_______________________________________________________________________________

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
_______________________________________________________________________________

                                   Form 20-F

 [ ]    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE
        SECURITIES EXCHANGE ACT OF 1934
                                     -OR-
 [X]    ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934 for the fiscal year ended January 31, 2003
                                     -OR-
 [ ]    TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934 (NO FEE REQUIRED) for the transition period
        from ______ to ______
        Commission File Number: 0-30906
 ______________________________________________________________________________
                            DataMirror Corporation
            (Exact name of Registrant as specified in its charter)

                                    Ontario
                        (Jurisdiction of Incorporation)

                           3100 Steeles Avenue East
                                  Suite 1100
                           Markham, Ontario, Canada
                                    L3R 8T3
                                (905) 415-0310
             (Address of Registrant's principal executive offices)
_______________________________________________________________________________

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Shares,
no par value

Securities for which there is a reporting obligation pursuant to
Section 15(d) of the Act -  None


Indicate the number of outstanding shares of each class of the issuer's
classes of capital or common stock as of the close of the period covered by
the annual report.


As at January 31, 2003, 11,461,142 Common Shares were issued and outstanding.

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  [ ]


Indicate by check mark which financial statement item the registrant has
elected to follow.

      Item 17  [X]       Item 18 [ ]

                                                                             1
<PAGE>

<TABLE>
<CAPTION>


                                                TABLE OF CONTENTS

   <S>           <C>                                                                                     <C>
   ITEM 1.      Identity of Directors, Senior Management and Advisors.....................................3

   ITEM 2.      Offer Statistics and Expected Timetable...................................................3

   ITEM 3.      Key Information...........................................................................4

   ITEM 4.      Information on the Registrant............................................................10

   ITEM 5.      Operating and Financial Review and Prospects.............................................22

   ITEM 6.      Directors, Senior Management and Employees...............................................34

   ITEM 7.      Major Shareholders and Related Party Transactions........................................44

   ITEM 8.      Financial Information....................................................................46

   ITEM 9.      The Offer and Listing....................................................................46

   ITEM 10.     Additional Information...................................................................48

   ITEM 11.     Quantitative and Qualitative Disclosures about Market Risk...............................54

   ITEM 12.     Description of Securities Other than Equity Securities...................................55

   ITEM 13.     Defaults, Dividend Arrearages and Delinquencies..........................................55

   ITEM 14.     Material Modifications to the Rights of Security Holders and Use of Proceeds.............55

   ITEM 15.     Controls and Procedures..................................................................55

   ITEM 16.     Audit Committee Financial Expert and Code of Ethics......................................55

   ITEM 17.     FINANCIAL STATEMENTS.....................................................................56

   ITEM 18.     FINANCIAL STATEMENTS.....................................................................93

   ITEM 19.     EXHIBITS.................................................................................93



                                                                                             2
</TABLE>
<PAGE>

                                    PART I


ITEM 1.    Identity of Directors, Senior Management and Advisors

A.    Directors and Senior Management.

      Information not required for annual report.

B.    Advisors.

      Information not required for annual report as it was not provided
      in the Company's jurisdiction of incorporation.

C.    Auditors.

      Information not required for annual report.


ITEM 2.    Offer Statistics and Expected Timetable

      Information not required for annual report.



                                                                             3
<PAGE>


ITEM 3.    Key Information

A.    Selected Financial Data.

         The following selected consolidated financial information is derived
from the audited Consolidated Financial Statements of DataMirror Corporation
(together with its subsidiaries "DataMirror" or the "Company") presented in
accordance with Canadian generally accepted accounting principles ("GAAP"),
and must be read in conjunction with such Consolidated Financial Statements
and related notes thereto. These principles conform in all material respects
with accounting principles generally accepted in the United States, except as
described in Note 20 to the Company's consolidated financial statements.
Historic results are not necessarily indicative of the results that you may
expect for any other future period or for a full year. Data is in thousands of
Canadian dollars, except share and per share data.

<TABLE>
<CAPTION>
                                                                         Statement of Income (Loss)
                                                                      For the Years Ended January 31,

                                                   2003               2002               2001               2000               1999
                                                   ----               ----               ----               ----               ----
Revenue(1)
<S>                                              <C>               <C>                <C>                <C>                <C>
   License                                       33,223            $28,592            $35,040            $29,009            $24,331
   Maintenance                                   23,210             20,562             14,065              8,562              4,956
   Services                                       6,057              7,222              8,353              4,836              4,374
                                         ---------------    ---------------    ---------------    ---------------    ---------------
                                                 62,490             56,376             57,458             42,407             33,661
                                         ---------------    ---------------    ---------------    ---------------    ---------------

Cost of revenue(1)
   License                                          239                257                514                379                249
   Maintenance and services                      12,605             13,464             11,184              7,322              6,836
                                         ---------------    ---------------    ---------------    ---------------    ---------------
                                                 12,844             13,721             11,698              7,701              7,085
                                                                                                  ---------------    ---------------
                                         ---------------    ---------------    ---------------
Gross Margin                                     49,646             42,655             45,760             34,706             26,576
                                         ---------------    ---------------    ---------------    ---------------    ---------------

Operating Expenses
   Selling and marketing                         21,289             21,542             23,815             19,549             17,181
   Research and development                      10,459             10,895              7,742              6,619              4,088
   General and administration                     8,812              9,088              9,668              7,181              5,723
   Amortization of intangibles                    2,740              3,244              1,570              1,147                975
                                         ---------------    ---------------    ---------------    ---------------    ---------------
                                                 43,300             44,769             42,795             34,496             27,967
                                         ---------------    ---------------    ---------------    ---------------    ---------------
Operating income (loss)                           6,346            (2,114)              2,965                210            (1,391)
Investment income, net                              611                859              1,333                286              1,186
Gain (loss) from investment in
   PointBase, Inc.
   Dilution gain                                (4,595)                  -              6,186              2,327                  -
   Equity loss                                  (2,081)            (4,112)            (4,709)            (3,620)                  -
                                                                                                  ---------------    ---------------
                                         ---------------    ---------------    ---------------
Income (loss) before income taxes                   281            (5,367)              5,775              (797)              (205)
                                         ---------------    ---------------    ---------------    ---------------    ---------------
Provision for income taxes
   Current                                        2,762                428                877                356                  -
   Future                                         (328)              (131)                190                276                255
                                         ---------------    ---------------    ---------------    ---------------    ---------------
                                                  2,434                297              1,067                632                255
                                                                                                  ---------------    ---------------
                                         ---------------    ---------------    ---------------
Net income (loss)                               (2,153)            (5,664)              4,708            (1,429)              (460)
                                         ---------------    ---------------    ---------------    ---------------    ---------------

Earnings per share
   Basic                                         (0.19)             (0.49)               0.41             (0.14)             (0.04)
   Diluted                                       (0.19)             (0.49)               0.40             (0.14)             (0.04)

Weighted average number of shares
     [000's]
   Basic                                         11,411             11,500             11,362             10,191             10,330
   Diluted                                       11,411             11,500             11,856             10,191             10,330

Amounts presented which differ under
   US GAAP

Net loss                                        (2,404)            (5,643)            (1,388)            (3,718)            (2,252)
EPS                                              (0.21)             (0.49)             (0.12)             (0.36)             (0.22)

</TABLE>


                                                                             4
<PAGE>

Notes:
    (1)    During the year ended January 31, 2001, the Company began
           retroactively reporting maintenance revenues and services revenues
           separately. During the year ended January 31, 2000, the Company
           changed the classification of certain expenses on its consolidated
           statements of income (loss). In particular, expenses relating to
           the provision of maintenance and services have been reclassified
           from operating expenses to cost of revenue. In each case,
           information presented for prior years has been reclassified to
           conform to the described presentation.

<TABLE>
                                               Balance Sheet Data(1)
                                          For the Years Ended January 31,
<CAPTION>


                                        2003          2002          2001         2000         1999
                                        ----          ----          ----         ----         ----
<S>                                     <C>          <C>           <C>          <C>          <C>
Cash, cash equivalents                  38,827       $36,495       $28,205      $10,219      $15,807
     and short term investments
Working capital                         31,139        32,826        35,606       15,356       17,328
Total assets                            81,347        79,603        88,445       41,052       43,291
Long-term obligations                    1,538         1,205         2,903        1,582        1,851
Share capital                           64,637        64,740        65,583       30,773       30,891
Total shareholders' equity              55,470        58,359        65,218       27,239       29,603
Number of shares outstanding            11,461        11,472        11,624       10,207       10,303
[000's] (2)

Amounts presented which differ
under US GAAP

Total assets                            85,901        79,597        88,548       39,663       41,371
Shareholders' equity                    59,821        58,354        65,322       25,850       27,683
</TABLE>

Notes:
(1)      Effective February 1, 2000 the Company retroactively adopted new
         recommendations of the Canadian Institute of Chartered Accountants
         with respect to accounting for income taxes, for the years ended
         January 31, 2001 and 2000. As permitted under the new rules, prior
         years' financial statements have not been restated. The cumulative
         effect on the opening deficit as of February 1, 2000 of adopting the
         recommendation was not material on current or prior periods.

(2)      The number of Common Shares outstanding as at the dates noted
         excludes options and warrants to purchase Common Shares outstanding
         on such dates.

DIVIDENDS

         The Company has not paid any dividends on its Common Shares in the
last five completed financial years. The payment of any future dividends will
be at the discretion of the Company's Board of Directors and will depend upon,
among other things, the Company's future earnings, operations, capital
requirements and financial condition, general business conditions and
contractual restrictions on payment of dividends, if any.

                                                                             5

<PAGE>

EXCHANGE RATE INFORMATION

    The Company publishes its consolidated financial statements in Canadian
dollars. In this document, except where otherwise indicated, all dollar
amounts are expressed in Canadian dollars. References to US$ are to United
States dollars.

    The following table sets forth the high and low exchange rates for each of
the previous six months, and the average rate for each of the five most
recently completed financial years, calculated by using the average of the
exchange rates on the last day of each month during the year, based on the
inverse of the noon buying rate in the city of New York for cable transfers in
Canadian dollars as certified for customs purposes by the Federal Reserve Bank
of New York (the "Noon Buying Rate"):

                        Monthly Data                        Annual Data
                        ------------                        -----------
                           High               Low                     Average
April, 2003               0.6975            0.6732        2003         0.6390
March, 2003               0.6815            0.6709        2002         0.6412
February, 2003            0.6720            0.6530        2001         0.6707
January, 2003             0.6570            0.6349        2000         0.6766
December, 2002            0.6461            0.6329        1999         0.6694
November, 2002            0.6440            0.6288


    On May 27, 2003, the inverse of the Noon Buying Rate was US$0.7271 = $1.00.

B. Capitalization and indebtedness.

           Information not required for annual report.

C. Reasons for the offer and use of proceeds.

           Information not required for annual report.

D.    Risk factors.

      Forward-looking statements in this annual report, including statements
regarding the Company's business which are not historical facts, are made
pursuant to the "safe harbor" provisions of the United States Private
Securities Litigation Reform Act of 1995. Forward-looking statements include
statements of estimates, expectations, objectives and plans (financial and
otherwise). The words "anticipate", "believe", "estimate", "expect" and
similar expressions are intended to identify forward-looking statements. Such
statements reflect the current views of the Company with respect to future
events and are subject to certain risks, uncertainties and assumptions.
Numerous factors affect the Company's operating results and could cause the
Company's actual results to differ materially from the results indicated by
this annual report or by any forward-looking statements made by, or on behalf
of, the Company, and there can be no assurance that future results will meet
expectations, estimates or projections. These factors include, but are not
limited to, the following: variability of quarterly operating results;
dependence upon the continued growth and success of the Company's software
products; competition; the ability to develop, market, support and acquire new
products in an environment of rapidly changing technology; dependence upon
continued growth in the database and enterprise data integration markets;
dependence upon relationships with complementary vendors and distribution
channels; pursuing, completing and integrating acquisitions could divert
resources and may not achieve the intended business objectives; the ability to
recruit and retain key personnel; risks of international operations, currency
exchange rate fluctuations and global economic conditions; possible software
errors or defects; possible infringement claims by third parties; and other
factors discussed herein, in the Company's Management Discussion and Analysis
of Financial Conditions and Results of Operations and other periodic filings
with the United States Securities and Exchange Commission and other 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
anticipated, believed, estimated or expected. The Company does not intend, and
does not assume any obligation, to update these forward-looking statements.

      An investment in the Company's Common Shares involves certain risks and
uncertainties which should be carefully considered. The following risk
factors, each of which could have a material adverse effect on the Company's
business, results of operations and financial condition, and on the value or
market price of the Company's Common Shares, should be considered carefully in
addition to the other information contained in this Form (including
information incorporated by reference herein).

      Limited Operating History; Uncertainty of Future Operating Results. The
Company's predecessor was incorporated on November 19, 1993 and did not earn
revenue until 1995. While the Company earned operating income for the years

                                                                             6
<PAGE>

ended January 31, 2000 and 2001, it incurred an operating loss for the year
ended January 31, 2002. In addition, while the Company earned net income for
the year ended January 31, 2001, it recorded net losses for the years ended
January 31, 2002 and January 31, 2003. Due to the Company's short operating
history, the uncertainty of continued acceptance of the Company's products,
the rapid evolution of competitive software products, and the other risk
factors discussed herein, there can be no assurance that the Company will be
able to sustain its recent revenue growth or to achieve or sustain
profitability or positive cash flow from operations in the future. See
"Operating and Financial Review and Prospects".

      Variability of Quarterly Operating Results. The Company's revenue and
results of operations have fluctuated significantly on a quarterly basis and
the Company expects substantial variability of future quarterly operating
results due to a variety of factors. These factors include: (i) the timing of
the release of new software products and enhanced versions of existing
products by the Company; (ii) the introduction of new products and product
enhancements by the Company's competitors; (iii) market acceptance of and
demand for the Company's products; (iv) the strength or weakness of global
markets for the Company's products and for computer platforms and databases
with which the Company's products operate, in particular the IBM iSeries
(AS/400) platform; (v) changes in operating expenses, including possible
increases related to the introduction of new and enhanced products; (vi) the
timing of receipt of orders from major customers; (vii) general economic
factors, including the potential negative effect of actual or perceived
weakening of global economic conditions on the level of spending by the
Company's customers and prospective customers; (viii) concentration of
revenues in the last month of each quarter and in the fourth quarter of the
fiscal year; (ix) the proportion of revenues attributable to license fees
versus service revenues; and (x) changes in pricing policies by the Company or
its competitors. Accordingly, the Company believes that period to period
comparisons of results of operations are not necessarily meaningful and
historical results should not be relied upon as indicative of future
performance. The Company's operating expenses are based in part on anticipated
short term revenue levels and are relatively fixed in the short term. As a
result, if revenues are not realized as expected, the Company's operating
results could be materially adversely affected. Variability of future
quarterly operating results may cause volatility in the market price of the
Common Shares. In addition, due to some or all of the foregoing factors, it is
possible that in some future quarter the Company's operating results will be
below the expectations of market analysts and investors. In such event, the
price of the Company's Common Shares would likely be materially adversely
affected. See "Operating and Financial Review and Prospects".

      Product Markets and Product Acceptance. To date the Company has derived
a large portion of its license revenue from its Transformation Server and High
Availability Suite products, particularly for the IBM iSeries (AS/400)
platform. The Company expects that sales of Transformation Server software,
and particularly Transformation Server for the iSeries, as well as High
Availability Suite, will continue to represent a substantial portion of its
revenue for the foreseeable future. With the acquisition of Constellar Hub and
the release of iReflect, the Company expects to derive increased revenues from
products that operate in conjunction with Oracle databases. A decline in the
market for IBM's iSeries (AS/400) or other hardware platforms on which the
Company's products operate, or for applications and data management software
for such platforms, may occur as a result of new competitive products, price,
technological changes or other factors. The Company's future results of
operations will depend, in part, on achieving broader market acceptance of its
software products, as well as on its ability to continue to enhance these
products to meet the evolving needs of customers. Future results may also
depend on the strength or weakness of global markets for computer platforms
and databases with which the Company's products operate, including the IBM
iSeries (AS/400) platform and Oracle databases. A decline in these markets, or
the inability of the Company to achieve broader acceptance of its products or
to enhance its products as required to meet market demand, could have a
material adverse effect on the Company's business, results of operations and
financial condition. See "Business Overview - Competition".

      Product Development, Acquisition and Technological Change. The market
for business data integration software is characterized by rapid technological
change and frequent new product introductions and enhancements. The Company
must continue to develop, create or acquire new products and update existing
products to reflect technological changes and market developments in hardware
platforms, operating systems and database technology platforms in order to
compete effectively. Such product development or acquisition may require the
Company to invest substantial amounts in research and development on an
ongoing basis. Although the Company may seek to acquire businesses or
technologies from time to time, there can be no assurance that any such
acquisition will be available on acceptable terms or at all, or that the
Company will be able to successfully consummate or integrate any such
potential acquisition. The development cycle for new products may be
significantly longer than development cycles experienced by the Company for
its prior products and upgrades. The introduction of products embodying new
technologies and the emergence of new industry standards could render the
Company's existing products, and products currently under development,
obsolete and unmarketable. The Company's future success will depend on its
ability to enhance its current products and to develop and introduce new
products that keep pace with technological developments, respond to customer
requirements and achieve market acceptance. In addition to decreasing revenues
as products reach the end of their natural life cycles, if the Company were
unable to develop upgrades or new products in a timely manner due to resource
constraints or technological or other reasons, the Company could experience
decreases in future sales and revenues. There can be no assurance that the
Company's future products or enhancements will keep pace with technological
change or satisfy market needs or that the Company will successfully develop,
acquire or market any future products.

      Competition. The market for business data integration software is new
and continuously evolving. Given the variety of uses for the Company's
products and the range of platforms, operating systems and databases on which
they operate, the Company faces competition from many competitors, including
other independent software vendors, database vendors and large hardware
manufacturers who also offer data integration tools. The Company also faces
significant competition from in-house development departments within
businesses that may


                                                                             7
<PAGE>

develop custom software for the specific data movement or integration
requirements of their enterprises. Current and potential competitors may have
or may in the future establish alliances or cooperative relationships among
themselves or with potential customers and may rapidly acquire significant
market share. In addition, many of the Company's competitors and potential
competitors are significantly larger than the Company and have significantly
longer operating histories, greater financial resources and more market and
brand recognition than the Company. The Company believes that it must continue
to develop new products and introduce enhancements to its existing products in
a timely manner to remain competitive. In addition, the Company believes that
its ability to compete depends on many factors within and outside its control,
including product functionality, performance, price, reliability, vendor and
product reputation, customer service and support, sales and marketing efforts,
product distribution and product releases both by the Company and its
competitors. Even if the Company introduces new and enhanced products, it may
not be able to compete effectively because of the significantly greater
financial, marketing and other resources available to some of its competitors.
As the markets for the Company's products expand, additional competition may
emerge and competitors may commit more resources to competitive products.
There can be no assurance that the Company will be able to compete
successfully in current or future markets or that competitive pressures will
not have a material adverse effect on the Company's business, results of
operations and financial condition. See "Business Overview - Competition".

      Dependence on Continued Growth of the Database and Data Integration
Markets and the Internet. The Company believes key future uses of its software
will be for business data integration and data and application resiliency
(high systems availability) applications, such as e-commerce applications,
data distribution to and from data warehouses and other data stores,
enterprise application integration, workload balancing, and back-up protection
against planned and unplanned system outages. Consequently, the Company's
future financial performance will depend in part on the growth in the
utilization of databases and in the number of data warehouse installations.
The database and data warehouse markets are rapidly evolving, and there can be
no assurance that such markets will be sustained at their current size or
continue to grow. In addition, to the extent that the Company's products may
be used in electronic commerce and Internet-based applications, the Company's
future financial performance will depend in part on the reliability, growth in
use and public acceptance of the Internet, particularly for the conduct of
business-to-business and business-to-consumer commercial transactions. The
Internet is a relatively new communications and commercial infrastructure
which is rapidly evolving. There can be no assurance that the Internet
infrastructure will be able to support the communications demands placed on
it, or that the Internet will gain or sustain widespread acceptance as a
communications or electronic commerce channel. In addition, there is no
assurance that the Company's products will adequately address the requirements
of customers or keep pace with changes in any of these markets.

      Dependence on Relationships with Complementary Vendors. The Company
believes that it is important to develop, maintain, and enhance close
associations with complementary hardware and software vendors. In particular,
it is important that the Company maintain its existing relationship with IBM
due to the Company's dependence on the IBM iSeries market. In the High
Availability market the Company depends on IBM rebates and incentives offered
to IBM customers who purchase software from IBM High Availability Business
Partners to encourage customers to purchase the Company's software. There can
be no assurance that IBM won't terminate the Company's status as a High
Availability Business Partner. This would have a direct negative impact on
sales of the Company's High Availability software. The Company also depends on
IBM to market and promote the Company and its products to IBM sales employees,
IBM business and channel partners and end user customers. There can be no
assurance that IBM will continue to market and promote the Company and its
products. There can be no assurance that IBM will not enter the market for
High Availability or integration software directly. There can be no assurance
that the Company will be able to maintain its existing relationships or enter
into new relationships. The Company's failure to do so could adversely affect
the portability of the Company's products to, and compatibility and
integration with, existing and new platforms, software applications and
databases and the timing of the introduction of new and enhanced products by
the Company. In addition, failure to do so could affect the Company's ability
to leverage third party distribution channels and increase its market
presence. See "Business Overview - Sales and Marketing".

      Dependence on Distribution Channels. A portion of the Company's revenue
is derived from the sale of its products through third parties. There can be
no assurance that the direct sales model will continue to work effectively for
new products or that it will scale effectively as the Company attempts to grow
its revenue from existing products. There can be no assurance that the Company
will be able to retain a sufficient number of its existing or future
re-marketers and distributors, that such re-marketers and distributors will
not give higher priority to the sale of other products (which could include
products of competitors) or that these re-marketers and distributors will
devote sufficient resources to marketing of the Company's products. The
Company depends on IBM business partners to remarket and distribute its
products and there can be no assurance that IBM will continue to promote the
Company to its business partners. The performance and financial strength of
third party re-marketers and distributors is outside the control of the
Company and the Company is unable to predict the extent to which these parties
will be successful in marketing and selling the Company's products. A
reduction in sales efforts or discontinuance of sales of the Company's
products by its re-marketers and distributors could lead to reduced sales and
could, as a result, have a material adverse effect on the Company's business,
results of operations and financial condition. In addition, other methods of
product distribution may become important in the future, such as Internet
access to products and services and other electronic distribution. The
Company's success will depend, in part, upon its ability to attract and retain
sufficient direct sales personnel, to maintain and expand access to existing
channels of distribution and to gain access to new channels if and when they
develop. See "Business Overview - Sales and Marketing".

      Dependence on Key Personnel. The success of the Company depends upon the
continued contributions of key personnel including members of its senior
management, including Nigel Stokes, Chairman, President and Chief Executive
Officer and Kirk Dixon, Executive


                                                                             8
<PAGE>

Vice-President, Global Operations, the loss of one or more of whom could have
a material adverse effect on the Company. There can be no assurance that the
Company will be able to retain these individuals or recruit other qualified
personnel. The Company believes that its future success will also depend in
large part on its ability to attract and retain highly skilled technical,
managerial and sales and marketing personnel. Competition for such personnel
is intense, and there can be no assurance that the Company will be successful
in attracting and retaining the personnel required to continue to grow.

      Risks Associated with International Operations. The Company intends to
continue to make efforts to increase international sales and anticipates that
international sales will continue to account for a significant portion of its
revenue. These sales are subject to certain risks and costs associated with
international operations, including the difficulty and expense of staffing and
administering business abroad, difficulties in accounts receivable collection,
complications in complying with foreign laws and domestic and international
import and export laws and regulations and costs related to localizing
products for foreign markets and translating and distributing products in a
timely manner. Significant international sales may also expose the Company to
greater risk from political and economic instability, potential adverse tax
consequences, unexpected changes in Canadian or other governmental policies
concerning import and export of goods and technology, other regulatory
requirements and tariffs and other trade barriers. In addition, while U.S. and
Canadian copyright law, international conventions and international treaties
may provide meaningful protection against unauthorized duplication of
software, the laws of some foreign jurisdictions may not protect proprietary
rights to the same extent as the laws of the United States or Canada. Software
piracy has been, and can be expected to be, a persistent problem for the
software industry. See "Business Overview - Intellectual Property". Although
to date the Company has not experienced any of the foregoing factors to any
significant extent, there can be no assurance that these factors will not be
experienced by the Company in the future or that they will not have a material
adverse effect on the Company's business, results of operations and financial
condition. In addition, international earnings may be subject to taxation by
more than one jurisdiction or other adverse tax consequences, which could also
materially adversely affect the Company's results of operations.

      Currency Exchange Risk. As the Company realizes a significant portion of
its revenue in U.S. dollars and European currencies and incurs a significant
portion of its operating expenses in Canadian dollars, changes in exchange
rates between the Canadian dollar and the U.S. dollar or other foreign
currencies could affect the Company's operating results. The Company's policy
of hedging a portion of its foreign currency denominated accounts receivable
can provide only a short-term protection against a limited portion of the
Company's foreign currency exposure. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations".

      Global Economic Conditions. The Company's operating results may vary
significantly based upon the impact of actual or perceived changes in global
economic conditions on its customers. The global economic environment since
2001 is more uncertain than in recent periods and has the potential to have a
material adverse effect on the Company and its operating results. The
Company's revenue and operating results depend in large part on the overall
demand for business data integration solutions, and related computer software
and services. A reduction of demand for business data integration solutions
and related computer software and services caused by actual or perceived
weakening in the global economy may result in decreased revenues and lower
growth rates for the Company. Customers may defer or reconsider purchasing
products from the Company if they experience a downturn in their business or
if there is a downturn in general economic conditions.

      Management of Growth. In recent years, due to internal growth, the
acquisition of a German subsidiary, the Constellar acquisition, and the
expansion into the Asia Pacific region, the Company has experienced rapid
growth in the scope of its operations. This growth has resulted in increased
responsibilities for the Company's existing personnel, the hiring of
additional personnel and, in general, higher levels of operating expenses. In
addition, the Company may continue to experience rapid growth in the future,
due to continued internal expansion, acquisition or other factors. In order to
manage its current operations and any future growth effectively, the Company
will need to continue to implement and improve its operational, financial and
management information systems, to hire, manage and retain its employees, to
integrate acquired businesses, technologies and personnel, if any, with
existing operations and to maintain its corporate culture including technical
and customer service standards. There can be no assurance that the Company
will be able to manage such growth effectively or that its management,
personnel or systems will be adequate to support growth in the Company's
operations.

      Software Defects. The Company's products are technically complex and may
contain undetected errors or performance problems. There can be no assurance
that such errors or performance problems will not be discovered in the future,
which may cause delays in product introduction and shipments, require design
modifications or result in damage to the Company's reputation, loss of
revenue, loss of market share, delay in market acceptance or product liability
or other claims against the Company. Furthermore, there can be no assurance
that the Company will be able to correct any such errors on a timely basis, or
at all. Correction of errors or other defects may require significant
expenditures by the Company. Provisions contained in the Company's license
agreements that are designed to limit the Company's exposure to potential
claims, as well as any liabilities arising from such claims, may not
effectively protect the Company against some or all of such claims and the
liability and costs associated therewith. Any of these possible occurrences
could have a material adverse effect on the Company's business, results of
operations or financial condition. See "Business Overview - Research and
Development".

      Potential Infringement Liability. As the number of software products in
the industry increases and the functionality of these products further
overlaps, it is possible that software developers will become increasingly
subject to infringement claims. Moreover, there has been an increase in the
number of patents issued in Canada and the United States relating to computer
software, and, accordingly, the


                                                                             9
<PAGE>

risk of patent infringements in the industry can be expected to increase,
potentially resulting in an increase in patent infringement claims. There can
be no assurance that third parties will not assert infringement claims against
the Company in the future. Such claims may result in costly litigation,
diversion of management time and resources, financial liability or a
requirement that the Company suspend licensing of its products or redesign its
products, or enter into royalty or licensing agreements. Furthermore, there
can be no assurance that the Company would be able to successfully redesign
its products, if required, or that any such royalty or licensing agreements
will be available on reasonable terms, or at all. Any such claim or the
results thereof could have a material adverse effect on the Company's
business, results of operations or financial condition. See "Business Overview
- Intellectual Property".

     Dependence on Maintenance Renewals. The Company realises a significant
portion of its revenue from maintenance and support services provided in
connection with the products that it licenses. There can be no assurance that
licensees will continue to renew their maintenance and support services or
that the Company will be able to charge its current rates for maintenance and
support services in the future.

     Risks Related to Acquisitions. Pursuing, completing, and integrating
recent and potential acquisitions could divert management's attention and
financial resources and may not produce the desired business results. In the
past the Company has made acquisitions of products and businesses. In the
future, the Company may engage in additional selective acquisitions of other
products or businesses. There can be no assurance that management will be able
to identify additional suitable acquisition candidates available for sale at
reasonable prices, consummate any acquisition, or successfully integrate any
acquired product or business into the Company's operations. Further,
acquisitions may involve a number of special risks, including: (a) diversion
of management's attention; (b) disruption to the Company's ongoing business;
(c) failure to retain key acquired personnel; (d) difficulties in assimilating
acquired operations, technologies, products, and personnel; (e) unanticipated
expenses, events, or circumstances; and (f) assumption of legal and other
undisclosed liabilities. If the Company does not successfully address these
risks or any other problems encountered in connection with an acquisition, the
acquisition could have a material adverse effect on the Company's business,
results of operations, and financial condition. In addition, if the Company
proceeds with an acquisition, available cash may be used to complete the
transaction, or shares may be issued which could cause a dilution to existing
shareholders.

     Risks of Investing in South Africa. The Company has made a significant
investment in Idion Technology Holdings Limited ("Idion"), a South African
company listed on the JSE Securities Exchange under the symbol IDI. This
investment is subject to a number of risks including: (a) the standards of
accounting, auditing and financial reporting may not be as stringent as in
Canada and the United States; (b) the quality and standards of the judicial
and financial regulatory systems may not be as high as in Canada or the United
States; (c) persons in foreign markets may act of out national or non-economic
interests to the detriment of the Company; (d) political risks to trading in
foreign markets; (e) a change of government or a change in the economy can
affect the markets; (f) governments may impose exchange controls or devalue
currencies; (g) foreign markets are less liquid and more volatile than North
American markets; (h) low trading volumes may affect the Company's ability to
trade its shares; (i) foreign exchange volatility; (j) war and civil
disturbances; (k) foreign taxation; and (l) delays in obtaining or inability
to obtain necessary government permits. There can be no assurance that the
Company will be able to manage these risks and realise an acceptable return on
its investment.

         Enforcement of Judgements. The enforcement by investors of civil
liabilities under the federal securities laws of the United States may be
affected adversely because: the Company is incorporated under the laws of
Ontario; all of its officers and directors, with the exception of Bryan E.
Plug, are non-residents of the United States; some or all of the experts named
in this annual report, if any, are residents of Canada; and the Company and a
substantial portion of its assets are located outside the United States.

         Seasonality. The Company depends on both direct and indirect sales
for the revenue for its iCluster and HA Suite products. The sale of these
products is often linked to the sale of IBM hardware by IBM Business Partners.
Generally, sales of these products are strongest in the calendar quarter
ending December 31st and are reflected in the Company's fourth fiscal quarter
of each year. There can no assurance that the Company will continue to be
successful with the indirect sales model or will continue to partner with
motivated distributors as the Company tries to grow revenue from these
products. A weak calendar fourth quarter for IBM hardware and IBM Business
Partners will adversely affect revenue from these products. In uncertain
economic times customers may delay purchases until the end of their budgetary
years which usually occur in the calendar fourth quarter. This may adversely
affect revenue in other quarters or for the year in the event of economic
disruption in the calendar fourth quarter.


ITEM 4.         Information on the Registrant

A.    History and development of the Registrant

      The Company's legal and commercial name is DataMirror Corporation. The
predecessor corporation to DataMirror Corporation was incorporated in Canada
under the Business Corporations Act (Ontario) on November 19, 1993. This
predecessor corporation amalgamated under the Business Corporations Act
(Ontario) on February 1, 1996 with four other corporations to form DataMirror
Corporation as it is currently constituted. The Company's articles of
amalgamation were amended on December 6, 1996 to effect a 1 for 2 share
consolidation of the Common Shares and to create a class of preferred shares
issuable in series. On December 16, 1996, the


                                                                            10
<PAGE>

Company completed an initial public offering of 2,000,000 Common Shares priced
at $5.50 per share and began trading on the Toronto Stock Exchange. On
September 3, 1997 the Company completed a special warrant offering, selling
1,600,000 Special Warrants of the Company priced at $10.35 per Special
Warrant. Each Special Warrant entitled the holder thereof upon exercise to
purchase one Common Share without any additional payment. All of the Special
Warrants were exercised. On April 6, 2000, the Company completed an offering
of 1,305,000 Common Shares priced at $27.00 per share. On January 18, 2001,
the Company's Common Shares were approved for listing and began trading on the
Nasdaq National Market.

      The head office and principal place of business of the Company is
located at 3100 Steeles Avenue East, Suite 1100, Markham, Ontario, Canada L3R
8T3. The Company's phone number is (905) 415-0310 and its fax number is (905)
415-0340.

      The Company's agent in the United States is DataMirror, Inc., 1600 Golf
Road, Suite 1200, Rolling Meadows, IL, USA, 60008. The agent's telephone
number is (847) 981-5066.

         The Company has grown substantially over the past six years. By
expanding its indirect sales network, direct international presence and
products and services, it has achieved substantial growth in its customer
base, employees and revenues, going from 135 employees, 500 customers and $10
million in revenue for fiscal 1997 to 269 employees, over 1,700 customers and
$62.5 million in revenue for fiscal 2003.

