SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q

[X]  Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934 for the quarterly period ended July 31, 2000 or

[ ]  Transition report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934 for the transition period from ___ to ___


                        Commission File Number: 001-15010

                                 CERTICOM CORP.
         --------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

Yukon Territory, Canada                                      Not Applicable
-----------------------                                      -------------------
(Province or other                                           (I.R.S. Employer
jurisdiction of                                              Identification No.)
incorporation)


25801 Industrial Boulevard
Hayward, California                                          94545
--------------------------------------------------------------------------------
(Address of principal executive offices)                     (Zip Code)

                                 (510) 780-5400
                    -----------------------------------------
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant:  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities 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. Yes [X] No ___

As of September 11, 2000, there were 25,853,749 of registrant's common shares,
no par value, outstanding.


<PAGE>

<TABLE>
                                TABLE OF CONTENTS
<CAPTION>
                                                                                                              Page
<S>                                                                                                           <C>
Exchange Rate Information................................................................................     1

Special Note Regarding Forward-Looking Statements........................................................     1

PART I.  FINANCIAL INFORMATION

Item 1. Financial Statements.............................................................................     2

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............     7

            Factors That May Affect Operating Results....................................................     12

Item 3. Quantitative and Qualitative Disclosure About Market Risk........................................     22

PART II. OTHER INFORMATION

Item 1. Legal Proceedings................................................................................     23

Item 2. Changes in Securities and Use of Proceeds........................................................     23

Item 6. Exhibits and Reports on Form 8-K.................................................................     24

Signatures...............................................................................................     25

</TABLE>

     All information in this Form 10-Q gives effect to the 2-for-1 split of our
outstanding common shares which was effective on July 12, 2000.

     Certicom(R), certicom encryption(TM), SSL Plus(TM), SSL Plus for Embedded
Systems(TM), WTLS Plus(TM), Certifax(TM), Certilock(TM), Security Builder(R),
MobileTrust(TM), and Trustpoint(TM) are trademarks of Certicom.

     In this Form 10-Q, the terms "Certicom," "we," "us," and "our" refer to
Certicom Corp., a Yukon Territory corporation, and/or its subsidiaries.


<PAGE>


                            EXCHANGE RATE INFORMATION

     Unless otherwise indicated, all dollar amounts in this Form 10-Q are
expressed in United States dollars. References to "$" or "U.S.$" are to United
States dollars, and references to "Cdn.$" are to Canadian dollars. The following
table sets forth, for each period indicated, information concerning the exchange
rates between U.S. dollars and Canadian dollars based on the noon buying rate in
the City of New York on the last business day of each month during the period
for cable transfers as certified for customs purposes by the Federal Reserve
Bank of New York (the "Noon Buying Rate"). The table illustrates the portion of
a U.S. dollar it would take to buy one Canadian dollar.

                                                U.S.$ per Cdn.$
                                                Noon Buying Rate
                                                ----------------
                                 Average(1)     Low         High     Period End
                                 ----------     ---         ----     ----------
    Twelve months ended
    -------------------
    April 30, 2000                 0.6804      0.6969      0.6607      0.6756

    Three months ended
    ------------------
    July 31, 1999                  0.6787      0.6891      0.6607      0.6639
    July 31, 2000                  0.6740      0.6831      0.6629      0.6720

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

(1) The average of the daily Noon Buying Rates on the last business day of each
month during the period.

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     Certain statements contained in this Form 10-Q constitute "forward-looking
statements" within the meaning of the United States Private Securities
Litigation Reform Act of 1995. When used in this document, the words "may,"
"would," "could," "will," "intend," "plan," "anticipate," "believe," "estimate,"
"expect" and similar expressions, as they relate to us or our management, are
intended to identify forward-looking statements. Such statements reflect our
current views with respect to future events and are subject to certain risks,
uncertainties and assumptions. Many factors could cause our actual results,
performance or achievements to be materially different from any future results,
performance or achievements that may be expressed or implied by such
forward-looking statements, including, among others, those which are discussed
in "Factors That May Affect Operating Results" beginning on page 12 of this Form
10-Q, in our Annual Report on Form 10-K and in other documents that we file with
the Securities and Exchange Commission and Canadian securities regulatory
authorities. Should one or more of these risks or uncertainties materialize, or
should assumptions underlying the forward-looking statements prove incorrect,
actual results may vary materially from those described herein as intended,
planned, anticipated, believed, estimated or expected. We do not intend, and do
not assume any obligation, to update these forward-looking statements.


                                        1



<PAGE>


                                            PART I. FINANCIAL INFORMATION


Item 1. Financial Statements
<TABLE>
                                           CERTICOM CORP. AND SUBSIDIARIES
                                        CONDENSED CONSOLIDATED BALANCE SHEETS
                               (In thousands of U.S. dollars, except number of shares)
<CAPTION>
                                                                                     April 30,         July 31,
                                                                                       2000              2000
                                                                                   --------------    --------------
                                                                                                      (Unaudited)
ASSETS
<S>                                                                                     <C>              <C>
Current assets:
     Cash and cash equivalents                                                          $ 10,508         $  50,251
     Marketable securities, available for sale                                             2,550             3,585
     Accounts receivable (net of allowance for doubtful
        accounts of $161 and $211, respectively)                                           3,862             3,525
     Unbilled receivables                                                                  2,115             2,198
     Inventories                                                                             218               250
     Prepaid expenses and deposits                                                         1,740             1,281
-------------------------------------------------------------------------------------------------------------------
        Total current assets                                                              20,993            61,090

Property and equipment, net                                                                5,213             5,794

Patents                                                                                      873               953

Acquired intangibles (net of accumulated
     amortization of $10,586 and $12,662, respectively)                                   24,437            22,361
-------------------------------------------------------------------------------------------------------------------
        Total assets                                                                    $ 51,516         $  90,198
===================================================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Accounts payable                                                                    $   974         $   2,437
     Accrued liabilities                                                                   2,107             2,742
     Income taxes payable                                                                    430               516
     Deferred revenue                                                                        909             1,122
     Note payable                                                                         10,000                 -
-------------------------------------------------------------------------------------------------------------------
        Total current liabilities                                                         14,420             6,817

Lease inducements                                                                          1,105             1,064
-------------------------------------------------------------------------------------------------------------------
        Total liabilities                                                                 15,525             7,881

Shareholders' equity:
     Common shares, no par value; shares authorized: unlimited;
       shares issued and outstanding: 23,087,866 and 25,747,549, respectively (1)         80,859           133,386
     Additional paid-in capital                                                           11,922            13,851
     Deferred compensation expense                                                             -            (1,516)
     Accumulated other comprehensive loss                                                 (2,497)           (2,464)
     Deficit                                                                             (54,293)          (60,940)
-------------------------------------------------------------------------------------------------------------------
        Total shareholders' equity                                                        35,991            82,317
-------------------------------------------------------------------------------------------------------------------
        Total liabilities and shareholders' equity                                      $ 51,516         $  90,198
===================================================================================================================
<FN>
(1) Number of shares has been retroactively adjusted to reflect the 2-for-1 stock split which was
    effective on  July 12, 2000.

                       See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>


                                                          2



<PAGE>

<TABLE>
                                          CERTICOM CORP. AND SUBSIDIARIES
                                  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands of U.S. dollars, except number of shares and per share data)
<CAPTION>
                                                                               Three months ended July 31,
                                                                                 1999                2000
                                                                            ----------------     --------------
                                                                              (Unaudited)         (Unaudited)
<S>                                                                             <C>                <C>
Revenues                                                                        $     2,148        $     5,053
---------------------------------------------------------------------------------------------------------------

Costs and expenses:
      Selling and marketing                                                           1,272              3,139
      Research and development                                                          810              2,428
      Depreciation and amortization                                                   1,730              2,748
      General and administrative (including deferred compensation
           amortization of $0 and $111, respectively)                                 1,533              2,583
      Consulting and systems integration                                                322              1,019
      Cost of hardware sold                                                               9                232
---------------------------------------------------------------------------------------------------------------
           Total costs and expenses                                                   5,676             12,149

Operating loss                                                                       (3,528)            (7,096)

Non-cash interest income (expense)                                                        -               (423)
Interest income (expense), net                                                         (70)                952
---------------------------------------------------------------------------------------------------------------
Loss before income taxes                                                             (3,598)            (6,567)

Income taxes                                                                             78                 80
---------------------------------------------------------------------------------------------------------------
Net loss                                                                             (3,676)            (6,647)

Other comprehensive income:
      Unrealized gain on marketable securities, available for sale                        -                 33
---------------------------------------------------------------------------------------------------------------

Comprehensive loss                                                              $    (3,676)       $    (6,614)
---------------------------------------------------------------------------------------------------------------


Basic and diluted net loss per share (1)                                        $     (0.17)       $     (0.26)
===============================================================================================================

Shares used in computing basic and diluted net loss per share (1)                21,842,677         25,571,708
===============================================================================================================
<FN>
(1)  Number of shares and per share data have been retroactively adjusted to reflect the 2-for-1 stock split
     which was effective on July 12, 2000.

