XCEED INC, S-3/A, 2000-04-11

XCEED INC
S-3/A, 2000-04-11
COMPUTER INTEGRATED SYSTEMS DESIGN

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As filed with the Securities and Exchange Commission on April 11, 2000
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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AMENDMENT NO. 1

FORM S-3

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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Xceed Inc.
(Exact Name of Registrant as Specified in Its Charter)

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<TABLE>
<S> <C> <C>
Delaware 7373 13-3006788
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>
488 Madison Avenue, New York, New York 10022
(212) 419-1200
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
---------------
Werner Haase, President, Chief Executive Officer and Co-Chairman
Xceed Inc.
488 Madison Avenue, New York, New York 10022
(212) 419-1200
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

---------------
Copies to:

Victoria A. Baylin, Esq.
Paul A. Belvin, Esq.

Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1333 New Hampshire Avenue, N.W.
Washington, D.C. 20036
(202) 887-4000

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

Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
reinvestment plans, check the following box. [X]
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. [_]

CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>

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Proposed
Amount to be Proposed Maximum Maximum Amount of
Registered Offering Aggregate Registration
Title of Shares to be Registered (2)(3) Price Per Share (1) Offering Price Fee (2)
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<S> <C> <C> <C> <C>
Common Stock, par
value $.01 per
share........... 1,602,864 14.46875 $23,191,438 $6,123
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</TABLE>

(1) The proposed maximum offering price per share is estimated for purposes of
this filing pursuant to Rule 457(c) based upon the average of the high and
low selling prices on April 5, 2000.

(2) A fee of $5,867 was previously paid to register 840,548 shares of common
stock in connection with the intended filing of registration statement No.
333-33866.

(3) This Registration Statement also covers an indeterminate number of
additional shares of common stock that may be issued to the selling
shareholders, with respect to the 2,443,412 shares of common stock
registered hereby, in the event of a stock dividend, stock split,
recapitalization or other similar change in the common stock.

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

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<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+Information contained herein is subject to completion or amendment. A +
+registration relating to these securities has been filed with the Securities +
+and Exchange Commission. These securities may not be sold nor may offers to +
+buy be accepted prior to the time the registration statement becomes +
+effective. This prospectus shall not constitute an offer to sell or the +
+solicitation of an offer to buy, nor shall there be any sale of these +
+securities in any jurisdiction in which such offer, solicitation or sale +
+would be unlawful prior to the registration or qualification under laws of +
+any such jurisdiction. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION, DATED APRIL 11, 2000

PROSPECTUS

[LOGO OF XCEED INC.]

2,443,412 Shares of Common Stock

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This prospectus relates to up to 2,443,412 shares of common stock of Xceed
Inc. which may be offered from time to time by certain existing shareholders of
Xceed. Xceed will not receive any of the proceeds from the sale of the common
stock. Xceed will bear the costs relating to the registration of the common
stock which are estimated to be approximately $31,990.

The common stock is being registered in connection with Xceed's issuance to
Peconic Fund, Ltd., Leonardo, L.P. and HFTP Investment, L.L.C. of:

. an aggregate of 30,000 shares of its Series A Cumulative Convertible
Preferred Stock, par value $0.05 per share issued on January 13, 2000;

. warrants to purchase an aggregate of 183,273 shares of its common stock,
par value, $0.01 per share, issued on January 13, 2000; and

. warrants to purchase an aggregate of 1,350,000 shares of common stocked
issued on April 4, 2000.

In connection with this issuance, Xceed agreed to register for resale the
shares of common stock of Xceed which would be issuable to those entities on
conversion of the shares of Series A Cumulative Preferred Stock and the
exercise of the warrants each received in the issuance.

The selling shareholders may sell the shares from time to time at fixed
prices, market prices, prices computed with formulas based on market prices or
at negotiated prices and may engage a broker or dealer to sell the shares. For
additional information on the selling shareholders' possible methods of sale,
you should refer to the section of this prospectus entitled "Plan of
Distribution" on page 16. We will not receive any proceeds from the sale of the
shares by the selling shareholders.

This prospectus also covers such additional shares of common stock as may be
issuable to the selling shareholders in the event of a stock dividend, stock
split, recapitalization or other similar change in the common stock.

Our common stock is traded on the Nasdaq National Market under the symbol
"XCED". On April 10, 2000, the last reported sale price for our common stock on
the Nasdaq National Market was $16.75 per share.

See "Risk Factors" beginning on page 6 to read about certain risks you should
consider before buying shares of our common stock.

Neither the Securities and Exchange Commission nor any other regulatory body
has approved or disapproved these securities or passed upon the accuracy or
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.

-----------

The date of this prospectus is , 2000
<PAGE>

Table of Contents

<TABLE>
<S> <C>
Xceed Inc. ................................................................. 2
Risk Factors................................................................ 4
Forward-Looking Statements.................................................. 4
Selling Shareholders........................................................ 5
Plan of Distribution........................................................ 5
Use of Proceeds............................................................. 6
Our Business................................................................ 7
Legal Matters............................................................... 18
Experts..................................................................... 18
Where You Can Find More Information......................................... 18
</TABLE>

1
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XCEED INC.

Our Business

We are Interactive Architects who provide Internet professional services
that seek to transform the way companies conduct eBusiness. Through our multi-
disciplined methodology, we offer a full range of services that allow us to
deliver end-to-end solutions enabling companies to capitalize on the reach and
efficiency of the Internet. Our key competencies include:

. strategic consulting--creating specialized business plans and models to
enable our clients to operate and improve their eBusinesses;

. creative design--developing robust visual and interactive web site
content and graphics;

. technology integration--combining third-party products with our
customized technology applications and components to create a
specialized, technical infrastructure for our clients;

. business transformation--implementing and integrating new eBusiness
models and technology with our clients' existing operations;

. research and analysis--conducted through our Xceed Intelligence group
that covers 13 industries; and

. marketing and branding--promoting our clients' eBusinesses, services and
brands to their existing and target customers and industry segment.

Our multi-disciplined methodology enables us to provide our clients with
solutions to:

. strengthen relationships with customers and business partners in both
business-to-business and business-to-consumer environments;

. create new revenue and distribution opportunities; and

. reduce costs and improve operating efficiencies, productivity and
internal communications.

Our strategic, technical and creative personnel collaborate to address the
full range of end-to-end solutions required to meet the increasingly large and
complex needs of an expanding, sophisticated client base. The industry in which
we operate is time-to-market sensitive, and we believe that we provide faster
project delivery than many of our competitors due to our ability to use
previously developed technology applications for multiple client engagements.
Our proven methodology provides a framework to assess and execute each stage of
a client engagement. By delivering our services in a seamless and integrated
fashion, we guide our clients from concept to launch and deployment of their
eBusinesses.

