SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C.  20549

                                    FORM 10-Q

                                QUARTERLY REPORT

                        PURSUANT TO SECTION 13 OR 15 (D)
                                     of the
                       SECURITIES AND EXCHANGE ACT OF 1934

                    For the quarter ended September 30, 1999


                             JAWS TECHNOLOGIES, INC.
             (Exact name of registrant as specified in its charter)

                                     NEVADA
         (State or other jurisdiction of incorporation or organization)
<TABLE>
<CAPTION>



<S>                       <C>
7371 . . . . . . . . . .                            98-0167013
(Commission File Number)  (IRS Employer Identification Number)
</TABLE>



                           1013 17TH AVENUE SW T2T 0A7
                             CALGARY, ALBERTA CANADA
                     (Address of principal executive offices)

                                 (403) 508-5055
              (Registrant's telephone number, including area code)



     Indicate  by  check mark whether the Registrant (1) has filed all documents
and  reports  required  to be filed by Section 13 or 15(d) of the Securities and
Exchange  Act  of 1934 during the preceding 12 months or for such shorter period
that  the Registrant was required to file such reports, and (2) has been subject
to  such  filing  requirements  for  the  past  90  days.
          X       Yes            No
          -

     Indicate  the  number of shares outstanding of each of the issuer's classes
of  common  stock,  as  of  the  latest  practicable  date.

          Class                    Outstanding  at  December  15,  1999
          -----                    ------------------------------------
     Common  Stock,  $  .001  par  value     21,326,945



<PAGE>
                                Table of Contents

                                    Form 10-Q
                                Quarterly Report
                            JAWS Technologies,  Inc.


PART  1     Financial  Information

JAWS  Technologies  Inc.
Consolidated  Financial  Statements
Ending  September  30,  1999

     Balance  Sheet                      .1
Statement  of  Loss  and  Deficit  and  Comprehensive  Loss     2
Statement  of  Changes  in  Stockholders  Equity         3
Statements  of  Cash  Flows                 .4
Notes  to  Consolidated  Financials              .5-16

Pace  Systems  Group  Inc.
Financial  Statement
Ending  July  31,  1999                             17

               Auditors  Report                    18
               Balance  Sheets                     19
               Income  (Loss)  and  Deficit                .20
     Statement  of  Cash  Flows                21
               Notes  to  Financial  Statements              22-26

Pace  Systems  Group  Inc.
Financial  Statements
Ending  September  30,  1999                          .27

               Balance  Sheet                     28
               Statement  of  Income                  .29
               Statements  of  Cash  Flows                30
               Notes  to  Financial  Statements              .31-35

JAWS  Acquisition  Corporation
Financial  Statements
Ending  November  29,  1999                          36

               Balance  Sheet                     .37
               Notes                        .38



PART  11     Other  Information

Item  1     Management's  Discussion  and  Analysis  of  Financial Condition and
Results  of  Operations

     Corporate  and  Business  Review              .39
     JAWS  Canada                    .  39
               Results  of  Operations                 .  41
               Assets                         41
               Liabilities                        42
               Stockholders  Equity                    42
               Financial  condition,  liquidity  and  capital  revenue       42
     Financing                        .43
               Recent  Developments                  .  43
               Financing  After  September  30,  1999            43
               Acquisition  of  Pace                   .  44
               Pending  Offsite  Acquisition                45
               JAWS  Acquisition  Corporation              .  47
               Offsite's  Corporate  History                47
               Benefits  to  Offsite  Acquisition              47
               Selected  Pro  Forma  Cosolidated  Financial  Information      48
               Management  Change                  .  49
               Risk  Factors                      49

Item  2          Legal  Proceedings                        58

Item  3          Changes  in  Securities  and  Use  of Proceeds             . 58

Item  4          Defaults  Upon  Services  Securities                 59

Item 5          Submission of Matters to a Vote of Security Holders          .59

Item  6          Other  Information                        60

Item  7          Exhibits  and  Reports  on  Forms  8-K                 60

Item  8          Financial  Data  Schedule                    63
                                    FORM 10-Q

                             JAWS TECHNOLOGIES, INC.

        PART I - ITEM I. FINANCIAL STATEMENTS -  JAWS TECHNOLOGIES, INC.


                           CONSOLIDATED BALANCE SHEETS
                   (all amounts are expressed in U.S. dollars)
                      (see basis of presentation - note 1)
<TABLE>
<CAPTION>


                           SEPTEMBER 30,     DECEMBER 31,     DECEMBER 31,

                                                              1999          1998        1997
<S>                                                       <C>           <C>           <C>
  $. . . . . . . . . . . . . . . . . . . . . . . . . . .  $             $
  (unaudited)
--------------------------------------------------------
ASSETS
CURRENT
Cash . . . . . . . . . . . . . . . . . . . . . . . . . .      664,428        33,732        111
Term deposits  [note 4]. . . . . . . . . . . . . . . . .       27,000             -          -
Accounts receivable. . . . . . . . . . . . . . . . . . .      421,138         7,243          -
Due from related parties [note 7]. . . . . . . . . . . .            -        13,118          -
Prepaid expenses and deposits. . . . . . . . . . . . . .       86,828       140,456      7,500
                                                            1,199,394       194,549      7,611
Fixed assets, net of $82,292 (December 31, 1998 -
13,461; December 31, 1997 - $1,160) accumulated
depreciation [note 5]. . . . . . . . . . . . . . . . . .      498,004        78,830      2,320
                                                            1,697,398       273,379      9,931

LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT
Accounts payable and accrued liabilities . . . . . . . .      897,947       428,600     32,976
Current portion of capital lease obligations payable
     [note 12] . . . . . . . . . . . . . . . . . . . . .       14,119             -          -
Due to related parties [note 7]. . . . . . . . . . . . .      196,258       197,115          -
Due to stockholders [note 7] . . . . . . . . . . . . . .        2,044        74,717     78,159
                                                            1,110,368       700,432    111,135

Capital lease obligations payable [note 12]. . . . . . .       66,989             -          -
Convertible debentures [note 8]. . . . . . . . . . . . .    1,091,348       146,606          -
                                                            1,158,337       146,606     78,159

COMMITMENTS [NOTE 10]
STOCKHOLDERS' DEFICIENCY
Authorized
 95,000,000 common shares at $0.001 par value
        5,000,000 preferred shares at $0.001 par value
Common stock issued and paid-up [note 6] . . . . . . . .       15,114        10,612      4,000
Capital in excess of par value [note 6]. . . . . . . . .    5,369,891     2,212,153     31,650
Contributed surplus. . . . . . . . . . . . . . . . . . .    1,241,607       425,559          -
Cumulative translation adjustment. . . . . . . . . . . .     (145,643)       (8,842)         -
Deficit. . . . . . . . . . . . . . . . . . . . . . . . .   (7,052,276)   (3,213,141)  (136,854)
                                                             (571,307)     (573,659)  (101,204)
                                                          ------------  ------------  ---------
                                                            1,697,398       273,379      9,931
                                                          ------------  ------------  ---------
</TABLE>


See  accompanying  notes
On  behalf of the Board:     (signed)     Arthur Wong          (signed)     Riaz
Mamdani
                    Director                    Director

<PAGE>
JAWS  TECHNOLOGIES,  INC.


                   CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
                             AND COMPREHENSIVE LOSS
                   (all amounts are expressed in U.S. dollars)
<TABLE>
<CAPTION>



                                                 PERIOD FROM
                                                INCORPORATION
                                                JANUARY 27, TO
                         NINE MONTHS ENDED     YEAR ENDED      DECEMBER 31,

                                      SEPTEMBER 30,    DECEMBER 31,
                                     ---------------  --------------
<S>                                  <C>              <C>             <C>           <C>
                                               1999            1998          1998        1997
  $ . . . . . . . . . . . . . . . .  $                $               $
  (unaudited)
-----------------------------------

REVENUE [note 7]. . . . . . . . . .         372,630          28,440        29,068           -

EXPENSES [NOTE 7]
Accounting and legal. . . . . . . .         246,909         105,372       186,128      69,952
Advertising and promotion . . . . .         234,398         194,764       218,574      35,000
Consulting. . . . . . . . . . . . .         438,655         685,375       514,894      30,731
Depreciation and amortization . . .          67,462           8,877        14,041         580
Directors' fees . . . . . . . . . .          97,501               -        33,333           -
Management fees . . . . . . . . . .         147,036               -             -           -
Amortization of deferred financing
fees [note 8] . . . . . . . . . . .          75,601               -         5,158           -
Foreign exchange loss . . . . . . .          10,248               -          (431)          -
Non cash interest expense . . . . .         833,115               -       381,688           -
Interest expense and bank charges .           6,197               -         2,869           -
Investor relations. . . . . . . . .         100,255               -       258,016           -
Office and administration . . . . .         110,638               -        83,143           -
Other . . . . . . . . . . . . . . .         291,420          76,649        52,928         591
Rent. . . . . . . . . . . . . . . .         180,840          13,523        29,637           -
Sub-contracting costs . . . . . . .         337,712               -             -           -
Travel. . . . . . . . . . . . . . .         281,643         120,342       132,646           -
Wages and employee benefits . . . .         752,135         124,599       283,728           -
Software development costs
 [note 3] . . . . . . . . . . . . .               -         909,003       909,003           -
                                          4,211,765       2,238,504     3,105,355     136,854
LOSS FOR THE PERIOD [NOTE 10] . . .      (3,839,135)     (2,210,064)   (3,076,287)   (136,854)
-----------------------------------  ---------------  --------------  ------------  ----------
OTHER COMPREHENSIVE LOSS
Foreign currency translation
adjustment. . . . . . . . . . . . .        (136,801)        (29,847)       (8,842)          -
COMPREHENSIVE LOSS. . . . . . . . .      (3,975,936)     (2,239,911)   (3,085,129)   (136,854)

DEFICIT, BEGINNING OF PERIOD. . . .      (3,213,141)       (136,854)     (136,854)          -
LOSS FOR THE PERIOD . . . . . . . .      (3,839,135)     (2,210,064)   (3,076,287)   (136,854)
DEFICIT, END OF PERIOD. . . . . . .      (7,052,276)     (2,346,918)   (3,213,141)   (136,854)

Loss per common share [note 9]. . .           (0.30)          (0.31)        (0.42)      (0.03)
Weighted average number of shares
outstanding . . . . . . . . . . . .      12,837,302       7,101,869     7,405,421   4,000,000
</TABLE>



See  accompanying  notes

<PAGE>
JAWS  TECHNOLOGIES,  INC.

            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                   (all amounts are expressed in U.S. dollars)
<TABLE>
<CAPTION>


                                                 CAPITAL IN
                                               --------------
                                               EXCESS OF PAR   CONTRIBUTED
                                                   SHARES       PAR VALUE       VALUE      SURPLUS
<S>                                            <C>             <C>           <C>          <C>
                                               $               $             $

BALANCE, JANUARY 27, 1997
Issuance of Common Stock for cash . . . . . .       4,000,000         4,000      56,000           -
Less share issue costs. . . . . . . . . . . .               -             -     (24,350)          -
BALANCE, DECEMBER 31, 1997. . . . . . . . . .       4,000,000         4,000      31,650           -
---------------------------------------------  --------------  ------------  -----------  ----------
Issuance of Common Stock for services
    [note 6]. . . . . . . . . . . . . . . . .         400,000           400     199,600           -
---------------------------------------------  --------------  ------------  -----------  ----------
Issuance of Common Stock on acquisition of
subsidiary [note 4] . . . . . . . . . . . . .       1,500,000         1,500     838,248           -
Issuance of Common Stock for cash . . . . . .       2,800,000         2,800   1,017,200           -
Warrants issued with issuance of convertible
debentures [note 8] . . . . . . . . . . . . .               -             -           -     342,857
Equity component of convertible debentures
[note 8]. . . . . . . . . . . . . . . . . . .               -             -           -     118,462

Equity component of financing fees [note 8] .               -             -           -     (11,760)

Equity component of financing fees [note 8] .               -             -           -     (24,000)

Issue of Common Stock upon conversion of
convertible debentures [note 8] . . . . . . .       1,912,317         1,912     211,886           -
Financing fee associated with converted
debentures [note 8] . . . . . . . . . . . . .               -             -     (21,117)          -
Share issue costs . . . . . . . . . . . . . .               -             -     (65,314)
BALANCE, DECEMBER 31, 1998. . . . . . . . . .      10,612,317        10,612   2,212,153     425,559
(UNAUDITED)
---------------------------------------------
Issuance of Common Stock for cash . . . . . .         317,188           317     101,183           -
Equity component of convertible debentures
[note 8]. . . . . . . . . . . . . . . . . . .               -             -           -     424,575

Equity component of financing fees [note 8] .               -             -           -     (14,000)
Issuance of Common Stock for cash . . . . . .       4,044,761         4,044   2,867,756           -
Equity component of convertible debenture
[note8] . . . . . . . . . . . . . . . . . . .               -             -           -     193,292

Equity component of financing fee [note 8]. .               -             -           -     (19,329)
Warrants issued with issuance of convertible
debentures [note 8] . . . . . . . . . . . . .               -             -           -     341,538

Equity component of financing fee [note 8]. .               -             -           -    (110,028)
Issuance of Common Stock in settlement of
trade payable . . . . . . . . . . . . . . . .         141,000           141     188,799           -
BALANCE, SEPTEMBER 30, 1999 . . . . . . . . .      15,115,266        15,114   5,369,891   1,241,607
</TABLE>


See  accompanying  notes

<PAGE>
JAWS  TECHNOLOGIES,  INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                   (all amounts are expressed in U.S. dollars)
<TABLE>
<CAPTION>



                                                     PERIOD FROM
                                                    INCORPORATION
                                                    JANUARY 27, TO
                             NINE MONTHS ENDED     YEAR ENDED     DECEMBER 31,

                                               SEPTEMBER 30,    DECEMBER 31,
                                              ---------------  --------------
<S>                                           <C>              <C>             <C>           <C>
                                                        1999            1998          1998       1997
  $. . . . . . . . . . . . . . . . . . . . .  $                $               $
  (unaudited)
--------------------------------------------
CASH FLOWS USED IN OPERATING ACTIVITIES
Loss for the period. . . . . . . . . . . . .      (3,839,135)     (2,210,064)   (3,076,287)  (136,854)
Adjustments to reconcile loss to cash flows
used in operating activities:
Consulting expense not involving the
payment of cash [note 6] . . . . . . . . . .               -         200,000       200,000          -
Depreciation and amortization. . . . . . . .          67,462           8,877        14,041        580
Amortization of deferred financing fees. . .          75,601               -         5,158          -
Software development costs . . . . . . . . .               -         909,189       909,003          -
Non-cash interest expense on warrants. . . .               -               -       257,143          -
Non-cash interest expense on convertible
debentures . . . . . . . . . . . . . . . . .         755,792               -       118,462          -

Non-cash interest expense on convertible
debenture conversion and accrued interest. .          77,323               -         6,083          -
Changes in non-cash working capital
balances [note 13] . . . . . . . . . . . . .         121,341         364,410       439,422     25,476
                                                  (2,741,731)       (727,588)   (1,126,975)  (110,798)

CASH FLOWS USED IN INVESTING ACTIVITIES
Purchase of fixed assets . . . . . . . . . .        (542,329)       (134,474)     (115,584)    (2,900)
Purchase of term deposits [note 4] . . . . .         (27,000)              -             -          -
                                                    (569,329)       (134,474)     (115,584)    (2,900)
                                              ---------------  --------------  ------------  ---------

CASH FLOWS GENERATED BY (USED IN)
FINANCING ACTIVITIES
Proceeds from the issuance of Common
Stock, net of issue costs. . . . . . . . . .       3,024,314         954,686       954,686     35,650
Repayment of stockholder advances. . . . . .         (72,673)       (117,044)      (78,159)    78,159
Proceeds from stockholder advances . . . . .               -          24,309        20,273          -

Proceeds on issue of convertible debenture .       1,100,000               -       420,000          -
Financing fees on issue of convertible
debenture. . . . . . . . . . . . . . . . . .        (110,000)              -       (42,000)         -
                                                   3,941,641         861,951     1,274,800    113,809
                                              ---------------  --------------  ------------  ---------

INCREASE (DECREASE) IN CASH. . . . . . . . .         630,696            (111)       32,241        111

Cash acquired on acquisition of subsidiary .               -               -         1,380          -
Cash, beginning of period. . . . . . . . . .          33,732             111           111          -
CASH, END OF PERIOD. . . . . . . . . . . . .         664,428               -        33,732        111
</TABLE>


See  accompanying  notes

<PAGE>
JAWS  TECHNOLOGIES,  INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (all amounts are expressed in U.S. dollars)

  (AMOUNTS AS AT SEPTEMBER 30, 1999 AND FOR THE NINE MONTH PERIOD THEN ENDED ARE
                                   UNAUDITED)


JAWS  TECHNOLOGIES,  INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (all amounts are expressed in U.S. dollars)

  (AMOUNTS AS AT SEPTEMBER 30, 1999 AND FOR THE NINE MONTH PERIOD THEN ENDED ARE
                                   UNAUDITED)


1.  BASIS  OF  PRESENTATION
JAWS  Technologies,  Inc.,  (the "Company") was incorporated on January 27, 1997
under  the  laws of the State of Nevada as "E-Biz" Solutions, Inc.  On March 27,
1998,  "E-Biz"  Solutions, Inc. changed its name to JAWS Technologies, Inc.  The
business purpose is developing and selling encryption software. These activities
are  carried  out  through  the  Company's  wholly  owned  Canadian  subsidiary.
The  accompanying  financial  statements  have  been prepared on a going concern
basis,  which  contemplates  the  realization  of assets and the satisfaction of
liabilities  in  the  normal  course  of  business.  As  shown  in the financial
statements, the Company has a working capital deficiency of $505,883 at December
31,  1998,  a  deficit  of  $3,213,141 at December 31, 1998 and $7,052,276 as at
September  30,  1999  and net operating cash outflows of $2,741,616 for the nine
month  period  ended  September  30,  1999.  Although  it has a positive working
capital  balance of $89,026 at September 30, 1999, the Company's continuation as
a going concern is dependent on its ability to generate sufficient cash flow, to
meet its obligations on a timely basis, to obtain additional financing as may be
required, and ultimately to attain successful operations.  However, no assurance
can  be  given  at this time as to whether the Company will achieve any of these
conditions.  These  factors,  among  others,  raise  substantial doubt about the
Company's  ability  to continue as a going concern.  The financial statements do
not include any adjustments relating to the recoverability and classification of
recorded  asset  amounts  or  the amounts and classification of liabilities that
might  be  necessary should the Company be unable to continue as a going concern
for  a  reasonable  period  of  time.
Management believes that additional funding will be required to finance expected
operations  until  a  market  has  been  developed  for  the Company's software.
Management intends to seek additional financing through future private or public
offerings  of  stock  and  through  the  exercise  of  stock  options.
The  accompanying financial statements reflect all adjustments which are, in the
opinion  of management, necessary to reflect a fair presentation for the periods
being  presented.
2.  SIGNIFICANT  ACCOUNTING  POLICIES
The  financial  statements have, in management's opinion, been properly prepared
in  accordance  with  accounting  principles  generally  accepted  in the United
States.

USE  OF  ESTIMATES
Because a precise determination of many assets and liabilities is dependent upon
future  events, the preparation of financial statements for a period necessarily
involves  the use of estimates which would affect the amount of recorded assets,
liabilities,  revenues  and  expenses.  Actual  amounts  could differ from these
estimates.

CONSOLIDATION
The  consolidated  financial  statements include the accounts of the Company and
its  wholly  owned  subsidiaries,  JAWS  Technologies,  Inc., an Alberta, Canada
corporation  ("JAWS  Alberta"),  and JAWS Technologies (Ontario) Inc. an Ontario
Canada  corporation ("JAWS Ontario"), after elimination of intercompany accounts
and  transactions.

FIXED  ASSETS
Fixed  assets  are  recorded at cost and are depreciated at the following annual
rates which are designed to amortize the cost of the assets over their estimated
useful  lives.
     Furniture  and  fixtures     -  20%  diminishing  balance
     Computer  hardware     -  33%  straight  line
     Computer  software  for  internal  use     -  33%  straight  line
     Leasehold  improvements     -  20%  straight  line

SOFTWARE  DEVELOPMENT
Software  development  costs are expensed when technological feasibility has not
yet  been  established.  Subsequent  to  establishing technological feasibility,
such  costs  are  capitalized  until  the  commencement  of  commercial  sales.
FINANCING  FEES
Financing  fees  associated  with that portion of the 10% convertible debentures
classified  as  debt are deferred and amortized over the life of the debentures.
Financing  fees  associated  with  that  portion  of  the convertible debentures
classified  as  contributed  surplus  is  charged to that account.  The pro rata
portion  of  financing  fees  associated with converted debentures is charged to
share  capital  in  excess  of  par  value.

