<PAGE>

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

                                   FORM 10-Q

(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
   ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000

                                       or

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
   EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM      TO    .

                          Commission File No. 00021539

                           ALYSIS TECHNOLOGIES, INC.
             (Exact name or Registrant as specified in its charter)

              Delaware                               94-3161772
   (State or other jurisdiction of        (I.R.S. Employer Identification
   incorporation or organization)                     Number)


                         1900 Powell Street, Suite 500
                          Emeryville, California 94608
                    (Address of principal executive offices)

                                 (510) 450-7000
              (Registrant's telephone number, including area code)

   Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 of 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.

                                [X] Yes   [_] No

The number of outstanding shares of the Registrant's Common Stock, $0.01 par
value, was 13,571,722 as of November 9, 2000.
<PAGE>

                           ALYSIS TECHNOLOGIES, INC.

                              REPORT ON FORM 10-Q

                               TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

<TABLE>
 <C>     <S>                                                                <C>
 Item 1. Financial Statements (unaudited)
         Condensed Consolidated Balance Sheets at September 30, 2000 and
          December 31, 1999...............................................    2
         Condensed Consolidated Statements of Operations for the three
          months and nine months ended September 30, 2000 and 1999........    3
         Condensed Consolidated Statements of Cash Flows for the nine
          months ended September 30, 2000 and 1999........................    4
         Notes to Condensed Consolidated Financial Statements.............    5
 Item 2. Management's Discussion and Analysis of Financial Condition and
         Results of Operations............................................    7

PART II. OTHER INFORMATION

 Item 6. Exhibits and Reports on Form 8-K.................................   19
         Signatures.......................................................   20
</TABLE>

                                       1
<PAGE>

                         PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

                           ALYSIS TECHNOLOGIES, INC.

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                (in thousands, except share and per share data)
                                  (unaudited)

<TABLE>
<CAPTION>
                                                     September 30, December 31,
                                                         2000          1999
                                                    -------------- ------------
<S>                                                 <C>            <C>
Assets
Current assets:
  Cash and cash equivalents........................    $  2,449      $  9,159
  Restricted cash..................................         500           --
  Receivables, including unbilled receivables of
   $219 at September 30, 2000 and $548 at December
   31, 1999, less allowance for doubtful accounts
   of $300 at September 30, 2000 and $126 at
   December 31, 1999...............................       1,006         1,807
  Other current assets.............................         289           494
                                                       --------      --------
    Total current assets...........................       4,244        11,460
Property and equipment, net........................         649           770
Other assets.......................................          67            34
Intangible assets..................................       1,700         2,337
                                                       --------      --------
                                                       $  6,660      $ 14,601
                                                       ========      ========
Liabilities and stockholders' equity
Current liabilities:
  Accounts payable.................................    $    607      $    547
  Accrued compensation and related liabilities.....       1,054         2,483
  Deferred revenues................................         592         1,973
  Other accrued liabilities........................         679           584
                                                       --------      --------
    Total current liabilities......................       2,932         5,587
Stockholders' equity:
Preferred shares, Series B, $.001 par value:
  Authorized shares--5,000,000
  Issued and outstanding shares--400 at September
   30, 2000 and
   December 31, 1999...............................       3,814         3,814
Common stock, $0.01 par value:
  Authorized shares--35,000,000
  Issued shares--11,130,414, outstanding shares--
   11,106,414 at
   September 30, 2000 Issued shares--10,643,792,
   outstanding shares--10,619,792 at December 31,
   1999............................................         110           106
Class B common stock, $0.01 par value:
  Authorized shares--5,000,000
  Issued and outstanding shares--2,417,112 at
   September 30, 2000 and
   December 31, 1999...............................          25            25
Additional paid-in capital.........................      31,445        30,067
Treasury stock at cost (24,000 shares).............         (39)          (39)
Accumulated deficit................................     (31,530)      (24,632)
Deferred stock compensation........................         (97)         (327)
Foreign currency translation adjustment............         --            --
                                                       --------      --------
    Total stockholders' equity.....................       3,728         9,014
                                                       --------      --------
                                                       $  6,660      $ 14,601
                                                       ========      ========
</TABLE>
--------
Note: The December 31, 1999 balance sheet amounts were derived from the
      December 31, 1999 audited financial statements.

                             See accompanying notes

                                       2
<PAGE>

                           ALYSIS TECHNOLOGIES, INC.

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     (in thousands, except per share data)
                                  (unaudited)

<TABLE>
<CAPTION>
                                               Three Months     Nine Months
                                                  Ended            Ended
                                              September 30,    September 30,
                                              --------------- -----------------
                                               2000     1999    2000     1999
                                              -------  ------ --------  -------
<S>                                           <C>      <C>    <C>       <C>
Revenues:
  License...................................  $   603  $3,839 $  2,434  $ 5,769
  Service...................................      696   1,759    1,923    5,525
  Maintenance...............................      814   1,230    2,890    3,810
                                              -------  ------ --------  -------
    Total revenues..........................    2,113   6,828    7,247   15,104
Cost of revenues:
  License...................................      --       16       23       47
  Service...................................      134     919      782    3,238
  Maintenance...............................      278     466    1,240    1,710
                                              -------  ------ --------  -------
    Total cost of revenues..................      412   1,401    2,045    4,995
                                              -------  ------ --------  -------
Operating expenses:
  Sales and marketing.......................    1,277     880    4,408    3,297
  General and administrative................    2,421   1,982    8,356    5,845
  Product development.......................      843     536    3,057    1,070
                                              -------  ------ --------  -------
    Total operating expenses................    4,541   3,398   15,821   10,212
                                              -------  ------ --------  -------
Income (loss) from operations...............   (2,840)  2,029  (10,619)    (103)
Other income:
  Interest income...........................       23     109      165      224
  Other income..............................      --      --         4      --
  Gain on sale of product line..............    3,762     --     3,762      --
                                              -------  ------ --------  -------
Net income (loss)...........................      945   2,138   (6,688)     121
Preferred stock dividends...................       69      47      210       47
                                              -------  ------ --------  -------
Net income (loss) applicable to common
 stockholders...............................  $   876  $2,091 $ (6,898) $    74
                                              =======  ====== ========  =======
Basic net income (loss) per share applicable
 to common stockholders.....................  $   .06  $  .17 $   (.52) $   .01
                                              =======  ====== ========  =======
Basic and diluted net loss per share
 applicable to common stockholders..........  $   .05  $  .15 $   (.52) $   .01
                                              =======  ====== ========  =======
Shares used in computing basic net income
 and net loss per share applicable to common
 stockholders...............................   13,487  12,384   13,334   12,134
                                              =======  ====== ========  =======
Shares used in computing diluted net income
 and net loss per share applicable to common
 stockholders...............................   16,530  14,387   13,334   13,042
                                              =======  ====== ========  =======
</TABLE>

                             See accompanying notes

                                       3
<PAGE>

                           ALYSIS TECHNOLOGIES, INC.

