., which was incorporated in the
United Kingdom on July 12, 1999. All significant intercompany balances and
transactions have been eliminated.

Unaudited interim results

The interim consolidated financial statements as of June 30, 2000 and for
the three months ended June 30, 1999 and 2000 are unaudited. In the opinion of
management, these interim consolidated financial statements have been prepared
on the same basis as the audited consolidated financial statements and reflect
all adjustments consisting only of normal, recurring adjustments necessary for
the fair presentation for the results of interim periods. The financial data
and other information disclosed in these notes to the consolidated financial
statements for the related periods are unaudited. The results of the interim
periods are not necessarily indicative of the results to be expected for any
future periods.

Use of estimates by management

The preparation of financial statements, in conformity with accounting
principles generally accepted in the United States, requires management to make
certain 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 reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those estimates.

Foreign currency translation

The Company's functional currency is the United States dollar, except as
noted below. Foreign denominated non-monetary assets, liabilities and operating
items of the Company are measured in United States dollars at the exchange rate
prevailing at the respective transaction dates. Monetary assets and liabilities
denominated in foreign currencies are measured at exchange rates prevailing at
the balance sheet date. Resulting remeasurement adjustments are included in
general and administrative expenses within the consolidated statements of
operations.

The functional currency of the Company's subsidiary in the United Kingdom
is the local currency. Accordingly, the Company applies the current exchange
rate to translate the subsidiary's assets and liabilities

F-7
<PAGE>

IRONSIDE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of and/or for the three months ended June 30, 1999 and 2000 is
unaudited

and the weighted average exchange rate to translate the subsidiary's revenues,
expenses, gains and losses into United States dollars. Translation adjustments
are included as a separate component of comprehensive income within
shareholders' equity (deficit) in the accompanying consolidated financial
statements.

Revenue recognition

The Company derives revenues from licensing of its software and related
services, which include implementation services and training services. The
Company expects to earn revenues from the Ironside Network, a network that
provides sellers with a single point of entry into multiple online trading
exchanges.

The Company generally recognizes revenue under the residual method as
prescribed by Statement of Position ("SOP") No. 97-2 "Software Revenue
Recognition" and SOP No. 98-9, "Modification of SOP No. 97-2 with Respect to
Certain Transactions" whereby revenue is allocated to each undelivered element
when sold separately and the residual amount is then allocated to the delivered
element. The license fee revenues are recognized when there is persuasive
evidence of an arrangement with a fixed and determinable fee that is probable
of collection and when delivery has occurred.

For contracts involving significant implementation or customization
essential to the functionality of the Company's product, the license and
service revenues are recognized under the percentage-of-completion method using
labor hours incurred as the measure of progress towards completion. The Company
classifies revenues from these arrangements as license and services and
maintenance revenues, respectively, based upon the estimated fair value of each
element. Provisions for estimated contract losses are recognized in the period
in which the loss becomes probable and can be reasonably estimated.

License revenues from reseller arrangements are recognized upon receipt
of payment from the reseller relating to sales to third parties. The Company's
agreements with its customers and resellers do not contain product return
rights.

Services and maintenance revenues consist of professional services and
maintenance fees. Professional services primarily consist of software
implementation and training. Professional services revenues are recognized as
such services are performed. Services revenues from maintenance agreements,
which include services such as technical product support and an unspecified
number of product upgrades, is recognized ratably over the term of the
agreement, which is generally one year.

The revenues that the Company expects to generate from the Ironside
Network will primarily consist of implementation fees, monthly subscription
license fees per transaction fees and monthly fees for value-added services.
Implementation fees and subscription license fees will be recognized on a
ratable basis over the term of the agreement. Revenues from transaction fees
will be recognized as these services are performed. Revenues from monthly fees
for value-added services will be recognized as these services are rendered.

Cash and cash equivalents

Cash equivalents consist of short-term investments that are highly
liquid, are readily convertible into cash and have original or remaining
maturity of three months or less at the time of purchase and money market
funds.

F-8
<PAGE>

IRONSIDE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of and/or for the three months ended June 30, 1999 and 2000 is
unaudited

Fair value of financial instruments

The carrying amounts of cash and cash equivalents, restricted cash,
accounts receivable, accounts payable and accrued liabilities approximate fair
values because of the short period to receipt or payment of cash.

Restricted cash

At March 31 and June 30, 2000, cash balances of approximately $316,000
and $311,000, respectively, were restricted from withdrawal and held by a bank
in the form of certificates of deposit. These certificates of deposit serve as
collateral supporting the outstanding balance of certain capital lease
obligations.

Concentration of credit risk and business risk

The Company's financial instruments that are exposed to concentration of
credit risk consist primarily of cash and cash equivalents and accounts
receivable. The Company maintains its accounts for cash and cash equivalents
primarily with one major low-credit-risk financial institution in Canada.
Deposits with this financial institution may exceed the amount of insurance
provided on such deposits. The Company has not experienced any losses on its
deposits of cash and cash equivalents.

The Company performs ongoing credit evaluations of its customers'
financial condition and generally requires no collateral and maintains an
allowance for potential credit losses based upon the expected collectibility of
accounts receivable. At March 31, 1999, two customers accounted for 13% and 11%
of total trade accounts receivable, respectively. At March 31, 2000, two
customers accounted for 30% and 13% of total trade accounts receivable,
respectively. At June 30, 2000, one customer accounted for 16% of total trade
accounts receivable.

During 1997, the Company emerged from the development stage. Although no
longer in the development stage, the Company continues to be subject to risks
and challenges similar to other companies in a comparable stage of development.
These risks include, but are not limited to, successful development,
commercialization, integration and market acceptance of products, expansion of
direct and indirect sales channels, maintaining strategic relationships and the
ability to obtain adequate financing to support growth.

Property and equipment

Property and equipment are recorded at historical cost and depreciated on
a straight-line basis over the estimated useful lives of the assets, ranging
between two and four years. Leasehold improvements are amortized on a straight-
line basis over the term of the lease or estimated useful lives, whichever is
shorter.

In January 1999, the Company adopted SOP No. 98-1, "Accounting for the
Cost of Computer Software Developed or Obtained for Internal Use," which
requires software development costs associated with internal use software to be
charged to operations until certain capitalization criteria are met.

Software development costs

Software development costs incurred in the research and development of
new products and enhancements to existing products are charged to expense as
incurred. Software development costs are capitalized after technological
feasibility has been established. The period between the achievement of

F-9
<PAGE>

IRONSIDE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of and/or for the three months ended June 30, 1999 and 2000 is
unaudited

technological feasibility, which the Company defines as the establishment of a
working model, until the general availability of such software to customers has
been short, and software development costs qualifying for capitalization have
been insignificant. Accordingly, the Company has not capitalized any software
development costs since its inception.

Valuation of long-lived assets

The Company periodically evaluates the carrying value of its long-lived
assets, including, but not limited to, property and equipment, patents and
trademarks, and other assets. The carrying value of a long-lived asset is
considered impaired when the undiscounted cash flow from such asset is
estimated to be less than its carrying value. In that event, a loss is
recognized based on the amount by which the carrying value exceeds the fair
market value of the long-lived asset. Fair market value is determined primarily
using the anticipated cash flows discounted at a rate commensurate with the
risk involved. Losses on long-lived assets to be disposed of would be
determined in a similar manner, except that fair market values would be reduced
by the cost of disposal.

Income taxes

The Company provides for income taxes under the asset and liability
method. Under this method, deferred tax assets and liabilities are determined
based on differences between the financial reporting and income tax bases of
assets and liabilities and are measured using enacted tax rates and laws.
Valuation allowances are established, when necessary, to reduce deferred tax
assets to the amounts expected to be realized.

Stock-based compensation

The Company accounts for stock-based awards to employees in accordance
with the provisions of Accounting Principles Board Opinion ("APB") No. 25,
"Accounting for Stock Issued to Employees", and complies with the disclosure
provisions of Statement of Financial Accounting Standards (" SFAS") No. 123,
"Accounting for Stock-Based Compensation". Under APB No. 25, deferred stock-
based compensation is based on the difference, if any, on the date of the
grant, between the fair value of the Company's shares and the exercise price.
Deferred stock-based compensation is amortized and expensed on an accelerated
basis over the vesting period of the individual award consistent with the
method described in Financial Accounting Standards Board Interpretation ("FIN")
No. 28. The Company accounts for stock issued to non-employees in accordance
with the provisions of SFAS No. 123 and the Emerging Issues Task Force
Consensus on Issue ("EITF") No. 96-18, "Accounting for Equity Instruments That
Are Issued to Other Than Employees for Acquiring or in Conjunction with Selling
Goods or Services".