                     See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>


                                                          3


<PAGE>

<TABLE>
                                        CERTICOM CORP. AND SUBSIDIARIES
                                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                         (In thousands of U.S. dollars)
<CAPTION>
                                                                               Three months ended July 31,
                                                                                 1999                2000
                                                                            ----------------    ---------------
                                                                              (Unaudited)        (Unaudited)
<S>                                                                              <C>                <C>
Cash flows from operating activities:
     Net loss                                                                    $  (3,676)         $   (6,647)
     Adjustments to reconcile net loss to net cash used in
     operating activities:
        Depreciation and amortization                                                  280                 672
        Amortization of acquired intangibles                                         1,478               2,076
        Stock compensation                                                              80                 190
        Non-cash interest expense                                                        -                 423
        Changes in non-cash working capital items                                   (1,385)              3,071
---------------------------------------------------------------------------------------------------------------
           Net cash used in operating activities                                    (3,223)               (215)
---------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
     Purchase of property and equipment                                               (659)             (1,247)
     Patents                                                                           (79)                (86)
     Purchase of marketable securities, available for sale                          (5,334)             (1,035)
     Sales and maturities of marketable securities, available for sale               8,914                   -
---------------------------------------------------------------------------------------------------------------
           Net cash (used in) provided by investing activities                       2,842              (2,368)
---------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
     Issuance of common shares                                                          33              52,326
     Note payable                                                                        -             (10,000)
---------------------------------------------------------------------------------------------------------------
           Net cash provided by financing activities                                    33              42,326
---------------------------------------------------------------------------------------------------------------
(Decrease) increase in cash and equivalents                                           (348)             39,743
Cash and equivalents, beginning of period                                            1,400              10,508
---------------------------------------------------------------------------------------------------------------
Cash and equivalents, end of period                                              $   1,052          $   50,251
===============================================================================================================

Supplemental disclosure of cash flow information:
     Income taxes paid                                                           $     193                   -
     Interest paid                                                               $       2          $       33

Non-cash investing and financing activities:
     Deferred compensation expense                                               $       -          $    1,627

<FN>
                     See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>


                                                          4


<PAGE>


              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Basis of Presentation

     The condensed consolidated financial statements included in this document
are unaudited and reflect all adjustments (consisting only of normal recurring
adjustments) which are, in the opinion of our management, necessary for a fair
presentation of the financial position, results of operations and cash flows for
the interim periods shown. These condensed consolidated financial statements
should be read in conjunction with our consolidated financial statements and
notes thereto, and Management's Discussion and Analysis of Financial Condition
and Results of Operations contained in our Annual Report on Form 10-K for the
fiscal year ended April 30, 2000. The results of operations for the three months
ended July 31, 2000 are not necessarily indicative of the results for the entire
fiscal year ending April 30, 2001.

Revenue Recognition and Deferred Revenues

     We recognize revenue in accordance with applicable accounting regulations,
including American Institute of Certified Public Accountants Statement of
Position 97-2, "Software Revenue Recognition," as amended. Revenue from sales of
products is recognized when a contract has been executed, the product has been
delivered, the sales price is fixed and determinable, and collection of the
resulting receivable is probable.

     Revenue earned on software arrangements involving multiple elements (i.e.,
software products, upgrades/enhancements, post contract customer support,
installation, training) is allocated to each element based on vendor specific
objective evidence of relative fair value of the elements. The revenue allocated
to post contract support is recognized ratably over the term of the support and
revenue allocated to service elements (such as training and installation) is
recognized as the services are performed. When arrangements contain multiple
elements and vendor specific objective evidence exists for all undelivered
elements, we recognize revenue for the delivered elements using the residual
method. For arrangements containing multiple elements for which vendor specific
objective evidence does not exist for all undelivered elements, revenue for the
delivered and undelivered elements is deferred until vendor specific objective
evidence exists or all elements have been delivered.

Research and Product Development Cost

     We expense all research and development costs as they are incurred.
Scientific research tax credits are recognized at the time the related costs are
incurred and recovery is reasonably assured. We have capitalized certain costs
associated with the filing of approximately fifty patent applications in various
jurisdictions. These patent filings relate to Elliptic Curve Cryptography, or
ECC, various mathematical computational methodologies, security protocols and
other cryptographic inventions. Once granted, we amortize the individual patent
cost over three years. We capitalize patents not yet granted at their cost less
a provision for the possibility of the patent not being granted or abandoned.

Note 2. Net Loss per Common Share

     Basic net loss per common share is computed using the weighted average
number of common shares outstanding during the period. Diluted net loss per
common share is computed using the weighted average number of common shares
outstanding during the period and, when dilutive, potential common shares from
options and warrants to purchase common shares, using the treasury stock method.

     The following potential common shares have been excluded from the
calculation of diluted net loss per share for all periods presented because the
effect would have been anti-dilutive (in thousands):

                                                    Three months ended July 31,
                                                    ---------------------------
                                                       1999             2000
                                                       ----             ----
    Shares issuable under stock options             1,181,063         5,729,350
    Shares issuable pursuant to warrants                -                30,000


                                       5


<PAGE>

     The weighted average exercise price of stock options was $4.28 and $9.04 at
July 31, 1999 and 2000, respectively. The weighted average exercise price of
warrants was $25.77 at July 31, 2000.

Note 3. Note Payable

     On April 27, 2000, we entered into an agreement with Sand Hill Capital II,
LP for a line of credit of $15,000,000 bearing interest at the prime rate of
interest plus 3%. As of the end of fiscal year 2000, we had borrowed $10,000,000
against this line. In connection with this financing, we also issued a warrant
which entitles Sand Hill to purchase 30,000 of our common shares for Cdn$38.13
per share (U.S.$25.74 based on the exchange rate on September 11, 2000) until
April 27, 2005. The amount borrowed was repaid in May 2000, and the line of
credit facility was terminated. The warrant was valued at $423,000 at the time
of issuance based on the Black-Scholes option valuation model. The value of the
warrant was charged to interest expense in the first quarter of fiscal 2001 as
the note payable was paid off with proceeds from the public offering.

Note 4. Comprehensive Income (Loss)

     Other comprehensive income refers to revenues, expenses, gains and losses
that under U.S. generally accepted accounting principles are recorded as an
element of shareholders' equity but are excluded from net income. In the first
quarter of fiscal 2001, we incurred unrealized gains of approximately $33,000 on
our available-for-sale marketable securities.

Note 5. Disclosure About Segments

     We operate in one reportable segment. We are a developer, manufacturer and
vendor of digital information security products, technologies and services
within the industry segment of electronic commerce. Information about our
revenues is as follows (in thousands of U.S. dollars):

                                           Three months ended July 31,
                                           ---------------------------
                                                  1999           2000
                                                  ----           ----
   Software license revenue                     $1,731         $4,401
   Consulting revenue                              367            355
   Hardware revenue                                 50            297
                                     ------------------ --------------
                                                $2,148         $5,053

     Information about our geographic operations is given below (in thousands of
U.S. dollars):

                                          Three months ended July 31,
                                          ---------------------------
                                                  1999           2000
                                                  ----           ----

 United States revenue                          $2,048         $4,403
 Canada revenue                                     71             30
 Europe and other revenue                           29            620
                                     ------------------ --------------
                                                $2,148         $5,053


Note 6. Public Offering and Stock Split

     On May 3, 2000, we completed a public offering of 2,500,000 common shares
in the United States and Canada for net proceeds of approximately U.S.
$51,500,000.

     On July 12, 2000, we completed a two-for-one split of our outstanding
common shares. All share and per share amounts in this document have been
adjusted to give effect to this split.

Note 7. Recent Accounting Pronouncements

     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting


                                       6


<PAGE>

Standards No. 133 ("SFAS No. 133"), "Accounting for Derivative Instruments and
Hedging Activities." SFAS No. 133 establishes new accounting and reporting
standards for derivative financial instruments and for hedging activities. SFAS
No. 133 requires us to measure all derivatives at fair value and to recognize
them on the balance sheet as an asset or liability, depending on our rights or
obligations under the applicable derivative contract. In June 1999, the FASB
issued SFAS No. 137, which deferred the effective date of the adoption of SFAS
No. 133 for one year. We will adopt SFAS No. 133 no later than the first quarter
of fiscal year 2002. Adoption of the new method of accounting for derivatives
and hedging activities is not expected to have a material impact on our
financial position.

