ADEXA INC
S-1/A, 2000-12-11
PREPACKAGED SOFTWARE
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<PAGE>

   AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 11, 2000.


                                                      REGISTRATION NO. 333-44618
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

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


                                AMENDMENT NO. 4
                                       TO
                                    FORM S-1
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933

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

                                  ADEXA, INC.
             (Exact Name of Registrant as Specified in its Charter)

<TABLE>
<S>                               <C>                               <C>
            DELAWARE                            7372                           33-0616222
(State or Other Jurisdiction of     (Primary Standard Industrial            (I.R.S. Employer
 Incorporation or Organization)     Classification Code Number)          Identification Number)
</TABLE>

                       5933 W. CENTURY BLVD., 12TH FLOOR
                             LOS ANGELES, CA. 90045
                                 (310) 338-8444
  (Address, including zip code, and telephone number, including area code, of
                   registrant's principal executive offices)
                           --------------------------

                              DR. K. CYRUS HADAVI
                     PRESIDENT AND CHIEF EXECUTIVE OFFICER
                                  ADEXA, INC.
                       5933 W. CENTURY BLVD., 12TH FLOOR
                             LOS ANGELES, CA. 90045
                                 (310) 338-8444
 (Name, address, including zip code, and telephone number, including area code,
                             of agent for service)
                           --------------------------

                                   COPIES TO:

<TABLE>
<S>                                               <C>
              DAVID T. YOUNG, ESQ.                             GARY L. SELLERS, ESQ.
         WILLIAM E. GROWNEY, JR., ESQ.                       SIMPSON THACHER & BARTLETT
             DAMON D. JORDAN, ESQ.                              425 LEXINGTON AVENUE
             DAVID W. WIENER, ESQ.                            NEW YORK, NEW YORK 10017
            GUNDERSON DETTMER STOUGH                               (212) 455-2000
      VILLENEUVE FRANKLIN & HACHIGIAN, LLP
             155 CONSTITUTION DRIVE
          MENLO PARK, CALIFORNIA 94025
                 (650) 321-2400
</TABLE>

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

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

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

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

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

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

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

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
                 SUBJECT TO COMPLETION, DATED            , 2000
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
PROSPECTUS
                                4,000,000 SHARES

                                  [ADEXA LOGO]
                                  COMMON STOCK

    This is an initial public offering of common stock by Adexa, Inc. All of the
shares of common stock are being sold by Adexa, Inc. The estimated initial
public offering price will be between $12.00 and $14.00 per share.
                                 --------------
    Before this offering, there has been no public market for our common stock.
We have applied to have our common stock approved for quotation on the Nasdaq
National Market under the symbol ADXA.
                                 --------------

<TABLE>
<CAPTION>
                                                              PER SHARE    TOTAL
                                                              ---------   -------
<S>                                                           <C>         <C>
Initial public offering price...............................   $          $
Underwriting discounts and commissions......................   $          $
Proceeds to Adexa, before expenses..........................   $          $
</TABLE>

    Adexa has granted the underwriters an option for a period of 30 days to
purchase up to 600,000 additional shares of common stock.
                                 --------------
    INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE RISK
FACTORS BEGINNING ON PAGE 7.
                                 -------------
    NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

CHASE H&Q                                                    MERRILL LYNCH & CO.

                             DAIN RAUSCHER WESSELS

           , 2000
<PAGE>
                             [GRAPHIC APPEARS HERE]

Narrative Description of Graphic on the Inside Front Cover

The graphic is horizontally spread across two pages joined at their longer side.
At the top of the graphic is a thin, black rectangle that spans nearly the
entire width of the graphic. At the far right end of the black rectangle is the
Company's name, "ADEXA", in white letters and in the standard font. At the
bottom left corner of the graphic is the logo of the iCollaboration suite,
including the word, "iCollaboration." Centered at the bottom of the graphic is
the phrase "Advanced software technology: open, scalable, adaptable."

In the bottom right corner of the graphic is a rectangular legend key with a
solid line leading to the text "Information and transaction flows within the
enterprise." Below the solid line in the box is a dotted line inside leading to
the text "Information and transaction flows outside the enterprise."

The left side of the graphic contains a rectangle, shaded in yellow, and lying
so that its longer side is vertical. The yellow rectangle contains the following
text:

    "Adexa provides software products that enable collaborative commerce, or
    c-Commerce. Our iCollaboration suite is designed to automate and optimize
    interactions among customers, manufacturers and suppliers across the
    extended supply chain"

To the right of the yellow rectangle lies a rectangle that forms the background
for the graphic. It contains a hued, gray and white Universal Transverse
Mercator (UTM) map image of the world, centered on the Western Hemisphere.
Eastern Asia and the Pacific Ocean lie in the left half of the map image.
Europe, Africa and the Atlantic Ocean lie in the right half of the image.

Overlaid on the background map are three clusters of objects, forming a large
triangle. In the top cluster, there is an office building, with the word,
"ENTERPRISE" written below. To the left of the office building, and connected by
a dotted line, is a factory with one smokestack with the word, "SUPPLIERS"
written below, and to the left of this factory are two smaller factories with
smokestacks with the words, "SUPPLIERS' SUPPLIERS" written to the left. To the
right of the office building, and connected by a dotted line, is a smaller
office building with the word, "CUSTOMERS" written below. Below the larger
office building are, from left to right, two factories with three smokestacks
each and the word, "PLANTS" written below, and a warehouse with the words,
"DISTRIBUTION CENTER" written below. All three icons are connected to the larger
office building by a solid line. Below the middle factory with three
smokestacks, and connected by solid lines, are three machine gears with the
words, "SHOP FLOOR" written below.

The following text appears to the right of the larger office building:

"iCollaboration
FOR ENTERPRISES

iCollaboration for Enterprises is software that enables companies to plan and
coordinate activities across multiple levels of the supply chain both inside and
outside the enterprise"
<PAGE>
The second cluster is below and to the left of the top cluster, forming the
lower left point of the cluster triangle. The top cluster and the second cluster
are connected by a solid line. In the center of the cluster is a large factory
with a gridded globe contained inside the building. A cloud serves as a backdrop
for the factory. The words, "PRIVATE EXCHANGE" appear below the factory. Above
the large factory are three medium-sized factories with the word, "SUPPLIERS"
written beneath the middle one. Above the three medium-sized factories are two
smaller factories with the words, "SUPPLIERS' SUPPLIERS" between them. Below the
large factory are three office towers with the words, "CUSTOMERS" written
beneath the middle one. The three medium-sized factories and three office towers
are connected to the central, large factory by dotted lines. The two smaller
factories are connected to the center medium-sized factory by dotted lines.

The following text appears to the left of the central factory:

"iCollaboration
FOR PRIVATE EXCHANGES

iCollaboration For Private Exchanges provides the same functionality as
iCollaboration for Enterprises in a private exchange environment"

The third cluster is below and to the right of the top cluster, forming the
lower right point of the cluster triangle. The top cluster and the third cluster
are connected by a dotted line. In the center of the cluster is a gridded globe.
A cloud serves as a backdrop for the globe. The words, "PUBLIC EXCHANGE" appear
below the globe. Above the globe are three medium-sized factories with the word,
"SELLERS" written beneath the middle one. Above the three medium-sized factories
are two smaller factories with the words, "SELLERS' SUPPLIERS" written below.
Below the globe are three office towers with the words, "BUYERS" written beneath
the middle one. The three medium-sized factories and three office towers are
connected to the central globe by dotted lines. The two smaller factories are
connected to the center medium-sized factory by dotted lines.

The following text appears to the right of the globe:

"iCollaboration
FOR PUBLIC EXCHANGES

iCollaboration for Public Exchanges enables exchanges to offer the functionality
of iCollaboration for Enterprises to buyers and sellers participating in a
public exchange"
<PAGE>
                               TABLE OF CONTENTS

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

Risk Factors................................................      7

Forward-Looking Statements..................................     17

Use of Proceeds.............................................     17

Dividend Policy.............................................     17

Capitalization..............................................     18

Dilution....................................................     20

Selected Financial Data.....................................     21

Management's Discussion and Analysis of Financial Condition
  and Results of Operations.................................     23

Business....................................................     36

Management..................................................     52

Related Party Transactions..................................     62

Principal Stockholders......................................     64

Description of Capital Stock................................     66

Shares Eligible for Future Sale.............................     69

Underwriting................................................     71

Legal Matters...............................................     73

Experts.....................................................     73

Where You Can Find More Information.........................     74

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

    THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS.
THIS SUMMARY DOES NOT CONTAIN ALL OF THE INFORMATION THAT YOU SHOULD CONSIDER
BEFORE INVESTING IN OUR COMMON STOCK. YOU SHOULD READ THE ENTIRE PROSPECTUS
CAREFULLY, INCLUDING RISK FACTORS AND THE FINANCIAL STATEMENTS, BEFORE MAKING AN
INVESTMENT DECISION.

                                  ADEXA, INC.

    WHAT WE DO

    We develop and market software products that enable collaborative commerce,
or c-Commerce. Our iCollaboration software provides visibility into multi-tiered
supply chains and is designed to synchronize and optimize how enterprises
source, make and deliver direct materials. By synchronize, we mean coordinate
multiple, interdependent tasks so that they happen at the correct time and in
the desired order. By optimize, we mean use the resources within an enterprise
and across its supply chain to complete tasks in a highly efficient manner. Our
software is also designed to:

    - enable companies to address the increasing volume, complexity and speed of
      business interactions across the supply chain, both inside and outside the
      enterprise;

    - automate selected inter- and intra-company business processes based on
      user-defined rules; and

    - allow electronic exchanges to provide enhanced services to their
      participants.

    Fundamentally, our software is designed to enable enterprises and exchange
participants to make informed decisions about complex supply chain interactions
on a rapid basis, resulting in enhanced supply chain efficiency, greater
customer responsiveness and improved strategic planning.

    OUR MARKET OPPORTUNITY

    We believe many companies are recognizing the need for c-Commerce to
synchronize and streamline their supply chain activities. c-Commerce is an
Internet-based approach to sourcing, making and delivering goods that involves
intelligent planning, real-time synchronization and collaboration among members
of an extended supply chain. c-Commerce represents a distinct departure from
e-Commerce, which is merely transactional in nature, and empowers enterprises
and electronic exchanges to respond more quickly and effectively to customer
demands and changing variables across the supply chain.

    OUR PRODUCTS

    We believe our software's speed, flexibility, ease of integration and open
architecture differentiate it from other approaches to c-Commerce. Specifically,
we believe that our software:

    - scales with growing numbers of supply chain members, increasing
      transaction volumes and expanding product complexity;

    - can be easily configured to support company-specific supply chain
      strategies and extended to meet a business's evolving needs;

    - synchronizes and integrates supply chain activities at different levels
      within and outside the enterprise;

    - features sophisticated optimization algorithms to rapidly solve the
      complex and changing supply chain problems of enterprises and exchanges;

    - integrates with an organization's existing technologies and those of its
      supply chain members, resulting in reduced implementation time and
      expense; and

                                       3
<PAGE>
    - addresses the supply chain-specific issues of a broad range of industries.

    OUR STRATEGY

    Our objective is to become a leading global provider of software that
enables c-Commerce. To achieve this objective, we intend to:

    - continue focusing on markets where we have industry knowledge and
      penetrate additional markets that are characterized by complex supply
      chains;

    - take advantage of the network effect created when non-customer
      participants in the supply chains of our customers are exposed to, and
      benefit from, our software;

    - pursue a global, multi-channel distribution strategy;

    - continue to target electronic exchanges and application service providers,
      or ASPs, that can offer their customers our products on a hosted basis;
      and

    - continue to develop our technology to extend the features and
      functionality of our product offerings.

    OUR CUSTOMERS

    We target Global 2000 companies and electronic exchanges in large markets,
such as the aerospace and defense, automotive, electronics, semiconductors and
textiles and apparel industries. As of September 30, 2000, we had more than 50
customers in 11 countries. Our largest customers based on end-user license
contract revenues, in alphabetical order, include: Advanced Micro
Devices, Inc.; Conexant Systems, Inc.; Framatome Connectors International;
Fujitsu Quantum Device Limited; Lucent Technologies, Inc.; Matsushita
Electronics Corporation; Philips Semiconductors B.V.; Sanyo Electronics
Co. Ltd.; and Sumitomo Metal Industries, Ltd., Sitix division.

    ADDITIONAL INFORMATION

    We maintain a web site at www.adexa.com. Information contained on our web
site does not constitute part of this prospectus. Our principal offices are
located at 5933 W. Century Blvd., 12th Floor, Los Angeles, California 90045, and
our telephone number is (310) 338-8444.

    Adexa, iCollaboration and our logo are our trademarks. Trade names, service
marks or trademarks of other companies appearing in this prospectus are the
property of their holders.

                                       4
<PAGE>
                                  THE OFFERING


<TABLE>
<S>                                            <C>
Common stock offered by Adexa................  4,000,000 shares

Common stock to be outstanding after the
  offering...................................  42,146,612 shares

Use of proceeds..............................  Working capital and general corporate
                                               purposes.

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



    The number of shares of common stock to be outstanding after this offering
is based on the number of shares outstanding as of September 30, 2000 and
excludes:



    - 10,816,336 shares of common stock issuable upon exercise of stock options
      outstanding as of September 30, 2000 at a weighed average exercise price
      of $1.22 per share;



    - 972,078 shares of common stock reserved for future issuance under our 1998
      stock plan as of September 30, 2000;



    - 4,000,000 shares of common stock reserved for future issuance under our
      2000 stock incentive plan;


    - 1,500,000 shares of common stock reserved for future issuance under our
      2000 employee stock purchase plan; and

    - an outstanding warrant to purchase 456,024 shares of series A convertible
      preferred stock.

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

    Except as otherwise indicated, information in this prospectus is based on
the following assumptions:

    - our reincorporation in the state of Delaware before the effectiveness of
      this offering and the filing of an amended certificate of incorporation
      providing for the authorization of 250,000,000 shares of common stock and
      10,000,000 shares of undesignated preferred stock;


    - conversion of all outstanding shares of preferred stock into shares of
      common stock upon the closing of this offering;


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

    - a stock split of two for one before the effectiveness of this offering.

                                       5
<PAGE>
                             SUMMARY FINANCIAL DATA

    The following table summarizes our financial data. You should read this
information with the financial statements and the notes to those statements
appearing elsewhere in this prospectus and the information under Selected
Financial Data and Management's Discussion and Analysis of Financial Condition
and Results of Operations.


<TABLE>
<CAPTION>
                                                                                                              NINE MONTHS
                                                                                                                 ENDED
                                                                 YEAR ENDED DECEMBER 31,                     SEPTEMBER 30,
                                                   ----------------------------------------------------   -------------------
                                                     1995       1996       1997       1998       1999       1999       2000
                                                   --------   --------   --------   --------   --------   --------   --------
                                                                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                <C>        <C>        <C>        <C>        <C>        <C>        <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues
  License revenues...............................       --     $  175    $ 3,735    $ 4,841    $16,093    $10,960    $ 22,415
  Service revenues...............................   $  823      1,618      2,035      2,251      5,175      4,072       9,333
  Maintenance revenues...........................       --         54        416      1,020      2,393      1,452       4,177
                                                    ------     ------    -------    -------    -------    -------    --------
          Total revenues.........................      823      1,847      6,186      8,112     23,661     16,484      35,925
Gross Profit.....................................      423      1,391      4,299      2,869     17,616     12,146      25,556
Operating Income (Loss)..........................      136        139     (1,093)    (9,198)    (2,751)    (1,016)     (3,909)
Net Income (Loss)................................      139        152       (847)    (9,434)    (5,185)    (2,812)     (5,975)
Accretion and Deemed Dividend on Redeemable
  Preferred Stock................................       --         --         --         --         --         --      (8,346)
Net Income (Loss) Attributible to Common
  Stockholders...................................   $  139     $  152    $  (847)   $(9,434)   $(5,185)   $(2,812)   $(14,322)
                                                    ======     ======    =======    =======    =======    =======    ========
Net Income (Loss) per Share:
  Basic and Diluted..............................   $ 0.01     $ 0.01    $ (0.04)   $ (0.47)   $ (0.26)   $ (0.14)   $  (0.67)
                                                    ======     ======    =======    =======    =======    =======    ========
  Weighted Average Shares of Common Stock........   19,400     19,850     20,000     20,000     20,197     20,092      21,291
                                                    ======     ======    =======    =======    =======    =======    ========
Pro Forma Net Income (Loss) per Share:
  Basic and Diluted..............................                                              $ (0.16)              $  (0.41)
                                                                                               =======               ========
  Weighted Average Shares of Common Stock........                                               33,442                 34,963
                                                                                               =======               ========
</TABLE>



<TABLE>
<CAPTION>
                                                                     SEPTEMBER 30, 2000
                                                              ---------------------------------
                                                                           PRO       PRO FORMA
                                                               ACTUAL     FORMA     AS ADJUSTED
                                                              --------   --------   -----------
                                                                       (IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents...................................  $18,990    $18,990      $65,850
Working capital.............................................   12,599     12,599       59,459
Total assets................................................   36,599     36,599       83,459
Deferred revenues...........................................    9,451      9,451        9,451
Capital lease obligations...................................      149        149          149
Redeemable convertible preferred stock......................   19,940         --           --
Total stockholders' equity (deficit)........................   (4,440)    15,500       62,360
</TABLE>


    See note 2 of notes to consolidated financial statements for an explanation
of the determination of the number of shares used in computing per share data
above.


    The balance sheet above summarizes our balance sheet at September 30, 2000:


    - on an actual basis;


    - on a pro forma basis to reflect the conversion of all series of preferred
      stock into shares of common stock; and



    - on a pro forma as adjusted basis to reflect the issuance of 4,000,000
      shares of common stock at an assumed price of $13.00 per share under this
      offering, after deducting underwriting discounts and commissions and
      estimated offering expenses payable by us.


                                       6
<PAGE>
                                  RISK FACTORS

    THIS OFFERING AND AN INVESTMENT IN OUR COMMON STOCK INVOLVE A HIGH DEGREE OF
RISK. YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS AND ALL OTHER
INFORMATION IN THIS PROSPECTUS BEFORE INVESTING IN OUR COMMON STOCK. OUR
BUSINESS AND RESULTS OF OPERATIONS COULD BE SERIOUSLY HARMED BY ANY OF THE
FOLLOWING RISKS. THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE DUE TO ANY
OF THESE RISKS, AND YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT.

                         RISKS RELATED TO OUR BUSINESS

OUR LIMITED OPERATING HISTORY MAKES IT DIFFICULT TO EVALUATE OUR BUSINESS AND
FUTURE PROSPECTS.

    We first licensed versions of our current product components in early 1997.
Since then, our suite of products has continued to evolve. In the third quarter
of 1999, we reconfigured our products to form our iCollaboration suite and
repositioned Adexa to increase our focus on c-Commerce applications. We are
subject to the risks inherent to the establishment of a new business enterprise.
Our prospects must be considered in light of the risks, expenses and
difficulties frequently encountered by early-stage companies in new and rapidly
evolving markets. To address these risks, we must respond to competitive
developments, continue to upgrade our products, continue to manage our growth
effectively and continue to attract, retain and motivate qualified personnel. If
we do not successfully address these risks and challenges, our business and
operating results could be harmed.

WE HAVE A HISTORY OF LOSSES AND WE MAY NOT BE PROFITABLE IN THE FUTURE.


    We have experienced net losses in each period since 1997. We incurred net
losses of $9.4 million for the fiscal year ended December 31, 1998,
$5.2 million for the fiscal year ended December 31, 1999 and $6.0 million for
the nine months ended September 30, 2000. We expect to significantly increase
our sales and marketing, professional services, research and development,
maintenance and support services and general and administrative expenses and
consequently our losses are expected to increase in the future. We will need to
produce significant increases in our revenues to achieve and maintain
profitability and we may not be profitable in the future. If our revenues fail
to grow or grow more slowly than we anticipate or our operating expenses exceed
our projections, our losses could significantly increase.


WE MAY NOT ACHIEVE ANTICIPATED REVENUES IF OUR SOFTWARE PRODUCTS FAIL TO ACHIEVE
MARKET ACCEPTANCE.

    We believe that revenues from software licenses and revenues from related
services and maintenance will account for substantially all of our revenues in
the future. If our products do not achieve widespread market acceptance, we may
not achieve anticipated revenues. If our competitors release new products that
are superior to ours, demand for our products could decline and our business
could be harmed.

OUR FINANCIAL RESULTS MAY VARY SIGNIFICANTLY FROM QUARTER TO QUARTER AND WE MAY
FAIL TO MEET THE EXPECTATIONS OF PUBLIC MARKET ANALYSTS AND INVESTORS.

    Our operating results have varied significantly from quarter to quarter in
the past and we expect that they will continue to vary in the future. Factors
that could affect our quarterly operating results include:

    - market acceptance of our products;

    - size and timing of customer orders and contracts;

    - budgetary constraints of our customers;

    - entry of new competitors into our market, or the announcement of new
      products or product enhancements by competitors;

                                       7
<PAGE>
    - our ability to successfully expand our sales and marketing, professional
      services, maintenance and support and research and development
      organizations;

    - unexpected delays in developing and marketing new and enhanced products;

    - time, cost and resource utilization of product implementations;

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

    - variability in the mix of professional services that we perform and those
      performed by third parties;

    - variability in the mix of domestic and international revenues;

    - foreign currency exchange rate fluctuations;

    - our ability to establish and maintain relationships with key partners and
      systems integrators; and

    - potential costs of any acquisitions.

    A significant portion of our expenses is fixed and cannot be quickly reduced
to respond to decreases in revenues. If our revenues are below our expectations,
our operating results and net income are likely to be harmed. We also may reduce
our prices or accelerate our investment in research and development efforts in
response to competitive pressures or to pursue new market opportunities. Our
revenues may not grow at historical rates in future periods, or they may not
grow at all. If this occurs, we may not achieve positive operating margins in
future quarters.

    We experience seasonal fluctuations in our operating results. Our operating
results have tended to be stronger in the fourth quarter of the year and weaker
in the first quarter of the year. In future periods, we expect that seasonal
trends could cause first quarter operating results to remain consistent with, or
decrease from, the level achieved in the preceding quarter. If our operating
results fall below the expectations of public market analysts and investors, the
price of our common stock could decline.

COMPETITION COULD CAUSE US TO REDUCE PRICES AND LOSE MARKET SHARE, WHICH COULD
HARM OUR BUSINESS.

    The market for our products is highly competitive. Our competitors offer a
variety of solutions directed at the enterprise level and at various segments of
the supply chain. We face two primary sources of competition:

    - in-house development efforts by potential customers or partners; and

    - enterprise application vendors in general, but principally i2
      Technologies, Inc., Manugistics Group, Inc., Oracle Corporation and SAP
      Corporation.

    We also face potential competition from e-Business and electronic exchange
infrastructure providers, such as Ariba, Inc. and Commerce One, Inc., as they
seek to extend their product offerings.

    A number of enterprise resource planning vendors have jointly marketed our
products as a complement to their own. However, as we increase our market share
and expand our product offerings, and as enterprise resource planning vendors
expand their own product offerings, we believe our relationships with these
vendors will become more competitive. We believe that other enterprise resource
planning vendors are focusing significant resources on increasing the
functionality of their own planning and scheduling modules.

    Relative to us, many of our competitors have:

    - longer operating histories;

    - significantly greater financial, technical, marketing and other resources;

    - greater name recognition;

                                       8
<PAGE>
    - a broader range of products to offer; and

    - a larger installed base of customers.

    We expect to experience increasing price competition as we compete for
market share. We may not be able to compete successfully with our existing or
new competitors. If we experience increased competition, our business, operating
results and financial condition could be harmed.

IF WE FAIL TO INTRODUCE NEW VERSIONS AND RELEASES OF OUR PRODUCTS IN A TIMELY
MANNER, WE MAY LOSE CUSTOMERS AND OUR REVENUES MAY DECLINE.

    Much of our future success depends upon our ability to introduce new
versions and releases of our products. We may fail to introduce or deliver these
new versions and releases on a timely basis, if at all. We may fail to achieve
timely market acceptance of these enhancements. If we fail to introduce new
versions and releases of our products in a timely manner, our business, results
of operations and financial condition could be harmed. For example, if we fail
to complete the development and release of version 5.0 of our iCollaboration
software in a timely manner, our business may be harmed.

WE DEPEND ON SIGNIFICANT INDIVIDUAL CONTRACTS AND LOSS OR DELAY OF ANY
PARTICULAR CONTRACT COULD HARM OUR BUSINESS.


    We receive a significant portion of our revenues in each quarter from a
small number of relatively large contracts. Our largest customer, measured by
the reseller in the case of indirect sales and by the end user in the case of
direct sales, accounted for 28% of total revenues for 1997, 30% of total
revenues for 1998, 13% of total revenues for 1999 and 14% of total revenues for
the nine months ended September 30, 2000. Our largest customers for 1997 and
1998 were end users. Our largest customer for 1999 was Compaq Computer
Corporation, which is a reseller. Our largest customer for the nine months ended
September 30, 2000 was QAD, which is also a reseller. Concentrations of customer
revenue have been and are likely to continue to be significantly higher for
individual quarters than for nine month and annual periods. If in any future
period we fail to close one or more substantial license, service or maintenance
sales that have been targeted to close in that period, our operating results for
that period could be materially affected. Due to customer purchasing patterns,
we typically realize a significant portion of our software license revenues in
the last few weeks of a quarter. If we incur any delays in customer orders, we
may experience significant reductions in our revenues and results of operations.


WE RELY ON AND NEED TO DEVELOP AND ENHANCE RELATIONSHIPS WITH THIRD PARTIES AND
OUR INABILITY TO DEVELOP THESE RELATIONSHIPS COULD HARM OUR BUSINESS.

    Companies increasingly rely on consulting and systems integration firms and
third-party software and hardware vendors in selecting and implementing software
like ours. We expect to rely in part on third parties for sales and lead
generation and for implementation services. We also rely on partners to
penetrate additional industries. We have formal and informal arrangements with a
number of third-party software and hardware vendors and consulting and systems
integration firms to enhance our marketing, sales, support, service and product
development efforts and software implementation services. Many of these firms
have similar, and often more established, relationships with our competitors.
Even when we establish a relationship with a consulting or systems integration
firm, the success of the relationship will depend on factors that may not be
within our control. There can also be no assurance that these firms, many of
which have significantly greater financial and marketing resources than we do,
will not develop or market software products that compete with our products in
the future or will not otherwise discontinue their relationships with us. If we
fail to maintain these existing relationships or to establish new relationships
in the future, our business, results of operations and financial condition could
be harmed.

    We embed and integrate third-party software into our software products and
we may continue this practice in the future. Third-party software licenses may
not continue to be available to us on

                                       9
<PAGE>
commercially reasonable terms, if at all. The loss of, or inability to maintain
or obtain, any of these software licenses could delay or reduce our product
shipments until equivalent software can be identified, licensed and integrated.
Any delay or reduction in product shipments could harm our business, operating
results and financial condition.

IF OUR EFFORTS TO EXPAND SALES OF OUR PRODUCTS TO OTHER INDUSTRIES DO NOT
SUCCEED, OUR BUSINESS WOULD BE HARMED.

    We have sold our products primarily to companies in the electronics,
semiconductors and textile and apparel industries. We intend to market our
products to customers in additional industries. Although we have targeted
enterprises in other markets as potential customers, these potential customers
may not be as willing to purchase products like ours and the time required to
gain an understanding of additional industries may slow our penetration into
these industries.

OUR LENGTHY AND VARIABLE SALES CYCLE MAKES IT DIFFICULT FOR US TO PREDICT WHEN
OR IF SALES WILL OCCUR AND WE MAY EXPERIENCE AN UNPLANNED SHORTFALL IN REVENUES.

    Our products typically have lengthy and unpredictable sales cycles,
contributing to the uncertainty of our operating results. Customers view the
purchase of our iCollaboration suite of software products as a significant and
strategic decision. Customers generally evaluate our software products and
determine their impact on existing infrastructure over a long period of time.
Our sales cycle typically ranges from approximately one to twelve months, but
has extended to over one year depending upon the customer's need to rapidly
implement a solution and whether the customer is new or is extending an existing
implementation. The licensing of our software products may be subject to delays
if the customer has lengthy internal budgeting, approval and evaluation
processes. We may incur significant selling and marketing expenses during a
customer's evaluation period, including the costs of developing a full proposal
and completing a rapid proof of concept or custom demonstration, before the
customer places an order with us. Customers may also initially purchase a
limited number of component, server and user licenses before expanding their
implementations. Larger customers may purchase our software products as part of
multiple simultaneous purchasing decisions, which may result in additional
unplanned administrative processing and other delays in our recognition of
license revenues. If revenues forecasted from a specific customer for a
particular quarter are not realized or are delayed to another quarter, we may
experience an unplanned shortfall in revenues, which could harm our operating
results.

OUR FAILURE TO RETAIN AND ATTRACT KEY PERSONNEL COULD HARM OUR BUSINESS.

    We rely upon the continued service of a relatively small number of key
technical and senior management personnel. We do not maintain key person
insurance. If we lose any of our key technical or senior management personnel,
our business, operating results and financial condition could be harmed.

    Our future success also depends on our ability to attract, train and retain
other highly qualified personnel. There is substantial competition for
experienced personnel in our industry. We may not be able to attract, assimilate
or retain other highly qualified personnel in the future. Failure to do so could
limit our growth, and we could also experience deterioration in service levels
or decreased customer satisfaction.

    After this offering, our ability to attract and retain qualified personnel
may be even more difficult because potential employees may perceive the value of
our future stock option grants offered to them to be less valuable than stock
option grants offered by other companies that are not yet public. Our inability
to attract, train or retain the number of highly qualified technical, sales,
marketing, professional services and customer support personnel that our
business needs may seriously harm our business and results of operations.

                                       10
<PAGE>
IF WE ARE NOT ABLE TO MANAGE OUR GROWTH, OUR BUSINESS AND FINANCIAL CONDITION
COULD BE HARMED.


    Our business has grown rapidly in recent years. Our employee count has
increased from 196 at December 31, 1999 to 322 at September 30, 2000. We have
also increased the scope of our operating and financial systems and the
international and geographic distribution of our operations and customers. Our
management and operations have been strained by this growth and will continue to
be strained should rapid growth continue. Our officers and other key employees
must continue to implement and improve our operational, customer support and
financial control systems and effectively expand, train and manage our employee
base. If we are unable to manage future expansion successfully, our business,
operating results and financial condition could be harmed.


IF OUR CUSTOMERS ARE NOT SATISFIED WITH OUR PRODUCTS, WE MAY NOT ACHIEVE GROWTH
IN OUR REVENUES.

    Some of our customers initially license a limited number of our software
components. Customers may subsequently add additional components as they expand
the implementations of our products to different levels of their enterprises. It
is important that our customers be satisfied with our initial products that they
use and their related implementations. If implementations take longer than
expected or are unsuccessful, customers will not be satisfied with our products
and may decrease their willingness to license additional components or
discourage other potential customers from licensing our products.

OUR SOFTWARE MAY BE INCOMPATIBLE WITH NEW PLATFORMS, WHICH COULD HINDER MARKET
ACCEPTANCE OF OUR PRODUCTS.

    Our software supports operating system platforms from Compaq Computer,
Hewlett-Packard, IBM, Microsoft and Sun Microsystems. If additional software
platforms gain significant market acceptance, we may be required to make our
software compatible with those platforms to remain competitive. These platforms
may not be architecturally compatible with our software product design, and we
may not be able to make our software compatible with those additional platforms
on a timely basis, or at all. Any failure to maintain compatibility with
existing platforms or to achieve compatibility with new platforms that achieve
significant market acceptance could harm our business, operating results and
financial condition.

OUR FAILURE TO PROTECT OUR INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS COULD
REDUCE OUR REVENUES OR CAUSE US TO INCUR COSTLY LITIGATION.

    We rely primarily on a combination of copyright, trademark and trade secret
laws, confidentiality procedures and contractual provisions to protect our
proprietary rights. We also seek to avoid disclosure of our intellectual
property by requiring employees and consultants with access to our proprietary
information to execute confidentiality agreements. However, these legal
protections afford only limited protection for our technology. 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 believe is
proprietary. Although we believe software piracy may be a significant problem,
we are unable to determine the extent to which piracy of our software products
exists. The laws of some foreign countries do not protect our proprietary rights
to the same extent as do the laws of the United States. Litigation may be
necessary in the future to enforce our intellectual property rights, to protect
our trade secrets and to determine the validity and scope of the proprietary
rights of others. Our failure to adequately protect our intellectual property
could harm our business and operating results.

IF WE ARE SUBJECT TO INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS, WE MAY INCUR
SUBSTANTIAL COSTS, WHICH COULD HARM OUR OPERATING RESULTS.

    The software industry is characterized by frequent claims of infringements
of copyright, patent and other property rights. Our success and ability to
compete are dependent upon our ability to operate without infringing upon the
property rights of others. We may be subject to future litigation based on

                                       11
<PAGE>
claims that our products infringe the intellectual property rights of others or
that our own intellectual property rights are invalid. Any intellectual property
infringement claims or litigation could result in substantial costs and
diversion of resources and could harm our business and operating results.

IF WE BECOME SUBJECT TO PRODUCT LIABILITY CLAIMS, THEY MAY BECOME COSTLY AND
TIME-CONSUMING TO DEFEND.

    Our license agreements with customers typically contain provisions designed
to limit our exposure to product liability claims. However, these contract
provisions may not preclude all potential claims. Product liability claims could
require us to spend significant time and money in litigation or to pay
significant damages. Any claim, whether or not successful, could harm our
reputation, business, operating results and financial condition.

OUR INTERNATIONAL OPERATIONS EXPOSE US TO RISKS.


    Non-U.S. based customers, based upon the location of the reseller for
indirect sales and the location of the end user for direct sales, accounted for
approximately 52% of our total revenues in 1997, 36% of our total revenues in
1998, 57% of our total revenues in 1999 and 48% of our total revenues in the
nine months ended September 30, 2000. To continue our growth and profitability,
we will need to expand our sales in international markets. Further penetration
of international markets will require us to expand our existing foreign
operations, to establish additional foreign operations and to translate our
software and manuals into additional foreign languages. Expansion may be costly
and time-consuming and may not produce returns for a significant period of time,
if at all. If we are unable to expand our international operations or localize
our software in a timely manner, our business, results of operations and
financial condition could be harmed.


    Our international operations are subject to risks inherent in international
business activities, including:

    - difficulty in staffing and managing geographically dispersed operations;

    - longer sales cycles and collection of accounts receivables in some
      countries;

    - compliance with a variety of foreign laws and regulations;

    - unexpected changes in regulatory requirements, taxes, trade laws and
      tariffs;

    - overlap of different tax structures;

    - greater difficulty in safeguarding intellectual property;

    - increased financial accounting and reporting burdens and complexities;

    - trade restrictions; and

    - economic or political changes in international markets.

    In particular, countries in the Asia-Pacific region have recently
experienced weaknesses in their currencies, banking and equity markets. These
weaknesses could adversely affect the demand for our products.

CURRENCY FLUCTUATIONS EXPOSE US TO FINANCIAL RISK.

    Our international operations revenues have primarily been denominated in
U.S. dollars. The majority of our international operations expenses and some
licenses have been denominated in currencies other than the U.S. dollar. Changes
in the value of the U.S. dollar may harm our operating results. As our
international operations expand, our exposure to exchange rate fluctuations will
increase as we produce revenues and incur expenses in an increasing number of
foreign currencies. This exposure could harm our business, results of operations
or financial condition in future periods.

                                       12
<PAGE>
WE MAY EXPERIENCE DIFFICULTIES INTEGRATING POTENTIAL FUTURE ACQUISITIONS, WHICH
COULD DISRUPT OUR BUSINESS, BE DILUTIVE TO STOCKHOLDERS AND ADVERSELY AFFECT OUR
OPERATING RESULTS.

    We may expand our operations or market presence by acquiring or investing in
businesses, products or technologies that complement our business, increase our
market coverage or enhance our technical capabilities. These transactions create
risks such as:

    - difficulty assimilating the operations, technology, products and personnel
      we acquire;

    - disruption of our ongoing business;

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

    - one-time charges and expenses for amortization of goodwill and other
      purchased intangible assets; and

    - potential dilution to our stockholders.

    Our inability to address these risks could harm our operating results. Any
future acquisitions, even if successfully completed, may not produce any
additional revenues or provide any benefit to our business.

OUR SOFTWARE IS COMPLEX AND MAY CONTAIN UNDETECTED ERRORS, WHICH COULD CAUSE US
TO LOSE CUSTOMERS.