Advertising costs

The Company expenses the cost of advertising as incurred. The Company
incurred advertising costs of approximately $455,000, $623,000 and $1,531,000
for the years ended March 31, 1998, 1999 and 2000, respectively. The Company
incurred advertising costs of approximately $278,000 (unaudited) and $1,014,000
(unaudited) for the three months ended June 30, 1999 and 2000, respectively.

Comprehensive income (loss)

Under SFAS No. 130 "Reporting Comprehensive Income" the Company displays
all items required to be recognized under accounting standards as components of
its comprehensive income. Comprehensive loss differs from net loss as a result
of foreign currency translation adjustments.

F-10
<PAGE>

IRONSIDE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of and/or for the three months ended June 30, 1999 and 2000 is
unaudited

Net loss per share

Basic net loss per share is computed by dividing the net loss available
to common shareholders for the period by the weighted average number of common
shares outstanding during the period. Diluted net loss per share is computed by
dividing the net loss available to common shareholders for the period by the
weighted average number of common and potential common shares outstanding
during the period. The calculation of diluted net loss per share excludes
potential common shares if their effect is anti-dilutive.

The following table sets forth the computation of basic and diluted net
loss per share available to common shareholders for the periods indicated:

<TABLE>
<CAPTION>
Three Months
Year ended March 31, ended June 30,
-------------------------- ----------------
1998 1999 2000 1999 2000
------- ------- -------- ------- -------
(unaudited)
(in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Numerator
Net loss attributable to
common shareholders....... $(5,300) $(5,971) $(21,986) $(2,710) $(9,973)
======= ======= ======== ======= =======
Denominator
Weighted average shares.... 4,040 4,040 4,040 4,040 4,040
======= ======= ======== ======= =======
Basic and diluted net loss
per share................... $ (1.31) $ (1.48) $ (5.44) $ (0.67) $ (2.47)
======= ======= ======== ======= =======
</TABLE>

The following table sets forth the potential common shares that are not
included in the diluted net loss per share available to common shareholders
calculation above because to do so would be antidilutive for the periods
indicated:

<TABLE>
<CAPTION>
Three Months
ended June
Year ended March 31, 30,
-------------------- -------------
1998 1999 2000 1999 2000
------ ------ ------ ------ ------
(unaudited)
(in thousands)
<S> <C> <C> <C> <C> <C>
Effect of common share equivalents
Class A preferred shares.............. 18,799 18,799 18,799 18,799 18,799
Class B preferred shares.............. -- 20,103 20,103 20,103 20,103
Class C-1 preferred shares............ -- -- 30,065 -- 30,065
Class C-2 preferred shares............ -- -- 5,612 -- 5,612
Class D preferred shares.............. -- -- -- -- 8,052
Warrants to purchase Class A preferred
shares............................... 480 480 480 480 480
Warrants to purchase Class C-1
preferred shares..................... -- -- 601 -- 601
Warrants to purchase Class D preferred
shares............................... -- -- -- -- 322
Option to purchase Class B preferred
shares............................... -- 10,051 -- -- --
Common stock options.................. -- 2,054 6,094 3,152 11,004
------ ------ ------ ------ ------
19,279 51,487 81,754 42,534 95,038
====== ====== ====== ====== ======
</TABLE>

F-11
<PAGE>

IRONSIDE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of and/or for the three months ended June 30, 1999 and 2000 is
unaudited

Pro forma net loss per share (unaudited)

Pro forma net loss per share for the year ended March 31, 2000 and the
three months ended June 30, 2000 is computed using the weighted average number
of shares outstanding, including the conversion of the Company's Mandatorily
Redeemable Convertible Preferred Shares into Common Shares of the Company
effective upon closing of the Company's initial public offering, as if such
conversion occurred at April 1, 1999 or at the date of issuance, if later. The
resulting unaudited pro forma adjustment includes an increase in the weighted
average shares of 55,323,000 and 81,658,000 used to compute basic and diluted
net loss per share for the year ended March 31, 2000 and the three months ended
June 30, 2000, respectively. The calculation of pro forma diluted net loss per
share excludes incremental Common Shares issuable upon the exercise of stock
options and warrants as the effect would be antidilutive.

Pro forma shareholders' equity (unaudited)

Effective upon the closing of the Company's initial public offering, the
outstanding shares of Class A, B, C-1, C-2 and D preferred shares will
automatically convert into 18,799,000; 20,103,000; 30,065,000; and 5,612,000;
and 8,052,000 common shares, respectively. The pro forma effects of these
transactions have been reflected in the accompanying pro forma balance sheet at
June 30, 2000.

Recent accounting pronouncements

In June 1998, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities".
SFAS No. 133 established accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. In July 1999, the Financial Accounting
Standards Board issued SFAS No. 137, "Accounting with Derivative Instruments
and Hedging Activities Deferral of the Effective Date of FASB Statement No.
133". SFAS No. 137 deferred the effective date until the first fiscal quarter
of the first fiscal year beginning after June 15, 2000. The Company will adopt
SFAS No. 133 in its quarter ending June 30, 2001. The Company has not engaged
in hedging activities or invested in derivative instruments and accordingly,
does not believe Implementation of SFAS 133 will have a material effect on its
financial statements.

In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements", which provides guidance on the recognition, presentation and
disclosure of revenue in financial statements filed with the SEC. SAB No. 101
outlines the basic criteria that must be met to recognize revenue and provides
guidance for disclosures related to revenue recognition policies. Management
has complied with the guidance in SAB No. 101.

In March 2000, the FASB issued FIN No. 44, "Accounting for Certain
Transactions Involving Stock Compensation--an interpretation of APB Opinion No.
25". This Interpretation clarifies the definition of employee for purposes of
applying APB No. 25, the criteria for determining whether a plan qualifies as a
noncompensatory plan, the accounting consequence of various modifications to
the terms of a previously fixed stock option or award, and the accounting for
an exchange of stock compensation awards in a business combination. This
Interpretation is effective July 1, 2000, but certain conclusions in this
Interpretation cover specific events that occur after either December 15, 1998,
or January 12, 2000. Management believes the adoption of FIN No. 44 will not
have a material effect on the financial position or results of operations of
the Company.

F-12
<PAGE>

IRONSIDE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of and/or for the three months ended June 30, 1999 and 2000 is
unaudited

2 Balance sheet components

Accounts receivable

<TABLE>
<CAPTION>
March 31,
--------------
1999 2000
------ ------
(in
thousands)
<S> <C> <C>
Trade........................................................ $1,862 $3,617
Less: Allowance for doubtful accounts........................ (54) (154)
Less: Provision for bad debts................................ (40) (95)
------ ------
1,768 3,368
Sales tax receivable......................................... 42 159
------ ------
$1,810 $3,527
====== ======
</TABLE>

Certain accounts receivable have been netted against deferred revenue. At
March 31, 2000, this included $1,689,000 of accounts receivable.

Property and equipment

<TABLE>
<CAPTION>
March 31,
-------------
1999 2000
----- ------
(in
thousands)
<S> <C> <C>
Computer equipment and software............................... $ 473 $1,646
Furniture and fixtures........................................ 374 1,561
Leasehold improvements........................................ -- 206
----- ------
847 3,413
Less: Accumulated depreciation and amortization............... (321) (901)
----- ------
$ 526 $2,512
===== ======
</TABLE>

Property and equipment includes $139,000 and $564,000 of fixed assets
under capital leases at March 31, 1999 and 2000, respectively. Accumulated
amortization of assets under capital lease totaled $32,000 and $158,000 at
March 31, 1999 and 2000, respectively.

