UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                  Washington, D.C. 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 March 31, 2001



      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934

      For the transition period from


                    SIDEWARE SYSTEMS INC.
  (Exact name of Registrant as specified in its charter)


     British Columbia
   -------------------               ----------------------
  (State or jurisdiction                 (IRS Employer
      of incorporation)                Identification No.)

     1810 Samuel Morse Drive, Reston, Virginia 20190-5316
    ------------------------------------------------------
            (Address of principal executive offices)

            Issuer's telephone number (703) 437-9002

    Securities registered pursuant to section 12(b) of the Act:

                             None

    Securities registered pursuant to section 12(g) of the Act:

               Common Shares without par value
             ------------------------------------
                       (Title of Class)


Check 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 past 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


State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
66,116,167 common shares without par value as at May 12, 2001.

               Index to Exhibits on Page 9

<PAGE>

                    Sideware Systems Inc.
                          Form 10-Q
                      TABLE OF CONTENTS

                                                           Page

PART I.  FINANCIAL INFORMATION

Item 1.	Financial Statements                                   1

Item 2.	Management's Discussion and
        Analysis or Plan of Operation                          1

Item 3.	Qualitative and Quantitative
	Disclosure about Market Risk                           8

PART II.  OTHER INFORMATION

Item 1.	Legal Proceedings                                      9

Item 2.	Changes in Securities and Use of Proceeds              9

Item 3.	Defaults upon Senior Securities                        9

Item 4.	Submission of Matters to a Vote of
	Securities Holders                                     9

Item 5.	Other Matters                                          9

Item 6.	Exhibits and Reports on Form 8-K                       9



<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

Each of the following items are contained in our Consolidated
Financial Statements and are set forth herein.

(i)  Condensed Consolidated Balance Sheets as of December 31, 2000
     and March 31, 2001 (unaudited);

(ii) Condensed Consolidated Statements of Operations (unaudited)
     for the three month periods ended March 31, 2000 and 2001;

(iii)Condensed Consolidated Statements of Stockholders' Deficit for
     the three month period ended March 31, 2001;

(iv) Condensed Consolidated Statements (unaudited) of Cash Flows for
     the three month periods ended  March 31, 2000 and 2001; and

(v)  Notes to Consolidated Financial Statements.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF
OPERATION

RESULTS OF OPERATIONS

THREE MONTH PERIOD ENDED MARCH 31, 2001 COMPARED WITH THE THREE
MONTH PERIOD ENDED MARCH 31, 2000

During the three month period ended March 31, 2001 we recognized
revenue of $95,891, consisting of:

-    $27,000 in license revenue from sales of our software
     products;
-    $35,507 for services rendered in installing and maintenance
     of our software products; and
-    $33,384 in hardware and software re-sales.

Of the $33,384 in hardware and software re-sales, approximately
$31,000 came from sales to related parties.

In addition, we have recorded $108,062 in deferred revenue as at
March 31, 2001.  Our deferred revenue consists of payments we
have received, and accounts receivable we have recorded, on
account of:

-    future maintenance obligations; and

                                   1
<PAGE>

-    software product sales which were not sufficiently completed
     by March 31, 2001 to comply with our revenue recognition
     policy.

We expect to continue completing our obligations in these
transactions, so that the deferred revenue can be recognized as
revenue in future periods.

Cost of revenues for the three month period ended March 31, 2001
was $36,414.  Cost of revenues allocated to hardware and software
re-sales was $33,384, of which approximately $31,000 resulted
from sales to related parties.  Our sales to related parties are
made at cost.  Our re-sales of hardware and software to arm's
length parties are generally included in sales of software
products.  Our current practice is to allocate:

-    an amount equal to the cost of hardware or software sold as
     revenue attributed to the re-sale of hardware and software;
     and
-    the balance of the revenue from any sale to license revenue
     or services.

Cost of revenues allocated to services and license revenue were,
respectively, $2,830 and $200.

We did not realize any revenue from sales of software during the
three month period ended March 31, 2000.  Revenue from hardware
and software re-sales was $8,806, all of which came from sales to
related parties. Cost of revenues was also $8,806, in accordance
with our policy re-selling hardware and software to related
parties at cost.

Interest income increased from $91,792 for the three month period
ended March 31, 2000 to $198,496 for the three month period ended
September 30, 2000.  Interest income reported for the three month
period ended March 31, 2001 includes a net realized holding gain on
short term investments of $136,550.  Net of the realized holding
gain, interest income decreased by $29,846 as a result of lower
average cash balances during the three month period ended March
31, 2001.

Owing to the increase in our work force and the opening of
additional offices in the United States during 2000, cash expenditures
increased in virtually all categories from the three month period
ended March 31, 2000 compared to the three month period ended March 31,
2001.  These increases were offset by higher stock-based
compensation expenses during the three month period ended March
31, 2000.