    Our software is complex and may contain undetected errors or bugs. Despite
our testing, bugs may be discovered only after our product has been installed
and used by customers. We have on occasion experienced delays in the
introduction of new and enhanced products because of bugs. For example, bugs
encountered in the development of version 5.0 of our iCollaboration software
could result in delays in the release of version 5.0. Undetected errors could
result in adverse publicity, loss of revenues or claims against us by customers,
any of which could harm our business, operating results and financial condition.

                         RISKS RELATED TO OUR INDUSTRY

IF WE FAIL TO ADAPT TO THE RAPID TECHNOLOGICAL CHANGE THAT CHARACTERIZES OUR
MARKET WE COULD LOSE MARKET SHARE OR OUR PRODUCTS COULD BECOME OBSOLETE.

    The market for c-Commerce software is characterized by rapid technological
advances, changing customer needs and evolving industry standards. Enterprises
are increasing their focus on enabling supply chain collaboration and are
requiring their application software vendors to provide greater levels of
functionality and broader product offerings. Also, competitors in our market
continue to make rapid technological advances in computer hardware and software
technology and frequently introduce new products and enhancements. We must
continue to enhance our product line and develop and introduce new products that
keep pace with the technological developments of our competitors. We must also
satisfy increasingly sophisticated customer requirements. We must also
anticipate and adapt to new industry standards so that our software products do
not become obsolete. If we cannot successfully respond to the technological
advances of others or if our new products or product enhancements do not achieve
market acceptance, our business, operating results and financial condition could
be harmed.

THE MARKET FOR C-COMMERCE SOFTWARE PRODUCTS IS NEWLY EMERGING AND DEMAND FOR
THESE PRODUCTS MAY NOT INCREASE AND COULD DECLINE.

    The market for c-Commerce software is newly emerging. We cannot be certain
that this market will continue to develop and grow or that companies will choose
to use our iCollaboration products rather than attempting to develop alternative
platforms and applications internally or through other sources. Companies that
have already invested substantial resources in other methods of sharing
information during the design, manufacturing and supply process may be reluctant
to adopt new technology or infrastructures that may replace, limit or compete
with their existing systems or methods. We expect that we will continue to need
to pursue intensive marketing and selling efforts to educate prospective
customers about the uses

                                       13
<PAGE>
and benefits of our iCollaboration product suite. Due to these factors, demand
for and market acceptance of our software products is subject to a high level of
uncertainty.

WE FACE RISKS IF USE OF THE INTERNET DOES NOT CONTINUE TO GROW AND RELIABLY
SUPPORT THE DEMANDS PLACED ON IT BY E-COMMERCE.

    Growth in the sales of our products and services depends upon the continued
and increased use of the Internet as a medium for commerce and communication.
Growth in the use of the Internet is a recent phenomenon and may not continue.
The Internet infrastructure may be unable to support the demands placed on it by
increased usage and bandwidth requirements. There have also been recent
well-publicized security breaches involving denial of service attacks on major
web sites. Concerns over these and other security breaches may slow the adoption
of electronic commerce by businesses.

    The recent growth in the use of the Internet has caused frequent periods of
poor or slow performance, requiring components of the Internet infrastructure to
be upgraded. Delays in the development or adoption of new equipment and
standards or protocols required to handle increased levels of Internet activity
could cause the Internet to lose its viability as a commercial medium. If the
Internet infrastructure does not develop sufficiently to address these concerns,
it may not develop as a commercial marketplace, and our sales would be harmed.

THE GOVERNMENT MAY INCREASE ITS REGULATION OF THE INTERNET, WHICH COULD REDUCE
MARKET ACCEPTANCE OF OUR PRODUCTS.

    As electronic commerce and the Internet continue to evolve, federal, state
and foreign governments may adopt laws and regulations covering issues such as
user privacy, taxation of goods and services provided over the Internet,
pricing, content and quality of products and services. If enacted, these laws
and regulations could limit the market for electronic commerce and the market
for our products and services. Although many of these regulations may not apply
directly to our business, we expect that laws regulating the solicitation,
collection or processing of personal or consumer information could indirectly
affect our business.

    Laws or regulations concerning telecommunications might also negatively
impact us. Several telecommunications companies have petitioned the Federal
Communications Commission to regulate Internet service providers and online
service providers in a manner similar to long distance telephone carriers and to
impose access fees on these companies. If enacted, these laws, rules or
regulations could limit the market for our products and our business could be
harmed.

OUR SUCCESS DEPENDS ON THE WILLINGNESS OF BUYERS AND SELLERS TO CARRY OUT
TRANSACTIONS OVER THE INTERNET INSTEAD OF USING MORE TRADITIONAL METHODS AND
THEIR FAILURE TO DO SO COULD SIGNIFICANTLY HARM OUR BUSINESS.

    Our future success depends in part on the growth of our customers'
electronic exchanges as a preferred alternative to the traditional methods of
transacting business for purchasers and sellers. Online trading is new and not
proven. We cannot be certain that our customers' electronic exchanges will be
successful or that they will achieve or sustain revenue growth or create any
profits. To succeed, our customers' clients must use our customers' online
marketplaces with greater frequency and consistency. We cannot be certain that
enterprises will accept the Internet as a viable alternative to the traditional
methods of transacting business. Participants may be unwilling to adopt an
electronic exchange due to their comfort with traditional purchasing and selling
habits and established relationships, the costs required to change trading
methods, their demand for products and services not offered in our marketplace,
security and privacy concerns or a general reluctance to use or unfamiliarity
with the Internet. If electronic exchanges do not develop as a preferred
alternative for purchasers and sellers, many of our customers and potential
customers may not license or continue to license our products.

                                       14
<PAGE>
                         RISKS RELATED TO THIS OFFERING

OUR DIRECTORS AND EXECUTIVE OFFICERS WILL RETAIN SIGNIFICANT CONTROL OVER US
AFTER THIS OFFERING, WHICH WILL ALLOW THEM TO DECIDE THE OUTCOME OF MATTERS
SUBMITTED TO STOCKHOLDERS FOR APPROVAL.


    Upon completion of this offering, our directors and executive officers will
beneficially own approximately 70.8% of our outstanding common stock assuming no
exercise of the underwriters' over-allotment option. These stockholders, acting
in concert, could control all matters submitted to our stockholders for a vote,
including the election of directors and the approval of mergers and other
significant corporate transactions, which could delay or prevent a change in
control of Adexa that stockholders may consider desirable. The interests of
these persons may conflict with your interests as stockholders, and the actions
they take or approve may be contrary to those desired by other stockholders.


OUR CHARTER AND BYLAWS HAVE ANTI-TAKEOVER PROVISIONS WHICH COULD DISCOURAGE OR
PREVENT A TAKEOVER OF US EVEN IF IT WERE FAVORED BY OUR STOCKHOLDERS.

    Provisions of our certificate of incorporation and bylaws and the Delaware
General Corporation Law could make it more difficult for a third party to
acquire us, even if doing so would be beneficial to our stockholders. These
provisions may also prevent changes in our management. The provisions include:

    - authorizing the issuance of undesignated preferred stock;

    - staggering the elections of the board of directors over three years;

    - requiring super-majority voting to amend specific provisions of our
      certificate of incorporation and bylaws;

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

    - prohibiting stockholder action by written consent; and

    - establishing advance notice requirements for nominations for election to
      the board of directors or for proposing matters that can be acted on at
      stockholder meetings.

    We also will be subject to the provisions of section 203 of the Delaware
General Corporation Law, which restricts some business combinations with
interested stockholders. The combination of these provisions may inhibit a
nonnegotiated merger or other business combination involving us, even if it were
favored by our stockholders.

OUR STOCK PRICE MAY BE VOLATILE, AND THIS VOLATILITY COULD RESULT IN SUBSTANTIAL
LOSSES FOR INVESTORS PURCHASING SHARES IN THIS OFFERING.

    Before this offering, there was no public market for our stock. An active
public market for our common stock may not develop or be sustained after the
offering. We negotiated and determined the initial public offering price with
the representatives of the underwriters. This price may vary from the market
price of common stock after the offering. You may be unable to sell your shares
of common stock at or above the offering price. The market price of the common
stock may fluctuate significantly in response to the following factors, some of
which are beyond our control:

    - variations in our quarterly operating results;

    - changes in securities analysts' estimates of our financial performance;

    - changes in market valuations of similar companies;

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

    - loss of a major customer or failure to complete significant license
      transactions;

    - a failed implementation of our software; and

                                       15
<PAGE>
    - additions or departures of key personnel.

WE ARE AT RISK OF SECURITIES CLASS ACTION LITIGATION DUE TO OUR EXPECTED STOCK
PRICE VOLATILITY WHICH COULD INCREASE OUR EXPENSES AND DAMAGE OUR REPUTATION.

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

SUBSTANTIAL FUTURE SALES OF OUR COMMON STOCK COULD DEPRESS OUR STOCK PRICE,
RESULTING IN THE LOSS OF ALL OR PART OF YOUR INVESTMENT IN OUR COMMON STOCK.


    If our current stockholders sell substantial amounts of our common stock in
the public market following this offering, the market price of our common stock
could fall. Upon completion of this offering, we will have outstanding
42,146,612 shares of common stock. Of the outstanding shares, the
4,000,000 shares sold in this offering will be freely tradable, except for any
shares purchased by our affiliates. An affiliate is a person such as an officer,
director or significant stockholder that controls us or that we control. All or
substantially all of our remaining stockholders will be subject to agreements
with the underwriters or us that restrict their ability to transfer their stock
for 180 days from the date of this prospectus. After these agreements expire,
38,146,612 shares will be eligible for sale in the public market subject in some
cases to the restrictions of Rule 144.


AS A NEW INVESTOR, YOU WILL INCUR SUBSTANTIAL DILUTION BECAUSE OF THIS OFFERING
AND FUTURE EQUITY ISSUANCES.


    The initial public offering price will be substantially higher than the net
tangible book value per share of our outstanding common stock. Investors
purchasing common stock in this offering will incur immediate dilution of $11.52
per share, assuming an initial public offering price of $13.00 per share.
Investors will incur additional dilution upon the exercise of outstanding stock
options and warrants.


WE HAVE BROAD DISCRETION TO USE THE PROCEEDS FROM THIS OFFERING, AND WE MAY NOT
BE SUCCESSFUL IN INVESTING THESE PROCEEDS IN WAYS THAT WILL ENHANCE OUR MARKET
VALUE.

    We plan to use the proceeds from this offering for general corporate
purposes. We will have broad discretion concerning how we will spend the
proceeds, and our stockholders may not agree with the ways in which we use the
proceeds. We may not be successful in investing the proceeds from this offering
in our operations or external investments and our investments may not yield a
favorable return.

                                       16
<PAGE>
                           FORWARD-LOOKING STATEMENTS

    Some of the statements we make in this prospectus are forward-looking
statements about our plans, objectives, strategies, expectations, intentions,
future financial performance and other statements that are not historical facts.
We use words like anticipates, believes, expects, plans, continue, future and
intends and similar expressions to mean that the statement is forward-looking.
These statements involve known and unknown risks and uncertainties that could
cause our results to differ materially from forward-looking statements. In
evaluating these statements, you should specifically consider various factors,
including the risks outlined under Risk Factors. These factors may cause our
actual results to differ materially from any forward-looking statement. We are
under no duty to update any of the forward-looking statements after the date of
this prospectus to conform these statements to actual results.

                                USE OF PROCEEDS

    We estimate that the net proceeds of this offering will be approximately
$46.9 million, or $54.1 million if the underwriters' over-allotment option is
exercised in full, assuming an initial public offering price of $13.00 per
share, and after deducting underwriting discounts and commissions and estimated
offering expenses payable by us.

    We expect to use the net proceeds of this offering for general corporate
purposes, including working capital and capital expenditures. While the exact
use of the proceeds has not been specifically determined, we intend to:

    - expand our sales and marketing organizations;

    - expand our professional services, training and customer support functions;

    - increase our research and development activities; and

    - increase our spending to support general administrative operations.

    We also anticipate making various capital expenditures over the next
12 months. We intend, if the opportunity arises, to use an unspecified portion
of the net proceeds from this offering to acquire or invest in complementary
businesses, products and technologies. However, we have no understandings,
commitments or agreements for any specific acquisitions. Until we use the net
proceeds of this offering, we will most likely invest the net proceeds in
interest-bearing, investment-grade securities with maturities of less than one
year.

                                DIVIDEND POLICY

    We do not expect to declare or pay cash dividends on our common stock in the
future. We anticipate that all future earnings, if any, produced from operations
will be retained to develop and expand our business. Any future determination of
the payment of dividends will be at the discretion of the board of directors and
will depend upon factors including our operating results, financial condition
and capital requirements, the terms of then-existing indebtedness and general
business conditions. The terms of our line of credit prohibit the payment of
cash dividends without the lender's consent.

                                       17
<PAGE>
                                 CAPITALIZATION


    The following table presents our capitalization as of September 30, 2000. We
present capitalization on:


    - an actual basis;


    - a pro forma basis to reflect the conversion of all series of preferred
      stock into shares of common stock; and


    - a pro forma as adjusted basis to reflect:

       - our receipt of the estimated net proceeds from the sale of 4,000,000
         shares of common stock offered by us at an assumed initial public
         offering price of $13.00 per share, after deducting the estimated
         underwriting discounts and commissions and estimated offering expenses
         payable by us; and

       - the authorization of 10,000,000 shares of undesignated preferred stock.

    This table should be read with our consolidated financial statements and
related notes and Management's Discussion and Analysis of Financial Condition
and Results of Operations included elsewhere in this prospectus.


<TABLE>
<CAPTION>
                                                                        SEPTEMBER 30, 2000
                                                               -------------------------------------
                                                                                         PRO FORMA
                                                                ACTUAL     PRO FORMA    AS ADJUSTED
                                                               ---------   ----------   ------------
                                                               (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<S>                                                            <C>         <C>          <C>
Capital lease obligations...................................    $   149     $   149       $   149
                                                                =======     =======       =======
Series C redeemable convertible preferred stock; 4,200,000
  shares authorized, 3,149,602 shares issued and
  outstanding, actual; no shares authorized, issued or
  outstanding, pro forma and pro forma as adjusted..........     19,940          --            --
                                                                -------     -------       -------
Stockholders' equity:
  Series A convertible preferred stock; 8,716,372 shares
    authorized, 8,260,340 shares issued and outstanding,
    actual; no shares authorized, issued or outstanding, pro
    forma and pro forma as adjusted.........................      4,284          --            --
  Series B convertible preferred stock; 5,800,000 shares
    authorized, 4,984,848 shares issued and outstanding,
    actual; no shares authorized, issued or outstanding, pro
    forma and pro forma as adjusted.........................      8,126          --            --
  Undesignated preferred stock; no shares authorized, issued
    or outstanding, actual and pro forma; 10,000,000 shares
    authorized, no shares issued or outstanding, pro forma
    as adjusted.............................................         --          --            --
  Common stock; 46,000,000 shares authorized and 21,751,822
    shares issued and outstanding, actual; 60,000,000 shares
    authorized and 38,146,612 shares issued and outstanding,
    pro forma; 250,000,000 shares authorized and
    42,146,612 shares issued and outstanding, pro forma as
    adjusted................................................        379      32,729        79,589
Additional paid-in capital..................................     25,945      25,945        25,945
Unearned stock-based compensation...........................    (13,592)    (13,592)      (13,592)
Accumulated deficit.........................................    (29,582)    (29,582)      (29,582)
                                                                -------     -------       -------
    Total stockholders' equity (deficit)....................     (4,440)     15,500        62,360
                                                                -------     -------       -------
      Total capitalization..................................    $15,649     $15,649       $62,509
                                                                =======     =======       =======
</TABLE>


                                       18
<PAGE>

    The number of shares of common stock to be outstanding after this offering
is based on the number of shares outstanding as of September 30, 2000, and on a
pro forma basis to reflect the conversion of all series of preferred stock into
shares of common stock, and excludes:



    - 10,816,336 shares of common stock issuable upon exercise of stock options
      outstanding as of September 30, 2000 at a weighted average exercise price
      of $1.22 per share;



    - 972,078 shares of common stock reserved for future issuance under our 1998
      stock plan as of September 30, 2000;


    - 4,000,000 shares of common stock reserved for future issuance under our
      2000 stock incentive plan;

    - 1,500,000 shares of common stock reserved for future issuance under our
      2000 employee stock purchase plan; and

    - an outstanding warrant to purchase 456,024 shares of our series A
      convertible preferred stock.

                                       19
<PAGE>
                                    DILUTION


    If you invest in our common stock, your interest will be diluted by the
difference between the public offering price per share of the common stock and
the pro forma as adjusted net tangible book value per share of the common stock
after this offering. Pro forma net tangible book value per share represents the
amount of our total tangible assets less total liabilities, divided by the pro
forma number of shares of common stock outstanding as of September 30, 2000.
Dilution in pro forma net tangible book value per share represents the
difference between the amount per share paid by purchasers of common stock in
this offering and the pro forma as adjusted net tangible book value per share of
common stock immediately after the completion of this offering.



    Our pro forma net tangible book value as of September 30, 2000 was $15.5
million, or $0.41 per share of common stock. Pro forma net tangible book value
per share represents the amount of our pro forma tangible stockholders' equity
divided by 38,146,612 shares of our common stock on a pro forma basis to reflect
the conversion of all series of preferred stock into shares of common stock.
After giving effect to the sale of the 4,000,000 shares of common stock offered
by us at an assumed initial public offering price of $13.00 per share, less
underwriting discounts and commissions and estimated offering expenses, our pro
forma as adjusted net tangible book value as of September 30, 2000 would have
been $62.4 million, or $1.48 per share. This represents an immediate increase in
pro forma net tangible book value of $1.07 per share to existing stockholders
and an immediate dilution in pro forma net tangible book value of $11.52 per
share to new investors of common stock in this offering, as illustrated in the
following table:



<TABLE>
<S>                                                           <C>      <C>
Assumed initial public offering price per share.............           $13.00
  Pro forma net tangible book value per share as of
    September 30, 2000......................................  $ 0.41
  Increase per share attributable to new investors..........    1.07
                                                              ------
Pro forma as adjusted net tangible book value per share
  after the offering........................................             1.48
                                                                       ------
Dilution per share to new investors.........................           $11.52
                                                                       ======
</TABLE>



    The following table presents on a pro forma as adjusted basis, after giving
effect to the conversion of all outstanding shares of preferred stock into
common stock upon completion of this offering, the difference between the number
of shares of common stock purchased from us, the total consideration paid and
the average price per share paid by the existing stockholders and by the new
investors purchasing shares of common stock in this offering, as of
September 30, 2000.



<TABLE>
<CAPTION>
                                                   SHARES PURCHASED       TOTAL CONSIDERATION
                                                 ---------------------   ----------------------   AVERAGE PRICE
                                                   NUMBER     PERCENT      AMOUNT      PERCENT      PER SHARE
                                                 ----------   --------   -----------   --------   -------------
<S>                                              <C>          <C>        <C>           <C>        <C>
Existing stockholders..........................  38,146,612     90.5%    $33,477,316     39.2%        $ 0.88
New investors..................................   4,000,000      9.5      52,000,000     60.8          13.00
                                                 ----------    -----     -----------    -----
  Totals.......................................  42,146,612    100.0%    $85,477,316    100.0%
                                                 ==========    =====     ===========    =====
</TABLE>



    As of September 30, 2000, there were options outstanding to purchase a total
of 10,816,336 shares of common stock at a weighted average exercise price of
$1.22 per share under our 1998 stock plan and a warrant outstanding to purchase
456,024 shares of series A convertible preferred stock. If outstanding options
or the warrant are exercised, there will be further dilution to new investors.


                                       20
<PAGE>
                            SELECTED FINANCIAL DATA

    The tables that follow present selected portions of our financial
statements. You should read the following selected financial data with our
consolidated financial statements and related notes, Risk Factors and
Management's Discussion and Analysis of Financial Condition and Results of
Operations included elsewhere in this prospectus.


    We obtained the selected consolidated statement of operations data for each
of the years in the three-year period ended December 31, 1999 and the balance
sheet data at December 31, 1998 and 1999 from our financial statements, which
have been audited by Deloitte & Touche LLP, independent auditors, and are
included elsewhere in this prospectus. The balance sheet data at December 31,
1996 and 1997 and the statement of operations data for the year ended
December 31, 1996 are obtained from our audited financial statements which are
not included in this prospectus. The statement of operations data for the year
ended December 31, 1995 and the balance sheet data at December 31, 1995 are
obtained from unaudited financial statements. The consolidated statement of
operations data for the nine months ended September 30, 1999 and September 30,
2000 and the balance sheet data at September 30, 2000 are obtained from
unaudited financial statements included elsewhere in this prospectus and, in the
opinion of our management, include all adjustments that are necessary for a fair
presentation of the results of operations for these periods. The historical
results are not necessarily indicative of the operating results to be expected
in the future.



<TABLE>
<CAPTION>
                                                                                                             NINE MONTHS ENDED
                                                                  YEAR ENDED DECEMBER 31,                      SEPTEMBER 30,
                                                    ----------------------------------------------------   ----------------------
                                                      1995       1996       1997       1998       1999        1999         2000
                                                    --------   --------   --------   --------   --------   -----------   --------
                                                                        (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                 <C>        <C>        <C>        <C>        <C>        <C>           <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues:
  License revenues................................       --    $   175    $ 3,735    $ 4,841    $16,093      $10,960     $ 22,415
  Service revenues................................   $  823      1,618      2,035      2,251      5,175        4,072        9,333
  Maintenance revenues............................       --         54        416      1,020      2,393        1,452        4,177
                                                     ------    -------    -------    -------    -------      -------     --------
        Total revenues............................      823      1,847      6,186      8,112     23,661       16,484       35,925
                                                     ------    -------    -------    -------    -------      -------     --------
Cost of Revenues:
  Cost of license revenues........................       --          2         11        123        268          144        1,341
  Cost of service and maintenance revenues,
    excluding stock-based compensation............      400        454      1,876      4,859      5,737        4,165        8,764
  Stock-based compensation--cost of service and
    maintenance revenues..........................       --         --         --        261         40           29          264
                                                     ------    -------    -------    -------    -------      -------     --------
        Total cost of revenues....................      400        456      1,887      5,243      6,045        4,338       10,369
                                                     ------    -------    -------    -------    -------      -------     --------
Gross Profit......................................      423      1,391      4,299      2,869     17,616       12,146       25,556
                                                     ------    -------    -------    -------    -------      -------     --------
Operating Expenses:
  Sales and marketing, excluding stock-based
    compensation..................................       71        616      3,664      7,860     12,929        8,168       17,725
  Research and development, excluding stock-based
    compensation..................................       --        413        980      1,707      4,534        2,991        5,300
  General and administrative, excluding
    stock-based compensation......................      216        223        748      1,437      2,689        1,842        4,543
  Stock-based compensation--sales and marketing...       --         --         --        191         61           46        1,049
  Stock-based compensation--research and
    development...................................       --         --         --        834        127           95          262
  Stock-based compensation--general and
    administrative................................       --         --         --         38         27           20          586
                                                     ------    -------    -------    -------    -------      -------     --------
        Total operating expenses..................      287      1,252      5,392     12,067     20,367       13,162       29,465
                                                     ------    -------    -------    -------    -------      -------     --------
Operating Income (Loss)...........................      136        139     (1,093)    (9,198)    (2,751)      (1,016)      (3,909)
Interest and Other Income (Expense), Net..........        3         17         58          9       (320)        (213)        (112)
                                                     ------    -------    -------    -------    -------      -------     --------
Income (Loss) before Income Taxes.................      139        156     (1,035)    (9,189)    (3,071)      (1,229)      (4,021)

Provision (Benefit) for Income Taxes..............       --          4       (188)       245      2,114        1,583        1,954
                                                     ------    -------    -------    -------    -------      -------     --------
Net Income (Loss).................................   $  139    $   152    $  (847)   $(9,434)   $(5,185)     $(2,812)    $ (5,975)
Accretion and Deemed Dividend on Redeemable
  Preferred Stock.................................       --         --         --         --         --           --       (8,346)
                                                     ------    -------    -------    -------    -------      -------     --------
Net Income (Loss) Attributable to Common
  Stockholders....................................   $  139    $   152    $  (847)   $(9,434)   $(5,185)     $(2,812)    $(14,322)
                                                     ======    =======    =======    =======    =======      =======     ========
Net Income (Loss) per Share:
  Basic and diluted...............................   $ 0.01    $  0.01    $ (0.04)   $ (0.47)   $ (0.26)     $ (0.14)    $  (0.67)
                                                     ======    =======    =======    =======    =======      =======     ========
  Weighted Average Shares of Common Stock.........   19,400     19,850     20,000     20,000     20,197       20,092       21,291
                                                     ======    =======    =======    =======    =======      =======     ========
Pro forma (Loss) per share:
  Basic and Diluted...............................                                              $ (0.16)                 $  (0.41)
                                                                                                =======                  ========
  Weighted Average Shares of Common Stock.........                                               33,442                    34,963
                                                                                                =======                  ========
</TABLE>


                                       21
<PAGE>


<TABLE>
<CAPTION>
                                                                      DECEMBER 31,
                                                  ----------------------------------------------------   SEPTEMBER 30,
                                                    1995       1996       1997       1998       1999         2000
                                                  --------   --------   --------   --------   --------   -------------
                                                                             (IN THOUSANDS)
<S>                                               <C>        <C>        <C>        <C>        <C>        <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents.......................    $(13)     $  611     $3,209     $4,424    $ 6,232       $18,990
Working capital.................................      97         163      2,907      2,866     (2,172)       12,599
Total assets....................................     275       1,615      7,602      8,182     12,347        36,599
Deferred revenues...............................      --         679      2,672        781      2,012         9,451
Capital lease obligations.......................      --          --        155        238        117           149
Redeemable convertible preferred stock..........      --          --         --         --         --        19,940
Total stockholders' equity (deficit)............     188         370      3,930      3,891       (847)       (4,440)
</TABLE>


                                       22
<PAGE>
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    THIS SECTION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER SIGNIFICANTLY FROM THOSE
ANTICIPATED IN THE FORWARD-LOOKING STATEMENTS DUE TO FACTORS DISCUSSED IN RISK
FACTORS, BUSINESS AND ELSEWHERE IN THIS PROSPECTUS.

OVERVIEW

    We were founded in February 1994 in Texas as NP Complete. We relocated to
California in May 1994 and formed a new corporation, called Paragon Management
Systems, Inc., which acquired all of the assets of NP Complete as its successor.
We began primarily as a supply chain-consulting firm. In 1997, we licensed our
first versions of our current product components and have continued to expand
and improve our suite of products. In the third quarter of 1999, we aggregated
our product components into our iCollaboration suite, and in February 2000, we
changed our name to Adexa, Inc. We target Global 2000 companies, private
exchanges and public exchanges in large markets, such as the aerospace and
defense, automotive, electronics, semiconductors and textile and apparel
industries. We market and license our products in North America, Europe and Asia
through our direct sales force and through systems integrators, e-Business
infrastructure providers and resellers.

REVENUES


    LICENSE REVENUES.  Customers typically pay a one-time fee for a license to
use our software products. The amount of the fee is based on the number of
licensed sites and users and the type and number of components licensed. We have
experienced, and expect to continue to experience, significant variations in the
size of individual licensing transactions. We have begun entering into
arrangements with some of our customers that require delivery of unspecified
software products in the future. Customers who enter into these arrangements
with us might reduce the number of software products that they license from us
in the future, because these arrangements entitle them to receive unspecified
software products in the future at no additional charge. Revenue on such
transactions is recognized ratably over the term of the arrangement. The impact
of these arrangements on our future operations will depend upon the number and
size of these arrangements. We are introducing alternative pricing models that
may involve licensing our software to application service providers, or ASPs,
that will host our software for their customers. We have not signed any ASP
customers.


    SERVICE REVENUES.  Our service revenues consist principally of revenues
received from implementing our products and training our customers' employees on
the use of our products. We do not provide professional services to all our
customers, as these services may be provided by resellers or other service
providers. Service revenues may fluctuate relative to license revenues depending
upon whether implementation is performed by us or by a third party contracted by
the customer. We also subcontract third-party service providers to perform
aspects of implementations that we are contracted to perform. We expect that
service revenues as a percentage of total revenues will decline as system
integrators and other professional services organizations provide a greater
percentage of implementation services required by our customers. Our
implementation and training services generally are delivered on a
time-and-materials basis, although occasionally on a fixed-price basis.

    MAINTENANCE REVENUES.  We offer annual maintenance contracts to our
customers as part of a software license, a separate contract or a renewal of a
previous contract. Our maintenance and support services include product upgrades
and enhancements and user and technical support services. Most of our
maintenance and support contracts are invoiced annually in advance, are
renewable at the discretion of the customer and allow for future fee increases.
All of our licenses to customers have included maintenance contracts, and most
of our customers have renewed their maintenance contracts.

                                       23
<PAGE>
REVENUE RECOGNITION

    We recognize revenues under the American Institute of Certified Public
Accountants Statement of Position No. 97-2, Software Revenue Recognition, as
amended by Statement of Position Nos. 98-4 and 98-9. Effective January 1, 2000,
we adopted SOP No. 98-9 which requires us to use the residual method of revenue
recognition when arrangements include multiple product components or other
elements and vendor specific objective evidence exists for the fair value of all
undelivered elements and does not exist for one or more of the delivered
elements.

    We recognize software license revenues when persuasive evidence of an
agreement exists, delivery of the product component has occurred, the fee is
fixed and determinable, collection is probable and acceptance criteria, if any,
have been met. If any of these criteria is not met, revenue recognition is
deferred until all of these criteria are met. We recognize revenues for some of
our software contracts according to paragraphs 48 and 49 of SOP 97-2, under
which customer contracts that require delivery of unspecified additional
software products in the future are accounted for as subscriptions. We recognize
this revenue ratably over the term of the arrangement beginning with the
delivery of the first product.

    All of our multiple-element arrangements entered into since the effective
date of SOP No 98-9 have been accounted for using the residual method. Vendor
specific objective evidence of fair value for an element offered for sale
separately is based on the price for the element when it is sold separately or,
when the element has not yet been sold separately, is based on the price
established by management.

    We generally enter into separate contracts for professional services. We
recognize revenues from services delivered on a time-and-materials basis as they
are performed. Revenues from fixed-price arrangements are recognized on a
percentage-of-completion basis.

    We recognize revenue from maintenance and support arrangements on a
straight-line basis over the life of the arrangement, which is typically one
year.

    We enter into master agreements with our resellers. These agreements require
the reseller to issue a purchase order to us for each software license the
reseller enters into with an end user. We recognize revenue from licensing our
software to resellers using the same criteria and methods as we use for our
direct end-user customers. Deferred revenue in our consolidated balance sheet
includes amounts collected or billed in excess of recognizable revenue. This
deferred revenue relates to arrangements accounted for as subscriptions, amounts
allocated to undelivered elements or services not yet performed, and amounts
related to the remaining life of maintenance and support agreements.

COST OF REVENUES

    COST OF LICENSE REVENUES.  Our cost of license revenues includes royalties
to third parties for software embedded in our products, royalties due for the
resale of third-party software to our customers and the costs of documentation,
delivery and packaging.

    COST OF SERVICE AND MAINTENANCE REVENUES.  Our cost of service and
maintenance revenues includes salaries and other personnel-related costs for
implementation and training services, travel expenses, bonuses, facility costs,
costs of third parties contracted to provide implementation services to
customers, costs for our customer support organization and associated overhead
expenses. Our cost of service and maintenance revenues can fluctuate depending
upon the amount of professional services provided by us as compared to
third-party service providers acting as subcontractors.

OPERATING EXPENSES

    SALES AND MARKETING.  Our sales and marketing expenses consist primarily of
salaries and other personnel-related costs, bonuses and commissions, facility
costs, travel, marketing collateral, advertising,

                                       24
<PAGE>
public relations programs and promotional events such as trade shows, customer
user group meetings, seminars and technical conferences.

    RESEARCH AND DEVELOPMENT.  Our research and development expenses consist
primarily of salaries and other personnel-related costs, bonuses, facility
costs, and costs of third-party development services. We maintain a research and
development staff to enhance our products and to develop new products. Our
research and development operation is located in Toronto, Canada. We have
expensed all software development costs because the establishment of
technological feasibility of products and their availability for sale have
substantially coincided.

    GENERAL AND ADMINISTRATIVE.  Our general and administrative expenses consist
of salaries, bonuses and other personnel-related costs for our administrative,
finance and human resources employees, legal and accounting services, facility
costs, bad debt expense and other general corporate expenses.

    STOCK-BASED COMPENSATION.  Deferred stock-based compensation for employees
represents the difference between the exercise price of stock options granted
and the estimated fair market value of the underlying common stock on the date
of the grant. This amount is included as a component of stockholders' equity and
is being amortized by charges to operations over the vesting period of the
options, consistent with the method described in Accounting Principles Board
Opinion 25 and the disclosure requirements of SFAS No. 123. We account for stock
options issued to non-employees according to provisions of SFAS No. 123 and
Emerging Issues Task Force Issue No. 96-18, Accounting for Equity Instruments
That Are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services.

                                       25
<PAGE>
RESULTS FROM OPERATIONS

    The following table presents selected statement of operations data expressed
as a percentage of our total revenues for the periods indicated.


<TABLE>
<CAPTION>
                                                                                                               NINE MONTHS
                                                                           YEAR ENDED                             ENDED
                                                                          DECEMBER 31,                        SEPTEMBER 30,
                                                              ------------------------------------       -----------------------
                                                                1997          1998          1999           1999           2000
                                                              --------      --------      --------       --------       --------
                                                                             (AS A PERCENTAGE OF TOTAL REVENUES)
<S>                                                           <C>           <C>           <C>            <C>            <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:

Revenues:
  License revenues..........................................      60%           60%           68%            66%            62%
  Service revenues..........................................      33            28            22             25             26
  Maintenance revenues......................................       7            12            10              9             12
                                                                ----          ----          ----           ----           ----
        Total revenues......................................     100           100           100            100            100
                                                                ----          ----          ----           ----           ----
Cost of Revenues:
  Cost of license revenues..................................      --             2             1              1              4
  Cost of service and maintenance revenues, excluding
    stock-based compensation................................      31            59            24             25             24
  Stock-based compensation--cost of service and maintenance
    revenues................................................      --             3            --             --              1
                                                                ----          ----          ----           ----           ----
        Total cost of revenues..............................      31            64            25             26             29
                                                                ----          ----          ----           ----           ----
Gross Profit................................................      69            36            75             74             71
                                                                ----          ----          ----           ----           ----
Operating Expenses:
  Sales and marketing, excluding stock-based
    compensation............................................      59            97            55             50             49
  Research and development, excluding stock-based
    compensation............................................      16            21            19             18             15
  General and administrative, excluding stock-based
    compensation............................................      12            18            11             11             13
  Stock-based compensation--sales and marketing.............      --             2            --             --              3
  Stock-based compensation--research and development........      --            10             1              1              1
  Stock-based compensation--general and administrative......      --            --            --             --              1
                                                                ----          ----          ----           ----           ----
        Total operating expenses............................      87           148            86             80             82
                                                                ----          ----          ----           ----           ----
Operating Loss..............................................     (18)         (112)          (11)            (6)           (11)

Interest and Other Income (Expense), Net....................       1            --            (1)            (1)            --
                                                                ----          ----          ----           ----           ----
Loss before Income Taxes....................................     (17)         (112)          (12)            (7)           (11)

Provision (Benefit) for Income Taxes........................      (3)            3             9             10              5
                                                                ----          ----          ----           ----           ----
Net Loss....................................................     (14)%        (115)%         (21)%          (17)%          (16)%
                                                                ====          ====          ====           ====           ====
</TABLE>



NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 2000


REVENUES


    Total revenues were $16.5 million for the nine months ended September 30,
1999 and $35.9 million for the nine months ended September 30, 2000,
representing an increase of $19.4 million, or 118%. Revenues from non-U.S. based
customers as a percentage of total revenues, based upon the location of the
reseller for indirect sales and the location of the end user for direct sales,
were 66% for the nine months ended September 30, 1999 and 48% for the nine
months ended September 30, 2000. In the nine months ended September 30, 1999,
QAD, a reseller, accounted for 16% of our total revenues, Hewlett Packard, a
reseller, accounted for 15% of our total revenues, and Compaq Computer
Corporation, another reseller, accounted for 14% of our total revenues. In the
nine months ended September 30, 2000, QAD accounted for 14% of our total
revenues and Compaq Computer Corporation accounted for 13% of our total
revenues.