Accrued liabilities

<TABLE>
<CAPTION>
March 31,
-----------
1999 2000
---- ------
(in
thousands)
<S> <C> <C>
Salaries and benefits........................................... $261 $ 879
Warranty costs.................................................. -- 1,067
Accrual for loss on contracts................................... -- 383
Accrued professional services................................... 31 705
Sales tax....................................................... 96 116
Other........................................................... 54 395
---- ------
$442 $3,545
==== ======
</TABLE>

F-13
<PAGE>

IRONSIDE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of and/or for the three months ended June 30, 1999 and 2000 is
unaudited

3 Mandatorily redeemable convertible preferred shares

Mandatorily redeemable convertible preferred shares consist of the
following:

<TABLE>
<CAPTION>
Shares
---------------------- Proceeds net
Issued and Liquidation Redemption of issuance
Authorized outstanding value value costs
---------- ----------- ----------- ---------- ------------
(in thousands)
<S> <C> <C> <C> <C> <C>
Class A................. unlimited 18,799 $ 7,263 $ 8,981 $ 6,753
Class B................. unlimited 16,630 7,333 7,721 6,447
Class C-1............... unlimited 30,065 26,000 24,542 23,380
Class C-2............... unlimited 4,210 3,640 3,479 3,322
------ ------- ------- -------
Balance at March 31,
2000................. 69,704 44,236 44,723 39,902
Class D (unaudited)..... unlimited 8,052 27,268 25,210 24,567
Accretion of Class A, B,
C-1 and C-2
(unaudited)............ -- 570 1,039 --
------ ------- ------- -------
Balance at June 30,
2000 (unaudited)..... 77,756 $72,074 $70,972 $64,469
====== ======= ======= =======
</TABLE>

On July 8, 1997, the Company issued 640,000 units consisting of 6 Class A
preferred shares and 4 Class A preferred share purchase warrants. The units
were issued at a price of $9.07 per unit. The purchase warrants and $3.63 of
the price per unit were held in escrow and were to be released subject to the
terms of the escrow agreement. On January 30, 1998, pursuant to an amending
agreement, the purchase warrants were cancelled and replaced by an issuance of
9,736,000 Class A preferred shares and the amount held in escrow was released.

On September 18, 1998, the Company issued 16,630,000 Class B preferred
shares and an option to purchase additional Class B preferred shares at a
price of $0.4410 per share. The net proceeds on issuance were allocated
between the preferred shares and the investors' option, based upon relative
fair values, in the amount of $6,447,000 and $825,000, respectively.

On October 14, 1999, the Company issued 30,065,000 Class C-1 preferred
shares at a price of $0.8315 per share.

In July and September 1999, the Company issued non-interest bearing
convertible promissory notes in the amounts of $1,667,000 and $1,833,000,
respectively. The notes were convertible into Class C preferred shares at
either a 25% discount or a conversion price equal to $0.3648 per share,
depending on the occurrence and timing of the Class C offering. The difference
between the fair value at the respective dates of issuance and the conversion
price most beneficial to the holders of the notes resulted in a beneficial
conversion feature of $2,931,000. This amount was charged to interest expense,
using the effective interest method, from the date of issuance to when the
notes were converted.

In conjunction with the Class C round of financing, the terms of the
convertible notes were renegotiated and converted into 4,210,000 Class C-2
preferred shares at a price of $0.8315 per share.

In April 2000, the Company issued 8,052,170 Class D preferred shares at a
price of $3.32 per share.

F-14
<PAGE>

IRONSIDE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of and/or for the three months ended June 30, 1999 and 2000 is
unaudited

The terms of the respective classes of shares are as follows:

Liquidation preferences

In the event of any liquidation, dissolution or winding up of the
Company, the holders of the Class A, B, C-1, C-2 and D preferred shares shall
be entitled to receive an amount equal to $0.3549, $0.4410, $0.8315, $0.8315
and $3.32 per share, respectively, plus any declared but unpaid dividends. In
addition, the holders of Class C-1, C-2 and D preferred shares shall be
entitled to receive an amount equal to an 8% annual cumulative dividend thereon
from the date of issuance of Class C-1, C-2 and D preferred shares, before any
payment will be made to the holders of Class A and B preferred shares and the
holders of common shares. Should the Company's assets be insufficient to
satisfy the liquidation preferences of the holders of Class A, B, C-1, C-2 and
D preferred shares, the funds will be distributed ratably firstly among the
holders of Class C-1, C-2 and D preferred shares, secondly among the holders of
Class B preferred shares, and thirdly among the holders of Class A preferred
shares. Any assets remaining following the distribution of the liquidation
preferences to the preferred shares holders will be distributed ratably among
the holders of Class B, C-1, C-2 and D preferred shares and the holders of the
common shares, with the holders of preferred shares being deemed to have
converted into common shares immediately prior to the Liquidation Event.

Conversion

Each class of preferred shares is convertible at the option of the holder
without the payment of any additional consideration, at any time, into such
number of fully paid and non-assessable common shares at the respective
conversion rate for each class of preferred share. The conversion rate per
share for Class A, Class B, Class C-1, Class C-2 and Class D preferred shares
is 1:1, 1:1.21, 1:1, 1:1.33 and 1:1, respectively. In the event that the
Company does not complete an initial public offering under the terms described
below by December 31, 2000, the Class D conversion price will be adjusted by
dividing the initial conversion price of $3.32 by 1.1. These conversion rates
are subject to adjustment, as defined, which essentially provides adjustments
for holders of the preferred shares in the event of dilutive issuances, stock
splits, combinations or other capitalizations.

Each Class A, B, C-1, C-2 and D preferred share shall automatically be
converted into common shares, based on the then effective conversion price, at
the earlier of the following events: (i) closing of an initial public offering
in the United States or Canada, covering the offer and sale of common shares
for account of the Company in which: (a) the net proceeds of the Company from
such offering is not less than $30 million; (b) the common shares of the
Company are quoted on the NASDAQ National Market, or listed for trading on the
Toronto Stock Exchange, or the Canadian Venture Exchange; and (c) the offering
price per common share is not less than $4.98 per share; or (ii) a Liquidation
Event, a vote of shareholders or a qualification event occurs as defined under
each of the terms for each class of shares.

Voting

Each preferred share of Class A, B, C-1, C-2 and D entitles the holder
thereof to the number of votes per share equal to the number of common shares
into which each preferred share of Class A, B, C-1, C-2 and D is convertible,
and votes together as a single class with the holders of common shares.

Dividends

The holders of Class A, B, C-1, C-2 and D preferred shares are entitled
to participate in dividends on common shares, when and if declared by the Board
of Directors, based on the number of common shares held on an as-if-converted
basis.

F-15
<PAGE>

IRONSIDE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of and/or for the three months ended June 30, 1999 and 2000 is
unaudited

Redemption

Holders of Class A, B, C-1, C-2 and D preferred shares may elect to have
the Company redeem their shares from them, subject to certain restrictions,
after the following dates: in the case of Class D, March 31, 2005; in the case
of Class C-1 and Class C-2, the fifth anniversary of the original issue date;
and in the case of Class B and Class A, the later of (a) October 13, 2003 and
(b) the fifth anniversary of the original issue date.

In the event of redemption, each holder of Class A, B, C-1, C-2 and D
preferred shares would receive an amount equal to the sum of the consideration
originally paid and an 8% annual cumulative dividend thereon from the date of
issuance.

Warrants and option for preferred shares

The Company issued warrants and an option, the fair values of which have
been estimated using the Black-Scholes pricing model at the date of grant,
using the contractual terms of the respective instruments and the following
assumptions: Risk free interest rate of 5.2% in fiscal 1997 and fiscal 1998,
6.2% in fiscal 1999, 6.5% in fiscal 2000, and 6.4% for the three months ended
June 30, 2000, no expected dividends and volatility of 75%.

<TABLE>
<CAPTION>
Number of
warrants/ Exercise Fair
Date of Issuance Class option price value
---------------- ----- --------- -------- -----
(in thousands, except per
share data)
<S> <C> <C> <C> <C>
July 1997.................................... A 480 $0.9100 $137
September 1998............................... B 8,315 $0.4410 $939
October 1999................................. C-1 601 $0.8315 $345
April 2000 (unaudited)....................... D 322 $ 3.32 $472
</TABLE>

In connection with the Class A preferred shares, and pursuant to an
agency agreement, the Company issued brokers' warrants for no additional
consideration in July 1997. The warrants expire on the date which is 24 months
from the date upon which the Company becomes a reporting issuer in the Province
of Ontario, Canada. The fair value of the warrants was treated as a share
issuance cost of the preferred financing and charged directly to additional
paid-in capital. The warrants automatically convert to warrants to purchase
common shares at a 1 for 1 ratio upon the effective date of an initial public
offering.