Our Market Opportunity

The emergence and acceptance of the Internet as a new global medium has
fundamentally changed the way that consumers and businesses communicate, obtain
information, purchase goods and services and transact business. eBusiness,
which is business that combines the reach and efficiency of the Internet with
both emerging and existing technologies, is significant for many companies,
regardless of industry or location. International Data Corporation, an
independent market research firm, expects dramatic growth in total eBusiness
transaction volume, projecting an increase from $111.4 billion in 1999 to $1.3
trillion in 2003, representing a compound annual growth rate of 85%. With the
expanding creative and technical demands of supporting eBusiness, companies are
increasingly outsourcing their eBusiness functions to capitalize on the
competencies of Internet professional services companies. According to
International Data Corporation, this trend will help increase the demand for
Internet professional services from $12.9 billion in 1999 to $78.5 billion in
2003, representing a compound annual growth rate of 57%.

Recent Developments

We were founded in 1979 and primarily manufactured and marketed first aid
burn products and provided business travel services to corporations until 1998.
During 1998, we decided to pursue a number of strategic acquisitions designed
to shift our corporate focus to the provision of Internet professional
services. As part of this decision, we changed our name from Water-Jel
Technologies, Inc. to Xceed Inc. in March 1998.

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Since August 1998, we have acquired 12 companies engaged in operations such
as Internet consulting, interactive marketing and e-commerce development
strategies, custom software design, systems administration and strategic
consulting for mergers and acquisitions, process management and large systems
implementation. These acquisitions have allowed us to expand our existing
Internet professional services operations, as well as develop a more expansive
geographic presence. Through these acquisitions, personnel with expertise in
systems solutions, consulting, eBusiness and e-commerce joined our company. We
have grown from 237 employees as of August 31, 1999 to 615 employees as of
March 1, 2000.

Until recently, we operated two divisions that were not aligned with our
current corporate focus. These two divisions were Water-Jel Technologies, our
first aid burn product division, and Journeycorp, our business travel division.
We sold Water-Jel in January 2000 and expect to sell Journeycorp by the end of
fiscal year 2000. We are currently exploring various strategic alternatives
with respect to our performance enhancement business, including the possible
sale of all or part of this business.

Our Offices

Our principal executive offices are located at 488 Madison Avenue, New York,
New York 10022. Our telephone number at that location is (212) 419-1200. We
also have offices in Atlanta, Chicago, Colorado Springs, Dallas, Los Angeles,
Phoenix, San Francisco, Amsterdam and London. Our Internet address is
www.xceed.com. The information contained on our web site is not incorporated by
reference in this prospectus and shall not be considered a part of this
prospectus.

3
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RISK FACTORS

A purchase of our common stock involves risk. Please see our annual report
on Form 10-K/A for the fiscal year ended August 31, 1999 for a discussion of
risks that could harm our business, financial condition, operating results and
stock price. You should carefully consider these factors and the other
information in this prospectus in evaluating us and deciding whether to
purchase our common stock.

FORWARD-LOOKING STATEMENTS

The statements contained in this prospectus that are not historical facts
are "forward-looking statements," as defined in Section 27A of the Securities
Act and Section 21E of the Securities Exchange Act of 1934, which can be
identified by the use of forward-looking terminology such as "estimates,"
"projects," "anticipates," "expects," "intends," "believes," or the negative
thereof or other variations thereon or comparable terminology, or by
discussions of strategy that involve risks and uncertainties. Examples of these
forward-looking statements include, but are not limited to:

. our plans to expand our existing operations through acquisitions and the
hiring of additional personnel;

. expectations of anticipated benefits of our acquisitions;

. estimates of future operating results;

. expectations of generating a significant portion of our revenues from a
limited number of large clients;

. plans to further develop and commercialize value-added services;

. expectations regarding our relationships with clients and other third
parties;

. expectations of pricing for our services in the future;

. our ability to successfully launch a branding campaign;

. our anticipated capital expenditures;

. other statements contained in this prospectus regarding matters that are
not historical facts; and

. our plans with respect to strategic alternatives regarding our
performance enhancement business.

These statements are only estimates or predictions and cannot be relied
upon. We can give you no assurance that future results will be achieved. Actual
events or results may differ materially as a result of risks facing us or
actual results differing from the assumptions underlying such statements. These
risks and assumptions could cause actual results to vary materially from the
future results indicated, expressed or implied in the forward-looking
statements included in this prospectus.

All forward-looking statements made in this prospectus that are attributable
to us or persons acting on our behalf are expressly qualified in their entirety
by the factors listed above in the section captioned "Risk Factors" and other
cautionary statements included in this prospectus. We disclaim any obligation
to update information contained in any forward-looking statement.

4
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SELLING SHAREHOLDERS

The 2,443,412 common shares now being offered will be held by three selling
shareholders upon the conversion of the Series A Cumulative Convertible
Preferred Stock and the exercise of the warrants held by them. Any selling
shareholder listed below may or may not choose to sell all of the common shares
owned by it.

<TABLE>
<CAPTION>
Securities Securities Which
Owned Before May be Sold in the Securities To Be Owned
Name of Shareholder Offering Offering After Offering

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<S> <C> <C> <C>
Leonardo, L.P. 814,471 814,471 0

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Peconic Fund, Ltd. 664,470 664,470 0

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HFTP Investment, L.L.C. 964,471 964,471 0
</TABLE>

PLAN OF DISTRIBUTION

We are registering the shares being offering hereunder in connection with
the Registration Rights Agreement, dated January 13, 2000, by and among Xceed,
Leonardo, L.P., Peconic Fund, Ltd. and HFTP Investment, L.L.C. and the
Agreement, dated April 4, 2000, by and among Xceed, Leonardo, L.P. Peconic
Fund, Ltd. and HFTP Investment, L.L.C.

The selling shareholders (and their respective pledgees, transferees, donees
or other successors in interest) may offer and sell the shares of our common
stock covered by this prospectus from time to time as follows:

. in the open market

. on the NASDAQ National Market;

. in privately negotiated transactions;

. in an underwritten offering; or

. a combination of such methods or any other legally available means.

Such sales may be made at varying prices determined by reference to, among
other things:

. market value prevailing at the time of the sale;

. prices related to the then-prevailing market price; or

. negotiated prices.

Negotiated transactions may include:

. purchases by a broker-dealer as principal and resale by such broker-
dealer for its account pursuant to this prospectus;

. ordinary brokerage transactions and transactions in which a broker
solicits purchasers; or

. block trades in which a broker-dealer so engaged will attempt to sell
the shares as agent but may take a position and resell a portion of the
block as principal to facilitate the transaction.

In connection with distributions of our common stock, any selling
shareholder may:

. enter into hedging transactions with broker-dealers and the broker-
dealers may engage in short sales of our common stock in the course of
hedging the positions they assume with the selling shareholders;

. sell our common stock short and deliver the common stock to close out
such short positions;

. enter into option or other transactions with broker-dealers that involve
the delivery of our common stock to the broker-dealers, which may then
resell or otherwise transfer such common stock; and

. loan or pledge our common stock to a broker-dealer which may then sell
our common stock so loaned or upon a default may sell or otherwise
transfer the pledged common stock.

5
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Broker dealers may receive commissions or discounts from the selling
shareholders in amounts to be negotiated immediately prior to the sale. The
selling shareholders and any broker executing selling orders on behalf of the
selling shareholders may be deemed to be an "underwriter" within the meaning of
the Securities Act. Commissions received by any such broker may be deemed to be
underwriting commissions under the Securities Act.