                                       26
<PAGE>

    LICENSE REVENUES.  License revenues were $11.0 million for the nine months
ended September 30, 1999 and $22.4 million for the nine months ended
September 30, 2000, representing an increase of $11.5 million, or 105%. License
revenues as a percentage of total revenues were 66% for the nine months ended
September 30, 1999 and 62% for the nine months ended September 30, 2000. The
increase in license revenues was due to an increase in the number of
transactions, which accounted for 72% of the increase, and an increase in
average transaction size, which accounted for 16% of the increase. The remaining
12% of the increase was due to sales of third-party software which we do not
expect to occur frequently in the future.



    SERVICE REVENUES.  Service revenues were $4.1 million for the nine months
ended September 30, 1999 and $9.3 million for the nine months ended
September 30, 2000, representing an increase of $5.3 million, or 129%. Service
revenues as a percentage of total revenues were 25% for the nine months ended
September 30, 1999 and 26% for the nine months ended September 30, 2000. The
increase in service revenues was due to increases in license revenues and
associated implementations.



    MAINTENANCE REVENUES.  Maintenance revenues were $1.5 million for the nine
months ended September 30, 1999 and $4.2 million for the nine months ended
September 30, 2000, representing an increase of $2.7 million, or 188%.
Maintenance revenues as a percentage of total revenues were 9% for the nine
months ended September 30, 1999 and 12% for the nine months ended September 30,
2000. The increase in maintenance revenues was due to increased licensing of our
products.


COST OF REVENUES


    COST OF LICENSE REVENUES.  Cost of license revenues was $144,233 for the
nine months ended September 30, 1999 and $1.3 million for the nine months ended
September 30, 2000, representing an increase of $1.2 million. Cost of license
revenues as a percentage of total revenues was 1% for the nine months ended
September 30, 1999 and 4% for the nine months ended September 30, 2000. The
increase in cost of license revenues was due primarily to royalties to two third
parties for the resale of their software by us, which accounted for 84% of the
increase. This software was not embedded in our products and we do not expect
royalty payments from reselling third-party software to occur frequently in the
future.



    COST OF SERVICE AND MAINTENANCE REVENUES.  Cost of service and maintenance
revenues was $4.2 million for the nine months ended September 30, 1999 and
$8.8 million for the nine months ended September 30, 2000, representing an
increase of $4.6 million, or 110%. Cost of service and maintenance revenues as a
percentage of total revenues was 25% for the nine months ended September 30,
1999 and 24% for the nine months ended September 30, 2000. The increase in the
cost of service and maintenance revenues was due primarily to the increased
salaries and related personnel expenses for the hiring and training of our
implementation and maintenance and support professionals, which accounted for
62% of the increase, and to increased use of third-party service providers,
which accounted for 23% of the increase.


OPERATING EXPENSES


    SALES AND MARKETING.  Sales and marketing expenses were $8.2 million for the
nine months ended September 30, 1999 and $17.7 million for the nine months ended
September 30, 2000, representing an increase of $9.6 million, or 117%. Sales and
marketing expenses as a percentage of total revenues were 50% for the nine
months ended September 30, 1999 and 49% for the nine months ended September 30,
2000. The increase in sales and marketing expenses was due primarily to
increased salaries and related personnel expenses for the hiring of sales
management, sales representatives, sales support and marketing personnel, which
accounted for 63% of the increase. We expect that sales and marketing expenses
will increase substantially in the future as we hire additional sales and
marketing personnel, increase spending on advertising and marketing programs and
establish sales organizations in additional domestic and international
locations.


                                       27
<PAGE>

    RESEARCH AND DEVELOPMENT.  Research and development expenses were
$3.0 million for the nine months ended September 30, 1999 and $5.3 million for
the nine months ended September 30, 2000, representing an increase of
$2.3 million, or 77%. Research and development expenses as a percentage of total
revenues were 18% for the nine months ended September 30, 1999 and 15% for the
nine months ended September 30, 2000. The increase in research and development
expenses was due primarily to the increased salaries and related personnel
expenses for the hiring of additional software developers and quality assurance
personnel to support our product development and testing activities related to
the development and release of our products, which accounted for 77% of the
increase. We anticipate that research and development expenses will continue to
increase in absolute dollars in the future as we continue to invest in product
development.



    GENERAL AND ADMINISTRATIVE.  General and administrative expenses were
$1.8 million for the nine months ended September 30, 1999 and $4.5 million for
the nine months ended September 30, 2000, representing an increase of
$2.7 million, or 147%. General and administrative expenses as a percentage of
total revenues were 11% for the nine months ended September 30, 1999 and 13% for
the nine months ended September 30, 2000. The increase in general and
administrative expenses was due primarily to increased salaries and related
personnel expenses, which accounted for 38% of the increase, and increased legal
and accounting expenses, which accounted for 30% of the increase. We expect that
general and administrative expenses will increase substantially in the future as
we assume the responsibilities of a public company and as we hire additional
general and administrative personnel.


STOCK-BASED COMPENSATION


    Total stock-based compensation was $189,798 for the nine months ended
September 30, 1999 and $2.2 million for the nine months ended September 30,
2000, representing an increase of $2.0 million, or 1,038%. The increase in
stock-based compensation was due to increased hiring of personnel and granting
of employee incentives.


INTEREST AND OTHER INCOME (EXPENSE), NET


    Interest and other income (expense), net was ($213,749) for the nine months
ended September 30, 1999 and ($111,899) for the nine months ended September 30,
2000, representing a decrease of $101,850, or 48%. Interest and other income
(expense), net consists primarily of interest expense and loss on sale of
securities.


PROVISION (BENEFIT) FOR INCOME TAXES


    Provision (benefit) for income taxes was $1.6 million for the nine months
ended September 30, 1999 and $2.0 million for the nine months ended
September 30, 2000, representing an increase of $371,518, or 23%. Provision
(benefit) for income taxes as a percentage of total revenues was 10% for the
nine months ended September 30, 1999 and 5% for the nine months ended
September 30, 2000. The increase in provision (benefit) for income taxes was due
to increased foreign source revenues, which resulted in increased foreign income
and withholding taxes. During the nine months ended September 30, 1999 and
September 30, 2000, we reported losses for both financial reporting and income
tax purposes. We made no significant provision for U.S. income taxes in either
period. We have placed a valuation allowance against our net deferred tax assets
to reduce them to zero because of uncertainties about the realization of the
asset balance. When we have determined that it is more likely than not that the
net deferred tax assets are realizable, we will reduce the valuation allowance.


FISCAL YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999

TOTAL REVENUES

    Total revenues were $6.2 million for fiscal 1997, $8.1 million for fiscal
1998 and $23.7 million for fiscal 1999, representing increases of $1.9 million,
or 31%, from fiscal 1997 to fiscal 1998 and $15.6 million, or

                                       28
<PAGE>
192%, from fiscal 1998 to fiscal 1999. Revenues from non-U.S. based customers as
a percentage of total revenues, based on the location of the reseller for
indirect sales and the location of the end user for direct sales, were 52% for
fiscal 1997, 36% for fiscal 1998 and 57% for fiscal 1999. In fiscal 1997, a new
end-user customer in the semiconductor industry accounted for 28% of total
revenues, Hewlett-Packard Japan, Ltd., a reseller, accounted for 13% of total
revenues and another new end-user customer in the semiconductor industry
accounted for 11% of total revenues. In fiscal 1998, a new end-user customer in
the textile and apparel industry accounted for 30% of total revenues and QAD, a
reseller, accounted for 11% of total revenues. In fiscal 1999, Compaq Computer
Corporation, a reseller, accounted for 13% of total revenues, QAD accounted for
12% of total revenues and Hewlett-Packard Japan, Ltd. accounted for 11% of total
revenues.

    LICENSE REVENUES.  License revenues were $3.7 million for fiscal 1997,
$4.8 million for fiscal 1998 and $16.1 million for fiscal 1999, representing
increases of $1.1 million, or 30%, from fiscal 1997 to fiscal 1998 and
$11.3 million, or 232%, from fiscal 1998 to fiscal 1999. License revenues as a
percentage of total revenues were 60% for fiscal 1997, 60% for fiscal 1998 and
68% for fiscal 1999. The increase in license revenues from fiscal 1997 to fiscal
1998 was due to an increase in average transaction size. The increase in license
revenues from fiscal 1998 fiscal to 1999 was due to an increase in the number of
transactions, which accounted for 47% of the increase, and an increase in
average transaction size, which accounted for 53% of the increase.

    SERVICE REVENUES.  Service revenues were $2.0 million for fiscal 1997,
$2.3 million for fiscal 1998 and $5.2 million for fiscal 1999, representing
increases of $216,747, or 11%, from fiscal 1997 to fiscal 1998 and
$2.9 million, or 130%, from fiscal 1998 to fiscal 1999. Service revenues as a
percentage of total revenues were 33% for fiscal 1997, 28% for fiscal 1998 and
22% for fiscal 1999. The increase from fiscal 1997 to fiscal 1998 and from
fiscal 1998 to fiscal 1999 was due to increases in license revenues.

    MAINTENANCE REVENUES.  Maintenance revenues were $415,961 for fiscal 1997,
$1.0 million for fiscal 1998 and $2.4 million for fiscal 1999, representing
increases of $604,262, or 145%, from fiscal 1997 to fiscal 1998 and
$1.4 million, or 135%, from fiscal 1998 to fiscal 1999. Maintenance revenues as
a percentage of total revenues were 7% for fiscal 1997, 13% for fiscal 1998 and
10% for fiscal 1999. The increase in maintenance revenues from fiscal 1997 to
fiscal 1998 and from fiscal 1998 to fiscal 1999 was due to increased licensing
of our products.

COST OF REVENUES

    COST OF LICENSE REVENUES.  Cost of license revenues was $11,252 for fiscal
1997, $122,504 for fiscal 1998 and $267,985 for fiscal 1999, representing
increases of $111,252, or 989%, from fiscal 1997 to fiscal 1998 and $145,481, or
119%, from fiscal 1998 to fiscal 1999. Cost of license revenues as a percentage
of total revenues was 0.2% for fiscal 1997, 1.5% for fiscal 1998 and 1.1% for
fiscal 1999. The increase in the cost of license revenues from fiscal 1997 to
fiscal 1998 and from fiscal 1998 to fiscal 1999 was due primarily to increased
royalties to third parties for the resale of their software by us, which
accounted for 90% of the increase from fiscal 1997 to fiscal 1998 and 99% of the
increase from fiscal 1998 to fiscal 1999. This software was not embedded in our
products and we do not expect royalty payments from reselling third-party
software to occur frequently in the future.

    COST OF SERVICE AND MAINTENANCE REVENUES.  Cost of service and maintenance
revenues was $1.9 million for fiscal 1997, $4.9 million for fiscal 1998 and
$5.7 million for fiscal 1999, representing increases of $3.0 million, or 158%,
from fiscal 1997 to fiscal 1998 and $878,374, or 16%, from fiscal 1998 to fiscal
1999. Cost of service and maintenance revenues as a percentage of total revenues
was 31% for fiscal 1997, 59% for fiscal 1998 and 24% for fiscal 1999. The
increase in the cost of service and maintenance revenues from fiscal 1997 to
fiscal 1998 and from fiscal 1998 to fiscal 1999 was due to increased salaries
and related personnel expenses for hiring and training of implementation,
maintenance and support personnel, which accounted for 65% of the increase from
fiscal 1997 to fiscal 1998 and 45% of the increase from fiscal 1998 to fiscal
1999. The increase in cost of service and maintenance revenues from fiscal 1998

                                       29
<PAGE>
to fiscal 1999 was also due to increased use of third-party service providers,
which accounted for 36% of the increase.

OPERATING EXPENSES

    SALES AND MARKETING.  Sales and marketing expenses were $3.7 million for
fiscal 1997, $7.9 million for fiscal 1998 and $12.9 million for fiscal 1999,
representing increases of $4.2 million, or 115%, from fiscal 1997 to fiscal 1998
and $5.0 million, or 64%, from fiscal 1998 to fiscal 1999. Sales and marketing
expenses as a percentage of total revenues were 59% for fiscal 1997, 97% for
fiscal 1998 and 55% for fiscal 1999. The increase in sales and marketing
expenses from fiscal 1997 to fiscal 1998 and from fiscal 1998 to fiscal 1999 was
due primarily to increased salaries and related personnel expenses for the
hiring of sales managment, sales representatives, sales support and marketing
personnel, which accounted for 85% of the increase from fiscal 1997 to fiscal
1998 and 72% of the increase from fiscal 1998 to fiscal 1999.

    RESEARCH AND DEVELOPMENT.  Research and development expenses were $979,657
for fiscal 1997, $1.7 million for fiscal 1998 and $4.5 million for fiscal 1999,
representing increases of $727,023, or 74%, from fiscal 1997 to fiscal 1998 and
$2.8 million, or 166%, from fiscal 1998 to fiscal 1999. Research and development
costs as a percentage of total revenues were 16% for fiscal 1997, 21% for fiscal
1998 and 19% for fiscal 1999. The increase in research and development expenses
from fiscal 1997 to fiscal 1998 and from fiscal 1998 to fiscal 1999 was due
primarily to increased salaries and related personnel expenses for the hiring of
additional software developers and quality assurance personnel to support our
product development and testing activities related to the development and
release of our products, which accounted for 73% of the increase from fiscal
1997 to fiscal 1998 and 62% of the increase from fiscal 1998 to fiscal 1999.

    GENERAL AND ADMINISTRATIVE.  General and administrative expenses were
$747,541 for fiscal 1997, $1.4 million for fiscal 1998 and $2.7 million for
fiscal 1999, representing increases of $689,326, or 92%, from fiscal 1997 to
fiscal 1998 and $1.3 million, or 87%, from fiscal 1998 to fiscal 1999. General
and administrative expenses as a percentage of total revenues were 12% for
fiscal 1997, 18% for fiscal 1998 and 11% for fiscal 1999. The increase in
general and administrative expenses from fiscal 1997 to fiscal 1998 was due
primarily to increases in salaries and related personnel expenses, which
accounted for 12% of the increase, increased legal and accounting expenses,
which accounted for 15% of the increase, and increased bad debt reserves, which
accounted for 39% of the increase. The increase from fiscal 1998 to fiscal 1999
was due primarily to increased salaries and related personnel expenses, which
accounted for 13% of the increase, increased bad debt reserves, which accounted
for 54% of the increase, and increased taxes, which accounted for 38% of the
increase.

STOCK-BASED COMPENSATION

    Stock-based compensation expenses were $0 for fiscal 1997, $1.3 million for
fiscal 1998 and $253,068 for fiscal 1999, representing an increase of
$1.3 million from fiscal 1997 to fiscal 1998 and a decrease of $1.0 million, or
81%, from fiscal 1998 to fiscal 1999. The increase in stock-based compensation
from fiscal 1997 to fiscal 1998 was due to the establishment of our 1998 stock
plan and the granting of options promised to employees, some of which vested
immediately or were subject to vesting over periods of less than four years. The
decrease of stock-based compensation from fiscal 1998 to fiscal 1999 was due to
the granting of options with exercise prices closer to the fair value of the
underlying stock.

INTEREST AND OTHER INCOME (EXPENSES), NET

    Interest and other income (expenses) net, was $58,058 for fiscal 1997,
$8,774 for fiscal 1998 and ($319,908) for fiscal 1999, representing a decrease
in income of $49,284, or 85%, from fiscal 1997 to fiscal 1998 and an increase in
expense of $328,682 from fiscal 1998 to fiscal 1999. The decrease in income from
fiscal 1997 to fiscal 1998 was due to an increase in interest expense. The
increase of expense from fiscal 1998 to fiscal 1999 was due to an increase in
interest expense and losses on the sale of securities.

                                       30
<PAGE>
PROVISION (BENEFIT) FOR INCOME TAXES

    Provision (benefit) for income taxes was ($188,458) for fiscal 1997,
$245,494 for fiscal 1998 and $2.1 million for fiscal 1999, representing
increases of $433,952 from fiscal 1997 to fiscal 1998 and $1.9 million, or 761%,
from fiscal 1998 to fiscal 1999. The increase in provision (benefit) for income
taxes from fiscal 1997 to fiscal 1998 and from fiscal 1998 to fiscal 1999 was
due to increases in foreign source revenues that resulted in additional foreign
income and withholding taxes.

QUARTERLY RESULTS OF OPERATIONS


    The following tables present our unaudited consolidated statement of
operations data for each of the seven quarters in the period ended
September 30, 2000, and that data expressed as a percentage of our total
revenues for the quarters presented. This data has been prepared on a basis
consistent with our audited consolidated financial statements appearing
elsewhere in this prospectus, and in the opinion of our management, reflects all
adjustments 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 operating results for any quarter.



<TABLE>
<CAPTION>
                                                                                 THREE MONTHS ENDED
                                                    ----------------------------------------------------------------------------
                                                    MAR. 31,   JUNE 30,   SEPT. 30,   DEC. 31,   MAR. 31,   JUNE 30,   SEPT. 30,
                                                      1999       1999       1999        1999       2000       2000       2000
                                                    --------   --------   ---------   --------   --------   --------   ---------
                                                                                   (IN THOUSANDS)
<S>                                                 <C>        <C>        <C>         <C>        <C>        <C>        <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues:
  License revenues................................  $ 2,054    $ 3,523     $ 5,382    $ 5,133    $ 5,782    $ 7,554     $ 9,079
  Service revenues................................    1,334      1,156       1,582      1,103      3,053      2,905       3,375
  Maintenance revenues............................      269        524         659        941      1,047      1,367       1,762
                                                    -------    -------     -------    -------    -------    -------     -------
          Total revenues..........................    3,657      5,203       7,623      7,177      9,883     11,826      14,216
                                                    -------    -------     -------    -------    -------    -------     -------
Cost of Revenues:
  Cost of license revenues........................      134          3           7        124         17      1,313          10
  Cost of service and maintenance revenues,
    excluding stock-based compensation............    1,033      1,537       1,594      1,573      2,730      2,748       3,287
  Stock-based compensation--cost of service and
    maintenance revenues..........................       10         10          10         10         47         96         121
                                                    -------    -------     -------    -------    -------    -------     -------
          Total cost of revenues..................    1,177      1,550       1,611      1,707      2,794      4,157       3,418
                                                    -------    -------     -------    -------    -------    -------     -------
Gross Profit......................................    2,480      3,653       6,012      5,470      7,089      7,669      10,798
                                                    -------    -------     -------    -------    -------    -------     -------
Operating Expenses:
  Sales and marketing, excluding stock-based
    compensation..................................    2,235      2,687       3,246      4,762      4,557      5,474       7,695
  Research and development, excluding stock-based
    compensation..................................      752      1,063       1,176      1,543      1,570      1,746       1,984
  General and administrative, excluding
    stock-based compensation......................      564        483         795        847      1,495      1,234       1,814
  Stock-based compensation--sales and marketing...       15         15          15         15        138        362         549
  Stock-based compensation--research and
    development...................................       32         32          32         32         49         94         118
  Stock-based compensation--general and
    administrative................................        7          7           7          7         24         49         513
                                                    -------    -------     -------    -------    -------    -------     -------
          Total operating expenses................    3,605      4,287       5,271      7,206      7,833      8,959      12,673
                                                    -------    -------     -------    -------    -------    -------     -------
Operating Income (Loss)...........................   (1,125)      (634)        741     (1,736)      (744)    (1,290)     (1,875)
Interest and Other Income (Expense), Net..........      (35)       (99)        (79)      (107)       (79)       (40)          7
                                                    -------    -------     -------    -------    -------    -------     -------
Income (Loss) before Income Taxes.................   (1,160)      (733)        662     (1,843)      (823)    (1,330)     (1,868)
Provision for Income Taxes........................      432        426         726        532        552        375       1,027
                                                    -------    -------     -------    -------    -------    -------     -------
Net Loss..........................................  $(1,592)   $(1,159)    $   (64)   $(2,375)   $(1,375)   $(1,705)    $(2,895)
                                                    =======    =======     =======    =======    =======    =======     =======
</TABLE>


                                       31
<PAGE>


<TABLE>
<CAPTION>
                                                                              THREE MONTHS ENDED
                                                 ----------------------------------------------------------------------------
                                                 MAR. 31,   JUNE 30,   SEPT. 30,   DEC. 31,   MAR. 31,   JUNE 30,   SEPT. 30,
                                                   1999       1999       1999        1999       2000       2000       2000
                                                 --------   --------   ---------   --------   --------   --------   ---------
                                                                     (AS A PERCENTAGE OF TOTAL REVENUES)
<S>                                              <C>        <C>        <C>         <C>        <C>        <C>        <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues:
  License revenues.............................     56 %       68 %        71 %       72 %       58 %       64 %        64 %
  Service revenues.............................     37         22          21         15         31         25          24
  Maintenance revenues.........................      7         10           8         13         11         11          12
                                                   ---        ---         ---        ---        ---        ---         ---
          Total revenues.......................    100        100         100        100        100        100         100
                                                   ---        ---         ---        ---        ---        ---         ---
Cost of Revenues:
  Cost of license revenues.....................      4         --          --          2         --         11          --
  Cost of service and maintenance revenues,
    excluding stock-based compensation.........     28         30          21         22         28         23          23
  Stock-based compensation--cost of service and
    maintenance revenues.......................     --         --          --         --         --          1           1
                                                   ---        ---         ---        ---        ---        ---         ---
          Total cost of revenues...............     32         30          21         24         28         35          24
                                                   ---        ---         ---        ---        ---        ---         ---
Gross Profit...................................     68         70          79         76         72         65          76
                                                   ---        ---         ---        ---        ---        ---         ---

Operating Expenses:
  Sales and marketing, excluding stock-based
    compensation...............................     61         52          43         66         46         46          54
  Research and development, excluding
    stock-based compensation...................     21         20          15         21         16         15          14
  General and administrative, excluding
    stock-based compensation...................     15          9          10         12         15         10          13
  Stock-based compensation--sales and
    marketing..................................     --         --          --         --          1          3           4
  Stock-based compensation--research and
    development................................      1          1          --          1          1          1           1
  Stock-based compensation--general and
    administrative.............................     --         --          --         --         --         --           3
                                                   ---        ---         ---        ---        ---        ---         ---

          Total operating expenses.............     98         82          69        100         79         75          89
                                                   ---        ---         ---        ---        ---        ---         ---

Operating Income (Loss)........................    (30)       (12)         10        (24)        (7)       (10)        (13)

Interest and Other Expense, Net................     (1)        (2)         (1)        (2)        (1)        (0)         --
                                                   ---        ---         ---        ---        ---        ---         ---
Income (Loss) before Income Taxes..............    (31)       (14)          9        (26)        (8)       (10)        (13)

Provision for Income Taxes.....................     12          8          10          7          6          4           7
                                                   ---        ---         ---        ---        ---        ---         ---
Net Loss.......................................    (43)%      (22)%        (1)%      (33)%      (14)%      (14)%       (20)%
                                                   ===        ===         ===        ===        ===        ===         ===
</TABLE>



    REVENUES.  Our total revenues increased for each of the seven quarters in
the period ended September 30, 2000, except for the quarter ended December 31,
1999. The increase in revenues for these periods reflects the increase in the
number of customers and implementations and increased license contract values
due to greater market acceptance of the iCollaboration suite, expanded sales and
marketing efforts, expansion into new market segments, the introduction of new
products and the upgrade of products. The decrease in revenues for the quarter
ended December 31, 1999 was due to higher than anticipated revenues for the
quarter ended September 30, 1999. During the quarter ended June 30, 2000,
$1.4 million in revenue represents sales of third-party software which we do not
expect to occur frequently in the future.



    COST OF REVENUES.  Total cost of revenues increased for each of the six
quarters in the period ended June 30, 2000. Total cost of license revenue
decreased in the quarter ended September 30, 2000 compared to the quarter ended
June 30, 2000 because $1.1 million in royalties paid to two third parties in the
quarter ended June 30, 2000 did not recur. The increase or decrease in the cost
of license revenues from


                                       32
<PAGE>

quarter to quarter during these seven quarters was related to the periodic
resale of third-party software. This third-party software was not embedded in
our products and we do not expect royalty payments from reselling third-party
software to occur frequently in the future. The increase in the cost of service
and maintenance revenues was due primarily to an increase in staffing and
related expenses required to support greater business activity. The increase in
the cost of service and maintenance revenues for the quarters ended March 31,
2000, June 30, 2000 and September 30, 2000 was also due to increased use of
third party service-providers to implement our software.



    OPERATING EXPENSES.  Operating expenses increased for each of the seven
quarters in the period ended September 30, 2000. The increase in operating
expenses for these periods was due to increased sales and marketing, research
and development and general and administrative expenses for higher numbers of
personnel, related hiring expenses and the growth of our business. The increase
in sales and marketing expenses for the quarter ended December 31, 1999 was also
due to commissions and other year-end compensation. The increase in research and
development expenses for the quarter ended December 31, 1999 was also due to the
payment of special bonuses. The increase in general and administrative expenses
for the quarter ended March 31, 2000 was also due to higher accounting and legal
expenses.


    Our quarterly operating results have varied widely in the past, and we
expect that they will continue to fluctuate in the future because of a number of
factors, many of which are outside our control. We believe that our
period-to-period operating results are not necessarily meaningful, and you
should not rely on them as indicative of our future performance. You should also
evaluate our prospects in light of the risks and uncertainties encountered by
early-stage companies in new and rapidly emerging markets. We may not be able to
successfully address the risks that we face.

    Although we have experienced significant revenue growth recently, our
revenue may not continue to grow and we may not become or remain profitable in
the future. Our expansion will also place significant demands on our management
and operational resources. To manage this rapid growth and increased demands, we
must improve existing and implement new operational and financial systems,
procedures and controls. We must also hire, train, manage, retain and motivate
qualified personnel. We expect future expansion to continue to challenge our
ability to hire, train, manage, retain and motivate our employees.

LIQUIDITY AND CAPITAL RESOURCES

HOW WE HAVE FINANCED OUR BUSINESS

    We have funded our operations primarily through the private sale of equity
securities with aggregate proceeds of approximately $32.7 million and, to a
lesser extent, through bank lines of credit. On August 24, 2000, we closed a
private sale of series C redeemable convertible preferred stock raising
aggregate proceeds of approximately $20 million. The investors that participated
in the series C financing, ordered by size of investment, include J. &
W. Seligman & Co., Amerindo Investment Advisors, Vitria Technology, Inc., Sutter
Hill Ventures, L.P. and affiliates, DRW Venture Partners L.P., an affiliate of
Dain Rauscher Incorporated, one of the underwriters of this offering, and
Information Technology Ventures II, L.P. and affiliates.

CASH


    LINES OF CREDIT.  At September 30, 2000, we had cash and cash equivalents of
$19.0 million and a secured bank credit line of $5.0 million. This line of
credit is secured by our accounts receivable and substantially all our other
assets. We anticipate using available cash to provide working capital to fund
our operations, to purchase capital equipment and to make leasehold and other
facility improvements.



    OPERATING ACTIVITIES.  Net cash provided by (used in) our operating
activities primarily equals our net income adjusted for changes in deferred
revenue, accounts receivable, accounts payable, and accrued


                                       33
<PAGE>

expenses and taxes. Deferred revenue represents maintenance that is billed
annually in advance, with revenue being recognized ratably over the billing
period, and licenses already billed for which revenue cannot yet be recognized
under our revenue recognition policies. An increase in deferred revenue will
result in an increase in cash, if collected, or an increase in accounts
receivable, if not collected. Net cash used in operating activities was $810,321
for fiscal 1997, $8.6 million for fiscal 1998, and $441,016 for fiscal 1999, and
net cash used by operating activities was $255,474 for the nine months ended
September 30, 2000. Net cash used in operating activities for fiscal 1997 and
for fiscal 1998 related primarily to funding our operating losses. Net cash used
in operating activities in fiscal 1999 related primarily to an operating loss of
$5.2 million and increased accounts receivables of $3.0 million partially offset
by $1.2 million in deferred revenue and a $4.9 million increase in accounts
payable and accrued expenses and taxes. Deferred revenue, accounts payable and
accrued expenses and taxes increased due to our revenue and corresponding
expense growth. Net cash used by operating activities for the nine months ended
September 30, 2000, related primarily to an operating loss of $6.0 million and
increased accounts receivables of $9.2 million offset by an increase of
$7.4 million in deferred revenue and a $5.4 million increase in accounts
payable, accrued liabilities and accrued taxes payable. Deferred revenue
increased with our growth in maintenance revenue and growth in license revenue,
including specific licenses accounted for as subscriptions with revenue being
recognized ratably over the term of the contract. Accounts payable and accrued
expenses and taxes increased due to our revenue growth and corresponding expense
increase.



    INVESTING ACTIVITIES.  Net cash provided by (used in) investing activities
was ($3.3) million for fiscal 1997, ($1.2) million for fiscal 1998 and
$2.5 million for fiscal 1999, and primarily related to capital equipment
expenditures and net short-term investments. Net cash used in investing
activities of $2.0 million for the nine months ended September 30, 2000 was used
primarily to acquire capital equipment. Capital equipment expenditures primarily
consist of the purchase of computer hardware and software, office furniture and
equipment and leasehold improvements. We expect capital expenditures and lease
commitments to increase in the future as our business expands.



    FINANCING ACTIVITIES.  Net cash provided by financing activities was
$4.4 million for fiscal 1997, $10.2 million for fiscal 1998, $2.9 million for
fiscal 1999 and $15.1 million for the nine months ended September 30, 2000. Net
cash was provided primarily by the sale of capital stock and, to a lesser
extent, bank and capital lease borrowings and the exercise of warrants and
options.


FUTURE CASH NEEDS

    We expect to experience significant growth in our operating expenses,
particularly sales and marketing and research and development expenses, and in
capital expenditures as we execute our business strategy. We anticipate that
these operating expenses and planned capital expenditures will constitute a
material use of our cash resources. We may use cash resources to fund
acquisitions of, or investments in, complementary businesses, technologies or
product lines. We believe that the net proceeds from the sale of the common
stock in this offering, cash balances and borrowings available under our credit
facility will be sufficient to meet our working capital needs for at least the
next 12 months. After that, we may require additional funds. We may not be able
to obtain adequate or favorable financing in the future. Any additional
financing may dilute your ownership interest in Adexa, and new debt or equity
securities, if issued, could have rights senior to those of our common
stockholders.

RECENT ACCOUNTING PRONOUNCEMENTS

    In December 1998, the American Institute of Certified Public Accountants
issued SOP No. 98-9, Modification of SOP 97-2, Software Revenue Recognition,
with Respect to Certain Transactions, which amends SOP No. 97-2, and was
effective for transactions that we entered into beginning January 1, 2000.
Adoption of SOP No. 98-9 did not have a material impact on our consolidated
financial position or results of operation.

                                       34
<PAGE>
    DERIVATIVES.  In June 1998, June 1999 and June 2000, the Financial
Accounting Standards Board issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, SFAS No. 137, Accounting for Derivative
Instruments and Hedging Activities--Deferral of the Effective Date of FASB
Statement No. 133 and SFAS No. 138, Accounting for Derivative Instruments and
Hedging Activities--An Amendment of SFAS No. 133. SFAS No. 133 requires the
recognition of all derivatives as either assets or liabilities in the balance
sheet and the measurement of those instruments at fair value. The accounting for
changes in the fair value of a derivative depends on the planned use of the
derivative and the resulting designation. We are required to implement SFAS
No. 133 in the first quarter of 2001. We have not determined the effects, if
any, adoption of SFAS No. 133 will have on our consolidated financial
statements.

    STOCK COMPENSATION.  In March 2000, the Financial Accounting Standards Board
issued FASB Interpretation No. 44, Accounting for Certain Transactions Involving
Stock Compensation--an interpretation of APB Opinion No. 25. FIN 44 clarifies
the application of APB Opinion No. 25 and clarifies the following:

    - the definition of an employee for purposes of applying APB Opinion
      No. 25;

    - the criteria for determining whether a plan qualifies as a noncompensatory
      plan;

    - the accounting consequence of various modifications to the terms of the
      previously fixed stock options or awards; and

    - the accounting for an exchange of stock compensation awards in a business
      combination.

    FIN 44 is effective July 1, 2000, but specific conclusions in FIN 44 cover
specific events that occurred after either December 15, 1998 or January 12,
2000. We do not expect the application of FIN 44 to have a material impact on
our consolidated financial position or results of operations.

    In December 1999, the SEC issued Staff Accounting Bulletin No. 101, Revenue
Recognition in Financial Statements, which summarizes the views of the staff of
the SEC in applying generally accepted accounting principles to revenue
recognition in financial statements. In March 2000 and June 2000 the SEC issued
SAB No. 101A and SAB No. 101B, which delayed the implementation dates of
SAB No. 101. We believe our revenue recognition policies comply with SAB
No. 101.

QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

    We are headquartered in the United States and market our products in North
America, Asia and Europe. Our financial results could be affected by factors
such as changes in foreign currency exchange rates or weak economic conditions
in foreign markets. Because the majority of our revenues are denominated in U.S.
dollars, a strengthening of the dollar could make our products less competitive
in foreign markets. Our interest income is sensitive to changes in the general
level of U.S. interest rates, particularly since the majority of our investments
are in short-term instruments. Due to the short-term nature of our investments,
we believe that there is not a material risk exposure.

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<PAGE>
                                    BUSINESS

OVERVIEW

    We provide software products that enable c-Commerce. Our iCollaboration
product suite is designed to synchronize, optimize and automate interactions
among trading partners at multiple tiers of the supply chain. By synchronize, we
mean coordinate multiple, interdependent tasks so that they happen at the
correct time and in the desired order. By optimize, we mean use the resources
within an enterprise and across its supply chain to complete tasks in a highly
efficient manner. Our software allows companies and participants in electronic
exchanges to collaborate in real-time with members of their extended supply
chains and provides visibility into critical business variables, such as changes
in customer demand and material and component availability. Users of our
products can predict future material needs based on collaborative demand
forecasts, can provide their customers with accurate delivery dates and can
optimize a broad range of supply chain activities, from coordinating shop floor
production processes to managing resource allocation across an enterprise with
multiple locations. Our products are tailored for the Internet using an open,
standards-based architecture and can be easily configured for the individual
business conditions and industry requirements of each customer, allowing us to
deliver a company-specific solution.

    We target Global 2000 companies in large markets that are characterized by
complex supply chains, including the aerospace and defense, automotive,
electronics, semiconductors and textiles and apparel industries. We sell our
products to companies and electronic exchanges through a direct sales force and
indirect channels, including e-Business infrastructure providers, such as Agile
Software Corporation, BroadVision, Inc., Selectica, Inc., and Vitria Technology,
Inc., and resellers, such as Compaq Computer Corporation, Hewlett-Packard Japan,
Ltd., QAD, Inc. and Western Data Systems. Our largest customers based on
end-user license contract revenues include: Advanced Micro Devices Inc.;
Conexant Systems, Inc.; Framatome Technologies, Inc.; Fujitsu Quantum Devices,
Ltd.; Lucent Technologies, Inc.; Matsushita Electric Industrial Co., Ltd.;
Philips Semiconductors; Sanyo Electric Co. Ltd.; and Sumitomo Metal Industries,
Ltd.

INDUSTRY BACKGROUND

    EMERGENCE OF THE INTERNET FOR BUSINESS

    The Internet has emerged as a critical communications and commerce platform
for business, providing a medium through which companies can interact in
real-time with their trading partners and customers. While first generation
business-to-business solutions are focused on providing cost-savings through
activities such as procurement of indirect goods, companies are now beginning to
use the Internet to increase market share and revenues. These businesses are
increasingly using the Internet to collaborate with suppliers, distributors and
customers to make faster, better informed business decisions.

    The Internet has also given rise to electronic exchanges where companies can
transact business with multiple buyers and sellers. These electronic exchanges
may be private exchanges, which are operated by a single business for the
purpose of trading with multiple partners, or may be public exchanges, which are
operated by third parties and facilitate commerce among multiple buyers and
multiple sellers. Businesses are attempting to use these electronic exchanges to
remove market inefficiencies and share information broadly among market
constituencies. These efforts, along with the widespread use of the Internet,
have increased the volume and speed of business interactions, placing greater
demands on enterprises to become more efficient, make decisions faster, bring
products to market more quickly and provide a higher level of service to
customers and partners.

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<PAGE>
    INCREASING SUPPLY CHAIN COMPLEXITY

    Supply chains are communities of trading partners that source, make and
deliver both finished products for resale and the materials and components used
to produce them. We believe that supply chains are becoming increasingly complex
and that the primary reasons for this change include:

    - heightened demand for complex build-to-order products, which is causing
      businesses to add new suppliers and increase the number of components that
      they purchase through their supply chains;

    - increased outsourcing of manufacturing processes, which is adding to the
      number of parties involved in the production and distribution of products;
      and

    - continuing globalization, which is extending supply chains across multiple
      continents.

    Together, these factors are adding significant complexity to the supply
chain by increasing the number of supply chain activities that must be
synchronized.