     In March 1998, the Company provided initial capital funding and entered
into a strategic development agreement with PointBase, Inc. ("PointBase"), a
developer of 100% Pure Java SQL database technology. Since that time the
Company has participated in several rounds of PointBase financing. The
PointBase database is deployable on multiple platforms, from small footprint
embedded devices to Java application servers. Under the strategic development
agreement, the Company will support the integration of PointBase data to and
from other databases. As of January 31, 2003, the Company has invested a total
of $10,603,000 in PointBase. PointBase has had a history of operating losses
and, while the level of operating losses has decreased in the current year,
there is little prospect of short-term profitability. In June of 2002,
PointBase started a downsizing of their business, with the intent of achieving
break-even operations in the short-term. In October 2002 it became apparent
that these measures would not result in profitable or break-even operations in
the near future and the Company's investment had become impaired and,
accordingly, the investment was written down to the estimated fair value of
nil. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Acquisition and Investments.

     In September 1998 the Company acquired, in an all cash transaction, at a
total purchase cost of $4,848,000, all the outstanding common shares of,
mpc-Software GmbH, a software distributor located in Frankfurt, Germany. The
acquisition enabled the Company to establish an immediate direct sales and
technical support presence in the mid-European market

      In September 2000, the Company purchased certain assets and assumed
certain liabilities of Constellar Corporation. As a result of this
acquisition, DataMirror acquired the Constellar Hub EAI software technology as
well as certain related assets including computer equipment, office furniture
and other fixed assets, accounts receivable, customer contracts and alliance
contracts, and assumed certain related liabilities including accounts payable
and deferred revenue. The Constellar acquisition was valued at approximately
$16,500,000 (including the full value of contingent consideration). The
contingent consideration consisted of up to U.S. $3,000,000 payable contingent
on certain revenue targets being generated from the acquired technology during
the three-year period ending August 31, 2003. In November 2001, a payment of
$724,000 was made in payment of contingent consideration of $856,000 for the
period ended August 31, 2001 less a holdback of $132,000 related to assets
purchased which are not realized.

     On May 18, 2001, the Company purchased the technology and certain related
assets of saipx Inc. ("saipx"), a developer of pervasive mobile computing and
turnkey solutions for SAP for cash consideration of $293,000. The Company's
Pervasive Gateway, Synapse Agility and Synapse Mobility products are based on
saipx technology.

     On June 8, 2001 the Company purchased the technology and certain related
assets of BDI Systems, Inc. ("BDI"). BDI developed bi-directional, Java-based,
data transformation software that exchanges data between XML (eXtensible
Markup Language), relational database and text formats, as well as web-based
reporting. The Company's Transformation Server for XML product includes
technology acquired from BDI and the Company's DB/XML Transform and DB/XML
Vision products are based on BDI technology. Total consideration for the
transaction was cash of $424,000 and 50,000 shares of common stock with a
value of $307,000 to be released from escrow over two years. The assets
acquired have been accounted for as acquired technology of $424,000 and
deferred compensation of $307,000. The technology will be amortized over a
period of three years. The deferred compensation will be amortized over two
years.

     On March 18, 2002, the Company announced its intention to make a
take-over bid for all of the shares of Idion Technology Holdings Limited
("Idion"), a South African company listed on the JSE Securities Exchange
("JSE") under the symbol IDI, in a cash bid valued at $9.8 million. On April
18, 2002, the bid was increased to $18.9 million, and subsequently, on May 8,
2002, the bid was further increased to $30.4 million. On July 4, 2002 the
Company closed its bid to acquire Idion, having not been successful in


                                                                            11
<PAGE>

completing the take-over. At May 31, 2003, the Company owned approximately
43,568,000 or 38.46% of Idion's outstanding common shares acquired at a cost
of $9,548,000.

      On January 7, 2003, the Company acquired the technology and certain
related assets of SmartSales Inc., a developer of CRM solutions, in a cash
transaction. The Company acquired current assets valued at $15,000, capital
assets valued at $22,000 and technology valued at $332,000 for cash
consideration of $369,000. The technology acquired will be amortized over a
term of one year.

      The Company will continue to pursue its strategy of developing and
marketing software solutions that allow companies to integrate, protect,
capture and audit their data. More enterprises are expected to recognize the
importance of managing data for business intelligence, enterprise application
integration and e-business applications in real-time. To establish and
maintain useful databases for these purposes, data must be captured,
transformed and flowed from the source databases that generate operational
data to separate databases such as data warehouses or web servers in
real-time. Competitive pressures are forcing more companies to be available to
their customers 24 hours a day. Having key operational systems unavailable due
to planned (system maintenance, upgrade or backup) or unexpected (hardware or
communications failure) system outages is no longer acceptable. The US Food
and Drug Administration ("FDA") is mandating that all FDA-regulated firms
provide electronic audit trails, also known as E-Records, for FDA examination.
It is expected that federal regulators in other industries will follow suit
and mandate similar E-Records requirements. The Company's LiveBusiness
solutions are designed to help companies address all these needs. It is the
Company's intention to try to acquire the remaining shares of Idion from its
existing management.

     Some of the key growth issues the Company faces include building and
managing its direct and indirect distribution channels, increasing its
marketing efforts to enhance general market awareness of its products,
continuing to improve the efficiency and functionality of its existing
products, introducing new products, hiring quality people and maintaining
adequate management reporting and information systems. The Company continues
to invest in these areas in order to achieve its growth objectives.

     During fiscal 2003 the Company adjusted its business model to drive a
significant improvement in operating profits. We believe that these
adjustments have positioned us to continue to drive increased levels of
profitability in the coming year. The Company's balance sheet is strong and we
remain confident that our LiveIntegration, LiveResiliency, LiveAudit and
LiveCapture solutions will continue to resonate in the marketplace. We believe
our near and long-term prospects for success remain strong, but are aware of
the uncertain economic and business conditions that could cause fluctuations
in operating results. Nevertheless, the Company remains committed to its
objective of generating significant value for its shareholders, customers,
business partners and employees.


B.    Business overview

Description of Operations

      The Company designs, develops and markets software solutions for
real-time data integration, resiliency and data monitoring. The Company's
comprehensive family of products allows companies to capture, transform and
flow data in real-time across multi-platform computing environments. The
Company's software products provide business data integration, giving its
customers the ability to keep corporate data integrated, distributed and
available within enterprises and across the Internet. The Company's resiliency
solutions provide disaster recovery and avoidance ensuring highly available
24/7 business operations under any circumstances. The Company's data
monitoring solution allows companies to monitor, track and report on critical
information stored in their databases to ensure the security of their data
assets at all times. The Company's products are suited to such business
applications as building and replenishing data warehouses, data distribution
and workload balancing, e-commerce and the integration of e-business
applications with operational and legacy systems, enterprise application
integration ("EAI"), monitoring and reporting on the integrity and security of
data assets, mobile and remote data capture for ERP systems, high availability
and back-up and recovery applications.

      The Company derives its revenue from three main sources, sales of
software licenses, software maintenance and support contracts and consulting
and implementation services. The sale of software licenses has historically
been on a direct basis to the Company's customers in North America, Asia
Pacific and much of Europe, while also employing indirect sales channels, such
as distributors and remarketers in these territories. In Australia, South and
Central America and certain European countries the Company sells mainly on an
indirect basis through distributors or remarketers who may also provide
customer support and service to end users. The Company sells single and
multiple-year software maintenance and support agreements with the related
software licenses. These agreements are generally renewed on an annual basis
after expiry of their initial term. Revenue from consulting and implementation
services is derived primarily on a time-and-materials basis under a services
agreement with the customer, which in some cases may be pre-billed with the
related software licenses.

                                                                            12
<PAGE>

      The Company's predecessor was incorporated in November 1993 as a
software research and development firm focused on the problem of
transformational data replication across various hardware and database
platforms. Since the introduction of the Company's Transformation Server
software in October 1994 as an IBM iSeries (AS/400) data replication product,
the Company has commercially released several new versions and extensions of
Transformation Server, extending its functionality to become a cross-platform
transformational integration solution. Transformation Server now offers
bi-directional data capture, transformation and flow to and from a variety of
mid-range servers, mainframe processors and software databases including:
DB2/UDB running on IBM iSeries (AS/400), UNIX (HP, AIX, SUN) and OS/390;
Oracle databases running on UNIX (HP, AIX, SUN), Linux and Windows NT/2000
platforms; Sybase databases running on UNIX and Linux platforms; Microsoft SQL
Server databases; XML data sources; and PointBase Java databases.

      The Company's major resiliency product, High Availability Suite for IBM
iSeries (AS/400) (also known as HA Suite), was released in November 1998. HA
Suite is an iSeries (AS/400) high availability solution that captures objects
and database transactions from primary systems, mirrors them to one or more
recovery systems, and invokes operational switching as required. HA Suite was
complemented and enhanced in mid 1999 with the introduction of DataMirror
iCluster software, an iSeries (AS/400) cluster management solution that
includes a GUI to define nodes in a cluster, determine what data and objects
are mirrored to specific nodes and monitor the entire cluster from a single
station.

     The Company's major EAI product, DataMirror Constellar Hub, is an EAI
solution which enables data movement, transformation and integration between a
wide variety of mixed system environments. It supports over 40 data types
including real-time, batch and message-oriented systems.

      The Company has also developed additional software products including
iDeliver, a data integration product that delivers data from Transformation
Server sources to Windows desktop data stores, Enterprise Administrator, an
enhanced Java based graphical user interface ("GUI") for administration of the
Transformation Server family of products.

      During the past three years the Company introduced the following
software products:

         1. LiveAudit. An extension of DataMirror's Transformation Server
         software that enables companies in regulated industries such as
         pharmaceutical, health-care and food services to meet requirements to
         provide electronic audit trails of changes to their operational
         databases for regulatory examination;

         2. iReflect. A high availability solution for Oracle 9i databases,
         which can be used for resiliency, disaster avoidance and recovery.
         iReflect is an extension of the Company's High Availability Suite for
         IBM iSeries (AS/400);

         3. Transformation Server for DB2/UDB Version 4.6. An extension of
         DataMirror's Transformation Server software to extend native support
         for DB2/UDB on additional platforms where data resides, including
         Linux and Microsoft Windows NT/2000;

         4. Transformation Server for XML. An addition to DataMirror's
         Transformation Server software family, which enables companies to
         capture, transform and flow data in real-time to and from common
         database formats and XML;

         5. iCluster for EMC Symmetrix. Resiliency software for the IBM
         iSeries (AS/400) that is closely integrated with EMC Corporation's
         system and storage replication solutions Symmetrix Remote Data
         Facility (SRDF(TM)) and TimeFinder(TM). iCluster for EMC Symmetrix
         increases application availability and workload distribution in EMC
         iSeries (AS/400) environments;

         6. Pervasive Gateway. Pervasive Gateway is a client-server software
         solution that extends SAP functionality to remote users by allowing
         them to execute ERP transactions from mobile devices. Business
         applications of Pervasive Gateway include warehouse and shop floor
         operations, time and attendance, asset management, transportation
         management, service/sales force automation and CRM. The solution can
         be deployed on any DOS, Windows or Windows CE based computer or
         mobile device including industry standard PCs, PDAs, handheld
         computers and rugged portable computers for use in industrial
         settings. Transactions can be executed in on-line mode in near
         real-time or in batch-mode to support disconnected devices and
         network interruptions;

         7. Synapse Agility. An enhancement toolkit extending the capabilities
         of SAP's Report Distribution and Job Scheduling functionality built
         to work with SAP (R) R/3 (R);

         8. Synapse Mobility. Allows mobile data collection devices to
         communicate in real-time with the bar-code server and with the SAP
         R/3 software suite. Synapse Mobility runs on a Windows NT/2000
         workstation and economically extends SAP systems to mobile
         environments;

                                                                            13
<PAGE>

         9. DB/XML Transform. An engine for bi-directional data transformation
         between XML, database and text formats;

         10. DB/XML Vision. A cost-effective, scaled-down version of DB/XML
         Transform for simple database to XML conversion projects. The
         software automatically creates XML documents containing hierarchical
         data from any database for B2B applications, EDI, database
         integration and conversion;

         11. LiveConnector. An integration solution that enables information
         flow between CRM, ERP or packaged software applications.
         LiveConnector uses application-specific adapters to capture,
         transform and flow business transactions in real-time between various
         applications within the organization. Previously incompatible
         applications can use LiveConnector to integrate and share data,
         providing consistency in the data available across the enterprise.
         The solution is comprised of a set of pre-built adapters, including a
         Siebel 2000 validated adapter, that support multiple business
         transactions, capture, transform and flow data integration software,
         and expert implementation services;

         12. iCluster for IBM TotalStorage(TM) Enterprise Storage Server(TM).
         DataMirror iCluster for IBM TotalStorage Enterprise Storage Server
         (ESS) is a single integrated software solution for highly available
         business operations in IBM eServer iSeries environments. iCluster for
         IBM ESS enables high levels of data and application resiliency for
         Storage Area Networks (SANs) running on IBM iSeries and ESS systems.
         iCluster for IBM ESS integrates with IBM's Advanced Copy functions,
         Peer-to-Peer Remote Copy (PPRC) and FlashCopy(R) to provide
         availability at the storage level, system level and application
         level; and

         13. Outsmart. A simple CRM software solution for Sales Force
         Automation and Pipeline Management. The solution works within
         Microsoft(R) Outlook(R).


Principal Markets

      The Company operates in only one industry, the business of developing
and marketing computer software products. The Company has two reportable
segments, North America and Europe, based on the geographic location of its
operations. The Company's geographical revenue distribution has been as
follows:

FOR THE YEARS ENDED
                                                  January 31,

                                    2003             2002              2001
                                    ----             ----              ----
        Canada                       6.9 %            5.2 %             3.4 %
        United States               53.6             50.4              50.0
        United Kingdom              18.7             24.0              26.8
        Germany                      8.1              9.8               6.9
        Other                       12.7             10.6              12.9
                                   -----            -----             -----
                                   100.0 %          100.0 %           100.0 %
                                   =====            =====             =====

         Additional information about the geographic segments of the Company's
business is available in "Management's Discussion and Analysis of Financial
Condition and Results of Operations", incorporated by reference herein, and in
the Consolidated Financial Statements of the Company for the year ended
January 31, 2003, Note 17, Segmented Information.


Pricing and Licensing Practices

      A typical licensing transaction for the Company's two primary software
products, Transformation Server and High Availability Suite, includes the
purchase of at least two licenses, one license to act as a source utility for
each of the computers from which the customer intends to replicate data, and
one or more licenses to act as a target utility for each computer to which the
customer intends to replicate data. The Company often sells a customer
additional licenses or increased use licenses as the implementation of a
customer project proceeds or as a customer undertakes additional or expanded
projects that require additional data and application integration capability
across the enterprise.

      Following mid-range software industry practice, the Company's license
prices vary depending on a number of factors. The Company licenses
Transformation Server and High Availability Suite using a pricing model that
considers the operating system and relative size and processing capability of
the computer hardware platform on which the software will operate and the
location of the purchaser. In general,


                                                                            14
<PAGE>

license prices are higher for multiple processor and large-scale processor
computer models than for small processors, and for UNIX, iSeries (AS/400) and
OS/390 platforms than for Windows NT platforms. It is the Company's general
practice to charge customers transfer or upgrade fees if they want to move
licensed software from one platform to another.

      Licenses for the Company's Constellar Hub are typically priced based on
usage volume and whether the license will be used on a production or
development system. As such, pricing may vary widely depending upon, among
other things, a customer's computing systems environment. iDeliver pricing is
similar to Transformation Server pricing, and is based on the number of
iDeliver Client concurrent users.

      The standard U.S. dollar list pricing per license for Transformation
Server, DB/XML Transform and iReflect, ranges from as low as $5,000 to almost
$225,000. Licenses for LiveAudit are typically sold in conjunction with
licenses for Transformation Server at a discount from the Transformation
Server pricing. The price for a license for High Availability Suite and
iCluster ranges from U.S.$10,000 to almost U.S.$300,000. Production licenses
for Constellar Hub generally range from $25,000 to almost $325,000. Pervasive
Gateway is a client-server solution. Pricing is based on the number of
servers, the number of clients and the number of customised ERP transactions
that a customer requires. The base price for a solution is approximately
U.S.$100,000 and increases depending on the number of customised ERP
transactions and number of client licenses required.

Research and Development

         The Company has made significant investments in product development
over the past few years, including introducing several new
internally-developed software products and adding features and integrating
acquired technologies into existing products. The Company incurred research
and development expenses (before investment tax credits) of $10,459,000 for
the twelve months ended January 31, 2003 and $10,895,000 for the twelve months
ended January 31, 2002. Such expenditures constituted approximately 16.7% and
19.5% of the Company's revenue for fiscal 2003 and 2002, respectively.
Research and development expenses are comprised of salaries and other direct
costs associated with the development of new products and existing products.

         The Company has historically improved on its products and on the
value it has been able to deliver to customers through its ongoing efforts to
continually improve its software products through new versions and increased
functionality that responds to the needs of its customers and helps it retain
its competitive advantage in its market spaces. The Company intends to
continue to make substantial investments in research and development to
enhance existing products, develop new products and to respond to
technological change and competitive products and services. The main focus of
the Company's planned research and development activities for fiscal 2004 will
be to continue to develop and devote resources to its integration, resiliency
and audit solutions and to continue to make general enhancements to its
existing products. For further detail on the Company's planned research and
development activities for fiscal 2004, see "Operating and Financial Results
and Prospects - Outlook".

Sales and Marketing

         The Company markets and sells licenses for its software products
primarily through its direct sales force in North America, much of Europe and
Hong Kong. In addition to its direct sales activities, the Company also
employs indirect sales channels, such as distributors and resellers, in North
America, Europe, Asia and the Pacific rim. In Australia, Central and South
America and in certain European countries, the Company sells mainly on an
indirect basis through distributors and resellers, who may also provide
customer support and service to end users.

         The Company's direct sales staff consists of technically trained
salespersons and engineers who serve customers' IS and business management
staffs. Direct sales and related support personnel are organized by designated
regional sales territories and/or product line, each reporting directly to
head office, in the case of the Americas and the Asia Pacific region, or
DataMirror (Europe) head office in London, England, in the case of European
sales. The Company's sales staff covers the North American market from its
head office in Markham, Ontario and from branch offices in New York, New York;
Chicago, Illinois; and Newport Beach, California. The Company's direct sales
in Europe are conducted from the offices of DataMirror (UK) Limited in London,
England, and European branch offices in Antwerp, Frankfurt and Paris. The Asia
and Pacific rim office is located in Hong Kong.

         The Company uses its World Wide Web site as a sales channel and
customer service centre. Customers and potential customers may download trial
versions of particular software products and obtain on-line access to product
demonstrations. The Company also offers certain product support assistance on
the Web, including the ability for customers to generate their own temporary
user authorization codes, download product upgrades and obtain product
information through the Company's on-line KnowledgeBase.

      In addition to the activities described above, the Company's marketing
efforts include advertising, direct mail and public relations programs,
participation in industry trade shows and individual and joint organization of
seminars, Webcasts and conferences to promote its products.

                                                                            15
<PAGE>

Resellers

The Company has focused on establishing relationships with resellers who are
well established and financially stable industry leaders. The following are
some of the key resellers that the Company has entered into reseller
agreements with in the past 2 fiscal years.

      In 2002 the Company entered into a global DataWorld Partner agreement
with Cap Gemini & Ernst & Young. In Mexico, the Company has signed a
Value-Added Remarketer agreement with IBM Mexico, a subsidiary of IBM, for IBM
Mexico to resell a number of the Company's products.

         The Company also signed a reseller agreement with Nissay Information
Technology Co., Ltd. of Japan, a leading provider of systems integration,
network-related and outsourcing services to clients in the insurance,
financial services, health care and medical services industries.

      To further strengthen the Company's position in the US government
sector, the Company signed a reseller agreement with Science Applications
International Corporation (SAIC), the largest employee-owned research and
engineering firm in the United States. SAIC brings a concentration of
customers in the US federal government sector and telecommunications industry,
and holds major contracts with the U.S. Department of Energy and Department of
Defense.

Alliances

      The Company has also developed distribution and marketing channels
through alliances with vendors that offer products that are complementary to
the Company's products. The details of these arrangements vary, but they are
generally co-operative arrangements in which alliance partners may recommend
DataMirror's products directly to their customers as part of a larger systems
solution.

     Included among the key alliances that the Company entered into in the
past 2 years are BEA Systems, where the Company joined the BEA Star Program to
provide a BEA-READY (TM) XML Solution, and Business Objects to help position
the Company in the data integration marketplace.

     The Company has joined the Siebel Alliance Program and has successfully
validated the integration of the software portion of the LiveConnector version
2.0 packaged service with Siebel 2000. Siebel Systems, Inc. (Nasdaq: SEBL) is
a leading provider of multichannel eBusiness applications software.

     The Company's iCluster software has successfully completed
interoperability testing with IBM's TotalStorage Enterprise Storage Server
(ESS) products and has earned IBM TotalStorage Proven status. DataMirror
iCluster for IBM ESS extends the capabilities of iCluster to enable the
highest levels of data and application availability for Storage Area Networks
(SANs) running on IBM iSeries and ESS systems.

     In April 2002, the Company joined EMC's Developer's Program. The
Company's application-aware iCluster for EMC Symmetrix is integrated with
EMC's system and storage replication solutions. iCluster for EMC Symmetrix
will help customers achieve a higher level of availability and resiliency on
IBM iSeries (AS/400) systems.

     The Company signed a strategic alliance with SSA Global Technologies, a
worldwide provider of enterprise solutions and services with 6,500 client
implementations, to provide DataMirror's LiveAudit solution as the preferred
E-Records audit trail solution for it's global customer base.

Customer Service and Support

         The Company offers annual maintenance and support contracts for its
software products. Customers may obtain support either (i) on business days
during certain standard business hours (depending on location), or (ii) 24
hours a day, 7 days a week for an additional charge. Product support is
delivered by a combination of telephone, fax, electronic mail and materials
available on the Company's website. If purchased, product maintenance and
support includes product revisions and updates that are commercially released
within the support period. The Company also offers its on-line knowledge base
in a variety of languages including French, German and Spanish to better serve
its worldwide customer base.

         The Company also supports its customers with a range of professional
services including education, consulting, training and implementation
services. The Company offers systems engineering expertise to assist customers
with the initial implementation of the Company's software on customers'
systems. Longer term consulting services, which generally occur less
frequently than implementation services, consist of a range of on-site
engagements that are custom designed to assist individual customers through
successive phases of their business data integration efforts. Professional
services are generally priced based on a time and materials basis depending on
the customer's requirements.

                                                                            16
<PAGE>

Products

      The Company designs, develops and markets software solutions for
real-time data integration, resiliency and data monitoring. The Company's
products include:

Transformation Server

      DataMirror Transformation Server software is a flexible, high
performance, peer-to-peer data integration solution that enables users to
capture, transform and flow data in real-time throughout the enterprise and
across the Internet. Transformation Server simplifies the process of working
in a heterogeneous world. It enables users to easily and seamlessly move and
share data in real-time among mixed system environments. For organizations
with homogeneous computing environments, Transformation Server provides high
performance, cost effective data integration between like databases.

      Transformation Server provides bi-directional data integration among
DB2/UDB running on IBM iSeries (AS/400), UNIX (HP, AIX, SUN) and OS/390;
Oracle databases running on UNIX (HP, AIX, SUN), Linux and Windows NT/2000
platforms; Sybase databases running on UNIX and Linux platforms; Microsoft SQL
Server databases; XML data sources; and PointBase Java databases. Flat file
integration is also supported. The product's web-enabled Enterprise
Administrator interface enables administration and monitoring of a complex
integration network from a single location. It also provides metadata
management capabilities. With an open Application Programming Interface (API),
Enterprise Administrator enables customers and application providers to take
control of Transformation Server's real-time, multi-platform data integration
capabilities and incorporate these functions directly into their own
solutions. Wireless administration is supported via DataMirror's iTransmit
product.

      With flexible data selection and filtering, built-in transformation and
enhancement capabilities, and extended support for ODBC compliant subscriber
systems, Transformation Server enables DataMirror's customers to employ a wide
range of business applications including e-Business, business intelligence,
enterprise application integration, CRM and a host of other distributed data
applications.

      Transformation Server licensing and related fees account for
approximately 60% of the Company's overall revenue. The Company depends mainly
on direct sales for revenue for its Transformation Server product as such the
sale of this product is not dependent on indirect sales channels and calendar
quarter seasonality to the same extent as the Company's HA Suite and iCluster
products. See "Risk Factors - Dependence on Distribution Channels" and "Risk
Factors - Seasonality".

High Availability Suite and iCluster

      The Company's major resiliency product, High Availability Suite for IBM
iSeries (AS/400) (also known as HA Suite), was released in November 1998. HA
Suite is an iSeries (AS/400) high availability solution that captures objects
and database transactions from primary systems, mirrors them to one or more
recovery systems, and invokes operational switching as required. High
Availability Suite was complemented and enhanced in mid 1999 with the
introduction of DataMirror iCluster software, a high availability cluster
management solution for a `cluster' or integrated network of IBM iSeries
(AS/400) systems. High Availability Suite is comprised of the following four
integrated components:

     (i) data mirroring functionality which captures database transactions on
primary systems and mirrors them, on a continuous or periodic basis, to one or
more secondary or back-up iSeries computers;

     (ii) object mirroring functionality that provides continuous or periodic,
on-demand mirroring of non-data objects, such as user id's and security
profiles, from primary systems to one or more secondary or back-up computers;

     (iii) role switching capability to detect primary system failure and
invoke operational switching from primary iSeries (AS/400) systems to
secondary or back-up computers in the event of planned or unplanned system
outages; and

     (iv) administration, monitoring and inquiry functions, allowing system
administrators to monitor and analyse both current and historical information
regarding the status of the HA Suite mirroring process.

     In mid-1999 DataMirror released its iCluster cluster management product
for IBM iSeries (AS/400). iCluster is a solution for ensuring the continuous
availability of business-critical applications such as e-Business, ERP and
customer-facing applications. iCluster can be installed on distributed systems
to maintain around-the-clock system availability.

     A `cluster' consists of an integrated network of iSeries (AS/400) systems
(or nodes) that work together to provide seamless iSeries (AS/400) operations.
If the node in a cluster that provides a service can no longer perform this
role, operations are automatically switched to a designated backup node. To
achieve this objective, objects and data must be replicated from the primary
system to the backup node so that operations can be easily moved to this node.
DataMirror iCluster software complements High Availability Suite


                                                                            17
<PAGE>

for clustered iSeries servers. iCluster enables users to define nodes in a
cluster, determine what data and other critical objects are mirrored to
specific nodes and monitor the entire cluster from a single station. It also
handles the data and object mirroring requirements of clustered high
availability environments.

     In 2000 DataMirror released XtremeCache, a technology exclusive to
DataMirror iCluster and High Availability Suite that optimizes the flow of
data into and out of a high speed software cache. XtremeCache enhances the
business availability and system back-up and recovery capabilities of HA Suite
and iCluster.

     The Company depends on both direct and indirect sales for the revenue for
its iCluster and HA Suite products. The sale of these products is often linked
to the sale of IBM hardware by IBM Business Partners. Generally, sales of
these products are strongest in the calendar quarter ending December 31st and
are reflected in the Company's fourth fiscal quarter of each year. There can
no assurance that the Company will continue to be successful with the indirect
sales model or will continue to partner with motivated distributors as the
Company tries to grow revenue from these products. A weak calendar fourth
quarter for IBM hardware and IBM Business Partners will adversely affect
revenue from these products

iReflect

     DataMirror iReflect is a resiliency product designed for Oracle 9i
databases. It is designed to reduce system downtime for Oracle environments.
The software is used for disaster avoidance and recovery. iReflect uses
intelligent database-level mirroring to provide a cost-effective solution to
help businesses running Oracle achieve superior uptime and availability for
their valuable data assets. It mirrors Oracle database transactions from the
primary system to the recovery system in real-time. The software also has the
ability to detect primary system failure and invoke operational switching to
enable highly available business operations in Oracle environments. iReflect
supports log-based replication of Oracle databases.

     iReflect enhances the inherent availability features of Oracle databases
to provide thorough protection against failures. Whereas tape backups may
result in loss of data and require considerable time and effort to restore
data since the last backup, iReflect provides a resiliency solution in the
event of planned or unplanned downtime. iReflect's flexible architecture
supports one-to-many, many-to-one and two-way replication scenarios.

     Customers generally can use DataMirror resiliency products for 24/7
access to key databases, disaster avoidance and recovery, minimizing the costs
of both planned and unplanned downtime, enhancing service levels and promoting
customer retention and loyalty, efficient distribution of data processing and
workload balancing and ensuring the continuity of supply chains and e-Business
environments.

     The licensing and other related fees for High Availability Suite,
iReflect and the Company's other resiliency products account for approximately
35% of the Company's overall revenue.

Constellar Hub

         DataMirror Constellar Hub is an Oracle-based enterprise application
integration tool that enables the movement, transformation and integration of
data between heterogeneous system environments from a central point of
control. With DataMirror Constellar Hub, organisations can integrate a wide
variety of applications. It supports over 40 data types including real-time,
batch and message-oriented systems. DataMirror Constellar Hub options include
interfaces for Oracle Applications and PeopleSoft and connectors to MQSeries
and SAP. The solution incorporates support for XML, HTTP and FTP to allow
e-business transactions to be readily integrated with a company's other core
systems including ERP and CRM applications.

LiveAudit

      LiveAudit is a software solution based on Transformation Server
technology that allows organisations to monitor the security of their data
assets and meet electronic records requirements imposed by regulators. For
example, the electronic records regulations of the U.S. FDA require all FDA
regulated companies to use computer-generated, time stamped audit trails to
ensure the integrity of systems storing FDA-related records. LiveAudit
captures historical database information and transactional details that would
otherwise be overwritten. LiveAudit can track any changes made to an
application database as well as the time the change was made and the identity
of the user. LiveAudit can be deployed across a wide range of industries
including financial services, government, e-Business and retail to combat
fraud, enhance security and accountability, and improve customer service
levels.

Pervasive Gateway

     DataMirror Pervasive Gateway is a client-server software solution that
extends SAP functionality to remote users by allowing them to execute ERP
transactions from mobile devices. Business applications of Pervasive Gateway
include warehouse and shop floor operations, time and attendance, asset
management, transportation management, service/sales force automation and CRM.


                                                                            18
<PAGE>

The solution can be deployed on any DOS, Windows or Windows CE based computer
or mobile device including industry standard PCs, PDAs, handheld computers and
rugged portable computers for use in industrial settings. Transactions can be
executed in on-line mode in near real-time or in batch-mode to support
disconnected devices and network interruptions.

Other Products

      The Company's other software products include:

      (i)         iDeliver. A data integration product that delivers data from
                  Transformation Server sources to Windows desktop data
                  stores;
      (ii)        Transformation Server for XML. An addition to DataMirror's
                  Transformation Server software family, which enables
                  companies to capture, transform and flow data in real-time
                  to and from common database formats and XML;
      (iii)       iCluster for EMC Symmetrix. An application-aware technology
                  that is closely integrated with EMC Corporation's system and
                  storage replication solutions Symmetrix Remote Data Facility
                  (SRDF(TM)) and TimeFinder(TM). iCluster for EMC Symmetrix
                  provides higher levels of application availability and
                  workload distribution in EMC iSeries environments;
      (iv)        Synapse Agility. An enhancement toolkit extending the
                  capabilities of SAP's Report Distribution and Job Scheduling
                  functionality, built to seamlessly bolt-on to SAP (R) R/3(R);
      (v)         Synapse Mobility. Allows mobile data collection devices to
                  communicate in real-time with the bar-code server and with
                  the SAP R/3 software suite. Synapse Mobility runs on a
                  Windows NT/2000 workstation and extends customers' SAP
                  systems to mobile environments;
      (vi)        DB/XML Transform. An engine for bi-directional data
                  transformation between XML, database and text formats;
      (vii)       DB/XML Vision. A cost-effective, scaled-down version of
                  DB/XML Transform for simple database to XML conversion
                  projects. The software automatically creates XML documents
                  containing hierarchical data from any database for B2B
                  applications, EDI, database integration and conversion;
      (viii)      LiveConnector. An integration solution that enables
                  information flow between CRM, ERP or packaged software
                  applications. LiveConnector uses application-specific
                  adapters to capture, transform and flow business
                  transactions in real-time between various applications
                  within the organization;
      (ix)        iCluster for IBM TotalStorage(TM) Enterprise Storage
                  Server(TM). A single integrated software solution for highly
                  available business operations in IBM eServer iSeries
                  environments. iCluster for IBM ESS enables high levels of
                  data and application resiliency for Storage Area Networks
                  (SANs) running on IBM iSeries and ESS systems; and
      (x)         Outsmart. A simple CRM software solution for Sales Force
                  Automation and Pipeline Management that works within
                  Microsoft(R) Outlook(R).