REVENUE  RECOGNITION
Revenue  from  selling  encryption  software  is recognized when the software is
delivered.  Consulting  fees  are  recognized  when the services are rendered or
earned.
ADVERTISING
Advertising  costs  are  expensed  as  incurred.
INCOME  TAXES
The  Company  follows  the  liability method of accounting for the tax effect of
temporary  differences  between  the  carrying  amount  and the tax basis of the
company's  assets  and  liabilities.  Temporary  differences  arise  when  the
realization  of  an  asset  or  the settlement of a liability would give rise to
either  an  increase  or  decrease in the Company's income taxes payable for the
year  or  later  period.  Deferred  income  taxes are recorded at the income tax
rates  that  are expected to apply when the deferred tax liability is settled or
the  deferred  tax  asset is realized.  When necessary, valuation allowances are
established  to  reduce  deferred income tax assets to the amount expected to be
realized.  Income  tax  expense is the tax payable for the period and the change
during  the  period  in  deferred  income  tax  assets  and  liabilities.
FOREIGN  CURRENCY  TRANSLATION
The  functional  currency  of the Company's subsidiaries is the Canadian dollar.
Accordingly,  assets  and  liabilities of the subsidiaries are translated at the
year-end  exchange  rate  and  revenues  and  expenses are translated at average
exchange  rates.  Gains and losses arising from the translation of the financial
statements  of  the  subsidiaries  are  recorded  in  a  "Cumulative Translation
Adjustment"  account  in  stockholders'  equity.
LOSS  PER  COMMON  SHARE
The  loss  per  common  share  has been calculated based on the weighted average
number  of  common  shares  outstanding during the period.  Diluted earnings per
share,  assuming  all  warrants, options and conversion features were exercised,
does  not  differ  from  basic  earnings  per  share.
STOCK  OPTIONS
The  Company  applies  the  intrinsic  value  method  prescribed  by  Accounting
Principles  Board Opinion No. 25, "Accounting for Stock Issued to Employees" and
related  interpretations in accounting for its stock option plans.  Accordingly,
no  compensation  cost is recognized in the accounts as options are granted with
an  exercise  price  that  approximates  the  prevailing  market  price.
PRIOR  YEAR  AMOUNTS
Certain prior year amounts have been reclassified to conform to the presentation
adopted  in  1999.
3.  ACQUISITION
On  February  10, 1998 the Company issued 1,500,000 restricted common shares, as
well  as  options  to  purchase 400,000 shares of its restricted Common Stock at
$0.50  per  share  in  exchange  for all of the outstanding Common Stock of JAWS
Alberta.  The  options  issued  in  connection  with  the  acquisition have been
ascribed  no  value.  JAWS  Alberta was a development stage company which at the
time  of  acquisition  was  in the process of creating a new encryption software
product.  The  acquisition  has  been  accounted  for  by  the  purchase method.
The purchase price, and thereby the amounts allocated to software and the shares
issued,  net  of  other assets and liabilities acquired, was determined based on
estimates  by  management as to the replacement cost for the encryption software
development  which  had  been  incurred by JAWS Alberta prior to the acquisition
date.  The purchase price has been allocated to the net assets acquired based on
their  estimated  fair  values  as  follows:
<TABLE>
<CAPTION>


                                          $
                                      ---------
<S>                                   <C>

Net assets acquired
Non-cash working capital . . . . . .    (5,087)
Software under development . . . . .   909,003
Fixed assets . . . . . . . . . . . .     2,891
Due to stockholders. . . . . . . . .   (54,443)
Net assets acquired, excluding cash.   852,364
------------------------------------  ---------
Acquisition costs. . . . . . . . . .   (13,996)
Cash acquired. . . . . . . . . . . .     1,380
Net assets acquired for Common Stock   839,748
</TABLE>


The  amount  allocated  to  software  under  development  relates  to encryption
software  and  its  related  algorithms,  including  the  "L5"  software.  This
software,  at  the  time  of  purchase,  was not completely developed, tested or
otherwise  available for sale and therefore has been immediately expensed in the
accompanying  consolidated  statements  of loss and deficit.  Coding and testing
activities  for  this  software  were  completed  on  July  31,  1998.
The  operating  results of the acquired company are included in the consolidated
statements of loss, deficit and comprehensive loss from the date of acquisition.
Pro  forma  loss  and  pro forma loss per common share for the nine month period
ended September 30, 1998, giving effect to the acquisition of JAWS Alberta as at
January  1,  1998 are $2,217,462 and $0.31 respectively (year ended December 31,
1998  -  $3,083,685  and $0.42 respectively).  Pro forma revenue does not differ
from  that  recorded for the period to September 30, 1998, being $28,440, or for
the  period  to  December  31,  1998,  being  $29,068.
4.  TERM  DEPOSITS
The term deposits are on deposit with a Canadian Chartered Bank.  These deposits
have  been  pledged  as security for certain corporate credit cards, and as such
are  not  available for the Company's general use.  These deposits earn interest
at  2.95  percent  per  annum  and  mature  May  9,  2000.
5.  FIXED  ASSETS
<TABLE>
<CAPTION>

     SEPTEMBER  30,  1999


<S>                                 <C>            <C>            <C>
                                    ACCUMULATED    NET BOOK
                                    COST           DEPRECIATION   VALUE
                                    $              $              $
Furniture and fixtures . . . . . .        261,184         29,978   231,206
----------------------------------  -------------  -------------  --------
Computer hardware. . . . . . . . .        122,815         27,769    95,046
Computer software for internal use         33,937          6,680    27,257
Leasehold improvements . . . . . .        162,360         17,865   144,495
                                          580,296         82,292   498,004
  DECEMBER 31,
                                             1998
                                    -------------
    ACCUMULATED. . . . . . . . . .  NET BOOK
  COST . . . . . . . . . . . . . .  DEPRECIATION   VALUE
----------------------------------
  $. . . . . . . . . . . . . . . .  $              $
Furniture and fixtures . . . . . .         31,758          6,482    25,276
----------------------------------  -------------  -------------  --------
Computer hardware. . . . . . . . .         47,371          5,534    41,837
Computer software for internal use         13,162          1,445    11,717
                                           92,291         13,461    78,830
</TABLE>


6.  SHARE  CAPITAL
AUTHORIZED
95,000,000 common shares at $0.001 par value (increased from 20,000,000 April 8,
1999)
  5,000,000  preferred  shares  at  $0.001  par  value
COMMON  STOCK  ISSUED
During  1998,  the 400,000 restricted common shares issued for services provided
by  two consultants in relation to the establishment of the capital structure of
the  Company.  The  shares  were  recorded  at  their  estimated  fair  value of
$200,000.
COMMON  STOCK  HELD  IN  ESCROW
Upon  entering  into  the  10%  convertible debenture agreement (see note 8) the
Company  placed  9,500,000  shares  in  escrow  relating  to  the  $2 million of
financing.  In  addition,  1,071,429  shares  and  357,143 shares were placed in
escrow  relating  to  the purchasers' and agent's warrants issued in relation to
the  10%  convertible  debenture  agreement.
OPTIONS
As  at  September 30, 1999, the Company has issued 2,360,600 options to purchase
Common  Stock  to the Company's directors, officers and employees.  Of the total
issued, none have been exercised as at September 30, 1999.  Details of the stock
options  outstanding  at  September  30,  1999  are  as  follows:
<TABLE>
<CAPTION>


NUMBER OF OPTIONS  EXERCISE PRICE  EXPIRY DATE
                   --------------  -------------------
<C>                <C>             <S>


          200,000            0.15    February 22, 2008
           50,000            0.23    June 30, 2008
           35,000            0.23    June 30, 2008
           31,000            0.33    June 30, 2008
          143,000            0.37    June 30, 2008
           22,000            0.40    June 30, 2008
          400,000            0.48    August 1, 2000
          706,500            0.48    June 30, 2008
           82,500            0.58    June 30, 2008
           71,000            0.62    June 30, 2008
           10,000            0.65    June 30, 2008
           36,000            0.69    June 30, 2008
           20,000            0.71    June 30, 2008
           62,000            0.73    June 30, 2008
           43,500            0.75    June 30, 2008
           75,000            0.77    June 30, 2008
            5,000            0.81    June 30, 2008
           47,500            0.82    June 30, 2008
          250,000            0.87    June 30, 2008
            5,600            0.98    June 30, 2008
           65,000            2.44    June 30, 2008
        2,360,600
-----------------

</TABLE>


The  fair value of each option granted to date is estimated on the date of grant
using  the  Black  Scholes  option-pricing model with the following assumptions:
expected  volatility  of  167%,  risk-free interest rate of 4.87%; no payment of
common  share  dividends;  and expected life of 10 years.  Had compensation cost
for  these  plans  been  determined  based  upon  the  fair value at grant date,
consistent  with the methodology prescribed in Statement of Financial Accounting
Standards No. 123, "accounting for Stock-Based compensation," the Company's loss
and  loss  per  common  share for the nine month period ended September 30, 1999
would have been $4,220,310 and $0.33 respectively (year ended December 31, 1998:
$3,324,618  and  $0.45  respectively).
During  1998,  the  Company  had  entered  into  a  Put Option agreement with an
investor  which  allowed  the  Company to require the investor to purchase up to
25,000,000 shares of the Common Stock of the Company.  In addition, the investor
was  to  be granted warrants to purchase up to 3,000,000 shares of Common Stock.
On  April  26, 1999, the Company and the investor agreed to cancel the agreement
in  exchange  for warrants to the investor to purchase up to 1,000,000 shares of
Common Stock at an exercise price of $0.70 per share.  The warrants expire April
15,  2002.
On  June  21,  1999,  the  Company issued 834,000 share purchase warrants, which
entitle  the  holder to purchase  834,000 common shares at $2.25 per share until
June  20,  2001.  On August 26, 1999 the Company issued 141,000 common shares at
$1.34  per  common  share  in  settlement  of  a  trade  payable.
7.  RELATED  PARTY  TRANSACTIONS
Amounts  due  to  related  parties  consist  of  the  following  amounts:
<TABLE>
<CAPTION>


                   SEPTEMBER 30,     DECEMBER 31,     DECEMBER 31,

                                 1999      1998     1997
  $                               $         $
-----------------------------  --------
<S>                            <C>       <C>       <C>
DUE FROM RELATED PARTIES
Futurelink Corp.. . . . . . .         -     9,073       -
Futurelink/Sysgold Ltd. . . .         -     4,045       -
                                      -    13,118       -

DUE TO RELATED PARTIES
Officers and stockholders . .    12,849    43,588       -
Futurelink Corp.. . . . . . .    18,602    32,175       -
Willson Stationers Ltd. . . .     7,304     1,352       -
Directors . . . . . . . . . .   157,503   120,000       -
                                196,258   197,115       -

DUE TO STOCKHOLDERS
Bankton Financial Corporation         -    15,775       -
Cameron Chell . . . . . . . .     2,044     1,957       -
Hampton Park Ltd. . . . . . .         -    56,985       -
Other stockholder . . . . . .         -         -  78,159
                                  2,044    74,717  78,159
</TABLE>


Effective  July 31, 1999 the Company entered into an agreement with Pace Systems
Group  Inc., a related party (see note 17), whereby Pace assigned certain of its
revenue  contracts  to the Company.  During the period from July 31 to September
30,  1999 the Company earned $337,988 from these contracts, which is included in
revenues  on  the  accompanying financial statements.  The Company also incurred
sub-contracting  costs  in respect of these contracts, in the amount of $337,712
which  is  included  in  expenses  in  the  accompanying  financial  statements.
During  the  year  ended December 31, 1998, the Company incurred $76,612 in fees
associated  with  computer  services  provided by Futurelink Corp., an entity of
which  certain  directors are also directors of the Company.  There were $28,289
fees  incurred  during the period ended September 30, 1999. The Company provided
sales  to  Futurelink  Corp.  during  the period ended September 30, 1999 in the
amount  of  $2,925  (December 31, 1998 - $9,073).  The fees charged by and sales
provided  to  Futurelink  Corp.  are  recorded  at  their  exchange  amounts.
During the year ended December 31, 1998, the Company provided services of $4,045
to  Futurelink/Sysgold  Ltd.,  an  entity  of  which  certain directors are also
directors  of the Company.  This amount was included in due from related parties
at December 31, 1998. These services are provided on normal commercial terms and
conditions.  No  services  were  provided  to Futurelink/Sysgold Ltd. during the
period  ended  September  30,  1999.
Office and administration expenses for the nine month period ended September 30,
1999,  include  $11,858  (December 31, 1998 - $8,035) paid to Willson Stationers
Ltd.,  an  entity  of which certain directors are also directors and officers of
the  Company.  These  transactions  are  recorded  at  their  exchange  amounts.
Consulting  fees  for  the  year  ended  December  31, 1998, include $198,168 to
officers  and  stockholders  of  the  Company  for  services  provided.
Due to stockholders represents advances received by the Company.  The amount due
to Hampton Park Ltd., a company owned by a stockholder, bears interest at 8% per
annum and has no set repayment terms.  The remaining amounts due to stockholders
do  not  carry  interest and have no set repayment terms.  All stockholders have
indicated  they  do  not  intend  to  demand  repayment  within  the  next year.
The Company entered into an agreement to lease premises from a stockholder.  The
lease  began  on November 1, 1998 and is for a five year term.  The minimum rent
is  $9.42 per square foot per annum with 9,920 square feet of net rentable area.
Additional  rent  is estimated at $4.03 per square foot of net rentable area per
annum.  The net rent expense recognized in the nine month period ended September
30,  1999  was  $67,870  (year  ended  December  31,  1998  -  $3,991).
8.  CONVERTIBLE  DEBENTURES
<TABLE>
<CAPTION>

                                SEPTEMBER 30,     DECEMBER 31
                                        1999     1998

                                                                     $           $
                                                                -----------  ----------
<S>                                                             <C>          <C>

PRINCIPAL
Net balance outstanding, beginning of period . . . . . . . . .     146,606           -
Funds advanced to date . . . . . . . . . . . . . . . . . . . .   1,100,000     420,000
Debentures converted during the period . . . . . . . . . . . .           -    (210,000)
                                                                 1,246,606     210,000

FINANCING FEES
Fees paid on funds advanced to date. . . . . . . . . . . . . .    (110,000)    (42,000)
Intrinsic value associated with equity component of debentures      33,329      11,760
Fees paid through issuance of warrants to agent. . . . . . . .    (341,538)    (85,714)
Intrinsic value associated with equity component of debentures     110,027      24,000
Amortization of financing fees to date . . . . . . . . . . . .      75,601       5,158
Financing fees associated with debentures converted to date. .           -      21,117
                                                                  (232,581)    (65,679)

INTEREST EXPENSE
Accrued interest expense . . . . . . . . . . . . . . . . . . .      77,323       2,285
NET BALANCE OUTSTANDING, END OF PERIOD . . . . . . . . . . . .   1,091,348     146,606
</TABLE>


On  September  25,  1998  the  Company  entered  into  an agreement to issue 10%
convertible  debentures  in  series  of  $200,000  up  to a total of $2,000,000,
subject  to  the Company meeting certain conditions, which mature on October 31,
2001.  The  holders have the right to convert the debentures in increments of at
least  $100,000,  at  a price equal to the lower of $0.28 and 78% of the average
closing  bid  price  of  the  Company's  Common Stock for the three trading days
immediately  preceding  the Notice of Conversion served on the Company.  For the
$500,000  of  convertible  debentures  that  were  issued  on  January 26, 1999,
$250,000  of  debentures  can  be converted at a fixed price of $0.40 per common
share and the remaining $250,000 can be converted into shares at a fixed rate of
$0.28  per  common  share.  The Company may prepay any or all of the outstanding
principal amounts at any time, upon thirty days' notice, subject to the holders'
right  to  convert into common shares.  A financing fee of 10% is charged on the
principal  sum of each convertible debenture issued.  Interest is payable on the
maturity  date.  At  the  holders'  election,  interest can be settled in Common
Stock  of  the  Company  based  on  market  prices.
On  April  16,  1999,  the Company drew down an additional $600,000 of financing
under  the  10%  convertible  debenture  agreement,  which can be converted into
Common  Stock  at  a  fixed  price  of  $0.65  per  common  share.
On April 27, 1999, the debenture agreement was amended to include (among others)
the  following  changes:
(i)     the  total  amount available under the debenture agreement was increased
from  $2,000,000  to  $5,000,000.
(ii)     the financing fee applicable to the additional $3,000,000 available was
set  at  8%  of  the  principal  sum  issued.
(iii)     the  balance  of  the financing not yet drawn, $3,480,000, has a fixed
conversion  price  of  $0.40  per  share.
(iv)     an  additional  923,077 share purchase warrants were issued, which give
the  holder  the  right to purchase one common share for each warrant held, at a
price  of  $0.65  per  warrant.
Through  September  30,  1999,  the  Company  has  issued convertible debentures
totalling  $1,520,000 of which $736,329 was recorded as contributed surplus with
an  offsetting  amount charged as interest on long term debt.  Of the debentures
issued,  $210,000  principal  plus  $3,798 interest was converted into 1,912,317
shares on November 30, 1998, based on a conversion price of $.1118 (being 78% of
the  average  closing  bid  price  of  the  Company's Common Stock for the three
trading  days  preceding  the Notice of Conversion).  Interest totalling $79,608
has  been  accrued and included in the convertible debenture balance outstanding
at  September 30, 1999.  These shares will be formally issued when the Company's
SB-2  Registration  Statement  has  been  declared  effective.
At  the  time  of  the  initial  funding  on October 1, 1998, the Company issued
1,428,572  common share purchase warrants (357,143 to the agent and 1,071,429 to
the  ultimate subscriber of the issue).  Each warrant gives the holder the right
to purchase one common share of the Company at $0.28 until October 31, 2001.  An
amount  of  $342,857  has  been included in contributed surplus as the estimated
value  attributed  to these warrants as they were exercisable upon issuance.  In
addition,  the warrants issued to the agent have been treated as a financing fee
in  the  amount  of $85,714.  The value of these fees associated with the equity
component  of  the  10%  convertible  debentures has been charged to contributed
surplus in the amount of $24,000.  The remaining balance is being amortized over
the  life  of  the  10%  convertible  debentures.
Through  September  30,  1999  the  Company  has  paid financing fees on the 10%
convertible  debentures totalling $152,000.  The fees associated with the equity
component of the 10% convertible debentures, being $45,089, have been charged to
contributed  surplus.  The  remaining  amount,  which  has  been  recorded  as a
reduction  of  the  debenture principal, is being amortized over the life of the
10%  convertible debentures, unless the debentures are converted.  If converted,
the  pro  rata  portion  of  the  financing  fees  associated with the converted
debentures  is  charged to capital in excess of par value.  During 1998, $21,117
has  been  charged  to  capital  in  excess of par value relating to $210,000 of
convertible  debentures  which  were  converted.
The  additional share purchase warrants issued on April 27, 1999 as described in
(iv) above have been recorded as contributed surplus at their estimated value of
$341,538,  as  they  were  exercisable  upon  issuance.  An offsetting amount of
$110,027  attributable  to the equity portion of the related debentures has been
recorded as a charge against contributed surplus; the remainder has been charged
as  a  discount  to  debt  and  is  being  amortized  over the life of the debt.
The  Company  is  currently  in  the  process of filing a form SB-2 Registration
Statement  qualifying  the  shares  to be issued on conversion of the debentures
with  the  Securities  and  Exchange  Commission.  Until such time as the common
shares are registered, a charge of 0.986% per day will apply against the initial
amount  funded.  Further,  as  registration  did  not  occur  within 120 days of
initial funding, a charge of 0.1644% per day will apply for each day thereafter.
The initial amount funded on October 1, 1998 was $200,000.  An amount of $82,200
for  the  penalty  of  late  filing  of the Registration Statement, and has been
included  in  accounts  payable.
9.  LOSS  PER  SHARE
Loss  per  common  share  is loss for the period divided by the weighted average
number  of  common  shares outstanding.  The effect on earnings per share of the
exercise  of  options  and  warrants,  and  the  conversion  of  the convertible
debentures  is  anti-dilutive.
10.  INCOME  TAXES
The  income  tax  benefit  differs from the amount computed by applying the U.S.
federal  statutory  tax  rates to the loss before income taxes for the following
reasons:
<TABLE>
<CAPTION>