    Effective synchronization of the extended supply chain is highly
challenging, in part because many supply chain processes are interdependent and
determined by both prior and future events. Coordination of the supply chain
typically involves frequent interaction among multiple parties, each of which
must also simultaneously react to market forces originating outside the supply
chain. Ineffective supply chain coordination can harm revenues, costs and
customer satisfaction, particularly if a company is unable to effectively manage
material and capacity constraints. For example, late components from a supplier
could result in poor customer service or higher production costs. Similarly,
unexpected changes in customer demand can result in a lost sale or excess
inventory if a company's supply chain is inflexible. Ultimately, if its supply
chain cannot react quickly and in a coordinated fashion to a broad range of
market forces, a company may risk losing ground to more responsive competitors.

    THE EMERGENCE OF c-COMMERCE

    We believe companies are beginning to use the Internet and its inherent
speed and flexibility to synchronize their supply chain activities and to
conduct c-Commerce. c-Commerce is an Internet-based approach to sourcing, making
and delivering goods that involves intelligent planning, real-time
synchronization and collaboration among members of an extended supply chain.
c-Commerce reduces inefficiencies in the supply chain and empowers enterprises
and electronic exchanges to respond more quickly and effectively to customer
demands and changing variables within the supply chain. c-Commerce represents a
distinct departure from e-Commerce, which is merely transactional in nature.
While c-Commerce does involve Internet-based transactions between manufacturers
and suppliers for the real-time procurement of direct materials--the basis for
many electronic exchanges--it also involves using the Internet to
collaboratively determine how and when these materials are purchased and
delivered across a multi-tiered supply chain. c-Commerce can also involve
providing real-time product availability information to customers based on the
collective capabilities of a business's supply chain or creating production
forecasts based on real-time inputs from multiple supply chain participants.

    In April 2000, AMR Research predicted that Internet-based
business-to-business commerce will grow from $215 billion in 1999 to
$5.7 trillion by 2004. AMR also estimated that the cost of goods, for public
U.S. companies across all industries, represents 63% of revenue, while sales,
general and administrative costs are 18% of revenue. Consequently we believe
that there will be an increasing need for business-to-business commerce
applications that support the sourcing, making and delivering of direct goods
using the Internet.

    INADEQUACIES OF CURRENT SOLUTIONS

    Many companies are using various enterprise applications, such as those for
procurement, enterprise resource planning and manufacturing automation, to help
streamline specific business processes. Generally,

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<PAGE>
these applications focus on tasks such as transaction execution or data
collection and address only limited aspects of the supply chain within the
enterprise. These same companies are now attempting to extend the functionality
of these applications to conduct c-Commerce. c-Commerce, however, requires
applications that account for the interdependence of all supply chain functions
to synchronize multiple activities across the extended supply chain efficiently
and intelligently.

    While there are other software products in the market that attempt to
address c-Commerce, we believe that they fall short in one or more of the
following ways:

    - they do not scale easily with growing numbers of supply chain members,
      increasing transaction volumes and expanding product complexity, and their
      functionality cannot be easily extended to meet a business's evolving
      needs, due in large part to their client-server architecture;

    - they cannot be configured to support company-specific supply chain
      strategies;

    - they do not closely synchronize and integrate supply chain activities at
      different levels of the enterprise;

    - they do not solve the complex and changing supply chain problems of
      enterprises and electronic exchanges on a rapid basis;

    - they do not integrate easily with an organization's existing technologies
      or those of its supply chain members, resulting in significant
      implementation time and expense; and

    - they do not address supply chain-specific issues across a broad range of
      industries.

    We believe that to retain both customers and key supply chain partners,
enterprises and electronic exchanges must conduct c-Commerce, and that an
effective c-Commerce strategy demands a comprehensive approach to the supply
chain. We consequently believe there is a significant opportunity for a software
platform that accounts for the interdependence of supply chain functions, is
tailored for the Internet, supports real-time interaction and is adaptable to
any business environment.

THE ADEXA SOLUTION

ATTRIBUTES

    We develop and market software products that enable c-Commerce. Our
iCollaboration suite is designed to automate and optimize supply chain
interactions among trading partners. Our software enables intelligent planning,
real-time synchronization and collaboration among members of an extended, multi-
tiered supply chain. Our software addresses the increasing volume, complexity
and speed of business interactions within and across the extended supply chain.
Our software's architecture is designed for the open and scalable requirements
of c-Commerce and for rapid implementation and integration. The key attributes
of our solution include:

    SUPPLY CHAIN VISIBILITY AND SYNCHRONIZATION.  Our software facilitates
c-Commerce by allowing enterprises to gain visibility into supply and demand
information across the supply chain, enabling them to synchronize multiple
interactions at different tiers of the supply chain. Using our software,
enterprises can provide customers with accurate delivery dates and
build-to-order commitments and make rapid decisions about choosing alternative
suppliers or allocating limited resources, based on up-to-the-minute
information.

    SUPPLY CHAIN OPTIMIZATION.  Our software employs sophisticated algorithms
and heuristics designed to quickly reach optimal planning solutions. We believe
that our iCollaboration suite provides faster planning solutions relative to
competing software products.

    BUSINESS DECISION AUTOMATION.  Our software uses agent-based technology and
user-defined rules to intelligently automate selected inter- and intra-company
business decisions. By automating activities, such as determining order promise
dates or material requirements, our software enables enterprises to expedite

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<PAGE>
and improve their decision-making processes. This enhances the ability of
enterprises to respond to changes in supplier commitments, customer requirements
and market conditions.

    ENHANCED AND EXPANDED EXCHANGE SERVICES.  Our iCollaboration suite allows
private and public exchanges to provide enhanced and expanded services to their
customers such as collaborative demand planning, multi-tiered supply chain
planning, capacity brokering, rules-based auctioning and order promising and
inventory management. Our software also enables electronic exchanges to provide
real-time available-to-promise information and gives electronic exchange
participants visibility into material or capacity shortages. Our software also
provides suppliers with advance notification of demand for their products,
allowing them to adjust production to improve customer service.

    INTERNET-BASED ARCHITECTURE.  Our iCollaboration suite is based on open
systems and industry standards that we believe allow for rapid implementation
and scalable Internet applications. In particular, our software:

    - uses a distributed architecture that can allow it to process high volumes
      of complex data in real-time and support large numbers of concurrent users
      across multiple remote locations;

    - uses a single data model that can accelerate software performance and
      enable application and feature extensibility;

    - features a component-based design that we believe provides improved
      scalability, reliability and availability relative to traditional
      applications; and

    - overlays existing software applications, extending their functionality
      rather than replacing it.

    ADAPTABILITY AND FLEXIBILITY.  Our products employ user-definable business
rules and industry-specific templates, allowing our customers to accurately
model their specific supply chain-related business processes. Our software can
be easily configured for the individual business conditions and industry
requirements of each customer, allowing us to deliver a tailored solution.

BENEFITS

    Our software is designed to help enterprises and electronic exchanges
improve profitability and increase revenue by providing the following key
benefits:

    ENHANCED SUPPLY CHAIN EFFICIENCY.  Our software is designed to optimize
supply chain efficiency by allowing enterprises and electronic exchanges to
synchronize material, product and data flows among multiple locations and
third-party suppliers. Our products can help enterprises reduce inventory,
enhance financial results, increase resource utilization and improve on-time
delivery performance.

    GREATER EXCHANGE PREPAREDNESS.  By streamlining and automating selected
business processes, our software enables companies to prepare for the increased
velocity of electronic exchange-based business activity by improving decision
response times, shrinking information lead times and reducing planning cycles.
For example, our software can rapidly determine a supplier's ability to fulfill
an order and the price at which it can do so and remain profitable, allowing the
supplier to be competitive when responding to a real-time auction bid or
request-for-quote.

    INCREASED RESPONSIVENESS TO CUSTOMERS.  Our iCollaboration suite enables our
customers to provide real-time available-to-promise information to buyers of
both standard and configured products. Our software also allows enterprises and
electronic exchange participants to respond to changes in demand by
collaborating in real-time with supply chain members to improve on-time delivery
of the specified quantity and types of products. We believe this enables
companies and electronic exchanges to provide better customer service than their
competitors.

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<PAGE>
    CLOSER COORDINATION WITH SUPPLIERS.  Our software enables enterprises and
electronic exchanges to provide suppliers with updated and accurate projections
of short- and long-term demand. This visibility gives suppliers the flexibility
to plan production and predict material needs, enabling them to use their
resources more efficiently, increase inventory turnover and respond to
last-minute demand changes.

    IMPROVED STRATEGIC PLANNING AND FLEXIBILITY.  Our collaborative planning
solutions enable enterprises and electronic exchange participants to make
strategic decisions across functional areas throughout the supply chain. Our
software is designed to help companies improve profitability by enabling them to
plan the quantities of products they produce, the components they use to produce
them and the distribution resources they use to support these activities. Our
software provides enterprises with visibility into changes in future supply and
demand that can enable them to plan more effectively and to manage constraints
in their development, procurement, production and delivery processes.

STRATEGY

    Our objective is to become a leading global provider of software that
enables c-Commerce. Key elements of our strategy are to:

    FOCUS ON LARGE MARKETS.  We focus our sales and marketing efforts primarily
on Global 2000 companies in industries that are characterized by complex supply
chains, including the aerospace and defense, automotive, electronics,
semiconductors and textiles and apparel industries. We intend to use our current
customer base and industry knowledge to further penetrate these markets. We also
intend to target companies in new industries both by selling our software to
well-known companies within those markets and by taking advantage of our
software's inherent flexibility and our strategic relationships to create new
industry-specific solutions.

    TARGET ELECTRONIC EXCHANGES.  We are a neutral provider of software to
electronic exchanges, which allows us to license our products to multiple
electronic exchanges within the same industry. We will continue to license our
products to electronic exchanges because we believe that our software allows
them to offer their participants enhanced and expanded services. When used
within an exchange, our software products provide exchange participants with the
ability to effectively conduct c-Commerce. For example, our software allows
buyers to receive available-to-promise information and sellers to gain
visibility into future demand. As an alternative, our software can also be
hosted by an exchange, allowing exchange participants to subscribe to components
of the iCollaboration suite for the specific functionality that they need.

    EXTEND OUR PRODUCT OFFERINGS AND TECHNOLOGY LEADERSHIP.  We will continue to
develop our software products using advanced technologies, including Java and
extensible mark-up language, or XML. Building on an open and scalable
architecture, we have established simple interfaces between our iCollaboration
suite and various transaction and execution systems and we intend to expand
these interfaces to support other existing and emerging technologies. We intend
to use our industry experience and our knowledge of advanced software technology
to continue to improve the functionality of our software. We also plan to
continue to expand our offerings by enabling applications service providers, or
ASPs, to host our iCollaboration suite. We believe that this ASP offering is
another distribution channel that will allow us to target small and medium sized
enterprises.

    TAKE ADVANTAGE OF NETWORK EFFECT TO EXPAND CUSTOMER BASE.  As users of the
iCollaboration suite implement our software across their supply chains, their
business partners and customers are exposed to our products. We believe that
this exposure, which allows non-customer participants in the supply chain to
benefit from our software, will create a network effect that will accelerate
industry recognition and adoption of our iCollaboration suite, and we intend to
take advantage of this network effect to expand our customer base.

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<PAGE>
    BUILD RELATIONSHIPS WITH IMPLEMENTATION PARTNERS.  We intend to continue to
pursue additional relationships with systems integrators and other
implementation partners that can provide consulting and implementation services,
enabling us to focus on building a high-margin, software-driven business. These
relationships with systems integrators are also designed to enable us to extend
the reach of our sales and marketing efforts.

    CONTINUE TO EXPAND SALES AND MARKETING EFFORTS.  We intend to pursue a
global distribution strategy by expanding our direct sales force and by taking
advantage of indirect sales channels with complementary technology providers,
resellers and systems integrators to increase widespread adoption of our
products. To accomplish this objective, we plan to increase the size of our
sales force to target a broader base of potential customers. We will also expand
our reseller relationships with independent software vendors that have
traditionally sold their products in the markets that we intend to penetrate. We
also plan to promote our brand awareness through expanded sales and marketing
campaigns, including joint marketing efforts with our partners.

PRODUCTS

    Our iCollaboration suite consists of multiple components designed to provide
enterprises and electronic exchanges with c-Commerce functionality, including
collaborative planning, supply chain synchronization and optimization and
business decision automation. The iCollaboration suite is a component-based,
extensible solution that uses a common, unified architecture. Our software's
design and our library of user-defined business rules and industry-specific
templates allow rapid configuration and implementation of a c-Commerce solution
tailored to customers' specific needs.

    iCOLLABORATION SUITE FOR ENTERPRISES

    Our iCollaboration suite for enterprises is designed to enable companies to
plan and coordinate activities across multiple levels of the supply chain both
inside and outside an enterprise. At the corporate level, our products are
designed to enable an enterprise with multiple internal and external production
and distribution facilities to synchronize and optimize activities across its
global supply chain. At the individual site or plant level, our products
facilitate distributed and decentralized planning that improves operational
efficiency and sequences work orders in a way that is consistent with corporate
planning objectives. And at the shop floor level, our software provides
planning, scheduling and monitoring for individual production lines and
machines. Our software can also synchronize supply chain activities across these
different levels of the enterprise. For example, changing supply chain
conditions at the production line and shop floor levels can be assessed at the
plant and corporate planning levels so that activities can be resynchronized.

    iCOLLABORATION SUITE FOR ELECTRONIC EXCHANGES

    Our iCollaboration suite can be used to address the specific supply
chain-related needs of electronic exchanges. Our iCollaboration suite enables
organizations with private exchanges to collaborate and share supply chain
information with their customers and suppliers in a secure environment. Our
iCollaboration suite provides public exchanges with enhanced and expanded
services to attract and retain both buyers and sellers.

    Electronic exchanges can choose among a variety of functionalities depending
on their specific requirements. For example, in a private exchange an enterprise
may want to share critical supply chain information such as work-in-progress,
finished and component goods inventory levels and production capacity.
Functionalities such as collaborative demand or supply planning and real-time
order promising may be desirable in both private and public exchanges. A public
exchange may offer capacity brokering where the excess production capacity of
the exchange participants is aggregated and auctioned to large potential buyers.
The component-based architecture of our iCollaboration suite is designed to
allow us to

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<PAGE>
configure our software to meet the varied needs of electronic exchanges and
adapt to their evolving business models and structures.

    iCOLLABORATION COMPONENTS

    Our iCollaboration suite consists of the following components:

<TABLE>
<S>                                            <C>
iCOLLABORATION COMPONENTS                      DESCRIPTION
----------------------------------------------------------------------------------------------------
Supply Chain Planner                           iCollaboration's Supply Chain Planner is a planning
                                               application that coordinates and synchronizes global,
                                               multi-tiered supply chain activities, including
                                               procurement, production and distribution. Supply
                                               Chain Planner uses a detailed supply chain model that
                                               accounts for multiple production and distribution
                                               sites, transportation networks, suppliers and
                                               customers and is designed to help enterprises and
                                               exchange participants optimize the use of inventory,
                                               material and capacity and improve financial
                                               performance.
----------------------------------------------------------------------------------------------------
Available-to-Promise                           iCollaboration's Available-to-Promise, or ATP, is
                                               designed to provide real-time available-to-promise
                                               and capable-to-promise information. ATP
                                               simultaneously considers a variety of constraints
                                               provided by Supply Chain Planner, including current
                                               and projected inventory positions, production and
                                               distribution capacity, appropriate substitution and
                                               configuration alternatives and the priorities of
                                               competing commitments.
----------------------------------------------------------------------------------------------------
Plant Planner                                  iCollaboration's Plant Planner is a planning
                                               application designed to optimize plant-level
                                               operations without violating strategic business
                                               constraints, such as customer priority. Plant Planner
                                               uses configurable business rules to model complex
                                               production processes and advanced planning algorithms
                                               to quickly process and route large numbers of jobs.
                                               We believe that Plant Planner is designed to improve
                                               the profitability, reliability and feasibility of
                                               production plans by balancing material and capacity
                                               constraints with supplier constraints and customer
                                               preferences as they change.
----------------------------------------------------------------------------------------------------
Strategic Planner                              iCollaboration's Strategic Planner is a
                                               scenario-based planning and optimization application
                                               that can enable companies to design their supply
                                               chain and business processes to achieve strategic
                                               business objectives, improve customer service levels
                                               and more accurately predict the impact of supply
                                               chain decisions on financial performance.
----------------------------------------------------------------------------------------------------
</TABLE>

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<PAGE>
<TABLE>
<S>                                            <C>
----------------------------------------------------------------------------------------------------
Collaborative Demand Planner                   iCollaboration's Collaborative Demand Planner can
                                               enable multiple geographically dispersed users within
                                               and outside an enterprise or exchange to
                                               collaboratively plan for future demand. Collaborative
                                               Demand Planner enables users to aggregate, securely
                                               view, analyze and publish changes to forecasted
                                               demand. Collaborative Demand Planner quickly creates
                                               a consensus forecast based on a broad array of data
                                               inputs from a wide range of users.
----------------------------------------------------------------------------------------------------
Collaborative Supply Planner                   iCollaboration's Collaborative Supply Planner is
                                               being designed to complement Collaborative Demand
                                               Planner by providing suppliers with visibility into
                                               forecasted demand over the Internet. Collaborative
                                               Supply Planner will enable multiple levels of
                                               suppliers to collaborate on component-level demand
                                               from Supply Chain Planner. Collaborative Supply
                                               Planner is currently under development.
----------------------------------------------------------------------------------------------------
Product Development Planner                    iCollaboration's Product Development Planner is
                                               designed to optimize product development processes by
                                               intelligently allocating design resources,
                                               synchronizing multiple development projects and
                                               scheduling sequence-dependent activities. Product
                                               Development Planner uses a planning engine to create
                                               product development plans that are based on
                                               user-defined constraints.
----------------------------------------------------------------------------------------------------
Shop Floor Sequencer                           iCollaboration's Shop Floor Sequencer is designed to
                                               translate work orders into detailed execution
                                               instructions for shop floor systems and sequences
                                               jobs across multiple plant resources to efficiently
                                               meet production requirements. Shop Floor Sequencer
                                               functions as an intelligent buffer between the
                                               production plan and shop floor systems and can reduce
                                               the impact of unexpected events, such as machine
                                               outages or inventory shortfalls, by automatically
                                               re-sequencing production events.
----------------------------------------------------------------------------------------------------
Business Agents                                - iCOLLABORATION'S ATP AGENT is embedded in external
                                                 applications, such as an order entry system, and
                                                 works with our Available-to-Promise application to
                                                 provide customers with real-time order promising
                                                 information.
                                               - iCOLLABORATION'S BUSINESS ALERT AGENT is a
                                               messaging system that monitors supply chain
                                                 activities and sends alerts when user-defined
                                                 thresholds are exceeded.
                                               - iCOLLABORATION'S CUSTOMER AGENT monitors order
                                               status and notifies customers when user-defined
                                                 thresholds are exceeded.
                                               - iCOLLABORATION'S SUPPLIER AGENT monitors the status
                                               of ordered components and provides users with
                                                 immediate access to material requirement
                                                 information when new production plans are created.
----------------------------------------------------------------------------------------------------
</TABLE>

                                       43
<PAGE>
<TABLE>
<S>                                            <C>
----------------------------------------------------------------------------------------------------
Unified Data Server                            iCollaboration's Unified Data Server provides
                                               persistent data storage for all iCollaboration
                                               components through a relational database. Unified
                                               Data Server manages the data required for distributed
                                               supply chain planning by enabling data communication
                                               between multiple Unified Data Server components and
                                               supporting multiple supply chain models.
----------------------------------------------------------------------------------------------------
Supply Chain Controller                        iCollaboration's Supply Chain Controller is the
                                               connectivity, workflow and integration component for
                                               the iCollaboration suite. Supply Chain Controller
                                               consists of a graphical workflow modeling tool,
                                               application programming interfaces and certified
                                               connectors to external data sources and applications.
----------------------------------------------------------------------------------------------------
</TABLE>

    FUTURE RELEASES

    We are developing a major release of our iCollaboration suite, version 5.0.
This version of our software will feature extended functionality and enhanced
technology based on our existing single data model and Internet framework. The
iCollaboration suite will be further enhanced to provide a unified environment
for collaborative commerce ranging from planning to execution and is being
developed to operate with different levels of detail based on the availability
of data and business objectives. Our agent technology is also being further
developed to provide personalized user- and business rule-defined alerts and
work flow structure. We have completed the basic architecture for version 5.0
and are developing a prototype version. We expect version 5.0 to be available to
end users in the first half of 2001.

iCOLLABORATION ARCHITECTURE AND TECHNOLOGY

    We believe iCollaboration's architecture and underlying technology provide
significantly greater flexibility and adaptability, scalability and openness
than competitive product offerings. We believe our product offerings have
technological advantages, including:

    FLEXIBILITY AND ADAPTABILITY.  All iCollaboration suite components share a
common architecture that provides the flexibility and adaptability to address a
customer's particular business environment, processes and requirements. Our
software's functionality is flexible, rather than rigidly designed to address
only a specific industry. Its components can be readily configured to address
specific customer needs through a library of user-definable business rules,
industry-specific templates, attribute logic and alternative decision logic. A
customer can further extend the applicability of iCollaboration software by
fine-tuning the pre-existing library of business rules and attributes or by
introducing more detailed and sophisticated business rules and attribute logic
to fit the specific business environment. The iCollaboration suite molds to the
needs of the customer, rather than requiring the customer to change its
technology infrastructure to accommodate the software.

    SCALABILITY.  Our single data model and component-based architecture enable
customers to easily add functionality and accommodate additional users and
increased transaction volumes. Our iCollaboration product can scale to handle
large supply chain models through:

    - EXTENSIBILITY. Our component-based architecture allows additional
      capabilities and features to be seamlessly added. Once an iCollaboration
      component is integrated with other applications, the single data model
      enables more components to be added with limited integration effort.

    - SPEED. iCollaboration suite uses optimization algorithms and heuristics to
      allow users to reach highly efficient planning solutions. iCollaboration's
      algorithms and heuristics intelligently limit the search space based on
      user-defined parameters to eliminate unnecessary searches and allow for

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<PAGE>
      rapid solve times. Speed is further enhanced though the use of a cached
      object model with optimized cross-references.

    - SUPPORT OF DISTRIBUTED COMMUNITIES. Components of the iCollaboration suite
      can be distributed across an enterprise, run from an enterprise server,
      hosted by application service providers or offered as services in both
      public and private exchanges. This allows our software to scale with a
      business as it expands geographically and changes the way it uses its
      technology infrastructure.

    OPENNESS.  Our software's open, Internet-based architecture is designed to
operate on a variety of technology platforms. iCollaboration supports five
hardware/operating system combinations. Our database technology is also platform
independent, supporting over 20 combinations of platform and relational database
management system, or RDBMS, types. The integration components of our products
provide connectivity by supporting multiple technologies, vendors and standards
at the relational, object and document levels. These include XML over http, open
database connectivity, structured query language, Java serialization and tool
command language. Application connectors are available for enterprise resource
planning, manufacturing execution systems, enterprise application integration
and RDBMS tools.

    INTERNET ARCHITECTURE.  Our products' Internet architecture offers
personalized, browser-based views, XML communication and secure access for
planning and collaboration to multiple users across multiple enterprises.
Additionally, our products can deliver planning and collaboration functionality
in a hosted environment through an application service provider. It also
provides for load balancing to enable organizations to scale to accommodate
large numbers of users and transactions through the Internet.

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<PAGE>
CUSTOMERS

    As of September 30, 2000, we had licensed components of our iCollaboration
suite to more than 50 end-user customers in North America, Europe and Asia. Our
customers, other than those that have requested confidential treatment, are:

ELECTRONICS
AT&T Wireless
Com2B*
Dlink Corporation
Harmonic, Inc.
KYE Systems Corp.
Lucent Technologies, Inc.--Optical Fiber Solutions
MiTAC International Corp.
Philips Components B.V.
Quanta Display Inc.
Ricoh Company, Ltd.
Sharp Corporation, LCD
Synnex Information Technologies, Inc.
Technitrol, Inc.
TECO Electric & Machinery Company, Ltd.
Viasystems Technologies Corporation
Xerox Corporation
SEMICONDUCTORS
Acbel Polytech, Inc.
Advanced Micro Devices, Inc.
Centillium Communications, Inc.
Chartered Semiconductor Manufacturing, Ltd.
Conexant Systems, Inc.
ESM Limited
Fujitsu AMD Semiconductor Ltd.
Fujitsu Quantum Device Ltd.
Hitachi, Ltd.
Integrated Silicon Solution, Inc.
Lucent Technologies, Inc.
Matsushita Electronics Corporation
Philips Semiconductors B.V.
S3 Incorporated
Sanyo Electric Co. Ltd.
Sharp Microelectronics Technology, Inc.
Silicon Manufacturing Partners PTE, Ltd.
Sumitomo Metal Industries, Ltd. Sitix division
Toshiba Corporation Semiconductor Company
Trecenti Technologies, Inc.
United Microelectronics Corporation
Winbond Electronics Corporation
ZiLOG, Inc.

TEXTILES AND APPAREL
Gulistan Carpets, Inc.
Malden Mills Industries, Inc.
Mannington Mills, Inc.
Quaker Fabric Corporation of Fall River
Teijin Limited
Tropical Sportswear International Corporation


INDUSTRIAL/CONSUMER PACKAGED GOODS
Firmenich S.A.
Framatome Connectors International
Hunter Douglas Europe B.V.
Rich Products Corporation
Samsung SDS Company, Ltd.
The Rowe Companies


AEROSPACE AND DEFENSE
Aerospace Industrial Development Corporation
Naval Air Systems Commandor
Template Software, Inc.

AUTOMOTIVE
General Motors Corporation

*   These companies have signed a letter of intent to license our products.

SAMPLE CUSTOMER CASE STUDIES

    The following case studies describe the use of our software by three of our
customers. We believe that these case studies are representative of how our
customers use our software products, but they do not represent endorsements of
our software products.

PHILIPS SEMICONDUCTORS B.V.

    Philips Semiconductors, a division of Royal Philips Electronics, is one of
the world's largest semiconductor suppliers.

                                       46
<PAGE>
    THE PROBLEM.  The semiconductor industry is characterized by huge volumes of
operations, long lead times, complex inter-plant dependencies and a high level
of breakdowns, scrap, and rework. Philips wanted to improve its level of
delivery performance and reduce the long cycle times that led to high levels of
work-in-progress inventory at its Albuquerque, New Mexico facility. Philips
needed a planning solution that could model the complexities of the
semiconductor environment, streamline manufacturing, optimize product mixes,
provide reliable commitments to its customers and relieve bottlenecks in
production.

    THE SOLUTION.  Our Plant Planner was implemented at the Philips Albuquerque
fabrication facility to help streamline plant-level operations. One year after
implementation of our Plant Planner, Philips reported doubling on-time delivery
performance. Delivery performance increased from roughly 50 percent to over
97 percent. Philips also reported more than 25 percent reduction in cycle times,
and a 10 percent reduction in works in progress. Based on the success of the
implementation at its Albuquerque site, Philips announced that it had chosen us
to plan, synchronize and optimize additional worldwide manufacturing operations,
including one site in North America and four sites in Europe.

MITAC INTERNATIONAL CORP.

    MiTAC International Corp., headquartered in Taiwan with support sites in the
U.S. and the U.K., designs, builds and markets a diverse range of products such
as high-performance workstations, servers, motherboards, notebook computers and
LCD monitors.

    THE PROBLEM.  MiTAC needed a central planning and supply chain system that
would unite management systems across its three facilities in Taiwan, the U.S.
and the U.K. MiTAC faced a lack of visibility into inventories at all
facilities, inadequate inventory controls and access, a lack of supply chain
integration across the three separate sites and a need for faster materials
requirements planning, or MRP, reports.

    THE SOLUTION.  MiTAC implemented Supply Chain Planner at its home office in
Taiwan and installed Plant Planner in its support facilities in the U.S. and the
U.K. Our software provides MiTAC with real-time reports that register multi-site
consolidated inventory information for all raw and finished materials,
consumption of inventory and in-transit inventory. Supply Chain Planner also
extracts vital information from each site's enterprise resource planning system
and produces customized reports for specific audiences, including MiTAC's
materials planners and key customers. Supply Chain Planner also facilitates
up-to-the-minute MRP reports that can be published over the Internet for
customers to view, providing them with improved visibility into MiTAC's
production processes. While the previous MRP reports took hours to create and
were only run weekly, our software can run MRP reports across all three sites in
only 15 minutes, allowing reports to be computed daily. Supply Chain Planner has
also enabled synchronization of MiTAC's top 20 most critical production factors.
Since implementing our software, MiTAC has experienced the following tangible
benefits: better on-time delivery performance, decreases in excess or obsolete
inventories, improved response time to customer orders, and better communication
among remote sites.

FIRMENICH S.A.

    Firmenich S.A. is one of the world's leading manufacturers and distributors
of perfumes, aromatic compounds and flavors for the cosmetics and food
industries, with 24 plants and facilities worldwide.

    THE PROBLEM.  Firmenich has over 6,000 clients worldwide, producing more
than 1,000 new sales orders a day. Firmenich manufactures products based on
approximately 50,000 different formulas, adding roughly 100 new formulas each
day, and has over 75,000 components in its supply chain and bills-of-materials
containing more than 3 million items. Firmenich sought a solution to optimize
its complex supply chain and gain visibility into global operations.

                                       47
<PAGE>
    THE SOLUTION.  Firmenich licensed our software through QAD, one of our
resellers, along with purchasing QAD's own enterprise resource planning
software. Firmenich uses our software to provide up-to-the-minute visibility and
monitoring through the Internet for inventory levels and work-in-progress at
each of its facilities worldwide. Our joint Adexa-QAD solution was initially
implemented across Firmenich's operations in Geneva, Switzerland and was later
extended to Latin America. Additional implementations are being rolled out.
Firmenich plans to take advantage of our financial optimization capabilities
with a view toward maximizing profits and minimizing overhead costs for
different product groups and sourcing scenarios. Firmenich also plans to use our
software to synchronize its supply chain planning and manufacturing planning
across its plants and facilities worldwide.

STRATEGIC RELATIONSHIPS

    We plan to continue to enhance and expand our strategic relationships with
leading consulting and systems integration firms, e-Business infrastructure
providers and resellers. These relationships help us promote the widespread
adoption of our products in different industries through joint marketing and
reseller arrangements.

    SYSTEMS INTEGRATORS AND IMPLEMENTATION RELATIONSHIPS

    Our consulting and systems integration relationships accelerate
implementation and provide enhanced and expanded services, including business
process redesign, training and industry expertise. We work closely with
third-party consulting and system integration professionals to educate them on
our iCollaboration suite. Our customers use these certified consultants to
implement our software and to offer other services. We have relationships with
Andersen Consulting, Arthur Andersen, Compaq Computer Corporation, EDS,
Hewlett-Packard Japan, Ltd., Origin, Spectrum Group and TRW.

    e-BUSINESS INFRASTRUCTURE PROVIDERS

    Our relationships with leading providers of e-Business-enabling
infrastructure technologies allow us to take advantage of the rapid growth in
business-to-business e-Commerce and the emergence of new e-Business
opportunities such as public and private exchanges. We take advantage of the
technologies of our e-Business infrastructure partners to deliver expanded
solutions to our customers. We have strategic relationships with Agile Software,
Broadvision, Selectica and Vitria Technology.

    RESELLERS

    We have reseller agreements for software products with Compaq Computer
Corporation, Essentus, Hewlett-Packard Japan, Ltd., QAD and Western Data
Systems.

PROFESSIONAL SERVICES


    Our portfolio of professional services includes implementation, education
and customer support. As of September 30, 2000, we employed 116 persons in our
professional services operations.


    IMPLEMENTATION SERVICES.  Our consultants have significant expertise in
specific industries enabling them to conduct in-depth value assessments and
develop business solution designs before implementation of our software. The
consulting team develops a business model of each customer's supply chain
environment and incorporates customer-specific rules within our software to
automate supply chain planning, optimization and execution. This solution design
process also includes formulating supply chain performance improvement metrics,
which can then be tracked and audited. We have adopted a supply chain assessment
program to enable companies to rapidly develop a supply chain performance
scorecard, identify baseline performance, assess business process drivers of
performance and establish attainable target performance based on our business
solution.

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<PAGE>
    EDUCATION SERVICES.  We offer education and training programs and customized
courses designed to address the specific needs of our clients and partners. We
offer modular, content-focused courses based on an instructor-led training
methodology that combines lectures with hands-on exercises. Our education
program is designed for both implementation specialists and end users seeking to
become more familiar with our applications.

    CUSTOMER SUPPORT SERVICES.  Our customer support organization has product
and technology experts that help to quickly resolve product issues and reduce
disruptions to our customers' business activities. Annual maintenance agreements
entitle our customers to receive technical support and software upgrades and
enhancements to components they have licensed. We also provide user and
reference manuals, answers to frequently asked questions, conversion roadmap
guides and detailed release notes. Customers may download all of this
information and receive product support from our central web server. We also
offer product support through a telephone hotline and through on-site support
services.

RESEARCH AND DEVELOPMENT


    As of September 30, 2000, we employed 75 people in research and development
and technical support. Our primary research and development facility is located
in Toronto, Canada. Our research and development staff is responsible for
enhancing our existing products and services and expanding our product line and
services offered. Our product development activities focus on new products,
product enhancements and the integration of external services and partner
technology.



    We have made substantial investments in research and development. Our
research and development expenses totaled approximately $980,000 for fiscal
1997, $1.7 million for fiscal 1998, $4.5 million for fiscal 1999 and
$5.3 million for the nine months ended September 30, 2000, excluding
amortization of stock-based compensation. We intend to continue to make
substantial investments in research and development.


SALES AND MARKETING


    As of September 30, 2000, we employed 104 persons in our sales and marketing
department, of which 66 were employed in North America, 19 in Asia and 19 in
Europe. Our direct sales offices are located in the U.S., Germany, Japan,
Singapore, South Korea, Taiwan and the U.K. We focus our sales efforts on Global
2000 companies and electronic exchanges. We sell our products and services
through our direct sales organization, resellers and other strategic
relationships. We target large markets, including the aerospace and defense,
automotive, electronics, semiconductors and textiles and apparel industries. We
are continuing to significantly expand our sales and marketing organization and
to establish additional sales offices.


    During our sales process, we typically target members of senior executive
management, including the chief executive officer, chief financial officer,
chief operating officer, chief information officer and vice presidents of supply
chain management, manufacturing and operations. We use local sales teams
consisting of both sales and technical professionals who work with our strategic
partners to create proposals, presentations and demonstrations that address the
specific needs of each potential customer.

    We focus our marketing efforts on educating our target markets and strategic
partners, supporting our sales teams, creating new sales opportunities and
promoting awareness of our brand and c-Commerce solution. We engage in marketing
activities such as business seminars, trade shows, public relations, web
broadcasts and industry analyst programs.

COMPETITION

    The c-Commerce solutions market is relatively new, fast growing, competitive
and rapidly changing. We expect competition to persist and intensify in the
future. Competitors vary in size and in the scope and breadth of the products
and services they offer. We believe that our ability to compete depends on many
factors, including:

    - functionality and performance;

    - scalability;

                                       49
<PAGE>
    - flexibility;

    - ease and speed of implementation;

    - integration with other systems;

    - product support services; and

    - price.

    Although we believe that we compete favorably in each of these areas, our
market is relatively new and c-Commerce software is a new category of product.
We believe that our architecture and our ability to enable electronic exchanges
to offer enhanced and expanded services to their participants provide us with
advantages over our competitors. We face two primary sources of competition:

    - in-house development efforts by potential customers or partners; and

    - enterprise application vendors in general, but principally i2
      Technologies, Manugistics, Oracle and SAP.

    We also face potential competition from e-Business and electronic exchange
infrastructure providers such as Ariba and Commerce One, as they seek to extend
their product offerings.

    A number of enterprise resource planning vendors have jointly marketed our
products as a complement to their own. However, as we increase our market share
and expand our product offerings, and as enterprise resource planning vendors
expand their own product offerings, we believe our relationships with these
vendors will become more competitive. We believe that other enterprise resource
planning vendors are focusing significant resources on increasing the
functionality of their own planning and scheduling modules.

    We may be unable to maintain our competitive position against current and
potential competition, particularly competitors that have longer operating
histories and significantly greater financial, technical, sales and marketing,
and other resources than we do. Also, many current and potential competitors
have greater name recognition, a broader range of products to offer and more
extensive customer bases that could be used to gain market share to our
detriment. These competitors may be able to undertake more extensive promotional
activities, adopt more competitive pricing policies and offer more attractive
terms to purchasers than we can. Current and potential competitors have
established or may establish cooperative relationships among themselves or with
third parties to enhance their products. It is possible that new competitors or
alliances among competitors may emerge and rapidly acquire significant market
share, which could hurt our business. We also expect that competition may
increase because of industry consolidation.