Competition

Overview

      The Company competes in markets that are competitive, subject to and
affected by changes in technology, product innovations and the actions of its
competitors. Based on the variety of operating systems, databases and hardware
platforms upon which the Company's products operate, the Company can expect a
number of sources of competition. The primary sources of competition are:

  o      Hardware and Database Vendors. Many hardware and database vendors,
         including IBM, Microsoft, Oracle and Sybase, also offer integration,
         resiliency and capture software products, either as stand-alone
         products or as a technological component of their hardware, operating
         system, database or other software products. Such products tend to be
         focused on the vendors' core hardware or database offerings, and
         generally do not offer the full range of functionality and
         cross-platform compatibility of the Company's products. Nevertheless,
         such products can and do pose significant competition for the
         Company's products. Many of these vendors are significantly larger
         than the Company and have significantly longer operating histories,
         greater financial resources and more market and brand recognition
         than the Company. If IBM, Microsoft, Oracle, Sybase or other leading
         vendors were to introduce, enhance or expand cross-platform data
         integration tools designed to move or integrate data rapidly and
         seamlessly among a wide variety of different databases and computer
         platforms, such tools could represent even more significant
         competition to the Company and to a wider range of the Company's
         products. Although the Company has participated in product alliance,
         joint marketing, product referral and other co-operative arrangements
         with such vendors, there is no guarantee that any such arrangements
         will be available or will continue in the future.

  o      Independent Software Vendors. A number of independent software
         vendors have developed integration, resiliency and capture software
         products for a variety of databases and computer platforms, including
         platforms supported by the Company's products such as IBM DB2 on
         various platforms, Oracle, Sybase and SQL Server. These products may
         offer varying degrees of bi-directional replication capability,
         platform compatibility and continuous or periodic replication ability,
         and offer significant direct competition with the Company products
         including in particular Transformation Server, HA Suite, iCluster and
         Constellar Hub. As with hardware and database vendors described above,
         many of these independent software vendors are significantly


                                                                            19
<PAGE>

         larger than the Company and have significantly longer operating
         histories, greater financial resources and more market and
         brand recognition than the Company.

  o      In-house Development. Many large business organisations have sizeable
         information systems departments and software development and
         programming staff. These organisations may choose to develop their
         own custom software for their internal integration, resiliency and
         capture requirements. The Company has encountered, and expects to
         continue to face, competition for the sale of its products from such
         in-house development efforts.

Integration Software Market

         In the market for integration software the Company's Transformation
Server and Constellar Hub products face competition from specific data
replication software products, designed for use on many of the platforms
between which Transformation Server and Constellar Hub function, including the
following products from the following vendors:

      Data Propagator and MQSeries from IBM; Oracle Replication from Oracle;
      Sybase Replication Server from Sybase; SQL Replication (DTS) from
      Microsoft; Symbiator from Vision Solutions (a subsidiary of Idion
      Technology Holdings Inc.); OmniReplicator from Lakeview Technology;
      Detail from Striva; DataStage from Ascential; PowerCenter from
      Informatica; ETI-Extract from ETI; webMethods Integration Platform from
      webMethods; integration solutions from SeeBeyond Technology and
      Mercator; and Businessware Integration Platform from Vitria.

         The Company tries to differentiate Transformation Server from
competitive products by promoting the following product features and
capabilities: (i) unique "Capture, Transform and Flow" architecture which
provides the ability to deliver real-time, transaction based data integration
solutions (ii) single Java - enabled GUI (Enterprise Administrator) which
enables administration, and operational control of Transformation Server
across platforms and databases within the enterprise from a single point (iii)
sophisticated Enterprise Administrator Monitor which provides "Visualization"
of complex integration networks and allows the creation of user-defined
network diagrams to monitor operations status and performance; (iv) rapid
deployment with minimum requirement for programming or professional services;
(v) diverse heterogeneous platform and database support; and (vi) peer-to-peer
architecture (as opposed to hub-and-spoke or staging) facilitating high speed,
high transaction throughput.

      The Company tries to differentiate its Constellar Hub product from the
competitors by promoting the following features: (i) an advanced hub and spoke
architecture that provides a single point of contact for all data sources;
(ii) real-time data flows and full integration with Transformation Server;
(iii) pre-built application interface support for leading ERP and CRM
applications; (iv) ease of use; and (v) use of PL/SQL as its transformation
language.

         There can be no assurance that competitors won't add these or similar
features to their products or that the Company will be successful in selling
its products by promoting these features and differentiators.

Resiliency Software Market

         In the IBM iSeries (AS/400) market for resiliency software, the
Company's HA Suite and iCluster products compete against other system
mirroring software products that are generally designed to move data and
maintain a current back-up of an entire iSeries (AS/400) system on a second
iSeries (AS/400), perform operational switchover in the event of system
failure, and mirror all database activity as well as all non-database file and
object activity. This market space has fewer, more readily identifiable direct
competitors. The primary competitors are Lakeview Technology who sell Mimix
Suite and Vision Solutions -who sell Vision Suite. Both of these competitors
have greater market share than the Company and have longer operating histories
in the iSeries (AS/400) resiliency market. Recent products to enter this
market include Echo2 from iTera and NOMAX from Maximum Availability.

    The Company tries to differentiate HA Suite and iCluster from competitive
products by promoting the following features and capabilities: (i) single code
based for data replication, object replication, monitoring and switching
capabilities; (ii) unique Match/Merge technology for synchronisation on the
recovery server; (iii) real-time auto registration; (iv) object type support;
and (iv) implementation methodology.

    The Company also tries to differentiate itself from its competitors in
terms of: (i) the Company's publicly disclosed financial position; (ii) the
Company's partnerships and alliances; (iii) the quality of the Company's
support and professional services offerings; and (iv) the responsiveness and
innovation of the Company's development team.

    There can be no assurance that competitors won't improve their
products and services to respond to these differentiators or that the Company
will be successful in selling its products by promoting these differentiators.
IBM continues to add features to its database and operating systems that may
make it easier for new entrants or customers to develop their own resiliency
solutions. IBM may also choose to offer its own resiliency solution in the
future.

                                                                            20

<PAGE>

    In the Oracle market for resiliency software, the Company's iReflect
product competes against other database replication software products that are
generally designed to move data and maintain a current back-up of an entire
Oracle database on a second system. The main competitor in this market space
is Quest Software which sells its SharePlex product. The Company tries to
differentiate the iReflect product from competitive products by promoting the
following features and capabilities: (i) real-time log-based replication; (ii)
DDL (Data Definition Language) support; (iii) real-time auto registration; and
(iv) high speed operational switching. There can be no assurance that the
Company will be successful in selling into this market. In addition, Oracle
may add features to its database or the Oracle 9iAS platform that make it
easier for new entrants or customers to develop their own resiliency
solutions. Oracle may also choose to offer a resiliency solution that competes
directly with iReflect in the future.

Audit Software

      The Company's LiveAudit software was developed as an out-of-the-box
solution to meet the electronic records requirements of the FDA. The Company
tries to differentiate the LiveAudit product in terms of its out-of-the-box,
non-intrusive integration with existing systems and databases. The Company
expects that competitors will also develop solutions for electronic records
compliance. The Company also expects that existing providers of ERP solutions
to regulated companies will add electronic records compliance features to
their existing solutions.

Capture Software

      There are a number of competitors in the market for SAP mobile
connectivity solutions including SAP. The Company tries to differentiate its
Pervasive Gateway software in terms of: (i) its ability to function in both
batch and on-line modes; (ii) its easy to use GUI interface; and (iii) its
platform independence and the fact that it can be installed on common industry
operating systems and mobile devices. There can be no assurance that
competitors won't improve their products and services to respond to these
differentiators or that the Company will be successful in selling its products
by promoting these differentiators.

XML Software

         There are a large number of competitors in the market for XML
transformation software. Many of these competitors are larger than the
Company. Many of these competitors provide their software free of charge. The
Company tries to differentiate its DB/XML Transform product in terms of: (i)
its advanced structured query technology; (ii) its built-in support for
back-end database functionality; and (iii) its portability and platform
independence. There can be no assurance that competitors won't improve their
products and services to respond to these differentiators or that the Company
will be successful in selling its products by promoting these differentiators.

Intellectual Property

         The Company regards its software as proprietary and attempts to
protect it using copyright, trademark and trade secret laws, contractual
provisions regarding confidentiality, non-disclosure and ownership of
proprietary information and embedded software authorization routines. Despite
these precautions, it may be possible for unauthorized third parties to copy
certain portions of the Company's products and obtain and use information the
Company regards as proprietary. In addition, there is a risk that third
parties may assert infringement claims against the Company or its products.
See "Risk Factors - Potential Infringement Liability".

         The Company licenses its software products pursuant to either
mutually negotiated software license and maintenance agreements or "shrink
wrap" licenses (that is, licenses included as part of the product packaging)
and/or "click wrap" licenses (that is, licenses which appear on a user's
computer screen prior to the user being able to effectively use the software).
The Company's use of "click wrap" licenses may increase as the Company further
extends its product licensing activities on the Internet. "Shrink wrap" or
"click wrap" licenses are not negotiated with or signed by individual
licensees and purport to take effect upon the opening of the product package
or upon download or an indication of acceptance by "clicking" on an acceptance
indicator or button on a web page or computer screen. Certain provisions of
such licenses, including provisions protecting against unauthorized use,
copying, transfer and disclosure of the licensed program, may be unenforceable
under the laws of certain jurisdictions.

         While the Company is unable to determine the extent of software
piracy of its products, software piracy can be expected to be a persistent
problem in the software industry. The Company utilises software authorization
routines to provide copy protection on all platforms where hardware serial
numbers are available for this purpose. However, in keeping with industry
standards, the Company does not copy protect its software on Windows NT and
certain other platforms. Policing unauthorized use of the Company's products
is difficult, but given that, in most cases, the Company's primary software
products currently require that at least one machine at any installation be
fully and properly licensed, it is probable that any unauthorized use would be
limited to licensed sites. In addition, the laws of some foreign countries do
not protect the Company's proprietary rights to the same extent as do the laws
of Canada and the United States. Accordingly, it may be possible for
unauthorized parties to copy or reverse engineer the Company's products or
otherwise obtain and use information that the Company regards as proprietary.


                                                                            21
<PAGE>

Government Regulations

      The Company's LiveAudit product was developed to assist organisations
regulated by the Food and Drug Administration ("FDA") to comply with 21 CFR
Part 11, the Final Rule of the FDA with respect to electronic records and
electronic signatures. There can be no assurance that the FDA will not amend
or repeal this Rule which could adversely affect sales of the LiveAudit
product or result in increased costs associated with the development,
maintenance or support of the product.


C.    Organizational Structure

      As at January 31, 2003, the Company had the following direct and
indirect subsidiaries:


   SUBSIDIARY(1)                                 JURISDICTION OF INCORPORATION

   DataMirror  Europe (Holdings) Limited                England
   DataMirror (UK) Limited                              England
   DataMirror Hub Company (UK) Limited                  England
   DMC Holdings, Inc.                                   Delaware
   DataMirror, Inc.                                     Delaware
   DataMirror Benelux NV                                Belgium
   DataMirror France SARL                               France
   DataMirror Germany(2)                                A partnership under the
                                                        laws of Germany
   DM Nordic AB                                         Sweden
   DataMirror (Asia Pacific) Limited                    Hong Kong
   DataMirror Hub Company (Canada) Inc.                 Ontario
   1512630 Ontario Inc.                                 Ontario

(1)      Except as otherwise noted, each subsidiary is wholly owned by
         DataMirror Corporation and/or one or more wholly-owned subsidiaries
         of DataMirror Corporation.
(2)      DataMirror Germany is a partnership between two wholly-owned
         subsidiaries of DataMirror Corporation, DataMirror Deutschland GmbH,
         as limited partner, and DataMirror Deutschland Verwaltungs-GmbH, as
         general partner.


D.       Property, plants and equipment

         The Company's head office is located in a leased facility in Markham,
Ontario, where the Company currently occupies approximately 67,222 sq. ft. of
office space. The term for the leased premises shall renew on May 1, 2004 for
an additional 5 year period. The Company leases private office space,
generally on a short-term basis, for its sales and technical operations in
Chicago, Illinois and Newport Beach, California. The Company's UK subsidiary
occupies leased office space in London, England (expiry March 2004) and
additional office space is leased for European branch offices in Antwerp,
Belgium; Frankfurt, Germany; and Paris, France. Leases for the European
offices are generally terminable on short-term notice, except for the
Frankfurt location which has a lease expiring in November 2004. The Company's
Asia Pacific operations are housed in leased office facilities in Hong Kong
(expiry November 2003). The Company believes that its existing facilities and
offices are adequate to meet its immediate requirements and that additional
space in similar facilities will be available to satisfy its requirements in
the foreseeable future.


ITEM 5.         Operating and Financial Review and Prospects


COMPARISON OF FISCAL 2003 TO FISCAL 2002 AND FISCAL 2002 TO FISCAL 2001

     The following information should be read in conjunction with the audited
Consolidated Financial Statements of the Company for the years ended January
31, 2003 ("Fiscal 2003") and January 31, 2002 ("Fiscal 2002") presented in
accordance with Canadian generally accepted accounting principles ("Canadian
GAAP") which are in all material respects in accordance with accounting
principles generally accepted in the United States ("US GAAP"), except as
disclosed in note 20 of the audited Consolidated Financial Statements. All
amounts are stated in Canadian dollars unless otherwise noted.


                                                                            22
<PAGE>

OVERVIEW

     The Company designs, develops and markets software solutions that enable
over 1,700 companies in 61 countries to integrate, protect, capture and audit
their data.


SOURCES OF REVENUE

      The Company derives its revenue from three main sources: sales of
software licenses, software maintenance and support agreements and consulting
and implementation services.

      The sales of software licenses have historically been on a direct basis
to the Company's customers in North America, Asia Pacific and most of Europe,
while also employing indirect sales channels, such as distributors and
remarketers in these territories. During fiscal 2003, sales through these
indirect sales channels accounted for 24% of revenue, down slightly from 26%
in fiscal 2002. In Australia, South and Central America and certain European
countries, the Company sells mainly on an indirect basis through distributors
or remarketers who may also provide customer support and service to end users.

      The Company sells single and multiple year software maintenance and
support agreements with the related software licenses. These agreements are
generally renewed on an annual basis after expiry of their initial term.

      Revenue from consulting and implementation services is derived primarily
on a time-and-materials basis under a services agreement with the customer,
which in some cases may be prebilled with the related software licenses.


CRITICAL ACCOUNTING POLICIES AND ESTIMATES

      The Company's Consolidated Financial Statements are prepared in
accordance with Canadian GAAP which are in all material respects in accordance
with US GAAP, except as disclosed in note 20 of the audited Consolidated
Financial Statements. The preparation of the Company's financial statements is
based on the selection and application of significant accounting policies,
some of which require management to make significant estimates and judgements
that affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosure of contingent assets and liabilities. On an
on-going basis, the Company evaluates its estimates, including those related
to revenue, bad debts, investments, intangible assets, goodwill and income
taxes. The Company bases its estimates on historical experience and on various
other assumptions that are believed at the time to be reasonable under the
circumstances. Under different assumptions or conditions, the actual results
will differ, potentially materially, from those previously estimated. Many of
the conditions impacting these assumptions and estimates are outside of the
Company's control.

      The Company believes that the following are the critical judgement areas
in the application of its accounting policies that currently affect the
Company's financial condition and results of operations.

      Revenue Recognition. The Company's revenues are generated from the sale
of software licenses, software maintenance and support fees and services.

      Revenue is recognized in accordance with Statement of Position ["SOP"]
97-2, "Software Revenue Recognition" issued by the American Institute of
Certified Public Accountants ["AICPA"] in October 1997 and amended by SOP
98-4, "Deferral of the Effective Date of a Provision of SOP 97-2", issued in
March 1998. Software license revenue is recognized when persuasive evidence of
an arrangement exists, the related products are shipped, there are no
significant uncertainties surrounding product acceptance, the fees are fixed
and determinable and collection is considered probable. Revenue from software
maintenance and support agreements is recognized on a straight-line basis over
the term of the related agreements. Revenue from services is comprised of
consulting, training and installation fees and is recognized at the time the
services are performed.

      Allowance for Doubtful Accounts. The Company maintains an allowance for
doubtful accounts for the estimated losses resulting from the inability of its
customers to make required payments. The Company performs ongoing credit
evaluations of its customers' financial condition and if the financial
condition of the Company's customers were to deteriorate, resulting in an
impairment of their ability to make payments, additional allowances would
likely be required. Actual collections could materially differ from our
estimates.

      Investments. From time to time the Company may hold minority interests
in companies having operations or technology in areas within its strategic
focus, some of which are publicly traded and have highly volatile share
prices. The Company records an investment impairment charge when a decline in
the value of an investment occurs which is considered to be other than a
temporary impairment. Future adverse changes in market conditions or poor
operating results of the companies in which the Company has invested could
result in losses or an inability to recover the carrying value of the
investments and may possibly require an impairment charge in the future.


                                                                            23
<PAGE>

      Intangible Assets. The Company has intangible assets related to acquired
technology. The determination of the related estimated useful lives and
whether or not these assets are impaired involves significant judgements. In
assessing the recoverability of these intangible assets, the Company must make
assumptions regarding estimated future cash flows, market conditions and other
factors to determine the fair value of the asset. If these estimates or their
related assumptions change in the future, the Company may be required to
record impairment charges for these assets not previously recorded. In fiscal
2003, the Company did not record an impairment charge related to intangible
assets.

      Goodwill. The Company has goodwill assets arising from business
acquisitions which are comprised of the excess of amounts paid over the fair
value of net identifiable assets acquired. The Company performs an annual
assessment of the fair value of the businesses to which this goodwill relates.
In assessing the fair value of these businesses, the Company must make
assumptions regarding estimated future cash flows, market conditions and other
factors to determine the fair value of the business. If these estimates or
their related assumptions change in the future, the Company may be required to
record impairment charges for these assets not previously recorded. In fiscal
2003, the Company did not record an impairment charge related to goodwill.

      Future Income Taxes. The Company has future tax assets, which are
subject to periodic recoverability assessments. Realization of the Company's
future tax assets is principally dependant upon its achievement of projected
future taxable income. The Company's judgements regarding future profitability
may change due to future market and other factors. These changes, if any, may
require possible material adjustments to these future tax asset balances by
recording a valuation allowance to reduce the future tax asset to the amount
that is more likely to be realized. While the Company has considered future
taxable income and ongoing tax planning strategies in assessing the need for
valuation allowances, in the event the Company were to determine that it would
be able to realize future tax assets in excess of the recorded amount, an
adjustment to the future tax assets would increase income in the period such a
determination were made. Likewise, in the event the Company were to determine
that it would not be able to realize all or part of its net future tax assets,
an adjustment to the future tax assets would be charged to income in the
period such a determination were made.


                                                                            24
<PAGE>

RESULTS OF OPERATIONS
The following table sets forth the Company's consolidated statements of income
(loss) for the years indicated:

<TABLE>

                        For the Years Ended January 31,
                            (In thousands of CDN $)
<CAPTION>

                                                             2003              2002              2001
                                                        ----------        ---------          --------
   Revenue:
<S>                                                       <C>             <C>               <C>
      License                                             $ 33,223        $  28,592         $  35,040
      Maintenance                                           23,210           20,562            14,065
      Services                                               6,057            7,222             8,353
                                                        ----------        ---------          --------
                                                            62,490           56,376            57,458
                                                        ----------        ---------          --------
   Cost of revenue:
      License                                                  239              257               514
      Maintenance and services                              12,605           13,464            11,184
                                                        ----------        ---------          --------
                                                            12,844           13,721            11,698
                                                        ----------        ---------          --------
   Gross margin                                             49,646           42,655            45,760
                                                        ----------        ---------          --------
   Operating expenses:
      Selling and marketing                                 21,289           21,542            23,815
      Research and development                              10,459           10,895             7,742
      General and administration                             8,812            9,088             9,668
      Amortization of intangibles                            2,740            3,244             1,570
                                                        ----------        ---------          --------
         Total operating expenses                           43,300           44,769            42,795
                                                        ----------        ---------          --------
   Income (loss) from operations                             6,346           (2,114)            2,965
   Investment income, net                                      611              859             1,333
   Gain (loss) from investment in PointBase, Inc.
      Dilution gain                                         (4,595)            ----             6,186
      Equity loss                                           (2,081)          (4,112)           (4,709)
                                                        ----------        ---------          --------
   Income (loss) before income taxes                           281           (5,367)            5,775
   Provision for income taxes                                2,434              297             1,067
   Net income (loss)                                    $   (2,153)       $  (5,664)         $  4,708
                                                        ==========        =========          ========
</TABLE>


FISCAL YEAR ENDED JANUARY 31, 2003
COMPARED TO FISCAL YEAR ENDED JANUARY 31, 2002

REVENUE

      The Company's revenue is derived primarily from sales of licenses for
its software products. License revenue has historically been heavily dependent
on sales of Transformation Server and High Availability Suite software for use
in connection with IBM iSeries (AS/400) platforms, and this trend continued in
fiscal 2003, accounting for 66.5% of license revenue as compared to 66.9% in
fiscal 2002. It is expected that the Company's future success will continue to
depend on its relationship with IBM and the success of the AS/400 platform.

      License sales accounted for 53.2% of total revenue in fiscal 2003 as
compared to 50.7% in fiscal 2002. The Company expects that software license
revenues will continue to account for a substantial portion of its revenues
for the foreseeable future. During fiscal 2003, 37.1% of the Company's revenue
was derived from customer software maintenance and support contracts, compared
to 36.5% of revenue in fiscal 2002. Revenue from services, which includes
consulting, training and other services, accounted for 9.7% of revenue during
fiscal 2003, compared to 12.8% in fiscal 2002.

      License. License revenue in fiscal 2003 was $33,223,000 compared to
$28,592,000 for fiscal 2002, an increase of 16.2%. The increase in license
revenue was largely attributable to revenue derived from new products such as
LiveAudit, Pervasive Gateway and iReflect, as well as increased penetration
into the High Availability for IBM iSeries market.

                                                                            25
<PAGE>

      Maintenance. Maintenance revenue in fiscal 2003 was $23,210,000 compared
to $20,562,000 in fiscal 2002, an increase of 12.9%. This increase was a
result of maintenance revenue generated by additional license sales since the
end of fiscal 2002 and the renewal of maintenance and support contracts for
license sales completed in prior periods.

      Services. Services revenue in fiscal 2003 was $6,057,000 compared to
$7,222,000 in fiscal 2002, a decrease of 16.1%. This decrease was due to lower
rates of new customer adoption, which caused a reduction in demand for
implementation services.

     The Company derives most of its sales revenue from international
customers, with sales outside Canada usually denominated in U.S. dollars or
European currencies including pounds sterling and Euros. For fiscal 2003,
sales denominated in U.S. dollars and European currencies represented 58.9%
and 34.2% respectively of the Company's revenues, while a significant portion
of the Company's operating expenses are incurred in Canadian dollars.
Accordingly, changes in exchange rates between the Canadian dollar and these
foreign currencies can positively or negatively affect the Company's operating
results. The Company has a policy of hedging a portion of its foreign currency
denominated accounts receivable. Management recognizes that this policy can
provide only a short-term protection against a limited portion of the
Company's currency exposure.

     The Company's geographical revenue distribution based on the customers'
country of residence has been as follows:


      FOR THE YEARS ENDED
                                                       January 31,
                                                    2003             2002
                                                    ----             ----

        Canada                                       6.9 %            5.2 %
        United States                               53.6             50.4
        United Kingdom                              18.7             24.0
        Germany                                      8.1              9.8
        Other                                       12.7             10.6
                                                   -----            -----
                                                   100.0 %          100.0 %
                                                   =====            =====


     Transaction values for sales of the Company's products have been as large
as $1,400,000, although a typical sale ranges from $70,000 to $100,000. No
single customer accounted for more than 1.8% of revenue in fiscal 2003 (1.2%
of revenue for fiscal 2002), and no single industry accounted for more than
23.3% of license revenue in fiscal 2003 (20.5% of license revenue for fiscal
2002).

COST OF REVENUE

      License. Cost of license revenue consists primarily of duplication,
media, packaging and shipping expenses. For fiscal 2003, costs of license
revenue were $239,000 (0.7% of license revenue) relatively unchanged from
$257,000 (0.9% of license revenue) for fiscal 2002.

      Maintenance and Services. Costs of maintenance and service revenue
consist primarily of the salary and related costs of providing those services.
For fiscal 2003, costs of maintenance and service revenue were $12,605,000
(43.1% of maintenance and service revenue) compared to $13,464,000 (48.5% of
maintenance and service revenue) for fiscal 2002. The gross margin on
maintenance and service revenue improved slightly, as the Company realized
economies of scale in the cost of providing support to its growing customer
base.

OPERATING EXPENSES

      Selling and Marketing. Selling and marketing expenses include expenses
for sales commissions, salaries, advertising, tradeshows, promotional
materials and other selling and marketing related expenses. For fiscal 2003,
these expenses totaled $21,289,000 (34.1% of revenue) down slightly from
$21,542,000 (38.2% of revenue) for fiscal 2002 as the Company reduced travel
and trade show related expenditures and had a reduction of headcount in this
area. Management expects selling and marketing expenses to increase as the
Company expands its sales and marketing activities.

         Research and Development. Research and development expenses include
only salaries and other direct costs associated with the development of new
products and are net of related investment tax credits. Research and development
expenses were $10,459,000 (16.7% of revenue) for fiscal 2003 down slightly from
$10,895,000 (19.3% of revenue) for fiscal 2002. The overall headcount in


                                                                            26
<PAGE>

research and development was reduced from 96 at the end of fiscal 2002 to 82
at the end of fiscal 2003, however the bulk of these reductions were made late
in the third quarter and did not impact the annual expense significantly.

      General and Administration. General and administration expenses consist
primarily of administrative salaries, rent, recruiting costs and professional
fees. For fiscal 2003, general and administration expenses were $8,812,000
(14.1% of revenue) compared to $9,088,000 (16.1% of revenue) for fiscal 2002,
a decrease of 3.0%. The Company initiated a series of cost saving measures
during fiscal 2003 with the goal of increasing operating profitability which,
combined with a reduction in overhead expenses as a result of the headcount
reductions, resulted in this reduction in costs.

      Amortization of Intangibles. Effective February 1, 2002, amortization of
intangibles consists of the amortization of acquired technology. In fiscal
2002, amortization of intangibles also included the amortization of goodwill,
as explained in note 2 to the financial statements. For fiscal 2003,
amortization of intangibles was $2,740,000 compared to $3,244,000 for fiscal
2002. The decrease of $504,000 is due to the elimination of goodwill
amortization.


INVESTMENT INCOME, NET

     Investment income, net includes interest on short-term investments and
other investment income net of interest expense on long-term liabilities and
lease obligations. In fiscal 2003, net investment income was $611,000 compared
to $859,000 in fiscal 2002. This decrease of $248,000 over the prior year is
primarily a result of earning a lower rate of interest on invested cash
balances in Canada during the year as well as a further reduction in interest
rates received on cash balances set aside during the second quarter in support
of the Company's bid to acquire Idion Technology Holdings Limited.

     The Company invests its cash in a variety of short-term Canadian dollar
denominated financial instruments, including government bonds, commercial
paper and bankers acceptances. The portfolio is diversified and consists
primarily of investment grade securities to minimize credit risk. Cash
balances in foreign operations are generally invested in term deposits in the
local operating banks. The investment in short-term financial instruments
carries a degree of interest rate risk, and consequently our future investment
income may fall short of expectations due to changes in short-term interest
rates.

LOSSES FROM INVESTMENT IN POINTBASE

      PointBase has had a history of operating losses and, while the level of
operating losses has decreased in the current year, there is little prospect
of short-term profitability. In June of 2002, PointBase started a downsizing
of their business, with the intent of achieving break-even operations in the
short-term. In October 2002 it became apparent that these measures would not
result in profitable or break-even operations in the near future and the
Company's investment had become impaired and, accordingly, the investment was
written down to the estimated fair value of nil.

      The equity loss from the Company's investment in PointBase was
$2,081,000 in fiscal 2003 compared to $4,112,000 in fiscal 2002. The decrease
was the result of several factors, including the change in accounting policy
with respect to goodwill amortization, as the equity loss in fiscal 2002
included $1,000,000 in amortization of the goodwill recorded on the Company's
investment in PointBase as well as reduced operating losses incurred by
PointBase over the nine months ended October 31, 2002. Also, the Company's
decision to write the investment in PointBase off at October 31, 2002 resulted
in only nine month's of equity losses being recorded in fiscal 2003 compared
to twelve months in fiscal 2002.

INCOME TAX EXPENSE

      During fiscal 2003, the Company recorded an income tax provision of
$2,434,000 as compared to a provision of $297,000 in fiscal 2002.

      The combined basic Canadian federal and provincial tax rate used in
determining the income tax provision for fiscal 2003 was 38.6% [2002 - 41.7%].
The decrease in the combined rate is due to the announced reduction in the
federal and provincial tax rates coming into effect during the year. The
announced federal and provincial tax rates cuts for the coming year will
further reduce the combined rate to approximately 36.6%.

      The income tax provision is different than expected due to a combination
of factors including: the equity loss and write-off of PointBase being
non-deductible for tax purposes, other non-deductible expenses, the inability
to benefit from certain foreign tax losses incurred during the year, the
effect of foreign tax rates, the effect of the rate changes on future taxes
and the manufacturing and processing tax deduction.

                                                                            27
<PAGE>

      Certain of the Company's foreign subsidiaries have carry-forwards for
income tax purposes of approximately $3,952,000 that are not recognized in
these financial statements. These losses are available to claim against future
taxable income in the applicable tax jurisdictions.

OPERATING SEGMENTS

      The Company operates in two reportable segments, North America and
Europe. In fiscal 2003, the North American segment (which includes the
Company's Asia Pacific operations, which are currently not significant) had an
operating income of $4,580,000 compared to an operating loss of $2,455,000 in
fiscal 2002. This increase in profitability was due to a program of
controlling the North American operating expenses through headcount reductions
and other cost control measures while increasing revenue by 18.8%. Other
factors include a reduction in operating losses generated from the Asia
Pacific operations and the effect of the change in accounting policies for
goodwill amortization. The European segment had operating income of $1,766,000
in fiscal 2003 compared to operating income of $341,000 in fiscal 2002. This
increase in profitability was achieved mainly through cost reductions over the
previous fiscal year.


FISCAL YEAR ENDED JANUARY 31, 2002
COMPARED TO FISCAL YEAR ENDED JANUARY 31, 2001

REVENUE

      The Company's revenue is derived primarily from sales of licenses for
its software products. License revenue has historically been heavily dependent
on sales of Transformation Server and High Availability Suite software for use
in connection with IBM iSeries (AS/400) platforms, and this continued in
fiscal 2002, accounting for 66.9% of license revenue as compared to 71.8% in
fiscal 2001. It is expected that the Company's future success will continue to
depend on its relationship with IBM and the success of the AS/400 platform.

      License sales accounted for 50.7% of total revenue in fiscal 2002 as
compared to 61.0% in fiscal 2001. The Company expects that software license
revenues will continue to account for a substantial portion of its revenues
for the foreseeable future. During fiscal 2002, 36.5% of the Company's revenue
was derived from customer software maintenance and support contracts, compared
to 24.5% of revenue in fiscal 2001. Revenue from services, which includes
consulting, training and other services, accounted for 12.8% of revenue during
fiscal 2002, compared to 14.5% in fiscal 2001.

      Effective September 1, 2000 the Company acquired certain assets and
liabilities of Constellar Corporation and its UK subsidiary Constellar Limited
("Constellar"). The financial impact from the operations of Constellar are
included in these results from the date of acquisition.

      License. In fiscal 2002, license revenue was $28,592,000 compared to
$35,040,000 in fiscal 2001, a decrease of 18.4%. The decrease in license
revenue was attributable to lower rates of new customer adoption in all
regions as a result of the weakening global economic conditions.

      Maintenance. Maintenance revenue in fiscal 2002 was $20,562,000 compared
to $14,065,000 in fiscal 2001, an increase of 46.2%. This increase was a
result of maintenance revenue generated by additional license sales since the
end of fiscal 2001, the renewal of maintenance and support contracts for
license sales completed in prior periods and having a full year's revenue from
maintenance and support contracts assumed as part of the Constellar
acquisition completed in September 2000.

      Services. Service revenue in fiscal 2002 was $7,222,000 compared to
$8,353,000 in fiscal 2001, a decrease of 13.5%. This decrease was due to lower
rates of new customer adoption, which caused a reduction in demand for
implementation services.

      DataMirror derives most of its sales revenue from international
customers, with sales outside Canada usually denominated in U.S. dollars or
European currencies including pounds sterling and Euros. For fiscal 2002,
sales denominated in U.S. dollars and European currencies represented 56.2%
and 38.6% respectively of the Company's revenues, while a significant portion
of the Company's operating expenses are incurred in Canadian dollars.
Accordingly, changes in exchange rates between the Canadian dollar and these
foreign currencies can positively or negatively affect the Company's operating
results. The Company has a policy of hedging a portion of its foreign currency
denominated accounts receivable. However, management recognizes that this
policy can provide only a short-term protection against a limited portion of
the Company's currency exposure.


                                                                            28
<PAGE>

      The Company's geographical revenue distribution based on the customers'
country of residence has been as follows:

      FOR THE YEARS ENDED
                                                         January 31,
                                                    2002             2001
                                                   -----            -----

        Canada                                       5.2 %            3.4 %
        United States                               50.4             50.0
        United Kingdom                              24.0             26.8
        Germany                                      9.8              6.9
        Other                                       10.6             12.9
                                                   -----            -----
                                                   100.0 %          100.0 %
                                                   =====            =====


      Transaction values for sales of the Company's products have been as
large as $1,400,000, although a typical sale ranges from $50,000 to $70,000.
No single customer accounted for more than 1.2% of revenue in fiscal 2002
(2.5% of revenue for fiscal 2001), and no single industry accounted for more
than 20.5% of license revenue in fiscal 2002 (21.5% of license revenue for
fiscal 2001).

COST OF REVENUE

      License. Cost of license revenue consists primarily of duplication,
media, packaging and shipping expenses. For fiscal 2002, costs of license
revenue were $257,000 (0.9% of license revenue) down significantly from
$514,000 (1.5% of license revenue) for fiscal 2001, due mainly to a decrease
in third party sublicensing costs.

      Maintenance and Services. Costs of maintenance and service revenue
consist primarily of the salary and related costs of providing those services.
For fiscal 2002, costs of maintenance and service revenue were $13,464,000
(48.5% of maintenance and service revenue) compared to $11,184,000 (49.9% of
maintenance and service revenue) for fiscal 2001. The gross margin on
maintenance and service revenue improved slightly, as the Company recognized
economies of scale in the cost of providing support to its growing customer
base.

