AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 24, 2000.

FILE NO.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

INTEGRITY SOFTWARE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------

DELAWARE 7372 84-1424647
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)

CAMDEN LOCK, SOUTH DOCK ROAD, DUBLIN 4, IRELAND, TEL: 011-353-1-665-2002
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

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

PETER D. NAGLE, CHIEF EXECUTIVE OFFICER AND CHAIRMAN
C/O DONALD S. RADCLIFFE, RADCLIFFE AND ASSOCIATES, INC., 575 MADISON AVE., NEW
YORK, NY 10022, TEL. (212) 605-0100
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
AGENT FOR SERVICE)

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

Copies to:

ANTHONY J. RENZI, JR. PETER DIIORIO
CLIFFORD CHANCE ROGERS & WELLS LLP HELLER EHRMAN WHITE & MCAULIFFE LLP
607 FOURTEENTH STREET, NW 711 FIFTH AVENUE
WASHINGTON, DC 20005 NEW YORK, NY 10022
TEL: (202) 434-0700 TEL: (212) 832-8300
FAX: (202) 434-0800 FAX: (212) 832-3353

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the 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 of the Securities Act of
1933, check the following box. [ ]

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

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

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

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

CALCULATION OF REGISTRATION FEE

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PROPOSED MAXIMUM PROPOSED
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------------------------

Common stock, par value $0.0025 per
share................................... 3,450,000(1) $21.56(2) $74,390,625(2) $19,640
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- -------------------------------------------------------------------------------------------------------------------------------

(1) Includes 450,000 shares subject to the underwriters' overallotment option.

(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) under the Securities Act.

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

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2

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER
OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION, DATED , 2000

PROSPECTUS

3,000,000 SHARES

LOGO

COMMON STOCK
------------------------

We are offering 3,000,000 shares of our common stock for sale. A limited
number of shares of our common stock currently is traded over the counter. On
, 2000, the bid price of our common stock on the Pink Sheets of the
National Quotation Bureau, LLC was $ per share. We have filed an
application to qualify our common stock for quotation on the Nasdaq National
Market under the symbol "INTY."
------------------------

INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING
ON PAGE 4 OF THIS PROSPECTUS.
------------------------

Public Price................................................ $ $
Underwriting Discount....................................... $ $
Proceeds, before expenses, to Integrity Software............ $ $
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------

We and a group of selling stockholders have granted the underwriters an
option for a period of 30 days to purchase additional shares of common stock at
the offering price, less the underwriting discount, solely to cover
over-allotments. We will not receive any of the proceeds from the sale of shares
by selling stockholders. Of the shares subject to the over-allotment option,
210,000 will be sold by the selling stockholders and 240,000 will be sold by
Integrity Software.

The Securities and Exchange Commission and state securities regulators have
not approved or disapproved of these securities or determined if this prospectus
is truthful or complete. It is illegal for any person to tell you otherwise.
------------------------
NEEDHAM & COMPANY, INC. A.G. EDWARDS & SONS, INC.

The date of this prospectus is , 2000
3

TABLE OF CONTENTS

PAGE
----

Prospectus Summary.......................................... 1
Risk Factors................................................ 4
Forward-Looking Statements.................................. 12
Use of Proceeds............................................. 13
Dividend Policy............................................. 13
Capitalization.............................................. 14
Price Range of Common Stock................................. 15
Dilution.................................................... 16
Selected Consolidated Financial Data........................ 17
Exchange Rates.............................................. 19
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 20
Business.................................................... 30
Management.................................................. 40
Principal and Selling Stockholders.......................... 45
Related Party Transactions.................................. 46
Description of Capital Stock................................ 47
Shares Eligible for Future Resale........................... 49
Underwriting................................................ 50
Where You Can Find Additional Information................... 52
Legal Matters............................................... 52
Experts..................................................... 52
Enforcement of Civil Liabilities............................ 52
Index to Financial Statements............................... F-1

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

All amounts listed in this prospectus are stated in U.S. dollars, unless
otherwise noted. In this prospectus, references to "Pounds," "Pounds Sterling"
or "L" are to British pounds, references to "IRL" or "Irish Pounds" are to Irish
pounds and references to "U.S. dollars" or "$" are to United States dollars. Any
discrepancy between the amounts listed and their totals in the tables included
in this prospectus are due to rounding.

References in this prospectus to "we," "our," "us," "our company,"
"Integrity" and "Integrity Software" are to Integrity Software, Inc. On March
13, 2000, we changed our name to Integrity Software, Inc., from Integrity
Holdings, Ltd. and reincorporated from Nevada to Delaware. Accordingly,
references to Integrity Software, Inc. for periods prior to March 13, 2000, or
where the context otherwise requires, are to Integrity Holdings, Ltd.
------------------------

In this prospectus, we rely on and refer to information regarding the
enterprise-wide software market that has been prepared by independent industry
research firms, including Forrester Research, or compiled from market research
reports and other publicly available information. Although we believe this
information is reliable, we cannot guarantee the accuracy and completeness of
the information and we have not independently verified it.

We have not, and the underwriters have not, authorized any person to
provide you with information not contained in this prospectus. If anyone
provides you with different or inconsistent information, you should not rely on
it. This prospectus is not making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information contained in this
4

prospectus is accurate only as of the date on the front of this prospectus. Our
business, financial condition, results of operations and prospects may have
changed since that date.

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

ii
5

PROSPECTUS SUMMARY

This summary highlights selected information contained elsewhere in this
prospectus. This summary does not contain all of the information that you should
consider before investing in our common stock. You should read the entire
prospectus carefully, including "Risk Factors" and the financial statements,
before making an investment decision.

INTEGRITY SOFTWARE

We are a Dublin-based software company that develops, markets, implements
and supports web-enabled, enterprise-wide software applications for smaller to
mid-sized organizations in the distribution and contracting industries. Our
products enable organizations to optimize the efficiency of internal and
external information flow by integrating business-to-business modules with
mission-critical, enterprise-wide software applications. These applications
include core accounting functions as well as key, industry-specific
functionality. The modular design of our products enables us to provide
customers with cost-effective, tailored solutions that can be easily implemented
and integrated with existing business systems. We conduct our operations
primarily in the United Kingdom, Ireland and South Africa, where we currently
have approximately 3,800 customers under contract using software applications.

According to Forrester Research, an independent market research firm,
global license revenues from packaged enterprise-wide applications are expected
to grow from $14 billion in 1998 to over $41 billion by 2003, representing a
compound annual growth rate of 24%. The non-U.S. portion of this market is
projected to grow even faster from $6 billion to over $20 billion during this
same period, representing a compound annual growth rate of 27%. However, the
market for enterprise-wide software applications for smaller to mid-sized
organizations has historically been under-served because vendors have targeted
large organizations with expensive, large-scale packages. We believe that this
market will generate a significant portion of the growth for enterprise-wide
software applications due to smaller to mid-sized organizations' unique
requirements. These organizations generally do not have the information
technology resources to purchase, implement and support large-scale,
enterprise-wide systems. We believe that our products, Vision and Legerdemain
for the distribution industry, and Evolution and Foundation for the contracting
industry, offer greater functionality, faster implementation and integration and
lower cost of ownership solutions for customers in our targeted markets.

Our primary business objective is to be the leading provider of
web-enabled, enterprise-wide software applications to our target markets. To
achieve our objective, we intend to pursue the following strategies:

- focus our research and development on next-generation web-enabled,
mission-critical software products

- accelerate growth and achieve economies of scale through strategic
acquisitions

- leverage our legacy customer base by selling our new products to them

- expand our value added reseller, or VAR, channel

- further penetrate targeted markets

- enhance our service and support functions

We have four integrated business areas: business-to-business, or B2B,
enterprise-wide software, general accounting and technical services, or GATS,
and computer finance services, or CFS. We support our four business areas with
cross-company resources in sales and marketing, research and development,
training and support. Our research and development investment is focused on
creating web-enabled, enterprise-wide, mission-critical applications to address
the requirements of customers across all of our business areas.

We are incorporated in Delaware. Our principal executive offices are
located at Camden Lock, South Dock Road, Dublin 4, Ireland, and our telephone
number is 011-353-1-665-2002. Our corporate web site is www.integrity-us.com.
Information on our web site is not part of this prospectus.
1
6

THE OFFERING

Except as otherwise indicated, all information in this prospectus reflects
a 2-for-5 reverse stock split of our common stock on March 20, 2000 and assumes
no exercise of the underwriters' over-allotment option.

Common stock offered by Integrity... 3,000,000 shares

Common stock to be outstanding after
this offering....................... 16,957,808 shares

Use of proceeds..................... We intend to use the net proceeds of
this offering to finance research and
development activities, as well as
potential future acquisitions. We will
use the balance of the net proceeds for
general corporate and working capital
purposes.

Listing............................. Our common stock is currently traded
over the counter and quoted in the Pink
Sheets. We have applied to have our
common stock quoted on the Nasdaq
National Market effective upon
completion of this offering.

Proposed Nasdaq National Market
symbol.............................. INTY

Unless otherwise indicated, all information in this prospectus, including
the outstanding share information above, is based on the number of shares
outstanding as of March 22, 2000 and:

- excludes 1,650,000 shares of common stock reserved for issuance under our
stock option plan

- excludes currently exercisable options to purchase 40,000 shares of
common stock

- assumes no issuance of 240,000 shares by us pursuant to the
over-allotment option granted to the underwriters

2
7

SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

You should read our summary consolidated financial data in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the financial statements and related notes included elsewhere in
this prospectus. Our consolidated financial statements for the years ended
December 31, 1997, 1998 and 1999 have been audited by BDO International,
independent accountants, and our financial statements for the years ended
December 31, 1998 and 1999 have been restated to reflect our December 7, 1999
merger with Jyris Limited, which has been accounted for as a pooling of
interests. Our consolidated financial statements for the years ended December
31, 1997, 1998 and 1999 have been prepared and presented in accordance with
generally accepted accounting principles in the United States, or U.S. GAAP. The
financial statements for the years ended December 31, 1995 and 1996 (not
included herein) are the statements of the Wyse Group plc, which is considered
to be our predecessor for accounting purposes, and have been prepared and
presented in accordance with generally accepted accounting principles in the
United Kingdom. These financial statements have not been reconciled to U.S.
GAAP; however, in the opinion of our management, there is no material difference
in these presentations. The pro forma financial data summarizes our Unaudited
Pro Forma Condensed Consolidated Financial Information included elsewhere in
this prospectus, which includes the results of operations of each of the
companies acquired in 1999 (including companies acquired by Jyris) as if all
companies had been acquired on January 1, 1999.

The as adjusted balance sheet data gives effect to the sale of 3,000,000
shares of common stock in this offering at an assumed offering price of
$ per share and the application of the net proceeds therefrom, after
deducting underwriting commissions and discounts and estimated offering expenses
payable by us.

YEAR ENDED DECEMBER 31,
----------------------------------------------------------
PRO FORMA
1995 1996 1997 1998 1999 1999
------ ------ ------ ------- ------- -----------
CONSOLIDATED STA(UNAUDITED)PERATIONS DATA:

Total revenues....................... $4,755 $2,726 $2,002 $10,403 $49,158 $59,695
Gross profit......................... 446 597 445 3,173 24,026 31,688
Amortization of goodwill............. -- -- -- 59 1,857 2,366
Income (loss) from operations........ 113 114 64 757 (2,771) (3,176)
Net income (loss).................... $ 71 $ 73 $ 45 $ 640 $(2,387) $(2,881)
====== ====== ====== ======= ======= =======
Basic earnings (loss) per common
share............................. $ 3.55 $ 3.65 $ 0.19 $ 0.32 $ (0.21) $ (0.25)
====== ====== ====== ======= ======= =======
Diluted earnings (loss) per share.... $ 3.55 $ 3.65 $ 0.19 $ 0.20 $ (0.21) $ (0.25)
====== ====== ====== ======= ======= =======
Weighted average shares outstanding:
Basic........................... 20 20 238 2,027 11,510 11,570
Diluted......................... 20 20 238 3,142 11,510 11,570

DECEMBER 31, 1999
----------------------
ACTUAL AS ADJUSTED
-------- -----------

BALANCE SHEET DATA:
Cash and cash equivalents................................. $ 1,965 $
Working capital........................................... (12,556)
Total assets.............................................. 38,303
Long-term debt, (excluding current maturities)............ 450
Total stockholders' equity................................ 9,250

3
8

RISK FACTORS

This offering involves a high degree of risk. You should carefully consider
the risks and uncertainties described below and the other information in this
prospectus before deciding whether to invest in shares of our common stock. This
prospectus contains forward-looking statements that involve risks and
uncertainties, such as statements of our plans, objectives, expectations and
intentions. Our actual results could differ materially from those anticipated in
the forward-looking statements for many reasons, including the factors described
below and elsewhere in this prospectus. You should not place undue reliance on
these forward-looking statements.

IF OUR PRODUCTS DO NOT PERFORM ADEQUATELY OR ARE NOT ACCEPTED IN OUR MARKETS,
OUR RESULTS OF OPERATIONS AND PROFITABILITY WILL SUFFER.

We cannot assure you that our products will perform adequately to suit our
customers or that they will be accepted in the markets in which we operate. We
cannot assure you that proposed new products will be completed and ready to ship
on schedule or that we will not be beaten to market by one of our competitors.
If our products fail to function properly, satisfy our customers' needs or
remain competitive with our competitors' new products, our business and future
operating results will suffer.

In addition, a significant part of our growth strategy is to sell
web-enabled, enterprise-wide software applications that meet the increasing
needs of customers to conduct business on the Internet. The market for web-based
applications is characterized by rapidly changing technologies, evolving
industry standards and changing customer demands. We have only recently begun to
market our web-enabled software products, and our applications may not achieve
broad market acceptance.

OUR TECHNOLOGY MAY BECOME OBSOLETE OR MAY BE INCOMPATIBLE WITH OTHER SOFTWARE
AND HARDWARE PRODUCTS.

The markets in which we operate are constantly changing through rapid
development of new products, evolving industry standards and frequent new
product introductions and enhancements. In order to succeed, we will have to
continually develop and market new products and services that satisfy evolving
technologies, customer preferences and industry requirements. We cannot
guarantee that our products will not become obsolete or that we will be able to
develop new products that meet the changing needs of our customers.

In addition, our ability to sell our products depends on the compatibility
of our products with other software and hardware products. These products may
change or new products may appear that are incompatible with our products. If we
fail to adapt our products to remain compatible with other vendors' software and
hardware, we may be unable to sell our products.

THE MARKETS IN WHICH WE OPERATE ARE HIGHLY COMPETITIVE, AND SOME OF OUR
COMPETITORS HAVE MORE RESOURCES AND ARE MORE ESTABLISHED THAN WE ARE, WHICH MAY
HARM OUR ABILITY TO SUCCESSFULLY COMPETE.

Our industry, the software industry, is highly competitive. It includes
major domestic and international companies, many of which have financial,
technical, marketing, sales, distribution and other resources substantially
greater than ours. Many of our competitors also have greater brand recognition.
In addition, new competitors may emerge, and they or existing competitors may
begin offering lower-cost products, enhancements and/or additional features that
we are unable to offer. As competition increases, competitors can be expected to
aggressively price their products and offer new products and services that we do
not currently offer. If new competitors emerge, and if they or existing
competitors begin offering lower-cost products, enhancements and/or additional
features, we may not be able to compete effectively and our margins may suffer
as a result.

4
9

generally the same competitors that we face in the contracting and distribution
software markets, in addition to dedicated Internet solution vendors.

WE HAVE EXPERIENCED LOSSES IN THE PAST AND MAY CONTINUE TO INCUR LOSSES IN THE
FUTURE.

We began our current business in July 1998 and generated net losses in our
most recent fiscal year. Our net loss for 1999 was $2.4 million, a large part of
which was attributable to amortization of goodwill.

We may continue to incur net losses for the coming years in connection with
implementing our business plan. We cannot assure you that our operating
activities will ever provide a revenue base adequate to achieve or sustain
profitability or that we will begin to generate positive cash flow in the near
future. Our ability to provide products and services on a profitable scale and
to generate positive operating results will depend on our ability to, among
other things:

- develop our operational and support systems
- integrate our chosen technological solutions and remain current with
technological advances
- market our products successfully throughout our selected markets
- attract and retain a sufficient customer base
- raise additional capital as required
- retain and attract qualified management and personnel
- assimilate the operations of businesses that we have acquired and plan to
acquire in the future

We cannot assure you that we will be able to accomplish all of these tasks
well enough to regain profitability.

WE HAVE A LIMITED OPERATING HISTORY, WHICH MAY MAKE EVALUATION OF OUR BUSINESS
DIFFICULT.

Although some of our subsidiaries have been operating for considerably
longer than Integrity itself has, we as Integrity have offered our consolidated
range of products and services only since July 1998. Our limited operating
history as a consolidated entity makes it difficult to evaluate our future
prospects. Our prospects are subject to risks and uncertainties frequently
encountered by early-stage companies, particularly in the rapidly evolving
markets that we serve. Many of the risks associated with the markets in which we
operate are unknown. If we fail to identify the challenges and risks in these
markets or to address these risks effectively, our business will be harmed.

IF OUR PRODUCT SUPPORT SERVICES FAIL TO SATISFY OUR CUSTOMERS' NEEDS, IT COULD
DETER CUSTOMERS FROM PURCHASING OUR SOFTWARE OR THESE SERVICES.

While we believe that our ongoing reorganization of our service and support
operations will enable us to offer improved services and support to our
customers, we cannot guarantee that we will achieve this goal. Our efforts to
enhance our service and support offerings could fail if we are unable to
successfully integrate our service and support operations throughout our
business areas or if we are unable to retain and attract highly qualified
service and support personnel.

If we fail to provide high-quality service and support, customers could be
deterred from purchasing our software. This type of failure could also prevent
us from building long-term relationships with our customers, which could lead to
a reduction in new or repeat business. Any of these events could cause our
revenues from product sales or service and support to decline.

ERRORS IN OUR PRODUCTS MAY INCREASE OUR COSTS AND IMPAIR THE MARKET ACCEPTANCE
OF OUR PRODUCTS.

Our software products are complex and may contain errors that can cause
malfunctions at any point in a product's life cycle. While we attempt to
identify and correct errors in our software, we expect that errors will continue
to be found in the future. In the past, we have discovered errors in some of our
products. To date, none of these errors has materially affected our business.
However, product errors or delays in the future could be material, including any
product errors or delays associated with the

5
10

introduction of our new products or the versions of our products that support
Windows 2000, itself a recent product. The appearance of any significant errors
may:

- hinder market acceptance and sales of our products
- divert personnel and resources required to address the errors
- injure our reputation
- increase maintenance costs

These problems could harm our business and future operating results.

WE COULD BE SUED BY OUR CUSTOMERS OR WE COULD HAVE TO REFUND MONEY TO OUR
CUSTOMERS IF OUR PRODUCTS HAVE ERRORS OR FAIL.

Our software typically performs functions that are critical for our
customers' businesses. As a result, an error in our software could cause
significant disruption to our customers' operations. Any errors in our software
could lead to claims by our customers for refunds or lawsuits by our customers
for damages. Our agreements with customers typically contain provisions intended
to limit our exposure to liability claims. However, these provisions may be held
unenforceable and may not preclude all potential claims. Liability claims could
require us to spend significant time and money in litigation or to pay
substantial damages. Any claims of that type, whether or not successful, could
seriously damage our reputation and our business.

WE MAY NOT BE SUCCESSFUL IN OUR ATTEMPTS TO ACQUIRE ATTRACTIVE COMPANIES IN
ORDER TO PURSUE OUR GROWTH STRATEGY.

We cannot assure you that we will be able to locate or acquire suitable
acquisition candidates, or that any operations that are acquired can be
effectively and profitably integrated into our existing operations. Even if we
are able to identify companies that complement our strategy, we may be unable to
acquire an interest in those companies for many reasons, including:

- a failure to agree on the structure or terms of the acquisition
- incompatibility between us and management of the target
- being outbid by companies that have significantly greater financial and
other resources
- a lack of available capital

If we are not successful in acquiring complementary businesses or product
lines, we may not succeed in our growth strategy.

IF WE ARE UNABLE TO SUCCESSFULLY OBTAIN THE EXPECTED BENEFITS FROM OUR PAST
ACQUISITIONS, OR FROM ANY FUTURE ACQUISITIONS THAT WE MAKE, OUR GROWTH AND
FINANCIAL PERFORMANCE MAY BE HARMED.

Acquisitions have been, and will continue to be, a key part of our growth
strategy. Since August 1998, we have acquired eight companies. If we are unable
to successfully assimilate the operations, or integrate and retain the key
personnel, of acquired companies, we may be unable to achieve the anticipated
benefits from these acquisitions. In addition, our failure to successfully
integrate any acquired companies may result in the following specific risks to
our company:

- our management may need to dedicate a great deal of time and attention to
the acquisition and to the subsequent integration of the new business,
which may harm our existing operations

- we may not be able to achieve expected synergies between our current
businesses and new businesses that we have acquired or may acquire,
including research and development and sales and marketing efforts

- it may be difficult to integrate personnel with disparate business
backgrounds and to combine different corporate cultures

- we may acquire companies in business or geographic markets in which we
have little experience

- we may incur debt or issue dilutive equity securities to pay for future
acquisitions

6
11

- acquisitions may result in a variety of accounting charges that would
increase our reported expenses, including amortization of goodwill and
the write-off of in-process research and development

The occurrence of any of these risks could harm our business and financial
results.

IF WE ARE UNABLE TO MANAGE OUR GROWTH SUCCESSFULLY, IT MAY DIVERT OUR RESOURCES
AND HARM OUR OPERATING RESULTS.

We have experienced, and are continuing to experience, a period of rapid
growth, which may be difficult to manage. Our growth has placed, and any further
growth is likely to continue to place, a significant strain on our managerial,
operational, financial and other resources. This growth will require us to
implement additional management information systems, to further develop our
operating, administrative, financial and accounting systems and controls and to
maintain close coordination among our research and development, accounting,
finance, sales and marketing and customer service and support departments. In
addition, we may be required to add and retain additional personnel to
adequately support our growth. If we cannot effectively manage our expanding
operations, we may not be able to continue to grow, or we may grow at a slower
pace. Our failure to successfully manage growth and to develop financial
controls and accounting and operating systems or to add and retain personnel
that adequately support our growth would harm our business and financial
results.

WE DEPEND ON THE SERVICES OF OUR SENIOR MANAGEMENT AND OTHER KEY PERSONNEL,
WHOSE TECHNICAL EXPERTISE AND KNOWLEDGE OF OUR BUSINESS WOULD BE DIFFICULT TO
REPLACE.

Our success depends to a significant degree upon the continuing
contributions of key personnel, including our management team of chief executive
officer Peter D. Nagle, chief financial officer Paul C. Carroll, and chief
operating officer Paul B. Nagle. In addition, we rely heavily on key sales and
marketing, research and development and support personnel. We have employment
contracts with most of our key personnel, but we cannot guarantee that all of
these personnel will remain with us for any period in the future. If we are
unable to retain our senior management team, we may not be able to execute our
growth strategy and our results of operations may be harmed.

WE MAY BE UNABLE TO HIRE AND RETAIN SOFTWARE DEVELOPMENT AND SALES AND MARKETING
PERSONNEL NECESSARY TO EXECUTE OUR BUSINESS STRATEGY.

We believe that our future success will depend in part upon our ability to
attract and retain highly skilled software developers, as well as sales and
marketing personnel, particularly as we continue to grow. Competition for this
type of personnel is intense, and we cannot ensure that we will be successful in
attracting and retaining personnel of adequate quality and in sufficient numbers
to meet our needs in the future. If we fail to attract and retain key personnel,
it could harm our business, limit our growth, and damage our competitiveness.

WE DEPEND ON PROPRIETARY TECHNOLOGY FOR WHICH WE DO NOT HAVE PATENTS OR OTHER
PROPRIETARY PROTECTION; WE ALSO RUN THE RISK OF THIRD-PARTY INFRINGEMENT CLAIMS.

Our success is substantially dependent upon the protection of our
proprietary technologies, and our profitability could suffer if third parties
infringe upon our intellectual property rights or misappropriate our
technologies. We presently have no patents or patent applications with respect
to our proprietary technologies. Instead, we currently rely upon copyright and
trademark laws, trade secrets, confidentiality procedures and contractual
provisions to protect our proprietary products. All of these afford only limited
protection. We cannot be certain that we will be able to prevent unauthorized
parties from copying or otherwise obtaining and using our products or
technology, particularly in foreign countries where the laws may not protect
proprietary rights as fully as those in the United States. Furthermore, actions
by us to enforce our intellectual property rights, protect our trade secrets or
determine the validity and scope of the proprietary rights of others could
result in our incurring substantial costs and diversion of our resources.

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12

Our competitors may independently develop or patent technologies that are
substantially equivalent or superior to our technologies.

In addition, we cannot be sure that third parties will not assert
infringement claims against us or with respect to products and technologies
which we license from third parties. These claims could require us to pay
extensive damages or enter into costly settlement agreements. In addition, any
claims, with or without merit, could:

- be time-consuming to defend

- result in costly litigation

- divert our management's attention and resources

- cause product shipment delays

- require us to enter into royalty or licensing agreements which may not be
available on terms acceptable to us, if at all

If we are unable to license or otherwise use products and technologies in
which third parties have rights, we will have to redevelop these products or
incur substantial additional expenses in order to sell these products, which
could harm our business.

WE MAY HAVE DIFFICULTY RAISING ADDITIONAL CAPITAL NECESSARY TO EXECUTE OUR
STRATEGY.

Executing our strategy may require the commitment of substantial amounts of
capital. If our business operations do not provide enough capital to fund our
expansion and achieve our goals, we will have to raise additional funding
through the issuance of debt or equity. Other than our L4.0 million revolving
credit facility for acquisitions and our L1.0 million working capital credit
facility, we have no current commitments or arrangements with respect to, or
readily available sources of, additional funding. We cannot ensure that we will
be able to raise additional funds by issuing debt or equity securities under
satisfactory terms at the time we need funds. As a result, we may not be able to
take advantage of market opportunities or potential acquisition opportunities.

IF WE CANNOT MAINTAIN AND EXPAND OUR INDIRECT SALES CHANNEL TO SELL OUR
PRODUCTS, OUR ABILITY TO GENERATE REVENUES MAY BE HARMED.

We intend to market and sell our products and services both directly
through our internal sales force and indirectly through VARs. Until recently, we
marketed and sold our products exclusively through our direct sales force, and
we may not be able to maintain and expand our sales channel with the VARs.
Regardless of our efforts, VARs may not devote sufficient resources to marketing
and supporting our products and could discontinue selling our products at any
time in favor of our competitors' products or for any other reason.

OUR GLOBAL OPERATIONS AND ANY FUTURE EXPANSION EXPOSES US TO LESS DEVELOPED
MARKETS, UNFAMILIAR LEGAL REGIMES, POTENTIAL POLITICAL INSTABILITY AND OTHER
ECONOMIC AND POLITICAL RISKS.

We currently conduct operations predominantly in the United Kingdom,
Ireland and South Africa. We intend to evaluate opportunities to expand our
business by seeking new customers and acquiring complementary businesses or
products in other foreign countries, including the rest of Europe, the United
States and Australia. These international operations expose us to various
economic, political and other risks, including the following:

Less developed markets. We may attempt to sell our products in countries
with software markets that are less developed than the markets we currently
serve. If any of these new markets do not mature, our business activities
may fail.

Compliance with laws. As we expand internationally, we will become
increasingly subject to the laws and regulations of foreign countries and
the costs of complying with such laws. We may not be familiar with these
laws and regulations, and these laws and regulations may change at any time.

8
13

Accordingly, it may be difficult for us to foresee risks and costs
associated with compliance with those laws at the time of our entry into
those countries.

Political instability. We may purchase interests in foreign companies that
are located, or that transact business, in parts of the world that
experience political instability. Political instability may have a negative
impact on the subject country's economy, and may limit or eliminate a
subsidiary company's ability to conduct business.

Economic policy changes. Changes in policies by foreign governments
resulting in, among other things, increased duties, higher taxation,
currency conversion limitations, restrictions on the transfer or
repatriation of funds or limitations on imports or exports could damage our
business.

Lack of developed infrastructure. The countries in which we may do business
may not have developed a communication and/or transportation infrastructure
sufficient to support the needs of our current or future business. A lack of
developed infrastructure could limit our ability to conduct our business in
such countries and may harm our business.

Management of a multi-national organization. As we expand globally,
management of employees, accounting, taxation and other organizational
elements of our business will become increasingly complex. Any failure to
manage the international implications of global expansion may harm our
business.

WE FACE RISKS ASSOCIATED WITH INTERNATIONAL TRADE AND CURRENCY EXCHANGE.

Because of our international operations, all of our sales are denominated
in currencies other than U.S. dollars. We do not currently engage in currency
hedging activities. Although exposure to currency fluctuations to date has been
insignificant, future fluctuations in currency exchange rates may harm our
operating results. To the extent that we also sell products and services in
currencies other than the local currency, we may also be less competitive than a
vendor whose products are sold in the local currency during times of exchange
rate instability. In addition, although all of our revenues are denominated in
currencies other than U.S. dollars, we report our operating results in U.S.
dollars. These reports may therefore be affected by exchange rate fluctuations
and may not accurately reflect operating results. We expect that our
international sales operations will increase substantially, and that we will
continue to be subject to currency exchange risk.

FLUCTUATIONS IN OUR QUARTERLY OPERATING RESULTS MAY AFFECT OUR STOCK PRICE.

Our operating results can vary, sometimes substantially, from quarter to
quarter. These fluctuations may be due to a number of factors, many of which are
beyond our control. These factors include:

- the varying length of the sales cycles for our products

- the size and timing of our licensing transactions

- the timing of release, proper operation and market acceptance of our
products

- changes in the budget cycles of our customers

- seasonality of our customers' technology purchases

- economic recessions in the geographic markets we serve

- foreign currency exchange rates

The timing of our revenue recognition can be affected by many factors,
including the timing of a contract's execution and delivery, a customer's
acceptance and our post-delivery obligations with respect to the installation
and implementation of our products. As a result, the time between contract
execution and the satisfaction of the criteria necessary for revenue recognition
can be lengthy and unpredictable and, consequently, may affect our revenues. As
a result, it is possible that in some future quarters our results of operations
may fall below the expectations of some securities analysts and investors. In
that event, the trading price of our stock may likely be materially and
adversely affected.

9
14

THE TAX BENEFITS THAT WE CURRENTLY RECEIVE IN IRELAND MAY BE LOST IF WE FAIL TO
SATISFY SPECIFIED CONDITIONS.

We maintain our principal headquarters in Ireland. As a means of
encouraging foreign investment, the Irish government provides tax incentives and
exemptions from regulatory restrictions. Among the benefits that directly affect
us are a reduced tax rate applicable to certain companies operating from
Ireland. To be eligible for these tax benefits, we must continue to meet
specified conditions including developing software in Ireland. Our failure to
meet these conditions could result in cancellation of these tax benefits or
these tax benefits could be discontinued or modified in the future. If either of
these situations were to occur, our profitability could be harmed.

OUR BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION COULD SUFFER FROM THE
RESIDUAL IMPACT OF THE YEAR 2000 TRANSITION.

We have executed a plan designed to make our software applications Year
2000 ready. To date, none of our applications have experienced material
difficulties from the transition to Year 2000. During the Year 2000, it is
possible that material difficulties could still be discovered or could arise.
Computer experts have warned that there may still be residual consequences of
the change in century date. Any such difficulties could result in a decrease in
the purchase of our software products, interruptions of data or other critical
information, an increase in allocation of resources to address Year 2000
problems or an increase in litigation costs relating to losses due to such Year
2000 problems. Any of these events could materially harm our business or
financial results.

OUR TRADING PRICE MAY BE VOLATILE, AND AN ACTIVE PUBLIC MARKET FOR OUR COMMON
STOCK MAY NOT DEVELOP.

Currently our common stock trades over the counter. Although we have
applied to have our common stock approved for quotation and trading on the
Nasdaq National Market upon completion of this offering, an active public market
may not develop. If our daily stock trading remains limited, one large purchase
or sale can affect our stock price more than it would a more widely traded
stock. Additionally, the price of our common stock that will prevail in the
market after the offering may be higher or lower than the price you pay and
could fluctuate widely due to factors beyond our control. Significant factors
that may affect our stock price include:

- actual or anticipated fluctuation in our operating results

- announcements of major new products by us or our competitors

- changes in security analysts' expectation of us

- general market conditions

AFTER THIS OFFERING, OUR EXECUTIVE OFFICERS, DIRECTORS AND ENTITIES AFFILIATED
WITH THEM WILL STILL CONTROL ALL MATTERS REQUIRING A STOCKHOLDER VOTE.

Currently, our existing officers, directors and entities affiliated with,
and immediate family members of, our officers and directors in the aggregate
beneficially own approximately 61% of our outstanding capital stock. Upon
consummation of this offering, they will continue to own a majority of our
outstanding capital stock. As a result, those persons, acting together, will
have the ability to control the vote on all matters requiring approval by our
stockholders, including the election of directors and approval of significant
corporate transactions, and might act in a manner inconsistent with the wishes
of our other stockholders. This concentration of ownership may have the effect
of delaying, deferring or preventing a change in control.

YOU WILL INCUR IMMEDIATE AND SUBSTANTIAL DILUTION IN THE NET TANGIBLE BOOK VALUE
OF THE SHARES YOU PURCHASE.

As a purchaser of our stock, you will incur immediate substantial dilution
in net tangible book value per share from the public offering price in the
amount of $ , assuming an offering price as set forth on the cover
page. Additionally, your ownership interest will be further diluted if
outstanding or

10
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future stock options to purchase our stock are exercised or if we issue
additional shares in connection with acquisitions or for other purposes. For a
more detailed discussion of how you will be affected by dilution, see
"Dilution."

SALES OF OUTSTANDING COMMON STOCK MAY DEPRESS THE STOCK PRICE AFTER THE
OFFERING.

A substantial number of shares of our common stock could be sold into the
public market after this offering. The occurrence of such sales, or the
perception that such sales could occur, could materially lower our stock price
or could impair our ability to obtain capital through an offering of equity
securities. After this offering, we will have outstanding 16,957,808 shares of
common stock, or 17,197,808 shares if the underwriters exercise in full their
option to purchase additional shares of common stock in the offering. In
addition, 1,650,000 shares of common stock may be issued under our stock option
plan.

The shares of common stock being sold in this offering will be freely
transferable under the securities laws immediately after issuance, except for
any shares sold to "affiliates" of Integrity. In connection with this offering,
our directors, executive officers and stockholders holding 10,797,617 shares of
our common stock will agree under written "lock-up" agreements that, for a
period of 180 days from the date of this prospectus, they will not sell their
shares. As a result, upon the expiration of the lock-up agreements 180 days
after the date of this prospectus, these shares of common stock will be eligible
for sale on the first anniversary of their respective dates of issuance,
subject, in most cases, to certain volume and other restrictions under the
federal securities laws. The remaining shares of common stock that are not
subject to these lock-up agreements are, or will become on the first anniversary
of their respective dates of issuance, eligible for resale under the federal
securities laws, subject to these same restrictions. We have also entered into a
registration rights agreement that requires us to register for resale 1,536,000
shares of common stock held by a stockholder.

OUR MANAGEMENT AND BOARD OF DIRECTORS MAY FAIL TO USE THE OFFERING PROCEEDS
EFFECTIVELY.

We have not designated any specific use for the net proceeds of this
offering. As a result, our management and board of directors will have broad
discretion in spending the proceeds of this offering. We cannot assure you that
we will use the proceeds in a way that will ultimately lead to profitability.

WE ARE SUBJECT TO ANTI-TAKEOVER PROVISIONS OF DELAWARE LAW AND IN OUR
CERTIFICATE OF INCORPORATION WHICH MAY AFFECT THE VALUE OF OUR STOCK.

As a Delaware corporation, we are subject to Section 203 of the General
Corporation Law of the State of Delaware. In general, Section 203 restricts the
ability of a public Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which the person became an interested
stockholder. As a result of the application of Section 203, potential acquirors
may be discouraged from attempting to acquire us, which could possibly deprive
our stockholders of acquisition opportunities to sell or otherwise dispose of
our stock at above-market prices typical of acquisitions.

In addition, our certificate of incorporation divides our board of
directors into three classes whose terms are staggered to begin in successive
years. This and other provisions of our certificate of incorporation and bylaws
could delay or prevent a change of control or sale of Integrity.

The existence of these provisions of Delaware law and our certificate of
incorporation could depress our stock price below that which would otherwise
prevail in a marketplace where in the absence of those limits, stockholders
wishing to accumulate large positions or assume control of our board of
directors would be free to bid up the price of our stock.

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FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that involve risks and
uncertainties. You may find these statements under the sections entitled
"Prospectus Summary," "Use of Proceeds," "Management's Discussion and Analysis
of Financial Condition and Results of Operations," "Business" or "Risk Factors,"
or by the use of forward-looking terminology such as "believe," "expect,"
"anticipate," "estimate," "plan," "project," "may," "will" or other similar
words. We have based these forward-looking statements on our own information and
on information from other sources that we believe are reliable. These
forward-looking statements include, without limitation, statements about our
market opportunities, strategies, competition, expected activities and
expenditures as we pursue our business plan. Many factors could cause our actual
results, performance or achievements to be materially different from any future
results, performance or achievements that may be expressed or implied by these
forward-looking statements, including:

- any failure of our products to perform adequately or claims by customers
for errors in our products

- our inability to acquire companies necessary to pursue our growth
strategy

- our inability to assimilate the operations of past or future acquisitions

- the loss of the right to use proprietary technology and any third-party
claims against us for infringement

- difficulty in raising additional capital funds

- our inability to hire or retain senior management and other key personnel

- our failure to develop new channels to sell our products or to
successfully compete in our chosen markets or to expand into new markets

- unanticipated downturns in the markets in which we operate

- our inability to achieve positive operating results

These factors are not exhaustive. Factors that could cause our actual
results, performance or achievements to differ include, but are not limited to,
those discussed in "Risk Factors." Given this level of uncertainty, you should
not place undue reliance on these forward-looking statements, which speak only
as of the date of this prospectus.

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USE OF PROCEEDS

The net proceeds to us from the sale of our shares of common stock in the
offering are expected to be approximately $ , based on an assumed
offering price of $ per share, after deducting the underwriting discount and
estimated offering expenses that we will have to pay. The principal purpose of
the offering is to finance our research and development activities, and to
finance future acquisitions. The balance of the net proceeds will be used for
general corporate and working capital purposes. Pending these uses, we intend to
invest the net proceeds to us from the offering in short-term, investment-grade,
interest-bearing securities.

We will not receive any proceeds from the sale of shares by selling
stockholders pursuant to the exercise of the over-allotment option.

DIVIDEND POLICY

We have not previously paid any cash or other dividends with respect to our
common stock. We do not expect to pay any dividends for the foreseeable future.
We intend to retain our earnings to finance our operations and any future
investments and business combinations. Our Board of Directors will decide from
year to year whether dividends will be paid based on factors such as our results
of operations, general business conditions, capital requirements, overall
financial condition and any other factors that the Board considers relevant.

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CAPITALIZATION

The following table sets forth our consolidated capitalization at December
31, 1999 and as adjusted to reflect our receipt of the estimated net proceeds of
$ from the sale of 3,000,000 shares offered by this prospectus at an
assumed offering price of $ per share, after deducting underwriting
discounts, commissions and our portion of estimated net offering expenses as
described under "Use of Proceeds."

DECEMBER 31, 1999
----------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)

Short-term debt
Loans payable............................................. $ 1,285 $
Current portion of long-term debt......................... 387
Note payable.............................................. 162
------- -------
Total short-term debt.................................. 1,834
------- -------
Long-term debt, (excludes current maturities)
Long-term capital lease................................... 450
-------
Stockholders' equity(1):
Shares of common stock, par value $0.0025; 40,000,000
shares authorized, actual and adjusted; 11,784,473
shares issued and outstanding actual and 14,784,473
shares issued and outstanding as adjusted.............. 29
Capital in excess of par value............................ 12,078
Accumulated deficit....................................... (1,659)
Accumulated other comprehensive loss...................... (954)
Receivable from exercise of stock options................. (244)
------- -------
Total stockholders' equity............................. 9,250
------- -------
Total capitalization................................. $11,534 $
======= =======

- ---------------
(1) This table excludes, at December 31, 1999, 2,128,734 shares issuable upon
the exercise of outstanding stock options.

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PRICE RANGE OF COMMON STOCK

A limited number of shares of our common stock currently is traded over the
counter. The following table sets forth, for the periods indicated, the high and
low bid prices per share of our common stock, as reported in the OTC Bulletin
Board from August 1998 to January 2000 and as reported in the Pink Sheets by the
National Quotation Bureau, LLC since January 2000. The prices listed below
reflect bid prices only and may not represent actual transactions.