LEGAL PROCEEDINGS

    We have been, are and may in the future become involved in litigation
relating to claims arising from our ordinary course of business. We believe that
there are no claims or actions pending or threatened against us, the ultimate
disposition of which would have a material adverse effect on us.

INTELLECTUAL PROPERTY

    We rely primarily on a combination of copyright, trademark and trade secret
laws, confidentiality procedures and contractual provisions to protect our
proprietary rights. We also seek to avoid disclosure of our intellectual
property by requiring employees and consultants with access to our proprietary
information to execute confidentiality agreements. However, these legal
protections afford only limited protection for our technology. 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 believe is
proprietary. Although we believe software piracy may be a problem, we are unable
to determine the extent to which piracy of our

                                       50
<PAGE>
software products exists. The laws of some foreign countries do not protect our
proprietary rights to the same extent as the laws of the United States.
Litigation may be necessary in the future to:

    - enforce our intellectual property rights;

    - protect our trade secrets; and

    - determine the validity and scope of the proprietary rights of others. Our
      failure to adequately protect our intellectual property could
      significantly harm our business and operating results.

    We embed third-party software in our products and may continue this
practice. Third-party software licenses may not continue to be available to us
on commercially reasonable terms, if at all. The loss of, or inability to
maintain or obtain, any of these software licenses could delay, reduce or
prevent our product shipments. Any delay or reduction in product shipments could
damage our business, operating results and financial condition.

EMPLOYEES


    As of September 30, 2000, we had 322 full-time employees, including 75
primarily engaged in research and development activities, 104 engaged in sales
and marketing activities, 116 engaged in professional services and 27 in general
administration. Of these employees, 233 were located in the North America, 34 in
Europe and 55 in Asia. None of our employees is represented by collective
bargaining units and we have never experienced a work stoppage. We believe that
our employee relations are good.


FACILITIES

    Our primary office is located in approximately 18,400 square feet of space
in Los Angeles, California under a lease expiring in June 2005. We also lease
space for our other offices in the United States, Canada, Germany, Japan,
Singapore, South Korea and Taiwan.

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<PAGE>
                                   MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

    The following table presents information about our executive officers and
directors and key employees, including their ages and positions as of
September 30, 2000:

<TABLE>
<CAPTION>
NAME                                          AGE      POSITION(S)
----                                        --------   -----------
<S>                                         <C>        <C>
EXECUTIVE OFFICERS AND DIRECTORS
K. Cyrus Hadavi, Ph.D.....................     47      President, Chief Executive Officer and Director
Hoon Chung................................     42      Chief Operating Officer
Udo Dengler...............................     44      Chief Technology Officer
J. Timothy Romer..........................     39      Chief Financial Officer
David R. Golob............................     32      Director
William W. Lattin, Ph.D...................     59      Director
Sam H. Lee................................     39      Director
William H. Younger, Jr....................     50      Director

KEY EMPLOYEES
Chris Givens..............................     37      Vice President of Product Management
Chris Smith...............................     49      Vice President of Development
David Smith...............................     55      Senior Vice President of Marketing
Shuji Sueshige............................     50      Country and Sales Manager of Japan
Richard Wolinski..........................     44      Senior Vice President of North American Sales
</TABLE>

    K. CYRUS HADAVI, PH.D., has served as president and chief executive officer
of Adexa since our incorporation in 1995. Before founding Adexa, Dr. Hadavi
served as director of implementations at i2 Technologies, Inc., a supply chain
management software company, from 1992 to 1994. Dr. Hadavi holds a B.S. in
electrical engineering and a M.S. in industrial management from the University
of Birmingham, UK, a M.S. in computer engineering from the University of
Southampton, UK, and a Ph.D. in computer science from the University of
Michigan.

    HOON CHUNG has served as chief operating officer of Adexa since
December 1999. Mr. Chung served as president of Asia Pacific and executive vice
president of professional services of Adexa from 1997 to 1999. Before joining
Adexa, Mr. Chung served as senior vice president, supply chain management
consulting services, North America at Numetrix Inc., a supply chain management
software company, from 1994 to 1997. Before his tenure at Numetrix, Mr. Chung
held senior management positions at Haagen-Dazs Company, Inc., from 1991 to 1994
and the Level Brothers Company, from 1989 to 1991. Mr. Chung holds a B.S. in
civil engineering and operations research from Princeton University and a M.B.A.
in management policy, marketing and operations management from Northwestern
University.

    UDO DENGLER has served as chief technology officer of Adexa since
January 1995. Before joining Adexa, Mr. Dengler was employed by Numetrix, Inc.,
a supply chain management software company, where he was manager of research and
development from 1991 to 1994. Mr. Dengler holds a M.S. in computer science from
the University of Stuttgart, Germany.

    J. TIMOTHY ROMER has served as chief financial officer of Adexa since
February 2000. From 1989 to 2000, Mr. Romer was an investment banker with
Merrill Lynch & Co., most recently as a group manager and managing director.
Mr. Romer holds a B.S. in industrial engineering from Stanford University and a
M.B.A. in entrepreneurial management and finance from the Wharton School of the
University of Pennsylvania.

    DAVID R. GOLOB has served as a director of Adexa since July 1997. Since
March 2000, Mr. Golob has been a co-founder and managing director of Octane
Capital Management, an investment management firm. From 1997 to February 2000,
Mr. Golob worked for Tiger Management, LLC, an investment management

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<PAGE>
company. From 1996 to 1997, Mr. Golob worked at Sutter Hill Ventures, a venture
capital firm, and from 1991 to 1996, Mr. Golob worked at General Atlantic
Partners, a private equity investment firm. Mr. Golob holds an A.B., summa cum
laude, in chemistry from Harvard College and an M.B.A from Stanford University.

    WILLIAM W. LATTIN, PH.D. has served as a director of Adexa since
August 2000. Dr. Lattin retired as executive vice president of Synopsys, an
electronic design automation software company, in October 1999. Dr. Lattin
served as president and chief executive officer of Logic Modeling from 1992
until its acquisition by Synopsys in 1994. Before that, Dr. Lattin served as the
chief executive officer of Logic Automation from 1986 to 1992. Before Logic
Automation, he was with Intel from 1975 to 1986. Dr. Lattin left Intel as vice
president and general manager of Intel's System Group. He also serves on the
board of directors of Synopsys, the Oregon Graduate Institute, FEI, EasyStreet
Online Services, Inc. and is a consultant with Vitesse Semiconductor.
Dr. Lattin holds a B.S.E.E. and an M.S.E.E. from the University of California at
Berkeley and a Ph.D. in electrical engineering from Arizona State University.

    SAM H. LEE has served as a director of Adexa since June 1998. Since
July 1999, Mr. Lee has been a co-founder and managing director of Infinity
Capital, a venture capital firm. Since 1995, Mr. Lee has been a co-founder and
general partner of Information Technology Ventures, a venture capital firm.
Before founding Information Technology Ventures, from 1990 to 1994 he served as
vice president of Philadelphia Ventures, a venture capital firm. Mr. Lee serves
on the board of directors of E.piphany, a software solutions company, and
several privately held companies. Mr. Lee holds a B.S. in electrical engineering
from Mississippi State University, an M.E. in electrical engineering from Texas
A&M University and an M.B.A. from the Wharton School of the University of
Pennsylvania.

    WILLIAM H. YOUNGER, JR. has served as a director of Adexa since
January 1998. Mr. Younger is a managing director of the general partner of
Sutter Hill Ventures, a venture capital management firm, which he joined in
1981. Mr. Younger also sits on the board of directors of Vitria, an e-Business
platform provider company, Virage, Inc., a software company, and several
privately held companies. Mr. Younger holds a B.S., summa cum laude, in
electrical engineering from the University of Michigan and an M.B.A. from
Stanford University.

    CHRIS GIVENS has served as vice president of product management of Adexa
since October 1997. Before joining Adexa, Mr. Givens served as manager,
logistics strategy practice at Andersen Consulting from 1992 to 1997. Before his
tenure at Andersen Consulting, Mr. Givens was a consultant for the
transportation and operations department at SRI International, formerly Stanford
Research Institute, a research company, from 1990 to 1992. Mr. Givens holds a
B.S. in mechanical engineering from California State University, Sacramento and
an M.S. in industrial engineering from Stanford University.

    CHRIS SMITH has served as vice president of development of Adexa since
October 1999. Before joining Adexa, Mr. Smith was with Marcam Solutions, Inc.,
an asset management and ERP solution provider company, as vice president and
general manager from 1998 to 1999, and as vice president and director of
development from 1996 to 1998, and he held several management and technical
positions at IBM Canada Software Development Laboratory in Toronto, a software
company, from 1981 to 1996. Mr. Smith holds an M.S. in astrophysics from the
University of Toronto, Canada.

    DAVID SMITH has served as senior vice president of marketing of Adexa since
August 2000. Before joining Adexa, Mr. Smith was a co-founder of
IndustrialVortex.com, an electronic marketplace for industrial automation, from
1999 to 2000. Before that, he was a co-founder of Object Automation, a supply
chain software company, from 1996 to 1999. Before that, Mr. Smith served as the
vice president of marketing for Wonderware, an industrial software company, from
1990 to 1995, and was a vice president and general manager for Locus, an
internet software company, from 1989 to 1990. Mr. Smith holds a B.A. in
mathematics and computer science from the University of California at Irvine and
an M.B.A. from Pepperdine University.

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<PAGE>
    SHUJI SUESHIGE has served as country and sales manager of Japan of Adexa
since February 1998. Before joining Adexa, Mr. Sueshige was senior manager for
global partners sales with Informix K.K., a software company, from 1995 until
1998; was a sales manager at Tandem Corporation, a computer company, from 1992
to 1995; and was a sales manager at Sun Microsystems K.K., a computer company,
from 1988 to 1992. Mr. Sueshige holds a B.E. in mechanical engineering from
Akashi College of Technology, Japan.

    RICHARD WOLINSKI has served as senior vice president of North American sales
of Adexa since January 1999. Mr. Wolinski served as regional vice president of
Adexa from April 1998 to January 1999. Before joining Adexa, Mr. Wolinski served
as sales executive of IMI North America, a software company, from 1995 to 1998
and as divisional vice president, client server products at Computer Associates,
a software company, from 1992 to 1995.

BOARD OF DIRECTORS

    We have six authorized director positions and there is one vacancy on the
board. Upon the completion of the offering, the terms of the office of the board
of directors will be divided into three classes:

    - class I, whose term will expire at the annual meeting of the stockholders
      to be held in 2001;

    - class II, whose term will expire at the annual meeting of stockholders to
      be held in 2002; and

    - class III, whose term will expire at the annual meeting of stockholders to
      be held in 2003.

    The class I director will be K. Cyrus Hadavi; the class II directors will be
David R. Golob and William W. Lattin; and the class III directors will be
Sam H. Lee and William H. Younger, Jr. This classification of the board of
directors may have the effect of delaying or preventing changes in control or
management of Adexa. All of our officers serve at the discretion of the board of
directors. There are no family relationships among our directors and officers.

BOARD COMMITTEES

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

    COMPENSATION COMMITTEE.  The compensation committee of the board of
directors reviews and makes recommendations to the board of directors about all
forms of compensation provided to the executive officers and directors of Adexa
and our subsidiaries, including stock compensation and loans. The compensation
committee also reviews and makes recommendations on bonus and stock compensation
arrangements for all of our employees. Following this offering, the compensation
committee will administer our 2000 stock incentive plan. The members of the
compensation committee are William W. Lattin, Sam H. Lee and William H. Younger,
Jr.

    AUDIT COMMITTEE.  The audit committee of the board of directors reviews and
monitors the corporate financial reporting and the internal and external audits
of Adexa, including our internal audit and control functions, the results and
scope of the annual audit and other services provided by our independent
auditors and our compliance with legal matters that have a significant impact on
our financial reports. The audit committee also consults with our management and
our independent auditors before the presentation of financial statements to
stockholders and, as appropriate, initiates inquiries into aspects of our
financial affairs. The audit committee also has the responsibility to consider
and recommend the appointment of, and to review fee arrangements with, our
independent auditors. The members of the audit committee are David R. Golob, Sam
H. Lee and William H. Younger, Jr.

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<PAGE>
DIRECTOR COMPENSATION AND OTHER ARRANGEMENTS

    Our directors who are not employees receive no cash payments beyond
reimbursement for expenses. Upon and following this offering, directors will be
eligible for automatic option grants under our 2000 stock incentive plan. In
February 1998, we granted Mr. Golob, one of our directors, an option to purchase
50,000 shares of our common stock at an exercise price of $0.075 per share,
subject to our repurchase right. In August 2000, when we appointed Mr. Lattin to
our board of directors, we granted him an option to purchase 50,000 shares of
our common stock at an exercise price of $3.50 per share, subject to our
repurchase right. Mr. Golob's options are immediately exercisable, with
twenty-five percent vesting after each year of service, provided that as of
January 1, 2001 vesting will begin on a monthly basis over the remainder of his
four year vesting schedule. Mr. Lattin's options are immediately exercisable,
with twenty-five percent vesting after one year and the balance vesting ratably
on a monthly basis for the next thirty-six months.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

    None of the members of the compensation committee is or has been, at any
time, an officer or employee of Adexa. None of our executive officers has served
as a member of the board of directors or compensation committee of any entity
that has had one or more executive officers serving as a member of our board of
directors or compensation committee.

INDEMNIFICATION

    In            , the board of directors authorized Adexa to enter into
indemnification agreements with each of our directors. The form of indemnity
agreement provides that we will indemnify against any and all expenses of the
director who incurred these expenses because of the director's status as a
director, to the fullest extent permitted by Delaware law, our certificate of
incorporation and our bylaws.

    Our certificate of incorporation and bylaws contain provisions relating to
the limitation of liability and indemnification of directors and officers.

    UNDER OUR CERTIFICATE OF INCORPORATION.  The certificate of incorporation
provides that our directors shall not be personally liable to us or our
stockholders for monetary damages for any breach of fiduciary duty as a
director, except for liability for:

    - any breach of the director's duty of loyalty to Adexa or our stockholders;

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

    - unlawful payments of dividends or unlawful stock repurchases or
      redemptions as provided in section 174 of the Delaware General Corporation
      Law; or

    - any transaction from which the director gains any improper personal
      benefit.

    The certificate of incorporation also provides that if the Delaware General
Corporation Law is amended after the approval by our stockholders of the
certificate of incorporation to authorize corporate action further eliminating
or limiting the personal liability of directors, then the liability of our
directors shall be eliminated or limited to the fullest extent permitted by the
Delaware General Corporation Law. The preceding provisions of the certificate of
incorporation are not intended to limit the liability of directors or officers
for any violation of applicable federal securities laws.

    UNDER OUR BYLAWS.  As permitted by section 145 of the Delaware General
Corporation Law, our bylaws provide that:

    - we are required to indemnify our directors and executive officers to the
      fullest extent permitted by the Delaware General Corporation Law;

                                       55
<PAGE>
    - we may, in our discretion, indemnify other officers, employees and agents
      as provided by the Delaware General Corporation Law;

    - to the fullest extent permitted by the Delaware General Corporation Law,
      we are required to advance all expenses incurred by our directors and
      executive officers concerning a legal proceeding, subject to some
      exceptions;

    - the rights conferred in the bylaws are not exclusive;

    - we are authorized to enter into indemnification agreements with our
      directors, officers, employees and agents; and

    - we may not retroactively amend the bylaws provisions relating to
      indemnity.

Our bylaws provide that we shall indemnify our directors to the fullest extent
permitted by Delaware law, including in circumstances in which indemnification
is otherwise discretionary under Delaware law.

EXECUTIVE COMPENSATION

    The following summary compensation table presents the compensation earned by
our chief executive officer and the two other executive officers who were
serving as executive officers of Adexa during the fiscal year ended
December 31, 1999, and whose aggregate compensation exceeded $100,000 for
services provided in all capacities to Adexa and our subsidiaries for that
fiscal year.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                                 LONG-TERM
                                                                                                COMPENSATION
                                                                                                   AWARDS
                                                                                                ------------
                                                                   ANNUAL COMPENSATION           SECURITIES
                                                            ---------------------------------    UNDERLYING
NAME AND PRINCIPAL POSITION                                   YEAR     SALARY ($)   BONUS ($)   OPTIONS (#)
---------------------------                                 --------   ----------   ---------   ------------
<S>                                                         <C>        <C>          <C>         <C>
K. Cyrus Hadavi ..........................................    1999      $156,250    $ 75,000           --
  President and Chief Executive Officer
Hoon Chung ...............................................    1999       250,000     281,720           --
  Chief Operating Officer
Udo Dengler ..............................................    1999       148,219      25,000      200,000
  Chief Technology Officer
</TABLE>

OPTION GRANTS IN LAST FISCAL YEAR

    The following table contains information concerning the stock option grants
made to each of the named officers during the fiscal year ended December 31,
1999.

    The figures representing percentages of total options granted to employees
in the last fiscal year are based on a total of 1,686,600 option shares granted
to our employees under our 1998 stock plan during the fiscal year ended
December 31, 1999.

    The amount listed in the column Exercise Price is equal to the fair market
value of our common stock, as determined by our board of directors on the date
of grant. In determining the fair market value, the board of directors
considered the purchase price paid by investors for shares of our preferred
stock, taking into account the liquidation preferences and other rights,
privileges and preferences of the preferred stock, and our revenues, operating
history and prospects.

    We calculated the amounts listed in the column Potential Realizable Value at
Assumed Annual Rates of Stock Price Appreciation for Option Term based on the
10-year term of the option at the time of grant. For purposes of this column, we
assumed stock price appreciation of 5% and 10% per year under the rules

                                       56
<PAGE>
of the Securities and Exchange Commission. These rates do not represent a
prediction of our stock price performance. We calculated the potential
realizable values at 5% and 10% appreciation by assuming that:

    - the estimated fair market value on the date of grant increases at the
      indicated rate for the entire term of the option; and

    - that the option is exercised on the last day of its term and that the
      shares are sold at the appreciated price.

    Information on how we determined the fair market value of our common stock
is provided in the preceding paragraph. The price to the public in this offering
is higher than the estimated fair market value on the date of grant. The
potential realizable value of the option grant would be significantly higher
than the numbers shown in the table if future stock prices were projected to the
end of the option term by applying the same annual rates of stock price
appreciation to the public offering price.

    No stock appreciation rights were granted to these individuals during the
fiscal year ended December 31, 1999.

                       OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                                            INDIVIDUAL GRANTS                     POTENTIAL REALIZABLE
                                           ----------------------------------------------------     VALUE AT ASSUMED
                                           NUMBER OF                                                 ANNUAL RATES OF
                                           SECURITIES                                                     STOCK
                                           UNDERLYING     % OF TOTAL                               PRICE APPRECIATION
                                            OPTIONS     OPTIONS GRANTED   EXERCISE                   FOR OPTION TERM
                                            GRANTED     TO EMPLOYEES IN    PRICE     EXPIRATION   ---------------------
NAME                                          (#)         FISCAL YEAR      ($/SH)       DATE       5% ($)      10% ($)
----                                       ----------   ---------------   --------   ----------   ---------   ---------
<S>                                        <C>          <C>               <C>        <C>          <C>         <C>
K. Cyrus Hadavi..........................        --            --              --          --           --          --
Hoon Chung...............................        --            --              --          --           --          --
Udo Dengler..............................   200,000          11.4%         $0.975      2/7/09     $122,634    $310,780
</TABLE>

    The option granted to Mr. Dengler is exercisable at any time following the
date of grant for the first 102,564 shares and at any time following January 1,
2000 for the remaining 97,436 shares. All shares subject to this option were
fully vested from the date of grant. The option expires before the expiration
date shown above if Mr. Dengler's service terminates.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES

    The following table presents information concerning the year-end number and
value of unexercised options for each of the named officers. No options or stock
appreciation rights were exercised by the named officers in fiscal year 1999,
and no stock appreciation rights were outstanding at the end of that year.

                         FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
                                                         NUMBER OF SECURITIES
                                                        UNDERLYING UNEXERCISED         VALUE OF UNEXERCISED
                                                            OPTIONS HELD AT           IN-THE-MONEY OPTIONS AT
                                                              FY-END (#)                    FY-END ($)
                                                      ---------------------------   ---------------------------
NAME                                                  UNEXERCISABLE   EXERCISABLE   UNEXERCISABLE   EXERCISABLE
----                                                  -------------   -----------   -------------   -----------
<S>                                                   <C>             <C>           <C>             <C>
K. Cyrus Hadavi.....................................          --              --              --            --
Hoon Chung..........................................     239,128         282,610      $  358,692    $  423,915
Udo Dengler.........................................     250,000       2,950,000         375,000     4,425,000
</TABLE>

    The value of unexercised in-the-money options at fiscal year end is based on
a value of $1.50 per share, the fair market value of our common stock as of
December 31, 1999, as determined by the board of

                                       57
<PAGE>
directors, less the per share exercise price, multiplied by the number of shares
issued upon exercise of the option. All options were granted under our 1998
stock plan.

    In a letter dated March 3, 1999, we agreed to pay Mr. Dengler cash bonuses
when he exercises options that we granted to him in 1998 under our 1998 stock
plan. The aggregate amount of these bonuses will not exceed $145,000. The
bonuses are not reflected in the table above.

EMPLOYMENT CONTRACTS AND CHANGE OF CONTROL ARRANGEMENTS

    We have not entered into an employment contract with any of the executive
officers named in the summary compensation table above.

    The options held by Messrs. Chung and Dengler vest on an accelerated basis
if Adexa is subject to a change in control and if, within 12 months after the
change in control, the option holder's service terminates for one of the reasons
described below:

    - if the option holder is discharged for reasons unrelated to his own
      misconduct, he receives an additional 24 months' vesting credit;

    - if the option holder resigns because his level of authority or
      responsibility was significantly reduced or because his compensation was
      reduced, then he also receives an additional 24 months' vesting credit; or

    - if the option holder resigns because he was asked to relocate his
      principal place of employment by more than 50 miles, then he receives an
      additional 12 months' vesting credit.

EMPLOYEE STOCK PLANS

2000 STOCK INCENTIVE PLAN

    SHARE RESERVE.  Our board of directors adopted our 2000 stock incentive plan
on August 24, 2000. We have reserved 4,000,000 shares of our common stock for
issuance under the 2000 stock incentive plan. Any shares not yet issued under
our 1998 stock plan on the date of this offering will also be available under
the 2000 stock incentive plan. On January 1 of each year, starting with the year
2001, the number of shares in the reserve will automatically increase by 5% of
the total number of shares of common stock that are outstanding at that time or
by 30,000,000 shares, whichever is less. In general, if options or shares
awarded under the 2000 stock incentive plan or the 1998 stock plan are
forfeited, then those options or shares will again become available for awards
under the 2000 stock incentive plan. We have not yet granted any options under
the 2000 stock incentive plan.

    ADMINISTRATION.  Following the date of this offering the compensation
committee of our board of directors will administer the 2000 stock incentive
plan. The committee has the complete discretion to make all decisions relating
to the interpretation and operation of our 2000 stock incentive plan. The
committee has the discretion to determine who will receive an award, what type
of award it will be, how many shares will be covered by the award, what the
vesting requirements will be, and what the other features and conditions of each
award will be. The compensation committee may also reprice outstanding options
and modify outstanding awards in other ways.

    ELIGIBILITY.  The following groups of individuals are eligible to
participate in the 2000 stock incentive plan:

    - employees;

    - members of our board of directors who are not employees; and

    - consultants.

                                       58
<PAGE>
    TYPES OF AWARDS.  The 2000 stock incentive plan provides for the following
types of awards:

    - incentive stock options to purchase shares of our common stock;

    - nonstatutory stock options to purchase shares of our common stock; and

    - restricted shares of our common stock.

    OPTIONS.  An option holder who exercises an incentive stock option may
qualify for favorable tax treatment under section 422 of the Internal Revenue
Code of 1986. Nonstatutory stock options, however, do not qualify for similar
favorable tax treatment. The exercise price for incentive stock options granted
under the 2000 stock incentive plan may not be less than 100% of the fair market
value of our common stock on the option grant date. For nonstatutory stock
options, the minimum exercise price is 50% of the fair market value of our
common stock on the option grant date. Option holders may pay the exercise price
by using:

    - cash;

    - shares of common stock that the option holder already owns;

    - a full-recourse promissory note;

    - an immediate sale of the option shares through a broker designated by us;
      or

    - a loan from a broker designated by us, secured by the option shares.

    Options vest at the time or times determined by the compensation committee.
In most cases, our options vest over the four-year period following the date of
grant. Options generally expire 10 years after they are granted, except that
they generally expire earlier if the option holder's service terminates earlier.
The 2000 stock incentive plan provides that no participant may receive options
covering more than 4,000,000 shares in the same year, except that a newly hired
employee may receive options covering up to 8,000,000 shares in the first year
of employment.

    RESTRICTED SHARES.  Restricted shares may be awarded under the 2000 stock
incentive plan in return for:

    - cash;

    - a full-recourse promissory note; or

    - services provided to us or to be provided to us.

    Restricted shares vest at the time or times determined by the compensation
committee.

    CHANGE IN CONTROL.  If a change in control of Adexa occurs, an option or
restricted stock award under the 2000 stock incentive plan may vest on an
accelerated basis as determined by the compensation committee. The compensation
committee may determine that outstanding grants will vest in full or in part at
the time of the change in control. The committee may also determine that vesting
will accelerate only if the participant, after the change in control, is
discharged or resigns because the participant's position has become less
attractive. Finally, the committee may determine that the grants will remain
outstanding without acceleration of vesting.

    However, if the surviving corporation fails to assume an outstanding option
or replace it with a comparable option, then the option will always become fully
vested because of the change in control. A change in control includes:

    - a merger of Adexa after which our own stockholders own 50% or less of the
      surviving corporation or its parent company;

    - a sale of all or substantially all of our assets;

                                       59
<PAGE>
    - a proxy contest that results in the replacement of at least one-half of
      our directors over a 24-month period; or

    - an acquisition of 50% or more of our outstanding stock by any person or
      group, other than a person related to Adexa, such as a holding company
      owned by our stockholders.

    AUTOMATIC GRANTS TO NON-EMPLOYEE DIRECTORS.  Each non-employee director who
first joins our board after the effective date of this offering will receive an
initial option for 50,000 shares. That grant will occur when the director takes
office. The initial options vest in equal annual installments over the four-year
period following the date of grant. At the time of each of our annual
stockholders' meetings, beginning in 2001, each non-employee director who will
continue to be a director after that meeting will automatically be granted an
annual option for 12,000 shares of our common stock. However, a new non-employee
director who is receiving the 50,000-share initial option will not receive the
12,000-share annual option in the same calendar year.

    The annual options vest in full one year following the date of grant. The
exercise price of each non-employee director's option will be equal to the fair
market value of our common stock on the option grant date. A director may pay
the exercise price by using cash, shares of common stock that the director
already owns, or an immediate sale of the option shares through a broker
designated by us. The non-employee directors' options expire after 10 years, or
one year after a director leaves the board, whichever is earlier. A non-employee
director's option granted under the 2000 stock incentive plan will become fully
vested if a change in control of Adexa occurs and the director does not serve on
the board of the surviving corporation for at least 12 months. Vesting also
accelerates upon the director's death, disability or retirement after age 65.

    AMENDMENTS OR TERMINATION.  Our board may amend or terminate the 2000 stock
incentive plan at any time. If our board amends the plan, it does not need to
ask for stockholder approval of the amendment unless applicable law requires it.
The 2000 stock incentive plan will continue in effect indefinitely, unless the
board decides to terminate the plan.

2000 EMPLOYEE STOCK PURCHASE PLAN

    SHARE RESERVE AND ADMINISTRATION.  Our board of directors adopted our 2000
employee stock purchase plan on August 24, 2000. Our 2000 employee stock
purchase plan is intended to qualify under section 423 of the Internal Revenue
Code. We have reserved 1,500,000 shares of our common stock for issuance under
the plan. On May 1 of each year, starting with the year 2001, the number of
shares in the reserve will be increased by the number of shares that have been
issued under the 2000 employee stock purchase plan during the prior 12-month
period. The compensation committee of our board of directors will administer the
plan.

    ELIGIBILITY.  All of our employees are eligible to participate if we employ
them for more than 20 hours per week and for more than five months per year.
Eligible employees may begin participating in the 2000 employee stock purchase
plan at the start of any offering period. Each offering period lasts 24 months.
Overlapping offering periods start on May 1 and November 1 of each year.
However, the first offering period will start on the effective date of this
offering and end on October 31, 2002.

    AMOUNT OF CONTRIBUTIONS.  Our 2000 employee stock purchase plan permits each
eligible employee to purchase common stock through payroll deductions. Each
employee's payroll deductions may not exceed 15% of the employee's salary, bonus
and commissions. Purchases of our common stock will occur on April 30 and
October 31 of each year. Each participant may purchase up to 10,000 shares on
any purchase date, but no more than 20,000 shares per year. The value of the
shares purchased in any calendar year, measured as of the beginning of the
applicable offering period, may not exceed $25,000.

                                       60
<PAGE>
    PURCHASE PRICE.  The price of each share of common stock purchased under our
2000 employee stock purchase plan will be 85% of the lower of:

    - the fair market value per share of common stock on the date immediately
      before the first day of the applicable offering period; or

    - the fair market value per share of common stock on the purchase date.

    For the first offering period, the price per share under the plan will be
85% of the lower of:

    - the price per share to the public in this offering; or

    - the fair market value per share of common stock on the purchase date.

    OTHER PROVISIONS.  Employees may end their participation in the 2000
employee stock purchase plan at any time. Participation ends automatically upon
termination of employment with Adexa. If a change in control of Adexa occurs,
our 2000 employee stock purchase plan will end and shares will be purchased with
the payroll deductions accumulated to date by participating employees, unless
the surviving corporation or its parent assumes the plan. Our board of directors
may amend or terminate the plan at any time. If our board increases the number
of shares of common stock reserved for issuance under the plan, except for the
automatic increases described above, it must seek the approval of our
stockholders. The 2000 employee stock purchase plan will continue in effect for
20 years, unless the board decides to terminate the plan earlier.

                                       61
<PAGE>
                           RELATED PARTY TRANSACTIONS

EQUITY FINANCINGS

    We have financed our growth primarily through the sale of preferred stock,
resulting in the issuance of an aggregate of 8,260,340 shares of series A
convertible preferred stock at a purchase price of $0.59 per share, 4,984,848
shares of series B convertible preferred stock at a purchase price of $1.65 per
share, and 3,149,602 shares of series C redeemable convertible preferred stock
at a purchase price of $6.35 per share. The buyers of our series A convertible
preferred stock, series B convertible preferred stock and series C redeemable
convertible preferred stock included the following directors, executive officers
and 5% stockholders.

<TABLE>
<CAPTION>
                                                                 SHARES OF PREFERRED STOCK
                                                              --------------------------------
                                                              SERIES A    SERIES B    SERIES C
                                                              ---------   ---------   --------
<S>                                                           <C>         <C>         <C>
DIRECTORS
William H. Younger, Jr.(1)..................................    552,172      49,844    16,574
William W. Lattin...........................................     84,712          --        --

ENTITIES AFFILIATED WITH DIRECTORS AND 5% STOCKHOLDERS
Entities Associated with Sutter Hill Ventures(2)............  6,321,500     566,938   217,418
Entities Associated with Information Technology
  Ventures(3)...............................................         --   3,636,364   118,110
</TABLE>

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

(1) Includes investments made by Sutter Hill Associates which will have been
    distributed to its partners before the date of this offering.

(2) William H. Younger, Jr., one of our directors, is a managing director of the
    general partner of venture funds associated with Sutter Hill Ventures.

(3) Sam H. Lee, one of our directors, is a managing member of venture funds
    associated with Information Technology Ventures.

    On August 24, 2000, we sold an aggregate of 3,149,602 shares of our
series C redeemable convertible preferred stock at a price of $6.35 per share to
a group of investors including J. & W. Seligman & Co., Amerindo Investment
Advisors, Vitria Technology, Inc., entities associated with Sutter Hill
Ventures, Information Technology Ventures II, L.P. and DRW Venture Partners
L.P., an affiliate of Dain Rauscher Incorporated, one of the underwriters of
this offering. This sale of our series C redeemable convertible preferred stock
yielded gross proceeds to us of approximately $20.0 million. The series C
redeemable convertible preferred stock will convert into shares of our common
stock upon the completion of this offering. William H. Younger, Jr., one of our
directors, is a member of the board of directors of Vitria Technology, Inc.

AGREEMENTS WITH DIRECTORS AND OFFICERS AND INDEBTEDNESS OF MANAGEMENT


    We made a loan of $200,000 to K. Cyrus Hadavi, our president and chief
executive officer, indicated by a promissory note dated July 31, 1997. The loan
is secured by a pledge of 3,389,840 shares of our common stock owned by
Dr. Hadavi. We have no recourse against other assets of Dr. Hadavi. The loan
bears interest at the rate of 5% per year and is payable in full on or before
July 31, 2002. In 1998, we offset a $30,000 debt that we owed to Dr. Hadavi
against the loan, reducing the loan balance to $170,000. The highest outstanding
balance since January 1999 including accrued interest was $178,500. As of
September 30, 2000, the loan balance including accrued interest was $176,375. We
have agreed to forgive half of the outstanding principal and interest on Dr.
Hadavi's loan if he is still employed by Adexa on October 1, 2001 and to forgive
the remaining principal and interest on Dr. Hadavi's loan if he is still
employed by Adexa on October 1, 2002.



    We made an unsecured loan of $300,000 to Udo Dengler, our chief technology
officer, indicated by a promissory note dated May 19, 2000. The loan bears
interest at the rate of 5% per year and is payable in


                                       62
<PAGE>

full on or before May 19, 2008 or, if earlier, when Mr. Dengler's employment
terminates. As of September 30, 2000, the loan balance including accrued
interest was $305,458. We have agreed to forgive $50,000 of the outstanding
principal on Mr. Dengler's loan on each December 31st that he remains employed
by Adexa.


    We have also granted options and other arrangements to attract, retain and
provide incentive to our directors and executive officers.

INDEMNIFICATION

    We have entered into an indemnification agreement with each of our
directors.

    We believe that all of the transactions presented above were made on terms
no less favorable to us than could have been obtained from unaffiliated third
parties. All future transactions, including loans between us and our officers,
directors, principal stockholders and their affiliates will be approved by a
majority of the board of directors, including a majority of the independent and
disinterested outside directors on the board of directors, and will continue to
be on terms no less favorable to us than could be obtained from unaffiliated
third parties.

                                       63
<PAGE>
                             PRINCIPAL STOCKHOLDERS


    The table below presents selected information about beneficial ownership of
our outstanding common stock as of September 30, 2000, and as adjusted to
reflect the sale of common stock being sold in this offering by us, for the
following individuals:


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

    - each of our directors;

    - our chief executive officer and our three other highest-paid executive
      officers; and

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


    The information below assumes no exercise of the underwriters'
over-allotment option and is based upon 38,146,612 shares outstanding before the
offering and 42,146,612 shares outstanding after the offering.


    Beneficial ownership is determined under the rules of the Securities and
Exchange Commission and generally includes voting or investment power of
securities. Common stock subject to options exercisable within 60 days of
August 24, 2000 is considered outstanding for purposes of computing the
percentage ownership of the person holding the option but is not considered
outstanding for purposes of computing the percentage ownership of any other
person. Except where indicated, and subject to community property laws where
applicable, the persons in the table below have sole voting and investment power
for all common stock shown as beneficially owned by them.

    Unless otherwise indicated, the address of each of the individuals listed in
the table is c/o Adexa, Inc., 5933 West Century Boulevard, Twelfth Floor, Los
Angeles, CA 90045.


<TABLE>
<CAPTION>
                                                                                PERCENT BENEFICIALLY
                                                                                        OWNED
                                                                                ---------------------
                                                              TOTAL NUMBER OF    BEFORE       AFTER
NAME AND ADDRESS                                                  SHARES        OFFERING    OFFERING
----------------                                              ---------------   ---------   ---------
<S>                                                           <C>               <C>         <C>
NAMED EXECUTIVE OFFICERS AND DIRECTORS:
K. Cyrus Hadavi(1)..........................................     17,400,000       45.6%       41.3%
Udo Dengler(2)..............................................      3,210,000        7.8         7.1
Hoon Chung(3)...............................................      1,121,738        2.9         2.6
J. Timothy Romer(4).........................................        450,000        1.2         1.1
David R. Golob..............................................         66,948          *           *
William W. Lattin(5)........................................        134,712          *           *
Sam H. Lee(6)...............................................      3,754,474        9.8         8.9
William H. Younger, Jr.(7)..................................      7,105,856       18.6        16.9
All directors and officers as a group(8 persons)(8).........     33,243,728       77.5        70.8

OTHER 5% SHAREHOLDERS:
Funds affiliated with Sutter Hill Ventures(9)...............      7,105,856       18.6        16.9
  755 Page Mill Road
  Suite A-200
  Palo Alto, CA 94304
Funds affiliated with Information Technology Ventures(10)...      3,754,474        9.8         8.9
  100 Hamilton Avenue
  Suite 400
  Palo Alto, CA 94301
Kameron Hadavi..............................................      2,000,000        5.2         4.8
</TABLE>


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

   * Represents beneficial ownership of less than 1% of the outstanding shares
     of our common stock.