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                Nine Months
                                                                   Ended
                                                                September 30
                                                                2000     1999
                                                              --------  -------
<S>                                                           <C>       <C>
Operating activities
 Net income (loss)..........................................  $ (6,688) $    74
 Adjustments to reconcile net loss to net cash (used in)
  provided by operating activities:
  Depreciation and amortization.............................       986      266
  Amortization of deferred stock compensation...............       --       280
  Interest expense on warrants..............................         6      --
  Gain on sale of product line..............................    (3,762)     --
  Gain on sale of equipment.................................        (4)     --
  Changes in operating assets and liabilities(a):
   Receivables, net.........................................       (63)  (1,375)
   Other current assets.....................................       172      (21)
   Other assets.............................................       (27)     --
   Accounts payable.........................................        60       88
   Accrued compensation and related liabilities.............    (1,309)     162
   Deferred revenues........................................       204     (197)
   Other accrued liabilities................................        56      272
                                                              --------  -------
Net cash used in operating activities.......................   (10,369)    (451)
Investing activities
Business combination, net of cash acquired..................       --    (1,768)
Purchases of property and equipment.........................      (350)    (139)
Net proceeds from the sale of property and equipment........        23      --
Net proceeds from the sale of product line..................     3,315      --
                                                              --------  -------
Net cash (used in) provided by investing activities.........     2,988   (2,690)
                                                              --------  -------
Financing activities
Net proceeds from sale of preferred stock...................       --     3,814
Purchases of treasury stock.................................       --       (33)
Net proceeds from exercise of stock options.................       470      250
Net proceeds from employee stock purchase plan..............       201      177
                                                              --------  -------
Net cash provided by financing activities...................       671    4,208
                                                              --------  -------
Effect of exchange rate changes on cash.....................       --       --
Net (decrease) increase in cash and cash equivalents........    (6,710)   1,850
Cash and cash equivalents at beginning of period............     9,159    7,582
                                                              --------  -------
Cash and cash equivalents at end of period..................  $  2,449  $ 9,432
                                                              ========  =======


Supplemental cash flow information:
Deferred stock compensation adjustment related to variable
 stock options..............................................  $    230  $   --
                                                              ========  =======
Warrants issued in conjunction to line of credit agreement..  $     73  $   --
                                                              ========  =======
Common stock issued in business combination.................  $    --   $   750
                                                              ========  =======
Assumed liabilities related to business combination.........  $    --   $   227
                                                              ========  =======
</TABLE>
--------
(a) Net effect of sale of assets and liabilities in conjunction with sale of
    product line.

                             See accompanying notes

                                       4
<PAGE>

                           ALYSIS TECHNOLOGIES, INC.

              Notes to Condensed Consolidated Financial Statements
                                  (Unaudited)

1.  Our Company and Basis of Presentation

   Alysis Technologies, Inc. (previously known as IA Corporation I) was
incorporated on July 20, 1992. We are a leading provider of component-based e-
billing software that snaps-in to any major e-commerce implementation. Our
modular WorkOut(R) products enable companies to solve complex business problems
via streamlining billing, segmentation and analysis, payment, and workflow.
WorkOut(R) e-billing products are running live on three continents. With
offices in San Francisco, New York, and London, Alysis markets its software
worldwide via direct sales, partner channels, and key relationships with global
leaders such as IBM and Pitney Bowes docSense. Certain reclassifications have
been made to the prior period's financial statements in order to conform to the
current period's presentation.

   On August 24, 2000, Alysis Technologies, Inc. completed the sale of its
CheckVision(R) Business and certain other assets and liabilities to Computer
Sciences Corporation, a Nevada corporation. Alysis received a cash purchase
price of $3.98 million from CSC in consideration for the Asset Sale. Operating
results of that product line are included in the consolidated financial
statements through August 24, 2000.

   The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and pursuant to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments, consisting
of normal recurring accrual adjustments, considered necessary for a fair
presentation have been included. Operating results for the three months and
nine months ended September 30, 2000 are not necessarily indicative of the
results that may be expected for any future period.

   These financial statements and notes should be read in conjunction with
Alysis Technologies, Inc.'s audited financial statements and notes thereto for
the year ended December 31, 1999 included in the Company's 1999 Annual Report
on Form 10-K.

2.  Basic and Diluted Net income (Loss) Per Share

   Our net income (loss) per share applicable to common stockholders has been
calculated in accordance with Statement of Financial Accounting Standards
(SFAS) No. 128, Earnings Per Share. Basic net income (loss) per share
applicable to common stockholders has been computed using the weighted average
number of common shares outstanding during the period. Diluted net income
(loss) per share applicable to common stockholders has been computed using the
weighted average number of common shares outstanding plus the dilutive effect
of outstanding stock options using the "treasury stock" method. The following
table shows the computation of basic and diluted net income (loss) per share
applicable to common stockholders.

<TABLE>
<CAPTION>
                                               Three Months     Nine Months
                                                   Ended           Ended
                                              --------------- ----------------
                                              9/30/00 9/30/99 9/30/00  9/30/99
                                              ------- ------- -------  -------
                                              (in thousands, except per share
                                                           data)
<S>                                           <C>     <C>     <C>      <C>
Net income (loss) applicable to common
 stockholders................................ $  876  $2,091  $(6,898) $   74
Weighted average common shares outstanding... 13,487  12,384   13,334  12,134
Effect of dilutive securities (a)............  3,043   2,003      --      908
Shares used in computing diluted net income
 (loss) per share............................ 16,530  14,387   13,334  13,042
Basic net income (loss) per share applicable
 to common stockholders...................... $  .06  $  .17  $  (.52) $  .01
Diluted net income (loss) per share
 applicable to common stockholders........... $  .05  $  .15  $  (.52) $  .01
</TABLE>
--------
(a) The effect of outstanding stock options and other common stock equivalents
    are excluded from the calculation of diluted net loss per share, if their
    inclusion would be anti-dilutive.