                  SEPTEMBER 30,     SEPTEMBER 30,     DECEMBER 31,     DECEMBER 31,
                                   1999     1998     1998     1997

                                                   $            $            $            $
                                              ------------  ----------  ------------  ---------
<S>                                           <C>           <C>         <C>           <C>

                                                     (34%)       (35%)         (34%)      (34%)

Income tax benefit at U.S. statutory rate. .   (1,305,306)   (773,522)   (1,045,938)   (46,530)
Increase (decrease) in taxes resulting from:
Change in deferred tax asset valuation
allowance. . . . . . . . . . . . . . . . . .    1,200,985     968,663     1,106,172     46,530
Non-deductible expenses. . . . . . . . . . .      338,887           -       128,162          -
Foreign tax rate differences . . . . . . . .     (234,566)   (195,141)     (188,396)         -
Income tax benefit . . . . . . . . . . . . .            -           -             -          -
</TABLE>


For  financial  reporting  purposes,  loss  before  income  taxes  includes  the
following  components:
<TABLE>
<CAPTION>

          SEPTEMBER 30,     SEPTEMBER 30,     DECEMBER 31,     DECEMBER 31,
                           1999     1998     1998     1997

                     $             $             $            $
                ------------  ------------  ------------  ----------
<S>             <C>           <C>           <C>           <C>

Pre-tax loss:
 United States   (1,740,449)     (258,650)   (1,302,313)   (136,854)
Foreign. . . .   (2,098,686)   (1,951,414)   (1,773,974)          -
                 (3,839,135)   (2,210,064)   (3,076,287)   (136,854)
</TABLE>


Deferred  income  taxes  reflect  the  net  tax effects of temporary differences
between  the  carrying amounts of assets and liabilities for financial reporting
purposes  and  the  amounts used for income tax purposes.  The components of the
Company's  deferred  tax  assets  are  as  follows:
<TABLE>
<CAPTION>

                   SEPTEMBER 30,     DECEMBER 31,     DECEMBER 31,

                                        1999          1998        1997
  $                                      $             $
----------------------------------  ------------  ------------
<S>                                 <C>           <C>           <C>

Deferred tax assets (liabilities):
  Net operating loss
carryforwards. . . . . . . . . . .    1,884,932       697,768         -
Start-up costs . . . . . . . . . .       30,859        37,999    46,333
Depreciation . . . . . . . . . . .       35,714         5,807         -
  Organization costs . . . . . . .          361           394       197
  Debt issue costs . . . . . . . .       (3,776)        5,137         -
  Software costs . . . . . . . . .      405,597       405,597         -
Net deferred tax assets. . . . . .    2,353,687     1,152,702    46,530
----------------------------------  ------------  ------------  --------
Valuation allowance. . . . . . . .   (2,353,687)   (1,152,702)  (46,530)
Net deferred tax assets. . . . . .            -             -         -
</TABLE>


The  Company  has provided a valuation allowance for the full amount of deferred
tax  assets  in  light  of  its history of operating losses since its inception.
The Company has U.S. operating losses carried forward of $1,705,000 which expire
as  follows:
<TABLE>
<CAPTION>



         $
      --------
<S>   <C>
2018   880,000
2019   825,000
</TABLE>


The  availability  of  these  loss carryforwards to reduce future taxable income
could  be  subject  to  limitations  under the Internal Revenue Code of 1986, as
amended.  Certain  ownership  changes can significantly limit the utilization of
net  operating  loss carryforwards in the period following the ownership change.
The Company has not determined whether such changes have occurred and the effect
such  changes could have on its ability to carry forward all or some of the U.S.
net  operating  losses.
The  Company  has  non-capital  losses  carried  forward for Canadian income tax
purposes  of  $3,022,000.  These  losses  expire  as  follows:
<TABLE>
<CAPTION>


          $
<S>   <C>
2003      45,000
2004       7,000
2005     895,000
2006   2,075,000
</TABLE>


11.  COMMITMENTS
The Company is committed to the following minimum lease payments under operating
leases  for  premises  and  equipment:
<TABLE>
<CAPTION>


                      $
<S>                <C>       <C>
Remainder of 1999    28,236
                       2000  112,943
                       2001   94,932
                       2002   94,641
                       2003   78,867
                             -------
Total . . . . . .   409,619
                   --------
</TABLE>


12.  CAPITAL  LEASE  OBLIGATIONS  PAYABLE
The future minimum lease payments at September 30, 1999 under capital leases are
as  follows:
<TABLE>
<CAPTION>




<S>                                                                         <C>       <C>

Remainder of 1999. . . . . . . . . . . . . . . . . . . . . . . . . . . . .    7,965
                                                                               2000   22,344
                                                                               2001   22,344
                                                                               2002   21,486
                                                                               2003   20,627
                                                                               2004   11,868
Total future minimum lease payments. . . . . . . . . . . . . . . . . . . .  106,634
Less: imputed interest . . . . . . . . . . . . . . . . . . . . . . . . . .  (25,526)
Balance of obligations under capital leases. . . . . . . . . . . . . . . .   81,108
--------------------------------------------------------------------------  --------

Less: current portion included in accounts payable and accrued liabilities  (14,119)
Long term obligation under capital leases. . . . . . . . . . . . . . . . .   66,989
</TABLE>


13.  NET  CHANGE  IN  NON-CASH  WORKING  CAPITAL
<TABLE>
<CAPTION>

          SEPTEMBER 30,     SEPTEMBER 30,     DECEMBER 31,     DECEMBER 31,

                                  1999       1998        1998      1997
                               ----------
<S>                            <C>         <C>        <C>         <C>
  $ . . . . . . . . . . . . .  $           $          $

Accounts receivable . . . . .   (413,895)   (20,088)     (7,243)       -
Due from related parties. . .     13,118          -     (13,118)       -
Prepaid expenses and deposits     53,628    (19,612)   (132,956)  (7,500)
Accounts payable and accrued
liabilities . . . . . . . . .    469,347    404,110     395,624   32,976
Due to related parties. . . .       (857)         -     197,115        -
Change relating to operating
activities. . . . . . . . . .    121,341    364,410     439,422   25,476
</TABLE>


14.  SEGMENTED  INFORMATION
The  Company's  activities  are  conducted  in  one  operating  segment with all
activities  relating  to the development and sale of encryption software.  These
activities  are  planned  to be carried out in Canada and the United States.  To
date,  all  the  activities  have  occurred  in  Canada.
15.  FINANCIAL  INSTRUMENTS
Financial  instruments  comprising  cash,  accounts receivable, amounts due from
related parties, deposits, accounts payable and accrued liabilities, amounts due
to  related  parties, capital lease obligations, and amounts due to stockholders
approximate  their  fair  value.  It is management's opinion that the Company is
not exposed to significant currency or credit risks arising from these financial
instruments.
The  estimated  fair  value  as  at  September  30,  1999 of the 10% convertible
debentures  is  $864,934  (December  31, 1998 - $189,000).  This is based on the
estimated  present  value  of  the  principal  and  interest  of  the debenture.
The  Company  is subject to cash flow risk to the extent of the fixed 10% simple
interest rate being charged on the convertible debentures.  The effective annual
interest  rate realized by the Company, exclusive of the amounts relating to the
conversion  feature  of the 10% convertible debentures and the warrants, was 10%
(December  31,  1998  -  10%).
16.  RECENT  PRONOUNCEMENTS
In  June,  1998,  the  FASB issued SFAS No. 133, "Accounting for Derivatives and
Hedging  Activities",  which  will be effective for fiscal years beginning after
June  15,  2000.  The  Company does not acquire derivatives or engage in hedging
activities.
17.  SUBSEQUENT  EVENTS
a)     Effective  on  November  3,  1999,  the  Company  acquired  all  of  the
outstanding common shares of Pace Systems Group Inc. ("Pace").  As consideration
for  this  purchase,  the  Company will issue 1,731,932 common shares, valued at
$1.70  per  share,  representing  total  consideration  of  $2,944,284.
b)     On  November 2, 1999 and as amended December 2, 1999, the Company entered
into  a  pre-acquisition  agreement with Offsite Data Services Ltd. (Offsite), a
company  incorporated in the Province of Alberta and listed on the Alberta Stock
Exchange,  whereby the companies have agreed to combine their business interests
through  an  offer  by  the Company to purchase all of the outstanding shares of
Offsite.  The  offer  is  expected  to  be  mailed  on  December  10,  1999.
18.  CANADIAN  GAAP  RECONCILIATION
The  consolidated  financial  statements  have  been prepared in accordance with
accounting principles generally accepted in the United States ("US GAAP") which,
in  most respects, conform to accounting principles generally accepted in Canada
("Canadian  GAAP").  Significant differences between Canadian and US GAAP are as
follows.
<TABLE>
<CAPTION>


                                         PERIOD FROM
                                        INCORPORATION
                                      NINE MONTHS ENDED     YEAR ENDED     JANUARY 27, TO
U.S. DOLLARS FOR THE PERIOD ENDED       SEPTEMBER 30       DECEMBER 31,     DECEMBER 31,
-----------------------------------  -------------------  --------------  ----------------
<S>                                  <C>                  <C>             <C>               <C>
                                                   1999            1998              1998      1997
  $ . . . . . . . . . . . . . . . .  $                    $               $
Loss for the period - US GAAP . . .           3,389,135       2,210,064         3,076,287   136,854
-----------------------------------  -------------------  --------------  ----------------  --------
Software development costs. . . . .            (909,003)       (909,003)                -
Depreciation and amortization . . .             366,126               -            63,125         -
Net loss for the period - Canadian
GAAP. . . . . . . . . . . . . . . .           3,755,261       1,301,061         2,230,409   136,854

Loss per common share -
Canadian GAAP (U.S.$/share) . . . .               (0.31)          (0.18)            (0.30)    (0.03)
</TABLE>



Stock  options  outstanding  are  antidilutive

In accordance with U.S. GAAP, costs associated with the development of software,
whether  incurred  directly  or  otherwise  purchased  are  to be expensed.  The
software  was  acquired from the original developer of the encryption algorithms
and  was  assigned a value based on its fair market value.  Under Canadian GAAP,
the  $909,003  is capitalized.  For income tax purposes, future tax assets would
change  by  the  following  amounts  with  an  equal and offsetting amount being
recorded  as  valuation  allowance.

For  income  tax  purposes, future tax assets would increase or decrease with an
equal  and offsetting amount being recorded as a valuation allowance as follows:

          SEPTEMBER 30,     SEPTEMBER 30,     DECEMBER 31,     DECEMBER 31,

                                       1999        1998        1998     1997
                                    ----------  ----------  ----------  ----
                                       $           $           $
Increase (decrease) in future tax
assets                               163,365    (405,597)   (377,430)    -
----------------------------------  ----------  ----------  ----------  ----
(Increase) decrease in valuation
allowance                           (163,365)    405,597     377,430     -
                                        -           -           -        -



If  Canadian  GAAP  had  been followed, the balance sheet would have differed as
follows:
<TABLE>
<CAPTION>



                             SEPTEMBER 30,    DECEMBER 31,   DECEMBER 31,
U.S. DOLLARS AT PERIOD END       1999             1998           1997
--------------------------  ---------------  --------------  ------------
<S>                         <C>              <C>             <C>
  $. . . . . . . . . . . .  $                $
Capital assets . . . . . .       1,040,881         924,708              -
--------------------------  ---------------  --------------  ------------
Deficit. . . . . . . . . .      (6,572,524)     (2,367,263)             -
</TABLE>



Under  Canadian  GAAP the following disclosure would be provided with respect to
Year  2000  Uncertainty:

The  Year  2000  Issue  arises  because many computerized systems use two digits
rather  than  four to identify a year.  Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year  2000  dates is processed.  In addition, similar problems may arise in some
systems  which  use  certain  dates  in 1999 to represent something other than a
date.  The  effects  of  the  Year  2000 Issue may be experienced before, on, or
after  January  1,  2000,  and,  if  not addressed, the impact on operations and
financial  reporting  may range from minor errors to significant systems failure
which  could  affect  a company's ability to conduct normal business operations.
Management  has  developed  and  is implementing a plan designed to identify and
address  the  expected  effects  of  the  Year  2000  Issue  on the Company.  An
assessment  of  the  readiness of third parties such as customers, suppliers and
others  is  ongoing.  It  is  not possible to be certain that all aspects of the
Year 2000 Issue affecting the Company, including those related to the efforts of
customers,  suppliers,  or  other  third  parties,  will  be  fully  resolved.


<PAGE>




FINANCIAL  STATEMENTS

PACE  SYSTEMS  GROUP  INC.





JULY  31,  1999  AND  1998

<PAGE>


                                AUDITORS' REPORT





To  the  Directors  of
PACE  SYSTEMS  GROUP  INC.

We  have  audited  the  balance sheets of PACE SYSTEMS GROUP INC. as at July 31,
1999 and 1998 and the statements of income (loss) and deficit and cash flows for
the  years then ended.  These financial statements are the responsibility of the
Corporation's  management.  Our responsibility is to express an opinion on these
financial  statements  based  on  our  audits.

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

In  our  opinion,  these  financial  statements  present fairly, in all material
respects, the financial position of the Corporation as at July 31, 1999 and 1998
and the results of its operations and its cash flows for the years then ended in
accordance  with  generally  accepted  accounting  principles.




Toronto,  Canada,     (signed)  Ernst  &  Young  LLP
October  1,  1999.     Chartered  Accountants

<PAGE>
PACE  SYSTEMS  GROUP


                                 BALANCE SHEETS

As  at  July  31
<TABLE>
<CAPTION>




                                                1999       1998
                                                 $
<S>                                           <C>        <C>
ASSETS
CURRENT
Cash and cash equivalents. . . . . . . . . .    12,734    236,125
Accounts receivable. . . . . . . . . . . . .   350,831    193,813
Income taxes recoverable . . . . . . . . . .         -      2,238
TOTAL CURRENT ASSETS . . . . . . . . . . . .   363,565    432,176
--------------------------------------------
Fixed assets, net [note 2] . . . . . . . . .     9,870      6,129
--------------------------------------------
                                               373,435    438,305

LIABILITIES AND SHAREHOLDER'S DEFICIENCY
CURRENT
Accounts payable and accrued liabilities . .   129,045    542,501
Due to related parties [note 4]. . . . . . .   262,854        605
TOTAL CURRENT LIABILITIES. . . . . . . . . .   391,899    543,106
--------------------------------------------
Commitment and contingency [notes 6 and 11]

SHAREHOLDER'S DEFICIENCY
Share capital [note 3] . . . . . . . . . . .       100        100
Deficit. . . . . . . . . . . . . . . . . . .   (18,564)  (104,901)
TOTAL SHAREHOLDER'S DEFICIENCY . . . . . . .   (18,464)  (104,801)
--------------------------------------------
                                               373,435    438,305
</TABLE>



See  accompanying  notes

<PAGE>
PACE  SYSTEMS  GROUP


                     STATEMENTS OF INCOME (LOSS) AND DEFICIT


Years  ended  July  31
<TABLE>
<CAPTION>






                                    1999         1998
                                     $
<S>                              <C>          <C>
REVENUE
Consulting fees . . . . . . . .   1,901,187   1,626,094
Subcontracting [note 4] . . . .   1,580,833   1,604,394
                                    320,354      21,700

EXPENSES
General and administrative. . .     232,198     116,392
Depreciation. . . . . . . . . .       1,819       1,599
                                    234,017     117,991
NET INCOME (LOSS) FOR THE YEAR.      86,337     (96,291)

Deficit, beginning of year. . .    (104,901)     (8,610)
-------------------------------
DEFICIT, END OF YEAR. . . . . .     (18,564)   (104,901)
-------------------------------
</TABLE>



See  accompanying  notes

<PAGE>
PACE  SYSTEMS  GROUP


                            STATEMENTS OF CASH FLOWS


Years  ended  July  31

<TABLE>
<CAPTION>





                                                     1999       1998
                                                     $
<S>                                               <C>         <C>
OPERATING ACTIVITIES
Net income (loss) for the year . . . . . . . . .     86,337   (96,291)
Add item not affecting cash
Depreciation . . . . . . . . . . . . . . . . . .      1,819     1,599
------------------------------------------------
                                                     88,156   (94,692)
Net change in non-cash working capital balances
related to operations [note 9] . . . . . . . . .   (568,236)   69,284
CASH USED IN OPERATING ACTIVITIES. . . . . . . .   (480,080)  (25,408)
------------------------------------------------

INVESTING ACTIVITIES
Purchase of fixed assets . . . . . . . . . . . .     (5,560)        -
CASH USED IN INVESTING ACTIVITIES. . . . . . . .     (5,560)        -
------------------------------------------------

FINANCING ACTIVITIES
Due to related parties . . . . . . . . . . . . .    262,249    (2,010)
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES.    262,249    (2,010)
------------------------------------------------

NET DECREASE IN CASH DURING THE YEAR . . . . . .   (223,391)  (27,418)
Cash and cash equivalents, beginning of year . .    236,125   263,543
------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF YEAR . . . . .     12,734   236,125
------------------------------------------------
</TABLE>



See  accompanying  notes

<PAGE>
PACE  SYSTEMS  GROUP

                          NOTES TO FINANCIAL STATEMENTS

                             JULY 31, 1999 AND 1998


PACE  SYSTEMS  GROUP

                          NOTES TO FINANCIAL STATEMENTS

                             JULY 31, 1999 AND 1998


1.  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICES

Pace  Systems  Group [the "Corporation"] was incorporated in 1986 under the laws
of  Ontario.  The  Corporation's  purpose  is  providing  consulting services to
companies  relating  to  information  systems.

The  accompanying financial statements reflect all adjustments which are, in the
opinion  of  management,  necessary to reflect a fair presentation for the years
being  presented.

These financial statements have, in management's opinion, been properly prepared
in  accordance with Canadian generally accepted accounting principles.  The more
significant  accounting  policies  are  summarized  below:

REVENUE  RECOGNITION

Consulting  fees  are  recognized  when  the  services  are  rendered or earned.

USE  OF  ESTIMATES

Because a precise determination of many assets and liabilities is dependent upon
future  events, the preparation of financial statements for a period necessarily
involves  the use of estimates which would affect the amount of recorded assets,
liabilities,  revenue  and  expenses.  Actual  amounts  could  differ from these
estimates.

FIXED  ASSETS

Fixed  assets  are recorded at cost less accumulated depreciation.  Depreciation
is provided on a declining balance basis at rates which are designed to amortize
the  cost  of  the  assets  over  their  estimated  useful  lives  as  follows:

Furniture  and  fixtures     20%
Computer  hardware     30%

INCOME  TAXES

The  Corporation  accounts  for  deferred  income  taxes  based on the liability
method.  Under  the  liability  method, deferred income taxes are recognized for
the  future  tax  consequences attributable to differences between the financial
statement  carrying  amounts  of  existing  assets  and  liabilities  and  their
respective tax bases measured using the substantially enacted tax rates and laws
that  will  be  in  effect  when  the  difference  as  reflected  reverse.




FOREIGN  CURRENCY  TRANSLATION

Monetary assets and liabilities denominated in foreign currencies are translated
into  Canadian  dollars at the rates of exchange prevailing at the balance sheet
dates.  Non-monetary  assets  and  liabilities denominated in foreign currencies
are  translated  into  Canadian dollars at historic rates.  Revenue and expenses
denominated  in  foreign  currencies are translated into Canadian dollars at the
rates  prevailing  at  the  transaction  dates.  Exchange  gains  and losses are
included  in  net  income  (loss)  for  the  year.

CASH  EQUIVALENTS

Cash  equivalents  comprise  only  highly  liquid  investments  with  original
maturities  of  less  than  ninety  days.

2.  FIXED  ASSETS

Fixed  assets  consist  of  the  following:
<TABLE>
<CAPTION>



                             1999
                         -------------
ACCUMULATED                NET BOOK
COST                     DEPRECIATION    VALUE
                              $           $
<S>                      <C>            <C>      <C>
Furniture and fixtures.         67,949   58,340  9,609
Computer hardware . . .          1,279    1,018    261
-----------------------
                                69,228   59,358  9,870

                                  1998
                         -------------
    ACCUMULATED . . . .  NET BOOK
  COST. . . . . . . . .  DEPRECIATION   VALUE
  $ . . . . . . . . . .  $              $

Furniture and fixtures.         62,388   56,632  5,756
Computer hardware . . .          1,279      906    373
-----------------------
                                63,667   57,538  6,129
</TABLE>



3.  SHARE  CAPITAL

Share  capital  consists  of  the  following:
<TABLE>
<CAPTION>



                    1999   1998
                     $
<S>                 <C>    <C>
AUTHORIZED
100 common shares

ISSUED
100 common shares.    100   100
------------------
</TABLE>



On  August  20,  1999,  the Articles of Incorporation were amended to change the
amount  of  authorized  common  shares  to  unlimited.