OPERATING EXPENSES

      Selling and Marketing. Selling and marketing expenses include expenses
for sales commissions, salaries, advertising, trade shows, promotional
materials and other selling and marketing related expenses. For fiscal 2002,
these expenses totaled $21,542,000 (38.1% of revenue) as compared to
$23,815,000 (41.4% of revenue) for fiscal 2001, a decrease of 9.5%. The
decrease in selling and marketing expenses is attributable primarily to a
reduction in expenses related to the former Constellar operations resulting
from the integration of these operations into the Company's existing
infrastructure over the period since the acquisition, as well as tighter cost
controls implemented during the year. Management expects selling and marketing
expenses to continue to increase as the Company expands its sales and
marketing activities.

      Research and Development. Research and development expenses include only
salaries and other direct costs associated with the development of new
products and are net of related investment tax credits. Research and
development expenses (before investment tax credits) were $10,895,000 (19.3%
of revenue) for fiscal 2002 compared to $8,167,000 (14.2% of revenue) for the
prior fiscal year. The increase in research and development expenses is
attributable to an increase in the number of research and development
employees. This increase was due mainly to having the research and development
personnel associated with the Company's acquisition of assets from Constellar
employed for the entire year, and increased personnel associated with the
other technology acquisitions completed during the year (see Acquisitions and
Investments). Because of the need to enhance existing products and develop new
products, the Company has invested, and continues to invest, substantial
resources in its product development efforts.

      General and Administration. General and administration expenses consist
primarily of administrative salaries, rent, recruiting costs and professional
fees. For fiscal 2002, general and administration expenses were $9,088,000
(16.1% of revenue) compared to $9,668,000 (16.8% of revenue) for fiscal 2001,
a decrease of 6.0%. The decrease in general and administration expenses is
attributable to a reduction in expenses related to the former Constellar
operations resulting from the integration of these operations into the
Company's existing infrastructure over the period since the acquisition, as
well as tighter cost controls implemented during the year.

         Amortization of Intangibles. Amortization of intangibles consists
of the amortization of goodwill and technology. For fiscal 2002,
amortization of intangibles was $3,244,000 compared to $1,570,000 for the
previous fiscal year. The increase of $1,674,000 in fiscal


                                                                            29
<PAGE>

2002 is related to the amortization of the technology acquired as part of the
Constellar acquisition and the other technology acquisitions completed during
the year (see Acquisitions and Investments).

INVESTMENT INCOME, NET

      Investment income, net includes interest on short-term investments and
other investment income net of interest expense on long-term liabilities and
lease obligations. In fiscal 2002, net investment income was $859,000 compared
to $1,333,000 in fiscal 2001. This decrease of $474,000 over the prior year
was the result of having lower average cash balances on hand during the year
as well as a decrease in interest rates earned on funds invested during the
year, as well as increased interest expense on long-term debt.

GAINS (LOSSES) FROM INVESTMENT IN POINTBASE

      The dilution gain from PointBase represents the increase in the value of
the Company's pro- rata share in the assets of PointBase resulting from
PointBase raising funds from other investors. In fiscal 2002, the Company did
not record a dilution gain from its equity investment in PointBase, compared
to a dilution gain of $6,186,000 in fiscal 2001. There was no gain recorded as
PointBase did not raise any additional funds from other investors during the
fiscal year.

      The equity loss from PointBase represents the Company's pro- rata share
of the operating losses of PointBase. During fiscal 2002 the Company recorded
an equity loss from its investment in PointBase of $4,112,000 compared to
$4,709,000 in fiscal 2001. This decrease was the result of a decrease in
operating losses by PointBase during the fiscal year, as well as having the
reduction in the Company's ownership percentage that occurred in June 2000
affect the entire year's equity loss.

INCOME TAX EXPENSE

      During fiscal 2002, the Company recorded an income tax provision of
$297,000 as compared to a provision of $1,067,000 in fiscal 2001.

      The combined basic Canadian federal and provincial tax rate used in
determining the income tax provision for fiscal 2002 was 41.7% (2001 - 43.8%).
The decrease in the combined rate is due to the announced reduction in the
federal and provincial tax rates coming into effect during the year. The
announced federal and provincial tax rates cuts for the coming year will
further reduce the combined rate to approximately 38.6%.

      The income tax provision is higher than expected due to a combination of
factors including: the equity loss from PointBase being non- deductible for
tax purposes, other non- deductible expenses, the inability to benefit from
certain foreign tax losses incurred during the year, the effect of foreign tax
rates, the effect of the rate changes on future taxes and the manufacturing
and processing tax deduction.

      Certain of the Company's foreign subsidiaries have loss carry-for wards
for income tax purposes of approximately $4,817,000 that are not recognized in
these financial statements. These losses are available to claim against future
taxable income in the applicable tax jurisdictions.

OPERATING SEGMENTS

      The Company operates in two reportable segments, North America and
Europe. In fiscal 2002, the North American segment (which includes the
Company's Asia Pacific operations, which are currently not significant) had an
operating loss of $2,455,000 compared to an operating loss of $130,000 in
fiscal 2001. This decrease in profitability was due to several factors
including the continued losses generated from the Asia Pacific operations, the
effect of a full year of amortization of the Constellar technology and the
economic downturn experienced in North America during the year. The European
segment had operating income of $341,000 in fiscal 2002 compared to operating
income of $3,095,000 in fiscal 2001. The decrease in operating profitability
is due mainly to decreased license sales and services revenue from the
European Constellar operation and a general economic downturn in Europe
experienced during the second half of the fiscal year.

ACQUISITIONS AND INVESTMENTS

      On March 18, 2002, the Company announced its intention to make a
take-over bid for all of the shares of Idion Technology Holdings Limited
("Idion"), a South African company listed on the JSE Securities Exchange
("JSE") under the symbol IDI, in a cash bid valued at $9.8 million. On April
18, 2002, the bid was increased to $18.9 million, and subsequently, on May 8,
2002, the bid was further increased to $30.4 million. On July 4, 2002 the
Company closed its bid to acquire Idion, having not been successful in


                                                                         30
<PAGE>

completing the take-over. At May 31, 2003 the Company owned approximately
43,568,000 or 38.46% of Idion's outstanding common shares acquired at a cost
of $9,548,000.

      Should the Company decide to liquidate its investment in Idion, the sale
of these shares could result in a gain or loss depending on the circumstances
in which they are sold and subject to foreign exchange and other risks
associated with investments in JSE listed companies. Under South African
securities regulations, the Company may acquire an additional 5% of Idion's
common shares over the one-year period starting July 5, 2002, and subsequent
to that one-year period, may launch a new take-over bid. If the Company is
ultimately successful in completing the transaction, there are factors which
may impact the acquisition. These factors include, but are not limited to, the
following: risks involved in the completion and integration of the
acquisition, expected cost savings from the acquisition may not be fully
realized or realized within the expected timeframe, revenue of the combined
company may be lower than expected, the possibility of technical, logistical
or planning issues in connection with deployments, costs or difficulties
related to obtaining regulatory approvals for completing the acquisition,
costs or difficulties related to integration of the companies following the
acquisition may be greater than expected and legislative or regulatory changes
may adversely affect the businesses in which the companies are engaged.

      The investment in Idion is accounted for using the cost method, as the
Company does not have significant influence over the affairs of Idion and
cannot obtain adequate financial information from Idion to enable the Company
to account for its investment in Idion using the equity method. On January 31,
2003, shares of Idion were trading at approximately Cdn. $0.32 per share,
which would indicate a market value of $14,450,000 for the Company's
investment at that date. If a decline in market value is determined to be
other than a temporary decline in value, the Company will be required to
write-down its investment in Idion. During its latest fiscal year ended
December 31, 2002, Idion incurred a net loss of approximately U.S. $5.4
million of which approximately U.S. $2.2 million was from continuing
operations.

         On January 7, 2003, the Company acquired the technology and
certain related assets of SmartSales Inc., a developer of CRM solutions, in
a cash transaction. The Company acquired current assets valued at $15,000,
capital assets valued at $22,000 and technology valued at $332,000 for cash
consideration of $369,000. The technology acquired will be amortized over a
term of one year.

      On June 8, 2001, the Company acquired the technology and certain related
assets of BDI Systems Inc., a developer of XML-based data transformation
software products, in a cash and stock transaction. Total consideration for
the transaction was cash of $424,000 and 50,000 shares of common stock with a
value of $307,000. The assets acquired have been accounted for as acquired
technology of $424,000 and deferred compensation of $307,000. The acquisition
of technology will be amortized over a period of three years. The deferred
compensation will be amortized over two years.

      On May 18, 2001, the Company acquired the technology and certain related
assets of saipx Inc., a developer of pervasive mobile computing and turnkey
solutions for SAP, in a cash transaction. The Company acquired current assets
valued at $9,000, capital assets valued at $65,000 and technology valued at
$219,000 for cash consideration of $293,000. The acquisition has been
accounted for under the purchase method, and the technology acquired will be
amortized over a term of three years.

      Effective September 1, 2000, the Company acquired certain assets and
liabilities of Constellar, a company engaged in the business of developing and
marketing enterprise application integration products with offices in Redwood
Shores, California and London, England. The acquisition has been accounted for
under the purchase method, and the results of the continuing operations of the
Constellar business acquired by DataMirror are included from the date of
acquisition. A total of U.S. $5 million in payments relating to the Constellar
acquisition were deferred over 3 years, with U.S. $ 3 million of these
payments being contingent on revenues realized by DataMirror from the acquired
business over the three years beginning September 1, 2000. Payments of U.S. $1
million each were made in October 2001 and October 2002 in consideration of
the fixed portion of this obligation. In November 2001, a payment of $724,000
was made in payment of $856,000 of contingent consideration for the year ended
August 31, 2001 less a holdback of $132,000 related to assets which were not
realized. No payment of contingent consideration is due in respect of the year
ended August 31, 2002.

      The Company expects to continue to explore and pursue acquisitions as a
strategy to build its distribution channels, enhance its product offerings,
increase its market share in its existing markets, and achieve revenue growth.
The consideration and completion of possible acquisitions may divert
significant management time and other resources, including financial
resources, of the Company. It is not certain that future acquisitions will
achieve their business objectives.

QUARTERLY RESULTS OF OPERATIONS

      The following table sets forth certain unaudited information for each of
the eight most recent quarters ended January 31, 2003. The information has
been derived from the Company's unaudited Consolidated Financial Statements
that, in management's opinion,

                                                                            31
<PAGE>

have been prepared on a basis consistent with the audited Consolidated
Financial Statements contained elsewhere in this Annual Report and include all
adjustments necessary for a fair presentation of the information presented.
Past performance is not a guarantee of future performance, and this
information is not necessarily indicative of results for any future period.

<TABLE>

                                                           For the Years Ended January 31,


                                                 2003                                           2002
                             ---------------------------------------------- ----------------------------------------------
Quarter ending                  Apr. 30      July 31     Oct. 31    Jan. 31     Apr. 30     July 31     Oct. 31    Jan. 31
                                           (In thousands of CDN dollars, except per share data - Unaudited)

<S>                             <C>         <C>        <C>         <C>         <C>         <C>        <C>         <C>
Total revenue                   $14,142     $14,813    $15,745     $17,790     $13,545     $14,017    $14,352     $14,462

Net income (loss)                $(947)      $(186)   $(4,270)      $3,250    $(2,008)    $(1,511)     $(764)    $(1,381)

Earnings (loss) per share
  Basic                          (0.08)      (0.02)     (0.38)        0.29      (0.17)      (0.13)     (0.07)      (0.12)

  Fully diluted                  (0.08)      (0.02)     (0.38)        0.28      (0.17)      (0.13)     (0.07)      (0.12)

Weighted average number of
shares outstanding (000's)
  Basic                          11,431      11,434     11,369      11,388      11,582      11,551     11,518      11,434
  Fully diluted                  11,431      11,434     11,369      11,592      11,582      11,551     11,518      11,434

</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

      Since its inception, the Company has financed its cash requirements from
the sale of equity securities, funds provided by shareholders, bank lines of
credit, long-term debt and capital lease financing. In December 1996 the
Company completed an initial public offering of 2,000,000 common shares for
net proceeds of $9,377,000, and in September 1997 raised net proceeds of
$15,721,000 through the issue of 1,600,000 special warrants (subsequently
converted into 1,600,000 common shares). In April 2000, the Company raised net
proceeds of $34,151,000 through the issuance of 1,305,000 common shares.

      As at January 31, 2003 the Company had cash, cash equivalents and
short-term investments of $38,827,000, compared to $36,495,000 at the end of
fiscal 2002. The increase in cash, cash equivalents and short-term investments
was primarily due to increased cash flow from operations. For the year ended
January 31, 2003, cash flow from operations was $15,908,000, an increase of
$595,000 over fiscal 2002 due to a significant increase in operating profits
and an increase in the rate of collections of accounts receivable, which
resulted in a decrease in days sales outstanding to 64 at January 31, 2003
from 81 at the end of fiscal 2002. The Company's investing activities
consisted primarily of purchases of capital assets and the purchase of shares
of Idion. During fiscal 2003, capital expenditures of $1,859,000 ($1,460,000
in fiscal 2002) were financed internally and none ($165,000 in fiscal 2002)
were financed under capital lease facilities. Capital assets acquired were
primarily computer hardware and software utilized in research and development
activities and leasehold improvements to the Company's head office facilities.
The Company expects that its capital expenditures will increase in support of
higher levels of research and development activities and as its sales and
administration employee base grows. Financing activities during the year
included repayments of long-term liabilities, capital lease payments and share
capital transactions. During the fiscal year the Company used $1,557,000
($2,249,000 in fiscal 2002) in cash to repurchase its common shares under a
normal course issuer bid and raised an additional $821,000 ($747,000 in fiscal
2002) through the issuance of common shares pursuant to the Company's stock
option plans.

      The Company has available short-term bank credit facilities amounting to
approximately $3,377,000. At January 31, 2003 there was no outstanding
indebtedness under these credit facilities. Management believes that its
current cash, cash equivalents and short-term investments together with
continued positive cash flow from operations will be adequate to fund the
Company's short-term financial requirements with the exception of acquisition
related cash requirements. The Company's short-term financial requirements may
increase substantially if the Company is successful in its take-over bid for
Idion or in the event the Company makes other significant acquisitions.
Short-term financial requirements related to acquisitions may include direct
and indirect costs including restructuring and other expenses related to
integrating and refinancing the acquired business. In the short-term, the
Company does not plan on making any acquisitions that would result in
short-term financial requirements exceeding the sources of cash described
above. In the long-term, the Company may finance its long-term requirements
from the sale of equity securities, by borrowing under bank lines of credit,
by issuing long-term debt or by entering into capital lease financing
arrangements.

                                                                            32
<PAGE>

NEW ACCOUNTING RECOMMENDATIONS

      During 2002, the Financial Accounting Standards Board ("FASB") adopted
two new accounting recommendations which may have an impact on the Company's
future financial statements. The Company will adopt each of these
recommendations as of February 1, 2003 and does not anticipate any material
adverse effect to result from such adoption.

      In June 2002, FASB introduced Statement of Financial Accounting Standard
("SFAS") 146, which addresses financial accounting and reporting for costs
associated with exit or disposal activities. Prior to SFAS 146, a liability
for an exit cost was recognized at the date of an entity's commitment to an
exit plan. Under SFAS 146, a liability for a cost associated with an exit or
disposal activity is recognized when the liability is incurred. SFAS 146
applies to exit or disposal activities initiated after December 31, 2002.

      In December 2002, FASB introduced SFAS 148, amending SFAS 123, to
provide alternate methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation. The
Company has adopted this standard and determined it has no impact on its U.S.
GAAP financial information.

      In November 2001, the Accounting Standards Board ("AcSB") approved
AcG-13, an accounting guideline establishing conditions which must be
satisfied in order to apply hedge accounting. These guidelines will not affect
the Company until the fiscal year starting February 1, 2004. The company has
not yet determined the impact, if any, of these new guidelines.

OUTLOOK

      The Company will continue to pursue its strategy of developing and
marketing software solutions that allow companies to integrate, protect,
capture and audit their data. More enterprises are expected to recognize the
importance of managing data for business intelligence, enterprise application
integration and e-business applications in real-time. To establish and
maintain useful databases for these purposes, data must be captured,
transformed and flowed from the source databases that generate operational
data to separate databases such as data warehouses or web servers in
real-time. Competitive pressures are forcing more companies to be available to
their customers 24 hours a day. Having key operational systems unavailable due
to planned (system maintenance, upgrade or backup) or unexpected (hardware or
communications failure) system outages is no longer acceptable. The US Food
and Drug Administration ("FDA") is mandating that all FDA-regulated firms
provide electronic audit trails, also known as E-Records, for FDA examination.
It is expected that federal regulators in other industries will follow suit
and mandate similar E-Records requirements. The Company's LiveBusiness
solutions are designed to help companies address all these needs. It is the
Company's intention to try to acquire the remaining shares of Idion from its
existing management.

     Some of the key growth issues the Company faces include building and
managing its direct and indirect distribution channels, increasing its
marketing efforts to enhance general market awareness of its products,
continuing to improve the efficiency and functionality of its existing
products, introducing new products, hiring quality people and maintaining
adequate management reporting and information systems. The Company continues
to invest in these areas in order to achieve its growth objectives.

     During fiscal 2003 the Company adjusted its business model to drive a
significant improvement in operating profits. We believe that these
adjustments have positioned us to continue to drive increased levels of
profitability in the coming year. The Company's balance sheet is strong and we
remain confident that our LiveIntegration, LiveResiliency, LiveAudit and
LiveCapture solutions will continue to resonate in the marketplace. We believe
our near and long-term prospects for success remain strong, but are aware of
the uncertain economic and business conditions that could cause fluctuations
in operating results. Nevertheless, the Company remains committed to its
objective of generating significant value for its shareholders, customers,
business partners and employees.


                                                                            33
<PAGE>

ITEM 6.         Directors, Senior Management and Employees

A.    Directors and Senior Management

         The following table sets forth the name, municipality of residence,
principal occupation and month of election of each of the directors of the
Company on the date of this form:

<TABLE>
<CAPTION>

Name and
Municipality of Residence             Principal Occupation                       Elected Director
-------------------------             --------------------                       ----------------

<S>                                   <C>                                        <C>
P. KIRK DIXON....................     Secretary and Executive Vice               November 1997
Midhurst, Ontario                     President, Global Operations of the
                                      Company

DONALD L. LENZ(1)(3).............     Managing Director of Newport Partners      September 1999
Toronto, Ontario                      Inc.

BRYAN E. PLUG(1)(2) .............     Chief Executive Officer of Kintana,        October 1996
Saratoga, California                  Inc.

KEITH POWELL(2)(3)...............     Principal, Keith Powell Consulting         May 2001
Mississauga, Ontario                  Inc.

NIGEL W. STOKES (3)..............     Chairman, President and Chief              December 1995
Toronto, Ontario                      Executive Officer of the Company

E. HERMAN WALLENBURG.............     Chief Scientist of the Company             November 1997
Toronto, Ontario

DONALD WOODLEY(1)(2)                  President of The Fifth Line Enterprise     May 2001
Town of Mono, Ontario

</TABLE>
_________________
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
(3) Member of the Corporate Governance Committee.

         The term of office for all directors expires at the time of the
election of their successors at the close of the next annual meeting of
shareholders of the Company.


Officers

         The following table sets forth the name, municipality of residence,
position with the Company and principal occupation of each of the officers of
the Company on the date of this form:

Name and                                         Position with the Company
Municipality of Residence                        and Principal Occupation
-------------------------                        ------------------------

PETER F. CAULEY .................                Vice President, Finance and
Toronto, Ontario                                 Chief Financial Officer

P. KIRK DIXON....................                Secretary and Executive Vice
Midhurst, Ontario                                President, Global Operations

STEWART A. RITCHIE...............                Vice President, Sales, Americas
Newmarket, Ontario                                and Asia Pacific

NIGEL W. STOKES..................                Chairman, President and Chief
Toronto, Ontario                                 Executive Officer

                                                                            34

<PAGE>

DONALD G. SYMONDS................                Vice President, Sales, EMEA
London, United Kingdom

E. HERMAN WALLENBURG.............                Chief Scientist
Toronto, Ontario

         As a group, as at January 31, 2003 directors and senior officers
owned, directly or indirectly, or exercised control or direction over
3,068,289 (approximately 26.76% of the total outstanding on such date) Common
Shares of the Company. The information as to shares owned directly or over
which control or direction is exercised by the directors and officers, but
which are not registered in their names, not being within the knowledge of the
Company, has been furnished by such directors and officers.

         The principal occupations of each of the directors and officers of
the Company for the five years preceding the date of this Form and additional
biographical information is set forth below:

         Peter F. Cauley joined the Company in November 1996 as the Company's
Corporate Controller and also served as Interim CFO from December 1999 to
August 2000. In January 2001 Mr. Cauley was appointed Vice President, Finance
and Chief Financial Officer.

         P. Kirk Dixon co-founded the Company with Mr. Wallenburg in November
1993, and was Secretary and Treasurer of the Company until appointed as
Executive Vice President, Implementation in December 1995. Mr. Dixon was
appointed as Executive Vice President, Development and Support of the Company
in March 2000. Mr. Dixon was appointed to his current position as Executive
Vice President, Global Operations in March 2001. Mr. Dixon has been a director
of the Company since November 1997.

         Donald L. Lenz is a founding partner of Newport Partners Inc., an
independent investment bank based in Toronto, Canada. Mr. Lenz also sits on
several boards including those of Mad Catz Interactive Inc., Cancer Care
Ontario, Ontario Genomics Institute and The Laidlaw Foundation. He is also
Vice Chairman of the Ontario Research and Development Challenge Fund and Chair
of Cancer Care Ontario Central East Region. From 1986 to 1999, Mr. Lenz was a
senior partner with the Investment Banking Division of RBC Dominion Securities
Inc. Mr. Lenz has been a director of the Corporation since September 1999.

         Bryan E. Plug was President of SAP Canada Inc., an integrated
business applications software vendor, from 1991 until July 1997. Mr. Plug was
the first President and Chief Executive Officer of Pandesic LLC (the Internet
company from SAP and Intel) from July 1997 to May 1998. Mr. Plug was
President, Chief Executive Officer and Chairman of the Board of SMART
Technologies, Inc., a developer and supplier of customer-driven Enterprise
Relationship Management software, from June 1998 to July 1999. Mr. Plug is
currently Chief Executive Officer of Kintana, Inc. (formerly Chain Link
Technologies, Inc.), a leading provider of e-Business applications management
software based in Sunnyvale, California. Mr. Plug has been a director of the
Corporation since October 1996.

         Keith Powell is currently the principal of Keith Powell Consulting
Inc., an information technology consulting firm and a Partner in XPV Capital
Corp., a venture capital company investing in early stage communications
companies. Mr. Powell also sits on several other boards including DMTI Spatial
Inc., electroBusiness.com Inc., ClientLogic Corporation, Diversinet
Corporation, Selkirk Financial Technologies Inc., Sumitomo Mitsui Banking
Corporation of Canada and the Arthritis and Autoimmunity Research Center
Foundation. From 1980 to 2000, Mr. Powell held a number of positions with
Nortel Networks, including Senior Vice President, Information Services & Chief
Information Officer from 1996 to 2000. Mr. Powell was appointed as a director
of the Corporation in May 2001.

         Stewart A. Ritchie has been with the Company since October 1998 and
is currently Vice President, Sales, Americas and Asia Pacific of the Company.
Prior to joining the Company, Mr. Ritchie managed channel sales and enterprise
accounts for Network Associates (Canada) from February 1995 to October 1998.

         Nigel W. Stokes founded Nidak Associates Inc. ("Nidak"), a
client/server and database consulting firm, in 1986. Mr. Stokes was President
of Nidak until the firm was sold to SHL Systemhouse Inc., a worldwide systems
integration and computer consulting firm, in 1993 at which time Mr. Stokes
became a Managing Director of that organisation. Mr. Stokes joined the Company
in October 1994 and became Chairman and Chief Executive Officer in December
1995. Mr. Stokes assumed the role of President of the Company in August 1998.

         Donald G. Symonds was named Vice President, Sales, EMEA of the
Company in September 1999. From April 1996 to September 1999 Mr. Symonds held
other positions with the Company including Director, Business Planning, EMEA,
Director, Channel Operations (EMEA) and Channel Consultant. Prior to joining
the Company, Mr. Symonds held a variety of professional and senior management
positions with IBM Canada and also was employed independently as a marketing
consultant.

                                                                            35
<PAGE>

         E. Herman Wallenburg co-founded the Company with Mr. Dixon in
November 1993, and was President of the Company until appointed as Executive
Vice President, Research and Development in December 1995. Mr. Wallenburg was
appointed to his current position as Chief Scientist of the Company in March
2000. Mr. Wallenburg has been a director of the Company since November 1997.

         Donald Woodley is currently the President of The Fifth Line
Enterprise, a consulting firm engaged in providing strategic advisory services
to the Canadian information technology industry. From February 1997 to October
1999, Mr. Woodley was President of Oracle Corporation Canada Inc. From
September 1987 to January 1997, Mr. Woodley was President of Compaq Canada
Inc. Mr. Woodley was appointed as a director of the Corporation in May 2001.
Mr. Woodley also sits on several boards including those of TELUS Corporation,
Steam Whistle Brewing, and OnX Enterprise Solutions Inc. Mr. Woodley also
serves as the Chair of the Board of Governors of The Stratford Festival of
Canada.


B.    Compensation

1.       Summary Compensation Table

     The following table sets forth information concerning the compensation
earned during the financial years ended January 31, 2003, 2002 and 2001 by the
three directors who are employed by the Company.

<TABLE>
                                                          Summary Compensation Table
<CAPTION>

===================================================================================================================================
                                               Annual Compensation                     Long Term Compensation
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                        Awards              Payouts
-----------------------------------------------------------------------------------------------------------------------------------
                                                                            Securities   Restricted
                                                            Other Annual      Under       Shares or     Long Term      All Other
        Name and          Financial    Salary      Bonus    Compensation     Options     Restricted     Incentive     Compensation
   Principal Position        Year       ($)         ($)         ($)          Granted     Share Units  Plan Payouts        ($)
                                                                              (# of          ($)           ($)
                                                                              Common
                                                                             Shares)
-----------------------------------------------------------------------------------------------------------------------------------
<S>                          <C>      <C>         <C>                         <C>
Nigel W. Stokes              2003     375,000     150,000       Nil           40,000         Nil           Nil          Nil
Chairman, President and
Chief Executive Officer      2002     275,000       Nil         Nil            Nil           Nil           Nil          Nil

                             2001     316,667     125,000       Nil          100,000         Nil           Nil          Nil
-----------------------------------------------------------------------------------------------------------------------------------
P. Kirk Dixon                2003     240,000      50,000       Nil           10,000         Nil           Nil          Nil
Secretary and Executive
Vice President, Global       2002     200,000       Nil         Nil            Nil           Nil           Nil          Nil
Operations
                             2001     230,000      50,000       Nil           50,000         Nil           Nil          Nil
-----------------------------------------------------------------------------------------------------------------------------------
Herman Wallenburg            2003     170,000       Nil         Nil           5,000          Nil           Nil          Nil
Chief Scientist
                             2002     150,000       Nil         Nil            Nil           Nil           Nil          Nil

                             2001     163,333       Nil         Nil            Nil           Nil           Nil          Nil
===================================================================================================================================


</TABLE>
                                                                            36
<PAGE>

2.    Stock Options

        Option Grants During the Most Recently Completed Financial Year

     The following table sets out the number of options granted during the
year ended January 31, 2003 to the three directors employed by the Company.

<TABLE>
<CAPTION>

========================= ================== ================ ================== ============================ ================
                                               % of Total                          Market Value of Common
                           Securities Under      Options        Exercise Price   Shares on Date of Grant(1)
         Name and          Options Granted     Granted to
    Principal Position    (# Common Shares)   Employees in     ($/Common Share)        ($/Common Share)       Expiration Date
                                               Fiscal Year

------------------------- ------------------ ---------------- ------------------ ---------------------------- ----------------
<S>                             <C>               <C>                <C>                    <C>                     <C> <C>
Nigel W. Stokes
Chairman, President and         40,000            14.6%              11.54                  11.54              June 30, 2006
Chief Executive Officer
------------------------- ------------------ ---------------- ------------------ ---------------------------- ----------------
P. Kirk Dixon
Secretary and Executive         10,000            3.65%              11.54                  11.54              June 30, 2006
Vice President, Global
Operations
------------------------- ------------------ ---------------- ------------------ ---------------------------- ----------------
Herman Wallenburg
Chief Scientist                 5,000             1.83%              11.54                  11.54              June 30, 2006
------------------------- ------------------ ---------------- ------------------ ---------------------------- ----------------
</TABLE>

Notes:
(1)  The market value of the Common Shares on the date of the grant is
     determined by taking the average of the closing price of the Common
     Shares on the Toronto Stock Exchange for the 5 immediately preceding
     trading days.


 Aggregated Option Exercised During the Most Recently Completed Financial Year
                     and Financial Year-End Option Values

     The following table sets out the number of options exercised during the
year ended January 31, 2003 and the number of exercisable/unexercisable
options held as at January 31, 2003 by the three directors employed by the
Company.

<TABLE>
<CAPTION>
======================== ============= =========== =================================== ====================================
                           Securities  Aggregate
                          Acquired on    Value      Number of Unexercised Options at    Value of Unexercised in-the-Money
         Name and           Exercise   Realised             January 31, 2003             Options at January 31, 2003(1)
     Principal Position       (#)         ($)
                                                   ----------------- ----------------- ----------------- ------------------
                                                     Exercisable      Unexercisable      Exercisable       Unexercisable
                                                         (#)               (#)               ($)                ($)
------------------------ ------------- ----------- ----------------- ----------------- ----------------- ------------------
<S>                        <C>           <C>           <C>                <C>               <C>               <C>
Nigel W. Stokes
Chairman, President and       Nil         Nil          110,000            30,000            4,600             13,800
Chief Executive Officer
------------------------ ------------- ----------- ----------------- ----------------- ----------------- ------------------
P. Kirk Dixon
Secretary and Executive       Nil         Nil           52,500            7,500             1,150              3,450
Vice President, Global
Operations
------------------------ ------------- ----------- ----------------- ----------------- ----------------- ------------------
Herman Wallenburg
Chief Scientist               Nil         Nil           1,250             3,750              575               1,725
------------------------ ------------- ----------- ----------------- ----------------- ----------------- ------------------
</TABLE>

Notes:
(1)   Based on the closing trading price of the Common Shares on The Toronto
      Stock Exchange on January 31, 2003 of $12.00.


     The Company's directors, executive officers and senior officers are
eligible to participate in the Company's Share Purchase Plan. The purpose of
the Share Purchase Plan is to provide long-term incentives to attract,
motivate and retain key employees, officers,


                                                                            37
<PAGE>

directors and consultants providing services to the Company. Shares issued
under the Share Purchase Plan are issued for market consideration determined
by taking the average of the closing price of the Shares on the Toronto Stock
Exchange for the five immediately preceding trading days prior to the date of
issuance. The Share Purchase Plan provides that the Company may loan money to
participants to purchase Common Shares of the Company. The Company has not
loaned money to participants since the provisions of the Sarbanes-Oxley Act
prohibiting such loans came into effect. Loans made prior to the coming into
effect of the Sarbanes-Oxley Act are grandfathered. Repayment of these loans
is secured by a pledge of the Common Shares purchased with the proceeds of the
loan and such Common Shares are deposited with and held by a custodian until
the loan has been repaid. Prior to the coming into effect of the
Sarbanes-Oxley Act, the Company granted interest free loans to certain of its
directors to purchase Common Shares under the Share Purchase Plan. The loans
are to be repaid from quarterly directors' fees due to such persons as they
are earned, and may also be repaid in whole or in part at any time without
penalty. The full principal amount of a director's loan is immediately due and
payable on the date a director ceases to be a director of the Company. The
aggregate indebtedness to the Company of all officers, directors, employees
and former officers, directors and employees in respect of the Share Purchase
Plan as at April 30, 2003 was $5,000. The following table sets out the
indebtedness of the officers and directors of the Company to the Corporation
in connection with the purchase of Common Shares under the Share Purchase
Plan:

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

Name and Principal   Involvement of     Largest Amount          Amount           Financially        Security for
Position              the Company        Outstanding      Outstanding as at        Assisted         Indebtedness
                                      During the Fiscal     April 30, 2003       Purchases of
                                          Year Ended                            Common Shares
                                       January 31, 2003                       During the Fiscal
                                                                                  Year Ended
                                                                               January 31, 2003
-------------------- ---------------- ------------------- ------------------- ------------------- ------------------

<S>                                         <C>                 <C>                   <C>
Donald L. Lenz,          Lender             22,500              2,500                 0           Pledge of Common
director                                                                                               Shares
-------------------- ---------------- ------------------- ------------------- ------------------- ------------------

Donald Woodley,          Lender             25,000              2,500                 0           Pledge of Common
director                                                                                               Shares
==================== ================ =================== =================== =================== ==================
</TABLE>


     No officer or director or former officer or director or any associate of
any such persons had any indebtedness to the Company or any of its
subsidiaries during the financial year ended January 31, 2003 except as set
out above.

     During the fiscal year ending on January 31, 2003, directors of the
Company who were not employees of the Company were entitled to be paid a fee
of $2,500 for each quarterly meeting of the Board of Directors attended.
Directors are also eligible to participate in the Company's Executive Stock
Compensation Plan and Share Purchase Plan.

     The Company maintains liability insurance for its directors and officers
acting in their respective capacities. During the fiscal year ended January
31, 2003, the Company maintained directors and officers insurance coverage in
an aggregate amount of US $20 million, subject to a US $100,000 loss payable
by the Company. The annual premium for this coverage is US $162,000.