In connection with subscription agreements signed in September 1998, the
Class B preferred shareholders had the option to purchase additional Class B
preferred shares no later than ten business days after the audited financial
statements for the year ended March 31, 1999 were delivered to such investors.
This option was not exercised prior to expiration. The net Class B proceeds
were allocated between mandatorily redeemable preferred shares and the option
based on the relative fair value of each instrument. The fair value ascribed to
the option of $825,000 was charged directly to additional paid-in capital.

In connection with the Class C-1 preferred shares and pursuant to an
agency agreement, the Company issued brokers' warrants in October 1999, for no
additional consideration. The brokers' warrants expire five years from the date
of grant. The fair value of the warrants was treated as a share issuance cost
of the preferred financing and charged directly to additional paid-in capital.
The warrants automatically convert to warrants to purchase common shares at a
one for one ratio upon the effective date of an initial public offering.

F-16
<PAGE>

IRONSIDE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of and/or for the three months ended June 30, 1999 and 2000 is
unaudited

In connection with the Class D preferred shares and pursuant to an agency
agreement, the Company issued brokers' warrants in April 2000, for no
additional consideration. The brokers' warrants expire five years from the date
of grant. The fair value of the warrants was treated as a share issuance cost
of the preferred financing and charged directly to additional paid-in capital.
The warrants automatically convert to warrants to purchase common shares at a
one for one ratio upon the effective date of an initial public offering.

4 Convertible preferred shares

During fiscal 1996 and 1997, the Company obtained financing to fund
operations from a shareholder in exchange for promissory notes totaling
$733,000. These promissory notes were subsequently converted into 4,424,000
Class A convertible preferred shares. At the respective dates, each Class A
convertible preferred share was non-voting, convertible at any time, at the
option of the holder, into one common share, and ranked ahead of common shares
in the event of liquidation, dissolution or winding up of the Company.

On July 8, 1997, the Company converted an additional promissory note in
the principal amount of $726,000 into 800,000 Class A convertible preferred
shares.

In addition, on July 8, 1997, the Company's articles of incorporation
were amended to entitle the holders of the Class A convertible preferred shares
the right to require the Company to redeem the Class A convertible preferred
shares, at any time after July 8, 2002, at a redemption amount equal to the
aggregate consideration received by the Company upon the issuance of each Class
A convertible preferred share together with all dividends declared thereon and
unpaid.

5 Common shares

As of March 31, 2000, the Company has reserved for issuance of common
shares as follows (in thousands):

<TABLE>
<S> <C>
Conversion of Class A shares.......................................... 18,799
Conversion of Class B shares.......................................... 20,103
Conversion of Class C-1 shares........................................ 30,065
Conversion of Class C-2 shares........................................ 5,612
Exercise of warrants issued for Class A shares ....................... 480
Exercise of warrants issued for Class C-1 shares...................... 601
Common stock options.................................................. 10,697
------
Total shares reserved for issuance.................................. 86,357
======
</TABLE>
As of June 30, 2000, the Company has reserved for issuance of common
shares as follows (in thousands) (unaudited):

<TABLE>
<S> <C>
Conversion of Class A shares.......................................... 18,799
Conversion of Class B shares.......................................... 20,103
Conversion of Class C-1 shares........................................ 30,065
Conversion of Class C-2 shares........................................ 5,612
Conversion of Class D shares.......................................... 8,052
Exercise of warrants issued for Class A shares........................ 480
Exercise of warrants issued for Class C-1 shares...................... 601
Exercise of warrants issued for Class D shares........................ 322
Common stock options.................................................. 15,768
------
Total shares reserved for issuance.................................. 99,802
======
</TABLE>

F-17
<PAGE>

IRONSIDE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of and/or for the three months ended June 30, 1999 and 2000 is
unaudited

The Company is authorized to issue an unlimited number of common shares.
The holders of common shares are entitled to one vote per share held on all
matters to be voted upon by the shareholders of the Company. Subject to the
preferences that may be applicable to any outstanding preferred shares, the
holders of common shares are entitled to receive ratably such dividends, if
any, as may be declared by the Board of Directors.

6 Employee Benefit Plans

401(k) Savings Plan

The Company has a 401(k) Savings Plan (the "US Plan") that qualifies as a
deferred salary arrangement under Section 401(k) of the Internal Revenue Code.
Under the US Plan, participating employees may elect to contribute up to 20% of
their eligible compensation, subject to certain limitations. All employees on
the United States payroll of the Company are eligible to participate in the US
Plan. The Company is not required to contribute to the US Plan and has made no
contributions since the US Plan's inception.

Registered Retirement Savings Plan

The Company has a group registered retirement savings plan ("the Canadian
Plan"), which is a defined contribution plan in which all employees on the
Canadian payroll of the Company are eligible to participate. Under the Canadian
Plan, participating employees may elect to contribute up to 18% of their
eligible compensation, subject to certain limitations. The Company is not
required to contribute to the Canadian Plan and has made no contributions since
the Canadian Plan's inception.

Group Personal Pension Plan

The Company has a group personal pension plan (the "UK Plan"), which is a
defined contribution plan in which all employees on the UK payroll are eligible
to participate. Under the UK Plan, participating employees may elect to
contribute up to 40% of their eligible compensation, subject to certain
limitations. The Company contributes 5% of each participant's eligible
compensation under the UK Plan.

Stock Option Plan

In 1997, the Company established a stock option plan, as amended by the
Board of Directors on September 18, 1998 and June 30, 2000 (the "1998 Plan").
Under the 1998 Plan, options to purchase common shares may be granted to
employees, directors and advisors of the Company, at the discretion of the
Board of Directors. A total of 14,800,000 common shares have been allotted out
of the authorized but unissued share capital of the corporation for issuance to
the holders of options granted under the 1998 Plan.

Generally, the options granted under the 1998 Plan become exercisable at
a rate of 25% after the first year and ratably over the next three years on a
quarterly basis. Upon termination of employment with the Company, all unvested
options are cancelled immediately. Upon retirement of employees or directors of
the Company, the options are cancelled three months after retirement date. The
options expire at the later of five years from the date of grant or six months
after an initial public offering, or immediately after the closing of an
amalgamation, consolidation or merger of the Company, where the Company is not
the continuing entity or has less than 80% voting power of the continuing
entity. The fair value of the Company's common shares is determined by the
Board of Directors.

F-18
<PAGE>

IRONSIDE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of and/or for the three months ended June 30, 1999 and 2000 is
unaudited

The following table summarizes the activity under the 1998 Plan (options
in thousands):

<TABLE>
<CAPTION>
Options Outstanding
----------------------------
Options
available for Number Weighted average
grant outstanding exercise price
------------- ----------- ----------------
<S> <C> <C> <C>
Initial shares authorized.......... 1,696
Granted.......................... (413) 413 $0.11
Cancelled........................ 18 (18) 0.11
------ ------ -----
Balance at March 31, 1998.......... 1,301 395 0.11
Additional shares authorized....... 8,033
Granted.......................... (3,133) 3,133 0.11
Cancelled........................ 145 (145) 0.11
------ ------ -----
Balance at March 31, 1999.......... 6,346 3,383 0.11
Granted.......................... (4,887) 4,887 0.40
Cancelled........................ 120 (120) 0.22
------ ------ -----
Balance at March 31, 2000.......... 1,579 8,150 0.28
Additional shares authorized
(unaudited)....................... 5,071
Granted (unaudited).............. (6,615) 6,615 1.52
Cancelled (unaudited) ........... 297 (297) 0.14
------ ------ -----
Balance at June 30, 2000
(unaudited)....................... 332 14,468 $0.85
====== ====== =====
</TABLE>

The options outstanding and exercisable by exercise price under the 1998
plan at March 31, 2000 are as follows (share information in thousands):