     In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition," which provides
guidance on the recognition, presentation and disclosure of revenue in financial
statements filed with the SEC. SAB 101 outlines the basic criteria that must be
met in order to recognize revenue and provides guidance for disclosures related
to revenue recognition policies. In June 2000, the SEC issued SAB 101B, "Second
Amendment: Revenue Recognition in Financial Statements" which extended the
effective date of SAB 101 to the fourth fiscal quarter of fiscal years
commencing after December 15, 1999. Although we have not fully assessed the
implications of SAB 101, management does not believe the adoption of the
statement will have a significant impact on our consolidated financial position,
results of operations or cash flows.

Note 8. Stock Option Repricing

     In March 2000, the FASB issued Interpretation No. 44, "Accounting for
Certain Transactions involving Stock Compensation," an interpretation of APB
Opinion No. 25, "Accounting for Stock Issued to Employees," which, among other
things, requires variable-award accounting for repriced options from the date
the options are repriced until the date of exercise. This interpretation became
effective on July 1, 2000 to cover specific events that occur after December 15,
1998. On March 17, 1999, our Board of Directors approved the exchange of options
to acquire an aggregate of 1,106,240 of our common shares for options having a
right to acquire 382,914 common shares. The average exercise price of the newly
issued options was $5.44 per common share, the quoted market price of the
shares, compared to an average exercise price of $10.19 for the original
options. Deferred compensation amortization expense of $111,462 was recorded to
reflect the FASB Interpretation No. 44 in the first quarter of fiscal 2001.
Deferred compensation expense, a contra-equity account, of $1.516 million was
booked on the balance sheet to reflect the intrinsic value of the repricing of
the options.

Note 9. Subsequent Events

     On September 12, 2000, we acquired DRG Resources Group, Inc., an eCommerce
security consulting company located in Redwood City, California in exchange for
397,595 Certicom common shares and the assumption of options exercisable to
acquire a total of 103,100 Certicom common shares. The acquisition was accounted
for using the purchase method of accounting.

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
        of Operation

Overview

     Certicom is an encryption technology company specializing in security
solutions for mobile computing and wireless data markets, including mobile
eCommerce, or mCommerce. Our solutions often use less processing power and
bandwidth than conventional encryption technologies, and are therefore more
suitable for many mobile and wireless environments. Our original equipment
manufacturer, or OEM, customers incorporate our patented technology into their
applications for handheld computers, mobile phones, two-way pagers and other
Internet information appliances. As these devices communicate increasingly
sensitive and valuable information, we believe the demand for stronger security
will increase.

     Our product line includes cryptographic toolkits, information security
protocol toolkits, public-key infrastructure, or PKI, products, and certificate
authority, or CA, services. We have announced for availability later this year a
virtual private network, or VPN, client application. In addition to licensing
our security products, we provide consulting and systems integration services to
assist our customers in designing and implementing efficient security solutions.
Our customers include 724 Solutions, Aether Systems, BellSouth Wireless Data,
Motorola, Palm,


                                       7



<PAGE>

Inc., PUMATECH, Inc., QUALCOMM, Sony, Research In Motion, Oracle, Sybase,
AvantGo and Schlumberger Systems.

     We were founded in 1985 and are governed by the laws of the Yukon
Territory, Canada. We determined that commencing May 1, 1999 our functional
currency was the U.S. dollar and, accordingly, we began measuring and reporting
our results of operations in U.S. dollars from that date. We changed our
functional currency as we derive a majority of our revenues and incur a
significant portion of our expenses in U.S. dollars.

     Our consolidated financial statements contained in this Form 10-Q are
reported in U.S. dollars and are presented in accordance with U.S. generally
accepted accounting principles, or GAAP. The following discussion and analysis
relates to our financial statements that have been prepared in accordance with
U.S. GAAP.

Sources of Revenue and Revenue Recognition Policy

     We derive our revenues from a variety of sources, which we generally
classify as software licensing, consulting and systems integration and hardware.
We earn software licensing revenues from one-time base license fees or
technology access fees, royalties based upon per unit or per usage charges or a
percentage of the revenue from licensees' products containing our technology and
annual maintenance and support fees. In addition, a small amount of our revenue
comes from annual license fees under licenses entered into by Consensus
Development Corporation, or Consensus, prior to our acquisition of Consensus.
Our license agreements may permit the licensee to sublicense without us
receiving any revenue from the sublicensees. Consulting and systems integration
revenue is derived from the performance of contracted services to licensees and
can be based upon a time-and-materials framework or a fixed contract for a
complete solution. Hardware revenues comprise sales of products manufactured by
third parties to our specifications, and components procured by third parties
and resold by us.

     We generally negotiate sales contracts with our customers and we generally
do not use standardized contracts. However, each of our contracts (other than
our contracts for consulting and systems integration or hardware sales) includes
provisions for us to receive an up-front license fee and royalties. Our
royalties for mobile and wireless devices generally range from $1.00 to $5.00
per unit, with other amounts if the royalties are calculated on a per user or
usage basis or as a percentage of revenue.

     In the first quarter of fiscal 2001, our software licensing revenue,
consulting and systems integration revenue and hardware revenue represented
approximately 87%, 7% and 6%, respectively, of our total revenue. In the same
period, approximately 87% of our total revenue was derived from sales in the
United States, while 1% and 12% of our total revenue was derived from sales in
Canada and international sales, respectively.

     In the first quarter of fiscal 2000, our software licensing revenue,
consulting and systems integration revenue and hardware revenue represented
approximately 81%, 17% and 2%, respectively, of our total revenue. In the same
period, approximately 95% of our total revenue was derived from sales in the
United States, while 3% and 2% of our total revenue were derived from sales in
Canada and international sales, respectively.

     We recognize software licensing revenue in accordance with all applicable
accounting regulations including the American Institute of Certified Public
Accountants Statement of Position 97-2 ("SOP 97-2"), "Software Revenue
Recognition," as amended. Following the requirements of SOP 97-2, we recognize
license revenues when all the following conditions are met:

         o  we have signed a non-cancelable license agreement with the customer;

         o  we have delivered the software product to the customer;

         o  the amount of the fees to be paid by the customer are fixed or
            determinable; and

         o  we believe that collection of these fees is probable.

     Maintenance and support services revenue is recognized ratably over the
period, usually one year. Revenue derived from consulting and systems
integration is recognized upon performance of the related services.

                                       8


<PAGE>

     In the first quarter of fiscal 2001, approximately 99.8% of our revenue was
generated in U.S. dollars. In the same period, approximately 32.8% of our
expenses were incurred in Canadian dollars, and the balance was incurred in U.S.
dollars and other currencies.

     We expect that a substantial majority of our revenue will continue to be
generated in U.S. dollars for the foreseeable future and that a portion of our
expenses, including labor costs as well as capital and operating expenditures,
will continue to be denominated in Canadian dollars. If the Canadian dollar
appreciates against the U.S. dollar, our results of operations could be
materially adversely affected.

Costs and Expenses

     Our costs and expenses consist of selling and marketing, research and
development, depreciation and amortization, general and administrative,
consulting and systems integration and cost of hardware sold. Our selling and
marketing expenses consist primarily of employee salaries and commissions, and
include related travel, public relations and corporate communications costs and
trade shows, marketing programs and market research. Research and development
expenses consist primarily of employee salaries, sponsorship of cryptographic
research activities at various universities, participation in various
cryptographic, wireless and eCommerce standards associations and related travel
and other costs. Depreciation and amortization represents the allocation to
income of the cost of fixed assets and intangibles over their estimated useful
lives. General and administrative expenses consist primarily of salaries and
other personnel-related expenses for executive, financial and administrative
personnel. Deferred compensation amortization represents the expense of the
repricing of options to acquire common shares. Consulting and systems
integration expenses consist primarily of salaries and travel. Our cost of
hardware sold consists primarily of the component cost of our hardware products
manufactured by third parties to our specifications as well as the procured
costs of third-party hardware.

     In anticipation of business growth, we expect to incur significantly higher
selling and marketing, research and development and general and administrative
expenses and capital expenditures in subsequent periods. We may not grow at a
pace that will support these costs and expenditures. To the extent that our
revenue does not increase at a rate commensurate with these additional costs and
expenditures, our results of operations and liquidity would be materially
adversely affected.

Net Losses

     We have incurred significant annual and quarterly net losses and operating
losses from our operations since our inception, and we expect to incur
significant net losses and operating losses on both an annual and quarterly
basis for at least the next year as we grow our business by hiring additional
personnel and increasing marketing and capital expenditures. Additionally, given
the rapidly evolving nature of our business and fluctuations in the timing of
our sales, our operating results are difficult to forecast and, accordingly, our
historical financial results may not be meaningful assessments of our future
business operations or prospects. We believe that other factors may be better
indicators of our future business operations or prospects, including the pace of
deployment of mCommerce products and services, the acceptance of Elliptic Curve
Cryptography as a cryptographic standard and the extent and timing of our
royalty revenues.

     We pay taxes in accordance with U.S. federal, state and local tax laws and
Canadian federal, provincial and municipal tax laws. We do not expect to pay any
significant corporate income taxes in Canada in the foreseeable future because
we have significant Canadian tax credits and loss carry-forwards.