We incur stock-based compensation expenses when we grant stock
options to employees having exercise prices below the prevailing
market prices for our shares, or to consultants based on the fair
value of the options as the services are performed and the options
earned.  Total stock-based compensation expenses decreased from
$4,587,942 for the three month period ended March 31, 2000 to
$265,149 for the three month period ended March 31, 2001.  Most of
our stock-based compensation expense for the three month period
ended March 31, 2000 arose from the grant of 1,000,000 stock options
on January 21, 2000.  That grant occurred in the following circumstances:

                              2

<PAGE>

-    Under regulations of the Canadian Venture Exchange
     ("CDNX"), where our shares were then trading, the minimum
     price for stock options was based on the average closing
     price for our shares during the 10 trading days preceding
     the grant of stock options.
-    We granted options to purchase 1,000,000 shares at $11.08 on
     January 21, 2000.  In accordance with CDNX regulations, the
     $11.08 exercise price was based on the average closing price
     of our shares during the 10 trading days preceding January 21,
     2000.
-    The closing price for our shares on January 21, 2000 was
     $19.00.  We used this price in calculating the stock-based
     expense arising from this transaction.  The total stock-
     based expense from this transaction was equal to $6,980,000,
     of which we recognized $4,345,525 during the three month period
     ended March 31, 2000.
-    The stock options granted on January 21, 2000 were subject
     to approval of the CDNX, and could not be exercised before
     that approval was obtained.  We received CDNX approval on
     February 23, 2000.  The closing price for our shares on that
     date was $10.00.
-    None of the options granted January 21, 2000 have been
     exercised.

Inclusive of stock-based compensation expenses, sales and
marketing expenses decreased from $2,676,052 for the three month
period ended March 31, 2000 to $2,479,085 for the three month
period ended March 31, 2001.  These amounts include stock-based
compensation of $1,234,618 and $136,767, respectively.   Net of
stock-based compensation, sales and marketing expenses increased
from $1,441,434 to $2,342,318.  The principal factors which
contributed to this increase included the following:

-    Salaries and benefits allocated to sales and marketing increased
     from $626,657 to $1,535,514.  During 2000 we hired approximately
     65 new sales and marketing employees.
-    Advertising, tradeshows, and other direct marketing expenses
     decreased from approximately $372,000 to approximately
     $181,000.  During the three month period ended March 31, 2000 we
     incurred higher expenses in preparing marketing materials and
     obtaining marketing studies.
-    Facility costs increased from $79,100 to $204,926, due principally
     to expansion of our North Vancouver facility and to costs
     associated with our new head office in Reston.
-    Amortization charges allocated to sales and marketing
     increased from $5,177 to $101,257.

Total research and development expenses increased from $529,325
for the three month period ended March 31, 2000 to $1,092,665 for
the three month period ended March 31, 2001.  These amounts
include stock-based compensation of $30,722 and $87,146,
respectively.   Net of stock-based compensation, research and
development expenses increased from $498,603 to $1,005,519.  The
principal factors which contributed to this increase included the
following:

                               3
<PAGE>

-    Salaries and benefits allocated to research and development
     increased from $393,870 to $774,068.  During 2000 we hired
     approximately 25 new research and development employees.
-    Amortization charges allocated to research and development
     increased from $42,679 to $73,321.
-    Travel costs allocated to research and development increased from
     $0 to $35,885, principally as a result of travel by our
     research and development personnel between our Reston and
     North Vancouver offices.
-    Facility costs allocated to research and development
     increased from $30,226 to $87,708.

Total general and administrative expenses decreased from
$4,171,324 for the three month period ended March 31, 2000 to
$1,528,701 for the three month period ended March 31, 2001.
These amounts include stock-based compensation of $3,322,602 and
$41,236, respectively.   Net of stock-based compensation, general
and administrative expenses increased from $848,722 to
$1,487,465.  The principal factors which contributed to this
increase included the following:

-    Salaries and benefits allocated to general and administrative
     expenses increased from $252,429 to $312,083.  During 2000 we
     hired approximately 10 new administrative employees.
-    Professional services decreased from $287,426 to $98,414.
     During the three month period ended March 31, 2000 we incurred
     additional professional expenses relating to our financing activities,
     to the establishment of our offshore subsidiaries, and to costs
     incurred in hiring additional personnel.
-    Recruiting expenses increased from $7,448 to $58,322.
-    We recorded a bad debt expense of $86,420 for the three month period
     ended March 31, 2001.  There was no similar expense for the three
     month period ended March 31, 2000.
-    During the three month period ended March 31, 2001 we recognized
     a foreign exchange loss of $681,168, compared with $136,262 for the
     three month period ended March 31, 2000. Our foreign exchange losses
     result principally from the translation of financial transactions
     recorded in Canadian dollars into our functional and reporting
     currency of United States dollars for financial reporting purposes.

     BOARD OF DIRECTORS

Since January 1, 2001 three new directors have been appointed to
the Sideware Board of Directors.

JACK KEMP.  Mr. Kemp is a co-founder of Empower America, an
organization devoted to ensuring that government actions foster
growth, economic well-being, freedom, and individual
responsibility.  In 1996, Mr. Kemp was the Vice-Presidential
candidate for the Republican Party.  Prior to founding Empower
America, Mr. Kemp served for four years as U.S. Secretary of
Housing and Urban Development, and for 18 years in the U.S. House

                            4
<PAGE>

of Representatives.  Mr. Kemp also serves as a director of Oracle
Corp., Hawk Corporation, Proxicom, Inc., and Speedway Motorsports
Inc.