<TABLE>
<CAPTION>
Options outstanding Options exercisable
-------------------------------- --------------------
Weighted
average
remaining Weighted Weighted
contractual average average
Number life exercise Number exercise
Exercise price outstanding (years) price exercisable price
-------------- ----------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
$0.11................. 6,188 4.0 $0.11 914 $0.11
$0.83................. 1,962 4.9 $0.83 120 $0.83
----- -----
8,150 $0.28 1,034 $0.19
===== =====
</TABLE>

The options outstanding and exercisable by exercise price under the 1998
plan at June 30, 2000 are as follows (share information in thousands)
(unaudited):

<TABLE>
<CAPTION>
Options outstanding Options exercisable
-------------------------------- --------------------
Weighted
average
remaining Weighted Weighted
contractual average average
Number life exercise Number exercise
Exercise price outstanding (years) price exercisable price
-------------- ----------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
$0.11................ 5,903 3.58 $ 0.11 1,478 $0.11
$0.83................ 4,663 4.72 $ 0.83 120 $0.83
$2.00................ 3,902 4.88 $ 2.00 -- --
------ -----
14,468 $ 0.85 1,598 $0.18
====== =====
</TABLE>

F-19
<PAGE>

IRONSIDE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of and/or for the three months ended June 30, 1999 and 2000 is
unaudited

At March 31, 1998, 1999 and 2000, approximately zero, 92,000 and
1,034,000 options were exercisable at a weighted average exercise price per
share of $0.00, $0.11 and $0.19, respectively. At June 30, 2000, approximately
1,598,000 options were exercisable at a weighted average exercise price per
share of $0.18.

Fair value disclosure

The fair value of each option grant has been estimated on the date of
grant using the minimum value method of the Black-Scholes options pricing model
with the following weighted average assumptions:

<TABLE>
<CAPTION>
Year ended March
31,
-----------------
1998 1999 2000
----- ----- -----
<S> <C> <C> <C>
Risk-free interest rate.................................. 5.10 4.70 5.70
Expected life (in years)................................. 4.50 4.50 4.50
Dividend yield........................................... -- -- --
Weighted average fair value of options granted (per
share).................................................. $0.17 $0.28 $1.26
</TABLE>

Had compensation cost for options granted under the 1998 plan and the
executive employment agreements been determined based on the fair value at the
grant dates for the awards under a method prescribed by SFAS No. 123, the
Company's net loss would have been increased to the pro forma amounts below for
the years ended March 31, 1998, 1999 and 2000 and the three months ended June
30, 1999 and 2000, respectively.

<TABLE>
<CAPTION>
Year ended March 31,
--------------------------
1998 1999 2000
------- ------- --------
(in thousands, except
per share amounts)
<S> <C> <C> <C>
Net loss attributable to common shareholders... $(5,300) $(5,971) $(21,986)
======= ======= ========
Net loss--FAS 123 adjusted..................... $(5,349) $(6,028) $(22,162)
======= ======= ========
Net loss per share--as reported
Basic and diluted............................ $ (1.31) $ (1.48) $ (5.44)
======= ======= ========
Net loss per share--FAS 123 adjusted
Basic and diluted............................ $ (1.32) $ (1.49) $ (5.49)
======= ======= ========
</TABLE>

Because the determination of the fair value of all options granted after
the Company becomes a public entity will include an expected volatility factor
in addition to the factors described above and because additional option grants
are expected to be made each year, the compensation expense for options granted
during each of the three years in the period ended March 31, 2000 and the three
months ended June 30, 1999 and 2000 are not representative of the pro forma
effects of options grants on reported net income (loss) for future years.

Options issued to service providers

Stock-based compensation expense related to stock options granted to
consultants is recognized as the stock options are earned. The fair value of
the stock options granted is calculated at each reporting date using the Black-
Scholes option pricing model. As a result, the stock-based compensation expense
will fluctuate as the

F-20
<PAGE>

IRONSIDE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of and/or for the three months ended June 30, 1999 and 2000 is
unaudited

fair market value of the common stock fluctuates. The Company believes that the
fair value of the stock options are more reliably measurable than the fair
value of the services received. In connection with the granting of stock
options to consultants, the Company recorded stock-based compensation expense
of $63,000 and $31,000 for the year ended March 31, 2000 and the three months
ended June 30, 2000, respectively.

Deferred stock-based compensation

In connection with certain stock options granted during the years ended
March 31, 1999 and 2000 and the three months ended June 30, 2000, the Company
recorded deferred stock-based compensation for the estimated difference between
the exercise price of the options and their deemed fair value of $497,000,
$4,447,000 and $13,693,000 (unaudited), respectively, which is being amortized
over the four-year vesting period of the options. Amortization of stock-based
compensation totaled $128,000, $937,000 and $2,365,000 (unaudited), for the
years ended March 31, 1999 and 2000 and the three months ended June 30, 2000,
respectively. The remaining deferred stock-based compensation for all option
grants through June 30, 2000 will be amortized as follows: $6,680,000 in fiscal
2001, $4,846,000 in fiscal 2002, $2,627,000 in fiscal 2003, $1,023,000 in
fiscal 2004, and $31,000 in fiscal 2005.

Stock options issued to executives

Pursuant to employment agreements between the Company and two senior
executives, the executives have an option to purchase 968,000 additional common
shares of the Company, outside of the Company's stock option plan. These
current options are exercisable at a price of $0.01. The options expire March
31, 2007 or if the executives terminate employment. At March 31, 2000, the
weighted average remaining contractual life of these options is 6.9 years.

7 Income taxes

<TABLE>
<CAPTION>
Year ended March 31,
-------------------------
1998 1999 2000
------- ------- -------
(in thousands)
<S> <C> <C> <C>
Net loss for the period is summarized as follows:
Canadian......................................... $ 4,354 $ 4,897 $17,821
United Kingdom................................... -- -- 1,364
------- ------- -------
$ 4,354 $ 4,897 $19,185
======= ======= =======
Canadian statutory rate at 44.62% in 1998 and 1999,
and 43.58% in 2000................................ $(1,943) $(2,185) $(8,361)
Amounts not deductible for tax purposes............ 12 69 1,755
Foreign tax rate differential...................... -- -- 185
Decrease in enacted tax rates...................... -- -- 108
Other.............................................. (10) (20) (2)
Net operating loss and temporary differences for
which no benefit was recognized................... 1,941 2,136 6,315
------- ------- -------
$ -- $ -- $ --
======= ======= =======
</TABLE>

F-21
<PAGE>

IRONSIDE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of and/or for the three months ended June 30, 1999 and 2000 is
unaudited

Deferred tax assets consist of the following:

<TABLE>
<CAPTION>
Year ended March 31,
--------------------------
1998 1999 2000
------- ------- --------
(in thousands)
<S> <C> <C> <C>
Deferred tax assets
Benefit of unclaimed scientific research and
experimental development expenditures....... $ (9) $ 50 $ 60
Net operating loss carryforwards............. 2,377 4,349 10,538
Benefit of net investment tax credit......... 128 188 200
Depreciation and amortization of property and
equipment................................... 40 130 378
Share issuance costs......................... 131 123 736
Other........................................ -- 23 55
------- ------- --------
Deferred tax assets............................ 2,667 4,863 11,967
Deferred tax asset valuation allowance......... (2,667) (4,863) (11,967)
------- ------- --------
$ -- $ -- $ --
======= ======= ========
</TABLE>

The valuation allowance increased by $2,117,000 during 1998, $2,196,000
in 1999 and $7,104,000 in 2000.

The Company provides a valuation allowance for deferred tax assets when
it is more likely than not that some portion or all of the net deferred tax
assets will not be realized. Based on a number of factors, including the lack
of a history of profits and that the market in which the Company competes is
intensely competitive and characterized by rapidly changing technology,
management believes that there is sufficient uncertainty regarding the
realization of deferred tax assets that a full valuation allowance has been
provided.

As of March 31, 2000, the Company has available net operating loss
carryforwards for Canadian and United Kingdom purposes of approximately
$23,149,000 and $1,306,000, respectively. The Canadian net operating loss
carryforwards begin to expire in 2003 and the United Kingdom net operating
losses do not expire. Approximately $11,442,000 of the Canadian net operating
loss carryforwards relate to the Company's U.S. operations. As such, they may
be utilized to reduce United States taxable income arising from operations in
the United States and begin to expire in 2013 for U.S. tax purposes. The
Canadian net operating losses are subject to certain Canadian and United States
restrictions that may apply on any change in the control of the Company and
which could adversely effect the amounts and benefits to be derived therefrom
in certain circumstances.

