RATEXCHANGE CORP, S-1/A, 2000-07-25

RATEXCHANGE CORP
S-1/A, 2000-07-25
BUSINESS SERVICES, NEC

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 25, 2000

REGISTRATION STATEMENT NO. 333-37004

AMENDMENT NO. 1 TO
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------------

FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

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

RATEXCHANGE CORPORATION
(Formerly NetAmerica.com Corporation)
(Exact name of registrant as specified in its charter)

<TABLE>
<CAPTION>
DELAWARE 7370 11-2936371
<S> <C> <C>
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>

185 BERRY STREET, SUITE 3515
SAN FRANCISCO, CALIFORNIA 94107
(415) 371-9800
(Address, including zip code, and telephone number,
including area code, of principal executive offices)
----------------------------------------------------

DONALD SLEDGE
CHIEF EXECUTIVE OFFICER
RATEXCHANGE CORPORATION
185 BERRY STREET, SUITE 3515
SAN FRANCISCO, CALIFORNIA 94107
(415) 371-9800
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
--------------------------------------------------

COPIES TO:
DAWN M. CALL
SNELL & WILMER L.L.P.
15 WEST SOUTH TEMPLE, SUITE 1200
SALT LAKE CITY, UTAH 84101
(801) 257-1900
--------------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after this registration statement becomes effective.

If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please 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, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]

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

If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration 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. [ ]

<PAGE> 2

<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
------------------------ --------------------- --------------------- --------------------- ---------------------
TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED(2) OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED(1) PER UNIT OFFERING PRICE FEE(5)
------------------------ --------------------- --------------------- --------------------- ---------------------
<S> <C> <C> <C> <C>
Common Stock, $.0001 6,500,475 $ 9.59(3) $62,339,555(3) $ 16,458
par value 137,630 $ 6.00(4) $825,780(4) $218
Shares
======================== ===================== ===================== ===================== =====================
</TABLE>

(1) This registration statement covers the resale by certain selling
stockholders of up to an aggregate of 6,638,105 shares of common stock,
$.0001 par value, of RateXchange Corporation, 3,773,062 shares of which
were previously acquired by the selling stockholders and 2,865,043
shares of which may be acquired by such selling stockholders upon
exercise of presently outstanding warrants and/or options to purchase
common stock.

(2) In the event of a stock split, stock dividend or similar transaction
involving RateXchange's common stock, to prevent dilution, the number of
shares registered will be automatically increased to cover the
additional shares in accordance with Rule 416(a) under the Securities
Act of 1933.

(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c), based on the average of the bid and asked price
of the Company's securities of the same class on the OTC Bulletin Board
as of May 9, 2000.

(4) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c), based on the closing price of the Company's
securities of the same class as reported by the American Stock Exchange
as of July 19, 2000.

(5) The registration fee was paid as follows: $16,458 in May 2000 for the
registration of 6,500,475 shares and $218 in July 2000 for the
registration of 137,630 shares.

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 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.

<PAGE> 3

PROSPECTUS

185 Berry Street, Suite 3515
San Francisco, California 94107
(415) 371-9800

[RATEXCHANGE LOGO]

CORPORATION

6,638,105 SHARES COMMON STOCK

With this prospectus, the selling stockholders identified in this
prospectus are offering up to 6,638,105 shares of our common stock.

The selling stockholders may sell these shares through public or private
transactions, at prevailing market prices or at privately negotiated prices. The
selling stockholders will receive all of the net proceeds from the sale of the
shares offered with this prospectus. The selling stockholders will pay all
underwriting discounts and selling commissions, if any, applicable to the sale
of those shares. We will not receive any proceeds from the sale of the shares.

BEFORE PURCHASING ANY OF THE SHARES, YOU SHOULD CONSIDER VERY
CAREFULLY THE INFORMATION PRESENTED UNDER THE CAPTION "RISK
FACTORS" ON PAGE 3 OF THIS PROSPECTUS.

Our common stock is traded on the American Stock Exchange under the
symbol "RTX." On July 18, 2000, the closing price for our common stock on the
American Stock Exchange was $6.00.

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.

THE DATE OF THIS PROSPECTUS IS JULY 25, 2000.

<PAGE> 4

================================================================================

We have not authorized any dealer, salesperson or other person to give any
information or represent anything not contained in this prospectus. You must not
rely on any unauthorized information. This prospectus does not offer to sell or
buy any shares in any jurisdiction where it is unlawful. The information in this
prospectus is current only as of its date.

_______________

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
PROSPECTUS SUMMARY .............................................. 5
RISK FACTORS .................................................... 6
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING
STATEMENTS ...................................................... 12
USE OF PROCEEDS ................................................. 13
SELLING STOCKHOLDERS ............................................ 14
PLAN OF DISTRIBUTION ............................................ 19
DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED ......... 20
BUSINESS ........................................................ 21
PROPERTIES ...................................................... 28
LEGAL PROCEEDINGS ............................................... 28
MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS ............................................. 28
SELECTED CONSOLIDATED FINANCIAL DATA ............................ 29
SUPPLEMENTARY FINANCIAL INFORMATION ............................. 30
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS ................... 31
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK ..................................................... 35
MANAGEMENT ...................................................... 37
EXECUTIVE COMPENSATION .......................................... 41
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION ................................................... 44
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT ...................................................... 45
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ABOUT THIS PROSPECTUS ........................................... 47
WHERE YOU CAN FIND MORE INFORMATION ............................. 49
LEGAL MATTERS ................................................... 49
EXPERTS ......................................................... 49
</TABLE>

6,638,105 Shares
of Common Stock

RATEXCHANGE CORPORATION

____________

PROSPECTUS
____________

================================================================================

<PAGE> 5

PROSPECTUS SUMMARY

You should read this summary together with the more detailed information
and financial statements and notes appearing elsewhere in this prospectus. You
should carefully consider, among other things, the matters set forth in "Risk
Factors."

THE COMPANY

RateXchange Corporation is a pioneer in the development of
business-to-business e-commerce for the telecommunications industry. We are a
development stage company seeking to develop new transaction services for the
estimated $1 trillion international market for telecommunications services. We
focus on developing, operating and maintaining liquid, efficient and automated
online market services to trade bandwidth and other telecommunications products.
In February 2000, we announced the launch of the RateXchange Real-Time Bandwidth
eXchange. We believe RTBX is the first online exchange specializing in
telecommunication bandwidth as a tradeable commodity. During June 2000, we also
announced the commencement of another service called RateXchange CustomAuctions
for buying and selling of other telecommunications products and services.

We were incorporated in Delaware in 1987. Our principal executive
offices are located at 185 Berry Street, Suite 3515, San Francisco, California
94107, and our telephone number is (415) 371-9800.

THE OFFERING

<TABLE>
<S> <C>
Common stock offered by RateXchange Corporation....... 0 shares

Common stock offered by the selling stockholders...... 6,638,105 shares

Common stock to be outstanding after this offering.... 20,276,217 shares

Use of proceeds....................................... We will not receive any proceeds from
the sale of common stock by the
selling stockholders

American Stock Exchange symbol........................ RTX

</TABLE>

The foregoing information is based upon shares outstanding as of July
18, 2000. The common stock offered by the selling stockholders includes
3,773,062 shares that were previously acquired by the selling stockholders and
2,865,043 shares that may be acquired by the selling stockholders upon exercise
of presently outstanding warrants and/or options to purchase common stock.
Except as otherwise noted, the shares outstanding on July 18, 2000 do not
include shares issuable upon exercise of any additional outstanding stock
options and warrants.

We are registering the shares offered hereby to satisfy various
obligations to the selling stockholders to register their resale of our common
stock.

2
<PAGE> 6

RISK FACTORS

You should carefully consider the following risks before you decide to buy our
securities. If any of the following risks actually occur, our business,
financial condition or results of operations would likely suffer. As a result,
the trading price of our securities could decline, and you may lose all or part
of the money you paid to buy our securities.

AS A DEVELOPMENT STAGE COMPANY WITH A LIMITED OPERATING HISTORY IN A NEW AND
RAPIDLY CHANGING INDUSTRY, IT IS DIFFICULT TO EVALUATE OUR BUSINESS AND
PROSPECTS.

We are a development stage company with a limited operating history. Our
activities to date, including the activities of our predecessor, have
concentrated on:

- offering a free online lead-generation service in order to build
clientele and educate potential exchange participants about the
benefits of online trading; and

- planning and developing our online exchange for trading
bandwidth and other telecommunications products.

Accordingly, we have a limited operating history on which to base an
evaluation of our business and prospects. Our prospects must be considered in
light of the risks, expenses and difficulties frequently encountered by
companies in the early stage of development, particularly companies in new and
rapidly evolving markets such as online commerce. There can be no assurance that
we will be successful in addressing such risks, and the failure to do so could
have a material adverse effect on our business and results of operations.

OUR SUCCESS DEPENDS ON OUR ABILITY TO SUCCESSFULLY DEVELOP OUR ONLINE EXCHANGE,
SECURE PARTICIPATION IN THE EXCHANGE AND CONNECT PARTICIPANTS TO OUR NETWORK.

Our online exchange is still in the early stages of continued
development and implementation and, as such, is subject to the inherent risks
involved in the development and implementation of an integrated hardware and
software application.

The success of our online exchange is dependent upon the creation of a
network of physically interconnected users. Prior to trading on the exchange,
users must connect to our network at one of our delivery hubs. We currently do
not own any delivery hub equipment or other infrastructure necessary to
interconnect users. Instead, we plan to lease switching capacity from one or
more providers. There is a risk that we will not be able to identify suitable
switching facilities, or even if we do identify such facilities, we may not be
able to enter into contractual arrangements on favorable terms, if at all.

Although we have established a timetable for the full launch of our
online exchange, we may need additional time and substantially more resources
than anticipated to develop the website and configure the necessary
infrastructure in multiple cities. Setbacks or delays in the development of the
online exchange would have a material adverse impact on our business and results
of operations.

The success of our business depends on our ability to attract users to
our online exchange. While we have identified target users, there can be no
assurance that we will be able to secure their participation in the exchange.
Users must agree to physically connect their systems to our network. In
addition, we do not presently have commitments from any of the members of our
free online lead-generation service to participate in the fee-based online
exchange, and therefore, there can be no assurance that any such members will
use the online exchange.

WE HAVE A HISTORY OF LOSSES AND EXPECT TO INCUR LOSSES IN THE FUTURE, AND WE MAY
NEVER ACHIEVE PROFITABILITY.

At March 31, 2000, our accumulated deficit since inception was
$(19,266,121). For the three months ended March 31, 2000, we incurred net losses
of $(10,575,071). We have incurred a net loss in each year of our existence, and
have financed our operations primarily through sales of equity securities. Our
expense levels are high and our revenues nonexistent. We expect to incur net
losses for the foreseeable future. We may never achieve or sustain significant
revenues or profitability on a quarterly or annual basis in the future.

3
<PAGE> 7

IF OUR ONLINE EXCHANGE DOES NOT ACHIEVE COMMERCIAL ACCEPTANCE, OUR RESULTS WILL
SUFFER.

We will rely primarily on a single source (fees and commissions from
transactions facilitated on the online exchange) for our revenues for the
foreseeable future. Online trading of telecommunications bandwidth and minutes
currently has only a limited market acceptance. As a result, our future ability
to gain commercial acceptance of our online exchange is critical to our success.
Any failure to successfully gain commercial acceptance of our online exchange
would not only have a material adverse impact on our business and results of
operation but also on our ability to seek additional revenue opportunities.

WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY AGAINST CURRENT AND FUTURE
COMPETITORS.

The market for online bandwidth and minutes trading services is new,
rapidly evolving and very competitive, as are the online commerce and
business-to-business e-commerce markets generally. We expect competition in this
market to intensify in the future. Several of our existing competitors, such as
Band-X, Enron, Arbinet and InterXion currently operate online exchanges and have
established customer bases. Our ability to compete with them will depend largely
upon our ability to capture market share by obtaining sufficient participants
for our online exchange.

In addition, we compete with all companies who trade, broker or
otherwise assist in the buying and selling of telecommunications bandwidth and
minutes. Therefore, we currently or potentially compete with a variety of other
companies, including established clearinghouses, lead-generation services and
traditional offline brokers. We are aware of established clearinghouses, such as
GRIC, ITXC and AT&T Global Clearinghouse, that aggregate supply and demand and
contract directly with buyers or sellers, rather than facilitate trades. Many
established companies, such as Band-X, Min-X, Asia Capacity Exchange and Cape
Saffron offer lead-generation services which provide opportunities for buyers
and sellers to identify trading opportunities through online listings. Barriers
to entry in the lead-generation category are minimal, as current and new
competitors can launch sites at a relatively low cost. Traditional offline
brokers act as agents for buyers and sellers of bandwidth for a commission and
have the advantage of established industry practices and industry contacts. The
increased use and acceptance of any other method of facilitating the buying and
selling of excess telecommunications bandwidth and minutes may adversely impact
the commercial viability of our online exchange.

Large telecommunications companies such as AT&T and MCI Worldcom have
the ability and resources to compete in the online bandwidth and minutes trading
services market if they choose to do so, including launching their own online
exchanges or offering clearinghouse and other trading services. Many of our
competitors have substantially greater financial, technical and marketing
resources, larger customer bases, longer operating histories, greater name
recognition and more established relationships in the industry than we have. In
addition, a number of these competitors may combine or form strategic
partnerships. As a result, our competitors may be able to offer, or bring to
market earlier, products and services that are superior to our own in terms of
features, quality, pricing or other factors. Our failure to compete successfully
with any of these companies could have a material adverse impact on our business
and results of operations.

Increased pressure created by any present or future competitors, or by
our competitors collectively, could have a material adverse effect on our
business and results of operations. Increased competition may result in reduced
commissions and loss of market share. Further, as a strategic response to
changes in the competitive environment, we may from time to time make certain
pricing, service or marketing decisions or acquisitions that could have a
material adverse effect on our business and results of operations. There can be
no assurance that we will be able to compete successfully against current and
future competitors. In addition, new technologies and the expansion of existing
technologies may increase the competitive pressures on us.

WE MAY BECOME SUBJECT TO REGULATION BY THE COMMODITY FUTURES TRADING COMMISSION
DEPENDING ON THE TYPES OF PRODUCTS AND SERVICES WE EVENTUALLY INTRODUCE.

We propose to develop an online exchange for trading spot and forward
contracts for the purchase or sale of bandwidth and other telecommunications
products. Spot contracts for the near term delivery of a commodity are not
subject to regulation by the Commodity Futures Trading Commission. Forward
contracts, which impose binding obligations for the deferred delivery of a
commodity between commercial parties, also are excluded from the CFTC's
jurisdiction. We currently intend to operate our online exchange in a manner
consistent with existing regulatory guidance concerning transactions and
services that are not subject to regulation by the CFTC.

4
<PAGE> 8

The Commodity Exchange Act provides that futures contracts may only be
entered into on an exchange that has been designated by the CFTC as a contract
market. If we elected in the future to provide trading and/or clearing services
for futures contracts and options on futures contracts, we would have to apply
to the CFTC for designation as a contract market. The contract market
designation process is complicated, time consuming and expensive. We cannot
assure that we could satisfy all of the regulatory requirements applicable to
obtaining designation as a contract market or predict how long the process would
take.

Contract markets must comply on an ongoing basis with numerous
regulatory requirements. Those requirements currently include submitting all
proposed rules and contracts, and proposed changes to existing rules and
contracts, to the CFTC for prior review and approval, implementing and enforcing
disciplinary rules and submitting reports to the CFTC on, among other things,
trading volume, open contracts and prices.

The CFTC has never determined whether some or all swap agreements are
futures contracts. Nevertheless, depending on the type of trading and/or
clearing services that we elected in the future to provide for swap agreements,
we may need to request an exemption from the CFTC from the requirement that
futures contracts and options on futures contracts only be traded on a
CFTC-designated contract market. The CFTC is under no obligation to reach a
decision within a certain period or to grant an exemption.

Future regulatory changes also could affect our operations. Pending
regulatory proposals, if they become law, may remove some of the obstacles to
our providing trading and/or clearing services for swap agreements involving
telecommunications products. Some of those proposals still would subject
possible future services to CFTC regulation. We are unable to predict at this
time, however, whether pending regulatory proposals, if enacted, would have an
affect on our ability to offer trading and/or clearing services for swap
agreements, futures contracts and options on futures contracts involving
telecommunications products.

WE ARE DEPENDENT ON THE CONTINUED GROWTH OF ONLINE COMMERCE AND THE ACCEPTANCE
BY USERS OF THE INTERNET AS A MEANS FOR TRADING EXCESS BANDWIDTH AND MINUTES.

Our future revenues and profits are substantially dependent upon the
widespread acceptance and use of the Internet and online services as an
effective medium of commerce by businesses. Rapid growth in the use of and
interest in the Internet and online services is a recent phenomenon, and there
can be no assurance that acceptance and use will continue to develop or that a
sufficiently broad base of businesses or customers will adopt, and continue to
use, the Internet and online services as a medium of commerce.

Demand and market acceptance for recently introduced services and
products over the Internet are subject to a high level of uncertainty. We will
rely on customers who have historically used traditional offline means of
commerce to buy and sell excess telecommunications bandwidth and minutes. For us
to be successful, these customers must accept and utilize novel ways of
conducting business and exchanging information over the Internet.

Critical issues concerning the commercial use of the Internet, such as
ease of access, security, reliability, cost and quality of service, remain
unresolved and may affect the growth of Internet use or the attractiveness of
conducting commerce online. In addition, the Internet and online services may
not be accepted as a viable commercial marketplace for a number of reasons,
including potentially inadequate development of the necessary network
infrastructure or delayed development of enabling technologies and performance
improvements. To the extent that the Internet and online services continue to
experience significant growth, there can be no assurance that the infrastructure
of the Internet and online services will prove adequate to support increased
user demands. In addition, the Internet or online services could lose their
viability due to delays in the development or adoption of new standards and
protocols required to handle increased levels of Internet or online service
activity. Changes in or insufficient availability of telecommunications services
to support the Internet or online services also could result in slower response
times and adversely affect usage of the Internet and online services generally
and us in particular. If use of the Internet and online services does not
continue to grow or grows more slowly than expected, if the infrastructure for
the Internet and online services does not effectively support growth that may
occur, or if the Internet and online services do not become a viable commercial
marketplace, we would be materially adversely affected.

5
<PAGE> 9

WE FACE ONLINE COMMERCE SECURITY RISKS.

We rely on encryption and authentication technology licensed from third
parties to provide the security and authentication necessary to effect secure
transmission of confidential information, such as bank account or credit
information. There can be no assurance that advances in computer capabilities,
new discoveries in the field of cryptography, or other events or developments
will not result in a compromise or breach of the algorithms used by us to
protect transaction data. Any compromise of our security could have a material
adverse effect on us and our reputation. A party who is able to circumvent our
security measures could misappropriate proprietary information or cause
interruptions in our operations. We may be required to expend significant
capital and other resources to protect against such security breaches or to
alleviate problems caused by such breaches. To the extent that our activities or
those of third party contractors involve the storage and transmission of
proprietary information, such as bank account or credit information, security
breaches could damage our reputation and expose us to a risk of loss or
litigation and possible liability which could have a material adverse impact on
our business and results of operations.

OUR OPERATING RESULTS COULD BE IMPAIRED IF WE ARE OR BECOME SUBJECT TO
BURDENSOME GOVERNMENTAL REGULATION OF ONLINE COMMERCE.

We are not currently subject to direct regulation by any domestic or
foreign governmental agency, other than regulations applicable to businesses
generally, including e-commerce companies. However, due to the increasing
popularity and use of the Internet and other online services, it is possible
that a number of laws and regulations may be adopted with respect to the
Internet or other online services covering issues such as:

- user privacy,

- pricing,

- content,

- copyrights,

- distribution, and

- characteristics and quality of products and services.

The adoption of any additional laws or regulations may decrease the
growth of the Internet or other online services, which could, in turn, decrease
the demand for our products and services and increase our cost of doing
business, or otherwise have an adverse effect on our business and results of
operations. Moreover, the applicability to the Internet and other online
services of existing laws in various jurisdictions governing issues such as
property ownership, sales and other taxes and personal privacy is uncertain and
may take years to resolve.

We plan to facilitate transactions between numerous customers residing
in various states and foreign countries, and such jurisdictions may claim that
we are required to qualify to do business as a foreign corporation in each such
state and foreign country. Our failure to qualify as a foreign corporation in a
jurisdiction where it is required to do so could subject us to taxes and
penalties. Any new legislation or regulation, the application of laws and
regulations from jurisdictions whose laws do not currently apply to our business
or the application of existing laws and regulations to the Internet and other
online services could have a material adverse effect on our business and results
of operations.

6
<PAGE> 10

WE MAY FACE LIABILITY FOR INFORMATION RETRIEVED FROM OUR WEBSITE.

Due to the fact that material may be downloaded from our website and
subsequently distributed to others, there is a potential that claims may be made
against us for negligence, copyright or trademark infringement or other theories
based on the nature and content of such material. Although we carry general
liability insurance, our insurance may not cover potential claims of this type
or may not be adequate to cover all costs incurred in defense of potential
claims or to indemnify us for all liability that may be imposed. Any costs or
imposition of liability that is not covered by insurance or in excess of
insurance coverage could have a material adverse effect on our business and
results of operations.

WE ARE AT RISK OF CAPACITY CONSTRAINTS AND FACE SYSTEM DEVELOPMENT RISKS.

The satisfactory performance, reliability and availability of our online
exchange and the related network infrastructure are critical to our reputation
and our ability to attract and retain users and maintain adequate customer
service levels. Our revenues depend on the number of users of our online
exchange and the volume of trading that the exchange facilitates. Any system
interruptions that result in the unavailability of our website or reduced
performance of the online exchange could reduce the volume of bandwidth traded
and the attractiveness of our website as a means for such trading.

As a start-up venture, we expect to experience system interruptions,
which may continue to occur from time to time. There may be a significant need
to upgrade the capacity of our website in order to handle thousands of
simultaneous users and transactions. Our inability to add additional software
and hardware or to develop and upgrade further our existing technology,
transaction-processing systems or network infrastructure to accommodate
increased traffic on our online bandwidth exchange or increased trading volume
through our online trading or transaction-processing systems may cause
unanticipated system disruptions, slower response times, degradation in levels
of customer service and impaired quality and speed of trade processing, any of
which could have a material adverse effect on our business and results of
operations.

OUR BUSINESS AND OPERATIONS WOULD SUFFER IN THE EVENT OF SYSTEM FAILURES.

Our ability to successfully facilitate bandwidth trades and provide
high-quality customer service, largely depends on the efficient and
uninterrupted operation of our computer and communications hardware systems. Our
systems and operations are vulnerable to damage or interruption from fire,
flood, power loss, telecommunications failure, break-ins, earthquake and similar
events. We do not have a formal disaster recovery plan and carry only limited
business interruption insurance to compensate us for losses that may occur.
Despite the implementation of network security measures, our servers are
vulnerable to computer viruses, physical or electronic break-ins and similar
disruptions, which could lead to interruptions, delays, loss of data or the
inability to accept and fulfill customer orders. In addition, we rely on online
trading software developed by third parties. Disruptions or failures in the
online trading software systems, or the occurrence of any of the other foregoing
system disruptions, could have a material adverse effect on our business and
results of operations.

IF WE DO NOT RESPOND EFFECTIVELY TO TECHNOLOGICAL CHANGE, OUR SERVICE COULD
BECOME OBSOLETE AND OUR BUSINESS WILL SUFFER.