                                       5
<PAGE>

3.  Revenue Recognition

   Our total revenues are derived from software licenses, maintenance and
support contracts and implementation and training services. Software license
and service revenue from contracts requiring significant customization services
are recognized on the percentage-of-completion method based on the ratio of
incurred costs to total estimated costs. The implementation of these
application frameworks can take several months or more depending on the
complexity of the customer's environment and the resources directed by the
customers to the implementation projects. Estimated losses, if any, on
contracts are reported in the period in which such losses become known.

   Revenues from contracts for software licenses that don't require significant
customization are recognized upon delivery and installation of the software if
there is persuasive evidence of an arrangement, collection of the related
receivable is probable, the fee is fixed or determinable and there is
sufficient vendor-specific objective evidence to support allocating the total
fee to all elements of multiple-element arrangements. Software maintenance
revenues are recognized ratably over the term of the support contract, which is
generally one year. Other service revenue is recognized as services are
performed.

   In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 "Revenue Recognition in Financial Statements",
("SAB 101"). SAB 101 provides guidance on the recognition, presentation, and
disclosure of revenue in financial statements. All registrants are expected to
apply the accounting and disclosures described in SAB 101 and any changes in
its revenue recognition policy resulting from SAB 101 is required to be
reported as a change in accounting principle in the quarter ending December 31,
2000. The effect of adopting SAB 101 will not have a material affect on the
financial statements.

4.  Comprehensive Income (Loss)

   The following table sets forth the calculation of comprehensive loss for all
periods presented (in thousands):

<TABLE>
<CAPTION>
                                                 Three Months     Nine Months
                                                     Ended           Ended
                                                --------------- ----------------
                                                9/30/00 9/30/99 9/30/00  9/30/99
                                                ------- ------- -------  -------
   <S>                                          <C>     <C>     <C>      <C>
   Net income (loss)...........................  $945   $2,138  $(6,688)  $121
   Foreign currency translation losses.........    (4)     --       --     --
                                                 ----   ------  -------   ----
   Comprehensive income (loss).................  $941   $2,138  $(6,688)  $121
                                                 ====   ======  =======   ====
</TABLE>

5. Sale Of CheckVision Product Line

   On August 24, 2000, Alysis Technologies, Inc. completed the sale of its
CheckVision(R) Business and certain other assets and liabilities to Computer
Sciences corporation ("CSC"), a Nevada corporation. We received a cash purchase
price of $3.98 million from CSC in consideration for the Asset Sale. Pursuant
to the terms of the Asset Purchase Agreement, $500,000 of the purchase price
has been deposited in escrow for a period of twelve months to secure the
payment by CSC of any amounts that may become due under the indemnification
provisions of the Asset Purchase Agreement. the purchase price was determined
through a series of negotiations in an arms length transaction between the
Alysis and CSC. We intend to use the proceeds of the Asset Sale to further
strengthen its WorkOut(R) product's position in the e-presentment marketplace.

                                       6
<PAGE>

   The following "Management Discussion and Analysis of Financial Condition and
Results of Operations" should be read in conjunction with the Company's
Consolidated Financial Statements and Notes thereto included elsewhere in this
report and Annual Report on Form 10-K. Additionally, this "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contains forward-looking statements (identified with an asterisk "*") that
involve risk and uncertainties. The Company's actual results may differ
materially from the results discussed in the forward-looking statements.
Factors that might cause such a difference include, but are not limited to,
those discussed in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and in "Risk Factors." The Company assumes
no obligation to update such forward-looking statements or to update the
reasons actual results could differ materially from those anticipated in such
forward-looking statements.

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

Overview

   Alysis develops and delivers electronic billing and statement presentment
software that document intensive industries need to remain competitive in the
electronic commerce arena. We were incorporated in July 1992, when management,
in partnership with EM Warburg Pincus and Co. LLC, purchased certain assets and
liabilities of Litton Industries' Integrated Automated Division, a leading
system integrator with a primary focus on the aerospace industry and secondary
focus on the financial services and transportation industries. At that time, a
decision was made to de-emphasize the aerospace market and develop an
enterprise transaction management platform and corresponding software
application frameworks targeted to the financial services industry.

   In August 1998, with the hiring of a new Chief Executive Officer, we decided
to aggressively pursue a new product strategy of Internet presentment of legacy
data primarily based on a successful installation of an intranet based
statement delivery system at Merrill Lynch. This installation, which was
completed in early 1998, was the precursor to the CyberStatement application
framework. In order to further penetrate the e-presentment marketplace, Alysis
acquired At Work, a New York based provider of Electronic Bill Presentment and
Payment ("EBPP") software and early pioneer in XML technology. As a result, our
CyberStatement product was replaced by At Work's WorkOut product. In 2000,
management believes we will derive an increasing amount of revenue from the
WorkOut product, however, there can be no assurance that we will be successful
in our efforts.*

   Through September 30, 2000, revenues primarily consisted of application
development contracts and were derived from three application frameworks,
CheckVision, RemitVision, and WorkOut. Our total revenues declined 69% from
$6.8 million for the three months ended September 30, 1999 to $2.1 million for
the three months ended September 30, 2000. Also, for the three months ended
September 30, 2000, we recorded net income of $945,000 as compared to net
income of $2.1 million for the three months ended September 30, 1999. The 2000
results are due to the $3.8 million gain recognized on the sale of our
CheckVision(R) business and certain associated assets and liabilities to
Computer Sciences Corporation, a Nevada corporation. This gain was offset by
costs for our continued building of infrastructure and pipeline necessary to
position WorkOut in the e-presentment marketplace.

   WorkOut enables financial services firms to efficiently manage, store and
distribute legacy reports and print-formatted documents such as customer
statements over the Internet. It is a solution to parse and render print
streams from billing systems, and to implement electronic data interchange and
other structured data feeds. CheckVision provides high-volume check image
capture, storage, and distribution functions necessary to meet the stringent
processing deadlines of check operations.