                                       64
<PAGE>
 (1) Includes:

    - 870,000 shares owned by the S. Hadavi Trust;

    - 870,000 shares owned by the C. Hadavi Trust;

    - 100,000 shares owned by the R. S. Hadavi Trust; and

    - 100,000 shares owned by the R. C. Hadavi Trust.

 (2) Includes:


    - 3,200,000 shares subject to options that are exercisable within 60 days of
      September 30, 2000; and



    - 10,000 shares subject to options that are exercisable within 60 days of
      September 30, 2000 that are owned by Mr. Dengler's wife, Cordula Dengler.



 (3) Includes 1,121,738 shares subject to options that are exercisable within
     60 days of September 30, 2000.



 (4) Includes 450,000 shares subject to options that are exercisable within
     60 days of September 30, 2000.



 (5) Includes 50,000 shares subject to options that are exercisable within
     60 days of September 30, 2000.


 (6) Includes:

    - 3,616,760 shares owned by Information Technology Ventures II, L.P.; and

    - 137,714 shares owned by ITV Affiliates Fund II, L.P.

    Mr. Lee, a managing member of each of these entities, disclaims beneficial
    ownership in the shares, except for his pecuniary interest in each of the
    limited partnerships.

 (7) Includes:

    - 4,449,674 shares owned by Sutter Hill Ventures;

    - 44,010 shares owned by Sutter Hill Entrepreneurs Fund (AI), LP;

    - 111,432 shares owned by Sutter Hill Entrepreneurs Fund (QP), LP; and

    - 2,500,740 shares held by other parties affiliated with Sutter Hill
      Ventures, including 618,590 shares held by William H. Younger Jr.,
      Trustee, The Younger Living Trust.

    Mr. Younger is a managing director of the general partner of Sutter Hill
    Ventures and disclaims beneficial ownership of the shares held by these
    entities except for his proportionate partnership interest in them.


 (8) Includes 4,831,738 shares subject to options that are exercisable within
     60 days of September 30, 2000.


 (9) Includes:

    - 4,449,674 shares owned by Sutter Hill Ventures;

    - 44,010 shares owned by Sutter Hill Entrepreneurs Fund (AI), LP;

    - 111,432 shares owned by Sutter Hill Entrepreneurs Fund (QP), LP; and

    - 2,500,740 shares held by other parties affiliated with Sutter Hill
      Ventures.

    Sutter Hill Ventures disclaims voting power and beneficial ownership to the
    shares held by its affiliated parties.

 (10) Includes:

    - 3,616,760 shares owned by Information Technology Ventures II, L.P.; and

    - 137,714 shares owned by ITV Affiliates Fund II, L.P.

                                       65
<PAGE>
                          DESCRIPTION OF CAPITAL STOCK

    On the closing of this offering, our authorized capital stock will consist
of 250,000,000 shares of common stock and 10,000,000 shares of preferred stock.

COMMON STOCK


    As of September 30, 2000, there were 38,146,612 shares of common stock
outstanding, adjusted to reflect the conversion of our preferred stock into
common stock on a one-for-one basis, that were held of record by approximately
93 stockholders. As of September 30, 2000, there were 10,816,336 shares of
common stock subject to outstanding options, all of which are exercisable. There
will be 42,146,612 shares of common stock outstanding, which includes the sale
of the shares of common stock to the public offered by us and the conversion of
our preferred stock into common stock on a one-for-one basis, assuming no
exercise of the underwriters' over-allotment option and assuming no exercise
after September 30, 2000 of outstanding options or warrants.


    The holders of common stock are entitled to one vote per share on all
matters to be voted on by the stockholders. Subject to preferences that may be
applicable to any outstanding preferred stock, the holders of common stock are
entitled to receive dividends, if any, as may be declared by the board of
directors out of funds legally available for that purpose. Upon our liquidation,
dissolution, or winding up, the holders of common stock are entitled to share
ratably in all assets remaining after payment of liabilities, subject to prior
distribution rights of preferred stock, if any, then outstanding. The common
stock has no preemptive or conversion rights or other subscription rights. There
are no redemption or sinking fund provisions applicable to the common stock. All
outstanding shares of common stock are fully paid and nonassessable, and the
shares of common stock to be issued on completion of this offering will be fully
paid and nonassessable.

PREFERRED STOCK

    On the closing of this offering, 10,000,000 shares of preferred stock will
be authorized and no shares will be outstanding. The board of directors has the
authority to issue the preferred stock in one or more series and to fix their
rights, preferences, privileges and restrictions, including dividend rights,
dividend rates, conversion rights, voting rights, terms of redemption,
redemption prices, liquidation preferences and the number of shares constituting
any series or the designation of the series, without further vote or action by
the stockholders. The issuance of preferred stock may have the effect of
delaying, deferring or preventing a change in control of us without further
action by the stockholders and may adversely affect the voting and other rights
of the holders of common stock. The issuance of preferred stock with voting and
conversion rights may adversely affect the voting power of the holders of common
stock, including the loss of voting control to others. We have no plans to issue
any of our preferred stock.

REGISTRATION RIGHTS


    After this offering, the holders of approximately 36,850,814 shares of
common stock and rights to acquire common stock will be entitled to various
rights concerning the registration of those shares under the Securities Act.
Under the terms of the agreement between us and the holders of these registrable
securities, if we propose to register any of our securities under the Securities
Act, either for our own account or for the account of other security holders
exercising registration rights, these holders are entitled to notice of any
registration and may be entitled to include their shares of common stock in that
registration. Additionally, these holders are also entitled to demand
registration rights, which may require us on up to two occasions to file a
registration statement under the Securities Act at our expense concerning their
shares of common stock, and we are required to use all reasonable efforts to
cause registration of those shares.


    Further, these holders may require us to file an unlimited number of
additional registration statements on Form S-3 at our expense. All of these
registration rights terminate upon the earlier of:

                                       66
<PAGE>
    - five years following the completion of our initial public offering; or

    - after the completion of our initial public offering, the date on which the
      holder holds less than one percent of our outstanding common stock and may
      sell all of the holder's registrable securities under Rule 144 in any
      ninety day period.

All of these registration rights are subject to various conditions and
limitations, including the right of the underwriters of an offering to limit the
number of shares included in any registration and our right not to cause a
requested registration within 180 days following the initial offering of our
securities.

ANTI-TAKEOVER EFFECTS OF PROVISIONS OF THE CERTIFICATE OF INCORPORATION, BYLAWS
AND DELAWARE LAW

    GENERAL.  Provisions of Delaware law and our certificate of incorporation
and bylaws could have the effect of making it more difficult for a third party
to acquire, or of discouraging a third party from acquiring, control of us.
These provisions could limit the price that investors might be willing to pay in
the future for shares of our common stock. These provisions of Delaware law and
the certificate of incorporation and bylaws may also have the effect of
discouraging or preventing transactions involving an actual or threatened change
of control of us, including unsolicited takeover attempts, even though such a
transaction may offer our stockholders the opportunity to sell their stock at a
price above the prevailing market price.

    DELAWARE TAKEOVER STATUTE.  We are subject to the business combination
provision of section 203 of the Delaware General Corporation Law. Subject to
exceptions, section 203 prohibits a publicly-held Delaware corporation,
including those whose securities are listed on the Nasdaq National Market, from
engaging in a business combination with an interested stockholder for a period
of three years after the date of the transaction in which the person became an
interested stockholder, unless:

    - the transaction is approved by the board of directors before the date the
      interested stockholder obtained interested stockholder status;

    - upon completion of the transaction that resulted in the stockholder
      becoming an interested stockholder, the interested stockholder owned at
      least 85% of our voting stock outstanding at the time the transaction
      began, excluding for purposes of determining the number of shares
      outstanding those shares owned by:

       - persons who are directors and also officers; and

       - employee stock plans in which employee participants do not have the
         right to determine confidentially whether shares held subject to the
         plan will be tendered in a tender or exchange offer; or

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

    A business combination includes mergers, asset sales and other transactions
resulting in a financial benefit to the interested stockholder. Subject to
exceptions, an interested stockholder is a person who, with affiliates and
associates, owns, or within three years did own, 15% or more of the
corporation's voting stock. This statute could prohibit or delay the
accomplishment of mergers or other takeover or change in control attempts
concerning us and may discourage attempts to acquire us.

    A Delaware corporation may opt out of DGCL section 203 with an express
provision in its original certificate of incorporation or an express provision
in its certificate of incorporation or bylaws resulting from amendments approved
by the holders of at least a majority of the corporation's outstanding voting
shares. We have not opted out of the provisions of DGCL section 203.

    CERTIFICATE OF INCORPORATION AND BYLAWS.  Provisions of the bylaws and the
amended and restated certificate of incorporation provide that the stockholders
may amend the bylaws or provisions of the amended and restated certificate of
incorporation only with the affirmative vote of two thirds of our capital

                                       67
<PAGE>
stock. These provisions of the amended and restated certificate of incorporation
and bylaws could discourage potential acquisition proposals and could delay or
prevent a change in control of Adexa. These provisions are intended to enhance
the likelihood of continuity and stability in the composition of the board of
directors and in the policies formulated by the board of directors and to
discourage some types of transactions that may involve an actual or threatened
change of control of Adexa. These provisions are designed to reduce our
vulnerability to an unsolicited acquisition proposal. The provisions also are
intended to discourage tactics that may be used in proxy fights. However, these
provisions could have the effect of discouraging others from making tender
offers for our shares and they also may inhibit fluctuations in the market price
of our shares that could result from actual or rumored takeover attempts. These
provisions also may have the effect of preventing changes in our management.

    CLASSIFIED BOARD OF DIRECTORS.  Our board will be divided into three classes
of directors serving staggered three-year terms. Approximately one-third of the
board of directors will be elected each year. These provisions are likely to
increase the time required for stockholders to change the composition of our
board of directors. For example, in general at least two annual meetings will be
necessary for stockholders to produce a change in the majority of our board of
directors. Subject to the rights of the holders of any outstanding series of
preferred stock, the certificate of incorporation authorizes only the board of
directors to fill vacancies, including newly created directorships. The
certificate of incorporation also provides that directors may be removed by
stockholders only because of their misconduct and only by affirmative vote of
holders of two-thirds of the outstanding shares of voting stock.

    STOCKHOLDER ACTION; SPECIAL MEETING OF STOCKHOLDERS.  The certificate of
incorporation provides that stockholders may not take action by written consent,
but may only take action at properly called annual or special meetings of
stockholders. The certificate of incorporation further provides that special
meetings of our stockholders may be called only by the chairman of the board of
directors or a majority of the board of directors. This limitation on the right
of stockholders to call a special meeting could make it more difficult for
stockholders to initiate actions that are opposed by the board of directors.
These actions could include the removal of an incumbent director or the election
of a stockholder nominee as a director. They could also include the
implementation of a rule requiring stockholder ratification of specific
defensive strategies that have been adopted by the board of directors concerning
unsolicited takeover bids. The limited ability of the stockholders to call a
special meeting of stockholders may make it more difficult to change the
existing board and management.

    AUTHORIZED BUT UNISSUED SHARES.  The authorized but unissued shares of
common stock and preferred stock are available for future issuance without
stockholder approval. These additional shares may be used for a variety of
corporate purposes, including future public offerings to raise additional
capital, corporate acquisitions and employee benefit plans. The existence of
authorized but unissued shares of common stock and preferred stock could impair
or discourage an attempt to obtain control of us by means such as a proxy
contest, tender offer or merger.

NASDAQ NATIONAL MARKET LISTING

    We have requested approval to list our common stock on The Nasdaq Stock
Market's National Market under the symbol ADXA.

TRANSFER AGENT AND REGISTRAR

    The transfer agent and registrar for the common stock is EquiServe.

                                       68
<PAGE>
                        SHARES ELIGIBLE FOR FUTURE SALE


    Upon completion of this offering, we will have 42,146,612 shares of common
stock outstanding assuming no exercise of the underwriters' over-allotment
option and no exercise of options after September 30, 2000. Of this amount, all
of the 4,000,000 shares offered by us in this offering will be available for
immediate sale in the public market as of the date of this prospectus, other
than shares purchased by our affiliates. An affiliate is a person such as an
officer, director or significant stockholder that controls us or that we
control. This leaves 38,146,612 shares eligible for sale into the public market
as follows:


ELIGIBILITY OF SHARES FOR SALE IN THE PUBLIC MARKET


<TABLE>
<CAPTION>
                                             APPROXIMATE
                                                SHARES
                                             ELIGIBLE FOR
RELEVANT DATES                               FUTURE SALE                      COMMENT
--------------                              --------------   ------------------------------------------
<S>                                         <C>              <C>
On effective date.........................       4,000,000   Freely tradable shares sold in offering
                                                             and shares salable under Rule 144(k) that
                                                             are not subject to 180-day lock-up

180 days after effective date.............      34,997,010   Lock-up and market stand-off provisions
                                                             released; additional shares salable under
                                                             Rule 144, 144(k) or 701

More than 180 days after effective date...       3,149,602   Additional shares salable under Rule 144
                                                             more than 180 days after the effective
                                                             date
</TABLE>


LOCK-UP AGREEMENTS AND MARKET STAND-OFF PROVISIONS

    All or substantially all of our employees, directors and stockholders are
subject to lock-up agreements or market stand-off provisions under which they
have agreed not to transfer or dispose of, directly or indirectly, any shares of
common stock or any securities convertible into or exercisable or exchangeable
for shares of common stock, for a period of 180 days after the date of this
prospectus. Chase Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated may, however, in their sole discretion, at any time, without
notice, release shares subject to lock-up agreements to which they are parties.
However, we may, without their consent, grant options and sell shares under our
stock plans.

RULE 144

    In general, under Rule 144, a person, or persons whose shares are
aggregated, who has beneficially owned shares for at least one year is entitled
to sell within any three-month period beginning 90 days after the date of this
prospectus a number of shares that does not exceed the greater of:


    - 1% of the then outstanding shares of common stock, approximately 421,466
      shares immediately after the offering; or


    - the average weekly trading volume during the four calendar weeks preceding
      that sale, subject to the filing of a Form 144 about that sale.

A person or persons whose shares are aggregated who is not considered to have
been one of our affiliates at any time during the 90 days immediately preceding
the sale who has beneficially owned the shares for at least two years is
entitled to sell their shares under Rule 144(k) without regard to the
limitations described above. Persons considered to be affiliates must always
sell under Rule 144, even after the applicable holding periods have been
satisfied.

    We are unable to estimate the number of shares that will be sold under
Rule 144, since this will depend on factors such as the market price for our
common stock and the personal circumstances of the

                                       69
<PAGE>
sellers. Before this offering, there has been no public market for the common
stock, and we cannot assure you that a significant public market for the common
stock will develop or be sustained after the offering. Any future sale of
substantial amounts of the common stock in the open market may harm the market
price of the common stock sold in this offering.

RULE 701

    Some of our employees or consultants who purchased their shares under the
1998 stock plan or under a written compensatory plan or contract are entitled to
rely on the resale provisions of Rule 701. Rule 701 permits nonaffiliates to
sell their Rule 701 shares without having to comply with the public information,
holding period, volume limitation or notice provisions of Rule 144. It also
permits affiliates to sell their Rule 701 shares without having to comply with
the Rule 144 holding period restrictions. In each case, the holding period
begins 90 days after the date of this prospectus.

REGISTRATION OF SHARES ISSUED UNDER OUR EMPLOYEE BENEFIT PLANS


    As of September 30, 2000, options to purchase 10,816,336 shares of our
common stock were issued and outstanding. No shares have been issued to date
under our 2000 employee stock purchase plan. We intend to file a registration
statement on Form S-8 under the Securities Act to register 5,500,000 shares of
common stock subject to outstanding stock options or reserved for issuance under
the 2000 stock incentive plan and the 2000 employee stock purchase plan within
180 days after the date of this prospectus. We also intend to file a
registration statement on Form S-8 to register approximately 146,875 shares of
common stock subject to outstanding stock options or reserved for issuance under
the 1998 stock plan. These registration statements will permit the resale of
these shares by nonaffiliates in the public market without restriction under the
Securities Act.


REGISTRATION RIGHTS


    After this offering, the holders of approximately 36,850,814 shares of our
common stock and rights to acquire common stock, or their transferees, will be
entitled to rights concerning registration of their shares under the Securities
Act. Registration of these shares under the Securities Act would result in these
shares becoming freely tradable without restriction under the Securities Act,
except for shares purchased by our affiliates, immediately upon the
effectiveness of their registration.


                                       70
<PAGE>
                                  UNDERWRITING

    Chase Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as joint bookrunners, and Dain Rauscher Incorporated are the
representatives of the underwriters. As joint bookrunners, Chase
Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated will have
shared responsibility for managing this offering. Subject to the terms and
conditions of the underwriting agreement, the underwriters named below, through
their representatives, have agreed to purchase from us the following numbers of
shares of common stock.

<TABLE>
<CAPTION>
                                                               NUMBER
UNDERWRITERS                                                  OF SHARES
------------                                                  ---------
<S>                                                           <C>
Chase Securities Inc........................................
Merrill Lynch, Pierce, Fenner & Smith
          Incorporated......................................
Dain Rauscher Incorporated..................................
                                                              ---------
    Total...................................................  4,000,000
                                                              =========
</TABLE>

    CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS.  The underwriting agreement
provides that the obligations of the underwriters are subject to specified
conditions, including the absence of any material adverse change in our business
and the receipt of various certificates, opinions and letters from us, our
counsel and the independent auditors. The underwriters are committed to purchase
all of the shares offered by us if they purchase any shares.

    UNDERWRITING DISCOUNTS AND COMMISSIONS.  The following table shows the per
share and total underwriting discounts and commissions that we will pay to the
underwriters. Amounts are shown assuming both no exercise and full exercise of
the underwriters' over allotment option to purchase additional shares.

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

    We estimate that the total expenses of this offering, excluding underwriting
discounts and commissions, will be approximately $ million.

    PRICING OF THE COMMON STOCK.  The underwriters propose to offer the shares
directly 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 re-allow a
concession not in excess of $     per share to other dealers. If all of the
shares are not sold at the initial public offering price, the representatives
may change the offering price and other selling terms. The underwriters do not
intend to confirm sales to accounts over which they exercise discretionary
authority that exceed 5% of the total number of shares of common stock offered
by them.

    THE UNDERWRITERS' OPTION TO PURCHASE MORE COMMON STOCK.  We have granted to
the underwriters an option, exercisable no later than 30 days after the date of
this prospectus, to purchase up to 600,000 additional shares of common stock at
the initial public offering price, less the underwriting discount on the cover
page of the prospectus. If the underwriters exercise this option, each
underwriter will have an obligation to purchase approximately the same
percentage of these option shares which the number of shares of common stock to
be purchased by it shown in the table listing the underwriters bears to the
total number of shares of common stock offered by this prospectus. We will be
obligated to sell additional

                                       71
<PAGE>
shares to the underwriters if the option is exercised. The underwriters may
exercise this option only to cover over-allotments of shares of common stock
offered in this prospectus.

    OTHER CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS.  The offering of the
shares is made for delivery when, as and if accepted by the underwriters and
subject to prior sale and to withdrawal, cancellation or modification of the
offering without notice. The underwriters reserve the right to reject an order
for the purchase of shares in whole or in part.

    INDEMNIFICATION.  We have agreed to indemnify the underwriters against
liabilities specified in the underwriting agreement, including liabilities under
the Securities Act, and to contribute to payments the underwriters may be
required to make for these liabilities.

    LOCK-UP AGREEMENT.  Our officers and directors and all of our stockholders
have agreed that they will not, without the prior written consent of Chase
Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, directly
or indirectly, offer, sell, contract to sell, transfer the economic risk of
ownership in, make any short sale, pledge or dispose of any shares of capital
stock, options or warrants to acquire shares of capital stock or securities
exchangeable for or convertible into shares of capital stock owned by them or
any other rights to purchase or acquire capital stock for a period of 180 days
following the effective date of the registration statement that includes this
prospectus.

    We have agreed that we will not, without the prior written consent of Chase
Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, offer,
sell or dispose of any shares of capital stock, options or warrants to acquire
shares of capital stock or securities exchangeable for or convertible into
shares of capital stock for a period of 180 days following the date of this
prospectus, except that we may issue shares upon the exercise of options granted
before the date of this prospectus and may grant additional options or sell
additional shares under our stock option or stock purchase plans. Without the
prior written consent of Chase Securities Inc. and Merrill Lynch, Pierce, Fenner
& Smith Incorporated, any additional options granted shall not be exercisable
during this 180-day period. We may also issue up to 10% of our common stock for
bona fide acquisition transactions, as long as the recipients of these shares
agree to abide by similar lock-up provisions.

    MARKET STABILIZATION ACTIVITIES.  The underwriters may engage in
transactions that could have the effect of stabilizing or maintaining the market
price of our shares at a level above that which might prevail in the open market
in the absence of these transactions. These transactions may occur on the Nasdaq
National Market or in the over-the-counter market.

    In particular, the underwriters may make short sales of our shares and may
purchase our shares on the open market to cover positions created by short
sales. Short sales involve the sale by the underwriters of a greater number of
shares than they are required to purchase in the offering. Covered short sales
are sales made in an amount not greater than the over-allotment option. The
underwriters may close out any covered short position by either exercising their
over-allotment option or purchasing shares in the open market. In determining
the source of shares to close out the covered short position, the underwriters
will consider the price of shares available for purchase in the open market as
compared to the price at which they may purchase shares through the
over-allotment option. Naked short sales are sales in excess of the
over-allotment option. The underwriters must close out any naked short position
by purchasing shares in the open market. A naked short position is more likely
to be created if the underwriters are concerned that there may be downward
pressure on the price of the shares in the open market after pricing that could
adversely affect investors who purchase in this offering.

    The underwriters may enter a stabilizing bid, which is the placing of any
bid or the making of any purchase, for the purposes of pegging, fixing or
maintaining the price of the shares. The underwriters may also impose a penalty
bid, which permits them to reclaim the selling concession from a syndicate
member when shares sold by the syndicate member are purchased in syndicate
covering transactions. Any stabilizing, if begun, may be discontinued at any
time.

                                       72
<PAGE>
    FACTORS IN PRICING OUR SHARES IN THE OFFERING.  Before this offering, there
has been no public market for our shares. The initial public offering price for
the shares will be determined by negotiations among us and the representatives.
Among the factors considered in determining the initial public offering will be
prevailing market and economic conditions, our revenue, the prospects for our
future earnings, market valuations of other companies engaged in activities
similar to our business operations and our management. The estimated initial
public offering price range on the cover of this preliminary prospectus is
subject to change as a result of market conditions.

    DIRECTED SHARES PROGRAM.  At our request, the underwriters have reserved up
to      shares of common stock for sale at the initial public offering price to
our directors, officers, employees, business associates and related persons. The
number of shares of common stock available for sale to the general public will
be reduced if these individuals and entities purchase the reserved shares. Any
reserved shares which are not purchased by these persons may be offered by the
underwriters to the general public on the same basis as the other shares offered
by this prospectus.

    UNDERWRITER'S AFFILIATE OWNERSHIP.  As of August 24, 2000, we sold 3,149,602
shares of our series C redeemable convertible preferred stock in a private
placement at a price of $6.35 per share. In this private placement, DRW Venture
Partners L.P., an affiliate of Dain Rauscher Incorporated, one of the
underwriters of this offering, purchased 118,110 shares of series C redeemable
convertible preferred stock, all on the same terms as the other investors in the
private placement.

    ELECTRONIC DISTRIBUTIONS.  Merrill Lynch, Pierce, Fenner & Smith
Incorporated will be facilitating Internet distribution for this offering to
some of its Internet subscription customers. Merrill Lynch, Pierce, Fenner &
Smith Incorporated 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, Pierce, Fenner & Smith
Incorporated. Other than the prospectus in electronic format, the information on
the Merrill Lynch, Pierce, Fenner & Smith Incorporated web site is not intended
to be part of this prospectus.

                                 LEGAL MATTERS

    Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP, Menlo Park,
California will pass upon the validity of the common stock in this offering for
Adexa. Simpson Thacher & Bartlett, New York, New York, will pass upon legal
matters concerning this offering for the underwriters. As of the date of this
prospectus, some members and employees of Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian, LLP beneficially owned an aggregate of 14,518 shares of
our stock.

                                    EXPERTS

    The financial statements included in this prospectus and the related
financial statement schedule included elsewhere in the registration statement
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their reports appearing in the prospectus and elsewhere in the registration
statement. We have included our financial statements and the related financial
statement schedule in the prospectus and elsewhere in the registration statement
in reliance upon the reports of Deloitte and Touche LLP given upon their
authority as experts in accounting and auditing.

                                       73
<PAGE>
                      WHERE YOU CAN FIND MORE INFORMATION

    We have filed with the Securities and Exchange Commission, Washington, D.C.
20549, a registration statement on Form S-1 under the Securities Act relating to
the common stock offered by us. This prospectus does not contain all of the
information presented in the registration statement and the exhibits and
schedules to the registration statement. For further information about Adexa and
the common stock that we are offering, reference is made to the registration
statement and the exhibits and schedules filed as a part of the registration
statement. Statements contained in this prospectus concerning the contents of
any contract or any other document referred to are not necessarily complete and
summarize only the provisions of these documents that are material to investors.
You should refer to the exhibits to this registration statement for the complete
contents of these contracts and documents. Each statement is qualified by
reference to that exhibit.

    The registration statement, including the exhibits and schedules, may be
inspected without charge at the public reference facilities maintained by the
Securities and Exchange Commission in room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of all or any part of the document may be
obtained from that office after payment of fees set by the Securities and
Exchange Commission. The Securities and Exchange Commission maintains a world
wide web site that contains reports, proxy and information statements and other
information about registrants, including us, that file electronically with the
Securities and Exchange Commission at http://www.sec.gov.

                                       74
<PAGE>
                                     ADEXA
                         INDEX TO FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
                                                                PAGE
                                                              --------
<S>                                                           <C>
Independent Auditors' Report................................    F-2

Consolidated Balance Sheets as of December 31, 1998 and 1999
  and September 30, 2000 (unaudited)........................    F-3

Consolidated Statements of Operations for the Years Ended
  December 31, 1997, 1998 and 1999,
  and the Nine Months Ended September 30, 1999 (unaudited)
  and September 30, 2000 (unaudited)........................    F-4

Consolidated Statement of Stockholders' Equity (Deficit) for
  the Years Ended December 31, 1997, 1998 and 1999, and the
  Nine Months Ended September 30, 2000 (unaudited)..........    F-5

Consolidated Statements of Cash Flows for the Years Ended
  December 31, 1997, 1998 and 1999, and the Nine Months
  Ended September 30, 1999 (unaudited) and September 30,
  2000 (unaudited)..........................................    F-6

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


                                      F-1
<PAGE>
                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders

Adexa, Inc.:


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


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


    In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the Company
at December 31, 1998 and 1999, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1999 in
conformity with accounting principles generally accepted in the United States of
America.



Los Angeles, California
March 30, 2000 (May 19, 2000 as to the second paragraph of Note 10, August 22,
2000 as to the second and third paragraphs of Note 4 and August 24, 2000 as to
Note 12, except the last paragraph of Note 12 as to which the date is
December , 2000)



The accompanying consolidated financial statements reflect a two-for-one stock
split of the Company's capital stock which is to be effected on or about
December  , 2000. The above report is in the form which will be signed by
Deloitte & Touche LLP upon consummation of such stock split, which is described
in the last paragraph of Note 12 of Notes to Consolidated Financial Statements,
and assuming that from August 24, 2000 to the date of such stock split, no other
events shall have occurred, other than those described in Note 12 of Notes to
Consolidated Financial Statements, that would affect the accompanying
consolidated financial statements and notes thereto.


/s/ DELOITTE & TOUCHE LLP

                                      F-2
<PAGE>
                          ADEXA, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS


         DECEMBER 31, 1998 AND 1999 AND SEPTEMBER 30, 2000 (UNAUDITED)



<TABLE>
<CAPTION>
                                                                     DECEMBER 31,               SEPTEMBER 30, 2000
                                                              ---------------------------   ---------------------------
                                                                  1998           1999          ACTUAL       PRO FORMA
                                                              ------------   ------------   ------------   ------------
                                                                                            (UNAUDITED)    (UNAUDITED)
<S>                                                           <C>            <C>            <C>            <C>
ASSETS

Current Assets:
  Cash and cash equivalents.................................  $  1,285,736   $  6,231,569   $ 18,990,361   $ 18,990,361
  Short-term investments....................................     3,138,292
  Accounts receivable, net of allowance for doubtful
    accounts of $480,000, $528,000, and $1,126,857 as of
    December 31, 1998 and 1999 and September 30, 2000,
    (unaudited).............................................     2,327,548      4,448,375     12,868,962     12,868,962
  Prepaid and other current assets..........................       110,412        189,306      1,689,681      1,689,681
                                                              ------------   ------------   ------------   ------------
        Total current assets................................     6,861,988     10,869,250     33,549,004     33,549,004
                                                              ------------   ------------   ------------   ------------
Property and Equipment, Net.................................       997,220      1,149,455      2,289,024      2,289,024
Loans Receivable from Related Parties.......................       226,500        214,556        517,889        517,889
Other Assets................................................        96,469        113,749        243,721        243,721
                                                              ------------   ------------   ------------   ------------
Total Assets................................................  $  8,182,177   $ 12,347,010   $ 36,599,638   $ 36,599,638
                                                              ============   ============   ============   ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities:
  Line of credit............................................  $  2,100,000   $  5,000,000             --             --
  Accounts payable..........................................       212,551        969,321   $  2,931,914   $  2,931,914
  Accrued wages and related liabilities.....................       742,308      2,393,372      4,464,622      4,464,622
  Accrued expenses and other current liabilities............       110,370      1,139,069      1,711,875      1,711,875
  Accrued taxes payable.....................................                    1,440,870      2,249,807      2,249,807
  Deferred revenues.........................................       781,482      2,012,149      9,450,604      9,450,604
  Current portion of capital lease obligations..............       109,428        123,286        141,370        141,370
                                                              ------------   ------------   ------------   ------------
        Total current liabilities...........................     4,056,139     13,078,067     20,950,192     20,950,192
                                                              ------------   ------------   ------------   ------------
Capital lease obligations...................................       237,951        117,406        149,265        149,265
                                                              ------------   ------------   ------------   ------------
Total Liabilities...........................................     4,294,090     13,195,473     21,099,457     21,099,457
                                                              ------------   ------------   ------------   ------------

Series C redeemable convertible preferred stock, no par
  value, 4,200,000 shares authorized; 3,149,602 shares
  issued and outstanding as of September 30, 2000
  (unaudited), no shares issued and outstanding as of
  September 30, 2000 (unaudited pro forma)                              --             --     19,940,390             --

Commitments and Contingencies

Stockholders' Equity (Deficit):
  Series A convertible preferred stock, no par value;
    8,716,372 shares authorized; 8,260,340 shares issued and
    outstanding as of December 31, 1998 and 1999 and
    September 30, 2000 (unaudited); no shares issued and
    outstanding as of September 30, 2000 (unaudited pro
    forma)..................................................     4,283,838      4,283,838      4,283,838             --
  Series B convertible preferred stock, no par value;
    5,800,000 shares authorized; 4,984,848 shares issued and
    outstanding as of December 31, 1998 and 1999 and
    September 30, 2000 (unaudited); no shares issued and
    outstanding as of September 30, 2000 (unaudited pro
    forma)..................................................     8,125,738      8,125,738      8,125,738             --
  Common stock, no par value; 46,000,000 shares authorized
    as of December 31, 1998 and 1999 and September 30, 2000,
    (unaudited) 60,000,000 shares authorized as of
    September 30, 2000 (unaudited pro forma); 20,000,000,
    20,920,322, and 21,751,822 shares issued and outstanding
    as of December 31, 1998 and 1999 and September 30, 2000
    (unaudited), respectively; 38,146,612 shares issued and
    outstanding as of September 30, 2000 (unaudited pro
    forma)..................................................        78,500        154,149        378,743     32,728,709
  Additional paid-in capital................................     2,249,041      2,531,090     25,945,056     25,945,056
  Unearned stock-based compensation.........................      (654,106)      (683,092)   (13,591,603)   (13,591,603)
  Accumulated deficit.......................................   (10,074,705)   (15,260,186)   (29,581,981)   (29,581,981)
  Accumulated other comprehensive loss......................      (120,219)            --             --             --
                                                              ------------   ------------   ------------   ------------
        Total stockholders' equity (deficit)................     3,888,087       (848,463)    (4,440,209)    15,500,181
                                                              ------------   ------------   ------------   ------------
Total Liabilities and Stockholder's Equity..................  $  8,182,177   $ 12,347,010   $ 36,599,638   $ 36,599,638
                                                              ============   ============   ============   ============
</TABLE>


          See accompanying notes to consolidated financial statements.

                                      F-3
<PAGE>
                          ADEXA, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS


               YEARS ENDED DECEMBER 31, 1997, 1998, AND 1999 AND
              NINE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED) AND
                        SEPTEMBER 30, 2000, (UNAUDITED)



<TABLE>
<CAPTION>
                                                                                                NINE MONTHS ENDED
                                                         YEAR ENDED DECEMBER 31,                  SEPTEMBER 30,
                                                 ---------------------------------------   ---------------------------
                                                                                               1999           2000
                                                    1997          1998          1999       (UNAUDITED)    (UNAUDITED)
                                                 -----------   -----------   -----------   ------------   ------------
<S>                                              <C>           <C>           <C>           <C>            <C>
Revenues:
  License revenues.............................  $ 3,734,725   $ 4,840,992   $16,092,786   $ 10,960,037   $ 22,415,088
  Service revenues.............................    2,034,664     2,251,411     5,174,889      4,071,567      9,332,772
  Maintenance revenues.........................      415,961     1,020,223     2,393,057      1,452,500      4,176,861
                                                 -----------   -----------   -----------   ------------   ------------
        Total revenues.........................    6,185,350     8,112,626    23,660,732     16,484,104     35,924,721
                                                 -----------   -----------   -----------   ------------   ------------
Cost of Revenues:
  Cost of license revenues.....................       11,252       122,504       267,985        144,233      1,340,698
  Cost of service and maintenance revenues,
    excluding stock-based compensation.........    1,876,106     4,859,990     5,738,364      4,164,626      8,764,559
  Stock-based compensation--cost of service and
    maintenance revenues.......................           --       261,468        38,575         28,931        263,559
                                                 -----------   -----------   -----------   ------------   ------------
        Total cost of revenues.................    1,887,358     5,243,962     6,044,924      4,337,790     10,368,816
                                                 -----------   -----------   -----------   ------------   ------------
Gross Profit...................................    4,297,992     2,868,664    17,615,808     12,146,314     25,555,905
                                                 -----------   -----------   -----------   ------------   ------------
Operating Expenses:
  Sales and marketing, excluding stock-based
    compensation...............................    3,663,973     7,859,925    12,929,224      8,167,643     17,725,474
  Research and development, excluding
    stock-based compensation...................      979,657     1,706,680     4,534,197      2,991,292      5,299,566
  General administrative, excluding stock-based
    compensation...............................      747,541     1,436,867     2,689,005      1,842,060      4,543,435
  Stock-based compensation--sales and
    marketing..................................           --       190,600        60,793         45,596      1,048,682
  Stock-based compensation--research and
    development................................           --       833,562       127,017         95,262        261,591
  Stock-based compensation--general and
    administrative.............................           --        38,399        26,678         20,009        586,269
                                                 -----------   -----------   -----------   ------------   ------------
        Total operating expenses...............    5,391,171    12,066,033    20,366,914     13,161,862     29,465,017
                                                 -----------   -----------   -----------   ------------   ------------
Operating Loss.................................   (1,093,179)   (9,197,369)   (2,751,106)    (1,015,548)    (3,909,112)
                                                 -----------   -----------   -----------   ------------   ------------
Interest and Other Income (Expense):
  Interest income..............................       66,176       202,759       149,674        130,436         78,549
  Interest expense.............................       (8,118)     (137,438)     (293,630)      (162,788)      (180,455)
  Other income (expense).......................           --       (56,547)     (175,952)      (181,397)        (9,993)
                                                 -----------   -----------   -----------   ------------   ------------
        Total interest and other income
           (expense)...........................       58,058         8,774      (319,908)      (213,749)      (111,899)
                                                 -----------   -----------   -----------   ------------   ------------
Loss before Income Taxes.......................   (1,035,121)   (9,188,595)   (3,071,014)    (1,229,297)    (4,021,011)

Provision (Benefit) for Income Taxes...........     (188,458)      245,494     2,114,467      1,582,912      1,954,430
                                                 -----------   -----------   -----------   ------------   ------------
Net Loss.......................................  $  (846,663)  $(9,434,089)  $(5,185,481)  $ (2,812,208)  $ (5,975,441)
Accretion and Deemed Dividend on Redeemable
  Preferred Stock..............................           --            --            --             --     (8,346,354)
                                                 -----------   -----------   -----------   ------------   ------------
Net Loss Attributable to Common Stockholders...  $  (846,663)  $(9,434,089)  $(5,185,481)  $ (2,812,208)  $(14,321,795)
                                                 ===========   ===========   ===========   ============   ============
Basic and Diluted Net Loss per Share...........  $     (0.04)  $     (0.47)  $     (0.26)  $      (0.14)  $      (0.67)
                                                 ===========   ===========   ===========   ============   ============
Weighted Average Shares of Common Stock........   20,000,000    20,000,000    20,196,544     20,091,784     21,290,592
                                                 ===========   ===========   ===========   ============   ============
</TABLE>


          See accompanying notes to consolidated financial statements.