To remain competitive, we must continue to enhance and improve the
responsiveness, functionality and features of our online exchange. The Internet
and the online commerce industry are characterized by rapid technological
change, changes in user and customer requirements and preferences, frequent new
product and service introductions embodying new technologies and the emergence
of new industry standards and practices that could render our existing online
exchange and proprietary technology and systems obsolete. Our success will
depend, in part, on our ability to license leading technologies useful in our
business, enhance our existing services, develop new services and technology
that address the increasingly sophisticated and varied needs of our prospective
customers, and respond to technological advances and emerging industry standards
and practices on a cost-effective and timely basis.

The development of the online exchange and other proprietary technology
entails significant technical and business risks. There can be no assurance that
we will successfully use new technologies effectively or adapt our online
exchange and proprietary technology to user requirements or emerging industry
standards. Our failure to

7
<PAGE> 11

adapt in a timely manner for technical, legal, financial or other reasons, to
changing market conditions or customer requirements, could have a material
adverse effect on our business and results of operations.

IF WE DO NOT EFFECTIVELY MANAGE GROWTH, OUR ABILITY TO PROVIDE TRADING SERVICES
WILL SUFFER.

To manage the expected growth of our operations and personnel, we will
be required to improve existing and implement new transaction-processing,
operational and financial systems, procedures and controls, and to expand, train
and manage a growing employee base. Further, we will be required to maintain and
expand our relationships with various hardware and software vendors, Internet
and other online service providers and other third parties necessary to our
business. If we are unable to manage growth effectively, we will be materially
adversely affected.

WE NEED TO RETAIN AND HIRE QUALIFIED PERSONNEL TO SUSTAIN OUR BUSINESS.

We are currently managed by a small number of key management and
operating personnel. We do not maintain "key man" insurance on any employee. Our
future success depends, in part, on the continued service of our key executive,
management and technical personnel, many of whom have only recently been hired,
and our ability to attract highly skilled employees. If any key officer or
employee were unable or unwilling to continue in his or her present position,
our business could be harmed. From time to time we have experienced, and we
expect to continue to experience, difficulty in hiring and retaining highly
skilled employees. Competition for employees in our industry is intense,
particularly in the San Francisco Bay Area where we are located. If we are
unable to retain our key employees or attract, assimilate or retain other highly
qualified employees in the future, that may have a material adverse effect on
our business and results of operations.

OUR SUCCESS IS DEPENDENT ON OUR ABILITY TO PROTECT OUR INTELLECTUAL PROPERTY.

Our performance and ability to compete is dependent on our proprietary
technology, including, but not limited to, the design of our online exchanges
and delivery hubs. We regard our copyrighted material, trade secrets and similar
intellectual property as critical to our success, and we rely on trademark and
copyright law, trade secret protection and confidentiality and/or license
agreements with our employees, customers, partners and others to protect our
proprietary rights. There can be no assurance that we will be able to secure
significant protection for any of our intellectual property. It is possible that
our competitors or others will adopt product or service names similar to our
marks, thereby inhibiting our ability to build brand identity and possibly
leading to customer confusion.

We generally have entered into agreements containing confidentiality and
non-disclosure provisions with our employees and consultants and limited access
to and distribution of our software, documentation and other proprietary
information. There can be no assurance that the steps taken by us will prevent
misappropriation of our technology or that agreements entered into for that
purpose will be enforceable. Notwithstanding the precautions we have taken, it
might be possible for a third party to copy or otherwise obtain and use our
software independently. Policing unauthorized use of our technology is
difficult, particularly because the global nature of the Internet makes it
difficult to control the ultimate destination or security of software or other
data transmitted. The laws of other countries may afford us little or no
effective protection of our intellectual property.

Effective trademark, service mark, copyright and trade secret protection
may not be available in every country where our services are made available
online. In the future, we may also need to file lawsuits to enforce our
intellectual property rights, protect our trade secrets and determine the
validity and scope of the proprietary rights of others. Such litigation, whether
successful or unsuccessful, could result in substantial costs and diversion of
resources, which could have a material adverse effect on our business and
results of operations.

WE MAY NOT BE ABLE TO SECURE LICENSES FOR TECHNOLOGY FROM THIRD PARTIES ON
COMMERCIALLY REASONABLE TERMS.

We rely on a variety of software and hardware technologies that we
license from third parties, including our database and Internet server software,
components of our online trading software and transaction-processing software
which is used in our online exchange to perform key functions. There can be no
assurance that these third-party technology licenses will continue to be
available to us on commercially reasonable terms. The loss of our ability to
maintain or obtain upgrades to any of these technology licenses could result in
delays in completing our proprietary software enhancements and new developments
until equivalent technology could be identified,

8
<PAGE> 12

licensed or developed and integrated. Any such delays could have a material
adverse impact on our business and results of operations.

WE EXPECT TO NEED ADDITIONAL CAPITAL IN THE FUTURE AND IT MAY NOT BE AVAILABLE
ON ACCEPTABLE TERMS.

We anticipate incurring substantial costs in developing, operating and
maintaining the online exchange and in implementing the objectives of our
business plan. We may need significant amounts of working capital for
infrastructure, software development, marketing, personnel, general and
administrative costs, and to fund losses prior to achieving profitability.

We may need to raise additional funds through additional equity and/or
debt financings to meet our capital requirements. We may need to raise
additional funds if we have underestimated our capital needs or if we incur
unexpected expenses. There can be no assurance that such financings will be
available in amounts or on terms acceptable to us, if at all. Further, our lack
of tangible assets to pledge could prevent us from establishing a source of
financing. The inability to raise all needed funding would adversely affect our
ability to successfully implement the objectives of our business plan.

THE VOLATILITY OF OUR SECURITIES PRICES MAY INCREASE.

The market price of our common stock has in the past been, and may in
the future continue to be, volatile. A variety of events may cause the market
price of our common stock to fluctuate significantly, including:

- adverse news announcements,

- the introduction of new products and services,

- market conditions in the telecommunications industry in general,
Internet-based services and business-to-business e-commerce,

- quarter-to-quarter variations in operating results, and

- general market conditions.

In addition, the stock market in recent years has experienced
significant price and volume fluctuations that have particularly affected the
market prices of equity securities of many companies in our business and that
often have been unrelated to the operating performance of such companies. These
market fluctuations may adversely impact the price of our common stock.

WE MAY BE REQUIRED TO ISSUE STOCK IN THE FUTURE THAT WILL DILUTE THE VALUE OF
OUR EXISTING STOCK.

We have a significant number of outstanding options and warrants. The
exercise of all of the outstanding options and warrants would dilute the
then-existing stockholders' percentage ownership of our common stock. Any sales
resulting from exercise of options and warrants in the public market could
adversely affect prevailing market prices for our common stock. Moreover, our
ability to obtain additional equity capital could be adversely affected since
the holders of outstanding options and warrants will likely exercise the options
and warrants when we would also wish to enter the market to obtain capital on
terms more favorable than those provided by these securities. We lack control
over the timing of any exercise or the number of shares issued or sold if
exercises occur.

CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that address
numerous matters, including the following:

- trends we believe may affect our business, financial condition or
results of operations,

- factors that determine demand for our products,

- advantages we believe will help us compete effectively,

9
<PAGE> 13

- our strategies concerning the expansion of our operations, and

- our plans to restructure ourselves to refocus our business strategy
on the continued development and expansion of the operations of our
subsidiary, RateXchange I, Inc.

In some cases you can identify forward-looking statements by terminology
including "believes," "anticipates," "expects," "estimates," "may," "should,"
"could," "plans," "predicts," "potential," "continue" or similar terms.

Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. The forward-looking statements
involve known and unknown risks, uncertainties and other factors that may cause
actual results to be materially different from any future results expressed or
implied by the forward-looking statements. These factors include those listed
under "Risk Factors" and elsewhere in this prospectus. All forward-looking
statements contained in this prospectus are expressly qualified in their
entirety by this cautionary notice.

USE OF PROCEEDS

We will not receive any proceeds from the sale of any shares offered by
this prospectus. We may, however, receive proceeds when the selling stockholders
pay to exercise their warrants and/or options. Selling stockholders are not
obligated to exercise their warrants or options, and there can be no assurance
that they will choose to exercise all or any of these warrants or options. Our
gross proceeds, assuming all warrants and options are exercised for cash, would
be $31,641,342. However, we are unable to predict the exact amount of cash we
will receive upon exercise of the warrants because some warrants have a cashless
exercise provision which allows the holder to pay for the warrant by reducing
the number of shares received upon exercise. We will use any proceeds we receive
for the exercise of warrants and options to augment our working capital for
general corporate purposes.

10
<PAGE> 14

SELLING STOCKHOLDERS

The table below lists the selling stockholders and other information
regarding the beneficial ownership of our common stock by each of the selling
stockholders. This prospectus relates to a total of 6,638,105 shares of common
stock, 2,865,043 of which are not currently outstanding, but may be acquired by
the selling stockholders upon exercise of outstanding options and/or warrants
held by individual stockholders. The first column provides the name of each
selling stockholder and describes the stockholder's position, office or other
material relationship with RateXchange, if any, as well as any other material
relationship the stockholder has had within the past three years with
RateXchange, its predecessors or any affiliate. The second column lists the
number of shares of common stock beneficially owned by each selling stockholder
on May 9, 2000. The selling stockholders are offering only the shares of common
stock indicated in the third column. The fourth and fifth columns assume the
selling stockholders dispose of all the shares offered by this prospectus and
that the selling stockholders do not acquire any additional stock.

We are registering the shares for resale by the selling stockholders in
accordance with registration rights granted or offered to many of the selling
stockholders. We will pay the registration and filing fees, printing expenses,
listing fees, blue sky fees, if any, and fees and disbursements of our counsel,
but the selling stockholders will pay any underwriting discounts, selling
commissions and similar expenses relating to the sale of the shares. In
addition, we have agreed to indemnify certain selling stockholders, as well as
certain affiliated parties, against specific liabilities, including liabilities
under the Securities Act, in connection with this offering. Those selling
stockholders we have agreed to indemnify have agreed to indemnify us and our
directors and officers, as well as any person that controls us, against specific
liabilities, including liabilities under the Securities Act.

The information provided in the table below has been obtained from the
selling stockholders. To our knowledge, the selling stockholders have sole
voting and investment power with respect to these securities, except as
otherwise indicated in the first column. The selling stockholders may sell all,
some or none of their shares in this offering.

11
<PAGE> 15

<TABLE>
<CAPTION>
Shares Maximum Shares Beneficially
Beneficially Number of Owned after
Owned Shares to be Offering (assuming Percentage of Common
Name of Selling Stockholder and Material Prior to Sold in all shares offered Stock Beneficially
Relationship, if any, with RateXchange Offering Offering are actually sold) Owned after Offering
-------------------------------------- -------- -------- ------------------ --------------------
<S> <C> <C> <C> <C>
Counterpoint Master L.L.C 237,500 237,500 0 *
Andrew Brown shares voting and
disposition power over the securities
held by this stockholder and offered
pursuant to this prospectus
Cypress VI Partners 12,500 12,500 0 *
Leonard Eber, as Managing Partner for
the Eber Family Living Trust and the
Eber Family Trusts Numbered One
through Four, shares voting and
disposition power over the securities
held by this stockholder and offered
pursuant to this prospectus
Donaghy Sales, Inc. 23,000 21,000 2,000 *
Gruber & McBain Capital Management
L.L.C. shares voting and disposition
power over the securities held by this
stockholder and offered pursuant to this
prospectus
Edward O. Thorp & Associates, L.P. 12,500 12,500 0 *
Elbaz, Elliott S. 11,250 11,250 0 *
Ellis, Ian P. 6,250 6,250 0 *
First Security Van Kasper 564,020 564,020 0 *
Placement Agent for RateXchange I,
Inc. January 2, 2000 Bridge Loan; Co-
Underwriter for RateXchange
Corporation March 2000 Private
Placement; D. Jonathan Merriman,
Senior Managing Director of First
Security Van Kasper, is a Director of
RateXchange Corporation
Five Points Fund, L.P. 75,000 75,000 0 *
Five Points Offshore Fund, Ltd. 50,000 50,000 0 *
Forsythe McArthur Associates, Inc. 69,500 69,500 0 *
Lessor of RateXchange
Gerard, Klauer, Mattison & Co., Inc. 3,975 3,975 0 *
Placement Agent for RateXchange I,
Inc. January 2, 2000 Bridge Loan
Germanotta, Joe 2,852 2,852 0 *
Former Consultant to RateXchange
Gilston Corporation, Ltd. 31,250 31,250 0 *
Golby, Wesley 4,500 4,500 0 *
Grange, Richard C 84,404 84,404 0 *
Former Director of predecessor of
RateXchange I, Inc.
Gruber Family Foundation 11,418 11,418 0 *
Gruber & McBain Capital Management
L.L.C. shares voting and disposition
power over the securities held by this
stockholder and offered pursuant to this
prospectus
Gruber-McBaine International 121,282 112,782 8,500 *
Gruber & McBain Capital Management
L.L.C. shares voting and disposition
power over the securities held by this
stockholder and offered pursuant to this
</TABLE>

12
<PAGE> 16

<TABLE>
<CAPTION>
Shares Maximum Shares Beneficially
Beneficially Number of Owned after
Owned Shares to be Offering (assuming Percentage of Common
Name of Selling Stockholder and Material Prior to Sold in all shares offered Stock Beneficially
Relationship, if any, with RateXchange Offering Offering are actually sold) Owned after Offering
-------------------------------------- -------- -------- ------------------ --------------------
<S> <C> <C> <C> <C>
prospectus
Grunewald, Brad K 73,601 73,601 0 *
Guarantee & Trust Company TTEE FBO, 12,500 12,500 0 *
Paul Dwork Sep IRA
Hare & Co. 651653 (Hamilton College) 17,351 17,351 0 *
Gruber & McBain Capital Management
L.L.C. shares voting and disposition
power over the securities held by this
stockholder and offered pursuant to this
prospectus
Hare & Co. 705286 (L-3 Communications 7,784 5,784 2,000 *
Corp.)
Gruber & McBain Capital Management
L.L.C. shares voting and disposition
power over the securities held by this
stockholder and offered pursuant to this
prospectus
Hart, Patti S. and Milledge A 12,500 12,500 0 *
Hicks, Ian and Anna 20,000 10,000 10,000 *
Hilspen Capital Partners 4,350 4,350 0 *
Hilspen Capital Partners, II 24,750 24,750 0 *
Intercoastal Financial Services Corp. 100,000 100,000 0 *
Irvine Capital Partners, II LP 25,000 25,000 0 *
The Kaufmann Fund 62,500 62,500 0 *
Kensington Partners, L.P. 9,687 9,687 0 *
Kensington Partners II, L.P. 563 563 0 *
Kingdon Associates 37,500 37,500 0 *
Kingdon Family Partnership, L.P. 9,375 9,375 0 *
Kingdon Partners 23,750 23,750 0 *
Lagunitas Partners, L.P. 238,882 225,882 13,000 *
Gruber & McBain Capital Management
L.L.C. shares voting and disposition
power over the securities held by this
stockholder and offered pursuant to this
prospectus
Liberty-Stein Roe Small Company Growth 12,500 12,500 0 *
Fund
Maroon Bells Capital Partners 1,800,844 453,375 1,302,469 6.42%
Significant Stockholder and Party to
Financial Advisory Agreement with
RateXchange Corporation
Mayfield, Ross 230,738 16,675 214,063 1.04%
Executive Officer of RateXchange
Corporation
Mehra, Raj 1,250 1,250 0 *
Metzman, Mitch A 12,500 12,500 0 *
MJE Partners 6,250 6,250 0 *
M. Kingon Offshore, N.V. 179,375 179,375 0 *
Mooney, Edward 576,667 100,000 476,667 2.34%
Former Executive Officer and Director
</TABLE>

13
<PAGE> 17

<TABLE>
<CAPTION>
Shares Maximum Shares Beneficially
Beneficially Number of Owned after
Owned Shares to be Offering (assuming Percentage of Common
Name of Selling Stockholder and Material Prior to Sold in all shares offered Stock Beneficially
Relationship, if any, with RateXchange Offering Offering are actually sold) Owned after Offering
-------------------------------------- -------- -------- ------------------ --------------------
<S> <C> <C> <C> <C>
of RateXchange Corporation,
Currently a consultant to RateXchange;
Party to Severance Agreement with
RateXchange
New-Day Investment Partnership, L.P. 12,500 12,500 0 *
North Olmsted Partners, LP 12,500 12,500 0 *
Omni Resources, LLC 12,500 12,500 0 *
Ozada, Erinch R 6,250 6,250 0 *
Park Avenue Cons. Group 116,522 116,522 0 *
Pequot Scout Fund, L.P. 250,001 250,001 0 *
Pequot Capital Management, Inc., as
investment advisor to this stockholder,
shares voting and disposition power
over the securities held by this
stockholder and offered pursuant to this
prospectus
Phaeton, B.V.I 49,625 49,625 0 *
Phoenix Partners, L.P. 51,250 51,250 0 *
Pilgrim Baxter Hybrid Partners I, L.P. 112,500 112,500 0 *
Pilgrim Baxter & Assoc., Ltd., as
investment advisor to this stockholder,
shares voting and disposition power
over the securities held by this
stockholder and offered pursuant to this
prospectus
Pilgrim Baxter Hybrid Partners II, L.P. 12,501 12,501 0 *
Pilgrim Baxter & Assoc., Ltd., as
investment advisor to this stockholder,
shares voting and disposition power
over the securities held by this
stockholder and offered pursuant to this
prospectus
Poe, Fred W 25,000 25,000 0 *
Prism Partners I, L.P. 75,000 52,500 22,500 *
Prism Partners II Offshore Fund 75,000 15,000 60,000 *
Prism Partners Offshore Fund 75,000 7,500 67,500 *
Quantum Partners LDC 500,000 500,000 0 *
Soros Fund Management LLC, as Principal
Investment Manager to this stockholder,
shares voting and disposition power over
the securities held by this stockholder
and offered pursuant to this prospectus
Raptor Global Portfolio Ltd. 186,665 186,665 0 *
Rawitser, Michael 12,500 12,500 0 *
</TABLE>

14
<PAGE> 18

<TABLE>
<CAPTION>
Shares Maximum Shares Beneficially
Beneficially Number of Owned after
Owned Shares to be Offering (assuming Percentage of Common
Name of Selling Stockholder and Material Prior to Sold in all shares offered Stock Beneficially
Relationship, if any, with RateXchange Offering Offering are actually sold) Owned after Offering
-------------------------------------- -------- -------- ------------------ --------------------
<S> <C> <C> <C> <C>
Retirement Plan of Space Systems/Loral Inc. 5,784 5,784 0 *
- Kane & Co. P51455
Gruber & McBain Capital Management
L.L.C. shares voting and disposition
power over the securities held by this
stockholder and offered pursuant to this
prospectus
Rice, Philip 27,500 12,500 15,000 *
Executive Officer of RateXchange
Corporation
Robb, Larry F 215,625 93,750 121,875 *
Rogers, Malcolm 808,000 43,000 765,000 3.75%
Significant Stockholder
Janet L. Rogers shares voting and
disposition power over the securities
held by this stockholder and offered
pursuant to this prospectus
Scheele, Michael J. 381,313 121,313 260,000 1.27%
Consultant to RateXchange
Corporation
Schottenfeld Associates, LP 62,500 62,500 0 *
Schow Family Trust 119,250 119,250 0 *
Sidana, Annupreet 11,250 11,250 0 *
Smith, Raymond M.; IRA Rollover 31,250 31,250 0 *
Custodian
Special Situations Cayman Fund, L.P. 81,250 81,250 0 *
Special Situations Fund III, L.P. 275,000 275,000 0 *
Special Situations Private Equity Fund, L.P. 81,250 81,250 0 *
Special Situations Technology Fund, L.P. 62,500 62,500 0 *
Spirit Fund, Ltd. 25,000 25,000 0 *
Stein Roe Variable Investment Trust Small 37,500 37,500 0 *
Company Growth, Var Series
Suyama, Roger, Pacific Century 12,500 12,500 0 *
Swindells, Theodore 1,900,844 45,000 1,402,469 6.92%
The Timken Living Trust U/A/D 9/14/99 62,500 62,500 0 *
Tirman Family Limited Partnership 18,750 18,750 0 *
Geoffrey Tirman, General Partner of
Tirman Family Limited Partnership,
shares voting and disposition power
over the securities held by this
stockholder and offered pursuant to this
prospectus
Tonga Partners, LP 31,250 31,250 0 *
Cannell Capital Management shares
voting and disposition power over the
securities held by this stockholder and
offered pursuant to this prospectus
Trinity Fund, Ltd. 100,000 100,000 0 *
VICD Bipod & Co. 3,099 3,099 0 *
(AIM Variable Insurance Funds, Inc. on
</TABLE>

15
<PAGE> 19

PLAN OF DISTRIBUTION

The selling stockholders (or, subject to applicable law, their pledgees,
donees, distributees, transferees or other successors in interest) may sell all
or portions of the shares from time to time while the registration statement of
which this prospectus is a part remains effective. The selling stockholders may
sell shares in public transactions, on or off the American Stock Exchange or any
exchange with which we register or in private transactions. The selling
stockholders may sell the shares at any price and in different types of
transactions including, but not limited to, one or any combination of the
following:

- ordinary brokers transactions and transactions in which the broker
solicits purchasers,

- transactions involving cross or block trades or otherwise,

- purchases by brokers, dealers or underwriters as principals and
resale by such purchasers for their own accounts pursuant to this
prospectus,

- "at the market" to or through market makers or into an existing
market for the common stock,

- in other ways not involving market makers or established trading
markets, including direct sales to purchasers or sales effected
through agents, or

- in privately negotiated transactions.

Selling stockholders may also sell shares pursuant to Rule 144 of the Securities
Act, if available.

Sales of the shares at less than market prices may depress the market
price of our common stock. Moreover, generally the selling stockholders are not
restricted as to the number of shares which may be sold at any one time, and it
is possible that a significant number of shares could be sold at the same time.

16
<PAGE> 20

In effecting sales, brokers or dealers engaged by the selling
stockholders may arrange for other brokers or dealers to participate in the
resales. The selling stockholders may enter into hedging transactions with
broker-dealers or other financial institutions, and in connection with those
transactions, the broker-dealers or other financial institutions may engage in
short sales of the shares. The selling stockholders also may sell shares short
and deliver the shares to close out such short positions. The selling
stockholders also may enter into option or other transactions with
broker-dealers or other financial institutions that require the delivery to the
broker-dealers or other financial institutions of the shares, which the
broker-dealers or other financial institutions may resell pursuant to this
prospectus.

Broker-dealers may agree with the selling stockholders to sell a
specified number of shares at a stipulated price per share and, to the extent
such broker-dealers are unable to do so acting as agents for the selling
stockholders, to purchase as principals any unsold shares at the price required
to fulfill the broker-dealers' commitments to the selling stockholders.
Broker-dealers who acquire shares as principals may thereafter resell such
shares from time to time in transactions (which may involve block transactions
and sales to and through other broker-dealers, including transactions of the
nature described above) in the over-the-counter market or otherwise at prices
and on terms then prevailing at the time of the sale, at prices then related to
the then-current market price or in negotiated transactions and, in connection
with such resales, may pay to or receive from the purchasers of such shares
commissions as described above. The selling stockholders also may pledge the
shares to broker-dealers or other financial institutions, and upon a default,
the broker-dealers or other financial institutions may effect sales of the
pledged shares pursuant to this prospectus.