F-22
<PAGE>

IRONSIDE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of and/or for the three months ended June 30, 1999 and 2000 is
unaudited

8 Supplemental cash flow information

<TABLE>
<CAPTION>
Three Months
ended
Year ended March 31, June 30,
-------------------- ------------
1998 1999 2000 1999 2000
------ ------ ------ ---- ------
(in thousands) (unaudited)
<S> <C> <C> <C> <C> <C>
Cash paid for interest................... $ 24 $ 16 $ 39 $ 10 $ 6
====== ====== ====== ==== ======
Conversion of note payable to Class A
shares.................................. $ 726 $ -- $ -- $ -- $ --
====== ====== ====== ==== ======
Capital lease obligations................ $ 22 $ 114 $ 424 $328 $ --
====== ====== ====== ==== ======
Conversion of promissory notes to Class
C-2 mandatorily redeemable convertible
preferred shares........................ $ -- $ -- $3,322 $ -- $ --
====== ====== ====== ==== ======
Accretion of mandatorily redeemable
convertible preferred shares to
redemption value........................ $ 946 $1,074 $2,801 $355 $1,682
====== ====== ====== ==== ======
Conversion of Class A convertible
preferred shares to mandatorily
redeemable convertible preferred
shares.................................. $1,459 -- -- -- --
====== ====== ====== ==== ======
Issuance of warrants to purchase
mandatorily redeemable convertible
preferred shares in connection with
financing............................... $ 137 -- $ 345 -- $ 472
====== ====== ====== ==== ======
Issuance of an option to purchase
mandatorily redeemable convertible
preferred shares in connection with
financing............................... -- $ 825 -- -- --
====== ====== ====== ==== ======
</TABLE>

9 Commitments

Capital lease obligations

Future minimum lease payments due under capital leases at March 31, 2000
is as follows (in thousands):

<TABLE>
<CAPTION>
March 31,
---------
Years ended March 31, 2000
--------------------- ---------
<S> <C>
2000............................................................... $ --
2001............................................................... 164
2002............................................................... 154
2003............................................................... 95
2004............................................................... 58
2005............................................................... 47
-----
518
Less: Imputed interest on capital lease obligations................ (78)
-----
440
Less: Current portion.............................................. (131)
-----
Capital lease obligations, long-term............................... $ 309
=====
</TABLE>

F-23
<PAGE>

IRONSIDE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of and/or for the three months ended June 30, 1999 and 2000 is
unaudited

The amount of interest expense related to office equipment and computer
equipment under capital leases is $4,000, $6,000 and $30,000 in 1998, 1999 and
2000, respectively.

The Company leases its facilities and certain equipment under non-
cancelable operating leases which expire at various dates through 2005. Total
rent expense for the years ended March 31, 1998, 1999 and 2000 was $67,000,
$135,000 and $382,000, respectively. Total rent expense for the three months
ended June 30, 1999 and 2000 was $68,000 and $493,000, respectively.

Operating leases

Future minimum lease payments due under operating leases at March 31,
2000 are as follows (in thousands):

<TABLE>
<CAPTION>
March 31,
---------
Years ended March 31, 2000
--------------------- ---------
<S> <C>
2001............................................................... $1,108
2002............................................................... 1,108
2003............................................................... 936
2004............................................................... 679
2005............................................................... 671
------
$4,502
======
</TABLE>

The Company also has commitments at March 31, 2000 with respect to
capital expenditures amounting to approximately $300,000.

10 Segment information

Revenues from two customers accounted for 15% and 14% of total revenues
for the year ended March 31, 1998. One customer accounted for 11% of total
revenues for the year ended March 31, 1999. Revenues from two customers
accounted for 19% and 16% of total revenues for the year ended March 31, 2000.
Two customers accounted for 27% and 13% of total revenues for the three months
ended June 30, 2000 (unaudited).

In 1998, the Company adopted SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information". This replaced the previous industry
segment approach with disclosure based upon the internal organization used by
management for making operating decisions and assessing performance. SFAS No.
131 also requires disclosures as to products and services, geographic areas and
major customers.

F-24
<PAGE>

IRONSIDE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of and/or for the three months ended June 30, 1999 and 2000 is
unaudited

The Company operates in one segment, business-to-business electronic
commerce solutions. Revenue and asset information by geographic area is as
follows:

Geographic information

Revenue by customer location

<TABLE>
<CAPTION>
Three Months
ended
Year ended March 31, June 30,
-------------------- ------------
1998 1999 2000 1999 2000
------ ------ ------ -------------
(unaudited)
(in thousands)
<S> <C> <C> <C> <C> <C>
North America
Canada.................................. $ 277 $ 174 $ 443 $ 58 $ 62
United States........................... 1,089 3,153 4,908 519 3,428
------ ------ ------ ----- -------
1,366 3,327 5,351 577 3,490
Europe
United Kingdom.......................... -- -- 830 -- 779
------ ------ ------ ----- -------
$1,366 $3,327 $6,181 $ 577 $ 4,269
====== ====== ====== ===== =======
</TABLE>

Long-lived assets

<TABLE>
<CAPTION>
Three Months
ended
March 31, June 30,
----------- ------------
1999 2000 1999 2000
---- ------ -------------
(unaudited)
(in thousands)
<S> <C> <C> <C> <C>
Canada............................................. $370 $1,658 $ 835 $ 1,988
United States...................................... 156 376 153 773
United Kingdom..................................... -- 478 -- 464
---- ------ ----- -------
$526 $2,512 $ 988 $ 3,225
==== ====== ===== =======
</TABLE>

11 Related party transactions

a) Revenues

Revenues for the year ended March 31, 1998, 1999 and 2000 include
$54,300, $zero and $290,000, respectively, to a significant shareholder.
Revenues for the three months ended June 30, 2000 include $25,000 (unaudited)
to a significant shareholder. These sales were made on the same general terms
and conditions as the majority of other sales during the respective years.

b) Loan to officer

In August 1998, the Company advanced $200,000, representing a moving
allowance, to a senior executive officer and shareholder. The amount is non-
interest bearing and will be forgiven if the executive remains employed by the
Company through September 2000. The amount of the advance is being charged as a
compensation expense on a straight-line basis over two years, the period over
which the advance becomes non-

F-25
<PAGE>

IRONSIDE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of and/or for the three months ended June 30, 1999 and 2000 is
unaudited

repayable. At March 31, 1999 and 2000, $142,000 and $42,000, respectively, is
included in prepaid expenses and other assets. At June 30, 2000, $16,000 is
included in prepaid expenses and other assets.

12 Subsequent events

a) Stock option plan

During the period from July 1, 2000 to September 30, 2000, the Company
granted options to purchase 138,500 common shares at an exercise price of
$2.00 per share. The Company recorded deferred stock-based compensation
expense of approximately $262,000 related to the issuance of these options.

b) Initial public offering

In June 2000, the Board of Directors authorized the filing of a
registration statement with the Securities and Exchange Commission, that would
permit the Company to sell its common shares in connection with a proposed
initial public offering that meets all the requirements for automatic
conversion of the preferred shares.

c) 2000 stock option plan

The Company's board of directors adopted a 2000 Stock Option Plan (the
"2000 Plan") which was approved by the shareholders in October 2000. The 2000
Plan will become effective as of October 19, 2000. The 2000 Plan provides for
the granting of incentive stock options and nonqualified stock options to
their employees, directors and consultants. Initially, 2,250,000 common shares
will be reserved for issuance under the 2000 Plan.

The number of shares reserved for issuance under the 2000 Plan will
increase by the following:

. The number of shares that were reserved but unissued under our 1998
Plan on the effective date of the 2000 Plan; and

. any shares returned to the 1998 Plan as a result of termination of
options issued under the 1998 Plan.

The board of directors may not, without the adversely affected
optionee's prior written consent, amend, modify or terminate the 2000 Plan if
the amendment, modification or termination would impair the rights of option
holders. The 2000 Plan will terminate in 2010 unless terminated earlier by the
board of directors.