   Our total revenues are derived from software licenses, maintenance and
support contracts and implementation and training services. Software license
and service revenue from contracts requiring significant customization services
are recognized on the percentage-of-completion method based on the ratio of
incurred

                                       7
<PAGE>

costs to total estimated costs. The implementation of these application
frameworks can take several months or more depending on the complexity of the
customer's environment and the resources directed by the customers to the
implementation projects. Estimated losses on contracts are reported in the
period in which such losses become known or expected.

   Revenues from contracts for software licenses that don't require significant
customization are recognized upon delivery of the software if there is
persuasive evidence of an arrangement, collection is probable, the fee is fixed
or determinable and there is sufficient vendor-specific objective evidence to
support allocating the total fee to all elements of multiple-element
arrangements. Software maintenance revenues are recognized ratably over the
term of the support contract, which is generally one year. Other service
revenue is recognized as services are performed.

   We adopted Statement of Position 97-2, "Software Revenue Recognition" ("SOP
97-2") and Statement of Position 98-4, "Deferral of the Effective Date of a
Provision of SOP 97-2, Software Revenue Recognition" ("SOP 98-4") as of January
1, 1998. SOP 97-2 and SOP 98-4 provide guidance for recognizing revenue on
software transactions and supercede Statement of Position 91-1, "Software
Revenue Recognition" ("SOP 91-1"). The adoption of SOP 97-2 and SOP 98-4 did
not have a material impact on our financial results.

   In December 1998, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position 98-9, "Modification of SOP 97-2,
Software Revenue Recognition with Respect to Certain Transactions" ("SOP 98-
9"). SOP 98-9 amends SOP 98-4 to extend the deferral of the application of
certain passages of SOP 97-2 provided by SOP 98-4 through fiscal years
beginning on or before March 15, 1999. All other provisions of SOP 98-9 are
effective for transactions entered into in fiscal years beginning after
March 15, 1999. The adoption of SOP 98-9 did not have a material impact on our
financial results.

   In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No.101 "Revenue Recognition in Financial Statements," ("SAB
101"). SAB 101 provides guidance on the recognition, presentation, and
disclosure of revenue in financial statements. All registrants are expected to
apply the accounting and disclosures described in SAB 101 and any changes in
its revenue recognition policy resulting from SAB 101 is required to be
reported as a change in accounting principle in the quarter ending December 31,
2000. The effect of adopting SAB 101 will not have a material effect on the
financial statements.

   As of September 30, 2000, we had an accumulated deficit of approximately
$31.5 million, including net income of $945,000 for the three months ended
September 30, 2000. We expect to incur operating losses in the foreseeable
future as we continue to invest in further development of the WorkOut product
and to recruit and train personnel for engineering, sales, marketing and
professional services for the WorkOut product.*

Results of Operations

Comparison of Three Months Ended September 30, 2000 and 1999

Revenues

   License. License revenue for the three months ended September 30, 2000 has
been primarily derived from the sale of licenses of WorkOut. License revenue
decreased 84% to $603,000 from $3.8 million for the three months ended
September 30, 2000 and 1999, respectively. This decrease in license revenue
primarily resulted from significantly decreased licenses and royalties recorded
in connection with the amendment of the Global Strategic Alliance Agreement
signed in June 1999 and the decrease of revenue from CheckVision customers.
This decrease reflects the sale of the CheckVision business, on August 24,
2000, and the redirection of our resources to support WorkOut. Management
believes that an increasing amount of future license revenue will be derived
from the WorkOut product.*

                                       8
<PAGE>

   Service. Service revenue is comprised primarily of fees from software
application development contracts, and to fees from installation services and
training for our WorkOut software solution. Service revenue decreased 60% to
$696,000 from $1.8 million for the three months ended September 30, 2000 and
1999, respectively. This decrease reflects our sale of the CheckVision business
and the redirection of our resources to support WorkOut. Management believes
that an increasing amount of future service revenue will be derived from
installation services performed for the WorkOut product. *

   Maintenance. Maintenance revenue is generated by software support contracts
to customers who have entered into license agreements for the use of our
software application solutions. Maintenance support includes telephone support,
minor software upgrades and, in some cases, third party support. Maintenance
revenue decreased 34% to $814,000 from $1.2 million for the three months ended
September 30, 2000 and 1999, respectively. Maintenance revenue decreased due to
a smaller number of maintenance customers as many maintenance contracts were
included in the sale of the CheckVision business.

Cost of Revenues

   Service. Cost of service revenue is primarily comprised of employee-related
costs and fees for third-party consultants incurred in providing
personalization, installation, and training and development services. Cost of
service revenue decreased 85% to $134,000 for the three months ended September
30, 2000 as compared to $919,000 for the three months ended September 30, 1999,
representing 19% and 52% of service revenues for the three months ended
September 30, 2000 and 1999, respectively. Cost of service revenue decreased in
absolute dollars due primarily to a reduction in engineers and a decline in the
number of contracts to serve as we have directed our resources to support
WorkOut. The decreased cost of service revenue as a percentage of service
revenue is primarily due to certain contracts having costs captured in periods
prior to the recognition of its respective revenue as required by revenue
recognition guidelines.

   Maintenance. Cost of maintenance revenue is primarily comprised of employee-
related costs incurred in providing customer support and also includes the
costs of services provided by third parties for hardware-related maintenance
for certain of the installed base of customers. Cost of maintenance revenue
decreased 40% to $278,000 for the three months ended September 30, 2000, from
$466,000 for the three months ended September 30, 1999, representing 34% and
38% of maintenance revenue for the three months ended September 30, 2000 and
1999, respectively. The decrease in maintenance costs is primarily due to
reduced headcount and improved productivity in delivering maintenance.

Operating expenses

   Sales and marketing. Sales and marketing expenses consist primarily of
salaries, commissions and bonuses earned by sales personnel, cost of running
field offices, travel and related expenses, and promotional and advertisement
expenses. Sales and marketing expenses increased 45% to $1.3 million from
$880,000 for the three months ended September 30, 2000 and 1999, respectively,
representing 60% and 13% of total revenue for the three months ended September
30, 2000 and 1999, respectively. Sales and marketing expenses increased
primarily due to an increase in the sales and marketing personnel and increased
sales efforts related to the WorkOut product.

   General and administrative. General and administrative expenses were $2.4
million and $2.0 million for the three months ended September 30, 2000 and
1999, respectively. General and administrative expenses increased in absolute
dollars primarily due to increased retention bonuses and amortization of
purchased technology acquired during the acquisition of At Work Corporation in
September 1999.