Brokers, dealers or agents may receive compensation in the form of
commissions, discounts or concessions from the selling stockholders or
purchasers in amounts to be negotiated in connection with the sale. The selling
stockholders and any participating brokers or dealers may be deemed
"underwriters" within the meaning of the Securities Act in connection with such
sales, and any such commission, discount or concession may be deemed
underwriting compensation.

Information as to whether any underwriter that the selling stockholders
may select, or any other broker-dealers, are acting as principals or agents for
the selling stockholders, the compensation to be received by any underwriters
that the selling stockholders may select or by any broker-dealers acting as
principals or agents for the selling stockholders, and the compensation to be
paid to other broker-dealers, in the event the compensation of such other
broker-dealers is in excess of usual and customary commissions, will, to the
extent required, be set forth in a supplement to this prospectus. Any
broker-dealers participating in any distribution of the shares may be required
to deliver a copy of this prospectus, including a prospectus supplement, if any,
to any person who purchases any of the shares from or through such
broker-dealers.

During any time that the selling stockholders are engaged in a
distribution of the shares, the selling stockholders will be required to comply
with the Exchange Act. With certain exceptions, the Exchange Act precludes the
selling stockholders, any affiliated purchasers and any broker-dealers or other
persons who participate in such distribution from bidding for or purchasing, or
attempting to induce any person to bid for or purchase any security that is the
subject of the distribution until the entire distribution is complete. The
Exchange Act also prohibits any bids or purchases made in order to stabilize the
price of a security in connection with the distribution of that security. All of
the foregoing may affect the marketability of the common stock.

To comply with certain states' securities laws, if applicable, the
shares may be sold in any such jurisdictions only through registered or licensed
brokers or dealers. The shares may not be sold in certain states unless the
seller meets the applicable state notice and filing requirements.

DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED

DESCRIPTION OF CAPITAL STOCK

The authorized common stock of the Company consists of 300,000,000
shares, $.0001 par value per share, of which 17,411,174 were outstanding on July
18, 2000. The outstanding shares of common stock are validly issued, fully paid
and non-assessable.

17
<PAGE> 21

Dividends

Holders of the common stock are entitled to receive dividends, when, and
as, declared by our Board of Directors out of funds available therefore. Any
such dividends may be paid in cash, property or shares of the common stock.

Voting Rights

Each holder of common stock is entitled to one vote per share on all
matters submitted to the vote of stockholders, including the election of
directors. Holders of common stock do not have cumulative voting rights. The
absence of cumulative voting means that the holders of more than 50% of the
shares voting for the election of directors can elect all directors if they so
choose. The affirmative vote of a majority of a quorum of stockholders is
required for approval of all other items. A majority of the shares issued and
outstanding and entitled to vote, represented in person or by proxy, constitutes
a quorum at a meeting of stockholders.

Preemption, Conversion, Redemption and Sinking Funds

Holders of common stock have no preemptive or conversion rights, no
redemption or sinking fund provisions and are not liable to further call or
assessment.

Liquidation Rights

Holders of common stock are entitled to share ratably in any assets
available for distribution to holders of the Company's equity securities upon
liquidation of the Company.

Authorization of Preferred Stock

In April 2000, our shareholders approved an amendment to our Certificate
of Incorporation, authorizing the issuance of up to 60,000,000 shares of "blank
check" preferred stock. The term "blank check" preferred stock refers to stock
for which the designations, preferences, rights, qualifications, limitations and
restrictions thereof are determined by the Board of Directors. The authorization
of new shares of preferred stock will not, by itself, have any effect on the
rights of the holders of shares of common stock. Nonetheless, the issuance of
the preferred stock could affect the holders of common stock in a number of
respects, including: (i) if voting rights are granted to holders of preferred
stock, the voting power of holders of common stock will be diluted, (ii) the
issuance of preferred stock may result in a dilution of earnings per share of
the common stock, (iii) dividends payable on the preferred stock will reduce the
amount of funds available for payment of dividends on the common stock, and (iv)
future amendments to the Certificate of Incorporation affecting holders of
preferred stock may require approval by the separate vote of these shareholders
(in addition to the approval of the holders of shares of the common stock)
before we can take any action.

BUSINESS

OVERVIEW

We are a pioneer in the development of business-to-business e-commerce
for the telecommunications industry. We are a development stage company seeking
to develop new transaction services for the estimated $1 trillion international
market for telecommunications services. We focus on developing, operating and
maintaining liquid, efficient and automated online market services to trade
bandwidth and other telecommunications products. In February 2000, we announced
the launch of the RateXchange Real-Time Bandwidth eXchange. We believe RTBX is
the first online exchange specializing in telecommunication bandwidth as a
tradeable commodity. During June 2000, we also announced the commencement of
another service called RateXchange CustomAuctions for buying and selling of
other telecommunications products and services.

18
<PAGE> 22

GENERAL DEVELOPMENT OF BUSINESS

The Company was originally incorporated as Venture World, Ltd. on May 6,
1987, under the laws of the State of Delaware for the purpose of developing or
acquiring general business opportunities. We had no material operations from
1992 to 1998.

On September 30, 1998, we acquired PolarCap, Inc. As a result of this
acquisition, PolarCap became our wholly owned subsidiary. PolarCap is a
California corporation that was organized in April 1997 for the purpose of
investing in and developing rights to a variety of software technologies related
to multimedia, development tools and applications technologies.

In September 1998, in connection with our strategy to acquire and
consolidate Internet Service Providers, we also entered into an agreement with
NetAmerica, Inc., a Washington corporation, pursuant to which we agreed to
purchase the outstanding stock of Net America, Inc. Net America, Inc.
subsequently agreed to be renamed A1 Internet, Inc. and agreed to assign and
transfer to us all of its right, title and interest in the name "Net America."
We determined in March 1999 that it was not in our best interest to complete the
purchase of A1 Internet's stock after A1 Internet acknowledged that certain
representations made to us were inaccurate. Consequently, on March 16, 1999, we
entered into an agreement with A1 Internet to abandon the stock purchase and
settle our differences.

In 1999, we changed the name of the Company to NetAmerica.com
Corporation. Shortly thereafter, we incorporated Telenisus Corporation, a
Delaware corporation, as one of our wholly owned subsidiaries. Telenisus is a
development stage company that is seeking to become a single source provider of
secure and reliable Internet-based business-to-business services to corporate
customers, carriers, ISPs and marketers of telecommunications services. Through
acquisitions and internal business development, Telenisus seeks to develop a
full suite of Internet and data network management tools that will enable
customers to increase productivity, to reduce costs and to access a wide range
of Internet, e-commerce, security and communication applications from a one-stop
network service delivery provider.

On or about November 3, 1999, Telenisus announced the closing of its
first independent private placement financing. The common stock issued in this
financing, together with stock issued in a Telenisus-subsidiary acquisition,
reduced our percentage ownership interest in Telenisus to less than 10%.
Telenisus used the proceeds of the financing to expand its management team and
to accelerate development of its four service families: virtual private
networks, managed firewall/security services, Web site and application hosting
and e-commerce. Telenisus is focused on delivering its business Internet
solutions to large and mid-sized corporate customers.

On July 6, 1999, we acquired 100% of the outstanding stock of Rate
Exchange, Inc., a Colorado corporation, through a merger into RateXchange I,
Inc., our wholly owned Delaware subsidiary. The Delaware subsidiary was the
surviving entity. We paid 574,998 shares of common stock and $450,000 in a note
that was due one year from the date of closing. This note is now fully paid. On
July 23, 1999, RateXchange I, Inc. entered into an agreement with a consultant
for market development expertise as applied to the telecommunications market. In
exchange for these services, RateXchange I agreed to issue up to 10% of its
common stock based on successful completion and delivery of certain software. As
of the date of this report, no shares of RateXchange I have been issued under
the consultant agreement and the parties preliminarily have agreed to the
terms of a settlement agreement. The settlement documents are under negotiation.

On September 15, 1999, RateXchange I and Donald H. Sledge entered into
an employment agreement under which RateXchange I agreed to grant Mr. Sledge an
equity position of up to 10% of RateXchange I's outstanding stock through a
stock purchase right. RateXchange I has repurchased Mr. Sledge's equity as part
of our restructuring.

RateXchange I is a development stage business-to-business, e-commerce
company seeking to develop new transaction services for the estimated $1
trillion international market for telecommunications services. RateXchange I has
operated an Internet-based lead generation service for trading in long-distance
minutes, telephony minutes and bandwidth since January 1998.

On February 7, 2000, we announced our intention to change our name to
RateXchange Corporation and to focus our efforts on the business of RateXchange
I, Inc. As part of our restructuring, Donald H. Sledge agreed to serve as our
Chairman and CEO. On May 8, 2000, we changed our name to RateXchange
Corporation.

19
<PAGE> 23
PRODUCTS & MARKETS

We initially anticipate revenue from four sources:

- Transaction fees on trades executed through RTBX, typically
generated as commissions paid by both buyer and seller upon each
trade;

- Service fees for CustomAuctions paid by the offeror for holding an
Auction Event;

- Exchange membership fees which entitle members to trading
privileges and Web-based, premium marketplace information services;
and

- Advertising revenues from exchange members or suppliers purchasing
advertising banners for display on the RateXchange portal.

We have developed an efficient and flexible exchange platform based upon robust
and open technical architecture, proprietary intellectual property and strategic
customer relationships to facilitate business-to-business trade through our
three primary online exchange services:

<TABLE>
<CAPTION>
B2B TELECOM
EXCHANGE SERVICE PRODUCTS TRADED KEY BENEFITS TO EXCHANGE PARTICIPANTS
---------------- --------------- -------------------------------------
<S> <C> <C>
Lead Generation Minutes, VoIP - Free leads for standard products
Bandwidth, - Community-building
Co-location - Open access to real time market info

Real-Time Bandwidth Bandwidth - Anonymous trading
eXchange (RTBX) (standard - Managed credit, settlement &
increments delivery
ranging from DS1 - Spot and Forward trading
to OC-x) - Effective risk and yield management

RateXchange Blocks of - Large market of prequalified
CustomAuctions Bandwidth, competitive bidders
Minutes, Internet - Reduced time & cost of sales
Access, etc. - RateXchange contract & market
design allows specialized
transactions
</TABLE>

From inception, we have believed that inefficiencies in the global
telecommunications marketplace cost carriers (and their customers) billions of
dollars in operating costs and missed business opportunities. Due to the
explosive growth of the Internet, e-commerce and other forms of data and
bandwidth intensive transmissions and the increasingly competitive nature of
global telecommunications, we believe that participants in the
telecommunications market will increasingly seek to maximize the efficiency and
speed of their buying and selling of bandwidth and other telecommunications
products and services. Telecommunications transactions, in general, are hindered
by lack of standardized contracts and the traditional requirement to negotiate
every aspect of interconnection, delivery, quality of service, payment and
settlement terms, terms and conditions and dispute resolution. Lack of adequate,
real-time market pricing information has also resulted in many tiers of
arbitrage, which results in further market inefficiencies. While others,
including some of our competitors, have created online sites which mirror and
perpetuate this inefficient, arbitrage-based market, we believe we have created
a new paradigm which reflects the "commoditization" of bandwidth and certain
other telecommunications products and services.

In order to increase participation by buyers and sellers of
telecommunications products in this more efficient marketplace, we are
introducing an evolutionary model to educate the industry and to encourage
membership in the RateXchange portal. Since the telecommunications industry is
highly competitive and buying decisions are almost entirely based on even small
pricing differentials, we seek market entry and awareness by focusing on
acquiring and publishing real time pricing information. Our pricing indices are
regularly quoted and relied upon by industry publications and industry
professionals. We intend to use our various exchange platforms and products to
enable participants to benefit from equal, real time access to accurate pricing
information. These existing and planned exchange platforms include:

LEAD-GENERATION SERVICES (COMMENCED DECEMBER 1997)

20
<PAGE> 24

The RateXchange lead-generation service has built an online community of
capacity traders. Registration for the service is free and available to capacity
suppliers and buyers or their direct representatives. Members post bids and
offers in an electronic format and members' identities are kept anonymous. When
a member wishes to accept a bid or offer and engage in a transaction, our
traders manually introduce the parties to generate the lead. We currently
operate lead generation for basic, non-delivered products as a non-revenue
generating service to build membership and traffic to our portal and to educate
active exchange participants about the additional benefits of online trading.

REAL-TIME BANDWIDTH EXCHANGE (RTBX) (COMMENCED FEBRUARY 2000)

Deploying an online bandwidth exchange is the cornerstone of the
RateXchange business-to-business e-commerce strategy. On the RTBX, carriers and
capacity users establish memberships, adhere to terms and conditions established
by us for telecommunications performance standards and financial terms, and
trade in the exchange's multiple-user environment. To facilitate delivery of
capacity traded on our exchange, buyers and sellers interconnect facilities at
one or more of RateXchange's delivery hubs in the cities that comprise the
natural termination points for major traffic corridors. Once interconnected,
customers can buy or sell bandwidth with any other RateXchange member based on
the standardized contractual and credit terms and conditions.

CUSTOMAUCTIONS (COMMENCED JUNE 2000)

We have developed a CustomAuctions service to facilitate the trade of
products with specific product, geographic or financial requirements that are
not covered by the RTBX. CustomAuctions service benefits include:

- Providing specialized products to a large and pre-qualified market;

- Significantly reducing time and cost of the transaction;

- "Book-building" process to assure matching of supply/demand to
contract and market design; and

- Market and contract design to assure optimal price discovery in
auction events.

COMPETITIVE CONDITIONS

Products, services and geographic location define the competitive
landscape for online bandwidth trading. At this stage in the telecommunications
exchange industry's development, we believe first-mover advantage is
significant. Because participation in a real-time bandwidth exchange requires
physical connection to one of the exchange's interconnection locations, once a
carrier is connected, the cost of moving operations to a new exchange will be
significant. In addition, building a critical mass of connected carriers creates
a network effect, with each new connection enhancing the value of the service to
all customers and raising the barrier to competition. For these reasons, we are
focused on attracting large numbers of users to our exchange and in connecting
significant numbers of carriers and other traders of bandwidth to our delivery
hubs.

We believe we are well positioned to compete effectively in this
competitive landscape for three reasons:

- NEUTRALITY - We believe that some of our competitors intend to take
positions in their own exchanges as market makers. This will
generate initial liquidity, but carrier reactions have been
negative as these companies are perceived as competing with their
own exchange customers.

- FIRST-MOVER ADVANTAGE - We believe that we are one of the first
bandwidth exchanges established in the United States and among the
first in the world. We also believe that we are currently one of
the only United States exchanges that:

- Provides a neutral bandwidth exchange with no other lines of
business;
- Provides delivery hubs in more than one region; and
- Provides a spot and forward contract exchange.

21
<PAGE> 25

- INDUSTRY EXPERIENCE - Our management team's knowledge of key
industry participants in the core market and expertise in telephony
and financial markets adds credibility and reduces time to market.

COMPETITORS

The companies currently in the online bandwidth trading market fall into
three categories: real-time exchanges, clearinghouses and lead-generation
services. We plan to operate primarily in the first category but will operate
services in other categories. Another category, offline brokers, also competes
with the new paradigm of online bandwidth trading.

- ELECTRONIC EXCHANGES

RTBX is an online electronic exchange. In the real-time
exchange model, a neutral third party operates an Internet-based
exchange with integrated real-time delivery of capacity bought and sold.
Members trade online on a route-by-route basis with variable terms. The
exchange provides a trading forum and facilitates the transaction
between buyer and seller, maintaining anonymity, and providing billing
and settlement services, quality assurance and the physical delivery hub
to fulfill the transaction. A typical business model involves a fee for
initial connection to the delivery hub, exchange membership fees and
commissions on each transaction completed on the exchange.

- CLEARINGHOUSES

Clearinghouses differ from exchanges in that they aggregate
supply and demand (sometimes taking a speculative position in the
market) and contract directly with buyers or sellers, rather than
facilitating a relationship between the two. In the current telecom
market, clearinghouses often also act as carriers, providing transit
over their own networks and least-cost routing services. Despite the
cost advantages of least-cost routing, many buyers are uncomfortable
ceding control of route selection to a third party or an automated
system. Most clearinghouse services deal only in IP telephony minutes, a
market that is small at the moment but growing rapidly.

- LEAD-GENERATION

Companies in the lead-generation category, including our own
lead-generation service, provide an opportunity for buyers and sellers
to identify trading opportunities through online listings. The buyers
and sellers then complete their deals offline, paying a commission back
to the listing service upon completion of the deal. In contrast to
real-time exchanges and clearing houses, lead-generation services do
nothing to reduce the typical 60-90 day fulfillment cycle. They also
typically depend on the "honor system" for buyers and sellers to send
commissions back to the lead-generation service. Though not directly
challenging to us, some lead-generation services include geographic
areas complementary to our initial targets.

- AUCTIONS

While Clearinghouse models employ an auction market design
into their least-cost routing mechanism, there is only one other
competitor that we know of that provides a service similar to our
CustomAuctions. This competitor is believed to have held at least one
auction but is not believed to have provided the contracting or market
design components and the auction was not a web-based event.

- OFFLINE BROKERS

As with any technological change, online bandwidth trading
must compete with established practices and routines. In this case, some
carriers do their own buying and selling through bilateral transactions
while others rely on brokers. The most successful brokers act as agents
for a small clientele of carriers, assisting them in buying and selling
certain routes for a commission estimated at $0.0025 to $0.005 per
minute. We will seek to attract some of these brokers to become traders
through RTBX.

22
<PAGE> 26

TARGET CUSTOMERS

The market for domestic and international bandwidth includes dominant
major Tier 1 carriers such as AT&T and MCI WorldCom as well as wholesale-only
carriers, resellers, brokers and large multinational corporations. Customer
interviews, surveys and a review of the industry press have yielded the
following observations:

- Customers have significant frustrations with the current process;

- Customers see benefits to trading with us;

- Customers have indicated willingness to interconnect with us and
are willing to pay for our services; and

- In addition to carriers, large corporate users of bandwidth and
telecom products may become direct users to purchase selected
bandwidth on a domestic or international city-to-city basis.

We anticipate that some early participants in the RTBX will be the large
inter-exchange carriers that are seeking ways to reduce sales inefficiencies and
take advantage of a new sales channel. These carriers have large and sometimes
costly sales forces aimed at the wholesale, ISP and enterprise markets. Selling
bandwidth through us should allow carriers and ISPs to serve additional market
segments where they have less success due to the cumbersome contract process,
interconnection inefficiencies or where it may not be financially prudent to use
sales resources to sell low end products such as DS-1 and DS-3 private lines.
Our products may also allow carriers to serve additional market segments,
without re-directing, retraining or redeploying their workforce. Because our
members seeking to sell bandwidth and other products will be required to agree
to quality standards prior to interconnection, we expect that the willingness of
buyers to trade in our online environment may be enhanced.

We believe that international carriers and ISPs seeking to expand their
operations into the United States may also be early participants in the
bandwidth markets. Many of these companies want to enter the United States
marketplace without the appearance that they are partnering with a particular
United States carrier. Initially, second- and third-tier carriers may buy
through us to obtain the best market pricing and to ensure a guaranteed
connection timeframe. We estimate that as acceptance of our exchange grows,
large ISPs and enterprises with strategic applications that require bandwidth
for a guaranteed period of time may use us to ensure access to bandwidth at the
required time of their application.

Initial buyers on our portal are expected to be small carriers, new
carriers, resellers and ISPs. We will offer these buyers easy access to large
carriers and their product offerings at competitive prices. Buyers will have
identical access, no matter their size or expertise, to the same competitive
products, prices and quality standards. Some of the new carriers interested in
this model are expected to include international telecommunications companies
entering the United States marketplace.

INDUSTRY INFORMATION

INDUSTRY OVERVIEW

At least one analyst estimates the market for bandwidth trading will
reach $12 billion in traffic with orders of magnitude greater in traded volume
in 5 years. Some analysts go further to predict that the competitive, or
tradable, market for communications bandwidth will exceed $400 billion in 2005,
surpassing the competitive worldwide market for electricity and gas.

SUITABILITY OF TELECOMMUNICATIONS FOR BUSINESS-TO-BUSINESS E-COMMERCE

- LARGE ADDRESSABLE MARKET - Annual global spending on telecom
services is currently estimated at $726 billion and is expected to
grow to $1 trillion by 2001. Technology and deregulation continue
to transform the telecommunications market from a closed industry
made up of localized monopolies to an increasingly competitive
marketplace. Formerly state-owned carriers must both defend their
own markets and pursue opportunities abroad to remain competitive.
Both new and legacy carriers are taking advantage of rapid advances
in technology to build new networks with drastically lower costs of
operation. Liberalization of telecommunications, most recently with
the World Trade Organization agreement in which 70 countries,
comprising 90% of telephone users, is allowing carrier competition.
The number of carriers licensed to

23
<PAGE> 27

trade international voice traffic in the United States alone has
doubled in each of the past three years to over 1,200.

- LOW TECHNOLOGICAL BARRIERS. - Most telecommunications professionals
are sophisticated users and present no barrier to adoption based on
innovations in software or hardware.

- BANDWIDTH IS A PERISHABLE COMMODITY - If bandwidth is not utilized
as an asset, the return on that asset is lost. Traditionally,
perishable commodities have been liquidated at a loss to the
seller.

- MARKET FRICTION AND INEFFICIENCY - Carriers are increasingly
seeking to use partnerships and outsource agreements to quickly
gain access to new markets or to alleviate congestion in their
current networks. These are the market drivers behind the rapidly
growing spot and forward markets. However, despite advances in
hardware and software technologies and increasing network
interconnection, telecommunications transactions remain inefficient
due to legacy business processes still utilized by carriers of all
sizes.

TELECOMMUNICATIONS CAPACITY AS A BUSINESS-TO-BUSINESS COMMODITY

We believe that bandwidth demonstrates the qualities of a successful
tradable commodity. In order for a commodity to be successfully traded through
e-commerce, there needs to be a need or desire, economic or otherwise, to
promote trading, a sufficient number of buyers and sellers, standardization of
the commodity, and a physical ability to deliver the traded commodity.

We also believe there are a sufficient number of buyers and sellers to
support telecom bandwidth capacity as a commodity. The current trading methods
in bandwidth are quite inefficient given the multiple national and global
networks with approximately 10,000 potential buyers, including more than 6,000
ISPs. With such a large universe of potential buyers and sellers, we believe it
is atypical that a buyer or seller has achieved their best possible price using
the current bilateral, telephone-based, purchasing and selling approach.

Our hub approach further standardizes the trading points around delivery
hubs where large amounts of product are already traded. This hub approach has
proven very successful in natural gas (i.e., Henry Hub, Chicago and Perriem
Basin as the three big pool points) and in electricity (i.e., New York power
pool and Bloomberg's hub market such as the Western PJM Hub). An effective
exchange market requires an efficient delivery system and our delivery hubs are
expected to fulfill this requirement by establishing seamless delivery
capability at the traded points.

It is an economic axiom that all markets for services and commodities
are finite. Bandwidth is not a storable commodity; thus creative pricing
mechanisms will be played against one another until some predictability and
experience is gained. As demand approaches marginal costs, and suppliers,
jointly or in unison, move to limit supply, prices will approach equilibrium,
increasing volatility and furthering the online trading solution as the best
means to manage risk.

Finally, our approach of standardizing contracts (i.e., DS-1 and DS-3
monthly and yearly contracts), trading rules, settlement, scheduling, billing,
credit management and managed delivery should further enhance online trading of
bandwidth.

INTELLECTUAL PROPERTY

We have applied for several trademarks covering specific businesses and
products offered on our internet web site. We also hold several software
licenses that are critical to our ongoing business. We do not have any patents
or franchises.