HIGH LOW
-------- -------

YEAR ENDED DECEMBER 31, 1998:
Third Quarter (from August 21, 1998)...................... $ 20.625 $13.750
Fourth Quarter............................................ 20.781 5.000
YEAR ENDED DECEMBER 31, 1999:
First Quarter............................................. 25.625 7.500
Second Quarter............................................ 24.375 11.875
Third Quarter............................................. 14.688 5.000
Fourth Quarter............................................ 29.688 7.500
YEAR ENDING DECEMBER 31, 2000:
First Quarter (through March 20, 2000).................... 21.875 10.000

As of March 17, 2000, we had 295 holders of record of our common stock. On
March 21, 2000, the last reported bid price for our common stock as reported in
the Pink Sheets was $21.250.

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DILUTION

Purchasers of our common stock offered hereby will experience an immediate
and substantial dilution in the net tangible book value of the common stock from
the public offering price. The deficit in net tangible book value of our company
as of December 31, 1999 was approximately $9.2 million or approximately $0.78
per share of common stock. The deficit in net tangible book value per share
represents the amount by which our total liabilities exceed our net tangible
assets divided by the number of outstanding shares of common stock. After giving
effect to the sale of the 3,000,000 shares of common stock offered by us at the
assumed public offering price of $ per share, and after deducting
underwriting discounts and commissions and estimated offering expenses payable
by us, our pro forma net tangible book value at December 31, 1999 would have
been approximately $ million or approximately $ per share. This
represents an immediate and substantial increase in net tangible book value of
approximately $ per share to existing stockholders and an immediate and
substantial dilution of approximately $ per share to new investors
purchasing the shares in this offering. The following table illustrates the per
share dilution:

Public offering price....................................... $--
Deficit in net tangible book value before the offering.... $(0.78)
Increase in net tangible book value attributable to new
investors.............................................. --
------
Pro forma net tangible book value after the offering...... --
---
Dilution to new investors................................... $--
===

The following table sets forth as of December 31, 1999 the number of shares
of common stock purchased from us, the total consideration paid and the average
price per share paid by existing stockholders and the new investors purchasing
shares of common stock from us in this offering (before deducting underwriting
discounts and commissions and estimated offering expenses):

SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
--------------------- --------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ---------- ------- ---------

Existing stockholders................. 11,784,473 79.7% $7,243,126 % $0.615
New investors......................... 3,000,000 20.3 $
---------- ----- ---------- -----
Total................................. 14,784,473 100.0% $ 100.0%
========== ===== ========== =====

The foregoing discussion and tables assume no exercise of the underwriters'
over-allotment option or of any outstanding stock options after December 31,
1999.

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SELECTED CONSOLIDATED FINANCIAL DATA

You should read the following selected consolidated financial data in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the financial statements and related notes
included elsewhere in this prospectus. Our consolidated financial statements for
the years ended December 31, 1997, 1998 and 1999 have been audited by BDO
International, independent accountants, and our financial statements for the
years ended December 31, 1999 and 1998 have been restated to reflect our
December 7, 1999 merger with Jyris Limited, which has been accounted for as a
pooling of interests. Our consolidated financial statements for the years ended
December 31, 1997, 1998 and 1999 have been prepared and presented in accordance
with generally accepted accounting principles in the United States, or U.S.
GAAP. The financial statements for the years ended December 31, 1995 and 1996
(not included herein) are unaudited and are the statements of the Wyse Group
plc, which is considered to be our predecessor for accounting purposes, and have
been prepared and presented in accordance with generally accepted accounting
principals in the United Kingdom. These financial statements have not been
reconciled to U.S. GAAP; however, in the opinion of our management, there is no
material difference in these presentations. The pro forma financial data
summarizes our Unaudited Pro Forma Condensed Consolidated Financial Information
included elsewhere in this prospectus, which includes the results of operations
of each of the companies acquired in 1999 (including companies acquired by
Jyris) as if all companies had been acquired on January 1, 1999.

YEAR ENDED DECEMBER 31,
---------------------------------------------------------
PRO FORMA
1995 1996 1997 1998 1999 1999
------ ------ ------ ------ ------- -----------
CONSOLIDATED STATEMENT OF OPERATIONS DATA: (IN THOUSANDS, EXCEPT PER SHARE DATA(UNAUDITED)

REVENUES:
License and systems sales..................... -- -- -- $1,275 $23,283 $29,065
Support and maintenance....................... -- -- -- 1,106 10,983 11,832
Services...................................... $4,755 $2,726 $2,002 8,022 14,892 18,798
------ ------ ------ ------ ------- -------
Total revenues.............................. 4,755 2,726 2,002 10,403 49,158 59,695
COST OF REVENUES:
License and systems sales..................... -- -- -- 641 11,505 12,704
Support and maintenance....................... -- -- 218 2,212 2,376
----
Services...................................... 4,309 2,129 1,558 6,372 11,415 12,926
------ ------ ------ ------ ------- -------
Total cost of revenues...................... 4,309 2,128 1,558 7,231 25,132 28,007
------ ------ ------ ------ ------- -------
Gross profit.................................... 446 597 445 3,173 24,026 31,688
OPERATING EXPENSES:
Sales and marketing........................... 19 21 20 60 5,748 6,429
General and administrative.................... 314 462 351 2,277 16,955 22,922
Research and development...................... -- -- 7 20 2,477 3,387
Amortization of goodwill...................... -- -- -- 59 1,857 2,366
(Profit) loss on sale of fixed assets......... -- -- 3 -- (240) (240)
------ ------ ------ ------ ------- -------
Total operating expenses.................... 333 483 381 2,416 26,797 34,864
------ ------ ------ ------ ------- -------
Income (loss) from operations................... 113 114 64 757 (2,771) (3,176)
Interest income (expense)....................... -- (2) 4 (2) (92) (18)
Other income.................................... -- -- -- 75 745 745
------ ------ ------ ------ ------- -------
INCOME (LOSS) BEFORE INCOME TAX................. 113 112 68 829 (2,118) (2,449)
Taxation........................................ 42 39 22 189 269 432
------ ------ ------ ------ ------- -------
NET INCOME (LOSS)............................... $ 71 $ 73 $ 45 $ 640 $(2,387) $(2,881)
====== ====== ====== ====== ======= =======
Basic earnings (loss) per common share.......... $ 3.55 $ 3.65 $ 0.19 $ 0.32 $ (0.21) $ (0.25)
====== ====== ====== ====== ======= =======
Diluted earnings (loss) per share............... $ 3.55 $ 3.65 $ 0.19 $ 0.20 $ (0.21) $ (0.25)
====== ====== ====== ====== ======= =======
Weighted average number of shares outstanding
Basic......................................... 20 20 238 2,027 11,510 11,570
Diluted....................................... 20 20 238 3,142 11,510 11,570

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DECEMBER 31,
---------------------------------------------------------------------------------
1995 1996 1997 1998 1999 1999
----------- ----------- ----------- ----------- ----------- -----------
CONSOLIDATED BALANCE SHEET DATA: (IN THOUSANDS) AS ADJUSTED

Cash and cash equivalents...... $ 91 $1,471 $ 91 $ 1,070 $ 1,965
Working capital................ 15 99 152 (1,762) (12,556)
Total assets................... 402 1,806 595 15,358 38,303
Long-term debt, (excluding
current maturities).......... 2 -- -- 206 450
Total stockholders' equity..... 84 159 191 6,146 9,250

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EXCHANGE RATES

The following table contains certain information regarding the exchange
rates between Irish pounds and British pounds and U.S. dollars for the periods
indicated. All exchange rates presented below represent the noon buying rate in
New York City for cable transfers in foreign currencies as certified for customs
purposes by the Federal Reserve Bank of New York (the Noon Buying Rate), except
for the Irish pound exchange rates for 1999. Those rates were calculated based
on the Noon Buying Rate for euros and the fixed euro-Irish pound exchange rate.

BRITISH POUND

AT END AVERAGE
PERIOD ENDED DECEMBER 31, OF PERIOD RATE(1) HIGH(2) LOW(3)
------------------------- --------- ------- ------- ------
($ PER L1.0)

1995.............................................. $1.55 $1.58 $1.62 $1.53
1996.............................................. $1.71 $1.57 $1.71 $1.51
1997.............................................. $1.64 $1.64 $1.69 $1.60
1998.............................................. $1.66 $1.66 $1.70 $1.63
1999.............................................. $1.62 $1.62 $1.65 $1.58

- ---------------
(1) Average of month-end exchange rates.

(2) Highest month-end exchange rate for the year.

(3) Lowest month-end exchange rate for the year.

IRISH POUND

AT END AVERAGE
PERIOD ENDED DECEMBER 31, OF PERIOD RATE(1) HIGH(2) LOW(3)
------------------------- --------- ------- ------- ------
($ PER IR L1.0)

1995.............................................. $1.60 $1.61 $1.64 $1.56
1996.............................................. $1.69 $1.61 $1.69 $1.56
1997.............................................. $1.42 $1.51 $1.59 $1.42
1998.............................................. $1.49 $1.42 $1.50 $1.36
1999.............................................. $1.28 $1.34 $1.44 $1.28

- ---------------
(1) Average of month-end exchange rates.

(2) Highest month-end exchange rate for the year.

(3) Lowest month-end exchange rate for the year.

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

The following discussion and analysis should be read in conjunction with
"Selected Consolidated Financial Data" and the financial statements and related
notes included elsewhere in this prospectus. This discussion contains certain
forward-looking statements that involve risks and uncertainties. See "Forward-
Looking Statements." Our actual results could differ materially from those
discussed here. Factors that could cause or contribute to such differences
include those discussed in "Risk Factors" as well as those discussed elsewhere
in this prospectus. Our financial statements are reported in U.S. dollars and
prepared in accordance with U.S. GAAP. Unless otherwise stated, the data
presented in this discussion is derived from our actual statements of financial
condition and results of operation, and not from pro forma financial statements.
In the following discussion, the period to period comparisons of our operating
results do not include information regarding percentage increases or decreases
in items such as revenues. Our history of acquisitions, described below, has
caused wide variations in these items and management believes that the resulting
percentage increases and decreases are not meaningful. The pro forma financial
data summarizes our Unaudited Pro Forma Consolidated Financial Information
included elsewhere in this prospectus, which includes the results of operations
of each of the companies acquired in 1999 (including companies acquired by Jyris
Limited) as if all companies had been acquired on January 1, 1999.

OVERVIEW

We are a provider of web-enabled, enterprise-wide software applications for
smaller to mid-sized organizations. We operate our business as four integrated
business areas:

- business-to-business, or B2B
- software
- general accounting and technical services, or GATS
- computer finance services, or CFS

We recognize revenues from three sources:

- license and systems sales
- support and maintenance
- services

Our company was originally incorporated under the laws of the State of
Nevada on July 27, 1977, and was inactive from 1980 to 1998. On July 13, 1998,
our company issued 4,000,000 shares to its then-current owners for $0.0025 per
share, along with options to acquire an additional 2,511,800 shares at an
exercise price of $2.50 per share. At that time, we put a management team in
place to institute our strategic plan to develop our company into an information
technology company through the acquisition of existing businesses. Pursuant to
our strategic plan, on August 4, 1998 we acquired The Wyse Group plc. For
accounting purposes, Wyse is treated as our predecessor entity for all periods
prior to August 4, 1998. Until October 1998, the time of our next acquisition
after Wyse, our only source of revenues was Wyse's computer finance agency
services. On March 13, 2000, we reincorporated in Delaware and changed our name
to Integrity Software, Inc.

ACQUISITION HISTORY. To date, a substantial part of our growth has been
achieved through acquisitions. For the period from August 4, 1998 to December
31, 1999, we completed eight strategic acquisitions, including the acquisition
of Jyris Limited, a provider of enterprise-wide software applications, on
December 7, 1999. In exchange for all of the outstanding capital stock of Jyris,
we issued 6,365,064 shares of our common stock. Like our company, Jyris was
engaged in a strategy of growth through strategic acquisitions. Jyris was
incorporated in November of 1998 and completed seven acquisitions prior to being
acquired by us. The first acquisition Jyris made as part of its strategy was the
acquisition of Ibis Systems Limited on January 1, 1999.

We accounted for our acquisition of Jyris as a pooling of interests, and
have restated our consolidated financial statements for 1999 and 1998 to reflect
the consummation of the Jyris transaction. As a result,
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our financial position, results of operations and cash flows are presented as if
the pooled companies had been consolidated since November 1998 (the
incorporation date of Jyris). Our other seven acquisitions were accounted for
using the purchase method. Given the number of acquisitions in the periods
presented and the impact that those acquisitions have had on our financial
condition and operating results, the comparisons of our operating results from
period to period may not necessarily be meaningful.

The table below sets forth all of our acquisitions from August 1998 to
December 1999.

ACQUISITION DATE NAME AND LOCATION BUSINESS DESCRIPTION
- ----------------- ------------------------------ --------------------------------------

December 7, 1999 Jyris Ltd., Software for distribution, general
United Kingdom accounting, technical services and web
technology
December 2, 1999 Computer Foundations Ltd., Software for the contracting industry
United Kingdom
July 16, 1999 Net Results, Software application/web technology
Ireland
July 16, 1999 Datasoft Ltd., Software for the distribution industry
Ireland
December 23, 1998 Premier Computer Group Ltd., Software applications for credit
Ireland unions, construction and print and
packaging
October 12, 1998 Information Support Ltd., Computer maintenance and networking
United Kingdom services
October 1, 1998 Saracen Computer Systems Ltd., Software applications for industrial
United Kingdom cleaning management
August 4, 1998 The Wyse Group plc, Computer and information technology
United Kingdom finance agency

The table below sets forth all of the acquisitions that Jyris completed in
1999, prior to the time we acquired it.

ACQUISITION DATE NAME AND LOCATION BUSINESS DESCRIPTION
- ----------------- ------------------------------ --------------------------------------

December 6, 1999 Softly Aware Ltd., Software applications for the
United Kingdom distribution industry
December 3, 1999 Outsource Ltd., Software applications for the
Ireland distribution industry
December 2, 1999 Webbed Feet, Web technology; B2B software design
United Kingdom
December 1, 1999 Total Asset Ltd., Computer and information technology
United Kingdom finance agency
November 30, 1999 Multisoft SA, GATS software applications
South Africa
August 1, 1999 Todds of Lincoln Ltd., United Software for the distribution industry
Kingdom
January 1, 1999 Ibis Systems Ltd., GATS software applications; support
United Kingdom and maintenance services

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REVENUES. We derive revenues from three principal sources, which are:

License and systems sales -- License and systems sales revenues are derived
from initial software licensing, business-to-business software,
implementation services and hardware sales related to turnkey solutions.

Support and maintenance -- Support and maintenance revenues are derived
from annual contracts that automatically renew unless terminated, to
provide on-site maintenance and technical support for our software and
systems, and access to our help desk hotlines. These contracts typically
provide for fees that amount to approximately 20% of the initial license
fees we receive from our software sales to customers.

Services -- Services revenues are derived from the training, consultancy
and computer finance services we offer in connection with our systems and
on a stand-alone basis.

The following table sets forth the percentages of our 1999 total revenue
attributable to each of our revenue sources, broken out by business area.

B2B SOFTWARE GATS CFS
--- -------- ---- ---

License and systems sales................................... 98% 71% 61% --
Support and maintenance..................................... 1 25 31 --
Services.................................................... 1 4 8 100%
--- --- --- ---
Totals................................................. 100% 100% 100% 100%
=== === === ===

All of our revenues for all periods to December 31, 1997 consisted of
services revenues and reflect the fact that all of the revenues of Wyse, our
predecessor company, were derived from computer finance services. Since July
1998, the various acquisitions we have consummated have caused our revenue
sources to change significantly. In the future, we expect the proportion of our
revenues attributable to license and systems sales and support and maintenance
to continue to grow.

GROSS PROFIT. We generally derive different gross profit margins from our
three principal revenue sources. For 1999, they were as follows:

License and systems sales -- The gross profit margin was 51%. The costs of
revenues for license and systems sales consist primarily of personnel
costs, third-party software licenses, hardware costs and related expenses
for implementation and training.

Support and maintenance -- The gross profit margin was 80%. Costs of
revenues for support and maintenance primarily consist of personnel costs.
Support and maintenance is typically supplied on a contract basis, for a
period of one or more years.

Services -- The gross profit margin was 23%. The costs of services revenues
consist of personnel and outsourcing costs.

SALES AND MARKETING. These expenses consist primarily of sales personnel
costs, advertising, promotional literature and other public relations expenses.

GENERAL AND ADMINISTRATIVE. These expenses consist of salaries and
benefits for administration, executive, finance, legal, human resources and
associated overheads as well as bad debts, accounting and legal expenses. Our
general and administrative expenses also include depreciation of fixed assets.

RESEARCH AND DEVELOPMENT. These expenses include personnel costs,
facilities and overheads associated with the development of new products and
technologies.

AMORTIZATION OF GOODWILL. These expenses are derived solely from the
goodwill arising as a result of the seven acquisitions that we made and the
seven acquisitions that Jyris made using the purchase method of accounting.
Goodwill is amortized on a straight-line basis over 10 years. The total
amortization for the year ended December 31, 1999 was $1.9 million.

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SEASONALITY. In our limited operating history we have experienced some
seasonal fluctuations in revenues, with less revenue recognition occurring in
the first and fourth quarters of our fiscal years, particularly in the months of
January and December. We believe that these seasonal fluctuations are
attributable to our customers being less inclined to make purchasing decisions
regarding products and services such as ours during these particular months.

CURRENCY TRANSLATION AND TRANSACTIONS. All of our business is conducted in
currencies other than U.S. dollars, the currency into which the historical
consolidated financial statements have been translated. Historically, we have
recorded substantially all of our operating expenses in British and Irish
pounds. Our consolidated balance sheets are translated into U.S. dollars at the
respective exchange rates prevailing on the balance sheet dates, and the
statements of operations and cash flows are translated into U.S. dollars at the
average exchange rates for the relevant periods. Gains and losses resulting from
the translation are accumulated as a separate component of stockholders' equity.
Increase in the exchange rates from British and Irish pounds to U.S. dollars
from one year to the next negatively impact stockholders' equity.

Net gains and losses resulting from currency exchange transactions are
included in our statement of operations. We did not incur material net foreign
exchange transaction losses in 1997, 1998 or 1999. Because of the currencies
involved, the constant exposures and the substantial volatility of exchange
rates, we may experience currency losses in the future, and we cannot predict
the effect of exchange fluctuations on our future operating results. We have not
previously undertaken hedging transactions to cover possible currency exposure,
but may implement such a program in the future if appropriate.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, the percentage
of revenues represented by each item in our statement of operations:

YEAR ENDED DECEMBER 31,
----------------------------------
1997 1998 1999 1999
---- ---- ---- -----------
(PRO FORMA)

REVENUES:
(Percentage of Total Revenue)
License and systems sales................................. -- 12% 47% 49%
Support and maintenance................................... -- 11 22 20
Services.................................................. 100% 77 30 31
--- --- --- ---
Total revenues......................................... 100 100 100 100
COST OF REVENUES:
(Percentage of Each Revenue Item)
License and systems sales................................. -- 50 49 44
Support and maintenance................................... -- 20 20 20
Services.................................................. 78 79 77 69
Total cost of revenues................................. 78 70 51 47
GROSS PROFIT:
(Percentage of Each Revenue Item)
License and systems sales................................. -- 50 51 56
Support and maintenance................................... -- 80 80 80
Services.................................................. 22 21 23 31
Total gross profit..................................... 22 31 49 53

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YEAR ENDED DECEMBER 31,
----------------------------------
1997 1998 1999 1999
---- ---- ---- -----------
(PRO FORMA)

OPERATING EXPENSES:
Sales and marketing....................................... 1 1 12 11
General and administrative................................ 18 22 34 38
Research and development.................................. -- -- 5 5
Amortization of goodwill.................................. -- 1 4 4
--- --- --- ---
Total operating expenses............................... 19 24 55 58
Income (loss) from operations............................... 3 7 (6) (5)
Other income................................................ -- 1 2 1
--- --- --- ---
INCOME (LOSS) BEFORE INCOME TAX............................. 3 8 (4) (4)
Taxation.................................................... 1 2 1 1
--- --- --- ---
NET INCOME (LOSS)........................................... 2% 6% (5)% (5)%
=== === === ===

YEARS ENDED DECEMBER 31, 1999 AND DECEMBER 31, 1998

REVENUES. Our total revenues for the year ended December 31, 1999 were
$49.2 million, representing an increase of $38.8 million compared to total
revenues of $10.4 million in 1998. This increase was primarily attributable to
the inclusion of revenues from Saracen Computer Systems Limited, Information
Support Limited, or ISL, and Premier Computer Group Limited -- companies that we
acquired in 1998 -- for the full 1999 fiscal year. In addition, because our 1999
and 1998 financial statements are restated for the acquisition of Jyris,
revenues from Jyris are included for the full year of 1999. Jyris contributed
$14.4 million in revenues in 1999 and had no revenues in 1998. No single
customer accounted for more than 5% of our total revenues for 1999 or 1998.

License and Systems Sales

Our revenues from license and systems sales for the year ended December 31,
1999 were $23.3 million, representing an increase of $22.0 million over revenues
of $1.3 million for the year ended December 31, 1998. This increase was due to
the inclusion of full-year financials for acquired businesses, including
Saracen, ISL and Premier, all of which were acquired in the latter part of 1998.
The combined revenues from these three businesses included in our 1999 revenues
were $14.2 million. Because these companies were acquired in 1998, only part of
their revenues, $1.3 million in the aggregate, were included in our 1998
results. Our license and systems sales revenues for 1999 also include $9.1
million from Jyris. Jyris had no 1998 revenues.

We expect that license and systems sales revenues will constitute a larger
portion of our total revenues as we begin to upgrade customers from legacy
products to our next-generation products and as we include full-year revenues
from businesses that we acquired in 1999.

Our license and systems sales revenues generated from our B2B business in
1999 were $868,000, all of which were generated from previously existing
customers. These revenues were from sales of software products that allow our
customers to conduct business over the Internet. There were no revenues from B2B
in previous years because we implemented this line of business in 1999. We
expect that the proportion of our total revenues derived from the B2B business
will increase significantly in the future as our customers increasingly require
e-business solutions.

Support and Maintenance

Revenues from support and maintenance for the year ended December 31, 1999
were $11.0 million, representing an increase of $9.9 million over revenues of
$1.1 million in 1998. This increase resulted from the inclusion of revenues from
Saracen, ISL and Premier for the full year of 1999, as opposed to part-year

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inclusion from their respective dates of acquisition in 1998. Support and
maintenance revenues for 1999 also include full-year revenues from Jyris and
$199,000 generated in December 1999 by two companies that they acquired in that
month. We anticipate that the proportion of revenues derived from support and
maintenance will increase in the future with the inclusion of full year revenues
of acquired businesses and as our customers convert from legacy products to
next-generation products.

Services

Revenues for services were $14.9 million for the year ended December 31,
1999, which represents an increase of $6.9 million, as compared to $8.0 million
in 1998. As a percentage of total revenues, services decreased to 30% in 1999
from 77% in 1998. This decrease in revenues from services as a percentage of
total revenues is attributable to the fact that until October 1998, our only
revenues were from Wyse's computer finance agency services. The overall decline
in services revenues as a percentage of total revenues is consistent with our
strategy of reducing our emphasis on lower-margin services, particularly
computer finance services. In addition to the revenues from computer finance
services, $1.9 million of services revenues for 1999 were attributable to
consultancy and training services. This represented an increase of $1.6 million
from 1998, when we derived approximately $298,000 of revenues from consultancy
and training services. This increase is attributable to the inclusion of Jyris
in our 1999 revenues for the full year.

GROSS PROFIT.

License and Systems Sales

The gross profit margin for license and systems sales was 51% for the year
ended December 31, 1999, compared to 50% for 1998. The increase of 1% is
attributable to the inclusion of Jyris's results of operations in our financial
statements for 1999, as Jyris was able to achieve slightly higher margins on its
sales. If we are able to develop and commercialize more of our own software
products, rather than resell products that have been developed by others, we
expect the gross profit margins from license and systems sales to continue to
increase.

Support and Maintenance

The gross profit margin for support and maintenance was 80% for the years
ended December 31, 1999 and December 31, 1998.

Services

The gross profit margin for services was 23% for the year ended December
31, 1999, compared to 21% for the year ended December 31, 1998. This 2% increase
is attributable to the increase in consultancy and training services, which
accounted for $1.9 million of revenues in 1999 and only $298,000 of revenues in
1998. We expect the gross profit margin from services to continue to increase as
a result of our strategy of increasing our emphasis on higher margin business
lines such as consultancy and training.

SALES AND MARKETING. Our sales and marketing expenses were $5.7 million
for the year ended December 31, 1999, compared to $60,000 for the year ended
December 31, 1998. Sales and marketing expenses as a percentage of total
revenues were 12% for year ended December 31, 1999, compared to less than 1% for
the year ended December 31, 1998. The increase in sales expenses reflects
significant personnel-related expenses such as salaries and commissions,
recruiting fees and other costs of hiring. In addition, we experienced an
increase in marketing expenses associated with trade exhibitions and advertising
in trade publications. The increase also reflects the significant shift in our
business from providing computer finance services to providing web-enabled,
enterprise-wide software applications. Sales and marketing expenses increased as
a percentage of total revenues in 1999 as a result of our acquisition of higher
margin software businesses with correspondingly higher sales costs. We
anticipate that our sales and marketing expenditures will continue to rise for
the foreseeable future as we expand our sales force.

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GENERAL AND ADMINISTRATIVE. Our general and administrative expenses were
$17.0 million for the year ended December 31, 1999, representing an increase of
$14.7 million over general and administrative expenses for the year ended
December 31, 1998. General and administrative expenses as a percentage of total
revenues were 34% for the year ended December 31, 1999, compared to 22% for the
year ended December 31, 1998. The increase in general and administrative
expenses was due to the cumulative effect of the general and administrative
costs of the eight companies acquired by Integrity and the seven companies
acquired by Jyris in 1998 and 1999 and the hiring of related professional
accounting and legal advisors. The general and administrative expenses for Jyris
Limited for the year ended 1999 was $7.9 million. We expect that general and
administrative costs as a percentage of revenues will decrease in the future as
we realize anticipated synergies from our acquisitions and consolidation of our
administrative functions.

RESEARCH AND DEVELOPMENT. Our research and development expenses were $2.5
million for the year ended December 31, 1999, as compared to $20,000 for the
year ended December 31, 1998. Research and development expenses as a percentage
of licensing and systems sales revenues were 11% for the year ended December 31,
1999. The increase in our research and development expenses for 1999 is
attributable to the increases in personnel we have made among software
engineers, quality assurance personnel and outside contractors in order to
support the product development, documentation and testing activities related to
the development and release of our next-generation product versions. Until
October 1998, all of our operations consisted of Wyse's computer finance
services, which did not require research and development expenditures.

AMORTIZATION OF GOODWILL. Goodwill amortization for the year ended
December 31, 1999 was $1.9 million compared to $60,000 in the year ended
December 31, 1998. This increase was due to our continued growth through
acquisitions, most of which have been accounted for using the purchase method.
We amortize goodwill on a straight-line basis over 10 years. The total gross
amount of intangible assets at December 31, 1999 was $20.4 million, compared to
$6.9 million for the year ended December 31, 1998.

OPERATING INCOME (LOSS). We had an operating loss of $2.8 million in 1999,
compared to operating income of $757,000 in 1998. This change resulted from a
number of factors, including increased general and administrative costs, sales
and marketing costs, research and development costs and amortization of
goodwill, all of which resulted from the inclusion of acquired companies in our
results of operations.

PRE-TAX INCOME (LOSS). Our pre-tax loss for 1999 was $2.1 million,
compared to pre-tax income of $829,000 in 1998. Net interest expense was $92,000
for the year ended December 31, 1999, compared to $2,000 for the year ended
December 31, 1998. These charges were incurred as a result of financing our
short-term debt and working capital needs. As of December 31, 1999, we had no
long-term debt other than capital lease commitments. Other income for the year
ended December 31, 1999 amounted to $745,000, compared to $75,000 for the year
ended December 31, 1998. This income came from our sale of two businesses that
were not core to our future strategy.

TAXES. Taxes on income increased to $268,000 for the year ended December
31, 1999 from $189,000 for the year ended December 31, 1998. The charge for 1999
was due entirely to capital gains tax on the sales of two non-core businesses.
For 1999, no taxes were paid on income. The effective tax rate for 1998 was
22.8%. The effective tax rate is lower than the statutory rate because we take
advantage of the special 10% tax rate applicable to some companies operating in
Ireland.

NET INCOME (LOSS). We had a net loss of $2.4 million for the year ended
December 31, 1999, or $0.21 per diluted share, as compared with net income of
$640,000, or $0.20 per diluted share for the year ended December 31, 1998. The
loss for 1999 is partially attributable to amortization expenses of $1.9 million
associated with our various acquisitions that have been accounted for using the
purchase method. In addition, Jyris had net losses for fiscal 1999 of $1.7
million, which are included in our operating results. Of Jyris's net loss, $1.1
million is attributable to an amortization charge related to its prior
acquisitions.

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Pro Forma for the Year Ended December 31, 1999 and Actual Year Ended December
31, 1999

Our pro forma revenues for the year ended December 31, 1999 were $59.7
million as compared to $49.2 million of actual revenues. This increase in
revenues is a result of the inclusion of full-year revenues of the companies
acquired during the year. The pro forma net loss for 1999 was $2.9 million, or
$0.25 per share, as compared to actual net losses for 1999 of $2.4 million, or
$0.21 per share.

The pro forma results include amortization of goodwill of $2.4 million for
the year ended December 31, 1999, as compared to $1.9 million actual. This
difference reflects the amortization of goodwill as if our acquisitions had
taken place at January 1, 1999.

These results are not necessarily indicative of the results that would have
been achieved had the acquisitions occurred on January 1, 1999.

Years Ended December 31, 1998 and December 31, 1997

REVENUES. Our total revenues for the year ended December 31, 1998 were
$10.4 million, representing an increase of $8.4 million from total revenues in
1997. This increase is partially attributable to the inclusion in our operating
results of three months of revenues from Saracen and ISL, which we acquired in
the fourth quarter of 1998. No single customer accounted for more than 5% of our
total revenues for 1998 or 1997.

License and Systems Sales

Our revenues from license and systems sales for the year ended December 31,
1998 were $1.3 million. These revenues are attributable to the inclusion in our
operating results of three months of revenues from Saracen and ISL. We had no
revenues from our B2B business in 1998.

Support and Maintenance

Revenues from support and maintenance for the year ended December 31, 1998
were $1.1 million. These revenues are attributable to the inclusion in our
operating results of three months of revenues from Saracen and ISL.

Services

Revenues from services were $8.0 million for the year ended December 31,
1998, which represents an increase of $6.0 million over revenues in 1997 of $2.0
million. This increase is attributable to the growth in the computer finance
industry and the wider availability of innovative financing methods for both
hardware and software.

GROSS PROFIT.

License and Systems Sales

The gross profit margin from license and systems sales was 50% for the year
ended December 31, 1998. We had no revenue from license and systems sales in
1997.

Support and Maintenance

The gross profit margin for support and maintenance for the year ended
December 31, 1998 was 80%. We had no revenue from support and maintenance in
1997.

Services

The gross profit margin from services for the year ended December 31, 1998
was 21%, as compared with 22% for the year ended December 31, 1997.

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SALES AND MARKETING. Our sales and marketing expenses were $60,000 for the
year ended December 31, 1998, representing an increase of $40,000 over our sales
and marketing expenses for the year ended December 31, 1997. Sales and marketing
expenses as a percentage of total revenues were 1% for both the year ended
December 31, 1998 and the year ended December 31, 1997.

GENERAL AND ADMINISTRATIVE. Our general and administrative expenses were
$2.3 million for the year ended December 31, 1998, representing an increase of
$1.9 million over our general and administrative expenses for the year ended
December 31, 1997. General and administrative expenses as a percentage of total
revenues were 22% for the year ended December 31, 1998, compared to 18% for the
year ended December 31, 1997. This increase represents the inclusion of expenses
related to acquisitions that we consummated in the fourth quarter of 1998. In
addition, we experienced higher general and administrative expenses associated
with the increased sales volume of our computer finance agency business.

RESEARCH AND DEVELOPMENT. Our research and development expenses were
insignificant for the years ended December 31, 1998 and 1997.

AMORTIZATION OF GOODWILL. Goodwill amortization in the year ended December
31, 1998 was $59,000. There was no goodwill amortization charge in 1997. The
total gross amount of intangible assets at December 31, 1998 was $6.9 million,
which arose from the acquisitions of Saracen, ISL and Premier.

INTEREST EXPENSE. Net interest expense was $2,000 for the year ended
December 31, 1998. These charges were incurred as a result of financing our
short-term debt and working capital needs. As of December 31, 1998 and 1997 we
had no long-term debt, except for capital lease commitments.

TAXES. Taxes on income increased to $189,000 for the year ended December
31, 1998 from $22,000 for the year ended December 31, 1997. The effective tax
rate for the year ended December 31, 1998 was 22.7%, as compared to 33% for
1997. The effective tax rate is lower than the statutory rate because we take
advantage of the special 10% tax rate applicable to some companies operating in
Ireland.

NET INCOME. Our net income was $640,000 for the year ended December 31,
1998, or $0.20 per diluted share, as compared to $45,000, or $0.19 per diluted
share for the year ended December 31, 1997.

LIQUIDITY AND CAPITAL RESOURCES

Our principal capital requirements to date have been to fund:

- acquisitions
- working capital needs
- research and development
- sales and marketing
- capital expenditures

We have met our liquidity needs over the past three years through funds
provided by operating activities, private equity placements, short-term
borrowings and capital leases.

Net cash provided by operating activities for the year ended December 31,
1999 was $3.0 million, compared to net cash used for operating activities of
$59,000 for the year ended December 31, 1998 and $1.4 million for the year ended
December 31, 1997. The cash provided by operations in 1999 arose as a result of
accounts payable increases associated with the acquisition of Jyris completed in
late 1999.

Our accounts receivable at December 31, 1999 were $11.3 million, compared
to $4.2 million at December 31, 1998, representing an increase of $7.1 million.
This reflects the significant growth we experienced during this period and our
acquisition of businesses with high levels of accounts receivable. As of
December 31, 1999, our receivables accounted for 84 days of average revenues as
compared with 148 days in 1998. This reduction is attributable to benefits that
companies we acquired have realized from efficiencies in our receivables
collection process.

We had provisions for doubtful debts of $808,000 at December 31, 1999 and
of $463,000 at December 31, 1998. Due to our growth, we do not consider the
historical write-off of receivables to be
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33

indicative of future trends. We review the adequacy of our doubtful debt
provision based on a review of the aged receivables. We believe that the
provision of $808,000 is adequate to cover the receivables balance at December
31, 1999.

Net cash used in investing activities for the years ended December 31,
1999, 1998 and 1997 were $4.2 million, $1.8 million and $13,000, respectively.
Of these amounts, cash used in the acquisition of businesses, net of cash
acquired, amounted to $3.6 million in 1999, $1.8 million in 1998 and none in
1997. In 1999, $1.3 million was received from the sale proceeds of two non-core
businesses.

Net cash flows from financing activities for the years ended December 31,
1999 and 1998 were $2.2 million and $2.9 million, respectively. In 1999 and
1998, proceeds from the sale of our common stock amounted to $1.6 million and
$2.8 million. In 1999, we retired two short-term loans made to us by one of our
directors, in an aggregate amount of $1.0 million. This same director made an
additional short-term loan of $1.3 million to us in 1999, which we repaid in
2000. We incurred no such borrowings in 1998. Bank overdraft facilities were
increased in 1999 by $433,000, in 1998 by $126,000 and in 1997 by $13,000.

Our financing activities include equity offerings and borrowings. In
February 2000, we entered into an agreement for a L4.0 million revolving credit
facility from Barclays Bank plc, which will bear interest at an annual rate of
1.75% over the London Interbank Offered Rate (LIBOR). We have drawn down L1.1
million from this facility and the balance may be used only to finance future
acquisitions. We have also entered into an agreement for a L1.0 million working
capital facility from Barclays, which will bear interest at an annual rate of
1.75% over LIBOR. We believe that we will be able to fund our future short-term
cash needs through cash from operations and these two credit facilities. The
credit facilities are secured by a lien on substantially all of our assets and
contain covenants that restrict, among other things, our ability to borrow,
acquire businesses, guarantee debts of others and lend funds to affiliated
companies.

We intend to continue to fund our acquisition strategy and the promotion of
our new web-enabled, enterprise-wide applications software through cash from
operations, our credit facilities and other financing arrangements that we deem
appropriate. We believe that our anticipated cash flows from operations,
together with our credit facilities and the net proceeds of the offering
described in this prospectus, will provide us with sufficient liquidity to meet
our currently foreseeable cash needs for at least the next two years.

RECENT ACCOUNTING PRONOUNCEMENTS

SFAS No.133, "Accounting for Derivative Instruments and Hedging Activities"
requires companies to record derivatives on the balance sheet as assets or
liabilities, measured at fair market value. Gains or losses resulting from
changes in the values of those derivatives are accounted for depending on the
use of the derivative and whether it qualifies for hedge accounting. The key
criterion for hedge accounting is that the hedging relationship must be highly
effective in achieving offsetting changes in fair value or cash flows. SFAS
No.133 is effective for fiscal years beginning after June 15, 2000. We believe
that the adoption of SFAS No.133 will have no material effect on our financial
statements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

FOREIGN CURRENCY EXCHANGE RATES. All of our business is transacted in
currencies other than the U.S. dollar. Our functional currency is the British
pound and the functional currencies of our non-U.K. subsidiaries are their local
currencies. As a result, we are subject to exposure from movements in foreign
currency exchange rates, specifically the U.S. dollar/British pound, the U.S.
dollar/Irish pound and the British pound/Irish pound exchange rates. We do not
use derivative financial instruments for speculative trading purposes, nor do we
hedge our foreign currency exposure to manage our foreign currency fluctuation
risk.

INTEREST RATE SENSITIVITY. We do not believe that we currently have any
material exposure to any market risks related to interest rate sensitivity.

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34

BUSINESS

OVERVIEW

INDUSTRY BACKGROUND

Businesses of all sizes recognize the value of information and the need to
distribute information across their respective enterprises to improve their
competitive positions and better serve their customers. Mission-critical systems
from core accounting functions through sales and marketing, order processing,
inventory control and human resources must be capable of generating and
disseminating critical information quickly and efficiently. Enterprise-wide
software applications are designed to help a business manage and execute its
mission-critical operations, as well as enable it to respond rapidly to changing
market environments and customer needs.

The flexibility currently demanded by enterprise users as a result of the
rapid expansion of local and wide area networks, distributed computing, and a
greater investment in critical systems, is creating increasing demand for
high-quality, flexible, enterprise-wide software applications. Historically,
organizations' information systems were based on proprietary mainframe and mini
computers that focused on security, scalability, and performance but offered
limited flexibility. The inflexible nature of these systems has created an
opportunity for web-enabled, enterprise-wide software applications. This
opportunity has driven the trend toward more flexible, open systems.

Key developments of this trend include:

Migration from inflexible legacy systems. Organizations relying on legacy
systems are now evaluating flexible, user-friendly, enterprise-wide
platforms that address their mission-critical system requirements,
including networking and e-business.

Increasing dependence on outsourced software. We believe that businesses
are increasingly outsourcing their requirements for enterprise-wide
software applications principally because of the increased complexity and
expense of in-house development.

Increasing demand for web-enabled software applications. Organizations of
all sizes are seeking Internet and electronic commerce technologies that
can extend the availability of information to employees across their
enterprises and allow them to interact with customers and suppliers through
the Internet.

According to Forrester Research, an independent market research firm,
global license revenues from packaged applications are expected to grow from $14
billion in 1998 to over $41 billion by 2003, representing a compounded annual
growth rate of 24%. The non-U.S. portion of this market is projected to grow
even faster from $6 billion to over $20 billion over the same period,
representing a compounded annual growth rate of approximately 27%.

Organizations with revenues greater than $1 billion were the first to adopt
flexible enterprise-wide applications. Several large vendors like PeopleSoft and
SAP have historically targeted and dominated this large market. Although these
solutions have undergone significant evolution since their introduction, they
remain very expensive and require significant resources because they involve
lengthy implementation cycles

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and can demand substantial customization. Accordingly, the solutions provided by
these large vendors are not appropriate for smaller to mid-sized organizations.

OUR MARKET

We target the market for web-enabled, enterprise-wide software applications
for smaller to mid-sized organizations. Because this market has been
under-served by vendors who traditionally target large organizations, we believe
that this market will generate a significant portion of the growth in demand for
enterprise-wide software applications. In addition, we believe that smaller to
mid-sized organizations have a number of key business requirements that differ
from those of large organizations, including:

Cost effectiveness and ease of use. Smaller to mid-sized organizations
generally have fewer information technology resources. They require
cost-effective solutions from vendors that can provide the essential
assistance needed during the implementation process, as well as ongoing
support and service. They also require systems that can be rapidly
implemented and are easy to learn, use and modify.

Flexibility and scalability. As they grow, smaller to mid-sized
organizations require business software applications that are modular and
configurable to meet their evolving business needs.