Results of Operations

     Although we have experienced substantial growth in revenues in recent
periods, we have incurred substantial operating losses since our inception and
we may incur substantial operating losses in the foreseeable future. As of July
31, 2000, we had an accumulated deficit of approximately $60.9 million. We
expect to incur additional losses for at least the next year, and we may never
achieve profitability. We intend to invest heavily in sales and marketing and
the development and enhancement of our product and service offerings.


                                       9


<PAGE>

     The following table sets out, for the periods indicated, selected financial
information from our consolidated financial statements as presented in
accordance with U.S. generally accepted accounting principles as a percentage of
revenue.

                                                    Three months ended July 31,
                                                    ---------------------------
                                                           1999            2000
                                                           ----            ----
    Consolidated Statement of Operations Data:              (%)              (%)
    Revenues                                                100             100
    Costs and expenses:
        Selling and marketing                                59              62
        Research and development                             38              48
        Depreciation and amortization                        81              54
        General and administrative                           71              51*
        Consulting and systems integration                   15              20
        Cost of hardware sold                                 0               5
    Interest income (expense), net                           (3)             19
    Non-cash interest income (expense)                        -              (8)

    Loss before income taxes                               (168)           (130)
    Income taxes                                             (4)             (2)
    Net loss                                               (171)           (132)

* Including the percentage of non-cash expense related to the repricing of stock
options under FASB Interpretation No. 44.

First quarter of fiscal 2001 compared to first quarter of fiscal 2000

     Revenue. Revenue for the three months ended July 31, 2000 was $5.1 million,
a 135% increase from $2.1 million in the first quarter of fiscal 2000. The
increase was primarily attributable to increased software licensing, which grew
to approximately $4.4 million, a 154% increase over $1.7 million in the first
quarter of fiscal 2000. The increase in software licensing revenue was primarily
a result of a growing market awareness of our products and, to a lesser extent,
an expanded sales force. In addition, consulting and systems integration revenue
was approximately $0.4 million in each of the first quarter of fiscal 2000 and
the first quarter of fiscal 2001. We have added resources in this area in the
first quarter of fiscal 2001 and focused our activities on internal projects.
Hardware sales grew 494% to $0.3 million for the first quarter of fiscal 2001,
and increased as a percentage of revenue to 6% versus 2% in the first quarter of
fiscal 2000.

     Selling and Marketing. Selling and marketing expenses were $3.1 million for
the three months ended July 31, 2000 versus $1.3 million for the same period in
fiscal 2000, an increase of 147%. This increased expense was primarily due to an
increase in personnel costs. We are in the process of adding marketing personnel
and expanding our marketing operations into Europe and the Asia Pacific region
and anticipate that expenses in this area will continue to increase.

     Research and Development. Our research and development expenses for the
first quarter of fiscal 2001 increased 200% compared to the first quarter of
fiscal 2000, to $2.4 million as a result of new product development in the
public-key infrastructure area. We expect that these expenses will continue to
increase in the foreseeable future as we add additional engineering resources
and continue to grow our technical capabilities to support the growth of our
business.

     Depreciation and Amortization. Depreciation and amortization increased 59%
to $2.7 million in the first quarter of fiscal 2001 compared to $1.7 million in
the first quarter of fiscal 2000. The primary reason for the increase was that
our results for the first quarter of fiscal 2001 included amortization expenses
relating to our acquisition of TrustPoint, which occurred during the third
quarter of fiscal 2000.

     General and Administrative. General and administrative expenses increased
68% in the first quarter of


                                       10


<PAGE>

fiscal 2001 to $2.6 million from $1.5 million for the first quarter of fiscal
2000. This increase resulted from growth in personnel and office space in
California, additional support for research and development and sales and
marketing, and amortization related to the repricing of stock options. Deferred
compensation expense, a contra-equity account, of $1.516 million was booked on
the balance sheet to reflect the intrinsic value of the repricing of the
options.

     Consulting and Systems Integration. Consulting and systems integration
expenses were $1.0 million for the first quarter of fiscal 2001, a 216% increase
over $0.3 million for the first quarter of fiscal 2000. This increase was
primarily as a result of increasing the number of engineers in this group in
order to keep up with growing customer and internal demands. We expect that this
trend will continue as we add resources to these groups through both internal
hiring and acquisitions of other entities, if any.

     Cost of Hardware Sold. Cost of hardware sold increased 2478% in the first
quarter of fiscal 2001 to approximately $0.2 million from $9,000 in the first
quarter of fiscal 2000. This increase was primarily due to higher hardware
sales. This increase is also attributable to a shift in product mix with a
greater proportion of hardware sales being generated by sales of higher cost
third-party procured hardware.

     Interest and Other Income (Expense). For the first quarter of fiscal 2001,
interest income was $0.5 million compared to an interest expense of $0.1 million
for the first quarter of fiscal 2000. This increase consists of an increase in
the amount of cash and marketable securities invested during the first quarter
of fiscal 2001, as well as currency adjustments, primarily Canadian dollars to
U.S. dollars. This increase is net of the one-time non-cash interest expense of
$0.4 million from the warrants issued to Sand Hill Capital II, LP.

     Income Taxes. Income tax expense was $0.1 million for the first quarter of
fiscal 2001 compared to $0.1 million in the first quarter of fiscal 2000. The
income tax expense for the first quarter of fiscal 2001 was estimated based on
25% of the income tax for fiscal 2000.

     Net Loss. Our net loss increased 81% in the first quarter of fiscal 2001 to
$6.6 million ($0.26 per share basic and diluted) compared to $3.7 million ($0.17
per share basic and diluted) for the same period of the previous fiscal year.
This increase was predominately attributable to the amortization of
acquisition-related intangibles as well as the increased expense for personnel
and office space in California. The loss before interest, depreciation and
amortization and taxes amounted to $4.3 million in the first quarter of fiscal
2001 ($0.17 per share basic and diluted), a 142% increase over $1.8 million
($0.08 per share basic and diluted) for the first quarter of fiscal 2000.

Financial Condition, Liquidity and Capital Resources

     In May 2000, we completed a public offering of 2,500,000 common shares in
the United States and Canada. Our net proceeds from the offering were
approximately $51.5 million. On April 27, 2000, we borrowed $10 million from
Sand Hill Capital II, LP, or Sand Hill, at the prime rate of interest plus 3%.
As partial consideration for making advances to us under this credit facility,
we granted Sand Hill a warrant to purchase 30,000 of our common shares with an
exercise price of Cdn. $38.13 per share (U.S.$25.74 based on the exchange rate
on September 11, 2000) for a period of five years from the date of grant. We
repaid the loan and interest on May 5, 2000, using a portion of the proceeds
received from our public offering, and terminated this facility. Total cash
increased $39.7 million during the first quarter of fiscal 2001. Our cash and
cash equivalents and marketable securities at July 31, 2000 were $53.8 million.

     We lease all of our office premises and certain furniture and equipment
under operating leases which require, in the aggregate, minimum payments of $2.1
million in fiscal 2001. The leases for our offices in the United States and
Canada expire in 2006 and 2009, respectively. Our equipment leases expire in
2009.

     We believe that, in the future, it may be advisable to augment our cash in
order to fund our activities. Therefore, we will consider raising cash whenever
market conditions are favorable. Capital may be raised through additional public
or private financing, as well as collaborative relationships, borrowings and
other available sources.

     Our future capital requirements may be substantial and will depend on, and
could increase as a result of, many factors, including: costs associated with
facility expansion and the build-up of our Mobile Trust Certificate


                                       11


<PAGE>

Authority service; progress of our research and development programs; whether we
acquire interests in products currently held by third parties; whether we
acquire and/or merge with other entities; the time and costs involved in
obtaining regulatory approvals; costs involved in filing, prosecuting and
enforcing patent claims; competing technological and market developments; our
success in entering into collaborative agreements; and administrative and legal
expenses. However, we believe our cash and cash equivalents and marketable
securities position at July 31, 2000 is sufficient to meet our short-term
liquidity needs. There can be no assurance that additional or sufficient
financing will be available, or, if available, that it will be available on
acceptable terms. If we raise additional funds by issuing additional equity
securities, dilution to then existing shareholders may result. If adequate funds
are not available, we may be required to significantly curtail one or more of
our research and development programs or commercialization efforts or obtain
funds through arrangements with collaborative partners or others on less
favorable terms than might otherwise be available.

Factors That May Affect Operating Results

     We operate in a dynamic and rapidly changing environment that involves
risks and uncertainties. You should carefully consider the risks described below
and the other information in this Form 10-Q. If any of the following risks
occur, our business, financial condition or results of operations could be
materially harmed. This section should be read in conjunction with our annual
report on Form 10-K for the fiscal year ended April 30, 2000.

Risks Related to Our Business

We have historically incurred losses and will for the foreseeable future.