   Product development. Product development expenses increased 186% to $3.1
million for the nine months ended September 30, 2000, from $1.1 million for the
nine months ended September 30, 1999, representing 42% and 7% of total revenues
for the nine months ended September 30, 2000 and 1999, respectively. The
increase in product development expenses for the nine months ended September
30, 2000 is primarily due to the

                                       9
<PAGE>

increase in costs incurred for the ongoing development of our WorkOut product.
In 2000, management expects to incur increased costs in the ongoing development
of our WorkOut product.*

   Interest Income. Interest income represents interest earned by the Company
on its cash and cash equivalents. Interest income decreased to $165,000 from
$224,000 for the nine months ended September 30, 2000 and 1999 respectively,
due to lower average invested cash balances in the nine months ended
September 30, 2000.

Results of Operations

Comparison of Nine Months Ended September 30, 2000 and 1999

Revenues

   License. License revenue decreased 58% to $2.4 from $5.8 million for the
nine months ended September 30, 2000 and 1999, respectively. This decrease in
license revenue primarily resulted from decreased recognition of revenue from
CheckVision customers. Management believes that an increasing amount of future
license revenue will be derived from the WorkOut product.*

   Service. Service revenue decreased 65% to $1.9 million from $5.5 million for
the nine months ended September 30, 2000 and 1999, respectively. This decrease
reflects the sale of the CheckVision business and the redirection of our
resources to support WorkOut. Management believes that an increasing amount of
future service revenue will be derived from installation services performed for
the WorkOut product.*

   Maintenance. Maintenance revenue decreased 24% to $2.9 million from $3.8
million for the nine months ended September 30, 2000 and 1999, respectively.
Maintenance revenue decreased for the nine months ended September 30, 2000 from
the nine months ended September 30, 1999 due to a smaller number of maintenance
customers.

Cost of Revenues

   Service. Cost of service revenue decreased 76% to $782,000 for the nine
months ended September 30, 2000 as compared to $3.2 million for the nine months
ended September 30, 1999, representing 41% and 59% of service revenues for the
nine months ended September 30, 2000 and 1999, respectively. Cost of service
revenue decreased in absolute dollars due primarily to a reduction in engineers
and a decline in the number of contracts to serve as we have redirected our
resources to support WorkOut. The decrease cost of service revenue as a
percentage of service revenue is primarily due to WorkOut installation services
not requiring costly customizations. Customizations were required on many of
the CheckVision projects generating revenue in 1999.

   Maintenance. Cost of maintenance revenue decreased 27% to $1.2 million for
the nine months ended September 30, 2000, from $1.7 million for the nine months
ended September 30, 1999, representing 43% and 45% of maintenance revenue for
the nine months ended September 30, 2000 and 1999, respectively. The decrease
in maintenance costs is primarily due to reduced headcount and improved
productivity in delivering maintenance.

Operating Expenses

   Sales and marketing. Sales and marketing expenses increased 34% to $4.4
million from $3.3 million for the nine months ended September 30, 2000 and
1999, respectively, representing 61% and 22% of total revenue for the nine
months ended September 30, 2000 and 1999, respectively. Sales and marketing
expenses increased primarily due to an increase in the sales and marketing
personnel and increased sales efforts related to the WorkOut product.

                                       10
<PAGE>

   General and administrative. General and administrative expenses were $8.4
million and $5.8 million for the nine months ended September 30, 2000 and 1999.
General and administrative expenses increased in absolute dollars primarily due
to increased retention bonuses, an increase in the allowance for doubtful
accounts for certain contracts associated with high collectibility risks, and
amortization of purchased technology acquired during the acquisition of At Work
Corporation in September 1999.

   Product development. Product development expenses increased 186% to $3.1
million for the nine months ended September 30, 2000, from $1.1 million for the
nine months ended September 30, 1999, representing 42% and 7% of total revenues
for the nine months ended September 30, 2000 and 1999, respectively. The
increase in product development expenses for the nine months ended September
30, 2000 is primarily due to the increase in costs incurred for the ongoing
development of our WorkOut product. In 2000, management expects to incur
increased costs in the ongoing development of our WorkOut product.*

   Interest Income. Interest income represents interest earned by the Company
on its cash and cash equivalents. Interest income decreased to $165,000 from
$224,000 for the nine months ended September 30, 2000 and 1999 respectively,
due to lower average invested cash balances in the nine months ended
September 30, 2000.

Liquidity and Capital Resources

   Operating activities for the nine months ended September 30, 2000 used $10.4
million of cash. For the nine months ended September 30, 1999, operating
activities used $451,000 of cash. The net cash used by the operating activities
of the Company for the nine months ended September 30, 2000 was primarily the
result of a decrease in accrued compensation and related liabilities, the gain
on sale of product line, and the increase in net loss.

   Our investing activities for the nine months ended September 30, 2000 and
September 30, 1999, provided $3.0 million and used $2.7 million of cash,
respectively. Our investing activities for the nine months ended September 30,
2000, consisted primarily of the sale of our CheckVision business and certain
associated assets and liabilities to Computer Sciences Corporation. We
currently have no significant capital spending requirements or purchase
commitments other than a non-cancelable operating lease for our facilities.

   Cash provided by financing activities was $671,000 and $4.2 million for the
nine months ended September 30, 2000 and 1999, respectively. The cash generated
during the nine months ended September 30, 2000, was the result of net proceeds
from the exercise of stock options and employee stock purchases under our
employee stock purchase plan.

   As of September 30, 2000, we had $2.4 million in cash and cash equivalents
and $1.3 million in working capital. We do not believe that our existing cash
and cash equivalents, together with expected cash flows from operations, will
be sufficient to fund our operations through the end of the fourth quarter of
this year.* Accordingly, before December 31, 2000, we must raise additional
capital through debt or equity financings or other arrangements to fund
operations, including the continued building of infrastructure and pipeline
with respect to WorkOut.* We are actively pursuing financing alternatives.
However, additional financing may not be available, or, if available, may not
be available on acceptable terms or terms that will not be dilutive to our
existing stockholders. Our inability to secure necessary funding could
seriously affect our ability to continue operations.*

                                       11
<PAGE>

   This "Risk Factors" section contains forward-looking statements (identified
with an asterisk "*") that involve risk and uncertainties. The Company's actual
results may differ materially from the results discussed in the forward-looking
statements. Factors that might cause such a difference include, but are not
limited to, those discussed in this "Risk Factors" section and in "Business"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations". The Company assumes no obligation to update such forward-looking
statements or to update the reasons actual results could differ materially from
those anticipated in such forward-looking statements.