F-26
<PAGE>

IRONSIDE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information as of and/or for the three months ended June 30, 1999 and 2000 is
unaudited

d) Amendment to Articles of Continuance

In October 2000, the shareholders of the Company approved an amendment to
the Company's Articles of Continuance providing that the outstanding preferred
shares automatically convert to common shares upon completion of an initial
public offering if among other things, the price per share is approved by the
Board of Directors or a committee thereof consisting of not less than four
directors.

F-27
<PAGE>

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

Through and including , 2000 (the 25th day after the date of this
prospectus), all dealers effecting transactions in these securities, whether or
not participating in this offering, may be required to deliver a prospectus.
This is in addition to the dealers' obligation to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.

[LOGO OF IRONSIDE TECHNOLOGIES INC.]

Common Shares

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

PROSPECTUS

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

Merrill Lynch & Co.

CIBC World Markets

Thomas Weisel Partners LLC

, 2000

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

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

The following table sets forth the costs and expenses, other than the
underwriting discounts and commissions, payable by the registrant in connection
with the sale of the securities being registered. All amounts are estimates
except the Securities and Exchange Commission registration fee, the NASD filing
fee and The Nasdaq National Market listing fee.

<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee.............. $ 19,800
NASD Filing Fee.................................................. 6,500
Nasdaq National Market Filing Fee................................ 90,000
Printing Costs................................................... 175,000
Legal Fees and Expenses.......................................... 500,000
Accounting Fees and Expenses..................................... 500,000
Directors' and Officers' Insurance Policy Premium................ 475,000
Blue Sky Fees and Expenses....................................... 7,500
Transfer Agent and Registrar Fees................................ 5,000
Miscellaneous.................................................... 126,200
----------
Total.......................................................... $1,830,000
==========
</TABLE>

Item 14. Indemnification of Directors and Officers.

The Yukon Business Corporations Act and the Company's Bylaws provide the
following authority to indemnify directors or officers or former directors or
officers of the Company or of a company of which the Company is or was a
shareholder:

(1) Except in respect of an action by or on behalf of the
corporation or a body corporate to procure a judgment in its favor, a
corporation shall indemnify a director or officer of the corporation,
a former director of officer of the corporation or a person who acts
or acted at the corporation's request as a director or officer of a
body corporate of which the corporation is or was a shareholder or
creditor, and his heirs and legal representatives, against all costs,
charges and expenses, including an amount paid to settle an action or
satisfy a judgment, reasonably incurred by him in respect of any
civil, criminal or administrative action or proceeding to which he is
made a party by reason of being or having been a director or officer
of that corporation or body corporate, if (a) he acted honestly and
in good faith with a view to the best interests of the corporation,
and (b) in the case of a criminal or administrative action or
proceeding that is enforced by a monetary penalty, he had reasonable
grounds for believing that his conduct was lawful.

(2) A corporation may, with the approval of the Supreme Court,
indemnify a person referred to in subsection (1) in respect of an
action by or on behalf of the corporation or body corporate to
procure a judgment in its favor, to which he is made a party by
reason of being or having been a director or an officer of the
corporation or body corporate, against all costs, charges and
expenses reasonably incurred by him in connection with the action if
he fulfills the conditions set out in paragraphs (1)(a) and (b).

The Yukon Business Corporations Act also provides that:

(3) Notwithstanding anything in subsections (1) through (6), a
person referred to in subsection (1) is entitled to indemnity from
the corporation in respect of all costs, charges and

II-1
<PAGE>

expenses reasonably incurred by him in connection with the defense of
any civil, criminal or administrative action or proceeding to which
he is made a party by reason of being or having been a director or
officer of the corporation or body corporate, if the person seeking
indemnity (A) was substantially successful on the merits of his
defense of the action or proceeding, (B) fulfills the conditions set
out in paragraphs (1)(a) and (b), and (C) is fairly and reasonably
entitled to indemnity.

(4) A corporation may purchase and maintain insurance for the
benefit of any person referred to in subsection (1) against any
liability incurred by him (a) in his capacity as a director or
officer of the corporation, except when the liability relates to his
failure to act honestly and in good faith with a view to the best
interests of the corporation, or (b) in his capacity as a director or
officer of another body corporate if he acts or acted in that
capacity at the corporation's request, except when the liability
relates to his failure to act honestly and in good faith with a view
to the best interests of the body corporate.

The Bylaws of the Company also provide that the provisions for
indemnification contained in the Bylaws (outlined in subsections (1) and (2)
above) shall not limit the right of any person entitled to indemnity to claim
indemnity, apart from the provisions of the Bylaws. The Company maintains
director's and officer's insurance.

The Company has also entered into agreements to indemnify its directors
and executive officers. These agreements, among other things, indemnify the
Company's directors and executive officers for expenses, such as attorneys'
fees, judgments, fines and settlement amounts, incurred by any person in any
action or proceeding, including any action by the Company arising out of that
person's services as a director or executive officer of the Company or any of
its subsidiaries or any other company or enterprise to which the person
provides services at the Company's request. The Company believes that these
provisions and agreements are necessary to attract and retain qualified persons
as directors and executive officers.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, or persons controlling the
Company pursuant to the foregoing provisions, the Company has been informed
that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.

Item 15. Recent Sales of Unregistered Securities.

The following is a description of all securities that the registrant has
sold within the past three years without registering the securities under the
Securities Act:

On July 8, 1997, the company issued 640,000 units consisting of 6 Class A
preferred shares and 4 Class A preferred share purchase warrants. The units
were issued at a price of $9.07 per unit for cash consideration of $5,431,376,
net of issuance costs of $372,876. The purchase warrants and $3.63 of the price
per unit were held in escrow and were to be released subject to the terms of
the escrow agreement. On January 30, 1998, pursuant to an amending agreement,
the purchase warrants were cancelled and replaced by an issuance of 9,735,760
Class A preferred shares and the amount held in escrow was released to the
company to acquire these additional Class A preferred shares. In connection
with the private placement of Class A preferred shares and pursuant to an
agency agreement dated July 8, 1997, the company granted brokers' warrants to
Gordon Capital Corporation, which was acquired by HSBC James Capel Canada Inc.
(now HSBC Securities (Canada) Inc.) in January 1999, and CIBC Wood Gundy
Securities Inc., for no additional consideration, representing the right to
purchase up to 480,000 Class A preferred shares at a price of $0.91 per share.
The brokers' warrants expire on the date which is 24 months from the date upon
which the company becomes a reporting issuer in the Province of Ontario,
Canada. The securities involved in this transaction were issued on a private
placement basis pursuant to the Ontario Securities Act. To the extent that the
issuance of

II-2
<PAGE>

these securities was subject to the registration requirements of the U.S.
Securities Act, the company believes that they were exempt from such
requirements under Section 4(2) of the same.

Under various subscription agreements dated September 18, 1998, the
company entered into an arrangement to sell up to an aggregate amount of
24,945,318 Class B preferred shares at a price of $0.4409645 per share, in two
tranches. On September 18, 1998, the company issued 16,630,212 Class B
preferred shares in the first tranche for cash consideration of $7,272,260, net
of issuance costs of $61,074. Pursuant to certain conditions under the
subscription agreement, the investors had the option to purchase an additional
8,315,106 Class B preferred shares at a price of $0.4409645 per share no later
than ten business days after the audited financial statements for the year
ended March 31, 1999 were delivered to such investors. This option expired, and
no additional Class B shares were issued. The securities involved in this
transaction were issued on a private placement basis pursuant to the Ontario
Securities Act. To the extent that the issuance of these securities was subject
to the registration requirements of the U.S. Securities Act, the company
believes that they were exempt from such requirements under Section 4(2) of the
same.