USE OF PROCEEDS

The shares of common stock offered through this prospectus are being
registered for the account of the selling shareholders. Accordingly, we will
not receive any proceeds from the sale of the shares of common stock. The
principal reason for this offering is to enable the selling shareholders to
resell the common stock acquired through the conversion of the Series A
Cumulative Convertible Preferred Stock and the warrants.

6
<PAGE>

OUR BUSINESS

Overview

We are Interactive Architects who provide Internet professional services
that seek to transform the way companies conduct eBusiness. Using a proven,
multi-disciplined methodology, we offer a full range of services that allow us
to deliver end-to-end solutions enabling companies to capitalize on the reach
and efficiency of the Internet. Our key competencies include:

. strategic consulting--creating specialized business plans and models to
enable our clients to operate and improve their eBusinesses;

. creative design--developing robust visual and interactive web site
content and graphics;

. technology integration--combining third-party products with our
customized technology applications and components to create a
specialized, technical infrastructure for our clients;

. business transformation--implementing and integrating new eBusiness
models and technology with our clients' existing operations;

. research and analysis--conducted through our Xceed Intelligence group
that covers 13 industries; and

. marketing and branding--promoting our clients' eBusinesses, services and
brands to their existing and target customers and industry segment.

Our Internet professional services clients are a combination of
multinational corporations, mid-to-large-sized companies and startups operating
in various industries, such as computers and technology, entertainment,
financial services, healthcare and pharmaceuticals, retail and
telecommunications. These clients include CBS, Casual Corner, Compaq, HBO,
Motorola, Nestle, Pitney Bowes and Warner Bros. Online. We provide our clients
with solutions to:

. strengthen relationships with customers and business partners in both
business-to-business and business-to-consumer environments;

. create new revenue and distribution opportunities; and

. reduce costs and improve operating efficiencies, productivity and
internal communications.

Industry Background

Emergence and growth of the Internet

The emergence and acceptance of the Internet as a new global medium has
fundamentally changed the way that consumers and businesses communicate, obtain
information, purchase goods and services and transact business. According to
International Data Corporation, an independent market research firm, the number
of worldwide Internet users will increase from 196 million at the end of 1999
to 502 million by the end of 2003, representing a compound annual growth rate
of 27%. International Data Corporation also estimates that Internet content,
measured by the number of web pages worldwide, will increase from 1.7 billion
pages in 1999 to 13.1 billion pages in 2003, representing a compound annual
growth rate of 67%.

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Initially, companies used the Internet as a means of advertising or
promoting their businesses. Typically they published web sites with read only,
brochure-like information intended to enhance internal and external
communications. Companies either used their own internal design and information
technology resources or hired online advertising agencies and web design firms
to develop and deploy their initial web sites. Businesses quickly recognized
the Internet's potential to enhance their ability to attract and serve clients
and viewed the Internet as a medium to differentiate themselves and gain a
competitive advantage.

The next stage in the adoption of the Internet as a business medium
typically involved the construction of systems that enabled limited types of
transactions to be conducted over the Internet or that focused on improvements
in procurement and distribution. At this stage, companies came to view the
Internet primarily as another channel to their core business. In order to build
these sorts of eBusiness systems, companies were required to shift their focus
from simple web design to the integration of client/server applications with
those systems. Because internal marketing and information technology, or IT
departments, often lacked the resources or capabilities to build these systems,
firms increasingly began to hire traditional IT services firms focused on the
integration of client/server systems and traditional marketing services firms
to complement the services of web design firms.

Growth of eBusiness

Today, many companies recognize that the Internet offers even greater
potential for enhancing or defending their competitive positions. These
companies understand that the Internet is redefining the key determinants of
business success and the way business is conducted. In our view, this
understanding has led to the emergence of eBusiness, which is business that
combines the reach and efficiency of the Internet with both emerging and
existing technologies.

The emergence of eBusiness is significant for companies across many
industries. International Data Corporation expects significant growth in total
eBusiness transaction volume, projecting an increase from $111.4 billion in
1999 to $1.3 trillion in 2003, representing a compound annual growth rate of
85%. In many industries, physical or capital assets are becoming less important
as barriers to entry. The Internet is reducing the effect of geographic
barriers, providing access to the best prices worldwide and challenging the way
many businesses have historically competed. Competition can come from new,
unexpected sources in addition to traditional ones. The ability to
differentiate products or services and to price advantageously is greatly
enhanced as the consumer is given more information, choice and power. In light
of all of these factors, many new and established companies are expanding or
creating their businesses to integrate eBusiness capabilities.

Market for Internet professional services

The development and implementation of Internet-based solutions require the
successful integration of strategic consulting, creative design, application
development and systems engineering skills. Historically, expertise in these
areas either has not existed within an organization or has been located in
disparate functional areas. Accordingly, many businesses have chosen to
outsource a significant portion of the development, design, implementation and
maintenance of their intranets, extranets, web sites and e-commerce
applications to independent service providers who can capitalize on their
accumulated strategic, creative and technical expertise. Such outsourcing needs
have generated worldwide demand for Internet professional services, which
International Data Corporation estimates will grow from $12.9 billion in 1999
to $78.5 billion in 2003, representing a compound annual growth rate of 57%.

8
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Companies are increasingly looking for firms that can supply end-to-end
strategic consulting, creative design, application development, systems
engineering skills and other value-added services. Many traditional service
providers lack the requisite expertise to implement comprehensive Internet-
based solutions. Many IT services firms lack the creative and marketing skills
required to build audiences and deliver unique and compelling content as well
as Internet expertise and implementation capabilities. Advertising and
marketing communications firms typically cannot provide the extensive technical
skills and systems integration expertise required to deliver the increasingly
complex solutions demanded by clients. Many strategic consulting firms do not
offer Internet expertise, marketing perspective and implementation capabilities
to deliver comprehensive solutions. A number of Internet professional services
firms have emerged to address these needs. We believe that we are one of the
few firms that have the depth, management and infrastructure necessary to
deliver the end-to-end solutions required to meet the increasingly larger and
more complex projects and needs of an expanding, and sophisticated client base.

We believe that the rapidly increasing demand for Internet solutions has
created significant market opportunities for us, as we are able to address the
full range of end-to-end solutions.

The Xceed Solution

We help our clients use the Internet to develop and enhance their
eBusinesses and interact effectively, both internally with employees and
externally with vendors, suppliers and customers. To enhance our clients' core
businesses, operations and communications, we:

. Follow a proven methodology. Our multi-disciplined branded methodology
is designed to carefully plan and implement successful and innovative
eBusinesses for our clients. Our methodology clarifies client
expectations, helps our clients achieve faster project delivery, reduces
project delivery risks and is cost effective.

. Provide an integrated services offering. Our integrated and collaborative
team delivers end-to-end strategic consulting, creative design,
technology integration, business transformation, research and analysis
and marketing and branding in a seamless package. Our research and
analysis department, Xceed Intelligence, provides industry-specific
knowledge that helps our clients obtain competitive advantages. We are
able to build our clients' eBusinesses "Front to Back and Inside Out." We
first help our clients integrate Internet strategies with their core
business objectives through use of our end-to-end strategic consulting,
creative design, marketing and technology capabilities (Front). We then
integrate web-based applications with the client's existing systems,
using existing and emerging technologies (Back). Finally, we apply e-
commerce solutions and consulting, using our industry and marketing
expertise, to enhance existing business processes and identify new
business processes and opportunities created by the Internet (Inside
Out). We believe that by providing our clients with a full range of
professional services, we are able to meet their eBusiness needs on an
ongoing basis.