JOHN SHOEMAKER.  For the past 10 years, Mr. Shoemaker has held a
variety of senior executive positions with Sun Microsystems.
Since July 2000, he has served as executive vice president of
Sun's systems product group.  Prior to joining Sun Microsystems,
Mr. Shoemaker was the senior vice president of electronic
printing and the vice president and general manager of the
document systems business at Xerox Corporation.

KENNETH THORNTON.   Mr. Thornton was previously employed by IBM,
as General Manager of IBM's Public Sector. In this role, he led
IBM's government, education, healthcare and pharmaceuticals
business operations worldwide. Previously, he served as the vice
president and general manager of IBM's Mid-Atlantic Area, where
he was responsible for leading IBM's marketing and services
operations in the Mid-Atlantic states. Prior positions with IBM
include Industry Director of the Public Sector, Regional Manager
of the Atlantic Region, Director of Federal Marketing Operations
and Sales Branch Manager.  Mr. Thornton has been a member of the
Internet2 Executive Council, a part of IBM's Worldwide Management
Council, and a member of IBM's Corporate Technology Council.

     REDUCTION IN PERSONNEL

During March and April 2001, we implemented a substantial
reduction in our work force.  We have terminated approximately 50
employees.

We are also transferring our research and development operations
from North Vancouver, British Columbia to our head office in
Reston, Virginia.  We have 14 development personnel working in
North Vancouver on a transitional basis, to complete some of the
development work in progress, and to assist in transferring
development work to Reston personnel.  We are in the process of
hiring development personnel in Reston, and we expect to complete
the transition of our development work to Reston by the end of June
2001.  We expect that the transfer will reduce rent and travel
costs, and provide efficiencies by having our senior technical
staff and development team in one location.  We are also reducing
sales, marketing, general and administrative expenditures, and
closing several remote sales offices.

On completion of the reduction in our work force and the transfer
of our development work to Reston, our workforce will total
approximately 75 employees, consisting of approximately:

-    28 development personnel;
-    32 sales and marketing personnel; and
-    15 general and administrative personnel.

Costs associated with this restructuring activity will be recorded
in the quarter ended June 30, 2001 or as determinable thereafter.

                            5
<PAGE>

     LIQUIDITY AND CAPITAL RESOURCES - PLAN OF OPERATION

As at April 30, 2001 our cash resources total approximately $5
million.

As a result of the cost saving measures described above, we
expect to reduce our operating costs.  We estimate that our
average monthly expenditures for the remainder of 2001 will be
approximately $850,000 per month.  We expect our principal
expenditures to be approximately as follows:

     salaries and benefits      -     $600,000 per month
     discretionary marketing    -     $65,000 per month
     general and administrative -     $85,000 per month

Monthly expenditures for the remainder of the second quarter will
be slightly higher, owing to termination and transitional
expenses.  By the end of the second quarter of 2001, we expect
that our monthly cash expenditures will be approximately $800,000
per month, representing a reduction of approximately 33% from the
first quarter of 2001.

Based on the foregoing, we believe that our present cash
resources will be sufficient to pay ongoing cash operating
expenses until approximately the end of October 2001.

We are reducing our discretionary marketing expenses, as our
previous marketing programs did not produce substantial sales.
We are also reducing our sales force, but plan to retain
approximately 32 sales and marketing personnel for the immediate
future.  We believe that if our products begin to gain market
acceptance, our remaining sales force will be large enough to
support a sales program.

To continue as a going concern, we will either have to raise
additional capital or begin to generate substantial sales
revenue.  If we cannot do either by the end of the third quarter
of 2001, we face a risk that our business will fail.  If it
appears that we will be unable either to raise capital or
generate sales, we may try to reduce costs further by ceasing
efforts to sell our current products.  That course of action
would involve focusing our remaining resources on product
development, to develop products with substantially different or
enhanced features.  However, we have no assurance that such
development work would lead to more successful products, that we
would be able to complete the development of those products, or
that we would be able to raise the funds necessary to market
those products, once completed.

                             6
<PAGE>

     PRIVATE PLACEMENT

On February 22, 2001 we completed a private placement of
5,229,752 units.  We issued 3,667,252 units at a price of $0.76
per unit and 1,562,500 units at a price of $0.80 per unit.  Each
unit consisted of one share and one share purchase warrant.  Each
share purchase warrant entitled the holder to purchase one
additional share for a period of three years at a price of $1.00.
We paid commissions totalling $282,253 to H.C. Wainwright & Co.,
Inc. for acting as placement agent in the private placement.  In
addition, we issued to H.C. Wainwright warrants to acquire
526,316 units at a price of $0.76 per unit, with each unit
consisting of one share and one share purchase warrant. The
brokers' warrants, and any share purchase warrants issued under
them, expire February 22, 2004. The purchasers of the units
included the following directors and executive officers:

   Grant Sutherland              1,250,000 units

Paul Hildebrand and Alder Enterprises Ltd. acquired,
respectively, 187,500 and 125,000 units.  Mr. Hildebrand is our
corporate Secretary and Alder Enterprises Ltd. is a private
holding company in which Mr. Hildebrand holds a 45% interest.
Under regulations of the Toronto Stock Exchange, Mr. Sutherland,
Mr. Hildebrand, and Alder Enterprises Ltd. were required to pay
$0.80 per unit, as opposed to $0.76 per unit for other
purchasers.