     We have experienced substantial net losses in each fiscal period since we
were formed. As of July 31, 2000, we had an accumulated deficit of approximately
$60.9 million and, in addition, an accumulated other comprehensive loss of $2.5
million. The risks described in this Form 10-Q, among other factors, make
predicting our future operating results difficult. We expect to incur additional
losses for the next few years, and we may never achieve profitability. If we do,
we may not be able to sustain it. Because we may be unable to sustain our
revenue growth, you should not consider our historical growth indicative of our
future revenue levels or operating results.

Our business depends on continued development of the Internet, the acceptance of
mobile and wireless devices and the continued growth of eCommerce and mCommerce.

     Our future success is substantially dependent upon continued growth in the
use of the Internet and the acceptance of mobile and wireless devices and their
use for mobile eCommerce, or mCommerce. The adoption of the Internet for
commerce and communications, particularly by individuals and companies that have
historically relied upon alternative means of commerce and communication,
generally requires the understanding and acceptance of a new way of conducting
business and exchanging information. In particular, companies that have already
invested substantial resources in other means of conducting commerce and
exchanging information may be particularly reluctant or slow to adopt a new,
Internet-based strategy that may make their existing personnel and
infrastructure obsolete. To the extent that individuals and businesses do not
consider the Internet to be a viable commercial and communications medium, and
do not increase their use of mobile and wireless devices, our business may not
grow.

     In addition, our business may be materially adversely affected if the
number of users of mobile and wireless devices does not increase, or if
eCommerce and mCommerce do not become more accepted and widespread. The
projections, estimates and forecasts in this regard of third parties that we
cite in this Form 10-Q could prove to be overly optimistic. The use and
acceptance of the Internet and of mobile and wireless devices may not increase
for any number of reasons, including:

         o  actual or perceived lack of security for sensitive information, such
            as credit card numbers;

         o  congestion of traffic or other usage delays on the Internet;

         o  inconsistent quality of service or the lack of availability of
            cost-effective, high-speed service;



                                       12


<PAGE>

         o  lack of high-speed modems and other communications equipment;

         o  competing technologies;

         o  possible outages or other damage to the Internet;

         o  governmental regulation; and

         o  uncertainty regarding intellectual property ownership.

     Published reports have indicated that capacity constraints caused by growth
in the use of the Internet may impede further development of the Internet to the
extent that users experience delays, transmission errors and other difficulties.
If the necessary infrastructure, products, services or facilities are not
developed, or if the Internet does not become a viable and widespread commercial
and communications medium, and if individuals and businesses do not increase
their use of mobile and wireless devices for mCommerce, our business, financial
condition and operating results could be materially adversely affected.

Unless the demand for mutual authentication in mCommerce transactions increases,
our growth prospects will be materially adversely affected.

     Most of the advantages of our Elliptic Curve Cryptography-based technology
for mobile and wireless devices over conventional security technology are not
applicable to a transaction that does not involve the mutual authentication of
both parties to the transaction. The vast majority of eCommerce and mCommerce
transactions currently do not involve mutual authentication. Participants in
mCommerce have only recently begun to require mutual authentication in some
applications, such as enterprise data access and certain high-value
transactions. Unless the number of mCommerce transactions involving mutual
authentication increases, the demand for our products and services, and our
growth prospects, will be materially adversely affected.

Our success depends on Elliptic Curve Cryptography ("ECC") technology becoming
accepted as an industry standard.

     To date, ECC technology has not been broadly accepted. In order for our
business to be successful, ECC technology must become accepted as an industry
standard, which may never happen. The technology of our principal competitor,
RSA Security, is, and has been for the past several years, the de facto standard
for such security over open networks like the Internet. RSA Security owns a
patent relating to its algorithm that expires on September 20, 2000. This
patented technology should be freely available after that date and may become
commoditized. The inexpensive or free availability of such security technology
could significantly delay or prevent the acceptance of ECC as a security
standard.

Our quarterly operating results are subject to fluctuations and if we fail to
meet the expectations of securities analysts or investors in any quarter, our
share price could decline significantly.

     Our quarterly operating results have historically fluctuated and may
fluctuate significantly in the future. Accordingly, our operating results in a
particular period are difficult to predict and may not meet the expectations of
securities analysts or investors. If this occurs, our share price would likely
decline significantly. Factors that may cause our operating results to fluctuate
include:

         o  the level of demand for our products and services as well as the
            timing of new releases of our products;

         o  our dependence in any quarter on the timing of a few large sales, as
            described below;

         o  our ability to maintain and grow a significant customer base;

         o  the fixed nature of a significant proportion of our operating
            expenses, particularly personnel, research


                                       13

<PAGE>

            and development and facilities;

         o  costs related to the opening or expansion of our facilities;

         o  unanticipated product discontinuation, exchange or deferrals by our
            original equipment manufacturer, or OEM, customers;

         o  changes in our pricing policies or those of our competitors;

         o  competition from sources that provide products similar to ours for
            free;

         o  currency exchange rate fluctuations and other general economic
            factors;

         o  our effectiveness at integrating acquisitions with existing
            operations; and

         o  timing of acquisitions and related costs.

Accordingly, we believe that quarter-to-quarter comparisons of our results of
operations are not necessarily meaningful. You should not rely on the results of
one fiscal quarter as an indication of our future performance.

Our revenues are difficult to predict.

     We derive our revenue primarily from sales of our products and services to
our original equipment manufacturer, or OEM, customers. Our sales vary in
frequency, and OEM customers may or may not purchase our products and services
in the future. In addition, our customers may defer the purchase of, or cease
using, our products and services at any time, and certain license agreements may
be terminated by the customer at any time. Our customer contracts typically
provide for base license fees or technology access fees and/or royalties based
on a per unit or per usage charge or a percentage of revenue from licensees'
products containing our technology, and a number of our large contracts provide
that we will not earn additional royalty revenues from those contracts until
these customers' shipments exceed certain thresholds specified in the contracts.
As a result, our revenues are not recurring from period to period, which makes
them more difficult to predict. In addition, estimating future revenue is
difficult because we generally ship our products soon after an order is received
and, as such, we do not have a significant backlog. Our expense levels are
based, in part, on our expectations of future revenues and are largely fixed in
the short term. We may not be able to adjust spending in a timely manner to
compensate for any unexpected shortfall in revenues.

We may be unable to protect our intellectual property rights, which would
materially adversely affect our business.

     We rely on one or more of the following to protect our proprietary rights:
patents, trademarks, copyrights, trade secrets, confidentiality procedures and
contractual provisions. Despite our efforts to protect our proprietary rights,
unauthorized parties may attempt to copy and may succeed in copying aspects of
our product designs and products, or obtain and use information we regard as
proprietary. Preventing the unauthorized use of our proprietary technology may
be difficult because it may be difficult to discover such use. Stopping
unauthorized use of our proprietary technology may be difficult, time-consuming
and costly. In addition, the laws of some countries in which our products are
licensed do not protect our products and services and related intellectual
property to the same extent as the laws of Canada, the United States and the
European Union. While we believe that at least some of our products are covered
by one or more of our patents and these patents are valid, a court may not agree
if the matter is litigated. There can be no assurance that we will be successful
in protecting our proprietary rights and, if we are not, our business, financial
condition and operating results could be materially adversely affected.

     Enforcement of intellectual property rights is time consuming and costly
and entails the possibility that some or all of our intellectual property rights
may be invalid or unenforceable or subject to adverse claims of ownership. None
of our patents has faced a challenge in the courts or in front of an
administrative body. There is always the possibility that some or all of our
patents could be found invalid or unenforceable. Likewise, no one has challenged
our trade secrets or copyrights, but there is a possibility that some or all of
the rights we believe that we


                                       14


<PAGE>

have could be adversely affected by litigation.

     We are engaged in joint development projects with certain companies. One of
these projects has resulted in the issuance of jointly owned patents. There is
always a risk that the companies with which we are working could decide not to
commercialize the joint technology and that we may be unable to commercialize
joint technology without their consent and/or involvement.

     We are members of organizations which set standards. As such, we may be
required to license patents that we own which are necessary for practice of the
standard. Further, to provide products that are compliant with standards that
have been adopted or will be adopted in the future, we may have to license
patents owned by others. Such licensing requirements may adversely affect the
value of our products.

If the sales of our customers' products decline, our royalty revenue would also
decline.

     Our licenses to our original equipment manufacturer, or OEM, customers
generally provide that royalty payments are not due to us until such time as the
licensee both incorporates our technology into its products and ships those
products for sale to third parties. Accordingly, our royalty license revenue is
linked to our OEM customers' sales, and if those customers' product shipments
decline, then our royalty license revenue would also decline.

We depend on sales of our principal products.