                                      F-4
<PAGE>

                          ADEXA, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
 YEARS ENDED DECEMBER 31, 1997, 1998, AND 1999 AND NINE MONTHS ENDED SEPTEMBER
                             30, 2000 (UNAUDITIED)


<TABLE>
<CAPTION>
                                                                    SERIES A                   SERIES B
                                                                PREFERRED STOCK            PREFERRED STOCK
                                                            ------------------------   ------------------------
                                                             NUMBER OF                  NUMBER OF
                                                              SHARES                     SHARES
                                                            OUTSTANDING     AMOUNT     OUTSTANDING     AMOUNT
                                                            -----------   ----------   -----------   ----------
<S>                                                         <C>           <C>          <C>           <C>
Balance, December 31, 1996
  Issuance of Series A preferred stock, net of offering
    costs.................................................   8,150,340    $4,218,938
  Issuance of preferred stock and common stock purchase
    warrants..............................................
  Dividends...............................................
  Net loss................................................
                                                             ---------    ----------
Balance, December 31, 1997................................   8,150,340     4,218,938
  Comprehensive income:
  Net loss................................................
  Other comprehensive loss--
    Unrealized loss on investments........................
    Comprehensive loss....................................
  Issuance of Series A preferred stock, net of offering
    costs.................................................     110,000        64,900
  Issuance of Series B preferred stock, net of offering
    costs.................................................                              4,984,848    $8,125,738
  Unearned stock-based compensation.......................
  Amortization of stock-based compensation................
  Common stock options issued for services................
                                                             ---------    ----------    ---------    ----------
Balance, December 31, 1998................................   8,260,340     4,283,838    4,984,848     8,125,738
  Comprehensive income:
    Net loss..............................................
    Other comprehensive income--
      Reclassification adjustment for loss on investments
        included in net loss..............................
  Comprehensive loss......................................
  Issuance of common stock upon exercise of options.......
  Unearned stock-based compensation.......................
  Amortization of stock-based compensation................
  Common stock options issued for services................
                                                             ---------    ----------    ---------    ----------
Balance, December 31, 1999................................   8,260,340     4,283,838    4,984,848     8,125,738
  Net loss (unaudited)....................................
  Issuance of common stock upon exercise of options
    (unaudited)...........................................
  Unearned stock-based compensation (unaudited)...........
  Amortization of stock-based compensation (unaudited)....
  Common stock options issued for services (unaudited)....
  Accretion on redeemable preferred stock (unaudited).....
  Deemed dividend on redeemable preferred stock
    (unaudited............................................
                                                             ---------    ----------    ---------    ----------
Balance, September 30, 2000 (unaudited)...................   8,260,340    $4,283,838    4,984,848    $8,125,738
                                                             =========    ==========    =========    ==========

<CAPTION>

                                                                 COMMON STOCK
                                                            ----------------------                                  RETAINED
                                                             NUMBER OF               ADDITIONAL      UNEARNED       EARNINGS
                                                              SHARES                   PAID-IN     STOCK-BASED    (ACCUMULATED
                                                            OUTSTANDING    AMOUNT      CAPITAL     COMPENSATION     DEFICIT)
                                                            -----------   --------   -----------   ------------   ------------
<S>                                                         <C>           <C>        <C>           <C>            <C>
Balance, December 31, 1996                                  20,000,000    $ 78,500                                $    289,505
  Issuance of Series A preferred stock, net of offering
    costs.................................................
  Issuance of preferred stock and common stock purchase
    warrants..............................................                           $   270,906
  Dividends...............................................                                                             (83,458)
  Net loss................................................                                                            (846,663)
                                                            ----------    --------   -----------                  ------------
Balance, December 31, 1997................................  20,000,000      78,500       270,906                      (640,616)
  Comprehensive income:
  Net loss................................................                                                          (9,434,089)
  Other comprehensive loss--
    Unrealized loss on investments........................

    Comprehensive loss....................................

  Issuance of Series A preferred stock, net of offering
    costs.................................................
  Issuance of Series B preferred stock, net of offering
    costs.................................................
  Unearned stock-based compensation.......................                             1,950,681   $(1,950,681)
  Amortization of stock-based compensation................                                           1,296,575
  Common stock options issued for services................                                27,454
                                                            ----------    --------   -----------   ------------   ------------
Balance, December 31, 1998................................  20,000,000      78,500     2,249,041      (654,106)    (10,074,705)
  Comprehensive income:
    Net loss..............................................                                                          (5,185,481)
    Other comprehensive income--
      Reclassification adjustment for loss on investments
        included in net loss..............................

  Comprehensive loss......................................

  Issuance of common stock upon exercise of options.......     920,322      75,649
  Unearned stock-based compensation.......................                               212,103      (212,103)
  Amortization of stock-based compensation................                                             183,117
  Common stock options issued for services................                                69,946
                                                            ----------    --------   -----------   ------------   ------------
Balance, December 31, 1999................................  20,920,322     154,149     2,531,090      (683,092)    (15,260,186)
  Net loss (unaudited)....................................                                                          (5,975,441)
  Issuance of common stock upon exercise of options
    (unaudited)...........................................     831,500     224,594
  Unearned stock-based compensation (unaudited)...........                            14,420,091   (14,420,091)
  Amortization of stock-based compensation (unaudited)....                                           1,511,580
  Common stock options issued for services (unaudited)....                               648,521
  Accretion on redeemable preferred stock (unaudited).....                                                              (1,000)
  Deemed dividend on redeemable preferred stock
    (unaudited............................................                             8,345,354                    (8,345,354)
                                                            ----------    --------   -----------   ------------   ------------
Balance, September 30, 2000 (unaudited)...................  21,751,822    $378,743   $25,945,056   $(13,591,603)  $(29,581,981)
                                                            ==========    ========   ===========   ============   ============

<CAPTION>

                                                             ACCUMULATED
                                                                OTHER
                                                            COMPREHENSIVE
                                                                LOSS           TOTAL
                                                            -------------   -----------
<S>                                                         <C>             <C>
Balance, December 31, 1996                                                  $   368,005
  Issuance of Series A preferred stock, net of offering
    costs.................................................                    4,218,938
  Issuance of preferred stock and common stock purchase
    warrants..............................................                      270,906
  Dividends...............................................                      (83,458)
  Net loss................................................                     (846,663)
                                                                            -----------
Balance, December 31, 1997................................                    3,927,728
  Comprehensive income:
  Net loss................................................                   (9,434,089)
  Other comprehensive loss--
    Unrealized loss on investments........................    $(120,219)       (120,219)
                                                                            -----------
    Comprehensive loss....................................                   (9,554,308)
                                                                            -----------
  Issuance of Series A preferred stock, net of offering
    costs.................................................                       64,900
  Issuance of Series B preferred stock, net of offering
    costs.................................................                    8,125,738
  Unearned stock-based compensation.......................
  Amortization of stock-based compensation................                    1,296,575
  Common stock options issued for services................                       27,454
                                                              ---------     -----------
Balance, December 31, 1998................................     (120,219)      3,888,087
  Comprehensive income:
    Net loss..............................................                   (5,185,481)
    Other comprehensive income--
      Reclassification adjustment for loss on investments
        included in net loss..............................      120,219         120,219
                                                                            -----------
  Comprehensive loss......................................                   (5,065,262)
                                                                            -----------
  Issuance of common stock upon exercise of options.......                       75,649
  Unearned stock-based compensation.......................
  Amortization of stock-based compensation................                      183,117
  Common stock options issued for services................                       69,946
                                                              ---------     -----------
Balance, December 31, 1999................................                     (848,463)
  Net loss (unaudited)....................................                   (5,975,441)
  Issuance of common stock upon exercise of options
    (unaudited)...........................................                      224,594
  Unearned stock-based compensation (unaudited)...........
  Amortization of stock-based compensation (unaudited)....                    1,511,580
  Common stock options issued for services (unaudited)....                      648,521
  Accretion on redeemable preferred stock (unaudited).....                       (1,000)
  Deemed dividend on redeemable preferred stock
    (unaudited............................................
                                                              ---------     -----------
Balance, September 30, 2000 (unaudited)...................    $      --     $(4,440,209)
                                                              =========     ===========
</TABLE>


          See accompanying notes to consolidated financial statements.

                                      F-5
<PAGE>
                          ADEXA, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS


               YEARS ENDED DECEMBER 31, 1997, 1998, AND 1999 AND
    NINE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED) AND SEPTEMBER 30, 2000
                                  (UNAUDITED)



<TABLE>
<CAPTION>
                                                                                                  NINE MONTHS ENDED
                                                            YEAR ENDED DECEMBER 31,                 SEPTEMBER 30,
                                                     --------------------------------------   --------------------------
                                                        1997         1998          1999          1999           2000
                                                     ----------   -----------   -----------   -----------   ------------
                                                                                              (UNAUDITED)   (UNAUDITED)
<S>                                                  <C>          <C>           <C>           <C>           <C>
Cash Flows from Operating Activities:
  Net loss.........................................  $ (846,663)  $(9,434,089)  $(5,185,481)  $(2,812,208)  $ (5,975,441)
  Adjustments to reconcile net loss to net cash
    provided by (used in) operating activities:
    Depreciation and amortization..................     151,121       414,857       562,028      409,235         626,784
    Provision for losses on receivables............      25,000       412,843       920,000      710,117         748,907
    Loss on disposal of property and equipment.....          --            --        21,022           --
    Stock-based compensation.......................          --     1,324,029       253,063      189,798       2,160,103
    Deferred income taxes..........................    (189,258)      189,258            --           --
    Changes in operating assets and liabilities:             --            --            --           --
      Accounts receivable..........................  (2,325,571)      219,086    (3,040,827)  (8,763,570)     (9,169,494)
      Prepaid and other current assets.............      63,017       (35,866)      (78,894)    (159,868)     (1,500,375)
      Accounts payable.............................     (90,224)     (184,061)      756,770    1,024,905       1,962,593
      Accrued wages and related liabilities........     142,091       600,217     1,651,064    1,560,475       2,071,250
      Accrued expenses and other current
        liabilities................................     266,775      (236,940)    1,028,702           --         572,806
      Accrued taxes payable........................                               1,440,870      590,169         808,937
      Deferred revenue.............................   1,993,391    (1,890,909)    1,230,667    4,244,526       7,438,456
                                                     ----------   -----------   -----------   -----------   ------------
        Net cash provided by (used in) operating
          activities...............................    (810,321)   (8,621,575)     (441,016)  (3,006,422)       (255,474)
                                                     ----------   -----------   -----------   -----------   ------------

Cash Flows from Investing Activities:
  Net (purchases) sales of short-term
    investments....................................  (2,284,375)     (974,136)    3,258,511    3,138,292              --
  Purchases of property and equipment..............    (737,546)     (212,985)     (731,503)    (421,091))    (1,607,800)
  Loans receivable from related parties............    (200,000)      (26,500)       11,944       50,125        (303,333)
  Other assets.....................................     (55,638)      (13,493)      (17,280)      (5,665)       (129,972)
                                                     ----------   -----------   -----------   -----------   ------------
        Net cash (used in) provided by investing
          activities...............................  (3,277,559)   (1,227,114)    2,521,672    2,761,661      (2,041,105)
                                                     ----------   -----------   -----------   -----------   ------------

Cash Flows from Financing Activities:
  Net borrowings (repayments) under line of
    credit.........................................          --     2,100,000     2,900,000           --      (5,000,000)
  Payments on capital lease obligations............      (4,901)      (80,758)     (110,472)     (78,103)       (108,613)
  Net proceeds from sale of preferred stock........   4,489,844     8,190,638            --           --      19,939,390
  Proceeds from the exercise of common stock
    options........................................          --            --        75,649       23,124         224,594
  Dividends........................................     (83,458)           --            --           --              --
                                                     ----------   -----------   -----------   -----------   ------------
        Net cash provided by (used in) financing
          activities...............................   4,401,485    10,209,880     2,865,177      (54,979)     15,055,371
                                                     ----------   -----------   -----------   -----------   ------------

Net Increase (Decrease) in Cash and Cash
  Equivalents......................................     313,605       361,191     4,945,833     (299,740)     12,758,792

Cash and Cash Equivalents, Beginning of Period.....     610,940       924,545     1,285,736    1,285,736       6,231,569
                                                     ----------   -----------   -----------   -----------   ------------

Cash and Cash Equivalents, End of Period...........  $  924,545   $ 1,285,736   $ 6,231,569   $  985,996    $ 18,990,361
                                                     ==========   ===========   ===========   ===========   ============

Supplemental Disclosures of Cash Flow Information--
  Cash Paid during the Year for:
    Interest.......................................  $    3,770   $   137,438   $   266,568   $  162,788    $    180,455
    Income taxes...................................         800        56,236        57,354        2,537           2,948
    Foreign taxes withheld by customers............          --        55,436       833,111      795,793         770,798

Noncash Investing and Financing Activities--

  During the years ended December 31, 1997, 1998, and 1999 and the nine months ended September 30, 2000, the Company
    financed acquisitions of equipment amounting to $74,598, $358,440, $3,779, and $158,556, (unaudited) respectively,
    under capital lease arrangements.
</TABLE>


          See accompanying notes to consolidated financial statements.

                                      F-6
<PAGE>
                          ADEXA, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  BUSINESS

    Adexa, Inc. and its subsidiaries (collectively, the "Company") develop and
market software products that enable collaborative commerce, or c-Commerce. The
Company's applications provide visibility into multi-tiered supply chains and
are designed to intelligently synchronize and optimize complex and
interdependent supply chain activities. The Company's software enables companies
to address the increasing volume, complexity and speed of business interactions
within and across the extended supply chain and automates selected inter- and
intra-company business processes based on user-defined rules. The Company's
software allows electronic exchanges to provide value-added services to their
participants, including collaborative demand planning, multi-tiered supply chain
planning and available-to-promise capabilities. Fundamentally, the software
enables enterprises and exchange participants to make faster, more informed
decisions about their supply chain interactions, resulting in enhanced supply
chain efficiency, greater customer responsiveness and improved strategic
planning and flexibility.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


    BASIS OF PRESENTATION--The accompanying financial statements have been
prepared assuming the Company will continue as a going concern. The Company's
financial statements reflect losses from operations, a stockholders' deficit and
negative working capital. As discussed in Notes 4 and 12, subsequent to
December 31, 1999, the Company has entered into a new line of credit arrangement
with a bank and has completed the sale of its Series C redeemable convertible
preferred stock. Management believes that its cash balances, the available line
of credit and the additional equity referred to above will be sufficient to meet
the Company's future operating needs for the next twelve months.



    UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS--The condensed
consolidated financial statements as of September 30, 2000 and for the nine
months ended September 30, 1999 and 2000 are unaudited. In the opinion of
management, the unaudited financial statements have been prepared on the same
basis as the annual financial statements and include all adjustments necessary
for a fair presentation of the financial statements. Results of interim periods
are not necessarily indicative of the results to be expected for the entire
fiscal year.


    PRINCIPLES OF CONSOLIDATION--The accompanying consolidated financial
statements include the accounts of the Company and its subsidiaries. All
significant intercompany balances and transactions have been eliminated in
consolidation.

    USE OF ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

    CASH AND CASH EQUIVALENTS--Cash equivalents are highly liquid investments
with insignificant interest rate risk and original maturities of 90 days or less
and are stated at amounts that approximate fair values, based on quoted market
prices. Cash equivalents consist principally of money market mutual funds and
highly liquid debt securities of certain U.S. municipalities.

    INVESTMENTS--Investments consist primarily of highly liquid municipal bonds,
commercial paper, and equity securities. Investments are categorized as
available for sale and are carried at fair value. The fair value of investments
is determined by the quoted market prices for each investment. Investments with
a maturity of less than one year but greater than three months when purchased
are classified as short-term

                                      F-7
<PAGE>
                          ADEXA, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
investments. Realized and unrealized gains or losses on investments are measured
using the specific identification method. Realized gains or losses on the sale
of investments are recognized in the statements of operations in the period
sold. Unrealized holding gains and losses on investments available for sale
represent other comprehensive income (loss) and are included as a component of
stockholders' equity until realized. Interest income and dividends on investment
securities of $56,176, $162,555, and $52,750 are reflected as interest income
during the years ended December 31, 1997, 1998, and 1999, respectively.


    CONCENTRATION OF CREDIT RISK--Financial instruments that potentially subject
the Company to a concentration of credit risk principally consist of cash, cash
equivalents, investments, and accounts receivable. The Company places its cash,
cash equivalents, and investments with high credit quality institutions. Three
customers represented 28 percent, 13 percent and 11 percent of total revenues in
1997. Two customers represented 30 percent and 11 percent of total revenues in
1998. Three customers represented 13 percent, 12 percent and 11 percent of total
revenues in 1999. Four customers represented 24 percent, 15 percent,
11 percent, and 11 percent of total gross accounts receivable at December 31,
1998. Three customers represented 25 percent, 12 percent, and 11 percent of
total gross accounts receivable at December 31, 1999.


    The Company generally does not require collateral on accounts receivable, as
the Company's customers are generally large, well-established companies. The
Company periodically performs credit evaluations of its customers and maintains
reserves for potential credit losses.

    PROPERTY AND EQUIPMENT--Property and equipment are stated at cost, less
accumulated depreciation. Depreciation is provided for using the straight-line
method over the estimated useful lives of the assets. Leasehold improvements are
amortized over the lesser of the lease terms or the useful lives of the
improvements.


    UNAUDITED PRO FORMA BALANCE SHEET AND UNAUDITED PRO FORMA NET LOSS PER
SHARE--The unaudited pro forma consolidated balance sheet at September 30, 2000
reflects the automatic conversion of Series A, B and C convertible preferred
stock, outstanding as of September 30, 2000, into 16,394,790 additional shares
of common stock immediately prior to the closing of the initial public offering
of the Company's common stock.



    Unaudited pro forma net loss per share is computed using the weighted
average number of common shares outstanding, including the pro forma effects of
the automatic conversion of the Company's Series A, B and C convertible
preferred stock into shares of the Company's common stock effective upon the
closing of the Company's initial public offering. Conversion of the Series A, B
and C convertible preferred stock is


                                      F-8
<PAGE>
                          ADEXA, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

assumed to have occurred upon issuance. The following table summarizes the
components of the unaudited pro forma net loss per share:



<TABLE>
<CAPTION>
                                                               YEAR ENDED     NINE MONTHS ENDED
                                                              DECEMBER 31,      SEPTEMBER 30,
                                                                  1999              2000
                                                              -------------   -----------------
<S>                                                           <C>             <C>
Net loss....................................................   $(5,185,481)     $ (5,975,441)
Accretion and deemed dividend to preferred stockholders.....            --        (8,346,354)
                                                               -----------      ------------
Net loss attributable to common stockholders................   $(5,185,481)     $(14,321,795)
                                                               ===========      ============
Shares used in computing basic and diluted net loss per
  share.....................................................    20,196,544        21,290,592
Adjusted to reflect the effect of the assumed conversion of
  convertible preferred stock...............................    13,245,188        13,672,057
                                                               -----------      ------------
Weighted average shares used in computing pro forma basic
  and diluted net loss per share............................    33,441,732        34,962,649
                                                               ===========      ============
Pro forma basic and diluted net loss per share attributable
  to common stockholders....................................   $     (0.16)     $      (0.41)
                                                               ===========      ============
</TABLE>


    REVENUE RECOGNITION--The Company's revenues consist of license revenues,
service revenues, and maintenance revenues.

    Revenue is recognized in accordance with the American Institute of Certified
Public Accountants Statement of Position ("SOP") No. 97-2, "Software Revenue
Recognition," as amended by SOP No. 98-4, "Deferral of the Effective Date of a
Provision of SOP 97-2, Software Revenue Recognition" and SOP No. 98-9,
"Modification of SOP 97-2, Software Revenue Recognition, With Respect to Certain
Transactions." Effective January 1, 2000, the Company adopted SOP No. 98-9 which
requires the Company to use the residual method of revenue recognition when
arrangements include multiple product components or other elements and vendor
specific objective evidence exists for the fair value of all undelivered
elements and does not exist for one or more of the delivered elements. Software
license revenue is recognized when persuasive evidence of an arrangement exists,
delivery of the product component has occurred, the fee is fixed and
determinable, collectibility is probable and acceptance criteria, if any, have
been met. If any of these criteria is not met, revenue recognition is deferred
until such time as all of the criteria are met.

    The Company recognizes revenue for certain software contracts in accordance
with paragraphs 48 and 49 of SOP No. 97-2, whereby customer contracts that
require delivery of unspecified additional software products in the future are
accounted for as subscriptions. The Company recognizes this revenue ratably over
the term of the arrangement beginning with the delivery of the first product.

    All of the Company's multiple element arrangements entered into since the
effective date of SOP No. 98-9 have been accounted for using the residual
method. Vendor specific objective evidence of fair value for an element offered
for sale separately is based on the price established for the element when it is
sold separately, or in the case when the element has not yet been sold
separately, is based on the price established by management.

                                      F-9
<PAGE>
                          ADEXA, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    The Company generally enters into separate contracts for professional
services. The Company recognizes revenues from services delivered on a
time-and-materials basis as the services are performed. Revenues from
fixed-price arrangements are recognized on a percentage-of-completion basis.

    The Company recognizes revenues from maintenance and support arrangements on
a straight-line basis over the life of the agreement, which is typically one
year.

    The Company enters into master agreements with its resellers. These
agreements require the reseller to issue a purchase order to the Company for
each software license the reseller enters into with an end user. The Company
recognizes revenue from licensing its software to resellers using the same
criteria and methods as it uses for its direct end-user customers.


    Deferred revenue in the accompanying consolidated balance sheet includes
amounts collected or billed in excess of recognizable revenue. Such deferred
revenue relates to arrangements accounted for as subscriptions, amounts
allocated to undelivered elements or services not yet performed, and amounts
related to the remaining life of maintenance and support agreements. Amounts
recognized as revenue in advance of billing are recorded as unbilled receivables
and generally involve maintenance and service revenues. Accounts receivable
include unbilled revenue amounting to $132,500 as of December 31, 1998,
$1,355,050 as of December 31, 1999, and $688,959 as of September 30, 2000
(unaudited).


    COST OF REVENUES--Cost of revenues consists of cost of license revenues and
cost of service and maintenance revenues. Cost of license revenues includes
royalties to third parties for software embedded in the Company's products,
royalties for the resale of third party software to the Company's customers and
the costs of documentation, delivery, and packaging. Cost of service and
maintenance revenues include salaries and other personnel-related costs for
implementation and training services, customer support organization, travel,
bonuses, facility costs, costs of third parties contracted to provide
implementation services to the Company's customers and associated overhead
expenses.

    RESEARCH AND DEVELOPMENT--Research and development costs consist primarily
of salaries and other personnel-related costs, bonuses, facility costs, and
third party services. The Company maintains a research and development staff to
enhance its products and to develop new products. In accordance with Statement
of Financial Accounting Standards ("SFAS") No. 86, "Accounting for the Costs of
Computer Software to Be Sold, Leased, or Otherwise Marketed," software costs are
expensed as incurred until technological feasibility of the software is
determined and the recovery of the cost can reasonably be expected, after which
any additional costs are capitalized. The Company has expensed all software
development costs because the establishment of technological feasibility of
products and their availability for sale have substantially coincided.


    PRODUCT WARRANTY--The Company generally warrants that its products will
function substantially in accordance with documentation provided to customers
for approximately 3 to 12 months following initial shipment to the customer. As
of December 31, 1999, the Company had not incurred any significant expenses
related to warranty claims.


    STOCK-BASED COMPENSATION--The Company accounts for stock-based employee
compensation arrangements in accordance with provisions of Accounting Principles
Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees," and
complies with the disclosure provisions of SFAS No. 123, "Accounting for
Stock-Based Compensation." Under APB Opinion No. 25, compensation is calculated
as the difference, if any, on the date of grant, between the fair value of the
Company's stock and the exercise

                                      F-10
<PAGE>
                          ADEXA, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
price. Stock-based compensation related to employee option grants is recorded on
the grant date as unearned stock-based compensation, which is classified as a
separate component of stockholders' equity, and is amortized to expense on a
straight-line basis according to the vesting terms of the related stock options.
The Company accounts for stock options issued to non-employees in accordance
with the provisions of SFAS No. 123 and Emerging Issues Task Force Issue
No. 96-18, "Accounting for Equity Instruments That Are Issued to Other Than
Employees for Acquiring, or in Conjunction with Selling, Goods or Services."

    INCOME TAXES--Deferred income tax assets and liabilities are computed
annually for temporary differences between the financial statement and income
tax bases of assets and liabilities. Such deferred income tax asset and
liability computations are based on enacted tax laws and rates applicable to
years in which the differences are expected to reverse. Income tax expense is
the tax payable or refundable for the year plus or minus the change during the
year in deferred income tax assets and liabilities. A valuation allowance is
established, when necessary, to reduce deferred income tax assets to the amount
that is more likely than not to be realized.

    NET LOSS PER SHARE OF COMMON STOCK--Basic earnings or loss per share
excludes dilution for potentially dilutive securities and is computed by
dividing income or loss available to common stockholders by the weighted average
number of common shares outstanding during the period. Diluted earnings or loss
per share reflects the potential dilution that could occur if securities or
other contracts to issue common stock were exercised or converted into common
stock. Potentially dilutive securities are excluded from the computation of
diluted earnings or loss per share when their inclusion would be antidilutive.


    Unaudited--Potentially dilutive securities outstanding as of September 30,
2000 consist of the following:



<TABLE>
<CAPTION>

<S>                                                           <C>
Series A convertible preferred stock........................   8,260,340
Series B convertible preferred stock........................   4,984,848
Series C redeemable convertible preferred stock.............   3,149,602
Series A convertible preferred stock warrants...............     456,024
Common stock options........................................  17,816,336
</TABLE>


    FAIR VALUE OF FINANCIAL INSTRUMENTS--SFAS No. 107, "Disclosures About Fair
Value of Financial Instruments", requires disclosure about the fair value of
financial instruments whether or not such instruments are recognized in the
balance sheet. Due to the short-term nature of the Company's financial
instruments, other than debt, fair values are not materially different from
their carrying values. Based on the borrowing rates available to the Company for
similar variable rate debt, the carrying value of debt approximates fair value.
The fair value of loans receivable from related parties cannot be determined due
to their related party nature.

    EFFECTS OF RECENT ACCOUNTING PRONOUNCEMENTS--In December 1998, the American
Institute of Certified Public Accountants issued SOP No. 98-9, "Modification of
SOP 97-2, Software Revenue Recognition, with Respect to Certain Transactions,"
which amends SOP No. 97-2, and was effective for transactions entered into by
the Company beginning January 1, 2000. Adoption of SOP No. 98-9 did not have a
material impact on the Company's consolidated financial position or results of
operation.

                                      F-11
<PAGE>
                          ADEXA, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    In June 1998, June 1999, and June 2000, the Financial Accounting Standards
Board ("FASB") issued SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities," SFAS No. 137, "Accounting for Derivative Instruments and
Hedging Activities--Deferral of the Effective Date of FASB Statement No. 133,"
and SFAS No. 138, "Accounting for Derivative Instruments and Hedging
Activities--An Amendment of SFAS No. 133." SFAS No. 133, as amended, requires
the recognition of all derivatives as either assets or liabilities in the
balance sheet and the measurement of those instruments at fair value. The
accounting for changes in the fair value of a derivative depends on the planned
use of the derivative and the resulting designation. The Company is required to
implement SFAS No. 133, as amended, in the first quarter of 2001. The Company
has not determined the effects, if any, adoption of SFAS No. 133, as amended,
will have on the its consolidated financial statements.

    In March 2000, the FASB issued FASB Interpretation No. 44 ("FIN 44"),
"Accounting for Certain Transactions Involving Stock Compensation--an
interpretation of APB Opinion No. 25." FIN 44 clarifies the application of APB
Opinion No. 25 and, among other issues, clarifies the following: the definition
of an employee for purposes of applying APB Opinion No. 25; the criteria for
determining whether a plan qualifies as a noncompensatory plan; the accounting
consequence of various modifications to the terms of the previously fixed stock
options or awards; and the accounting for an exchange of stock compensation
awards in a business combination. FIN 44 is effective July 1, 2000, but certain
conclusions in FIN 44 cover specific events that occurred after either
December 15, 1998 or January 12, 2000. The Company does not expect the
application of FIN 44 to have a material impact on the Company's consolidated
financial position or results of operations.

    In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements," which summarizes the views of the staff of the SEC in applying
generally accepted accounting principles to revenue recognition in financial
statements. In March 2000 and June 2000, the SEC issued SAB No. 101A and SAB
No. 101B, which delayed the implementation dates of SAB No. 101. The Company
believes its revenue recognition policies are in accordance with SAB No. 101.

3.  PROPERTY AND EQUIPMENT

    The major classes of property and equipment are as follows:


<TABLE>
<CAPTION>
                                                                        DECEMBER 31,
                                                         USEFUL    -----------------------
                                                         LIVES        1998         1999
                                                        --------   ----------   ----------
<S>                                                     <C>        <C>          <C>
Computers and related equipment.......................  3 years    $1,170,618   $1,573,044
Furniture and fixtures................................  4 years       443,530      516,839
Leasehold improvements................................  5 years        16,528       82,744
                                                                   ----------   ----------
                                                                    1,630,676    2,172,627
Less accumulated depreciation and amortization........                633,456    1,023,172
                                                                   ----------   ----------
Total.................................................             $  997,220   $1,149,455
                                                                   ==========   ==========
</TABLE>



    Depreciation and amortization expense related to property and equipment was
$151,121, $414,857, and $562,028 for the years ended December 31, 1997, 1998 and
1999. The total cost and accumulated depreciation of equipment acquired under
capital leases were $433,038 and $129,070 as of December 31, 1998 and $435,993
and $242,823 as of December 31, 1999.


                                      F-12
<PAGE>
                          ADEXA, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4.  LINE OF CREDIT

    In March 1999, the Company entered into a loan agreement with a bank. The
agreement, as amended in July 2000, provided for line-of-credit borrowings based
on a formula aggregating up to $5,000,000. The line of credit was secured by
substantially all of the Company's assets. Borrowings under the line of credit
bear interest at the bank's prime rate plus 1 percent (10.5 percent at June 30,
2000).


    On August 22, 2000, the Company entered into a new loan agreement with its
bank that replaced the prior bank credit line. The amount available under this
line of credit is generally limited to the lower of $5,000,000, or an amount
equal to 70 percent of eligible domestic accounts receivable, and bears interest
at the bank's prime rate plus 1.50 percent. Borrowings outstanding under the new
loan agreement are due on August 22, 2001.


    The new loan agreement contains covenants that, among other things, limit
the type and amount of additional indebtedness that may be incurred by the
Company or any of its subsidiaries and impose limitations on investments, loans,
advances, sales, or transfers of assets, the making of dividends and other
payments, the creation of liens, and certain mergers. The Company is also
required to maintain minimum tangible net worth, as defined in the agreement.

5.  COMMITMENTS AND CONTINGENCIES


    LEASES--The Company leases its facilities and some equipment under lease
agreements that expire at various dates through 2003. Rental expense under
operating leases for the years ended December 31, 1997, 1998, and 1999 totaled
approximately $170,000, $418,000 and $492,661, respectively. Minimum annual
payments under all leases as of December 31, 1999 are as follows:



<TABLE>
<CAPTION>
                                                              CAPITAL    OPERATING
                                                               LEASES      LEASES
                                                              --------   ----------
<S>                                                           <C>        <C>
2000........................................................  $146,192   $  532,684
2001........................................................   101,217      326,310
2002........................................................    25,577      236,395
2003........................................................     1,972
                                                              --------   ----------
                                                               274,958   $1,095,389
                                                                         ==========
Less imputed interest.......................................    34,266
                                                              --------
Present value of minimum capital lease payments.............   240,692
Less current portion of capital lease obligations...........   123,286
                                                              --------
Capital lease obligations...................................  $117,406
                                                              ========
</TABLE>


    LITIGATION--The Company is involved in legal proceedings, claims, and
litigation arising in the ordinary course of business. In the opinion of
management, the ultimate disposition of these matters will not have a materially
adverse effect on the Company's consolidated financial statements.

6. EMPLOYEE BENEFIT PLAN


    The Company has a 401(k) employee benefit plan covering eligible employees
whereby the Company will match employee contributions up to an amount generally
determined annually by the Board of Directors. The Company's contributions to
the plan were approximately $7,140, $40,842, and $56,270 for the years ended
December 31, 1997, 1998, and 1999, respectively.


                                      F-13
<PAGE>
                          ADEXA, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. INCOME TAXES

    The provision (benefit) for income taxes consists of the following:


<TABLE>
<CAPTION>
                                                                     YEAR ENDED DECEMBER 31,
                                                              -------------------------------------
                                                                1997         1998          1999
                                                              ---------   -----------   -----------
<S>                                                           <C>         <C>           <C>
Current:
  State.....................................................  $     800   $       800   $       800
  Foreign...................................................         --        55,436     2,113,667
                                                              ---------   -----------   -----------
Total current...............................................        800        56,236     2,114,467
                                                              ---------   -----------   -----------
Deferred:
  Federal...................................................   (505,547)   (2,440,189)   (1,125,710)
  State.....................................................    (87,314)     (312,683)     (201,555)
                                                              ---------   -----------   -----------
Total deferred..............................................   (592,861)   (2,752,872)   (1,327,265)
                                                              ---------   -----------   -----------
Valuation allowance.........................................    403,603     2,942,130     1,327,265
                                                              ---------   -----------   -----------
Total.......................................................  $(188,458)  $   245,494   $ 2,114,467
                                                              =========   ===========   ===========
</TABLE>


    The components of net deferred income taxes consist of the following:


<TABLE>
<CAPTION>
                                                                   DECEMBER 31,
                                                              -----------------------
                                                                 1998         1999
                                                              ----------   ----------
<S>                                                           <C>          <C>
Current deferred income tax assets:
  Accounts receivable allowances............................  $  205,515   $  231,475
  Accrued vacation..........................................          --      255,097
  Accrued bonuses...........................................          --      323,736
  Other.....................................................      (4,684)      16,820
  Valuation allowance.......................................    (200,831)    (827,128)
                                                              ----------   ----------
Total current deferred income tax assets....................          --           --
                                                              ----------   ----------
Non-current deferred income tax assets:
  Net operating loss carryforwards..........................   3,621,330    4,142,991
  Deductible stock-based compensation.......................      11,888       42,700
  Accrual to cash basis.....................................    (488,315)    (339,820)
  Valuation allowance.......................................  (3,144,903)  (3,845,871)
                                                              ----------   ----------
Total non-current deferred income tax assets................          --           --
                                                              ----------   ----------
Net deferred income tax assets..............................  $       --   $       --
                                                              ==========   ==========
</TABLE>


                                      F-14
<PAGE>
                          ADEXA, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. INCOME TAXES (CONTINUED)

    The effective income tax rate differs from the federal statutory income tax
rate applied to loss before income taxes due to the following:


<TABLE>
<CAPTION>
                                                                               YEAR ENDED
                                                                              DECEMBER 31,
                                                                  ------------------------------------
                                                                    1997          1998          1999
                                                                  --------      --------      --------
<S>                                                               <C>           <C>           <C>
Federal statutory income tax rate...........................       (35.0)%       (35.0)%       (35.0)%
Foreign income taxes........................................          --           0.6          68.9
Valuation allowance.........................................        32.5          28.2          32.0
Non-deductible stock-based compensation.....................          --           4.8           2.0
Net deferred income tax benefit recognized upon conversion
  to a C corporation........................................       (27.2)           --            --
S corporation losses........................................         9.8            --            --
Other.......................................................         1.7           4.1           1.0
                                                                   -----         -----         -----
                                                                   (18.2)%         2.7%         68.9%
                                                                   =====         =====         =====
</TABLE>


    Foreign income taxes arise from the Company's contractual arrangements to
license its software or provide services to customers in certain foreign
countries.