EMPLOYMENT AGREEMENTS

     The Company entered into an employment agreement of indefinite
duration with Mr. Nigel Stokes, Chairman, President and Chief Executive
Officer dated as of March 25, 2002. This employment agreement provides for
an annual salary of $375,000 effective February 1, 2002, and also provided
for a retroactive salary and bonus adjustment payment of $150,000 covering
the period from September 30, 2000 to January 31, 2002 during which Mr.
Stokes had continued his employment with the Company under the terms of a
previous employment agreement that had expired on September 30, 2000. Mr.
Stokes' agreement also provides that he may receive an annual performance
bonus of up to $300,000, the amount to be determined by the Board of
Directors on the recommendation of the Compensation Committee based upon
consideration of the financial performance of the Company in respect of
each fiscal period. In addition, Mr. Stokes is eligible to receive an
additional performance bonus of up to $300,000, the amount to be determined
by the Board of Directors on the recommendation of the Compensation
Committee based upon consideration of over-achievement of the financial
performance of the Company in respect of each fiscal period. Mr. Stokes is
also eligible to participate in the Company's group benefit plans and
Executive Stock Compensation Plan. The employment agreement also provides
that in the event of termination of the executive's employment, he will not
compete with the Company for a period of eighteen months following that
date. The employment agreement provides that the Company may terminate Mr.
Stokes' employment without cause by making a lump


                                                                            38
<PAGE>

sum payment of an amount equal to two times his annual salary thereunder.
The employment agreement automatically renews each year and is subject to
annual compensation review.

     The Company has entered into an employment agreement of indefinite
duration with Mr. Kirk Dixon, Executive Vice President, Development and Global
Operations dated April 23, 2002. This employment agreement provides for an
annual salary of $240,000 effective February 1, 2002 and also provided for a
retroactive bonus payment of $50,000 covering the period from May 8, 2001 to
January 31, 2002 during which Mr. Dixon had continued his employment with the
Company under the terms of a previous employment agreement that had expired on
May 8, 2001. Mr. Dixon's agreement also provides that he may receive an annual
performance bonus of up to $125,000, the amount to be determined by the Board
of Directors on the recommendation of the Compensation Committee based upon
consideration of the financial performance of the Company in respect of each
fiscal period. Mr. Dixon is also eligible to participate in the Company's
group benefit plans and Executive Stock Compensation Plan. The agreement also
provides that in the event of termination of the executive's employment, he
will not compete with the Company for a period of eighteen months following
that date. The employment agreement provides that the Company may terminate
Mr. Dixon's employment without cause by making a lump sum payment of an amount
equal to one times his annual salary thereunder. The employment agreement
automatically renews each year and is subject to annual compensation review.

     The Company has entered into an employment agreement dated as of June 14,
2002 with Mr. Herman Wallenburg, Chief Scientist. This employment agreement
provides for an annual salary of $170,000, retroactive to February 1, 2002.
Mr. Wallenburg's agreement also provides that he may receive an annual
performance bonus of up to $20,000, the amount to be determined by the Board
of Directors on the recommendation of the Compensation Committee based upon
consideration of the financial performance of the Company in respect of each
fiscal period during the duration of the employment agreement and any
extension or renewal thereof. Mr. Wallenburg is also eligible to participate
in the Company's group benefit plans and Executive Stock Compensation Plan.
This agreement also provides that in the event of termination of the
executive's employment, he will not compete with the Company for a period of
eighteen months following that date. The employment agreement provides that
the Company may terminate Mr. Wallenburg's employment without cause by making
a lump sum payment of an amount equal to one half his annual salary
thereunder.

      There are no other agreements with directors providing for benefits upon
termination of employment.

C.         Board Practices

         The Board of Directors adopted a new charter for the Audit Committee
and a formal charter for the Compensation Committee at its meeting on March 3,
2003. The Audit Committee Charter is attached to this Form as Exhibit 6.1. The
Compensation Committee Charter is attached to this Form as Exhibit 6.2. The
Audit Committee provides assistance to the Board of Directors in fulfilling
its oversight responsibility to the shareholders, potential shareholders, the
investment community, and others relating to the Company's financial
statements and the financial reporting process, the systems of internal
accounting and financial controls, the internal audit function, the annual
independent audit of the Company's financial statements, and the legal
compliance and ethics programs as established by management and the Board and
as required by applicable law. The Audit Committee is currently composed of
Mr. Lenz, Mr. Plug and Mr. Woodley. The Board of Directors has determined that
Mr. Lenz, Mr. Plug and Mr Woodley are independent of management under
applicable laws, rules and listing standards. The Compensation Committee
reviews and approves the compensation of the directors and the CEO and advises
the Board and management on compensation and incentive policy. The
Compensation Committee is currently composed of Mr. Plug, Mr. Powell and Mr.
Woodley. The Board of Directors has determined that Mr. Plug, Mr. Powell and
Mr. Woodley are independent of management under applicable laws, rules and
listing standards.


D.         Employees

<TABLE>
------------------------------------------------------------------------------------------------
                                         Number of Employees
------------------------------------------------------------------------------------------------
----------------------- ------------------------ ---------------------- ------------------------
                         As at January 31, 2003  As at January 31, 2002  As at January 31, 2001
----------------------- ------------------------ ---------------------- ------------------------
<S>                               <C>                      <C>                    <C>
North America                     212                      245                    219
----------------------- ------------------------ ---------------------- ------------------------
Europe                             59                      61                      94
----------------------- ------------------------ ---------------------- ------------------------
Other                              5                        5                      6
----------------------- ------------------------ ---------------------- ------------------------
Total                             276                      311                    319
----------------------- ------------------------ ---------------------- ------------------------

----------------------- ------------------------ ---------------------- ------------------------
Research & Development             82                      96                      84
----------------------- ------------------------ ---------------------- ------------------------
Sales & Marketing                 151                      167                    190
----------------------- ------------------------ ---------------------- ------------------------
Other                              43                      48                      45
----------------------- ------------------------ ---------------------- ------------------------
Total                             276                      311                    319
----------------------- ------------------------ ---------------------- ------------------------
</TABLE>


                                                                         39
<PAGE>


E.         Share Ownership

     The following table sets forth with respect to each director the number
of Common Shares of the Company owned beneficially, or over which control or
direction was exercised, by such person at the date of this form. No special
voting rights attach to any of the following Common Shares. Percentages are
calculated based on the 11,428,837 Common Shares of the Company outstanding on
April 30, 2003.

Director                               Common Shares        Percentage of Class
--------                               -------------        -------------------


P. Kirk Dixon                            591,724(1)                5.15%

Donald L. Lenz                           38,933(2)                 0.34%

Bryan E. Plug                            30,000(3)                 0.26%

Keith Powell                             10,000(4)                 0.09%

Nigel W. Stokes                         2,108,563(5)               18.2%

E. Herman Wallenburg                     541,240(6)                4.74%

Donald Woodley                           16,663(7)                 0.15%
__________

(1) Includes 55,000 Options exercisable either currently or within 60 days.
(2) Includes 20,000 Options exercisable either currently or within 60 days.
(3) Includes 10,000 Options exercisable either currently or within 60 days.
(4) Includes 10,000 Options exercisable either currently or within 60 days.
(5) Includes 120,000 Options exercisable either currently or within 60 days
    and 33,750 Options exercisable either currently or within 60 days granted to
    his spouse.
(6) Includes 2,500 Options exercisable either currently or within 60 days.
(7) Includes 10,000 Options exercisable either currently or within 60 days.


      The following table sets forth the outstanding options to acquire Common
Shares granted to each director as at the date of this Form. Each option was
granted at an exercise price equal to the market value of the Common Shares on
the date of the grant which was determined by taking the average of the
closing price of the Common Shares on the Toronto Stock Exchange for the 5
immediately preceding trading days. There was no purchase price in respect of
any of the options.

-------------------- ----------------------- --------------- -------------------
Director             Number of Common Shares Exercise Price  Expiration Date
-------------------- ----------------------- --------------- -------------------
P. Kirk Dixon        50,000                  $13.51          May 29, 2005
-------------------- ----------------------- --------------- -------------------
                     10,000                  $11.54          March 18, 2007
-------------------- ----------------------- --------------- -------------------

-------------------- ----------------------- --------------- -------------------
Nigel W. Stokes      100,000                 $13.51          May 29, 2005
-------------------- ----------------------- --------------- -------------------
                     40,000                  $11.54          March 18, 2007
-------------------- ----------------------- --------------- -------------------

-------------------- ----------------------- --------------- -------------------
Herman Wallenburg    5,000                   $11.54          March 18, 2007
-------------------- ----------------------- --------------- -------------------

-------------------- ----------------------- --------------- -------------------
Donald L. Lenz       20,000                  $6.44           September 14, 2004
-------------------- ----------------------- --------------- -------------------

-------------------- ----------------------- --------------- -------------------
Keith Powell         20,000                  $6.28           June 30, 2006
-------------------- ----------------------- --------------- -------------------

-------------------- ----------------------- --------------- -------------------
Bryan E. Plug        20,000                  $9.06           December 31, 2005
-------------------- ----------------------- --------------- -------------------

-------------------- ----------------------- --------------- -------------------
Donald Woodley       20,000                  $6.28           June 30, 2006
-------------------- ----------------------- --------------- -------------------

                                                                         40
<PAGE>


Employee Stock Option Plan

     The Company has adopted an employee stock option ("Option") plan (the
"Plan"). All bona fide full-time employees of and all others who provide
services to the Company or any of its subsidiaries and who are designated by
the Company as being eligible to participate in the Plan will be eligible to
participate in the Plan ("Eligible Participants", and actual participants
"Participants"). The Plan was originally approved by the Board and the
Company's shareholders on December 5, 1996 and November 20, 1996 respectively.
The Board and shareholders approved amendments to the Plan which were
effective on May 25, 1999 and June 14, 2000 which increased the number of
shares under the Plan to 2,000,000 and removed directors and officers as
Eligible Participants under the Plan, respectively. The Board may, in its
absolute discretion, add to, amend, vary, cancel, discontinue or terminate the
Plan or any Options granted thereunder, at any time without notice. Any such
amendment, will, if required, be subject to the prior approval of, or
acceptance by, any stock exchange or regulatory body having jurisdiction over
the Company's securities. The Plan is not subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended, and is not
qualified under Section 401(a) of the United States Internal Revenue Code of
1986, as amended (the "Code").

     The purpose of the Plan is to provide long-term incentives to attract,
motivate and retain key employees and consultants providing services to the
Company. The Plan will be administered by the Board or a committee of the
Board to which such administrative authority is delegated by the Board. The
Board has the power to make rules and regulations to administer the Plan, and
to interpret the provisions and rules of the Plan. The Board's determination
of all questions arising under the Plan are final and binding on all
Participants. The Company maintains detailed records of each Option granted,
including number of options granted, date of grant, earliest and latest
exercise dates, vesting dates and exercise price.

     The maximum number of Common Shares reserved for issuance upon the
exercise of all Options granted under the Plan may not exceed 2,000,000,
provided however, that pursuant to Section 6 of the Plan, the number of Shares
subject to Options granted will be adjusted by the Board to reflect
adjustments in the number of Common Shares arising as a result of subdivisions
or consolidation of Common Shares, capital reorganization, reclassification or
change of outstanding equity shares, mergers, consolidations, or amalgamation.
If any Option is terminated, cancelled or has expired without being fully
exercised, any unissued Common Shares which have been reserved to be issued
upon the exercise of the Option will become available to be issued upon the
exercise of Options subsequently granted under the Plan, provided that any
such termination or cancellation of Options will be conducted in accordance
with the applicable rules of any stock exchange in Canada upon which the
Common Shares of the Company are listed.

     The Board will determine, in its sole discretion, which Eligible
Participants will be granted Options pursuant to the Plan. Participation in
the Plan is entirely voluntary. An Option granted under the Plan may not be
assigned, encumbered or otherwise disposed of by the Participant, otherwise
than by will or by the laws of succession. The Board will designate the
number, price, earliest and latest exercise dates and vesting period of Common
Shares that a Participant is entitled to purchase under the Plan, as well as
whether an option granted to a U.S. holder may be an incentive stock option
("ISO"). The number of Common Shares reserved for issuance under the Plan to
any one person may not exceed 5% of the Outstanding Issue and the number of
Common Shares reserved for issuance to Insiders under the Plan may not exceed
10% of the Outstanding Issue. The option price per Common Share will be
determined by the Board, but may not be less than the weighted average trading
price for the Common Shares on The Toronto Stock Exchange for the five (5)
business days immediately preceding the date of the Option grant. The Board
may designate the earliest and latest dates upon which an Option may be
exercised, provided however, that such dates may be as early as the grant
date, but no later than ten years following the grant date. Unless specified
otherwise, 20% of a Participant's Options will vest each year over a five year
period.

     Unless otherwise determined by the Board, if a Participant ceases to be
an Eligible Participant for any reason other than death, any Options held by
such Participant which have not been exercised will immediately cease and
terminate and be of no further force or effect whatsoever regardless of
whether the Options have vested or not. If a Participant ceases to be an
Eligible Participant on account of death, and at the time of death that person
has not previously had his or her rights under the Plan terminated, any
Options which at the time of death have vested and were exercisable, may be
exercised for up to 180 days following the death (or the expiry date of the
Option, if earlier). Any Options which at the time of death have not vested
may, at the discretion of the Company and upon its written consent, be
exercised for up to 90 days following the death (or the expiry date of the
Option, if earlier). In the event of a take-over bid, the Board may, in its
discretion, give its express consent to the immediate exercise of any Options
held by Participants, regardless of whether such Options have vested.

     A Participant's Options will terminate and may not be exercised after the
latest exercise date, as determined by the Board, which may not be later than
10 years after the Option was granted. A Participant must provide the Company
with written notice of any intention to exercise Options. Upon satisfactory
payment of the Option, the Participant will be entitled to a certificate
representing that number of Common Shares being exercised. No Participant will
have any rights as a shareholder until the Common Shares have been paid for in
full. Subject to applicable law, the Company may, in its discretion, make
loans, or provide guarantees for loans, on terms approved of by the Company,
to assist Participants in the purchase of Common Shares upon the exercise of
Options.

                                                                         41
<PAGE>


Executive Stock Option Plan

     The Company has adopted an executive stock option plan (the "Executive
Plan"). The Executive Plan was approved by the Board and the Company's
shareholders on April 28 and May 30 2000 and June 14, 2000, respectively. All
members of the board of directors and all bona fide full-time officers of the
Company or any of its subsidiaries who are designated by the Company as being
eligible to participate in the Plan will be eligible to participate in the
Executive Plan ("Eligible Executives", and those actually participating "Plan
Executives"). The Company may, in its absolute discretion, add to, amend,
vary, cancel, discontinue or terminate the Executive Plan or any Options
granted thereunder, at any time without notice. Any such amendment, will, if
required, be subject to the prior approval of, or acceptance by, any stock
exchange or regulatory body having jurisdiction over the Company's securities.
The Executive Plan is not subject to the provisions of the Employee Retirement
Income Security Act of 1974, as amended, and is not qualified under Section
401(a) of the United States Internal Revenue Code of 1986, as amended (the
"Code").

     The purpose of the Executive Plan is to provide long-term incentives to
attract, motivate and retain key executive officers and directors of Company.
The Executive Plan will be administered by or under the authority of the Board
or a person or committee to which such administrative authority is delegated
by the Board. The Company has the power to make rules and regulations to
administer the Executive Plan, and to interpret the provisions and rules of
the Executive Plan. The Company's determination of all questions arising under
the Executive Plan are final and binding on all Plan Executives. The Company
maintains detailed records of each Option granted, including number of options
granted, date of grant, earliest and latest exercise dates, vesting dates and
exercise price. The maximum number of Common Shares reserved for issuance upon
the exercise of all Options granted under the Executive Plan is currently
500,000, provided however, that pursuant to Section 7 of the Executive Plan,
the number of Common Shares subject to Options granted will be adjusted to
reflect adjustments in the number of Common Shares arising as a result of any
subdivisions or consolidation of Common Shares, capital reorganization,
reclassification or change of outstanding equity shares, merger,
consolidation, or amalgamation. On March 3, 2003, the Board of Directors,
subject to approval of shareholders and the Toronto Stock Exchange, adopted an
amendment to the Executive Plan to increase the maximum number of Common
Shares issuable upon exercise of options under the Executive Plan to 800,000.
It is expected that the Company's shareholders will approve the amendment at
the Annual and Special Meeting of the shareholders to be held on June 12,
2003.

     The Company will determine, in its sole discretion, which Eligible
Executives will be granted Options pursuant to the Executive Plan.
Participation in the Executive Plan is entirely voluntary. An Option granted
under the Executive Plan may not be assigned, encumbered or otherwise disposed
of by the Plan Executive, otherwise than by will or by the laws of succession.
The Company will designate the number, price, earliest and latest exercise
dates and vesting periods of Common Shares that a Plan Executive is granted
under the Executive Plan, as well as whether an option granted to a U.S.
holder may be an incentive stock option ("ISO").

     The number of Common Shares reserved for issuance under the Executive
Plan to any one person may not exceed 5% of the Outstanding Issue and the
number of Common Shares reserved for issuance to Insiders under the Executive
Plan may not exceed 10% of the Outstanding Issue. The option price per Common
Share will be determined by the Company, but may not be less than the weighted
average trading price for the Common Shares on The Toronto Stock Exchange for
the five (5) business days immediately preceding the date of the Option grant.
The Company may designate the earliest and latest dates upon which an Option
may be exercised, provided however, that such dates may be as early as the
grant date, but no later than ten years following the grant date. Unless
specified otherwise, 25% of a Plan Executive's Option will vest each year over
a four year period.

     Unless otherwise determined by the Company, if a Plan Executive ceases to
be an Eligible Executive for any reason other than death, any Options held by
such Plan Executive which have not been exercised will immediately cease and
terminate and be of no further force or effect whatsoever regardless of
whether the Options have vested or not. If a Plan Executive ceases to be an
Eligible Executive on account of death, and at the time of death that person
has not previously had his or her rights under the Executive Plan terminated,
any Options which at the time of death have vested and were exercisable, may
be exercised for up to 180 days following the death (or the expiry date of the
Option, if earlier). Any Options which at the time of death have not vested
may, at the discretion of the Company and upon its written consent, be
exercised for up to 90 days following the death (or the expiry date of the
Option, if earlier). In the event of a take-over bid, the Board may, in its
discretion, give its express consent to the immediate exercise of any Options
held by Plan Executives, regardless of whether such Options have vested.

     A Plan Executives Options will terminate and may not be exercised after
the latest exercise date for such options. A Plan Executive must provide the
Company with written notice of any intention to exercise Options. Upon
satisfactory payment of the Option exercise price, the Plan Executive will be
entitled to a certificate representing that number of Common Shares being
purchased upon exercise of the Option. No Plan Executive will have any rights
as a shareholder until the Common Shares have been paid for in full. Subject
to applicable law, the Company may, in its discretion, make loans, or provide
guarantees for loans, on terms approved of by the Company, to assist Plan
Executive's in the purchase of Common Shares upon the exercise of Options.


                                                                         42
<PAGE>

SHARE PURCHASE PLAN

     The Company has adopted a share purchase plan (the "Purchase Plan"). The
Purchase Plan was originally approved by the Board and the Company's
shareholders on December 5, 1996 and November 20, 1996 respectively. On August
27, 2001, the Directors approved amendments to the Purchase Plan effective as
of July 24, 2001. All directors, officers and employees of the Company or of
any of its subsidiaries or affiliates and others who provide services to the
Company or any of its subsidiaries or affiliates may be eligible to
participate in the Purchase Plan ("EPPP", and those participating "PPP").
Generally, the Company may, in its absolute discretion, amend, suspend,
discontinue or terminate the Purchase Plan at any time without notice.
However, any such amendment, will, if required, be subject to the prior
approval of, or acceptance by, any stock exchange or regulatory body having
jurisdiction over the Company's securities and no such amendment or
termination may be made at any time which has a material adverse effect upon
the existing rights of a PPP in respect of Common Shares which have been
acquired under the Purchase Plan, prior to the date of such amendment or
termination without his or her consent in writing. Upon termination of the
Purchase Plan, all Loans to PPPs will either (i) continue until their
termination or maturity on the terms and conditions thereof, or (ii) at the
discretion of each PPP, be paid in full. The Purchase Plan is not subject to
the provisions of the Employee Retirement Income Security Act of 1974, as
amended, and is not qualified under Section 401(a) of the United States
Internal Revenue Code of 1986, as amended (the "Code").

     The purpose of the Purchase Plan is to provide long-term incentives to
attract, motivate and retain key employees, officers, directors and
consultants providing services to the Company. The Purchase Plan will be
administered by or under the authority of the Board or a person or committee
to which such administrative authority is delegated by the Board. The Company
has the power to make rules and regulations to administer the Purchase Plan,
and to interpret the provisions and rules of the Purchase Plan. The Company
undertakes to provide each PPP with (i) a written explanation of the pertinent
provisions of the Purchase Plan (including amendments thereto applicable to
the PPP), together with a written explanation of the rights and obligations of
a PPP; (ii) any other information regarding the Purchase Plan required to be
provided, and in a manner prescribed, under any applicable laws; and (iii) a
statement of the PPP's account setting out the outstanding balance under all
Loans each fiscal year. The Company will maintain such account for each PPP in
such manner that the outstanding balance of any Loan of each PPP and/or any
contribution made on behalf of PPPs may be audited and ascertained. Such
individual accounts will be posted monthly.

     The Company will appoint a custodian (the "Custodian") to serve as the
Custodian under the Purchase Plan. The Company may not appoint itself, or any
of its directors or employees as the Custodian. The Custodian will hold the
full amount of all Loans as custodian for the respective PPPs, purchase with
such amounts Common Shares under the Purchase Plan and hold those Common
Shares pledged to the Company. The Company has the right to appoint a new
Custodian.

     The maximum number of Common Shares reserved for issuance from treasury
under the Purchase Plan is currently 250,000. The number of Common Shares
issued under all Share Compensation Arrangements to any Insider may not exceed
5% of the Outstanding Issue in any one year period and the number of Common
Shares issued to Insiders under all Share Compensation Arrangements may not
exceed 10% of the Outstanding Issue in any one year period. To become a PPP,
an EPPP must (i) be granted a Loan (as described below in "Loans to PPPs"),
(ii) execute any and all documents determined by the Company, in its sole
discretion, to be necessary or desirable to evidence the Loan and (iii) borrow
the Loan amount, and authorize the Company in writing to regularly deduct
amounts from his or her salary in repayment of the Loan. The Company has not
loaned money to PPPs since the provisions of the Sarbanes-Oxley Act
prohibiting such loans came into effect. Prior to the coming into effect of
the Sarbanes-Oxley Act, the Company granted interest free loans to certain of
its directors under the Purchase Plan. Loans made prior to the coming into
effect of the Sarbanes-Oxley Act are grandfathered. If consented to by the
Company, an EPPP may purchase shares through a Consultant Entity, a Personal
Holding Company, an RRSP or an RRIF.

     Common Shares may be acquired, at the option of the Company, by (i)
subscription to the Company or (ii) market transactions. If acquired by
subscription, the price per Common Share will be the weighted average trading
price for the Common Shares on The Toronto Stock Exchange for the five (5)
business days immediately preceding the date of the subscription. Any
appreciation in the value of Common Shares will inure to the benefit of, and
any dividends payable in respect of the Common Shares will be paid to, the
PPPs and any depreciation in the value of the Common Shares will be borne by
the PPPs. Subject to applicable law, the Company may, in its discretion, grant
Loans to PPPs to be used exclusively for the purchase of Common Shares in
accordance with Section 5 of the Purchase Plan. In granting a Loan, the
Company will determine: (i) the amount of the Loan, (ii) the term of the Loan,
which may not exceed ten years; (iii) the interest rate of the Loan; and (iv)
the amount and frequency of the payments, which will be made by regular
payroll deduction and applied to accrued interest and outstanding principal.
The Purchase Plan provides that the Company may from time to time, at its sole
discretion, establish procedures, terms and conditions upon which it will
contribute, on behalf of a PPP, an amount of up to 15% of any Loan provided to
such PPP to be used for the purchase of Common Shares under the Purchase Plan.
Repayment of Loans is to be secured by the Common Shares purchased with the
proceeds of the Loans, which Common Shares are to be deposited with and held
by a Custodian in accordance with the terms of the Purchase Plan until the
Loan has been repaid in full, provided however, that pursuant to Section 7.2
of the Purchase Plan, if, on each six month anniversary of the date that the
Loan was granted, all amounts due and payable under the Loan have been paid in
full, then upon direction from the Company, the Custodian will deliver to the
PPP certificates representing the portion of the Common Shares originally
purchased for which the Loan has been repaid.

                                                                         43
<PAGE>

     The full principal amount payable together with all accrued and unpaid
interest in respect of all Loans made to a PPP will become due and immediately
payable on the date that the PPP ceases to be a bona fide full-time employee,
director or consultant of the Company, or a date which is ninety (90) days
after (i) the death of the PPP, (ii) the date on which the Company determines
that the PPP is totally and permanently disabled and unable to return to his
or her position with the Company; or (iii) the PPP has defaulted on his or her
Loan and such amount remains unpaid.


ITEM 7.     Major Shareholders and Related Party Transactions

A.    Major Shareholders

    The following table sets forth certain information regarding the
beneficial ownership of the Company's outstanding Common Shares as of the date
of this Form. The information in this table is based on the Company's records,
information provided to the Company by directors and executive officers and a
review of any Schedules 13D and 13G filed by shareholders with the Securities
and Exchange Commission and delivered to the Company in accordance with
applicable law. Beneficial ownership is determined in accordance with rules of
the Securities and Exchange Commission and includes shares over which the
indicated beneficial owner exercises voting and/or investment power. Common
shares subject to options currently exercisable or exercisable within 60 days
are deemed outstanding for computing the percentage ownership of the person
holding the options but are not deemed outstanding for computing the
percentage ownership of any other person. This information is based on
11,428,837 Common Shares outstanding as of April 30, 2003. Under applicable
Canadian regulatory rules, shareholders are not required to disclose an
ownership interest unless it exceeds 10% of the voting rights attached to the
Common Shares of the Company. As a result, Canadian shareholders who did not
file a Schedule 13D or 13G will not be shown in this table unless their
ownership interest exceeds 10% of the voting rights attached to their Common
Shares, or unless they are otherwise known to the Company. None of the
Company's major shareholders have any special voting rights attached to their
Common Shares.

                                         Aggregate                 Percentage of
                                         Number of                  Outstanding
               Name                    Common Shares               Common Shares
               ----                    -------------               -------------

          Nigel W. Stokes                2,108,563(1)                  18.2 %

          AGF Funds Inc.                 1,784,950                     15.6%

          TAL Global Asset               1,483,800                     13.0%
          Management Inc.

       Guardian Capital Inc.               874,600(2)                  7.65%

 Notes:
  (1)    Includes 120,000 Options exercisable either currently or within 60
         days and 33,750 Options exercisable either currently or within 60
         days granted to his spouse.
  (2)    Based on a Schedule 13G/A filed with the SEC on March 25, 2003
         relating to a date of event that requires filing of December 31, 2002.


    Significant changes in ownership

    The following table sets forth significant changes in ownership by the
Company's Major Shareholders over the previous 3 fiscal years, based on
information available to the Company.

<TABLE>
 --------------------------------  --------------------------  -----------------------------
 Major Shareholder                 Date                        Transaction
 --------------------------------  --------------------------  -----------------------------

 --------------------------------  --------------------------  -----------------------------
<S>                                <C>                         <C>
 TAL Global Asset Management Inc.  Period from March 31,       Holdings increased from
                                   2002 to March 31, 2003      approximately 7.7% to 13.0%
 --------------------------------  --------------------------  -----------------------------
</TABLE>


    Information available to the Company indicates that, as at March 31, 2003,
there were five record holders in the U.S. holding a total of 684,285 Common
Shares.

    Based on the information available to the Company, the Company is not
directly or indirectly owned or controlled by any other corporation, foreign
government or person. To the best of the Company's knowledge there are no
arrangements in existence that could lead to a subsequent change in control of
the Company.

                                                                         44
<PAGE>

B.    Related Party Transactions

         During fiscal 2003, the Company sublet space to SmartSales Inc., a
company of which Nigel W. Stokes served as Chairman of the Board of Directors
and was a significant shareholder. The annual rent for the sublet space was
$51,000. The rental transaction was made at market prices under normal trade
terms and conditions. During fiscal 2003, SmartSales went bankrupt and the
Company wrote off its rent receivable of $77,000.

      During fiscal 2003, the Company purchased certain assets of SmartSales
from the trustee in bankruptcy of the estate of SmartSales in a cash
transaction accounted for under the purchase method. The assets acquired
consisted of computer equipment, office furniture, customer lists, accounts
receivable, and software and related technology and intellectual property. The
Company did not assume any liabilities or obligations of SmartSales pursuant
to the transaction. The Company expects the purchase to be of benefit to it,
but does not expect the transaction to have a material impact on its financial
results or on its business and affairs. The transaction was approved by the
court under the Bankruptcy and Insolvency Act (Canada). The President, CEO and
Chairman of the Company, Mr. Nigel Stokes, is a former director and Chairman
of SmartSales and he held approximately 20% of the common shares of
SmartSales. Mr. Stokes did not receive any of the proceeds of the sale from
the Trustee as a result of his shareholding in SmartSales. The former
directors of SmartSales including Mr. Stokes may benefit indirectly from the
transaction because the Trustee's use of the proceeds of the sale reduced
certain potential liabilities of the former directors with respect to unpaid
taxes. At the request of Mr. Stokes, the nature and extent of his interest in
SmartSales was disclosed and recorded in the minutes of the proceedings of the
directors of the Company. The terms of the transaction were reviewed and
approved unanimously by the board of directors of the Company. The board of
directors was of the view that the assets to be acquired and the immediate
potential for collecting accounts receivable and generating revenue would
benefit the Company.

     The Company's directors, executive officers and senior officers are
eligible to participate in the Company's Share Purchase Plan. The purpose of
the Share Purchase Plan is to provide long-term incentives to attract,
motivate and retain key employees, officers, directors and consultants
providing services to the Company. Under the Share Purchase Plan the Company
may loan money to participants to purchase Common Shares of the Company.
Repayment of these loans is secured by a pledge of the Common Shares purchased
with the proceeds of the loan and such Common Shares are deposited with and
held by a custodian until the loan has been repaid. The Company has granted
interest free loans to certain of its directors to purchase Common Shares
under the Share Purchase Plan. The loans are to be repaid from quarterly
directors' fees due to such persons as they are earned, and may also be repaid
in whole or in part at any time without penalty. The full principal amount of
a director's loan is immediately due and payable on the date a director ceases
to be a director of the Company. The aggregate indebtedness to the Company of
all participants in the Share Purchase Plan as at April 30, 2003 was $5,000.
The Company has not loaned money to directors since the provisions of the
Sarbanes-Oxley Act prohibiting such loans came into effect. Loans made prior
to the coming into effect of the Sarbanes-Oxley Act are grandfathered. See
Directors, Senior Management and Employees - Share Ownership. The following
table sets out the indebtedness of the officers and directors of the Company
to the Company in connection with the purchase of Common Shares under the
Share Purchase Plan:

<TABLE>
===================== ================ =================== ================== =================== ==================
Name and Principal     Involvement of    Largest Amount          Amount          Financially        Security for
Position                the Company       Outstanding      Outstanding as at       Assisted         Indebtedness
                                       During the Fiscal     April 30, 2003      Purchases of
                                           Year Ended                           Common Shares
                                        January 31, 2003                      During the Fiscal
                                                                                  Year Ended
                                                                               January 31, 2003
--------------------- ---------------- ------------------- ------------------ ------------------- ------------------
<S>                                          <C>                 <C>                  <C>         <C>
Donald L. Lenz,            Lender            22,500              2,500                0           Pledge of Common
director                                                                                               Shares
--------------------- ---------------- ------------------- ------------------ ------------------- ------------------

Donald Woodley,            Lender            25,000              2,500                0           Pledge of Common
director                                                                                               Shares
===================== ================ =================== ================== =================== ==================
</TABLE>


C. Interests of experts and counsel

Information not required for annual report.


                                                                         45
<PAGE>

ITEM 8.    Financial Information

A.    Consolidated Statements and Other Financial Information

See item 17

LEGAL PROCEEDINGS

     The Company is not a party to any material legal proceedings.

DIVIDENDS

     The Company has not paid any dividends on its Common Shares in the last
five completed financial years. The payment of any future dividends will be at
the discretion of the Company's Board of Directors and will depend upon, among
other things, the Company's future earnings, operations, capital requirements
and financial condition, general business conditions and contractual
restrictions on payment of dividends, if any.


B.    Significant Changes

     No significant change has occurred since the date of the annual financial
statements.


ITEM 9.    The Offer and Listing

A.    Offer and Listing Details

NATURE OF TRADING MARKET

     The Company's Common Shares are traded on the Nasdaq National Market
under the symbol "DMCX" and on the Toronto Stock Exchange under the symbol
"DMC". The following tables set forth, for the periods indicated, high and low
closing prices of the Company's Common Shares as reported on the Nasdaq
National Market and on the Toronto Stock Exchange. Prices on the Toronto Stock
Exchange are shown in Canadian dollars. Prices on the Nasdaq National Market
are shown in U.S. dollars. The Company's shares began trading on the Nasdaq
National Market on January 18, 2001.