Integrated e-business solutions. Because smaller to mid-sized
organizations generally have fewer internal resources available to address
their Internet and electronic commerce requirements, they increasingly rely
on their enterprise software vendors for applications that address these
needs and easily integrate with their existing business systems.

We believe that there is a substantial and growing market for flexible,
web-enabled, enterprise-wide software applications. Great opportunity exists for
smaller to mid-sized organizations to take advantage of the technological
developments and efficiencies available to them because of the lower cost of
ownership of these applications. In addition, the faster implementation and
integration of these applications minimizes the costs and business disruptions
normally associated with changing mission-critical software systems.

THE INTEGRITY SOLUTION

Our web-enabled, enterprise-wide software applications address the
information requirements of our customers. Our solutions provide the following
benefits:

OUR PRODUCTS OFFER EASE OF MIGRATION FROM LEGACY SYSTEMS.

Many organizations in our target markets have made substantial investments
in mission-critical software applications. These applications are often legacy
products that do not incorporate the latest technologies such as web-enabling
functions. Many of these organizations are evaluating their system requirements
in light of their need to address these new technologies. We believe we offer
our current and potential customers utilizing legacy products the most
cost-effective, mission-critical software for them to purchase and implement.
Our new products are designed to access and convert legacy data and, as a
result, they can be implemented more quickly and less expensively. Additionally,
because of our products' modular design, customers need only purchase those
modules that they require.

OUR WEB-ENABLED SOLUTIONS ARE DESIGNED TO MEET OUR CUSTOMERS' NEEDS.

Using Quikbild, our web-enabling technology, we satisfy our customers'
requirements for integrated commercial web applications. Quikbild delivers the
following benefits:

- online transaction processing integrated with back office and customer
relationship management systems

- fast development of tailored applications

- creation of front-end interfaces, intranets and industry portals

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Because our clients operate in dynamic, competitive industries, they must
react quickly to their customers' needs. Using our web products, our customers
can offer a fully functioning commercial interface that provides a competitive
advantage through faster processing, more reliable information, better services
and reduced operating costs.

WE OFFER COMPREHENSIVE SERVICE AND SUPPORT.

We believe that high-quality customer service and support are critical to
our success. We believe the key to high-quality service and support is
well-motivated, highly trained personnel, constantly attuned to customer needs.
To meet those needs, we have made significant investments to develop a
comprehensive service and support organization throughout our areas of
operation. We provide ongoing training for our service and support staff and
organize user groups of our customers to encourage feedback about our products
and services in order to enhance our customers' satisfaction. We expect to
provide an increasing level of support as our products are deployed across a
wider range of customers and locations and become increasingly sophisticated,
incorporating web-based functionalities.

OUR PRODUCTS ALLOW OPEN SYSTEM INTEGRATION.

Our products are designed around open system architecture to offer
customers fully integrated web-enabled, enterprise-wide applications which allow
interoperability with most platforms, including Unix, Windows, Novell and Linux.
Because we utilize Open Database Connectivity standards in our products, data
can be accessed through Oracle, Progress, SQL server, Informix and other
databases and the data can be easily retrieved by external programs.

STRATEGY

Our primary business objective is to be the leading provider of
mission-critical, web-enabled, enterprise-wide software applications to our
target markets. Key elements of our strategy include:

FOCUS OUR RESEARCH AND DEVELOPMENT ON NEW WEB-ENABLED, MISSION-CRITICAL SOFTWARE
PRODUCTS.

Utilizing Quikbild, our web-enabling technology, we are focusing a
significant portion of our research and development resources towards the goal
of creating a software product which addresses the mission-critical needs of
smaller to mid-sized organizations. In particular, it is our intent to create a
modular suite of web-based software products which can be tailored to a specific
client's needs across any number of vertical markets.

ACCELERATE GROWTH AND ACHIEVE ECONOMIES OF SCALE THROUGH STRATEGIC ACQUISITIONS.

We believe we have a successful record of growing our company by acquiring
complementary businesses. From August 1998 to December 1999 we completed eight
strategic acquisitions. We plan to continue our consolidation of overlapping
functions and elimination of redundant costs from our acquired businesses. We
will continue to focus on acquiring businesses that provide us with one or more
of the following strategic benefits:

- new products or technologies
- larger customer base
- expansion into new geographic markets
- expansion into new vertical markets
- key personnel
- economies of scale

We believe that our experience in identifying, structuring, completing and
integrating acquisitions will enable us to effectively capitalize on
opportunities to use acquisitions as a vehicle for future growth. We believe
that, through the further integration and consolidation of our operations, we
will achieve significant additional savings in our general and administrative
expenses.

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LEVERAGE OUR EXISTING LEGACY CUSTOMER BASE BY SELLING OUR NEW PRODUCTS.

We have contracts with approximately 3,800 customers relying on legacy
mission-critical software products. We believe there is significant opportunity
to migrate these customers to our next-generation software products which offer
enterprise-wide applications that are web-enabled, cost-effective and integrate
with customers' existing platforms. To that end, we have put in place a new
company-wide sales initiative to aggressively target legacy users in order to
migrate them to our next-generation products. This initiative involves both
customer and sales force incentives.

EXPAND OUR VALUE ADDED RESELLER CHANNEL.

Through our CFS business area, we have developed close relationships with a
significant number of VARs. We are currently evaluating these relationships in
order to identify the most technically competent VARs to market and sell our
software products to their customers. We intend to further leverage our existing
relationships with VARs with the goal of creating an efficient way of marketing
and selling our software products to their customer bases. We believe that the
accelerated development of this VAR channel would improve our competitive
position and lead to greater market penetration of our products.

FURTHER PENETRATE OUR TARGET MARKETS.

We believe there are substantial opportunities to increase our presence and
expand our customer base in the distribution and contracting markets. We plan to
apply our expertise in these markets to take advantage of common functionalities
across these industries, enabling us to efficiently and quickly meet our
customers' unique industry requirements.

ENHANCE OUR SERVICE AND SUPPORT FUNCTIONS.

In order to cultivate and strengthen long-term relationships with our
customers, we plan to continue to invest in the enhancement of our service and
support functions. We are currently consolidating our customer support functions
throughout our areas of operation and plan to use the resulting cost savings to
increase the number and quality of our service and support personnel. We believe
these actions will allow us to continue to provide high-quality service and
support, which is essential to the successful marketing and sale of our
products.

OUR BUSINESS

We have four integrated business areas: business-to-business, or B2B;
software; general accounting and technical services, or GATS; and computer
finance services, or CFS.

B2B SOFTWARE GATS CFS

PRODUCTS/ Quikbild, our web- Legerdemain and Legacy accounting Computer financing
SERVICES enabling technology Evolution, our software packages agency
targeted at enterprise-wide
applications for software
our software and applications
GATS customers
- -----------------------------------------------------------------------------------------------------
OPPORTUNITY Cross-sell to Further market our Migrate existing Expand and leverage
existing customer next-generation customers to next- our VAR channel for
base and through software generation software sales of our
the developing VAR applications to new and B2B products software and B2B
channel and existing products
customers
- -----------------------------------------------------------------------------------------------------
GEOGRAPHIC FOCUS UK, Ireland UK, Ireland, South UK, Ireland, South UK, Ireland
Africa Africa
- -----------------------------------------------------------------------------------------------------
CUSTOMERS 50 1,000 2,800 7,000
- -----------------------------------------------------------------------------------------------------
COMPANY-WIDE
FUNCTIONS Sales and marketing, research and development, training, service and support

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BUSINESS-TO-BUSINESS

OVERVIEW

We recently began to market web-enabling software modules that allow our
customers to interact with their customers and suppliers over the Internet. We
believe that our customers can realize several benefits by interacting with
their customers through this medium, including:

- faster transaction processing
- lower operating costs
- better information and access to information
- better customer service

Our development efforts are particularly focused on modules that can be
easily integrated with our Vision, Evolution and legacy products by individual
functions, offering a seamless transition for customers to a web-based
environment. We believe there is significant demand among our approximately
3,800 customers that currently use legacy products. In addition, the opportunity
exists to exploit the developing VAR channel to gain access to their end-users.

PRODUCTS

Our Quikbild development technology allows us to produce web-enabling
modules that we sell as a tailored solution to customers through our direct
sales force and our VARs. Each of these modules is designed to perform a
specific function and can be integrated into our customers' existing software
and combined with other Quikbild modules to meet each customer's unique
requirements. Quikbild modules require little technical expertise for our
customers to use, manage and maintain.

Quikbild uses a common source code to develop modules, which are reused
repeatedly and tailored for each customer's specific needs. We believe this will
enable us to produce high-quality, scalable products with substantially reduced
implementation and maintenance costs.

Our currently available Quikbild modules include:

Order Management Module. This module allows users to offer their customers
direct access through the web for the ordering of products, account
inquiries and order processing 7 days a week, 24 hours a day, saving time
and money for both parties to the transactions.

E-commerce Module. This module allows businesses to conduct transactions
directly with customers over the Internet. It provides for online catalog
functionality and order taking with the ability to take credit card details
via the web site and to allow online bank clearance and settlement.

Web Site Administration. This module enables our customers to
automatically update the contents of their web sites, incorporate the
latest news headlines (scrolling or static) and issue special bulletins
displayed as text in the news flash area. This allows customers to develop,
modify and maintain their web sites on a real-time basis. In addition, this
module includes a site search engine to locate content based on a variety
of categories.

We believe there is significant demand for our web-based solutions,
because, in addition to providing a high-quality, scalable product, they are
also competitively priced. The initial licensing fee for our introductory
modules starts at approximately $40,000, and the price of the solution increases
in proportion to the level of sophistication required. Our most sophisticated
solutions include e-commerce and order management modules which integrate
front-end user interfaces with back-end core enterprise software. In keeping
with our pricing policy, we generate recurring revenues from the licensing of
our Quikbild modules. Typically, annual licensing fees amount to approximately
20% of the initial licensing fee.

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SOFTWARE BUSINESS

OVERVIEW

Our software business area focuses on developing solutions to meet the
needs of our customers for enterprise-wide, integrated applications that are
reliable and can address the needs of our customers' particular industries.

Our software business serves approximately 300 customers in the
distribution industry and approximately 700 customers in the contracting market.
In addition, approximately 2,500 distribution industry customers and 300
contracting industry customers of our GATS business are currently utilizing
legacy products. We are seeking to migrate these customers from legacy products
to our next-generation distribution and contracting software products. We
believe the combination of functionality and price of our software products are
their key selling points and allow us to target companies in our chosen markets.

PRODUCTS

Distribution Industry

Our distribution software is Legerdemain, which is an enterprise-wide
application that is being enhanced with Internet communication protocols to take
advantage of our B2B order management module. We believe this product offers
significant advantages over many legacy systems currently being employed by
distribution customers in our GATS division as well as potential customers who
are using similar legacy systems. We are currently developing and testing a
next-generation Windows-based software suite, called Vision, that will offer the
same functionalities as Legerdemain and will use the same web-enabled B2B
technology already under development. We expect to launch Vision during the
second quarter 2000.

Our distribution software is built on our proprietary accounting platform
and provides the components necessary to fulfill core accounting as well as
industry-specific functions. Specific advantages of our distribution software
include:

Order management solutions. Our software provides real-time sales and
inventory management for distributors, wholesalers and manufacturers in
demanding supply chain environments.

Stock control management. Our software maintains a detailed description of
all items inventoried in the distributor's stockroom, including location,
quantity and all information related to fulfillment.

Electronic links to wholesalers and manufacturers. Our software allows all
communications between distributors and their customers to take place
through dedicated networks or through the Internet.

Telesales management. Our software offers a comprehensive solution for
businesses that need the ability to take customer orders over the phone by
giving operators instant access to full online account details, including
sales history, discounts, special deals, promotions and pricing.

Contracting Industry

Our current software product, Evolution, is the next-generation of our
Foundation product, specifically designed for the contracting market. Evolution
was released in September 1999, and our developers are currently creating
Internet communication protocols for this product.

Our contracting software is built on our proprietary accounting platform
and provides the components necessary to fulfill core accounting, as well as
industry-specific functions. Specific advantages of our Evolution product
include:

Project costing solutions. Our software delivers detailed cost estimate
analysis that allows the user to record and evaluate the costs of each job.

Sub-contractors management. Our software allows the process of measuring
and paying sub-contractors to be completed without duplication of entries.
The module can be fully integrated into our project costing module.

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Contractors payroll management. Our software allows control of up to
10,000 employees and the calculation of tax and insurance for the
appropriate region. The module can be fully integrated into our project
costing module.

Initial license fees for our contracting and distribution software starts
at approximately $20,000 and can cost as much as $150,000 depending on the level
of sophistication and the number of modules employed. Typically, annual
licensing fees amount to approximately 20% of the initial fee.

GENERAL ACCOUNTING AND TECHNICAL SERVICES

OVERVIEW

Our GATS business area, currently the largest in our company, supplies
legacy applications and turnkey business solutions to a broad base of customers.
Businesses in the general accounting market are increasingly seeking
enterprise-wide software applications and we anticipate that they will be
shifting from legacy systems to more sophisticated, enterprise-wide software
applications. We expect that many of our GATS customers will migrate to our
Vision and Evolution products. We will also continue to maintain our customers'
legacy systems, offer these customers our other products which offer
enterprise-wide solutions for their businesses, and where appropriate, seek new
customers for these systems.

We provide professional services for our customers through our GATS
division to fulfill their networking and information technology needs.

PRODUCTS AND SERVICES

Our GATS software provides the components necessary to fulfill core
accounting as well as industry specific functions:

We license these software programs under the brand names Multisoft, Quest,
Premier, Datasoft and Saracen. The software programs vary in their complexity
and sophistication from the most basic core accounting programs (Quest) to more
advanced products that offer greater functionality (Multisoft). Unlike Quest,
Premier, Datasoft, and Saracen, which are our proprietary products, we license
Multisoft from the Sage Group plc. under agreements giving us the right to sell
Multisoft in the United Kingdom and South Africa. In the United Kingdom, we have
exclusive distribution rights through March 2003 to market and sell Multisoft to
approximately 1,800 Multisoft users, of which approximately 800 currently are
under maintenance and support contracts with us. Under this agreement, we pay
Sage a royalty based on 40% of product sales, and 30% of recurring revenues. In
South Africa, we have the exclusive right through 2002 to market and sell
Multisoft, for which we pay Sage a nominal monthly fee.

In addition, we have extensive experience in and knowledge of fiber optic
communication, mass data storage solutions, operating environments (Unix,
Windows NT, Novell, Linux, DOS), communications protocols, fault tolerant system
design, secure Internet service provider (ISP) and hardware engineering.

Our GATS software products range in price from $2,000 to $120,000,
depending on the level of sophistication and complexity of the product.

COMPUTER FINANCE SERVICES

Our CFS business acts as an agent for the delivery of lease and rental
plans over one to five years to commercial organizations in the United Kingdom
and Ireland. Financial institutions such as GE Capital and Schroeders underwrite
all lease and rental plans. These institutions pay us a commission based on the
total transaction size. As agent, we do not assume any of the credit risk for
these leases.

Our CFS business works through VARs in the United Kingdom and Ireland who
distribute hardware and software solutions to end-users. Through our agency
agreement with Compaq Capital Finance, we have access to a significant number of
VARs. Our primary focus in our CFS business is to use the relationships that we
have already developed with key contacts in the VARs' sales forces in order to
cultivate these VARs as an additional distribution channel for our own software
products. We have formed
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a special sales and marketing team that is focused on promoting sales of our
software products and services through this VAR channel.

RESEARCH AND DEVELOPMENT

Research and development continues to be a key focus for our company. We
have two major enterprise-wide applications whose development is complete or
entering the final stages prior to product launch: Vision and Evolution. We are
continually designing new generations of software applications to provide
improved performance and enhanced functionality to our customers. We also have
numerous web-based applications at various stages of development focused on
addressing our customers' unique needs. We believe our software engineers to be
of the highest competence, and they have proven their ability to deliver
technically advanced, intuitive, user-friendly software.

We have integrated and consolidated our research and development
departments in the United Kingdom and Ireland to focus on our new product
offerings.

CUSTOMER SERVICE AND SUPPORT

We provide service and support to our customers to promote rapid and
efficient implementation and reliable, ongoing management of our products. In
addition, we periodically sell services on a stand-alone basis. This may lead to
future product sales by establishing and maintaining customer relationships. Our
service and support offerings include:

Project management. This service is designed to deliver to the customer
their expectations in a timely and cost effective manner.

Consulting and training. We consult on system evaluations, design,
programming, and implementation and offer extensive training in the use of
our products.

Problem solving and hot line access. Once the installation and training is
complete, customers receive ongoing support through our 24-hour help desk.
On-site support is available when appropriate.

Infrastructure support. Our technical service teams are trained to
implement and support all areas of the computer infrastructure, including
fiber optic communication, mass data storage solutions, operating
environments (Unix, Windows NT, Novell, Linux, DOS), communications
protocols, fault tolerant system design, secure ISP and hardware
engineering.

IT strategy. Our customers rely on us to advise them on the ever-changing
landscape of information technology.

Network management services. Our managed services allow us to remotely
monitor our customers' networks and conduct preventive maintenance and fast
diagnostics, resulting in greater network reliability and availability.
This is particularly important to our customers interested in using
e-commerce based applications.

SALES AND MARKETING

We market our products primarily through a direct sales force organized
around our target markets, enabling us to address the specialized needs of our
customers in each of these markets. As of March 20, 2000, our direct sales force
consisted of 90 sales representatives. Telemarketing augments our direct sales
effort where appropriate.

To supplement the efforts of our direct sales organization, we also sell
our products through marketing and distribution arrangements with VARs. As of
March 20, 2000, we had entered into agreements with approximately 20 VARs who
are selling our products. We intend to further leverage our existing
relationships with VARs with the goal of creating an efficient way of marketing
and selling our software products to their customer base.

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Our sales cycles for our products vary across each target market, typically
ranging from one to four months. For some of our more sophisticated
applications, the sales cycle can be up to 12 months. Our sales cycles depend on
many factors, including the size of the customer's organization, the number of
individuals involved in the purchasing decision, the status of a customer's
hardware system, and the degree of implementation, consulting and training
required.

Our marketing is targeted at existing and new customers in order to
position our company and our products in the forefront of the buying customer's
mind. We achieve this through interaction between our customers and all our
staff, industry specific advertising and exhibitions, direct mailing and
targeting industry associations. We produce marketing literature covering both
corporate and product information.

CUSTOMERS

We have approximately 3,800 customers who license products that generate
recurring revenues. No single customer accounted for more than 5% of our total
revenues in 1999. In addition, we are a major agent of lease and rental finance
in the U.K. market and have provided our agency leasing services to over 7,000
customers with existing leases, financed predominantly by GE Capital and
Schroeder.

COMPETITION

The web-enabled, enterprise-wide software applications market is intensely
competitive and rapidly changing. The competition that we encounter varies
across and within each vertical market depending upon, among other things, the
customer's size and specific system requirements. There are many factors that
affect competition in the software applications market, including a vendor's
responsiveness to customer needs and the quality of customer support as well as
a product's architecture, functionality, speed of implementation, ease of
integration, performance, features, reliability, breadth of distribution and
price.

Our principal competitors in the software market for the distribution
industry as well as for GATS are Sage, Great Plains and Pegasus Software. In the
software market for the contracting industry, our main competitors are Red Sky
Software, CSB/Coins and Mentor. Our competitors in the B2B market are
essentially the same competitors that we face in the contracting and
distribution software markets. Our CFS business competes with others in the
industry based primarily upon price. Our main competitor in this business area
is System Finance.

PROPRIETARY RIGHTS AND LICENSING

Our business is dependent upon our proprietary technology and other
intellectual property. We have not registered any copyrights nor received or
applied for any patents for our products, technologies or other intellectual
property. We typically enter into license arrangements with our customers that
grant them a nonexclusive license to use our software products. Our license
agreements generally allow the use of our software solely by the customer for
internal purposes without the right to sublicense or transfer the software to
third parties. Licenses usually are annual, but subject to termination for
breach or on notice, and contain confidentiality and nondisclosure provisions, a
limited warranty covering the software, and indemnification for the customer
from any infringement action related to the software. We have in the past and
may in the future resell some software products that we license from third
parties.

EMPLOYEES

As of March 20, 2000 we had 393 full-time employees. Of that number, 306
are based in our offices in the United Kingdom, 67 are based in Ireland, and 20
are based in South Africa. We have 90 employees in our sales force and 50 in
research and development. None of our employees are party to a collective
bargaining agreement, and we have never experienced a work stoppage. We consider
our relationship with our employees to be good and have not experienced any
interruptions of operations due to labor disagreements.

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PROPERTIES

We lease various facilities in the United Kingdom, Ireland and South Africa
which house our administrative, sales and marketing, service and support and
research and development functions. We also own two facilities in the United
Kingdom. The following table sets forth our principal facilities as of December
31, 1999:

LOCATION BUSINESS AREA LEASE EXPIRATION
-------- ------------- ----------------

UNITED KINGDOM
High Wycombe Software, GATS and B2B 2015
Lincoln Software, GATS and B2B 2013
IRELAND
Dublin Software and GATS 2025

We believe that our current facilities will be sufficient to meet our needs for
the next 12 months.

LEGAL PROCEEDINGS

As of the date of this prospectus, we are not party to any material legal
proceedings. From time to time, we may be involved in legal proceedings relating
to our operations in the normal course of business.

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MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth information with respect to our directors
and executive officers:

NAME AGE POSITION
---- -------- --------

Peter D. Nagle............................ 39 Chief Executive Officer, Chairman of the
Board
Paul C. Carroll........................... 38 Chief Financial Officer, Secretary and
Director
Paul B. Nagle............................. 40 Chief Operations Officer, Director
Kenneth F. Butler......................... 60 Commercial Director, Director
Philip L. Wood............................ 45 Vice President Sales
Barry M. Schechter(1)..................... 46 Director
Ivan M. Epstein(1)........................ 39 Director
Donald S. Radcliffe(1).................... 54 Director

- ---------------
(1) Members of the Audit and Compensation Committees.

PETER D. NAGLE has been our Chief Executive Officer and Chairman of our
Board of Directors since December 1999. He served as chief executive officer of
Jyris Ltd. from November 1998 to December 1999, at which time Jyris was acquired
by our company. From August 1997 to September 1999, Mr. Nagle was a director of
Ibis Systems, Ltd., where he had held several management-level positions since
1988. Ibis was acquired by Jyris in January 1999 and is now a subsidiary of our
company. Mr. Nagle started in the software industry in 1986 and has been
responsible for several successful software businesses, including Siteman
Software Ltd., for which he served as operations director from October 1992 to
August 1997. Mr. Nagle is the brother of Paul B. Nagle, our Chief Operations
Officer.

PAUL C. CARROLL has served as Chief Financial Officer, Secretary and a
director since July 1998. Prior to joining our company, Mr. Carroll ran his own
accountancy and international business consultancy practice, Paul Carroll & Co.,
for 15 years. During this time, he provided services in connection with numerous
mergers and acquisitions, particularly in the computer industry. Prior to the
commencement of his accountancy and consultancy practice, he was the chief
financial officer of Allied Leasing Limited in Dublin, Ireland. Mr. Carroll was
qualified as a Chartered Certified Accountant (FCCA) in 1984, and is an
Associate of the Institute of Arbitrators and a Fellow of the Institute of
Directors.

PAUL B. NAGLE has served as our Chief Operations Officer since December
1999 and as a director since April 1999. Mr. Nagle served as Chief Executive
Officer of our company from June 1999 until December 1999. From May 1995 through
March 1999, Mr. Nagle was managing director of Multisoft South Africa, a
computer software business. From August 1997 to March 1998, he was also managing
director of Brilliant Business Systems, an affiliate of Softline Ltd., a large
technology group listed on the Johannesburg Stock Exchange. Mr. Nagle is the
brother of Peter D. Nagle, our Chief Executive Officer.

KENNETH F. BUTLER has served as our Commercial Director since January 2000
and as a director since July 1998. From July 1998 to December 1999, Mr. Butler
was also our Chairman. Mr. Butler has over 35 years' experience in computer
software development, including acting as commercial director from October 1979
to May 1997 of Andrews Weatherfoil Ltd., a subsidiary of Powell Duffryn Group,
which is a company listed on the London Stock Exchange. Mr. Butler served as
director in the Kvaerner Construction Group from May 1997 until December 31,
1999.

PHILIP L. WOOD has been our Vice President of Sales since March 2000. Mr.
Wood is responsible for directing our VAR sales channel and overseeing our
direct sales force. Mr. Wood was managing director of Open Support Ltd., a value
added reseller of computer software and hardware, from June 1988 to July 1998.
From July 1998 to December 1999, Mr. Wood was the sales manager of Ibis Systems
Ltd., a

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value added reseller of computer software and hardware. Mr. Wood has 20 years'
experience in the computer software industry.

BARRY M. SCHECHTER has been a director of our company since December 1999.
Mr. Schechter is the chief executive officer and founder of SVI Systems Inc., an
AMEX-listed company which is a focused developer and implementor of end-to-end
software solutions for the retail industry. He has been with SVI since 1991.
Currently, Mr. Schechter is a director of Softline Limited, a South African
software company. He is also chairman of the board of directors of Applied
Retail Systems, Island Pacific Systems and Divergent Technologies.

IVAN M. EPSTEIN has served as a director of our company since December
1999. Mr. Epstein is co-founder of Softline Limited and has been its chief
executive officer since February 1997. Softline is listed in the Information
Technology sector of the Johannesburg Stock Exchange and has operations located
throughout South Africa, Australia, the United States and the United Kingdom.
Prior to joining Softline Limited, Mr. Epstein was an accountant at Price
Waterhouse for five years. Mr. Epstein is also a director of SVI Systems.

DONALD S. RADCLIFFE has served as a director of our company since December
1999. Mr. Radcliffe is currently chief operating officer of World-Wide Business
Centers, an office services provider, and has been in its employ since 1984.
Since 1993, Mr. Radcliffe has also been president of Radcliffe & Associates,
which provides financial consulting services to public companies. Currently Mr.
Radcliffe serves on the board of directors of SVI Systems, Inc., Pallet
Management Systems, Inc. and Complete Wellness Centers, Inc.

COMMITTEES OF OUR BOARD OF DIRECTORS

Our Board of Directors established an Audit Committee and a Compensation
Committee on March 15, 2000. The functions of the Audit Committee include
recommending to the Board of Directors the retention of independent auditors,
reviewing the scope of the annual audit undertaken by our company's independent
auditors and the progress and results of their work, and reviewing our company's
financial statements, internal accounting and auditing procedures and corporate
program to ensure compliance with applicable laws. The functions of the
Compensation Committee include reviewing and approving executive compensation
policies and practices, reviewing salaries and bonuses for some of our officers,
administering our 2000 Stock Option Plan and other benefit plans, and
considering other matters as may from time to time be referred to the committee
by our Board of Directors. The Board has appointed the following directors to
serve as members of the Audit Committee and the Compensation Committee: Ivan M.
Epstein, Barry M. Schechter and Donald S. Radcliffe.

ELECTION OF DIRECTORS AND OFFICERS

Our Board of Directors consists of seven directors, divided into three
classes, all of whom are elected for three-year terms, and one class of whom is
elected at each successive annual meeting of stockholders. Holders of shares of
common stock have no right to cumulative voting in the election of directors.
Consequently, at each annual meeting, a majority of the stockholders will be
able to elect all of the directors included in the class up for election. Our
executive officers are elected by the Board of Directors and may be removed at
any time by the Board of Directors. Our executive officers do not serve fixed
terms of office.

BOARD COMPENSATION

Our directors who are not also employees of our company or one of its
subsidiaries will receive $5,500 per year plus $500 for each meeting of the
Board of Directors attended and $500 for each committee meeting attended. No
other director will receive cash compensation for services as a director. All
directors will, however, be reimbursed for their expenses incurred in attending
meetings.

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EXECUTIVE COMPENSATION

The following table sets forth all compensation awarded to, earned by or
paid to our Chief Executive Officer and the two other executive officers of our
company whose annual salary and bonus exceeded $100,000 in 1999 for services
rendered in all capacities. In accordance with the rules of the SEC, other
compensation in the form of perquisites and other personal benefits has been
omitted for the named executive officers because the aggregate amount of
perquisites and other personal benefits was less than the lesser of $50,000 or
10% of the total of annual salary and bonuses for each of the named executive
officers in 1999.

SUMMARY COMPENSATION TABLE

ANNUAL COMPENSATION(1)
-----------------------
YEAR SALARY BONUS
---- -------- ------------

Peter D. Nagle, Chief Executive Officer(2).................. 1999 $244,600 --
Paul C. Carroll, Chief Financial Officer.................... 1999 $162,000 --
Paul B. Nagle, Chief Operations Officer(3).................. 1999 $121,500 --

- ---------------
(1) The amounts in this table have been translated to U.S. dollars from British
pounds based upon the average exchange rates in effect during 1999.

(2) Peter D. Nagle was chief executive officer of Jyris at the time it was
acquired by Integrity on December 7, 1999. He became Chief Executive Officer
of Integrity on December 7, 1999. All of Mr. Nagle's compensation referred
to in this table was paid by Jyris.

(3) Paul B. Nagle was our Chief Executive Officer from June 1999, to December 7,
1999, at which time he became our Chief Operations Officer.

AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUE

The following table sets forth, for the named executive officers, the
shares acquired and the value realized on each exercise of stock options during
the year ended December 31, 1999, and the number and value of securities
underlying unexercised options held by the named executive officers at December
31, 1999. The value of unexercised in-the-money options at December 31, 1999 has
been calculated using $17.813 per share, the closing bid price of our common
stock on December 31, 1999 as reported in the Pink Sheets.

NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED ----------------------------- -----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE NONEXERCISABLE EXERCISABLE NONEXERCISABLE
- ---- ----------- -------- ----------- -------------- ----------- --------------

Peter D. Nagle....... -- -- -- -- -- --
Paul C. Carroll...... 113,000 $468,750 147,000 -- $2,618,511 --
Paul B. Nagle........ -- -- -- -- -- --

2000 STOCK OPTION PLAN

Our 2000 stock option plan was adopted by our Board of Directors and
approved by our stockholders in March 2000. A total of 1,650,000 shares of
common stock have been reserved for issuance under this plan.

The 2000 stock option plan provides for grants of stock options to our
employees and directors. The purposes of our stock option plan are to attract
and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to our employees and to promote
the success of our business. At the request of the Board of Directors, the
Compensation Committee administers our stock option plan and determines the
optionees and the terms of options granted, including the exercise price, number
of shares subject to the option and the exercisability thereof.

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47

The term of options granted under the 2000 stock option plan is stated in
the relevant option agreement but may not exceed 10 years. Options granted under
the 2000 stock option plan vest and become exercisable as set forth in each
option agreement.

The 2000 stock option plan will terminate in March 2010, unless our Board
of Directors terminates it sooner.

Over the 10-year life of the plan, we may not grant any person options to
purchase more than 500,000 shares.

As of the date of this prospectus, we had no outstanding options to
purchase shares of common stock under the 2000 stock option plan, and the
reserved 1,650,000 authorized shares remain available for future option grants.

EMPLOYMENT AGREEMENTS

We have employment agreements with each of the executive officers listed in
the summary compensation table above.

Peter D. Nagle, our Chief Executive Officer, entered into an employment
agreement with us on December 7, 1999. Under the agreement, Mr. Nagle will be
employed for a period of one year from the date of the agreement, at an annual
salary of L150,000. Mr. Nagle is also entitled to an annual bonus and use of a
vehicle. The agreement contains non-compete provisions prohibiting Mr. Nagle
from competing with us during the term of employment and for nine months
following the term.

Paul C. Carroll, our Chief Financial Officer, entered into an employment
agreement with us on July 15, 1998. Under the agreement, Mr. Carroll will be
employed for a period of three years from the date of the agreement, at an
annual salary of L70,000 subject to an annual review and adjustment of his
salary at our discretion. Mr. Carroll is also entitled to an annual bonus and
use of a vehicle. The agreement contains non-compete provisions prohibiting Mr.
Carroll from competing with us during the term of employment and for nine months
following the term.

Paul B. Nagle, our Chief Operations Officer, entered into an employment
agreement with us on April 1, 1999. Under the agreement, Mr. Nagle will be
employed for a period of three years from the date of the agreement, at an
annual salary of L75,000 subject to an annual review and adjustment of his
salary at our discretion. Mr. Nagle is also entitled to an annual bonus and use
of a vehicle. The agreement contains non-compete provisions prohibiting Mr.
Nagle from competing with us during the term of employment and for nine months
following the term.

Each of these agreements contains confidentiality restrictions, as well as
provisions recognizing that we own all intellectual property rights to any
software that the named executive officer may work on during the term of his
employment agreement.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

We have adopted provisions in our Certificate of Incorporation that limit
the liability of our directors for monetary damages for breach of their
fiduciary duty as directors, except for liability that cannot be eliminated
under the Delaware General Corporation Law (DGCL). In addition, we have taken
out directors and officers insurance with a maximum coverage of $5 million per
claim. The DGCL provides that directors of a company will not be personally
liable for monetary damages for breach of their fiduciary duty as directors,
except for liability (i) for any breach of their duty of loyalty to the company
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) that arises
under Section 174 of the DGCL for unlawful payment of dividends or unlawful
stock repurchases or redemptions, or (iv) for any transaction from which the
director derived an improper personal benefit. Our Certificate of Incorporation
and bylaws also provide for indemnification of our directors and officers to the
fullest extent permitted by the DGCL. We intend to enter into separate
indemnification agreements with our directors and some of our officers that
could

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48

require us, among other things, to indemnify these persons against liabilities
that may arise by reason of their status or service as directors or officers and
to advance their expenses as a result of any proceeding against them as to which
they could be indemnified. We believe that the limitation of liability provision
in our Certificate of Incorporation and the indemnification agreements will
facilitate our ability to continue to attract and retain qualified individuals
to serve as directors and officers.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, the registrant has been
informed that in the opinion of the Securities and Exchange Commission
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.

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PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth information regarding beneficial ownership
of our common stock as of March 20, 2000, based on an aggregate of 13,957,808
shares outstanding as of that date, and as adjusted to reflect this offering,
by:

- each person (or group of affiliated persons) who is known by us to
beneficially own five percent or more of the outstanding shares of our
common stock

- each of our directors and executive officers

- all of our directors and executive officers as a group

- each selling stockholder

Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting and/or
investment power with respect to securities. Unless otherwise noted, we believe
that all persons named in the table have sole voting and sole investment power
with respect to all shares shown as beneficially owned by them. Shares of common
stock subject to options currently exercisable or exercisable within 60 days of
March 20, 2000 are deemed outstanding for purposes of computing the percentage
beneficially owned by the person holding options but are not deemed outstanding
for purposes of computing the percentages beneficially owned by any other
person.

BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERING AFTER OFFERING(1)
-------------------- NUMBER ---------------------
NUMBER OF OF SHARES NUMBER OF
SHARES PERCENT OFFERED SHARES PERCENT
---------- -------- --------- ---------- --------

EXECUTIVE OFFICERS AND DIRECTORS

Peter D. Nagle(2)................................ 2,762,389 19.8% -- 2,762,389 16.1%
Paul C. Carroll.................................. 366,614 2.6 -- 366,614 2.1
Paul B. Nagle(3)................................. 2,953,807 21.2 -- 2,953,807 17.2
Kenneth F. Butler................................ 80,000 * -- 80,000 *
Philip L. Wood(4)................................ 48,000 * -- 48,000 *
Donald S. Radcliffe.............................. 0 -- -- 0 --
Ivan M. Epstein.................................. 0 -- -- 0 --
Barry M. Schechter............................... 0 -- -- 0 --
All executive officers and directors as a group
(8 persons)(2)(3)(4)........................... 6,210,810 44.5 -- 6,210,810 36.1
FIVE PERCENT OR GREATER STOCKHOLDERS
Patrick G. Nagle(5).............................. 1,951,414 14.0 -- 1,951,414 11.3
Kielduff Investments Limited(6).................. 1,536,000 11.0 -- 1,536,000 8.9
SELLING STOCKHOLDERS
Arion Enterprises Limited........................ 520,000 3.7 94,000 426,000 2.5
Jeremy Hall(7)................................... 520,512 3.7 80,000 440,512 2.6
Kelvin Bell(7)................................... 104,640 * 10,000 94,640 *
Mario Macari..................................... 14,000 * 14,000 0 --
Robert Smith..................................... 6,560 * 3,000 3,560 *
Elaine Smith..................................... 6,560 * 3,000 3,560 *
Simon Shaw....................................... 6,560 * 3,000 3,560 *
Caroline Shaw.................................... 6,560 * 3,000 3,560 *

- ---------------
* Less than 1%

(1) Assumes the issuance of 3,000,000 common shares and that the underwriters'
over-allotment option is fully exercised.

(2) Includes 2,762,388 shares held in a trust set up by Mary Higgins (a sister
of Peter Nagle) for the benefit of her nieces and nephews, including Peter
Nagle's children. Mr. Nagle exercises dispositive power over the shares in
this trust and therefore may be deemed to be the beneficial owner of the
shares.

(3) Includes 1,920,000 shares held through the Paul Nagle Trust, and 713,722
shares held through Caldwell Limited, a corporation controlled by Mr. Paul
Nagle. In addition, the amount includes 56,362 shares held in the name of
Patrick G. Nagle, and 43,734 held in the names of P. Doe, G. Spurgeon, S.
Goldsworthy, C. Thompson, M. Thompson and G. King.

(4) Includes 24,000 shares held by Caroline Wood, Philip Wood's spouse.

(5) Includes 1,460,000 shares held through the Framewood Trust, 42,278 shares
held through Caldwell Limited, and 8,000 shares held by Sabina Cassidy,
Patrick G. Nagle's spouse. The address for Patrick G. Nagle is 64 Barks
Road, Beaconsfield, Buckinghamshire, England HP9 1PN.

(6) The address of Kielduff Investments Limited is the Marello Tower
Portmarnock Dublin, Ireland.

(7) Messrs. Hall and Bell are employees of subsidiaries of our company.
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RELATED PARTY TRANSACTIONS

On December 7, 1999, Integrity Software acquired Jyris Limited, a software
services group based in the United Kingdom and incorporated in the Republic of
Ireland. In order to make the acquisition, Integrity Software issued 6,365,064
shares of common stock, and exchanged them for all of the outstanding shares of
Jyris Limited stock. Peter D. Nagle, one of our directors, was chief executive
officer and a stockholder of Jyris Limited. The stockholders of Jyris Limited
that exchanged shares included Peter D. Nagle, who received one share of our
common stock, and Mary J. Higgins, Peter D. Nagle's sister, who received 160,000
shares of our common stock. In addition, Bushell Investments, Inc., a company
established by a trust set up by Mary J. Higgins of which Peter D. Nagle may be
deemed to be a beneficial owner, exchanged shares of Jyris Limited for 2,796,386
shares of our common stock in the transaction.

As part of the Jyris acquisition, Peter D. Nagle replaced his brother, Paul
B. Nagle, as Chief Executive Officer of Integrity Software, and Paul B. Nagle
became Chief Operations Officer of Integrity Software.

On January 1, 1999, prior to its acquisition by Integrity, Jyris Limited
issued 1,536,000 shares of Jyris Limited to Kielduff Investments Limited to
acquire all outstanding shares in Ibis Systems, Ltd. Peter D. Nagle, director of
Jyris Limited at the time of the transaction, was director of Ibis Systems.

In addition, on November 30, 1999, also prior to its acquisition by
Integrity, Jyris Limited acquired Multisoft SA, organized in South Africa. Mark
B. Nagle, a brother of Peter D. Nagle, the then director of Jyris Limited and
the current Chief Executive Officer of Integrity, and Paul B. Nagle, the current
Chief Operations Officer of Integrity, was and remains the managing director of
Multisoft. Mark Nagle was not a shareholder of Multisoft, but he held, and
continues to hold, 15,320 shares of our common stock.

In December 1999, Paul B. Nagle, one of our directors, granted a short-term
loan with an interest rate of 9.5% for a total of $1,284,640 to Integrity, for
the purpose of making acquisitions. The loan was repaid in full in February 2000
when we entered into a revolving credit facility with Barclays Bank. In 1999,
Paul B. Nagle made two additional short-term loans to us in the aggregate amount
of $1.0 million, both of which were repaid by us in 1999. The interest rate on
these loans was 9.5%.

In July 1998, we granted stock options, for a total of 2,511,800 shares of
common stock, to the then current owners of Integrity, at an exercise price of
$2.50 per share. These stock options were granted to, among others: Kenneth F.
Butler, a director of Integrity; Paul C. Carroll, Chief Financial Officer of
Integrity, and Caldwell Limited, a company beneficially owned by Patrick G.
Nagle and Paul B. Nagle. Paul B. Nagle is Chief Operations Officer of Integrity.
Patrick G. Nagle is the brother of Paul and Peter Nagle. All of these options
have been exercised. At the time the options were exercised, the grantees paid
an amount equal to the par value of the shares, and the remainder of the
consideration must be paid to us by December 31, 2000.