    PRODUCT DEVELOPMENT

Our next planned product release is the Sideware Enterprise
Interaction Suite 4.0, which we expect to release during the
final two weeks of June 2001.  Version 4.0 will include
two new components, Sideware Assist and Sideware Wireless.

Sideware Assist will permit a company to provide automated
responses to questions from its customers.  Sideware Assist will
offer customers an inquiry window, in which questions can be
typed.  Sideware Assist will utilize the principles of natural
language processing and interpretation to interpret the
questions, and to select an appropriate response from a series of
pre-defined responses.

We expect that installations of Sideware Assist will be highly
customized to individual users, and will require a user to
assemble:

-    a "knowledge" database of words, phrases, and questions
     that are likely to be used by its customers; and
-    a set of standardized responses, and procedures that can be
     used to select the appropriate response.

Sideware Assist will utilize the Relationship Modeling Engine of
Banter, Inc. to perform natural language processing and
artificial intelligence functions.  Banter, Inc. is a software
development company headquartered in San Francisco, California.

                              7
<PAGE>

Sideware Wireless will include software that interfaces with
browsers used by wireless devices, such as cellular phones or
palm pilots.  Wireless will thus permit customers using those
devices to interact with companies using Sideware Collaboration.

The e-mail management component of the Enterprise Interaction
Suite 4.0 will consist of the "Reply" program of Banter, Inc.
We expect that additional development work will be required,
following the release of version 4.0 of the Enterprise Interaction
Suite, to integrate the Reply program into the common queue created
by Sideware Telephony.  We expect to complete that additional
development work by the end of August, 2001.

We have entered into a reseller agreement with Banter, Inc.,
pursuant to which we are authorized to distribute both the
Relationship Modeling Engine and the Reply program of Banter,
Inc.  The reseller agreement specifies royalty rates, depending
on volume, which we must pay to Banter, Inc. on sales of Reply
and the Relationship Modeling Engine.  The term of the agreement
is to March 31, 2002.

We previously intended to include Sideware VoIP in version 4.0 of
the Enterprise Interaction Suite.  Sideware VoIP was intended to
provide Voice over Internet capability, permitting users to send
voice messages over the Internet to CSRs.  We planned to
incorporate the technology of Lipstream Networks into Sideware
VoIP.  On May 1, 2001, Lipstream Networks announced that it was
ceasing operation due to financial difficulties.  As a result,
development of Sideware VoIP will be delayed.  We have not yet
prepared a new development schedule for Sideware VoIP.

Our development plans may change, depending on our technical and
financial capabilities, and our assessment of the demands of the
marketplace.  There can be no assurance that our development work
will produce commercially viable products, or that we will be
able to license the third party technology we require on
commercially acceptable terms.

ITEM 3.  QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET
RISK

As at March 31, 2001 we have not entered into or acquired
financial instruments that have a material market risk.  We have
no financial instruments for trading or other purposes and no
derivative or other financial instruments with off balance sheet
risk.  All financial assets and liabilities are due within the
next twelve months and are classified as current assets or
liabilities in the consolidated balance sheet provided with this
prospectus.  The fair value of all financial instruments at March
31, 2001 is not materially different from their carrying value.

                               8
<PAGE>


PART II.  OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS

As at the date of this Form 10-Q we are not involved in any
material legal proceedings.

ITEM 2.	CHANGES IN SECURITIES AND USE OF PROCEEDS

Not applicable

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

During the three month period ended March 31, 2001 we did not
submit any matters to a vote of security holders.

ITEM 5.	OTHER MATTERS

Not applicable.

ITEM 6.	EXHIBITS AND REPORTS ON FORM 8-K

During the three month period ended March 31, 2001, we filed three
reports on Form 8-K.

On January 30, 2001 we filed a report on Form 8-K stating that we
had granted 5,830,500 stock options.

On February 16, 2001 we filed a report on Form 8-K stating that
John Shoemaker and Jack Kemp had joined our board of directors, and
that we had granted a further 798,000 stock options.

On March 9, 2001 we filed a report on Form 8-K stating that we had
completed the private placement described above.