-------------------------------------------------------------------------------
              Annual Market Prices on the Toronto Stock Exchange
--------------------------------------------------------------------------------
----------------------------------- ---------------------- --------------------
                                            High                   Low
----------------------------------- ---------------------- --------------------
Fiscal year ended January 31, 2003         $13.50                 $7.50
----------------------------------- ---------------------- --------------------
Fiscal year ended January 31, 2002         $15.49                 $4.52
----------------------------------- ---------------------- --------------------
Fiscal year ended January 31, 2001         $29.90                $11.75
----------------------------------- ---------------------- --------------------
Fiscal year ended January 31, 2000         $15.25                 $3.75
----------------------------------- ---------------------- --------------------
Fiscal year ended January 31, 1999         $15.10                 $5.75
----------------------------------- ---------------------- --------------------


                                                                            46
<PAGE>

-------------------------------------------------------------------------------
              Annual Market Prices on the Nasdaq National Market
--------------------------------------------------------------------------------
------------------------------------ ---------------------- --------------------
                                             High                   Low
------------------------------------ ---------------------- --------------------
Fiscal year ended January 31, 2003           $8.56                 $4.61
------------------------------------ ---------------------- --------------------
Fiscal year ended January 31, 2002          $10.19                 $2.70
------------------------------------ ---------------------- --------------------
Fiscal year ended January 31, 2001          $12.50                $10.06
------------------------------------ ---------------------- --------------------


-------------------------------------------------------------------------------
             Quarterly Market Prices on the Toronto Stock Exchange
-------------------------------------------------------------------------------
-------------------------------------- -------------------- -------------------
                                               High                 Low
-------------------------------------- -------------------- ------------------
Fiscal year ended January 31, 2004
-------------------------------------- -------------------- ------------------
     First Quarter                            $12.75              $10.75
-------------------------------------- -------------------- ------------------
Fiscal year ended January 31, 2003
-------------------------------------- -------------------- ------------------
     Fourth Quarter                           $12.40               $7.95
-------------------------------------- -------------------- ------------------
     Third Quarter                             $9.25               $7.50
-------------------------------------- -------------------- ------------------
     Second Quarter                           $10.75               $8.50
-------------------------------------- -------------------- ------------------
     First Quarter                            $13.50               $9.23
-------------------------------------- -------------------- ------------------
Fiscal year ended January 31, 2002
-------------------------------------- -------------------- ------------------
     Fourth Quarter                           $12.06               $6.53
-------------------------------------- -------------------- ------------------
     Third Quarter                             $7.50               $4.52
-------------------------------------- -------------------- ------------------
     Second Quarter                            $8.40               $5.50
-------------------------------------- -------------------- ------------------
     First Quarter                            $15.49               $5.20
-------------------------------------- -------------------- ------------------


-----------------------------------------------------------------------------
             Quarterly Market Prices on the Nasdaq National Market
-----------------------------------------------------------------------------
--------------------------------------- ------------------ ------------------
                                                High             Low
--------------------------------------- ------------------ ------------------
--------------------------------------- ------------------ ------------------
Fiscal year ended January 31, 2004
--------------------------------------- ------------------ ------------------
--------------------------------------- ------------------ ------------------
     First Quarter                              $8.77           $7.00
--------------------------------------- ------------------ ------------------
--------------------------------------- ------------------ ------------------
Fiscal year ended January 31, 2003
--------------------------------------- ------------------ ------------------
--------------------------------------- ------------------ ------------------
     Fourth Quarter                             $8.02           $5.13
--------------------------------------- ------------------ ------------------
--------------------------------------- ------------------ ------------------
     Third Quarter                              $6.00           $4.61
--------------------------------------- ------------------ ------------------
--------------------------------------- ------------------ ------------------
     Second Quarter                             $6.78           $5.21
--------------------------------------- ------------------ ------------------
--------------------------------------- ------------------ ------------------
     First Quarter                              $8.56           $6.00
--------------------------------------- ------------------ ------------------
--------------------------------------- ------------------ ------------------
Fiscal year ended January 31, 2002
--------------------------------------- ------------------ ------------------
--------------------------------------- ------------------ ------------------
        Fourth Quarter                          $7.60           $4.10
--------------------------------------- ------------------ ------------------
--------------------------------------- ------------------ ------------------
        Third Quarter                           $4.60           $2.70
--------------------------------------- ------------------ ------------------
--------------------------------------- ------------------ ------------------
        Second Quarter                          $5.00           $3.50
--------------------------------------- ------------------ ------------------
--------------------------------------- ------------------ ------------------
        First Quarter                          $10.19           $3.38
--------------------------------------- ------------------ --------------------


-----------------------------------------------------------------------------
              Monthly Market Prices on the Toronto Stock Exchange
-----------------------------------------------------------------------------
-------------------------------------- ------------------- ------------------
                                               High                Low
-------------------------------------- ------------------- ------------------
-------------------------------------- ------------------- ------------------
April 2003                                    $12.70             $12.00
-------------------------------------- ------------------- ------------------
-------------------------------------- ------------------- ------------------
March 2003                                    $12.75             $11.00
-------------------------------------- ------------------- ------------------
-------------------------------------- ------------------- ------------------
February 2003                                 $12.50             $10.77
-------------------------------------- ------------------- ------------------
-------------------------------------- ------------------- ------------------
January 2003                                  $12.40             $10.30
-------------------------------------- ------------------- ------------------
-------------------------------------- ------------------- ------------------
December 2002                                 $10.60             $10.10
-------------------------------------- ------------------- ------------------
-------------------------------------- ------------------- ------------------
November 2002                                  $9.75              $7.95
-------------------------------------- ------------------- ------------------


------------------------------------------------------------------------------
              Monthly Market Prices on the Nasdaq National Market
------------------------------------------------------------------------------
------------------------------------ -------------------- --------------------
                                             High                 Low
------------------------------------ -------------------- --------------------
------------------------------------ -------------------- --------------------
April 2003                                   $8.74               $8.16
------------------------------------ -------------------- --------------------
------------------------------------ -------------------- --------------------
March 2003                                   $8.77               $7.25
------------------------------------ -------------------- --------------------
------------------------------------ -------------------- --------------------
February 2003                                $8.18               $7.00
------------------------------------ -------------------- --------------------
------------------------------------ -------------------- --------------------
January 2003                                 $8.02               $6.60
------------------------------------ -------------------- --------------------
------------------------------------ -------------------- --------------------
December 2002                                $6.90               $6.50
------------------------------------ -------------------- --------------------
------------------------------------ -------------------- --------------------
November 2002                                $6.25               $5.13
------------------------------------ -------------------- --------------------


                                                                            47
<PAGE>

ITEM 10.        Additional Information

A.    Share capital

Information not required for annual report.

B.    Memorandum and Articles

BY-LAWS AND ARTICLES OF INCORPORATION

     The predecessor corporation to the Company was incorporated under the
Business Corporations Act (Ontario) on November 19, 1993. This predecessor
corporation amalgamated on February 1, 1996 with four other corporations to
form the Company as it is currently constituted. The Company's articles of
amalgamation were amended on December 6, 1996 to effect a 1 - for - 2 share
consolidation of the Common Shares and to create a class of preferred shares
issuable in series. The Company's articles are on file with the Ontario
Ministry of Consumer and Business Services under the Ontario Corporation
Number 1166680. The Company's articles do not include a stated purpose.

DIRECTORS

      In accordance with the Business Corporations Act (Ontario), a director
who is a party to a material contract or transaction or proposed material
contract or transaction with the Company, or is a director or officer of, or
has a material interest in, any person who is a party to a material contract
or transaction or proposed material contract or transaction with the Company,
shall disclose in writing to the Company or request to have entered in the
minutes of meetings of directors the nature and extent of his or her interest.
In such circumstances, a director shall not vote on any resolution to approve
the contract or transaction unless the contract or transaction is: (a) an
arrangement by way of security for money lent to or obligations undertaken by
the director for the benefit of the Company or an affiliate; (b) one relating
primarily to his remuneration as a director, officer, employee or agent of the
Company or an affiliate; (c) one for indemnity or insurance; or (d) one with
an affiliate.

      In accordance with the Business Corporations Act (Ontario), the
directors of the Company may fix the remuneration of the directors, officers
and employees of the Company. Where a material contract or a material
transaction (including a contract involving director remuneration) is entered
into between the Company and a director, or between the Company and another
person of which a director of the Company is a director or officer or in which
he or she has a material interest, the director is not accountable to the
Company or its shareholders for any profit or gain realised from the contract
or transaction and the contract or transaction is neither void nor voidable,
by reason only of the relationship or by reason only that the director is
present at or is counted to determine the presence of quorum at a meeting of
directors that authorized the contract or transaction, if the director
disclosed his interest in accordance with the Business Corporation Act
(Ontario) and the contract or transaction was reasonable and fair to the
Company at the time it was so approved.

      The directors may from time to time, in such amounts and on such terms
as they deem expedient: (a) borrow money on the credit of the Company; (b)
issue, sell or pledge debt obligations (including bonds, debentures, notes or
other similar obligations, secured or unsecured) of the Company; (c) charge,
mortgage, hypothecate or pledge all or any of the currently owned or
subsequently acquired real or personal, movable or immovable, property of the
Company, including book debts, rights, powers, franchises and undertaking, to
secure any debt obligations or any money borrowed or other debt or liability
of the Company. The directors may from time to time delegate to such one or
more of the directors and officers of the Company as may be designated by the
directors all or any of the powers conferred on the directors above to such
extent and in such manner as the directors shall determine with respect to
each such delegation.

      There is no age limit requirement for directors of the Company.
Directors are not required to own shares in the Company.

      Directors of the Company are elected annually at an annual meeting of
the shareholders of the Company. Each director holds office until the close of
the next annual meeting or until the successor of such director is elected or
appointed in accordance with the By-Laws of the Company and the Business
Corporations Act (Ontario). Each Common Share of the Company entitles the
holder thereof to one vote at a meeting of shareholders.

COMMON SHARES

      The Company is authorized to issue an unlimited number of Common Shares.
The rights, privileges, restrictions and conditions of the Common Shares
include the rights to vote at all meetings of shareholders and to receive the
remaining property of the Company upon dissolution.

      Subject to the prior rights of the holders of Preferred Shares, the
holders of Common Shares are entitled to receive dividends, as and when
declared by the Board of Directors, out of monies properly applicable to the
payment of dividends, in such amount and in


                                                                            48
<PAGE>

such form as the Board of Directors may from time to time determine, and all
dividends which the Board of Directors may declare on the Common Shares shall
be declared and paid in equal amounts per share on all Common Shares
outstanding as of the applicable record date.

      In the event of the dissolution, liquidation or winding-up of the
Company, whether voluntary or involuntary, or any other distribution of assets
of the Company among its shareholders for the purpose of winding up its
affairs, subject to the prior rights of the holders of Preferred Shares, the
holders of Common Shares will be entitled to receive the remaining property
and assets of the Company.

PREFERRED SHARES

      The Company is authorized to issue an unlimited number of Preferred
Shares issuable in series. Subject to the Business Corporations Act (Ontario),
the directors may fix, before the issue thereof, the number of Preferred
Shares of each series, the designation, rights, privileges, restrictions and
conditions attaching to the shares of each series, including, without
limitation, any voting rights, any right to receive dividends (which may be
cumulative or non-cumulative and variable or fixed) or the means of
determining such dividends, the dates of payment thereof, any terms and
conditions of redemption or purchase, any conversion rights, and any rights on
liquidation, dissolution or winding-up of the Company, any sinking fund or
other provisions, the whole to be subject to the issuance of a certificate of
amendment setting forth the designation, rights, privileges, restrictions and
conditions attaching to the Preferred Shares.

      Subject to the Business Corporations Act (Ontario), the holders of
Preferred Shares shall not, as such, be entitled to receive notice of or to
attend any meeting of the shareholders of the Company or to vote at any such
meeting, but shall be entitled to receive notice of and to attend, but not to
vote at, any meeting of the shareholders called for the purpose of authorizing
the dissolution of the Company or the sale, lease or exchange of all or
substantially all the property of the Company other than in the ordinary
course of business, unless the Company shall fail, for a period of eighteen
consecutive months, to pay dividends at the prescribed rate, if any, on the
Preferred Shares, whereupon and so long as any such dividends shall remain in
arrears, the holders of the Preferred Shares shall be entitled to receive
notice of, to attend and vote at all meetings of the shareholders, except
meetings at which only holders of a specified class of shares are entitled to
attend.

      The Preferred Shares shall be entitled to preference over the Common
Shares of the Company and over any other shares ranking junior to the
Preferred Shares with respect to priority in the payment of dividends and in
the distribution of assets in the event of the liquidation, dissolution or
winding-up of the Company, whether voluntary or involuntary, or any other
distribution of the assets of the Company among its shareholders for the
purpose of winding-up its affairs.

      The Preferred Shares of each series shall, with respect to the payment
of dividends and the distribution of assets in the event of liquidation,
dissolution or winding-up of the Company, whether voluntary or involuntary,
rank on a parity with the Preferred Shares of every other series and be
entitled to preference over the Common Shares. If any amount of cumulative
dividends (whether or not declared) or declared non-cumulative dividends or
any amount payable on any such distribution of assets constituting a return of
capital in respect of the Preferred Shares of any series is not paid in full,
the Preferred Shares of such series shall participate ratably with the
Preferred Shares of every other series in respect of all such dividends and
amounts.

ACTION NECESSARY TO CHANGE RIGHTS OF SHAREHOLDERS

     In order to add to, change or remove any of the rights, privileges,
restrictions or conditions of any of the Company's shares, the articles would
need to be amended to effect the change. Such an amendment would require
approval by special resolution, which is a resolution that is submitted to a
special meeting of shareholders of the Company duly called for the purpose of
considering the resolution and passed by at least two-thirds of the votes
cast, or consented to in writing be each shareholder entitled to vote at such
a meeting. To add to, remove or change the rights, privileges, restrictions or
conditions attached to the shares of a particular class or series, the
amendment is required to be approved by special resolution of the holders of a
class or series of shares voting separately as a class or series. A
shareholder who is entitled to vote on such a resolution is entitled to
dissent in respect of such a resolution and, if the resolution is adopted and
the Company implements such changes, demand payment of the fair value of its
shares in accordance with the Business Corporations Act (Ontario).

MEETINGS OF SHAREHOLDERS

     An annual meeting of shareholders is held each year for the purpose of
considering the Company's financial statements and reports, electing
directors, appointing auditors and for the transaction of other business as
may be brought before the meeting. The Board of Directors has the power to
call a special meeting of shareholders at any time. Subject to the Business
Corporations Act (Ontario), the holders of not less than 5 per cent of the
Common Shares of the Company may requisition the Board of Directors to call a
meeting of shareholders for the purposes stated in the requisition.

                                                                            49
<PAGE>

     Notice of the time and place of each meeting of shareholders must be
given not less than 21 days, nor more than 50 days, before the date of each
meeting to each director, to the auditor and to each shareholder entitled to
vote at the meeting. Notice of a meeting of shareholders called for any other
purpose other than consideration of the minutes of an earlier meeting,
financial statements and auditor's report, election of directors and
reappointment of the incumbent auditor, must state the nature of the business
in sufficient detail to permit the shareholder to form a reasoned judgment
thereon and must state the text of any special resolution or by-law to be
submitted to the meeting.

     The only persons entitled to be present at a meeting of shareholders are
those entitled to vote, the directors of the Company and the auditor of the
Company. Any other person may be admitted only on the invitation of the
chairman of the meeting or with the consent of the meeting. If a corporation
is winding-up, the Business Corporations Act (Ontario) permits a liquidator
appointed by the shareholders, during the continuance of a voluntary
winding-up, to call and attend meetings of the shareholders. In circumstances
where a court orders a meeting of shareholders, the court may direct how the
meeting may be held, including the parties entitled, or required, to attend
the meeting.

LIMITATIONS ON RIGHT TO OWN SECURITIES

      There are no limitations on the rights to own Common Shares, including
the rights of non-resident or foreign shareholders to hold or exercise voting
rights on the Common Shares imposed by the laws of Canada or the laws of the
Province of Ontario or by the articles or By-Laws of the Company except as
follows:

(a) foreign investors who acquire control of the Company must comply with the
Investment Canada Act; and
(b) the majority of directors of the Company must be resident Canadians, as
defined in the Business Corporations Act (Ontario).


C. Change in Control Provisions

      The Company and CIBC Mellon Trust Company (the "Rights Agent") entered
into an agreement dated as of May 7, 2002 (the "Rights Agreement") to
implement a shareholder rights plan for the Company (the "Shareholder Rights
Plan"). A shareholder rights plan creates a right (which can only be exercised
when a person acquires control of 20% or more of the Company's Common Shares)
for each shareholder, other than the 20% buyer, to acquire additional Common
Shares of the Company at one-half of the market price at the time of exercise.
This significantly dilutes the share position of the 20% buyer and practically
prevents that person from acquiring control of 20% or greater of the Company's
Common Shares unless the rights plan has been withdrawn or the buyer makes a
Permitted Bid, as that term is defined in the Shareholder Rights Plan. The
easiest way for the buyer to have a rights plan withdrawn is for it to
negotiate with the Board of Directors to have the rights plan waived or to
apply to a securities commission to order withdrawal of the rights plan if the
Company cannot develop an auction. Both of these approaches will give the
Board of Directors more time and control over any sale process and increase
the likelihood of a better offer to the Company's shareholders. The primary
objectives of the Shareholder Rights Plan are to ensure that, in the context
of a bid for control of the Company through an acquisition of the Company's
Common Shares, the Board of Directors has sufficient time to explore and
develop alternatives for maximizing shareholder value, to provide adequate
time for competing bids to emerge, to ensure that shareholders have an equal
opportunity to participate in such a bid and to give them adequate time to
properly assess the bid and lessen the pressure to tender typically
encountered by a securityholder of an issuer that is subject to a bid.


D.    Material contracts

      The following is a summary of the Company's material contracts entered
into since May 31, 2000.

           Effective as of November 30, 2001, DataMirror (UK) Limited took
assignment of leasehold property at 7th Floor, Offices Block 2, Elizabeth
House, 39 York Road, Waterloo, London SE1 in England. The term of the lease
expires on March 24, 2004. The leasehold property consists of approximately
13,770 square feet. The assignor and landlord of the leasehold property are
Confetti Network Limited and P & O Property Holdings Limited, respectively.
National Westminster Bank has given a guarantee, in an amount equal to 9
months rent, to the landlord. As security for the guarantee, the Company has
placed an amount, equivalent to the guaranteed amount, in a separate account
with National Westminster Bank.

     On June 8, 2001 the Company purchased the technology and certain related
assets of BDI Systems, Inc. ("BDI"). BDI developed bi-directional, Java-based,
data transformation software that exchanges data between XML (eXtensible
Markup Language), relational database and text formats, as well as web-based
reporting. The Company's Transformation Server for XML product includes
technology acquired from BDI and the Company's DB/XML Transform and DB/XML
Vision products are based on BDI technology. Total consideration for the
transaction was cash of $424,000 and 50,000 shares of common stock with a
value of $307,000 to be released from escrow over two years. The assets
acquired have been accounted for as acquired technology of $424,000 and deferred


                                                                            50
<PAGE>

compensation of $307,000. The technology will be amortized over a period of
three years. The deferred compensation will be amortized over two years.

     On May 18, 2001, the Company purchased the technology and certain related
assets of saipx Inc. ("saipx"), a developer of pervasive mobile computing and
turnkey solutions for SAP for cash consideration of $293,000. The Company's
Pervasive Gateway, Synapse Agility and Synapse Mobility products are based on
saipx technology.

      In September 2000, the Company purchased certain assets and assumed
certain liabilities of Constellar Corporation. As a result of this
acquisition, the Company acquired the Constellar Hub EAI software technology
as well as certain related assets including computer equipment, office
furniture and other fixed assets, accounts receivable, customer contracts and
alliance contracts, and assumed certain related liabilities including accounts
payable and deferred revenue. The Constellar acquisition was valued at
approximately $16,500,000 (including the full value of contingent
consideration). The contingent consideration consisted of up to U.S.
$3,000,000 payable contingent on certain revenue targets being generated from
the acquired technology during the three-year period ending August 31, 2003.
In November 2001, a payment of $724,000 was made in payment of contingent
consideration of $856,000 for the period ended August 31, 2001 less a holdback
of $132,000 related to assets purchased which are not realized. Additional
information about the Constellar acquisition is contained in the Consolidated
Financial Statements of the Company for the year ended January 31, 2002, Note
17, Acquisitions, contained in the Company's 2001 Annual Report to
Shareholders.

      In June and August 2000, PointBase, Inc. ("PointBase") completed an
additional round of financing in which the Company invested an additional
$5,893,000 in PointBase. However, as a result of the participation of other
parties in these investment rounds the Company's approximate ownership
percentage of PointBase was reduced from 42% to 29%.


E.    Exchange Controls

    The Investment Canada Act generally prohibits implementation of a
reviewable investment by an individual, government or agency thereof,
corporation, partnership, trust or joint venture that is not a "Canadian" as
defined in the Investment Canada Act (a "non-Canadian"), unless after review,
the minister responsible for the Investment Canada Act is satisfied that the
investment is likely to be of net benefit to Canada. An investment in Common
Shares of the Company by a non-Canadian (other than a "WTO investor" as
defined in the Investment Canada Act) would be reviewable under the Investment
Canada Act if it was an investment to acquire direct control of the Company
and the value of the assets of the Company was $5,000,000 or more.

    An investment in Common Shares of the Company by a WTO Investor, assuming
the Company is not involved in a "cultural business", "financial service"
business or "transportation service" business, each as defined in the
Investment Canada Act, would be reviewable under the Investment Canada Act if
it was an investment to acquire direct control of the Company and the value of
the assets of the Company equals or exceeds a specified amount (the "Review
Threshold"), which increases in stages. The Review Threshold is $223 million
for investments completed in 2003 and is indexed as of the first of January
every year.

    A non-Canadian, whether a WTO Investor or otherwise, would acquire control
of the Company for the purposes of the Investment Canada Act if he acquired a
majority of the Common Shares of the Company. The acquisition of less than a
majority but one-third or more of the Common Shares of the Company would be
presumed to be an acquisition of control of the Company unless it could be
established the Company was not controlled in fact by the acquirer through the
ownership of Common Shares.

    Certain transactions in relation to the Common Shares would be exempt from
the Investment Act, including:

  o      an acquisition of Common Shares by a person in the ordinary course of
         that person's business as a trader or dealer in securities;

  o      an acquisition of control of the Company in connection with the
         realization of a security interest granted for a loan or other
         financial assistance and not for any purpose related to the provision
         of the Investment Canada Act; and

  o      an acquisition of control of the Company by reason of an
         amalgamation, merger, consolidation or corporate reorganization
         following which the ultimate direct or indirect control in fact of
         the Company, though the ownership of voting interests, remains
         unchanged.


F.    Taxation

Canadian Federal Income Tax Considerations

         The following is a summary of certain material Canadian federal
income tax considerations under the Income Tax Act (Canada) (the "Tax Act")
generally applicable to a holder of Common Shares of the Company who at all
times: (i) for purposes of the Tax Act, is not and is not deemed to be resident
in Canada, deals at arm's length with and is not affiliated with the Company,


                                                                            51
<PAGE>

holds Common Shares as capital property, and does not use or hold and is not
deemed to use or hold Common Shares in the course of carrying on a business in
Canada, and is not a "financial institution", and (ii) for purposes of the
Canada-United States Income Tax Convention (1980), as amended (the
"Convention"), is a resident of the U.S. and not a resident of Canada and does
not hold and has not held Common Shares as part of the business property of a
permanent establishment in Canada or in connection with a fixed base in Canada
(hereinafter, a "U.S. Holder").

      This summary is based upon the current provisions of the Tax Act, the
regulations thereunder, the Convention, all proposed amendments to the Tax
Act, the regulations thereunder and the Convention publicly announced by the
Department of Finance, Canada prior to the date hereof, and the administrative
policies and assessing practices of the Canada Customs and Revenue Agency made
publicly available prior to the date hereof. Except for the foregoing, this
summary does not take into account or anticipate any changes in the law or the
Convention or the administrative policies or assessing practices of the Canada
Customs and Revenue Agency whether by legislative, governmental or judicial
action or decision. This summary does not take into account or anticipate
provincial, territorial or foreign tax legislation or considerations, which
may differ significantly from the Canadian federal income tax considerations
described herein.

      Amounts in respect of Common Shares paid or credited or deemed to be
paid or credited as, on account or in lieu of payment of, or in satisfaction
of, dividends to a U.S. Holder will generally be subject to Canadian
non-resident withholding tax. Under the Tax Act such withholding tax is levied
at a rate of 25%, which may be reduced pursuant to the terms of the
Convention. Under the Convention, the rate of Canadian non-resident
withholding tax on the gross amount of dividends beneficially owned by a U.S.
Holder is generally 15%. However, where such beneficial owner is a company
which owns at least 10% of the voting stock of the Company, the rate of such
withholding is 5%.

      A U.S. Holder will not be subject to tax under the Tax Act in respect of
any disposition of Common Shares (other than a disposition to the Company)
unless at the time of such disposition such Common Shares constitute "taxable
Canadian property" of the holder for purposes of the Tax Act. If the Common
Shares are listed on a prescribed stock exchange for the purposes of the Tax
Act (which currently includes the TSX and NASDAQ) at the time they are
disposed of, they will generally not constitute "taxable Canadian property" of
the U.S. Holder at the time of a disposition of such shares unless at any time
during the 60-month period immediately preceding the disposition of the Common
Shares, 25% or more of the issued shares of any class or series of the Company
was owned by the U.S. Holder, by persons with whom the U.S. Holder did not
deal at arm's length or by the U.S. Holder and persons with whom the U.S.
Holder did not deal at arm's length. The Common Shares may also be taxable
Canadian property in certain other circumstances. Under the Convention, gains
derived by a U.S. Holder from the disposition of Common Shares that constitute
"taxable Canadian property" will generally not be taxable in Canada unless the
value of the Common Shares is derived principally from real property situated
in Canada. If the Common Shares are listed on a prescribed stock exchange for
the purposes of the Tax Act at the time they are disposed of by a U.S. Holder
or they do not constitute "taxable Canadian property", the U.S. Holder will
not be required to comply with the provisions of section 116 of the Tax Act,
which requires a certificate to be obtained from the Canada Customs and
Revenue Agency when certain property is disposed of.

      The foregoing summary of certain material Canadian federal income tax
considerations is of a general nature only and is not intended to be, nor
should it be construed to be, legal or tax advice to any particular holder of
Common Shares. Holders should consult their own tax advisors with respect to
their particular circumstances.


United States Tax Consequences

      The following is a general discussion of certain material anticipated
United States federal income tax considerations relevant to holders of the
Company's Common Shares who hold such shares as capital assets (as defined in
Section 1221 of the United States Internal Revenue Code of 1986, as amended
(the "Code")). This discussion is intended to be a general description of the
United States federal income tax considerations material to a purchase of
Common Shares. Readers are cautioned that this discussion does not address all
relevant tax consequences relating to an investment in the Common Shares, nor
does it take into account tax consequences peculiar to persons subject to
special provisions of United States federal income tax law, such as financial
institutions, persons owning 10% or more (by vote or value) of the Common
Shares of the Company, persons that hold Common Shares through a partnership
or other pass through entity, or persons that hold Common Shares that are a
hedge against, or that are hedged against, currency risk or that are part of a
straddle or conversion transaction, or persons whose functional currency is
not the United States dollar. Therefore, investors should consult a tax
advisor regarding the particular consequences of purchasing Common Shares.

      Except as otherwise described in this form, this discussion applies to
investors that are (i) citizens or residents of the United States, (ii)
corporations (or other entities taxable as corporations), that are created or
organised in or under the laws of the United States, any State of the United
States or the District of Columbia, (iii) estates, the income of which is
subject to federal income taxation, regardless of its source or (iv) trusts,
if a court within the United States is able to exercise primary supervision
over the administration of such trust and one or more United States persons as
described in Section 7701(a)(30) of the Code has the authority to control all
substantial decisions of such trust (a "U.S. Holder"). Holders that are not
described in the definition of a U.S. Holder are


                                                                            52
<PAGE>

advised to consult their own tax advisors regarding the tax considerations
incident to the acquisition, ownership and disposition of Common Shares.

      Except as described below if the Company is treated as a passive foreign
investment company, investors that are U.S. Holders will be required to
include the gross amount of any distribution on Common Shares (without
reduction for Canadian tax withheld) in their gross income as a taxable
dividend, to the extent such distribution is paid from the Company's current
or accumulated earnings and profits as determined under United States federal
income tax principles. U.S. Holders must include in income an amount equal to
the United States dollar value of such dividends on the date of receipt, based
on the exchange rate on such date. To the extent that dividend distributions
paid by the Company exceed the Company's current or accumulated earnings and
profits, they will be treated first as a return of capital up to the U.S.
Holder's adjusted tax basis in the shares, and then as a gain from the sale or
exchange of the shares.

      U.S. Holders will generally be entitled to a foreign tax credit, or
deduction for United States federal income tax purposes, in an amount equal to
the Canadian tax withheld from a distribution on Common Shares. Dividends paid
by the Company generally will constitute foreign source "passive income" for
foreign tax credit purposes, which could reduce the amount of foreign tax
credit that a U.S. Holder may claim. The United States Internal Revenue Code
applies various limitations on the amount of foreign tax credit that may be
claimed by a United States taxpayer. Because of the complexity of those
limitations, U.S. Holders should consult their own tax advisors with respect
to the amount of the foreign taxes they may claim as a credit. Dividends paid
by the Company on the Common Shares will not generally be eligible for the
"dividends received" deductions.

      A U.S. Holder that sells Common Shares will generally recognise a gain
or loss in an amount equal to the difference, if any between the amount
realised on the sale and the U.S. Holder's adjusted tax basis in the shares.
Unless the Company is treated as a passive foreign investment company
(described below), any gain or loss recognised upon the sale of shares held as
capital assets will be a long-term or short-term capital gain or loss,
depending on whether the Common Shares have been held for more than one year.
Such gain or loss generally will be treated as United States source income or
loss for United States foreign tax credit purposes.

       The rules governing "passive foreign investment companies" can have
significant tax effects on U.S. Holders. The Company could be classified as a
passive foreign investment company if, for any taxable year, either:

  (a)    75% or more of the Company's gross income is "passive income", which
         generally includes interest, dividends, certain gains from the sale
         or exchange of shares or securities and some types of rents and
         royalties, or
  (b)    on average, 50% or more of the Company's assets, by fair market
         value, or, in some cases, by adjusted tax basis, produce or are held
         for the production of "passive income."

      Distributions constituting "excess distributions", as defined in Section
1291 of the Code, from a passive foreign investment company and dispositions
of shares of a passive foreign investment company are subject to the highest
rate of tax on ordinary income in effect and to an interest charge based on
the value of the tax deferred during the period during which the shares are
owned.

      The Company is likely to be characterized as a passive foreign
investment company for U.S. federal income tax purposes. However, U.S. Holders
who hold shares should be aware that the Company does not intend to provide
U.S. Holders with information as to its status as a passive foreign investment
company or to comply with any record keeping, reporting or other requirements
of the Code. U.S. Holders should consult with their own tax advisors as to the
tax consequences to them of holding stock of a passive foreign investment
company.

       United States backup withholding tax and information reporting
requirements generally apply to certain payments to certain non-corporate
holders of the Common Shares. Information reporting generally will apply to
payments of dividends on, and to proceeds from the sale or disposition of,
Common Shares by a payor within the United States to a U.S. Holder (if that
person is other than an exempt recipient, including a corporation, not a
United States person that provides an appropriate certification and certain
other persons).

      A payor within the United States will be required to withhold tax at a
rate equal to the fourth lowest rate applicable to ordinary income of
unmarried individuals on any payments made to a Common Share holder (if that
Common Share holder is other than an exempt recipient) consisting of dividends
on, or proceeds from the sale or disposition of, the Common Shares, if the
selling Common Share holder fails to furnish a correct taxpayer identification
number on United States Internal Revenue Service Form W-9 or otherwise fails
to comply with, or establish an exemption from, such backup withholding tax
requirements. Moreover, a payor or middleman may rely on a certification
provided by a payee that is not a United States person only if such payor or
middleman does not have actual knowledge or a reason to know that any
information or certification stated in such certificate is incorrect.
Investors will be allowed a refund or a credit equal to any amounts withheld
under the United States backup withholding tax rules against their United
States federal income tax liability, provided that they furnish the required
information to the United States Internal Revenue Service.

                                                                            53
<PAGE>


G.    Dividends and paying agents

Information not required for annual report.

H.    Statements by experts

Information not required for annual report.

I.    Documents on display

Documents on display

      Any documents referred to in this Form 20-F shall be available for
review at the registered office of the Company located at 3100 Steeles Avenue
East, Suite 1100, Markham Ontario, Canada, L3R 8T3. The Company is subject to
certain of the informational requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and in accordance therewith, files
reports and other information with the Securities and Exchange Commission (the
"SEC"). As a foreign private issuer, the Company is exempt from the rules
under the Exchange Act prescribing the furnishing and content of proxy
statements, and its officers, directors and principal shareholders are exempt
from the reporting and short-swing profit recovery provisions contained in
Section 16 of the Exchange Act. Under the Exchange Act, as a foreign private
issuer, the Company is not required to publish financial statements as
frequently or as promptly as United States companies. Such reports and other
information filed with the SEC may be inspected and copied at the public
reference facilities maintained by the SEC at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the SEC's regional offices,
including the one located at the Woolworth Building, 233 Broadway, 16th Floor
New York, New York 10279-1803. Copies of such material can also be obtained
from the principal office of the SEC at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates.


J.    Subsidiary information

Information not required.


ITEM 11.   Quantitative and Qualitative Disclosures about Market Risk

INTEREST RATE RISK.

     The Company invests its cash in a variety of short-term Canadian dollar
denominated financial instruments, including government bonds, commercial
paper and banker's acceptances. The portfolio is diversified and consists
primarily of investment grade securities to minimize credit risk. Cash
balances in foreign operations are generally invested in term deposits in the
local operating banks. The investment in short-term financial instruments
carries a degree of interest rate risk, and consequently the Company's future
investment income may fall short of expectations due to changes in short-term
interest rates. The investment in short-term financial instruments is not for
trading purposes. Management estimates that average invested cash balances
should approximate $35,000,000, therefore a 1% change in interest rates could
effect interest income by as much as $350,000 for the year.