Risk Factors

   We Can Make No Assurances that We Will Be Profitable in Any Future
Period. We have incurred significant net losses since our inception. At
September 30, 2000, we had an accumulated deficit of approximately $31.5
million. Although we achieved a net operating profit in the three months ended
September 30, 1999 and the three months ended March 31, 1995, 1996 and 1997,
September 30, 1996 and 1997, and December 31, 1996 and 1997, we cannot assure
you that we will have operating profits in any future period.

   We Must Raise Additional Capital in Order to Continue Operations. This
Capital May Not Be Available on Acceptable Terms, if at All. We do not believe
that our existing cash and cash equivalents, together with expected cash flows
from operations, will be sufficient to fund our operations through the end of
the fourth quarter of this year.* Accordingly, we will be required to raise
additional capital through debt or equity financings or other arrangements to
fund our operations, including the continued building of infrastructure and
pipeline with respect to WorkOut. There can be no assurance that such
financings will be available on acceptable terms, if at all, and that such
terms will not be dilutive to our existing stockholders. Our inability to
secure necessary funding could seriously affect our ability to continue
operations.

   Our Quarterly Operating Results Will Fluctuate because of Many Factors. Our
quarterly operating results have varied in the past, and we expect our
quarterly operating results to vary significantly in the future.* Our revenues
and operating results are difficult to forecast and could be significantly
affected by many factors, some of which are outside our control, including,
among others:

  .  Demand for the Company's products and services;

  .  The variable size and timing of individual license transactions;

  .  The timing of our future revenue which we will recognize under SOP 97-2,
     SOP 98-4, SOP 98-9, and SAB 101;

  .  Increased competition;

  .  The timing of new product releases by us and our competitors;

  .  Market acceptance of our software;

  .  The ability to expand our sales and marketing operations, including
     hiring additional sales personnel;

  .  Software defects or other quality problems with our software;

  .  Changes in pricing policies by us and our competitors;

  .  The mix of our license and service revenue;

  .  Budgeting cycles of our customers;

  .  Success in maintaining and enhancing existing relationships and
     developing new relationships with strategic partners;

  .  The introduction of indirect sales into our revenue mix which has
     resulted in and could continue to result in lower gross margins;

                                       12
<PAGE>

  .  The ability to control costs;

  .  Technological changes in our markets;

  .  Changes in our strategy;

  .  Personnel changes; and

  .  General economic factors.

   We are in the process of transitioning to the Electronic Statement
Presentment ("ESP") and EBPP application business. During this process we are
increasing our operating expenses to expand our sales and marketing operations,
fund greater levels of research and development, develop new partnerships,
expand our two East Coast facilities, expand our London sales office, and
expand into Europe and Asia. If our revenues do not increase along with these
expenses, our business, operating results and financial condition could be
seriously harmed and net losses in a given quarter could be even larger than
expected.* In addition, to successfully execute this strategy, we must raise
additional working capital.

   In addition, because our expense levels are relatively fixed in the near
term and based in part on expectations of our future revenues, any decline in
our revenues to a level that is below our expectations would have a
disproportionately adverse impact on our operating results.*

   We May Have Difficulties in Retaining the Proper Resources to Address Our
Current Contract Obligations. During our transition out of CheckVision and our
other mature software application frameworks, we may incur transition expenses
over the next few quarters such as retention bonuses, severance payments and
moving expenses.* Since the majority of our sales of CheckVision and our other
mature software application frameworks are to customers in the financial
services industry, this transition could result in ill will towards the company
and, as a result, hinder our ability to penetrate the financial services
industry with sales of our new ESP and EBPP products.* This transition could
also result in litigation. If we are unable to retain the proper resources, or
if we are hindered in our ability to penetrate the financial services industry,
or if we incur litigation resulting from this transition, our business,
operating results and financial condition could be significantly harmed.*

   The Business-To-Business Electronic Presentment Industry Is Very
Competitive, and We Face Intense Competition from Many Participants in this
Industry. The markets for electronic commerce software ESP and EBPP are
becoming progressively competitive. While Alysis believes that our product
offering is unique and our technology superior, there can be no assurance that
new competitors will not emerge and/or current competitors will match our
technology in the near to medium term.* There are a number of companies from
various industries vying for market share in the ESP and EBPP markets. Some
companies have more established alliances, marketing and sales departments and
greater financial resources. While we intend to maintain our current advantages
and seek out new ways to minimize our weaknesses, through acquisition or other
means, there can be no assurances that this will be achieved.*

   We Derive a Significant Portion of Our Revenue from the Financial Services
Industry and for Us to Be Successful We Will Need to Penetrate Additional
Industries Such as Telecommunications and Utilities. Currently, a substantial
majority of our total revenue results from services and licenses provided to
large banks and other financial institutions. Our future operating results will
depend in part on our ability to penetrate additional industries such as
telecommunications and utilities. While we may devote substantial resources to
penetrate these and other markets, we cannot assure you that the revenues we
generate from this effort, if any, will exceed the cost of such efforts.* To
successfully expand our product offerings to industries other than the
financial services industry, we must continue to enhance our ESP and EBPP
products and to expand our sales and marketing departments. We cannot assure
you that we will be able to create or modify our software products effectively,
that they will achieve market acceptance, or that we will be able to expand our
sales and marketing departments.* If we are unable to penetrate new industries,
our future financial condition will depend upon our ability to further
penetrate the financial services industry. The current focus of the banking
industry

                                       13
<PAGE>

on mergers may impede our ability to further penetrate this industry.* If we
are unable to adapt our software and product solutions or our sales and
marketing efforts to meet the needs of new industries, or if we are not able to
further penetrate the financial services industry, our business, operating
results and financial condition could continue to be significantly harmed.*

   Our Business Could Be Affected by Software Defects and Product Liability
Claims. Software products as complex as ours may contain errors that may be
detected at any point in a product's life cycle. We have in the past discovered
software errors in certain of our software application solutions and have
experienced delays in shipment of application frameworks during the period
required to correct these errors. We can make no assurances that, despite
testing by us as well as by current and potential customers, errors will not be
found, resulting in:*

  .  Loss of, or delay in, market acceptance;

  .  Diversion of development resources;

  .  Injury to our reputation; or

  .  Increased service and warranty costs, any of which could significantly
     harm our business, operating results and financial condition.