INDEX TO EXHIBITS

Number   Exhibit

3.1(1)   Memorandum of Incorporation dated March 30, 1983
3.2(1)   Articles of Incorporation dated March 30, 1983
3.3(1)   Special Resolution dated January 12, 1984

                               9
<PAGE>

3.4(1)   Special Resolution dated June 15, 1989
3.5(1)   Special Resolution dated September 27, 1990
3.6(1)   Special Resolution dated December 18, 1996
3.7(1)   Articles of Incorporation
3.8(1)   Special Resolution dated January 29, 1998
3.9(5)   Special Resolution dated June 28, 2000
4.1(1)   Escrow Agreement dated June, 1996
4.2(4)   2000 Stock Option Plan
4.3(4)   Amended 2000 Stock Option Plan
4.4(6)   Stock Option Plan (2001)
10.1(1)  Operating Agreement between the Company and
         BrainTech, Inc., dated October 18, 1996
10.2(2)  Software Development and License Agreement dated
         September 20, 1999 between the Company and
         BrainTech, Inc.
10.3(2)  Software Development License Agreement between
         the Company and Sideware International SRL
         effective August 27, 1999
10.4(2)  Research and Development Cost Sharing Agreement
         between the Company and Sideware International
         SRL effective August 27, 1999
10.5(2)  Distribution and Sales Agreement between the
         Company and Sideware Corp. effective January 1,
         1999
10.6(1)  Assignment of Lease and Modification of Lease
         Agreement dated August 17, 1998 between HOOPP
         Realty Inc., Techwest Management Inc., Sideware
         Systems Inc., and BrainTech, Inc.
10.7(1)  Lease Agreement dated January 25, 1999 between
         Sideware Corp. and Elden Investments, LLC with
         Addendum dated February 8, 1999
10.8(2)  Agreement between the Company and IBM for
         participation in the Enterprise Growth
         Opportunity program
10.9(2)  Reseller agreement between the Company and
         Enterprise Soft
10.10(2) Software license agreement between the Company
         and ICEsoft AS
10.11(2) Lease effective as of July 1, 1999 between the
         Company, Techwest Management Ltd., BrainTech,
         Inc. and Pacific Centre Leaseholds Ltd.
10.12(2) Assignment Agreement effective as of July 1,
         1999 between the Company, Techwest Management
         Ltd., BrainTech, Inc., and SJM Management Ltd.
10.13(2) Cost Sharing and Allocation Agreement dated
         October 29, 1999 between the Company and
         BrainTech, Inc.
10.14(2) Agreement between the Company and Advanced
         Contact Solutions Inc.
10.15(2) Contract Agreement No. SDW001 between the
         Company and Science Applications International
         Corp.
10.16(2) IBM International Independent Software Vendor
         Agreement
10.17(2) Distribution and Sales Agreement between
         Sideware Corp. and Sideware International SRL
10.18(3) Lease Agreement dated March 6, 2000 between
         Sideware Corp. and

                               10
<PAGE>

         Reston L.L.C.
10.19(3) Lease Agreement between Sideware Corp. and
         Sanctuary Park Realty Holding Company
10.20(3) Sub-Lease Agreement dated January 15, 2000
         between San Jose State University Foundation and
         Sideware Systems Inc.
10.21(3) Lease Agreement dated February 24, 2000 between
         CEO Suites, Inc. and Sideware Corp.
10.22(6) Change of Control Severance Agreement with Rahul
         Badhan
10.23(6) Change of Control Severance Agreement with Scott
         Friedlander
10.24(6) Change of Control Severance Agreement with
         Stewart Walchli
10.25(6) ASP Software Products Distribution and License
         Agreement dated January 21, 2001 between
         Sideware International SRL and Sideware Corp.
10.26(6) End User Software Products Distribution and
         License Agreement dated January 21, 2001 between
         Sideware International SRL and Sideware Corp.
10.27(6) Assignment of Lease
11.1     Computation of net loss per share

(1)  Exhibit already on file  - exhibit to our Form20-F
     registration statement filed in May 1999.
(2)  Exhibit already on file - exhibit to our Form F-1
     registration statement 333-90893 filed in December 1999.
(3)  Exhibit already on file - exhibit to our Form 20-F
     annual report covering the year ended December 31, 1999.
(4)  Exhibit already on file - exhibit to our Form F-3
     registration statement no. 333-34984 filed in April 2000.
(5)  Exhibit already on file - exhibit to our Form 10-Q
     filed in October 2000.
(6)  Exhibit already on file - exhibit to our Form 10-K
     filed in March 2001.

                               11
<PAGE>


SIGNATURES

In accordance with Section 13 of the Securities Exchange Act of
1934, the registrant caused this Quarterly Report to be signed on
its behalf by the undersigned, thereunto duly authorized.


Dated: May 11, 2001                     Sideware Systems Inc.


                                        "Grant Sutherland"


                                        W. Grant Sutherland
                                        Director
                                        Chairman of the Board of
                                        Directors


Pursuant to the requirements of the Securities Exchange Act of
1934, this annual report has been signed below by the following
persons in the capacities and on the dates indicated.