FOREIGN CURRENCY RATE FLUCTUATIONS.

     The Company derives most of its sales revenue from international
customers, with sales outside Canada usually denominated in U.S. dollars or
European currencies including pounds sterling and Euros. For fiscal 2003,
sales denominated in U.S. dollars and European currencies represented 58.9%
and 34.2% respectively of the Company's revenues, while a significant portion
of the Company's operating expenses are incurred in Canadian dollars.
Accordingly, changes in exchange rates between the Canadian dollar and these
foreign currencies can positively or negatively affect the Company's operating
results. The Company has a policy of hedging a portion of its foreign currency
denominated accounts receivable. However, management recognizes that this
policy can provide only a short-term protection against a limited portion of
the Company's currency exposure. The financial instruments utilized by the
Company pursuant to its hedging policy are not purchased for trading purposes.
Should the Company's take over bid for Idion not be successful, the sale of
its shares of Idion could result in a gain or loss depending on the
circumstances in which they are sold and subject to foreign exchange and other
risks associated with investments in JSE listed companies. See Note 16,
Financial Instruments and Hedging Activities, to the audited Annual Financial
Statements.

     The following table provides a sensitivity analysis on the Company's
exposure to changes in foreign exchange rates. For foreign currencies where
the Company engages in material transactions, the following table quantifies
the impact that a 10% decrease against


                                                                            54
<PAGE>

the Canadian dollar would have had on the Company's total revenues, operating
expenses and pre-tax net income for the year ended January 31, 2003.

                           Total      Operating    Pre-tax
                          Revenue    Expenses     Net Income

United States Dollar      $(3,682)       $(502)      $(3,180)
British Pound              (1,168)        (895)         (273)
Euro                         (971)        (515)         (456)


ITEM 12.   Description of Securities Other than Equity Securities

Information not required for annual report


                                    PART II


ITEM 13.   Defaults, Dividend Arrearages and Delinquencies

None.


ITEM 14.   Material Modifications to the Rights of Security Holders and
           Use of Proceeds

None.


ITEM 15.   Controls and Procedures

The Chief Executive Officer and the Chief Financial Officer (the "Executive
Officers") met with the General Counsel of the Company on May 15, 2003 to
review the effectiveness of the Company's disclosure controls and procedures.
The Company's disclosure controls and procedures are documented in the
Company's Disclosure Policy that has been approved by the Board of Directors.
The Disclosure Policy provides that the Executive Officers and the General
Counsel are responsible for the disclosure of material information. The
Executive Officers reviewed the terms of the Disclosure Policy and considered
how effectively its controls and procedures functioned in practice. The
Executive Officers determined that these controls and procedures were adequate
for the Company and in compliance with all applicable, laws, regulations,
rules and listing standards. Subsequent to this evaluation, there have been no
significant changes to these controls or other factors that could
significantly affect these controls.

ITEM 16A.  Audit Committee Financial Expert

The Company's Board of Directors has determined that the Company has at least
one audit committee financial expert serving on its Audit Committee. The Board
of Directors believes that Mr. Bryan Plug has the following attributes: an
understanding of generally accepted accounting principles and financial
statements; the ability to assess the general application of such principles
in connection with the accounting for estimates, accruals and reserves;
experience supervising one or more persons engaged in preparing, auditing,
analyzing or evaluating financial statements that present a breadth and level
of complexity of accounting issues that are generally comparable to the
breadth and complexity of issues that can reasonably be expected to be raised
by the Company's financial statements; an understanding of internal controls
and procedures for financial reporting; and an understanding of audit
committee functions. Mr. Plug acquired these attributes through his experience
actively supervising the principal financial officers of software companies
where he has held senior executive positions including his current position as
Chief Executive Officer of Kintana, Inc., a leading provider of e-Business
applications management software based in Sunnyvale, California.

ITEM 16B.  Code of ethics

Management of the Company implemented an Employee Conduct Policy in April
2002. The Employee Conduct Policy was amended in the past year to add a
section relating to the anonymous accounting complaints process adopted by the
Company. The Board of Directors formally adopted the amended Employee Conduct
Policy at its meeting on March 3, 2003. The Employee Conduct Policy applies to
all officers and employees of the Company. The Employee Conduct Policy is
attached to this Form as Exhibit 16.1. Any person may request a copy of the
Employee Conduct Policy from the General Counsel of the Company by contacting
the General Counsel at the address or telephone number of the Company's
principal executive offices set out on the first page of this Form.

                                                                            55
<PAGE>

                                   PART III


ITEM 17.   FINANCIAL STATEMENTS



                                                                            56
<PAGE>




                               AUDITORS' REPORT





To the Directors of
DataMirror Corporation

We have audited the consolidated balance sheets of DataMirror Corporation as
at January 31, 2003 and 2002 and the consolidated statements of income (loss),
shareholders' equity and cash flows for each of the years in the three-year
period ended January 31, 2003. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at January 31,
2003 and 2002 and the results of its operations and its cash flows for each of
the years in the three-year period ended January 31, 2003 in accordance with
Canadian generally accepted accounting principles.

As described in note 2 to the consolidated financial statements, the Company
changed its accounting policy for goodwill effective February 1, 2002.




Toronto, Canada,
March 4, 2003.                                            Chartered Accountants




                                                                            57
<PAGE>


DataMirror Corporation


                          CONSOLIDATED BALANCE SHEETS
                      [in thousands of Canadian dollars]


As at January 31


<TABLE>
                                                                2003               2002
                                                                  $                  $
------------------------------------------------------------------------------------------
ASSETS
Current
<S>                                                          <C>                 <C>
Cash and cash equivalents [note 3]                            13,025              9,073
Short-term investments [note 4]                               25,802             27,422
Accounts receivable                                           12,455             12,773
Prepaid expenses                                               1,618              1,747
Future tax assets [note 14]                                    2,578              1,851
------------------------------------------------------------------------------------------
Total current assets                                          55,478             52,866
------------------------------------------------------------------------------------------
Capital assets, net [note 5]                                   3,931              3,702
Investment tax credits recoverable                             1,664              2,440
Investments [note 6]                                           9,768              7,495
Intangibles [note 7]                                           7,388              9,982
Goodwill [note 2]                                              3,118              3,118
------------------------------------------------------------------------------------------
                                                              81,347             79,603
------------------------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities                       5,120              3,855
Deferred revenue                                              18,137             14,583
Current portion of long-term debt [note 9]                        --              1,464
Current portion of capital lease obligations [note 10]            89                138
Income taxes payable                                             993                 --
------------------------------------------------------------------------------------------
Total current liabilities                                     24,339             20,040
------------------------------------------------------------------------------------------
Future tax liabilities [note 14]                               1,505              1,106
Capital lease obligations [note 10]                               33                 98
------------------------------------------------------------------------------------------
Total liabilities                                             25,877             21,244
------------------------------------------------------------------------------------------
Commitments and contingencies [notes 15, 16 and 18]

Shareholders' equity
Share capital [note 11]                                       64,637             64,740
Deficit                                                       (8,669)            (5,883)
Cumulative translation adjustment                               (498)              (498)
------------------------------------------------------------------------------------------
Total shareholders' equity                                    55,470             58,359
------------------------------------------------------------------------------------------
                                                              81,347             79,603
------------------------------------------------------------------------------------------

See accompanying notes

                                                                                     58
</TABLE>
<PAGE>

DataMirror Corporation


                   CONSOLIDATED STATEMENTS OF INCOME (LOSS)
           [in thousands of Canadian dollars, except per share data]

<TABLE>

Years ended January 31

                                                               2003            2002          2001
                                                                 $               $             $
----------------------------------------------------------------------------------------------------

REVENUE
<S>                                                            <C>            <C>          <C>
Licence                                                        33,223         28,592       35,040
Maintenance                                                    23,210         20,562       14,065
Services                                                        6,057          7,222        8,353
----------------------------------------------------------------------------------------------------
                                                               62,490         56,376       57,458
----------------------------------------------------------------------------------------------------

Cost of revenue
Licence                                                           239            257          514
Maintenance and services                                       12,605         13,464       11,184
----------------------------------------------------------------------------------------------------
                                                               12,844         13,721       11,698
----------------------------------------------------------------------------------------------------
Gross margin                                                   49,646         42,655       45,760
----------------------------------------------------------------------------------------------------

OPERATING EXPENSES
Selling and marketing                                          21,289         21,542       23,815
Research and development [note 13]                             10,459         10,895        7,742
General and administration                                      8,812          9,088        9,668
Amortization of intangibles                                     2,740          3,244        1,570
----------------------------------------------------------------------------------------------------
                                                               43,300         44,769       42,795
----------------------------------------------------------------------------------------------------
Operating income (loss)                                         6,346         (2,114)       2,965
Investment income, net [notes 9 and 10]                           611            859        1,333
Gain (loss) from investment in PointBase, Inc. [note 6]
   Impairment of equity investment                             (4,595)            --           --
   Dilution gain                                                   --             --        6,186
   Equity loss                                                 (2,081)        (4,112)      (4,709)
----------------------------------------------------------------------------------------------------
Income (loss) before income taxes                                 281         (5,367)       5,775
----------------------------------------------------------------------------------------------------
Provision for (recovery of) income taxes [note 14]
   Current                                                      2,762            428          877
   Future                                                        (328)          (131)         190
----------------------------------------------------------------------------------------------------
                                                                2,434            297        1,067
----------------------------------------------------------------------------------------------------
Net income (loss) for the year                                 (2,153)        (5,664)       4,708
----------------------------------------------------------------------------------------------------

Earnings per share
Basic                                                          $(0.19)       $(0.49)        $0.41
Diluted                                                        $(0.19)       $(0.49)        $0.40
----------------------------------------------------------------------------------------------------

Weighted average number of shares [000's]
Basic                                                          11,411         11,500       11,362
Diluted                                                        11,411         11,500       11,856
----------------------------------------------------------------------------------------------------

See accompanying notes

                                                                                            59
</TABLE>
<PAGE>

DataMirror Corporation

                          CONSOLIDATED STATEMENTS OF
                             SHAREHOLDERS' EQUITY
                      [in thousands of Canadian dollars]

<TABLE>

Years ended January 31

@@@PICK UP HERE PLEASE
                                      Common shares        Retained   Cumulative        Total
                                    ------------------     earnings   translation     shareholders'
                                    Shares      Amount    (deficit)   adjustment        equity
                                       #           $          $            $               $
------------------------------------------------------------------------------------------------------
                                    [000's]

<S>                                 <C>         <C>         <C>           <C>              <C>
Balance, January 31, 2000           10,207      30,773      (3,036)       (498)            27,239
Net income for the year                 --          --       4,708          --              4,708
Issuance of common shares
   [note 11[b]]                      1,305      34,151          --          --             34,151
Exercise of stock options
   [note 12]                           209       1,190          --          --              1,190
Repurchase of common shares
   [note 11[c]]                        (97)       (531)     (1,539)         --             (2,070)
------------------------------------------------------------------------------------------------------
Balance, January 31, 2001           11,624      65,583         133        (498)            65,218
------------------------------------------------------------------------------------------------------
Net loss for the year                   --          --      (5,664)         --             (5,664)
Issuance of share capital
   [notes 11[d] and 18]                 72         435          --          --                435
Exercise of stock options [note 12]    112         619          --          --                619
Repurchase of common shares
   [note 11[c]]                       (336)     (1,897)       (352)         --             (2,249)
------------------------------------------------------------------------------------------------------
Balance, January 31, 2002           11,472      64,740      (5,883)       (498)            58,359
------------------------------------------------------------------------------------------------------
Net loss for the year                   --          --      (2,153)         --             (2,153)
Exercise of stock options [note 12]    153         821          --          --                821
Repurchase of common shares
   [note 11[c]]                       (164)       (924)       (633)         --             (1,557)
------------------------------------------------------------------------------------------------------
Balance, January 31, 2003           11,461      64,637      (8,669)       (498)            55,470
------------------------------------------------------------------------------------------------------

See accompanying notes

                                                                                            60
</TABLE>

<PAGE>

DataMirror Corporation

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                      [in thousands of Canadian dollars]

<TABLE>

Years ended January 31

                                                               2003            2002          2001
                                                                 $               $             $
-----------------------------------------------------------------------------------------------------

OPERATING ACTIVITIES
<S>                                                            <C>           <C>            <C>
Net income (loss) for the year                                 (2,153)       (5,664)        4,708
Add (deduct) items not affecting cash
   Amortization of capital assets                               1,630         1,876         1,729
   Amortization of intangibles                                  2,740         3,244         1,570
   Future income taxes                                           (328)         (131)          190
   Impairment of investment in PointBase, Inc.                  4,595            --        (6,186)
   Equity loss from investment in PointBase, Inc.               2,081         4,112         4,709
   Investment tax credits recoverable                             776            --            --
   Non-cash interest expense                                       63           215            48
   Non-cash foreign exchange loss                                  59            97            --
   Non-cash operating expense                                     186            90            --
-----------------------------------------------------------------------------------------------------
                                                                9,649         3,839         6,768
Net change in non-cash working capital balances
   related to operations                                        6,259        11,474        (3,307)
-----------------------------------------------------------------------------------------------------
Cash provided by operating activities                          15,908        15,313         3,461
-----------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES
Additions to capital assets                                    (1,859)       (1,460)       (1,134)
Purchase of short-term investments                            (25,802)      (27,422)           --
Maturity of short-term investments                             27,422            --            --
Investment in Idion Technology Holdings Limited                (8,949)         (820)           --
Acquisition of intangibles                                       (332)         (676)           --
Acquisition of business, net of cash [note 18]                     --          (724)       (8,940)
Purchase of investment [note 6]                                    --            --        (5,893)
-----------------------------------------------------------------------------------------------------
Cash used in investing activities                              (9,520)      (31,102)      (15,967)
-----------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES
Repayment of long-term debt                                    (1,586)       (1,566)         (890)
Payments of capital lease obligations                            (114)         (275)         (754)
Issuance of share capital                                         821           747        34,206
Repurchase of share capital                                    (1,557)       (2,249)       (2,070)
-----------------------------------------------------------------------------------------------------
Cash provided by (used in) financing activities                (2,436)       (3,343)       30,492
-----------------------------------------------------------------------------------------------------

Net increase (decrease) in cash and equivalents
   during the year                                              3,952       (19,132)       17,986
Cash and cash equivalents, beginning of year                    9,073        28,205        10,219
-----------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year                         13,025         9,073        28,205
-----------------------------------------------------------------------------------------------------

Supplemental cash flow information
Interest paid                                                     119            53            97
Income taxes paid                                                 238         1,080            --
-----------------------------------------------------------------------------------------------------

See accompanying notes

                                                                                             61
</TABLE>
<PAGE>

DataMirror Corporation


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   [Tabular amounts in thousands of Canadian dollars, except per share data]


January 31, 2003




1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Generally accepted accounting principles

The consolidated financial statements of DataMirror Corporation [the
"Company"] have been prepared in accordance with Canadian generally accepted
accounting principles ["Canadian GAAP"], which are in all material respects in
accordance with accounting principles generally accepted in the United States
["U.S. GAAP"], except as disclosed in note 20. The Company is incorporated
under the laws of Ontario.

Basis of consolidation

The consolidated financial statements include the accounts of the Company
together with its wholly-owned subsidiary companies. All significant
inter-company transactions and balances have been eliminated upon
consolidation. The purchase method is used to account for acquisitions and the
results of operations of subsidiaries are included from the dates of their
respective acquisitions.

Use of estimates

The preparation of these consolidated financial statements in conformity with
Canadian GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of these consolidated financial
statements and the reported amounts of revenue and expenses during the
reporting period. Actual amounts may vary from the current estimates.

Cash and cash equivalents

Cash and cash equivalents include highly liquid investments having maturity
dates of up to three months when purchased and are valued at cost, which
approximates their fair value.

Short-term investments

Short-term investments include highly liquid investments with maturity dates
of over three months and less than one year when purchased and are valued at
the lower of cost and market, which approximates their fair value.


                                                                            62
<PAGE>

DataMirror Corporation


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   [Tabular amounts in thousands of Canadian dollars, except per share data]


January 31, 2003





Capital assets

Capital assets are recorded at cost less accumulated amortization and related
investment tax credits. Amortization is provided over the estimated useful
life of the related asset. Computer equipment and software are amortized on a
declining balance basis at rates varying from 30% to 50%. Furniture and
equipment are amortized on a declining balance basis at 20%. Leasehold
improvements are amortized on a straight-line basis over the term of the
related lease.

Leases

Leases are classified as either capital or operating. Those leases which
transfer substantially all the benefits and risks of ownership of property to
the Company are accounted for as capital leases. The capitalized lease
obligation reflects the present value of future lease payments, discounted at
the appropriate interest rate and is reduced by rental payments net of imputed
interest. Assets under capital leases are amortized based on the useful life
of the asset. All other leases are accounted for as operating with rental
payments being expensed as incurred.

Investments

The Company's investment in PointBase, Inc. ["PointBase"] is recorded using
the equity method of accounting.

The Company's investment in Idion Technology Holdings Limited ["Idion"] is
recorded at cost as the Company does not have significant influence over the
affairs of Idion and was not able to obtain adequate financial information
from Idion to enable it to account for its investment using the equity method.

A decline in the value of an investment which is considered to be other than a
temporary impairment in value is charged against income in the period that
such determination is made.

Intangibles

Intangibles are comprised of acquired technology assets, which are recorded at
cost. Amortization is provided for on a straight-line basis over one to five
years. Acquired technology assets are assessed for future recoverability or
impairment on an annual basis by estimating future undiscounted cash flows.
When the net carrying value of an acquired technology asset exceeds the
estimated net recoverable amount, the asset is written down with a charge
against income in the period that such determination is made.



                                                                            63
<PAGE>

DataMirror Corporation


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   [Tabular amounts in thousands of Canadian dollars, except per share data]


January 31, 2003




Goodwill

Goodwill arises on business acquisitions and comprises the excess of amounts
paid over the fair value of net identifiable assets acquired.

Effective February 1, 2002, the Company adopted the requirements of The
Canadian Institute of Chartered Accountants ["CICA"] Handbook Section 3062,
"Goodwill and Other Intangible Assets." Under the new standard, goodwill and
intangible assets with indefinite useful lives are no longer amortized but are
subject to an impairment review at least annually. As of the adoption date,
the Company completed impairment testing on the balance of goodwill and no
impairment loss was recorded. The Company has determined that it has no
intangible assets of indefinite life.

The carrying value of goodwill is assessed at least annually to determine if a
permanent impairment exists. This assessment is based on the estimated fair
value of the business to which the goodwill relates.

Earnings per share

Basic earnings per share are calculated on net income (loss) for the year
using the weighted average number of shares outstanding. Diluted earnings per
share reflect the dilution that would occur if outstanding stock options were
exercised into common shares using the treasury stock method. The computation
of diluted earnings per share does not include stock options with dilutive
potential that would have an anti-dilutive effect on earnings per share. For
the years ended January 31, 2003 and 2002, the inclusion of the Company's
stock options in the computation of diluted earnings per share would have an
anti-dilutive effect. Therefore, stock options are excluded from the
computation for the years ended January 31, 2003 and 2002 and consequently
there is no difference between basic earnings per share and diluted earnings
per share.

Stock-based compensation plans

The Company has two stock-based compensation plans, which are described in
note 12. No compensation expense is recognized for these plans when stock
options are issued to directors, officers and employees. Any consideration
paid on the exercise of stock options is credited to share capital.


                                                                            64
<PAGE>

DataMirror Corporation


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   [Tabular amounts in thousands of Canadian dollars, except per share data]


January 31, 2003




Research and development costs

Research costs are expensed as incurred. Development costs are expensed as
incurred unless a project meets the criteria under Canadian generally accepted
accounting principles for deferral and amortization. The Company has not
deferred any such development costs to date. Research and development costs
are reduced by related investment tax credits.

Government assistance

Government assistance, consisting of investment and other tax credits, is
recorded using the cost reduction method. Such government assistance is
recorded when the qualifying expenditure is made and where there is reasonable
assurance that investment and other tax credits will be realized.

Foreign currency translation

Tile Company's subsidiaries are considered to be integrated operations.
Accordingly, the temporal method is used to translate the foreign operations
of the subsidiary companies. The temporal method is also used to translate
foreign transactions and balances. Under this method, monetary assets and
liabilities denominated in foreign currencies are translated at exchange rates
prevailing at the consolidated balance sheet dates. Non-monetary assets and
liabilities are translated at historical exchange rates. Revenue and expenses,
excluding amortization, are translated at average rates prevailing during the
year. Amortization is translated at weighted average historical rates. The
resulting net gain or loss on translation is included in the consolidated
statements of income (loss) in the period incurred.

Foreign exchange gains and losses on transactions during the year are
reflected in income, except for gains and losses on foreign exchange forward
contracts used to hedge the collection of accounts receivable denominated in
foreign currencies [note 16]. Gains or losses on these contracts are accounted
for as a component of the related hedged transaction. Unrealized foreign
exchange gains or losses on foreign denominated long-term debt are charged to
income in the period in which the gain or loss arises.

Revenue recognition and deferred revenue

The Company's revenues are generated from the sale of software licences,
software maintenance and support fees and services.

                                                                            65
<PAGE>

DataMirror Corporation


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   [Tabular amounts in thousands of Canadian dollars, except per share data]


January 31, 2003




Revenue is recognized in accordance with Statement of Position ["SOP"] 97-2,
"Software Revenue Recognition" issued by the American Institute of Certified
Public Accountants ["AICPA"] in October 1997 and amended by SOP 98-4 issued in
March 1998. Software licence revenue is recognized when persuasive evidence of
an arrangement exists, the related products are shipped, there are no
significant uncertainties surrounding product acceptance, the fees are fixed
and determinable and collection is considered probable. Revenue from software
maintenance and support agreements is recognized on a straight-line basis over
the term of the related agreements. Revenue from services is comprised of
consulting, training and installation fees and is recognized at the time the
services are performed.

Deferred revenue is comprised of software maintenance and support fees and
consulting revenue for which services have yet to be provided.

Income taxes

The Company accounts for income taxes using the liability method of tax
allocation. Under the liability method of tax allocation, future tax assets
and liabilities are determined based on the differences between financial
reporting and tax bases of assets and liabilities and are measured using the
substantively enacted tax rates and laws that are expected to be in effect
when the differences are expected to reverse. The Company provides a valuation
allowance on future tax assets when it is more likely than not that such
assets will not be realized.

2. NEW ACCOUNTING PRONOUNCEMENTS

[a] Business combinations, goodwill and other intangible assets

In September 2001, the CICA issued Handbook Sections 1581, "Business
Combinations", and 3062, "Goodwill and Other Intangible Assets". The new
standards require that the purchase method of accounting must be used for
business combinations initiated after June 30, 2001 and require that goodwill
and intangible assets with indefinite lives no longer be amortized but instead
be tested for impairment at least annually. The standards also specify
criteria that intangible assets must meet to be recognized and reported apart
from goodwill. The standards require that the value of the shares issued in a
business combination be measured using the average price for a reasonable
period before and after the date the terms of the acquisition are agreed to
and announced.

The Company has adopted these new standards as of February 1, 2002 and has
discontinued amortization of all existing goodwill. In connection with Section
3062's transitional goodwill


                                                                            66
<PAGE>

DataMirror Corporation


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   [Tabular amounts in thousands of Canadian dollars, except per share data]


January 31, 2003




impairment evaluation, the Company is required to assess whether goodwill is
impaired at February 1, 2002 using a two step test. The Company had six months
to complete step one of the test, which is to determine the fair value of its
reporting units and compare that to the carrying value of its reporting units.
The Company has completed step one of the test, and has determined that there
is no potential impairment to goodwill as at February 1, 2002. As a result,
the Company is not required to perform step two of the transitional impairment
test.

On November 1, 2002, the Company performed its annual impairment test, and
determined that there was no potential impairment to goodwill at that date. In
addition to the annual impairment test, the Company will perform an impairment
test if an event occurs or circumstances change that would more likely than
not reduce the value of a reporting unit below its carrying value. Any
resulting impairment will be charged to operating income in the period it is
discovered.

On February 1, 2002, the Company had unamortized goodwill of $3,118,000, which
is no longer being amortized. The Company's investment in PointBase included
$2,710,000 of unamortized goodwill as of February 1, 2002 which is no longer
being amortized. The investment in PointBase was written off in October 2002
as disclosed in note 6.

This change in accounting policy has not been applied retroactively and the
amounts presented for prior periods have not been restated for this change.
The impact of this change is as follows:

Years ended January 31,                            2003        2002       2001
                                                     $          $           $
-------------------------------------------------------------------------------

Net income (loss) for the year                   (2,153)     (5,664)     4,708
Add amortization of goodwill                         --       1,520      1,277
-------------------------------------------------------------------------------
Income (loss) before amortization of goodwill    (2,153)     (4,144)     5,985
-------------------------------------------------------------------------------

Basic earnings per share
Income (loss) per share
   Net income (loss) for the year                 (0.19)      (0.49)      0.41
   Income (loss) before amortization of goodwill  (0.19)      (0.36)      0.53
-------------------------------------------------------------------------------

Diluted earnings per share
Net income (loss) for the year                    (0.19)      (0.49)      0.40
Income (loss) before amortization of goodwill     (0.19)      (0.49)      0.50
------------------------------------------------------------------------------


                                                                         67
<PAGE>

DataMirror Corporation


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   [Tabular amounts in thousands of Canadian dollars, except per share data]


January 31, 2003



Of the amortization of goodwill of $1,520,000 [2000 - $1,277,000] for the year
ended January 31, 2002, $520,000 [2001 - $520,000] is included in amortization
of intangibles and $1,000,000 [2001 - $757,000] related to the amortization of
the goodwill associated with the Company's investment in PointBase is included
in the equity loss from investment in PointBase.

[b] Stock-based compensation and other stock-based payments

Effective February 1, 2002, the Company adopted CICA 3870, "Stock-based
Compensation and Other Stock-based Payments". As permitted by CICA 3870, the
Company has applied this change prospectively for new awards granted on or
after February 1, 2002. The Company has chosen to continue its policy of
recognizing no compensation when stock options are granted to employees and
directors under stock option plans with no cash settlement features. However,
direct awards of stock to employees and stock and stock option awards granted
to non-employees have been accounted for in accordance with the fair value
method of accounting for stock-based compensation. The fair value of direct
awards of stock are determined by the quoted market price of the Company's
stock and the fair value of stock options are determined using the
Black-Scholes option pricing model. In periods prior to February 1, 2002, the
Company recognized no compensation when stock or stock options were issued to
employees. This change in policy did not have a material impact on the results
for the year ended January 31, 2003.

[c] Foreign exchange gains and losses on long-term monetary liabilities

Effective February 1, 2002, the Company has retroactively adopted the
revisions to CICA 1650, "Foreign Currency Translation". Under the revised
section, foreign exchange gains or losses on long-term monetary assets and
liabilities are no longer deferred and amortized over the term on the related
asset or liability, but rather charged to income in the period in which that
gain or loss arises. This change in policy did not have a material impact on
the results for the years ended January 31, 2003, January 31, 2002 and January
31, 2001.


                                                                            68
<PAGE>

DataMirror Corporation


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   [Tabular amounts in thousands of Canadian dollars, except per share data]


January 31, 2003



3. CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of the following:

As at January 31,                              2003               2002
                                                 $                  $
-------------------------------------------------------------------------------

Cash                                          5,959              9,073
Commercial paper                              7,066                 --
-------------------------------------------------------------------------------
                                             13,025              9,073
-------------------------------------------------------------------------------

The commercial paper for 2003 bears interest at rates of approximately 2.8%
and expiry dates extending up to one month.

4. SHORT-TERM INVESTMENTS

As at January 31,                             2003               2002
                                                $                  $
-------------------------------------------------------------------------------

Commercial paper                            25,802             27,422
-------------------------------------------------------------------------------

Short-term investments consist of commercial paper bearing interest at a rate
of approximately 3.0% [2002 - 3.0%] and maturity dates of up to one month
[2002 - two months] from January 31, 2003.


                                                                            69
<PAGE>

5. CAPITAL ASSETS

Capital assets consist of the following:

                                            2003               2002
                                              $                  $
-------------------------------------------------------------------------------

Computer equipment and software              9,347              7,974
Furniture and equipment                      2,155              1,950
Leasehold improvements                       1,371              1,090
----------------------------------------------------------------------------
                                            12,873             11,014
Less accumulated amortization                8,942              7,312
----------------------------------------------------------------------------
                                             3,931              3,702
----------------------------------------------------------------------------

Capital assets include assets under capital leases of approximately $350,000
[accumulated amortization of $245,000] at January 31, 2003 and $498,000
[accumulated amortization of $262,000] at January 31, 2002.

During the year, capital assets were acquired at an aggregate cost of
$1,859,000 [2002 - $1,625,000] of which nil [2002 - $165,000] was acquired by
means of capital leases and excluded from the consolidated statements of cash
flows.

6. INVESTMENTS

The investments are as follows:

As at January 31,                                 2003               2002
                                                    $                  $
------------------------------------------------------------------------------

PointBase
   Investment, at cost                          10,603             10,603
   Cumulative dilution gain                      8,513              8,513
   Cumulative equity loss                      (14,521)           (12,441)
   Impairment charge                            (4,595)                --
------------------------------------------------------------------------------
                                                     --              6,675
Idion                                            9,768                820
------------------------------------------------------------------------------
                                                 9,768              7,495
------------------------------------------------------------------------------


                                                                            70
<PAGE>

DataMirror Corporation


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   [Tabular amounts in thousands of Canadian dollars, except per share data]


January 31, 2003



In June and August 2000, PointBase engaged in an additional round of financing
in which the Company invested an additional $5,893,000. However, as a result
of the participation of other parties in these investment rounds, the
Company's approximate ownership was reduced and the Company recognized a
dilution gain of $6,186,000, which represents the increase in the Company's
pro-rata share of the net assets of PointBase. The financings also decreased
the Company's approximate ownership percentage of PointBase from 29% to 25%.

PointBase has had a history of operating losses and, while the level of
operating losses has decreased in the current year, there is little prospect
of short-term profitability. In June of 2002, PointBase started a downsizing
of their business with the intent of achieving break-even operations in the
short-term. In October 2002, it became apparent that these measures would not
result in profitable or break-even operations in the near future and the
Company's investment had become impaired and, accordingly, the investment was
written down to the estimated fair value of nil.

On March 18, 2002, the Company announced its intention to make a take-over bid
for all of the shares of Idion, a South African company listed on the
Johannesburg Stock Exchange, in a cash bid valued at $9.8 million. On April
18, 2002, the bid was increased to $18.9 million, and subsequently, on May 8,
2002, the bid was further increased to $30.4 million. On July 4, 2002 the
Company closed its bid to acquire Idion, having not been successful in
completing the take-over. At January 31, 2003, the Company owned approximately
44,523,000 or 39.36% of Idion's outstanding common shares acquired at a cost
of $9,768,000. The ownership of 1,119,000 shares of Idion is subject to a
dispute between the Company and a broker acting on behalf of persons related
to the CEO of Idion. The outcome of this litigation is not determinable at
present and, therefore, the amount paid for these shares has been included in
this total.

The investment in Idion has been accounted for at cost, as the Company does
not have significant influence over the affairs of Idion and was not able to
obtain adequate financial information from Idion to enable it to account for
its investment using the equity method.


                                                                            71
<PAGE>

DataMirror Corporation


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   [Tabular amounts in thousands of Canadian dollars, except per share data]


January 31, 2003



7. INTANGIBLES

Intangibles consist of the following:

As at January 31,                                  2003                  2002
                                   ---------------------------------   ---------
                                                               Net        Net
                                             Accumulated      book       book
                                    Cost    amortization      value     value
                                      $           $             $          $
--------------------------------------------------------------------------------

Acquired technology                13,389       6,033        7,356      9,765
--------------------------------------------------------------------------------
Deferred compensation [note 18]       307         275           32        217
                                   13,696       6,308        7,388      9,982
--------------------------------------------------------------------------------

8. BANK CREDIT FACILITIES

At January 31, 2003 and 2002, the Company had available credit facilities of
$3,000,000 bearing interest at the prime rate plus 0.5% and (pound)150,000
[$377,000] bearing interest at the prime rate in the United Kingdom plus
3.00%. Under a general security agreement and a source code escrow agreement,
all of the Company's assets, including the source code for the Company's
software, are pledged as collateral for these credit facilities. As at January
31, 2003, no amounts have been drawn against these facilities other than
letters of credit of $140,000 [2002 - $140,000].

9. LONG-TERM DEBT

Long-term debt consists of the following:

As at January 31,                                           2003        2002
                                                              $           $
-------------------------------------------------------------------------------

Loan payable, repayable in two annual payments of
   U.S. $1,000,000 due on September 29, 2001 and 2002         --       1,464
Less current portion                                          --      (1,464)
-------------------------------------------------------------------------------
                                                              --          --
-------------------------------------------------------------------------------

The loan payable arose upon the acquisition of the assets of Constellar
Corporation ["Constellar"] by the Company [note 18] and is unsecured and
non-interest bearing. As the loan payable is non-interest bearing, it is shown
at a reduced value to reflect the imputed interest at a rate of 8%,

                                                                            72
<PAGE>


DataMirror Corporation


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   [Tabular amounts in thousands of Canadian dollars, except per share data]


January 31, 2003




representing the Company's approximate borrowing rate at the date of
acquisition. The imputed interest will be charged to interest expense on
long-term debt over the term of the loan. Included in investment income, net,
is interest expense on long-term debt of $63,000 [2002 - $215,000; 2001 -
$48,000].