RESEARCH & DEVELOPMENT

We conduct on-going research in the areas of commoditization of
telecommunications bandwidth in evolving pricing models for bandwidth and other
telecommunications products and services, and we are developing future products
and services based on this research. During 1999, we estimate that we spent
approximately $100,000 to commission proprietary university-based and private
sector research in these areas. Prior to 1999, we did not have any significant
expenditures for research and development.

24
<PAGE> 28

EMPLOYEES

As of July 18, 2000, RateXchange and its subsidiaries employed
approximately forty-six people. We believe our relations with our employees are
good. Our employees are not subject to any collective bargaining agreements.

PROPERTIES

Our principal facility is located at 185 Berry Street, Suite 3515, San
Francisco, California. We hold a lease on this facility. We believe that this
property is suitable for our immediate needs; however, we may expand our
facilities or relocate in the future.

LEGAL PROCEEDINGS.

On February 3, 2000, we filed a lawsuit against Waave
Telecommunications, Inc. in the San Francisco County Superior Court (Case No.
309608). Other defendants named in the lawsuit include Robert W. Ingraham, Gran
Columbia Resources, Inc. (aka Waave Telecommunications, Inc.) and Does One
through Fifty. The case has recently been transferred to Sacramento County
Superior Court. The lawsuit involves claims for breach of contract, promissory
estoppel, fraud and deceit, intentional interference with a contract and
prospective economic advantage, and unfair and unlawful business practices. We
are seeking in excess of $1 million in compensatory damages, exemplary damages,
interest and attorneys fees.

On February 24, 2000, Concentric Network Corporation filed a lawsuit
against NetAmerica, Inc., aka A1 Internet, Inc., and us in the Superior Court of
California for the County of Santa Clara (CV 784335). The lawsuit involves
claims for breach of contract and common counts based on A1 Internet's
nonperformance in a services agreement between A1 Internet and Concentric.
Concentric is asking for compensatory damages of at least $167,794, restitution,
costs and attorney fees. The matter is currently pending in the Superior Court
and will soon proceed to arbitration.

From time to time, we are a party to various legal proceedings
incidental to our business. Other than the proceedings mentioned above, none of
these proceedings is material to the conduct of our business, operations or
financial condition.

MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

PRICE RANGE OF COMMON STOCK

Our common stock trades on the American Stock Exchange under the symbol
"RTX." The closing price of our common stock on July 18, 2000 was $6 per share.
Prior to July 10, 2000, our stock traded on the OTC Bulletin Board. The
following table sets forth the range of the high and low sales prices per share
of our common stock for the fiscal quarters indicated, as reported by OTC. Prior
to December 18, 1998, there was no known public trading in our common stock.
Quotations represent inter-dealer prices, without retail markup, markdown or
commission and may not necessarily represent actual transactions.

<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
2000
Second Quarter $22 1/8 $5 3/16
First Quarter 43 1/4 5 5/8

1999
Fourth Quarter $8 7/8 $ 3 3/4
Third Quarter 6 3/4 4 3/8
Second Quarter 7 1/4 5 1/2
First Quarter 6 7/8 4 1/2

1998
Fourth Quarter $5 3/8 $ 4 1/2
Third Quarter N/A N/A
Second Quarter N/A N/A
</TABLE>

25
<PAGE> 29

First Quarter N/A N/A

APPROXIMATE NUMBER OF EQUITY SECURITY HOLDERS

On July 18, 2000, there were 323 shareholders of record of our common
stock. Because many of such shares are held by brokers and other institutions on
behalf of shareholders, we are unable to estimate the total number of
shareholders represented by these record holders.

DIVIDENDS

We have never paid dividends on our common stock. We intend for the
foreseeable future to continue the policy of retaining our earnings to finance
the development and growth of our business.

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data should be read in
conjunction with Management's Discussion and Analysis of Financial Condition and
Results of Operations and our consolidated financial statements and related
notes included elsewhere in this prospectus.

<TABLE>
<CAPTION>
THREE THREE MONTHS
MONTHS ENDED ENDED YEAR ENDED DECEMBER 31,
MARCH 31, MARCH 31, -------------------------------------------------
STATEMENT OF OPERATIONS DATA 2000 1999 1999 1998 1997
----------- ----------- ----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Net Revenues $ -- $ -- $ -- $ -- $ --

Net Income (loss) (11,075,071) (959,470) (7,329,280) (1,116,953) (200)

Income (loss) per common
share
Basic (0.75) (0.10) (0.57) (0.68) --
Diluted (0.75) (0.10) (0.57) (0.68) --

Average weighted number of
common shares outstanding:
Basic 14,820,000 9,244,000 12,863,020 1,636,919 200,000
Diluted 14,820,000 9,244,000 12,863,020 1,636,919 200,000
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
STATEMENT OF OPERATIONS DATA 1996 1995
----------- -----------

<S> <C> <C>
Net Revenues $ -- $ --

Net Income (loss) (1,961) (2,561)

Income (loss) per common
share
Basic -- --
Diluted -- --

Average weighted number of
common shares outstanding:
Basic 200,000 200,000
Diluted 200,000 200,000
</TABLE>

<TABLE>
<CAPTION>
AS OF AS OF DECEMBER 31,
MARCH 31, -------------------------------------------------------------------------------------
BALANCE SHEET DATA 2000 1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- ----------- -----------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Total assets $31,988,823 $ 2,749,222 $ 578,146 $ -- $ -- $ 211
Long-term debt, less
current portion $ -- $ -- $ -- $ -- $ -- $ --
Stockholders' equity $26,827,404 $ 224,921 $ 509,946 $ (200) $ (1,300) $ (5,689)
</TABLE>

26
<PAGE> 30

SUPPLEMENTARY FINANCIAL INFORMATION (UNAUDITED)

<TABLE>
<CAPTION>
For the For the For the For the For the
quarter quarter quarter quarter quarter
ended ended ended ended ended
March 31, December September June 30, March 31,
2000 31, 1999 30, 1999 1999 1999
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Net Income (Loss) $ (11,075,071) $ (3,627,146) $ (1,468,177) $ (1,278,487) $ (959,470)

Per Share Net Income (Loss)
Basic $ (0.75) $ (0.24) $ (0.11) $ (0.11) $ (0.10)
Diluted $ (0.75) $ (0.24) $ (0.11) $ (0.11) $ (0.10)
</TABLE>

<TABLE>
<CAPTION>
For the For the For the For the
quarter quarter quarter quarter
ended ended ended ended
December September June 30, March 31,
31, 1998 30, 1998 1998 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net Income (Loss) $ (1,108,816) $ (8,137) $ 0.00 $ 0.00

Per Share Net Income (Loss)
Basic $ (0.68) $ 0.00 $ 0.00 $ 0.00
Diluted $ (0.68) $ 0.00 $ 0.00 $ 0.00
</TABLE>

27
<PAGE> 31

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

The following discussions should be read in conjunction with our
Consolidated Financial Statements and the related notes included elsewhere in
this prospectus.

<TABLE>
<CAPTION>
Year Ended Dec. 31, Three Months Ended March 31,
------------------------------------- ----------------------------
1999 1998 1997 2000 1999
----------- ----------- ----- ------------ ---------
<S> <C> <C> <C> <C> <C>
Revenue: -- -- -- -- --
Expenses (including selling,
general and administrative) $ 7,474,757 $ 1,108,394 $ 200 $(10,983,042) $(965,059)
----------- ----------- ----- ------------ ---------
Net earnings (loss) $(7,329,280) $(1,116,953) $(200) $(11,075,071) $(959,470)
=========== =========== ===== ============ =========
</TABLE>

RESULTS OF OPERATIONS

QUARTER ENDED MARCH 31, 2000 COMPARED TO THE QUARTER ENDED MARCH 31, 1999

Revenue

We have not generated any revenues since inception. The only income we
generated during the first quarter of 2000 was interest income on the net
proceeds from the $32.8 million private placement. Interest income for the first
quarter of 2000 was $57,367 compared to $5,589 for the same period in 1999. The
increase in interest income is attributable to interest earned on the proceeds
from the private placement.

Expenses

Our total expenses increased to $10,983,042 from $965,059 for the three
months ended March 31, 2000 and 1999. The increase was due primarily to:

- compensation expense recorded for below market stock option grants,

- increased marketing and development activity,

- the expansion of our executive management team and the addition of
certain advisors, and

- costs associated with our restructuring.

Net Income (Loss):

During the three months ended March 31, 2000, we incurred losses of
$(11,075,071) compared to losses of $(959,670) during the same period in 1999.
Included in the loss for the period were:

- $7,566,083 in expenses associated with below market stock option
grants, of which $6,806,250 relate to options that vested in the
first quarter, none of which have been exercised,

- $1,122,698 in payroll costs,

- $373,000 in legal and professional fees,

- $607,000 in outside services,

- $100,000 in financing costs,

- $280,000 in marketing costs,

28
<PAGE> 32

- $290,000 in delivery equipment maintenance costs, and

- $201,000 in recruiting expenses.

Because we are in the early growth stage, we anticipate that we will
continue to incur operating losses and cash flow deficiencies for the
foreseeable future.

YEAR ENDED DECEMBER 31, 1999 COMPARED WITH YEAR ENDED DECEMBER 31, 1998

Revenue

The only income we generated during 1999 and 1998 was interest income on
our subscription receivables. Interest income for 1999 was $151,276 as compared
to $2,214 for 1998. The increase in interest income is attributable to the
amount of subscription receivables carried during 1999 versus 1998. Most of the
receivables have been collected and interest income from this source will be
substantially less in future periods.

Expenses

Our total expenses for 1999 increased substantially as compared to the
previous period in 1998 because of the time period we had operations in 1999 as
compared to 1998. Operations did not begin until September 30, 1998 (three
months) as compared to operations for the full year of 1999. We did not engage
in any ongoing business and incurred expenses related to finding and funding a
development stage enterprise. We investigated many potential acquisition targets
and succeeded in creating one entity, Telenisus Corporation, and acquiring
another entity, RateXchange I, Inc.

We funded Telenisus Corporation with an original equity capitalization
of $75,000 and loans that were repaid. We also covered certain of the Telenisus
operating expenses that were not reimbursed. Further funding of Telenisus was
completed on its own and did not affect our operations.

RateXchange I, Inc. is now our only operating subsidiary and during
1999, it was reliant primarily on our financing activities for its operations.

Total expenses for 1999 were $7,474,757 for the year and consisted of
the following:

- $1,537,300 for write down of goodwill;

- $863,750 for bad debt expense from advances to A1 Internet, Inc.;

- $2,522,222 for legal, accounting, consulting and other operational
expenses related to business development;

- $1,325,106 for payroll and payroll taxes;

- $501,839 for office and other administrative expenses;

- $342,762 for travel; and

- $381,778 for other miscellaneous expenses.

Total expenses for 1998 related to operations since September 30, 1998
and only included the activity of RateXchange because there were no subsidiaries
operating in 1998.

29
<PAGE> 33

YEAR ENDED DECEMBER 31, 1998 COMPARED WITH YEAR ENDED DECEMBER 31, 1997

Revenue

The only income we recorded in 1998 related to interest income of $2,214
which was from subscriptions receivable. There was no income for 1997 because we
did not have any material operations in that year.

Expenses

Total expenses for 1998 were $1,108,394 for the year and consisted of
the following:

- $885,000 for bad debt expenses from advances to A1 Internet, Inc.;

- $44,855 for the write down of goodwill from the purchase of
PolarCap, Inc.; and

- $178,539 for other miscellaneous expenses.

Total expenses for 1997 were $200 for miscellaneous expenses.

ANTICIPATED INCREASE TO OPERATING LOSS

The Company recently engaged new auditors who are going to reaudit the Company's
accounting records for 1997, 1998 and 1999. A preliminary review of the
accounting records indicates that certain transactions in 1999 and 1998
involving common stock issued in exchange for services received, conversion of
bridge financing and arrangement of financing appear to have been recorded at a
price lower than that generally available in the marketplace. As disclosed in
the Company's Annual Report on Form 10-K, the Company determined the value of
these stock transactions. An element of that determination was the consideration
of certain variables such as whether the stock being issued was restricted and,
if so, the level of those restrictions. One such restriction was a requirement
that the stock recipient hold the shares for at least a year before selling
them. Another restriction was that the Company generate $10 million in revenue
over a 12 month period before the restriction on sale is lifted. To date the
Company has not generated any revenue from operations. As a result, some of the
stock was issued at a discount. An issue has arisen, which will be addressed
during the reaudit, as to whether the difference between the price of the shares
and the value that others in the marketplace placed on the shares ought to be
reflected as an expense in the financial statements.

The expense amounts in question involve 7,504,347 shares of common stock issued
at $1,319,506. No determination has been made as of this date regarding the
appropriated valuation of the stock on the date issued due to the following
factors:

o Shares were being issued via a private placement memorandum at an average
price of $1.07.

o Shares trading on the over the counter market traded between $4.50 and
$8.88.

o The shares being traded on the over the counter market were limited in
availability and the trading process itself was somewhat cumbersome.

o Liquidity in the stock was provided through the private placement process,
versus the over the counter market.

At this time the outcome of the reaudit and the resolution of any other
potential issues that may arise is uncertain.

LIQUIDITY AND CAPITAL RESOURCES

We have financed our operations to date primarily through the sale of
equity securities. We have been unprofitable since inception and we have
incurred net losses in each year.

We had working capital of $25,859,000 at March 31, 2000 compared to
negative working capital of $(128,733) on December 31, 1999. In March 2000 we
closed a $32.8 million private placement, netting $30.1 million after expenses.
These funds should be sufficient to cover our operations and working capital
requirements for the next twelve (12) months. Nevertheless, we may be forced to
seek additional financing sooner than expected.

Our operating activities used $1,669,000 during the three months ended
March 31, 2000 due primarily to our:

- increased marketing and development,

- expansion of our executive management team, and

- increased professional services and consulting costs.

Our operating activities used $2,827,690 during the twelve months ended December
31, 1999 due primarily to our:

- operating losses,

- increased business development,

- expansion of our executive management team,

- acquisitions and integration of acquisitions,

- identification and analysis of prospective acquisition candidates,

- legal, accounting and consulting expenses, and

- lease deposits and payments and other operating expenses.

Our investing activities used $638,000 during the three months ended
March 31, 2000, due primarily to the purchase of capital equipment. Our
investing activities consumed $1,525,738 during the twelve months ended

30
<PAGE> 34

December 31, 1999, primarily to purchase capital equipment and for the
identification, acquisition and integration of acquisition targets.

Financing activities generated $32,863,000 during the three months ended
March 31, 2000. Financing activities during the three months ended March 31,
2000 consisted primarily of proceeds from sales of common stock. Between
February and March 2000, we sold to accredited investors a total of 2,733,329
shares of our restricted common shares plus warrants to purchase 1,366,673
shares of our common stock at an exercise price of $14.40 per share. The shares
were sold at a subscription price of $12.00 per share. After deducting the
expenses related to the offering, we received $30,135,000. The proceeds of the
sales of common stock were and will be used to accelerate deployment of our
delivery hubs, expand our online marketplace for telecommunications products and
enhance our geographic reach and product line.

Financing activities generated $4,276,527 during the twelve months ended
December 31, 1999. Financing activities during the twelve months ended December
31, 1999 consisted primarily of proceeds from sales of common stock. The
proceeds of the sales of common stock were and will be used for acquisitions,
business development, accounts payable, equipment purchases, and for general
working capital. The various sales of common stock are as follows:

- Between November 1998 and March 1999, we sold a total of 1,864,688
shares of our restricted common shares to accredited investors. The
shares were sold at an effective subscription price of $1.07 per
share. After deducting the offering expenses related to the
offering, we received $1,745,000 in cash, of which approximately
$1,631,188 was advanced to A1 Internet as working capital and for
debt repayment.

- In January 1999, we sold 916,574 shares of common stock to certain
related parties at a price of $.10 per share for notes. In March
1999, we sold 3,112,500 additional common shares as part of the
above private placement offering at an effective price per share of
$1.07 for notes. As of December 31, 1999, we collected a total of
approximately $1,924,126 from note repayments from both the January
and March offerings.

- In the second quarter 1999, we sold 515,188 shares of stock for
$1.60 per share in a second private placement and received a total
of $628,272 net proceeds.

In March 2000, we executed a Master Lease Line Commitment Agreement,
which has a minimum term of either 36 or 48 months (depending upon the type of
equipment we lease). Pursuant to this agreement, we are entitled to lease
equipment that has a cost or sale price which, in the aggregate, does not exceed
$10,000,000. Our periodic lease payments are determined by multiplying the cost
or sale price of the equipment leased by a lease rate factor of either .03277 or
.02633, depending upon the type of equipment. We are also responsible for all
taxes, shipping, transportation, installation, services and other expenses
related to the equipment we lease pursuant to the agreement.

We are executing an overall business plan that requires significant
additional capital for among other uses:

- additional equipment and facilities,

- expansion into new domestic and international markets,

- additional management and personnel,

- development of additional products and services; and

- acquisitions.

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<PAGE> 35

Furthermore, our funding of working capital and current and future
operating losses will require additional capital investment. We do not currently
possess a bank source of financing and we have not had any revenues. We
anticipate that the funds we obtained from our private placement and our lease
line commitment should be sufficient to cover our capital needs.

Our business and operations have not been materially affected by
inflation during the periods for which financial information is presented.

OUTLOOK

Historically, we have not had any long-term successful business
operations and we are concentrating our efforts in developing a new business
model for business-to-business e-commerce products and services for the
telecommunications sector. We are in an early stage of development and we are
subject to all the risks inherent in the establishment of a new business
enterprise. To address these risks, we must:

- establish market acceptance for our online exchange and other
products and services,

- continue to retain, attract and motivate qualified personnel,

- effectively manage our capital to support the expenses of
developing and marketing new products and services,

- implement and successfully execute our business and marketing
strategy,

- respond to competitive developments, and

- continue to develop and upgrade our exchange and delivery hub
technology.

The foregoing contains forward-looking statements that involve risks and
uncertainties, including but not limited to, changes in our business strategy,
our inability to raise sufficient capital, general market trends and conditions,
and other risks detailed above in "Risk Factors." Actual results may vary
materially from projected results.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to equity price risk on the marketable portion of our
equity securities. We own 100,000 shares of unregistered common stock of A1
Internet.com Inc. (OTC Bulletin Board: AWON). A1 Internet is a relatively new
company that has historically experienced volatility in its stock prices. At
March 31, 2000, 100,000 shares of publicly traded common stock of A1 would have
been valued at $400,000. We estimate our equity price risk to be a potential
loss in fair value equal to the entire value of the A1 Internet stock. Actual
results may differ. Currently, we carry the value of the A1 Internet stock at
par value because of the stock's price volatility and restricted nature and A1
Internet's lack of operations and profitability. We have not attempted to reduce
or eliminate our market exposure on these securities.

The remainder of our investment portfolio consists of equity securities
in private companies, including Telenisus Corporation, which are not publicly
traded. These investments are recorded at the lower of cost or fair market value
(if determinable by the Board of Directors). This method of valuation does not
result in increases or decreases in the fair value of these equity securities in
response to changes in market prices. Thus, these equity securities are not
subject to equity price risk.

Other than the securities described above, we have not invested in any
market rate sensitive instruments held for either trading purposes or for
purposes other than trading. The carrying values of our financial instruments
including cash, cash equivalents, interest receivable, deposits, accounts
payable, accrued expenses and notes payable approximate fair value because of
the short maturity of these instruments. As a result we are not

32
<PAGE> 36

subject to interest rate risk, foreign currency exchange rate risk, commodity
price risk or other relevant market risks.

33
<PAGE> 37

MANAGEMENT

The following sets forth certain information regarding our directors and
executive officers as of July 18, 2000:

<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Donald H. Sledge 60 Chairman of the Board of Directors and Chief Executive Officer

Christopher J. Vizas 50 Director

D. Jonathan Merriman 39 Director

Ronald E. Spears 51 Director

Gordon Hutchins, Jr. 51 Director

Ross Mayfield 29 President

Paul Wescott 42 Executive Vice President and Chief Operating Officer

Philip Rice 42 Executive Vice President and Chief Financial Officer
</TABLE>

DIRECTORS

DONALD H. SLEDGE,

Director since September 1999 and Chairman and Chief Executive Officer
since February 2000. Mr. Sledge is also the Chairman of the Board and Chief
Executive Officer of RateXchange I, Inc. Previously, he served as

34
<PAGE> 38

Vice Chairman and Chief Executive Officer of TeleHub Communications Corporation,
a next generation ATM-based telecommunications company. From 1994 to 1995, Mr.
Sledge was President and Chief Operating Officer of WCT, a $160 million
long-distance telephone company which was one of Fortune Magazine's 25 fastest
growing public companies before it was acquired by Frontier Corporation. Mr.
Sledge has also served as:

- head of operations for New T&T, a Hong Kong based start-up company
competing with Hong Kong Telephone,

- Chairman and Chief Executive Officer of New Zealand Telecom
International,

- a member of the executive board of TCNZ, where he led privatization
and public offerings,

- Managing Director of New Zealand's largest operating telephone
company, Telecom Auckland Ltd., and

- President and Chief Executive Officer of Pacific Telesis
International.

One of the subsidiaries of TeleHub Communications, TeleHub Network Services
Corporation, filed for bankruptcy several months after Mr. Sledge resigned from
TeleHub. Mr. Sledge holds a Master of Business Administration degree and a
Bachelor of Arts degree in Industrial Management from Texas Technological
University.

CHRISTOPHER J. VIZAS,

Director since February 2000. Mr. Vizas is currently the Chairman and
Chief Executive Officer of eGlobe, Inc. Mr. Vizas was elected Chairman and
appointed CEO of this Nasdaq traded company in December 1997. eGlobe, Inc.
operates in 41 nations and territories around the world and originates
telecommunications traffic in more than 90 countries. It provides global
enhanced telecommunications services, primarily Internet protocol-based
services, to carriers around the world. Through longstanding affiliations with
dominant carriers in key markets world-wide, eGlobe is building an intelligent
IP network. Current products and services of eGlobe, Inc. include IP voice, IP
fax, a range of calling card capabilities and unified messaging, along with a
global routing validation and billing competence. Mr. Vizas has extensive
experience in the structuring, development and early stage financing of
telecommunications and information technology business in North America, Europe
and Asia. Among other ventures, he was the co-founder of Orion Network Systems,
the first private multinational satellite company, and served as its Director
and Vice Chairman.

Between March 1995 and April 1997, Mr. Vizas was Chief Executive Officer
of Quo Vadis International, LLC, a Delaware company providing financial and
investment advice. Between April 1994 and March 1995, he was Managing Director
of Kouri Capital Group, a private company that also provides financial and
investment advisory services. Prior to pursuing his business interests, Mr.
Vizas held various positions in the United States government, serving in the
White House Office of Telecommunications Policy, as Special Counsel to the U.S.
Privacy Commission and on the staff of the U.S. House of Representatives. He has
represented the United States in international proceedings and has advised other
governments with regard to ITU and trade issues. Mr. Vizas is a graduate of Yale
University.

D. JONATHAN MERRIMAN,

Director since February 2000. Mr. Merriman is currently on the Board of
Directors of First Security Van Kasper, BigStar Entertainment, SSE Telecom,
Leading Brands Inc. (formerly Brio Industries) and Fiberstars, Inc. He brings
with him 19 years of broad-based institutional investment experience. In June
1998, Mr. Merriman became Managing Director and Head of the Equity Capital
Markets Group of First Security Van Kasper. In this capacity, he oversees the
Research, Institutional Sales, Equity Trading Syndicate and Derivatives Trading
departments. As a First Security Van Kasper board member, Mr. Merriman also
serves on the Management Committee, the Executive Committee, the Commitment
Committee and the First Security Van Kasper Advisors Investment Committee.