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DESCRIPTION OF CAPITAL STOCK

The following statements summarize several provisions of our certificate of
incorporation and by-laws and Delaware law. These summaries do not purport to be
complete and are qualified in their entirety by reference to the certificate of
incorporation and by-laws which have been filed as exhibits to this registration
statement, of which this prospectus forms a part, and to the provisions of
applicable law.

GENERAL

As of the date of this prospectus, we are authorized to issue 40,000,000
shares of common stock, par value $.0025 per share.

COMMON STOCK

As of March 22, 2000, there were 13,957,808 shares of our common stock
outstanding. Upon completion of this offering, we will have 16,957,808 shares
(17,197,808 shares if the underwriters' over-allotment option is exercised in
full) of common stock issued and outstanding.

AUTHORIZED BUT UNISSUED CAPITAL STOCK

We estimate that following this offering we will have 23,042,192 (or
22,802,192 if the underwriters' over-allotment option is exercised in full)
shares of authorized but unissued stock. Delaware law does not require
stockholder approval for the issuance of authorized shares. However, the listing
requirements of the Nasdaq National Market, which apply so long as the common
stock remains included in that inter-dealer quotation system, require prior
stockholder approval of specific issuances, including issuances of shares
bearing voting power equal to or exceeding 20% of the pre-issuance outstanding
voting power or pre-issuance outstanding number of shares of common stock. These
additional shares could be used for a variety of corporate purposes, including
future public offerings to raise additional capital or to facilitate corporate
acquisitions. We currently do not have any plans to issue additional shares of
common stock other than in connection with employee stock option plans. One of
the effects of the existence of issued and unreserved common stock may be to
enable the Board to issue shares to persons who may agree or be inclined to vote
in concert with current management on issues put to consideration of
stockholders, which issuance could render more difficult or discourage an
attempt to obtain control of us by means of a merger, tender offer, proxy
contest or otherwise, and protect the continuity of our management and possibly
deprive the stockholders of the opportunity to sell their shares of common stock
at prices higher than prevailing market prices.

VOTING

The holders of our common stock are entitled to one vote for each share on
all matters to be voted on by stockholders. Our certificate of incorporation
does not provide for cumulative voting in connection with the election of
directors, and accordingly, holders of more than 50% of the shares voting will
be able to elect all of the directors.

DIVIDENDS

Holders of shares of common stock are entitled to share ratably in
dividends, if any, as may be declared from time to time by the Board of
Directors in its discretion, from available funds. Upon any voluntary or
involuntary liquidation, dissolution, or winding up of our affairs, the holders
of shares of our common stock are entitled to share ratably in all assets
remaining after payment in full of creditors. All of the outstanding shares of
common stock are, and the shares offered by us will be, fully paid and non-
assessable.

PREEMPTIVE RIGHTS

Our common stock does not have preemptive rights.

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SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW

Section 203 of the Delaware General Corporation Law could make the
acquisition of Integrity Software and the removal of its officers and directors
difficult. The statute is expected to discourage specific types of coercive
takeover practices and inadequate takeover bids and to encourage persons seeking
to acquire control of Integrity Software to negotiate with it first. We believe
that the benefits of increased protection of our potential ability to negotiate
with the proponent of an unfriendly or unsolicited proposal to acquire or
restructure Integrity Software outweigh the disadvantages of discouraging
proposals, because, among other things, negotiation of proposals could result in
an improvement in their terms.

We are subject to the provisions of Section 203 of the Delaware General
Corporation Law. In general, this statute prohibits a publicly-held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date that the person became
an interested stockholder unless (with some exceptions) the business combination
the transaction in which the person became an interested stockholder is approved
in a prescribed manner. Generally, a "business combination" includes a merger,
asset or stock sale, or other transaction resulting in a financial benefit to
the stockholder. Generally, an "interested stockholder" is a person who,
together with affiliates and associates, owns (or within three years prior, did
own) 15% or more of the corporation's voting stock. These provisions may have
the effect of delaying, deferring or preventing a change of control of us
without further action by our stockholders.

REGISTRATION RIGHTS

In December 1999, we entered into a registration rights agreement with
Kielduff Investments Limited. Kielduff is the holder of 1,536,000 shares of our
common stock (approximately 11% of the outstanding shares), which it acquired in
exchange for its shares in Jyris Limited. At any time after August 2000,
Kielduff has the right to demand that we file a registration statement under the
Securities Act with respect to its shares, and we are required to use our best
efforts to effect up to a maximum of three of these registrations. Kielduff is
also entitled to demand that we register their shares under the Securities Act
on Form S-3 or any similar short form registration statement then available to
us, provided the aggregate offering price of the shares registered exceeds
$500,000. We are not required to effect more than two demand registrations on
Form S-3 in any calendar year. In addition, if, after August 2000, we propose to
register any of our securities under the Securities Act, Kielduff is entitled to
notice of the registration and is entitled to include its shares in the
registration. These registration rights are subject to various conditions and
limitations, including the right of the underwriters of an offering to limit the
number of shares that may be included in the offering. In addition, Kielduff
will be restricted from selling its shares until 180 days after the date of this
prospectus. We are generally required to bear all of the expenses of these
registrations, except underwriting discounts and selling commissions.
Registration of any of Kielduff's shares will result in these shares becoming
freely tradable without restriction under the Securities Act immediately upon
the effectiveness of such registration.

We have not entered into registration rights agreements with any other
stockholders.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the shares is Interwest Transfer.

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SHARES ELIGIBLE FOR FUTURE RESALE

Upon completion of the offering, we will have 16,957,808 shares of common
stock outstanding, assuming no exercise of the underwriters' over-allotment
option and no exercise of outstanding options and based upon the number of
shares outstanding as of March 22, 2000. Of these shares, the 3,000,000 shares
sold in this offering and 275,480 shares issued prior to this offering will be
freely tradable without restriction or further registration under the Securities
Act, unless such shares are purchased or held by our "affiliates," as that term
is defined in Rule 144 under the Securities Act. The remaining 13,682,328 shares
held by existing stockholders, and any shares purchased by affiliates in this
offering, will be "restricted securities" as that term is defined in Rule 144
under the Securities Act. Our affiliates will hold 8,574,883 of the restricted
shares. Restricted shares may be sold in the public market only if registered or
if they qualify for an exemption from registration under Rule 144, 144(k) or 701
under the Securities Act, which are summarized below.

Following August 2000, the holders of 1,536,000 shares of common stock, or
their transferees, will be entitled to rights to require the registration of
such shares under the Securities Act. Registration of such shares under the
Securities Act would result in such shares becoming freely tradable without
restriction under the Securities Act, except for shares purchased by our
affiliates, immediately upon the effectiveness of such registration.

Our officers, directors and stockholders holding approximately 10,797,617
shares of common stock will agree under written lock-up agreements not to,
without the prior written consent of Needham & Company, Inc., sell any shares of
common stock for 180 days after the date of this prospectus. See "Underwriting."

In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, stockholders who have beneficially owned restricted
shares for at least one year will be entitled to sell in any three-month period
a number of shares that does not exceed the greater of one percent of the then
outstanding shares of our common stock or the average weekly trading volume of
our common stock in the Nasdaq National Market during the four calendar weeks
immediately preceding the date on which notice of the sale is filed with the
SEC. Sales pursuant to Rule 144 are subject to certain requirements relating to
manner of sale, notice and availability of current public information about
Integrity. A person, or persons whose shares may be aggregated, who is not
deemed to have been one of our affiliates at any time during the 90 days
immediately preceding the sale and who has beneficially owned restricted shares
for at least two years is entitled to sell such shares pursuant to Rule 144(k)
without regard to the limitations described above.

Any of our employees, directors or consultants who purchased, or was
awarded shares or options to purchase shares pursuant to a written compensatory
plan or contract is entitled to rely on the resale provisions of Rule 701 under
the Securities Act, which permits stockholders to sell their Rule 701 shares
without having to comply with Rule 144's holding period restrictions, in each
case commencing 90 days after the date of this prospectus. In addition, holders
who are not affiliates may sell Rule 701 shares without complying with the
public information, volume and notice provisions of Rule 144.

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UNDERWRITING

Subject to the terms and conditions contained in an underwriting agreement
dated , 2000, the underwriters named below, for whom Needham &
Company, Inc. and A.G. Edwards & Sons, Inc. are acting as representatives, have
severally agreed to purchase, and we and the selling stockholders have severally
agreed to sell to them, an aggregate of shares of common stock. The
number of common shares that each underwriter has agreed to purchase is set
forth opposite its name below.

NUMBER OF SHARES
OF COMMON STOCK
----------------

Needham & Company, Inc.................................
A.G. Edwards & Sons, Inc...............................
----------
Total............................................. 3,000,000
==========

The underwriters are offering the shares subject to their acceptance of the
shares and subject to prior sale. The underwriting agreement provides that the
obligations of the underwriters to purchase shares are subject to the approval
of some legal matters by counsel and to some other conditions. If any of the
shares are purchased by the underwriters pursuant to the underwriting agreement,
all of the shares, other than the shares covered by the over-allotment option
described below, must be purchased.

The underwriters propose to offer the shares directly to the public at the
public offering price set forth on the cover page of this prospectus and to
dealers at that price less a concession not in excess of $ per share. The
underwriters may allow, and any dealers may reallow, a concession not in excess
of $ per share to other dealers. After the offering of the shares, the
offering price and other selling terms may be changed from time to time by the
underwriters.

We and the selling stockholders have granted to the underwriters an option
to purchase up to 450,000 additional shares of common stock on the same terms
and conditions solely to cover over-allotments. We have agreed to sell up to
240,000 shares, and the selling stockholders have agreed to sell up to 210,000
shares. The option may be exercised during the 30-day period after the date of
this prospectus. If the underwriters' option is exercised in full, the total
price to the public would be $ , the total underwriting discounts and
commissions would be $ , the total proceeds to us would be $
, before deducting $ in expenses and the total proceeds to
the selling stockholders, before expenses, would be $ .

We and the selling stockholders have agreed to indemnify the underwriters
against specified liabilities, including liabilities under the Securities Act,
and to contribute to payments that the underwriters may be required to make in
connection with liabilities.

We, our officers, directors and certain stockholders (including all of the
selling stockholders) holding an aggregate of 10,797,617 shares of common stock
have agreed not to, without the prior written consent of Needham & Company,
Inc., for a period of 180 days after the date of this prospectus:

- offer, pledge, announce the intention to sell, sell, contract to sell,
sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of, directly or indirectly, any shares of common
stock or any securities of Integrity Software which are substantially
similar to the shares including but not limited to any securities that
are convertible into or exercisable or exchangeable for, or that
represent the right to receive shares or any substantially similar
securities

- enter into any swap, option, future, forward or other agreement that
transfers, in whole or in part, any of the economic consequences of
ownership of common stock or any securities substantially similar to the
shares.

We may, however, issue shares of common stock upon the exercise of stock
options that are currently outstanding and may grant additional options under
our stock option plans, provided that, without the prior

50
55

written consent of Needham & Company, Inc., additional options shall not be
exercisable during a period of 180 days after the date of this prospectus.

In connection with the offering, the underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
shares. Specifically, the underwriters may overallot the offering, creating a
syndicate short position. In addition, the underwriters may bid for and purchase
shares of common stock in the open market to cover syndicate short positions or
to stabilize the price of the shares. Finally, the underwriting syndicate may
reclaim selling concessions allowed for distributing the shares in the offering,
if the syndicate repurchases previously distributed shares in syndicate covering
transactions, in stabilization transactions or otherwise. Any of these
activities may stabilize or maintain the market price of the shares of common
stock above independent market levels. The underwriters are not required to
engage in these activities and may end any of these activities at any time.

Prior to this offering, there has been only a limited public market for our
common stock. A limited number of shares of our common stock trades over the
counter and is quoted in the Pink Sheets. Due to the small number of our shares
that trade publicly and the limited trading information available with respect
to those shares, we and the underwriters believe that the pricing information
reported in the Pink Sheets does not necessarily represent an accurate market
valuation of our common stock. Accordingly, the public offering price for the
shares of common stock offered in this offering will be determined by
negotiation among us, the selling stockholders and the underwriters. In addition
to the pricing information reported in the Pink Sheets, the other factors to be
considered in determining the public offering price are our revenues and
earnings, market valuations of other companies engaged in activities similar to
ours, estimates of our business potential and prospects, the present state of
our business operations, our management, the general condition of the securities
markets at the time of the offering and other factors deemed relevant. The
estimated public offering price range set forth in the cover of this preliminary
prospectus is subject to change as a result of market conditions and other
factors. We cannot assure you that an active trading market will develop for our
common stock or that our common stock will trade in the public market at or
above the public offering price.

51
56

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed a Form S-1 registration statement with the Commission. This
prospectus, which is a part of the registration statement, does not contain all
of the information included in the registration statement. You should refer to
our registration statement and its exhibits if you would like to find out more
about us and about the common stock. If a contract or document has been filed as
an exhibit to the registration statement, we refer you to the copy of the
contract or other document that has been filed. Each statement in this
prospectus relating to a contract or document filed as an exhibit is qualified
in all respects by the filed exhibit.

Upon completion of this offering, we will be subject to the periodic
reporting and other information-supplying requirements of the Securities
Exchange Act of 1934. In accordance with those requirements, we will file
reports, including annual reports on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K, and other information with the Commission. You may
inspect copies of the registration statement, its accompanying exhibits, and any
other document that we file with the Commission, without charge. You also may
copy or obtain any of these documents at prescribed rates at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the regional offices of the
Commission located at Seven World Trade Center, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
You may obtain information on the operation of the Commission Public Reference
Room by calling the Commission at 1-800-SEC-0330. Our filings with the
Commission, including this prospectus, are or will be available to the public at
the Commission's web site at www.sec.gov.

We will furnish our stockholders with annual reports. These reports will
include a review of operations and annual audited combined financial statements
prepared in conformity with U.S. GAAP. We also will furnish our stockholders
with unaudited financial information prepared in conformity with U.S. GAAP for
each quarter of each fiscal year as soon as practicable following the end of
each quarter.

LEGAL MATTERS

The validity of the shares of our common stock under Delaware law will be
passed upon for us by Clifford Chance Rogers & Wells LLP. Certain legal matters
in connection with this offering will be passed upon for the underwriters by
Heller Ehrman White & McAuliffe LLP.

EXPERTS

The financial statements included in this prospectus and in the
registration statement have been audited by BDO International, independent
accountants, and BDO Simpson Xavier; Haslam Tunstall; Karia Owen & Company;
Moore Stephens; Hayes & Co.; Levy Gee; Wilkins Kennedy and Scrutton Bland, each
independent auditors, to the extent and for the periods set forth in their
reports appearing elsewhere herein and in the registration statement, and are
included in reliance upon such reports given upon the authority of said firms as
experts in auditing and accounting.

ENFORCEMENT OF CIVIL LIABILITIES

Most of our directors and executives and all of the experts named in this
prospectus reside in the United Kingdom or other countries other than the United
States. All or a substantial portion of our assets and the assets of these
persons are located outside the United States. As a result, it may not be
possible for investors to effect service of process within the United States
upon these persons or to enforce, in U.S. courts or outside the United States,
judgements obtained against these persons in jurisdictions outside the United
States. In addition, it may be difficult for investors to enforce, in original
actions brought in courts in jurisdictions located outside the United States,
liabilities predicated upon the civil liability provisions of the U.S.
securities laws.

52
57

INDEX TO FINANCIAL STATEMENTS

INTEGRITY SOFTWARE, INC.
Report of Independent Accountants......................... F-4
Consolidated Balance Sheets as at December 31, 1999 and
1998................................................... F-5
Consolidated Statements of Operations for the years ended
December 31, 1999, 1998 and 1997....................... F-6
Consolidated Statements of comprehensive (loss)/income for
the years ended December 31, 1999, 1998 and 1997....... F-6
Consolidated Statements of changes in Stockholders' Equity
(for the years ended) December 31, 1999, 1998 and
1997................................................... F-7
Consolidated Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997....................... F-9
Notes to the Consolidated Financial Statements............ F-10
Unaudited Pro Forma Condensed Consolidated Financial
Information for the year ended December 31, 1999....... F-28
Unaudited Pro Forma Condensed Consolidated Statements of
Operations year ended December 31, 1999................ F-29
Footnote to the Unaudited Pro Forma Condensed
Consolidated Statement of Operations.................. F-30
COMPUTER FOUNDATIONS LTD.
Unaudited Interim Financial Statements September 30, 1999
and 1998
Directors, Officers and Advisers.......................... F-31
Unaudited Profit and Loss Account......................... F-32
Unaudited Balance Sheet................................... F-33
Unaudited Statement of Cash Flows......................... F-34
Notes to the Unaudited Financial Statements............... F-35
Audited Financial Statements December 31, 1998 and 1997
Directors, Officers and Advisers.......................... F-41
Statement of Directors Responsibilities................... F-42
Auditors Report........................................... F-43
Profit and Loss Accounts.................................. F-45
Balance Sheets............................................ F-46
Statement of Cash Flows................................... F-47
Notes to the Financial Statement.......................... F-48

PREMIER COMPUTER GROUP, LTD.
Audited Consolidated Financial Statements for the year
ended December 31, 1998 and 1997
Directors and other information........................... F-54
Statement of Directors' Responsibilities.................. F-55
Auditors' Report.......................................... F-56
Consolidated Profit & Loss Accounts....................... F-57
Consolidated Balance Sheets............................... F-58
Consolidated Cash Flow Statements......................... F-59
Notes Forming Part of these Financial Statements.......... F-60

F-1
58

INFORMATION SUPPORT LTD.
Audited Financial Statements for the years ended March 31, 1998 and 1997
Auditors' Report................................................................................... F-69
Profit & Loss Accounts............................................................................. F-70
Balance Sheets..................................................................................... F-71
Statement of Cash Flows............................................................................ F-72
Notes to the Financial Statements.................................................................. F-73
SARACEN COMPUTER SYSTEMS LTD.
Audited Financial Statements for the years ended October 31, 1997 and 1996
Directors and Officers............................................................................. F-80
Directors' Responsibilities........................................................................ F-81
Auditors' Report................................................................................... F-82
Profit & Loss Account.............................................................................. F-83
Balance Sheets..................................................................................... F-84
Cash Flow Statements............................................................................... F-85
Notes to the Financial Statements.................................................................. F-87
Unaudited Interim Financial Statement for the periods ended April 30, 1997 & 1998
Profit & Loss Accounts............................................................................. F-94
Balance Sheets..................................................................................... F-95
Cash Flow Statements............................................................................... F-96
Notes to the Financial Statements.................................................................. F-98
SOFTLY AWARE LTD.
Audited Financial Statements for the years ended February 28, 1999 and 1998
Company Information................................................................................ F-105
Auditors' Report................................................................................... F-106
Profit & Loss Accounts............................................................................. F-107
Balance Sheets..................................................................................... F-108
Cash Flow Statements............................................................................... F-109
Notes to the Financial Statements.................................................................. F-110
TOTAL ASSET LTD.
Audited Financial Statements for the year ended October 31, 1999
Company Information................................................................................ F-115
Statement of Directors' Responsibilities........................................................... F-116
Auditors' Report................................................................................... F-117
Profit & Loss account.............................................................................. F-118
Balance Sheet...................................................................................... F-119
Notes to the Financial Statements.................................................................. F-120
TOTAL ASSET LTD.
Audited Financial Statements for the year ended October 31, 1998
Company Information................................................................................ F-124
Directors' Report.................................................................................. F-125
Auditors' Report................................................................................... F-127
Profit & Loss Accounts............................................................................. F-128
Balance Sheets..................................................................................... F-129
Notes to the Financial Statements.................................................................. F-130

F-2
59

IBIS SYSTEMS LTD.
Audited Financial Statements for the period ended March
31, 1998
Company Information....................................... F-136
Directors' Report......................................... F-137
Auditors' Report.......................................... F-139
Profit & Loss Account..................................... F-140
Balance Sheet............................................. F-141
Cash Flow Statement....................................... F-142
Notes to the Financial Statements......................... F-143

F-3
60

REPORT OF INDEPENDENT ACCOUNTANTS

INTEGRITY SOFTWARE, INC.
DUBLIN, IRELAND

We have audited the accompanying consolidated balance sheets of Integrity
Software, Inc. (formerly known as "Integrity Holdings, Limited") and
Subsidiaries as of December 31, 1999 and 1998 and the related consolidated
statements of operations, comprehensive (loss)/income, changes in stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with US 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
amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

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

DATE MARCH 23, 2000 BDO INTERNATIONAL

DUBLIN
IRELAND

F-4
61

INTEGRITY SOFTWARE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(IN US DOLLARS)

DECEMBER 31,
--------------------------
1999 1998
----------- -----------

ASSETS
Current assets:
Cash and cash equivalents................................. $ 1,965,313 $ 1,070,492
Accounts receivable, net.................................. 11,324,955 4,218,228
Inventories -- finished goods............................. 532,241 207,016
Prepaid and other......................................... 2,115,846 1,657,408
Deferred tax asset........................................ 107,644 53,900
Income tax refund receivable.............................. -- 37,215
----------- -----------
Total current assets................................... 16,045,999 7,244,259
Property and equipment, net................................. 3,727,595 1,292,513
Deferred tax asset.......................................... 5,065 --
Goodwill, net............................................... 18,523,922 6,821,430
----------- -----------
Total assets........................................... $38,302,581 $15,358,202
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $13,067,547 $ 3,482,847
Accrued expenses.......................................... 4,434,267 1,374,875
loans payable............................................. 1,284,640 --
Deferred revenue.......................................... 5,695,145 1,835,861
Current installments on capital leasing................... 386,520 191,025
Bank overdraft............................................ 572,941 140,410
Income taxes.............................................. 1,190,611 301,635
Other taxes............................................... 1,808,558 711,221
Note payable.............................................. 161,590 968,620
----------- -----------
Total current liabilities.............................. 28,601,819 9,006,494
Long term capital lease................................... 450,441 206,058
----------- -----------
Total liabilities...................................... 29,052,260 9,212,552
----------- -----------
Shareholders' equity:
Common stock
1999: 40,000,000 shares authorized, at $0.0025 par value;
issued and outstanding 11,784,473 shares............... 29,462 --
1998: 40,000,000 shares authorized at $0.0025 par value;
issued and outstanding 9,760,860....................... -- 24,403
Capital in excess of par value............................ 12,078,282 5,984,635
(Accumulated deficit)/retained earnings................... (1,658,755) 727,811
Accumulated other comprehensive (loss)/income............. (954,509) 19,626
Receivable from exercise of stock options and share
issues................................................. (244,159) (610,825)
----------- -----------
Total stockholders' equity............................. 9,250,321 6,145,650
----------- -----------
Total liabilities and stockholders' equity............. $38,302,581 $15,358,202
=========== ===========

See accompanying notes to consolidated financial statements.
F-5
62

INTEGRITY SOFTWARE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN US DOLLARS)

YEAR ENDED DECEMBER 31,
------------------------------------------
1999 1998 1997
------------ ----------- -----------

Revenues
License and systems sales........................ $ 23,282,519 $ 1,275,162 --
Support and Maintenance.......................... 10,983,252 1,105,750 --
Services......................................... 14,892,328 8,022,219 $ 2,002,210
------------ ----------- -----------
Total revenues................................ 49,158,099 10,403,131 2,002,210
Cost of revenues
License and systems sales........................ (11,505,183) (640,653) --
Support and Maintenance.......................... (2,211,789) (218,040) --
Services......................................... (11,415,014) (6,371,826) (1,557,510)
------------ ----------- -----------
Total cost of revenues........................ (25,131,986) (7,230,519) (1,557,510)
Gross profit.................................. 24,026,113 3,172,612 444,700
Operating expenses
Sales and marketing.............................. (5,748,225) (59,957) (19,501)
General administration........................... (16,954,606) (2,277,152) (351,348)
Research and development......................... (2,477,340) (19,986) (6,500)
Amortization of goodwill......................... (1,856,544) (58,551) --
Profit/(loss) on sale of fixed assets............ 239,917 -- (3,436)
------------ ----------- -----------
Total operating expenses........................... (26,796,798) (2,415,646) (380,785)
------------ ----------- -----------
Operating (loss)/income............................ (2,770,685) 756,966 63,915
Other income/(expense)
Profit on sale of product lines.................. 728,597 -- --
Management fee income............................ 16,178 74,589 --
Interest income.................................. 20,814 9,616 4,260
Interest expense and debt costs.................. (113,162) (12,000) (583)
------------ ----------- -----------
652,427 72,205 3,677
------------ ----------- -----------
(Loss)/income before provision for income taxes.... (2,118,258) 829,171 67,592
Provision for income taxes......................... (268,308) (189,012) (22,121)
------------ ----------- -----------
Net (loss)/income applicable to common
stockholders..................................... $ (2,386,566) $ 640,159 $ 45,471
============ =========== ===========
Net (loss)/income per common share
Basic............................................ $ (0.21) $ 0.32 $ 0.19
============ =========== ===========
Diluted.......................................... $ (0.21) $ 0.20 $ 0.19
============ =========== ===========
Weighted average number of shares outstanding:
Basic............................................ 11,510,375 2,027,377 237,780
Diluted.......................................... 11,510,375 3,141,748 237,780

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME
(IN US DOLLARS)

YEAR ENDED DECEMBER 31,
----------------------------------
1999 1998 1997
----------- -------- -------

Net (loss)/income......................................... $(2,386,566) $640,159 $45,471
Foreign currency translation adjustment................. (974,135) 9,748 4,935
----------- -------- -------
Comprehensive (loss)/income............................... $(3,360,701) $649,907 $50,406
=========== ======== =======

See accompanying notes to the consolidated financial statements.
F-6
63

INTEGRITY SOFTWARE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN U.S. DOLLARS)

ACCUMULATED (ACCUMULATED
COMMON STOCK CAPITAL OTHER DEFICIT)/
------------------------- IN EXCESS COMPREHENSIVE RETAINED CONTRA
SHARES AMOUNT OF PAR VALUE INCOME/(LOSS) EARNINGS EQUITY
---------- ------------ ------------ ------------- ------------ ---------

Balance as at January 1,
1997..................... 20,000 $ 76,560 -- $ 4,943 $ 75,367 --
Net income for the year ended
December 31, 1997............ -- -- -- -- 45,471 --
Currency translation
adjustment................... -- -- -- 4,935 -- --
Dividend declared.............. -- -- -- -- (16,386) --
Recapitalization to Integrity
Software, Inc. .............. 217,780 (75,966) $ 75,966 -- -- --
---------- -------- ----------- --------- ----------- ---------
Stockholders' Equity as at
December 31, 1997........ 237,780 594 75,966 9,878 104,452 --
---------- -------- ----------- --------- ----------- ---------
Issue of common stock for cash
at $0.0025 on July 13,
1998......................... 4,000,000 10,000 90,000 -- -- --
Issue of common stock for
acquisition of The Wyse Group
plc shares on August 4, 1998
at a fair value of $2.50..... 73,350 183 183,192 -- -- --
Issue of common stock for cash
at $5.00 on October 23,
1998......................... 180,000 450 899,550 -- -- --
Issue of common stock for
acquisition
of Saracen Computer Systems
Limited on October 1, 1998 at
a fair value of $17.50....... 4,225 11 73,923 -- -- --
Issue of common stock for
acquisition of Premier
Computer Group Limited shares
on December 23, 1998 at a
fair value of $17.50......... 59,069 148 1,033,556 -- -- --
Stock options granted for
acquisition
of Premier Computer Group
Limited on December 23, 1998
at a fair value of $15.00.... -- -- 1,326,000 -- -- --
Issue of common stock for cash
at $7.00 on December 7,
1998......................... 243,520 609 1,704,031 -- -- --
Net income for the year ended
December 31, 1998............ -- -- -- -- 640,159 --
Issue of common stock in
connection with the exercise
of options................... 196,666 492 491,174 -- -- $(491,666)
Issue of common stock on
November 25, 1998 for cash at
$0.025 in Jyris Limited...... 1 -- -- -- -- --
Issue of common stock on
December 11, 1998 for cash at
$0.025 in Jyris Limited...... 4,293,138 10,733 96,598 -- -- (107,331)
Issue of common stock on
December 11, 1998 for cash at
$0.025 in Jyris Limited...... 473,111 1,183 10,645 -- -- (11,828)
Currency translation
adjustment................... -- -- -- 9,748 -- --
Dividend declared.............. -- -- -- -- (16,800) --
---------- -------- ----------- --------- ----------- ---------
Stockholders' Equity as at
December 31, 1998........ 9,760,860 $ 24,403 $ 5,984,635 $ 19,626 $ 727,811 $(610,825)
========== ======== =========== ========= =========== =========

F-7
64
INTEGRITY SOFTWARE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN U.S. DOLLARS)

Forgiveness of debt by
stockholder of Jyris
Limited...................... -- -- $ 3,294,459 -- -- --
Issue of common stock of Jyris
Limited for acquisition of
Ibis Systems Limited for
$0.025 on January 1, 1999.... 1,536,000 $ 3,840 34,560 -- -- --
Issue of common stock for
acquisition of Datasoft
Limited on July 16, 1999 at a
fair value of $14.375........ 60,000 150 862,350 -- -- --
Issue of common Stock for
acquisition of NetResults on
July 16, 1999 at a fair value
of $14.375................... 50,000 125 718,625 -- -- --
Issue of common stock of Jyris
Limited for cash at $6.25 at
August 18, 1999.............. 60,991 152 381,046 -- -- --
Issue of common stock of Jyris
Limited for cash at $9.00 at
August 18, 1999.............. 1,822 5 16,394 -- -- --
Proceeds from issuance of
common stock in connection
with stock options exercised
in 1998...................... -- -- -- -- -- $ 491,666
Issue of common stock in
connection with the exercise
of stock options............. 314,800 787 786,213 -- -- (125,000)
Net (loss) for the year ended
December 31, 1999............ -- -- -- -- $(2,386,566) --
Currency translation
adjustment................... -- -- -- $(974,135) -- --
---------- -------- ----------- --------- ----------- ---------
Stockholders' Equity as at
December 31, 1999........ 11,784,473 $ 29,462 $12,078,282 $(954,509) $(1,658,755) $(244,159)
========== ======== =========== ========= =========== =========

F-8
65

INTEGRITY SOFTWARE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN US DOLLARS)

YEAR ENDED DECEMBER 31,
-----------------------------------------
1999 1998 1997
----------- ----------- -----------

Cash flows from operating activities:
Net (loss)/income................................... $(2,386,566) $ 640,159 $ 45,471
----------- ----------- -----------
Adjustments to reconcile net cash provided by (used
for) operating activities:
Amortization of goodwill....................... 1,856,544 58,551 --
(Profit)/loss on sale of fixed assets.......... (239,917) -- 3,436
(Profit) on sale of product lines.............. (728,597) -- --
Depreciation of property and equipment......... 881,146 61,516 31,745
Changes in current assets and liabilities net of
effects from acquisition of businesses:
(Increase)/decrease in accounts receivable,
net.......................................... (3,246,832) 228,368 47,909
(Increase) in prepaid expenses and other
receivables.................................. (517,247) (1,589,493) (201,330)
Increase/(decrease) in accounts payable,
accrued expenses and other current
liabilities.................................. 7,408,031 591,422 (1,279,687)
(Increase) in inventories...................... (63,400) -- --
(Increase) in tax refund due................... -- -- (4,113)
----------- ----------- -----------
Total adjustments.............................. 5,349,728 (649,636) (1,402,040)
----------- ----------- -----------
Net cash provided/(used) by operating activities.... 2,963,162 (9,477) (1,356,569)
----------- ----------- -----------
Cash flows from investing activities:
Capital expenditure............................ (1,411,460) (73,789) (12,832)
Proceeds from sale of product lines............ 1,325,038 -- --
Proceeds from sale of tangible fixed assets.... 43,544 34,149 --
Acquisitions of businesses net of cash
acquired..................................... (3,647,014) (1,798,354) --
Acquisition of intangibles..................... (508,286) -- --
----------- ----------- -----------
Net cash used by investing activities............... (4,198,178) (1,837,994) (12,832)
----------- ----------- -----------
Cash flows from financing activities:
Increase in directors' loan.................... 1,284,640 -- --
Proceeds from common stock issued.............. 1,551,258 2,704,640 --
Capital lease repayments....................... (128,504) -- --
Dividends paid................................. -- (16,800) (16,386)
Repayment of note payable...................... (968,620) -- --
Increase in bank overdraft..................... 432,531 126,199 13,056
----------- ----------- -----------
Net cash provided/(used) by financing activities.... 2,171,305 2,814,039 (3,330)
Foreign exchange effect on cash and cash
equivalents.................................. (41,468) 12,451 (45,898)
----------- ----------- -----------
Net increase/(decrease) in cash and cash
equivalents....................................... 894,821 979,019 (1,418,629)
Net cash and cash equivalents at beginning of
year.............................................. 1,070,492 91,473 1,510,102
----------- ----------- -----------
Net cash and cash equivalents at end of year........ $ 1,965,313 $ 1,070,492 $ 91,473
=========== =========== ===========

F-9
66

INTEGRITY SOFTWARE, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION

The Company was incorporated under the laws of the State of Nevada on July
27, 1977 with authorized common stock of 40,000 shares at $0.625 par value with
the name of Culver City Studios Records, Inc.

On December 9, 1997 the name of the Company was changed to Birds Eye, Inc.
and the authorized common stock was increased to 40,000,000 shares with a par
value of $0.0025.

On July 13, 1998 the founders of Integrity acquired the issued and
outstanding stock of 237,780 shares of Birds Eye Inc., an inactive public shell
with no assets. On the same day, 4,000,000 common shares were issued to the
founders for $0.0025 per share and 2,511,800 share options with an exercise
price of $2.50 per share were also granted to the founders.

The Company had been engaged in the activity of exploration of mining
properties until 1980. The Company was inactive until 1998 when it acquired The
Wyse Group plc.

On July 13, 1998 the company changed its name to Integrity Holdings,
Limited. On March 13, 2000 Integrity Holdings, Limited changed its name to
Integrity Software, Inc. and reincorporated from Nevada to Delaware. Integrity
Software, Inc. is engaged in the acquisition of software development and
computer services companies.

Beginning in August 1998, Integrity Software, Inc. made the following
acquisitions of businesses. These are:

ACQUISITION DATE NAME AND LOCATION BUSINESS DESCRIPTION
- ----------------- -------------------------- ----------------------------------------------

December 7, 1999 Jyris Ltd., United Kingdom Software for distribution, general accounting,
technical services and web technology
December 2, 1999 Computer Foundations Ltd., Software for the contracting industry
United Kingdom
July 16, 1999 Net Results, Ireland Software application/web technology
July 16, 1999 Datasoft Ltd., Ireland Software for the distribution industry
December 23, 1998 Premier Computer Group Software applications for credit unions,
Ltd., Ireland construction and print and packaging
October 12, 1998 Information Support Ltd., Computer maintenance and networking services
United Kingdom
October 1, 1998 Saracen Computer Systems Software applications for industrial cleaning
Ltd., United Kingdom management
August 4, 1998 The Wyse Group plc, Computer and information technology finance
United Kingdom agency

On December 7, Integrity Software, Inc. merged with Jyris Ltd. The table
below sets forth all of the acquisitions that Jyris completed in 1999, prior to
the time the merger with Integrity Software, Inc.

ACQUISITION DATE NAME AND LOCATION BUSINESS DESCRIPTION
- ----------------- -------------------------- ---------------------------------------------

December 6, 1999 Softly Aware Ltd., Software applications for the distribution
United Kingdom industry
December 3, 1999 Outsource Ltd., Ireland Software applications for the distribution
industry

F-10
67
INTEGRITY SOFTWARE, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1. ORGANIZATION -- CONTINUED

ACQUISITION DATE NAME AND LOCATION BUSINESS DESCRIPTION
- ----------------- -------------------------- ---------------------------------------------

December 2, 1999 Webbed Feet, Web technology; B2B software design
United Kingdom
December 1, 1999 Total Asset Ltd., Computer and information technology finance
United Kingdom agency
November 30, 1999 Multisoft SA, South Africa GATS software applications
August 1, 1999 Todds of Lincoln Ltd., Software for the distribution industry
United Kingdom
January 1, 1999 Ibis Systems Ltd., GATS software applications; support and
United Kingdom maintenance services

2. DISPOSALS

Premier Computer Group Limited disposed of two of its wholly owned
subsidiaries during 1999 -- Techsonix Limited was disposed of on April 19, 1999
and Premier Veterinary Limited was disposed of on November 22, 1999.

Both of these businesses operated in the general accounting and technical
services segment in the United Kingdom.

The assets disposed of in each instance are as follows:

PREMIER
TECHSONIX VETERINARY
LIMITED LIMITED
--------- ----------

Accounts receivable, net............................ $ 89,480 $ 487,162
Cash and cash equivalents........................... 3,358 130,410
Inventories......................................... 1,184 --
Tangible fixed assets............................... 58,152 411,655
Accounts payable.................................... (289,630) (803,616)
Intellectual property rights........................ -- 508,286
--------- ----------
(137,456) 733,897
Proceeds from disposal.............................. $ 193,908 $1,131,130
========= ==========
Profit on disposal.................................. $ 331,364 $ 397,233
========= ==========

These businesses contributed to the group during the year ended December
31, 1999 as follows:

Revenues.................................................... $ 805,781
Net (Loss).................................................. $(237,066)
=========

3. BASIS OF PRESENTATION

On December 7, 1999 Integrity Software, Inc. merged with Jyris Limited
through the exchange of 6,365,064 of its common shares for the 6,365,064 common
shares of Jyris Limited. Jyris Limited is engaged in the acquisition of software
development and computer services companies. This transaction has been accounted
for using the pooling of interests method. As a result, the financial position,
results of operations and cash flows are presented as if the combining companies
had been consolidated for 1999 and

F-11
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INTEGRITY SOFTWARE, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. BASIS OF PRESENTATION -- CONTINUED
1998. Additionally the statements of stockholders' equity reflect the accounts
of Integrity Software, Inc. as if the additional common stock had been issued
for all periods since Jyris's incorporation in November 1998.

Jyris Limited was incorporated on November 25, 1998 as Hastvale
Construction Limited. It changed its name to Jyris Limited on August 6, 1999.

These financial statements have been drawn up on the basis that The Wyse
Group plc is the predecessor entity of Integrity Software, Inc. (the only entity
with operations at the time of its acquisition on August 4, 1998).

The Consolidated Balance Sheet as at December 31, 1999 and Consolidated
Statements of Operations for the year ended December 31, 1999 include the
results of Integrity Software, Inc. and all of its wholly owned subsidiaries
together with the consolidated results of Jyris Limited for the same period.

All intercompany transactions have been eliminated. These financial
statements have been prepared in conformity with US Generally Accepted
Accounting Principles.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of the company
and all of its wholly-owned subsidiaries. All significant intercompany accounts
and transactions have been eliminated on consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reported period. Actual results could differ from those estimates.

Revenue Recognition

Licence and systems sales

Revenues arising from software installation contracts represent invoiced
sales over the period of the contract. Revenue recognition is determined by
contracts or at stages by customers. All installation contracts contain clearly
defined benchmarks against which revenues are recognized.

Revenues arising from the sale of hardware products represent invoiced
sales during the period, net of valued added taxation and are recognized as the
products are shipped.

Deferred income arises when either a portion of a contract period, for
which an invoice has been issued in advance, falls after the year end or where
work invoiced has not been completed.

Support and Maintenance

Revenues arising from annual maintenance and support contracts are
recognized over the period of the contract.

Deferred income arises when either a portion of a contract period, for
which an invoice has been issued in advance, falls after the year end or where
work invoiced has not been completed.
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INTEGRITY SOFTWARE, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
Services

The group's subsidiaries which are engaged in computer finance services
derive their revenues acting as an agent for the delivery of lease and rental
plans with respect of hardware and software products. These revenues are
entirely commission-based. These revenues are recognized on an earned basis when
the lessee of equipment signs a contract with the finance provider.

Inventories

Inventories are stated at the lower of cost or market value using the
first-in first-out (FIFO) convention.

Tangible Fixed Assets

Depreciation is provided straight-line at the following annual rates in
order to write-off each asset over its estimated useful life:

Helicopter................................................. Over life of lease
Fixtures and Fittings...................................... 5 Years
Office Equipment........................................... 5 Years
Motor Vehicles............................................. 4 Years
Computer Equipment......................................... 3 Years
Improvements to premises................................... 5 Years

The land and buildings are not depreciated as it is considered that the
residual value and life of the property is such that the depreciation would be
immaterial.

Intangibles

Intangibles represent acquisition costs in excess of the fair value of net
tangible assets of businesses purchased. These costs are being amortized over
ten years on a straight-line basis.

Long-Lived Assets

Long-lived assets, such as goodwill and property and equipment, are
evaluated for impairment when events or changes in circumstances indicate that
the carrying amount of the assets may not be recoverable through the estimated
undiscounted future cash flow resulting from the use of these assets. When any
such impairment exists, the related assets will be written down to fair value.
No impairment losses have been incurred through December 31, 1999.

Research and Development

Research and Development costs are expensed as incurred.