4.  RELATED  PARTY  TRANSACTIONS

As  at  July  31,  the  Corporation  has  outstanding  account balances with its
shareholder  and  related  party  as  follows:
<TABLE>
<CAPTION>



                         1999    1998
                         $
<S>                    <C>       <C>
1322669 Ontario Inc..   262,395     -
Shareholder . . . . .       459   605
---------------------
                        262,854   605
</TABLE>



The  amount due to the shareholder is unsecured, non-interest bearing and is due
on  demand.  1322669  Ontario  Inc.  is  wholly-owned  by the Corporation's sole
shareholder.

Included  in  subcontracting expenses are expenses incurred with related parties
as  follows:
<TABLE>
<CAPTION>



                         1999     1998
                         $
<S>                    <C>       <C>
1322669 Ontario Inc..   413,050       -
Shareholder's spouse.     9,800  49,346
---------------------
                        422,850  49,346
</TABLE>



5.  INCOME  TAXES

The income tax benefit differs from the amount computed by applying the Canadian
combined  statutory  tax  rates to the income (loss) before income taxes for the
following  reasons:
<TABLE>
<CAPTION>



                                                                        1999       1998
                                                                         $
<S>                                                                   <C>        <C>
Provision for (recovery of) income taxes at Canadian statutory rate.    19,000   (22,000)
Increase (decrease) in income taxes resulting from
Deferred tax asset valuation allowance . . . . . . . . . . . . . . .         -    22,000
Tax benefit of loss carryforwards. . . . . . . . . . . . . . . . . .   (19,000)        -
--------------------------------------------------------------------
                                                                             -         -
</TABLE>



Deferred  income  taxes  reflect  the  net  tax effects of temporary differences
between  the  carrying amounts of assets and liabilities for financial reporting
purposes  and  the  amounts used for income tax purposes.  The components of the
Corporation's  deferred  tax  assets  are  as  follows:
<TABLE>
<CAPTION>



                                           1999     1998
                                            $
<S>                                        <C>    <C>
Deferred tax assets (liabilities)
Tax benefit of loss carryforwards . . . .      -   22,000
-----------------------------------------
Deferred tax assets, net of liabilities .      -   22,000
Valuation allowance . . . . . . . . . . .      -  (22,000)
-----------------------------------------
NET DEFERRED TAX ASSETS . . . . . . . . .      -        -
-----------------------------------------
</TABLE>



The  Corporation  has  provided  a  valuation  allowance  for the full amount of
deferred  tax  assets  in  light  of  its  history  of  operating  losses.

6.  LEASE  COMMITMENTS

The  Corporation  is  committed  to  the  following  future minimum annual lease
payments  for  office  space:
<TABLE>
<CAPTION>



            $
<S>      <C>
2000. .   74,476
2001. .   74,476
2002. .   43,445
-------
192,397
</TABLE>



Under the operating leases for office space, the Corporation is also required to
pay  for  operating expenses.  These amounts vary from year to year depending on
usage  and  are,  therefore,  not  included  in  the  above  amounts.

7.  SEGMENTED  INFORMATION

The  Corporation's  activities  are  conducted in one operating segment with all
activities  relating  to  development and sale of encryption software.  To date,
all  the  activities  have  occurred  in  Canada.

8.  FINANCIAL  INSTRUMENTS

Financial instruments comprising cash and cash equivalents, accounts receivable,
accounts  payable  and  accrued liabilities approximate their fair value.  It is
management's opinion that the Corporation is not exposed to significant currency
or  credit  risks  arising  from  these  financial  instruments.

CREDIT  RISK

Accounts receivable are subject to concentration of credit risk.  As at July 31,
1999,  43%  of  accounts  receivable  is  outstanding  with  two  customers.

There  is  no  allowance for doubtful accounts recorded for the years ended July
31,  1999  and  1998.

9.  STATEMENTS  OF  CASH  FLOWS

The  net  change  in  non-cash  working  capital  balances related to operations
consists  of  the  following:
<TABLE>
<CAPTION>


     1999     1998

                                              $           $
<S>                                       <C>         <C>
Accounts receivable. . . . . . . . . . .   (157,018)   (172,608)
Income taxes recoverable . . . . . . . .      2,238      (2,238)
Accounts payable and accrued liabilities   (413,456)    246,368
Income taxes payable . . . . . . . . . .          -      (2,238)
----------------------------------------
                                           (568,236)     69,284
</TABLE>



10.  ECONOMIC  DEPENDENCE

Approximately  29% of the Corporation's sales were made to two customers.  These
customers  accounted for 24% of the Corporation's accounts receivable balance at
July  31,  1999.

Approximately  31% of the Corporation's subcontracting expenses were provided by
two  vendors.  These  vendors  accounted  for  23% of the Corporation's accounts
payable  and  accrued  liabilities  balance  at  July  31,  1999.

11.  YEAR  2000  ISSUE

The  Year  2000  Issue  arises  because many computerized systems use two digits
rather  than  four to identify a year.  Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year  2000  dates is processed.  In addition, similar problems may arise in some
systems  which  use  certain  dates  in 1999 to represent something other than a
date.  The  effects  of  the  Year  2000 Issue may be experienced before, on, or
after  January  1,  2000,  and,  if  not addressed, the impact on operations and
financial  reporting  may range from minor errors to significant systems failure
which  could  affect  an entity's ability to conduct normal business operations.
It  is  not  possible  to  be  certain  that  all aspects of the Year 2000 Issue
affecting  the Corporation, including those related to the efforts of suppliers,
customers,  or  other  third  parties,  will  be  fully  resolved.

12.  SUBSEQUENT  EVENT

In  October  1999,  the Corporation's sole shareholder agreed to sell all of the
Corporation's  issued shares to JAWS Technologies Inc.  The Corporation has been
dealing  with  JAWS  Technologies  Inc.  as a customer in the ordinary course of
business  during  1999.


<PAGE>




FINANCIAL  STATEMENTS

PACE  SYSTEMS  GROUP  INC.
Unaudited




SEPTEMBER  30,  1999  AND  1998

<PAGE>
PACE  SYSTEMS  GROUP


                                 BALANCE SHEETS


As  at  September  30     Unaudited
<TABLE>
<CAPTION>






                                                      1999      1998
                                                       $
<S>                                                 <C>        <C>
ASSETS
CURRENT
Cash and cash equivalents. . . . . . . . . . . . .   117,377   533,272
Accounts receivable. . . . . . . . . . . . . . . .    60,636   165,762
Income taxes recoverable . . . . . . . . . . . . .    24,546         -
TOTAL CURRENT ASSETS . . . . . . . . . . . . . . .   202,559   699,034
--------------------------------------------------
Fixed assets, net [note 2] . . . . . . . . . . . .     9,289     8,681
--------------------------------------------------
                                                     211,848   707,715

LIABILITIES AND SHAREHOLDER'S EQUITY (DEFICIENCY)
CURRENT
Accounts payable and accrued liabilities . . . . .   108,940   564,798
Income taxes payable . . . . . . . . . . . . . . .         -    64,762
Due to related parties [note 4]. . . . . . . . . .   158,407       605
TOTAL CURRENT LIABILITIES. . . . . . . . . . . . .   267,347   630,165
--------------------------------------------------
Commitments and contingencies [notes 6 and 11]

SHAREHOLDER'S EQUITY (DEFICIENCY)
Share capital [note 3] . . . . . . . . . . . . . .       100       100
Retained earnings (deficit). . . . . . . . . . . .   (55,599)   77,450
TOTAL SHAREHOLDER'S EQUITY (DEFICIENCY). . . . . .   (55,499)   77,550
--------------------------------------------------
                                                     211,848   707,715
</TABLE>



See  accompanying  notes

<PAGE>
PACE  SYSTEMS  GROUP

                         STATEMENTS OF INCOME (LOSS) AND
                           RETAINED EARNINGS (DEFICIT)


Two-month  periods  ended  September  30     Unaudited
<TABLE>
<CAPTION>






                                                      1999       1998
                                                       $
<S>                                                 <C>        <C>
REVENUE
Consulting fees. . . . . . . . . . . . . . . . . .    24,240    450,662
Subcontracting [note 4]. . . . . . . . . . . . . .    75,385    181,871
                                                     (51,145)   268,791

EXPENSES
General and administrative . . . . . . . . . . . .     9,855     19,188
Depreciation . . . . . . . . . . . . . . . . . . .       581        252
                                                      10,436     19,440
Income (loss) before income taxes. . . . . . . . .   (61,581)   249,351
Provision for (recovery of) income taxes [note 5].   (24,546)    67,000
--------------------------------------------------
NET INCOME (LOSS) FOR THE PERIOD . . . . . . . . .   (37,035)   182,351

Deficit, beginning of period . . . . . . . . . . .   (18,564)  (104,901)
--------------------------------------------------
RETAINED EARNINGS (DEFICIT), END OF PERIOD . . . .   (55,599)    77,450
--------------------------------------------------
</TABLE>



See  accompanying  notes

<PAGE>
PACE  SYSTEMS  GROUP


                            STATEMENTS OF CASH FLOWS


Two-month  periods  ended  September  30     Unaudited
<TABLE>
<CAPTION>






                                                     1999       1998
                                                     $
<S>                                               <C>         <C>
OPERATING ACTIVITIES
Net income (loss) for the period . . . . . . . .    (37,035)  182,351
Item not requiring an outlay of cash
Depreciation . . . . . . . . . . . . . . . . . .        581       252
Net change in non-cash working capital balances
related to operations [note 10]. . . . . . . . .    245,544   117,348
CASH PROVIDED BY OPERATING ACTIVITIES. . . . . .    209,090   299,951
------------------------------------------------

INVESTING ACTIVITIES
Purchase of fixed assets . . . . . . . . . . . .          -    (2,804)
CASH USED IN INVESTING ACTIVITIES. . . . . . . .          -    (2,804)
------------------------------------------------

FINANCING ACTIVITIES
Due to related parties . . . . . . . . . . . . .   (104,447)        -
CASH USED IN FINANCING ACTIVITIES. . . . . . . .   (104,447)        -
------------------------------------------------

NET INCREASE IN CASH DURING THE PERIOD . . . . .    104,643   297,147
Cash, beginning of period. . . . . . . . . . . .     12,734   236,125
------------------------------------------------
CASH, END OF PERIOD. . . . . . . . . . . . . . .    117,377   533,272
------------------------------------------------
</TABLE>



See  accompanying  notes

<PAGE>
PACE  SYSTEMS  GROUP

                          NOTES TO FINANCIAL STATEMENTS

                      September 30, 1999          Unaudited


PACE  SYSTEMS  GROUP

                          NOTES TO FINANCIAL STATEMENTS

                      September 30, 1999          Unaudited


1.  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICES

Pace  Systems  Group [the "Corporation"] was incorporated in 1986 under the laws
of  Ontario.  The  Corporation's  purpose  is  providing  consulting services to
companies  relating  to  information  systems.

The  accompanying financial statements reflect all adjustments which are, in the
opinion  of management, necessary to reflect a fair presentation for the periods
being  presented.

These financial statements have, in management's opinion, been properly prepared
in  accordance  with  generally  accepted  accounting  principles.  The  more
significant  accounting  policies  are  summarized  below:

REVENUE  RECOGNITION

Consulting  fees  are  recognized  when  the  services  are  rendered or earned.

USE  OF  ESTIMATES

Because a precise determination of many assets and liabilities is dependent upon
future  events, the preparation of financial statements for a period necessarily
involves  the use of estimates which would affect the amount of recorded assets,
liabilities,  revenue  and  expenses.  Actual  amounts  could  differ from these
estimates.

FIXED  ASSETS

Fixed  assets  are recorded at cost less accumulated depreciation.  Depreciation
is provided on a declining balance basis at rates which are designed to amortize
the  cost  of  the  assets  over  their  estimated  useful  lives  as  follows:

Furniture  and  fixtures     20%
Computer  hardware     30%

INCOME  TAXES

The  Corporation  accounts  for  deferred  income  taxes  based on the liability
method.  Under  the  liability  method, deferred income taxes are recognized for
the  future  tax  consequences attributable to differences between the financial
statement  carrying  amounts  of  existing  assets  and  liabilities  and  their
respective tax bases measured using the substantially enacted tax rates and laws
that  will  be  in  effect  when  the  differences  as  reflected  reverse.

<PAGE>
FOREIGN  CURRENCY  TRANSLATION

Monetary assets and liabilities denominated in foreign currencies are translated
into  Canadian  dollars at the rates of exchange prevailing at the balance sheet
dates.  Non-monetary  assets  and  liabilities denominated in foreign currencies
are  translated  into  Canadian dollars at historic rates.  Revenue and expenses
denominated  in  foreign  currencies are translated into Canadian dollars at the
rates  prevailing  at  the  transaction  dates.  Exchange  gains  and losses are
included  in  income  (loss)  for  the  period.

CASH

Cash  consists  of  cash  on  hand  and  balances  with  banks.

2.  FIXED  ASSETS

Fixed  assets  consist  of  the  following:
<TABLE>
<CAPTION>



                             1999
                         -------------
ACCUMULATED                NET BOOK
COST                     DEPRECIATION    VALUE
                              $           $
<S>                      <C>            <C>      <C>
Furniture and fixtures.         67,949   58,660  9,289
Computer hardware . . .          1,279    1,279      -
-----------------------
                                69,228   59,939  9,289

                                  1998
                         -------------
    ACCUMULATED . . . .  NET BOOK
  COST. . . . . . . . .  DEPRECIATION   VALUE
  $ . . . . . . . . . .  $              $

Furniture and fixtures.         65,192   56,871  8,321
Computer hardware . . .          1,279      919    360
-----------------------
                                66,471   57,790  8,681
</TABLE>



3.  SHARE  CAPITAL

Share  capital  consists  of  the  following:
<TABLE>
<CAPTION>



                    1999   1998
                     $
<S>                 <C>    <C>
AUTHORIZED
100 common shares

ISSUED
100 common shares.    100   100
------------------
</TABLE>



On  August  20,  1999,  the Articles of Incorporation were amended to change the
amount  of  authorized  common  shares  to  unlimited.

4.  RELATED  PARTY  TRANSACTIONS

As  at  September  30, the Corporation has outstanding account balances with its
shareholder  and  related  party  as  follows:
<TABLE>
<CAPTION>



                         1999    1998
                         $
<S>                    <C>       <C>
1322669 Ontario Inc..   157,948     -
Shareholder . . . . .       459   605
---------------------
                        158,407   605
</TABLE>



The  amount due to the shareholder is unsecured, non-interest bearing and is due
on  demand.  1322669  Ontario  Inc.  is  wholly-owned  by the Corporation's sole
shareholder.

Effective  August  1,  1999  the Corporation assigned the contracts which earned
consulting  fees  to  JAWS  Technologies  Inc.  [note  12]

5.  INCOME  TAXES

The income tax benefit differs from the amount computed by applying the Canadian
combined  statutory  tax  rates to the income (loss) before income taxes for the
following  reasons:
<TABLE>
<CAPTION>



                                                  1999      1998
                                                   $
<S>                                             <C>        <C>
Income tax benefit at Canadian statutory rate.   (24,546)  67,000
Increase (decrease) in taxes resulting from:
Deferred tax asset valuation allowance . . . .         -        -
Tax benefit of loss carryforwards. . . . . . .         -        -
----------------------------------------------
                                                 (24,546)  67,000
</TABLE>



At  the  end  of the period, no deferred tax asset or deferred tax liability had
been  recorded.

6.  LEASE  COMMITMENTS

The  Corporation  is  committed  to  the  following  future minimum annual lease
payments  for  leasing  office  space:
<TABLE>
<CAPTION>



            $
<S>      <C>
2000. .   62,063
2001. .   74,476
2002. .   55,858
-------
192,397
</TABLE>



Under the operating leases for office space, the Corporation is also required to
pay  for  operating expenses.  These amounts vary from year to year depending on
usage  and  are  therefore  not  included  in  the  above  lease  payments.

7.  SEGMENTED  INFORMATION

The  Corporation's  activities  are  conducted in one operating segment with all
activities  relating  to  development and sale of encryption software.  To date,
all  the  activities  have  occurred  in  Canada.

8.  FINANCIAL  INSTRUMENTS

Financial instruments comprising cash, accounts receivable, accounts payable and
accrued  liabilities  approximate  their fair value.  It is management's opinion
that  the  Corporation  is  not  exposed to significant currency or credit risks
arising  from  these  financial  instruments.

CREDIT  RISK

Accounts  receivable  are subject to concentration of credit risk.  As at period
end,  87%  of  accounts  receivable  is  outstanding  with  three  customers.

There  is  no allowance for doubtful accounts recorded for the two-month periods
ended  September  30,  1999  and  1998.

9.  ECONOMIC  DEPENDENCE

100%  of  the Corporation's sales were made to three customers.  These customers
accounted  for  47%  of  the Corporation's accounts receivable balance at period
end.

Approximately  99% of the Corporation's subcontracting expenses were provided by
seven  vendors.  These  vendors  accounted for 16% of the Corporation's accounts
payable  and  accrued  liabilities  balance  at  period  end.

10.  STATEMENTS  OF  CASH  FLOWS
<TABLE>
<CAPTION>



                                             1999      1998
                                              $
<S>                                        <C>        <C>
Accounts receivable . . . . . . . . . . .   290,195    28,051
Income taxes recoverable. . . . . . . . .   (24,546)    2,238
Accounts payable and accrued liabilities.   (20,105)   22,297
-----------------------------------------
Income taxes payable. . . . . . . . . . .         -    64,762
                                            245,544   117,348
</TABLE>



11.  YEAR  2000  ISSUE

The  Year  2000  Issue  arises  because many computerized systems use two digits
rather  than  four to identify a year.  Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year  2000  dates is processed.  In addition, similar problems may arise in some
systems  which  use  certain  dates  in 1999 to represent something other than a
date.  The  effects  of  the  Year  2000 Issue may be experienced before, on, or
after  January  1,  2000,  and,  if  not addressed, the impact on operations and
financial  reporting  may range from minor errors to significant systems failure
which  could  affect  an entity's ability to conduct normal business operations.
It  is  not  possible  to  be  certain  that  all aspects of the Year 2000 Issue
affecting  the Corporation, including those related to the efforts of customers,
suppliers,  or  other  third  parties,  will  be  fully  resolved.

12.  SUBSEQUENT  EVENT

In  October  1999,  the Corporation's sole shareholder agreed to sell all of the
Corporation's  issued shares to JAWS Technologies Inc.  The Corporation has been
dealing  with  JAWS  Technologies  Inc.  as a customer in the ordinary course of
business  during  1999.




<PAGE>

S:\C4\604\42604\20\0055-13-takeover  circular  (compilation).doc     C-36


                            JAC FINANCIAL STATEMENTS



                                AUDITORS' REPORT



To  the  Directors  of
JAWS  Acquisition  Corp.
We  have  audited the balance sheet of JAWS Acquisition Corp. as at November 29,
1999.  This  financial  statement  is  the  responsibility  of  the  Company's
management.  Our  responsibility  is  to  express  an  opinion on this financial
statement  based  on  our  audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those  standards  require that we plan and perform an audit to obtain reasonable
assurance  whether the balance sheet is free of material misstatement.  An audit
includes  examining,  on  a  test  basis,  evidence  supporting  the amounts and
disclosures  in  the  balance  sheet.  An  audit  also  includes  assessing  the
accounting principles used and significant estimates made by management, as well
as  evaluating  the  overall  balance  sheet  presentation.
In  our  opinion,  the  balance  sheet referred to above presents fairly, in all
material respects, the financial position of the Company as at November 29, 1999
in  accordance  with  accounting  principles  generally  accepted  in  Canada.