. Develop strong client relationships. We believe that building strong,
long-term relationships with our clients is an essential element of our
business. We work closely with our clients to understand, predict and
address their evolving business needs. Our strong, long-term
relationships allow us to more accurately meet our clients' objectives
and expectations. In many instances, we have been engaged by a client to
work on multiple projects. In addition, we often assist our clients in
locating and contracting with vendors and suppliers, identifying partners
for strategic alliances and joint ventures and identifying potential
investors.

. Provide faster project delivery. Our client engagements are becoming
larger and more complex and need to be completed in shorter timeframes.
We have developed a library of industry-specific technology applications
that reduce time to market for deliverables. We believe this library
gives us a competitive advantage and lowers maintenance requirements and
implementation risk. Our applications library continues to grow as
projects are completed, and many of our technology applications can be
used for more than one client or for more than one engagement. In
addition, our employees have developed a broad base of knowledge and best
practices through numerous service engagements and

9
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from prior experience. We capture this broad range of knowledge and best
practices throughout our organization and disseminate the information
through training, orientation and a firm-wide database and intranet. We
leverage intellectual capital to systemize and accurately predict project
completion.

. Deliver robust and scalable technology. Our engineers provide application
development and systems integration services by employing proven and
emerging Internet technologies. We have relationships with leading
software and hardware vendors that often provide us with early access to
their training, product support and technology. These relationships help
us add value to our clients' businesses and operations. We are able to
combine third-party products with custom technology applications and
components that we have designed and developed, which allow us to create
a specialized, technical infrastructure for a client's particular needs.
This technical infrastructure is scalable and can be modified at a later
date to adapt to a change in the way the client conducts its business.

Strategy

Our objective is to enhance our position as an Interactive Architect for
Fortune 1000, Global 2000 and other companies seeking to build eBusinesses. In
order to achieve this goal, we are pursuing the following strategies:

. Continue to build brand awareness and attract new clients. We plan to
continue to build our brand and identity, grow our sales efforts and
expand our skill set to acquire new clients seeking comprehensive
Internet professional solutions. We believe that brand and identity,
together with our full range of end-to-end service offerings and a
proven, multi-disciplinary methodology will be important factors for our
future success. We have been able to generate business based on word-of-
mouth and our reputation, and in order to further develop our brand and
identity, we believe that we will need to launch a branding campaign,
which will be funded through a portion of the proceeds of this offering.

. Develop additional business through our relationships with existing
clients. We seek to gain a comprehensive understanding of our clients and
their businesses and work closely with their senior managements to
understand, predict and address their strategic business needs. We often
seek to leverage our client relationships to expand the scope and length
of current projects and to enter into additional projects. We believe
that our reputation for providing innovative and sophisticated services
allows us to deepen relationships with existing clients, which has led to
in an increase in referrals for engagements with new clients. We also
plan to develop more applications and systems, such as pricing modules,
that will allow us to have greater contact with our clients once a
specific project has been completed.

. Attract, train, retain and motivate experienced professionals and
maintain creative leadership. Our growth and our ability to provide
strategic Internet professional services are based in large part on our
abilities to attract, train, retain and motivate experienced
professionals and maintain creative leadership. We actively expand our
existing expertise by recruiting senior professionals from major
consulting firms, creative design firms and information technology
services firms as well as from other companies that provide Internet
professional services. We maintain an informal, team-driven and results-
oriented culture and provide incentives for our employees through a
competitive compensation plan, equity ownership and our stock option
plans. We provide training for our employees which is designed to address
the rapidly changing technological environment in which our employees are
engaged.

. Expand through strategic acquisitions. We believe that building a
critical mass of strategic, technical and creative talent and
establishing a multinational presence through both acquisitions and
internal growth will provide us with a substantial competitive advantage.
We have grown rapidly both organically and through the completion of 12
acquisitions since August 1998. We will continue to pursue strategic
acquisitions to acquire expertise in new core competencies and
technologies, gain

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access to additional talented professionals and enter into new geographic
markets. We plan to pursue strategic acquisitions of companies that can be
assimilated into our existing operations. To complement our existing
operations in Atlanta, Chicago, Colorado Springs, Dallas, Los Angeles, New
York, Phoenix, San Francisco, Amsterdam and London, we also plan to
execute a global growth strategy, initially focusing on Europe and Asia.
We believe that reasonable geographic proximity will enhance our prospects
for servicing existing customers and attracting future significant
customers.

. Provide services in a broad range of industries. We believe that our
broad base of knowledge and expertise is scalable across a wide range of
industries. We are currently focusing on expanding our provision of
services to new industry segments as a result of acquisitions and
additional hiring of personnel. Our Xceed Intelligence research and
analysis division, which currently covers 13 industries, also provides us
with a strong knowledge base in a variety of market segments. We expect
Xceed Intelligence to expand its coverage to additional industries in the
future to expand our Internet professional services.

Engagement Methodology

Our branded engagement methodology is designed to carefully plan and
implement successful and innovative eBusinesses for our clients and is enhanced
by our depth of experience and expertise in strategic consulting, technology,
creative design and marketing. We believe our acquisition of methodfive in
February 2000 has enhanced our branded engagement methodology, which consists
of the following steps:

. Business requirements assessment. Typically, we begin an engagement by
gathering information, performing research and analysis and gaining a
comprehensive understanding of the project scope. This forms the
foundation for a series of client workshops, which are led by our
strategic services team. The workshops are customized to the client's
needs and desired outcomes and allow us to create a blueprint and program
from which our multidisciplinary teams can establish a successful
Internet-related initiative. Our clients are actively involved in this
initial step. Upon completion of the business requirements assessment
process, we provide the client with a strategic and tactical plan for its
eBusiness.

. Specifications. Using the information gathered during the business
requirements assessment process and the blueprint and program created
during the client workshops, we develop detailed functional and technical
specifications that are designed to meet the client's business vision. By
creating specifications, we seek to ensure that all of the details
related to the creation of a web site are accounted for prior to
beginning work on the project. Our combination of technical and creative
talent reduces the overall risk associated with large-scale development
efforts.

. Creative development and branding. Using state-of-the-art technologies
and ideas, our creative team extends or establishes the client's brand
online, while developing a user experience that meets the client's
business requirements and expectations. Through an interactive and
collaborative effort, we work with the client to refine a complete image
while developing plans to execute public relations, advertising and
marketing needs.

. Functional prototype. Before full scale development takes place, we
produce a prototype that combines user specifications and an agreed-upon
image. The prototype allows the client to test the systems that we have
developed to ensure that all of its requirements and expectations have
been met.

. Application development and system integration. We develop, integrate and
test all of the necessary components, including third-party hardware,
software and custom applications for the final launch of the online
effort. During this stage, our developers and technologists seek to
ensure that the client's business requirements and expectations are fully
aligned with the technological infrastructure we have created.