35
<PAGE> 39

Since June 1997, Mr. Merriman has served as Managing Director and head
of Capital Markets at The Seidler Companies in Los Angeles, where he also serves
on that firm's Board of Directors. Since December 1990, he has served as
Managing Director of Imperial Capital. Prior to Seidler, Mr. Merriman was
Director of Equities for Dabney/Resnick/Imperial, LLC where he increased that
firm's equity department from two principals to a sales, research and trading
operation comprising over 35 professionals. In 1989, Mr. Merriman co-founded the
hedge fund company Curhan, Merriman Capital Management, Inc., which managed
money for high net worth individuals and corporations in a market neutral
strategy. Prior to Curhan, Merriman Capital Management, Inc., he worked in the
Risk Arbitrage Department at Bear Stearns & Co. as a trader/analyst where he
covered hedge and arbitrage funds, researched special situations, and managed a
position trading account for the firm. Mr. Merriman began his career with
Merrill Lynch's Investment Banking Division where he worked on public offerings
for growth companies. He then joined Merrill Lynch's Institutional Equity Sales
Department, covering both mainstream institutions and equity hedge funds, while
completing coursework at New York University's Graduate School of Business. Mr.
Merriman received his Bachelor of Arts in Psychology from Dartmouth College.

RONALD E. SPEARS

Director since March 2000. Since May 1999, Mr. Spears has overseen the
formulation and implementation of CMGI Solutions' corporate-wide development
related to strategic planning, corporate vision, marketing, business alliances
and communications as CMGI Solutions' President and Chief Executive Officer. He
has over 20 years of leadership in the communications industry, and has managed
both telecommunications start-ups and established long distance powerhouses. Mr.
Spears joined CMGI Solutions after serving as an executive officer of e.spire
Communications, Inc., one of the nation's fastest growing integrated
communications providers. As President and Chief Operating Officer of e.spire
Communications, Mr. Spears was responsible for day-to-day business operations,
including marketing, sales, customer service, network planning and
implementation, technology support and information systems. Previously he was
Corporate Vice President at Citizens Utilities, managing that company's
independent telephone company operations in 13 states, as well as director of
CLEC operations in five markets. He also served as President of MCI's Midwest
Division, from 1984 to 1990. A pioneer of the competitive long distance
industry, Mr. Spears began his career in telecommunications as a Manager of AT&T
Longlines, following eight years as an officer in the U.S. Army. He is a
graduate of the United States Military Academy at West Point and also holds a
Master's Degree in Public Service from Western Kentucky University.

GORDON HUTCHINS, JR.

Director since June 2000. Since January 1996, Mr. Hutchins has served
as a director of Star Telecommunications, Inc., an international long distance
carrier. Since July 1989, Mr. Hutchins has been President and Chief Executive
Officer of GH Associates, Inc., a telecommunications consulting firm. Prior to
founding GH Associates, Mr. Hutchins served as President and Chief Executive
Officer of ICC Telecommunications, a competitive access provider, and held
senior management positions with several other companies in the
telecommunications industry.

EXECUTIVE OFFICERS

Ross Mayfield

Mr. Mayfield was appointed our President in February 2000. He is a
co-founder of RateXchange, Inc. and has also served as an officer of RateXchange
I, Inc. since July 1999. Mr. Mayfield was previously the marketing director for
a privately held telecommunications group in the Baltic States and was the lead
manager of the group's initial public offering. He founded:

- a Web design/software development company headquartered in Tallinn,
Estonia, and

- an Internet service provider that provides access on cable TV
networks in Estonia and Lithuania.

Mr. Mayfield is also a former foreign and telecommunications policy advisor to
the Office of the President of Estonia and started his career in the nonprofit
sector in Washington DC. Mr. Mayfield holds a Bachelor of Arts degree in
Political Science from the University of California at Los Angeles.

Paul Wescott

Mr. Wescott was appointed our Executive Vice President and Chief
Operating Officer in February 2000. He has also served as an officer of
RateXchange I, Inc. since September 1999. Prior to joining RateXchange I, Inc.,
Mr. Wescott was the vice president of marketing and interim Chief Executive
Officer of TimeShift, a business-to-business e-commerce company that provides
telecommunications carriers with a real-time transaction-

36
<PAGE> 40

processing network for deploying and billing new services. He has 18 years of
competitive telecommunications experience with Sprint in marketing, business
development, sales, operations, product development, external affairs and
network planning. Following the passage of the Federal Telecommunications Act of
1996, Mr. Wescott was responsible for the deployment of Sprint's competitive
local exchange carrier in a seven-state region. Previously, he developed joint
marketing programs and new national distribution channels for both the consumer
and small business markets. Mr. Wescott has a Bachelor of Arts degree in history
from the University of California at Berkeley and a Master of Business
Administration degree in finance from the University of San Francisco.

Philip Rice

Philip Rice was appointed our Executive Vice President and Chief
Financial Officer in March 2000. Mr. Rice was previously Vice President and
Treasurer for Transamerica Corporation, a diversified financial services
company. Mr. Rice was part of Transamerica's Senior Management and was head of
the Treasury Department, responsible for all corporate treasury functions
including finance, debt management, cash management, risk management, capital
markets, securitization and asset liability management. Prior to joining
Transamerica, Mr. Rice headed Atlas-Pleiades Partners, an investment firm he
founded in San Francisco. Prior to forming that company, Mr. Rice held senior
financial management positions with several firms including SBC Warburg, Goldman
Sachs and AIG Financial Products Corporation. Mr. Rice received his Bachelor of
Arts degree from Williams College, where he was elected Phi Betta Kappa and
received the Horace Clark Prize for outstanding scholarship. He also holds a
Master of Business Administration degree from the University of California,
Berkeley, where he received the ARCO Prize for outstanding scholarship.

OTHER KEY EMPLOYEES

Russell Matulich, 36, is Vice President of Sales and Marketing. We hired
Mr. Matulich in 1999. From 1998 until 1999, as the vice president of global
sales and marketing for WorldPort Communications, Mr. Matulich managed a global
sales force that targeted carriers, high-end corporate accounts and ISPs,
primarily in Europe. Prior to that, Mr. Matulich held the position of Vice
President of Regional Sales at Frontier Telecommunications, where he recruited
and hired one of the highest producing carrier sales forces in the nation and
was awarded Frontier's highest sales award. From 1996 until 1997, Mr. Matulich
was Vice President of the West Region at Citizen Communications. Mr. Matulich
has over 15 years of experience in the development, implementation and
management of marketing programs for both start-up venture and established
telecommunications corporations competing in international markets.

J. Terry Ginn, 54, is Vice President of Software Engineering and
Development, responsible for developing the architecture and the platform on
which RTBX will operate. We hired Mr. Ginn in 1999. Mr. Ginn performs a
leadership role in the engineering of the RateXchange Web site and other
services. Previously the Director of Engineering of SRI International from 1993
until 1999, Mr. Ginn was responsible for profit and loss for multiple programs,
with additional responsibilities including planning, marketing, program
management, operations and personnel management. With software skills acquired
from developing over 1 million lines of code in multiple operating systems and
languages, he has a broad range of competencies in software design and
engineering. While working at Hughes Aircraft Company, Mr. Ginn performed
initial systems requirements analysis and design using object-oriented
techniques, and he developed software processes and procedures at Lockheed
Sanders. Mr. Ginn holds a Bachelor of Science degree and a Master of Science
degree in Mathematics from the University of Kentucky.

R. Nick Cioll, 41, is the Vice President of Trading Operations. He
supervises the development and implementation of our credit, settlement and
payment mechanism for bandwidth trade. We hired Mr. Cioll in 1999. Mr. Cioll has
over 10 years of broad-based senior management experience in finance,
international business development and marketing, strategic planning, mergers
and acquisitions, initial and secondary public financings, and strategic
planning in the electricity, energy, chemicals, metals and e-commerce
industries. As Vice President of Automated Power Exchange until October 1999,
Mr. Cioll was responsible for leading the sales and marketing group in a company
that is a private developer of power exchanges and business-to-business
e-commerce for

37
<PAGE> 41
electricity. During this time he led development of Automated Power Exchange's
marketing strategies and tactical plans to expand the business. From 1995 to
1998, Mr. Cioll was the Director of Business Development at Kaiser Aluminum. Mr.
Cioll has a Bachelor of Science degree in economics from Louisiana State
University and a Master of Science in finance and Master of Business
Administration degree from the University of New Orleans. He is also a licensed
Certified Public Accountant.

EXECUTIVE COMPENSATION

The following table sets forth information regarding the compensation
paid for services rendered during the last three completed fiscal years to our
Chief Executive Officer and other executive officers, as well as certain
executive officers of our subsidiary, RateXchange I, Inc., who we appointed
executive officers in February 2000, and whose annual salary, bonus and other
compensation exceeded $100,000 in 1999.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------------------
Annual Compensation Awards Payouts
------------------------------------ ---------------------- -------
Restricted Securities
Name and Principal Other Annual Stock Underlying LTIP All Other
Position Year Salary Bonus Compensation Awards Options Payouts Compensation
------------------------ -------- -------- -------- ------------ --------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Douglas Cole (1) 1999 $126,000 $125,000 $ 0 $ 0 100,000 $ 0 $ 0
Chairman and Chief
Executive Officer 1998 N/A N/A N/A N/A N/A N/A N/A

1997 N/A N/A N/A N/A N/A N/A N/A

Edward Mooney (2) 1999 $ 90,000 $125,000 $ 0 $ 0 100,000 $ 0 $ 0
Executive Vice
President, 1998 N/A N/A N/A N/A N/A N/A N/A
Secretary and
Treasurer 1997 N/A N/A N/A N/A N/A N/A N/A

Donald Sledge (3) 1999 $ 94,653 $ 75,000 $ 0 $ 0 100,000 $ 0 $ 0
Chairman and Chief
Executive Officer 1998 N/A N/A N/A N/A N/A N/A N/A

1997 N/A N/A N/A N/A N/A N/A N/A

Ross Mayfield (4) 1999 $ 87,619 $ 0 $ 0 $ 0 100,000 $ 0 $ 0
President
1998 N/A N/A N/A N/A N/A N/A N/A

1997 N/A N/A N/A N/A N/A N/A N/A

Paul Wescott (5) Chief 1999 $ 64,230 $ 0 $ 0 $ 0 150,000 $ 0 $ 0
Operating Officer
1998 N/A N/A N/A N/A N/A N/A N/A

1997 N/A N/A N/A N/A N/A N/A N/A

</TABLE>

38
<PAGE> 42

(1) Mr. Cole was hired as an officer on April 1, 1999 and resigned in
February 2000. Mr. Cole's annual salary was $168,000 plus a bonus,
pursuant to his employment agreement. Mr. Cole's bonus of $125,000
accrued at year end on the Company's books; however, the bonus was not
paid to Mr. Cole until 2000.

(2) Mr. Mooney was hired as an officer on April 1, 1999 and resigned as
Executive Vice President in February 2000 and as Secretary and Treasurer
in March 2000. Mr. Mooney's annual salary was $120,000 plus a bonus,
pursuant to his employment agreement. Mr. Mooney's bonus of $125,000
accrued at year end on the Company's books; however, the bonus was not
paid to Mr. Mooney until 2000.

(3) Mr. Sledge was hired on September 15, 1999 as one of our directors and
as the Chairman and CEO of RateXchange I, Inc., one of our subsidiaries.
Mr. Sledge was appointed our Chairman and Chief Executive Officer in
February 2000. Mr. Sledge's annual salary at RateXchange was $300,000
plus a bonus, pursuant to his employment agreement. Mr. Sledge also
received approximately $1,000 each month for car allowance and
approximately $1,000 each month for payment of whole life insurance
premiums.

(4) Mr. Mayfield was hired as an executive officer of RateXchange I, Inc.,
one of our subsidiaries, in July 1999. While employed at RateXchange I,
Mr. Mayfield served, at various times during 1999, as Vice President of
Sales and Marketing, Chief Operating Officer and President. Mr.
Mayfield's annual salary at RateXchange I during 1999 was $165,000, plus
a bonus, pursuant to his employment agreement. We appointed Mr. Mayfield
as our President in February 2000.

(5) Mr. Wescott was hired as an executive officer of RateXchange I, Inc.,
one of our subsidiaries, in September 1999. While employed at
RateXchange I, Mr. Wescott served, at various times during 1999, as an
Executive Vice President, Chief Operating Officer and Vice President of
Business Development. Mr. Wescott's annual salary at RateXchange I
during 1999 was $165,000, plus bonuses, pursuant to his employment
agreement. We appointed Mr. Wescott our Chief Operating Officer in
February 2000.

OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth information regarding options granted
during fiscal year 1999 to the named executive officers. No stock appreciation
rights were granted in 1999.

<TABLE>
<CAPTION>
Individual Grants
----------------------------------------------------------------
Number of Percent of Potential Realizable Value at
Securities Total Options Assumed Annual Rates of Stock Price
Underlying Granted to Exercise or Appreciation for Option Term
Options Employees in Base Price Per Expiration -----------------------------------
Name Granted 1999 Share(1) Date 5% ($) 10% ($)
------------- ----------- ----------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Douglas Cole 100,000 3.28% $ 1.60 1/2004 $ 44,205.05 $ 97,681.60

Edward Mooney 100,000 3.28% $ 1.60 1/2004 $ 44,205.05 $ 97,681.60

Donald Sledge 100,000 3.28% $ 2.75 10/2004 $ 75,977.42 $167,890.25

Ross Mayfield 40,000 1.31% $ 2.50 7/2004 $ 27,628.15 $ 61,051.00

60,000 1.97% $ 2.75 7/2004 $ 45,586.45 $100,734.15

Paul Wescott 150,000 4.92% $ 2.75 9/2004 $113,966.13 $251,835.37
</TABLE>

(1) The exercise prices of the options included in this table reflect
the board's bona fide estimation of market value of the shares on the
various grant dates. The shares underlying each of these options are
restricted shares.

39
<PAGE> 43

COMPENSATION OF DIRECTORS

Directors of the Company may receive stock option grants for service on
the board at the sole discretion of non-interested board members. Messrs. Cole
and Mooney each received options to purchase 100,000 shares of the Company's
common stock in January 1999 at an exercise price of $1.60 per share for their
services as board members. Mr. Glen received options to purchase 175,000 shares
of Company stock in April 1999 at an exercise price of $1.60 per share for his
service as a board member. For their services on the board, Messrs. Sledge and
Dixon each received options to purchase 100,000 shares of Company stock in
October 1999 at an exercise price of $2.75 per share. RateXchange's non-employee
directors receive $500 for each board meeting attended in person and $100 for
each board meeting attended telephonically, plus out-of-pocket expenses. There
is no separate compensation for committee meeting attendance.

EMPLOYMENT AND TERMINATION AGREEMENTS

As part of our restructuring to focus on the business of RateXchange I,
Inc., Mr. Cole agreed to resign his position as an executive officer of the
Company, effective February 2000. Mr. Mooney resigned his positions as a
director and an executive officer in February 2000. In March 2000, Mr. Mooney
resigned as Secretary and Treasurer of the Company. Pursuant to severance
agreements the Company and Messrs. Cole and Mooney executed, Mr. Cole and Mr.
Mooney will continue to provide consulting services to us during our transition
phase. During this phase, Messrs. Cole and Mooney will receive consulting fees
and six-months' severance pay. They may also receive performance bonuses and
health insurance.

Also in February 2000, we appointed Donald Sledge our Chairman and Chief
Executive Officer, Ross Mayfield our President and Paul Wescott our Chief
Operating Officer. In March 2000, we appointed Philip Rice our Executive Vice
President and Chief Financial Officer. We have executed or intend to execute
separate employment agreements with Messrs. Sledge, Rice, Mayfield and Wescott.

Mr. Sledge's employment agreement provides for an annual base salary of
$300,000, an annual incentive bonus of up to 50% of base salary, stock purchase
rights, an expense reimbursement and other employee benefits. Pursuant to this
agreement, Mr. Sledge's employment may be terminated for cause or upon death or
disability so long as we pay all compensation owed as of the date of
termination. Mr. Sledge's employment may be terminated without cause if we pay
(1) severance pay equal to one year's annual salary and (2) a bonus payment of
$150,000.

Mr. Rice's employment agreement provides for an annual base salary of
$200,000, an annual incentive bonus of up to 50% of his base salary, option
rights and other employee benefits. Pursuant to this agreement, Mr. Rice's
employment may be terminated for cause, or upon death or disability, and all of
our obligations to pay compensation and provide benefits shall thereafter cease.
Mr. Rice's employment may be terminated without cause if we pay to Mr. Rice his
base salary for twelve months following termination, as well as a lump sum
payment of $100,000, and provide Mr. Rice certain other benefits.

We intend to enter into an employment agreement with Mr. Mayfield that
provides for an annual base salary of $165,000, an annual incentive bonus of up
to 50% of Mr. Mayfield's base salary, option rights and other employee benefits.
Pursuant to this agreement, Mr. Mayfield's employment may be terminated for
cause or upon death or disability, and all of our obligations to pay
compensation and provide benefits shall thereafter cease. Mr. Mayfield's
employment may be terminated without cause if we pay Mr. Mayfield's base salary
for twelve months following termination, as well as a lump sum payment of
$100,000, and provide Mr. Mayfield certain other benefits.

We intend to enter into an employment agreement with Mr. Wescott that
provides for an annual base salary of $200,000, an annual incentive bonus of up
to 50% of his base salary, option rights and other employee benefits. Pursuant
to this agreement, Mr. Wescott's employment may be terminated for cause, or upon
death or disability, and all of our obligations to pay compensation and provide
benefits shall thereafter cease. Mr. Wescott's employment may be terminated
without cause if we pay to Mr. Wescott his base salary for twelve months
following termination, as well as a lump sum payment of $100,000, and provide
Mr. Wescott certain other benefits.

40
<PAGE> 44

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Prior to creating the Compensation Committee during 1999, members of the
board performed all functions currently delegated to the committee. During 1999,
the following directors served as Compensation Committee members: Douglas Cole,
John Dixon and Douglas Glen. Currently, the Compensation Committee is composed
of Jonathan Merriman, Ronald Spears and Gordon Hutchins, Jr. John Dixon, Douglas
Glen and Douglas Cole resigned from the Committee in 2000 in conjunction with
their resignations from the board.

DOUGLAS COLE

In addition to his membership on the Compensation Committee, until
February 2000 Mr. Cole was our Chief Executive Officer, President and Principal
Financial Accounting Officer. Furthermore, in 1999, Mr. Cole served as Chief
Executive Officer of PolarCap, Inc., our wholly-owned subsidiary and director of
RateXchange I, Inc., another subsidiary.

Mr. Cole is acting Chief Executive Officer and a director of Fulcrum
International, Inc. Mr. Glen, one of our former Compensation Committee members,
was also a director of Fulcrum and has served on its compensation committee or
board equivalent.

Mr. Cole was promisor on two notes held by us for the purchase of
Company shares in the principal amounts of $22,257.40 and $125,000 and dated
January 2, 1999, and December 18, 1998, respectively. Interest on both notes was
6 1/2 % APR, and, together with any unpaid principal on the notes, was due on
January 2, 2001, and December 18, 2000, respectively. The greatest aggregate
amount outstanding on the notes during 1999 was approximately $23,703 and
$133,000, respectively, on December 31, 1999. In February 2000, Mr. Cole fully
satisfied his obligations under the January 2, 1999 note; however, because Mr.
Cole paid the entire principal amount owed under this note early at our request,
we agreed to waive unpaid accrued interest in the approximate amount of $1,500.
In March 2000, Mr. Cole paid the December 18, 1998 note in full, including all
accrued interest.

JOHN DIXON

During 1999, John Dixon was as a member of the Compensation Committee;
however, he has never been an officer or employee of the Company or its
subsidiaries. Mr. Dixon resigned as a director in February 2000.

DOUGLAS GLEN

During 1999, Douglas Glen was a member of the Compensation Committee;
however, he has never been an officer or employee of the Company or its
subsidiaries. Mr. Glen is a director of Fulcrum International, Inc. and has
served on that company's compensation committee or board equivalent. Mr. Cole,
one of our Compensation Committee members, is the acting Chief Executive Officer
and a director of Fulcrum. Mr. Glen resigned as our director in March 2000.

EDWARD MOONEY

Mr. Mooney, who participated in board deliberations regarding executive
officer compensation, also served as our Executive Vice President, Secretary and
Treasurer during 1999. Mr. Mooney resigned as both executive officer and
director in February 2000. In addition, during 1999 Mr. Mooney served as
Director and Secretary of RateXchange I, Inc., one of our subsidiaries, and
Director of Telenisus Corporation, one of our former subsidiaries. Currently, he
is an employee of Maroon Bells Capital Partners, Inc., a merchant investment
banking firm that is a party to a consulting agreement with us.

On December 15, 1998, we entered into an advisory agreement with Maroon
Bells Capital Partners, Inc. for 18 months with an automatic 12 month renewal.
We anticipate renewing the contract until at least January 2001. MBCP is one of
our significant shareholders. Pursuant to the advisory agreement, MBCP provides
certain advisory and business development services in exchange for a monthly
advisory fee. In addition, MBCP will be paid a

41
<PAGE> 45
success fee upon the completion of certain merger and acquisition and business
development activities on our behalf. The cost of the MBCP consulting agreement
to us during 1999 was $120,000 in advisory fees, $315,800 in success fees for
financings and acquisitions and warrants to purchase 250,000 of our shares at
$2.75 per share. We anticipate paying to MBCP at least $120,000 in advisory fees
and at least $150,000 in structuring and financing success fees during 2000.

Mr. Mooney was promisor on a note held by us for the purchase of 400,000
Company shares in the amount of $87,520 and dated December 18, 1998. The note
was secured and accrued interest at a rate of six and one-half percent (6 1/2%)
APR, with principal and interest due in two years on December 18, 2000. The
largest aggregate amount owed by Mr. Mooney during 1999 was approximately
$93,550 on December 31, 1999. In February 2000, Mr. Mooney paid the note in
full, including all accrued interest.

DONALD SLEDGE

As a board member, Mr. Sledge participated in board deliberations
regarding executive officer compensation. Mr. Sledge was appointed our Chief
Executive Officer in February 2000 and also served as Chief Executive Officer of
RateXchange I, Inc. during 1999. Mr. Sledge's son is also an employee of
RateXchange I, Inc., earning a base salary of approximately $70,000 annually.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding beneficial
ownership of our common stock, other than directors' qualifying shares, as of
July 18, 2000, by (i) each person who is known by us to own beneficially more
than five percent, (ii) each of our directors and director nominees, (iii) each
of our executive officers including all those who served as chief executive
officer during the 1999 fiscal year and (iv) all directors and executive
officers as a group.