     We currently derive substantially all our revenue from sales of our
cryptographic toolkits and protocol information security toolkits. As a result,
any factor adversely affecting sales of these products would have a material
adverse effect on our business, financial condition and operating results. Our
future financial performance will depend in part on the successful development,
introduction and customer acceptance of new and enhanced versions of our
cryptographic toolkits and protocol information security toolkits. There can be
no assurance that we will continue to be successful in marketing our products or
any new or enhanced versions of our products.

Our recently announced products and services may generate little or no revenue.

     We recently announced our public-key infrastructure tools products, our
certificate authority service and our virtual private network client
application. We cannot accurately predict the future level of acceptance, if
any, of these new products by our customers and we may not be able to generate
anticipated, or any, revenue from these products.

If we cannot successfully control our product defects and our product liability,
our business,  financial  condition  and  operating  results would be materially
adversely affected.

     Our products are highly complex and, from time to time, may contain design
defects that are difficult to detect and correct. Errors, failures or bugs may
be found in our products after commencement of commercial shipments. Even if
these errors are discovered, we may not be able to correct such errors in a
timely manner or at all. The occurrence of errors and failures in our products
could result in adverse publicity and the loss of, or delay in achieving, market
acceptance of our products, and correcting such errors and failures in our
products could require significant expenditure of capital by us. Our products
are integrated into our customers' products. The sale and support of these
products may entail the risk of product liability or warranty claims based on
damage to such equipment. In addition, the failure of our products to perform to
customer expectations could give rise to warranty claims. The consequences of
such errors, failures and claims could have a material adverse effect on our
business, financial condition and operating results.

The lengthy sales and implementation cycles of our products and services could
materially adversely affect us.

     We market many of our products and services directly to original equipment
manufacturers, or OEMs. The sale to, and implementation by, OEMs of our products
and services typically involve a lengthy education process and a significant
technical evaluation and commitment of capital and other resources by them. This
process is also subject to the risk of delays associated with their internal
budgeting and other procedures for approving capital


                                       15


<PAGE>

expenditures, deploying new technologies within their networks and testing and
accepting new technologies that affect key operations. As a result, the sales
and implementation cycles associated with many of our products and services are
generally lengthy, and we may not succeed in closing transactions on a timely
basis, or at all. If orders expected for a specific customer for a particular
period are not realized, our business, financial condition and operating results
could be materially adversely affected.

     We anticipate increased operating expenses, which would materially
adversely affect our business, financial condition and operating results if we
do not correspondingly increase our revenue.

         We expect to increase our operating expenses significantly as we:

         o  expand our sales and marketing operations and develop new
            distribution channels;

         o  enhance existing or build additional software development centers;

         o  enhance our operational and financial systems;

         o  broaden our customer support capabilities; and

         o  fund greater levels of research and development.

     If we do not significantly increase our revenue to meet these increased
operating expenses, our business, financial condition and operating results
would be materially adversely affected.

We have only a limited operating history, which makes it difficult to evaluate
an investment in our common shares.

     We have only a limited operating history. In particular, in 1997 we shipped
our first commercial toolkit and entered the U.S. market. Accordingly, our
business operations are subject to all the risks inherent in the establishment
and maintenance of a new business enterprise, such as competition and viable
operations management. Most of our competitors and their products have greater
market recognition and acceptance than we or our products do. Our ability to
market our products profitably is currently unproven. We may never be able to
achieve and sustain profitable operations.

Acquisitions could harm our financial condition and operations.

     We acquired Consensus Development Corporation and Uptronics Incorporated in
fiscal 1999 and we acquired Trustpoint in fiscal 2000. We may acquire additional
businesses, technologies, product lines or services in the future. Acquisitions
involve a number of risks, including:

         o  the difficulty of assimilating the operations and personnel of the
            acquired business;

         o  the potential disruption of our business;

         o  our inability to integrate, train, retain and motivate key personnel
            of the acquired business;

         o  the diversion of our management from our day-to-day operations;

         o  our inability to incorporate acquired technologies successfully into
            our products and services;

         o  the additional expense associated with completing an acquisition and
            amortizing any acquired intangible assets;

         o  increased demands for liquidity;

         o  the potential impairment of relationships with our employees,
            customers and strategic partners; and


                                       16


<PAGE>

         o  the inability to maintain uniform standards, controls, procedures
            and policies.

     In addition, we may not be able to maintain the levels of operating
efficiency that any acquired companies had achieved or might have achieved
separately. Successful integration of each of their operations would depend upon
our ability to manage those operations and to eliminate redundant and excess
costs. As a result of difficulties associated with combining operations, we may
not be able to achieve the cost savings and other benefits that we would hope to
achieve with these acquisitions.

     Given that our management will have to devote time and attention to
integrate the technology, operations and personnel of the businesses we acquire,
we may not be able to serve our current customers properly or attract new
customers. Also, our management faces the difficult and potentially time
consuming challenge of implementing uniform standards, controls, procedures and
policies throughout our various offices. Any difficulties in this process could
disrupt our ongoing business, distract our management, result in the loss of key
personnel or customers, increase our expenses and otherwise materially adversely
affect our business, financial condition and operating results.

     In the event of any future acquisitions, we could issue equity shares,
which would dilute our existing shareholders' equity interests, incur debt or
assume liabilities. We cannot assure you that we would be able to obtain any
additional financing on satisfactory terms, or at all, and this failure would
have a material adverse effect on our business, financial condition and
operating results. Additional indebtedness would make us more vulnerable to
economic downturns and may limit our ability to withstand competitive pressures.
The terms of any additional indebtedness may include restrictive financial and
operating covenants, which would limit our ability to compete and expand.

     Our business strategy also includes strategic investments and joint
ventures with other companies. These transactions are subject to many of the
same risks identified above for acquisitions.

We depend on key personnel for our future success and we have no protection if
they leave us.

     Our success is largely dependent on the performance of our key employees,
particularly Scott A. Vanstone, our Chief Cryptographer. Most of our key
technical and senior management personnel are not bound by employment
agreements. Loss of the services of any of these key employees could have a
material adverse effect on our business, financial condition and operating
results. We do not maintain key person life insurance policies on any of our
employees.

We may not be able to attract or retain qualified personnel.

     Competition for qualified personnel in the digital information security
industry is intense, and finding and retaining qualified and experienced
personnel in the San Francisco Bay Area is difficult. We believe there are only
a limited number of individuals with the requisite skills to serve in many of
our key positions, and it is becoming increasingly difficult to hire and retain
these persons. Competitors and others have in the past and may attempt in the
future to recruit our employees. A major part of our compensation to our key
employees is in the form of stock option grants. A prolonged depression in our
share price could make it difficult for us to retain employees and recruit
additional qualified personnel. In addition, the volatility and current market
price of our common shares may make it difficult to attract and retain
personnel.

If we are unable to manage our growth, our business would be disrupted.

     We have experienced a period of significant growth in our sales and
personnel that has placed strain upon our management systems and resources. Our
sales increased from $2.1 million in the first quarter of fiscal 2000 to $5.1
million in the first quarter of fiscal 2001. During the three months ended July
31, 2000, the number of our full-time, part-time and contract employees
increased from 165 to 240. We intend to continue to grow in the foreseeable
future and to pursue existing and potential market opportunities, including
acquisitions. Our growth has placed, and will continue to place, significant
demands on our management and operational resources, particularly with respect
to:


                                       17


<PAGE>

         o  recruiting and retaining skilled technical, marketing and management
            personnel in an environment where there is intense competition for
            skilled personnel;

         o  managing a larger, more complex international organization;

         o  expanding our facilities and other infrastructure in a timely manner
            to accommodate a significantly larger global workforce;

         o  maintaining and expanding a cutting edge research and development
            staff;

         o  expanding our sales and marketing efforts;

         o  providing adequate training and supervision to maintain our high
            quality standards;

         o  expanding our treasury and accounting functions to meet the demands
            of a growing company;

         o  strengthening our financial and management controls in a manner
            appropriate for a larger enterprise; and

         o  preserving our culture, values and entrepreneurial environment.

     Our management has limited experience managing a business of our size and,
in order to manage our growth effectively, we must concurrently develop more
sophisticated operational systems, procedures and controls. If we fail to
develop these systems, procedures and controls on a timely basis, our business,
financial condition and operating results could be materially adversely
affected.

If we do not successfully transition our financial, accounting and treasury
systems from Canada to California on a timely basis, our business could be
materially adversely affected.

     Since November 30, 1999, we have appointed a new Chief Executive Officer
and a new Chief Financial Officer, both of whom are located in our Hayward,
California office rather than our Mississauga, Ontario office. We are in the
process of moving our internal financial, accounting and treasury functions from
Mississauga to Hayward. There is a risk that these changes could cause
significant disruption in our company and adversely affect these critical
functions. If that were to occur, our business, financial condition and
operating results could be materially adversely affected.

If we fail to develop and maintain our strategic relationships, our business
would be materially adversely affected.