Once the initial project has been completed, our methodology can be
periodically reapplied to maintain and refine the client's eBusiness.

11
<PAGE>

We believe that our methodology clarifies client expectations, helps our
clients achieve faster time to market, reduces the risks associated with the
application and integration of emerging technologies, provides consistent
procedures for all engagement phases, provides a higher degree of project
organization, is cost effective and lowers implementation and technology
obsolescence risks.

Services

We provide a full range of Internet professional services that help our
clients capitalize on the reach and efficiency of the Internet. We believe we
offer our clients a single source for the services required to identify,
design, develop and deploy eBusiness solutions that complement or expand
conventional business processes, including:

. Strategic consulting. We work with our clients to develop and implement
eBusiness strategy and effect change management.

-- eBusiness strategy. We offer strategic advice designed by our business
and technical experts with industry-specific knowledge. We align client
strategic plans with the capabilities of the Internet and the dynamics
of the markets and industries in which they compete. We also help our
clients turn strategy into action, viewing strategy as the design of
the entire business system and an integrated set of actions to
continuously redefine competitive advantage.

-- Change management. We advise clients with respect to major business
and cultural changes by assessing current skills and resource
requirements, implementing organizational changes and associated
measurement systems and creating employee communications plans. Our
change management practice helps align our clients' organizational
structures and processes with their Internet strategies.

. Creative design. We have extensive experience in developing visual and
interactive content and creating electronic brand campaigns that enhance
and extend our clients' relationships with their customers. Our creative
design professionals assess and analyze our clients' existing brands,
identify opportunities and provide user-focused solutions that help our
clients build sustainable, long-term relationships with their customers.
To keep up with the increasing complexity of the creative solutions
required, we have developed expertise in editorial creation, content
management, information architecture, user-interface and rich-media
technologies.

. Technology. Our technical professionals perform system integration and
systems administration services for our clients using industry software
products developed by vendors such as Broadvision, Open Market and
Vignette, as well as our proprietary applications. Using our extensive
in-depth knowledge of the Internet and emerging technologies, we
translate strategic, creative and business requirements into
sophisticated and functional technology platforms. Recognizing that
technical infrastructure is the foundation for clients' Internet
solutions, we develop infrastructures designed to be reliable, robust,
secure and scalable. Our principal technology services include the
design, architecture and development of e-commerce platforms, customer
relationship management systems, sales automation systems, electronic
markets and exchanges, Internet and intranet portals, as well as the
implementation of enterprise middleware and the integration of Internet
solutions with legacy systems.

. Marketing and branding. Our marketing and branding team creates an
integrated plan for attracting audiences and building customer bases for
the eBusinesses we create. Our competencies in this area include brand
creation and positioning, corporate identity and product branding,
advertising, media placement, direct marketing and consumer and trade
promotions.

. Intranet/extranet. Our intranet/extranet practice provides clients with
both enterprise-wide and functional/workgroup services and component
solutions. We help our clients improve their overall business practices
by developing intranets and extranets that can be used to increase sales,
improve communications and create or enhance business identities. Our
solutions in this area have included the creation of new distribution
channels, the repositioning of online brands and the integration of a
client's operations by opening and expanding lines of communication among
the client's employees, customers,

12
<PAGE>

distributors and vendors. The practice is centered on our Enterprise Work
Portal, which is a service that enables companies to transform their first
generation intranets into value-added business tools.

. Research and analysis. We believe that deep, industry-specific knowledge
will separate Internet solutions providers in their attempts to build
successful eBusinesses. Our research and analysis group, Xceed
Intelligence, provides clients with customized, cutting-edge industry-
specific research in 13 industries, such as apparel, finance, sports and
entertainment. Our five analysts, who have a collective 27 years of
industry experience, produce analyses which enhance our overall ability
to provide clients with a clear vision and strategy across multiple
market segments. In addition to custom research, Xceed Intelligence
leverages its proven methodologies and data pool to produce industry-wide
"Intelligence Reports" which are sold to the industry at large. Xceed
Intelligence also produces a "Vertical View" e-mail newsletter. Xceed
Intelligence's analysts have been cited by numerous publications,
including Reuters, Bloomberg, The Associated Press, The Wall Street
Journal Interactive, Yahoo! Internet Life, Computer Shopper, Billboard,
Women's Wear Daily and Street & Smith's Sports Business Journal.

Client Case Studies

The following case studies are representative of the services we offer our
clients:

Warner Bros. Online (www.whatisthematrix.com)

"The Matrix," a science fiction/action movie starring Keanu Reeves and
Laurence Fishburne, was one of the top box office hits in the United States in
1999. Our multi-functional team worked closely with the film's development
team to create an interactive web site that featured cutting-edge design and
comic artwork and original content that related to major themes in the movie
and presented a consistent message with the film's other marketing programs.
The site also incorporated special hidden content, encouraging users to "hack"
into the site, much as the film's characters hack into The Matrix in the film.
E-mail exchanges between users helped them find the hidden content and were
used to foster ongoing relationships with fans.

The Matrix web site won a number of awards and accolades, including being
named Macromedia's site of the day and received top ratings from Entertainment
Weekly, MovieLink and the popular movie gossip site Ain't It Cool News.

Today, nearly a year after the film's debut, the web site continues to draw
substantial fan traffic. In addition to maintaining the web site, we continue
to implement modifications allowing the site to be utilized as a promotional
vehicle for the ongoing rollout of Matrix-related products.

Pitney Bowes

Pitney Bowes, a leading provider of informed mail management services to a
global clientele, sought to build a world-class intranet to enhance
productivity and communications and to promote shared accountability and
operational self-reliance among its employees.

Our mission was to provide a single point of entry for Pitney Bowes
employees to access relevant information, resources, tools and automatic
transactions in order to decrease processing time, eliminate errors and lower
personnel costs. We developed a total solution encompassing strategic
planning, legacy database integration, third party content acquisition and
management and an internal communications strategy designed to encourage
employee participation and satisfaction.

Specific work we have undertaken for Pitney Bowes includes:

. process analysis and re-design of their intranet;

. identification of best-of-class technologies;

. web architecture/interface design;

13
<PAGE>

. legacy integration;

. third-party product integration;

. communications services; and

. change management strategy.

Using intranet technology, we have helped Pitney Bowes transform internal
communications and helped them meet the challenges of servicing their clients.

Our Performance Enhancement Business

Our performance enhancement business offers clients a full-service approach
to the establishment of custom designed performance enhancement programs. This
full-service approach involves identifying a client's business objectives and
budget parameters, and analyzing the demographics of participants to design an
effective program with an appropriate mix of awards. Through Maestro, our
trademarked Internet and intranet software, our performance enhancement
business professionals communicate the business objectives and contest rules to
participants and provide participants with rankings and feedback throughout the
duration of the program. Maestro enables us to monitor and evaluate the
performance of program participants, generate status reports for clients and
distribute awards to participants.

Our performance enhancement business professionals provide services to
numerous corporate customers in various industries such as pharmaceuticals,
telecommunications, office equipment, insurance and electronics. Our
performance enhancement business markets its services through direct contacts
by its sales representatives with corporate sales, marketing and human resource
executives. Our performance enhancement business has 42 employees with offices
in Atlanta, Los Angeles and New York.