Calgary,  Canada     (signed)  Ernst  &  Young  LLP
November  29,  1999     Chartered  Accountants
(except  for  Note  5  which  is
as  at  December  9,  1999)


<PAGE>


                             JAWS ACQUISITION CORP.
           (Incorporated under the Alberta Business Corporations Act)


                                  BALANCE SHEET
                      (all amounts stated in U.S. dollars)



<TABLE>
<CAPTION>




          AS  AT
          NOVEMBER  29,
          1999

                        $
                        --
<S>                     <C>
ASSETS
CURRENT
Cash . . . . . . . . .   1
SHAREHOLDER'S EQUITY
Share capital [note 3]   1
</TABLE>


See  accompanying  notes

On  behalf  of  the  Board:

     (signed)     Arthur  Wong     (signed)     Riaz  Mamdani
          Director     [Director]


<PAGE>

1.  INCORPORATION
The Company was incorporated on November 24, 1999 and has been inactive from the
date  of  incorporation  to  November  29,  1999.
2.  SIGNIFICANT  ACCOUNTING  POLICIES
The  financial  statement  of  the  Company has been prepared in accordance with
accounting  principles  generally  accepted in Canada.  This financial statement
has, in management's opinion, been properly prepared within reasonable limits of
materiality.
3.  SHARE  CAPITAL
<TABLE>
<CAPTION>



<S>                                      <C>
AUTHORIZED
Unlimited number of exchangeable shares
Unlimited number of common shares
                                         $
ISSUED AND OUTSTANDING
1 common share. . . . . . . . . . . . .   1
</TABLE>


4.  YEAR  2000
The  Year  2000  Issue  arises  because many computerized systems use two digits
rather  than  four to identify a year.  Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year  2000  dates is processed.  In addition, similar problems may arise in some
systems  which  use  certain  dates  in 1999 to represent something other than a
date.  The  effects  of  the  Year  2000 Issue may be experienced before, on, or
after  January  1,  2000,  and,  if  not addressed, the impact on operations and
financial  reporting  may range from minor errors to significant systems failure
which  could  affect  a company's ability to conduct normal business operations.
Management  has  developed  and  is implementing a plan designed to identify and
address  the  expected  effects  of  the  Year  2000  Issue  on the Company.  An
assessment  of  the  readiness of third parties such as customers, suppliers and
others  is  ongoing.  It  is  not possible to be certain that all aspects of the
Year 2000 Issue affecting the Company, including those related to the efforts of
customers,  suppliers,  or  other  third  parties,  will  be  fully  resolved.
5.     SUBSEQUENT  EVENT
On  November  2,  1999 and as amended December 2, 1999, JAWS Technologies, Inc.,
the Company's parent, entered into a pre-acquisition agreement with Offsite Data
Services Ltd. ("Offsite"), a company incorporated in the Province of Alberta and
listed  on  the  Alberta  Stock  Exchange,  whereby the companies have agreed to
combine  their  business  interests through an offer by JAWS Technologies, Inc.,
through its wholly-owned subsidiary, JAWS Acquisition Corp., to purchase all the
outstanding  shares  of Offsite.  The offer is expected to be mailed on December
10,  1999.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF  OPERATIONS.

     This  Quarterly  Report  contains  forward-looking  statements  within  the
meaning  of  Section 27A of the Securities Act and Section 21E of the Securities
Exchange  Act.  Words  such  as  "expects,"  "anticipates,"  "intends," "plans,"
"believes,"  "seeks," "estimates" and other similar expressions or variations of
such  words  are  intended  to  identify  these  forward-looking  statements.
Additionally,  statements  concerning  future matters such as the development of
new  products, enhancements or technologies, possible changes in legislation and
other  statements  regarding  matters  that  are  not  historical  fact  are
forward-looking  statements.  Forward-looking  statements  involve  risks  and
uncertainties.  Actual  results  could differ materially from those projected in
the  forward-looking  statements. Factors that could cause or contribute to such
differences include, but are not limited to, availability of financial resources
adequate  for  short-,medium-  and  long-term needs, demand for our products and
services and market acceptance, as well as those factors discussed in this "ITEM
2.  Management's  Discussion  and  Analysis of Financial Condition and Operating
Results"  and  elsewhere  in  this  Report.

                         CORPORATE AND BUSINESS OVERVIEW

     JAWS  Technologies,  Inc. ("JAWS") was incorporated as a Nevada corporation
on  January  27,  1997  under  the  name  "e-biz" solutions, inc. ("e-biz").  On
February  10,  1998,  e-biz  entered  into  an  agreement  to  purchase  all the
outstanding common shares of JAWS Canada in exchange for 1,500,000 shares of the
restricted  common stock of e-biz and options to purchase 400,000 shares of such
restricted  common  stock  at $0.50 per share.  On March 27, 1998, e-biz changed
its  name  to  JAWS  Technologies,  Inc.
The  registered  office  of  JAWS  is located at Paracorp Incorporated, 208, 318
Carson  Street, Carson City, Nevada  89701 and its head office is located on the
second  floor  at  1013  -  17th  Avenue  S.W.,  Calgary,  Alberta  T2T  OA7.
JAWS  is  currently  the  parent corporation of two operating subsidiaries, JAWS
Canada  and  Pace.  The  overall  strategic  goal for JAWS is to consolidate the
highly fragmented information security industry, achieve increasing economies of
scale  through  the  acquisition  of  high  growth,  emerging  market  firms and
integrate  such  firms through centralized administration and planning.  Through
industry  and  management expertise, JAWS attempts to ensure that acquired firms
receive  the  capital  and  corporate  planning necessary to maximize the growth
potential  within  each  information  system  niche.
The shares of JAWS Common Stock trade on the OTC Bulletin Board under the symbol
"JAWZ".  For  a  description  of  the  OTC Bulletin Board, see "The OTC Bulletin
Board"  in  this  Circular.
JAWS  CANADA
     JAWS  currently  owns  100%  of the shares of JAWS Canada.  JAWS Canada was
incorporated  under  the  laws of the Province of Alberta on September 18, 1997.
The registered office of JAWS Canada is located at  4500, Bankers Hall East, 855
-  2nd  Street  S.W., Calgary, Alberta T2P 4K7 and its head office is located on
the  second  floor  at  1013  -  17th  Avenue  S.W.,  Calgary,  Alberta T2T OA7.
JAWS Canada specializes in the field of high-end information security, providing
consulting  services  and software solutions to minimize the threats to clients'
information and communications.  At its offices in Calgary, Alberta, JAWS Canada
develops  proprietary  encryption  software  using  what is currently one of the
world's  strongest  encryption algorithms, L5 , to secure binary data in various
forms,  including  streamlining  or  blocking  data.
L5  was  developed  and  refined over approximately 15 years by its inventor Mr.
James  L.  A.  Morrison.  Mr.  Morrison was Chief Programmer at JAWS Canada from
March  1,  1998  to  April  20,  1999.
On  October  20,  1997,  JAWS  Canada Software Ltd. (a company controlled by Mr.
Morrison)  assigned  all  of  its  right,  title  and interest in L5 , and other
miscellaneous  intellectual  property,  to JAWS Canada.  In October 1998, during
JAWS Canada's patent application process, there was a further assignment of L5 ,
and  other  miscellaneous  intellectual property, to JAWS Canada by Mr. Morrison
personally  in  order  to  fulfill  the  requirements  of the patent application
process.  L5  itself  is  not  the software produced and marketed by JAWS Canada
but  the  mathematical  process outlining the detailed steps required to encrypt
and  decrypt  data.  L5  can be incorporated into a variety of software programs
requiring  encryption  of  data.
Since  the  acquisition  of  L5  by  JAWS Canada, a team of JAWS Canada software
engineers  has  developed  and continues to develop numerous applications for L5
on many different platforms (such as JAWS Desktop , JAWS Xmail , and JAWS Memo ,
all  of  which  have  withstood  in-depth  scrutiny  from  hacking  experts). L5
software,  prior  to  acquisition,  had  been developed using the Borland Delphi
computer  programming  language  on  a  Windows  95/98  platform.  The  software
consisted  primarily  of  L5  and a Windows user interface.  Since that time, L5
has  been  rewritten  in the C language.  An in-house JAWS Canada cryptographer,
with  the co-operation of two University of Calgary professors, has made several
refinements  to  L5  including  some  changes  introduced  to  address speed and
security  considerations.  C  language  can  be  used  in a variety of operating
systems  (e.g. UNIX, OS/2, VMS, and Windows CE).  As L5  is no longer limited to
Windows,  it  can  now  be  deployed  interoperably  on  a variety of platforms.
JAWS  Canada's  business  plan  is to become a full service information security
solution  provider.  In accordance with this plan, JAWS Canada currently markets
both  information  security  products  and  professional  information  security
services.
In  an attempt to create and maintain a competitive advantage in the information
security  industry, JAWS Canada strives to continually differentiate itself from
other  industry  players and works towards establishing strong brand loyalty for
its  products  and  services  through  multiple  channels  of distribution.  The
distribution  strategy  used  by JAWS Canada addresses the requirements of small
organizations  to  large  enterprises  and  matches  the  appropriate  sales and
distribution  channels  to  the  software  and  services  offered.
Further  information  with respect to JAWS Canada is set forth under the heading
"JAWS  Canada"  in Appendix B, which is incorporated into and forms part of this
Circular.



                              RESULTS OF OPERATIONS

                               FINANCIAL POSITION
                     SEPTEMBER 30, 1999 V. DECEMBER 31, 1998
<TABLE>
<CAPTION>


                       SEPTEMBER 30, 1999     DECEMBER 31, 1998

                         ($USD)     ($USD)
                       ----------  ---------
<S>                    <C>         <C>

CURRENT ASSETS. . . .  1,199,394    194,549
LONG TERM ASSETS. . .    498,004     78,830
---------------------  ----------  ---------
TOTAL ASSETS. . . . .  1,697,398    273,379
---------------------  ----------  ---------
CURRENT LIABILITIES .  1,110,368    700,432
---------------------  ----------  ---------
LONG TERM LIABILITIES  1,158,337    146,606
---------------------  ----------  ---------
TOTAL LIABILITIES . .  2,268,705    847,038
---------------------  ----------  ---------
TOTAL EQUITY. . . . .   (571,307)  (101,204)
---------------------  ----------  ---------
</TABLE>



     Revenue  for  the  nine  months  ending September 30, 1999 was $ 372,630 as
compared  with  $29,068  ending  December 31, 1999.  Subsequent to September 30,
1999,  JAWS  completed  the acquisition of Pace Systems Group Inc ("Pace").  The
results for operations of this entity will be consolidated with JAWS' results in
the  fourth  quarter.  During the period of July 31, 1999 to September 30, 1999,
JAWS  earned  $337,988  from  Pace  contracts  which  revenue is included in the
September  30,  1999  financial  statements.

     The  loss  for  the  period  ending  September  30, 1999 was $ 3,839,135 as
compared  with  $  2,210,064  ending  September  30,  1998.

     Expenses  in all categories have increased significantly as a result of the
continued  growth  of  operations,  moving  JAWS  products  toward  and into the
commercialization stage and the expenses related to acquisitions.  These include
expenses related to the preparation of various marketing and sales documents and
materials, wages and benefits, requirements for office space, supplies and other
office  related  expenses.  For example, JAWS spent $ 234,398 on advertising and
promotion  for the period ending September 30, 1998 as compared with $194,764 in
1998.  Expenditures  on rent and wages and employee benefits also reflect growth
of  operations;  for the period ending September 30, 1999 JAWS spent $752,135 on
wages  and  benefits  and $ 180,840 on rent.  For the period ending December 31,
1998  JAWS  spent  $283,728  on  wages and benefits and $29,637 on rent.  All of
these  increases  relate  to  the  growth  of  the  business,  operations  and
administration  of  JAWS.

JAWS  anticipates  that  all  JAWS'  operating,  and  general and administrative
expenses  will  continue  to increase as JAWS' operations grow and the marketing
and  sales  initiatives  expand.  It  is expected that the costs associated with
these  initiatives  will  continue  to  increase  before  revenues are realized.

     Given  the  trend  of  JAWS  increasing  expenses  related  to  operations,
management  has  forecasted that expenses will continue to increase and revenues
for the next year will not be sufficient to support growing expenses.  JAWS will
continue  to  require  equity  investment  for at least the next year to support
these  expenses,  even  though  the  gap  between  revenue  and expenses lessens
slightly  as  sales  revenues  begin  to  be  realized.

ASSETS

     Current  assets increased to $1,199,394 at September 30, 1999 from $194,549
at  December  31,  1998.  This  increase  is  primarily  due  to the issuance of
convertible debentures to Thomson Kernaghan & Co. Limited. ("Thomson Kernaghan")
that  put  the company in a positive cash position.  Fixed assets increased from
$92,291  to  $580,296  during  this  period.

LIABILITIES

     Current  liabilities  increased to $1,110,368 from $700,432.  This increase
is  primarily  due to the growth of JAWS operations and the proportionate growth
in  the  accounts  payable  to  suppliers  and  contractors.

     Long Term liabilities increased by $1,421,667 between December 31, 1998 and
September  30,  1999.  This  increase  is  attributable  to  the  issuance  of
convertible  debentures.

STOCKHOLDERS'  EQUITY

     Overall  the balance in shareholders equity has not changed materially from
December  31, 1998 to September 30, 1999 ($573,659 versus $571,307 respectively)
as  equity  injections  offset  operating  losses.   However,  the  individual
components  of  shareholders  equity  have  changed  significantly.  As a direct
reflection  JAWS  increasing  availability  of and access to capital, capital in
excess  of  par value (and correspondingly share captial) increased dramatically
from  $2,212,153  to  $5,369,891 ($10,612 to $15,114 for share capital), as JAWS
issued  shares  to  finance  the  continuing  growth of operations.  Contributed
surplus increased (proportionately to share capital and capital in excess of par
value)  from  $425,559 to $1,241,607 due to the issuances of warrants associated
with  the  share  offerings.  Shares  were  primarily issued for cash in private
placements.  As  expected  and illustrated in the Income Statement, expenditures
outpaced  revenue  by  a  large  margin.  Correspondingly,  shareholders deficit
increased  in  size  from  -$3,213,141  to  -$7,052,276 due to JAWS expected and
ongoing  operating  losses.

FINANCIAL  CONDITION,  LIQUIDITY  AND  CAPITAL  RESOURCES

     Net cash used in operations for the period ending September 30, 1999, was $
2,741,731  as  compared with $ 727,588 for the fiscal period ended September 30,
1998.  These  increases are a result of the increased expenses incurred as noted
above.  Management  plans  to  raise  additional  capital in 2000 and is working
toward  arranging  the  appropriate  equity  investments  to maintain reasonable
levels of working capital.  As at September 30, 1999 JAWS had raised $ 3,941,641
in  additional  working  capital  for  operations.

     Cash on hand of $ 664,428 at September 30, 1999, is an increase from $ 0 at
September  30, 1998. This increase is as a result of a series of stock issuances
and  funds  advanced  under  a convertible debenture agreement.  A net amount of
$3,941,641  was  raised  from  financing during the nine month period January 1,
1999  to  September  30, 1999 and these funds will be deployed primarily to fund
operations.

     Accounts  payable  and accrued liabilities have increased from $ 428,600 at
December  31,  1998  to  $897,947  in September 30, 1999.  These increases are a
result  of  the  efforts  of management to increase sales revenue and grow JAWS'
operations and are consistent with the other expense increases in 1999. JAWS has
anticipated  and  budgeted for these increases to provide for the organizations'
shift  from  R  &  D  to  commercialization  and  to  provide  for the growth of
operations.  Management  has  budgeted for this trend and expects the trend will
continue  until  cash  flow  from  sales is realized allowing JAWS to reduce the
trade  accounts  in  a  more  timely  fashion.

     JAWS  has not established any lines of credit outside of trade accounts and
will not be in a position to negotiate any lines of credit until sales contracts
have been validated and matured.  JAWS has not used any debt instruments to date
due  to  its  early stage of operations, other than long term capital leases and
convertible  debentures  which have recently been converted to equity. (See Form
8K  dated  December  2,  1999  and  the  8K amendment filed December 7, 1999 for
additional  information  on  the  conversion  of  the  convertible  debentures).

FINANCING

          On September 25, 1998, JAWS entered into a $2,000,000, 10% Convertible
Debenture  Agreement  with  Thomson Kernaghan and 1,428,572 warrants to purchase
1,428,572  common  shares  at  $0.28  per  common  share.  The Thomson Kernaghan
warrants  expire  on  October 31, 2002 and may be exercised in whole or in part,
from time to time, prior to October 31, 2002 in accordance with the terms of the
Thomson  Kernaghan  warrants  and  the  amended debenture agreement. The Thomson
Kernaghan  warrants are assignable, and non-callable. Around this time JAWS also
entered  into an agreement with Bristol Asset Management LLC ("Bristol") whereby
JAWS  was  given the right to obligate Bristol to buy up to 25,000,000 shares of
Common  Stock  for  up  to  $7,000,000  in  "put"  options.

     On  April  20,  1999,  JAWS  signed  a  settlement  agreement  with  and in
consideration of the cancellation of the previous financing arrangement JAWS has
granted  warrants to Bristol to purchase 1,000,000 shares of the common stock of
JAWS  at $0.70 USD, expiring April 15, 2002.  The cancellation of this financing
will  not  have  an  immediate  impact  on  JAWS'  plan  of  operation.

     On  April  27,  1999,  JAWS  and  Thomson  Kernaghan  amended the debenture
agreement,  increasing the amount available to $5,000,000.  $1,520,000 of the $5
million  available  under  the  amended  debenture  agreement  was  advanced  in
accordance  with  the  terms  of  debentures  issued  by  JAWS.

On  November 17, 1999, JAWS executed a Debenture Acquisition Agreement Amendment
and Settlement Agreement with Thomson Kernaghan, (the "Settlement Agreement") in
order  to  settle  the  outstanding  obligations  of the parties relating to the
$5,000,000  Debenture Acquisition Agreement dated September 25, 1998, as amended
on  April  27,  1999.

     The  Settlement  Agreement  settles  the conversion terms of the $1,520,000
advanced  under  Debenture  Agreement  and  the exercise of outstanding warrants
issued  under  the  Debenture  Agreement  and terminates all further obligations
related  to  the  Debenture  Agreement.

     Debentures  issued  pursuant to the Debenture Agreement have been converted
to  5,127,672  restricted  shares.

Thomson  Kernaghan has exercised all of the outstanding warrants issued pursuant
to  the  Debenture  Agreement for the issuance of 2,180,220 shares in the common
stock  of  JAWS.

     The  parties  have  signed  a  mutual  release.


                               RECENT DEVELOPMENTS

FINANCING  AFTER  SEPTEMBER  30,  1999

     On  October  28,  1999,  JAWS  sold  283,000 shares of JAWS Common Stock at
U.S.$1.50  per  share  for  an  aggregate  investment of U.S.$424,500 to Striker
Capital,  in  a  private  placement.
     On  November  24,  1999,  JAWS  sold 411,765 shares of JAWS Common Stock at
U.S.$1.70  per  share  to  Heronwood,  Ltd.  for  an  aggregate  investment  of
U.S.$700,000  in  a  private  placement.  Further,  the  sale  included  411,765
warrants  to purchase 411,765 shares of JAWS Common Stock at U.S.$1.70 per share
until  November  1,  2002.

     It  is  anticipated  that  on  or about December 15, 1999, JAWS will sign a
placement  agency agreement with Smallcaps Online LLC and Thomson Kernaghan with
respect  to  a  private  placements  of  units  for  an  aggregate  of  between
U.S.$8,500,000  and  U.S.$10,625,000.  Under  the  provisions of this agreement,
units  consisting  of  one  share of JAWS Common Stock and a warrant to purchase
of  one  share  of  JAWS  Common  Stock at a price of U.S.$6.50 per share, which
warrants  expire  upon  the  third anniversary of the effective date of the JAWS
registration  statement relating to these securities.  The units are to be sold,
on  a  best  efforts  basis,  at  a  price  of  U.S.$4.25 per unit.  The private
placement  is  expected to close on December 17, 1999, unless otherwise extended
by  JAWS.  The  warrants are callable after the effective date of the applicable
JAWS  registration  statement  at  U.S.$0.001 upon 30 days notice if the closing
price  of  shares  of  JAWS  Common  Stock  exceeds U.S.$9.75 for 30 consecutive
trading  days.  The  exercise  price  of the warrants is to be discounted in the
event  that the applicable JAWS registration statement is not declared effective
within  certain  time  periods.
     Further,  on the closing date, JAWS will issue warrants to Smallcaps Online
LLC  and  Thomson  Kernaghan  entitling the holders thereof to acquire shares of
JAWS  Common  Stock  at U.S.$4.25 per share for a period of three years from the
effective date of the JAWS registration statement.  The number of warrants to be
issued  is  to  be 10% of the total number of units sold pursuant to the private
placement.

     JAWS  believes,  based  on  its  current  operating  plan, that its current
available  cash balances, and additional funds expected to be raised through the
Private Placement Memorandum to be sufficient to fund its operations through the
next  12  months.