<TABLE>
<CAPTION>
NON-MANAGEMENT BENEFICIAL OWNERS SHARES BENEFICIALLY OWNED PERCENTAGE (1)
-------------------------------- ------------------------- --------------
<S> <C> <C>
Maroon Bells Capital Partners, Inc. (2) 1,800,844 10.07%
450 Sansome Street, Suite 1550, San Francisco, CA 94111

Theodore Swindells (3) 1,900,844 10.63%
450 Sansome Street, Suite 1550, San Francisco, CA 94111
</TABLE>

<TABLE>
<CAPTION>
DIRECTORS AND EXECUTIVE OFFICERS
--------------------------------
<S> <C> <C>
Douglas Cole (4) 868,151 4.93%

Gordon Hutchins, Jr. (5) 58,333 *

Ross Mayfield (6) 230,738 1.31%

D. Jonathan Merriman (7) 309,900 1.77%

Philip Rice (8) 27,500 *

Donald Sledge (9) 1,000,000 5.43%

Ronald Spears (10) 50,000 *

Christopher Vizas (11) 50,000 *

Paul Wescott (12) 82,250 *
</TABLE>

42
<PAGE> 46

<TABLE>
<S> <C> <C>
All Directors and Executive Officers (13) 2,661,872 13.93%
</TABLE>

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

* Less than one percent.

(1) Applicable percentage ownership is based on 17,411,174 shares of common
stock outstanding as of July 18, 2000. Pursuant to the rules of the
Securities and Exchange Commission, shares shown as "beneficially"
owned include all shares of which the persons listed have the right to
acquire beneficial ownership within 60 days of the record date,
including (a) shares subject to options, warrants or any other right
exercisable within 60 days of the record date, even if these shares are
not currently outstanding, (b) shares attainable through conversion of
other securities, even if these shares are not currently outstanding,
(c) shares that may be obtained pursuant to the power to revoke a
trust, discretionary account or similar arrangement and (d) shares that
may be obtained pursuant to the automatic termination of a trust,
discretionary account or similar arrangement. This information is not
necessarily indicative of beneficial ownership for any other purpose.
Our directors and executive officers have sole voting and investment
power over the shares of common stock held in their names, except as
noted in the following footnotes.

(2) Includes 1,069,469 shares of common stock beneficially held by Theodore
Swindells, including Mr. Swindells' currently exercisable warrant to
purchase 25,000 shares at $5.00 per share, and 200,000 shares of common
stock held of record by Phillip Magiera. Messrs. Swindells and Magiera
are principals of Maroon Bells Capital Partners, Inc. (MBCP). MBCP
disclaims beneficial ownership of these shares. Also includes currently
exercisable warrants to purchase 250,000 shares at $2.75 per share,
3,375 shares at $5 per share and 200,000 shares at $14.40 per share.

(3) Includes 531,375 shares of common stock held of record by MBCP,
including currently exercisable warrants to purchase 453,375 shares
held by MBCP. Mr. Swindells, who is a principal of MBCP, may be deemed
a beneficial owner of the shares held of record by MBCP. Mr. Swindells
disclaims beneficial ownership of these shares. Also includes 300,000
shares of common stock held by Mr. Swindells' family and warrants to
purchase 25,000 shares at $5.00 per share.

(4) Includes 35,500 shares held by members of Mr. Cole's family. Includes
currently exercisable options to purchase 100,000 shares of common
stock at $1.60 per share, and 100,000 shares of common stock at $7 per
share. Mr. Cole resigned as our Chief Executive Officer in February
2000 and as a director in June 2000.

(5) Includes Mr. Hutchins currently exercisable options to purchase 58,333
shares of common stock at $5.69 per share. Mr. Hutchins also holds
options to purchase 41,667 shares of common stock that are not
currently exercisable.

(6) Includes Mr. Mayfield's currently exercisable options to purchase
20,000 shares of common stock at $2.50 per share, 30,000 shares of
common stock at $2.75 per share, and 164,063 shares of common stock at
$7 per share. Mr. Mayfield also holds options to purchase 185,937
shares of common stock that are not currently exercisable.

(7) Includes Mr. Merriman's currently exercisable options to purchase
50,000 shares of common stock at $7 per share. Mr. Merriman also holds
options to purchase 50,000 shares of common stock that are not
currently exercisable.

(8) Includes Mr. Rice's currently exercisable warrant to purchase 4,167
shares of common stock at $14.40 per share. Mr. Rice also holds options
to purchase 250,000 shares of common stock that are not currently
exercisable.

(9) Includes Mr. Sledge's currently exercisable options to purchase 100,000
shares of common stock at $2.75 per share, and 900,000 shares of common
stock at $7 per share. Mr. Sledge holds additional options to purchase
600,000 shares of common stock that are not currently exercisable.

(10) Includes Mr. Spears' currently exercisable options to purchase 50,000
shares of common stock at $7 per share. Mr. Spears also holds options
to purchase 50,000 shares of common stock that are not currently
exercisable.

43
<PAGE> 47

(11) Includes Mr. Vizas' currently exercisable options to purchase 50,000
shares of common stock at $7 per share. Mr. Vizas also holds options to
purchase 50,000 shares of common stock that are not currently
exercisable.

(12) Includes Mr. Wescott's currently exercisable options to purchase 75,000
shares of common stock at $2.75 per share, and a currently exercisable
warrant to purchase 2,083 shares of common stock at $14.40 per share.
Mr. Wescott also holds options to purchase an additional 325,000 shares
of common stock that are not currently exercisable.

(13) The total for directors and officers as a group includes 958,226
shares of common stock and 1,697,396 shares subject to outstanding
stock options that are currently exercisable, and 6,250 shares subject
to outstanding warrants that are currently exercisable.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Due to our closely held nature, we have engaged in certain transactions
with our officers, directors, principal shareholders and affiliates. We believe
that each of the transactions described below was entered into on terms no less
favorable to us than could have been obtained from unaffiliated third parties.
All transactions between us and our officers, directors, principal shareholders
and affiliates were reviewed and passed upon by the Audit Committee of the Board
of Directors.

- Our Board of Directors authorized the issuance to Theodore Swindells,
Douglas Cole and another unrelated party a total of 666,574 shares of
common stock in exchange for a total of $66,657 in secured notes dated
January 2, 1999. The board has placed restrictions on this stock so that
the stock cannot be sold, traded, assigned, transferred or pledged until
we reach $10,000,000 in gross revenues in a one-year period. Mr.
Swindells is a significant shareholder, either directly or through
beneficial ownership of our stock owned of record by Maroon Bells
Capital Partners, Inc. Mr. Cole was one of our directors and executive
officers. Interest on the notes was 6.5% APR and, together with any
unpaid principal on the notes, was due on January 2, 2001. The greatest
aggregate amount outstanding on the notes during 1999 was $70,990.13, on
December 31, 1999. In February 2000, the parties fully satisfied their
obligations under the January 2, 1999, notes. Because Messrs. Swindells
and Cole paid the entire principal amount owed under these notes early
at our request, we agreed to waive unpaid accrued interest in the
approximate amount of $4,700.

- On December 15, 1998, we entered into an advisory agreement with MBCP
for 18 months with an automatic 12 month renewal. We anticipate renewing
the contract until at least January 2001. MBCP, a merchant banking firm,
is one of our significant shareholders. Pursuant to the advisory
agreement, MBCP provides certain advisory and business development
services in exchange for a monthly advisory fee. In addition, MBCP is
paid a success fee upon the completion of certain merger and acquisition
and business development activities on our behalf. The cost of the MBCP
consulting agreement to us during 1999 was $120,000 in advisory fees,
$315,800 in success fees for financings and acquisitions and warrants to
purchase 250,000 shares of our common stock at a price of $2.75 per
share. We anticipate paying to MBCP at least $120,000 in advisory fees
and at least $150,000 in structuring and financing success fees during
2000.

Theodore Swindells is a principal of MBCP. Edward Mooney, a former
director and executive officer of ours, is an employee of MBCP. Mr.
Mooney's interest in the consulting agreement is limited to his interest
in MBCP as an employee of that company. Mr. Mooney is not a shareholder
of MBCP.

44
<PAGE> 48

- On December 18, 1998, Douglas Cole, our former Chief Executive Officer
and one of our former directors, executed a promissory note to us under
which Mr. Cole purchased 250,000 shares of our common stock at a price
of $0.50 per share. The note was secured and accrued interest at a rate
of six and one-half percent (6 1/2%) APR, with principal and interest
due in two years on December 18, 2000. The largest aggregate amount owed
by Mr. Cole during 1999 on this note was approximately $133,000 on
December 31, 1999. In March 2000, Mr. Cole paid the note in full,
including all accrued interest.

- On December 18, 1998, Edward Mooney, a former director and executive
officer, executed a promissory note to us under which Mr. Mooney
purchased 400,000 shares of our common stock at an average price of
$0.2188 per share. The note was secured and accrued interest at a rate
of six and one-half percent (6 1/2%) APR, with principal and interest
due in two years on December 18, 2000. The largest aggregate amount owed
by Mr. Mooney during 1999 was approximately $93,550 on December 31,
1999. In February 2000, Mr. Mooney paid the note in full, including all
accrued interest.

- In March 1999, we sold 525,000 shares of common stock to Theodore
Swindells in exchange for a note in the amount of $560,000 and bearing
interest at a rate of six and one-half percent (6 1/2%) APR, due in
March 2001. Mr. Swindells' obligation under this note was fully
satisfied in February 2000. Because Mr. Swindells paid the entire
principal amount owed under the note more than one year early, we agreed
to waive all interest accrued in the amount of approximately $25,000.

- In conjunction with a private offering of our securities, we paid the
investment banking firm First Security Van Kasper a commission
consisting of 7% of the aggregate proceeds of the offering and warrants
to purchase shares of our common stock in an amount equal to (a) 7% of
the common stock purchased by investors at an exercise price of $12.00
per share, and (b) 7% of the warrants purchased by investors at an
exercise price of $14.40 per share.

In February 2000, RateXchange I, Inc. closed a $2,000,000 convertible
note offering. The note offered was convertible into RateXchange I, Inc.
common stock at a price per share to be determined in an anticipated
subsequent financing of RateXchange I, Inc. As a result of our new
business strategy, we offered to such note holders the right to convert
their notes into our common stock at an exchange rate of $5.00 per
share. In addition, we agreed to issue such holders an aggregate of
500,000 warrants to purchase common stock at $5.00 per share. Any note
holders who decline this offer will be entitled to rescind their
original investment and receive their principal back in full, including
accrued interest. As of July 18, 2000, note holders have elected to
convert $1,375,000 of the notes.

Pursuant to the offer to convert the RateXchange I notes into our common
stock, and warrants to purchase our common stock, FSVK has elected to
convert its $525,000 note into 105,000 shares of common stock, as well
as a warrant to purchase an additional 131,250 shares at $5.00 per
share. In addition, we will issue to FSVK a warrant to purchase 40,770
shares at $5.00 per share to compensate FSVK for its services as
placement agent during the RateXchange I, Inc. convertible note
offering.

Mr. Merriman, a member of our Board of Directors since February 2000, is
a director of FSVK, as well as its Managing Director and Head of the
Equity Capital Markets Group.

- Also pursuant to the offer to convert the RateXchange I notes into our
common stock and warrants to purchase our common stock, Theodore
Swindells, one of our significant shareholders, has elected to convert
his $100,000 note into 20,000 shares, as well as a warrant to purchase
an additional 25,000 shares at $5.00 per share.

45
<PAGE> 49

ABOUT THIS PROSPECTUS

This prospectus is part of a registration statement we have filed with
the Securities and Exchange Commission to register 6,638,105 shares of our
common stock, par value $.0001. This prospectus does not include all of the
information contained in the registration statement and the exhibits to the
registration statement. For further information about RateXchange and the
shares, you should read the registration statement and the exhibits to the
registration statement. Statements contained in this prospectus concerning
documents we have filed with the SEC as exhibits to the registration statement
or otherwise are not necessarily complete and, in each instance, you should
refer to the actual filed document. Nevertheless, we have provided all material
information from the exhibits that is relevant to this prospectus.

We have not authorized anyone to provide you with any information that
is different from the information contained in this prospectus. The selling
stockholders are offering to sell and seeking offers to buy the shares 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 the sale of any shares.

WHERE YOU CAN FIND MORE INFORMATION

We are required to file annual, quarterly and special reports and proxy
statements and other information with the SEC. Our SEC filings are available to
the public over the Internet at the SEC's web site at http://www.sec.gov. You
may also read and copy any document we file at the SEC's Public Reference Room
at 450 Fifth Street, Mail Stop 1-2, N.W., Washington, D.C. 20549. Please call
the SEC at 1-800-SEC-0330 for additional information on the public reference
rooms.

LEGAL MATTERS

The validity of the securities offered hereby by the selling
stockholders has been passed upon for us by Snell & Wilmer, L.L.P., Salt Lake
City, Utah.

EXPERTS

The consolidated financial statements of RateXchange Corporation and
subsidiaries as of December 31, 1999 and 1998 and for the fiscal years then
ended, as well as the results of our operations and cash flows from the years
ended December 31, 1999, 1998 and 1997 and for the period from September 30,
1998 (the beginning of our development stage) to December 31, 1999, have been
audited by Crouch, Bierwolf & Chisholm, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in accounting and auditing.

<PAGE> 50
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Financial Statements of RateXchange Corporation:

Report of Independent Auditors................................................................................... F-2

Consolidated Balance Sheets as of December 31, 1999 and December 31, 1998........................................ F-3

Consolidated Statements of Operations for the years ended December 31, 1999, December 31, 1998,
and December 31, 1997............................................................................................ F-4

Consolidated Statements of Stockholders' Equity for the period December 31, 1996 to December 31, 1999............ F-5

Consolidated Statements of Cash Flows for the years ended December 31, 1999, December 31, 1998,
and December 31, 1997.......................................................................................... F-7

Notes to Consolidated Financial Statements....................................................................... F-8

Unaudited Consolidated Balance Sheet as of March 31, 2000........................................................ F-16

Unaudited Consolidated Statement of Income for the three months ended March 31, 2000 and 1999.................... F-17

Unaudited Consolidated Statement of Cash Flows for the three months ended March 31, 2000 and 1999................ F-18

Notes to Unaudited Consolidated Financial Statements............................................................. F-19
</TABLE>

F-1

<PAGE> 51

INDEPENDENT AUDITORS REPORT

To the
Board of Directors and Stockholders
of NetAmerica.com Corporation and Subsidiaries

We have audited the accompanying consolidated balance sheets of NetAmerica.com
Corporation (a Delaware corporation) (a development stage company) as of
December 31, 1999 and 1998 and the related consolidated statements of
operations, stockholders' equity and cash flows for the years ended December 31,
1999, 1998 and 1997 and for the period from September 30, 1998 (beginning of
development stage) to December 31, 1999. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audit.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
NetAmerica.com Corporation at December 31, 1999 and 1998, and the results of its
operations and cash flows from the years ended December 31, 1999, 1998 and 1997
and for the period from September 30, 1998 (beginning of development stage) to
December 31, 1999, in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 14, the Company's
recurring operating losses and lack of working capital raise substantial doubt
about its ability to continue as a going concern. Management's plans in regard
to those matters are also described in Note 14. The financial statements do not
include any adjustments that might result from outcome of this uncertainty.

/s/ Crouch, Bierwolf & Chisholm

February 29, 2000
Salt Lake City, Utah

F-2
<PAGE> 52

NETAMERICA.COM CORPORATION
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
ASSETS
December 31,
---------------------------
1999 1998
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash (Note 2) $ 451,615 $ 528,516
Interest Receivable (Note 9) 150,608 1,638
Prepaid Expenses 5,814 --
Note Receivable (Note 9) 1,787,531
----------- -----------
TOTAL CURRENT ASSETS 2,395,568 530,154

PROPERTY & EQUIPMENT (NET) (NOTE 4) 175,349 6,875

OTHER ASSETS
Investment in Affiliate (Note 13) 75,000 --
Goodwill (Note 6) -- 41,117
Deposits (Note 2) 103,305 --
Note Receivable (Note 9) -- 300,000
----------- -----------
TOTAL ASSETS 2,749,222 878,146
=========== ===========

LIABILITIES AND STOCKHOLDERS EQUITY

CURRENT LIABILITIES
Accounts Payable and Accrued Expenses $ 1,639,301 $ 68,200
Accrued Taxes (Note 7) 85,000 --
Short Term Debt (Note 12) 800,000 --
----------- -----------
TOTAL CURRENT LIABILITIES 2,524,301 68,200

COMMITMENTS AND CONTINGENCIES (NOTE 10) -- --

MINORITY INTERESTS (NOTE 16) -- --

STOCKHOLDERS' EQUITY
Common Stock, $.0001 par value; 300,000,000 shares
authorized; issued and outstanding; 14,087,425 shares
and 7,243,023 shares, respectively 1,409 724
Capital in Excess of Par Value 8,891,088 2,147,518
Retained (Deficit) Accumulated During Development Stage (8,667,576) (1,338,296)
----------- -----------
Total stockholders' equity 224,921 809,946
=========== ===========
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,749,222 $ 878,146
=========== ===========
</TABLE>

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

F-3
<PAGE> 53

NETAMERICA.COM CORPORATION
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
Beginning of
Development
Stage
For the For the For the September 30,
Year ended Year ended Year ended 1998 though
December 31, December 31, December 31, December 31,
1999 1998 1997 1999
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
REVENUE $ -- $ -- $ -- $ --

EXPENSES
Selling, General & Administrative 5,048,614 174,176 200 5,222,790
Bad Debt (Note 7) 863,750 885,000 -- 1,748,750
Depreciation and Amortization 25,093 4,363 -- 29,456
Loss from write down of Goodwill (Note 6) 1,537,300 44,855 -- 1,582,155
------------ ------------ ------------ ------------

TOTAL EXPENSES 7,474,757 1,108,394 200 8,583,151

OTHER INCOME (Expenses)

Interest Income 151,276 2,214 -- 153,490
Interest Expense (13,019) (10,773) -- (23,792)
Other Income 220 -- -- 220
Loss Allocated to Minority Interest 7,000 -- -- 7,000
------------ ------------ ------------ ------------

Income (Loss) Before Taxes (7,329,280) (1,116,953) (200) (8,446,233)

Taxes (Note 3) -- -- -- --

INCOME (LOSS) (7,329,280) (1,116,953) (200) (8,446,233)
============ ============ ============ ============

Loss Per Common Share (Note 2) --
Basic (0.57) (0.68) --
============ ============ ============
Fully Diluted (0.57) (0.68)
============ ============ ============
Weighted Average Number
of Shares (Note 2) 12,863,020 1,636,919 200,000
============ ============ ============
</TABLE>

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

F-4
<PAGE> 54

NETAMERICA.COM CORPORATION
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the Period December 31, 1996 to December 31, 1999

<TABLE>
<CAPTION>
Accumulated
Deficit during Subscriptions/
Common Par Paid-In Development Minority Notes
Shares Value Capital Stage Interest Receivable
------- ----- ------- -------------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996 200,000 20 219,823 (221,143) -- --
Contribution by Officer/Directors -- -- 1,300 -- -- --

Net (loss) for year ended
December 31, 1997 -- -- -- (200) -- --
--------- --- --------- --------- ------ ---------
Balance, December 31, 1997 200,000 20 221,123 (221,343) -- --

Shares issued for
services at $.001 1,000,000 100 900 -- -- --

Shares issued for acquisition
at $.001 2,400,000 240 2,160 -- -- --

Shares issued for conversion of
debt at $.34 1,399,773 140 474,559 -- -- --

Shares issued for
services at $1.00 87,000 9 86,991 -- -- --

Shares issued for cash at $1.07 1,106,250 110 1,179,890 -- -- --

Less: Offering Costs -- -- (118,000) -- -- --

Shares issued for
subscription receivable
at an average price of $0.40 1,050,000 105 299,895 -- -- (300,000)

Net (loss) for year ended
December 31, 1998 -- -- -- (1,116,953) -- --
--------- --------- --------- --------- --------- ---------
Balance, December 31, 1998 7,243,023 724 2,147,518 (1,338,296) -- (300,000)

Options/Warrants offered at $.05
and $.33 per share (Note 11) -- -- 261,835 -- -- --

Shares issued for cash and notes at
$0.10 per share (Note 8) 916,574 92 91,565 -- -- --

Shares issued for cost
reimbursement at $0.10 per
share (Note 8) 322,500 32 32,218 -- -- --

Shares issued for cash and notes
at $1.07 per share (Net) (Note 8) 3,870,938 387 4,047,713 -- -- (3,411,657)
</TABLE>

F-5
<PAGE> 55

(Continued)
NETAMERICA.COM CORPORATION
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the Period December 31, 1996 to December 31, 1999

<TABLE>
<CAPTION>
Accumulated
Deficit during Subscriptions/
Common Par Paid-In Development Minority Notes
Shares Value Capital Stage Interest Receivable
------ ----- -------- -------------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
Shares issued for conversion of
A1 Internet debt at $1.12
(average) (Note 7) 193,186 19 216,860 -- -- --

Shares issued for services at $1.07
per share (Note 8) 268,500 27 287,206 -- -- --

Shares issued for note conversion
at $1.00 per share (Note 8) 30,000 3 29,997 -- -- --

Shares issued for services at $1.07
per share (Note 8) 30,000 3 31,997 -- -- --

Shares issued for cash at $1.60
per share (Net) (Note 8) 515,188 52 628,220 -- -- --

Shares issued for services at $1.60
per share (Note 8) 122,518 12 196,017 -- -- --

Shares issued for purchase of
RateXchange at $1.60 per
share (Note 6) 574,998 58 919,942 -- -- --

Subscription receivables
collected (Note 9) -- -- -- -- -- 1,924,126

Shares issued from subsidiary for
services (Note 16) -- -- -- -- 7,000 --

Net (loss) for year ended
December 31, 1999 -- -- -- (7,329,280) (7,000) --
========== ========== ========== ========== ========== ==========
Balance, December 31, 1999 14,087,425 1,409 8,891,088 (8,667,576) -- (1,787,531)
========== ========== ========== ========== ========== ==========
</TABLE>

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

F-6
<PAGE> 56

NETAMERICA.COM CORPORATION
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
Beginning of the
For the For the For the Development
Year Year Year Stage September
Ended Ended Ended 30, 1998 to
December 31, December 31, December 31, December 31,
1999 1998 1997 1999
----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss) (7,329,280) (1,116,953) (200) (8,446,233)
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities
Depreciation and Amortization 25,093 4,363 -- 29,456
Bad Debt (Note 7) 863,750 885,000 -- 1,748,750
Write Off of Goodwill (Note 6) 1,537,300 44,855 -- 1,582,155
Stock for Services/Expenses 613,318 88,926 -- 702,244
Stock for Interest -- 10,773 -- 10,773
Stock for Accounts Payable conversion (30,000) -- -- (30,000)
(Increase) Decrease in Accounts
Receivable and Other Advances (155,184) (921,138) -- (1,076,322)
Increase (Decrease) in Accounts
Payable and Accrued Expenses 1,647,313 4,000 (1,100) 1,651,313
----------- ----------- ----------- -----------
TOTAL (2,827,690) (1,000,174) (1,300) (3,827,864)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of RateXchange (450,000) -- -- (450,000)
Payment for Purchase of Equipment (168,322) -- -- (168,322)
Payment for Deposits (103,305) -- -- (103,305)
Cash Purchased by Stock Acquisition
of Subsidiary (82,240) 3,690 -- (78,550)
Advances to Affiliates (721,871) -- -- (721,871)
----------- ----------- ----------- -----------
TOTAL (1,525,738) 3,690 -- (1,522,048)

CASH FLOWS FROM FINANCING ACTIVITIES
Loans and Other Debt (Net) 800,000 463,000 1,300 1,263,000
Proceeds from Stock Sales 3,557,427 1,180,000 -- 4,737,427
Less: Public Offering Costs (80,900) (118,000) -- (198,900)
----------- ----------- ----------- -----------
TOTAL 4,276,527 1,525,000 1,300 5,801,527

INCREASE (DECREASE) IN CASH (76,901) 528,516 -- 451,615

CASH BEGINNING OF PERIOD 528,516 -- -- --
=========== =========== =========== ===========
CASH END OF PERIOD 451,615 528,516 -- 415,615
=========== =========== =========== ===========

Supplementary Cash Flow Information
Cash Paid For:
Interest -- -- -- --
Taxes -- -- -- --
Stock Issuances for:
Services and Expenses $ 613,318 $ 99,699 -- $ 1,085,182
Acquisition of RateXchange $ 920,000 -- -- $ 920,000
Commission on stock sales $ 196,029 -- -- $ 196,029
A1 Internet Settlement $ 216,879 -- -- $ 216,879
Account payable conversion $ 30,000 -- -- $ 30,000
</TABLE>

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

F-7
<PAGE> 57

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 BACKGROUND AND HISTORY

NetAmerica.com Corporation is a consolidated group of companies
including the parent corporation, NetAmerica.com Corporation
(NetAmerica.com), and its subsidiaries, RateXchange, Inc. (RateXchange)
and PolarCap, Inc. (PolarCap).