     One of our business strategies has been to enter into strategic or other
collaborative relationships with many of our OEM customers to develop new
technologies and leverage their sales and marketing organizations. We may need
to enter into additional relationships to execute our business plan. We may not
be able to enter into additional, or maintain our existing, strategic
relationships on commercially reasonable terms. In such case, we may have to
devote substantially more resources to the development of new technology and the
distribution, sales and marketing of our digital information security products
and services than we would otherwise. Failure of one or more of our strategic
relationships could materially adversely affect our business, financial
condition and operating results.

We do not insure against all potential losses and we could be seriously harmed
and our reputation damaged by unexpected liabilities.

     Many of our products provide benefits to our clients' businesses that are
difficult to quantify. Any failure in a client's system could adversely affect
our reputation and result in a claim for substantial damages against us,
regardless of our responsibility for such failure. Although we generally attempt
to limit our contractual liability for damages arising from negligent acts,
errors, mistakes or omissions in rendering our services, we have not been, and
cannot assure you that we will be, able to do so in all cases or that any
limitations of liability set forth in our


                                       18


<PAGE>

agreements will be enforceable in all instances or will otherwise protect us
from liability for damages. In addition, our failure to meet client expectations
or to deliver error free services may result in adverse publicity for us and
damage to our reputation.

     We maintain general liability insurance coverage, including coverage for
errors or omissions. However, we cannot assure you that:

         o  insurance coverage will be available to us in sufficient amounts to
            cover one or more significant claims that are successfully asserted
            against us;

         o  insurance coverage will continue to be available to us in the future
            on reasonable terms, including reasonable premium, deductible and
            co-insurance requirements; or

         o  our insurer will not disclaim coverage of any future claim.

     Our business, financial condition and operating results could be materially
adversely affected if any of these developments were to occur.

Our share price is, and likely will continue to be, volatile.

     We expect that the market price of our common shares may fluctuate
substantially as a result of variations in our quarterly operating results.
These fluctuations may be exaggerated if the trading volume of our common shares
is low. In addition, due to the technology-intensive and emerging nature of our
business, the market price of our common shares may fall dramatically in
response to a variety of factors, including:

         o  announcements of technological or competitive developments;

         o  acquisitions or entry into strategic alliances by us or our
            competitors;

         o  the gain or loss of a significant customer or strategic
            relationship;

         o  changes in estimates of our financial performance or changes in
            recommendations by securities analysts regarding us, our industry or
            our customers' industries; and

         o  general market or economic conditions.

     This risk may be heightened because our industry is new and evolving,
characterized by rapid technological change and susceptible to the introduction
of new competing technologies or competitors.

     In addition, equity securities of many technology companies have
experienced significant price and volume fluctuations. These price and volume
fluctuations often have been unrelated to the operating performance of the
affected companies. Volatility in the market price of our common shares could
result in securities class action litigation. This type of litigation,
regardless of the outcome, could result in substantial costs to us and a
diversion of our management's attention and resources.

     In May 2000, we listed and began trading on The Nasdaq National Market. We
cannot predict the extent to which investor interest in our common shares will
continue to support a trading market in the United States or how liquid that
market might become. As discussed earlier, our financial results are difficult
to predict and could fluctuate significantly.

System interruptions and security breaches could materially adversely affect our
business.

     We plan to construct what we believe will be a secure data center. We will
depend on the uninterrupted operation of that data center. We will need to
protect this center and our other systems from loss, damage or interruption
caused by fire, power loss, telecommunications failure or other events beyond
our control. In addition,


                                       19


<PAGE>

most of our systems and the data center may be located, and most of our customer
information may be stored, in the San Francisco, California area, which is
susceptible to earthquakes. Any damage or failure that causes interruptions in
our data center and our other computer and communications systems could
materially adversely affect our business, financial condition and operating
results.

     Our success also depends upon the scalability of our systems. Our systems
have not been tested at the usage volumes that we expect will be required in the
future. Thus, a substantial increase in demand for our products and services
could cause interruptions in our systems. Any such interruptions could affect
our ability to deliver our services and our business, financial condition and
operating results.

     Although we periodically perform, and retain accredited third parties to
perform, evaluations of our operational controls, practices and procedures, we
may not be able to remain in compliance with our internal standards or those set
by these third parties. If we fail to maintain these standards, we may have to
expend significant time and money to return to compliance and our business,
financial condition and operating results could be materially adversely
affected.

     We will retain certain confidential customer information in our planned
data center. It is important to our business that our facilities and
infrastructure remain secure and be perceived by the marketplace to be secure.
Despite our security measures, our infrastructure may be vulnerable to physical
break-ins, computer viruses, attacks by hackers or similar disruptive problems.
It is possible that we may have to expend additional financial and other
resources to address these problems. Any physical or electronic break-ins or
other security breaches or compromises of the information stored at our planned
data center may jeopardize the security of information stored on our premises or
in the computer systems and networks of our customers. In such an event, we
could face significant liability and customers could be reluctant to use our
products and services. Such an occurrence could also result in adverse publicity
and adversely affect the market's perception of our products and services, which
would materially adversely affect our business, financial condition and
operating results.

We have limited financial resources and will likely require additional financing
that may not be available.

     Our financial resources are substantially smaller than the financial
resources of our current principal and potential competitors. We will likely
require additional equity or debt financing in the future. There can be no
assurance that we will be able to obtain the additional financial resources
required to successfully compete in our markets on satisfactory terms or at all.
Failure to obtain such financing could result in the delay or abandonment of
some or all of our plans for development, which could have a material adverse
effect on our business, financial condition and operating results.

Risks Related to the Digital Information Security Industry

Public-key cryptography technology is subject to the risk that it will be
successfully attacked or decoded.

     Our digital information security products and services are largely based on
public-key cryptography technology. With public-key cryptography technology, a
user has both a public key and a private key. The security afforded by this
technology depends on the integrity of a user's private key and on it not being
stolen or otherwise compromised. The integrity of private keys also depends in
part on the application of certain mathematical principles such as factoring and
elliptic curve discrete logarithms. This integrity is predicated on the
assumption that solving problems based on these principles is difficult. Should
a relatively easy solution to these problems be developed, then the security of
encryption products using public-key cryptography technology would be reduced or
eliminated. Furthermore, any significant advance in techniques for attacking
cryptographic systems could also render some or all of our products and services
obsolete or unmarketable. Even if no breakthroughs in methods of attacking
cryptographic systems are made, factoring problems or elliptic curve discrete
logarithm problems can theoretically be solved by computer systems significantly
faster and more powerful than those currently available. In the past, there have
been public announcements of the successful decoding of certain cryptographic
messages and of the potential misappropriation of private keys. Such publicity
could also adversely affect the public perception as to the safety of public-key
cryptography technology. Furthermore, an actual or perceived breach of security
at one of our customers, whether or not due to our products, could result in
adverse publicity for us and damage to our reputation. Such adverse public
perception or any of these other risks, if they actually occur, could materially


                                       20


<PAGE>

adversely affect our business, financial condition and operating results.

Product development and technological change could materially adversely affect
us.

     The digital information security industry is an emerging industry that is
characterized by rapid technological change and frequent new product
introductions. Accordingly, we believe that our future success depends upon our
ability to enhance our current products and develop and introduce new products
offering enhanced performance and functionality at competitive prices. In
addition, technological innovation in the marketplace, such as in the areas of
mobile processing power or, wireless bandwidth, or the development of new
cryptosystems, may reduce the comparative benefits of our products and could
materially adversely affect our business, financial condition and operating
results. Our inability, for technological or other reasons, to enhance, develop
and introduce products in a timely manner in response to changing market
conditions, industrial standards, customer requirements or competitive offerings
could result in our products becoming obsolete, or could otherwise have a
material adverse effect on our business, financial condition and operating
results. Our ability to compete successfully will depend in large measure on our
ability to maintain a technically competent research and development staff and
to adapt to technological changes and advances in the industry, including
providing for the continued compatibility of our products with evolving industry
standards and protocols.

We face intense competition that could materially adversely affect us.

     We operate in a dynamic and evolving industry that is highly competitive.
We anticipate that the quality, functionality and breadth of our competitors'
product offerings will improve. Most of our competitors have greater name
recognition, larger customer bases and significantly greater financial,
technical, marketing, public relations, sales, distribution and other resources
than we do. We compete in a new and rapidly evolving market and there can be no
assurance that we will be able to compete effectively with such companies. In
addition, we could face competition from our OEMs in the event that some or all
of them develop and distribute their own systems. We also could be materially
adversely affected if there were a significant movement towards the acceptance
of open source solutions that compete with our products.

     We expect that additional competition will develop, both from existing
businesses in the digital information security industry and from new entrants,
as demand for digital information products and services expands and as the
market for these products and services becomes more established. We may not be
able to compete successfully and competitive pressures may harm our business.
Our largest competitors include RSA Security, Inc., which licenses the de facto
Internet security standard, VeriSign, Inc., Baltimore Technologies plc and
Entrust Technologies, Inc.