     No  assurance  can  be  given,  however,  that  JAWS  will be successful in
obtaining  financing  on  terms acceptable to the Company, if at all. Should the
Company  fail to obtain any such financing, or to obtain such financing on terms
favorable  to  JAWS,  JAWS  may be unable to continue with its business plan, to
commercialize  its  products  or  continue  its  current operations as presently
conducted,  if  at  all,  beyond December 31, 2000.  JAWS' cash requirements may
vary  materially from those now planned because of factors such as acquisitions,
product  development, geographical expansion, and costs related to the growth of
operations.

ACQUISITION  OF  PACE

     Effective  as  of  November  3,  1999, JAWS acquired 100% of the issued and
outstanding  common shares of Pace Systems Group Inc. ("Pace") in exchange for a
maximum  issuance  of 1,731,932 shares of JAWS Common Stock, valued at U.S.$1.70
per  share,  to  be  released over a period of two years.  JAWS, considering the
value  of  all  of the assets of Pace, including the physical assets reported on
the  audited  financial  statements  of  Pace  dated  July  31, 1999, historical
revenues,  customer  lists,  goodwill,  leases,  key employees and other assets,
determined  the value of Pace to be U.S.$2,944,284.  Such a valuation represents
an  amount  equal  to  2.29 times the gross revenues of Pace for the fiscal year
ended  July  31,  1999.  However,  according  to  the  applicable share purchase
agreements,  the  final  purchase  price for the Pace common shares is dependent
upon  certain  performance  and  revenue  targets  of  four  key  employees.
Pace  was  incorporated  under the laws of the Province of Ontario on August 15,
1986  under  the name of Pace Systems Group Inc.  The registered office and head
office  of  Pace is located at 307, 1 Concord Gate, Don Mills, Ontario  M3C 3N9.
Pace  is  a  private  company  with a history of providing financial information
technology  security solutions to retailers and large financial organizations in
North  America  and Europe.  More specifically, Pace offers services in the area
of payment systems, including point of sale automated banking machine electronic
funds  transfer  switch  implementation,  point  of  sale application and device
integration,  network  architecture  and  design, system integration and project
management.  With  the  acquisition  of  Pace,  JAWS  retained  several  highly
qualified  financial  information  and technology specialists who have developed
relationships  with  clients  including  several  large  Canadian  banks  and
international  banks,  Sun  Life  Trust, Interac, ING Direct, SNS Assure, Future
Shop  and  Grand  &  Toy.  Four  key  specialists  have agreed to continue their
employment  with  Pace  for  a  period  of  at  least  24 months while the other
specialists are engaged by Pace as consultants.  The total number of specialists
varies  between  10  and  20  individuals.
Pace  has  worked  with  most of the major financial institutions of Canada with
respect  to  the  development  of  retail  banking systems.  As a result, it has
extensive  knowledge  of the electronic payment technology currently in place in
Canada.  Pace  also  has  a  broad  familiarity  with  most  electronic  payment
technologies  and has strategic, formal and informal, working relationships with
Compaq/Tandem,  Oracle,  ACI and others.  Such relationships are based upon Pace
gaining  knowledge  of  the products of these companies and assisting clients in
implementing  solutions.  As a result, Pace is currently one of the few Canadian
companies  with  the  capability  to  evaluate, recommend, integrate, implement,
source  and  operate  a variety of technologies and assist clients in delivering
improved  electronic  commerce  products  and  services  to  their  clients.
Pace  has  specialized  knowledge  with  respect to Interac and currently offers
implementation  and  business expertise to retailers, financial institutions and
third  party  processors  with  respect  to the  connection of such companies to
their banks or similar service providers or as a Direct Connector to the Interac
network.
     Other services which Pace provides include pre-sales support to assist with
the  customization  of  sales  efforts  for  prospective  clients,  software
development,  device  certification (primarily with respect to the certification
of  "Secure  PIN  Entry  Devices", as defined in the regulations of Interac) and
testing,  hardware and software vendor proposal evaluation, creation of requests
for  information  or  proposals  to  be distributed by the client to prospective
hardware  and  software  vendors, systems implementation, facilities management,
post  implementation  support,  user and technical documentation, user training,
general  consulting  and  year  2000  conversion  and  testing.
PENDING  OFFSITE  ACQUISITION

     JAWS,  through  its  wholly-owned  subsidiary  JAWS  Acquisition Corp. (the
"JAC"),  is  offering  to  purchase  all  of  the  outstanding common shares  of
("Offsite  Shares")  and  common  share purchase B warrants of Offsite ("Offsite
Warrants") upon the terms and subject to the conditions described in an Offer to
Purchase  (the  "Offer") dated December 9, 1999.  The Offer is made on the basis
of  0.3524  of  an  exchangeable  share  in the capital of JAC (an "Exchangeable
Share")  for  each  Offsite Share and one Exchangeable Share purchase warrant of
JAC  (a  "JAC Warrant") for each Offsite Warrant.  Each whole Exchangeable Share
will  be  exchangeable  for  one share of the common stock of JAWS ("JAWS Common
Stock").  Each JAC Warrant will have substantially the same terms and conditions
as the corresponding Offsite Warrant except that instead of receiving an Offsite
Share  upon  exercise,  the holder will receive 0.3524 of an Exchangeable Share.
The JAC Warrants may not be exercised in the United States or by or on behalf of
U.S.  Persons.  The  Exchangeable  Shares  and  the  JAC  Warrants may be resold
provided  that  no  offer  of the Exchangeable Shares is made to a person in the
United  States  and such sale is not accompanied by any directed selling efforts
in  the  United  states, and either (a) at the time the buy order is originated,
the  buyer  is  outside the United States and the seller or any person acting on
the  seller's  behalf reasonably believe the buyer is outside the United States,
or  (b)  the  transaction is executed through the facilities of a Canadian stock
exchange  and  neither the seller nor any person acting on its behalf knows that
the  transaction  has  be prearranged with or on behalf of a buyer in the United
States.  Jaws does not expect that the Exchangeable Shares will be listed on any
stock exchange in Canada or elsewhere.  Persons who hold both Offsite Shares and
Offsite  Warrants  will  be  treated  for  the  purpose  of  the Offer as having
exchanged  their  Offsite  Shares  and  Offsite  Warrants  for  a combination of
Exchangeable  Shares  and  JAC  Warrants  as  a  single exchange rather than two
separate  exchanges.

     According  to the securityholders lists of Offsite, as at November 22, 1999
there were 13,285,728 Offsite Shares and 1,818,550 Offsite Warrants outstanding.
Each  Offsite  Warrant  entitles  the  holder  to acquire one Offsite Share at a
purchase  price  of  $0.40n  CDN  per share.  As of December 15, 1999, there are
21,326,945  shares  of JAWS Common Stock outstanding and one common share of JAC
outstanding.  Assuming  that  all  of  the outstanding Offsite Shares (including
Offsite  Shares  issuable  upon exercise of all outstanding options, warrants or
other  rights) are tendered in acceptance of the Offer and JAC takes up and pays
for  such  Offsite  Shares,  JAC will issue approximately 6,012,769 Exchangeable
Shares.  Assuming  that all of the holders of Exchangeable Shares exchange their
Exchangeable  Shares  for  shares  of  JAWS  Common  Stock,  JAWS  will  issue
approximately  6,012,769  shares  of  JAWS  Common  Stock.
The  holders  of  Exchangeable  Shares  will  be entitled to dividends and other
economic  rights  equivalent to those of shares of JAWS Common Stock and will be
entitled,  through  a  voting  trust, to vote at meetings of the shareholders of
JAWS.  Each  holder of the Exchangeable Shares and JAC Warrants may resell their
Exchangeable  Shares  or  JAC  Warrants only in accordance with Regulation S, or
pursuant  to  an  applicable  securities  law exemption.  Pursuant to the resale
provisions of Regulation S, a holder (other than a holder who is an affiliate of
JAC  by virtue of a relationship other than as a director or officer thereof) of
Exchangeable  Shares  or  JAC  Warrants  may  resell  such  shares  through  the
facilities  of  a recognized Canadian stock exchange provided that (a) such sale
is  not accompanied by any directed selling efforts in the United States and (b)
neither  the  seller  nor  any  person  acting  on  its  behalf  knows  that the
transaction  has  been  prearranged  with  or on behalf of a buyer in the United
States  (with additional conditions imposed upon directors and officers of JAC).
Jaws  does  not  expect that the Exchangeable Shares will be listed on any stock
exchange  in  Canada or elsewhere.  The Exchangeable Shares issued in connection
with  the  Offer  and upon exercise of the JAC Warrants may not be exchanged for
shares  of  JAWS  Common  Stock  until  a registration statement registering the
issuance  of  the  JAWS  Common  Stock upon the exchange is effective.  JAWS has
agreed  that  it  will  file  a  registration  statement  with the United States
Securities  and  Exchange Commission (the "SEC") no later than 30 days after the
first  anniversary  of the completion of the acquisition of any of the remaining
Offsite  Shares not tendered pursuant to the Offer.  The JAC Warrants may not be
exercised  in  the  United  States  or  by  or  on  behalf  of  the U.S. Person.
The  Exchangeable  Shares  are designed to provide an opportunity for holders of
Offsite  Shares  and  Offsite  Warrants  to  achieve  a Canadian tax deferral in
certain  circumstances provided a joint tax election is filed on a timely basis.
Persons  who  only hold Offsite Warrants and exchange their Offsite Warrants for
JAC  Warrants as part of the Offer will not be eligible to make such a joint tax
election.  Such  persons  may  consider  exercising  their  Offsite Warrants and
tendering  their  Offsite Shares to the Offer so that they become eligible for a
Canadian  tax  deferral  upon  filing  a  joint  tax  election with the Offeror.
Each of the founders and principal shareholders of Offsite, has agreed to tender
his  Offsite  Shares  (representing approximately 40% of the outstanding Offsite
Shares) and Offsite Warrants in acceptance of the Offer.  Under the terms of the
agreements  with  these  individuals, these securities may not be withdrawn from
the  Offer.
The  Offer to purchase Offsite Shares and Offsite Warrants is subject to certain
conditions, including but not limited to, that no change occurs in the business,
capitalization  or financial condition of Offsite that is materially adverse and
that  there are validly deposited under the Offer and not withdrawn at least 90%
of the outstanding Offsite Shares (calculated on a diluted basis) and 90% of the
outstanding  Offsite  Warrants.
     JAC  reserves  the right to withdraw or terminate the Offer and not take up
and  pay for, or to extend the period of time during which the Offer is open and
postpone  taking  up  and  paying  for,  any  Offsite Shares or Offsite Warrants
deposited  under  the  Offer unless all of the conditions contained in the Offer
are  satisfied  or  waived  by  JAC.

JAWS  ACQUISITION  CORP  ("JAC")
     JAC  is  a  wholly-owned  subsidiary of JAWS and was incorporated under the
Business  Corporations  Act  (Alberta)  on  November 24, 1999 for the purpose of
making  the  Offer.   JAC  has no material assets, capital or liabilities and no
operating  history.  JAC's  registered  office  is located at 4500, Bankers Hall
East,  855  -  2nd  Street S.W., Calgary, Alberta T2P 4K7 and its head office is
located  on  the  second  floor at 1013 - 17th Avenue S.W., Calgary, Alberta T2T
0A7.

OFFSITE'S  CORPORATE  HISTORY

     Offsite  was  incorporated  on  January  10,  1995 under the name of 638279
Alberta  Ltd.  By  articles  of  amendment  dated  June 1, 1995, the name of the
corporation  was changed to Offsite Data Services Ltd.  The registered office of
Offsite is located at 1600, 407 - 2nd Street S.W., Calgary, Alberta  T2P 2Y3 and
its principal business office is located at 301, 630 - 8th Avenue S.W., Calgary,
Alberta  T2P  1G6.

     Offsite  is  a  Calgary-based  company  in  the internet based data storage
management  industry.  It  is  a  service  provider  of  on-line  data  storage
management.  For  a  monthly fee, Offsite offers secure, fully automated on-line
backup, retrieval and storage services through the internet from its data centre
in  Calgary.

     Offsite  has  entered  an  international  software  license  distribution
agreement  with  Beta Systems of Canada Ltd. (formerly Harbor Systems Management
Ltd.) for HarborTM back-up and protection for distributed data software, version
5.0 (the "HarborTM Software") for a five-year period commencing August 16, 1998,
with  a  five-year  renewal  option.  The  HarborTM  Software  consists  of four
components:

(a)     HarborTM  Backup  Host, which provides overall control and management of
all  the back-up and archive activities of the client, is located on a centrally
located  mainframe  (MVS)  computer;

(b)     HarborTM Client, which resides on the client's computer and communicates
with  the  back-up  host at the mainframe (MVS) computer and coordinates back-up
and  archiving  of  data  service  requests;

(c)     HarborTM  Distributed  Storage Services, which allow local area networks
or  multiple  networked  personal  computers  the ability to back-up and restore
data;  and

(d)     HarborTM  Transport  Gateway,  which  provides  high-speed communication
among  a  wide  variety  of  local area network and wide area network protocols.

     Offsite  Shares  trade  on the Canadian Venture Exchange ("CDNX") under the
symbol "OS" and the Offsite Warrants trade on the CDNX under the symbol "OS.WT".

BENEFITS  TO  OFFSITE  ACQUISITION

     The  integration  of  the  two  companies  will  increase  the  competitive
advantages  of  both JAWS and Offsite through consolidation of skills, resources
and  technologies.  The combination of the Company's current and future security
products  with  Offsite's  vaulting  technology  will  allow  the  Company's
shareholders  to  participate in the innovation of market-lead data vaulting and
security  software,  thus  increasing  the  market  share  within  the Company's
targeted  market  verticals,  increasing  the  brand  loyalty  for the Company's
products  and  services,  and  adding  value  for current and future Company and
Offsite  clientele.


SELECTED  PRO  FORMA  CONSOLIDATED  FINANCIAL  INFORMATION

     The following table sets out certain consolidated financial information for
JAWS,  Pace  and  Offsite  as  well  as certain pro forma consolidated financial
information after giving effect to the Offer and certain other adjustments.  THE
FOLLOWING  INFORMATION  SHOULD  BE  READ  IN  CONJUNCTION  WITH  THE  PRO  FORMA
CONSOLIDATED  FINANCIAL  STATEMENTS  OF  JAWS  SET  FORTH  IN  APPENDIX A TO THE
CIRCULAR.  THE  INFORMATION  PRESENTED  BELOW  AND IN APPENDIX A ASSUMES ALL THE
OFFSITE  SHARES  (INCLUDING  OFFSITE  SHARES  ISSUABLE  UPON  EXERCISE  OF  ALL
OUTSTANDING  COMMON  SHARE  PURCHASE  A  WARRANTS  OF  OFFSITE)  ARE TENDERED IN
ACCEPTANCE  OF  THE OFFER, JAC TAKES UP AND PAYS FOR SUCH OFFSITE SHARES AND ALL
EXCHANGEABLE  SHARES  ARE  EXCHANGED  FOR  SHARES  OF  JAWS  COMMON  STOCK.
<TABLE>
<CAPTION>

                          JAWS     PACE     OFFSITE     PRO FORMA
      (As at or for the     (As at or for the     (As at or for the     CONSOLIDATED
       nine month period     nine month period     nine month period     (As at or for
                                       the nine
      ended September     ended September     ended September     month period ended
                30, 1999     30, 1999     30, 1999)     September 30, 1999)

                                   (unaudited)  (unaudited)  (unaudited)  (unaudited)
                                   -----------  -----------
<S>                                <C>          <C>          <C>          <C>
                                   (U.S.$000s)

Revenue . . . . . . . . . . . . .         373          667          160        1,200
Net loss for the period . . . . .      (4,205)        (361)        (446)      (7,994)
Total assets. . . . . . . . . . .       2,177          127          399       18,314
Long-term debt. . . . . . . . . .       1,172            -            1           82

Shareholders' equity (deficiency)         (92)         (54)         313       15,865

</TABLE>



                               MANAGEMENT CHANGES

     Effective  November  30,  1999,  Cameron Chell submitted his resignation to
JAWS  which  was accepted by the Company's board.  As at November 30, 1999, JAWS
has  four  board  members: Robert Kubbernus, Julia Johnson, Arthur Wong and Riaz
Mamdani.


                                  RISK FACTORS

     In  addition  to the risk factors set out below, please see risk factors as
set  forth  in  it  Form  10-SB  effective  November  1,  1999 previously filed.

NO  ASSURANCE  OF  COMPLETION  OF  OFFSITE  ACQUISITION

     The  agreement to acquire Offsite provides a number of conditions precedent
to  closing  the transaction, including, but not limited to, regulatory approval
from  regulatory  bodies,  at  least 90% of the outstanding Offsite Warrants and
Offsite  shares  being tendered and other conditions.  There can be no assurance
that  JAWS or Offsite will be able to meet all of these conditions precedent, or
even if  the companies meet such obligations, that other unforeseen circumstance
might  obstruct  the  closing  of  the  proposed  transaction.

 RISKS  ASSOCIATED  WITH  RECENT  AND  PROPOSED  ACQUISITIONS

     With  the  recent  acquisition  of  Pace, and if the Offsite acquisition is
successfully  concluded,  there  can  be  no assurance that JAWS will be able to
profitably  manage  or  successfully integrate the acquired assets and personnel
without substantial expenses, delays or other operational or financial problems.
The  acquisitions  will  involve  the  recognition  of  goodwill  which  will be
amortized  as  a charge to operations over the next 3 years.  Furthermore, these
acquisitions  may  involve  additional  risks or effects, including diversion of
management's  attention, failure to retain key acquired personnel, unanticipated
events  or  circumstances,  legal  liabilities  and  other  one-time  or ongoing
acquisition related expenses, some or all of which could have a material adverse
effect  on  the  Company's  business, operating results and financial condition.
Client  satisfaction or performance problems of the acquired businesses, if any,
could  have  a  material  adverse  impact  on the reputation of JAWS as a whole.
These  acquisitions  involve JAWS adding offices in other geographical locations
which  will add further responsibilities to JAWS' existing management structure.
There  is  no  assurance  that  JAWS'  acquisition  of  Pace,  and  the proposed
acquisition  of  Offsite,  if  successful,  will  result  in  the  generation of
anticipated  revenues  and  earnings.

JAWS  AND  ITS  SUBSIDIARIES  HAVE  LIMITED  OPERATING  HISTORIES  AND CONTINUED
OPERATING  LOSSES

     With  the  exception of newly acquired Pace, JAWS and its subsidiaries have
short  operating  histories,  a  limited  number of sales and operating revenues
which  are  not  significant.  For  example,  JAWS  Canada  was  incorporated on
September  19, 1997, did not begin producing software until October 1997 and did
not begin marketing software until May 1998. Investors of Units will have little
meaningful  information  about  JAWS or its subsidiaries to assist in evaluating
whether  JAWS  or its subsidiaries will ever be able to successfully produce and
market  its  software  or  whether  an  investment in JAWS will be profitable or
unprofitable.