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INTEGRITY SOFTWARE, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
Income Taxes

The company accounts for its income tax on the liability method, under
which deferred taxes are determined based on the difference between the
financial statements and tax bases of assets and liabilities, using enacted tax
rates in effect for the year in which the differences are expected to reverse.
Valuation allowances are established when necessary to reduce the deferred tax
assets to the amount expected to be realised.

Foreign Currency Translation

The functional currencies of foreign subsidiaries are their local
currencies, and accordingly, the assets and liabilities of these foreign
subsidiaries are translated at the rate of exchange at the balance sheet date.
Revenues and expenses have been translated at the average rate of exchange in
effect during the periods. To date, Integrity has not entered into hedging
transactions to protect against changes in foreign currency exchange rates.
Other comprehensive income represents the translation difference arising when
the assets and liabilities, of the company's foreign subsidiaries are translated
from their functional currencies to US dollars.

Stock-Based Compensation

The company applies Accounting Principles Board Opinion ("APB") 25,
"Accounting for Stock Issued to Employees," and related Interpretations in
accounting for all stock option plans. Under APB 25, compensation cost is
recognized for stock options granted at prices below market price of the
underlying common stock on date of grant.

SFAS No. 123, "Accounting for Stock Based Compensation." requires Integrity
to provide pro forma information regarding net income as if compensation cost
for the stock options plans had been determined in accordance with the fair
value method prescribed in SFAS No. 123.

Comprehensive Income

In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income", which establishes standards for reporting and display of comprehensive
income, its components and accumulated balances. Comprehensive income is defined
to include all changes in equity except those resulting from investments by
owners and distribution to owners. Among other disclosures, SFAS No. 130
requires that all items that are required to be recognized under current
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements. The only item of comprehensive (loss)/income is foreign
currency translation adjustments.

Post Retirement Benefits

In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosure
about Pensions and Other Post Retirement Benefits," which standardizes the
disclosure requirements for Pensions and other post retirement benefits. The
adoption of SFAS 132 did not have a material impact on Integrity's disclosures.

Cost of Start-Up Activities

Statement of Position (SOP) 98-5, "Reporting on the Cost of Start-Up
Activities," requires that the costs of start-up activities, including
organisation costs, be expensed as incurred. This statement was

F-14
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INTEGRITY SOFTWARE, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
effective for financial statements issued for fiscal years beginning after
December 15, 1998 and had no effect on the financial statements.

Development of Computer Software

In March 1998, The American Institute of Certified Public Accountants
(AICPA) issued SOP 98-1, "Accounting for the Cost of Computer Software Developed
or Obtained for Internal Use". SOP 98-1 is effective for financial statements
for years beginning after December 15, 1998. This statement provides guidance
over accounting for computer software developed or obtained for internal use
including the requirements to capitalize specified cost and amortization of such
costs. The adoption of this standard does not have a material effect on these
financial statements.

Statement of Cash Flows

For the purpose of the statements of cash flows, Integrity considers all
highly liquid debt instruments and other short-term investments purchased with
an initial maturity of three months or less to be cash equivalents.

Impact of recently Issued Accounting Pronouncements

SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities" requires companies to record derivatives on the balance sheet as
assets or liabilities, measured at fair market value. Gains or losses resulting
from changes in the values of those derivatives are accounted for depending on
the use of the derivative and whether it qualifies for hedge accounting. The key
criterion for hedge accounting is that the hedging relationship must be highly
effective in achieving offsetting changes in fair value or cash flows. SFAS No.
133 is effective for fiscal years beginning after June 15, 2000. Management
believes that the adoption of SFAS No. 133 will have no material effect on its
financial statements.

5. ACCOUNTS RECEIVABLE, NET

DECEMBER 31,
-------------------------
1999 1998
----------- ----------

Trade receivables.......................................... $12,132,456 $4,681,014
Less: allowance for doubtful accounts...................... (807,501) (462,786)
----------- ----------
Trade receivables, net..................................... $11,324,955 $4,218,228
----------- ----------

Allowance for doubtful accounts consists of the following:

BALANCE AT CHARGED TO ALLOWANCES
BEGINNING OF ARISING ON COSTS AND WRITTEN BALANCE AT END
PERIOD ACQUISITION EXPENSES BACK OF PERIOD
------------ ----------- ---------- ---------- --------------

Year ended December 31, 1997.......... -- -- -- -- --
-------- ------- -------- --------- --------
Year ended December 31, 1998.......... -- $95,752 $367,034 -- $462,786
-------- ------- -------- --------- --------
Year ended December 31, 1999.......... $462,786 -- $707,141 $(362,426) $807,501
-------- ------- -------- --------- --------

F-15
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INTEGRITY SOFTWARE, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. PROPERTY AND EQUIPMENT

DECEMBER 31,
-------------------------
1999 1998
----------- ----------

Helicopter................................................. $ 316,304 --
Land and buildings......................................... 943,888 $ 306,127
Improvements to premises................................... -- 13,750
Fixtures and fittings...................................... 1,432,627 --
Office equipment........................................... 869,477 497,865
Motor vehicles............................................. 1,381,460 392,447
Computer equipment......................................... 1,818,391 227,324
----------- ----------
6,762,147 1,437,513
Less: accumulated depreciation and amortization............ (3,034,552) (145,000)
----------- ----------
Property and equipment, net................................ $ 3,727,595 $1,292,513
=========== ==========

7. BUSINESS ACQUISITIONS

Acquisitions Accounted for Using the Pooling of Interest Method

On December 7, 1999 Integrity completed the acquisition of Jyris Limited
which provided for the exchange of all the outstanding stock of Jyris Limited
for shares of Integrity Software, Inc. stock and is accounted for as a pooling
of interests.

Jyris Limited is involved in the acquisition of software development and
computer services companies. 6,365,064 shares of common stock in Integrity
Software, Inc. were issued for the acquisition subsequent to December 31, 1999
but have been reflected in the financial statements as if issued on the
acquisition date.

Revenues, net (loss)/income and net (loss)/income per common share of the
combining entities for the three years ending December 31, are as follows:

Revenues

YEAR ENDED DECEMBER 31,
----------------------------------------
1999 1998 1997
----------- ----------- ----------

Integrity Software, Inc...................... $34,792,035 $10,403,131 $2,002,210
Jyris Limited................................ 14,366,064 -- --
----------- ----------- ----------
Integrity Software, Inc. as restated......... $49,158,099 $10,403,131 $2,002,210
=========== =========== ==========

Net (loss)/income applicable to common stockholders

YEAR ENDED DECEMBER 31,
----------------------------------
1999 1998 1997
----------- -------- -------

Integrity Software, Inc........................... $ (704,591) $640,159 $45,471
Jyris Limited..................................... (1,681,975) -- --
----------- -------- -------
Integrity Software, Inc. as restated.............. $(2,386,566) $640,159 $45,471
=========== ======== =======

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INTEGRITY SOFTWARE, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. BUSINESS ACQUISITIONS -- CONTINUED
Net (loss)/income per common share

YEAR ENDED DECEMBER 31,
------------------------
1999 1998 1997
------ ----- -----

BASIC
Integrity Software, Inc.................................... $(0.06) $0.32 $0.19
====== ===== =====
Jyris Limited.............................................. $(0.15) -- --
====== ===== =====
Integrity Software, Inc. as restated....................... $(0.21) $0.32 $0.19
====== ===== =====

YEAR ENDED DECEMBER 31,
------------------------
1999 1998 1997
------ ----- -----

DILUTED
Integrity Software, Inc.................................... $(0.06) $0.20 $0.19
====== ===== =====
Jyris Limited.............................................. $(0.15) -- --
====== ===== =====
Integrity Software, Inc. as restated....................... $(0.21) $0.20 $0.19
====== ===== =====

Merger costs incurred with pooling of interest's transactions

In connection with this pooling of interests the company has expensed
merger related costs of $35,200 in respect of legal and advisory fees.

Acquisitions accounted for using the purchase method

On August 4, 1998, the company acquired The Wyse Group plc ("Wyse") a
leading computer leasing company with four offices in the UK. Prior to this,
Integrity Software Inc. had been engaged in the activity of exploration of
mining properties until 1980. The business combination has been accounted for
under the purchase method. The acquisition cost of $183,375 was based on the
fair value of common stock and was funded by way of the issue of shares in
Integrity Software, Inc.

On October 12, 1998, the company acquired all of the issued and outstanding
shares of Information Support Limited ("ISL") a major computer support services
business based in Wokingham, England with regional support centres throughout
the UK. ISL is engaged in providing maintenance services to the computer
industry and also engages in reselling of computer systems. The business
combination has been accounted for under the purchase method. The results of the
company from the date of acquisition have been included in the consolidated
statement of operations. The cost of acquisition was $561,000 and was funded by
way of a cash payment. The goodwill arising on the transaction of $1,918,717 is
being amortized over 10 years. The goodwill arose as a result of the net
liabilities at the date of acquisition.

On October 1, 1998, the company acquired all of the issued and outstanding
shares of Saracen Computer Systems Limited ("Saracen") a leading computer
software company based in Uttoxeter in the UK. The business combination has been
accounted for under the purchase method. The results of the company from the
date of acquisition have been included in the consolidated statement of
operations. The cost of acquisition $1,558,938 was funded by way of a cash
payment of $1,485,000 and issue of 4,225 shares in Integrity Software, Inc. at
fair value $17.50 based on the quoted market price of the company's shares on
the date of acquisition. The goodwill arising on the transaction of $1,229,645
is being amortized over 10 years.

F-17
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INTEGRITY SOFTWARE, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. BUSINESS ACQUISITIONS -- CONTINUED
On December 23, 1998, the company acquired the Dublin based Premier
Computer Group Limited ("Premier"). Premier provides software services to the
Credit Union, printing and packaging, cleaning and construction management
sectors. The business combination has been accounted for using the purchase
method. The results of the company from the date of acquisition have been
included in the consolidated statement of operations. The cost of acquisition
was $3,587,324 and was funded by way of a cash payment of $259,000, the issue of
59,069 shares in Integrity Software Inc. at fair value $17.50 based on the
quoted market price of the company's shares on the date of acquisition, a note
payable of $968,620 and the granting of 88,400 stock options at an exercise
price of $2.50 each. These options have been included as additional paid in
capital based on a fair value of $17.50 at December 23, 1998. The goodwill of
$3,731,614 arising on the transaction is being amortized over 10 years.

On March 26, 1999, Premier Computer Group Limited acquired the Intellectual
Property Rights of Axon Veterinary ("Axon"). Axon supplies software and related
information technology services to veterinary practices in the UK and Ireland.
It had over 800 customers. This business was carried on by Premier through its
wholly owned subsidiary, Premier Veterinary Services Limited. The intellectual
property rights of Axon were purchased for $508,286 and was funded by way of a
cash payment. This amount has been capitalized as "Intellectual Property Rights"
(as part of goodwill, net) in the financial statements.

On April 19, 1999, Integrity disposed of Techsonix Ltd as it was considered
non-core to the Companys' business.

On November 22, 1999 Integrity disposed of Premier Veterinary Services
Limited. This disposal included the disposal of the Intellectual Property Rights
purchased from Axon. Consequently the carrying value of these Intellectual
Property Rights have been fully written off at December 31, 1999.

On July 16, 1999, Premier acquired all of the issued and outstanding shares
of Datasoft Limited ("Datasoft"), which supplies accounting and distribution
software to 110 customers throughout Ireland and the UK. This business
combination has been accounted for under the purchase method. The results of the
company from the date of acquisition have been included in the consolidated
statement of operations. The cost of the acquisition, $1,149,518, was funded by
way of a cash payment of $287,018 and the issue of 60,000 shares in Integrity
Software, Inc. at a fair value of $14.375 based on the quoted market price of
the company's shares on the date of acquisition. The goodwill arising on the
transaction of $1,191,384 is being amortized over 10 years.

On July 16, 1999, Premier acquired the business of NetResults which
comprised Intellectual Property Rights and other business assets including
principally working capital assets. This transaction was completed by acquiring
all of the issued and outstanding shares of Westcorr Limited, which held the
Intellectual Property Rights and by entering into a business asset purchase
agreement with Flickswitch Limited, which traded as NetResults. NetResults is an
Internet Connectivity product. This business combination has been accounted for
under the purchase method. The results of NetResults from July 16, 1999 have
been included in the consolidated statement of operations. The cost of this
acquisition was $973,672 and was funded by way of a cash payment of $254,922 and
the issue of 50,000 shares in Integrity Software, Inc. at a fair value of
$14.375 based on the quoted market price of the company's shares on the date of
acquisition. The goodwill of $1,086,889 arising on the transactions is being
amortized over 10 years.

On December 2, 1999, Integrity acquired all of the issued and outstanding
shares of Computer Foundations Limited ("Computer Foundations") which trades as
computer programmers and consultants and also sells computer hardware with
particular emphasis on the construction industry market sector. This business
combination has been accounted for under the purchase method. The results of
Computer

F-18
75
INTEGRITY SOFTWARE, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. BUSINESS ACQUISITIONS -- CONTINUED
Foundations have been included in the consolidated statement of operations from
December 2, 1999. The cost of acquisition of $2,368,894 was funded by way of a
cash payment. The goodwill arising on the transaction of $1,864,466 is being
amortized over 10 years.

On January 1, 1999, Jyris Limited acquired all of the issued and
outstanding shares of Ibis Systems Limited ("Ibis") which is a provider of open
systems software in the UK. This business combination has been accounted for
under the purchase method. The results of Ibis have been included in the
consolidated statement of operations from January 1, 1999. The cost of
acquisition of $38,400 was funded by way of the issue of 1,536,000 shares in
Jyris Limited at a fair value of $0.025. The goodwill arising on the transaction
of $6,570,293 is being amortized over 10 years.

Jyris Limited entered into an acquisition agreement with Kielduff
Investments Limited to acquire all of the issued and outstanding common stock of
Ibis Systems Limited on January 1, 1999. Previously Kielduff Investments Limited
had acquired Ibis from SVI Holdings Limited. In connection with the acquisition,
Jyris assumed a loan of $3,294,459 to SVI Holdings Limited. In March of 1999,
SVI Holdings Limited (a subsidiary of Softline, a shareholder of Jyris) forgave
the loan.

On August 1, 1999, Jyris Limited acquired the business assets of Todds of
Lincoln Limited ("Todds") which trade in the provision of software services.
This business combination has been accounted for under the purchase method. The
results of Todds have been included in the consolidated statement of operations
from August 1, 1999. The cost of the acquisition was represented by the
assumption of liabilities at August 1, 1999. The goodwill arising on the
transaction of $151,895 is being amortized over 10 years.

On November 30, 1999, Jyris Limited acquired the business assets of
Multisoft South Africa ("Multisoft SA") which develops in accounting, payroll
and retail software solutions. This business combination has been accounted for
under the purchase method. The results of Multisoft SA have been included in the
consolidated statement of operations from November 30, 1999. The cost of
acquisition was represented by the assumption of net liabilities at November 30,
1999. The goodwill arising on the transaction of $379,739 is being amortized
over 10 years.

On December 1, 1999, Jyris Limited acquired all of the issued and
outstanding shares of Total Asset Limited ("Total Asset") which provides
tailor-made finance and leasing Plans. This business combination has been
accounted for under the purchase method. The results of Total Asset have been
included in the consolidated statement of operations from December 1, 1999. The
cost of acquisition of $807,950 was funded by way of a cash payment of $646,360
and a note payable of $161,590 to be paid on June 1, 2000. The goodwill arising
on the transaction of $1,200,614 is being amortized over 10 years. This goodwill
arose following fair value adjustments made by Integrity Software, Inc to reduce
the net assets to net liabilities. These adjustments principally included
provisions for deferred income and bad debts.

On December 2, 1999, Jyris Limited acquired all of the issued and
outstanding shares of Webbed Feet Limited ("Webbed Feet") which develops
e-commerce software solutions. This business combination has been accounted for
under the purchase method. The results of Webbed Feet have been included in the
consolidated statement of operations from December 2, 1999. The cost of the
acquisition was represented by the assumption of net liabilities at December 2,
1999. The goodwill arising on the transaction of $121,193 is being amortized
over 10 years.

On December 3, 1999, Jyris Limited acquired all of the issued and
outstanding shares of Outsource Limited ("Outsource") which is involved in the
provision of software services. This business combination has been accounted for
under the purchase method. The results of Outsource have been included in the

F-19
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INTEGRITY SOFTWARE, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. BUSINESS ACQUISITIONS -- CONTINUED
consolidated statement of operations from December 3, 1999. The cost of
acquisition of $382,968 was funded by way of a cash payment of $382,968. There
was no goodwill resulting from this transaction.

On December 6, 1999, Jyris Limited acquired all of the issued and
outstanding shares of Softly Aware Limited ("Softly Aware"). This business
combination has been accounted for under the purchase method. The results of
Softly Aware have been included in the consolidated statement of operations from
December 6, 1999. The cost of acquisition of $581,724 was funded by way of a
cash payment. The goodwill arising on the transaction of $959,845 is being
amortized over 10 years. There is also deferred consideration based on the
achievement of predetermined profit levels by Softly Aware management. The
maximum amount of deferred consideration payable is $2,423,850. This will be
funded by way of a cash payment of $807,950 and the issue of shares equal to
$1,615,900 at fair value in Integrity Software, Inc.

The summarised unaudited pro forma results of operations set forth below
for the years ended December 31, 1999 and 1998 assume that acquisitions in 1999
and 1998 occurred as of January 1, 1998.

YEAR ENDED DECEMBER 31,
--------------------------
1999 1998
----------- -----------
(UNAUDITED)

Revenues.......................................... $59,694,657 $46,430,891
Net (loss) after provision for income taxes....... (2,881,374) (1,941,081)
Net (loss) per common share:
Basic........................................... $ (0.25) $ (0.52)
=========== ===========
Diluted......................................... $ (0.25) $ (0.52)
=========== ===========
Weighted Average Shares
Basic........................................... 11,569,745 3,734,461
Diluted......................................... 11,569,745 3,734,461

The pro forma results of operations are not necessarily indicative of what
actually would have occurred if the acquisitions had been completed at the
beginning of each of the years presented, nor are the results of operations
necessarily indicative of the results that will be attained in the future.

8. GOODWILL, NET

Goodwill, net consists of the following:

DECEMBER 31,
------------------------- AMORTIZATION
1999 1998 PERIOD
----------- ---------- ------------
(YEARS)

Excess of cost of investments over
fair value of net assets acquired,
net of accumulated amortization of
$1,915,095 and $58,551
respectively........................ $18,523,922 $6,821,430 10
----------- ----------
$18,523,922 $6,821,430
=========== ==========

F-20
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INTEGRITY SOFTWARE, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9. SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid for interest and income taxes amounted to the following:

YEAR ENDED DECEMBER 31,
-----------------------------------
1999 1998 1997
------------ ----------- ----

Interest................................. $ 77,299 $ 12,000 $583
Income taxes............................. $ 291,488 $ 45,511 --

In conjunction with business acquisitions, Integrity Software, Inc. used
cash as follows:

YEAR ENDED DECEMBER 31,
---------------------------
1999 1998
------------ -----------

Fair value of assets acquired, excluding cash.... $ 23,038,066 $10,845,953
Less: liabilities assumed and created upon
acquisition.................................... (17,771,402) (6,430,586)
Stock and options issued......................... (1,619,650) (2,617,013)
------------ -----------
Net cash paid.................................... $ 3,647,014 $ 1,798,354
============ ===========

SUPPLEMENTAL NON CASH INFORMATION

YEAR ENDED DECEMBER 31,
---------------------------
1999 1998
------------ -----------

Capital leases................................... $ 568,382 $ 187,452
------------ -----------

10. COMMITMENTS

Integrity Software, Inc. leases its facilities and certain equipment under
operating leases and certain equipment under capital leases. Future minimum
commitments under both non-cancellable operating leases and capital leases at
December 31, 1999 are as follows:

CAPITAL OPERATING
LEASES LEASES LEASES
- ------ -------- ---------

2000................................................... $439,112 $318,342
2001................................................... 314,697 275,471
2002................................................... 143,612 108,104
2003................................................... 46,557 --
2004................................................... 1,440 --
Thereafter............................................. -- --
-------- --------
Gross minimum commitments 945,418 701,917
========
Less: amount representing interest..................... (108,457) --
--------
Present value of minimum lease payments................ 836,961
Less: current portion.................................. (386,520)
--------
Long term portion...................................... $450,441
========

The annual rent expense for the Integrity Software, Inc. and its
subsidiaries was

1997........................................................ $ 35,531
1998........................................................ 193,467
1999........................................................ 551,266

F-21
78
INTEGRITY SOFTWARE, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. STOCK OPTIONS

Stock options were granted to the founders of the company on July 13, 1998.
Stock options were granted to various key employees on September 23, 1999. The
total number of shares reserved for issues under these agreements amounted to
2,511,800 and 40,000. Each option granted to the Founders expires on July 13,
2002 with those granted to employees expiring on September 23, 2003. These
options were fully vested at the grant date with certain restrictions on the
sale of the shares once the options were exercised.

Statement of Financial Accounting Standards ("SFAS") No. 123, Accounting
for Stock-Based Compensation, requires companies to either (a) record an expense
related to its stock option plans based on the estimated fair value of stock
options as of the date of the grant or (b) disclose pro forma net income and
earnings per share data as if Integrity had recorded an expense.

The fair value of each option as of the date of grant was computed using
the Black-Scholes pricing model and the following weighted average assumptions:
expected volatility 59%, no dividend, risk free interest rate of 5% and expected
life of four years. The compensation expense, as computed was nominal and there
was no effect on net (loss) / income per share.

Stock options were granted in connection with the acquisition of Premier
Computer Group Limited on December 23, 1998. These options amounted to 88,400
shares. These options were fully vested at the grant date and expire on December
23, 2002. The fair value of the Integrity Software, Inc.'s stock on the date of
grant was $17.50. All of these options were exercised during 1999.

Various stock options were granted to employees on September 23, 1999.
These options amounted to 40,000 shares. These options were fully vested at the
grant date and expire on September 23, 2003. The market value of Integrity
Software, Inc.'s stock on the date of grant was $9.6875.

A summary of the Integrity Software, Inc.'s stock option activity and
related information as of December 31, 1999, 1998 and 1997, and changes during
the years ending on those dates is as follows:

YEAR ENDED DECEMBER 31, 1999

$2.50 $10.00
Options at Exercise Price --------- ---------

Outstanding at beginning of year...................... 2,403,534 --
Granted during the year............................... -- 40,000
Exercised during the year............................. (314,800) --
--------- ---------
Outstanding at end of year............................ 2,088,734 40,000
--------- ---------
Exercisable at end of year............................ 2,088,734 40,000
--------- ---------
Options at $2.50 are exercisable up to July 13, 2002 and options at $10 are
exercisable up to September 23, 2003.

F-22
79
INTEGRITY SOFTWARE, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. STOCK OPTIONS -- CONTINUED
YEAR ENDED DECEMBER 31, 1998

$2.50
Options at Exercise Price ---------

Outstanding at beginning of year............................ --
Granted during the year..................................... 2.600,200
Exercised during the year................................... (196,666)
---------
Outstanding at end of year.................................. 2,403,534
---------
Exercisable at end of year.................................. 2,403,534
---------

12. INCOME TAX

(Loss)/income before provision for income taxes is as follows:

YEAR ENDED DECEMBER 31,
----------------------------------
1999 1998 1997
----------- -------- -------

Ireland........................................... $ 1,641,954 -- --
United Kingdom.................................... (3,760,212) $829,171 $67,592
----------- -------- -------
Total............................................. $(2,118,258) $829,171 $67,592
=========== ======== =======

The provision for income taxes is as follows:

YEAR ENDED DECEMBER 31,
--------------------------------
1999 1998 1997
--------- -------- -------

Current tax provision:
Ireland.......................................... $ 379,288 -- --
United Kingdom................................... (52,171) $242,912 $22,121
--------- -------- -------
Total current.................................... 327,117 242,912 22,121
--------- -------- -------
Deferred tax (benefit)/provision
Ireland.......................................... 92,183 (53,900) --
United Kingdom................................... (150,992) -- --
--------- -------- -------
Deferred......................................... (58,809) (53,900) --
--------- -------- -------
Total provision for income tax................... $ 268,308 $189,012 $22,121
========= ======== =======

F-23
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INTEGRITY SOFTWARE, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

12. INCOME TAX -- CONTINUED
The provision for income taxes, differs from the amount computed by
applying the statutory income tax rate to income before taxes. The sources and
tax effects of the differences are as follows:

IRELAND

YEAR ENDED DECEMBER 31,
-------------------------------
1999 1998 1997
-------- -------- -------

Income tax computed at the Irish statutory income
tax rate of 10% for manufacturing operations...... $147,429 -- --
Income tax computed at the Irish statutory income
tax rate of 25% for non-manufactured operations... 11,665 -- --
Income tax on disposal of assets.................... 220,194 -- --
-------- -------- -------
Total provision for income taxes.................... $379,288 -- --
======== ======== =======

UNITED KINGDOM

YEAR ENDED DECEMBER 31,
-------------------------------
1999 1998 1997
-------- -------- -------

Income tax computed at the statutory income tax rate
of 31% in United Kingdom.......................... -- $257,043 $20,953
(Over) provision in previous year................... $(52,171) (14,131) --
Other items including non-deductible expenses in the
United Kingdom.................................... -- -- 1,168
-------- -------- -------
Total provision for income taxes.................... $(52,171) $242,912 $22,121
======== ======== =======

The tax effects of temporary differences that give rise to the Integrity's
deferred tax asset are as follows:

YEAR ENDED DECEMBER 31,
-----------------------------
1999 1998 1997
-------- ------- ------

Current deferred tax assets
Property and equipment................................ $ 5,065 -- --
Tax loss carryforwards................................ 107,644 $53,900 --
-------- ------- ------
Net deferred tax assets............................... $112,709 $53,900 --
-------- ------- ------

At December 31, 1999 the company has net operating losses to carryforward
for UK Income tax purposes of approximately $358,000. The company has concluded
that, based on expected future results, it is more likely than not that the
deferred tax assets will be realised.

13. EARNINGS PER SHARE

During 1997, the FASB issued SFAS No. 128, "Earning per Share", which
provides for the calculation of "basic" and "diluted" earnings per share. Basic
earnings per share includes no dilution and is computed by dividing income
available to common stockholders by the weighted average number of common shares
outstanding for the period. Diluted earnings per share reflect, in periods in
which they have a dilutive effect, the effect of common shares issuable upon
exercise of common stock options.

F-24
81
INTEGRITY SOFTWARE, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table sets forth the computation for basic and diluted
earnings per share.

YEAR ENDED DECEMBER 31
-------------------------------------
1999 1998 1997
----------- ---------- --------

NUMERATOR
Numerator for basic EPS and diluted EPS -- net
(loss)/income................................ $(2,386,566) $ 640,159 $ 45,471
=========== ========== ========
DENOMINATOR
Denominator for basic EPS -- weighted average
shares....................................... 11,510,375 2,027,377 237,780
Effect of dilutive securities -- stock
option....................................... -- 1,114,371 --
----------- ---------- --------
Denominator for diluted EPS.................... 11,510,375 3,141,748 237,780
----------- ---------- --------
Basic EPS...................................... $ (0.21) $ 0.32 $ 0.19
=========== ========== ========
Diluted EPS.................................... $ (0.21) $ 0.20 $ 0.19
=========== ========== ========

Options of 2,128,374 have not been included in 1999 as they are
antidilutive.

On March 13, 2000 the company declared a 2-for-5 reverse stock split. The
EPS amount has been retroactively restated.

14. RELATED PARTY TRANSACTIONS

At December 31, 1999 the group owed $1,284,640 to Mr. Paul B. Nagle, a
stockholder and officer of Integrity Software, Inc. These funds were provided by
Mr. Nagle to the group in order to fund acquisitions during the year. Interest
is charged on this loan at a rate of 9.5% per annum. The interest charge for the
year ended December 31, 1999 amounted to $28,782.

15. NOTES PAYABLE

Integrity Software Inc. acquired Premier Computer Group Limited on December
23, 1998. The purchase was part funded by means of a note payable of $968,620.
The note was paid during 1999.

On December 1, 1998 Jyris Limited acquired Total Asset Limited. The
purchase was part funded by means of a note payable of $161,590. This is to be
paid on June 1, 2000.

16. SUBSEQUENT EVENTS

On March 13, 2000 Integrity Software, Inc. declared and effected a 2-for-5
reverse stock split. The share information for all periods presented has been
restated to retroactively reflect the split.

17. BUSINESS SEGMENT AND GEOGRAPHIC DATA

Integrity Software, Inc. has four business segments is engaged in four
segments business-to-business (B2B), software (Software), general accounting and
technical services (GATS), and Computer finance services (CFS). Operations are
conducted in several geographic regions: Ireland, United Kingdom and South
Africa. The following is a summary of Integritys' operation by business segment
and geographic segment, as of and for the years ended December 31, 1999, 1998
and 1997.

F-25
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INTEGRITY SOFTWARE, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

17. BUSINESS SEGMENT AND GEOGRAPHIC DATA -- CONTINUED
INFORMATION BY BUSINESS SEGMENT -- DECEMBER 31, 1999

B2B SOFTWARE GATS CFS TOTAL
--------- --------- ------------ ------------ ------------

Revenues................ $ 868,094 $ 603,294 $ 34,800,111 $ 12,886,600 $ 49,158,099
Cost of sales........... (151,011) (171,827) (14,638,203) (10,170,945) (25,131,986)
Depreciation............ (736) (2,518) (792,814) (85,078) (881,146)
Amortization of
goodwill.............. (12,119) (516,816) (1,207,548) (120,061) (1,856,544)
Operating
income/(loss)......... 7,000 (503,000) (3,074,685) 800,000 (2,770,685)
Interest expense........ -- -- (113,162) -- (113,162)
Interest income......... -- 20,814 20,814
Capital expenditure..... (103,110) (19,890) (1,732,833) (124,009) (1,979,842)
Total assets............ 175,326 614,042 36,445,813 1,067,400 38,302,581

INFORMATION BY BUSINESS SEGMENT -- DECEMBER 31, 1998

B2B SOFTWARE GATS CFS TOTAL
-------- -------- ----------- ----------- -----------

Revenues..................... -- -- $ 2,611,786 $ 7,791,345 $10,403,131
Cost of sales................ -- -- (1,095,686) (6,134,833) (7,230,519)
Depreciation................. -- -- (33,754) (27,762) (61,516)
Amortization of goodwill..... -- -- (58,551) -- (58,551)
Operating income............. -- -- 50,133 706,833 756,966
Interest expense............. -- -- (12,000) -- (12,000)
Interest income.............. -- -- -- 9,616 9,616
Capital expenditure.......... -- -- (35,900) (145,341) (181,241)
Total assets................. -- -- 13,137,292 2,220,910 15,358,202

INFORMATION BY BUSINESS SEGMENT -- DECEMBER 31, 1997

B2B SOFTWARE GATS CFS TOTAL
------- -------- ------- ---------- ----------

Revenues............................ -- -- -- $2,002,210 $2,002,210
Cost of sales....................... -- -- 1,557,510 1,557,510
Depreciation........................ -- -- (31,745) (31,745)
Amortization of goodwill............ -- -- -- -- --
Operating income.................... -- -- -- 63,915 63,915
Interest expense.................... -- -- -- (583) (583)
Interest income..................... -- -- -- 4,260 4,260
Capital expenditure................. -- -- -- (12,832) (12,832)
Total assets........................ -- -- -- 634,252 $ 634,252

F-26
83
INTEGRITY SOFTWARE, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

17. BUSINESS SEGMENT AND GEOGRAPHIC DATA -- CONTINUED
INFORMATION BY GEOGRAPHIC REGION BASED ON LOCATION OF SUBSIDIARIES:

IRELAND UNITED KINGDOM SOUTH AFRICA TOTAL
---------- -------------- ------------ -----------

DECEMBER 31, 1999:
Revenues............................... $9,983,827 $38,938,073 $236,199 $49,158,099
Income (loss) before taxes............. 1,641,954 (3,760,212) -- (2,118,258)
Long-lived assets, net................. 9,641,723 12,181,580 428,214 $22,251,517
-----------
DECEMBER 31, 1998:
Revenues............................... -- 10,403,131 -- $10,403,131
Income before taxes.................... -- 829,171 -- 829,171
Long-lived assets, net................. -- 8,113,943 -- $ 8,113,943
-----------
DECEMBER 31, 1997:
Revenues............................... -- 2,002,210 -- $ 2,002,210
Income before taxes.................... -- 67,592 -- 67,592
Long-lived assets, net................. -- 39,136 -- $ 39,136
-----------

F-27
84

INTEGRITY SOFTWARE INC., AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

The unaudited pro forma condensed consolidated financial information
reflects financial information with respect to (a) three companies acquired by
Integrity in 1999 for an aggregate purchase price of $4,492,000 and (b) six
companies acquired by Jyris in 1999 for an aggregate purchase price of
$1,812,000. The acquisitions completed in 1999 included above have been
accounted for under the purchase method of accounting. The merger with Jyris has
been accounted for under the pooling of interests method of accounting and its
operations have been reflected in the restated financial statements of Integrity
for the year ended December 31, 1999.

The financial statements of the companies acquired (all of which are
foreign companies) and included in the Pro Forma Condensed Consolidated
Financial Information were translated at the following exchange rates: British
pound Sterling were translated to US dollars at the rate of 1.6178; Irish pounds
were translated to US dollars at the rate of 1.3546; and the South African rand
were translated to US dollars at the rate of 0.1634.

The financial statements of Computer Foundations, Total Asset and Softly
Aware included in the Pro Forma Condensed Consolidated Financial Information are
on the basis of US GAAP. The financial statements of the remaining acquired
companies (none of which are considered significant) are on the basis of either
generally accepted accounting principles in the United Kingdom or in the
Republic of Ireland, and differences between such basis and US GAAP are not
considered to be material.

The Pro Forma Condensed Consolidated Statement of Operations was prepared
as if the above acquisitions occurred as of January 1, 1999. They combine the
results of Integrity for the year ended December 31, 1999 with the results of
the acquired companies for the periods from January 1, 1999 through the
acquisition dates. The Pro Forma Condensed Consolidated Financial Information
should be read in conjunction with the historical financial statements and notes
thereto included elsewhere in this Prospectus.

The Pro Forma Condensed Consolidated Statement of Operations does not
include any potential cost savings. Integrity believes that it may be able to
reduce salaries and related costs and office and general expenses as it
eliminates duplication of overhead. However, there can be no assurance that
Integrity will be successful in effecting any such cost savings.

The Pro Forma Condensed Consolidated Financial Information is unaudited and
is not necessarily indicative of the consolidated results which actually would
have occurred if the above transactions had been consummated at the beginning of
the period presented; nor does it purport to present the results of operations
for future periods.

F-28
85

INTEGRITY SOFTWARE INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 1999
(IN US DOLLARS)

INTEGRITY COMPUTER TOTAL SOFTLY INTEGRITY JYRIS
CONSOLIDATED FOUNDATIONS ASSET AWARE OTHER OTHER ADJUSTMENT(1)
------------ ----------- ---------- ---------- --------- ---------- -------------

Revenue
License and systems sales... $23,282,519 $2,654,236 -- $1,980,692 $ 436,493 $ 711,018 --
Maintenance and support..... 10,983,252 123,993 -- 221,455 8,977 494,097 --
Services.................... 14,892,328 241,498 2,621,602 276,000 8,399 758,098 --
----------- ---------- ---------- ---------- --------- ---------- ---------
49,158,099 3,019,727 2,621,602 2,478,147 453,869 1,963,213 --
----------- ---------- ---------- ---------- --------- ---------- ---------
Cost of Revenues
License and systems sales... 11,505,183 384,888 -- 477,799 150,800 185,264 --
Maintenance and support..... 2,211,789 164,385 -- -- -- -- --
Services.................... 11,415,014 194,384 1,317,000 -- -- -- --
----------- ---------- ---------- ---------- --------- ---------- ---------
25,131,986 743,657 1,317,000 477,799 150,800 185,264 --
----------- ---------- ---------- ---------- --------- ---------- ---------
Gross profit.................. 24,026,113 2,276,070 1,304,602 2,000,348 303,069 1,777,949 --
Costs and expenses
Sales and marketing......... 5,748,225 158,298 64,083 89,683 84,457 284,213 --
General administration...... 16,954,606 1,694,952 1,128,712 1,960,341 385,303 797,870 --
Research and development.... 2,477,340 244,642 187,114 265,114 52,195 160,541 --
Amortization of intangible
assets.................... 1,856,544 -- -- -- -- -- $ 509,871
(Profit)/loss on sale of
assets.................... (239,917) -- -- -- -- -- --
----------- ---------- ---------- ---------- --------- ---------- ---------
Total operating expenses...... 26,796,798 2,097,872 1,379,909 2,315,138 521,955 1,242,624 509,871
----------- ---------- ---------- ---------- --------- ---------- ---------
Operating (loss)/income....... (2,770,685) 178,178 (75,307) (314,790) (218,886) 535,325 (509,871)
Other income/(expense) --
Profit on sale of product
lines..................... 728,597 -- --
Management fee income....... 16,178 -- -- -- --
Interest income............. 20,814 24,508 -- 75,089 --
Interest expense and debt
costs..................... (113,162) (14,157) (8,357) (2,849) --
----------- ---------- ---------- ---------- --------- ---------- ---------
652,427 24,508 (14,157) (8,357) (2,849) 75,089 --
----------- ---------- ---------- ---------- --------- ---------- ---------
(Loss)/income before provision
for income taxes............ (2,118,258) 202,686 (89,464) (323,147) (221,735) 610,414 (509,871)
Provision for income taxes.... (268,308) (127,394) -- 883 -- (37,180) --
----------- ---------- ---------- ---------- --------- ---------- ---------
Net (loss)/income............. $(2,386,566) $ 75,292 $ (89,464) $ (322,264) $(221,735) $ 573,234 $(509,871)
=========== ========== ========== ========== ========= ========== =========
Earnings per share
Basic....................... $ (0.21)
===========
Diluted..................... $ (0.21)
===========
Weighted Average no. of shares
Basic....................... 11,510,375
Diluted..................... 11,510,375

TOTAL
-----------

Revenue
License and systems sales... $29,064,958
Maintenance and support..... 11,831,774
Services.................... 18,797,925
-----------
59,694,657
-----------
Cost of Revenues
License and systems sales... 12,703,934
Maintenance and support..... 2,376,174
Services.................... 12,926,398
-----------
28,006,506
-----------
Gross profit.................. 31,688,151
Costs and expenses
Sales and marketing......... 6,428,959
General administration...... 22,921,784
Research and development.... 3,386,946
Amortization of intangible
assets.................... 2,366,415
(Profit)/loss on sale of
assets.................... (239,917)
-----------
Total operating expenses...... 34,864,187
-----------
Operating (loss)/income....... (3,176,036)
Other income/(expense)
Profit on sale of product
lines..................... 728,597
Management fee income....... 16,178
Interest income............. 120,411
Interest expense and debt
costs..................... (138,525)
-----------
726,661
-----------
(Loss)/income before provision
for income taxes............ (2,449,375)
Provision for income taxes.... (431,999)
-----------
Net (loss)/income............. $(2,881,374)
===========
Earnings per share
Basic....................... $ (0.25)
===========
Diluted..................... $ (0.25)
===========
Weighted Average no. of shares
Basic....................... 11,569,745
Diluted..................... 11,569,745

- ------------------------
(1) For footnote please refer to the following page.

F-29
86

FOOTNOTE TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS

(1) To record amortization of goodwill arising from the acquisitions for
the portion of 1999 prior to acquisition. Such amortization expense is based on
a 10 year life and is computed as follows:

ACQUISITION AMORTIZATION
COMPANY GOODWILL DATE MONTHS EXPENSE
- ------- ---------- ----------------- ------ --------------------

Datasoft $1,191,384 July 16, 1999 6.5 $ 56,260
Net Results 1,086,889 July 16, 1999 6.5 40,746
Computer Foundations 1,864,466 December 2, 1999 11 164,690
Multisoft 379,739 November 30, 1999 11 34,809
Todds of Lincoln 151,895 August 1, 1999 11 8,860
Webbed Feet 121,193 December 2, 1999 11 11,109
Softly Aware 959,845 December 6, 1999 11 83,386
Total Asset 1,200,614 December 1, 1999 11 110,011
Outsource 0 December 3, 1999 11 0
--------
$509,871
========

F-30
87

COMPUTER FOUNDATIONS LIMITED

DIRECTORS, OFFICERS AND ADVISERS

DIRECTORS T P K Milmo
P A Doe
S Goldsworthy
G King
G Spurgeon

SECRETARY C Milmo

REGISTERED OFFICE Foundation House
10 The Avenue
Colchester
CO3 5AL

AUDITORS Scrutton Bland
Sanderson House
Museum Street
Ipswich
IP1 1HE

BANKERS National Westminster Bank plc
13 Stratheden Parade
Old Dover Road
London
SE3 7SY

SOLICITORS Thompson Smith & Puxon
4/5 North Hill
Colchester
CO1 1EB

F-31
88

COMPUTER FOUNDATIONS LIMITED

UNAUDITED PROFIT AND LOSS ACCOUNT 9 MONTHS ENDED 30 SEPTEMBER

9 MONTHS 9 MONTHS
ENDED ENDED
NOTES 30 SEPT 99 30 SEPT 98
----- ---------- ----------

TURNOVER.................................................... 1 1,529,227 1,280,166
Cost of sales............................................... (607,779) (504,159)
---------- ----------
GROSS PROFIT................................................ 921,448 776,007
Administrative expenses..................................... (710,116) (611,244)
---------- ----------
OPERATING PROFIT............................................ 2 211,332 164,763
Provision for diminution in value of property............... (51,626) --
Interest receivable and similar income...................... 3 12,438 23,431
Interest payable and similar charges........................ 4 -- --
---------- ----------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION............... 172,144 188,194
Tax on profit on ordinary activities........................ 5 (61,000) (44,037)
---------- ----------
PROFIT FOR THE FINANCIAL PERIOD............................. 111,144 144,157
Dividends................................................... 6 (100,750) --
---------- ----------
RETAINED PROFIT FOR THE FINANCIAL PERIOD.................... 11 L 10,394 L 144,157
========== ==========

TOTAL RECOGNIZED GAINS AND LOSSES

The company has no recognized gains or losses other than the profit for the
above two financial periods.