The technology and wireless industry may fail to grow significantly, which would
materially adversely affect our growth.

     There can be no assurance that the market for our existing products and
services will continue to grow, that firms within the industry will adopt our
products and services, or that we will be successful in independently
establishing markets for our products and services. If the various markets in
which our, and our OEM customers', products and services compete fail to grow,
or grow more slowly than we currently anticipate, or if we are unable to
establish markets for our new products and services, our revenue and net income
may be lower than expected.

Disputes over intellectual property rights are common in our industry and, if we
become involved in such a dispute, we could be materially adversely affected.

     The industry in which we compete has many participants who own, or claim to
own, intellectual property. We indemnify our licensees against third-party
intellectual property claims based on our technology. Claims relating to
intellectual property by any third-party business, individual or university,
whether or not with merit, could be time-consuming to evaluate, result in costly
litigation, cause product shipment delays for products or the cessation of the
use and sale of products or services, or require us to enter into licensing
agreements that may require the payment of a license fee and/or royalties to the
owner of the intellectual property. Such licensing agreements, if required, may
not be available on royalty or other licensing terms acceptable to us. Any of
these situations would materially adversely affect our business, financial
condition and operating results. We also currently license third party
technology for use in our products and services. These third-party technology
licenses may not continue to be


                                       21


<PAGE>

available on commercially reasonable terms or may not be available at all. Our
business could be materially harmed if we lose the rights to certain technology.

We could be materially adversely affected by government regulation.

     The digital information security industry is governed by regulations that
could have a material adverse effect on our business. The export of strong
cryptographic equipment and software, including many of our products, is
regulated by both the U.S. and Canadian governments. Governments could seek to
impose taxes on companies that engage in electronic commerce or which are
involved in other markets where we sell our products and services. It is also
possible that laws could be enacted covering issues such as user privacy,
pricing, content and quality of products and services in these markets. Such
regulations, taxes and laws could materially adversely affect our sales and our
OEM customers' sales. Foreign governments could adopt regulations that are
detrimental to our interests. Such regulations could cause us to compromise our
source code protection, minimize our intellectual property protection,
negatively impact our plans for global expansion and consequently materially
adversely affect our business, financial condition and operating results.

Risks Related to Our Corporate Charter; Limitations on Dividends

We have a shareholder rights plan that could delay or prevent an acquisition of
us even if an acquisition would be beneficial to our shareholders.

     We have adopted a shareholder rights plan. The provisions of this plan
could make it more difficult for a third party to acquire a majority of our
outstanding voting shares, the effect of which may be to deprive our
shareholders of a control premium that might otherwise be realized in connection
with an acquisition of us.

The anti-takeover effect of certain of our charter provisions could delay or
prevent an acquisition of us even if an acquisition would be beneficial to our
shareholders.

     Our authorized capital consists of an unlimited number of common shares and
an unlimited number of preference shares issuable in one or more series. Our
board of directors has the authority to issue preference shares and determine
the price, designation, rights, preferences, privileges, restrictions and
conditions, including voting and dividend rights, of these shares without any
further vote or action by shareholders. The rights of the holders of common
shares will be subject to, and may be adversely affected by, the rights of
holders of any preference shares that may be issued in the future. The issuance
of preference shares, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, or the issuance of
additional common shares could make it more difficult for a third party to
acquire a majority of our outstanding voting shares, the effect of which may be
to deprive our shareholders of a control premium that might otherwise be
realized in connection with an acquisition of our company.

We do not currently intend to pay any cash dividends on our common shares in the
foreseeable future.

     We have never paid or declared any cash dividends on our common shares and
we currently intend to retain any future earnings to finance the development and
expansion of our business. We do not anticipate paying any cash dividends on our
common shares in the foreseeable future. In addition, any dividends paid to
residents of the United States would be subject to Canadian withholding tax,
generally at the rate of 15%.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

Foreign Exchange Risk

     Currency fluctuations may materially adversely affect us. A substantial
portion of our operating expenses are paid in currencies other than U.S.
dollars. Fluctuations in the exchange rate between the U.S. dollar and such
other currencies may have a material adverse effect on our business, financial
condition and operating results. In particular, we may be materially adversely
affected by a significant strengthening of the Canadian dollar against the U.S.
dollar. Operating expenses incurred in the first quarter of fiscal 2001 in
currencies other than the U.S. dollar


                                       22


<PAGE>

represented approximately 33% of our total operating expenses.

Interest Rate Risk

     We hold a significant portion of our cash in interest-bearing instruments
and are exposed to the risk of changing interest rates and their effect on
future earnings. Generally, if interest rates decrease, our interest income
would also decrease. We do not use any derivative instruments to reduce our
exposure to interest rate fluctuations.

                           PART II. OTHER INFORMATION

Item 1. Legal Proceedings

     We are not currently a defendant or co-defendant in any legal proceeding.
We have received a letter on behalf of Carnegie Mellon University asserting that
it owns the trademark "CERT", and that it believes our use of the stock symbol
"CERT" on The Nasdaq National Market will cause confusion with and/or dilute its
trademark. Although we intend to defend our use of the stock symbol "CERT"
vigorously, there can be no assurance that we will be successful in doing so, or
that this dispute with the university will not have a material adverse impact on
us.

     We have also received a letter on behalf of Geoworks, Inc. asserting that
it holds a patent on certain aspects of technology which are part of the WAP
standard, and that it believes that our WTLS Plus toolkit implements such
technology. After an internal investigation, it is our belief that we do not
implement any validly patented technology. We have also become aware of a letter
circulated on behalf of a Mr. Bruce Dickens asserting that he holds a patent on
certain aspects of technology which are implemented within certain aspects of
the Secure Sockets Layer standard. After an internal investigation, it is our
belief that we do not implement any validly patented technology. Although we
intend to vigorously defend any litigation that may arise on these matters,
there can be no assurance that we will be successful in doing so, or that such
disputes will not have a material adverse impact on us. In addition, we recently
became aware of a letter on behalf of a Mr. Leon Stambler asserting that he
holds a patent on certain aspects of technology which are implemented within the
Secure Sockets Layer standard. This latter matter is currently undergoing
internal review of the technological and legal issues to determine an
appropriate response, therefore there can be no assurance that such asserted
patent will not have a material adverse impact upon us.

Item 2. Changes in Securities and Use of Proceeds

     On May 3, 2000, we completed the public offering of 2,500,000 common shares
in the United States and Canada at a per share price of U.S.$23.15, for
aggregate proceeds of U.S.$57,875,000. The shares were offered pursuant to a
Form F-10 Registration Statement filed with the U.S. Securities and Exchange
Commission under Registration No. 333-11586, and began trading on The Nasdaq
National Market on May 2, 2000. Our placement agent for the offering was
FleetBoston Robertson Stephens, Inc. After deducting underwriting discounts and
commissions and offering expenses, our net proceeds from the offering were
approximately U.S.$51,500,000. On May 5, 2000, we used a portion of the proceeds
of the offering to repay a $10 million loan obtained from Sand Hill Capital II,
LP in April, 2000. We intend to use the remaining net proceeds from the offering
for the expansion of our sales and marketing activities, including hiring
additional sales personnel and opening new sales offices in Europe and the Asia
Pacific region, the development and enhancement of our products and services,
working capital and general corporate purposes.

     In connection with the $10 million loan obtained from Sand Hill Capital II,
LP mentioned above, we also issued a warrant which entitles Sand Hill to
purchase 30,000 of our common shares for Cdn$38.13 per share (U.S.$25.74 based
on the exchange rate on September 11, 2000) until April 27, 2005. The amount
borrowed was repaid in May 2000, and the line of credit facility was terminated.
The warrant was valued at $423,000 at the time of issuance based on the
Black-Scholes option valuation model. The value of the warrant was charged to
interest expense in the first quarter as the note payable was paid off with
proceeds from the public offering.

     On July 12, 2000, we completed a two-for-one split of our outstanding
common shares. All share and per share amounts in this document have been
adjusted to give effect to this split.


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<PAGE>

Item 6. Exhibits and Reports on Form 8-K

          (a) Index to Exhibits

          Exhibit Number                                        Description
          --------------                                 -----------------------
               27.1                                      Financial Data Schedule

          (b) Reports on Form 8-K

              None


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<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized, on this 14th day of September,
2000.

                                           Certicom Corp.

                                           By: /s/ Richard P. Dalmazzi
                                               -----------------------
                                           Richard P. Dalmazzi
                                           President, Chief Executive Officer
                                           and Director (Principal Executive
                                           Officer)

                                           /s/ Richard D. Brounstein
                                           -------------------------
                                           Richard D. Brounstein
                                           Senior Vice President, Finance, Chief
                                           Financial Officer and Secretary
                                           (Principal Financial and Accounting
                                           Officer)


                                       25