We are currently exploring various strategic alternatives with respect to
our performance enhancement business, including the sale of all or part of this
business, as this business is not aligned with our current corporate focus.

Clients

We have provided Internet professional services for a variety of clients in
many industries. Because of the strategic and competitively sensitive nature of
the engagements we perform for many of our clients, we have agreed to keep some
clients' identities confidential. The following is a partial list of clients
that we believe is representative of our overall client base:

Performance enhancement business Internet professional services

.Candle .CBS

.Knoll Pharmaceutical .Cable and Wireless

.MCI .Chamberbiz

.Pfizer .HBO

.Ricoh .Nestle

For the fiscal year ended August 31, 1999, our five largest clients
accounted for approximately 41% of our revenues, with Pfizer, Inc. accounting
for approximately 26% of our revenues.

14
<PAGE>

Sales and Marketing

Our sales and marketing efforts are dedicated to strengthening our brand
name and enhancing our reputation as a leading provider of Internet
professional services. Our sales professionals operate through a coordinated
and structured process to evaluate and respond to large numbers of prospective
clients and opportunities, target qualified prospects and secure new
engagements and joint ventures. We target our sales efforts to multinational
corporations, mid-to-large-sized companies and startups and plan to target
Fortune 1000, Global 2000 and other companies in the future.

Our sales efforts are supplemented by marketing and communications
activities that we pursue to further build our brand name and recognition in
the marketplace. We have public relations, investor relations and marketing
groups that also publish industry research and weekly and bi-weekly
newsletters, primarily through our Xceed Intelligence group. We seek to enhance
the visibility of our brand by attending and speaking at industry conferences
and business events, sponsoring trade shows and holding seminars which are
designed to promote our services and offerings.

Competition

Competition in the Internet professional services market is intense, and the
market is fragmented and evolving rapidly. We believe that competition will
become more focused as Internet professional services companies will grow
dramatically through organic and acquired growth.

Our current competitors include the following:

. systems integrators that primarily engage in fixed time/fixed price
contracts, such as Sapient and Viant;

. large systems integrators, such as Andersen Consulting and the consulting
arms of the Big Five accounting firms;

. web consulting firms and online agencies, such as Proxicom and Razorfish;

. advertising and new media companies, such as True North Communications
and Omnicom;

. the professional services groups of computer equipment companies, such as
IBM and Compaq;

. outsourcing firms, such as Computer Sciences Corporation and Electronic
Data Systems;

. general management consulting firms, such as Bain & Company and Booz
Allen & Hamilton; and

. internal IT departments of current and potential clients.

Because relatively low barriers to entry characterize our market, we also
expect other companies to enter our market. We believe that the principal
competitive factors in our industry are:

. the speed of development and implementation of eBusiness systems;

. the quality of services and deliverables;

. technical, strategic and industry expertise;

. project management capabilities;

. reputation and experience of professionals delivering the service;

. the effectiveness of sales and marketing efforts;

. brand recognition;

. size of firm; and

. value of the services provided compared to the price of such services.

15
<PAGE>

Our performance enhancement business competes with numerous companies that
provide incentive or performance enhancement services. These companies include
Maritz, Inc., Carlson Marketing Group and BI Performance Services.

Intellectual Property Rights

We rely upon a combination of trade secrets, nondisclosure and other
contractual arrangements, and copyright and trademark laws, to protect our
proprietary rights. We enter into confidentiality agreements with our
employees, generally require that our consultants and clients enter into such
agreements, and limit access to and distribution of our proprietary
information.

Our business involves the development of technology solutions for specific
client engagements. Ownership of these solutions is the subject of negotiation
and is frequently assigned to the client, although we may retain a license for
certain uses. Some clients have prohibited us from marketing the solutions
developed for them for specified periods of time or to specified third parties
and there can be no assurance that clients will not demand similar or other
restrictions in the future. Issues relating to the ownership of and rights to
use solutions can be complicated and there can be no assurance that disputes
will not arise that affect our ability to resell or reuse such solutions.

Employees, Recruiting and Training

At March 1, 2000, we had 615 full time employees. Our headcount has
increased an average of 50% per quarter for the last two fiscal quarters. We
believe that we maintain high employee retention rates as compared to the
industry average by paying competitive salaries, granting stock options and
providing other benefits.

We dedicate significant resources to our recruiting efforts. We believe a
strong human resources and recruiting division is necessary to expand our
current employee base and retain our high employee retention rates.

Our internal recruiting efforts primarily focus on supplying quality
personnel to each of our business units. In addition to the efforts of our in-
house recruiting group, we seek to meet our hiring needs through:

. referrals from our existing employees;

. technical and executive search firms;

. use of ITS, an online information tracking system which acts as a resume
repository and search engine and also is used to distribute and track job
requisitions;

. online resume databases such as Monster.com and ComputerJobs.com; and

. attendance at job fairs targeted to the specific talent we are seeking.

In 2000, we intend to initiate a college recruiting program through
CareerTrack, which has affiliations with over 1,000 U.S. colleges.

We provide a one-week intensive training program for our new employees which
is designed to educate them on our business strategy, the methodologies and
technical competencies that are required for successful project delivery and
our corporate culture. We also have formal, mandatory training for all of our
employees in their core competencies on an annual and semi-annual basis. Our
training programs utilize a comprehensive curriculum of courses that focus on
such areas as project analysis, project management, programming languages and
development skill sets. We strongly believe that comprehensive training is
necessary to ensure that all aspects of the project cycle are performed by our
employees in a uniform and consistent manner and that best practices are
effectively utilized.

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<PAGE>

Our employees are not represented by any union and, except for senior
management and certain other employees, are retained on an at-will basis. We
believe we have a good relationship with our employees.

Properties

We lease a variety of offices and facilities for our operations. Our
principal executive offices are currently located at 488 Madison Avenue, New
York, NY 10022, where we maintain approximately 26,000 square feet under a
lease that expires in 2008. We lease a total of approximately 200,000 square
feet for our 31 offices in Atlanta, Chicago, Colorado Springs, Dallas, Los
Angeles, New York, Phoenix, San Francisco, Amsterdam and London. We recently
entered into an agreement to lease approximately 105,000 square feet of space
in the former Woolworth building in New York. This space is intended to become
our new corporate headquarters in the future. The term of our lease is 10
years, with an option to renew for an additional five years.

We believe that our properties are adequate for our current needs and that
additional space will be available as needed.

Legal Proceedings

We are involved in various lawsuits and claims incidental to our business.
In the opinion of management, the ultimate liabilities, if any, resulting from
these lawsuits and claims, will not materially affect our financial position or
results of operations.

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<PAGE>

LEGAL MATTERS

The validity of the shares of common stock offered hereby will be passed
upon for us by Akin, Gump, Strauss, Hauer & Feld, L.L.P.

EXPERTS

The consolidated financial statements for the year ended August 31, 1999,
incorporated in this prospectus by reference from the company's annual report
on Form 10-K/A for the year ended August 31, 1999, have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report (which
report expresses an unqualified opinion and includes an explanatory paragraph
referring to a restatement of the 1999 financial statements), which is
incorporated herein by reference, and have been so incorporated in reliance
upon the report of such firm given upon their authority as experts in
accounting and auditing.