10. CAPITAL LEASE OBLIGATIONS

Future minimum annual lease payments with imputed interest rates ranging from
7.3% to 8.4% and expiry dates to June 21, 2004 are as follows:

As at January 31,                                 2003               2002
                                                    $                  $
------------------------------------------------------------------------------

2003                                                --                151
2004                                               105                 80
2005                                                32                 28
------------------------------------------------------------------------------
                                                   137                259
Less amount representing imputed interest          (15)                23
------------------------------------------------------------------------------
                                                   122                236
Less current portion                                89                138
------------------------------------------------------------------------------
                                                    33                 98
------------------------------------------------------------------------------

Included in investment income, net is interest expense relating to capital
lease obligations of $13,000 [2002 - $18,000; 2001 - $51,000].

11. SHARE CAPITAL

[a]  Authorized

     Unlimited number of common and preferred shares.

[b]  Share issuance

     On April 6, 2000, the Company issued 1,305,000 common shares at a
     purchase price per common share of $27.00 for gross proceeds of
     $35,235,000. The Company incurred total costs of approximately $2,219,000
     relating to this share issuance, which have been offset against share
     capital, net of a future tax benefit of approximately $1,135,000.


                                                                            73
<PAGE>

DataMirror Corporation


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   [Tabular amounts in thousands of Canadian dollars, except per share data]


January 31, 2003



[c]  Shares purchased for cancellation

     Under a normal course issuer bid ["Bid"] effective September 21, 2001 and
     2000, the Company indicated its intention to purchase up to 576,226 and
     582,335 respectively of its outstanding common shares. These Bids expired
     on September 20, 2002 and 2001, respectively. Under a new Bid, effective
     September 21, 2002, the Company indicated its further intention to
     additionally purchase up to 569,912 of its outstanding common shares.
     This Bid expires on September 20, 2003. During the year ended January 31,
     2003, the Company purchased for cancellation 163,600 common shares [2002
     - 336,300; 2001 - 96,700] for cash consideration of $1,557,000 [2002 -
     $2,249,000; 2001 - $2,070,000]. As a result, stated capital was reduced
     by $924,000 [2002 - $1,897,000; 2001 - $531,000] and retained earnings
     were reduced by $633,000 [2002 - $352,000; 2001 - $1,539,000].

[d]  Share purchase plan

     Under a share purchase plan the Company issued nil shares [2002 - 22,215;
     2001 - nil] for consideration of nil [2002 - $128,000; 2001 - nil].


                                                                            74
<PAGE>

DataMirror Corporation


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   [Tabular amounts in thousands of Canadian dollars, except per share data]


January 31, 2003




12. STOCK-BASED COMPENSATION PLANS

At January 31, 2003, the Company has two stock-based compensation plans for
the purpose of providing shares to directors, officers and employees. The
first plan was established on December 12, 1996. Options under this plan
generally vest over four years from the date of grant and expire five years
from the date of grant. The second plan was established on June 14, 2000 with
similar attributes. The number of common shares reserved for issuance under
the first and second plan are 1,640,000 and 500,000, respectively.

A summary of the status of the Company's stock-based compensation plans as at
January 31, 2003, 2002 and 2001 and changes during the years then ended is
presented below:

<TABLE>

                                    2003                      2002                       2001
                            ---------------------   ------------------------   -----------------------
                                        Weighted                Weighted                Weighted
                                        average                 average                  average
                                       exercise                exercise                 exercise
                            Options      price       Options     price         Options    price
                               #           $            #          $              #         $
------------------------------------------------------------------------------------------------------
<S>                         <C>           <C>        <C>            <C>       <C>            <C>
Outstanding,
   beginning of year        1,267,661     10.89      1,169,546      11.89     1,078,724      7.32
Granted                       273,792     10.98        482,655       8.53       628,653     18.26
Exercised                    (152,715)     5.38       (112,422)      5.51      (208,566)     5.71
Expired                      (270,242)    12.33       (272,118)     13.24      (329,265)    13.00
------------------------------------------------------------------------------------------------------
Outstanding,
   end of year              1,118,496     11.32      1,267,661      10.89     1,169,546     11.89
------------------------------------------------------------------------------------------------------

Options exercisable
   at year end                506,400                  462,684                  368,623
------------------------------------------------------------------------------------------------------



                                                                                              75
</TABLE>
<PAGE>


DataMirror Corporation


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   [Tabular amounts in thousands of Canadian dollars, except per share data]


January 31, 2003




<TABLE>

                                      Options outstanding                  Options exercisable
                         -----------------------------------------   -------------------------------
                                           Weighted
                         Outstanding        average      Weighted       Vested and       Weighted
                             at            remaining      average     exercisable at      average
 Range of exercise       January 31,      contractual    exercise       January 31,      exercise
      prices                2003             life          price           2003            price
         $                    #           [in years]         $               #               $
----------------------------------------------------------------------------------------------------

<C>    <C>                  <C>               <C>           <C>             <C>              <C>
4.00 - 6.00                 156,901           2.2           5.51            86,440           5.26
6.01 - 9.00                 218,863           3.2           7.06            78,242           6.87
9.01 - 13.50                376,062           2.7          11.23           183,679          11.13
13.51 - 20.25               291,275           2.7          15.03           120,343          14.73
20.26 - 27.97                75,395           2.5          21.86            37,696          21.86
----------------------------------------------------------------------------------------------------
4.00 - 27.97              1,118,496           2.7          11.32           506,400          11.12
----------------------------------------------------------------------------------------------------
</TABLE>


The Company applies the intrinsic value based method of accounting for
stock-based compensation awards granted to employees. Accordingly, no
compensation cost has been recognized for its stock purchase plans.

Companies are required to calculate and disclose, on a pro forma basis,
compensation expense related to the fair value of stock options at the grant
date in the notes to the consolidated financial statements. Under the
transitional rules, CICA Handbook Section 3870 "Stock-based compensation and
other stock-based payments" allows companies to only include options issued
subsequent to January 31, 2002 in the pro forma calculation of net income
(loss) for the year. Based on stock options issued subsequent to January 31,
2002, stock-based compensation expense for 2003 would have been $220,000 and
the pro forma loss for 2003 would have been $2,373,000 [$0.21 per share basic
and diluted].

The Company has utilized the Black-Scholes option valuation model to estimate
the fair value of options granted based on the following assumptions:

Years ended January 31,                                             2003
----------------------------------------------------------------------------

Risk free interest rate                                             4.3%
Expected dividend yield                                               0%
Expected volatility                                                0.518
Expected option life [in years]                                      2.2
Weighted-average fair values of options granted                    $3.67
----------------------------------------------------------------------------


                                                                            76
<PAGE>


DataMirror Corporation


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   [Tabular amounts in thousands of Canadian dollars, except per share data]


January 31, 2003




The Black-Scholes option valuation method used by the Company to determine
fair values was developed for use in estimating the fair value of freely
traded options that are fully transferable and have no vesting restrictions.
This model requires the use of highly subjective assumptions, including future
stock price volatility and expected time until exercise. Because the Company's
outstanding stock options have characteristics that are significantly
different from those of traded options, and because changes in any of these
assumptions can materially affect the fair value estimate, in management's
opinion, the existing models may not provide a reliable single measure of the
fair value of its stock options.

13. GOVERNMENT ASSISTANCE

The Company applies for investment tax credits under the Income Tax Act
(Canada) relating to amounts expended on scientific research and development.
During the year, $590,000 [2002 - nil; 2001 - $700,000] in investment tax
credits were applied to reduce operating expenses. The amount of investment
tax credits recorded represents management's best estimate based on its
interpretation of current legislation. However, the Canada Customs and Revenue
Agency has not yet assessed all these claims and, therefore, the amount
ultimately received could be materially different than the amount recorded.


                                                                            77
<PAGE>

DataMirror Corporation


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   [Tabular amounts in thousands of Canadian dollars, except per share data]


January 31, 2003




14. INCOME TAXES

Significant components of the Company's future tax assets and liabilities are
as follows:

As at January 31,                                        2003        2002
                                                           $           $
-----------------------------------------------------------------------------

Future tax assets
Current
Deferred revenue                                        2,413       1,834
Other                                                     165          17
-----------------------------------------------------------------------------
                                                        2,578       1,851
Less valuation allowance                                   --          --
-----------------------------------------------------------------------------
                                                        2,578       1,851
-----------------------------------------------------------------------------

As at January 31,                                        2003        2002
                                                           $           $
-----------------------------------------------------------------------------

Future tax assets
Long-term
Tax benefit of loss carryforwards and tax credits       1,637       1,766
Share issue costs                                         282         451
Equity investment in PointBase, Inc.                    1,812       1,317
Other                                                      53         147
-----------------------------------------------------------------------------
                                                        3,784       3,681
Less valuation allowance                               (3,339)     (2,824)
-----------------------------------------------------------------------------
                                                          445         857
-----------------------------------------------------------------------------

Future tax liabilities
Long-term
Tax depreciation in excess of book depreciation         (941)     (1,135)
Scientific research investment tax credits              (666)       (828)
Other                                                   (343)         --
----------------------------------------------------------------------------
                                                      (1,950)     (1,963)
----------------------------------------------------------------------------
                                                      (1,505)     (1,106)
----------------------------------------------------------------------------


                                                                            78
<PAGE>


DataMirror Corporation


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   [Tabular amounts in thousands of Canadian dollars, except per share data]


January 31, 2003




The following table reconciles the income tax expense computed at the rates
specified in Canadian tax statutes to the reported income tax expense:

<TABLE>

Years ended January 31,                                       2003         2002        2001
                                                                $            $           $
-----------------------------------------------------------------------------------------------
<S>                                                           <C>           <C>        <C>
Income tax expense (recovery) at combined
   Canadian federal and provincial income tax
   rate of 38.6% [2002 - 41.70%; 2001 - 43.80%]                107       (2,240)      2,529
Effect of foreign tax rate differences                        (141)         (95)       (591)
Benefit of foreign tax losses not previously recognized       (282)        (101)       (897)
Items not deductible for income tax purposes                   268          244         134
Non-taxable loss (gain) from investment in PointBase, Inc.   2,578        1,556        (647)
Foreign tax losses not tax benefited                           137          448         962
Manufacturing and processing profits deduction                (283)         198         (65)
Ontario research and development incentives                     --           --         (99)
Effect of rate changes on future income taxes                 (315)          88          --
Other                                                          365          199        (259)
-----------------------------------------------------------------------------------------------
Income tax expense                                           2,434          297       1,067
===============================================================================================
</TABLE>


Significant components of the provision for income taxes are as follows:
<TABLE>

Years ended January 31,                                       2003         2002        2001
                                                                $            $           $
--------------------------------------------------------------------------------------------

<S>                                                          <C>            <C>         <C>
Current tax expense                                          2,762          428         877
Future income tax expenses (benefit) relating
    to origination and reversal of temporary
   differences                                                 (13)        (177)        190
Future income tax benefit resulting from
   recognition of loss carryforwards                            --         (42)          --
Future income tax expense (recovery) resulting
   from rate change                                           (315)          88          --
--------------------------------------------------------------------------------------------
Income tax expense                                           2,434          297       1,067
============================================================================================
</TABLE>


The Company has foreign non-capital loss carryforwards of approximately
$4,262,000, of which $3,952,000 have no expiry date and may be applied against
future years' taxable income in those


                                                                            79
<PAGE>

DataMirror Corporation


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   [Tabular amounts in thousands of Canadian dollars, except per share data]


January 31, 2003





tax jurisdictions for an indefinite period. The remaining $310,000 of those
losses expire in 2004 and 2005. Of the total losses of $4,262,000, a valuation
allowance has been recognized for all but $310,000 of the losses in one tax
jurisdiction.

15. LEASE COMMITMENTS

The Company has entered into agreements to lease office facilities and
equipment for which the future annual lease payments are approximately as
follows:

                                                             $
------------------------------------------------------------------------

2004                                                  2,473,000
2005                                                  1,409,000
2006                                                  1,216,000
2007                                                    975,000
2008                                                    975,000
Thereafter                                            1,219,000
========================================================================

16. FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

Foreign currency risk

The Company is exposed to foreign currency risk from fluctuation in foreign
currency rates. Increases and decreases in foreign currency rates could impact
the Company's income (loss).

During the year ended January 31, 2003, the Company incurred a foreign
exchange loss of $326,000 [2002 - gain of $149,000; 2001 - loss of $392,000].

Hedging activities

During the year, the Company entered into forward currency contracts to sell
U.S. dollars for Canadian dollars to hedge the future collection of its
accounts receivable denominated in U.S. dollars. At January 31, 2003, U.S.
$2,000,000 of forward currency contracts were outstanding at exchange rates of
approximately 1.58, maturing within thirty days of the Company's year end with
a fair value of $101,000 [2002 - $25,000]. These contracts hedge a portion of
the Company's U.S. dollar based accounts receivable. The Company does not
enter into foreign exchange contracts for speculative purposes.


                                                                            80
<PAGE>

DataMirror Corporation


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   [Tabular amounts in thousands of Canadian dollars, except per share data]


January 31, 2003





Current financial assets and liabilities

Due to the short period to maturity of these financial instruments, the
carrying values as presented in the consolidated balance sheets are reasonable
estimates of their fair values.

Investments

The Company's investment in PointBase, a privately-owned company, has been
written down to a fair value of nil.

The fair value of the investment in Idion at January 31, 2003 is $14,450,000.

Should the Company not ultimately be successful in taking over Idion, the sale
of these shares could result in a gain or loss depending on the circumstances
in which they are sold and are subject to foreign exchange and other risks.

Long-term debt

The fair value of the Company's long-term debt, based on current rates for
liabilities with similar terms and maturities, is not materially different
from its carrying values.

Risk management

Short-term investments are placed exclusively with entities having ratings of
at least R1-low by a recognized Canadian debt-rating agency.

Credit risk related to the Company's trade receivables is minimized due to its
large customer base, geographical distribution and diversification of
operations.

In addition to Canada and the United States, the Company also operates in the
United Kingdom, Germany and other European countries and is therefore exposed
to market risks related to foreign currency fluctuations between these
currencies.

17. SEGMENTED INFORMATION

The Company operates in only one industry, that being the business of
developing and marketing computer software products. The Company has two
reportable segments, North America, which includes the Company's newly
incorporated Asia Pacific operations, and Europe, based on the


                                                                            81
<PAGE>

DataMirror Corporation


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   [Tabular amounts in thousands of Canadian dollars, except per share data]


January 31, 2003





geographic location of its operations. The accounting policies followed by
these segments are the same as those described in the summary of significant
accounting policies. The Company accounts for intersegment sales at fair
value.

The Company's reportable segments are strategic business units. They are
managed separately because each reportable segment operates in different
economic marketplaces and therefore, requires different investing and
marketing strategies. The Company evaluates segment performance based on
profit or loss from operations before investment income and income taxes.


                                                                            82
<PAGE>

DataMirror Corporation


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   [Tabular amounts in thousands of Canadian dollars, except per share data]


January 31, 2003





The following table presents certain information with respect to the
reportable segments described above:


Years ended January 31,                   2003            2002           2001
                                            $               $              $
-------------------------------------------------------------------------------

REVENUE
North American customers                41,107          34,610         34,139
Intersegment                             5,100           5,320          5,821
-------------------------------------------------------------------------------
                                        46,207          39,930         39,960
European customers                      21,383          21,766         23,319
Elimination of intersegment revenue     (5,100)         (5,320)        (5,821)
-------------------------------------------------------------------------------
                                        62,490          56,376         57,458
-------------------------------------------------------------------------------

OPERATING INCOME (LOSS)
North America                            4,580          (2,455)          (130)
Europe                                   1,766             341          3,095
-------------------------------------------------------------------------------
                                         6,346          (2,114)         2,965
-------------------------------------------------------------------------------

AMORTIZATION
North America                            3,949           4,127          2,510
Europe                                     421             993            789
-------------------------------------------------------------------------------
                                         4,370           5,120          3,299
-------------------------------------------------------------------------------

CAPITAL ASSET ADDITIONS
North America                            1,696             996          1,033
Europe                                     163             629            286
-------------------------------------------------------------------------------
                                         1,859           1,625          1,319
-------------------------------------------------------------------------------

As at January 31,                         2003            2002           2001
                                            $               $              $
-------------------------------------------------------------------------------

IDENTIFIABLE ASSETS
North America                           60,861          53,898         54,965
Europe                                   9,980          12,605         18,487
-------------------------------------------------------------------------------
                                        70,841          66,503         73,452
Intangibles                              7,388           9,982         11,354
Goodwill                                 3,118           3,118          3,639
-------------------------------------------------------------------------------
                                        81,347          79,603         88,445
-------------------------------------------------------------------------------


                                                                            83
<PAGE>

DataMirror Corporation


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   [Tabular amounts in thousands of Canadian dollars, except per share data]


January 31, 2003





GOODWILL
North America                               50              50             64
Europe                                   3,068           3,068          3,575
-------------------------------------------------------------------------------
                                         3,118           3,118          3,639
-------------------------------------------------------------------------------


Summaries of revenue, segmented according to the customers' country of
residence, and of capital and intangible assets, segmented according to the
country in which the assets are located, are as follows:

Years ended January 31,                  2003            2002           2001
                                           $               $              $
-------------------------------------------------------------------------------

REVENUE
Canada                                  4,285           2,936          1,960
United States                          33,498          28,606         28,908
United Kingdom                         11,675          13,476         15,335
Germany                                 5,092           5,454          3,937
Other                                   7,940           5,904          7,318
-------------------------------------------------------------------------------
                                       62,490          56,376         57,458
-------------------------------------------------------------------------------

As at January 31,                        2003            2002           2001
                                           $               $              $
-------------------------------------------------------------------------------

CAPITAL AND INTANGIBLE ASSETS
Canada                                 10,950          13,058         14,569
Germany                                 2,717           2,782          3,312
Other                                     770             962          1,065
-------------------------------------------------------------------------------
                                       14,437          16,802         18,946
-------------------------------------------------------------------------------

18. ACQUISITIONS

On January 7, 2003, the Company acquired the technology and certain related
assets of SmartSales Inc. [note 19], a developer of CRM solutions, in a cash
transaction. The Company acquired current assets valued at $15,000, capital
assets valued at $22,000 and technology valued at $332,000 for cash
consideration of $369,000. The technology acquired will be amortized over a
term of one year.

On May 18, 2001, the Company acquired the technology and certain related
assets of saipx Inc., a developer of pervasive mobile computing and turnkey
solutions for SAP, in a cash transaction.


                                                                            84
<PAGE>


DataMirror Corporation


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   [Tabular amounts in thousands of Canadian dollars, except per share data]


January 31, 2003




The Company acquired current assets valued at $9,000, capital assets valued at
$65,000 and technology valued at $219,000 for cash consideration of $293,000.
The technology acquired will be amortized over a term of three years.

On June 8, 2001, the Company acquired the technology and certain related
assets of BDI Systems Inc., a developer of XML-based data transformation
software products, in a cash and stock transaction. Total consideration for
the transaction was cash of $424,000 and 50,000 shares of common stock with a
value of $307,000 to be released from escrow over two years. The assets
acquired have been accounted for as acquired technology of $424,000 and
deferred compensation of $307,000. The technology will be amortized over a
period of three years. The deferred compensation will be amortized over two
years.

Effective September 1, 2000, the Company acquired certain assets and
liabilities of Constellar, a company engaged in the business of developing and
marketing computer software products. The acquisition has been accounted for
under the purchase method of accounting.

As part of the purchase agreement, further cash payments of up to U.S.
$3,000,000 are payable contingent on certain revenue targets being generated
from the acquired technology during the three-year period ending August 31,
2003. In November 2001, a payment of $724,000 was made in payment of
contingent consideration of $856,000 for the period ended August 31, 2001 less
a holdback of $132,000 related to assets purchased which were not realized.
The additional contingent payment has been added to the value of the
technology acquired, bringing the total value of technology acquired to
$12,382,000. No payment of contingent consideration is due for the period
ended August 31, 2002. Any future contingent consideration will be recognized
when earned and added to the value of technology acquired at that time.

19. RELATED PARTY TRANSACTIONS

In the normal course of operations during the year, the Company entered into
several different transactions with SmartSales Inc., a company with a common
Chairman of the Board of Directors and significant shareholder. The
transactions consisted of purchases of nil [2002 - $100,000; 2001 - nil],
rental income of $51,000 [2002 - $102,000; 2001 - $24,000] and sales of nil
[2002 - nil; 2001 - $38,000]. These transactions were made at market prices
under normal trade terms and conditions. During fiscal 2003, SmartSales Inc.
entered into receivership and the Company wrote off its rent receivable of
$77,000. As at January 31, 2003, the Company had loans receivable from
directors of $8,000 [2002 - $48,000], bearing no interest and due at a term of
up to one year [2002 - three years].

                                                                            85
<PAGE>


DataMirror Corporation


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   [Tabular amounts in thousands of Canadian dollars, except per share data]


January 31, 2003





20. RECONCILIATION OF CANADIAN GAAP TO U.S. GAAP

The consolidated financial statements of the Company have been prepared in
accordance with Canadian GAAP which differ in certain material respects from
those applicable in the United States.



                                                                            86
<PAGE>

DataMirror Corporation


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   [Tabular amounts in thousands of Canadian dollars, except per share data]


January 31, 2003




The material differences as they apply to the Company's consolidated financial
statements are as follows:

[a] Balance sheet adjustments

<TABLE>

     As at January 31,                                                    2003            2002
                                                                            $               $
--------------------------------------------------------------------------------------------------

     INVESTMENTS
<S>                                                                      <C>             <C>
     Balance under Canadian GAAP                                         9,768           7,495
     Cumulative equity loss recorded for Canadian GAAP purposes [i]     14,521          12,441
     Dilution gain recognized for Canadian GAAP purposes [ii]           (8,513)         (8,513)
     Impairment charge for Canadian GAAP purposes                        4,595              --
     Cumulative equity loss recorded for U.S. GAAP purposes [i]        (16,165)        (14,084)
     Increase in equity investment for U.S. GAAP purposes [ii]          10,408          10,408
     Impairment charge for U.S. GAAP purposes                           (4,846)             --
     Unrealized gain (loss) on investment [iii]                          4,682            (130)
--------------------------------------------------------------------------------------------------
     Balance under U.S. GAAP                                            14,450           7,617
--------------------------------------------------------------------------------------------------

     GOODWILL
     Balance under Canadian GAAP                                         3,118           3,118
     Adjustment for recognition of tax loss carryforwards [iv]            (128)           (128)
--------------------------------------------------------------------------------------------------
     Balance under U.S. GAAP                                             2,990           2,990
--------------------------------------------------------------------------------------------------

     DEFICIT
     Balance under Canadian GAAP                                        (8,669)         (5,883)
     Current year's net income adjustments                                (251)             21
     Cumulative prior year's net income adjustments                         --         (10,176)
     Current year increase in equity investment                            251              --
     Adjustment for recognition of tax loss carryforwards [iv]            (128)           (128)
--------------------------------------------------------------------------------------------------
     Balance under U.S. GAAP                                            (8,797)        (16,166)
--------------------------------------------------------------------------------------------------
</TABLE>

     [i]  Under U.S. GAAP, specifically the provisions of Accounting
          Principles Board Opinion ["APB"] No. 18, "Equity Accounted
          Investments", when an investment, previously accounted for on a cost
          basis, qualifies for use of the equity method, the investment,
          results of operations and retained earnings of the investor should
          be retroactively adjusted.

                                                                           87
<PAGE>

DataMirror Corporation


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   [Tabular amounts in thousands of Canadian dollars, except per share data]


January 31, 2003




     [ii]  Under U.S. GAAP, additional equity raised by an investee is
           recognized as an equity transaction if the investee is a
           newly-formed, non-operating entity; a research and development,
           start-up or development stage company; an entity whose ability to
           continue in existence is in question; or other similar
           circumstances. The determination of the gain resulting from the
           dilution of the Company's equity interest is different under
           Canadian and U.S. GAAP due to the differences in the carrying value
           of the investment account.

     [iii] Under U.S. GAAP, investments classified as available for sale are
           carried at market values with unrealized gains or losses reflected
           as a component of other comprehensive income. The investment in
           Idion is classified as available for sale. PointBase is not
           available for sale as it is a private company.

     [iv]  Under U.S. GAAP, the realization of the benefit associated with
           utilizing tax losses which existed at the time of an acquisition but
           which were not recognized at that time, is reflected as a reduction
           of goodwill relating to the acquisition in the period upon which the
           Company determines that such realization is more likely than not.
           Under Canadian GAAP, prior to the adoption of the liability method
           in fiscal 2001, such benefit was recorded as a reduction of the
           income tax provision in the period of utilization.

[b] The components of shareholders' equity under U.S. GAAP are as follows:

<TABLE>
As at January 31,                                   2003         2002           2001
                                                      $            $              $
---------------------------------------------------------------------------------------
<S>                                               <C>          <C>            <C>
Share capital                                     64,637       64,740         65,583
Increase in equity investment                         --       10,408         10,408
Accumulated other comprehensive income (loss)      3,981         (628)          (498)
Deficit                                           (8,797)     (16,166)       (10,171)
---------------------------------------------------------------------------------------
Balance under U.S. GAAP                           59,821       58,354         65,322
=======================================================================================
</TABLE>

                                                                           88
<PAGE>

DataMirror Corporation


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   [Tabular amounts in thousands of Canadian dollars, except per share data]


January 31, 2003






[c] Reconciliation of net loss under Canadian and U.S. GAAP:

<TABLE>

     Years ended January 31,                           2003          2002           2001
                                                         $             $              $
-------------------------------------------------------------------------------------------

<S>                                                  <C>           <C>             <C>
     Net income (loss) under Canadian GAAP           (2,153)       (5,664)         4,708
     Dilution gain recognized for Canadian
      GAAP purposes                                      --            --         (6,186)
     Equity loss recorded for Canadian GAAP
       purposes                                       2,081         4,112          4,709
     Equity loss recorded for U.S. GAAP
       purposes [i]                                  (2,081)       (4,091)        (4,619)
     Impairment charge recorded for Canadian
       GAAP purposes                                  4,595            --             --
     Impairment charge recorded for U.S.
       GAAP purposes [i]                             (4,846)           --             --
-------------------------------------------------------------------------------------------
     Net loss under U.S. GAAP                        (2,404)       (5,643)        (1,388)
     Unrealized gain (loss) on investments            4,812          (130)            --
-------------------------------------------------------------------------------------------
     Comprehensive income (loss) under
       U.S. GAAP                                      2,408        (5,773)        (1,388)
===========================================================================================

     Net loss per share under U.S. GAAP               (0.21)       (0.49)          (0.12)
===========================================================================================

     Weighted average number of common shares
       outstanding under U.S. GAAP [000's]           11,411        11,500         11,362
===========================================================================================
</TABLE>

     [i] Included in the equity loss recorded for U.S. GAAP purposes is an
         amount for acquired in-process research and development. Under U.S.
         GAAP, specifically Statement of Financial Accounting Standard
         ["SFAS"] No. 2, "Accounting for Research and Development Costs",
         acquired in-process research and development having no alternative
         future use must be written off at the time of acquisition. The
         adjustment represents the value of the acquired in-process research
         and development capitalized under Canadian GAAP.


                                                                            89
<PAGE>

DataMirror Corporation


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   [Tabular amounts in thousands of Canadian dollars, except per share data]


January 31, 2003





[d] Other disclosures required under U.S. GAAP

     [i] Under U.S. GAAP, the Company measures compensation costs related to
         stock options granted to employees using the intrinsic value method
         as prescribed by APB Opinion No. 25, Accounting for Stock Issued to
         Employees as permitted by SFAS No. 123, Accounting for Stock-Based
         Compensation. However, SFAS No. 123 does require the disclosure of
         pro forma net earnings (loss) and earnings (loss) per share
         information as if the Company had accounted for its employee stock
         options under the fair-value method prescribed by SFAS No. 123:
<TABLE>

     Years ended January 31,                                  2003            2002           2001
                                                                $               $              $
     -----------------------------------------------------------------------------------------------

<S>                                                         <C>             <C>            <C>
     Loss for the year in accordance with U.S. GAAP         (2,404)         (5,643)        (1,388)
     Stock-based compensation expense                         (761)           (960)          (704)
     -----------------------------------------------------------------------------------------------
     Pro forma loss for the year                            (3,165)         (6,603)        (2,092)
     ===============================================================================================

     Basic and diluted loss per share, as reported           (0.21)         (0.49)          (0.12)
     Effect of stock-based compensation expense              (0.07)         (0.08)          (0.06)
     Pro forma basic and diluted loss per share              (0.28)         (0.57)          (0.18)
     ===============================================================================================

     The Company has utilized the Black-Scholes option valuation model to estimate
     the fair value of options granted based on the following assumptions:

     Years ended January 31,                                  2003            2002           2001
     -----------------------------------------------------------------------------------------------

     Risk free interest rate                                  4.3%            4.8%           5.9%
     Expected dividend yield                                    0%              0%             0%
     Expected volatility                                     0.518           0.815          0.875
     Expected option life [in years]                           2.2             2.0            1.9
     Weighted-average fair values of options granted         $3.67           $3.66          $8.59
     ===============================================================================================
</TABLE>

[e] Recent accounting developments

     [i] In December 2002, FASB issued SFAS No. 148, "Accounting for
         Stock-Based Compensation - Transition and Disclosure" ["SFAS 148"].
         SFAS 148 amends SFAS No. 123 to provide alternative methods of
         transition to SFAS No. 123's fair value method of


                                                                            90
<PAGE>

DataMirror Corporation


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   [Tabular amounts in thousands of Canadian dollars, except per share data]


January 31, 2003





         accounting for stock-based compensation. The Company has adopted this
         standard and determined that it has no material impact on its U.S.
         GAAP financial information.

21. COMPARATIVE CONSOLIDATED FINANCIAL STATEMENTS

The comparative consolidated financial statements have been reclassified from
statements previously presented to conform to the current year's presentation.
These reclassifications include the adoption of Emerging Issues Task Force
EITF O1-14, "Income Statement Characterization of Reimbursements Received for
'Out-of-Pocket' Expenses Incurred." As a result of this adoption, services
revenue increased by $540,000 for the year ended January 31, 2003 [2002 -
$637,000; 2001 - $547,000], with a corresponding increase in cost of services
revenue. The reimbursement of these amounts was previously offset against cost
of services revenue.



                                                                            91
<PAGE>



                SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                      [in thousands of Canadian dollars]





<TABLE>

                                                                         Write-offs
                                            Balance,        Charged          of          Balance,
                                            beginning         to          accounts          end
Description                                 of period      expenses      receivable      of period
                                                $              $              $              $
----------------------------------------------------------------------------------------------------
<S>                                           <C>             <C>              <C>            <C>
Allowance for doubtful accounts,
   deducted from accounts receivable
Year ended January 31, 2003                   612             (48)             (301)          263
Year ended January 31, 2002                 1,226           1,320            (1,934)          612
Year ended January 31, 2001                   710           3,103            (2,587)        1,226
====================================================================================================




                                                                                            92
</TABLE>
<PAGE>



ITEM 18.   FINANCIAL STATEMENTS

The Company has responded to Item 17 in lieu of responding to this Item.

ITEM 19.   EXHIBITS

    Exhibit No.                                    Description
    ----------     ------------------------------------------------------------
     1.1 **        Articles of Amalgamation of DataMirror Corporation, as
                   currently in effect.
     1.2 **        By-laws of DataMirror Corporation, as currently in effect.
     2.1 **        Specimen DataMirror Corporation share certificate.
     2.2 **        DataMirror Shareholder Rights Plan, dated as of May 7, 2002.
     4.1           ** Lease pursuant to which DataMirror Corporation's UK
                   subsidiary acquired rental space in London, England on
                   November 31, 2001.
     4.2 **        Technology Asset Purchase Agreement between DataMirror
                   Corporation and BDI Systems, Inc., dated June 8, 2001.
     4.3 **        Technology / Asset Purchase Agreement between DataMirror
                   Corporation and saipx Inc., dated May 18, 2001.
     4.4 **        Asset Purchase Agreement between DataMirror Corporation and
                   Constellar Corporation, dated September 1, 2000.
     4.5 **        DataMirror Corporation Share Purchase Plan, as currently
                   in effect.
     4.6 **        DataMirror Corporation Executive Stock Compensation Plan,
                   as currently in effect.
     4.7 **        Employment agreement between DataMirror Corporation and
                   Mr. Nigel Stokes.
     4.8 **        Employment agreement between DataMirror Corporation and
                   Mr. Kirk Dixon.
     4.9 **        Employment agreement between DataMirror Corporation and
                   Mr. Herman Wallenburg.
     4.10 **       Pointbase, Inc. Series E Preferred Stock Purchase Agreement,
                   dated June 14, 2000.
     6.1           Audit Committee Charter
     6.2           Compensation Committee Charter
     16.1          Employee Conduct Policy
     17.1          Consent of Ernst & Young LLP
     17.2          Certification of CEO and CFO Pursuant to Section 302 of the
                   Sarbanes-Oxley Act of 2002
     17.3          Certification of CEO and CFO Pursuant to Section 906 of the
                   Sarbanes-Oxley Act of 2002


** These exhibits are incorporated by reference to the Company's Annual Report
on Form 20F, filed on June 20, 2002.



                                                                            93
<PAGE>

                                  SIGNATURES

    Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant certifies that it meets all of the requirements for
filing on Form 20-F and has duly caused this annual report to be signed on its
behalf by the undersigned, thereunto duly authorized.



    June 5, 2003




                                                DATAMIRROR CORPORATION


                                                By: /s/ Peter Cauley
                                                --------------------
                                                Name:  Peter Cauley
                                                Title: Chief Financial Officer






                                                                            94
<PAGE>



                                 EXHIBIT INDEX

     6.1           Audit Committee Charter
     6.2           Compensation Committee Charter
     16.1          Employee Conduct Policy
     17.1          Consent of Ernst & Young LLP
     17.2          Certification of CEO and CFO Pursuant to Section 302 of the
                   Sarbanes-Oxley Act of 2002
     17.3          Certification of CEO and CFO Pursuant to Section 906 of the
                   Sarbanes-Oxley Act of 2002






                                                                            95