   Our license agreements with our customers typically contain provisions
designed to limit our exposure to potential product liability claims. Our
software application solutions are generally used to manage data that is
critical to an organization, and as a result, our sale and support of our
application frameworks may entail the risk of significant product liability
claims. A liability claim brought against us could significantly harm our
business, operating results and financial condition.*

   Our Success Depends on Our Ability to Expand Our Distribution Channels and
Successfully Manage the Risks Associated with Such Expansion. To date, we have
sold our ESP, EBPP and software application solutions primarily through our
direct sales force. We will need to successfully recruit, retain and train
sufficient direct sales personnel and establish other distribution channels and
partnerships to achieve significant revenue growth in the future.* We continue
to seek ways to augment our direct sales force by establishing indirect
distribution channels, including relationships with OEMs, resellers, bill
consolidators, application service providers and service bureaus. Our
distribution channels and alliances have to-date produced substantially less
revenue than we originally expected. We can make no assurances that we will
successfully increase our revenue through channels and alliances. We can make
no assurances that we will successfully expand our direct sales force or that
any such expansion will result in any substantial increase in our revenues. Our
failure to expand our direct sales force or other distribution channels could
continue to significantly harm our business, operating results and financial
condition.*

   We Expect Our Transition to the ESP and EBPP Application Market Will
Continue to Strain Our Management, Operational and Technical Resources. We are
in the process of transitioning from an application services focus to a
product-centric focus in the ESP and EBPP market. Our transition has placed
significant demands on our management, operational and technical resources. We
expect this transition to continue to challenge our sales, marketing, technical
and support personnel and senior management. Our future performance will depend
in part on our ability to adapt our operational systems to respond to changes
in our business. Our transition entails a number of risks, including continued
potential declines in revenue and the need to develop the appropriate sales and
marketing capabilities and software development estimation, production,
delivery and distribution infrastructure. We can make no assurances that we
will be successful in creating the necessary capabilities and infrastructure at
all. Our failure to manage the transition successfully has had and could
continue to significantly harm our business, operating results and financial
condition.*

   Our Senior Management and Other Key Personnel Are Critical to Our Business
and Those Managers and Personnel May Not Remain with Us in the Future. We must
retain the continued service of our senior management as well as sales and
product development personnel if we are to provide improved future

                                       14
<PAGE>

performance. We do not have and do not intend to obtain key person life
insurance on our personnel. The loss of one or more of our key personnel could
significantly harm our business, operating results and financial condition.* We
are also actively seeking key technical personnel. We believe that our future
success will depend in large part upon our ability to attract and retain highly
skilled management, marketing, sales and product development personnel.*
Competition for such personnel is intense, and we can make no assurances that
we can retain our key employees or that we will successfully attract,
assimilate and retain such personnel in the future. Our failure to attract,
assimilate and retain key personnel could significantly harm our business,
operating results and financial condition.*

   Our Efforts to Protect Our Intellectual Property May Not Protect Us Against
Misuse and Others May Claim that Our Products Infringe. Our success depends in
significant part upon our proprietary technology. We rely on a combination of
copyright, patent, trademark and trade secret laws, confidentiality procedures,
and licensing arrangements to establish and protect our proprietary rights. We
have a recently issued patent for a System for Data Extraction from a Print
Data Stream and U.S. and international patents pending for Data Parsing System
for Use in Electronic Commerce. In addition, we have four other patents. While
our current products are not dependent on these four patents, we may utilize
these patents in future software products.

   We vigorously enforce our patent rights. While there can be no assurances of
success, we continually evaluate methods by which to enforce and capitalize on
our patent rights. Such actions may cause us to incur substantial costs that
could impact our financial results.*

   As part of our confidentiality procedures, we generally enter into non-
disclosure agreements with our employees, consultants, distributors and
business partners, and limit access to and distribution of our products,
supporting documentation and other proprietary information. Despite these
precautions, a third party may be able to copy or otherwise obtain and use our
software products or technology without our authorization, or to develop
similar technology independently. In addition, effective protection of
intellectual property rights is unavailable or limited in certain foreign
countries, where customers have in the past licensed and may in the future
license our products. We cannot assure you that protection of our proprietary
rights will be adequate or that our competitors will not independently develop
similar technology, duplicate our software products or design around any
intellectual property rights upon which our business is now or may in the
future be dependent.

   Our products incorporate certain software that we license from third
parties, including software that is integrated with internally developed
software and used in our products to perform key functions. We cannot assure
you that:

  .  Such firms will remain in business;

  .  They will continue to support their software products; or

  .  Their software products will otherwise continue to be available to us on
     commercially reasonable terms.

   We believe that substantially all of the software we license is available
from vendors other than our current vendors. We also believe that we could
develop such software internally.* However, it is possible that the loss or
inability to maintain any of these software licenses could result in delays or
reductions in product shipments until we could develop, identify, license and
integrate equivalent software.* Such delays could significantly harm our
business, operating results and financial condition.*

   We are not aware that any of our products infringe on the proprietary rights
of third parties. We cannot assure you, however, that third parties will not
challenge our patents or claim infringement by us with respect to our current
or future products. We expect that software product developers will
increasingly be subject to such claims as the number of software products and
competitors in our industry segment grows and the functionality of software
products in the industry segment overlaps.* Any such claims, with or without
merit,

                                       15
<PAGE>

could result in costly litigation that could absorb significant management
time, which could have a material adverse affect on our business, operating
results and financial condition.* Such claims might require us to enter into
royalty or license agreements. Such royalty or license agreements, if required,
may not be available on terms acceptable to us or at all, which could
significantly harm our business, operating results and financial condition.*

   We Depend on the Introduction of New Versions of the Company's WorkOut
products and on Enhancing the Functionality and Services Offered by the
Company. If we are unable to develop new software products or enhancements to
our existing products on a timely and cost-effective basis, or if new products
or enhancements do not achieve market acceptance, our business would be
seriously harmed.* The life cycles of our products are difficult to predict
because the market for our products is new and emerging, and is characterized
by rapid technological change, changing customer needs and evolving industry
standards. The introduction of products employing new technologies and emerging
industry standards could render our existing products or services obsolete and
unmarketable.*

   To be successful, our products and services must keep pace with
technological developments and emerging industry standards, address the ever-
changing and increasingly sophisticated needs of our customers and achieve
market acceptance.