  Signature                Title                    Date

                     Chief Financial Officer
"Stewart Walchli"    (Principal Financial and     May 11, 2001
-------------------- Accounting Officer)
Stewart F. Walchli





                                    12
<PAGE>


                     Consolidated Financial Statements
                     (Expressed in United States dollars)

                     SIDEWARE  SYSTEMS  INC.
                     (Prepared in accordance with generally accepted
                     accounting principles in the United States)

                     Three months ended March 31, 2001 and 2000
                     (Unaudited)











<PAGE>

SIDEWARE SYSTEMS INC.
Condensed Consolidated Balance Sheets
(Expressed in United States dollars)
(Prepared in accordance with generally accepted accounting
principles in the United States)


<TABLE>
<CAPTION>

============================================================================
                                                   March 31,    December 31,
                                                        2001            2000
----------------------------------------------------------------------------
                                                  (Unaudited)
<S>                                              <C>            <C>
Assets

Current assets:
  Cash and cash equivalents                      $  6,303,046   $    949,999
  Short-term investments                                    -      5,982,588
  Accounts receivable:
    Trade, less allowance for
      doubtful accounts of $6,153
      (December 31, 2000 - $142,047)                  318,578        467,783
    Other                                              76,336        126,842
  Due from related parties                             67,581         29,859
  Current portion of long-term
    receivables                                         6,670          6,849
  Inventory                                            33,261         46,829
  Prepaid expenses                                    434,619        549,639
  --------------------------------------------------------------------------
                                                   7,240,091       8,160,388

Deposit on lease                                     128,200         129,926
Long-term receivables                                 98,727         105,587
Deferred finance charges                              90,615          95,583
Fixed assets                                       2,074,669       1,967,818
----------------------------------------------------------------------------
                                                 $ 9,632,332    $ 10,459,302
============================================================================

Liabilities and Stockholders' Equity

Current liabilities
  Accounts payable and accrued liabilities       $   821,538    $  1,246,683
  Deferred revenue                                   108,062    $    168,661
  --------------------------------------------------------------------------
                                                     929,600       1,415,344

Stockholders' equity:
  Common stock
    Authorized:  199,949,375 common shares,
      no par value
    Issued and outstanding:  66,116,167
      (2000 - 60,886,415)                         44,392,800      40,660,382
  Additional paid-in capital                      12,146,732      12,146,732
  Deferred stock-based compensation                 (195,746)       (460,895)
  Accumulated other comprehensive income                   -        (503,685)
  Deficit                                        (47,641,054)    (42,798,576)
  --------------------------------------------------------------------------
                                                   8,702,732       9,043,958
----------------------------------------------------------------------------
                                               $   9,632,332    $ 10,459,302
============================================================================
</TABLE>

See accompanying notes to consolidated financial statements.



<PAGE>

SIDEWARE SYSTEMS INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
(Expressed in United States dollars)
(Prepared in accordance with generally accepted accounting
principles in the United States)

<TABLE>
<CAPTION>

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


                                    Three months ended March 31,
                                         -----------------------
                                              2001          2000
----------------------------------------------------------------
<S>                                    <C>           <C>

Revenue:
  Licenses                             $    27,000   $         -
  Services                                  35,507             -
  Hardware and software resales              2,000             -
  Hardware resales to related
   parties                                  31,384         8,806
  --------------------------------------------------------------
                                            95,891         8,806

Cost of revenues:
  Licenses                                     200             -
  Services                                   2,830             -
  Hardware and software resales	             2,000             -
  Hardware resales to related
    parties                                 31,384         8,806
  --------------------------------------------------------------
                                            36,414         8,806
----------------------------------------------------------------
Gross margin                                59,477             -

Operating expenses:
  Sales and marketing (including
    stock-based compensation of
    $136,767 and $1,234,618)             2,479,085     2,676,052
  Research and development (including
    stock-based compensation of
    $87,146 and $30,722)                 1,092,665       529,325
  General and administrative (including
    stock-based compensation of
    $41,236 and $3,322,602)              1,528,701     4,171,324
  --------------------------------------------------------------
                                         5,100,451     7,376,791
----------------------------------------------------------------
Operating loss                          (5,040,974)   (7,376,701)

Non-operating:
  Interest income                          198,496        91,792
  --------------------------------------------------------------
                                           198,496        91,792
----------------------------------------------------------------

Loss for the period                   $ (4,842,478) $ (7,284,909)

Other comprehensive income (loss):
  Foreign currency translation
  adjustments                              640,235       (32,875)
  Net realized holding gain on
  short-term investments                  (136,550)            -
  --------------------------------------------------------------
                                           503,685       (32,875)

Comprehensive loss                    $ (4,338,793) $ (7,317,784)
================================================================
Basic and diluted loss per share:
  Net loss                            $      (0.08) $      (0.13)
  Weighted average shares used in
  computing net loss per share,
  basic and diluted                     62,066,046    56,190,341
================================================================
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>


SIDEWARE SYSTEMS INC.
Condensed Consolidated Statements of Stockholders' Equity
(Unaudited)
(Expressed in United States dollars)
(Prepared in accordance with generally accepted accounting
principles in the United States)

<TABLE>
<CAPTION>

==================================================================================================================
                                                                        Accumulated
                                              Additional     Deferred         other                          Total
                          Share capital          paid-in  stock-based comprehensive                   stockholders
                       Number     Assigned       capital compensation          loss        Deficit          equity
------------------------------------------------------------------------------------------------------------------
<S>                <C>         <C>           <C>         <C>           <C>           <C>              <C>

Balance, December
 31, 2000          60,886,415  $40,660,382   $12,146,732   $ (460,895) $   (503,685) $ (42,798,576)    $ 9,043,958