On October 14, 1999, pursuant to various subscription agreements, the
company issued 30,065,025 Class C-1 preferred shares at a price of $0.8315312
per share for cash consideration of $23,724,781, net of issuance costs of
$1,275,225. In connection with the private placement of Class C-1 preferred
shares and pursuant to an engagement letter agreement dated June 8, 1999, the
company granted brokers' warrants to Donaldson, Lufkin & Jenrette, for no
additional consideration, representing the right to purchase up to 601,300
Class C-1 preferred shares at a price of $0.8315312 per share. The brokers'
warrants expire five years from the date of grant. The securities involved in
this transaction were issued on a private placement basis pursuant to the Yukon
and Ontario Securities Acts. To the extent that the issuance of these
securities was subject to the registration requirements of the U.S. Securities
Act, the company believes that they were exempt from such requirements under
Section 4(2) of the same.

On October 14, 1999, pursuant to various subscription agreements, the
company issued 4,209,102 Class C-2 preferred shares at a price of $0.8315312
per share for net proceeds of $3,321,469, net of issuance costs of $178,531.
The cash with respect to the issuance of these shares was received on various
dates between July 23, 1999 and September 29, 1999 in exchange for convertible
promissory notes, which were converted into Class C-2 shares effective October
14, 1999. The securities involved in this transaction were issued on a private
placement basis pursuant to the Yukon and Ontario Securities Acts. To the
extent that the issuance of these securities was subject to the registration
requirements of the U.S. Securities Act, the company believes that they were
exempt from such requirements under Section 4(2) of the same.

On April 11, 2000, pursuant to various subscription agreements, the
company issued 8,052,170 Class D preferred shares at $3.32 per share for net
proceeds of $25,041,075, net of issuance costs of $1,692,126. In connection
with the private placement of Class D preferred shares, the company granted
broker's warrants to CIBC World Markets Inc. and Yorkton Securities Inc., for
no additional consideration, representing the right to purchase up to 322,087
compensation options convertible into common shares of the company at a price
of $3.32 per share. The broker's warrants expire on the second anniversary of
the company becoming a reporting issuer in the province of Ontario, Canada. The
securities involved in this transaction were issued on a private placement
basis pursuant to the Yukon and Ontario Securities Acts. To the extent that the
issuance of these securities was subject to the registration requirements of
the U.S. Securities Act, the company believes that they were exempt from such
requirements under Section 4(2) of the same.

From inception to September 30, 2000, the company granted outstanding
options to purchase 14,615,886 common shares under its amended and restated
stock option plan at a weighted average exercise price of $1.16 per share. In
addition, the company granted options to purchase 968,548 common shares outside
of its amended and restated stock option plan at an exercise price of $0.01.
These options were issued pursuant to the Ontario or Yukon Securities Acts. To
the extent that the issuance of these securities was subject to the
registration requirements of the U.S. Securities Act, the company believes that
they were exempt from such requirements under Rule 701 of the same.

II-3
<PAGE>

Item 16. Exhibits and Financial Statement Schedules.

(a) Exhibits.

<TABLE>
<CAPTION>
Number Description
------ -----------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1 Restated Articles of Continuance of the Registrant, filed with the
Yukon Registrar of Corporations on April 11, 2000.
3.2 Bylaws of the Registrant.
4.1 Registration Rights Agreement, dated April 11, 2000.
4.2 See Exhibits 3.1 and 3.2 for other instruments defining the rights of
shareholders.
5.1* Opinions of Stikeman Elliott and Anton, Campion, Macdonald & Oyler as
to the legality of the shares being registered.
8.1* Opinion of Stoel Rives LLP as to certain U.S. federal tax matters.
8.2* Opinion of Stikeman Elliott as to certain Canadian federal tax matters.
10.1 Form of Indemnification Agreement entered into by the Registrant and
its directors and executive officers.
10.2 Second Amended and Restated Stock Option Plan, dated June 30, 2000.
10.3 2000 Stock Incentive Plan.
10.4* Employee Stock Purchase Plan.
10.5 Lease Agreement between Bernal Corporate Park and the Registrant, dated
January 20, 2000.
10.6 Lease Agreement between Emery Place Limited Partnership and the
Registrant, dated February 1, 2000.
10.7 Lease Agreement between E. Manson Investments Limited, Zureit Holdings
Limited and Blackhill Development Limited and the Registrant, dated
March 5, 1999.
10.8 Sublease Agreement between Scott's Management Services, Inc. and the
Registrant, dated March 1, 1999.
10.9 Employment Agreement between the Registrant and William B. Lipsin,
dated April 1, 1997.
10.10 Employment Agreement between the Registrant and Derek J. Smyth, dated
April 14, 1997.
10.11 Employment Agreement between the Registrant and Daniel W. Fairfax,
dated March 2, 2000.
10.12 Employment Agreement between the Registrant and Lori A. Allan, dated
March 28, 2000.
10.13 Employment Agreement between the Registrant and Philip J. Padfield,
dated December 22, 1999.
10.14 Employment Agreement between the Registrant and Dale A. deFrietas,
dated April 14, 1997.
10.15 Software License and OEM Agreement between Registrant and Delano
Technology Corporation, dated February 2, 2000.
10.16* Software License Agreement between Registrant and SAP America, Inc.,
dated October 31, 1999.
10.17* Complementary Software Interface Testing and Demonstration License
Agreement between Registrant and SAP America, Inc., dated May 3, 1999.
10.18 Alliance Agreement between Registrant and Whittman-Hart, Inc., dated
August 31, 1999.
10.19* Complementary Software Program Certification Agreement between
Registrant and SAP Aketiengesellschaft, dated November 19, 1999.
10.20* Software Partner Program Certification Agreement between Registrant and
SAP Aketiengesellschaft, dated May 26, 2000.
10.21* PartnerWorld Agreement between Registrant and IBM Corporation, dated
June 2, 2000.
21.1 Subsidiaries of the Registrant.
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23.2* Consent of Anton, Campion, Macdonald & Oyler (contained in the opinion
filed as Exhibit 5.1 hereto).
23.3* Consent of Stoel Rives LLP.
23.4* Consent of Stikeman Elliott.
24.1 Power of Attorney (See Page II-6).
27.1 Financial Data Schedule.
</TABLE>
--------
* To be filed by amendment

II-4
<PAGE>

(b) Financial Statement Schedules.

All schedules are omitted because they are inapplicable or the requested
information is shown in the consolidated financial statements of the registrant
or related notes thereto.

Item 17. Undertakings.

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

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

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be a 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 registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Pleasanton, State of California, on the 18th day of October 2000.

IRONSIDE TECHNOLOGIES INC.

By: /s/ William B. Lipsin
----------------------------------
William B. Lipsin
President and Chief Executive
Officer

POWER OF ATTORNEY

Each person whose individual signature appears below hereby authorizes
and appoints William B. Lipsin and Daniel W. Fairfax, and each of them, with
full power of substitution and resubstitution and full power to act without the
other, as his true and lawful attorney-in-fact and agent to act in his name,
place and stead and to execute in the name and on behalf of each person,
individually and in each capacity stated below, and to file, any and all
amendments to this registration statement, including any and all post-effective
amendments thereto and any registration statement relating to the same offering
as this registration statement that is to be effective upon filing pursuant to
Rule 462(b) under the Securities Act of 1933, as amended, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in fact
and agents, and each of them, full power and authority to do and perform each
and every act and thing, ratifying and confirming all that said attorneys-in-
fact and agents or any of them or their or his substitute or substitutes may
lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated below on the 18th day of October, 2000.

<TABLE>
<CAPTION>
Signature Title
--------- -----

<C> <S>
/s/ William B. Lipsin President, Chief Executive
__________________________________________ Officer and Director
William B. Lipsin (Principal Executive Officer)

/s/ Daniel W. Fairfax Chief Financial Officer
__________________________________________ (Principal Financial
Daniel W. Fairfax and Accounting Officer)

/s/ Graham D.S. Anderson
__________________________________________ Director
Graham D.S. Anderson

/s/ Djenane Cameron
__________________________________________ Director
Djenane Cameron
</TABLE>

II-6
<PAGE>

<TABLE>
<CAPTION>
Signature Title
--------- -----

<C> <S>
/s/ Perry M. Monych
__________________________________________ Director
Perry M. Monych

/s/ A. Michael Spence
__________________________________________ Director
A. Michael Spence

/s/ Larry Wasser
__________________________________________ Director
Larry Wasser

/s/ Peter A. Weinbach
__________________________________________ Director
Peter A. Weinbach
</TABLE>

II-7
<PAGE>

EXHIBIT INDEX