Our consolidated financial statements for the fiscal years ended August 31,
1998 and 1997, incorporated in this prospectus by reference to our annual
report on Form 10-K/A for the fiscal year ended August 31, 1999, have been
audited by Holtz Rubenstein & Co., LLP, independent auditors, as stated in
their report, which is incorporated in reliance upon the report of such firm
given upon their authority as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Securities and Exchange Commission a registration
statement on Form S-3, of which this prospectus is a part, under the Securities
Act with respect to the shares of common stock offered hereby. This prospectus
does not contain all of the information included in the registration statement.
Statements contained in this prospectus concerning the provisions of any
document are not necessarily complete. You should refer to the copy of these
documents filed as an exhibit to the registration statement or otherwise filed
by us with the SEC for a more complete understanding of the matter involved.
Each statement concerning these documents is qualified in its entirety by such
reference.

We are also subject to the informational requirements of the Securities
Exchange Act of 1934. In accordance with the Exchange Act, we file reports,
proxy statements and other information with the SEC. The registration
statement, including the attached exhibits and schedules, may be inspected and
copied at the public reference facilities maintained by the SEC, Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
regional offices of the Commission located at Seven World Trade Center, New
York, New York 10048, and 500 West Madison Street, Chicago, Illinois 60661.
Please call the SEC at 1-800-SEC-0330 for further information about the public
reference rooms. The SEC maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the SEC. Copies of the registration statement and the
reports, proxy and information statements and other information that we file
with the SEC may be obtained from the SEC's Internet address at
http://www.sec.gov.

The SEC allows us to "incorporate by reference" into the prospectus the
information we have filed with them. The information incorporated by reference
is an important part of this prospectus and the information that we file
subsequently with the SEC will automatically update this prospectus. The
information incorporated by reference is considered to be part of this
prospectus. We incorporate by reference the documents listed below and any
filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, after the initial filing of this
registration statement that contains this prospectus and prior to the time that
we sell all the securities offered by this prospectus:

. Our Annual Report on Form 10-K for the year ended August 31, 1999, filed
with the SEC on November 29, 1999, as amended by our report on Form 10-
K/A, filed with the SEC on April 11, 2000;

. Our Quarterly Report on Form 10-Q for the quarter ended November 30,
1999, filed with the SEC on January 14, 2000, as amended by our report on
Form 10-Q/A filed with the SEC on April 11, 2000;

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<PAGE>

. Our Current Report on Form 8-K, filed with the SEC on January 20, 2000;

. Our Current Report on Form 8-K, filed with the SEC on January 28, 2000;

. Our Current Report on Form 8-K filed with the SEC on February 16, 2000,
as amended by our Current Report on Form 8-K/A, filed with the SEC on
April 11, 2000;

. Our Current Report on Form 8-K filed with the SEC on April 5, 2000.

You may request a copy of these documents, which will be provided to you at
no cost, by contacting: Xceed Inc., 488 Madison Avenue, New York, NY, 10022,
Attention: Investor Relations, (212) 962-7777, x7108.

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You should rely only on the information contained or incorporated by reference
in this prospectus. We have not authorized anyone to provide you with different
or additional information. This prospectus is not an offer to sell nor is it
seeking an offer to buy shares of our common stock in any jurisdiction where
the offer or sale is not permitted. The information contained or incorporated
by reference in this prospectus is correct as of the date of this prospectus,
regardless of the time of the delivery of this prospectus or any sale of our
common stock.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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[Logo of Xceed]

2,443,412 Shares of
Common Stock

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

PROSPECTUS

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

, 2000

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

PART II

Item 14. Other Expenses of Issuance and Distribution

We estimate that expenses in connection with the offering described in this
Registration Statement, other than underwriting discounts and commissions, will
be as follows:

<TABLE>
<CAPTION>
Item Amount
---- -------
<S> <C>
Registration fee.................................................... $11,990
NASDAQ National Market listing fee.................................. $ 0
Attorneys' fees and expenses........................................ $10,000
Accountants' fees and expenses...................................... $ 5,000
Printing and engraving.............................................. $ 5,000
Registrar's fees and expenses....................................... $ 0
Miscellaneous....................................................... $ 0
-------
Total............................................................. $31,990
</TABLE>

Item 15. Indemnification of Directors and Officers

Section 145 of the Delaware General Corporation Law permits indemnification
of directors, officers, employees and agents of corporations for liabilities
arising under the Securities Act of 1933.

Our certificate of incorporation and bylaws provide for indemnification of
the registrant's directors and officers to the fullest extent permitted by
Section 145 of the Delaware General Corporation Law.

Statutory Provisions

Section 102(b)(7) of the Delaware General Corporation Law enables a
corporation in its certificate of incorporation to eliminate or limit the
personal liability of members of its board of directors to the corporation or
its stockholders for monetary damages for violations of a director's fiduciary
duty of care. The provision would have no effect on the availability of
equitable remedies, such as an injunction or rescission, for breach of
fiduciary duty. In addition, no provision may eliminate or limit the liability
of a director for breaching his duty of loyalty, failing to act in good faith,
engaging in intentional misconduct or knowingly violating a law, paying an
unlawful dividend or approving an illegal stock repurchase, or obtaining an
improper personal benefit.

Section 145 of the Delaware General Corporation Law empowers a corporation
to indemnify any persons who was or is a party to or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation,
against expenses (including attorney's fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with the
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. No indemnification shall
be made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to the
extent that the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for expenses which the court shall deem proper. Additionally, a
corporation is required to indemnify its directors and officers against
expenses to the extent that the directors or officers have been successful on
the merits or otherwise in any action, suit or proceeding or in defense of any
claim, issue or matter.

II-1
<PAGE>

An indemnification can be made by the corporation only upon a determination
that indemnification is proper in the circumstances because the party seeking
indemnification has met the applicable standard of conduct as set forth in the
Delaware General Corporation Law. The indemnification provided by the Delaware
General Corporation Law shall not be deemed exclusive of any other rights to
which those seeking indemnification may be entitled under any bylaw, agreement,
vote of stockholders or disinterested directors, or otherwise. A corporation
also has the power to purchase and maintain insurance on behalf of any person,
whether or not the corporation would have the power to indemnify him against
such liability. The indemnification provided by the Delaware General
Corporation Law shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and administrators
of the person.

Our Charter Provisions

Our certificate of incorporation limits the director's liability for
monetary damages to our company and its stockholders for breaches of fiduciary
duty except under the circumstances outlined in Section 102(b)(7) of the
Delaware General Corporation Law as described above under "Statutory
Provisions."

To the extent indemnification for liabilities arising under the Securities
Act may be permitted for directors, officers or persons controlling us, we have
been advised that, in the opinion of the Securities and Exchange Commission,
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.

Item 16. Exhibits and Financial Statement Schedules

<TABLE>
<CAPTION>
Exhibit
Number
-------
<C> <S>
4(a) Form of Common Stock Purchase Warrant issued by Xceed Inc. to each
of Peconic Fund, Inc., Leonardo, L.P. and HFTP Investment, L.L.C. on
January 13, 2000 (1)

4(b) Form of Common Stock Purchase Warrant issued by Xceed Inc. to each
of Peconic Fund, Inc., Leonardo, L.P. and HFTP Investment, L.L.C. on
April 4, 2000 (2)

5(a) Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P.