Shares issued
 for cash           5,229,752    4,037,121             -            -             -              -       4,037,121

Share issue costs           -     (304,703)            -            -             -              -        (304,703)

Amortization
 of deferred
 stock-based
 compensation               -            -             -      265,149             -              -         265,149

Net unrealized
 holding gain
 on short-term
 investments                -            -             -            -      (136,550)             -        (136,550)

Foreign currency
 translation
 adjustment                 -            -             -            -       640,235              -         640,235

Loss for the
 period                     -            -             -            -             -     (4,842,478)     (4,842,478)
------------------------------------------------------------------------------------------------------------------
Balance,
 March 31,
 2001              66,116,167  $44,392,800   $12,146,732    $ (195,746) $         -   $(47,641,054)    $ 8,702,732

==================================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

SIDEWARE SYSTEMS INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Expressed in United States dollars)
(Prepared in accordance with generally accepted accounting
principles in the United States)

<TABLE>
<CAPTION>


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


                                    Three months ended March 31,
                                         -----------------------
                                               2001         2000
----------------------------------------------------------------
<S>                                  <C>             <C>

Cash provided by (used in):

Operating activities:
  Loss for the period                  $ (4,979,028) $(7,284,909)
  Items not involving cash:
   Amortization	                            208,138      101,487
   Stock-based compensation                 265,149    4,587,942
Changes in non-cash operating
 working capital:
  Accounts receivable                       199,711       16,636
  Due to related parties                    (37,722)    (107,004)
  Due to officers                                 -     (217,795)
  Inventory                                  13,568     (174,407)
  Prepaid expenses                          115,020      (62,711)
  Accounts payable and accrued
   liabilities                             (425,145)     360,069
  Deferred revenue                          (60,599)       5,436
----------------------------------------------------------------
                                         (4,700,908)  (2,775,258)

Financing activities:
  Share subscriptions receivable                  -   10,854,952
  Shares issued for cash, net of
   share issue costs                      3,732,418    7,037,225
Share subscriptions receivable                    -     (259,960)
----------------------------------------------------------------
                                          3,732,418   17,632,217

Investing activities:
  Proceeds on maturity of
   short-term investments                 5,982,588            -
  Long-term receivables and deferred
   charges                                   12,007          897
  Purchase of fixed assets                 (315,019)    (249,670)
  Deposit on lease, net                       1,726      (67,904)
  --------------------------------------------------------------
                                          5,681,302     (316,677)
----------------------------------------------------------------
Effect of exchange rates on cash and
 cash equivalents                           640,235      (38,208)
----------------------------------------------------------------
Increase in cash and
 cash equivalents                         5,353,047   14,502,074

Cash and cash equivalents,
 beginning of period                        949,999    5,929,801
----------------------------------------------------------------
Cash and cash equivalents,
  end of period                          $6,303,046  $20,431,875
================================================================

</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

SIDEWARE SYSTEMS INC.
Condensed Consolidated Notes to Financial Statements, page 1
(Unaudited)
(Expressed in United States dollars)
(Prepared in accordance with generally accepted accounting
principles in the United States)

Three months ended March 31, 2001 and 2000


1.  BASIS OF PRESENTATION:

    The unaudited condensed consolidated financial statements have
    been prepared by Sideware Systems Inc. ("Sideware") in
    accordance with generally accepted accounting principles in the
    United States and reflect all adjustments (all of which are normal
    and recurring in nature) that, in the opinion of management, are
    necessary for fair presentation of the interim financial
    information.  The results of operations for the interim periods
    presented are not necessarily indicative of the results expected
    for any subsequent quarter or for the entire year ending December
    31, 2001.  Certain information and footnote disclosures normally
    included in financial statements prepared in accordance with
    generally accepted accounting principles have been condensed or
    omitted.  These unaudited condensed consolidated financial
    statements and notes included herein should be read in
    conjunction with Sideware's audited consolidated financial
    statements and notes for the year ended December 31, 2000, as
    filed in its Annual Report on Form 10-K.

2.  FOREIGN CURRENCY TRANSLATION:

    Effective for its fiscal year beginning January 1, 2001, the
    Company established the U.S. dollar as its functional currency for
    all of its operations as it represents the primary market of revenues
    and for the Company's operations.  Accordingly, foreign currency
    denominated balances of the Company are translated to U.S. dollars.
    Monetary assets and liabilities denominated in a foreign currency
    are translated to U.S.  dollars at the rate of exchange in effect
    at the balance sheet date.  Other assets and revenue and expense items
    are measured using the rate of exchange prevailing at their respective
    transaction dates.  Exchange gains and losses resulting from the
    translation of foreign denominated monetary assets and liabilities to
    U.S. dollars are reflected in earnings for the period.