CONTINUING OPERATIONS

None of the company's activities were acquired or discontinued during the
above two financial periods

F-32
89

COMPUTER FOUNDATIONS LIMITED

UNAUDITED BALANCE SHEET AS AT 30 SEPTEMBER

30 SEPTEMBER
NOTES 1999
----- ------------
L

FIXED ASSETS
Tangible assets............................................. 7 246,986
CURRENT ASSETS
Stocks...................................................... 9,130
Debtors..................................................... 8 150,415
Cash at bank and in hand.................................... 550,869
--------
710,414
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR.............. 9 (349,208)
--------
NET CURRENT ASSETS.......................................... 361,206
--------
TOTAL ASSETS LESS CURRENT LIABILITIES....................... L608,192
========
CAPITAL AND RESERVES
Called up share capital..................................... 10 10,075
Profit and loss account..................................... 11 598,117
--------
SHAREHOLDERS' FUNDS -- EQUITY INTERESTS..................... 12 L608,192

F-33
90

COMPUTER FOUNDATIONS LIMITED

UNAUDITED STATEMENT OF CASH FLOWS 9 MONTHS ENDED 30 SEPTEMBER

9 MONTHS 9 MONTHS
ENDED ENDED
30 SEPT 99 30 SEPT 98
---------- ----------
L L

CASH FLOW FROM OPERATING ACTIVITIES
Net income.................................................. 111,144 144,157
Adjustments to reconcile net income to net cash provided by
operating activities:
Loss/(profit) on disposal of tangible fixed assets.......... 275 (2,066)
Depreciation................................................ 68,012 37,616
Amount written off freehold property........................ 51,626 --
Decrease/(increase) in debtors.............................. 85,773 (21,362)
(Increase)/decrease in stocks............................... (5,421) (2,244)
Increase/(decrease) in creditors............................ (135,410) (69,639)
Increase/(decrease) in corporation taxes payable............ 34,706 31,443
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES................... 210,705 117,905
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures........................................ (12,500) (99,449)
Proceeds from sale of assets................................ 2,000 8,123
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid.............................................. (100,750) (50,375)
-------- --------
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS........ 99,455 (23,796)
Cash and cash equivalents at beginning of period............ 451,414 570,087
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. L550,869 L546,291
======== ========
SUPPLEMENTAL NON-CASH INFORMATION:
Taxes paid.................................................. L 25,039 L 9,434
======== ========

F-34
91

COMPUTER FOUNDATIONS LIMITED

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
9 MONTHS ENDED 30 SEPTEMBER

1. ACCOUNTING POLICIES

Basis of accounting

The financial statements have been prepared under the historical cost
convention, and in accordance with the applicable accounting standards.

Basis of preparation

These unaudited interim financial statements have been prepared by the
directors of Computer Foundations Limited in accordance with generally accepted
accounting principles in the UK.

These unaudited interim financial statements reflect all adjustments,
consisting of normal recurring adjustments, which in the opinion of management
are necessary for fair presentation of the information contained therein.

Results of operations for the unaudited interim periods may not be
indicative of annual results.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write
off each asset over its estimated useful life:

Fixtures and fittings -- 15% on written down value
Plant and equipment -- 30% on written down value
Motor vehicles -- 25% on cost of vehicles or 25% on written
down value of vehicles purchased before
1.1.93
Freehold property -- 2% on cost
Portable buildings -- Straight line over 3 years

Any permanent diminution in the value of properties is charged to the
profit and loss account.

Stocks

Stocks are valued at the lower of cost and net realisable value, after
making due allowance for obsolete and slow moving items.

Capitalised leases

Assets held under capitalized leases are capitalized in the balance sheet
with an equivalent liability included under creditors. An asset held under a
capitalized lease is depreciated over the shorter of the lease term and its
useful life. The interest element of the amount payable is charged to the profit
and loss account and the capital element reduces the liability in the balance
sheet.

Rentals applicable to operating leases where substantially all of the
benefits and risks of ownership remain with the lessor are charged against
profit as incurred.

Income from maintenance and support contracts

F-35
92
COMPUTER FOUNDATIONS LIMITED

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)

support contracts of one year or less are taken as turnover at the date of
invoice, contracts of more than one year are accounted for on an earned basis.

Turnover

Turnover represents the amount receivable for goods sold during the period,
exclusive of VAT.

All turnover arises in the United Kingdom and in relation to the principal
activity of the company.

2. OPERATING PROFIT

The operating profit is stated after (crediting)/charging:

9 MONTHS 9 MONTHS
ENDED ENDED
30 SEPT 99 30 SEPT 98
---------- ----------
L

Loss/(profit) on disposal of tangible fixed assets.......... 275 (2,066)
Depreciation of tangible fixed assets....................... 68,012 37,616
========== ==========

3. INTEREST RECEIVABLE

9 MONTHS 9 MONTHS
ENDED ENDED
30 SEPT 99 30 SEPT 98
---------- ----------
L L

Bank Interest receivable.................................... L12,438 L23,431

4. INTEREST PAYABLE

9 MONTHS 9 MONTHS
ENDED ENDED
30 SEPT 99 30 SEPT 98
---------- ----------
L L

Bank interest payable....................................... L -- L --
======= =======

5. TAX ON PROFIT ON ORDINARY ACTIVITIES

9 MONTHS 9 MONTHS
ENDED ENDED
30 SEPT 99 30 SEPT 98
---------- ----------
L L

Based on the profit for the period
Corporation tax at 22.9% (1998: 23.4%)...................... L61,000 L44,037
======= =======

6. DIVIDENDS

9 MONTHS 9 MONTHS
ENDED ENDED
30 SEPT 99 30 SEPT 98
---------- ----------
L L

Interim dividend paid....................................... 100,750 --
Final dividend proposed..................................... -- --
-------- --------
L100,750 L --
======== ========

F-36
93
COMPUTER FOUNDATIONS LIMITED

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)

7. TANGIBLE FIXED ASSETS

FREEHOLD FIXTURES
LAND AND PORTABLE AND PLANT AND MOTOR
PROPERTY BUILDINGS FITTINGS EQUIPMENT VEHICLES TOTAL
-------- --------- -------- --------- -------- --------
L L L L L L

COST OF VALUATION
At 1 January 1999.................... 248,724 6,063 20,883 86,533 230,234 592,437
Additions............................ -- -- -- -- 12,500 12,500
Disposals............................ -- -- -- -- (15,308) (15,308)
Provision for diminution............. (51,626) -- -- -- -- (51,626)
-------- ------ ------- ------- -------- --------
At 30 September 1999................. 197,098 6,063 20,883 86,533 227,426 538,003
-------- ------ ------- ------- -------- --------
DEPRECIATION
At 1 January 1999.................... 43,368 6,063 13,384 58,090 115,133 236,038
On disposals......................... -- -- -- -- (13,033) (13,033)
Charge for the period................ 3,730 -- 844 6,400 57,038 68,012
-------- ------ ------- ------- -------- --------
At 30 September 1999................. 47,098 6,063 14,228 64,490 159,138 291,017
-------- ------ ------- ------- -------- --------
NET BOOK VALUES
At 30 September 1999................. L150,000 L -- L 6,655 L22,043 L 68,288 L246,986
======== ====== ======= ======= ======== ========

8. DEBTORS

30 SEPTEMBER
1999
------------
L

Trade debtors............................................... 127,901
Other debtors............................................... 22,514
--------
L150,415
========

9. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

30 SEPTEMBER
1999
------------
L

Bank loans.................................................. 1
Trade creditors............................................. 82,364
Corporation tax............................................. 61,000
Other taxes and social security costs....................... 78,495
Other creditors............................................. 10,775
Accruals and deferred income................................ 116,573
--------
L349,208
========

F-37
94
COMPUTER FOUNDATIONS LIMITED

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)

10. CALLED UP SHARE CAPITAL

30 SEPTEMBER
1999
------------

Authorised:
100,000 ordinary shares of L1 each........................ L100,000
========
Allotted, called up and fully paid:
10,075 ordinary shares of L1 each......................... L 10,075
========

11. RESERVES

PROFIT
AND LOSS
ACCOUNT
--------
L

At 1 January 1999........................................... 587,723
Retained profit for the period.............................. 10,394
--------
At 30 September 1999........................................ L598,117
========

12. RECONCILIATION OF MOVEMENTS ON SHAREHOLDERS' FUNDS

Profit for the financial period after taxation.............. 111,144
Dividends................................................... (100,750)
---------
10,394
Opening shareholders' funds at 1 January 1999............... 597,798
---------
Closing shareholders' funds at 30 September 1999............ L 608,192
=========

13. RELATED PARTIES

The company is controlled by a director and shareholder, Mr. T P K Milmo.

Dividends paid (see note 6) include amounts payable to directors who are
also shareholders of the company as follows:

9 MONTHS 9 MONTHS
ENDED ENDED
30 SEPT 99 30 SEPT 98
---------- ----------
L L

T P K Milmo................................................. L65,250 L --
------- -------
P A Doe..................................................... L20,000 L --
------- -------
S Goldsworthy............................................... L 3,000 L --
------- -------
G King...................................................... L 3,000 L --
------- -------
G Spurgeon.................................................. L 3,000 L --
------- -------

14. US/UK GAAP RECONCILIATION

The financial statements of the Company as set out from the profit and loss
account to note 13 but excluding the cash flow statement and notes thereto have
been prepared in accordance with generally

F-38
95
COMPUTER FOUNDATIONS LIMITED

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)

accepted accounting principles applicable in the UK ("UK GAAP"), which differ in
certain significant respects from those applicable in the US ("US GAAP"). The
material differences as they apply to the Company's financial statements are, as
follows:

PROVISION FOR DIMINUTION IN VALUE

At 30 September 1999, there is a shortfall between the valuation of the
freehold property occupied by the company and its net book value (based upon
historic cost less depreciation) of L51,626. In the opinion of the directors,
this represents a permanent diminution in value and, under UK GAAP, has been
charged in the profit and loss account for the 9 months ended 30 September 1999.
This would not represent an impairment in a long lived asset under US GAAP.

INCOME RECOGNITION

The accounting policy of the company for the recognition of income from
maintenance and support contracts, as detailed in note 1 to the financial
statements, is: --

"Income from maintenance and support contracts

Income from hardware maintenance and training contracts is recognized in
the profit and loss account on an earned basis with receipts in advance taken to
accruals at the year end. Income from software support contracts of one year or
less are taken as turnover at the date of invoice, contracts of more than one
year are accounted for on an earned basis."

This is inconsistent with US GAAP in respect of the treatment of income
from software support contracts of one year or less. SOP 97-2 requires that
support contract services should be recognized on a pro-rata basis over the term
of the arrangement.

The following tables also record the tax effect on the profits of the
company on the adoption of SOP 97-2. The application of SOP 97-2 has the effect
of reducing the taxable profits of the company. These tax effects are based on
an effective rate of 22.9% for the 9 months to 30 September 1999 and 23.4% for
the 9 months to 30 September 1998. The cumulative effect for 1999 in the table
on the "effect on Shareholders Equity" is based on a cumulative tax effect from
prior accounting periods and does not represent the actual tax effect under UK
taxation rules had the principles of SOP 97-2 been adopted under UK GAAP.

EFFECT ON SHAREHOLDERS' EQUITY:

AT 30 SEPT AT 30 SEPT
1999 1998
---------- ----------
L L

Shareholders' equity as stated under UK GAAP................ 608,192 674,975

US GAAP adjustments:
Reversal of provision for diminution in value............. 51,626 --
Increase in deferred income under US GAAP................. (267,470) (217,868)
Reduction in tax charge arising from the adjustment to
deferred income........................................ 58,565 50,981
--------- ---------
Shareholders equity as stated under US GAAP............... L 450,913 L 508,088
========= =========

F-39
96
COMPUTER FOUNDATIONS LIMITED

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)

EFFECT ON PROFIT FOR THE PERIOD:

9 MONTHS 9 MONTHS
ENDED ENDED
30 SEPT 99 30 SEPT 98
---------- ----------
L L

Profit for the period as stated under UK GAAP............... 111,144 144,157

US GAAP adjustments:
Adjustment for movement on deferred income................ (45,503) (13,620)
Impairment on long lived asset............................ 51,626 --
Reduction in tax charge arising from the movement in
deferred income........................................ 10,420 3,187
-------- --------
Profit for the period as stated under US GAAP............. L127,687 L133,724
======== ========

F-40
97

COMPUTER FOUNDATIONS LIMITED

DIRECTORS, OFFICERS AND ADVISERS

DIRECTORS T P K Milmo
P A Doe
S Goldsworthy
G King
G Spurgeon

SECRETARY C Milmo

REGISTERED OFFICE Foundation House
10 The Avenue
Colchester
Essex
CO3 5AL

REGISTERED NUMBER 1699194

AUDITORS Scrutton Bland
18 Sir Isaac's Walk
Colchester
CO1 1JL

BANKERS National Westminster Bank plc
13 Stratheden Parade
Old Dover Road
London
SE3 7SY

SOLICITORS Thompson Smith & Puxon
4/5 North Hill
Colchester
CO1 1EB

F-41
98

COMPUTER FOUNDATIONS LIMITED

STATEMENT OF DIRECTORS RESPONSIBILITIES

DIRECTORS' RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS

Company law requires the directors to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the
company and of the profit or loss of the company for that period. In preparing
those financial statements, the directors are required to:

- select suitable accounting policies and then apply them consistently;

- make judgements and estimates that are reasonable and prudent;

- state whether applicable accounting standards have been followed, subject
to any material departures disclosed and explained in the accounts,

- prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company will continue in business.

The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
company and enable them to ensure that the financial statements comply with the
Companies Act 1985. They are also responsible for safeguarding the assets of the
company and hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.

F-42
99

AUDITORS' REPORT TO THE MEMBERS OF
COMPUTER FOUNDATIONS LIMITED

We have audited the financial statements set out from the profit and loss
account following this report to note 14 but excluding the cash flow statement
and notes thereto, which have been prepared under the Historical Cost Convention
and the Accounting Policies set out in note 1.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS:

As described, the company's directors are responsible for the preparation
of financial statements in accordance with generally accepted accounting
principles in the United Kingdom. It is our responsibility to form an
independent opinion, based on our audit, on those statements and to report our
opinion to you.

BASIS OF OPINION

We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board, which are substantially similar to US GAAS. An audit
includes examination, on a test basis, of evidence relevant to the amounts
disclosed in the financial statements. It also includes an assessment of the
significant estimates and judgements made by the directors in the preparation of
the financial statements, and of whether the accounting policies are appropriate
to the company's circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatements, whether caused by fraud or other
irregularity or error. In forming our opinion, we also evaluated the overall
adequacy of the presentation of information in the financial statements.

OPINION

In our opinion, the financial statements give a true and fair view of the
state of the company's affairs at 31 December 1998 and 31 December 1997 and of
its profit for the years then ended and have been properly prepared in
accordance with the Companies Act 1985, applicable to small companies.

Scrutton Bland
Chartered Accountants and
Registered Auditors

Colchester
3 August 1999

ADDENDUM TO THE AUDITORS' REPORT TO THE MEMBERS OF COMPUTER FOUNDATIONS LIMITED

Since the preparation of the financial statements of Computer Foundations
Limited for United Kingdom statutory purposes, which were approved by the
directors on 3 August 1999 and which are referred to in the above audit report,
the information contained within this document has been amended as follows: --

- the removal of the directors report which would be required under the
Companies Act 1985

- the inclusion of a cash flow statement and notes thereto prepared in
accordance with generally accepted accounting principles in the United
States; and

- the inclusion of note 15 which provides information on the adjustments
which would be required if these financial statements, which have been
prepared under generally accepted accounting principles

F-43
100

in the United Kingdom, had been prepared under generally accepted
accounting principles in the United States.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS

It is the responsibility of the directors of the company to prepare the
additional information included in this document. It is our responsibility to
form an independent opinion, based on our audit, on note 15 and the cash flow
statement and notes thereto and to report our opinion to you.

OPINION

In our opinion the information contained within note 15 and the cash flow
statement and notes thereto fairly presents the adjustments which would be
required if these financial statements, which have been prepared under generally
accepted accounting principles in the United Kingdom, had been prepared under
generally accepted accounting principles in the United States.

Scrutton Bland
Chartered Accountants and
Registered Auditors

Colchester
10 March 2000

F-44
101

COMPUTER FOUNDATIONS LIMITED

PROFIT AND LOSS ACCOUNT YEAR ENDED 31 DECEMBER

NOTES 1998 1997
----- ---------- ----------
L L L

TURNOVER.................................................... 1 1,890,431 1,455,017
Cost of sales............................................... 761,831 594,748
---------- ----------
GROSS PROFIT................................................ 1,128,600 860,269
Administrative expenses..................................... (992,864) (790,748)
---------- ----------
OPERATING PROFIT............................................ 2 135,736 69,521
Interest receivable and similar income...................... 4 30,582 21,254
Interest payable and similar charges........................ 5 -- (1,198)
---------- ----------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION............... 166,318 89,577
Tax on profit on ordinary activities........................ 6 38,889 20,935
---------- ----------
PROFIT FOR THE FINANCIAL YEAR............................... 127,429 68,642
Dividends................................................... 7 60,450 50,375
---------- ----------
RETAINED PROFIT FOR THE FINANCIAL YEAR...................... 12 L 66,979 L 18,267
========== ==========

TOTAL RECOGNIZED GAINS AND LOSSES

The company has no recognized gains or losses other than the profit for the
above two financial years.

CONTINUING OPERATIONS

None of the company's activities were acquired or discontinued during the
above two financial years.

F-45
102

COMPUTER FOUNDATIONS LIMITED

BALANCE SHEET AS AT 31 DECEMBER

NOTES 1998 1997
----- -------- --------
L L

FIXED ASSETS
Tangible assets............................................. 8 356,399 256,474
-------- --------
CURRENT ASSETS
Stocks...................................................... 3,709 2,448
Debtors..................................................... 9 236,188 93,455
Cash at bank and in hand.................................... 451,414 570,087
-------- --------
691,311 665,990
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR.............. 10 449,912 391,645
-------- --------
NET CURRENT ASSETS.......................................... 241,399 274,345
-------- --------
TOTAL ASSETS LESS CURRENT LIABILITIES....................... L597,798 L530,819
======== ========
CAPITAL AND RESERVES
Called up share capital..................................... 11 10,075 10,075
Profit and loss account..................................... 12 587,723 520,744
-------- --------
SHAREHOLDERS' FUNDS -- EQUITY INTERESTS..................... 13 L597,798 L530,819
======== ========

Advantage is taken in the preparation of the financial statements of the
special provisions contained in Part VII of the Companies Act 1985 relating to
small companies.

The financial statements were approved by the directors on 3 August 1999.

T P K MILMO
Director

F-46
103

COMPUTER FOUNDATIONS LIMITED

STATEMENT OF CASH FLOWS YEAR ENDED 31 DECEMBER

1998 1997
--------- --------
L L

CASH FLOW FROM OPERATING ACTIVITIES
Net income.................................................. 127,429 68,642
Adjustments to reconcile net income to net cash provided by
operating activities:
Profit on disposal of tangible fixed assets................. (11,514) (3,600)
Depreciation................................................ 69,551 38,477
(Increase)/decrease in debtors.............................. (142,733) 146,623
(Increase)/decrease in stocks............................... (1,261) 4,149
Increase/(decrease) in creditors............................ 104,375 (50,578)
Increase/(decrease) in corporation taxes payable............ 4,267 (43,504)
--------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES................... 150,114 160,209
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures........................................ (181,884) (16,999)
Proceeds from sale of assets................................ 23,922 3,600
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid.............................................. (110,825) (50,375)
--------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS................... (118,673) 96,435
Cash and cash equivalents at beginning of year.............. 570,087 473,652
--------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR.................... L 451,414 L570,087
========= ========
SUPPLEMENTAL NON-CASH INFORMATION:
Interest paid............................................... L -- L 1,198
========= ========
Taxes paid.................................................. L 9,434 L 52,938
========= ========

F-47
104

COMPUTER FOUNDATIONS LIMITED

NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER

1. ACCOUNTING POLICIES

Basis of accounting

The financial statements have been prepared under the historical cost
convention, and in accordance with applicable accounting standards.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write
off each asset over its estimated useful life:

Fixtures and -- 15% on written down value
fittings
Plant and equipment -- 30% on written down value
Motor vehicles -- 25% on cost of vehicles or 25% on
written down value of vehicles
purchased before 1.1.93
Freehold property -- 2% on cost
Portable buildings -- Straight line over 3 years

Any permanent diminution in the value of properties is charged to the
profit and loss account.

Stocks

Stocks are valued at the lower of cost and net realisable value, after
making due allowance for obsolete and slow moving items.

Capitalised leases

Rentals applicable to operating leases where substantially all of the
benefits and risks of ownership remain with the lessor are charged against
profit as incurred.

Income from maintenance and support contracts

Turnover

Turnover represents the amount receivable for goods sold during the year,
exclusive of VAT.

All turnover arises in the United Kingdom and in relation to the principal
activity of the company.

F-48
105
COMPUTER FOUNDATIONS LIMITED

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

2. OPERATING PROFIT

The operating profit is stated after (crediting)/charging:

1998 1997
-------- --------
L L

Profit on disposal of tangible fixed assets................. (11,514) (3,600)
Depreciation of tangible fixed assets....................... 69,551 36,321
Depreciation of assets held under capitalized leases........ -- 2,156
Operating lease rentals -- other............................ 18,680 24,367
Auditors' remuneration...................................... 3,600 3,600
Directors' emoluments (see below)........................... 303,397 185,341
======== ========
DIRECTORS' REMUNERATION
Aggregate emoluments........................................ 303,397 185,341
Contributions to money purchase pension schemes............. 22,554 22,548
-------- --------
L325,951 L207,889
======== ========

Contributions to a money purchase pension scheme are made on behalf of 4
directors.

The highest paid director received aggregate emoluments of L101,454
(1997: L49,075) and contributions of L1,560 (1997: L4,829) were made to a money
purchase pension scheme on his behalf.

3. STAFF COSTS

1998 1997
-------- --------
L L

Wages and salaries.......................................... 798,467 616,361
Social security costs....................................... 80,735 60,300
Other pension costs......................................... 31,586 31,021
-------- --------
L910,788 L707,682
======== ========
The average monthly number of employees, including directors
during the year was made up as follows:
Office and management....................................... 4 4
Production and sales staff.................................. 25 26
-------- --------
29 30
======== ========

4. INTEREST RECEIVABLE

1998 1997
------- -------
L L

Bank interest receivable.................................... L30,582 L21,254
======= =======

5. INTEREST PAYABLE

1998 1997
------ ------
L L

Bank interest payable....................................... L -- L1,198
====== ======

F-49
106
COMPUTER FOUNDATIONS LIMITED

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

6. TAX ON PROFIT ON ORDINARY ACTIVITIES

1998 1997
------- -------
L L

Based on the profit for the year
Corporation tax at 21% (1997: 24%/21%)...................... L38,889 L20,935
======= =======

7. DIVIDENDS

1998 1997
------- -------
L L

Interim dividend paid....................................... 60,450 --
Final dividend proposed..................................... -- 50,375
------- -------
L60,450 L50,375
======= =======

8. TANGIBLE FIXED ASSETS

FIXTURES
FREEHOLD PORTABLE AND PLANT AND MOTOR
PROPERTY BUILDINGS FITTINGS EQUIPMENT VEHICLES TOTAL
-------- --------- -------- --------- -------- ---------
L L L L L L

COST
At 1 January 1998................... 238,724 6,063 18,003 87,850 170,010 520,650
Additions........................... 10,000 -- 2,880 38,749 130,255 181,884
Disposals........................... -- -- -- (40,066) (70,031) (110,097)
-------- ------ ------- -------- -------- ---------
At 31 December 1998................. 248,724 6,063 20,883 86,533 230,234 592,437
-------- ------ ------- -------- -------- ---------

DEPRECIATION
At 1 January 1998................... 38,194 6,063 12,584 80,552 126,783 264,176
On disposals........................ -- -- -- (38,153) (59,536) (97,689)
Charge for the year................. 5,174 -- 800 15,691 47,886 69,551
-------- ------ ------- -------- -------- ---------
At 31 December 1998................. 43,368 6,063 13,384 58,090 115,133 236,038
-------- ------ ------- -------- -------- ---------

NET BOOK VALUES
At 31 December 1998................. L205,356 L -- L 7,499 L 28,443 L115,101 L 356,399
======== ====== ======= ======== ======== =========
At 31 December 1997................. L200,530 L -- L 5,419 L 7,298 L 43,227 L 256,474
======== ====== ======= ======== ======== =========

The charge for depreciation of motor vehicles includes LNil (1997: L2,156)
in respect of assets held under capitalized leases. At 31 December 1998 the net
book value of these assets was LNil (1997: L6,457).

9. DEBTORS

1998 1997
-------- -------
L L

Trade debtors............................................... 194,383 78,971
Other debtors............................................... 41,805 14,484
-------- -------
L236,188 L93,455
======== =======

F-50
107
COMPUTER FOUNDATIONS LIMITED

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

10. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

1998 1997
-------- --------
L L

Bank loans.................................................. 1 1
Trade creditors............................................. 160,745 101,693
Corporation tax............................................. 11,182 9,434
Other taxes and social security costs....................... 119,101 72,741
Other creditors............................................. 12,490 21,796
Accruals and deferred income................................ 131,280 123,011
Proposed dividend........................................... -- 50,375
Advance corporation tax..................................... 15,113 12,594
-------- --------
L449,912 L391,645
======== ========

11. CALLED UP SHARE CAPITAL

1998 1997
-------- --------

Authorised:
100,000 ordinary shares of L1 each........................ L100,000 L100,000
======== ========
Allotted, called up and fully paid:
10,075 ordinary shares of L1 each......................... L 10,075 L 10,075
======== ========

12. RESERVES

PROFIT
AND LOSS
ACCOUNT
--------
L

At 1 January 1998........................................... 520,744
Retained profit for the year................................ 66,979
--------
At 31 December 1998......................................... L587,723
========

13. RECONCILIATION OF MOVEMENTS ON SHAREHOLDERS' FUNDS

1998 1997
-------- --------
L L

Profit for the financial year after taxation................ 127,429 68,642
Dividends................................................... 60,450 50,375
-------- --------
66,979 18,267
Opening shareholders' funds at 1 January 1998............... 530,819 512,552
-------- --------
Closing shareholders' funds at 31 December 1998............. L597,798 L530,819
======== ========

14. RELATED PARTIES

The company is controlled by a director and a shareholder, Mr. T P K Milmo.

F-51
108
COMPUTER FOUNDATIONS LIMITED

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

Dividends paid and proposed (see note 7) include amounts payable to
directors who are also shareholders of the company as follows:

1998 1997
------ ------
L L

T P K Milmo................................................. 39,150 32,625
------ ------
P A Doe..................................................... 12,000 10,000
------ ------
S Goldsworthy............................................... 1,800 1,500
------ ------
G King...................................................... 1,800 1,500
------ ------
G Spurgeon.................................................. 1,800 1,500
------ ------

Included within other debtors is an amount of L12,807 (1997: Lnil) due from
Foundation Accounting Systems Limited, a company which is also controlled by Mr.
T P K Milmo.

15. US/UK GAAP RECONCILIATION

The financial statements of the Company as set out from the profit and loss
account to note 14 but excluding the cash flow statement and notes thereto have
been prepared in accordance with generally accepted accounting principles
applicable in the UK ("UK GAAP"), which differ in certain significant respects
from those applicable in the US ("US GAAP"). The material differences as they
apply to the Company's financial statements are, as follows:

INCOME RECOGNITION

The accounting policy of the company for the recognition of income from
maintenance and support contracts, as detailed in note 1 to the financial
statements, is: --

"Income from maintenance and support contracts

Income from hardware maintenance and training contracts is recognized in
the profit and loss account on an earned basis with receipts in advance taken to
accruals at the year end. Income from software support contracts of one year or
less are taken as turnover at the date of invoice, contracts or more than one
year are accounted for on an earned basis."

The following tables also record the tax effect on the profits of the
company on the adoption of SOP 97-2. The application of SOP 97-2 has the effect
of reducing the taxable profits of the company. These tax effects are based on
an effective rate of 21% for 1998 and 21.75% for 1997. The cumulative effect for
1998 in the table on the "effect on Shareholders Equity" is based on a
cumulative tax effect from prior accounting periods and does not represent the
actual tax effect under UK taxation rules had the principles of SOP 97-2 been
adopted under UK GAAP.

F-52
109
COMPUTER FOUNDATIONS LIMITED

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

EFFECT ON SHAREHOLDERS' EQUITY:

1998 1997
--------- ---------
L L

Shareholders' equity as stated under UK GAAP................ 597,798 530,819
US GAAP adjustments:
Increase in deferred income under US GAAP................... (221,967) (204,248)
Reduction in tax charge arising from the adjustment to
deferred income........................................... 48,145 44,424
--------- ---------
Shareholders equity as stated under US GAAP................. L 423,976 L 370,995
========= =========

EFFECT ON PROFIT FOR THE FINANCIAL YEAR:

1998 1997
-------- --------
L L

Profit for the financial year as stated under UK GAAP....... 127,429 68,642
US GAAP adjustments:
Adjustment for movement in deferred income.................. (17,719) (25,182)
Reduction in tax charge arising from the movement in
deferred income........................................... 3,721 5,477
-------- --------
Profit for the financial year as stated under US GAAP....... L113,431 L 48,937
======== ========

F-53
110

PREMIER COMPUTER GROUP LIMITED

DIRECTORS AND OTHER INFORMATION

DIRECTORS Brian Kearney (resigned 23/12/98)
Mark Howell
William Reid
Leo McCarthy (appointed 1/5/98)
Paul Carroll (appointed 23/12/98)

SECRETARY Mark Howell

REGISTERED OFFICE 13/16 Dame Street,
Dublin 2.

BANKERS Allied Irish Bank plc.,
24 Arran Quay,
Dublin 7.

AUDITORS BDO Simpson Xavier,
Chartered Accountants
and Registered Auditors,
Simpson Xavier Court,
Merchants Quay,
Dublin 8.

SOLICITORS Patrick Donaghy & Company,
Solicitors,
13/16 Dame Street,
Dublin 2.

F-54
111

PREMIER COMPUTER GROUP LIMITED

STATEMENT OF DIRECTORS' RESPONSIBILITIES

- select suitable accounting policies and then apply them consistently;

- make judgements and estimates that are reasonable and prudent;

- prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company will continue in business.

The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
company and to enable them to ensure that the financial statements comply with
the Companies Acts, 1963 to 1990. They are also responsible for safeguarding the
assets of the company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.

F-55
112

AUDITORS' REPORT

TO THE MEMBERS OF PREMIER COMPUTER GROUP LIMITED

We have audited the attached financial statements which have been prepared
under the historical cost convention and the accounting policies set in note 1.

Respective responsibilities of directors and auditors

The company's directors are responsible for the preparation of the
financial statements in accordance with generally accepted accounting principles
in the Republic Of Ireland. It is our responsibility to form an independent
opinion, based on our audit, on those statements and to report our opinion to
you.

Basis of opinion

We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board which are substantially similar to US GAAS. An audit
includes an examination, on a test basis, of evidence relevant to the amounts
and disclosures in the financial statements. It also includes an assessment of
the significant estimates and judgements made by the directors in the
preparation of the financial statements, and of whether the accounting policies
are appropriate to the company's circumstances, consistently applied and
adequately disclosed.

We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatements, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.

Opinion

In our opinion, the financial statements give a true and fair view of the
state of the group's affairs as at 31 December 1998 and 31 December 1997 and of
its results for the year's then ended and have been properly prepared in
accordance with the Companies Acts, 1963 to 1990.

In our opinion, there did exist at 31 December 1998 a financial situation
which, under Section 40(1) of the Companies (Amendment) Act 1983, does require
the convening of an extraordinary general meeting of the company.

We have obtained all the information and explanations we considered
necessary for the purposes of our audit. In our opinion, proper books of account
have been kept by the company. The financial statements are in agreement with
the books of account.

BDO SIMPSON XAVIER
Chartered Accountants
& Registered Auditors

1 MAY 1999

F-56
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PREMIER COMPUTER GROUP LIMITED

CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER

NOTE 1998 1997
---- ---------- ----------
IRL IRL

TURNOVER.................................................... 2 3,775,749 3,056,218
---------- ----------
GROSS PROFIT................................................ 1,924,282 1,960,171
Operating costs............................................. (2,447,851) (1,826,825)
---------- ----------
OPERATING (LOSS)/PROFIT..................................... (523,569) 133,346
Interest receivable......................................... 6 -- 7,484
Interest payable and similar charges........................ 7 (16,967) (30,254)
---------- ----------
(LOSS)/PROFIT BEFORE TAXATION............................... 3 (540,536) 110,576
Taxation.................................................... 8 -- (3,382)
---------- ----------
(LOSS)/PROFIT AFTER TAXATION................................ (540,536) 107,194
Minority interests.......................................... (3,415) (6,525)
---------- ----------
(LOSS)/PROFIT FOR THE YEAR.................................. (543,951) 100,669
Redemption of shares........................................ -- (114,196)
Transfer to capital redemption reserve fund................. -- (9,149)
---------- ----------
Retained loss for the financial year........................ (543,951) (22,676)
Balance at beginning of year................................ 397,716 420,392
---------- ----------
BALANCE AT END OF YEAR...................................... (146,235) 397,716
---------- ----------

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

All recognized gains and losses have been included in the profit and loss
account.

Mark Howell Paul Carroll
- ----------------------------------------------------- -----------------------------------------------------
Director Director

1 May 1999
- -----------------------------------------------------
Date

F-57
114

PREMIER COMPUTER GROUP LIMITED

CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER

ASSETS EMPLOYED NOTES 1998 1997
- --------------- ----- ---------- ---------
IRL IRL

FIXED ASSETS
Tangible assets............................................. 9 287,253 147,396
Financial assets............................................ 10 -- 149,585
Intangible assets........................................... 11 -- 83,774
---------- ---------
287,253 380,755
CURRENT ASSETS
Stocks...................................................... 12 58,875 220,867
Debtors..................................................... 13 996,587 718,782
Bank........................................................ 277,514 208,751
---------- ---------
1,332,976 1,148,400
CREDITORS (amounts falling due within one year)............. 14 (1,658,948) (982,458)
---------- ---------
NET CURRENT (LIABILITIES)/ASSETS............................ (325,972) 165,942
---------- ---------
TOTAL ASSETS LESS CURRENT LIABILITIES....................... (38,719) 546,697
CREDITORS (amounts falling due after more than one year).... 15 (58,464) (91,095)
---------- ---------
(97,183) 455,602
---------- ---------
CAPITAL AND RESERVES
Called up share capital..................................... 16 2,220 2,220
Share premium............................................... 17 199,267 199,267
Profit and loss account..................................... (146,235) 397,716
Other reserves.............................................. 18 (152,435) (140,071)
---------- ---------
Shareholders' funds......................................... (97,183) 459,132
Minority interest........................................... 19 -- (3,530)
---------- ---------
(97,183) 455,602
---------- ---------

Mark Howell Paul Carroll
- ----------------------------------------------------- -----------------------------------------------------
Director Director

1 May 1999
- -----------------------------------------------------
Date

F-58
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PREMIER COMPUTER GROUP LIMITED

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER

NOTE 1998 1997
-------- --------- --------
IRL IRL

CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss)\income.......................................... (543,951) 100,669
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
Depreciation and Amortization.............................. 227,627 159,485
Provision for losses on investment......................... 149,585 --
Loss on sale of facility................................... 2,178 --
Foreign currency adjustment................................ (9,980) --
CHANGE IN ASSETS AND LIABILITIES
Increase/Decrease in accounts receivable................... (277,805) 29,426
Decrease/Increase in inventory............................. 161,992 (29,218)
Increase in accounts payable and accrued expenses.......... 760,860 70,768
--------- --------
TOTAL ADJUSTMENTS.......................................... 1,014,457 230,461
--------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES.................. 470,506 331,130
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of facility............................. 5,038 36,770
Capital expenditures....................................... (233,138) (164,783)
Payments for acquisition of subsidiary net of cash
acquired................................................. -- (61,134)
--------- --------
NET CASH USED IN INVESTING ACTIVITIES...................... (228,100) (189,147)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Capital lease repayments................................... (32,960) (40,277)
Movement on bank overdraft................................. (52,391) (29,682)
Repayment of borrowings.................................... (88,292) (31,277)
Redemption of Common Stock................................. -- (123,345)
--------- --------
NET CASH USED IN FINANCING ACTIVITIES...................... (173,643) (224,581)
--------- --------
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS....... 68,763 (82,598)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR............. 208,751 291,349
--------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR................... 277,514 208,751
--------- --------
SUPPLEMENTAL NON CASH INFORMATION
Capital expenditure financed by debt....................... 59,702 59,156
--------- --------

F-59
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PREMIER COMPUTER GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. ACCOUNTING POLICIES

a) Basis of preparation

These financial statements have been prepared under the historical cost
convention in accordance with best accounting practice in the Republic of
Ireland (Irish GAAP). The Cash Flow Statement is presented in accordance with US
GAAP. Note 25 sets out a reconciliation of Irish GAAP to US GAAP showing the
effect on Shareholders Equity and results for the year.

b) Revenue Recognition

Revenue arising from the sale of hardware products represents invoiced
sales during the year, net of valued added taxation and is recognized as the
products are shipped. Revenue arising from annual maintenance, support and
software contracts is recognized over the period of the contract.

Deferred income arises when either a portion of a contract period, for
which an invoice has been issued in advance, falls after the year end or where
work invoiced has not been completed.

c) Depreciation

Depreciation is calculated to write off the cost of tangible assets over
their expected useful lives at the following annual rates:

Improvements to premises 20% straight line
Fixtures and fittings 20% straight line
Equipment 20% straight line
Software 20% straight line
Motor vehicles 20% - 33.3% straight line

d) Capitalised Leases

Assets held under leasing arrangements that transfer substantially all the
risks and rewards of ownership ("finance leases") to the company are
capitalized. The capital element of the related rental obligations is included
in creditors. The interest element of the rental obligations is charged to the
profit and loss account so as to produce a constant periodic rate of charge.
Rebates of rentals received on disposal of leased assets are treated as proceeds
on disposal.

All other leases are operating leases and the annual rentals are charged to
the profit and loss account.

e) Stocks

Stocks are valued at the lower of cost and net realisable value.

Cost comprises invoice cost exclusive of value added tax, together with
freight and carriage costs incurred.

Net realisable value comprises the actual or estimated selling price (net
of trade discounts) less all further costs to be incurred in marketing, selling
and distribution.

f) Foreign currencies

Monetary assets and liabilities denominated in foreign currencies are
translated at the exchange rates ruling at the balance sheet date and revenues,
costs and non-monetary assets at the exchange rates ruling at the dates of the
transactions.

F-60
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PREMIER COMPUTER GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Profits and losses arising from foreign currency transactions and on
settlement of amounts receivable and payable in foreign currency are dealt with
through the profit and loss account.

g) Pensions

Amounts paid to fund defined contribution schemes are charged to the profit
and loss account as incurred.

h) Research and development

Research and development costs are expensed as incurred.

i) Consolidated statement of cash flows

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

2. TURNOVER

The turnover of the company for the period has been derived from its
principle activity.