   In developing new products and services, we may:*

  .  Fail to develop and market products that respond to technological
     changes or evolving industry standards in a timely or cost-effective
     manner;

  .  Encounter products, capabilities or technologies developed by others
     that render our products and services obsolete or noncompetitive or that
     shorten the life cycles of our existing products and services;

  .  Experience difficulties that could delay or prevent the successful
     development, introduction and marketing of these new products and
     services; or

  .  Fail to develop new products and services that adequately meet the
     requirements of the marketplace or achieve market acceptance.

   If We Fail to Release Our Products in a Timely Manner, or if Our Products Do
Not Achieve Market Acceptance, Our Business Would Be Seriously Harmed. We may
fail to introduce or deliver new potential offerings on a timely basis or at
all. If new releases or potential new products are delayed or do not achieve
market acceptance, we could experience a delay or loss of revenues and customer
dissatisfaction.* Customers may delay purchases of WorkOut in anticipation of
future releases. If customers defer material orders of WorkOut in anticipation
of new releases or new product introductions, our business would be seriously
harmed.*

   In Order to Manage Our Growth and Expansion, We Will Need to Improve and
Implement New Systems, Procedures and Controls. We have recently experienced a
period of rapid expansion in our East Coast locations and this has placed a
significant strain upon our management systems and resources. If we are unable
to manage our growth and expansion, our business will be seriously harmed.* In
addition, we have recently hired a large number of employees and plan to
further increase our total headcount. We also plan to expand the geographic
scope of our customer base and operations, both domestically and
internationally. This expansion has resulted and will continue to result in
substantial demands on our management resources. Our ability to compete
effectively and to manage future expansion of our operations, if any, will
require us to continue to improve our financial and management controls,
reporting systems and procedures on a timely basis, and expand, train and
manage our employee work force.*

   As We Expand Our International Sales and Marketing Activities, Our Business
Will be Susceptible to Numerous Risks Associated With International
Operations. To be successful, we believe we must expand our

                                       16
<PAGE>

international operations and hire additional international personnel.*
Therefore, we expect to commit significant resources to expand our
international sales and marketing activities.* If successful, we will be
subject to a number of risks associated with international business activities.
These risks generally include:

  .  Currency exchange rate fluctuations;

  .  Seasonal fluctuations in purchasing patterns;

  .  Unexpected changes in regulatory requirements;

  .  Tariffs, export controls and other trade barriers;

  .  Longer accounts receivable payment cycles and difficulties in collecting
     accounts receivable;

  .  Difficulties in managing and staffing international operations;

  .  Potentially adverse tax consequences, including restrictions on the
     repatriation of earnings;

  .  The burdens of complying with a wide variety of foreign laws;

  .  The risks related to the recent global economic turbulence and adverse
     economic circumstances in Asia; and

  .  Political instability.

   We Depend on Increasing Use of the Internet and on the Growth of Electronic
Commerce. If the Use of the Internet and Electronic Commerce Do Not Grow as
Anticipated, Especially in the International Arena, Our Business Will Be
Seriously Harmed. Alysis' ESP and EBPP products depend on the increased
acceptance and use of the Internet as a medium of commerce. Rapid growth in the
use of the Internet is a recent phenomenon. As a result, acceptance and use may
not continue to develop at historical rates and a sufficiently broad base of
business customers may not adopt or continue to use the Internet as a medium of
commerce. Demand and market acceptance for recently introduced services and
products over the Internet are subject to a high level of uncertainty, and
there exist few proven services and products.

   Our business would be seriously harmed if:*

  .  Use of the Internet and other online services does not continue to
     increase or increases more slowly than expected;

  .  The technology underlying the Internet and other online services does
     not effectively support any expansion that may occur;

  .  The Internet and other online services do not create a viable commercial
     marketplace, inhibiting the development of electronic commerce and
     reducing the need for our products and services; or

  .  There is increased governmental regulation.

   Security Risks and Concerns May Deter the Use of the Internet for Conducting
Electronic Commerce. A significant barrier to electronic commerce and
communications is the secure transmission of confidential information over
public networks. Advances in computer capabilities, new discoveries in the
field of cryptography or other events or developments could result in
compromises or breaches of our security systems or those of other Web sites to
protect proprietary information. If any well-publicized compromises of security
were to occur, it could have the effect of substantially reducing the use of
the Web for commerce and communications. Anyone who circumvents our security
measures could misappropriate proprietary information or cause interruptions in
our services or operations. The Internet is a public network, and data is sent
over this network from many sources. In the past, computer viruses, software
programs that disable or impair computers, have been distributed and have
rapidly spread over the Internet. Computer viruses could be introduced into our
systems or those of our customers or suppliers, which could disrupt WorkOut or
make it inaccessible to

                                       17
<PAGE>

customers or suppliers. We may be required to expend significant capital and
other resources to protect against the threat of security breaches or to
alleviate problems caused by breaches. To the extent that our activities may
involve the storage and transmission of proprietary information, such as credit
card numbers, security breaches could expose us to a risk of loss or litigation
and possible liability.* Our security measures may be inadequate to prevent
security breaches, and our business would be harmed if we do not prevent them.*

                                       18
<PAGE>

                           PART II. OTHER INFORMATION

Item 6. Exhibits And Reports On Form 8-K

   a. Exhibits

   The following exhibits are furnished along with this Form 10-Q Quarterly
Report for the three months ended September 30, 2000:

 27.1 Financial Data Schedule (electronic filing only).

   b. Reports on Form 8-K

   The Company filed one report on Form 8-K during the three months ended
September 30, 2000.

                                       19
<PAGE>

                           ALYSIS TECHNOLOGIES, INC.

                                   SIGNATURES

   Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                          Alysis Technologies, Inc.

Date: November 14, 2000

                                                   /s/ David R. Bankhead
                                          _____________________________________
                                                     David R. Bankhead
                                            Vice President and Chief Financial
                                             Officer (Principal Financial and
                                                    Accounting Officer)

                                       20