    Effective for the fiscal year ended December 31, 2000, the
    Company adopted the U.S. dollar as its reporting currency.  The
    Company's functional currency for the fiscal year ended December
    31, 2000, was the Canadian dollar.  The Company's financial
    statements for fiscal 2000 were prepared in Canadian dollars before
    translation to the U.S. dollar reporting currency.  Accordingly, foreign
    currency denominated balances of the Company were re-measured in
    Canadian dollars as follows:  assets and liabilities are
    translated into U.S. dollars at the rate of exchange in effect at
    the balance sheet date and revenue and expense items at the
    average rates for the applicable period.  Unrealized gains and
    losses resulting from the translation to U.S. dollars are
    accumulated in a separate component of stockholders' equity
    described as accumulated other comprehensive income.

<PAGE>

SIDEWARE SYSTEMS INC.
Condensed Consolidated Notes to Financial Statements, page 2
(Unaudited)
(Expressed in United States dollars)
(Prepared in accordance with generally accepted accounting
principles in the United States)

Three months ended March 31, 2001 and 2000



3.  STOCK OPTIONS:

  A summary of the Company's stock option activity is as follows:

  ===============================================================
                                                         Weighted
                                   Number                 average
                                of shares          exercise price

  Balance, December 31, 2000   10,912,400                  $ 4.56
  Options granted                 458,000                    1.00
  Options cancelled/expired      (219,500)                   4.21
  ---------------------------------------------------------------
  Balance, March 31, 2001      11,150,900                  $ 4.38
  ===============================================================

On January 18, 2001, February 9, 2001, February 22, 2001, and March
7, 2001 the Company granted, under the 2001 Option Plan, 5,680,500,
490,000, 190,000, and 150,000 options, respectively, at $1.00 per share.
All options are exerciseable for five years and subject to vesting
schedules of up to 18 months.  The 2001 Option Plan, and all options
granted under it, are subject to approval by the Company's
shareholders.   The Company intends to seek that approval at its
next general stockholders' meeting.   For accounting purposes,
these options will not be deemed to have been granted until
approved by the stockholders' and compensation cost, if any, will be
measured based on market values at that time.

Approximately 3.6 million of the options outstanding at March 31,
2001 and included in the options granted under the 2001 Option Plan,
will expire by August 31, 2001 due to employee terminations (note
6).


4.  SHARE PURCHASE WARRANTS:

  A summary of the Company's warrant activity for the three month
  period ended March 31, 2001 is as follows:

<TABLE>
[/CAPTION]


=================================================================================================================
                                                 Outstanding                                          Outstanding
                                   Exercise     December 31,                                            March 31,
Expiry date                 price per share             2000       Granted     Exercised     Expired         2002
-----------------------------------------------------------------------------------------------------------------

<S>                       <C>   <C>               <C>           <C>           <C>         <C>          <C>

March 26, 2001            U.S.        0.383          197,882             -             -    (197,882)          -
April 7, 2001             CDN          0.63        2,000,000             -             -           -    2,000,000
September 14, 2001        U.S.         1.89        1,417,254             -             -           -    1,417,254
December 14, 2001         U.S.         1.89        1,901,271             -             -           -    1,901,271
April 13, 2001/2002       U.S.  10.00/11.50           45,000             -             -           -       45,000
April 13, 2002            U.S.         3.00          139,000             -             -           -      139,000
April 13, 2002            U.S.         1.00          900,000             -             -           -      900,000
February 22, 2004         U.S.         1.00                -     5,229,752             -           -    5,229,752
-----------------------------------------------------------------------------------------------------------------
                                                   6,600,407     5,229,752             -     (197,882) 11,632,277
=================================================================================================================


</TABLE>

<PAGE>

SIDEWARE SYSTEMS INC.
Condensed Consolidated Notes to Financial Statements, page 3
(Unaudited)
(Expressed in U.S. dollars)
(Prepared in accordance with generally accepted accounting
principles in the United States)

Three months ended March 31, 2001 and 2000


4.  SHARE PURCHASE WARRANTS (continued):

    The share purchase warrants issued in consideration for financing,
    outstanding at December 31, 2000 having an exercise price of U.S.$1.00
    and U.S.$3.00 expiring April 13, 2002 were repriced from U.S.$10.00 and
    U.S.$2.82 in March 2001.  The term of the re-priced warrants will be
    reduced to 30 days if, over any period of twenty consecutive days, the
    weighted average trading price for the Company's shares exceeds the new
    exercise price by 25% or more.


5.  PRIVATE PLACEMENT:

    On February 22, 2001, the Company issued, through a private
    placement, 5,229,752 common shares, for net proceeds of
    approximately $3,732,417.  Additionally, the Company issued
    5,229,752 share purchase warrants.  The Company also issued
    brokers' warrants, permitting the holders to acquire 526,316
    units at a price of $0.76 per unit, with each unit consisting of
    one share and one share purchase warrant.  Each share purchase
    warrant entitles the holder to purchase one additional common
    share of the Company, for a period of three years, at a price of
    $1.00 per share.


6.  SUBSEQUENT EVENT:

    Subsequent to March 31, 2001, the Company announced the closure
    of its North Vancouver B.C. office and an overall reduction in its
    workforce.  Total severance payments resulting from this change are
    currently estimated to be approximately $450,000.  Other expenses
    related to the office closure are not determinable at this time.
    Costs associated with this restructuring activity will recorded
    in the quarter ended June 30, 2001 or as determinable thereafter.