1998 1997
--------- ---------
IRL IRL

Republic of Ireland......................................... 3,473,214 2,811,336
United Kingdom.............................................. 302,535 244,882
--------- ---------
3,775,749 3,056,218
--------- ---------

3. (LOSS)/PROFIT BEFORE TAXATION

The (Loss)/profit before taxation has been arrived at after charging the
following items;

1998 1997
------- ------
IRL IRL

Auditors' remuneration...................................... 24,992 7,808
Depreciation................................................ 144,608 99,691
Amortization of software development costs.................. 83,019 59,794
------- ------

4. EMPLOYEES AND REMUNERATION

The average number of persons (including directors) employed by the group
during the financial year was 45 (1997: 39) and is analysed into the following
categories;

1998 1997
---- ----
IRL IRL

Sales....................................................... 6 5
Administration.............................................. 9 10
Technical................................................... 30 24
-- --
45 39
-- --

F-61
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PREMIER COMPUTER GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1998 1997
--------- -------
IRL IRL

Staff costs comprised:
Wages and salaries........................................ 1,113,821 858,311
Social welfare costs...................................... 97,643 90,751
Pension costs............................................. 25,468 11,769
--------- -------
1,236,932 960,831
--------- -------

5. DIRECTORS' EMOLUMENTS

1998 1997
------- -------
IRL IRL

Remuneration and other emoluments........................... 225,064 112,393
Pension costs............................................... 14,829 8,743
------- -------
239,892 121,136
======= =======

6. INTEREST RECEIVABLE

1998 1997
---- -----
IRL IRL

Interest received and receivable............................ -- 7,484
== =====

7. INTEREST PAYABLE AND SIMILAR CHARGES

1998 1997
------ ------
IRL IRL

This interest was in respect of:
Borrowings wholly repayable within five years
-- bank loan and overdraft................................ 11,855 20,743
-- capitalized leases..................................... 5,111 9,511
------ ------
16,967 30,254
====== ======

8. TAXATION

1998 1997
---- ------
IRL IRL

Corporation tax principally at 10%.......................... -- 9,000
Overprovision in prior year................................. -- (5,618)
-- ------
-- 3,382
== ======

No tax liability arises in the current year due to loss relief.

F-62
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PREMIER COMPUTER GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9. TANGIBLE ASSETS

GROUP

IMPROVEMENTS FIXTURES MOTOR
TO PREMISES & FITTINGS EQUIPMENT SOFTWARE VEHICLES TOTAL
------------ ---------- --------- -------- -------- ---------
IRL IRL IRL IRL IRL IRL

COST
At 1 January 1998............. 33,194 341,667 238,352 133,731 40,951 787,895
Additions..................... -- 3,037 168,315 36,273 85,215 292,840
Disposals..................... -- (6,029) -- -- (14,240) (20,269)
Translation adjustments....... -- (9,627) (3,034) -- (1,349) (14,010)
------ ------- ------- ------- ------- ---------
AT 31 DECEMBER 1998........... 33,194 329,048 403,633 170,004 110,577 1,046,456
====== ======= ======= ======= ======= =========
DEPRECIATION
At 1 January 1998............. 17,427 327,114 168,131 109,529 18,298 640,499
Charge for year............... 6,492 889 97,004 22,223 18,000 144,608
Disposals..................... -- -- -- -- (13,053) (13,053)
Translation adjustments....... -- (9,207) (3,045) -- (599) (12,851)
------ ------- ------- ------- ------- ---------
At 31 December 1998........... 23,919 318,796 262,090 131,752 22,646 759,203
------ ------- ------- ------- ------- ---------
NET BOOK VALUE
AT 31 DECEMBER 1998........... 9,275 10,252 141,543 38,252 87,931 287,253
====== ======= ======= ======= ======= =========
At 1 January 1998............. 15,767 14,553 70,221 24,202 22,653 147,396
====== ======= ======= ======= ======= =========

Tangible assets with a net book amount of IRL 102,051 (1997: IRL 47,014)
are held by the group under capitalized leases. The depreciation charge on these
assets amounts to IRL 38,459 (1997: IRL 21,032).

10. FINANCIAL ASSETS

GROUP

1998 1997
---- --------
IRL IRL

Leasehold interest.......................................... -- 149,585
== ========

The directors have decided to make a full provision against the value of
this investment due to doubt over group's legal ownership of the lease hold
interest.

F-63
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PREMIER COMPUTER GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. INTANGIBLE ASSETS

GROUP

SOFTWARE
DEVELOPMENT
COSTS
-----------
IRL

COST
At 1 January 1998........................................... 362,689
Translation adjustments..................................... (3,128)
-------
AT 31 DECEMBER 1998......................................... 359,561
=======
DEPRECIATION
At 1 January 1998........................................... 278,915
Charge for year............................................. 83,019
Translation adjustments..................................... (2,373)
-------
At 31 December 1998......................................... 359,561
=======
NET BOOK AMOUNT
AT 31 DECEMBER 1998......................................... --
-------
At 1 January 1998........................................... 83,774
=======

12. STOCKS

1998 1997
---- ----
IRL IRL

Goods for resale............................................ 58,875 215,297
Other stock................................................. -- 5,570
------- --------
58,875 220,867
======= ========

In the opinion of the directors, the replacement cost of stock does not
differ significantly from the figures shown above.

13. DEBTORS (AMOUNTS FALLING DUE WITHIN ONE YEAR)

GROUP

1998 1997
---- ----
IRL IRL

Trade debtors and prepayments............................... 996,587 718,782
======= =======

F-64
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PREMIER COMPUTER GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

14. CREDITORS (AMOUNTS FALLING DUE WITHIN ONE YEAR)

GROUP

1998 1997
---- ----
IRL IRL

Trade creditors............................................. 714,095 360,908
Bank overdraft.............................................. 42,738 95,129
Corporation tax............................................. 333 9,000
PAYE/PRSI................................................... 56,115 20,955
VAT......................................................... 92,026 53,698
Accruals and deferred income................................ 692,969 353,207
Obligations under capitalized leases........................ 60,672 37,717
Unsecured loan.............................................. -- 50,000
Secured loan................................................ -- 1,844
--------- -------
1,658,948 982,458
========= =======

The bank overdraft is secured by fixed and floating charges over the fixed
assets of Techsonix Limited.

15. CREDITORS (AMOUNT FALLING DUE AFTER MORE THAN ONE YEAR)

GROUP

1998 1997
---- ----
IRL IRL

Bank loan................................................... -- 36,448
Capitalised leases -- repayable within five years........... 58,464 54,647
------ ------
58,464 91,095
====== ======

16. SHARE CAPITAL

1998 1997
---- ----
IRL IRL

AUTHORISED
100,000 ordinary shares of IRL1 each........................ 100,000 100,000
------- -------
ALLOTTED, CALLED UP AND FULLY PAID
Equity Shares
2,220 ordinary shares of IRL1 each.......................... 2,220 2,220
------- -------

17. SHARE PREMIUM

1998 1997
---- ----
IRL IRL

At 31 December 1998 and 31 December 1997.................... 199,267 199,267
------- -------

F-65
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PREMIER COMPUTER GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

18. OTHER RESERVES

GOODWILL CAPITAL
WRITE-OFF TRANSLATION REDEMPTION
RESERVE RESERVES RESERVE TOTAL
--------- ----------- ---------- -----
IRL IRL IRL IRL

At 1 January 1998.............................. (175,885) 1,665 34,149 (140,071)
Translation differences arising during the
year......................................... -- (399) -- (399)
Goodwill on acquisition........................ (11,965) -- -- (11,965)
-------- -------- -------- --------
AT 31 DECEMBER 1998............................ (187,850) 1,266 34,149 (152,435)
======== ======== ======== ========

19. MINORITY INTEREST

1998 1997
---- ----
IRL IRL

At 1 January 1998........................................... (3,530) (8,810)
Share of profit after taxation.............................. (3,415) 6,525
Foreign currency translation................................ (1,114) (1,245)
Acquisition of minority interest by holding company......... 8,059 --
------ ------
AT 31 DECEMBER 1998......................................... -- (3,530)
====== ======

20. FINANCIAL COMMITMENTS

At 31 December 1998 the Group had annual commitments of IRL3,384 (1997:
IRL5,076) under non-cancellable operating leases. These leases were due to
expire in the following periods after 31 December:

1998 1997
----- -----
IRL IRL

Within one year............................................. 1,128 1,692
Between two and five years.................................. 2,256 3,384
----- -----
3,384 5,076
===== =====

21. CONTROLLING PARTY

As from 23 December 1998 Premier Computer Group Limited was controlled by
Integrity Holdings Limited, a company incorporated in the U.S.A. and operating
in Europe. There were no transactions by Premier Computer Group Limited between
December 23, 1998 and December 31, 1998.

Consequently, a separate profit and loss account for the period between
December 23 and December 31 has not been presented.

22. RELATED PARTY TRANSACTIONS

The company has availed of the exemptions under FRS 8 (Related Party
Disclosure) which allows non-disclosure of transactions with other group
companies.

F-66
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PREMIER COMPUTER GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

23. GROUP UNDERTAKINGS

Premier Computer Group Limited had the following subsidiary undertakings at
31 December 1998:

COMPANY % HELD REGISTERED OFFICE PRINCIPLE ACTIVITY
- ------- ------ ----------------- ------------------------------------------

INCORPORATED IN THE
REPUBLIC OF IRELAND
Premier Information 100% (a) Modification, sale and support of computer
Systems Ltd. systems and software
Premier Software Ltd. 100% (a) Manufacture and sale of software
Progress Systems Ltd. 100% (a) Manufacture, sale and support of computer
systems and software
Premier Services Ltd. 100% (a) Dormant
Premier Distribution Ltd. 100% (a) Dormant

COMPANY % HELD REGISTERED OFFICE PRINCIPLE ACTIVITY
- ------- ------ ----------------- ------------------------------------------

INCORPORATED IN THE
UNITED KINGDOM
Ravplot Ltd 100% (b) Investment holding company
Techsonix Ltd 100% (b) Supply of computer based cost and
management information systems, together
with associated training and support
services to the construction industry

- ---------------
(a) 13/16 Dame Street, Dublin 2, Ireland

(b) 5 Ashted Lock, Dartmouth Middleway, Birmingham, B7 4AZ

24. CAPITAL COMMITMENTS

The company does not have any capital commitments at 31 December 1998.

25. RECONCILIATION OF IRISH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("IRISH
GAAP") TO GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN THE UNITED STATES OF
AMERICA ("US GAAP")

The financial statements of the Company set out on pages 5 to 20 have been
prepared in accordance with generally accepted accounting principles applicable
in the Republic of Ireland ("Irish GAAP"), which differ in certain significant
respects from those applicable in the US ("US GAAP"). The material differences
as they apply to the Company's financial statements are, as follows:

Goodwill

Under Irish GAAP the company has written off goodwill arising on
acquisitions against shareholders equity. Goodwill recognized in accordance with
US GAAP purchase accounting requirements is capitalized on the balance sheet and
amortized over it's estimated remaining useful life through the income
statement. The useful life of goodwill as considered by the directors is 10
years.

Financial Assets

This Financial Asset was written off during the year ended 31 December 1998
due to doubt over the groups legal ownership of the leasehold interest (which
was acquired in the year ended 31

F-67
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PREMIER COMPUTER GROUP LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

December 1997) in accordance with Irish GAAP. This amount has been treated as a
correction of an error under US GAAP and consequently written off in its year of
acquisition.

Deferred Tax

Under Irish GAAP, provision is made for deferred tax under the liability
method where it is probable that a deferred tax liability will become payable or
a tax asset will crystallise within the foreseeable future. Under US GAAP
Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes" requires deferred tax to be provided on a full liability basis and
a valuation adjustment is established against deferred tax assets where
valuation it is more likely than not that some portion will not be realised.

Research & Development

In accordance with Irish GAAP certain Research & Development costs are
capitalized and written off through the income statement over the period in
which the benefits from these activities arise. The amounts would be expensed to
the income statement under US GAAP as technological feasibility has not been
established.

The tables below set out the effect on shareholders funds and profit for
the year on the results of the company.

EFFECT ON LOSSES:

1998 1997
-------- --------
IRL IRL

Loss as stated under Irish GAAP............................. (543,951) (100,669)
US GAAP adjustments:
Goodwill amortization....................................... (17,588) (17,588)
Research & Development costs written off.................... 83,019 59,794
Deferred tax asset.......................................... 44,000 --
Leasehold interest written off.............................. 149,585 (149,585)
NET LOSS AS STATED UNDER US GAAP............................ (284,935) (208,048)
OTHER COMPREHENSIVE LOSS.................................... (399) (6,580)
COMPREHENSIVE LOSS.......................................... (285,334) (214,628)

EFFECT ON SHAREHOLDERS' EQUITY:

AT 31 DECEMBER, AT 31 DECEMBER,
1998 1997
--------------- ---------------
IRL IRL

Shareholders' equity as stated under Irish GAAP............. (97,183) 459,132
US GAAP adjustments:
Goodwill written off........................................ 162,245 167,868
Deferred Tax Asset.......................................... 44,000 --
Research & Development costs written off.................... (755) (83,774)
Leasehold interest written off.............................. -- (149,585)
SHAREHOLDERS' EQUITY AS STATED UNDER US GAAP................ 108,307 393,641

26. APPROVAL OF FINANCIAL STATEMENTS

The board approved the financial statements on 1 May 1999.

F-68
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INFORMATION SUPPORT LTD

AUDITORS' REPORT TO THE SHAREHOLDERS YEAR ENDED 31ST MARCH

We have audited the attached financial statements which have been prepared
under the historical cost convention and the accounting policies set out on note
1.

RESPECTIVE RESPONSIBILITIES OF THE DIRECTORS AND THE AUDITORS

The company's directors are responsible for the preparation of the
financial statements in accordance with generally accepted accounting principles
in the U.K. It is our responsibility to form an independent opinion, based on
our audit, on those statements and to report our opinion to you.

BASIS OF OPINION

We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board, which are substantially similar to US GAAS. An audit
includes examination, on a test basis, of evidence relevant to the amounts and
disclosures in the financial statements. It also includes an assessment of the
significant estimates and judgements made by the directors in the preparation of
the financial statements, and of whether the accounting policies are appropriate
to the company's circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.

OPINION

In our opinion, the financial statements give a true and fair view of the
state of the company's affairs at 31 March 1998 and 31 March 1997 and of its
profit for the years then ended and have been properly prepared in accordance
with the Companies Act, 1985.

45 Long Lane KARIA OWEN & CO.
London Chartered Certified Accountants
N3 2PY & Registered Auditors
10/7/1998

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INFORMATION SUPPORT LTD

PROFIT AND LOSS ACCOUNT YEAR ENDED 31st MARCH

NOTE 1998 1997
---- --------- ---------
L L

TURNOVER.................................................... 2 4,667,813 4,235,112
Cost of sales............................................... 3,643,500 3,322,141
--------- ---------
GROSS PROFIT................................................ 1,024,313 912,971
DISTRIBUTION COSTS.......................................... 367,235 239,858
Administrative expenses..................................... 601,228 670,110
Other operating income...................................... 3 (39,517) (40,151)
--------- ---------
OPERATING PROFIT............................................ 4 95,367 43,154
INTEREST PAYABLE............................................ 7 14,256 19,428
--------- ---------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION............... 81,111 23,726
TAX ON PROFIT ON ORDINARY ACTIVITIES........................ 8 28,042 21,742
--------- ---------
RETAINED PROFIT FOR THE FINANCIAL YEAR...................... 53,069 1,984
BALANCE BROUGHT FORWARD..................................... (94,695) (96,679)
--------- ---------
Balance carried forward..................................... (41,626) (94,695)
========= =========

The company has no recognized gains or losses other than the results for the
year as set out above.

All of the activities of the company are classed as continuing.

F-70
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INFORMATION SUPPORT LTD

BALANCE SHEET 31st MARCH

NOTE 1998 1997
---- ---------------------- ----------------------
L L L L L

FIXED ASSETS
Intangible assets.................... 9 265,716 288,235
Tangible assets...................... 10 76,753 99,268
Investments.......................... 11 2 --
-------- --------
342,471 387,503
CURRENT ASSETS
Stocks............................... 12 236,253 410,417
Debtors.............................. 13 1,433,161 1,035,843
Cash at bank and in hand............. 1,131 918
---------- ----------
1,670,545 1,447,178
CREDITORS: AMOUNTS FALLING DUE WITHIN
ONE YEAR........................... 14 (1,938,700) (1,813,434)
---------- ----------
NET CURRENT LIABILITIES.............. (268,155) (366,256)
-------- --------
TOTAL ASSETS LESS CURRENT
LIABILITIES........................ 74,316 21,247
======== ========
CAPITAL AND RESERVES
Called-up equity share capital....... 17 115,942 115,942
Profit and loss account.............. 18 (41,626) (94,695)
-------- --------
SHAREHOLDERS' FUNDS.................. 19 74,316 21,247
======== ========

These financial statements were approved by the directors on the 9/7/1998 and
are signed on their behalf by:

- ---------------------------------------------------------
MR. A GROVER

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INFORMATION SUPPORT LTD

STATEMENT OF CASH FLOWS YEAR ENDED 31ST MARCH

1998 1997
--------------------- ----------------------
L L L L

CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers.................. 4,270,495 3,895,983
Cash paid to suppliers and employees.......... (4,282,155) (3,845,400)
Rent received................................. 39,517 40,151
Corporation tax paid.......................... (25,150) (21,354)
Interest paid................................. (14,256) (19,428)
---------- ----------
NET CASH PROVIDED/(USED) BY OPERATING
ACTIVITIES.................................. (11,549) 49,952
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures.......................... (18,255) (58,073)
Payments to acquire subsidiary................ (2) --
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES......... (18,257) (58,073)
CASH FLOWS FROM FINANCING ACTIVITIES:
Movement in Bank Overdraft.................... 30,019 46,014
Repayment of debenture loan................... -- (38,020)
---------- ----------
NET CASH PROVIDED/(USED) BY FINANCING
ACTIVITIES.................................. 30,019 7,994
------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS..... 213 (127)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
YEAR........................................ 918 1,045
------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR...... 1,131 918
------- --------
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES

1998 1997
---------- ----------
L L

Net income.................................... 53,069 1,984
Adjustments to reconcile net income to net
cash Provided by operating activities:
Amortization.................................. 22,519 46,223
Depreciation.................................. 40,770 28,020
Decrease/(Increase) in stock.................. 174,164 (117,554)
Increase in debtors........................... (397,319) (339,129)
Increase in creditors......................... 95,248 430,408
---------- ----------
NET CASE PROVIDED/(USED) BY OPERATING
ACTIVITIES.................................. (11,549) 49,952
========== ==========

F-72
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INFORMATION SUPPORT LTD

NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDING 31ST MARCH

1. ACCOUNTING POLICIES

Basis of accounting

The financial statements have been prepared under the historical cost
convention, and in accordance with applicable accounting standards.

Consolidation

In the opinion of the directors, the company and its subsidiary
undertakings comprise a medium-sized group. The company has therefore taken
advantage of the exemption provided by Section 248 of the Companies Act 1985 not
to prepare group accounts.

Goodwill

Purchased goodwill is written off to the profit & loss account over its
estimated useful life. This year the directors have increased to write off
period to 20 years from 10 years.

Amortization

Amortization is calculated so as to write off the cost of an asset, less
its estimated residual value, over the useful economic life of that asset as
follows:

Goodwill -- Over 20 years -- Straight Line

Depreciation

Depreciation is calculated so as to write off the cost of an asset, less
its estimated residual value, over the useful economic life of that asset as
follows:

Equipment -- 20% Straight Line

Stocks

Stocks are valued at the lower of cost and net realisable value, after
making due allowance for obsolete and slow moving items.

Operating lease agreements

Rentals applicable to operating leases where substantially all of the
benefits and risks of ownership remain with the lessor are charged against
profits as incurred.

Pension costs

The company operates a defined contribution pension scheme for employees.
The assets of the scheme are held separately from those of the company. The
annual contributions payable are charged to the profit and loss account.

2. INCOME REVENUE RECOGNITION

Revenue arising from the sale of hardware products represents invoiced
sales during the period, net of value added taxation and is recognized as the
products are shipped. Revenue arising from annual maintenance and support
contracts is recognized over the period of the contract.

F-73
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INFORMATION SUPPORT LTD

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

Deferred income arises when a portion of a contract period, for which an
invoice has been issued in advance, falls after the year end.

3. OTHER OPERATING INCOME

1998 1997
------ ------
L L

Rent receivable............................................. 39,517 40,151
====== ======

4. OPERATING PROFIT

Operating profit is stated after charging:

1998 1997
------ ------
L L

Amortization................................................ 22,519 46,223
Depreciation................................................ 40,770 28,020
Auditors' remuneration -- as auditors....................... 5,500 5,400
====== ======

5. PARTICULARS OF EMPLOYEES

The average number of staff employed by the company during the financial
year amounted to:

1998 1997
NO. NO.
---- ----

Number of field/workshop staff.............................. 31 33
Number of distribution staff................................ 13 7
Number of administrative staff.............................. 7 7
-- --
51 47
== ==

The aggregate payroll costs of the above were:

1998 1997
--------- ---------
L L

Wages and salaries & Social security costs.................. 1,302,750 967,943
Other pension costs......................................... 40,470 46,487
--------- ---------
1,343,220 1,014,430
========= =========

6. DIRECTORS' EMOLUMENTS

The directors' aggregate emoluments in respect of qualifying services were:

1998 1997
------- -------
L L

Emoluments receivable....................................... 158,730 161,447
Pension contributions....................................... 14,080 14,040
------- -------
172,810 175,487
======= =======

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INFORMATION SUPPORT LTD

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

The number of directors who are accruing benefits under the company pension
schemes were as follows:

1998 1997
NO. NO.
---- ----

Defined contribution schemes................................ 3 3
==== ====

7. INTEREST PAYABLE

1998 1997
------ ------
L L

Interest payable on bank borrowing.......................... 14,256 16,412
Other similar charges payable............................... -- 3,016
------ ------
14,256 19,428
====== ======

8. TAX ON PROFIT ON ORDINARY ACTIVITIES

1998 1997
------ ------
L L

In respect of the year:
Corporation tax based on the results for the year at 21%
(1997 -- 24%).......................................... 25,067 18,334
Adjustment in respect of previous years:
Corporation tax........................................... 2,975 (3,408)
------ ------
28,042 21,742
====== ======

9. INTANGIBLE FIXED ASSETS

GOODWILL
--------
L

COST
AT 1ST APRIL 1997 AND 31ST MARCH 1998....................... 450,376
=======
AMORTIZATION
At 1st April 1997........................................... 162,141
Charge for the year......................................... 22,519
-------
184,660
=======
AT 31ST MARCH 1998
NET BOOK VALUE
AT 31ST MARCH 1998.......................................... 265,716
=======
At 31st March 1997.......................................... 288,235
=======

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INFORMATION SUPPORT LTD

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

10. TANGIBLE FIXED ASSETS

FIXTURES
FITTING &
EQUIPMENT
---------
L

COST
At 1st April 1997........................................... 203,851
Additions................................................... 18,255
-------
AT 31ST MARCH 1998.......................................... 222,106
=======
DEPRECIATION
At 1st April 1997........................................... 104,583
Charge for the year......................................... 40,770
-------
AT 31ST MARCH 1998.......................................... 145,353
=======
NET BOOK VALUE
AT 31ST MARCH 1998.......................................... 76,753
=======
At 31st March 1997.......................................... 99,268
=======

11. INVESTMENTS

Shares in Group Undertaking

COST
Additions................................................... 2
---------
At 31st March 1998.......................................... 2
=========
NET BOOK VALUE
AT 31ST MARCH 1998.......................................... 2
=========

The company owns 100% of the issued share capital of ISL Software Solutions
Ltd and the aggregate amount of its capital and reserves and the results for the
period ended 31st March 1998 were as follows:

1998 1997
------- -------
L L

AGGREGATE CAPITAL AND RESERVES
Capital & reserves........................................ (43,911) --
Profit and (loss) for the year............................
Results................................................... (43,913) --

Under the provision of section 248 of the Companies Act 1985 the company is
exempt from preparing consolidated accounts and has not done so, therefore the
accounts show information about the company as an individual entity.

12. STOCKS

1998 1997
------- -------
L L

Finished goods.............................................. 236,253 410,417
======= =======

F-76
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INFORMATION SUPPORT LTD

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

13. DEBTORS

1998 1997
--------- ---------
L L

Trade debtors............................................... 1,072,818 872,538
Amounts owed by group undertakings.......................... 131,195 --
Other debtors............................................... 20,000 --
Prepayments and accrued income.............................. 209,148 163,305
--------- ---------
1,433,161 1,035,843
========= =========

14. CREDITORS: Amounts failing due within one year

1998 1997
--------- ---------
L L

Bank loans and overdrafts................................... 89,983 59,964
Trade creditors............................................. 639,622 607,212
Other creditors including taxation and social security:
Corporation tax............................................. 28,042 25,150
PAYE and social security.................................... 46,781 56,990
VAT......................................................... 148,443 171,688
--------- ---------
223,266 253,828
Accruals and deferred income................................ 985,829 892,430
--------- ---------
1,938,700 1,813,434
========= =========

The bank overdraft is secured by fixed and floating charge on the assets of
the company.

15. COMMITMENTS UNDER OPERATING LEASES

At 31st March 1998 the company had annual commitments under non-cancellable
operating leases as set out below.

1998 1997
-------------------- --------------------
LAND & OTHER LAND & OTHER
BUILDINGS ITEMS BUILDINGS ITEMS
--------- ------- --------- -------
L L L L

Operating leases which expire:
Within 1 year............................... 70,125 130,089 70,125 92,386
Within 2 to 5 years......................... 87,656 95,276 157,781 75,936
------- ------- ------- -------
157,781 225,365 277,906 168,322
======= ======= ======= =======

16. RELATED PARTY TRANSACTIONS

During the year the company paid consultancy fees to Mr C Williams of
L14,689 (1997 L7,823) in the normal course of business. Mr C Williams is a
shareholder of the company and ex-director.

F-77
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INFORMATION SUPPORT LTD

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

17. SHARE CAPITAL

AUTHORISED SHARE CAPITAL:

1998 1997
------- -------
L L

1,600,000 Ordinary shares of L0.05 each..................... 80,000 80,000
718,840 Ordinary "A" shares of L0.05 each................... 35,942 35,942
------- -------
115,942 115,942
======= =======

ALLOTTED, CALLED UP AND FULLY PAID:

1998 1997
-------------------- --------------------
NO. L NO. L
--------- ------- --------- -------

Ordinary shares.......................... 1,600,000 80,000 1,600,000 80,000
Ordinary "A" shares...................... 718,840 35,942 718,840 35,942
--------- ------- --------- -------
2,318,840 115,942 2,318,840 115,942
========= ======= ========= =======

18. PROFIT AND LOSS ACCOUNT

1998 1997
------- -------
L L

Balance brought forward..................................... (94,695) (96,679)
Retained profit for the financial year...................... 53,069 1,984
------- -------
Balance carried forward..................................... (41,626) (94,695)
======= =======

19. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

1998 1997
------ ------
L L

Profit for the financial year............................... 53,069 1,984
Opening shareholders' equity funds.......................... 21,247 19,263
------ ------
Closing shareholders' equity funds.......................... 74,316 21,247
====== ======

20. RECONCILIATION BETWEEN UK AND US ACCOUNTING PRINCIPLES

The financial statements of the company set out on pages 2 to 13 have been
prepared in accordance with generally accepted accounting principles applicable
in the UK ("UK GAAP"), which differ in certain significant respects from those
applicable in the US ("US GAAP"). The material differences as they apply to the
company's financial statements are, as follows:

Consolidation

The company has availed of specific exemptions (available under UK GAAP)
from the requirement to prepare consolidated financial statements to incorporate
the results of its wholly owned subsidiary, ISL Software Solutions Limited.

F-78
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INFORMATION SUPPORT LTD

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

The tables below set out the effect on shareholders funds and profit for
the year on the results of the company on the inclusion of ISL Software
Solutions Limited in its results for the year.

Effect on the Retained Profit:

1998 1997
------- ------
L L

Profit as stated under UK GAAP.............................. 53,069 1,984
US GAAP adjustments:
Consolidation of ISL Software Solutions Limited............. (43,913) --
------- ------
Net (loss)/income as stated under US GAAP................... 9,156 1,984
------- ------

Effect on Shareholders' Equity:

Shareholders' equity as stated under UK GAAP................ 74,316 21,247
US GAAP adjustments:
Inclusion of ISL Software Solutions Limited................. (43,913) --
------- ------
Shareholders' equity as stated under US GAAP................ 30,403 21,247
======= ======

F-79
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SARACEN COMPUTER SYSTEMS LIMITED

DIRECTORS J. D. Swingler
Mrs. D. J. Swingler
D. M. Billinge
A. P. Stephens
SECRETARY Mrs. D. J. Swingler
AUDITORS Moore Stephens,
Chartered Accountants,
Charterhouse,
165 Newhall Street,
Birmingham B3 1SW
BANKERS Barclays Bank plc,
15 Market Square,
Stafford ST16 2BE
REGISTERED OFFICE St. Mary's House,
Church Street,
Uttoxeter,
Staffordshire ST14 8AG
Company number :
1930247

F-80
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SARACEN COMPUTER SYSTEMS LIMITED

STATEMENT OF DIRECTORS' RESPONSIBILITIES

- select suitable accounting policies and then apply them consistently.

- make judgments and estimates that are reasonable and prudent.

- prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company will continue in business.

The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
company and to enable them to ensure that the financial statements comply with
the Companies Act 1985. They are also responsible for safeguarding the assets of
the company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.

F-81
138

AUDITORS' REPORT TO THE MEMBERS OF
SARACEN COMPUTER SYSTEMS LIMITED

We have audited the financial statements set out on the following pages
which have been prepared under the historical cost convention and the accounting
policies set out in note 1.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS

As described on the preceding page, the company's directors are responsible
for the preparation of financial statements in accordance with generally
accepted accounting principles in the UK. It is our responsibility to form an
independent opinion, based on our audit, on those statements and to report our
opinion to you.

BASIS OF OPINION

We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board which are substantially similar to US GAAS. An audit
includes examination, on a test basis, of evidence relevant to the amounts and
disclosures in the financial statements. It also includes an assessment of the
significant estimates and judgments made by the directors in the preparation of
the financial statements, and of whether the accounting policies are appropriate
to the company's circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.

OPINION

In our opinion the financial statements give a true and fair view of the
state of the company's affairs at 31st October 1997 and 31st October 1996 and of
its profit for the years then ended and have been properly prepared in
accordance with the Companies Act 1985.

MOORE STEPHENS

CHARTERED ACCOUNTANTS
AND REGISTERED AUDITOR

Charterhouse
165 Newhall Street
Birmingham B3 1SW

15TH JANUARY 1998

ADDENDUM

In our opinion the information contained within note 19 and the cash flow
statement and notes thereto fairly presents the adjustments which would be
required if these financial statements, which have been prepared under generally
accepted accounting principles in the United Kingdom, had been prepared under
generally accepted accounting principles in the United States.

MOORE STEPHENS

CHARTERED ACCOUNTANTS

24TH JANUARY 2000

F-82
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SARACEN COMPUTER SYSTEMS LIMITED

PROFIT AND LOSS ACCOUNT
FOR THE YEARS ENDED
31ST OCTOBER

NOTES 1997 1996
----- --------- -------
L L

TURNOVER.................................................... 3 1,063,160 970,374
Cost of sales............................................... 417,434 371,818
--------- -------
GROSS PROFIT................................................ 645,726 598,556
Administrative expenses..................................... 520,724 509,393
--------- -------
OPERATING PROFIT............................................ 4 125,002 89,163
Interest payable............................................ 5 5,472 5,986
--------- -------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION............... 119,530 83,177
Taxation.................................................... 6 25,462 22,845
--------- -------
PROFIT FOR THE FINANCIAL YEAR............................... 94,068 60,332
Proposed dividends.......................................... 90,000 --
--------- -------
TRANSFER TO RESERVES........................................ 15 4,068 60,332
========= =======

There are no recognized gains or losses other than those included in the profit
and loss account.

Notes 1 to 18 form part of these financial statements.

F-83
140

SARACEN COMPUTER SYSTEMS LIMITED

BALANCE SHEET
AS AT 31ST OCTOBER

NOTES 1997 1996
----- -------- -------
L L

FIXED ASSETS
Intangible assets........................................... 7 54,824 9,964
Tangible assets............................................. 8 313,893 305,161
-------- -------
368,717 315,125
CURRENT ASSETS
Stock....................................................... 9 20,570 35,825
Debtors..................................................... 10 222,647 158,348
Taxation.................................................... 11 22,500 --
Directors loans............................................. 25,000 --
Cash at bank and in hand.................................... 200 15
-------- -------
290,917 194,188
-------- -------
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Bank loans and overdrafts (Secured)......................... 12 58,503 48,431
Creditors................................................... 13 203,890 180,690
Dividends payable........................................... 90,000 --
Taxation.................................................... 49,500 17,290
-------- -------
401,893 246,411
-------- -------
NET CURRENT LIABILITIES..................................... (110,976) (52,223)
-------- -------
TOTAL ASSETS LESS CURRENT LIABILITIES....................... 257,741 262,902
CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR..... 13 13,771 23,000
-------- -------
243,970 239,902
======== =======
CAPITAL AND RESERVES
Share capital............................................... 14 5,000 5,000
Profit and loss account..................................... 15 238,970 234,902
-------- -------
243,970 239,902
======== =======

Notes 1 to 18 form part of these financial statements.

These financial statements were approved by the Board on 15th January 1998

J. D. Swingler
Director

F-84
141

SARACEN COMPUTER SYSTEMS LIMITED

CASH FLOW STATEMENT
FOR THE YEARS ENDED
31ST OCTOBER

1997 1996
---------- ----------
L L

CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers.............................. 1,158,045 1,084,032
Cash paid to suppliers and employees...................... (1,044,209) (1,019,713)
Interest paid............................................. (5,472) (5,986)
UK Corporation tax paid................................... (15,752) --
========== ==========
NET CASH PROVIDED BY OPERATING ACTIVITIES................... 92,612 58,333
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of tangible fixed assets............... 7,414 2,700
Capital expenditures...................................... (64,864) (32,858)
========== ==========
NET CASH USED IN INVESTING ACTIVITIES....................... (57,450) (30,158)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments under capital lease obligations........ (25,049) (16,628)
Repayment of loans........................................ (20,000) --
Increase/(Decrease) in short-term bank borrowing.......... 10,072 (11,591)
========== ==========
NET CASH USED BY FINANCING ACTIVITIES....................... (34,977) (28,219)
---------- ----------
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS........ 185 (44)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR.............. 15 59
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF YEAR.................... 200 15
========== ==========
SUPPLEMENTAL NON CASH INFORMATION
Capital expenditures financed by debt..................... 36,314 7,500
========== ==========

F-85
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SARACEN COMPUTER SYSTEMS LIMITED

RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES

1997 1996
------- -------
IRL IRL

PROFIT FOR THE FINANCIAL YEAR............................... 94,068 60,332
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES
Depreciation.............................................. 45,461 39,441
Profit on sale of tangible fixed assets................... (5,289) (1,548)
Change in assets and liabilities Increase in debtors...... (85,634) (2,957)
Decrease/(Increase) in stock........................... 15,255 (4,325)
Increase in prepaid expenses........................... (3,665) (4,461)
Increase/(decrease) in creditors and accrued
expenses.............................................. 22,706 (50,994)
Increase in corporation tax payable.................... 9,710 22,845
======= =======
TOTAL ADJUSTMENTS........................................... (1,456) (1,999)
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES................... 92,612 58,333
======= =======

F-86
143

SARACEN COMPUTER SYSTEMS LIMITED

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31ST OCTOBER 1996 & 1997

1. PRINCIPAL ACCOUNTING POLICIES

BASIS OF ACCOUNTING

The financial statements have been prepared in accordance with applicable
accounting standards and under the historical cost convention.

REVENUE RECOGNITION

Revenue arising from the sale of hardware products represents invoiced
sales during the period, net of value added taxation and is recognized as the
products are shipped. Revenue arising from annual maintenance support and
software contracts is recognized over the period of the contract.

Deferred income arises when either a portion of a contract period, for
which an invoice has been issued in advance, falls after the year end or where
work invoiced has not been completed.

FIXED ASSETS AND DEPRECIATION

Fixed assets are depreciated over their estimated useful lives using the
following rates:--

Freehold property.......................................... Nil
Office equipment........................................... 10% Straight line
Motor vehicles............................................. 25% Straight line
Computers.................................................. 20% Straight line
Research and development................................... Nil

Freehold property is not depreciated as it is considered that the residual
value and life of the property is such that depreciation would not be material.

RESEARCH AND DEVELOPMENT

Research and development expenditure is charged against profit in the year
in which it is incurred, except insofar as it relates to a clearly defined
project and the benefits therefrom can reasonably be regarded as assured.
Expenditure so deferred is limited to the value of future benefits and is
amortized through the profit and loss account on a systematic basis over the
period expected to benefit from the project.

STOCKS

Stocks have been consistently valued at the lower of cost and net
realisable value.

DEFERRED TAXATION

Deferred taxation is calculated under the liability method. Taxation
deferred or accelerated by reason of material timing differences is accounted
for if such liability is expected to arise in the foreseeable future. Advance
corporation tax is carried forward to the extent that it is expected to be
recovered.

F-87
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SARACEN COMPUTER SYSTEMS LIMITED

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

2. DIRECTORS AND EMPLOYEES

1997 1996
----------- -------
L L

DIRECTORS' EMOLUMENTS
Aggregate emoluments........................................ 193,218 173,937
Company pension contributions to money purchase schemes..... 21,493 51,140
----------- -------
214,711 225,077
=========== =======

The number of directors to whom retirement benefits are accruing under the
following schemes are:--

NUMBER NUMBER
----------- -------

MONEY PURCHASE SCHEMES...................................... 4 4
========= =======

STAFF

Staff costs, including directors, during the year were as follows:--

L L
----------- -------

Wages and salaries.......................................... 308,729 296,350
Social security costs....................................... 32,932 30,587
Other pension costs......................................... 21,493 51,140
--------- -------
363,154 378,077
========= =======

The average number of persons employed by the company in the year was:--

NUMBER NUMBER
----------- -------

Creative.................................................... 7 6
Administration.............................................. 2 2
Directors................................................... 4 4
--------- -------
13 12
========= =======

3. TURNOVER

1997 1996
----------- -------
L L

Geographical analysis:--
United Kingdom............................................ 888,680 666,372
Rest of Europe............................................ 122,640 295,937
South Africa.............................................. 51,840 8,065
--------- -------
1,063,160 970,374
========= =======

F-88
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SARACEN COMPUTER SYSTEMS LIMITED

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

4. OPERATING PROFIT

1997 1996
--------- -----------
L L

Operating profit is stated after charging:--
Depreciation and amounts written off tangible fixed
assets.................................................... 45,461 39,441
(Profit) on disposal of assets.............................. (5,289) (1,548)
Research and development Current year's expenditure......... -- 4,249
Directors' emoluments (note 2).............................. 214,711 225,077
Auditors' remuneration...................................... 3,000 3,000
========= =======

5. INTEREST PAYABLE

1997 1996
----------- -------
L L

Bank loans and overdrafts................................... 3,054 3,447
Finance lease charges....................................... 2,418 2,539
--------- -------
5,472 5,986
========= =======

6. TAXATION ON ORDINARY ACTIVITIES

1997 1996
----------- -------
L L

Corporation tax at 24% (1996 25%)........................... 27,000 23,000
Under/(over)provision for previous years.................... (1,538) (155)
--------- -------
25,462 22,845
========= =======

7. INTANGIBLE FIXED ASSETS

RESEARCH &
DEVELOPMENT
-----------
L

COST
At 31st October 1996........................................ 9,964
Additions................................................... 44,860
---------
At 31st October 1997........................................ 54,824
=========

F-89
146
SARACEN COMPUTER SYSTEMS LIMITED

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

8. TANGIBLE FIXED ASSETS

FREEHOLD OFFICE MOTOR
PROPERTY EQUIPMENT VEHICLES COMPUTERS TOTAL
-------- --------- -------- --------- -------
L L L L L

COST
31st October 1996...................... 183,281 77,967 87,469 152,052 500,769
Additions.............................. 1,800 2,234 38,814 13,470 56,318
Disposals.............................. -- -- (20,414) -- (20,414)
------- ------ ------- ------- -------
31st October 1997...................... 185,081 80,201 105,869 165,522 536,673
------- ------ ------- ------- -------
AMOUNTS WRITTEN OFF
31st October 1996...................... -- 30,656 57,422 107,530 195,608
Disposal adjustment.................... -- -- (18,289) -- (18,289)
Charge for the year.................... -- 7,800 23,194 14,467 45,461
------- ------ ------- ------- -------
31st October 1997...................... -- 38,456 62,327 121,997 222,780
------- ------ ------- ------- -------
NET BOOK VALUE
31st October 1997...................... 185,081 41,745 43,542 43,525 313,893
======= ====== ======= ======= =======
31st October 1996...................... 183,281 47,311 30,047 44,522 305,161
======= ====== ======= ======= =======

The net book value includes an amount of L37,301 (1996 L25,625) in respect
of assets held under finance leases. The depreciation charge for the year was
L5,109 (1996 L14,868) in respect of these assets.

The cost of depreciable assets included above is L351,592.