NetAmerica.com (formerly Venture World, Ltd.) is a Delaware corporation
organized on May 6, 1987 for the purpose of seeking out and developing
any general business opportunity.

RateXchange, a Delaware corporation organized in June 1999, is in the
business of business-to-business e-commerce seeking to develop new
exchange services for the telecommunications market.

PolarCap is a California corporation organized on April 7, 1997 for the
purpose of investing in and developing rights to a variety of software
technologies related to multimedia, development tools and application
technologies. Together, all companies are combined into NetAmerica.com
Corporation, a consolidated group of corporations known in this report
as the Company.

The Company is in its planning stages for its eventual day to day
business and has not generated any revenues from its planned operations.
The Company is defined as a development stage company per SFAS No. 7.
The Company had no operations or business before September 30, 1998. All
operations since the start of the development stage, September 30, 1998,
when the Company acquired PolarCap, have been reported.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of
NetAmerica.com and its subsidiaries. Collectively, these entities are
referred to as the Company. All significant intercompany transactions
and accounts have been eliminated.

Cash and Cash Equivalents

For purposes of the statements of cash flows, the Company considers all
highly liquid debt instruments with an original maturity of three months
or less to be equivalents.

Nonmonetary Transactions

Nonmonetary transactions are transactions for which no cash was
exchanged and for which shares of common stock were exchanged for goods
and services. These transactions are recorded at fair market value as
determined by the board of directors based on the quoted price of the
stock (restricted and unrestricted) at the time of the transaction.

Earnings Per Share and Average Shares Outstanding

Earnings (loss) per share are computed based on the weighted average
method. Options and warrants on shares of common stock were not included
in computing diluted earnings per share because their effects were
antidilutive (2,990,000 options and 625,000 warrants).

Concentration of Risk - Cash

At December 31, 1999, the Company had several bank accounts, many of
which exceeded the $100,000 limit of FDIC insured balances. As of the
end of the year, the Company had $53,159 and $198,452 at risk to such
loss.

Deposits

NetAmerica.com issued a letter of credit for security for the
RateXchange lease (Note 10). This letter of credit is secured by a
Certificate of Deposit in the amount of $103,305.

F-8
<PAGE> 58

NOTE 3 INCOME TAXES

The Company adopted Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes" in the fiscal year ended December 31, 1997
and has applied the provisions of the statement on a retroactive basis
to all the previous years which resulted in no significant adjustment.

Statement of Financial Accounting Standards No. 109 "Accounting for
Income Taxes" requires an asset and liability approach for financial
accounting and reporting for income tax purposes. This statement
recognizes (a) the amount of taxes payable or refundable for the current
year and (b) deferred tax liabilities and assets for future tax
consequences of events that have been recognized in the financial
statements or tax returns.

Deferred income taxes result from temporary differences in the
recognition of accounting transactions for tax and financial reporting
purposes. There were no temporary differences at December 31, 1999 and
earlier years; accordingly, no deferred tax liabilities have been
recognized for all years.

The Company has cumulative net operating loss carryforwards over
$8,000,000 at December 31, 1999. No effect has been shown in the
financial statements for the net operating loss carryforwards as the
likelihood of future tax benefit from such operating loss carryforwards
is not presently determinable. Accordingly, the potential tax benefits
of the net operating loss carryforwards, estimated based upon current
tax rates at December 31, 1999 have been offset by valuation reserves in
the same amount. The net operating losses begin to expire in 2007.

NOTE 4 PROPERTY AND EQUIPMENT

The Company capitalizes purchases of long-lived assets that are expected
to give benefit to the Company over the life of the asset. The Company
also capitalizes improvements and costs that increase the value of or
extend the life of the asset.

Capitalized assets are depreciated over the estimated useful lives of
the assets (5 to 7 years for furniture and fixtures, 3 years for
computer equipment) on a straight line basis.

Property and Equipment consists of the following:

<TABLE>
<CAPTION>
December 31,
------------------------
1999 1998
--------- ---------
<S> <C> <C>
Furniture and Fixtures $ 12,323 $ 7,500
Computer Equipment and Software 173,792 --
--------- ---------
186,115 7,500
Less: Accumulated depreciation (10,766) (625)
========= =========
$ 175,349 $ 6,875
========= =========
</TABLE>

Depreciation expense for the years 1999 and 1998 is $10,141 and $625,
respectively.

NOTE 5 USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the
financial statements and revenues and expenses during the reporting
period. In these financial statements, assets, liabilities and earnings
involve extensive reliance on management's estimates. Actual results
could differ from those estimates.

NOTE 6 ACQUISITION OF SUBSIDIARY/GOODWILL

On September 30, 1998, the Company purchased all of the outstanding
stock of PolarCap, Inc. for 2,400,000 shares of stock. The equity of
PolarCap at September 30, 1998 was $(87,310). The value of the stock was
issued at $.001, for a total purchase price of $2,400. All of the assets
of PolarCap were

F-9
<PAGE> 59

established at estimated fair market value leaving a value of $89,710
for goodwill that was to be written off over three years. By the end of
1998, the Company determined that $44,855 of the value of goodwill would
be expensed in the current period based on the estimated continued value
and use of PolarCap and its corporate image, operations and personnel
talent. Amortization expense for 1999 was $14,952. The remaining
goodwill at year end was written off.

In the third quarter, 1999, the Company acquired Rate Exchange, Inc., a
Colorado corporation, in the business of business-to-business e-commerce
seeking to develop new exchange services for the telecommunications
market. The Company paid $574,998 shares of common stock and $450,000 in
a note. The transaction was valued at $1,395,000 ($920,000 in stock and
$450,000 in a note plus out of pocket expenses of $25,000). The fair
market value of Rate Exchange's assets was $(116,134) before the
acquisition, creating goodwill in the amount of $1,511,135. Management
elected to write off all goodwill attributed to RateXchange in 1999.

NOTE 7 ADVANCES TO AFFILIATE/BAD DEBT

On September 30, 1999 the Company negotiated, and later terminated by
mutual agreement, a purchase of 100% of the ownership of NetAmerica,
Inc., subsequently renamed A1 Internet, Inc., an Internet services
provider company based in Seattle, Washington. Between the time the
Company agreed to purchase (September 30, 1999) and the time the
termination agreement was reached (March 1999), the Company advanced
$1,748,750 ($1,531,871 in cash and $216,879 in stock) which was
eventually written off as bad debt. After the March agreement was
reached, A1 Internet agreed to repay certain of the costs incurred prior
to the termination. As part of its plan to repay the costs, A1 Internet
informed the Company that it had entered into an agreement with another
potential acquiror, Halo Holdings of Nevada, Inc., to sell substantially
all of its assets in exchange for shares of common stock and assumption
of certain liabilities, including A1 Internet's obligations to the
Company. In September 1999, after further negotiations, the Company
agreed with A1 Internet (aka Halo) to the following settlement:

- The Company retained certain rights to the name "NetAmerica,"

- A1 Internet transferred to the Company its interest in 100,000
shares of Halo restricted stock,

- The Company agreed to pay $85,000 of past due payroll taxes of
A1 Internet from 1998, and

- All further obligations of the Company to issue stock or options
to A1 Internet were canceled.

The 100,000 shares of Halo stock are being held by the Company at par
value since the stock is restricted, the shares of Halo stock are thinly
traded and Halo has little or no assets and little or no business
activity.

NOTE 8 COMMON STOCK TRANSACTIONS

All stock transactions conducted during the period for which no cash was
exchanged and for which shares of stock were exchanged for assets or
goods and services were recorded at fair market value of the stock as
best determined by the board of directors at the time the share
issuances were authorized. The Company stock had a listed price
beginning December 1998.

Common stock transactions during 1999 are as follows:

During the fourth quarter of 1998, the board of directors approved
several stock transactions that were not completed and issued until
1999:

- 916,574 shares of stock issued for $91,657 in notes to related
parties. ($0.10) (January). The board has placed restrictions on
this stock so that the stock cannot be sold, traded, assigned,
transferred or pledged until the Company reaches $10,000,000 in
gross revenues in a one year time period.

- 322,500 shares issued for cost reimbursements of $32,250 ($.10
per share) (January).

F-10
<PAGE> 60

The remaining stock issuances were approved and issued in 1999:

- 758,438 shares of stock were issued for $727,342 (Net of $80,900
commissions). ($1.07) (February).

- 3,112,500 shares of stock issued for $3,320,000 in notes to
related parties and other investors. ($1.07) (March).

- 268,500 shares of stock issued for $287,233 of legal and
consulting services. ($1.07) (March).

- 193,186 shares of stock issued for $216,879 of debt to creditors
of A1 Internet. ($1.12, average) (March and May).

- 30,000 shares of stock issued in lieu of a $30,000 outstanding
note payable. ($1.00) (March).

- 30,000 shares for services rendered of $32,000. ($1.07) (March).

- 515,188 shares of stock issued for $1.60 per share or $628,272.
(Net of $196,029 in commission paid in stock) (122,518 shares -
see below) (May and June).

- 122,518 shares issued for commissions on private placement of
$1.60 per share. ($1.60 per share) (June). (netted against
proceeds of sale of 515,188 shares-see above).

- 574,998 shares of stock issued for $1.60 per share for Rate
Exchange, Inc. (July).

NOTE 9 SUBSCRIPTIONS RECEIVABLE /NOTE RECEIVABLE- RELATED PARTY

In January 1999, the Company sold 916,574 shares for $91,657 to a
related party and other investors at a price of $.10 per share. (See
Note 8 for additional restrictions placed on stock).

In March 1999, the Company sold 3,112,500 shares to a related party and
other investors in exchange for $3,320,000 in notes receivable at a
price of $1.07 per share.

Of the total subscriptions receivable/note receivable issued during the
year of $3,411,157 and $300,000 issued in 1998, $1,924,126 was
collected. Interest is being assessed at 6.5% and accrued interest on
the subscription receivable was $150,608 at December 31, 1999.

Subsequent to year end, the board of directors of the Company waived the
interest on the purchase of 3,112,500 shares when the notes were
collected in full by February 25, 2000 (originally due by March 31,
2001).

The subscription receivables have been reclassified from the equity
section to the long-term asset section for 1998 to comply with the
comparative nature of the asset in 1999 as a note receivable since the
collection of the receivables occurred in early 2000.

NOTE 10 COMMITMENTS AND CONTINGENCIES

RateXchange negotiated an office lease beginning October 1999 for 36
months with the following terms:

<TABLE>
<CAPTION>
Year Monthly Rent Totals
--------- ------------ --------
<S> <C> <C> <C>
1999-2000 $ 16,325 $195,900
2000-2001 $ 16,676 $200,112
2001-2002 $ 17,028 $204,336
--------
$600,348
========
</TABLE>

F-11
<PAGE> 61

In 1999, RateXchange entered into a term sheet agreement with a vendor
to provide specialized consulting and computer programming to assist in
RateXchange's business plans and operations in the business-to-business
e-commerce niche it was developing. The term sheet was never finalized
into a formal agreement, but some services were provided, and payments
were made for the services that were rendered. The term sheet provided
for the vendor to receive a stock position in RateXchange of up to 10%
for certain services. The Company is in discussion with the vendor
concerning the 10% stock position in RateXchange because the formal
agreement was never completed and the contemplated services were not
fully provided. The ultimate outcome of this discussion is uncertain at
this time. No adjustment has been made in the financial statements for
this uncertainty.

The Company is involved in several issues as follows:

Gregory K. Martin v. NetAmerica., Inc. et al. In the spring of 1999,
Gregory K. Martin, a former officer of both NetAmerica (Seattle)(NAI)
and the Company, brought suit against the Company and others in the
Superior Court of Washington (Civil Action No. 99-2-09171-OSEA). The
suit related to, among other things, Mr. Martin's claims for
compensation, reimbursement for business expenses, certain insurance
benefits, payment of certain other obligations guaranteed by Mr. Martin
(or reimbursement of payments made by him as guarantor), payment of
certain tax and other obligations of a company referred to as
SRG/Quantum that were purportedly assumed by NAI and the Company,
issuance of options to purchase stock of the Company and other remedies
relating to the terminated acquisition and other transactions. The suit
was conditionally settled by an agreement dated May 22, 1999 among NAI
(referred to therein as "A1"), the Company and Mr. Martin (with William
Fritts undertaking certain limited obligations). Pursuant to that
agreement, Mr. Martin took a voluntary non-suit, i.e. dismissed his suit
without prejudice. Mr. Martin may have the ability to attempt to void
the settlement pursuant to noncompliance on the part of NAI to their
part of the settlement. As of December 31, 1999, the Company has
fulfilled all of its current obligations under the settlement agreement.

NAI Office Lease. The Company understands that NAI leased certain office
space in Seattle pursuant to a lease agreement. The lease's
identification of the party intended to be obligated as tenant may not
be entirely clear. In early 1999, the Landlord asserted that the Company
may be liable for NAI's obligations under that lease, although the
Landlord did not clearly present its basis for that assertion. The
Landlord brought suit against NAI for breach of this lease and also
named the Company as a party. The Company believes that there is a
remote chance that any further losses will result from this action.

Dispute with Waave Telecommunications, Inc. The Company has asserted
certain claims against Waave Telecommunications, Inc. ("Waave"). These
claims arise out of (i) a three-page agreement that the Company and
Waave entered into in March 1999 which contemplated the Company's
acquisition of 50% of Waave's outstanding equity, and subsequent oral
statements and course of conduct, and (ii) a service agreement between
the Company and Waave pursuant to which Waave agreed to provide certain
services to the Company and to which the Company has provided funds to
Waave for those services. The Company has not made an evaluation as to
the likelihood of settlement or favorable or unfavorable results from
this action.

On February 24, 2000, Concentric Network Corporation filed a lawsuit
against NetAmerica, Inc., aka A1 Internet, Inc., and us in the Superior
Court of California for the County of Santa Clara (CV 784335). The
lawsuit involves claims for breach of contract and common counts based
on A1 Internet's nonperformance in a settlement agreement between A1
Internet, Concentric and us. Concentric is asking for compensatory
damages of at least $167,794, restitution, costs and attorney fees. We
have issued 23,305 shares of our common stock for settlement of this
dispute and we do not believe that any additional compensation will be
required to resolve this lawsuit.

F-12
<PAGE> 62

NOTE 11 OPTIONS/WARRANTS FOR PURCHASE OF COMMON STOCK

Stock Option Plans - The Company has a stock incentive plan which
provides for the grant of options to officers, consultants and employees
to acquire shares of its common stock at a purchase price generally
equal to the fair market value on the date of grant. Options generally
expire five years from date of grant. The Company has also issued
warrants that generally expire five years from the date of grant. A
summary of activity follows:

Warrants:

<TABLE>
<CAPTION>
1999 1998
------------------------------- -------------------------------
Number of Weighted average Number of Weighted-average
shares exercise price shares exercise price
--------- ---------------- --------- ----------------
<S> <C> <C> <C> <C>
Outstanding at beginning of year 100,000 $ 2.00 -- $ --
Granted 525,000 1.69 100,000 2.00
Exercised -- -- -- --
Canceled -- -- -- --
------- ------- ------- -------
Outstanding at end of year 625,000 1.74 100,000 2.00
======= ======= ======= =======
Exercisable at end of year 625,000 1.74 100,000 2.00
======= ======= ======= =======
</TABLE>

Options:

<TABLE>
<CAPTION>
1999 1998
------------------------------- -------------------------------
Number of Weighted average Number of Weighted-average
shares exercise price shares exercise price
--------- ---------------- --------- ----------------
<S> <C> <C> <C> <C>
Outstanding at beginning of year -- $ -- -- $ --
Granted 3,050,000 2.24 -- --
Exercised -- -- -- --
Canceled 60,000 2.50 -- --
--------- -------- ------- -------
Outstanding at end of year 2,990,000 2.23 -- --
========= ======== ======= =======
Exercisable at end of year 1,287,500 1.96 -- --
========= ======== ======= =======
</TABLE>

As permitted by SFAS #123 "Accounting for Stock-Based Compensation," the
Company has elected to account for the stock option plans under APB #25
"Accounting for Stock Issued to Employees." Accordingly, no compensation
cost has been recognized for these plans when options were issued at
equal to or more than fair market value.

For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. Had
compensation cost for the stock option plan been determined based on the
fair value at the grant date consistent with SFAS #123, the Company's
net earnings and earnings per share are estimated as follows:

<TABLE>
<CAPTION>
1999 1998
------------- -------------
<S> <C> <C>
Net Earnings
As reported $ (7,329,280) $ (1,116,953)
Pro Forma (8,309,779) (1,116,953)

Net earnings per share (basic and diluted)
As reported (0.57) (0.68)
Pro forma (0.65) (0.68)
============= =============
</TABLE>

The fair market value of each option grant was estimated at the date of
grant using the Black-Scholes option pricing model with the following weighted
average assumptions:

F-13
<PAGE> 63

<TABLE>
<CAPTION>
1999 1998
---- ---
<S> <C> <C>
Risk-free interest rate 7.0% N/A
Dividend yield 0% N/A
Volatility 100% N/A
Average expected term (years) 5 N/A
=== ===
</TABLE>

Employee stock options and warrants outstanding and exercisable under
these plans as of December 31, 1999 were:

<TABLE>
<CAPTION>
Outstanding Exercisable
------------------------------------------------- ------------------------------
Weighted
Weighted Average Weighted
Range of Average Remaining Average
exercise Warrant/ Exercise Contractual Warrants/ Exercise
prices Options Price Life (years) Options Price
------------- --------- -------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
$.05-$.99 275,000 $ .10 4.06 275,000 $ .10
$1.00 -$1.99 1,155,000 $ 1.58 4.16 700,000 $ 1.56
$2.00 - $2.75 2,185,000 $ 2.70 4.69 937,500 $ 2.65
------------- ---------- -------- ------- --------- ---------
3,615,000 1,912,500
========== =========
</TABLE>

Shareholders authorized the 1999 NetAmerica.com Stock Option Plan during
1999. Total options available to employees are 3,000,000 shares. Total
options and warrants issued during the year for less than fair market
value were 225,000 for which the Company recognized related compensation
expense of $261,835.

NOTE 12 SHORT TERM DEBT

The Company issued a note for $450,000 for the purchase of Rate
Exchange, Inc (Note 6). The notes carried an interest rate of 5%. The
notes were paid in January 2000.

During December 1999, RateXchange received $350,000 in short term loans
in anticipation of a $2,000,000 bridge loan agreement. The $2 million
bridge loan agreement will be used as ongoing financing of RateXchange
activities. The loan will bear interest at 10% and will mature six
months from the completion of the funding of the loan (completed
February 2000). The loan agreement comes with warrants to purchase up to
400,000 shares of RateXchange stock at $2.40 per share (subject to
adjustments and other funding objectives). The warrants are set to
expire on December 31, 2002.

NOTE 13 INVESTMENT IN AFFILIATE.

During 1999, the Company created a wholly owned subsidiary, Telenisus
Corporation, a Delaware corporation, for the purpose of providing
internet services to small to mid-sized corporations and
telecommunications service providers. The Company funded the initial
capital of Telenisus of $75,000. It subsequently loaned Telenisus
additional funds to start operations. Telenisus has funded operations
from its own equity and debt financing and has paid back the Company all
loans except for the initial capitalization of $75,000. At the end of
the year, the Company's interest in Telenisus had decreased to less than
10% ownership and the Company is showing this investment at cost.

NOTE 14 GOING CONCERN

The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. The Company has negative
working capital and has had recurring operating losses and is dependent
upon financing to continue operations. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty. Management intends to fund RateXchange activities,
according to its business plan, and emerge profitable sometime in the
future.

F-14
<PAGE> 64

NOTE 15 RELATED PARTY TRANSACTIONS

During 1998, the Company entered into a consulting contract with a major
shareholder that pays a monthly consulting fee plus an incentive bonus
for 1) any successful acquisition of business enterprises, or 2)
successful capital funding of a least $5,000,000 in 1998 or 1999. The
incentive awards are $250,000 in cash, warrants to purchase 250,000
shares of common stock at $2.75, and a mergers and acquisition fee for
any acquisition during 1998 or 1999. At December 31, 1999, the Company
accrued $315,800 in cash incentives relating to completed financing and
the value of the RateXchange acquisition.

NOTE 16 MINORITY INTEREST

During 1999, the Company issued 10% of the outstanding shares of its
subsidiary, RateXchange, to Donald Sledge, the Chief Executive Officer
of RateXchange, as an incentive for employment. The shares were issued
at par value, since the shares are privately owned, have no trading
value, have no book value, and no voting or liquidation value based on
its minority status.

NOTE 17 SUBSEQUENT EVENTS

In February 2000, the Company anticipates another private placement for
further funding of RateXchange activities.