     Because  of  JAWS  Canada's  short  operating history and limited sales, it
faces  all  the risks and problems associated with a new business, including the
existence  of  operating  losses.  For  example,  between  the  time  of  the
incorporation  of  JAWS  and September 30, 1999, JAWS and JAWS Canada have, on a
consolidated basis, incurred cumulative losses of US$7,052,276.  JAWS anticipate
that  losses with respect to JAWS Canada will continue in the future unless JAWS
Canada  it  is  able  to  produce  revenue  from  sales  of  its  software.
With  respect  to  Pace,  although  Pace  began  operations in 1986, it has only
achieved profitability over the past year.  JAWS cannot be certain that Pace can
sustain  such profitability in any future period.  Potential Investors should be
aware  that  Pace operates in a new and rapidly evolving market and must respond
to  competitive  developments,  continue  to  upgrade and expand the services it
offers  and  continue  to  attract,  retain  and  motivate employees in order to
maintain  its  profitability.
JAWS  cannot  predict  future  revenues and operating results of Pace nor can it
predict  Pace's  operating  expenses  based  on previous results for a number of
reasons  including  the factors described below.  The revenues associated with a
particular  sale  may  vary  significantly depending upon the number of products
licensed  by a client, the number of devices used by the client and the client's
relative  need for Pace's services.  Large individual sales or even small delays
in  customer  orders  can  cause significant variation in licensing revenues and
results  of operations for a particular period.   In addition, JAWS expects Pace
to  increasingly  focus  its  efforts  on  the  sale of enterprise-wide security
solutions,  including  JAWS  Canada's  entire  product  suite and Pace's related
services,  as  opposed  to  the  sale  of component products.  As a result, JAWS
anticipates  that  each sale made by Pace may require additional time and effort
from  sales  staff.  Further,  JAWS  expects Pace to expand upon the services it
provides  as  well  as  its  sales  and  marketing operations and to improve its
internal  operating  and  financial  systems.  Finally, to enhance Pace's market
share and the services it offers, JAWS intends to seek additional candidates for
acquisition.  As  a result, spending levels for Pace will be established by JAWS
based,  in large part, on expected future revenues.  If Pace's actual results in
any  future  period  fall below the expectations of JAWS and Pace, the operating
results of JAWS and Pace will be adversely affected.  Due to these factors, JAWS
anticipates  that  Pace's  quarterly and annual revenues, expenses and operating
results  will  vary  significantly  in  the  future.
AUDITORS  HAVE  ISSUED  A  GOING  CONCERN  OPINION
     The  consolidated  audited financial statements of JAWS include a statement
that  the  recurring  losses  of JAWS from operations and net capital deficiency
raise  substantial  doubts  about  the  ability  of  JAWS to continue as a going
concern.  While  JAWS  continues to pursue funding to continue its subsidiaries'
operations, the financing terms may not be favorable for JAWS; further, there is
no  guarantee  that  JAWS will cease to have recurring losses from operations or
cease  to  have  a  net  capital  deficiency  in  the  near  future.
PROCEEDS  FROM  AVAILABLE  FINANCING  MAY  NOT  BE  SUFFICIENT

     Developing,  manufacturing  and marketing software and information security
solutions  and the plans of JAWS for expansion of its subsidiaries, as mentioned
above,  will  require  significant  amounts  of  capital.  Since  JAWS  and  its
subsidiaries  have no significant internal revenues to finance the subsidiaries'
continuing  operations  and  plans  for expansion, JAWS and its subsidiaries are
dependent upon the proceeds from sales of JAWS securities to satisfy its capital
requirements.  JAWS  believes  that  it  has  adequate  financing to satisfy its
subsidiaries'  capital  requirements  for 12 months.  After 12 months, JAWS will
have to arrange for additional financing, unless its subsidiaries are generating
revenues  from  their  products  and  services,  to  finance  the  subsidiaries'
manufacturing and marketing operations at a sufficient level.  Financing options
could  include,  but will not be limited to, additional sales of JAWS securities
or  an  operating  line  of  credit.  If  JAWS  is  unable  to obtain additional
financing  on  satisfactory  terms  when  needed, JAWS' subsidiaries may have to
suspend  their  operations  or  terminate  their  operations  altogether.
JAWS  NEEDS  TO  CONSTANTLY  MAINTAIN  ITS  SOFTWARE  AND  RELATED  PRODUCTS AND
TECHNOLOGY  IN  ORDER  TO  REMAIN  COMPETITIVE

     The  success  of  JAWS  and  its  subsidiaries  depends upon, amongst other
things, its proprietary encryption technology. JAWS and its subsidiaries rely on
a  combination  of  contractual  rights,  copyright,  trade  secrets,  know-how,
trademarks,  non-disclosure  agreements  and technical measures to establish and
protect  these  rights.  JAWS  cannot  assure  Investors that it can protect its
rights  and  prevent  third  parties  from  using  or  copying its subsidiaries'
technology  or  intellectual  property.
JAWS  and  its  subsidiaries  do  not  presently  own  any  patents or copyright
registrations  but  it  has  filed a U.S. patent application for L5TM.  However,
there  is  no  guarantee  JAWS  will  be  successful  and  receive  a  patent.
JAWS  believes  that  its  subsidiaries'  technologies  have  been independently
developed and that its subsidiaries do not infringe on the proprietary rights or
trade  secrets  of  others.  However,  JAWS  cannot  assure  Investors  that its
subsidiaries  have  not  infringed  on the technologies of third parties or that
third  parties  will  not make infringement violation claims against JAWS or its
subsidiaries.  Any infringement claims against JAWS or its subsidiaries may have
a  negative  effect  on  JAWS  and  on  its  subsidiaries'  abilities to produce
software.
International  companies  currently  use  all or a portion of the name "JAWS" in
connection  with  products  or  services in industries the same as and different
from  that  of  JAWS  and  its  subsidiaries.
THE  MARKET  MAY  NOT  ACCEPT  THE  PRODUCTS  AND SERVICES OF JAWS' SUBSIDIARIES
     The  success  of  JAWS  and  its subsidiaries depends on whether or not its
subsidiaries'  products and services are accepted in the marketplace.  Investors
should  be  aware  that  companies  introducing new products into the market are
subject  to  a  high  level of uncertainty and risk.  Because the market for its
subsidiaries' software and services is new and evolving, JAWS cannot predict the
size  and  future  growth  rate,  if  any,  of  the  market.  JAWS cannot assure
Investors  that  the  market  for  its  subsidiaries' products and services will
develop  or  that  demand  for  such products and services will emerge or become
economically  sustainable.  Market  acceptance of its subsidiaries' products and
services  depends  on  its subsidiaries' abilities to establish brand images and
reputations  for  high  quality and to differentiate their products and services
from competitors.  There can be no assurance that the products and services will
be  perceived  as  being of high quality or better than products and services of
others,  or that the subsidiaries will be successful in establishing their brand
image.  Additionally,  the management teams of JAWS and its subsidiaries have no
experience  manufacturing or marketing software or providing services on a large
scale.  This  lack of experience could result in the failure of the subsidiaries
to  sell  their  products  and  services.
JAWS  MAY  NOT  BE  ABLE  TO  KEEP PRODUCTS, SERVICES AND TECHNOLOGY CURRENT AND
COMPETITIVE
     Rapid  advances  in  technology  cause  significant risks that JAWS and its
subsidiaries  cannot  control  or  influence the forces behind such changes.  In
addition to emerging competition, evolving requirements and needs of clients and
the  extent  to which hackers and others seek to compromise secure systems, JAWS
and  its  subsidiaries  must  adapt  to  changing computer hardware and software
standards  as  well  as to frequently introduce new products and enhancements to
existing products.  The success of JAWS will depend on its subsidiaries' ability
to  create,  develop,  adapt  and  improve  information  technology solutions in
response  to  these  and  other  changes.
JAWS  cannot  assure  Investors  that  it  and  its subsidiaries will be able to
successfully  identify  new opportunities and develop and bring new products and
services  to  market  in  a timely manner, nor can JAWS guarantee Investors that
products  and services developed by the competitors of its subsidiaries will not
make  it  or its subsidiaries' products and services noncompetitive or obsolete.
Further,  the  techniques used by hackers to compromise the security of networks
and  intranets  are  constantly  evolving  and  are  increasingly sophisticated.
Because new hacking techniques are usually not recognized until utilized against
one  or  more targets, JAWS and its subsidiaries are not able to anticipate such
techniques.  To  the extent that new hacking techniques result in the compromise
of  the  security  systems  of  JAWS  and its subsidiaries, affected clients may
believe  that  the products and services of the subsidiaries are ineffective and
may  affect  the business, operating results and financial condition of JAWS and
its  subsidiaries.
Because  the  products and services of JAWS and its subsidiaries involve complex
technology,  major  new products and product enhancements require a long time to
develop  and test before going to market.  JAWS cannot assure Investors that its
subsidiaries will have the capital resources or the ability to implement any new
technology  or  service.  In  addition,  because it is difficult to estimate the
amount  of  time  which  is  required  to  develop  new  products  and  product
enhancements, JAWS Canada has had to delay the scheduled introduction of new and
enhanced products in the past and the subsidiaries of JAWS may have to delay the
introduction  of  new  products,  enhancements  and services in the future.  Any
failure  by  the  subsidiaries  to timely develop and introduce new products and
services  or  enhance  current  products and services could adversely affect the
business,  operating  results  and  financial  condition  of  JAWS  and  its
subsidiaries.
DEFECTS  COULD  MATERIALLY  AND  ADVERSELY  EFFECT  JAWS'  BUSINESS
     Many  organizations  use  the  products and services of the subsidiaries of
JAWS  for  critical functions of monitoring and enhancing network security. As a
result,  JAWS'  subsidiaries  risk  product  liability  and  related  claims for
products  and  services  if  they  do not adequately perform this function.  The
subsidiaries  of  JAWS  typically  seek  to  limit  liability  for  special,
consequential  or  incidental  damages  in  their  licensing agreement but these
provisions may not in all cases be enforceable under applicable laws.  A product
liability  claim,  to  the extent not covered by insurance, could materially and
adversely affect the business, operating results and financial condition of JAWS
and  its  subsidiaries.
     In  addition,  complex  software  products, such as those developed by JAWS
Canada  and  Pace,  may  contain  undetected  "bugs"  that, despite testing, are
discovered only after installation and use by clients. Such bugs could result in
adverse  publicity,  loss  of or delay in market acceptance or claims by clients
against  JAWS  and  its subsidiaries, any of which could have a material adverse
effect  upon the business, operating results and financial condition of JAWS and
its subsidiaries.  Clients who deploy or use products improperly or incompletely
may experience temporary disruptions to their computer networking systems, which
could  damage  the  reputation  of  JAWS  and  its  subsidiaries of JAWS and the
relationship  of  such  subsidiaries  with clients.  Current products may not be
error-free  and  it  is  extremely  doubtful  that  the future products of JAWS'
subsidiaries  will  be  error-free. Furthermore, computers are manufactured in a
variety  of  different  configurations with different operating systems, such as
Windows,  Unix,  Macintosh  and  OS/2, and embedded software. As a result, it is
very  difficult  to  comprehensively  test  software products for programming or
compatibility  errors.  Errors  in  the  performance  of  the  products of JAWS'
subsidiaries,  whether  due  to  design  or their compatibility with products of
other  companies,  could  hinder  the  acceptance of such products, and thus the
subsidiaries'  ability  to  implement  those  products.
THE YEAR 2000 MAY ADVERSELY AFFECT OUR COMPUTER SYSTEMS AND THIRD PARTY COMPUTER
SYSTEMS
     Many  existing  computer programs use only two digits to identify a year in
the  date  field. These programs were designed and developed without considering
the  impact of the upcoming change in the year 2000. Some older computer systems
store  dates  with  only  a two-digit year with an assumed prefix of "19", which
limits  those  older  systems  to dates between 1900 and 1999. If not corrected,
many computer systems and applications could fail or create erroneous results by
or  at  the  year  2000.
     JAWS and its subsidiaries have assessed the scope of their risks related to
the  problems  these  computer  systems  may  have  related to the year 2000 and
management  of the subsidiaries believe that such risks are not significant.  In
addition,  JAWS  and  its  subsidiaries  are in the process of questioning their
vendors and business partners about their progress in identifying and addressing
problems  related to the year 2000.  However, no assurance can be given that all
of these third party systems or the computer systems of JAWS or its subsidiaries
will  be  year  2000  compliant.  (For  more year 2000 disclosure see JAWS 10-SB
registered  November  1,  1999)
The  principal  software  products  of  the  subsidiaries  of JAWS are year 2000
compliant.  However,  because  these  products  are  designed to work with other
software  products  developed  and  sold  by third parties, any failure of these
third  party  software  products  to  be year 2000 compliant could result in the
failure  of  the  software  products of the subsidiaries to effectively operate.
Any  such  failure could harm the reputation of JAWS and its subsidiaries in the
market and could have an adverse effect on sales of their products and financial
performance.
JAWS  CANADA  MAY  NOT  BE  ABLE  TO  COMPETE
     The  market for the type of encryption software JAWS Canada has designed is
extremely  competitive  and management expects that competition will increase in
the  future.  JAWS  Canada's  competitors include many large companies that have
substantially  greater  market presence and financial resources than JAWS Canada
or  JAWS.  For example, JAWS Canada will compete with RSA Data Security Inc. and
Network  Associates,  national  accounting  firms,  systems  consulting  and
implementation  firms,  application  software  firms, service groups of computer
equipment  companies,  facilities  management  companies,  general  management
consulting  firms  and  programming  companies  and other national, regional and
local  companies,  for  a  greater share of the encryption software market.  The
ability  of  JAWS  Canada to compete successfully depends on a number of factors
including:
(a)     the  design  of  high  performance  and  quality  encryption  software;
(b)     the  development  of  a  market  presence;
(c)     the  timely  delivery  of  JAWS  Canada's  encryption  software;
(d)     the  establishment  of competitive pricing policies for its products and
services;
(e)     the  timing and introduction of JAWS Canada's products and services into
the  market;  and
(f)     JAWS  Canada's  ability  to  keep up with existing and emerging industry
trends.
Current  or  increased competition may either prevent JAWS Canada from entering,
or  maintaining,  a  place  in  the encryption software production market.  JAWS
cannot guarantee that JAWS Canada will have the financial resources or marketing
and  manufacturing  capabilities  to  compete  successfully  in  the  encryption
software  production  market.  If  JAWS Canada cannot successfully compete, JAWS
will  probably  be  forced  to  terminate  JAWS  Canada's  operations.
PACE  MAY  NOT  BE  ABLE  TO  COMPETE
     The  market  for  network  security  monitoring,  detection  and  response
solutions  is  intensely competitive and Pace expects competition to increase in
the  future.  JAWS  cannot guarantee that Pace will compete successfully against
current  or  potential  competitors, especially those with significantly greater
financial resources or brand name recognition.  Increased competition may result
in  price  reductions,  reduced gross margins and loss of market share for Pace.
The  competitors of Pace generally fall within one of four following categories:
(a)     internal  information  technology  departments  of  clients  and  the
consulting  firms  that  assist  them  in  formulating  security  systems;
(b)     relatively  small  software  companies  offering  relatively  limited
applications  for  network  and  internet  security;
(c)     large  companies,  including  Axent Technologies and Network Associates,
that  currently  sell  competitive  products and services as well as other large
software  companies  that have the technical capability and resources to develop
competitive  products;  and
(d)     software  or  hardware  companies that could integrate features that are
similar  to  the  products  of  Pace  into  their  own  products.
     Mergers or consolidations among these competitors, or acquisitions of small
competitors  by  larger  companies,  would  make  such  combined  entities  more
formidable  competitors  to  Pace. Large companies may have advantages over Pace
because  of  their  longer operating histories, greater name recognition, larger
customer  bases  or  greater financial, technical and marketing resources.  As a
result,  they  may be able to adapt more quickly to new or emerging technologies
and  changes  in  customer  requirements. Such companies can also devote greater
resources  than  Pace  to  the  promotion  and  sale  of  their  products.
JAWS'  MARKETING  STRATEGIES  MAY  BE  UNSUCCESSFUL
     JAWS  expects  JAWS  Canada  and Pace to derive some of their sales revenue
through  independent  third  parties who will either resell or use JAWS Canada's
products  to  enhance  their  own  products.  JAWS  is  unable  to determine how
successful  these  providers  will  be  in  selling  JAWS  Canada's  software.
Furthermore,  JAWS  Canada  and  Pace  do  not have any history or experience in
establishing  or  maintaining  such  third  party  support,  and there can be no
assurance  that  they  will  be  able  to  successfully  support  their reseller
networks.  If  JAWS Canada and Pace are unable to provide such support, they may
lose  resellers  and, consequently, distribution of JAWS Canada's products would
be  adversely  affected.  Additionally,  most  resellers  will offer competitive
products  manufactured  by  third  parties.  There  can  be  no  assurance  that
resellers  will  give  priority  to  JAWS  Canada's  products  and services over
competitors' products and services.  Finally, if JAWS Canada and Pace are unable
to  support  a  reseller,  they  will  need to attract additional or replacement
resellers  to  sell  JAWS  Canada's  products  and  services.  There  can  be no
assurance that JAWS Canada and Pace will be able to convince a sufficient number
of  additional  or  replacement resellers in order to assure that their products
and  services  will be successfully marketed and distributed at a profit or that
such  additional  or  replacement  resellers will be successful in selling their
products and services.  Any reduction or delay in sales of products and services
of  JAWS Canada and Pace, their resellers will have a material adverse effect on
the  business,  operating  results  and  financial  condition  of  JAWS  and its
subsidiaries.
JAWS  AND  ITS  SUBSIDIARIES  MAY  NOT  SUCCESSFULLY  EXPAND  PRODUCTION  AND
DISTRIBUTION  CAPACITIES
     JAWS  Canada  must increase its software production capacity and expand its
marketing  network  to sell its software before it will have a chance to compete
in  the  marketplace.  Increasing  JAWS  Canada's  manufacturing,  service  and
marketing  capacity  will  involve  hiring  additional  personnel,  purchasing
additional  manufacturing  equipment  and  spending  significant  funds  on
advertising.  The foregoing will require significant capital expenditures, which
will  most  likely  increase  JAWS  Canada's  and  JAWS' operating losses for an
indefinite  period  of  time.  JAWS  Canada's  expansion plans will also place a
great  deal  of  strain  on  its  management  team,  most  of  whom have not had
experience  managing  large  complex business operations.  JAWS cannot guarantee
that  JAWS  Canada  will  be able to expand its software production, service and
marketing  capabilities  as  planned.  If  any  of  these obstacles prevent JAWS
Canada  from  expanding its software production, service and marketing business,
JAWS  may  be  forced  to  terminate  JAWS  Canada's  operations.
     Although  direct  sales have accounted for a majority of Pace's revenues in
1999,  Pace's  future  performance  will  depend,  in  part, upon its ability to
attract new partners and develop additional distribution channels to effectively
market  and  support  its services and the products of JAWS Canada.  JAWS cannot
guarantee  that Pace will be able to attract such partners or develop additional
distribution  channels.
JAWS  AND  ITS  SUBSIDIARIES  DEPEND  ON  KEY  PERSONNEL
     The  success  of  JAWS  and  its subsidiaries depends on the efforts of its
management  team.  JAWS and its subsidiaries have one-year employment agreements
with  their  respective  key  employees,  but  JAWS  cannot guarantee that these
persons  will continue their employment. The loss of the services of one or more
of  the  key  people  may  have a negative effect on the ability of JAWS and its
subsidiaries'  ability  to  conduct  their  operations.
     The  success  of JAWS and its subsidiaries also depends on their ability to
attract and retain highly qualified engineers, managers, marketers and sales and
service  personnel.  The  competition  for  employees  at  all  levels  of  the
information  security  industry,  especially  those  with  experience  in  the
relatively  new  discipline  of  security software, is increasingly  intense and
JAWS cannot assure that it, and its subsidiaries, will be able to hire or retain
necessary  personnel.
THE  MARKET  FOR  JAWS  SECURITIES  IS  LIMITED
     There  is  currently  only a limited trading market for JAWS' Common Stock.
JAWS'  Common  Stock  trades  on the OTC Bulletin Board under the symbol "JAWZ,"
which  is  a  limited  market in comparison to the Nasdaq system or the American
Stock  Exchange.
     JAWS  cannot  assure Investors that JAWS Common Stock will ever qualify for
inclusion for quotation on the Nasdaq Small Cap Stock Market or that more than a
limited  market  will  ever  develop  for  JAWS  Common  Stock.
STOCK  PRICE  FLUCTUATIONS  CAN  BE  VOLATILE
     Stock  markets  are  subject to significant price fluctuations which may be
unrelated  to  the  operating performance of particular companies and the market
price  of  JAWS'  Common Stock may frequently change.  The market price of JAWS'
Common  Stock  could  also  fluctuate  substantially  due  to a variety of other
factors,  including: quarterly fluctuations in results of operations of JAWS and
its  subsidiaries,  JAWS'  ability  to  meet  analysts'  expectations,  adverse
circumstances  affecting  the  introduction of market acceptance of new products
and  services offered by the subsidiaries of JAWS, announcements of new products
and  services by competitors, changes in the information technology environment,
changes  in  earnings  estimates  by analysts, changes in accounting principles,
sales  of  JAWS  Common  Stock  by  existing  holders and loss of key personnel.
PENNY  STOCK  RULES  MAY  LIMIT  THE  LIQUIDITY  OF  JAWS  COMMON  STOCK
     JAWS' Common Stock has recently traded on the OTC Bulletin Board at a price
greater  than  US$5.00 per share but may now and in the future be subject to the
penny  stock  rules  under the Exchange Act.  These rules regulate broker-dealer
practices for transactions in "penny stocks".  Penny stocks generally are equity
securities  with  a  price  of less than US$5.00.  The penny stock rules require
broker-dealers  to  deliver  a standardized risk disclosure document prepared by
the  Securities  and  Exchange  Commission that provides information about penny
stocks  and  the  nature  and  level  of  risks  in the penny stock market.  The
broker-dealer  must  also  provide  the  customer  with  current  bid  and offer
quotations  for  the  penny stock, the compensation of the broker-dealer and its
salesperson  and  monthly  account  statements  showing the market value of each
penny  stock  held in the customer's account.  The bid and offer quotations, and
the broker dealer and salesperson compensation information, must be given to the
customer  orally  or  in writing prior to completing the transaction and must be
given  to  the  customer  in writing before or with the customer's confirmation.
     In addition, the penny stock rules require that prior to a transaction, the
broker  and/or  dealer  must make a special written determination that the penny
stock  is  a  suitable  investment for the purchaser and receive the purchaser's
written  agreement  to  the transaction. These additional penny stock disclosure
requirements are burdensome and may reduce purchases of this Offering and reduce
the  trading  activity  in  the  market for JAWS' Common Stock. As long as JAWS'
Common  Stock is subject to the penny stock rules, holders of JAWS' Common Stock
may  find  it  more  difficult  to  sell  their  securities.
AN  INVESTMENT  IN  JAWS  MAY  BE  DILUTED
     JAWS  may  issue  a  substantial  number of shares of JAWS' Common Stock or
preferred stock without Investor approval.  Any such issuance of JAWS securities
in  the future could reduce an Investor's ownership percentage and voting rights
in  JAWS  and  further  dilute  the  value  of  his  or  her  investment.
PROTECTING  DIRECTORS  AND  OFFICERS  FROM  LIABILITY  MAY ADVERSELY AFFECT JAWS
     The  JAWS' articles of incorporation allow it to reimburse its officers and
directors  for  damages  which  such  directors  or  officers may be subject to,
including  those  which  result  from  a  breach  of  fiduciary  duties  to JAWS
shareholders.  The  JAWS'  Articles  also  require  JAWS to advance money to any
officer  or  director  if  the  law does not prevent it from doing so.  JAWS may
experience  significant  cash  flow  problems  if  JAWS  is  required  to either
reimburse,  or  advance  money to, JAWS officers or directors for such purposes.
JAWS  DOES  NOT  PAY  DIVIDENDS
JAWS does not anticipate generating cash flows from its subsidiaries' operations
in  the  near  future.  If  the  subsidiaries  generate positive cash flows from
operations,  JAWS  intends  to  use those positive cash flows to finance further
growth  of  the  business  of  its  subsidiaries  and does not anticipate paying
dividends  to  JAWS' shareholders.  Accordingly, Investors who are interested in
receiving  distributions  as  an  investment objective should carefully consider
JAWS'  established  dividend  policy.