9. STOCKS

1997 1996
------ ------
L L

Stocks comprise:
Consumable stock............................................ 8,024 24,000
Work in progress............................................ 4,850 5,375
Computer equipment.......................................... 7,696 6,450
------ ------
20,570 35,825
====== ======

10. DEBTORS

1997 1996
------- -------
L L

Trade debtors............................................... 212,054 151,420
Prepayments and accrued income.............................. 10,593 6,928
------- -------
222,647 158,348
======= =======

11. TAXATION

Advance corporation tax of L22,500 is recoverable in more than one year.

F-90
147
SARACEN COMPUTER SYSTEMS LIMITED

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

12. BANK LOANS AND OVERDRAFTS

Bank loans and overdrafts are secured by a fixed and floating charge on the
assets of the company.

13. CREDITORS

AMOUNTS FALLING
DUE WITHIN ONE YEAR
--------------------
1997 1996
------- -------
L L

Trade creditors............................................. 153,731 149,736
Other taxation and social security payable.................. 20,899 16,123
Capitalised leases.......................................... 10,423 9,929
Accruals and deferred income................................ 18,837 4,902
------- -------
203,890 180,690
======= =======

AMOUNTS FALLING DUE
AFTER MORE THAN ONE YEAR
------------------------
1997 1996
--------- ---------
L L

Capitalised leases.......................................... 13,771 3,000
Other creditors............................................. -- 20,000
------- -------
13,771 23,000
======= =======

14. CALLED UP SHARE CAPITAL

1997 1996
------- -------
L L

Ordinary shares of L1 each:--
Authorised.................................................. 100,000 100,000
======= =======
Allotted, called up and fully paid.......................... 5,000 5,000
======= =======

15. PROFIT AND LOSS ACCOUNT

1997 1996
------- -------
L L

At 31st October 1996........................................ 234,902 174,570
Transfer for the year....................................... 4,068 60,332
------- -------
At 31st October 1997........................................ 238,970 234,902
======= =======

16. PENSION SCHEMES

The company operates defined contribution pension schemes for the directors
by way of payments to insurance companies. The pension cost charge represents
contributions payable by the company to the funds and amounted to L21,493 (1996
L51,140).

F-91
148
SARACEN COMPUTER SYSTEMS LIMITED

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

17. TRANSACTIONS WITH DIRECTORS

During the year non-interest bearing loans, repayable on demand were made
to the following directors:--

J.D. SWINGLER MRS. D.J. SWINGLER
------------- ------------------
L L

Amount at beginning of year................................. -- --
------ ------
Amount at end of year....................................... 12,000 13,000
------ ------
Maximum amount in the year.................................. 12,000 18,000
------ ------

18. CONTROL OF COMPANY

The company was controlled throughout the current and previous period by J.
D. Swingler and Mrs. D. J. Swingler by virtue of them holding a majority of the
issued ordinary share capital of the company.

19. RECONCILIATION BETWEEN UK AND US ACCOUNTING PRINCIPLES

The financial statements of the Company have been prepared in accordance
with generally accepted accounting principles applicable in the United Kingdom
("UK GAAP") which differ in certain significant respects from those applicable
in the US ("US GAAP"). The material differences as they apply to the Company's
financial statements are as follows:

INTANGIBLE FIXED ASSETS -- RESEARCH AND DEVELOPMENT

Under US GAAP the capitalized research & development costs would be
expensed through the income statement as technological feasibility has not yet
been established.

The following is a summary of the material adjustments to profit and
shareholders' equity which would be required had the financial statements been
prepared with US GAAP:

(i) EFFECT ON RETAINED PROFIT

1997 1996
------- -------
L L

Profit as stated under UK GAAP.............................. 94,068 60,332
US GAAP adjustments
Research and development costs.............................. (44,860) (1,754)
Corporation tax relief on the above......................... 10,000 400
------- -------
Net income as stated under US GAAP.......................... 59,208 58,978
======= =======

F-92
149
SARACEN COMPUTER SYSTEMS LIMITED

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

(ii) EFFECT ON SHAREHOLDERS' EQUITY

31ST OCT. 31ST OCT.
1997 1996
--------- ---------
L L

Shareholders Equity as stated under UK GAAP................. 243,970 239,902
US GAAP adjustments
Research and development.................................... (54,824) (9,964)
Corporation tax relief on the above......................... 12,400 2,400
------- -------
Shareholders' Equity as stated under US GAAP................ 201,546 232,338
======= =======

F-93
150

SARACEN COMPUTER SYSTEMS LIMITED

UNAUDITED PROFIT AND LOSS ACCOUNT

FOR THE SIX MONTHS ENDED

30TH APRIL 30TH APRIL
NOTES 1998 1997
----- ---------- ----------
L L

TURNOVER.................................................... 3 489,128 510,126
Cost of sales............................................... 140,579 208,148
------- -------
GROSS PROFIT................................................ 348,549 301,978
Administrative expenses..................................... 340,495 272,557
------- -------
OPERATING PROFIT............................................ 4 8,054 29,421
Interest payable............................................ 5 1,550 3,854
------- -------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION............... 6,504 25,567
Taxation.................................................... 6 -- 5,000
------- -------
PROFIT FOR THE FINANCIAL YEAR............................... 6,504 20,567
Proposed dividends.......................................... -- --
------- -------
TRANSFER TO RESERVES........................................ 15 6,504 20,567
======= =======

There are no recognized gains or losses other than those included in the profit
and loss account.

F-94
151

SARACEN COMPUTER SYSTEMS LIMITED

UNAUDITED BALANCE SHEET
30TH APRIL 1998

NOTES 1998
----- -------
L

FIXED ASSETS
Intangible assets........................................... 7 --
Tangible assets............................................. 8 297,151
-------
297,151
CURRENT ASSETS
Stock....................................................... 9 17,760
Debtors..................................................... 10 242,281
Taxation.................................................... 11 22,500
Directors loans............................................. --
Cash at bank and in hand.................................... 200
-------
282,741
-------
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Bank loans and overdrafts (Secured)......................... 12 61,179
Creditors................................................... 13 220,990
Dividends payable........................................... --
Taxation.................................................... 37,000
-------
319,169
-------
NET CURRENT LIABILITIES..................................... (36,428)
-------
TOTAL ASSETS LESS CURRENT LIABILITIES....................... 260,723
CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR..... 13 10,249
-------
250,474
=======
CAPITAL AND RESERVES
Share capital............................................... 14 5,000
Profit and loss account..................................... 15 245,474
-------
250,474
=======

F-95
152

SARACEN COMPUTER SYSTEMS LIMITED

UNAUDITED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED

30TH APRIL 30TH APRIL
1998 1997
---------- ----------
L L

CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers.............................. 575,136 660,192
Cash paid to suppliers and employees...................... (465,827) (643,599)
Interest paid............................................. (1,550) (3,854)
UK Corporation tax paid................................... (12,500) (21,146)
======== ========
NET CASH PROVIDED/(USED) BY OPERATING ACTIVITIES............ 95,259 (8,407)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of tangible fixed assets............... -- --
Capital expenditures...................................... (4,038) (31,763)
======== ========
NET CASH USED IN INVESTING ACTIVITIES....................... (4,038) (31,763)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments under capital lease obligations........ (3,897) (10,662)
Dividends paid............................................ (90,000) --
Increase in short-term bank borrowing..................... 2,676 50,832
======== ========
NET CASH USED BY FINANCING ACTIVITIES....................... (91,221) 40,170
-------- --------
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS........ -- --
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............ 200 15
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. 200 15
======== ========
SUPPLEMENTAL NON CASH INFORMATION
Capital expenditures financed by debt..................... -- 11,900
======== ========

F-96
153

SARACEN COMPUTER SYSTEMS LIMITED

UNAUDITED RECONCILIATION OF NET INCOME
TO NET CASH PROVIDED BY OPERATING ACTIVITIES
FOR THE SIX MONTHS ENDED

30TH APRIL 30TH APRIL
---------- ----------
1998 1997
---------- ----------
L L

PROFIT FOR THE FINANCIAL PERIOD............................. 6,504 20,567
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES
Depreciation.............................................. 20,780 22,500
Amounts written off intangible assets..................... 54,824 --
Change in assets and liabilities
Decrease/(Increase) in debtors......................... 37,457 (100,394)
Decrease in stock...................................... 2,810 10,825
Increase in prepaid expenses........................... (8,576) (24,467)
(Decrease)/Increase in creditors and accrued
expenses.............................................. (6,040) 78,708
(Decrease) in corporation tax payable.................. (12,500) (16,146)
======= ========
TOTAL ADJUSTMENT............................................ 88,755 (28,974)
------- --------
NET CASH PROVIDED/(USED) BY OPERATING ACTIVITIES............ 95,259 (8,407)
======= ========

F-97
154

SARACEN COMPUTER SYSTEMS LIMITED

NOTES TO THE
UNAUDITED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED
30TH APRIL 1997 & 1998

1. PRINCIPAL ACCOUNTING POLICIES

BASIS OF PREPARATION

These unaudited interim financial statements have been prepared by the
directors of Saracen Computer Systems Limited in accordance with generally
accepted accounting principles in the UK, and reflect all adjustments which are,
in the opinion of the management, necessary to present a fair statement of the
results for the interim periods presented.

Results of operations for the unaudited interim periods may not be
indicative of annual results.

REVENUE RECOGNITION

Revenue arising from the sale of hardware products represents invoiced
sales during the period, net of value added taxation and is recognized as the
products are shipped. Revenue arising from annual maintenance support and
software contracts is recognized over the period of the contract.

Deferred income arises when either a portion of a contract period, for
which an invoice has been issued in advance, falls after the year end or where
work invoiced has not been completed.

FIXED ASSETS AND DEPRECIATION

Fixed assets are depreciated over their estimated useful lives using the
following rates:-

Freehold property NIL
Office equipment 10% STRAIGHT LINE
Motor vehicles 25% STRAIGHT LINE
Computers 20% STRAIGHT LINE
Research and development NIL

Freehold property is not depreciated as it is considered that the residual
value and life of the property is such that depreciation would not be material.

RESEARCH AND DEVELOPMENT

STOCKS

Stocks have been consistently valued at the lower of cost and net
realisable value.

DEFERRED TAXATION

F-98
155
SARACEN COMPUTER SYSTEMS LIMITED

NOTES TO THE
UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)

2. DIRECTORS AND EMPLOYEES

30TH APRIL 30TH APRIL
1998 1997
---------- ----------
L L

DIRECTORS' EMOLUMENTS
Aggregate emoluments........................................ 92,040 92,350
Company pension contributions to money purchase schemes..... 7,838 13,440
------ -------
99,878 105,790
====== =======

The number of directors to whom retirement benefits are accruing under the
following schemes are:

NUMBER NUMBER
------ ------

Money purchase schemes...................................... 4 4
== ==

STAFF

Staff costs, including directors, during the period were as follows:-

L L
------- -------

Wages and salaries.......................................... 171,190 155,796
Social security costs....................................... 17,072 13,369
Other pension costs......................................... 8,713 13,440
------- -------
196,975 182,605
======= =======

The average number of persons employed by the company in the period was:-

NUMBER NUMBER
------ ------

3. TURNOVER

L L
------- -------

Geographical analysis:-
United Kingdom.............................................. 420,291 460,352
Rest of Europe.............................................. 68,837 49,774
------- -------
489,128 510,126
======= =======

F-99
156
SARACEN COMPUTER SYSTEMS LIMITED

NOTES TO THE
UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)

4. OPERATING PROFIT

30TH APRIL 30TH APRIL
1998 1997
---------- ----------
L L

Operating profit is stated after charging:-
Depreciation and amounts written off tangible fixed
assets.................................................... 20,780 22,500
Research and development
Amount written off.......................................... 54,824 --
Directors' emoluments (note 2).............................. 99,878 105,790
------ -------
Auditors' remuneration...................................... 2,000 1,635
====== =======

5. INTEREST PAYABLE

L L
----- -----

Bank loans and overdrafts................................... 451 1,189
Other loans............................................... -- 1,060
Finance lease charges..................................... 1,099 1,605
----- -----
1,550 3,854
===== =====

6. TAXATION ON ORDINARY ACTIVITIES

L L
--- -----

Corporation tax at 21% (1997 24%)........................... -- 5,000
--- -----

7. INTANGIBLE FIXED ASSETS

RESEARCH &
DEVELOPMENT
-----------
L

COST
At 31st October 1997........................................ 54,824
Amounts written off......................................... (54,824)
-------
At 30th April 1998.......................................... --
=======

F-100
157
SARACEN COMPUTER SYSTEMS LIMITED

NOTES TO THE
UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)

8. TANGIBLE FIXED ASSETS

FREEHOLD OFFICE MOTOR
PROPERTY EQUIPMENT VEHICLES COMPUTERS TOTAL
-------- --------- -------- --------- -------
L L L L L

COST
31st October 1997...................... 185,081 80,201 105,869 165,522 536,673
Additions.............................. -- -- -- 4,038 4,038
Disposals.............................. -- -- -- -- --
------- ------ ------- ------- -------
30th April 1998........................ 185,081 80,201 105,869 169,560 540,711
======= ====== ======= ======= =======
AMOUNTS WRITTEN OFF
31st October 1997...................... -- 38,456 62,327 121,997 222,780
Disposal adjustment.................... -- -- -- -- --
Charge for the period.................. -- 4,008 8,924 7,848 20,780
------- ------ ------- ------- -------
30th April 1998........................ -- 42,464 71,251 129,845 243,560
======= ====== ======= ======= =======
NET BOOK VALUE
30th April 1998........................ 185,081 37,737 34,618 39,715 297,151
======= ====== ======= ======= =======

The net book value includes an amount of L31,977 in respect of assets held
under finance leases. The depreciation charge for the year was L5,325 in respect
of these assets.

The cost of depreciable assets included above is L355,630.

9. STOCKS

30TH APRIL
----------
1998
----------
L

Stocks comprise:
Consumable stock............................................ 7,000
Work in progress............................................ 2,760
Computer equipment.......................................... 8,000
------
17,760
------

10. DEBTORS

30TH APRIL
1998
----------
L

Trade debtors............................................... 199,597
Prepayments and accrued income.............................. 42,684
-------
242,281
=======

11. TAXATION

Represents advance corporation tax recoverable.

12. BANK LOANS AND OVERDRAFTS

Bank loans and overdrafts are secured by a fixed and floating charge on the
assets of the company.

F-101
158
SARACEN COMPUTER SYSTEMS LIMITED

NOTES TO THE
UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)

13. CREDITORS

AMOUNTS FALLING
DUE WITHIN ONE YEAR
-------------------
L

Trade creditors............................................. 58,861
Other taxation and social security payable.................. 18,649
Capitalised leases.......................................... 10,048
Accruals and deferred income................................ 133,432
-------
220,990
=======

AMOUNTS FALLING DUE
AFTER MORE THAN ONE YEAR
------------------------
L

Capitalised leases.......................................... 10,249
Other creditors............................................. --
-----
10,249
=====

14. CALLED UP SHARE CAPITAL

30TH APRIL
1998
----------
L

Ordinary shares of L1 each: --
Authorised................................................ 100,000
==========
Allotted, called up and fully paid........................ 5,000
==========

15. PROFIT AND LOSS ACCOUNT

30TH APRIL
1998
----------
L

At 31st October 1997........................................ 238,970
Transfer for the period..................................... 6,504
-------
30th April 1998............................................. 245,474
=======

16. PENSION SCHEMES

F-102
159
SARACEN COMPUTER SYSTEMS LIMITED

NOTES TO THE
UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)

17. TRANSACTIONS WITH DIRECTORS

During the year non-interest bearing loans, repayable on demand were made
to the following directors: --

J.D. SWINGLER MRS. D.J. SWINGLER
------------- ------------------
L L

Amount at beginning of period.......................... 12,000 13,000
------ ------
Amount at end of period................................ -- --
------ ------
Maximum amount in the period........................... 12,000 13,000
------ ------

18. CONTROL OF COMPANY

19. RECONCILIATION BETWEEN UK AND US ACCOUNTING PRINCIPLES

INTANGIBLE FIXED ASSETS -- RESEARCH AND DEVELOPMENT

Under US GAAP the capitalized research & development costs would be
expensed through the income statement as technological feasibility has not yet
been established.

The following is a summary of the material adjustments to profit and
shareholders' equity which would be required had the financial statements been
prepared with US GAAP:

(i) EFFECT ON RETAINED PROFIT

SIX MONTHS SIX MONTHS
ENDED ENDED
30TH APRIL 30TH APRIL
1998 1997
---------- ----------
L L

Profit as stated under UK GAAP.............................. 6,504 20,567
US GAAP adjustments
Research and development costs.............................. 54,824 (19,430)
Corporation tax on the above................................ (12,400) 4,300
------- -------
Net income as stated under US GAAP.......................... 48,928 5,437
======= =======

F-103
160
SARACEN COMPUTER SYSTEMS LIMITED

NOTES TO THE
UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)

(ii) EFFECT ON SHAREHOLDERS' EQUITY

30TH APRIL 30TH APRIL
1998 1997
---------- ----------
L L

Shareholders Equity as stated under UK GAAP................. 250,474 260,469
US GAAP adjustments
Research and development.................................... -- (29,394)
Corporation tax relief...................................... -- 6,700
------- -------
Shareholders' Equity as stated under US GAAP................ 250,474 233,775
======= =======

F-104
161

SOFTLY AWARE LIMITED

COMPANY INFORMATION
FOR THE YEAR ENDED 28 FEBRUARY 1999 & 28 FEBRUARY 1998

DIRECTORS: J P Frederick
A R Billingham
Mrs E V Frederick
SECRETARY: Mrs E V Frederick
REGISTERED OFFICE: 2 Longden Court
Spring Gardens
Buxton
Derbyshire
SK17 6DE
REGISTERED NUMBER: 2086719 (England and
Wales)
AUDITORS: HAYES & CO
Chartered Accountants
Registered Auditors
4 St Andrews Place
BLACKBURN
Lancashire
BB1 8AL

F-105
162

SOFTLY AWARE LIMITED

REPORT OF THE AUDITORS TO THE SHAREHOLDERS OF
SOFTLY AWARE LIMITED

We have audited the financial statements commencing with the profits and
loss account and finishing with note 11, which have been prepared in accordance
with the Financial Reporting Standard for Smaller Entities (effective March
1999), under the historical cost convention and the accounting policies set out
in note 1.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS

As described in the statement of directors' responsibilities, the company's
directors are responsible for the preparation of financial statements in
accordance with generally accepted accounting principles in the UK. It is our
responsibility to form an independent opinion, based on our audit, on those
statements and to report our opinion to you.

BASIS OF OPINION

We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board which are substantially similar to US GAAS. An audit
includes examination, on a test basis, of evidence relevant to the amounts and
disclosures in the financial statements. It also includes an assessment of the
significant estimates and judgements made by the directors in the preparation of
the financial statements and of whether the accounting policies are appropriate
to the company's circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.

OPINION

In our opinion the financial statements give a true and fair view of the
state of the company's affairs as at 28 February 1999 and 28 February 1998 and
of its results for the year then ended and have been properly prepared in
accordance with the Companies Act 1985.

HAYES & CO
Chartered Accountants
Registered Auditors
4 St Andrews Place
BLACKBURN
Lancashire
BB1 8AL

Dated 26 July 1999

F-106
163

SOFTLY AWARE LIMITED

PROFIT AND LOSS ACCOUNT
FOR THE YEARS ENDED 28 FEBRUARY 1999 & 28 FEBRUARY 1998

NOTES 1999 1998
----- ---------- ----------
L L

TURNOVER.................................................... 1,512,146 1,473,304
Cost of Sales............................................... 558,242 547,943
---------- ----------
GROSS PROFIT................................................ 953,904 925,361
Administrative expenses..................................... 957,435 867,717
---------- ----------
OPERATING (LOSS)/PROFIT..................................... 2 (3,531) 57,644
Interest payable and similar charges........................ (5,805) (8,429)
---------- ----------
(LOSS)/PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION........ (9,336) 49,215
Tax on (loss)/profit on ordinary activities................. 3 (797) 10,067
---------- ----------
(LOSS)/PROFIT FOR THE FINANCIAL YEAR AFTER TAXATION......... (8,539) 39,148
Dividends................................................... 4 -- 8,000
---------- ----------
(8,539) 31,148
Retained profit brought forward............................. 138,093 106,945
---------- ----------
RETAINED PROFIT CARRIED FORWARD............................. L 129,544 L 138,093
========== ==========

The notes form part of these financial statements.
F-107
164

SOFTLY AWARE LIMITED

BALANCE SHEET AT
28 FEBRUARY 1999 & 28 FEBRUARY 1998

NOTES 1999 1998
----- -------- --------
L L L L

FIXED ASSETS:
Tangible assets.................................... 5 96,691 96,249
CURRENT ASSETS:
Stocks............................................. 111,007 63,568
Debtors............................................ 6 209,946 193,622
Cash in hand....................................... 216 81
------- -------
321,169 257,271
CREDITORS: Amounts falling due within one year..... 7 280,243 196,838
------- -------
NET CURRENT LIABILITIES............................ 40,926 60,433
-------- --------
TOTAL ASSETS LESS CURRENT LIABILITIES:............. 137,617 156,682
CREDITORS: Amounts falling due after more than one
year............................................. 8 7,963 18,489
-------- --------
L129,654 L138,193
======== ========
CAPITAL AND RESERVES:
Called up share capital............................ 10 100 100
Profit and loss account............................ 129,554 138,093
-------- --------
Shareholders' Funds................................ L129,654 L138,193
======== ========

STATEMENT OF DIRECTORS RESPONSIBILITIES

Company law require the directors to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the
company and of the profit or loss of the company for that period. In preparing
those financial statements, the directors are required to:

- select suitable accounting policies and then apply them consistently;

- make judgements and estimates that are reasonable and prudent;

- prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company will continue in business.

The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
company and to enable them to ensure that the financial statements comply with
the Companies Act 1985. They are also responsible for safeguarding the assets of
the company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.

These financial statements have been prepared in accordance with the
special provisions of Part VII of the Companies Act 1985 relating to small
companies and with the Financial Reporting Standards for Smaller Entities
(effective March 1999).

ON BEHALF OF THE BOARD:
P FREDERICK
A BILLINGHAM

Approved by the Board on 22 July 1999

The notes form part of these financial statements.
F-108
165

SOFTLY AWARE LIMITED

CASH FLOW STATEMENT
FOR THE YEARS ENDED 28 FEBRUARY 1999 & 28 FEBRUARY 1998

RESTATED
1999 1998
-------- --------
L L L L

CASH FLOWS FROM OPERATING ACTIVITIES
Net Income........................................ (8,539) 39,148
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Depreciation Charges.............................. 29,105 15,151
Profit on sale of fixed assets.................... (3,788) --
Increase in stock................................. (47,439) (10,543)
Increase in debtors............................... (14,421) (2,189)
Increase in creditors and accrued expenses........ 66,135 9.829
------- -------
29,592 12,248
-------- --------
TOTAL ADJUSTMENTS
Net Cash provided by operating activities......... 21,053 51,396
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of tangible fixed assets................. (32,266) (3,277)
Sale of tangible fixed assets..................... 53,019 20,753 -- (3,277)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid.................................... -- (8,000)
Loan payments in year............................. (21,487) (3,587)
Capital lease payments in year.................... (24,665) (12,626)
Decrease/(Increase) in bank overdraft............. 4,481 (24,313)
(41,671) (48,526)
-------- --------
Net increase in cash and cash equivalents......... 135 (407)
Cash and cash equivalents at beginning of year.... 81 488
-------- --------
Cash and cash equivalents at end of year.......... L 216 L 81
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION
New capital leases................................ 46,512 --
Interest paid..................................... 3,385 5,252
Interest element of capitalized lease payments.... 2,420 3,177
Taxation paid..................................... 10,824 5,444

F-109
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SOFTLY AWARE LIMITED

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED 28 FEBRUARY 1999 & 28 FEBRUARY 1998

1. ACCOUNTING POLICIES

ACCOUNTING CONVENTION

The financial statements have been prepared under the historical cost
convention and in accordance with the Financial Reporting Standard for Smaller
Entities (effective March 1999).

REVENUE RECOGNITION

Revenue arising from the sale of hardware products represents invoiced
sales during the period, net of value added taxation and is recognized as the
products are installed. Revenue arising from annual maintenance, support and
software contracts is recognized when invoiced.

TANGIBLE FIXED ASSETS

Depreciation is provided at the following annual rates in order to write
off each asset over its estimated useful life or, if held under a finance lease,
over the lease term, whichever is the shorter.

Plant and machinery -- 20% on reducing balance
Fixtures and fittings -- 15% on reducing balance
Motor vehicles -- 25% on reducing balance

STOCKS

Stock is valued at the lower of cost and net realisable value, after making
due allowance for obsolete and slow moving items.

CAPITALISED LEASING

Assets obtained under hire purchase contracts or finance leases are
capitalized in the balance sheet. Those held under hire purchase contracts are
depreciated over their estimated useful lives. Those held under finance leases
are depreciated over their estimated useful lives or the lease term, whichever
is the shorter.

The interest element of these obligations is charged to the profit and loss
account over the relevant period. The capital element of the future payments is
treated as a liability.

PENSIONS

The company operates a defined contributions pension scheme. Contributions
payable for the year are charged in the profit and loss account.

F-110
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SOFTLY AWARE LIMITED

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

2. OPERATING (LOSS)/PROFIT

The operating loss is stated after charging/(crediting):

1999 1998
------ -------
L L

Depreciation -- owned assets................................ 8,789 7,573
Depreciation -- assets on capitalized leases................ 20,316 7,578
Profit on disposal of fixed assets.......................... (3,788) --
Auditors' remuneration...................................... 4,692 2,150
Pension costs............................................... 81,922 112,446
====== =======
Directors' emoluments and other benefits etc................ 87,800 84,167
====== =======

3. TAXATION

The tax (credit)/charge on the loss on ordinary activities for the year was
as follows:

1999 1998
---- ------
L L

UK Corporation tax.......................................... -- 10,067
Overprovision in earlier years.............................. (797) --
---- ------
(797) 10,067
==== ======

4. DIVIDENDS

1999 1998
---- -----
L L

Final dividend.............................................. -- 8,000
== =====

5. TANGIBLE FIXED ASSETS

FIXTURES
LEASEHOLD PLANT AND AND MOTOR
PROPERTY MACHINERY FITTINGS VEHICLES TOTALS
--------- --------- -------- -------- -------
L L L L L

COST:
At 1 March 1998.......................... 41,750 43,316 26,049 81,857 192,972
Additions................................ -- -- 4,025 74,753 78,778
Disposals................................ (41,750) -- -- (31,825) (73,575)
------- ------ ------ ------- -------
At 28 February 1999...................... -- 43,316 30,074 124,785 198,175
------- ------ ------ ------- -------
DEPRECIATION:
At 1 March 1998.......................... 126 33,668 11,414 51,515 96,723
Charge for year.......................... -- 1,930 2,802 24,373 29,105
Eliminated on disposals.................. (126) -- -- (24,218) (24,344)
------- ------ ------ ------- -------
At 28 February 1999...................... -- 35,598 14,216 51,670 101,484
------- ------ ------ ------- -------
NET BOOK VALUE:
At 28 February 1999...................... -- 7,718 15,858 73,115 96,691
======= ====== ====== ======= =======
At 28 February 1998...................... 41,624 9,648 14,635 30,342 96,249
======= ====== ====== ======= =======

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SOFTLY AWARE LIMITED

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

Fixed assets, included in the above, which are capitalized lease contracts
are as follows:

MOTOR
VEHICLES
--------
L

COST:
At 1 March 1998............................................. 50,032
Additions................................................... 74,753
Transferred to ownership.................................... (38,455)
-------
At 28 February 1999......................................... 86,330
-------
DEPRECIATION:
At 1 March 1998............................................. 27,297
Charge for year............................................. 20,316
Transferred to ownership.................................... (22,232)
-------
At 28 February 1999......................................... 25,381
-------
NET BOOK VALUE:
At 28 February 1999......................................... 60,949
=======
At 28 February 1998......................................... 22,735
=======

6. DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

1999 1998
------- -------
L L

Trade debtors............................................... 207,873 193,469
Prepayments................................................. 170 153
Taxation recoverable........................................ 1,903 --
------- -------
209,946 193,622
======= =======

7. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

1999 1998
------- -------
L L

Bank loans and overdrafts................................... 35,823 35,164
Capitalised lease contracts................................. 22,671 7,963
Trade creditors............................................. 184,574 106,043
Other creditors............................................. -- 1,547
Social security & other taxes............................... 31,730 23,366
Taxation.................................................... 500 10,218
Accrued expenses & deferred income.......................... 4,945 12,537
------- -------
280,243 196,838
======= =======

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SOFTLY AWARE LIMITED

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

8. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

1999 1998
----- ------
L L

Bank loans.................................................. -- 17,665
Capitalised lease contracts................................. 7,963 824
----- ------
7,963 18,489
===== ======

9. SECURED DEBTS

The following secured debts are included within creditors:

1999 1998
------ ------
L L

Bank overdrafts............................................. 35,823 31,342
Bank loans.................................................. -- 21,487
------ ------
35,823 52,829
====== ======

10. CALLED UP SHARE CAPITAL

Authorised, allotted, issued and fully paid:

NOMINAL
NUMBER: CLASS: VALUE: 1999 1998
- ------- -------- ------- ---- ----
L L

100 Ordinary 1 100 100
=== ===

11. US/UK GAAP RECONCILIATION

The financial statements of the Company have been prepared in accordance
with generally accepted accounting principles applicable in the UK ("UK GAAP")
which differ in certain significant respects from those applicable in the US
("US GAAP"). The material differences as they apply to the Company's financial
statements are, as follows:

Revenue Recognition

In accordance with US GAAP revenue arising from annual maintenance, support
and software contracts is recognized over the period of the contract. Similarly,
deferred income arises when either a portion of a contract period, for which an
invoice has been issued in advance, falls after the year end or where work
invoiced has not been completed.

EFFECT ON RETAINED PROFIT:

1999 1998
------- ------

Profit as stated under UK GAAP.............................. (8,539) 39,148
------- ------
US GAAP ADJUSTMENTS:
Revenue deferred to future accounting periods............... (8,045) (7,960)
Taxation.................................................... 1,850 1,831
------- ------
(Loss)/profit as stated under US GAAP....................... (14,734) 33,019
------- ------

F-113
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SOFTLY AWARE LIMITED

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

EFFECT ON SHAREHOLDERS' EQUITY:

1999 1998
-------- --------

Shareholders' equity as stated under UK GAAP................ 129,654 138,193
-------- --------
US GAAP ADJUSTMENTS:
Revenue deferred to future accounting periods............... (160,078) (152,033)
Taxation.................................................... 3,681 1,831
-------- --------
Shareholders' equity as stated under US GAAP................ (26,743) (12,009)
-------- --------

F-114
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TOTAL ASSET LIMITED

COMPANY INFORMATION FOR THE YEAR ENDED 31 OCTOBER 1999

DIRECTORS: S J Dartnell
W Tadden
J S Hall

SECRETARY: S J Dartnell

REGISTERED OFFICE: Maxdov House
337/341 Chapel Street
Manchester
M3 5JY

REGISTERED NUMBER: 2607671 (England and Wales)

AUDITORS: Haslam Tunstall
Registered Auditors
Chartered Accountants
14 Bold Street
Warrington
WA1 1DL

F-115
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TOTAL ASSET LIMITED

STATEMENT OF DIRECTORS' RESPONSIBILITIES FOR THE
YEAR ENDED 31 OCTOBER 1999

- select suitable accounting policies and then apply them consistently;

- make judgements and estimates that are reasonable and prudent;

- prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company will continue in business.

The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
company and to enable them to ensure that the financial statements comply with
the Companies Act 1985. They are also responsible for safeguarding the assets of
the company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.

F-116
173

TOTAL ASSET LIMITED

REPORT OF THE AUDITORS TO THE SHAREHOLDERS OF TOTAL ASSET LIMITED

We have audited the financial statements commencing with the profit and
loss account and ending with note 14 to the financial statements which have been
prepared in accordance with the Financial Reporting Standard for Smaller
Entities (effective March 1999), under the historical cost convention and the
accounting policies set out in note 1.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS

As described on the previous page, the company's directors are responsible
for the preparation of financial statements in accordance with UK GAAP. It is
our responsibility to form an independent opinion, based on our audit, on those
statements and to report our opinion to you.

BASIS OF OPINION

We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board which are substantially similar to US GAAS. An audit
includes examination, on a test basis, of evidence relevant to the amounts and
disclosures in the financial statements. It also includes an assessment of the
significant estimates and judgements made by the directors in the preparation of
the financial statements, and of whether the accounting policies are appropriate
to the company's circumstances consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.

OPINION

In our opinion the financial statements give a true and fair view of the
state of the company's affairs as at 31 October 1999 and of its loss for the
year then ended and have been properly prepared in accordance with the Companies
Act 1985.

/s/ Haslam Tunstall
Haslam Tunstall
Registered Auditors
Chartered Accountants
14 Bold Street
Warrington
WA1 IDL

Dated: 28 January 2000

F-117
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TOTAL ASSET LIMITED

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 OCTOBER 1999

NOTES L
----- ----------

TURNOVER.................................................... 7,148,583
Cost of sales............................................... 5,418,998
----------
GROSS PROFIT................................................ 1,729,585
Administrative expenses..................................... 1,901,591
----------
(172,006)
Other operating income...................................... 14,280
----------
OPERATING LOSS.............................................. 2 (157,726)
Interest receivable and similar income...................... 186
----------
(157,540)
Interest payable and similar charges........................ 8,468
----------
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION................. (166,008)
Tax on loss on ordinary activities.......................... 3 --
----------
LOSS FOR THE FINANCIAL YEAR AFTER TAXATION.................. (166,008)
Retained profit brought forward............................. 14,634
----------
DEFICIT CARRIED FORWARD..................................... L (151,374)
==========

F-118
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TOTAL ASSET LIMITED

BALANCE SHEET 31 OCTOBER 1999

NOTES L L
----- --------- ---------

FIXED ASSETS:
Tangible assets............................................. 4 365,135
CURRENT ASSETS:
Debtors..................................................... 5 3,044,044
Cash at bank and in hand.................................... 84,987
---------
3,129,031
CREDITORS: Amounts falling due within one year.............. 6 3,221,782
---------
NET CURRENT LIABILITIES:.................................... (92,751)
---------
TOTAL ASSETS LESS CURRENT LIABILITIES:...................... 272,384
CREDITORS: Amounts falling due after more than one year..... 7 (126,965)
PROVISIONS FOR LIABILITIES AND CHARGES:..................... 10 (261,793)
---------
L(116,374)
=========
CAPITAL AND RESERVES:
Called up share capital..................................... 11 11,696
Share premium............................................... 12 23,304
Profit and loss account..................................... (151,374)
---------
Shareholders' funds......................................... L(116,374)
=========

ON BEHALF OF THE BOARD:

S J Dartnell -- Director

Approved by the Board on 28 January 2000

F-119
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TOTAL ASSET LIMITED

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 1999

1. ACCOUNTING POLICIES

Accounting convention

The financial statements have been prepared under the historical cost
convention and in accordance with the Financial Reporting Standard for Smaller
Entities (effective March 1999).

Turnover

Turnover represents the following:

Commissions and consultancy fees receivable from third parties in respect
of leases signed up by the company as agents.

Proceeds from finance houses for leases brokered on where the ultimate risk
and reward has been passes on by the company.

Gross rental income for leases brokered on to third parties.

First rental installment received for leases brokered on to third parties.

Tangible fixed assets

Helicopter -- over the life of the
lease
Fixtures and fittings -- 15% on reducing
balance
Motor vehicles -- 25% on reducing
balance

Deferred taxation

Provision is made at current rates for taxation deferred in respect of all
material timing differences except to the extent that, in the opinion of the
directors, there is reasonable probability that the liability will not arise in
the foreseeable future.

Capitalised leases

Assets obtained under capitalized leases are capitalized in the balance
sheet and are depreciated over their estimated useful lives or the lease term,
whichever is the shorter.

The interest element of these obligations is charged to the profit and loss
account over the relevant period. The capital element of the future payments is
treated as a liability.

Rentals paid under operating leases are charged to the profit and loss
account as incurred.

Pensions

The company operates a defined contribution pension scheme. Contributions
payable for the year are charged in the profit and loss account.

Leasing

F-120
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TOTAL ASSET LIMITED

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

the risks and rewards of the lease revert to the company at the end of the
primary period of the lease. For those leases where the company does not retain
title to the asset the company has no further claim on that asset after the
point of sale. Income from the sale is included in turnover, whilst the cost of
the assets is included in cost of sales.

2. OPERATING LOSS

The operating loss is stated after charging:

Depreciation -- owned assets................................ 18,288
Depreciation -- assets on capitalized lease contracts....... 25,134
Loss on disposal of fixed assets............................ 9,945
Auditors' remuneration...................................... 3,000
Pension costs............................................... 16,010
Operating lease rentals..................................... 134,373
=======
Directors' emoluments and other benefits etc................ 260,775
=======
The number of directors to whom retirement benefits were
accruing was as follows:
Money purchase schemes...................................... 1
=======

3. TAXATION

No liability to UK corporations tax arose on ordinary activities for the
year ended 31 October 1999.

4. TANGIBLE FIXED ASSETS

FIXTURES
AND MOTOR
HELICOPTER FITTINGS VEHICLES TOTALS
---------- -------- -------- -------
L L L L

COST:
At 1 November 1998......................... -- 96,485 107,648 204,133
Additions.................................. 195,745 68,427 70,260 334,432
Disposals.................................. -- (3,938) (63,152) (67,090)
------- ------- ------- -------
At 31 October 1999......................... 195,745 160,974 114,756 471,475
------- ------- ------- -------
DEPRECIATION:
At 1 November 1998......................... -- 39,055 39,820 78,875
Charge for year............................ 2,411 18,288 22,723 43,422
Eliminated on disposals.................... -- -- (15,957) (15,957)
------- ------- ------- -------
At 31 October 1999......................... 2,411 57,343 46,586 106,340
------- ------- ------- -------
NET BOOK VALUE:
At 31 October 1999......................... 193,334 103,631 68,170 365,135
======= ======= ======= =======

F-121
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TOTAL ASSET LIMITED

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

Fixed assets, included in the above, which are held under capitalized lease
contracts are as follows:

MOTOR
HELICOPTER VEHICLES TOTALS
---------- -------- -------
L L L

COST:
At 1 November 1998.................................... -- 107,648 107,648
Additions............................................. 195,745 70,260 266,005
Disposals............................................. -- (63,152) (63,152)
------- ------- -------
At 31 October 1999.................................... 195,745 114,756 310,501
------- ------- -------
DEPRECIATION:
At 1 November 1998.................................... -- 39,820 39,820
Charge for year....................................... 2,411 22,723 25,134
Eliminated on disposals............................... -- (15,957) (15,957)
------- ------- -------
At 31 October 1999.................................... 2,411 46,586 48,997
------- ------- -------
NET BOOK VALUE:
At 31 October 1999.................................... 193,334 68,170 261,504
======= ======= =======

5. DEBTORS

Amounts falling due within one year:
Trade Debtors............................................... 2,726,811
Other Debtors............................................... 103,540
Prepayments................................................. 13,568
Directors Current Accounts.................................. 43,935
Corporation Tax Debtor...................................... 6,190
---------
2,894,044
=========
Amounts falling due after more than one year:
Amounts due from Related Party.............................. 150,000
=========
Aggregate amounts........................................... 3,044,044
=========

6. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

Bank loans and overdrafts................................... 175,348
Capitalised leases.......................................... 70,892
Trade Creditors............................................. 2,535,961
Other Creditors............................................. 1,472
Other Taxes & PAYE.......................................... 29,996
Corporation Tax Liability................................... 21,357
Accruals & Deferred Income.................................. 386,756
---------
3,221,782
=========

F-122
179
TOTAL ASSET LIMITED

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

7. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

Capitalised leases.......................................... 126,965
=======

8. OPERATING LEASE COMMITMENTS

The following payments are committed to be paid within one year:

Expiring:
Between one and five years.................................. 98,479
======

9. SECURED DEBTS

The following secured debts are included within creditors:

Bank overdrafts............................................. 175,348
Capitalised leases.......................................... 197,857
-------
373,205
=======

10. PROVISIONS FOR LIABILITIES AND CHARGES

Provision for Rentals Payable............................... 261,793
=======

11. CALLED UP SHARE CAPITAL

AUTHORISED: NOMINAL
NUMBER: CLASS: VALUE: L

100,000 Ordinary 1 100,000
=======

ALLOTTED, ISSUED AND FULLY PAID: NOMINAL
NUMBER: CLASS: VALUE: L

11,696 Ordinary 1 11,696
=======

12. SHARE PREMIUM

Share Premium Account -- bal b/f............................ 23,304
======

13. ULTIMATE PARENT COMPANY

Subsequent to 31 October 1999, the company was acquired by Jyris Limited, a
company incorporated in Ireland and whose ultimate holding company is Integrity
Holdings Limited.

14. LEASES

The cost of the assets acquired for the purpose of letting under capital
lease contracts in the year was L2,788,060.

F-123
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TOTAL ASSET LIMITED