    Effective August 5, 1997, the Company changed its status for federal and
state income tax purposes from an S corporation to a C corporation. As an S
corporation, other than a 1.5 percent state surtax, the Company's income or loss
passed through to its stockholders for income tax purposes.

    At December 31, 1999, the Company has net operating loss carryforwards
totaling approximately $10,920,000 and $5,844,000 for federal and state income
tax purposes, which may be used to offset future taxable income and expire in
varying amounts in 2012 through 2019 and 2002 through 2004, respectively.

8. STOCKHOLDERS' EQUITY


    CAPITAL STOCK--The Company's capital stock as of December 31, 1999 consisted
of common stock, Series A preferred stock and Series B preferred stock.


    During 1997, the Company issued 8,150,340 shares of Series A convertible
preferred stock at $0.59 per share for cash proceeds of $4,489,844, net of
$320,708 in offering costs. The Company also issued a warrant to purchase
456,024 shares of Series A convertible preferred stock to an investment bank as
consideration for its services rendered in connection with the private
placement. The warrant issued to the investment bank expires August 1, 2002 and
is convertible into Series A convertible preferred stock at an exercise price of
$0.59 per share. The warrant was recorded as offering costs and an increase in
additional paid-in capital at its estimated fair value of $269,054. In
February 1998, the Company issued 110,000 shares of Series A preferred stock to
unrelated third parties at $0.59 per share for proceeds of $64,900.

    During 1998, the Company issued 4,984,848 shares of Series B preferred stock
for $1.65 per share. The Company received cash proceeds of $8,125,738, net of
$99,261 in offering costs, from the Series B preferred stock transaction in
1998.

                                      F-15
<PAGE>
                          ADEXA, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. STOCKHOLDERS' EQUITY (CONTINUED)
    Significant terms of the Series A and Series B preferred stocks are as
follows:


    - At the option of the holder, each share of preferred stock is convertible
      at any time into one share of common stock, subject to adjustment for
      certain dilutive issuances. As of December 31, 1999, no such adjustments
      had occurred. Shares automatically convert into common stock upon the
      earlier of (a) completion of an initial public offering with aggregate
      proceeds greater than $10,000,000 at not less than $2.95 per share or
      (b) upon the consent of more than two-thirds of the holders of the
      preferred stock, voting together as a single class.


    - Series A and B preferred stockholders are entitled to annual noncumulative
      cash dividends when and if dividends are declared on common stock by the
      Company's Board of Directors.

    - In the event of any liquidation of the Company (which includes the
      acquisition of the Company by another entity), the holders of Series A and
      Series B preferred stock have a liquidation preference over common stock
      of $0.59 per share and $1.65 per share, respectively, plus all declared
      but unpaid dividends. In the event the assets are insufficient to cover
      the aforesaid amounts, the Series A and Series B stockholders would share
      in the assets ratably in proportion to the full preferential amount. After
      the Series A and Series B stockholders have received their full
      preferential distributions as described above, the remaining assets will
      be distributed to the Series A, Series B, and common stockholders on a pro
      rata as-converted basis until the Series B stockholders have received an
      aggregate of $3.30 per share. Thereafter, remaining assets will be
      distributed to the holders of Series A preferred stock and common stock on
      a pro rata as-converted basis until the holders of Series A preferred
      stock have received an aggregate of $2.95 per share. Thereafter, the
      holders of common stock shall receive all of the remaining assets of the
      Company pro rata based on number of shares held by each.

    - The preferred stock is not redeemable.

    - Holders of preferred stock have the same voting rights as the holders of
      common stock.

    STOCKHOLDER AGREEMENT AND INVESTOR RIGHTS AGREEMENT--The Company, the common
stockholders and the preferred stockholders have entered into a Stockholder
Agreement, which, among other things, establishes the voting criteria for the
election of the Board of Directors and provides that the preferred stockholders
participate in any sale of common shares to any party (other than in an initial
public offering) on a pro rata basis. Additionally, the Company, the preferred
stockholders, the common stockholders, and a warrant holder have entered into an
Investor Rights Agreement, wherein the Company extended certain registration
rights to the parties.

9. STOCK OPTION PLAN


    In February 1998, the Company established the 1998 Stock Option Plan (the
"1998 Plan") under which employees, consultants, and directors may be granted
options to purchase up to an aggregate of 9,240,236 shares of the Company's
common stock. During the nine months ended September 30, 2000, the Company
increased the number of options available under the 1998 Plan to a total of
13,540,236. Options vest over periods of up to four years and expire ten years
from the grant date. The 1998 Plan also provides for early exercise of options
prior to full vesting. Any unvested shares purchased are subject to repurchase
by the Company upon occurrence of certain events or conditions, such as
employment termination, at the original purchase price. At December 31, 1999,
there were 4,000 shares subject to repurchase at a


                                      F-16
<PAGE>
                          ADEXA, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. STOCK OPTION PLAN (CONTINUED)
weighted-average exercise price of $0.265 per share. When the exercise price of
employee stock options issued under the 1998 Plan equals the fair value of the
underlying stock on the grant date, no compensation expense is recorded.
Compensation expense is recognized for the fair value of options granted to
non-employees and to the extent the fair value of the underlying stock exceeds
the exercise price of employee stock options.


    During the years ended December 1998 and 1999 and the nine months ended
September 30, 2000, the Company granted non-employees 104,000, 20,000 and
222,500 (unaudited) stock options, at a weighted-average exercise price of
$0.42, $1.05 and $2.35 (unaudited), respectively, for services performed and to
be rendered in the future. In each period in which the option shares are earned,
stock option compensation will be recorded. The amount of stock option
compensation will be the fair value of the option shares earned during the
period. The fair value of the option shares earned is calculated using the
Black-Scholes option-pricing model. The primary component in the Black-Scholes
calculation is the value of the Company's common stock at the time the option
shares are earned. The value of the option shares, and the corresponding stock
option compensation, increases as the fair value of the Company's common stock
increases. Conversely, the value of the option shares earned, and the
corresponding stock option compensation, decreases as the fair value of the
Company's common stock decreases. Since the fair value of the Company's common
stock in the future cannot be estimated, it is not possible to estimate the
amount of stock option compensation that could be recorded in connection with
the non-employee stock options granted and outstanding as of September 30, 2000.
During the years ended December 31, 1998 and 1999, and the nine months ended
September 30, 2000 stock option compensation to non-employees amounting to
$27,454, $69,946 and $648,521 (unaudited), respectively, was recognized in the
accompanying 2000 (unaudited) consolidated statements of operations. The
assumptions used in the computation of the fair value of non-employee options
include the following:



<TABLE>
<CAPTION>
                                                                                        NINE MONTHS
                                                                                           ENDED
                                                                1998       1999     SEPTEMBER 30, 2000
                                                              --------   --------   -------------------
                                                                                        (UNAUDITED)
<S>                                                           <C>        <C>        <C>
Risk-free interest rate.....................................     5.2%       6.1%             6.2%
Dividends yield.............................................      --         --               --
Expected life (years).......................................      10         10               10
Volatility..................................................    92.5%     108.8%           103.4%
</TABLE>



    During the years ended December 31, 1998 and 1999, and the nine months ended
September 30, 2000 the Company issued employee common stock options with
exercise prices less than the fair value of its underlying common stock.
Accordingly, the Company recorded $1,950,681, $212,103 and $12,888,149
(unaudited) during the years ended December 31, 1998 and 1999, and the nine
months ended September 30, 2000, respectively, as the intrinsic value of such
options. Stock-based compensation of $1,296,575, $183,117 and $1,033,040
(unaudited) was amortized to expense during the years ended December 31, 1998
and 1999, and the nine months ended September 30, 2000, respectively.


                                      F-17
<PAGE>
                          ADEXA, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. STOCK OPTION PLAN (CONTINUED)
    A summary of the Company's stock option activity follows:


<TABLE>
<CAPTION>
                                                                 WEIGHTED-
                                                     NUMBER       AVERAGE        RANGE OF
                                                       OF        EXERCISE        EXERCISE
                                                     OPTIONS       PRICE          PRICES
                                                   -----------   ---------   -----------------
<S>                                                <C>           <C>         <C>      <C>
Granted in 1998..................................    8,786,020    $ 0.155    $0.075-   $0.975
  Canceled.......................................   (1,469,612)     0.08      0.075-    0.50
                                                   -----------
Outstanding, December 31, 1998...................    7,316,408      0.17      0.075-    0.975
  Granted........................................    1,686,600      1.10      0.975-    1.50
  Exercised......................................     (920,322)     0.08      0.075-    0.975
  Canceled.......................................     (164,500)     0.585     0.075-    0.975
                                                   -----------
Outstanding, December 31, 1999...................    7,918,186      0.37      0.075-    1.50
  Granted (unaudited)............................    4,324,200      2.58      2.00 -    4.00
  Exercised (unaudited)..........................     (831,500)     0.27      0.075-    2.00
  Canceled (unaudited)...........................     (594,550)     1.20      0.075-    3.00
                                                   -----------
Outstanding, September 30, 2000 (unaudited)......   10,816,336    $ 1.22     $0.075-   $4.00
                                                   ===========
</TABLE>



    Information regarding stock option grants during the years ended
December 31, 1998 and 1999 is summarized as follows:



<TABLE>
<CAPTION>
                                                                       YEARS ENDED
                                          ---------------------------------------------------------------------
                                                  DECEMBER 31, 1998                   DECEMBER 31, 1999
                                          ---------------------------------   ---------------------------------
                                                      WEIGHTED                            WEIGHTED
                                                      AVERAGE     WEIGHTED                AVERAGE     WEIGHTED
                                                      EXERCISE    AVERAGE                 EXERCISE    AVERAGE
                                           SHARES      PRICE     FAIR VALUE    SHARES      PRICE     FAIR VALUE
                                          ---------   --------   ----------   ---------   --------   ----------
<S>                                       <C>         <C>        <C>          <C>         <C>        <C>
Exercise price exceeds market price.....         --        --          --     1,007,600    $0.98        $0.41
Exercise price is less than market
  price.................................  8,786,020    $0.155      $0.425       679,000    $1.275       $1.67
</TABLE>



    As of September 30, 2000, there were 972,078 shares (unaudited) available
for future grant under the 1998 Plan.


                                      F-18
<PAGE>
                          ADEXA, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. STOCK OPTION PLAN (CONTINUED)

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



<TABLE>
<CAPTION>
                                        OPTIONS OUTSTANDING
                              ---------------------------------------
                                             WEIGHTED-                     OPTIONS EXERCISABLE
                                              AVERAGE                   -------------------------
                                             REMAINING     WEIGHTED-                   WEIGHTED-
                                             CONTRACT       AVERAGE                     AVERAGE
EXERCISE PRICE                 NUMBER OF       LIFE        EXERCISE      NUMBER OF     EXERCISE
(UNAUDITED)                     OPTIONS       (YEARS)        PRICE        OPTIONS        PRICE
--------------                -----------   -----------   -----------   -----------   -----------
                              (UNAUDITED)   (UNAUDITED)   (UNAUDITED)   (UNAUDITED)   (UNAUDITED)
<S>                           <C>           <C>           <C>           <C>           <C>
$0.075......................   4,770,586      7.36          0$.075       3,820,782      0$.075
 0.50.......................     202,000      7.66          0.50           101,000      0.50
 0.875......................      45,000      7.78          0.875           22,500      0.875
 0.925......................      24,000      7.92          0.925           12,000      0.925
 0.975......................     979,100      8.50          0.975          245,650      0.975
 1.05.......................     288,000      9.05          1.05            10,750      1.05
 1.50.......................     333,000      9.19          1.50                --     --
 2.00.......................   2,811,050      9.41          2.00             7,500      2.00
 2.50.......................      30,000      9.67          2.50                --     --
 3.00.......................      82,800      9.71          3.00                --     --
 3.50.......................     107,500      9.86          3.50                --     --
 3.75.......................      82,000      9.90          3.75                --     --
 4.00.......................   1,061,300      9.98          4.00                --     --
                              ----------                                 ---------
                              10,816,336      9.98          1$.22        4,220,182      0$.15
                              ==========                                 =========
</TABLE>


    As discussed in Note 2, the Company accounts for its stock-based awards to
employees using the intrinsic value method in accordance with APB Opinion
No. 25 and its related interpretations. SFAS No. 123 requires the disclosure of
pro forma net income (loss) had the Company adopted the fair value method of
that statement. The pro forma disclosures required by SFAS No. 123 are as
follows:


<TABLE>
<CAPTION>
                                                               YEAR ENDED DECEMBER 31,
                                                              -------------------------
                                                                 1998          1999
                                                              -----------   -----------
<S>                                                           <C>           <C>
Net Loss:
  As reported...............................................  $(9,434,089)  $(5,185,481)
  Pro forma.................................................   (9,588,427)   (5,285,112)
Basic and diluted net loss per share:
  As reported...............................................       $(0.47)       $(0.26)
  Pro forma.................................................       $(0.48)       $(0.26)
</TABLE>


    The amounts above are based on the minimum value for each option computed as
(a) the current price of the stock on the date of grant reduced to exclude the
present value of any expected dividends

                                      F-19
<PAGE>
                          ADEXA, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. STOCK OPTION PLAN (CONTINUED)
during the options' minimum life and (b) the present value of the exercise
price. Assumptions used in the computation include the following:


<TABLE>
<CAPTION>
                                                                  YEAR ENDED
                                                                 DECEMBER 31,
                                                              -------------------
                                                                1998       1999
                                                              --------   --------
<S>                                                           <C>        <C>
Risk-free interest rate.....................................     5.2%       6.1%
Dividends yield.............................................      --         --
Expected life (years).......................................      10         10
</TABLE>



    The weighted-average estimated minimum value of employee stock options
granted was $0.32 and $0.39 for the years ended December 31, 1998 and 1999.


10. LOANS RECEIVABLE FROM RELATED PARTIES

    On July 31, 1997, the Company loaned $200,000 to a stockholder/officer in
the form of a note receivable. The note receivable accrues interest at five
percent and is payable semiannually. Unpaid interest is added to principal. The
outstanding principal and accrued interest on the note are due on July 31, 2002.
The note is collateralized by 1,694,920 shares of the Company's common stock
owned by the stockholder/officer.


    The Company loaned $300,000 to another officer, who is not a stockholder, in
the form of a promissory note receivable which is dated May 19, 2000. The
unsecured loan accrues interest at five percent and is payable in full on or
before May 19, 2008. Principal and accrued interest amounting to $301,708 is
included in loans receivable from related parties in the accompanying unaudited
consolidated balance sheet as of September 30 2000.


11. SEGMENT INFORMATION

    The Company is principally engaged in the design, development, marketing,
licensing, and support of computer software products operating on a diverse
range of hardware platforms and operating systems. Accordingly, the Company
considers itself to be operating in a single industry segment. The Company's
chief operating decision maker reviews financial information presented on a
consolidated basis, accompanied by disaggregated information about revenue, by
geographic region for purposes of assessing financial performance and making
operating decisions. The following table represents revenue in each of the
geographical regions:


<TABLE>
<CAPTION>
                                                                         YEAR ENDED
                                                                        DECEMBER 31,
                                                              ---------------------------------
                                                                1997          1998       1999
                                                              --------      --------   --------
<S>                                                           <C>           <C>        <C>
Geographic region:
  United States.............................................     48%           64%        43%
  Japan.....................................................     31            13         35
  Taiwan....................................................     14            14         15
  Other.....................................................      7             9          7
                                                                ---           ---        ---
                                                                100%          100%       100%
                                                                ===           ===        ===
</TABLE>


                                      F-20
<PAGE>
                          ADEXA, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

12. SUBSEQUENT EVENTS

    PREFERRED STOCK--On August 24, 2000, the Company issued an aggregate of
3,149,602 shares of Series C redeemable convertible preferred stock for $6.35
per share and gross proceeds of $19,999,973. The Series C redeemable convertible
preferred stock has rights and privileges similar to that of the Series A and B
preferred stock (see Note 8), except as follows:

    - Series C preferred shares automatically convert into common stock upon the
      earlier of (a) an initial public offering of the Company's common stock
      for aggregate proceeds of $25,000,000 with an offering price of at least
      $9.525 per share or (b) upon the consent of a majority of the holders of
      the Series C preferred stock.

    - In the event of a liquidation of the Company, the Series C preferred
      stockholders will be entitled to receive, in preference to the Series A
      and B preferred stockholders the greater of (i) the sum of $11.12 per
      share, plus declared and unpaid dividends, if any, or (ii) the amount per
      share that would have been payable had each share of Series C preferred
      stock been converted into common stock on the effective date of such
      liquidation.

    - The Series C preferred stock is mandatorily redeemable upon the election
      of at least a majority of the holders of the then-outstanding shares of
      Series C preferred stock, or at any time after July 30, 2005. The
      aggregate redemption amount is $6.35 per share plus all declared but
      unpaid dividends.


    The Series C redeemable convertible preferred stock was issued with a
beneficial conversion feature of $8,345,354. The beneficial conversion feature
was calculated as the difference between the conversion price and the estimated
fair value of the common stock into which the preferred stock is convertible.
This amount has been accounted for as an increase in additional paid-in capital
and a deemed dividend to the preferred stockholders.


    2000 STOCK INCENTIVE PLAN--On August 24, 2000, the Company's board of
directors adopted the 2000 Stock Incentive Plan (the "2000 Plan"). Under the
2000 Plan, employees, consultants and directors may be granted options to
purchase up to an aggregate of 4,000,000 shares of the Company's common stock.

    1998 STOCK OPTION PLAN--On August 10, 2000, the Company increased the number
of options available under the 1998 Plan to a total of 13,540,236.


    On August 17, 2000, the Company modified the vesting terms of 50,000 stock
options granted to two individuals upon termination of their services to the
Company. The modifications resulted in the immediate vesting of 25,000 options
that would have expired unvested and unexercisable. Accordingly, during the
quarter ended September 30, 2000, the Company recognized additional stock-based
compensation expense of $419,800, representing the difference between the
original exercise price of the options and the estimated fair value of the
Company's common stock on the modification date (August 17, 2000).



    On August 24, 2000, the Company accelerated the vesting schedule of all
unvested stock options outstanding that were granted prior to August 24, 2000.
The Company converted the vesting schedule from 25 percent for each annual
anniversary of optionee's vesting commencement date to 25 percent vesting one
year after an optionee's vesting commencement date with the balance of shares
vesting in equal monthly installments over the following 36 months. A
modification to accelerate the vesting of a fixed stock option award effectively
results in the renewal of that award if, after the modification, an employee is
able to exercise an award that, under the original terms of the award, would
have expired unexercisable. Accordingly, the Company estimated the amount of
additional stock-based compensation cost associated with the effective renewal
of these options to be approximately $1,111,000, $50,022 of which


                                      F-21
<PAGE>
                          ADEXA, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

12. SUBSEQUENT EVENTS (CONTINUED)

was expensed during the nine months ended September 30, 2000. The estimate was
based on the difference between the original exercise price of the options
granted and the estimated fair value of the Company's common stock on the
modification date (August 24, 2000) and included various assumptions, such as
estimated employee turnover. The estimated additional stock-based compensation
will be recognized over the remaining future vesting periods of the related
options, subject to any changes in estimates, such as employee turnover rates,
that may be necessary in the future.


    2000 EMPLOYEE STOCK PURCHASE PLAN--On August 24, 2000, the Board of
Directors adopted the 2000 Employee Stock Purchase Plan (the "2000 Purchase
Plan") to be effective upon completion of the Company's initial public offering.
Under the 2000 Purchase Plan, eligible employees are allowed to have salary
withholdings of up to 15 percent of their base compensation to purchase shares
of common stock at a price equal to 85 percent of the lower of the market value
of the stock at the beginning or end of defined purchase periods. The initial
purchase period will commence on the effective date of the Company's initial
public offering. The Company has reserved 1,500,000 shares of common stock for
issuance under the 2000 Purchase Plan.


    STOCK SPLIT--On December  , 2000, the Company approved a two-for-one stock
split of its capital stock to be effected upon the Company's reincorporation in
Delaware on or about December  , 2000. All share and per share amounts in the
accompanying consolidated financial statements have been retroactively restated
to reflect this split.


                                      F-22
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                                4,000,000 SHARES

                                  [ADEXA LOGO]

                                  COMMON STOCK

                                  -----------

                                   PROSPECTUS

                                  -----------

CHASE H&Q                                                    MERRILL LYNCH & CO.

                             DAIN RAUSCHER WESSELS

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

                                         , 2000

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

    YOU SHOULD RELY ONLY ON INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT
CONTAINED IN THIS PROSPECTUS. WE ARE OFFERING TO SELL, AND SEEKING OFFERS TO
BUY, SHARES OF COMMON STOCK ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE
PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS OF
THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS
PROSPECTUS OR OF ANY SALE OF OUR COMMON STOCK.

    NO ACTION IS BEING TAKEN IN ANY JURISDICTION OUTSIDE THE UNITED STATES TO
PERMIT A PUBLIC OFFERING OF OUR COMMON STOCK OR POSSESSION OR DISTRIBUTION OF
THIS PROSPECTUS IN THAT JURISDICTION. PERSONS WHO COME INTO POSSESSION OF THIS
PROSPECTUS IN JURISDICTIONS OUTSIDE THE UNITED STATES ARE REQUIRED TO INFORM
THEMSELVES ABOUT AND TO OBSERVE ANY RESTRICTIONS CONCERNING THIS OFFERING AND
THE DISTRIBUTION OF THIS PROSPECTUS APPLICABLE TO THAT JURISDICTION.

    UNTIL         , 2000, ALL DEALERS THAT BUY, SELL OR TRADE IN OUR COMMON
STOCK, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER
A PROSPECTUS. ALL DEALERS ALSO HAVE AN OBLIGATION TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND CONCERNING THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
                                    PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

    The following table presents the costs and expenses, other than underwriting
discounts and commissions, payable by Adexa in connection with the sale of
common stock being registered. All amounts are estimates except the SEC
registration fee and the NASD filing fees.

<TABLE>
<S>                                                           <C>
SEC Registration fee........................................  $   19,800
NASD fee....................................................       8,000
Nasdaq National Market listing fee..........................      95,000
Printing and engraving expenses.............................     175,000
Legal fees and expenses.....................................     650,000
Accounting fees and expenses................................     400,000
Blue sky fees and expenses..................................      15,000
Transfer agent fees.........................................      30,000
Miscellaneous fees and expenses.............................     107,200
                                                              ----------
  Total.....................................................  $1,500,000
                                                              ==========
</TABLE>

ITEM 14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

    Section 145 of the Delaware General Corporation Law authorizes a court to
award or a corporation's board of directors to grant indemnification to
directors and officers in terms sufficiently broad to permit indemnification
under some circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933, as amended (the "Securities
Act"). Article VII, Section 6, of the Registrant's bylaws provides for mandatory
indemnification of its directors and officers and permissible indemnification of
employees and other agents to the maximum extent permitted by the Delaware
General Corporation Law. The Registrant's certificate of incorporation provides
that, under Delaware law, its directors shall not be liable for monetary damages
for breach of the directors' fiduciary duty as directors to Adexa and its
stockholders. This provision in the certificate of incorporation does not
eliminate the directors' fiduciary duty, and in appropriate circumstances
equitable remedies including injunctive or other forms of non-monetary relief
will remain available under Delaware law. Each director will also continue to be
subject to liability for breach of the director's duty of loyalty to Adexa for
acts or omissions not in good faith or involving intentional misconduct, for
knowing violations of law, for actions leading to improper personal benefit to
the director, and for payment of dividends or approval of stock repurchases or
redemptions that are unlawful under Delaware law. The provision also does not
affect a director's responsibilities under any other law, including the federal
securities laws or state or federal environmental laws. The Registrant has
entered into Indemnification Agreements with its officers and directors, a form
of which is attached as Exhibit 10.1 hereto and incorporated herein by
reference. The Indemnification Agreements provide the Registrant's officers and
directors with further indemnification to the maximum extent permitted by the
Delaware General Corporation Law. Reference is made to section 7 of the
underwriting agreement contained in Exhibit 1.1 hereto, indemnifying officers
and directors of the Registrant against some types of liabilities.

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

    In the three years preceding the filing of this registration statement, the
Registrant has issued and sold the following securities:

    - During the period between August 4, 1997 and February 28, 1998, Registrant
      sold an aggregate of 8,260,340 shares of its Series A Preferred Stock to 8
      investors and 11 accredited investors at a purchase price of $0.59 per
      share.

    - During the period between July 2, 1998 and October 30, 1998, Registrant
      sold an aggregate of 4,984,848 shares of its Series B Preferred Stock to 8
      investors and 11 accredited investors at a purchase price of $1.65 per
      share.

    - On August 24, 2000, Registrant sold an aggregate of 3,149,602 shares of
      its Series C Preferred Stock to 16 institutional investors and 18
      accredited investors at a purchase price of $6.35 per share.


    - As of September 30, 2000, Registrant has sold and issued 1,751,822
      shares of its common stock for an aggregate purchase price of $300,243 to
      employees and consultants under direct issuance and to exercises of
      options under its 1998 Stock Plan, including 50,000 shares to one
      director.


    The sale of the above securities was considered to be exempt from
registration under the Securities Act in reliance upon Section 4(2) of the
Securities Act or Rule 701 under Section 3(b) of the Securities Act as
transactions by an issuer not involving any public offering or transactions
under compensation benefit plans and contracts relating to compensation as
provided under Rule 701. The recipients of securities in each transaction
represented their intentions to acquire the securities for investment only and
not with a view to or for sale in connection with any distribution of those
securities, and appropriate legends were affixed to the share certificates
issued in those transactions. All recipients had adequate access, through their
relationships with the Registrant, to information about the Registrant.

ITEM 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) EXHIBITS


<TABLE>
<CAPTION>
EXHIBIT NO.             DESCRIPTION
-----------             -----------
<C>                     <S>
   1.1*                 Form of Underwriting Agreement

   3.1*                 Certificate of Incorporation of the Registrant, as amended
                        to date

   3.2*                 Form of Restated Certificate of Incorporation to be filed
                        upon the closing of this offering

   3.3                  Bylaws of the Registrant

   3.4*                 Form of Amended and Restated Bylaws to take effect as of the
                        closing of the offering

   4.1*                 Reference is made to Exhibits 3.1, 3.2, 3.3 and 3.4

   4.2*                 Specimen common stock certificate

   4.3**                Amended and Restated Investors' Rights Agreement

   5.1*                 Opinion of Gunderson Dettmer Stough Villeneuve Franklin &
                        Hachigian, LLP

  10.1*                 Form of Indemnification Agreement

  10.2**                Lease between the Registrant and Haseko Corporation, a
                        Japanese corporation, dated June 20, 1996, as amended

  10.3**                Lease between the Registrant and 20 Adelaide St. East, a
                        co-ownership, dated August 30, 1999
</TABLE>


                                      II-2
<PAGE>


<TABLE>
<CAPTION>
EXHIBIT NO.             DESCRIPTION
-----------             -----------
<C>                     <S>
  10.4**                1998 Stock Plan

  10.5**                2000 Stock Incentive Plan

  10.6**                2000 Employee Stock Purchase Plan

  10.7**                Promissory note from K. Cyrus Hadavi to the Company dated
                        July 31, 1997

  10.8**                Promissory note from Udo Dengler to the Company dated
                        May 19, 2000

  10.9**                Loan from Silicon Valley Bank to the Company dated
                        August 22, 2000

  10.10+                Software Teaming Agreement between the Registrant and Compaq
                        Computer Corporation dated October 26, 1999

  10.11+                Solution Provider Agreement between the Registrant and
                        Hewlett Packard Japan, Ltd. dated September 1, 1999, as
                        amended

  10.12+                Value Added Reseller Agreement between the Registrant and
                        QAD Inc. dated April 14, 1998

  23.1*                 Consent of Independent Accountants

  23.2*                 Consent of Counsel. Reference is made to Exhibit 5.1

  24.1**                Power of Attorney

  27.1**                Financial Data Schedule
</TABLE>


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

  * To be filed by amendment.

 ** Previously filed.

  + Confidential treatment has been requested for certain portions which have
    been blacked out in the copy of the exhibit filed with the Securities and
    Exchange Commission. The omitted information has been filed separately with
    the Securities and Exchange Commission pursuant to the application for
    confidential treatment.

(b) FINANCIAL STATEMENT SCHEDULES

    Schedule II--Valuation and Qualifying Accounts

    Schedules not listed above have been omitted because the information
required to be presented therein is not applicable or is shown in the financial
statements or notes thereto.

ITEM 17.  UNDERTAKINGS

    The Registrant undertakes to provide to the Underwriters at the closing
specified in the Underwriting Agreement, certificates in the denominations and
registered in the names 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 under the Delaware General Corporation Law, the Certificate of
Incorporation or the Bylaws of the Registrant or the Underwriting Agreement the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission this indemnification is against public policy as expressed in the
Securities Act, and is unenforceable. If a claim for indemnification against
these 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 a director,
officer or controlling person in connection with the securities being registered
hereunder, the Registrant will, unless in the opinion of its counsel

                                      II-3
<PAGE>
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether the indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of that issue.

    The Registrant undertakes that:

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

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

                                      II-4
<PAGE>
                                   SIGNATURES


    Under the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Amendment No. 4 to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Los Angeles, State of California, on this 11th day of December, 2000.


<TABLE>
<S>                                                    <C>   <C>
                                                       ADEXA, INC.

                                                       By:               /s/ K. CYRUS HADAVI
                                                             ------------------------------------------
                                                                           K. Cyrus Hadavi
                                                                PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>


    UNDER THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
AMENDMENT NO. 4 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED:



<TABLE>
<C>                                            <S>                                 <C>
             /s/ K. CYRUS HADAVI               President and Chief Executive       December 11, 2000
    ------------------------------------         Officer (Principal Executive
               K. Cyrus Hadavi                   Officer) and Director

            /s/ J. TIMOTHY ROMER               Chief Financial Officer (Principal  December 11, 2000
    ------------------------------------         Financial and Accounting
              J. Timothy Romer                   Officer)

             /s/ DAVID R. GOLOB*               Director                            December 11, 2000
    ------------------------------------
               David R. Golob

           /s/ WILLIAM W. LATTIN*              Director                            December 11, 2000
    ------------------------------------
              William W. Lattin

               /s/ SAM H. LEE*                 Director                            December 11, 2000
    ------------------------------------
                 Sam H. Lee

        /s/ WILLIAM H. YOUNGER, JR.*           Director                            December 11, 2000
    ------------------------------------
           William H. Younger, Jr.
</TABLE>



<TABLE>
<S>    <C>                                        <C>                                  <C>
*By:              /s/ K. CYRUS HADAVI                                                  December 11, 2000
           --------------------------------
                    K. Cyrus Hadavi
                   ATTORNEY-IN-FACT

*By:             /s/ J. TIMOTHY ROMER                                                  December 11, 2000
           --------------------------------
                   J. Timothy Romer
                   ATTORNEY-IN-FACT
</TABLE>


                                      II-5
<PAGE>
          INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULE

To the Board of Directors and Stockholders
Adexa, Inc.:

    Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The financial statement schedule listed
in Item 16(b) is presented for the purpose of additional analysis and is not a
required part of the basic financial statements. This financial statement
schedule is the responsibility of the Company's management. The financial
statement schedule has been subjected to the auditing procedures applied in our
audits of the basic financial statements and, in our opinion, is fairly stated
in all material respects when considered in relation to the basic financial
statements taken as a whole.


Los Angeles, California
March 30, 2000



    The accompanying consolidated financial statements reflect a two-for-one
stock split of the Company's capital stock which is to be effected on or about
December , 2000. The above report is in the form which will be signed by
Deloitte & Touche LLP upon consummation of such stock split, which is described
in the last paragraph of Note 12 of Notes to Consolidated Financial Statements,
and assuming that from August 24, 2000 to the date of such stock split no other
events shall have occurred, other than those described in Note 12 of Notes to
Consolidated Financial Statements, that would affect the accompanying
consolidated financial statements and notes thereto.


/s/ DELOITTE AND TOUCHE, LLP

                                      S-1
<PAGE>
                                  ADEXA, INC.

                 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS


<TABLE>
<CAPTION>
                                                                     ADDITIONS/
                                                     BALANCE AT     (DEDUCTIONS)
                                                     BEGINNING    CHARGED TO COSTS                 BALANCE AT
DESCRIPTION                                          OF PERIOD      AND EXPENSES     DEDUCTIONS   END OF PERIOD
-----------                                          ----------   ----------------   ----------   -------------
<S>                                                  <C>          <C>                <C>          <C>
FOR THE YEAR ENDED DECEMBER 31, 1999
Allowances Deducted from Assets
    Accounts receivable............................   $480,000        920,000         (872,000)      $528,000
                                                      --------        -------        ---------       --------
    Total Allowances Deducted from Assets..........   $480,000        920,000         (872,000)      $528,000
                                                      ========        =======        =========       ========

FOR THE YEAR ENDED DECEMBER 31, 1998
Allowances Deducted from Assets
    Accounts receivable............................   $ 67,157        412,843               --       $480,000
                                                      --------        -------        ---------       --------
    Total Allowances Deducted from Assets..........   $ 67,157        412,843               --       $480,000
                                                      ========        =======        =========       ========

FOR THE YEAR ENDED DECEMBER 31, 1997
Allowances Deducted from Assets
    Accounts receivable............................   $ 42,157         25,000               --       $ 67,157
                                                      --------        -------        ---------       --------
    Total Allowances Deducted from Assets..........   $ 42,157         25,000               --       $ 67,157
                                                      ========        =======        =========       ========
</TABLE>


                                      S-2
<PAGE>
                               INDEX TO EXHIBITS


<TABLE>
<CAPTION>
EXHIBIT NO.             DESCRIPTION
-----------             -----------
<C>                     <S>
   1.1*                 Form of Underwriting Agreement

   3.1*                 Certificate of Incorporation of the Registrant, as amended
                        to date

   3.2*                 Form of Restated Certificate of Incorporation to be filed
                        upon the closing of this offering

   3.3                  Bylaws of the Registrant

   3.4*                 Form of Amended and Restated Bylaws to take effect as of the
                        closing of the offering

   4.1*                 Reference is made to Exhibits 3.1, 3.2, 3.3 and 3.4

   4.2*                 Specimen common stock certificate

   4.3**                Amended and Restated Investors' Rights Agreement

   5.1*                 Opinion of Gunderson Dettmer Stough Villeneuve Franklin &
                        Hachigian, LLP

  10.1*                 Form of Indemnification Agreement

  10.2**                Lease between the Registrant and Haseko Corporation, a
                        Japanese corporation, dated June 20, 1996, as amended

  10.3**                Lease between the Registrant and 20 Adelaide St. East, a
                        co-ownership, dated August 30, 1999

  10.4**                1998 Stock Plan

  10.5**                2000 Stock Incentive Plan

  10.6**                2000 Employee Stock Purchase Plan

  10.7**                Promissory note from K. Cyrus Hadavi to the Company dated
                        July 31, 1997

  10.8**                Promissory note from Udo Dengler to the Company dated
                        May 19, 2000

  10.9**                Loan from Silicon Valley Bank to the Company dated
                        August 22, 2000

  10.10+                Software Teaming Agreement between the Registrant and Compaq
                        Computer Corporation dated October 26, 1999

  10.11+                Solution Provider Agreement between the Registrant and
                        Hewlett Packard Japan, Ltd. dated September 1, 1999, as
                        amended

  10.12+                Value Added Reseller Agreement between the Registrant and
                        QAD Inc. dated April 14, 1998

  23.1*                 Consent of Independent Accountants

  23.2*                 Consent of Counsel. Reference is made to Exhibit 5.1

  24.1**                Power of Attorney

  27.1**                Financial Data Schedule
</TABLE>


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

  * To be filed by amendment.

 ** Previously filed.

  + Confidential treatment has been requested for certain portions which have
    been blacked out in the copy of the exhibit filed with the Securities and
    Exchange Commission. The omitted information has been filed separately with
    the Securities and Exchange Commission pursuant to the application for
    confidential treatment.


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