F-15
<PAGE> 65

RATEXCHANGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 2000 1999
------------ ------------
(unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and Cash Equivalents $ 31,007,201 $ 451,615
Interest Receivable -- 150,608
Prepaid Expenses 13,572 5,814
Note Receivable -- 1,787,531
------------ ------------
TOTAL CURRENT ASSETS 31,020,773 2,395,568

PROPERTY & EQUIPMENT (NET) (Net of accumulated
depreciation of $34,863 and $10,766 in 2000 and 1999) 656,665 175,349

OTHER ASSETS
Investment in Affiliate 75,000 75,000
Deposits 236,386 103,305
============ ============
TOTAL ASSETS $ 31,988,823 $ 2,749,222
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts Payable and Accrued Expenses $ 3,076,419 $ 1,639,301
Accrued Taxes 85,000 85,000
Short Term Debt 2,000,000 800,000
------------ ------------
TOTAL CURRENT LIABILITIES 5,161,419 2,524,301

STOCKHOLDERS' EQUITY
Common Stock, $.0001 par value; 300,000,000 shares
authorized; issued and outstanding; 17,019,651 shares and
14,087,425 shares 1,702 1,409
Capital in Excess of Par Value 46,591,823 8,891,088
Retained (Deficit) Accumulated Since Inception (19,766,121) (8,667,576)
------------ ------------
Total stockholders' equity 26,827,404 224,921
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 31,988,823 $ 2,749,222
============ ============
</TABLE>

F-16
<PAGE> 66

RATEXCHANGE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF INCOME

<TABLE>
<CAPTION>
Beginning of
Development Stage
September 30, 1998
Three Months ended March 31 through March 31,
2000 1999 2000
------------ ------------ -------------------
<S> <C> <C> <C>
REVENUE $ -- $ -- $ --

EXPENSES
Selling, General & Administrative 3,392,862 960,696 8,353,817
Compensation Expense - below market option grants 7,566,083 -- 7,827,918
Bad Debt -- -- 1,748,750
Depreciation and Amortization 24,097 4,363 53,553
Loss from write down of Goodwill -- -- 1,582,155
------------ ------------ ------------

TOTAL EXPENSES 10,983,042 965,059 19,566,193

OTHER INCOME (Expenses)

Interest Income 57,367 5,589 210,857
Interest Expense (150,896) -- (174,688)
Other Income 1,500 -- 1,720
Loss Allocated to Minority Interest -- -- 7,000
------------ ------------ ------------
Income (Loss) Before Taxes (11,075,071) (959,470) (19,521,304)

Taxes -- -- --
------------ ------------ ------------
INCOME (LOSS) $(11,075,071) $ (959,470) $(19,521,304)
============ ============ ============

Loss Per Common Share
Basic $ (0.75) $ (0.10)
============ ============
Fully Diluted $ (0.75) $ (0.10)
============ ============
Weighted Average Number of Shares 14,820,000 9,244,000
============ ============
</TABLE>

F-17
<PAGE> 67

RATEXCHANGE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
From the Beginning of
Development Stage on
For the Three Months Ended September 30, 1998 to
March 31, March 31,
2000 1999 2000
------------ ------------ ---------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss) $(11,075,071) $ (959,470) $(19,521,304)
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation and Amortization 24,097 4,363 53,553
Bad Debt -- -- 1,748,750
Stock Option Grants Below Fair Market Value 7,566,083 -- 7,827,918
Write Off of Goodwill -- -- 1,582,155
Stock for Services/Expenses -- -- 702,244
Stock for Interest -- -- 10,773
Stock for Accounts Payable conversion -- -- (30,000)
(Increase) Decrease in Accounts Receivable
and Other Advances 142,850 (750,996) (933,472)
Increase (Decrease) in Accounts Payable
and Accrued Expenses 1,672,960 41,478 3,062,438
------------ ------------ ------------
TOTAL (1,669,081) (1,664,625) (5,496,945)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of RateXchange -- -- (450,000)
Payment for Purchase of Equipment (505,413) -- (673,735)
Payment for Deposits (133,080) -- (236,385)
Cash Purchased by Stock Acquisition of Subsidiary -- -- (78,550)
Advances to Affiliates -- -- (721,871)
------------ ------------ ------------
TOTAL (638,493) -- (2,160,541)

CASH FLOWS FROM FINANCING ACTIVITIES
Loans and Other Debt (Net) 1,200,000 (30,000) 2,463,000
Net Proceeds from Stock Sales 30,135,000 1,425,450 34,673,527
Proceeds from Payment of Note Receivable 1,528,160 1,528,160
------------ ------------ ------------
TOTAL 32,863,160 1,395,450 38,664,687

INCREASE (DECREASE) IN CASH 30,555,586 (269,175) 31,007,200

CASH BEGINNING OF PERIOD 451,615 528,516
============ ============ ============
CASH END OF PERIOD $ 31,007,200 $ 259,341 $ 31,007,200
============ ============ ============
</TABLE>

F-18
<PAGE> 68

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 INTERIM FINANCIAL STATEMENTS AND BACKGROUND AND HISTORY

The interim financial statements presented herein are unaudited and have
been prepared in accordance with the instructions to Form 10-Q. These
statements should be read in conjunction with financial statements and
notes thereto included in our annual report on Form 10-K for the year
ended December 31, 1999. The accompanying financial statements have not
been examined by independent accountants in accordance with generally
accepted auditing standards, but in the opinion of management such
financial statements include all adjustments (consisting only of normal
recurring adjustments) necessary to summarize fairly our financial
position, results of operations, and cash flows. The results of
operations and cash flows for the three months ended March 31, 2000 may
not be indicative of the results that may be expected for the year ended
December 31, 2000.

RateXchange Corporation (the Company) is a consolidated group of
companies including the parent corporation, RateXchange Corporation
(RateXchange Corp.), and its subsidiaries, RateXchange I, Inc. and
PolarCap, Inc. (PolarCap).

RateXchange Corp. (formerly NetAmerica.com Corporation) is a Delaware
corporation organized on May 6, 1987 for the purpose of seeking out and
developing any general business opportunity. On February 7, 2000, the
Company announced its intention to change its name to RateXchange
Corporation and to focus its efforts on the business of RateXchange I,
Inc. The name change was approved by the shareholders on April 20, 2000.

RateXchange I, Inc., a Delaware corporation organized in June 1999, is
in the business of business-to-business e-commerce seeking to develop
new exchange services for the telecommunications market.

The Company is in its planning stages for its eventual day to day
business and has not generated any revenues from its planned operations.
The Company is defined as a development stage company per SFAS No. 7.
All operations since the start of the development stage, September 30,
1998, when the Company acquired PolarCap, have been reported.

NOTE 2 PRIVATE PLACEMENT

In March 2000, the Company completed a private placement offering in
which it sold 2,733,329 shares of restricted common stock plus warrants
to purchase 1,366,673 shares of its common stock at an exercise price of
$14.40 per share. The warrants are immediately exercisable and expire in
three years. After deducting $2,665,000 for costs associated with the
offering the Company received $30,135,000.

NOTE 3 EARNINGS PER SHARE AND AVERAGE SHARES OUTSTANDING

NOTE 4 COMMITMENTS AND CONTINGENCIES

In 1999, RateXchange I, Inc. entered into a term sheet agreement with a
vendor to provide specialized consulting and computer programming to
assist in RateXchange I, Inc.'s business plans and operations in the
business-to-business e-commerce niche it was developing. The term sheet
was never finalized into a formal agreement, but some services were
provided, and payments were made for the services that were rendered.
The term sheet provided for the vendor to receive a stock position in
RateXchange I, Inc. of up to 10% for certain services. The Company is in
discussion with the vendor concerning the 10% stock position in
RateXchange I, Inc. because the formal agreement was never completed and
the contemplated services were not fully provided. The ultimate outcome
of this discussion is uncertain at this time. No adjustment has been
made in the financial statements for this uncertainty.

F-19
<PAGE> 69

The Company is involved in several issues as follows:

Gregory K. Martin v. NetAmerica., Inc. et al. In the spring of 1999,
Gregory K. Martin, a former officer of both NetAmerica, Inc.
(Seattle)(NAI) and the Company, brought suit against the Company and
others in the Superior Court of Washington (Civil Action No.
99-2-09171-OSEA). The suit related to, among other things, Mr. Martin's
claims for compensation, reimbursement for business expenses, certain
insurance benefits, payment of certain other obligations guaranteed by
Mr. Martin (or reimbursement of payments made by him as guarantor),
payment of certain tax and other obligations of a company referred to as
SRG/Quantum that were purportedly assumed by NAI and the Company,
issuance of options to purchase stock of the Company and other remedies
relating to the terminated acquisition and other transactions. The suit
was conditionally settled by an agreement dated May 22, 1999 among NAI,
the Company and Mr. Martin (with William Fritts undertaking certain
limited obligations). Pursuant to that agreement, Mr. Martin filed a
voluntary non-suit, i.e. dismissed his suit without prejudice. Mr.
Martin may have the ability to attempt to void the settlement pursuant
to noncompliance on the part of NAI to their part of the settlement. As
of March 31, 2000, the Company has fulfilled all of its current
obligations under the settlement agreement.

Dispute with Waave Telecommunications, Inc. On February 3, 2000, the
Company filed a lawsuit against Waave Telecommunications, Inc. in the
San Francisco County Superior Court (Case No. 309608). Other defendants
named in the lawsuit include Robert W. Ingraham, Gran Columbia
Resources, Inc. (aka Waave Telecommunications, Inc.) and Does One
through Fifty. The case has recently been transferred to Sacramento
County Superior Court. The lawsuit involves claims for breach of
contract, promissory estoppel, fraud and deceit, intentional
interference with a contract and prospective economic advantage, and
unfair and unlawful business practices. The Company is seeking in excess
of $1 million in compensatory damages, exemplary damages, interest and
attorneys fees. The Company has not made an evaluation as to the
likelihood of settlement or favorable or unfavorable results from this
action.

On February 24, 2000, Concentric Network Corporation filed a lawsuit
against NetAmerica, Inc., aka A1 Internet, Inc., and the Company in the
Superior Court of California for the County of Santa Clara (CV 784335).
The lawsuit involves claims for breach of contract and common counts
based on A1 Internet's nonperformance in a service agreement between A1
Internet and Concentric. Concentric is asking for compensatory damages
of at least $167,794, restitution, costs and attorney fees. The matter
is currently pending in Superior Court and will soon proceed to
arbitration.

NOTE 5 OPTIONS FOR PURCHASE OF COMMON STOCK

Shareholders authorized the 1999 Stock Option Plan during 1999.
Shareholders authorized the 2000 Stock Option Plan on April 20, 2000.
Options to purchase a total of 8,000,000 shares are authorized for
issuance under these plans.

On February 24, 2000, the Board authorized additional options to
purchase 4,290,000 shares outside of either plan at a strike price of
$7.00. The closing stock price on February 24, 2000 was $12.00. Of these
options, 837,500 vested immediately. A further 400,000 vested in the
first quarter upon meeting a vesting provision that the Company's stock
price trade over $20 for ten consecutive days. The remaining options
vest over periods of between one and four years. Total options issued
during the quarter for less than fair market value were 4,215,000 for
which the Company recognized related compensation expense of $7,566,083,
of this amount $6,806,250 related to those options that vested during
the first quarter. None of the options that vested in the first quarter
have been exercised.

NOTE 6 SHORT TERM DEBT

In January 2000, RateXchange I, Inc. closed a $2,000,000 convertible
note offering (the "Notes"). The Notes were convertible into RateXchange
I, Inc. common stock at a price per share to be determined in an
anticipated subsequent financing of RateXchange I, Inc.

F-20
<PAGE> 70

As a result of the Company's new business strategy, the Company offered
to such note holders the right to convert their Notes into RateXchange
Corp. common stock at an exchange rate of $5.00 per share. In addition,
the Company agreed to issue such holders an aggregate of 500,000
warrants to purchase common stock at $5.00 per share. Any note holders
who decline this offer will be entitled to rescind their original
investment and receive their principal back in full, including accrued
interest. As of March 31, 2000, no conversions have occurred.

NOTE 7 GOING CONCERN

The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. The Company has had
recurring operating losses and is dependent upon financing to continue
operations. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty. Management intends to
fund RateXchange Corp. activities, according to its business plan, and
emerge profitable sometime in the future.

<PAGE> 71

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses payable by us in
connection with the sale of securities being registered. All amounts are
estimated except the SEC registration fee.

<TABLE>
<S> <C>
SEC registration fee ............................... $16,676
Legal fees and expenses ............................ 35,000
Printing fee ....................................... 2,000
Accounting fees and expenses ....................... 15,000
Transfer Agent fees and expenses ................... 2,000
Miscellaneous ...................................... 2,000
-------
TOTAL .............................................. $72,676
=======
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Delaware General Corporate Code Section 145 provides for
indemnification of directors and officers in terms sufficiently broad to permit
such indemnification, under certain circumstances, for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act. In
addition, Delaware Code provides that a corporation may purchase and maintain
insurance on behalf of an officer or director against liability incurred by the
officer or director as an officer or director.

Our Bylaws and Certificate of Incorporation require that we indemnify
our directors and officers to the fullest extent allowed under Delaware law. Our
Bylaws also provide that we may purchase and maintain insurance on behalf of our
officers and directors against any liability asserted against them as officers
and directors. Currently, we carry directors and officers liability insurance
which may insure against officer or director liability arising under the
Securities Act.

In addition, we have agreed to indemnify certain selling stockholders,
as well as certain affiliated parties, against specific liabilities, including
liabilities under the Securities Act, in connection with this offering. Those
selling stockholders we have agreed to indemnify have agreed to indemnify us and
our directors and officers, as well as any person that controls us, against
specific liabilities, including liabilities under the Securities Act.

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

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

UNREGISTERED EQUITY SECURITIES SOLD DURING 1997 TO THE PRESENT

- In September 1998, we exchanged 2,400,000 shares of our common
stock, valued at $2,400, for all outstanding shares of PolarCap,
Inc. We issued these shares to accredited investors pursuant to
Section 4(2) of the Securities Act.

- In October 1998, we exchanged 1,000,000 shares of our common
stock, valued at $1,000, for services provided by several
employees and/or consultants who were also accredited investors.
We issued these shares pursuant to the exemption provided by
Section 4(2) of the Securities Act.

II-1
<PAGE> 72

- From September through December 1998, we issued 1,399,773 shares
of our common stock to various accredited investors in exchange
for $474,699 in notes previously issued by us and held by these
investors. We issued these securities pursuant to Section 4(2)
of the Securities Act.

- In December 1998, we exchanged 87,000 shares of our common
stock, valued at $87,000, for services provided by employees
and/or consultants who were also accredited investors. We relied
upon the exemption provided by Securities Act Section 4(2).

- In December 1998, we issued 1,050,000 shares of our common stock
to various related parties in exchange for $300,000 in notes
previously issued by us and held by these parties. Because these
related parties were accredited investors, we relied upon the
exemption provided by Section 4(2) of the Securities Act.

- In January 1999, we issued to certain related parties 916,574
shares of our common stock for $91,657 in notes. We issued the
shares to accredited investors in reliance upon Section 4(2) of
the 1933 Act.

- In January 1999, we issued to certain services providers 322,500
shares of our common stock for cost reimbursement. The costs
were valued at $32,250. We issued the shares to accredited
investors in reliance upon Section 4(2) of the 1933 Act.

- In a private placement conducted between November 1998 and March
1999, we issued to certain private placement investors and
related parties a total of 1,864,688 shares of our common stock
for cash and 3,112,500 shares of common stock for notes at an
effective purchase price of $1.07 per share ($5,115,100 net). We
issued the shares to accredited investors in reliance upon
Section 4(2) of the 1933 Act.

- In March 1999, we issued to certain services providers 268,500
shares of our common stock for services. The services were
valued at $287,233. We issued the shares to accredited investors
in reliance upon Section 4(2) of the 1933 Act.

- Between March and May 1999, we issued to A1 Internet creditors
193,186 shares of our common stock to settle and discharge
obligations owed by A1 Internet to creditors. These obligations
totaled $216,879. We issued the shares to accredited investors
in reliance upon Section 4(2) of the 1933 Act.

- In March 1999, we issued to certain service providers 30,000
shares of our common stock for services valued at $32,000. We
issued the shares to accredited investors in reliance upon
Section 4(2) of the 1933 Act.

- In March 1999, we issued to certain services providers 30,000
shares of our common stock for $30,000 in notes. We issued the
shares to accredited investors in reliance upon Section 4(2) of
the 1933 Act.

- In a private placement conducted between May and June 1999, we
issued to certain private placement investors a total of 515,188
shares of our common stock for cash at a price of $1.60 per
share ($628,272 net). We issued an additional 122,518 shares
(valued at $196,029) of our common stock as commissions in this
private placement. We issued the shares to accredited investors
in reliance upon Section 4(2) of the 1933 Act.

- On July 6, 1999, we issued 574,998 shares ($920,000 aggregate)
of our common stock to the shareholders of Rate Exchange I, Inc.
to acquire all of the outstanding stock of Rate Exchange, Inc.
We issued the shares to accredited investors in reliance upon
Section 4(2) of the 1933 Act.

- Between December 1998 and November 1999, we granted to our
employees, officers, directors, consultants and advisors a total
of 2,990,000 options and 625,000 warrants to purchase shares of
our common stock at exercise prices ranging from $.05 to $2.75.
We issued the shares in reliance upon Rule 506 of Regulation D
and Section 4(2) of the 1933 Act.

II-2
<PAGE> 73

- In February 2000, we granted to our employees, officers,
directors, consultants and advisors options to purchase
4,215,000 shares of our restricted common stock at an exercise
price of $7 per share. The options are exercisable pursuant to a
vesting schedule and they expire on February 24, 2005. We issued
the shares in reliance upon Rule 506 of Regulation D and Section
4(2) of the 1933 Act.

- Between February and March 2000, we sold to certain private
placement investors 2,733,329 shares of our restricted common
stock plus warrants to purchase 1,366,673 shares of our common
stock at an exercise price of $14.40 per share. The warrants are
immediately exercisable and expire in three years. After
deducting $2,665,000 for expenses related to the offering, we
received $30,135,000. We issued the shares to accredited
investors only in reliance upon Rule 506 of Regulation D of the
1933 Act.

- Between February and March 2000, we issued to various services
providers additional warrants to purchase 804,620 shares of our
common stock in exchange for services. The exercise prices of
the warrants range from $5.00 to $14.40 per share and the
warrants expire between 2003 and 2005. We issued the warrants to
accredited investors only in reliance upon either Rule 506 of
Regulation D or Section 4(2) of the 1933 Act.

- In April 2000, we issued 116,522 shares of our restricted
common stock to certain warrant holders upon such warrant
holders' cashless exercise of certain of our warrants. We issued
the shares to accredited investors only in reliance upon Section
4(2) of the 1933 Act.

- In July 2000, certain of our subsidiary's bridge note holders
converted their bridge notes into 275,000 shares of our
restricted common stock at an exchange rate of $5 per share plus
warrants to purchase 343,750 shares of our restricted common
stock at an exercise price of $5 per share. All of the bridge
note holders were accredited investors. We converted the notes
in reliance upon Rule 506 of Regulation D and Section 4(2) of
the 1933 Act.

ITEM 16. EXHIBITS.

(a) The following exhibits are filed herewith:

<TABLE>
<S> <C>
3.1 Certificate of Incorporation for RateXchange Corporation, as
amended, filed with the Form S-1 dated May 12, 2000, incorporated
herein by reference.

3.2 Amended and Restated Bylaws, filed with the September 30, 1999, Form
10-Q, incorporated herein by reference.

4.1 Form of Warrant Agreement, filed with the Form 10-K dated December
31, 1999, incorporated herein by reference.

4.2 Form of Convertible Promissory Note between RateXchange, Inc. and
Investors, filed with the Form 10-K dated December 31, 1999,
incorporated herein by reference.

4.3 Form of Option Agreement, filed with the Proxy Statement for the
Annual Meeting of Shareholders on December 16, 1999, incorporated
herein by reference.

5.1 Opinion of Snell & Wilmer, L.L.P.

10.1 Agreement and Plan of Merger between NetAmerica.com Corporation and
Rate Exchange, Inc., dated June 1, 1999, filed with the Form 10-Q
dated September 30, 1999, incorporated herein by reference.

10.2 Acquisition Agreement between NetAmerica.com Corporation and
PolarCap, Inc., filed with the Form 8-K dated September 22, 1998,
incorporated herein by reference.

10.3 Form of Severance Agreement between NetAmerica.com Corporation and
each of Douglas Cole and Edward Mooney, filed with the Form 10-K
dated December 31, 1999, incorporated herein by reference.

10.4 Employment Agreement between RateXchange, Inc. and Donald H. Sledge,
filed with the Form 10-Q dated September 30, 1999, incorporated
herein by reference.

10.5 Form of Employment Agreement between RateXchange, Inc. and each of
Philip Rice, Ross Mayfield and Paul Wescott, filed with the Form 10-K
dated December 31, 1999, incorporated herein by reference.

10.6 Master Equipment Lease Agreement dated March 16, 2000.

21.1 List of Subsidiaries of RateXchange Corporation, filed with the
Form S-1 dated May 12, 2000, incorporated herein by reference.

23.1 Consent of Crouch, Bierwolf & Chisholm.

23.2 Consent of Snell & Wilmer, L.L.P. (included in Exhibit 5.1).

24.1 Power of Attorney (included on signature page).
</TABLE>

ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;

(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar

II-3
<PAGE> 74

value of securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.

(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement;

Provided, however, that paragraphs (1)(i) and (1)(ii) do not
apply if the registration statement is on Form S-3, Form S-8 or Form
F-3, and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Commission by the registrant pursuant to
Section 13 or 15(d) of the Exchange Act that are incorporated by
reference in the registration statement.

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

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.

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

II-4
<PAGE> 75

SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of San Francisco, State of
California on the 25th day of July, 2000.

RATEXCHANGE CORPORATION

By: /s/ DONALD H. SLEDGE
-----------------------------------------
DONALD H. SLEDGE, CHIEF EXECUTIVE OFFICER

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Donald Sledge and Philip Rice, and each
of them, his attorneys-in-fact, each with the power of substitution, for him and
in his name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this registration statement,
and sign any registration statement for the same offering covered by this
registration statement that is to be effective upon filing pursuant to Rule
462(b) promulgated under the Securities Act, as amended, and all post-effective
amendments thereto, and to file the same, with all exhibits thereto and all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that such attorneys-in-fact and agents or any of them, or his or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, 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/ DONALD H. SLEDGE Chief Executive Officer, Chairman and Director July 25, 2000
-----------------------------------
DONALD H. SLEDGE

/s/ PHILIP RICE Executive Vice President and Chief Financial Officer July 25, 2000
-----------------------------------
PHILIP RICE

* Director July 25, 2000
-----------------------------------
CHRISTOPHER J. VIZAS

* Director July 25, 2000
-----------------------------------
D. JONATHAN MERRIMAN

* Director July 25, 2000
-----------------------------------
RONALD E. SPEARS

/s/ GORDON HUTCHINS, JR. Director July 25, 2000
-----------------------------------
GORDON HUTCHINS, JR.

/s/ PHILIP RICE Director July 25, 2000
-----------------------------------
PHILIP RICE
* Attorney-in-Fact

</TABLE>

<PAGE> 76

EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit No.
-----------
<S> <C>
3.1 Certificate of Incorporation for RateXchange Corporation, as
amended, filed with the Form S-1 dated May 12, 2000,
incorporated herein by reference.

3.2 Amended and Restated Bylaws, filed with the September 30, 1999,
Form 10-Q, incorporated herein by reference.

4.1 Form of Warrant Agreement, filed with the Form 10-K dated
December 31, 1999, incorporated herein by reference.

4.2 Form of Convertible Promissory Note between RateXchange, Inc.
and Investors, filed with the Form 10-K dated December 31, 1999,
incorporated herein by reference.

4.3 Form of Option Agreement, filed with the Proxy Statement for the
Annual Meeting of Shareholders on December 16, 1999,
incorporated herein by reference.

5.1 Opinion of Snell & Wilmer, L.L.P.

10.1 Agreement and Plan of Merger between NetAmerica.com Corporation
and Rate Exchange, Inc., dated June 1, 1999, filed with the Form
10-Q dated September 30, 1999, incorporated herein by reference.

10.2 Acquisition Agreement between NetAmerica.com Corporation and
PolarCap, Inc., filed with the Form 8-K dated September 22,
1998, incorporated herein by reference.

10.3 Form of Severance Agreement between NetAmerica.com Corporation
and each of Douglas Cole and Edward Mooney, filed with the Form
10-K dated December 31, 1999, incorporated herein by reference.

10.4 Employment Agreement between RateXchange, Inc. and Donald H.
Sledge, filed with the Form 10-Q dated September 30, 1999,
incorporated herein by reference.

10.5 Form of Employment Agreement between RateXchange, Inc. and each
of Philip Rice, Ross Mayfield and Paul Wescott, filed with the
Form 10-K dated December 31, 1999, incorporated herein by
reference.

10.6 Master Equipment Lease Agreement dated March 16, 2000.

21.1 List of Subsidiaries of RateXchange Corporation, filed with the
Form S-1 dated May 12, 2000, incorporated herein by reference.

23.1 Consent of Crouch, Bierwolf & Chisholm.

23.2 Consent of Snell & Wilmer, L.L.P. (included in Exhibit 5.1).

24.1 Power of Attorney (included on signature page).
</TABLE>