JAWS  MAY  NOT  SUCCESSFULLY  ADOPT  INTERNET  NETWORKS

     In  order for us to be successful, Internet networks must be widely adopted
as  a means of trusted and secure communications and commerce within an adequate
time frame. Because trusted and secure communications and commerce over Internet
networks  is new and evolving, it is difficult to predict with any assurance the
size  of  this  market and its growth rate, if any. To date, many businesses and
consumers  have  been  deterred from utilizing Internet networks for a number of
reasons,  including,  but  not limited to, potentially inadequate development of
network infrastructure, security concerns, inconsistent quality of service, lack
of  availability of cost-effective, high-speed service, limited numbers of local
access  points for corporate users, inability to integrate business applications
on  Internet  networks,  the  need  to interoperate with multiple and frequently
incompatible  products,  inadequate  protection of the confidentiality of stored
data  and  information  moving  across  Internet networks and a lack of tools to
simplify  access  to  and  use  of  Internet  networks. The adoption of Internet
networks,  for  trusted  and secure communications and commerce, particularly by
individuals and entities that historically have relied upon traditional means of
communications  and  commerce, will require a broad acceptance of new methods of
conducting  business  and  exchanging  information.  Companies  and  government
agencies  that  already  have invested substantial resources in other methods of
conducting  business  may be reluctant to adopt a new strategy that may limit or
compete  with  their existing efforts. Furthermore, individuals with established
patterns  of  purchasing  goods  and  services  and  effecting  payments  may be
reluctant  to  alter  those  patterns.  There  can be no assurance that Internet
networks will be widely adopted or adopted by enough people to make our products
successful.

     The  use  of  Internet  networks  for trusted and secure communications and
commerce  may not increase or may increase more slowly than expected because the
infrastructure  required to support widespread trusted and secure communications
and  commerce  on  such  networks may not develop. For example, the Internet has
experienced, and may continue to experience, significant growth in its number of
users  and  amount  of  traffic.  There  can  be  no assurance that the Internet
infrastructure  will  continue  to  support  the  demands  placed  on it by this
continued growth or that the performance or reliability of the Internet will not
be  adversely  affected by this continued growth. In addition, Internet networks
could  lose  their viability due to delays in the development or adoption of new
standards  and  protocols  to  handle  increased  levels  of  activity or due to
increased  governmental  regulation.  Changes in or insufficient availability of
communications  services  to  support  Internet  networks could result in slower
response  times  and  also  adversely  affect usage of Internet networks. If the
market for trusted and secure communications and commerce over Internet networks
fails  to  develop  or  develops  more  slowly than expected, or if the Internet
infrastructure  does  not adequately support any continued growth, our business,
operating  results  and  financial  condition  would  be  materially  adversely
affected.

POTENTIAL  ACQUISITIONS  INCLUDE  INHERENT  RISKS

     JAWS  may  acquire  or invest in businesses, technologies and product lines
from  time to time that are complementary to our business and JAWS currently has
one pending acquisition. Any such acquisitions would be accompanied by the risks
commonly  encountered  in  such  transactions,  including,  among  others,  the
difficulty  of  assimilating  the  operations  and  personnel  of  the  acquired
businesses,  the  potential disruption of our ongoing business, the diversion of
our  management  from  our  day-to-day  operations, our inability to incorporate
acquired  technologies  successfully  into  our  products  and  services,  the
additional  expense  associated with amortization of acquired intangible assets,
the  potential impairment of our relationships with our employees, customers and
strategic  partners,  our  inability  to  retain  key  technical  and managerial
personnel  of  the  acquired  business  and  our  inability  to maintain uniform
standards,  controls,  procedures  and  policies.  Because  of  these  and other
factors,  any  such  acquisitions, if consummated, could have a material adverse
affect  on  our  business,  operating  results  and  financial  condition.

EXCHANGE  RATE  RISKS

     JAWS  records  it  transactions  and  prepares  its financial statements in
United  States  dollars.   Any  change in the value of, the United States dollar
against  the  Canadian dollar will affect United States revenues and earnings of
the  Company  when  translated  into  Canadian  dollars.


                                     PART II

                                OTHER INFORMATION

ITEM  1.  LEGAL  PROCEEDINGS.

Not  Applicable.

ITEM  2.  CHANGES  IN  SECURITIES  AND  USE  OF  PROCEEDS.

1.     On  September  15, 1999, Jaws sold 141,000 shares of Jaws Common Stock to
Richard  H.  Langley  Jr.,  an  accredited  investor,  for  consulting  services
including  investor  relations, communication and public relations services. The
sale  was made in a transaction not involving any public offering in reliance on
the  exemption  provided  by  Rule  506 of Regulation D and section 4 (2) of the
Securities Act.  The purchaser represented that he was an accredited investor as
defined  in  Rule  501 of Regulation D and that the securities were acquired for
investment  only  and  not  with  a  view  to  resale  or  redistribution.
2.     On  October  28,  1999,  Jaws sold 283,000 shares of Jaws Common Stock at
U.S.$1.50  per  share  for  an  aggregate  investment of U.S.$424,500 to Striker
Capital,  an accredited investor. The sale was made in a transaction in reliance
on  the  exemption  from registration provided by section 3(b) of the Securities
Act and the provisions of Regulation D Rule 504 promulgated under the Securities
Act  as  well  as  the exemption from registration in section 109.3 of the Texas
Administrative Code that permits general solicitation and general advertising so
long as sales are made only to "accredited investors" as defined in Rule 501(a).
The  investor  represented that it was an institutional "accredited investor" as
defined  in  Rule 501(a)(1),(2),(3) and (7) of Regulation D under the Securities
Act  purchasing  in  the  State  of Texas for its own account and for investment
purposes  and  not  with  a  view to or for offer or sale in connection with any
distribution.
3.     On  November  18, 1999, Jaws issued 94,340 shares of Jaws Common Stock at
U.S.$0.53  per  share  to  Cameron  Chell in satisfaction of the U.S.$50,000 fee
payable  to  Mr.  Chell for serving as a director of Jaws in 1998.  The issuance
was  made  in a transaction not involving any public offering in reliance on the
exemption  provided  by  Rule  506  of  Regulation  D, section 4 (2) of the 1993
Securities  Act and Regulation S.  Mr. Chell represented that he was not a "U.S.
Person",  as  such  term  is  defined  in  Rule 902(k) of Regulation S, that the
securities  have not been offered to him in the United States and that offers of
securities  of Jaws shall not be made to "U.S. Persons" for a period of one year
from  the  date  of  closing.
4.     On  November  18, 1999, Jaws issued 11,999 shares of Jaws Common Stock at
U.S.$0.53  per  share  to GROVEJOHNSONWOOD in consideration of services rendered
and  in  satisfaction  of  a  fee  of  U.S.$6,298.75 payable to GROVEJOHNSONWOOD
related to interior design services.  The issuance was made in a transaction not
involving  any public offering in reliance on the exemption provided by Rule 506
of  Regulation  D,  section  4  (2) of the 1993 Securities Act and Regulation S.
GROVEJOHNSONWOOD  represented  that  it was not a "U.S. Person", as such term is
defined  in  Rule  902(k)  of  Regulation  S,  that the securities have not been
offered  to  it in the United States and that offers of securities of Jaws shall
not be made to "U.S. Persons" for a period of one year from the date of closing.
5.     On  November  24,  1999, Jaws sold 411,765 shares of Jaws Common Stock at
U.S.$1.70  per  share  to  Heronwood,  Ltd.  for  an  aggregate  investment  of
U.S.$700,000.  Further,  the  sale included 411,765 warrants to purchase 411,765
shares  of Jaws Common Stock at U.S.$1.70 per share until November 1, 2002.  The
sale  was made in a transaction not involving any public offering in reliance on
the  exemption  provided  by Rule 506 of Regulation D, section 4 (2) of the 1993
Securities  Act  and Regulation S. Heronwood, Ltd. represented that it was not a
"U.S.  Person", as such term is defined in Rule 902(k) of Regulation S, that the
securities  have  not been offered to it in the United States and that offers of
securities  of Jaws shall not be made to "U.S. Persons" for a period of one year
from  the  date  of  closing.
6.     On  November  22,  1999  JAWS  entered  into  a  private placement agency
memorandum  with  Thomson  Kernaghan  and  SmallCaps Online LLC ("SmallCaps") to
raise  between  $8,500,000 and $10,625,000 USD on a best efforts basis,  through
the  offering of 2,000,000 - 2,500,000 units (the "Units").  The Units are being
sold  at  $4.25  per  Unit  and  consist  of one common share and one warrant to
purchase   share  of  common  stock at an exercise price of $6.50.  JAWS expects
the  Private  Placement  Memorandum for this offering to be ready for accredited
investor  review  on December 15, 1999.  The offering of the Units is being made
by  virtue of Section 4(2) of the 1933 Securities Act and the provisions of Rule
506  of  Regulation  D.
ITEM  3.  DEFAULTS  UPON  SENIOR  SECURITIES.

Not  Applicable.

ITEM  4.  SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS.
Not  Applicable

ITEM  5.  OTHER  INFORMATION.

Not  Applicable


ITEM  6.  EXHIBITS  AND  REPORTS  ON  FORM  8-K.

(A)     List  of  Exhibits

3.1.1     Articles  of Incorporation of "E-Biz" Solutions, Inc. (now JAWS US), a
Nevada  Corporation  was  amended  on March 11, 1998 and on February 4, 1999.(2)

3.1.2     Articles  of  Incorporation  of  JAWS  Technology  Inc.,  an  Alberta
corporation,  dated  September  18,  1997.(2)

3.1.3     Certificate  of  Amendment  of Articles of Incorporation , dated March
30,  1998,  changing  the  name  of  E-Biz  to  Jaws  Technologies,  Inc.(2)

3.1.4     Certificate  of  Amendment  of  Articles  of  Incorporation  of  JAWS
increasing  the total number of common stock which JAWS is allowed to issue from
20,000,000  to  95,000,000.(2)

3.2.1     Bylaws  of  E-Biz  Solutions  Inc.  (now  Jaws  US)  dated January 27,
1997.(2)

3.2.2     Bylaws No. 1 of JAWS Canada dated October 20, 1997 and Bylaw No.  2 of
JAWS  Canada  dated  October  20,  1997.(2)

4.1.1     Amendment  No.  1  to Debenture Purchase Agreement by and between JAWS
and  Thompson  Kernaghan  dated  April  27,  1999.(2)

4.1.2     Investment  Agreement by and between JAWS and Bristol Asset Management
V,  LLC  dated  August  27,  1998  and  letter  of  termination.(2)

4.1.3     Warrant to purchase 1,000,000 shares of common stock of JAWS issued to
Bristol  Asset  Management,  LLC.(2)

4.1.4     Debenture  Acquisition  Agreement  by  and  between  JAWS  and Thomson
Kernaghan  &  Co.  Ltd.  dated  September  25,  1998.(2)

5.1     Opinion  of  Sonfield  &  Sonfield.(1)

10.1.1     Lease  Agreement  by  and  between  JAWS and The Manufacturer of Life
Insurance  Company  dated  December  15,  1997.(Deleted)

10.1.2     Director's Agreement between JAWS and Arthur Wong dated July 1998.(2)

10.1.3     Director's  Agreement  between  JAWS and Julia Johnson dated July 30,
1998.(1)

10.1.4     Incentive  and  Non-Qualified  Stock  Option  Plan  for  JAWS.(2)

10.1.5     Master  Agreement  by  and  between  JAWS  and  A.I.  Axion  Internet
Communications,  Inc.  dated  November  24,  1998.  -  Deleted

10.1.6     Master  Agreement  by  and  between  JAWS  and  Calgary On-Line dated
December  1998.  -  Deleted

10.1.7     Master  Agreement  by  and  between  JAWS and ABC Internet Inc. dated
December  7,  1998.  -  Deleted

10.1.8     Alliance  Agreement  with  Glentel  Inc.  (1)

10.1.9     Letter  Agreement  between  JAWS  and Arrow Communications (ApexMail)
dated  August  10,  1999.  (1)

10.1.10     Addendum  to  the  Letter  Agreement  between JAWS and ApexMail.net,
dated  September  28,  1999.  (1)

10.1.11     Resolution and Assignment of JAWS Software Ltd. to JAWS Technologies
Inc,  dated  October  20,  1997.  (1)

10.1.12     Assignment  from  James  L.  A.  Morrison to JAWS Technologies Inc.,
dated  October  9,  1998.  (1)

10.1.13     Notification  of  Assignment  from  United  States  Department  of
Commerce,  Patent  and  Trademark  Office,  dated  March  15,  1999  (1)

10.1.13     Written  Consent  of  the  Board of Directors authorizing payment of
consulting  fees  to  officers  of  JAWS  and  their  affiliates.(2)

10.1.14      Indemnity  Agreements  by  and  between  JAWS  and  Ms.  Julia  L.
Johnson.(2)

10.1.15      Indemnity  Agreements  by  and between JAWS and Mr. Arthur Wong.(2)

21     Subsidiaries of JAWS: JAWS Technologies, Inc., an Alberta corporation.(2)

23.1     Consent  of  Sonfield  &  Sonfield.(included  in  exhibit  5.1)

23.2     Consent  of  Ernst  &  Young  LLP.(2)

27     Financial  Data  Schedule(1)

-------------------------
(1)     Incorporated  by  reference  to  Form  10-SB,  File  No.  000-24963
(2)     Incorporated  by  reference to registration statement on Form SB-2, File
No.  333-65583.


(B)     Reports  on  Form  8-K

JAWS  filed  a  Current  Report  on  Form 8-K on November 15, 1999 to report the
execution  of  an  agreement  to acquire all of the outstanding common shares of
Pace  Systems  Group  Inc.

JAWS  filed  a  Current  Report  on  Form 8-K on November 15, 1999 to report the
execution  of  an  agreement  to  acquire,  through  JAWS  Canada,  all  of  the
outstanding  common  shares,  options and warrants of Offsite Data Services Ltd.

JAWS  filed  a  Current  Report  on  Form  8-K on December 2, 1999 to report the
execution  of  an  a  debenture  acquisition  amendment  agreement  with Thomson
Kernaghan  &  Co.  Ltd.,  in  order to settle the outstanding obligations of the
parties  relating  to  the  $5,000,000  debenture  acquisition  agreement  dated
September  25,  1998,  as  amended  on  April  27,  1999.

JAWS  filed  an  Amendment to the Current Report on Form 8-K on December 7, 1999
amending  the  8-K  filed  on December 2, 1999, in order to attach the necessary
exhibits  in  accordance  with  Item  601  of  Regulation  S-K.

JAWS  filed  an amendment to the Current Report on Form 8-K on December 13, 1999
amending the 8-K filed on November 15, 1999 relating to the offsite acquisition,
in  order  to  report that on December 2, 1999, JAWS Technologies, Inc., entered
into  an  agreement  (the "amendment agreement") with JAWS Acquisition Corp., an
Alberta  corporation  ("JAC"),  JAWS  Technologies  Inc., an Alberta corporation
("JAWS  Canada")  and  Offsite  Data  Services  Ltd.,  an  Alberta  corporation
("Offsite")  ("collectively,  the  "parties")  to  amend  the  pre-acquisition
agreement  dated  November  2, 1999 between JAWS, JAWS Canada, and Offsite dated
November  2,  1999  (the  "pre-acquisition  agreement").
                                   SIGNATURES

Pursuant  to  the requirements of Section 13 or 15(d) of the Securities Exchange
Act  of  1934,  the  Registrant  has duly caused this report to be signed on its
behalf  by  the  undersigned,  thereunto  duly  authorized.


JAWS  TECHNOLOGIES,  INC.



By:
      Robert  J.  Kubbernus,  Chief  Executive  Officer
            and  Chairman  of  the  Board


Date:  December  ___,  1999

<PAGE>

                             FINANCIAL DATA SCHEDULE
<TABLE>
<CAPTION>


     This  schedule  contains summary financial information extracted from the financial
statements  as  of and for the six months ended September 30, 1999.  You should read the
financial  statements in their entirety for a full explanation of this summary financial
information.  (In  thousands,  except  EPS.)


<S>            <C>                                                        <C>


ITEM NUMBER .  ITEM DESCRIPTION                                           AMOUNT
-------------  ---------------------------------------------------------  --------------

5-02(1) . . .  Cash and cash items.                                       $          664
5-02(2) . . .  Marketable securities                                                   0
5-02(3)(a)(1)  Notes and interest receivable-trade accts                             421
5-02(4) . . .  Allowances for doubtful accounts                                        0
5-02(6) . . .  Inventory                                                               0
5-02(9) . . .  Total current assets                                                1,199
5-02(13). . .  Property, plant and equipment                                         580
5-02(14). . .  Accumulated depreciation                                               82
5-02(18). . .  Total assets                                                        1,697
5-02(21). . .  Total current liabilities                                           1,110
5-02(22). . .  Bonds, mortgages and similar debt                                       0
5-02(28). . .  Preferred stock-mandatory redemption                                    0
5-02(29). . .  Preferred stock-no mandatory redemption                                 0
5-02(30). . .  Common stock                                                           15
5-02(31). . .  Other stockholder's equity                                          6,611
5-02(32). . .  Total liabilities and stockholder's equity                          2,628
5-03(b)1(a) .  Net sales tangible products                                           373
5-03(b)1. . .  Total revenues                                                        373
5-03(b)2(a) .  Cost of tangible goods sold                                             0
5-03(b)2. . .  Total costs and expenses applicable to sales and revenues               0
5-03(b)3. . .  Other costs expenses                                                3,297
5-03(b)5. . .  Provision for doubtful accounts and notes                               0
5-03(b)(8). .  Interest and amortization of debt discount                            915
5-03(b)(10) .  Income before taxes and other items                                     0
5-03(b)(11) .  Income tax expense                                                      0
5-03(b)(14) .  Income/loss continuing operations                                       0
5-03(b)(15) .  Discontinued operations                                                 0
5-03(b)(17) .  Extraordinary items                                                     0
5-03(b)(18) .  Cumulative effect-changes in accounting principles                      0
5-03(b)(19) .  Net income or loss                                                  3,839
5-03(b)(20) .  Earnings per share-primary                                         <0.30>
5-03(b)(20) .  Earnings per share-fully diluted                           anti-dilutive

</TABLE>