10(a) Subscription Agreement dated January 13, 2000 by and among Xceed
Inc., Peconic Fund, Inc., Leonardo, L.P. and HFTP Investment, L.L.C.
(1)

10(b) Registration Rights Agreement dated January 13, 2000 by and among
Xceed Inc., Peconic Fund, Inc., Leonardo, L.P. and HFTP Investment,
L.L.C. (1)

10(c) Agreement dated April 4, 2000 by and among Xceed Inc., Peconic Fund,
Inc., Leonardo, L.P. and HFTP Investment, L.L.C. (2)

23(a) Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P. (included in
Exhibit 5(a))

23(b) Consent of Deloitte & Touche LLP

23(c) Consent of Holtz Rubenstein & Co., LLP

24(a) Power of Attorney (included on signature page of this Form S-3)
</TABLE>
- --------

(1) Incorporated by reference from our Current Report on Form 8-K, dated
January 17, 2000 and filed with the Commission on January 20, 2000.

(2) Incorporated by reference from our Current Report on Form 8-K dated April
4, 2000 and filed with the Commission on April 5, 2000.

II-2
<PAGE>

Item 17. Undertakings

We hereby undertake:

(a)(1) To file, during any period in which we offer or sell securities, a post-
effective amendment to this registration statement to:

(i) Include any prospectus required by section 10(a)(3) of the
Securities Act;

(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in the
registration statement;

(iii) Include any additional or changed material information on the
plan of distribution.

(2) For determining liability under the Securities Act, treat each post-
effective amendment as a new registration statement of the securities offered,
and the offering of the securities at that time to be the initial bona fide
offering.

(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.

(b) To supplement the prospectus, for purposes of determining any liability
under the Securities Act, each filing of our annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to section
15(d) of the Securities Exchange Act) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be the initial bona fide offering.

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

II-3
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, Xceed certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-3 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in New
York, New York on April 10, 2000.

XCEED INC.

/s/ Werner G. Haase
By: _________________________________
Name: Werner G. Haase
Title: President, Chief Executive
Officer and Co-Chairman

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

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----

<S> <C> <C>
/s/ Werner G. Hasse (attorney-in-fact) Chief Strategic Officer April 10, 2000
______________________________________ and Co-Chairman
Scott A. Mednick

/s/ Werner G. Haase President, Chief Executive April 10, 2000
______________________________________ Officer and Co-Chairman
Werner G. Haase (principal executive
officer)

/s/ Werner G. Hasse (attorney-in-fact) Director April 10, 2000
______________________________________
William N. Zabit

/s/ Werner G. Hasse (attorney-in-fact) Director April 10, 2000
______________________________________
John A. Bermingham

/s/ Werner G. Hasse (attorney-in-fact) Director April 10, 2000
______________________________________
Norman Docteroff

/s/ Werner G. Haase (attorney-in-fact) Director April 10, 2000
______________________________________
Terry A. Anderson

/s/ Werner G. Haase (attorney-in-fact) Senior Vice President and April 10, 2000
______________________________________ Chief Financial Officer
John P. Gandolfo (principal financial and
accounting officer)
</TABLE>

II-4

<PAGE>

Exhibit 5(a)

April 11, 2000

Xceed Inc.
488 Madison Avenue
3rd Floor
New York, New York 10022

Ladies and Gentlemen:

We have acted as counsel for Xceed Inc. (the "Company") in connection with
the filing of the registration statement on Form S-3 (the "Registration
Statement") under the Securities Act of 1933 (the "Act") covering 910,139 shares
of common stock, par value $.01, of the Company (the "Shares"), issuable upon
the conversion of 30,000 shares of Series A Cumulative Convertible Preferred
Stock of the Company pursuant to the Certificate of Designation, Preferences and
Rights of Series A Cumulative Convertible Preferred Stock of the Company dated
January 13, 2000 and filed with the Secretary of State of Delaware (the
"Certificate of Designation") and 1,533,273 shares of common stock (the "Warrant
Shares"), issuable upon exercise of warrants dated as of January 13, 2000 and
April 4, 2000 (the "Warrants"), all of which were issued pursuant to: (i) a
Subscription Purchase Agreement dated as of January 13, 2000, by and among the
Company and the purchasers party thereto (the "January Agreement"), and (ii) an
Agreement dated as of April 4, 2000, by and among the Company and the purchasers
party thereto (the "April Agreement"). The Registration Statement has been
filed pursuant to the terms of a Registration Rights Agreement dated as of
January 13, 2000 (the "Registration Rights Agreement").

In connection with this opinion, we have examined originals, or copies
certified or otherwise identified to our satisfaction, of the Certificate of
Incorporation (including the Certificate of Designation) and Bylaws of the
Company, and the amendments thereto, the January Agreement, the April Agreement,
the Warrants, the Registration Rights Agreement and other records and documents
that we have deemed necessary for the purpose of this opinion. In our
examination, we have assumed the genuineness of all signatures and the
conformity to original documents of all copies submitted to us. As to various
questions of fact material to our opinion, we have relied on statements and
certificates of officers and representatives of the Company, the representations
of the Company included in the January Agreement, the April Agreement and the
Registration Rights Agreement, and public officials.

In our opinion, the Shares and the Warrant Shares to be registered under
the Registration Statement have been duly authorized for issuance by the
Company, and upon issuance and delivery in accordance with the January Agreement
and the April Agreement, the Shares and the Warrant Shares will be validly
issued, fully paid and non-assessable.

We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the use of our name under the caption "Legal Matters." In
giving this consent, we do not admit
<PAGE>

Xceed, Inc.
April 11, 2000
Page 2

that we are acting within the category of persons whose consent is required
under Section 7 of the Act.

Very truly yours,

/s/ Akin, Gump, Strauss, Hauer & Feld, L.L.P.

Akin, Gump, Strauss, Hauer & Feld, L.L.P.

<PAGE>

Exhibit 23(b)

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in this Amendment No. 1 to the
Registration Statement of Xceed Inc. on Form S-3 of our report dated March 20,
2000 (which expresses an unqualified opinion and includes an explanatory
paragraph relating to restatement of the 1999 financial statements described in
Note 2 s.), appearing in the Annual Report on Form 10-K/A of Xceed Inc. for the
year ended August 31, 1999, and to the reference to us under the heading
"Experts" in such Prospectus.

/s/ DELOITTE & TOUCHE LLP

New York, New York

April 11, 2000

<PAGE>

Exhibit 23(c)

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We hereby consent to the incorporation by reference in Amendment No. 1 to
the Registration Statement on Form S-3 of our report dated November 19, 1999
(except for Note 4, as to which the date is January 13, 2000) with respect to
the consolidated financial statements of Xceed, Inc. included in the Company's
Annual Report on Form 10-KA for the year ended August 31, 1999, and to the
reference to us under the heading "Experts" in such Registration Statement.

/s/ Holtz Rubenstein & Co., LLP

HOLTZ RUBENSTEIN & CO., LLP

Melville, New York

April 8, 2000